Genasys Inc. Q3 FY2025 earnings call

• Puerto Rico: Fiscal Q3 revenues included $4.3M from Puerto Rico; software pipeline at all-time high; partial payment received for Puerto Rico dams' deposit; root cause of payment delays identified and resolved. - CROWS-AHD: U.S. Army issued RFQ in July 2025, purchase order $8M - $8.5M being finalized, expecting continued CROWS-related revenue. - Software bookings: Slowdown due to federal funding freezes; over $9M in software bookings awaiting federal funding; software pipeline at all-time high, with east of Rockies pipeline improved (over 25% of past 12-month software pipeline from east of Rockies). - Cost reductions: Completed headcount reduction of 19 employees, saving $2.5M annually starting Q1 2026.

In the fiscal third quarter of 2025, Genasys generated total revenues of $9.9 million. Of this, $4.3 million came from the Puerto Rico early warning system project. Hardware revenues grew approximately 50% year-over-year due to the Puerto Rico project. Total software revenues in the quarter grew 7% year-over-year but were flat sequentially. Gross profit margins for the June quarter were 26.3%, lower than prior year and previous quarter due to percentage of completion accounting for Puerto Rico revenues, less favorable hardware mix, and higher tariff costs on imported components. Revenue contribution: Puerto Rico accounted for 43.4% of total Q3 revenues ($4.3M / $9.9M).

• Fiscal Q4: Anticipate significant revenue and profit contribution from Puerto Rico; project $15M - $20M total revenues from Puerto Rico in FY2025; expect improving gross margins with operating expenses consistent with Q3; ended June 2025 with 12-month backlog totaling $61M.

• Temporary funding freezes and cancellations of federal programs (urban area security initiatives, Homeland Security Grant Program, FEMA's hazard mitigation programs) delayed, disrupted, or eliminated over $2B in annual funding for state and local agencies, slowing software bookings.

Q: Scott Searle from ROTH Capital asked about Puerto Rico revenue recognition, gross margins outlook, cash flow from Puerto Rico groups, and CROWS outlook.

A: Richard Danforth said Puerto Rico gross margins are higher than normal LRAD margins, Q4 revenue and margin expected to be substantially better than Q3; cash flow from operations should be healthy as dams are completed and group 3 is kicked off. On CROWS, purchase order $8M - $8.5M being finalized, revenue expected in fiscal '26 first half.

Q: Ed Woo from Ascendiant Capital asked about flood product and interest in it.

A: Richard Danforth said Genasys teamed with FloodMapp, integrating flood prediction models on Genasys Protect platform, which has gained traction on East Coast due to events like floods in Texas and North Carolina, allowing targeted messaging based on weather and flood forecasts.