Genasys Inc. Q1 FY2026 earnings call

• Appointed Cassandra Hernandez-Monteon as full-time Chief Financial Officer. She has extensive experience at Genasys. - Full repayment of $4,000,000 term loan while maintaining a strong cash position of $10,300,000. - LRAD systems gaining traction domestically and internationally with growing demand in various regions and applications. - LRIP products designed for saving lives and safe communication. - Software interest expanding with engagements across municipalities, states, and government entities, with 5 cities/counties and 2 federal agencies in contracting in Q2. - Puerto Rico project recognized $9,800,000 in revenue, first two dam groups completed, third group under construction, and fourth group site surveys/engineering designs begun. - CROWS initiative: $9,000,000 production order received, LRAD 450 XLRT model qualified, with significant multiyear revenue potential. - Twelve-month backlog at end of fiscal Q1 was $58,000,000, with steady pipeline growth and active pursuit of large-scale projects.

In Fiscal First Quarter 2026, Genasys generated $17,100,000 in revenue, which is a 146% year-over-year increase. Hardware revenues grew roughly 220% from the year-ago period, with $9,600,000 contribution from the Puerto Rico project. Total software revenue was flat at $2,300,000 compared to the year-ago period but saw a roughly 5% sequential increase. Gross profit margins improved 48% or 220 basis points from the year-ago period, and the company expects annualized gross margins to be roughly 50% moving forward.

• Expect annualized gross margins to be roughly 50%. - Confident in delivering meaningful year-over-year revenue growth for fiscal 2026. - Expect to achieve both operating income and GAAP net income profitability for the full year.

• Factors affecting actual results include those discussed in Risk Factors in recent SEC filings, such as budget uncertainties and sales cycle delays related to government funding. - Sales cycle was longer due to federal government grant freezes, though starting to thaw.

Q: Talk about visibility in the immediate quarter, impact of government slowdown on payments and deployment schedules, and CROWS.

A: Backlog insulates from budget uncertainties. CROWS: FY 2026 defense budget passed, unlikely to see FY '26 CROWS award in fiscal 2026 but backlog is significant.

Q: Updates on larger deals in Latin America, European naval opportunities, and software contracts.

A: Pursuing several European navy programs, expect to close Middle East orders soon. In contracting for 5 cities/counties and 2 federal agencies, working to close them now.

Q: Changes in sales cycle and gross margin goal.

A: Sales cycle was longer due to federal grant freezes but starting to thaw. Expect to be at 50% gross margin for the full fiscal year.

Q: Follow-up on gross margin variability and software commercial opportunities.

A: Deal sizes for SaaS are significantly higher than historically. Hardware has uptick in inquiries, but 50% gross margin expected for the year with mix affecting margin, next quarter likely to make up for any first quarter variance.