Senstar Technologies Ltd. Q2 FY2025 earnings call

• Second quarter results showed strong revenue growth of 16.2% and robust gross and EBITDA margin expansion. Gross margin was 66.1%, comfortably above targets. - EMEA region grew by 52% and now accounts for 35% of total revenue, with energy, solar farms, data centers, etc., driving growth. - North America saw growth in correction and utilities verticals. - Asia Pacific faced challenges due to the non-repetition of a large prior-year contract. - Lat Am region grew due to increasing security modernization needs. - Focus on technological innovation with MultiSensor, targeting noncritical infrastructure like hospitals and logistics facilities. - Business development team expanded, with plan to further expand to support large key accounts.

Revenue for Senstar Technologies in the second quarter of 2025 was $9.7 million, a 16.2% increase from $8.3 million in the second quarter of 2024. EMEA led geographic regions with 52% year-over-year revenue growth, now representing 35% of total revenue. North America, still the largest market, saw a 29% revenue increase in the second quarter. The Asia Pacific region faced a 47% revenue decline due to the non-repetition of a large customer contract from the prior year. Lat Am region returned to growth with a 26% revenue increase. The 4 core verticals saw an aggregate 27% year-over-year revenue increase, driven by strong performance in correction and energy.

• Market trends changing, reduced demand, and competitive nature of the security systems industry pose risks. - Non-GAAP financial measures should be considered in addition to GAAP measures, with actual results possibly differing materially from projections.

Q: Thanks for a great quarter. If you can elaborate about the onetime expense, how -- what's the expense exactly? And if you can elaborate about border control segment and biddings.

A: Okay. If you agree, I'm fine with starting with the border control before to let Alicia comment on the onetime expense. So border control is not one of our main target verticals. But clearly, as per current situation where tension between countries is very high, yes, we're active in this sector. The main reason why we're not active in this vertical is that it is highly scalable because it depends basically on specific, I would say -- on specific circumstances due to political or whatever scenarios. But as far as we can contribute to make them safer, we're happy to technologically contribute to those supporting our partners. I hope I answered your question. So we cover this market without being a fundamental of our verticals. Alicia, [indiscernible]. Alicia Kelly: For the first part of your question, so the onetime administration fees were relating to consulting fees for concluding the final processes related to our Israeli entity. Now that we've completed the flip and we have redomiciled to Canada, there was a couple of outstanding activities that just needed to be closed up in order to finish with that legal entity.