Glimpse Group, Inc. Q2 FY2024 earnings call

• The company is strategically realigning towards providing immersive enterprise software and services driven by Spatial Computing, Cloud, and AI (Spatial Core), led by Brightline Interactive.
• Working closely with NVIDIA, Microsoft, and hardware players as middleware to connect cloud and AI technologies with enterprise needs.
• Spatial Core pipeline has several multi-million dollar contracts with DoD entities and enterprises, to be executed over 12-18 months with potential recurring components.
• Other subsidiaries (QReal, Sector 5 Digital, Glimpse Learning) focused on enterprise use cases like 3D modeling, AR experiences, VR training for various sectors.
• Revenue decline expected to stabilize in Q1 2024 and grow in Q2 2024 with Spatial Core ramp-up and other subsidiaries' growth plans.
• Increased investment in Spatial Core while reducing operating expenses, positioned to reach profitability when revenue returns to prior levels.
• As of December 31, 2023, cash and cash equivalents were $5.2 million with no outstanding corporate debt or preferred equity obligations.

For the three months ended December 31, 2023, revenue was approximately $2.08 million, a decrease of 29% compared to $2.95 million in the same period of 2022. For the six months ended December 31, 2023, revenue was approximately $5.18 million, a decrease of 25% compared to $6.9 million in the same period of 2022. Gross margin for Q2 Fiscal Year 2024 was approximately 68%, and it is expected to remain in the 65% to 70% range going forward. Revenue contribution details weren't specified beyond the overall figures.

• Expect revenue decline to stabilize in Q1 2024 and growth to resume in Q2 2024 with Spatial Core ramp-up and other subsidiaries' execution.
• Spatial Core initiative expected to open new frontiers and drive strong revenue development in coming months.
• Other subsidiary companies positioned to be cash flow positive and achieve profitable growth as they execute on their plans.

• Statements made on the call regarding future financial results and industry prospects are forward-looking and may be subject to risks and uncertainties that could cause actual results to differ materially from those described.

Q: Of the $2.1 million revenue, is all part of the core business moving forward?

A: Lyron Bentovim states all $2.1 million revenue is part of the pieces moving forward.

Q: What's the margin profile of DoD contracts?

A: Lyron Bentovim expects DoD contract margins to be in the 60% to 70% range initially, with higher margins on recurring elements down the road.

Q: Will The Glimpse Group handle cloud processing or rely on partners?

A: Lyron Bentovim says the company will tap into capabilities of partners like NVIDIA and Microsoft and help customers use those solutions rather than reinventing the wheel.

Q: Do balance sheet goodwill and contingent liabilities change meaningfully with noncore asset divestment?

A: Lyron Bentovim defers to Maydan Rothblum, who states majority of contingent liabilities are cash-related and tied to future performance milestones.