VirTra, Inc. Q2 FY2025 earnings call

• Q2 saw year-over-year growth in revenue and bookings, though impacted by funding delays.
• Marketing efforts focus on a redesigned website launching soon to enhance lead capture.
• Regional sales model improved accountability and responsiveness.
• Targeted personnel changes to strengthen customer engagement.
• Reentry into GSA procurement channel to streamline contracting for agencies.
• 6 customers renewed STEP early in Q2, transitioning to 3-year agreements for improved reoccurring revenue visibility.
• V-XR platform interest growing across public safety, academic, and health care markets, with content conversion progressing.
• Investments in product quality enhanced hardware durability and reliability, driving repeat business.

In the second quarter of 2025, VirTra's total revenue was $7 million, a 15% increase from the prior year period. Government revenue was $5.4 million and international revenue was $1.4 million for Q2. For the six months ended June 30, 2025, total revenue was $14.1 million, a 5% increase from the prior year. Gross profit for Q2 was $4.8 million (69% of total revenue) and for the first six months was $10 million (71% of total revenue). Net operating expense for Q2 was $3.9 million, an 11% decrease from the prior year. Operating income for Q2 was $0.9 million. Bookings for Q2 totaled $4.6 million, up from the prior year but down sequentially. Backlog at June 30, 2025 was $18.8 million, including $7.1 million in capital, $5.7 million in service, and $6 million in STEP contracts.

• Expect improved order activity ahead as funding flows improve.
• Redesigned website to launch soon to boost lead capture and conversion.
• Reentry into GSA procurement will meaningfully impact Q4 and beyond.
• Confident in converting backlog to revenue as funding conditions improve.

• Federal and international funding delays continue to slow agency procurement cycles and influence quarterly order patterns.
• Sequential decline in bookings driven by timing of awards and customer-related deferrals.

Q: Drill down on IVAS program status after move from Microsoft to Android.

A: VirTra's product stands ready, contract novated to Android, with demo expected and production contract likely in September.

Q: Thoughts on U.S. Army selecting Bohemia in virtual battle space?

A: Good for Bohemia and BAE, furthers opportunities but doesn't guarantee VirTra sales, but positions VirTra with solid products using VBS.

Q: V-XR traction and customer conversations?

A: V-XR great for many uses but not ideal for weapons yet, but strong interest in health care and other sectors for portable, immersive certified training.

Q: STEP renewal rates and customer preferences?

A: Over 95% renewal rate, initial pushback on 3-year vs 5-year model navigated, some conversions between STEP and capital models.

Q: Impact of accelerated depreciation accounting?

A: No major immediate impact expected.

Q: Booking trends by geographic end market?

A: Grants opening up, assisting customers with grant applications, international activity increasing, and private investment in police departments seen.