Genasys Inc at Issuer Direct Winter Wonderland Best Ideas Investor Conference (Virtual) Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Mike Latimore - Northland Securities, Inc. - Analyst : So clearly, you put a lot of effort into the software side of your business. And maybe we can talk a little bit about this kind of the evolution over the last year. So I think you've talked about your fiscal '22, which is the September year end. In the year, you kind of prove out your software strategy. So maybe talk about how you printed out and then what do you expect to do in terms of execution this year?

Question: Mike Latimore - Northland Securities, Inc. - Analyst : Excellent. In terms of maybe just the product and sales strategy around software, what are some of the key product initiatives this year and you build out the sales force, was there any kind of interesting changes to their strategy or quotas this year for the salesforce?

Question: Mike Latimore - Northland Securities, Inc. - Analyst : Yeah. And then as you integrate your technologies into one platform, I assume it's going to be easier for customers to use one than two. It's probably easier to cross sell.

Question: Mike Latimore - Northland Securities, Inc. - Analyst : Maybe it's worth just touching on the core value out of your software. Basically talking of -- maybe kind of reference what sort of events are catalysts for customers buying the software. And then ask kind of what's the value added and provided with your core software? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 22, 2023 / 6:00PM, GNSS.OQ - Genasys Inc at Issuer Direct Winter Wonderland Best Ideas Investor Conference (Virtual)

Question: Mike Latimore - Northland Securities, Inc. - Analyst : Yeah. So it's a better safety, better efficiency overall. And in terms of just to get a sense of how much effort you're putting into the software side of the business, maybe you can just talk a little bit about total number of employees of the company and total number that's on the software side.

Question: Mike Latimore - Northland Securities, Inc. - Analyst : And just, by far, our record bookings quarter ended in software side.

Question: Mike Latimore - Northland Securities, Inc. - Analyst : And then how many salespeople you have focused on software and what's their quota? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 22, 2023 / 6:00PM, GNSS.OQ - Genasys Inc at Issuer Direct Winter Wonderland Best Ideas Investor Conference (Virtual)

Question: Mike Latimore - Northland Securities, Inc. - Analyst : Brilliant. And then in the broader technology market, there's been some sense of a macro uncertainty and some longer sales cycles in certain SaaS categories. What have you generally seeing in terms of the sales cycle that you're seeing among your customers?

Question: Mike Latimore - Northland Securities, Inc. - Analyst : Yeah. No, makes sense. So obviously, a large addressable market, how much of the market is kind of greenfield versus replacing what's out there? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 22, 2023 / 6:00PM, GNSS.OQ - Genasys Inc at Issuer Direct Winter Wonderland Best Ideas Investor Conference (Virtual)

Question: Mike Latimore - Northland Securities, Inc. - Analyst : No, makes sense. Good, good. And then just on, I think on the last earnings call, you talked a little bit about more confidence in the international markets. And so can you just talk a little bit about what kind of international backlog you have, how confident are you to convert to bookings, what are the products in the mix, sir?

Question: Mike Latimore - Northland Securities, Inc. - Analyst : And is that mostly your acoustic hailing device in the backlog there or more diverse?

Question: Mike Latimore - Northland Securities, Inc. - Analyst : So how do you factor that international backlog in your guidance? If you closed it all at the upside to guidance or was it factored into guidance or how do you think of that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 22, 2023 / 6:00PM, GNSS.OQ - Genasys Inc at Issuer Direct Winter Wonderland Best Ideas Investor Conference (Virtual)

Question: Mike Latimore - Northland Securities, Inc. - Analyst : Okay. And then the other thing you've historically talked about is just using the hardware business' cash flow to fund the software business. Can you give us just some general perspective on how much cash flow you used to build out the software business?

Question: Mike Latimore - Northland Securities, Inc. - Analyst : Yeah. And then you talked about this year, the second half gross margin is improving. Is that largely tied to scale and supply chain improvement or is it tied to more of the software business building? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 22, 2023 / 6:00PM, GNSS.OQ - Genasys Inc at Issuer Direct Winter Wonderland Best Ideas Investor Conference (Virtual)

Question: Mike Latimore - Northland Securities, Inc. - Analyst : Yeah. Then you've given a, I guess three- to five-year target of $80 million of revenue, I believe. Is getting from kind of current levels to that, is that all organic or you're factoring some acquisitions in there?

Question: Mike Latimore - Northland Securities, Inc. - Analyst : Sure. Yeah. And then on the acoustic hailing device side of things, you typically get a big order from the Army each year. Is that still doable this year and how visible is that?

Question: Mike Latimore - Northland Securities, Inc. - Analyst : Okay, got it. And then how about just -- I mean, you've made some astute acquisitions, Zonehaven being one. What's your appetite for kind of more acquisitions?

Question: Mike Latimore - Northland Securities, Inc. - Analyst : Yeah, okay. So we should think of it as like a technology application kind of priority. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 22, 2023 / 6:00PM, GNSS.OQ - Genasys Inc at Issuer Direct Winter Wonderland Best Ideas Investor Conference (Virtual)

Question: Mike Latimore - Northland Securities, Inc. - Analyst : Okay, got it. And then back on, you mentioned Aramco. I mean, that was probably one of the biggest deals in the mass notification space ever. Maybe can you talk a little bit about why you think you won that deal? I mean, I think you're competing as pretty much everybody in the world.

Question: Mike Latimore - Northland Securities, Inc. - Analyst : Yeah, good. And then, I guess, just last for me, maybe a little bit of historic perspective. You started off with acoustic hailing devices. I mean, you're clearly the leader in that category. But what was the catalyst to start saying, hey, we want to build out our kind of protective communications business here?

Question: Mike Latimore - Northland Securities, Inc. - Analyst : Awesome. That was a great wrap up and final point there. So thanks to you, guys. I appreciate you doing the conference and best of luck.