Genasys Inc Q1 2024 Earnings Call Transcript

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

Question: Scott Searle - Roth MKM - Analyst : Hey, good afternoon and thanks for taking the questions. Maybe just to quickly diving in the comfort level for the hardware ramp in the second half of this year, I just want to clarify when you're talking about a recovery to past historic levels, it really implies that back-end loaded ramp starting in June and September. I think you gave the caveat of US budgetary approval. I think for the continuing resolution, which is now targeted at March. I was wondering if you could provide a little bit more color around that, the timing of the budgetary on potential resolution and how much of the pipeline in backlog is actually tied to that?

Question: Scott Searle - Roth MKM - Analyst : Got you. And then maybe just to follow up on that, Rick, in terms of the overall opportunity pipeline. It seems like the funnel had been growing. You've given some metrics, I think on the past call. I'm wondering if you could just indicate what you're seeing sequentially? Have things been growing even though they haven't been coming out the bottom of the funnel? Is that getting larger?

Question: Scott Searle - Roth MKM - Analyst : And in your opening remarks, you talked a little bit more about civil unrest and geopolitical tensions, which has not necessarily been like, I'd say, the core staple of your business and is that becoming a bigger portion of the pipeline going forward? 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 13, 2024 / 9:30PM, GNSS.OQ - Q1 2024 Genasys Inc Earnings Call

Question: Scott Searle - Roth MKM - Analyst : The previous pipeline that you guys had talked about, those who did not reflect Puerto Rico, is that correct? The larger opportunities like that are not having that full amount put into them? And secondly, I wonder if you could just talk a little bit about Evertel and the cross-selling opportunities, how that's being received and kind of what your outlook is for the second half of this year? Thanks.

Question: Scott Searle - Roth MKM - Analyst : Great. Thanks. I'll get back in the queue.

Question: Brian Colley - Stephens Inc. - Analyst : Hey, guys. Thanks for taking my question. So it seems like the Puerto Rico contract should get you close to hitting your FY26 targets next year. I'm curious if you view that as a new base of which you can grow or if we should see a decline in the hardware revenue once Puerto Rico rolls off?

Question: Brian Colley - Stephens Inc. - Analyst : Got it. And then in terms of the cadence of revenue for Puerto Rico, how should we think about the split between FY25 and this year? I mean, maybe that should be 80% next year, 20% this year or more heavily?

Question: Brian Colley - Stephens Inc. - Analyst : Okay. Got it. That's helpful. And then also, I was curious if you could provide an update on the CROWS order and your confidence level in getting that award?

Question: Brian Colley - Stephens Inc. - Analyst : Got it. Okay. And then last question for me is, I was hoping you could maybe just talk about the software pipeline, how that's trending relative to your expectations and what the composition of that pipeline looks like between CONNECT, ALERT and EVAC, where you're seeing the most demand today?

Question: Brian Colley - Stephens Inc. - Analyst : Got it. Thank you for the time, gentlemen.

Question: Mike Latimore - Northland Securities - Analyst : All right, great. Thanks. On the hardware bookings in the first quarter, did you give a number there. I'm not sure I heard that or said -- I think you said it got back to normal, but can you give a little more detail on the hardware bookings in the first quarter?

Question: Mike Latimore - Northland Securities - Analyst : On the CROWS deal, if that's approved this budget passes, how much of that business would you see this year versus over multiple years?

Question: Mike Latimore - Northland Securities - Analyst : Yeah. In terms of your SaaS software or SaaS pipeline, how much of the pipeline is a prospect wanting one part of the stack versus the full software stack?

Question: Mike Latimore - Northland Securities - Analyst : Great. And then just last on the Puerto Rico deal, you said $50 million hardware. So overall, what are you considering gross margin to be and do you have to add much OpEx to deployment?

Question: Mike Latimore - Northland Securities - Analyst : The gross margin.

Question: Mike Latimore - Northland Securities - Analyst : Okay. Thank you.

Question: Ed Woo - Ascendiant Capital Markets LLC - Analyst : Yeah, just a clarification on the gross margin that you mentioned. On these bigger deals, why wouldn't you have much better leverage considering the contracts are that much bigger? Was pricing a big determinant for winning contract?

Question: Ed Woo - Ascendiant Capital Markets LLC - Analyst : Great. And this win and obviously last year's win with [Matco], should we anticipate much bigger type of deals going forward or you're specifically targeting much bigger deals? 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 13, 2024 / 9:30PM, GNSS.OQ - Q1 2024 Genasys Inc Earnings Call

Question: Ed Woo - Ascendiant Capital Markets LLC - Analyst : Very well, thank you and congratulations again.

Question: Martin Yang - Oppenheimer & Co. Inc. - Analyst : I think you are part of my first question I have regarding OpEx associated with Puerto Rico. I know there's not a lot of increase, but if anything, change for OpEx for Puerto Rico project, what would it? And should we assume a major operating leverage coming from the Puerto Rico project?

Question: Martin Yang - Oppenheimer & Co. Inc. - Analyst : Got it. Thank you. The second question is about on your enterprise customers. Can you maybe give us an update on how are you seeing customer engagement and pipeline regarding our sales into the enterprise market?

Question: Martin Yang - Oppenheimer & Co. Inc. - Analyst : Thank you. That's it for me. 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 13, 2024 / 9:30PM, GNSS.OQ - Q1 2024 Genasys Inc Earnings Call