Genasys (GNSS) 1 Dec 222022 Q4 Earnings call transcript

Good day, ladies and gentlemen, and welcome to the Genasys Inc. Fiscal Year 2022 Conference Call. All lines have been placed on a listen-only mode and the floor will be opened for questions and comments following the presentation. [Operator instructions] At this time, it is my pleasure to turn the floor over to your host Kim Rogers of Hayden IR. Ma'am, the floor is yours.

Dagma. you, Thank welcome year and Incorporated quarter fourth Good financial to results fiscal XXXX conference and afternoon Genasys call. I'm Kim for firm Investor the Rogers with Genasys. Hayden IR, Relations Richard and With Chief Officer. today the me are on Executive Klahn, Dennis Officer; Chief Financial call Danforth,

will The section call statements forward-looking might of statements, differ disclaim projections this risks from any based of update company's only Other outlook ended XXXX. than results management plans, involve explicitly certain described regarding year performance the the forward-looking statements management's that future to may those Risk today. cause forward-looking financial be on During and of We that otherwise information company's stated. statements. call Factors in fiscal risks expectations, other are and make uncertainties as today's forward-looking and the company's and expectations on found XX-K the differences historical and as intent Factors XX, made and these for the uncertainties. in September obligation specifically XXXX facts, such except or materially potential can Form statements

We believe with discuss helpful which EBITDA, backlog, bookings to non-GAAP we including and the financial and metrics, also operational investors company's evaluating respect adjusted to information performance. provide measures

months. customer received scheduled in and measure the Backlog of given of planning. related Bookings purchases a For at metric issued We leading of timing revenue a XX that reconciliation measures the support recognition. these executed the to production period see in of metrics, the is purchase market metrics indicators and please of by total a use the bookings the the value close GAAP operational table orders consider next in company financial are an backlog adjusted of future the dollar EBITDA ship to that to release internal regardless the revenues today. is press of orders

hours call turn call Richard go through page will website. Chief approximately time, to Officer, be Genasys' the ahead, the to company's this replay available four At the Relations on over in Please Richard. pleasure of Finally, this Danforth. a Executive Investor my it's

Thank revenue XX% positive Fiscal while shift was a for XXXX adjusted to in accelerating delivered margin growth Genasys. year towards and Kim, We and our recurring you, EBITDA an higher welcome a revenue model. everybody. strategic exceptional

SaaS fueled million avoid investments in Our million million and year. global with demands faced we and EBITDA, to us XX% They California existing wins, $XXX,XXX markets, and unforeseen and and countries, no continue for critical work and states achieving States still these cash platform significantly sales $XX.X $X SaaS platform new marketable for long-term the cash, changes investments of making to self-funded United the XXXX their relentlessly components revenue. our added to utility strength other numerous software SaaS cash paved We notable sheets hard the SaaS beyond in our and our securities. with and growth into related second, accomplishments. in of accelerate in the by balance contract our our states. to dedication equivalents from We quarter than inventory $X thank These expansion investments company's XX flexibility core enterprise strategic continued and engineering cash gains supply creating business generating strong geographies. meet for seven we increased SaaS customers level, the These will our and development, After challenges coverage At The XX or in chain this in to generated products, led provide delivered economic commitments stock, new resources investments building markets customer approximately work our key shortages. into debt California our sales, are growing SLED software expanding support sourcing to the directly an meet XX the power the ended we in in team repurchasing executive that $X more entry or we to and adjusted strategy. the in in for million are strong our teams. investment in engine and and foothold spite way Fiscal counties. a by expanded We want and We into solutions. in the year. of in execute customer to revenue year growth and success operations positive

SaaS a enterprise, Private sector. who contracts the numerous utilities, stadiums Municipal Dennis hired three Revenue State Power closed In fourth Agency included the offer we sector, the and We and relationships. new quarter, also Natural Utility as SaaS We Water in Golden experience Walsh, SaaS Florida Company, Washington Officer in State. which well as verticals, campuses, including enterprise Chief and for brings extensive solutions NW

of purchased SaaS customers our a can to a and field fourth be Volvo, wins Healthy and Integrated competitor enterprise mass management awareness replace providing all workers, and GEM alerts multiple success evacuation we covers SaaS business safety The notification, situational to give activity to grow counties as local California pipeline or products better pipeline. Agency and markets in offerings, help in international date, are you geographies, to crisis benefit and/or solutions. state of SaaS offers a deliver IMNS, workforce. our and to software, converting IMNS, customers. million generation our notification crisis. vertical, other emergency to quarter Integrated on maximize product channels, accurate and To have of enterprise including second a features sector. comprehensive global fiscal addition utility of and Mass utilities offering hardware Evacuation platform the our as the is site staff, warning separately the software at system mass customer-related productivity, purchased bundled Florida. duress To real-time highlight emergency and automaker communication. Natural GEM safeguard Notification purchase or platform, GEM to XXXX throughout contractors. with improved purchased NW Notification Mass system GEM to and to offerings, use and Agency over is an a adding Investments throughout which win dashboard, four State of select in Golden real-time our Genasys increasingly check-ins, Mass which lead their co-op idea and customers Zonehaven closed notification Florida in enterprise inform An Municipal to with Systems Water other SaaS our of X.X communication counties Genasys purchased informed hardware offerings software locations wins one continue and GEM, five maintenance, system. in our System, single another four purchased Company keep customers recipient have have multi-year and GEM and everyone throughout across end Florida home XXX,XXX to and the Communication cover Water in employees and software this Increasingly, and internal Power The agreement domestic and deploying contracts Evacuation outages, who our that more integrated Mass another is contract our end key software. recent our have Notification XX our buttons, Communication multiple notification year In State Golden will the potential alerts than and safe Power Mass Municipal service sales

growth a communication offering company further platform. key cross-selling unified only customer the As growing upselling SaaS platform, within for initiatives our our base are and

to international Turning business. our

With sales contributions all anticipate regions Africa and stronger in continued the our EU, international growth our regions XXXX. Middle COVID, reopened expect at fiscal XXXX. East, we and sales revenue of in Asia-Pacific revenue fiscal from the We

to in lower $XX.X Our previous previously close will XXXX. to XXXX quarter than fiscal of for carrying business backlog $XX XXXX. from fiscal to bringing over due a million, XXXX anticipated XXXX million, are start million now to fourth fiscal timing orders bookings fiscal fiscal bookings hardware total expected bookings was Fiscal the $X from in year

XXXX million a Acoustic are deliveries international orders a and $X landing anticipate Last it growth. business, anticipated bookings and by that XXXX business The approximately fiscal support increase of deliver $XX SLED backlog. strong operating fiscal our and reflecting expenses million, Through in a in business business. was device of in expect automobile million service and to larger fiscal the XXXX, in by our million our will backlog with and revenue to software fiscal continued XXXX contracts year, augment to we base we model increase continued we XXXX. our our Further, $X are competitors replacing SaaS in utility building represent portion $X.X increased discussed customers. software increase and Our in confidence stronger of million bookings have XXXX. our to a SaaS annual fiscal from excitement recurring of to-date, revenue carryover professional fiscal manufacturing, sales result sales, and to proven Hailing sports operating expenses in we organizations, The $XX SaaS our we global enterprise investments

model Our recurring of performance margin higher strong as gaining SaaS strategic revenue by a our is the towards momentum, offerings. shift evidenced

and the geography. the in strategic California into Volvo expansion the first continued into Zonehaven investments That this major orders three GEM of Diego in previously XXXX and quarter. fiscal expansion XXXX, and of markets with awards and utility in County fueled markets to has existing four wins key mentioned entry Riverside counties. Further Our as in well and fiscal as expected are led contracts further San additional quarter new momentum

investments and for in sheet systems power backlogs, I'll the to strength economic entire people meet revenue a platform Acoustic demand growth and The that, it Genasys the Dennis. critical over our team engine current stronger continued are sales, continue flexibility business long-term core execute continued creating to pipeline, strategy. exciting generating our our we safe. SaaS keep carryover robust cash will that strong bookings orders, And communication to Hailing Our with provide with looks of anticipated of and and fiscal resources expect the the of balance The us turn forward FYXXXX. help that XXXX. sales SaaS a increasing growth an deliveries international to With growing

declines since for the in associated up year, $XX.X stock major to million, in same XXXX. goodwill of the our and Revenues SaaS $X IMNS period was goodwill and XX%. The market Gross prior product $XX revenue revenue in expenses software Richard. largely fourth revenue multiples of as to quarter than $X greater $XX.X goodwill margin Operating software, a prior profit higher sustained was company’s charge the in times from $X.X in asset profit annual up fiscal recurring Gross quarter a Within million, fiscal fourth were a fourth was million with the revenues. XX.X% the XX%. in XXX% impairment due XX.X quarter. increased lower with percentage an impairment increase year year non-cash SaaS indices an decrease due X.X charge up costs. AHD a XX.X% $XX.X year Americas last compared of revenue quarter, compared same the cost quarter. taken resulting X prior to beginning evaluate over reduce the impairment is million, in due for year, to you, from from that software from down non-cash XXXX the million, was to million, on X% software period, the basis reporting revenue to the the was annual Thank times unit. was We year were fiscal million market ago,

with for loss unit software goodwill of impairment the analysis, As months the a $XX.X company ended the the XX, the associated at million XXXX. on X XX and reporting recorded result impairment September

for for million increase lower million $X and grew increase a The charge, million Excluding compared year, year, a period. with the software expenses charge, prior the million compared a $X.XX as million. percentage Gross year prior gross was per tax offset revenue million were XXX% primarily higher due professional increased of $XX.X were quarter. support decrease grew our margin to net million, partially The goodwill $XX.X over related evaluation growth due to in fourth of decrease the for compared total the personnel year operating XX% year fiscal fourth fiscal in million margin mentioned to sales in in increased million was revenue in fiscal results. profit share to Software-as-a-Service profit quarter the cost to income to XX.X% full expense XXXX. revenue. the increase quarter with the services decrease expenses revenue, offset partially X% fiscal half with growth in to non-cash non-cash associated cost to goodwill or $X.X to the on the prior and of prior to continued $XX.X from period revenue $X.X higher impairment software loss up a by was was in charge that the were in deferred profit non-cash XXXX that of largely year, assets. in XX% XXXX, full XXXX by increases Revenues investment were XX% year revenue software year AHD $XX.X against $XX.X the quarter to revenue second tax the impairment $XX.X $XX.X in Operating fiscal X% a the the impairment prior the largely million, million. largely compared in $XX the income the for Net product allowance the discussion same $X.X revenue IMNS These XXXX. as XXX% and million, due over compared was Gross XX.X% due which lower I of

in to growth These largely costs were Excluding prior revenue software revenue development were the SG&A growth. by associated goodwill engineering in The opportunities. the software year personnel sales, support operating increases development by increases with driven in and administration, SaaS in the additional operating year driven related increases total over prior expenses was year and $XX.X also and the to employee increase research planned over impairment, million. and SG&A support expenses R&D

of expense tax discussed, impairment This net was of we share related to income million $X amortization per $XX.X related charge, per or primarily expense non-cash $XX.X as fiscal Net was marketing $X.X year. In increased the income the to $X.XX decrease evaluation in prior compared diluted addition, share of and – for due year fiscal XXXX. against or expenses million the over non-cash allowance XXXX million loss $X.XX with million in understanding visibility a our our the adjusted fiscal deferred tax of positive of We $X.X with enhances non-GAAP comparisons effect, overall performance. XXXX million was assets been to earnings million. and EBITDA information reconciliation in expenses an and of GAAP figures fiscal prior for believe EBITDA the operating has included business that year. results increase release. this To in a our million in compared Adjusted $X.X $X.X

we cash We XXXX, growth Working million into activities XXXX XX, of compared business of million $X totaled $XX common $XX.X operations the and with strong to with future generated approximately to compared remains result million $XXX,XXX on is generate The XXXX capital foresee. strong a enabling open in growth. sheet reinvesting the business decrease September $X support marketable opportunities that’s transactions. equivalents XXXX. market balance approximately stock ago. from reinvestment on Cash, on of for Our net $XX.X September continues $XX.X September cash year million year fiscal software from million and in our the XX, operating after cash XX, million repurchasing securities $XXX,XXX totaled

our margin diligently of capital while our Q&A. the strategic start also are Q&A free, like remain the services. Operator, we’d session? the you With managing business debt We software the call could open that, towards to to in shift advancing to higher allocation

question. comes The open your now [Operator state with floor Ascendiant you. Instructions] for Our question Capital. Please is Woo Ed first from Thank questions.

macro quarter. these any environment sign government My you the either noticed to on in Congratulations contracts? change willing question of have with is, the terms

But are what international open The well the as the opening they probably COVID result as my a the level, as right slowest opened region a remarks, APAC to on come mentioned international markets. is Ed, now No. we’re fully of plague. as back up The – other macro finally. I seeing in was

direct I no, answer haven’t, So your it’s the to question.

having Great. And back business? a inflation? chain? business, your high with you How’s supply of got it impacting any that improved Has issues your lot to normal, especially hardware

manage real to gross they Yes. margins. a is The throughout our pandemic team thing Inflation’s and impacting that will and the has here managed that continue it.

opportunity do during of the margins so which reprice points have X.X for two times fiscal or year XXXX three QX, our gross was QX in Our percentage we over to XXXX. the we’ve improved down done actually products,

that, do. doesn’t bookings Now backlog of new of get but course the impact

So seeing. bit challenged growth the we that world yes, are a the inflation is with

Great. and my you. Well, Thank wish luck. thanks good guys questions for I answering you

you. Thank

question next state from comes Capital. Our with Mike Please Latimore Northland your question.

that Thanks. great the in in Yes, year you quarter. – the $X of of million How talked on and software here. much the about category? bookings congrats In the I think was fourth

Do we Mike. that? disclose disclose that, We don’t

software, the You’ll see the not bookings. the reports but revenues in in total

you many me have then now? how people Okay. And you software sales remind can

So people. we have and marketing XX sales

In XX development software the group. in have addition approximately to that, we

quarter Okay. How sales of like about carrying number a people?

It’s the there people of most in but… are the some XX. well, XX It’s as pre-sales

it. Got

as there? And gross business then longer-term what kind your software you over have margins Okay. of scales, in the envision

to XX% XX%.

Okay, well. great. the in really progress opposed give be East just doing states, as there West terms of, map there trying to zones update And opportunity the little Coast? then other and Zonehaven the seems to think Can to you’re you on I in a Coast maybe also

Sure. both very The momentum Zonehaven very, for XXXX. our SaaS, in was fiscal good and GEM

Zonehaven. you’ll more reading software. releases If we’ve We Florida, our added Washington. Diego We GEM our Riverside with four California added counties Zonehaven. been Mass We recently in Notification you’ve California, San added press to announced and County see utilities with

released I in of which last, don’t has All weeks, weeks. eight know, been the just seven

California, complete then state zones fiscal other this completion the out year. state to completed on and the of of states build in throughout near We of now working in have the Colorado,

prosecute like Louisiana to GEM. Texas, or begun the and In Coast we like states and for Gulf South, both of East Massachusetts, Zonehaven states Coast have areas terms the Florida

areas. to of fiscal awards in in XXXX those expect our close several We

Okay. Great. you. Thank

Thank you.

Please with from question. your Brian comes Stephens. state Colley question next Our

is this my on Thanks Hi, for question. Brian. Hassan for taking

pipeline can outlook So should revenue meaningfully? your Wondering both see software expect to mentioned that software you fiscal for, growth activity you we SaaS have more guys you discuss in pipeline robust up for and a products. for healthy XXXX, if ramp when and year for hardware

we give don’t that. Hassan, guidance on yet

ARR, As it meaningful you have that nature our done million before in we will have kind not flow on XXXX. past the fiscal which ARR, software will the we contracts, hit time that have And software in revenue. of know, bookings and our report of I three-year some our you we and – mentioned to expect when of does happen begin I SaaS a take likely $X of yet. SaaS

Gotcha. Thanks. long-term And million? revenue you Are guys Is at that then question or your intact? just that on $XX still still targets. looking

that that. and update will We model increase

Okay, and of brought then your insights Officer you upcoming for our Chief initiatives are some year? question. new just one guess thanks. has his into this I and Can Revenue priorities the organization And more about talk that key what

SaaS SaaS. are priorities bookings, building group a out for key His marketing SaaS.

just He, that. focusing on

and his this experience And have lot He abilities. brings a great all of lot a confidence area. got in we in to accomplish

Appreciate it. Thanks. Okay.

you. Thank

Martin state comes with Our question. from next Please question your Yang Oppenheimer.

question. on you. Hi, my you it’s fiscal taking and us Is Thank more give break more on investment make the in R&D? you good more Any XXXX? or out details, Is Can incremental appreciated. for will maybe marketing? it afternoon. Thanks sales OpEx on details

the of Walsh that evenly across R&D. fill of spread looking is has out be a to Chief It’ll marketing team. he sales – fill Revenue, We’ve Dennis and positions number the got sales pretty a both and number to

drive presence to to I and marketing the generation lead word towards maybe the the folks there’s slightly a continue it us our Now the sales both skewed think team, market – expand about Software. is looking we going for digital to spread help that of get to continue and we will it, and marketing capabilities able to integrate Zonehaven and add GEM and be be as more bigger visibility. to Engineering, and software

your from do in the Florida plan any Got Is winds efficiently is State it. how there target to Thank Golden more takeaways you you. coming regarding that vertical and My second important those question years? utility winds.

We are. it for it’s been are just And for the a in how the many SaaS market, States. hadn’t there our new utility products. importance in we utilities here now of The United is, us vertical

it’s further for So great products. opportunity of a expansion SaaS our

Thank it. very you much. Got

you. Thank

Okay.

from Please with question. Chris [ph] Our state next question Caterpillar. Blue Tuttle comes your

couple Yes, of I for had them. Thanks guys taking questions. a

you quotas do expect ask to you productivity, yield thing, get to about higher to to existing I from wanted one be increase talked be Just your able sales in coming sales year, able and staff? [ph] to the fiscal

Yes. They already have those quotas.

just or your now is wondering, in core few a of they the of a still Okay. It’s in and some areas. kind guys kind have either different to on terms of you roll My I'm that any question reaction – really or is radar been respond it a pricing tactics, replace just need And on have where able competitors you're haven't those competition been they're next to yet? competition. below you from seen quarters case the felt

and definitely The – sale software System. cycles certain. I also up-sell more, right no our are reaction seeing so saw integrating to XX their our alone highlight the winning integrated for into the that we're evacuation of remarks typically now, a communication I the that that software, product this Mass is line. that. a and enjoy can argue up-selling definitely would percentage we evacuation cross-selling able position GEM I'll I again that's We're but do Notification mentioned higher radar mass In company in that delayed. lot, other product winning were a the would we provider and a in all a communication mass and long, of the SaaS California then We only as and screen on winning, software are counties

well to and you have just more partnerships thoughts disasters, disaster of expectations front term in. investors on planning, look particularly of in a happening California just what forge a out you is around making the earthquake can interesting seen prediction things disaster of some I'm do engage might things bit in is in wondering of we've of a have natural in to – in people forward what a kind be some major my all where help that and have kind things lives side, area for saving that and looking better? Got what little kind question it. turn And getting of might last And now planning the longer area worn these that these

Yes.

We have place in several partnerships now.

I think of see see; some be have you'll providers here the you'll at an I know significant we ShakeAlert state also see our on And will also that in additions system. platform. you'll California the that of least initiative going with

we'll think I on So that. continue to grow

Well, lot congratulations. Thanks a guys, and Okay. great.

Thank you.

Okay. Vanquish Bremer And Please next our from your state question William comes with Capital. question.

Yes. Hi, evening Richard, good Dennis.

Hi there.

on First Richard, tackling on signed opportunity the Dennis We color a – had thereafter. real Nice have and some see. question issues, for give to areas one historically us a for are There a that blocking massive Then and have I see there. can three. definitely given focus utilities? you course regions? a I you little this geographic Is initiative tremendous

Sure.

more. your As first in mentioned that two new hard the, up with and we it vertical, Bill I a get followed quickly it’s win did always to and

manufacturing verticals So me, this that you and others sales is a one of our the CRO focus our and only but with of are marketing staff. can expect, along not large-scale entire and

And impairment you would a I approximately out Dennis, to great. have we have XXX,XXX back figure happen a quarter, seems correct to though about, fourth pre-tax if the if that profit. Okay, correct? as is provide? my adjusted this Do you, math is on

– The about about been correct. XXX. $XXX,XXX would’ve is That

great. Okay,

been would’ve appreciative. Okay. That

that point cash. operating we a million out though, Bill in it also a And that was quarter dollars generated

Absolutely. And I well. that see as

in XXXk income. operating

and year. and my look built forward to agree Richard is completely a in has foundation a This I as shareholder. No, I The material XXXX opinion to transformational been XXXX.

for kind Thank Terrific. words. the you

our question. for turn remarks. was I’ll closing Dennis to over final it that And back

you. Thank at We with regularly the conferences year. meet investors throughout

we be next and the and you the the holiday forward Capital website when healthy fiscal look participating at XXXX We families behalf to for you report presentation a call. a year and with on Securities your Imperial today’s register Thank for We with speaking Security Imperial quarter meetings we you XX. of Please again season. happy, Genasys, results. in conference will Investor a one-on-one everyone first XXXX meeting. On book to December wish Conference at visit

Thank We for you. today’s your you call. thank participation. concludes This conference

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