Genasys posts $40.8 million revenue in fiscal 2025, driven by hardware and software growth; expects 50% margins and profitability in 2026.

Excited to continue this positive progress into 2026, now shifting to the full year results in fiscal 2025, Genesys generated $40.8 million in revenue, up roughly 70% from 2024. Hardware revenues grew over 91% in fiscal 2024. This included $13.2 million in revenue related to the Portuguese Puerto Rico project. Excluding Puerto Rico, revenues from our hardware business also grew at over 12% this year, signaling a strength in our other core offerings. Our products are continually garnering interest from multiple customers across the world, and we expect to continue driving similar growth in our hardware business into 2026. Total software revenue in 2025 grew 21% compared to 2024. We believe our software segments remain a large growth driver for Genasys, and as government investments pick back up, we anticipate our software programs will capture substantial upside. Gross profit margins for the year was 41.6% in fiscal 2025 compared to 42.4% in fiscal 2024. The slight decrease in gross margin was largely due to the percentage of completion accounting methodology applied to the Puerto Rico in the first two thirds of the year and was partially offset by a more favorable hardware mix in the fourth quarter. As mentioned earlier, we do believe gross margin will stabilize at around 50%, levels we witnessed in Q4. Operating expenses for the year were down roughly 8%, or $3.1 million, to $33.8 million in fiscal 2025. Genasys had a reduction of professional services for the year of $1.2 million, a $1 million tax credit, and a reduction of travel and marketing expenses for $800,000. On a GAAP basis. Operating loss in fiscal 2025 was a negative $16.8 million compared to an operating loss of $26.7 million in fiscal 2024. This improvement was largely due to the growth in both our hardware and software revenues and was propelled by cost cutting initiatives we implemented throughout the year. Adjusted EBITDA, which excludes non cash stock compensation, was negative $12.4 million compared to. A negative $22.1 million in fiscal 2024. GAAP net loss for the year was a negative $18.1 million compared to a negative $31.7 million in fiscal 2024. Before handing it back to Richard to speak more on the company's momentum and outlook, I did want to touch base on our balance sheet as of September 30, 2025. Cash Cash equivalents and marketable securities totaled $8 million as of September 30, 2025 compared with 13.1 million as of September 30, 2024. Based on our current cash forecasted receipts and disbursements, the company believes we have sufficient capital to serve the debt while there is still more work and growth ahead. I am encouraged by the progress that we made in 2025 and I am confident in our ability to deliver meaningful financial improvements in 2026. Richard, back to you.

Thank you, Cassandra. The close of fiscal 2025 laid a strong foundation for Genasys, demonstrating our ability to execute on major projects and deliver results. This momentum positions the company to enter 2026 with confidence, setting the stage for growth and new opportunities. We expect to drive significant year over year revenue growth in both hardware and software businesses. Additionally, we expect to deliver margins of 50% throughout the year. As we all know, the world faces no shortage of natural disasters and emergencies that demand reliable protective communication systems. Our technologies save lives across the globe. Genasys Systems are making a real difference in protecting people during some of their most vulnerable moments. The need for our products is clear and we will continue to deliver the solutions that agencies and communities depend on to keep their citizens safe. Overall, 2025 was a pivotal year for Genasys, finishing with a significant step in the right direction. Supported by current momentum, a strong backlog, and a deep customer adoption, we will enter fiscal 2026 with real excitement and a clear commitment to improving our operational and financial results while delivering meaningful value to our shareholders. Before moving over to Q and A, we'd like to take a second to thank all of our employees, partners, customers and shareholders for your support and trust. With that, we'd like to open up the call for Q and A operator.

Thank you. At this time we will take your questions. If you have a question, please press star1 on your telephone keypad. Once again, that is star1 to ask a question today, we'll go first to Scott Searle from Roth Capital.

Hey, good afternoon. Thanks for taking my questions. Cassandra, maybe just start. I'm not sure if I heard it, but what was software mix in the quarter and then Richard, on the CROWS front, I'm wondering if we saw any contribution in the September quarter and what you're expecting in terms of linearity and follow ons throughout the course of the.

Year for crows, so I'll answer that question first. Scott, Crows will be a likely be a second half revenue generator. So all of it will likely happen in Q3 and maybe a little in Q4. But Q3 is more likely. And in.

Q4 our software revenue was roughly around $2.2 million. It was pretty flat compared to last quarter, but we would expect to see an increase in revenue going forward for software.

Gotcha. And Richard, just to follow up on CROWS, I think it's expected to be part of a larger, you know, decade long contract that could be, you know, 100 to 150 million. This is the initial order. Are you seeing visibility to the follow ons there and then as it relates to the pipeline, I wonder if you could discuss it a little bit more detail. Last quarter there were a couple of larger contracts that you called out specifically related to flooding and tsunami opportunities in international markets. I wonder if you could just provide some color in terms of size, magnitude, timing of some of those opportunities. Thanks.

Well, we haven't put size or timing on those opportunities out in the public, Scott, but none of what I mentioned last quarter from these larger opportunities has closed. One has reached a point where we've submitted the proposal. One is a proposal to be submitted later this month and the third's further down than that relative to the CROWS question. CROWS AHD is part of a program of record that has a line item in the defense budget. As you are well aware, the FY25 there was no budget. It was a continuing resolution. So far in fiscal year 26 it remains another continuing resolution. The current one is expected to expire the end of January as I recall. With that said Scott, it's the visibility into the annual awards is part of that budgeting process. So as they conclude with that, we'll know precisely what will be in there.

Gotcha. Maybe two quick follow ups then. Richard, just in terms of government engagement and opportunities in general, given the shutdown, has momentum returned on that front in terms of other RFPs domestically, are you seeing some momentum on that front or kind of how would characterize it? And then also on the commercial front, you know, the nuclear opportunity seems like it was a nice win. Are there other, you know, commercial or enterprise opportunities that you're starting to see building the pipeline? Thanks.

Yes to everything you said. So from a nowright hardware perspective, Scott, we had a very good bookings quarter you mentioned the nuclear opportunities. There's more nuclear opportunities. If we look internationally, substantial increase in opportunities in the APAC region. We expect to close here, some of those here shortly. In the Middle east, which historically hasn't been a great market for us, our expectations are quite keen on some significant bookings in this fiscal year and even Europe has shown. More promise from an LRAD perspective. So no is the answer to your direct question. I haven't seen a Significant decrease. In fact, I've seen an increase in demand for LRAD during these current times.

Great, thank you. I'll get back in the queue.

Thank you.

The next question comes from Jared Cohen from J.M. cohen and Company.

Yeah, I just have a few questions. Thank you. Well, you mentioned I'll start off with different types of projects. Can you give us an idea of what type of projects might be in the pipeline beside, such as, are they like what you've done in Puerto Rico or can you just give us.

Very much so, Jared. Very much so. Puerto Rico, of course, as you know, has 37 dams or countries that don't actually have dams but have large numbers of basins that tend to flood. And so it's the same principles of what we're doing in Puerto Rico, just a slightly different application.

Okay, this is more financial related you talked about. Could you give us an idea of what 2026, what you're looking in terms of revenue growth and or is it possible on a total 2026, are you looking for the company to be on an operating basis profitable?

We expect to be profitable in FY26, yes. And from a revenue perspective, we don't comment on, we don't give out forward looking guidance, but I would point you to $60 million of addressable backlog, 12 month addressable backlog without condition as we entered this fiscal year.

Okay, so but on operating basis, profitable, but even on a net income basis, even being profitable.

Yes.

Okay. And my last question just related to the software business. You have over 50 million users or something like that. And the software business, I know it takes a long time to grow and it's been up and down over the last few years. And you mentioned this past quarter was what you did revenue of about what, 2.2 or 2.3 million. When do you think that business could be basically on a break even type basis in terms of cash flow wise?

It's not going to be this year, Jared. As we exit the following fiscal year, I would think we have a shot to make it there. Pipeline has grown by more than 100% from the same period, same period last year. We are prosecuting some large SAS software opportunities that we expect to close in this fiscal year. As you're well aware, fiscal 25 was disappointing from a SAS bookings perspective, principally driven by, you know, the lack of funding in the grant process, the review process for grants which seems to be moving along now. So our expectations for SAS bookings and resulting ARR are very high for fiscal 26.

Okay, thank you You're very much welcome.

As a reminder, everyone, it is Star One. If you have a question, up next is Ed Wu, Ascendant Capital.

Yeah, congratulations on all the progress. My question is, as you guys get more interest in your product, have you noticed any change in competition? Have you noticed any new entrants or people you're competing with as you pitch out these projects?

No, either neither in software or hardware or systems.

All right, then my next question is if you guys are kind of like, you know, the main player and that's building these, you know, better reputation, do you see yourself having a better pricing power or being able to price higher.

Within the government customer base? Ed, you are, Although we don't provide any cost and pricing data, we are subject to. You know, if our price goes up too much, then we're subject to having to justify the price growth. Now in some cases, we're able to justify it, and we do increase the price to be more reflective of not only the cost, but improvements in profitability. But it's not like you can just charge them anything you want. Past practice is the barometer by which you determine whether they think the price is too high or not. Competitive solicitation, no cost of pricing. It's up to us to bid what we want, giving us keeping in mind we have to win.

That sounds. That sounds good. And then my last question is on overall for Puerto Rico. You know, the revenue number about $75 million is expected to remain the same. Has your cost or overall profitability on a project is expected to remain the same as well?

Yes.

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

Thank you.

The next question is from Steven Wagner, Integrity Wealth Advisors.

Hey, guys. Hi, Richard and Cassandra. Good job. Good to see a lot of the very positive wording in the press release. It's music to our ears to see the profitability in the fourth quarter and particularly some of the positive comments on the debt service. My first question is regarding the debt service, and that is what expectations do investors have that the debt will be greatly reduced or eliminated over the course of this fiscal year that we're in 26. And then beyond that, the other question that I have is a frustration. With the. It feels like there's been a lack of accolades given Genesis in light of the enormous amount of life that was saved in the historic and devastating LA fires. To have 30, 31 people die is. Was an. Was a massive win for humanity. And yet it seems like all we've had to endure is negativity. Is there any. Is there Any impetus. Is there any program on the part of the company to highlight how and why Genesis is able to save the lives that they did in la? And a quick follow on of that is, you know, what kind of outreach have you guys had in light of all of this? Because I'm sure other states, municipalities, fire departments, etc, counties, they know how well your, your software performed and I'm sure they want it. So I'll stop there.

All right, well, I may not remember every question, but let me address.

I apologize.

Yeah, okay, fair enough. You know, there was a lot of bad press put out regarding the LA fires across the board. Negative press on Genesis, negative press on the county itself. The negative press on Genesis was walked back. There was third party independent reviews of what happened out there. And they came to the same conclusion, Steve, that you just brought up. And the people that use the software, the people that are in that industry, know quite well how well it performed. And it is leading to not only additional business to existing customers, but to new customers as well.

Great.

And what was the first question you asked?

Yeah, yeah, the first question was regarding the debt service.

Oh, the debt. Yeah. Cassandra said, we expect cash flow receipts and disbursements to support paying off the entire debt on time.

Okay. Paying it off. Okay, good.

All right.

Very good. That sounds fantastic. Excellent.

Is there another question?

And everyone that does conclude our question and answer session that also concludes our conference for today, we would like to thank you all for your participation. You may now disconnect.