Genasys GAAP EPS of -$0.14 misses by $0.03, revenue of $9.86M beats by $0.11M

* Genasys press release [https://seekingalpha.com/pr/20201854-genasys-inc-reports-fiscal-third-quarter-2025-financial-results] (NASDAQ:GNSS [https://seekingalpha.com/symbol/GNSS]): FQ3 GAAP EPS of -$0.14 misses by $0.03.
* Revenue of $9.86M (+37.5% Y/Y) beats by $0.11M.
* Shares +0.31%.
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Business Outlook

Genasys is well underway with the implementation of the Puerto Rico EWS project. In the third fiscal quarter, the Company recorded $4.3 million in project-related revenue, with very little profit margin. As installations are completed, revenue and profit growth will accelerate consistent with the percentage-of-completion accounting methodology. To date, Genasys has recognized $5.6 million of revenue with less than 30% gross margins. As the project progresses and profits on prior instrumentation revenues can be realized, project margins will improve significantly as those revenues will be recognized at 100% gross margin. It is important to note that revenue and profit recognition continues to be significantly different from the expected cash-based accounting of the project. As each dam’s system is completed and accepted, Genasys is to be paid the remaining 40% of total value of each dam. Based on the current production and delivery schedules, and installation timelines, Genasys continues to expect to realize between $15 million and $20 million in Puerto Rico related revenue in fiscal 2025, with revenue and profit recognition on the project accelerating significantly in fiscal 2026.

Excluding the efforts in Puerto Rico, hardware bookings continue to improve year over year. The US Army is finalizing the procurement process for the initial production order for the CROWS AHD program. Genasys expects that this initial order will be for $8.0 million to $8.5 million of LRAD equipment. That order will take fiscal 2025 hardware bookings to date 10% higher than bookings for all fiscal 2024, excluding the Puerto Rico project. With CROWS AHD, Genasys’ hardware backlog, excluding the Puerto Rico project, will be over $16 million.

Software bookings continued to be soft in the fiscal third quarter. While numerous federal funding sources have officially been restarted, the increased scrutiny and ongoing uncertainty has impacted customers throughout the nation all the way up from local to state, and even federal agencies. Our Software pipeline continues to expand across all our product offerings, and we continue to expect deal conversions to improve and accelerate as access to federal funds normalizes. In the interim, however, Genasys has taken actions to reduce operating expenses associated with our software business. Beginning in the first fiscal quarter of 2026, we believe those combined actions will deliver approximately $2.5 million in annualized savings.

Operating expenses in the third fiscal quarter were down 3.9% sequentially and 6.8% year over year, owing to operational and cost discipline and the absence of certain legal and professional fees. Fiscal fourth quarter 2025 operating expenses, inclusive of severance costs, are expected to be similar to fiscal third quarter 2025 levels, with the savings discussed above beginning to be realized in the fiscal first quarter of 2026.

While the $5.5 million in cash, cash equivalents and marketable securities we are reporting at the end of June is lower than we would prefer, upcoming payments for invoices already issued from Puerto Rico and cash flows from the US Army order give us the confidence that we have adequate capital to operate and capture the profits embedded in our existing backlog.

MORE ON GENASYS

* Seeking Alpha’s Quant Rating on Genasys [https://seekingalpha.com/symbol/GNSS/ratings/quant-ratings]
* Historical earnings data for Genasys [https://seekingalpha.com/symbol/GNSS/earnings]
* Financial information for Genasys [https://seekingalpha.com/symbol/GNSS/income-statement]