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Genasys' Q2 2025 Earnings Call: Unraveling Contradictions in Revenue Recognition and Federal Opportunities
Generated by AI AgentEarnings Decrypt
Tuesday, May 20, 2025 2:59 pm ET1min read
Revenue recognition and gross margins for the Puerto Rico project, federal budgets and Genasys' opportunities, international opportunities and bookings, revenue recognition and timing for Puerto Rico project, and impact of federal budgets on Genasys' opportunities are the key contradictions discussed in Genasys' latest 2025Q2 earnings call.
Hardware Business Growth:
- reported slightly sequential growth in hardware revenues, with a 17% year-over-year increase in the March quarter.
- The growth was driven by the Puerto Rico project and increasing demand for LRAD systems in military and critical infrastructure sectors.
Software Revenue and Expansion:
- Total software revenue grew 29% year-over-year in the March quarter, although it was down 3% sequentially due to some customers not renewing agreements.
- The expansion in software is primarily due to increased use cases, such as the integration of LRAD units on autonomous surface vessels and upgrading physical security systems.
Puerto Rico Project Milestones:
- Genasys achieved significant milestones in the Puerto Rico project, with 19 dams approved and initial revenues recorded in the second fiscal quarter.
- The project is expected to contribute to record quarterly revenue in the fourth quarter due to installation schedules already underway.
CROWS AHD Program Outlook:
- Genasys expects to receive the initial production order under the CROWS AHD program this fiscal year, with deliveries spanning multiple years.
- This program is anticipated to deliver thousands of LRAD units, providing significant revenue potential for Genasys' LRAD business.
Impact of Federal Budget Uncertainty:
- The temporary freeze on federal grants had an impact on deal closings, particularly at the state level, with fewer deals closing and some opportunities delayed.
- Despite this, Genasys anticipates sequential growth in its software business over the remainder of fiscal 2025 as funding certainty improves.
Hardware Business Growth:
- reported slightly sequential growth in hardware revenues, with a 17% year-over-year increase in the March quarter.
- The growth was driven by the Puerto Rico project and increasing demand for LRAD systems in military and critical infrastructure sectors.
Software Revenue and Expansion:
- Total software revenue grew 29% year-over-year in the March quarter, although it was down 3% sequentially due to some customers not renewing agreements.
- The expansion in software is primarily due to increased use cases, such as the integration of LRAD units on autonomous surface vessels and upgrading physical security systems.
Puerto Rico Project Milestones:
- Genasys achieved significant milestones in the Puerto Rico project, with 19 dams approved and initial revenues recorded in the second fiscal quarter.
- The project is expected to contribute to record quarterly revenue in the fourth quarter due to installation schedules already underway.
CROWS AHD Program Outlook:
- Genasys expects to receive the initial production order under the CROWS AHD program this fiscal year, with deliveries spanning multiple years.
- This program is anticipated to deliver thousands of LRAD units, providing significant revenue potential for Genasys' LRAD business.
Impact of Federal Budget Uncertainty:
- The temporary freeze on federal grants had an impact on deal closings, particularly at the state level, with fewer deals closing and some opportunities delayed.
- Despite this, Genasys anticipates sequential growth in its software business over the remainder of fiscal 2025 as funding certainty improves.
Earnings Decrypt
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