Genasys Inc.

ladies and gentlemen, and welcome to the Genesis Inc. Fiscal Year 2021 conference call. All lines have been placed on a listen-only mode, and the floor will be open for questions and comments following the presentation. If you should require assistance throughout the conference, please press star zero on your telephone keypad to reach a live operator. At this time, it is my pleasure to turn the floor over to your host, Kim Rogers from Hayden IR. Ma'am, the floor is yours.

Thank you. Good afternoon and welcome to Genesis Incorporated fourth quarter and fiscal year 2021 financial results conference call. I am Kim Rogers with Hayden IR, the investor relations firm for Genesis. With me on the call today from Genesis are Richard Danforth, chief executive officer, and Dennis Kahn, chief financial officer. During today's call, management will make forward-looking statements regarding the company's plans, expectations, outlook, and future financial performance that involves certain risks and uncertainties. The company's results may differ materially from the projections described in these forward-looking statements. Factors that might cause such differences and other potential risks and uncertainties can be found in the risk factors section of the company's Form 10-K for the fiscal year ended September 30th, 2021. Other than statements of historical facts, forward-looking statements made on this call are based only on information and management expectations as of today. We explicitly disclaim any intent or obligation to update those forward-looking statements, except as otherwise specifically stated. We will also discuss non-GAAP financial measures and operational metrics, including adjusted EBITDA, bookings, and backlog. which we believe provide helpful information to investors with respect to evaluating the company's performance. For reconciliation of adjusted EBITDA to GAAP financial metrics, please see the table in the press release issued by the company at the close of the market today. We consider bookings and backlog leading indicators of future revenues and use these metrics to support production planning. Bookings is an internal operational metric that measures the total dollar value of customer purchase orders executed in a given period, regardless of the timing of related revenue recognition. Backlog is a measure of purchase orders received that are scheduled to ship in the next 12 months. Finally, a replay of this call will be available in approximately four hours through the investor relations page on our website. At this time, it's my pleasure to turn the call over to Genesis Chief Executive Officer, Richard Danforth. Please go ahead, Richard.

Thank you, Kim, and welcome, everybody. Our fiscal 2021 was a year of solid performance, combined with a significant level of investment to position us for future growth in our emerging software-as-a-service business. Our fiscal fourth quarter revenue grew by 8% to $15 million. and full year revenue grew 9% to $47 million, continuing our track record of consistent revenue growth over the last five years. Fiscal fourth quarter bookings were 4.1 million, bringing our total bookings for fiscal 2021 to 64 million, which exceeds any prior fiscal year total. From these bookings, we have a record 12-month backlog of $36 million. Backlog grew year over year by 217%. The company posted another quarter of positive cash provided by operating activities. Over our last four fiscal years, we have generated $24.2 million in positive operating cash, including $6.2 million this fiscal year. This performance is impressive given that we opened up offices in Dubai and Singapore and expanded our software development team as well as software sales and support team globally. Importantly, strong cash generation from our core hardware business supports these investments, as well as two software acquisitions. At the end of September, we had nearly 160 employees worldwide, seven global offices, and Genesys software now provides critical communication coverage for over 35 million people worldwide. In fiscal year 2021, we achieved our goals for record bookings, backlog, and revenue. Genesis is in an excellent position to deliver another year of backlog and revenue growth in 2022. We have seen a resounding positive reaction to our SaaS solutions, as evidenced by the announced contract awards in fiscal year 2021. In the past 12 months, the Genesis SaaS platform was launched in the United States, Canada, and Mexico, providing life-saving information for over 10 million people. We are now pursuing a wide range of global opportunities across multiple industry sectors and are excited about the growth that lies ahead. With our strategic investments, including the acquisitions of Zone Haven and Amica Mobile, Genesys has created the industry's only unified hardware and software critical communication platform. As a result, we are evolving from a pure hardware business towards an increasingly SaaS model. As we execute our strategy, we will continue to make key upfront investments in staffing and resources that will increase our operating expenses in fiscal 2022. This growth investment is expected to materially shift our revenue mix to a higher SaaS contribution with SaaS bookings anticipated to grow year over year by over 50%. The acquisitions are catalysts for our GEM, SAS, and integrated mass notification hardware and software businesses. Now with Zonehaven, we have three paths to selling this platform. Continuing to offer Zonehaven software as a standalone solution, integrating it in with our GEM enterprise software, and offering as a layer in our IM&S solutions. This combination gives Genesis three competitive advantages for securing local, regional, and national emergency management and warning contracts. Additionally, other large IM&S projects are expected to finalize and announce this fiscal year. The combination of Zone Haven evacuation management with IM&S is rapidly filling our business pipeline with opportunities from California and elsewhere in the United States. Our Genesis SaaS business is gaining momentum as evidenced by the expansion of our software services contract with a global automaker to its facilities outside North America, and will continue to expand internationally. We also landed a Gem Award in Riverside County here in California, and this is expected to expand in 2022. Our investments in sales, marketing, and software development are building a growing SaaS pipeline. GEM SAS contracts with other major corporations are in the pipeline for 2022. Additionally, opportunities exist in the United States and internationally with governments, cities, counties, and departments are part of a robust and growing SAS pipeline. We recently announced that counties in five states here in the U.S. entered multi-year GEM contracts. In all but one of these, we replaced an incumbent. The investments in sales with new offices in Dubai and Singapore expand our geographic presence and adds experienced sales leaders and sales support personnel in targeted regions. We have begun to see traction in these regions and announced a new distribution partner in Africa and the Middle East. The strategic partnership will focus on government and enterprise opportunities in this region where countries are experiencing crisis related to climate events, civil unrest, and security incidents. Our team in Europe supports Genesys' expectation for contract wins related to the EU-mandated national emergency warning systems. While we remain optimistic about the EU opportunities, the progress has been slower than expected due to the global pandemic. We now expect a mandated deadline of June of 2022 to be extended by at least one year. To date, the awards have been dominated by cell broadcasting and low price. Although most awards to date have been cell broadcast public warning systems, location-based SMS system-based RFPs are expected in 2022. With our strategic investments, including acquisitions, Genesys has created the industry's only unified hardware and software critical communication platform. As a result, we're evolving from a pure hardware business towards an increasingly SaaS model. As we execute our strategy, we will make key upfront investments in staffing and resources that will increase our operating expenses in fiscal year 2022. This growth investment is expected to materially shift our revenue mix to a higher SaaS contribution, with SaaS bookings anticipated to grow year over year by 50%. We expect another year of revenue growth for fiscal year 2022. Operating expenses are forecasted to increase year-over-year by $9 to $11 million, reflecting the additional strategic growth spending to accelerate SAS revenues. As our business grows, our model can deliver increasing SAS revenue and margin expansion once we are past the front-loaded investments to support our future growth. Having laid the groundwork for an in-demand high-margin SaaS business, we have focused on the execution of our game plan. Genesys addresses a growing global need for our unique products and solutions, putting us on track to achieve our goals. Our team is committed to our strategy of continuing to build on our base of hardware customers while rapidly increasing the SaaS-based contribution that brings attractive recurring revenues, higher margins, and increasing shareholder value. With that, I'll turn the call over to Dennis.