Genasys Inc.

Good day, ladies and gentlemen, and welcome to the Genesis, Inc. Fiscal Year 2022 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 of Hayden IR. Ma'am, the floor is yours.

Thank you, Dagma. Good afternoon and welcome to Genesis Incorporated fourth quarter and fiscal year 2022 financial results conference call. I'm Kim Rogers with Hayden IR, the investor relations firm for Genesis. With me on the call today are Richard Danforth, chief executive officer, and Dennis Klon, chief financial officer. During today's call, management will make forward-looking statements regarding the company's plans, expectations, outlook, as 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 and 2022. Other than statements of historical facts, forward-looking statements made on this call are based only on information and management's expectations as of today. We explicitly disclaim any intent or obligation to update those forward-looking statements except as otherwise specifically stated. We also discuss non-GAAP financial measures and operational metrics, including adjusted EBITDA, bookings, and backlogs. which we believe provide helpful information to investors with respect to evaluating the company's performance. For a 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. Booking is an internal operational metric that measures the total dollar value of customer purchases orders executed in a given period, regardless of the timing of the 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 the company's website. At this time, It's my pleasure to turn the call over to Genesys Chief Executive Officer, Richard Danforth. Please go ahead, Richard.

Thank you, Kim, and welcome to everybody. Fiscal 2022 was an exceptional year for Genesys. We delivered 15% growth in revenue and a positive adjusted EBITDA while accelerating our strategic shift towards a higher margin recurring revenue model. Our investments in software sales and support led to key contract wins fueled expansion in existing markets, and paved the way for entry into new markets and geographies. We expanded our SaaS platform into seven countries, 19 states, and 21 California counties. We self-funded more than $9 million in SaaS platform investments and still generated $1 million in cash from operations in the quarter and $468,000 for the year. These investments are creating a strong economic engine that will meet the growing demands for our SaaS solutions. After repurchasing approximately $1 million in company stock, we ended the year with no debt and $19.9 million in cash, cash equivalents, and marketable securities. The cash generating power of our core business and the strength of our balance sheets continue to provide us with the resources and flexibility to execute our long-term growth strategy. Fiscal 2022, we delivered 15% growth in revenue and a positive adjusted EBITDA in spite of the numerous global supply chain challenges we faced this year. We want to thank the team for their hard work and dedication in achieving these notable accomplishments. They work relentlessly to meet customer commitments by engineering products, second sourcing, or building critical components inventory to avoid unforeseen changes or shortages. At an executive level, we continued making strategic investments to accelerate our SAS revenue. We added new enterprise, sled, and utility customers and significantly increased our SAS coverage in the United States beyond our strong foothold in California by expanding into 19 other states. These gains are directly related to our investment in sales, software development, and customer success teams. We also hired a chief revenue officer, Dennis Walsh, who brings extensive enterprise SAS experience and relationships. We offer SAS solutions for numerous verticals, including utilities, enterprise, stadiums, and campuses, as well as the private sector. In the fourth quarter, we closed three new SAS contracts in the utility sector, which included Golden State Water Company, Florida Municipal Power Agency, and Northwest Natural in Washington State. In addition to providing accurate real-time safety alerts and notification throughout multiple channels, Golden State Water and Florida Municipal Power Agency will use GEM, our mass notification platform, to inform utility customers of service outages, system maintenance, and other customer-related communications. To give you an idea of that potential of this vertical, the Golden State Water Company contracts covers more than 260,000 customers. The Florida Municipal Power Agency, GEM, or Mass Notification Co-op Agreement, covers over 2.7 million home and business customers throughout Florida. Northwest Natural is deploying GEM to deliver alerts and internal communication to workers, staff, and contractors. An enterprise success to highlight, which closed at the end of our fourth quarter, is a multi-year enterprise SaaS contract win with Volvo, the second global automaker to select GEM to replace a competitive system and better safeguard their domestic and international workforce. The GEM platform features real-time situational awareness in a single dashboard, offers duress buttons, field check-ins, and recipient locations to help keep employees and everyone onsite, informed, and safe in a crisis. Healthy pipeline activity in our SAS products is increasingly converting to wins across end markets and geographies, including recent key wins in the enterprise utilities and state and local sector. CHEM and Zonehaven can be purchased separately as a comprehensive offering and or bundled with IM&S, our integrated emergency warning system. Investments throughout fiscal year 2022 have improved our sales productivity, lead generation, as we continue to grow our SaaS pipeline. Increasingly, customers who purchase one SaaS or hardware product are adding our other offerings to maximize the benefit of our emergency notification, crisis management, and evacuation solutions. To date, 13 California counties have purchased multiple Genesys software and hardware offerings. five of which have purchased all Genesis offerings. IMNS, Integrated Mass Notification System, Mass Communication Software, and Evacuation Software. Another four counties have purchased Mass Communication Software and our Integrated Mass Notification Systems, and another four purchased Mass Notification and Evacuation Software. As the only company offering a unified communication platform, upselling, and cross-selling within our growing customer base are further key growth initiatives for our SaaS platform. Turning to our international business, with the EU, Middle East, Africa, and Asia Pacific regions reopened after COVID, we expect stronger sales and revenue contributions from all of our international sales regions in fiscal 2023. We anticipate continued revenue growth in our fiscal 2023. Our hardware business will start from a lower backlog than the previous year due to timing of orders carrying over from fiscal 2022 to fiscal 2023. Fiscal fourth quarter bookings were 6 million, bringing total bookings for fiscal 2022 to 38.2. 18 million in previously expected fiscal 2022 bookings are now anticipated to close in fiscal 2023. Our fiscal 2022 bookings result in a backlog of $22 million that we expect to deliver in the fiscal 2023. The carryover of orders, stronger international sales, continued acoustic hailing device deliveries, and increased software service sales are anticipated to augment fiscal 2023 bookings and backlogs. Further, we are building a strong base of annual recurring revenue from our software business, and it will represent a larger portion of our revenue in fiscal 2023. Last year, we discussed a $9 to $11 million increase in operating expenses to support our SaaS business growth. The increase in fiscal 2022 was $6.4 million, and we anticipate operating expenses to increase by approximately $5 million in fiscal 2023, reflecting our continued confidence and excitement in our SaaS business. Through our investments to date, we have proven our SaaS business model by replacing competitors and landing contracts with global automobile manufacturing, professional sports organizations, sled, utility, and enterprise customers. Our strategic shift towards a higher margin recurring revenue model is gaining momentum, as evidenced by the strong performance of our SaaS offerings. Fiscal 2022 strategic investments led to key wins and fueled expansion in existing markets and entry into new markets and geography. That momentum has continued in the first quarter of fiscal 2023 with the previously mentioned Volvo and the three utility contracts, as well as major gem awards in San Diego County and further expansion of Zone Haven into Riverside and four additional California counties. Further orders are expected this quarter. Our SaaS platform investments are creating a strong economic engine that will meet the growing demand for critical communication systems that help keep people safe. The cash-generating power of our core business and the strength of our balance sheet continue to provide us with the resources and flexibility to execute our long-term growth strategy. With a robust pipeline, current bookings and backlogs, the carryover of anticipated orders, stronger international sales, continued acoustic hailing rights deliveries, and increasing SAS sales, we expect continued revenue growth in fiscal 2023. The entire Genesis team looks forward to an exciting FY23. And with that, I'll turn it over to Dennis.