Genasys Inc.

Good day, ladies and gentlemen, and welcome to the Genesis Fiscal Year 2023 Conference Call. All lines have been placed on the 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 to reach a live operator. At this time, it is my pleasure to turn the floor over to your host, Brian Alger, SVP of Investor Relations and Corporate Development. Sir, the floor is yours.

Thank you, Karen. Good afternoon. Welcome to Genesys' fiscal 2023 fourth quarter and full year financial results conference call. I'm Brian Alger, SVP, Investor Relations and Corporate Development for Genesys. With me on the call today are Richard Danforth, our CEO, and Dennis Klon, the company's CFO. During today's call, management will make forward-looking statements regarding the company's plans, expectations, outlook, and future financial performance that involve 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 30, 2022, or the 10-K that's going to be filed later today. Other than the statements of historical fact, Forward-looking statements made on this call are based only on the information and management's expectations as of today, December 7th, 2023. 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 backlog, and adjusted net loss, 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 the related revenue recognition. Backlog is a measure of purchase orders received that are scheduled to ship within 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. Now, at this time, it's my pleasure to turn the call over to Genesis' CEO, Richard Danforth.

Richard? Thank you, Brian, and welcome, everyone. Before we get into discussing the results of last fiscal year and our outlook for fiscal year 2024 and beyond, I want to take a moment to thank our shareholders, that have been incredibly supportive and resilient through our transition to a more balanced hardware and software company. The investments we have made over the past two years are beginning to bear fruit, and I have increasing confidence that these investments were not only well made, but will yield substantial returns in the not too distant future. Using the balance sheet and profits from the hardware business in less than two years, we have incubated a strategic software business that has already generated a recurring revenue stream in excess of $5 million with a clear line of sight to roughly double in 2024. We appreciate your support and we look forward to delivering the results to generate the return your patients deserves. Moving on, as expected, we exited fiscal year 2023 with over $10 million in cash and no debt. However, finishing out the quarter, we correctly assessed that the federal government was likely to once again delay approving a DOD budget, and as such, FY24 orders from this U.S. government would be delayed. This is a further complication to the numerous order delays that we experienced throughout fiscal 2023. With this in mind, we pursued and closed on a follow-on equity offering of 5.75 million common shares, raising net proceeds of approximately 10.6 million to protect the investments that we have been made to date and to assure that we remain positioned to capture the opportunities before us. Moving on, it is worth noting that the statewide RFP for Florida that we discussed on last quarter's call resulted in a no-award decision. And earlier this week, the state issued a new RFP that we plan on responding to before the end of this month. As was the case in August, we continue to believe we have the best and most complete offering for the state of Florida and its visitors and residents. Now on to the financial discussions. As we announced in mid-December, financial results for the fiscal fourth quarter were below expectations due to hardware opportunities that slipped out of the quarter and into fiscal 2024. Software bookings and revenue were in line with expectation, with recurring revenues achieving a new company record. As we discussed in a September announcement, both our hardware and software pipelines are rapidly expanding. Not including the $25 million of hardware bookings that slipped from fiscal 2023, today's hardware pipeline is more than 150% higher than it was at the same time last year. For software, in addition to growing our software bookings more than 100% in fiscal 2023, both the number of deals and the dollar value of the software opportunities has never been higher. Fourth quarter recurring revenue was up 43% year over year and 21% quarter over quarter. As most of you are aware, there is typically a one to two quarter between when we book a software order until initial revenue recognition. which means we have already won recurring revenue beyond what we report in any given period. Including those additional contracts, our ARR has increased roughly 20% since our conference call in August, not including the contributions of Evertel. In early October, just after the fiscal year ended, we completed the acquisition of Evertel. Evertel's fully compliant cross-agency communication application enables an unparalleled quality of response when paired with Genesis Protect. Evertel has been rebranded Genesis Protect Connect, and we have integrated their go-to market and positioning with our own. When we purchased Evertel, their ARR was approximately $800,000. In the two months since the acquisition, we have already begun to realize sales synergies between our respective customer bases. Today, we have over 200 customers with nearly 20,000 paying subscriptions of Connect. For anyone interested in learning more about Connect, Evertel's co-founder Jeff Halstead will be hosting a webinar on December 14th with two of our customers to discuss how they each use the solution today. To register for this event, just go to the Connect section of our solutions page at genesis.com. In addition to acquiring Evertel, we recently announced two strategic partnerships that we believe further differentiate our protective communication platform from legacy mass notification offerings. The first was with Tablet Command, a must-have software solution found in the front seat of fire trucks across the country and on over 30,000 first responders' mobile devices. By integrating our EVAC software with Tablet Command, first responders now have the ability to deploy and manage resources on a single plane of glass in concert with emergency managers throughout a critical event. We also extended the capabilities of Genesis Protect with a newly announced relationship with Ladris AI. Ladris' software brings AI-driven near real-time traffic modeling to the Genesis Protect platform to determine the most efficient way to get large populations out of a given area. Further differentiating Genesis Protect is our acoustic systems. As the disaster in Lahaina, Hawaii, catastrophically demonstrated, Cell, radio, and internet-based communications are not adequate in rapidly changing and fast-moving emergencies. Moreover, the inherent limitations of siren technology actually inhibited emergency management managers' communications efforts in Lahaina. As many of you know, Genesis's voice-quality acoustic systems are not reliant on the power grid and are equipped with satellite communication channels that enable emergency managers to clearly and concisely communicate to those in harm's way, even when the power and traditional communication lines have been compromised. In the wake of the global attention created in Hawaii, we received a number of inbound inquiries from customers looking to augment their software offerings with Genesys Protect acoustics. Combined, we believe the Genesys Protect platform with the additional capabilities of Connect, Tablet Command, and Ladris is the most complete and technologically advanced protective communication offering available. In its study released earlier this week, Forrester ranked Genesys as a strong performer in its broad-based critical event management wave analysis. Nat, based on current orders, contracting activity, and pipeline, we are confident that the software revenues for fiscal 2024 will at least double over fiscal 2023. As we have discussed on last quarter's call, 2023 hardware bookings and revenue were abnormally difficult to register. Since I arrived at this company, we have seen steady growth in our hardware revenues six out of the last seven fiscal years. with a CAGR through fiscal 2022 over 20%. 2023 was the one year where multiple opportunities pushed out of the revenue declining year over year. Though it would be convenient to point to global politics or economics to explain the slippage, there is no one thing that is consistent among the various deals that have been delayed. None of the deals that were delayed have been canceled or awarded to a competitor. Looking at our forecast and plan for fiscal 2024, we see enormous potential for a significant rebound in our hardware business. That said, certainty in the timing on a number of significant deals is not going to come before federal budget is approved. Others are progressing, but could be further delayed by a government shutdown. As a result, we expect that 2024 hardware revenues will be even more back-end loaded than our typical seasonality has indicated. It is important to note that we still expect a rebound in our hardware business in fiscal 2024, approaching the levels of 2022 up materially from the abnormal 2023 results. A number of large opportunities could positively impact our 2024 results. There is a large critical infrastructure protection opportunity that requires all of the Genesys Protect platform, including significant acoustics revenue, as well as recurring software revenue from the Genesys Protect suite of solution. On October 10th, we announced that we were awarded a $1 million contract for the Crows AHD program. With a fiscal 2024 DOD budget in place, we expect to receive initial production orders in our fiscal 2024. As we discussed on last quarter's call, the CROWS AHD program is expected to be of similar size to the prior Army program of record. Pending grant approval, we have already secured a multimillion-dollar acoustic award that will augment existing Genesys Protect software customers. Bottom line, Genesys has enough opportunities for growth. Summarizing the business as we enter fiscal 2024, we have a burgeoning software business with over 400 customers generating meaningful ARR that is expected to roughly double in the next 12 months. Supporting this growth is a rebounding hardware business that historically has seen high teen adjusted EBITDA margins. A balance sheet fortified by the recent public offering has no debt and adequate resources to not only weather the current storm, but to also facilitate the growth of our business back to a positive cash flow and beyond. In closing, I want to express my gratitude and appreciation for the shareholders that have remained supportive of the company over the past couple of years of transition. Myself and the entire Genesis team is committed to completing our objective to build a larger, more balanced business that operates globally, selling both hardware and software, resulting in more predictable revenue and considerably higher profit margins. Now I'll turn the call over to Dennis to go over through the financials and outlook in greater detail. Dennis?