Genasys Reports Revenue Growth Driven by Puerto Rico Dam Work

Puerto Rico, August 15, 2025

News Summary

Genasys posted a significant revenue increase driven largely by implementation work on an Emergency Warning System for multiple Puerto Rico dams. Quarterly revenue rose on strong hardware sales and early project billings, while gross margins fell due to percentage-of-completion accounting and underutilized hardware capacity. The company recorded a GAAP net loss and an adjusted EBITDA loss, announced workforce reductions expected to save about $2.5 million annually, and reported a software pipeline exceeding $60 million. Management expects Puerto Rico installations to boost future margins as systems are accepted and additional contract deposits fund production.

Genasys Reports $9.9M in Q3 Revenue as Puerto Rico Dam Project Moves Into Implementation

Genasys Inc. posted fiscal third-quarter results showing $9.857 million in revenue, a 38% year-over-year increase, driven largely by early deliveries and implementation work on a major Puerto Rico dam Emergency Warning System (EWS) contract. The quarter also included an announced workforce reduction aimed at cutting costs and a company claim of an expanded software pipeline exceeding $60 million.

Key financial and operational headlines

Puerto Rico EWS: implementation and accounting impact

The Puerto Rico Emergency Warning System contract was signed in August 2024 with a total referenced value of approximately $75M. The project is organized into seven dam groups, each with its own Emergency Operating Center. The first three groups—totaling more than $36M—have been designed and approved to proceed.

Under the contract terms, PREPA pays a 60% deposit after a group’s design is approved to fund procurement and manufacturing. The company received partial and prior deposits for the first three groups, began initial construction in early April, is assembling instrumentation and materials in its San Diego facility, and expected shipments for the first three groups to start in the company’s fiscal fourth quarter.

Genasys uses percentage-of-completion accounting for the project. Initial instrumentation deliveries are recognized on a cost (zero-margin) basis, with installation work recognized on an hourly basis as it completes. That method depressed the quarter’s gross margin; management expects margins to improve as installations are completed and prior instrumentation revenues are recognized at higher margins. The company reported recognizing $5.6M to date on the Puerto Rico project with margins under 30% so far, and projects between $15M and $20M in Puerto Rico-related revenue for fiscal 2025 based on current schedules.

Backlog, bookings and other program activity

Excluding Puerto Rico, hardware bookings improved year over year. The U.S. Army issued a request related to initial production for a CROWS AHD program, which Genasys expects to translate into an initial LRAD equipment order in the $8.0M–$8.5M range. With that order, the company’s hardware backlog excluding Puerto Rico is expected to exceed $16M.

The company also reported software bookings growth and claimed a software pipeline and 12‑month backlog of > $60M, though management noted many software deal conversions remain constrained by uncertainty in federal funding sources such as UASI, HSGP, BRIC and FEMA. Approximately $9M of current software bookings are reported as delayed by funding uncertainty.

Costs, cash and liquidity

Operating expenses in Q3 totaled $8.522M, down from $9.145M a year earlier. R&D fell 16% year over year to $2.100M, while SG&A held roughly flat at $6.422M. The announced workforce reductions are intended to reshape software operating expenses and are expected to yield the stated $2.5M in annualized savings starting in fiscal Q1 2026. The company said upcoming Puerto Rico invoice receipts and expected U.S. Army order cash flows support its confidence in near-term capital sufficiency despite the $5.5M cash balance at quarter end.

Accounting and performance metrics

Management highlighted that percentage-of-completion accounting for large system projects leads to timing differences between cash receipts and profit recognition. Initial deliveries are recorded at cost while later acceptance and installation work recognize profit, so margins will tend to improve as the project moves into acceptance milestones. Adjusted EBITDA removed non-operating items per the company’s definition and stood at ($4.781M) for the quarter.

Near-term outlook and investor communications

Management signaled that Puerto Rico revenues and profit recognition should accelerate in fiscal 2026 as installations are completed and items previously recorded at cost are accepted. The company plans to hold a conference call with investors to discuss Q3 results. Replays and supplemental financial tables are made available on the investor page following the presentation. Forward-looking statements remain subject to standard risk factors, including supply-chain and funding uncertainties.

FAQ

What drove the quarter’s revenue increase?

The primary driver was project-related revenue from the Puerto Rico Emergency Warning System. Hardware deliveries and early implementation work contributed significant revenue, though initial deliveries were recognized with minimal margin under percentage-of-completion accounting.

How did the Puerto Rico project affect margins?

Gross margin declined to 26.3% largely because initial instrumentation deliveries are recorded at cost and recognized on a zero-margin basis until accepted. Installation and final acceptance stages are expected to record higher margins later in the project timeline.

What is the expected Puerto Rico revenue for fiscal 2025?

The company expects to realize between $15 million and $20 million in Puerto Rico-related revenue in fiscal 2025 based on current schedules.

What cost actions were taken and when will savings start?

The company reduced its workforce by 19 FTEs, including 10 in Spain. These actions are expected to generate roughly $2.5 million in annualized savings beginning in fiscal Q1 2026. Fiscal Q4 2025 operating expenses, including severance, are expected to remain similar to Q3 levels.

How strong is the company’s cash position?

Cash and equivalents totaled $5.5 million at June 30, 2025. Management cited expected Puerto Rico invoice payments and anticipated U.S. Army order cash flows as reasons for confidence in near-term liquidity.

What backlog and pipelines are reported?

The company cites a hardware backlog excluding Puerto Rico of over $16 million and a claimed software pipeline/12‑month backlog exceeding $60 million, though some software bookings are delayed by federal funding uncertainty.

Key Features at a Glance

Feature Detail
Quarterly revenue $9.857M (Q3 FY2025), +38% YoY
Puerto Rico EWS impact $4.3M recorded in Q3; project total referenced as $75M; first three groups >$36M; expected $15–20M revenue in FY2025
Gross margin 26.3% in Q3 FY2025 (impacted by percentage-of-completion accounting)
Cash $5.5M as of June 30, 2025
Workforce reductions 19 FTEs, ~10 in Spain, ~ $2.5M annualized savings starting Q1 FY2026
Backlog & pipeline Hardware backlog excl. Puerto Rico > $16M; company claims software pipeline > $60M
Profitability metric GAAP net loss ($6.487M); Adjusted EBITDA ($4.781M)

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