Assembly and shipment preparation of emergency warning system equipment destined for Puerto Rico dam installations.
Puerto Rico, August 15, 2025
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 Inc. posted fiscal third-quarter results showing $9.857 million in revenue, a 38% increase from the prior-year quarter, driven largely by work on a multi-group Emergency Warning System for Puerto Rico dams. The company said implementation of the project is underway and signaled a large pipeline of software opportunities, while announcing workforce reductions to cut costs.
Revenue split showed hardware up 50% year-over-year and software up 7%. Quarterly recurring revenue rose 8% and annual recurring revenue finished the quarter at $8.7 million. Gross profit margin fell to 26.3% from 52.8% a year earlier. Management attributes the drop mainly to percentage-of-completion accounting for the Puerto Rico dam project and underutilized hardware revenue.
Operating expenses were $8.522 million for the quarter, down from $9.145 million a year earlier. Selling, general and administrative expenses were largely flat at $6.422 million, while research and development spending fell 16% to $2.1 million. GAAP net loss was ($6.487) million, or ($0.14) per share. Adjusted EBITDA was negative ($4.781) million.
The company has a definitive agreement to supply an Emergency Warning System to protect residents downstream of 37 dams. The overall contract value is referenced as $75 million and the project is divided into seven groups of dams. The first three groups, valued at more than $36 million, have been designed and approved to proceed.
Under the contract terms, after a group’s design is approved, the client pays a 60% deposit to help fund procurement and manufacturing. Genasys reported receiving two deposits earlier and recorded a partial deposit for the third group in mid-May, with the remaining funds expected shortly thereafter. Initial construction began in early April and the company is assembling instrumentation and materials in its San Diego facility with shipments for the first three groups expected in the fiscal fourth quarter.
The company uses percentage-of-completion accounting for the project. Initial instrumentation deliveries are recognized on a cost (zero-margin) basis, while installation and acceptance events are recognized with profit. This accounting treatment has compressed reported margins so far but the company expects margins to improve as installations are completed and remaining balances are billed and accepted.
Excluding Puerto Rico, hardware bookings improved year-over-year. The U.S. Army has issued a request that is expected to become a purchase order for an initial production order in support of a remote weapon station program, which the company expects to be an $8.0–$8.5 million initial order for long-range acoustic devices. Excluding Puerto Rico, hardware backlog is reported to exceed $16 million.
The company also reported more than $9 million in current software bookings delayed by uncertainty around federal grant funding. Management materials assert a software pipeline above $60 million for the next 12 months, with nationwide awareness of emergency events contributing to increased interest.
To address near-term software revenue constraints, the company announced actions to reduce operating expenses including 19 FTE reductions, with 10 roles cut in Spain. The firm expects approximately $2.5 million in annualized savings beginning in fiscal Q1 2026. Fiscal Q4 2025 operating expenses, inclusive of severance costs, are expected to be similar to Q3 levels while the savings ramp up in the following quarter.
Cash, cash equivalents and marketable securities totaled $5.5 million at quarter end, down from $13.1 million at the end of the prior fiscal year. The company stated confidence in funding operations based on expected Puerto Rico invoice payments and anticipated cash flow from the U.S. Army order.
Management noted that much of the revenue tied to the first three groups is expected to be recognized in the September quarter and that revenue recognition on the Puerto Rico project should accelerate in fiscal 2026 as installations are completed and acceptance milestones are reached. Company materials also point to risks around federal grant funding timelines, supply-chain pressures and other common project risks.
Management hosted a conference call to discuss results with a replay available on the company investors page. Questions may be submitted to investor relations by email before the call.
The main driver was project work on the Puerto Rico Emergency Warning System, which generated a material portion of Q3 revenue. Hardware sales also grew sharply year-over-year.
Gross margin declined due to percentage-of-completion accounting for the large Puerto Rico project and underutilized hardware revenue. Early instrumentation deliveries are recorded at cost, with profit recognized later during installation and acceptance.
The company reported $5.5 million in cash, cash equivalents and marketable securities as of June 30, 2025.
The overall agreement is referenced at $75 million, with the first three groups valued at over $36 million. Initial construction began in early April, instrumentation is being staged for shipment, and more revenue recognition is expected in the September quarter and into fiscal 2026 as installations are completed.
The company plans to reduce headcount by 19 FTEs and expects about $2.5 million in annualized savings beginning in fiscal Q1 2026.
| Feature | Detail |
|---|---|
| Quarterly Revenue | $9.857 million (Q3 FY2025) |
| ARR | $8.7 million |
| Gross Margin (Q3) | 26.3% (impacted by project accounting) |
| Puerto Rico Project | $75 million program value; first three groups >$36 million; implementation underway |
| Software Pipeline | Claimed to exceed $60 million over 12 months |
| Workforce Reductions | 19 FTEs; ~$2.5 million annualized savings from Q1 FY2026 |
| Cash | $5.5 million as of June 30, 2025 |
| Adjusted EBITDA | ($4.781) million |
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