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.
What happened: Genasys Inc. posted fiscal third-quarter revenue of $9.857 million, a 38% increase from the same quarter a year earlier. The gain was driven largely by work on an Emergency Warning System (EWS) for dams in Puerto Rico, where implementation has moved into an active phase. At the same time, the company announced workforce reductions and cost actions intended to cut expenses and preserve cash.
Revenue for Q3 FY2025 totaled $9.857M. Software revenue rose modestly year over year, while hardware revenue grew about 50% year over year. Quarterly recurring revenue increased 8% and annual recurring revenue (ARR) ended the quarter at $8.7M. Gross margin fell to 26.3%, down from 52.8% in the year‑ago quarter, a change the company attributes mainly to accounting and timing effects tied to the Puerto Rico project and underutilized hardware production.
GAAP net loss was ($6.487M) for the quarter, or ($0.14) per share. Adjusted EBITDA was ($4.781M). Operating expenses were reduced to $8.522M, down year over year, with R&D spending falling 16% and SG&A roughly flat. Cash, cash equivalents and marketable securities stood at $5.5M at June 30, 2025, down from $13.1M in late September 2024.
The company is executing a multi‑group contract to deliver Emergency Warning Systems for residents and visitors downstream of 37 dams. The total contract was referenced at $75M, broken into seven groups. The first three groups, collectively valued at over $36M, have been designed and approved and are in production and shipment stages. Initial construction on the island began in early April, instrumentation and materials are being assembled in the company’s San Diego facility, and shipments for the first three groups were expected to start in the fiscal fourth quarter.
Under the agreement, PREPA is to pay a 60% deposit after each group’s design approval to fund procurement and manufacturing; the company has received multiple deposits and reported receiving a partial deposit for the third group during the spring, with remainder expected. To date, Genasys has recognized about $5.6M in Puerto Rico revenue, including $4.3M recorded during this quarter, much of it recognized at or near zero margin because of percentage‑of‑completion accounting on delivered instrumentation. The company expects to record $15M–$20M of Puerto Rico‑related revenue in fiscal 2025 and forecasts margin improvement in fiscal 2026 as installations are accepted and higher‑margin work is recognized.
Excluding Puerto Rico, hardware bookings improved year over year. The U.S. Army issued an RFQ for an initial production order tied to a remote weapons station program; Genasys expects the initial order to be roughly $8.0M–$8.5M in LRAD equipment. Management reported that, excluding Puerto Rico, hardware backlog exceeds $16M. The company also says software demand has grown, with a claimed software pipeline exceeding $60M over a 12‑month view, though many software deals remain delayed by constrained federal grant funding sources.
The sharp drop in gross margin for the quarter was mainly the result of percentage‑of‑completion accounting for the Puerto Rico project and underutilized hardware capacity. Initial deliveries of instrumentation are booked at cost, with margins realized later as installations are completed and accepted. Management signaled confidence that expected Puerto Rico invoice payments and anticipated military order cash flows will provide adequate capital to operate despite the reduced cash balance.
To align expenses with current software cash timing, the company said it will reduce full‑time equivalents by 19 positions, including 10 in Spain. These steps are expected to generate approximately $2.5M in annualized savings beginning in fiscal Q1 2026. The company also said fiscal Q4 2025 operating expenses, including severance, should remain similar to Q3 levels, with savings realized afterward.
Management hosted a conference call and webcast to discuss results; a replay was to be posted on the company’s investor page. Investor relations contact information was provided in the release for follow‑up. Forward‑looking statements in the company materials include customary cautions about risks and uncertainties.
The quarter showed top‑line growth led by a large infrastructure contract now moving into active implementation, but near‑term profit margins and cash were pressed by accounting timing and upfront instrumentation deliveries recognized at low margin. Bookings in hardware are improving and a sizeable claimed software pipeline could support future revenue growth, but federal funding uncertainty and tight cash require the company to pare costs while it executes on the Puerto Rico project and expected military orders.
The main driver was project work on the Puerto Rico Emergency Warning System, which pushed overall revenue to about $9.9 million for the quarter. Hardware sales also rose substantially year over year.
The overall program referenced a total value of about $75 million, broken into seven dam groups. The first three groups exceed $36 million in value, and after design approval PREPA pays a 60% deposit for each group to fund procurement and manufacturing.
Gross margin fell mainly because of percentage‑of‑completion accounting for Puerto Rico instrumentation deliveries, which are booked at cost initially, and because hardware capacity was not fully utilized.
Cash and equivalents were $5.5 million at June 30, 2025. The company expects incoming Puerto Rico invoices and anticipated military order receipts to support operations through near‑term needs.
The company will reduce 19 FTEs, including 10 positions in Spain, and expects about $2.5 million in annualized savings beginning in fiscal Q1 2026.
The company reports an expanded software pipeline exceeding $60 million, but many software deals remain delayed pending clarity on federal grant and other public funding sources.
| Feature | Detail |
|---|---|
| Q3 Revenue | $9.857M (up 38% YoY) |
| Puerto Rico Project | Multi‑group EWS contract ~$75M; first 3 groups >$36M; implementation underway |
| Gross Margin | 26.3% (impacted by percentage‑of‑completion accounting) |
| Cash on hand | $5.5M at June 30, 2025 |
| ARR | $8.7M |
| Adjusted EBITDA (Q3) | ($4.781M) |
| Workforce change | 19 FTE reductions, ~$2.5M annualized savings |
| Software pipeline | Company claims >$60M 12‑month pipeline; conversions affected by federal funding timing |
| Notable prospective order | Expected U.S. Army LRAD order: $8.0M–$8.5M |
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