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 Q3 FY2025 Results Focusing on Puerto Rico EWS Progress and Expanding Software Pipeline
In the fiscal third quarter ended June 30, 2025, Genasys Inc. posted revenue of $9.857 million, marking a 38% year-over-year increase from $7.167 million in the prior-year Q3. The company highlighted that software revenue rose modestly while hardware revenue surged, and recurring revenue also climbed. Net losses persisted, with a GAAP net loss of $6.487 million and an Adjusted EBITDA loss of $4.781 million. On the balance sheet, cash and equivalents stood at $5.5 million at quarter-end, down from $13.1 million a year earlier.
Q3 FY2025 financial snapshot
- Q3 revenue: $9.857 million (+38% YoY)
- Software revenue: up about 7% YoY
- Hardware revenue: up about 50% YoY
- Quarterly recurring revenue: up 8% YoY
- ARR: $8.7 million
- Gross margin: 26.3% (vs 52.8% a year ago); margin headwinds linked to Puerto Rico project accounting and hardware underutilization
- Operating expenses: $8.522 million (down from $9.145 million in the prior-year quarter)
- SG&A: $6.422 million (roughly flat YoY)
- R&D: $2.100 million (down 16% YoY)
- GAAP net loss: $(6.487) million or $(0.14) per share
- Adjusted EBITDA: $(4.781) million
- Liquidity: $5.5 million in cash, equivalents and marketable securities as of June 30, 2025
- Sequential OpEx trend: down 3.9%; YoY OpEx down 6.8%
The company noted that cash and equivalents are supported by expected Puerto Rico invoice payments and anticipated US Army order cash flows, giving management confidence in operating capital for the near term.
Puerto Rico Emergency Warning System (EWS) project status
- Definitive agreement with PREPA (Puerto Rico Electric Power Authority) to deliver an Emergency Warning System to protect residents downstream of the island’s 37 dams, with a total contract value cited at $75 million.
- The project is organized into 7 dam groups, each with an Emergency Operating Center (EOC). The first three groups have been designed and approved; their combined value exceeds $36 million.
- After design approval for each group, PREPA pays a 60% deposit to support procurement, manufacturing and delivery. A partial third-group deposit was received in mid-May, with the remainder expected shortly thereafter.
- Initial construction on Puerto Rico began in early April. Instrumentation and material are being aggregated in the company’s San Diego facility, with shipments for the first three groups targeted for the company’s fiscal fourth quarter.
- Current shipping schedules indicate all material required to complete the first three groups will be delivered to Puerto Rico in the fiscal fourth quarter. Revenue recognition follows percentage-of-completion accounting, with early instrumentation deliveries recognized on a cost basis and subsequent installation work recognized as it is performed.
- Genasys recorded $4.3 million in project-related revenue in Q3 FY2025, with limited profit margin; total recognized Puerto Rico revenue to date stands at $5.6 million with margins under 30% to date.
- The company expects Puerto Rico-related revenue to total between $15 million and $20 million in fiscal 2025, based on production/delivery and installation timelines; as each dam group is completed and accepted, the remaining 40% of the contract value is paid.
- Management expects a marked acceleration of revenue and profit recognition in fiscal 2026 as installations advance and prior instrumentation margins are realized, with the majority of revenue from the first three groups expected in the September quarter.
- Headline references point to continued Puerto Rico project activity, including the acceptance of instrumentation for the first dam and ongoing installations across all dams in the initial groups.
Other programs, backlog and software pipeline
- Outside Puerto Rico, hardware bookings improved year over year; the U.S. Army issued an RFQ for an initial production order in support of the CROWS AHD program, with an expected initial LRAD equipment order of $8.0–$8.5 million.
- The initial CROWS AHD order is anticipated to lift fiscal 2025 hardware bookings to be about 10% higher than all fiscal 2024 bookings excluding Puerto Rico.
- Hardware backlog excluding Puerto Rico is reported to be over $16 million.
- Software bookings totaling more than $9 million are temporarily constrained by uncertainties around federal funding sources (including UASI, HSGP, BRIC and FEMA), which have seen renewed activity but ongoing scrutiny in 2025.
- The company asserts its software pipeline has expanded to unprecedented levels and cites broad awareness and recent events as drivers of software backlog growth, with the company claiming a software backlog of more than $60 million on a 12-month horizon.
Margins, accounting nuance and cost reduction measures
- The depressed gross margin in Q3 FY2025 is primarily tied to percentage-of-completion accounting for the Puerto Rico project and underutilization of hardware revenue. Initial instrumentation revenue is recognized at cost on delivery, with subsequent installation work recognized as work progresses.
- Genasys expects margin improvements on the Puerto Rico project as items from earlier instrumentation reach acceptance and associated margins are realized.
- The company announced actions to reduce operating expenses for its software business, targeting approximately $2.5 million in annualized savings beginning in fiscal Q1 2026.
- The reductions involve 19 FTE cuts, including 10 FTE reductions in Spain. Fiscal Q4 2025 operating expenses, including severance, are expected to be similar to Q3 2025 levels, with savings starting to be realized in Q1 2026.
Liquidity and outlook
- Cash, cash equivalents and marketable securities totaled $5.5 million as of June 30, 2025, down from $13.1 million a year earlier.
- Management cited forthcoming Puerto Rico deposits and expected U.S. Army order cash inflows as supporting capital sufficiency in the near term.
Overall context and forward-looking considerations
Management described the second half of fiscal 2025 as having “accelerated dramatically,” with hardware bookings improving and software growth constrained mainly by federal funding uncertainty. While the software pipeline remains robust, execution will depend on the normalization of federal funding sources. The company emphasized that it will continue to pursue deal conversions in software as funding normalizes, while pursuing cost reduction actions to align toward profitability goals.
Frequently Asked Questions
- What was Genasys’ revenue in Q3 FY2025?
- Q3 FY2025 revenue was $9.857 million, up 38% from the prior-year quarter.
- What is the status of the Puerto Rico EWS project?
- The project progresses across the first three dam groups with initial shipments planned in the fiscal fourth quarter. The contract with PREPA totals about $75 million, with deposits tied to design milestones and eventual acceptance; management expects $15–$20 million in Puerto Rico revenue in fiscal 2025 and accelerated revenue/profit in fiscal 2026.
- How does Puerto Rico affect gross margins?
- Gross margins were reported at 26.3% for Q3 FY2025, with the decline primarily attributed to percentage-of-completion accounting for the Puerto Rico project and underutilization of hardware revenue. Margins on earlier instrumentation are expected to improve as installations progress and become accepted.
- What cost-cutting measures were announced?
- Genasys plans to reduce operating expenses by about $2.5 million on an annualized basis starting in fiscal Q1 2026, through 19 FTE reductions, including 10 FTE positions in Spain, with fiscal Q4 2025 expenses expected to be similar to Q3 2025.
- What is the liquidity situation?
- As of June 30, 2025, cash and equivalents totaled $5.5 million. Management expects cash inflows from Puerto Rico deposits and U.S. Army orders to support near-term operating needs.
- What is the status of the software backlog and pipeline?
- The company reports a software backlog and pipeline totaling above $60 million on a 12-month horizon, with more than $9 million in current software bookings delayed by uncertainties in federal funding sources.
Key features table
| Feature | Description |
| Q3 Revenue | $9.857 million, up 38% YoY |
| Gross Margin | 26.3% in Q3 2025; primarily due to Puerto Rico accounting and hardware underutilization |
| Net Income | GAAP net loss of $6.487 million or $(0.14) per share |
| Adjusted EBITDA | $(4.781) million |
| Cash Position | $5.5 million as of June 30, 2025 |
| Puerto Rico EWS Contract | Value ~$75 million with deposits; first three dam groups >$36 million combined |
| Backlog / Pipeline (Software) | Backlog/pipeline > $60 million (12-month horizon); software bookings > $9 million held up by funding uncertainties |
| Cost Reductions | 19 FTE reductions; $2.5 million annualized savings starting Q1 2026; 10 FTE in Spain |
| Major Programs | CROWS AHD hardware order reflecting initial $8.0–$8.5 million LRAD equipment; hardware backlog excluding Puerto Rico > $16 million |
| Guidance / Outlook | Puerto Rico revenue expected to be $15–$20 million in fiscal 2025; significant recognition anticipated in fiscal 2026 as installations complete |
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