Genasys Inc. (NASDAQ:GNSS) has reported its fiscal year 2023 earnings, highlighting a strategic shift towards a more balanced hardware and software business model. Despite a challenging fiscal year with revenues falling 14% to $46.7 million, the company is optimistic about the future, banking on its software segment to double revenue in fiscal 2024. The transition has been marked by significant investments in the software business, resulting in a recurring revenue stream that is expected to grow substantially. However, the company faced setbacks, including a 33% decrease in fourth-quarter revenues and a GAAP net loss for both the quarter and the fiscal year. Genasys raised $10.6 million in a follow-on equity offering to bolster its financial position and capitalize on growth opportunities.
Key Takeaways
- Genasys' transition to a balanced hardware and software company is underway with software revenue expected to double in fiscal 2024.
- The company raised $10.6 million in a follow-on equity offering to secure its investment plans.
- A significant RFP in Florida resulted in a no award decision, but a new RFP has been issued.
- Fourth-quarter financial results were below expectations, with a 33% revenue decrease.
- Genasys acquired Evertel, enhancing sales synergies and announcing strategic partnerships with Tablet Command and Ladris AI.
- The company remains confident in a fiscal 2024 rebound for hardware bookings and revenue.
- Operating expenses have increased due to planned investments in the software segment.
- Genasys reported a GAAP net loss for the fourth quarter and fiscal year 2023.
Company Outlook
Looking ahead, Genasys is poised for significant growth in fiscal 2024, with projections indicating that software revenue will double and hardware revenue will bounce back to 2022 levels. The company's recent acquisition of Evertel has already contributed to a 20% increase in annual recurring revenue. With a robust backlog and an expected increase in bookings, Genasys aims to build a larger, more balanced business with a global operational footprint.
Bearish Highlights
The fiscal year 2023 posed challenges for Genasys, with total revenue dropping by 14%. The hardware segment saw a 16% decrease in revenue, and the company's fourth-quarter performance fell short of expectations. Inflationary pressures also impacted the gross profit margin, which was partially offset by higher-margin software revenues. The backlog for fiscal year 2024 is considerably lower, reflecting poor bookings in the previous fiscal year.
Bullish Highlights
Despite the bearish aspects of the fiscal year 2023, Genasys has a clear growth trajectory for its software business. The company's pipeline has increased by 150% year-over-year, excluding an additional $25 million. The gross margins for the fourth quarter were stable at 49.6%, and the strategic acquisitions and partnerships are expected to further enhance the company's offerings and market position.
Misses
Genasys' fourth-quarter revenues were a miss, declining by 33% from the prior year. Both the software and hardware segments saw decreases, with software revenue down by 3% and hardware revenue by 36%. The GAAP net losses for the fourth quarter and fiscal year also underscored the financial challenges faced by the company.
QA Highlights
During the earnings call, Richard Danforth emphasized the company's focus on critical infrastructure protection and the use of Genasys Protect in active shooter situations. The Genasys Protect platform has been successfully deployed in San Diego County, and the CONNECT platform is aiding first responders in managing emergencies more efficiently. Interest in the Genasys ACOUSTICS systems is expected to rise, particularly in California, as the company leverages its SaaS group to promote these offerings.
Genasys has conveyed a message of resilience and strategic redirection in the face of fiscal challenges. With a clear focus on expanding its software business and leveraging strategic partnerships, the company is setting the stage for a potential rebound and robust growth in the coming fiscal year.
InvestingPro Insights
Genasys Inc.'s strategic pivot towards software may be timely given the current market conditions, but it's essential to consider the company's financial health and stock performance. According to InvestingPro, Genasys has been facing a declining trend in earnings per share and is quickly burning through cash. These InvestingPro Tips suggest that while the company's optimism for its software segment is notable, it is also navigating through financial challenges that could impact its growth trajectory.
InvestingPro Data reveals that Genasys has a market capitalization of $75.59 million and is operating with a negative P/E ratio, specifically -5.96 for the last twelve months as of Q3 2023. This indicates that investors are currently not receiving earnings for their investment, reflecting the company's lack of profitability over the past year. Additionally, the revenue has slightly declined by 1.97% during the same period, which aligns with the company's reported revenue drop in the article. The price of Genasys shares has also taken a significant hit, with a 50.29% decrease over the last three months.
For readers looking to delve deeper into the financial nuances of Genasys and uncover additional insights, InvestingPro offers a comprehensive suite of tips that could further inform investment decisions. There are 11 additional InvestingPro Tips available, which can be accessed through an InvestingPro subscription, now on a special Cyber Monday sale at a discount of up to 60%. Moreover, using coupon code sfy23 can provide an additional 10% off a 2-year InvestingPro+ subscription, offering a substantial value for those seeking in-depth financial analysis and real-time metrics.
Full transcript - Genasys Inc (GNSS) Q4 2023:
Operator: Good day, ladies and gentlemen, and welcome to the Genasys Fiscal Year 2023 Conference Call. [Operator Instructions]. 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.
Brian Alger: Thank you, Karen. Good afternoon. Welcome to Genasys' Fiscal 2023 Fourth Quarter and Full Year Financial Results Conference Call. I'm Brian Alger, SVP, Investor Relations and Corporate Development for Genasys. With me on the call today are Richard Danforth, our CEO; and Dennis Klahn, 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 7, 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. A 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 Genasys' CEO, Richard Danforth. Richard?
Richard Danforth: 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 you 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, FY '24 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 our 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-quarter 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 Genasys Protect. Evertel has been rebranded Genasys 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-founded, Jeff Halstead, will be hosting a webinar on December 14, 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 genasys.com. In addition to acquiring Evertel, we recently announced two strategic partnerships that we believe further differentiate our Protective Communications 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 Genasys Protect with a newly announced relationship with Ladris AI. Ladris' software brings AI-driven, near real-time traffic modeling to the Genasys Protect platform to determine the most efficient way to get large populations out of a given area. Further differentiating Genasys Protect is our acoustic systems. As the disaster in Lahaina, Hawaii catastrophically demonstrated, cell, radio, and Internet-based communications are not adequate and rapidly changing in fast-moving emergencies. Moreover, the inherent limitations of siren technology actually inhibited emergency managers' communications efforts in Lahaina. As many of you know, Genasys' 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 Genasys Protect ACOUSTICS. Combined, we believe the Genasys 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 Genasys as a strong performer in its broad-based critical event management wave analysis. Next, 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. So, it would be convenient to point to a 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 of 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 material -- materially from the abnormal 2023 results. A number of large opportunities could positively impact our 2024 results. There was a large critical infrastructure protection opportunity that requires all of the Genasys Protect platform, including significant ACOUSTICS revenue as well as recurring software revenues from the Genasys Protect suite of solution. On October 10, 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 Genasys Protect software customers. Bottom line, Genasys 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. Our 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 Genasys 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 through [Audio Gap]
Dennis Klahn: Revenues for the fiscal '23 fourth quarter were $10.7 million, a decrease of 33% over the prior year's record revenue quarter. As compared to the same prior year period, total software revenue declined 3% to $1.1 million, due to a decline in professional services. Hardware revenue decreased 36% to $9.6 million, for all the reasons Richard discussed earlier. For the full fiscal year, total revenue was $46.7 million, a 14% decrease from fiscal 2022 revenues of $54 million. Software revenues for fiscal '23 increased 23% to $3.8 million, while hardware revenues decreased 16% to $42.9 million in fiscal 2023. Gross profit margin was 49.6% in this year's fiscal fourth quarter, consistent with the prior-year quarter. For most of fiscal 2023, the gross margin percentage was negatively impacted by inflationary pressures. This has been partially offset by the increasing software revenues that carry higher gross margins. Quarterly operating expenses were $7.9 million, up from $7.5 million, excluding the $13.1 million goodwill impairment charge in the fourth quarter of fiscal 2022. On the full fiscal year, operating expenses grew $3.1 million to $32.7 million. The year-over-year increase is directly tied to the planned investment to grow and accelerate our software business. On a GAAP basis, our current fiscal year fourth quarter operating loss was $2.6 million compared to a $396,000 profit in the year-ago quarter excluding the onetime goodwill impairment charge. Adjusted EBITDA, which excludes noncash stock comp, was a negative $1.7 million compared to last year's positive $1.6 million. On the full fiscal year, our 2023 GAAP operating loss was $11 million compared to fiscal 2022's $2.4 million operating loss, excluding the goodwill impairment charge. Fiscal 2023 adjusted EBITDA was a negative $6.8 million compared to last year's positive $2.4 million. GAAP net loss for the fourth quarter and fiscal year 2023 was $10.1 million and $18.4 million, respectively. Excluding this year's $7.4 million noncash deferred tax expense and last year's $13.1 million goodwill impairment charge for the fourth quarter and full-year net loss for 2023 of $2.7 million and $11 million, respectively, compares to $664,000 and $3.1 million net losses in the same periods in fiscal 2022. Cash, cash equivalents, and marketable securities totaled $10.1 million as of September 30, 2023, compared with $19.9 million as of the prior year-end. Cash used in operating activities in the fiscal year was $9.6 million. Since the fiscal year-end, the company has completed the acquisition of Evertel and closed on the sale of 5.75 million common shares. The net cash proceeds from those two subsequent events was $9.6 million. With our current backlog and forecasted bookings, we expect fiscal 2024 to be up materially from fiscal 2023. As Richard mentioned, we expect software revenues to at least double, and hardware revenues should rebound close to fiscal 2022 levels. We do expect hardware revenues to be significantly skewed to the second half of fiscal '24, with numerous opportunities pending budget approval and appropriation at the federal level. Including the addition of Evertel, we expect fiscal 2024 cash operating expenses to increase between 10% and 15% over -- year-over-year. Thus, adjusted EBITDA loss should improve in fiscal '24 versus fiscal '23. Now I'd like to open the call to Q&A. Operator.
Operator: [Operator Instructions]. And we'll take our first question from Brian Colley from Stephens. Please go ahead.
Brian Colley: So, Dennis, I'm curious, just if we can put a finer point on the expectations for EBITDA here in FY '24, from what I can tell in the investor deck, it kind of looks like the illustrative chart that you have in there, as you're around breakeven, is that kind of how we should think about it?
Dennis Klahn: I don't -- for the full year, no, I don't think that's -- the back-end is more heavily weighted with revenue. And that's more likely in the back half of the year, but not for the total year.
Brian Alger: Brian, this is Brian Alger. The slide you're referring to is a legacy slide from last quarter. We'll be updating the slide deck probably overnight. Bear in mind, we do have costs that came on board, and we referred to them on the operating expense side coming from the acquisition of Evertel.
Brian Colley: Got it. That's helpful. And then any sense you can give me for the magnitude of how much the revenue -- the hardware revenues will be skewed first half versus second half? Are we talking 70% of hardware revenues in the back half or more than that?
Richard Danforth: Brian if you look at a typical year for us, substantially more than 50% of the -- correct me if you think I'm wrong, revenue is in the second half.
Dennis Klahn: Yes. Over the last three years, it's been right around 60%.
Richard Danforth: 40%, 60%. It will likely be more skewed to 30-70 kind of thing.
Brian Colley: Okay. That's very helpful. And then I wanted to ask about Evertel. So, you now have a much more comprehensive unified platform with Genasys Protect, with GEM, Zonehaven, and Evertel kind of under the same roof now. How should we think about like the incremental uplift from upselling Zonehaven and also upselling Evertel to like existing GEM customers? I'm not necessarily asking for a pricing number, but I'm just kind of curious like what the ASP uplift looks like from upselling those additional solutions?
Richard Danforth: We'll see, but that's certainly one of the reasons we bought them. In the two months we've had them, we're probably seeing their ARR go up by 20%. And -- the use of Evertel historically has been in police forces. But the application is there for first responders and fire, which we have a large installed base with other hardware and software solutions. So, our expectations are very high that there'll be a lot of up and cross-selling.
Operator: And we'll take our next question from Mike Latimore from Northland Capital. Please go ahead, Mike.
Michael Latimore: Great. Congrats on the strong software growth. I guess just on your last comment there, that ARR is already up 20% of Evertel. Is that because you guys have brought in new customers? Or is it just stuff they've deployed? Or like what's driving that?
Richard Danforth: Some of it was what was in their pipeline. Some of it is a consequence of -- we've put together a five-person sales team for Evertel. What sales force Evertel had was two people. And right now, there's five. And again, we have a very large installed base, as I mentioned, over 400 customers combined. So, these -- the calls are not cold calls, there are calls to existing customers.
Michael Latimore: Got it. And then I think I know the answer to this, but you're expecting your software business to at least double year-over-year. I assume that's both reported revenue as well as ARR?
Richard Danforth: Yes.
Michael Latimore: Okay. Got it. And then on the $25 million of hardware business that slipped out of '23, how much of that is U.S. versus international?
Richard Danforth: Approximately 70-30 U.S.-international.
Michael Latimore: Got it. Okay. And then just last, I know the Maui fire has prompted a lot of states to reach out to you guys. What -- do you feel like there's a good chance that they will be making decisions from these other states this fiscal year?
Richard Danforth: I'd say I'm hopeful for that, Mike. It's -- whenever there's an emergency, there's an initial spike of interest and concern and it tends to wane pretty quickly. I think if you -- the world saw what happened in Lahaina, and that will result in additional business for Genasys. Not clear to me at all on the timing of that quite yet.
Operator: And we'll take our next question from Scott Searle from ROTH. Please go ahead, Scott.
Scott Searle: Good afternoon. Thanks for taking my questions. Maybe to dig in first on the hardware front. Certainly, sort like a back-end loaded year. There were a couple of numbers that you threw out. There was a 150% number. It wasn't clear to me if that was pipeline or backlog. I was wondering if you could clarify that? And also give us an idea of what that coverage ratio looks like in terms of that pipeline, given that we're talking about recovering to about $45 million, $48 million in terms of hardware sales, big ramp in the second half. And also, I believe the gross margins had been under pressure on the hardware front. I thought they were expected to come back. It looks like that's sort of embedded in the results. I was wondering if you could provide some more color on that front.
Richard Danforth: Scott, I'll do my best. If I forgot one of your questions, you'll remind me. But the pipeline question, I mentioned in my remarks, it's up 150% from this time last year, without consideration of the $25 million that's also moved. So, if you put that in there, it would be even a higher pipeline opportunity for us. From a gross margin perspective, the fourth quarter gross margins were 49.6%, bringing the year to 46.6%. So, we saw a significant uptick. Q2 was 43.9%, Q3 was 46.9%, and Q4 was 49.6%. So historically, gross margin on our hardware business toggles plus or minus 50%, and we saw that in Q4. In terms of backlog, backlog going into fiscal year '24 is down considerably from the backlog going into fiscal year '23, which was reflective of the poor bookings in fiscal year 2023. Our revenue was ahead of our backlog, which means we paid -- revenue was ahead of our bookings, which means we aid into a backlog.
Scott Searle: Okay. And then maybe moving over to the software side of the equation. It looks like you're looking for sales to double this year conservatively. What clarification is Evertel built into that expectation? Because it seems like you're seeing some early momentum on that front. And then what does Tablet Command and Ladris do in terms of the revenue opportunity in fiscal '24?
Richard Danforth: All right. What was the first question? Tablet command?
Brian Alger: Evertel include.
Richard Danforth: Yes, Evertel is included in the remarks on expected annual growth of ARR and software revenue. Tablet Command is a co-sharing kind of thing. It's not necessarily a revenue-generating relationship, as much as it is, we're first responders using Tablet Command have access to our EVAC layer. Other firefighters in counties and cities and states will be able to see the utility of having that, and it will help enlighten them and get them interested in the Genasys Protect platform. So, you can think of that as more of a marketing kind of thing than a revenue-generating thing. Ladris is, in fact, a revenue-generating thing. So Ladris is an AI-driven platform for modeling, how to get a lot of people out of harm's way in times of an emergency. So, it allows a community or a large enterprise to set up scenarios and then run the model. If you needed to evacuate a large stadium, for example, and you're using the existing road infrastructure, how long would it take for that stadium to be evacuated? Well, that might come back and say it's going to take four hours, which is three hours too long. What the first responders can do in advance of this is then practice with, well, what if we shut down this road? What if we open that road up to two-way traffic or one-way traffic? And do all of that in advance of a catastrophic event. So, it's a very useful utility, particularly when there's a lot of people involved.
Scott Searle: So, Richard, will that be integrated into Evac then?
Richard Danforth: It's separate right now, Scott. But over time, I would believe that we would integrate it.
Scott Searle: Okay. And then just on the opportunity pipeline, it seems like there have been a lot of inbounds. You look at things like Florida they got pushed out, but still kind of in that opportunity pipeline. It sounds like at record levels and the deal sizes are increasing. I'm wondering if you could provide a little bit more color in terms of what that translates to in terms of potential revenue or connected users? How should we be thinking about that?
Richard Danforth: I think I'll go back to what I said, Scott, that we expect software revenue and ARR to double in this fiscal year. And there's opportunities beyond that as well. But the pipeline is robust and the inbound opportunities, as you pointed out, is very good.
Scott Searle: Great. And lastly, if I could, the enterprise market, I think you announced something earlier this week in terms of some energy wins. I was wondering if you could specifically address that in terms of the interest level there, what you're seeing kind of sales cycles, close rates? Are this kind of one-offs? Or is this something that we should expect to see more of in the future?
Richard Danforth: More in the future. So, a vertical we focus on is critical infrastructure protection. The orders you're referencing are two nuclear power plants here in the United States. The order was -- will -- or the opportunity is for a total of four, two of which were booked and two more will likely book in our fiscal year 2025. But beyond that, we have in our forecast and pipeline power plants, large distribution centers. Anywhere there's a lot of people, the utility of our hardware and software is realized.
Operator: And we'll take our next question from Ed Woo from Ascendiant Capital. Please go ahead, Ed.
Ed Woo: Yes. Congratulations on the outlook for software. My question is on active shooting, it seems like there's news every day about some active shooting somewhere in the U.S. Are you going to possibly focus on that? What are your opportunities in that area?
Richard Danforth: Our evacuation platform has been used in cases of active shooters. The Genasys Protect platform allows first responders to send emergency messages to very specific geographic areas. In fact, we just went live in the County of San Diego for that. The other thing it does, the CONNECT or the former Evertel, the CONNECT allows the first responders to be able to communicate privately, you mentioned active shooters at I think it was in the state of Maine, not too long ago, there was an active shooter situation. And I can tell you from my personal experience, I'm watching the national news, and the reporters on the national news are listening to HF radios and saying, "Oh, the active shooter must be in this town" and panics everybody in the area. At one point, the reporter said -- there was a parking garage behind them with a stairwell that was open, and police, we're going to the top floor. So, we reported the shooter has got to be up there. So, a lot of misinformation out there, and that misinformation is a consequence of the chaos during any one of these catastrophic events. The CONNECT platform is private. It's not subject to being listened to by the public, or the -- or anybody else that can use that information against them. So, both this highly geographic-based messaging and CONNECT, two very good applications when you have an active shooter.
Operator: [Operator Instructions] And we'll take our next question from Martin Yang from Oppenheimer. Please go ahead, Martin.
Martin Yang: So, my one question is about the inbound requests you have regarding the ACOUSTICS systems. Given the recent interest, are you actively investing in more outreach effort to accounts or regions where there might be a potential interest, but they have not actively inquired about ACOUSTICS to combine with Genasys Protect?
Richard Danforth: Well, Martin, we've recently aligned the Genasys ACOUSTICS systems underneath the Genasys Protect platform. There are several customers, particularly here in California, that have bought all of our software and hardware systems. That's a slightly different approach than we have in the past, where the hardware acoustic systems were sold principally through the LRAD channels. Our expectations are for some significant uptick in the Genasys ACOUSTICS as we channel through our SaaS group, this third leg of the Genasys Protect tool.
Operator: And that was our last question. I'd like to turn the floor back to Mr. Alger for closing remarks.
Brian Alger: Great. Thanks for participating in the call tonight. A replay of the call will be available on our website shortly. For additional information and up-to-date news and activity regarding Genasys, our products, and the customers we serve, I highly recommend that you follow the company and Genasys Protect on your social networks, particularly LinkedIn and X, where we actively post and comment on events that are happening. We look forward to speaking with you again next quarter when we report the fiscal first quarter of 2024 results. Thank you. Good night.
Operator: Thank you. Ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time, and have a great day.
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