Earnings call transcript: Glimpse Group Q2 2025 sees 52% revenue growth

Glimpse Group Inc. (NASDAQ: VRAR), a $34.7 million market cap company, reported a significant revenue increase for Q2 FY2025, with a 52% year-over-year growth, reaching $3.17 million. This marks the company’s first profitable EBITDA quarter since going public. Despite positive financial results, Glimpse Group’s stock price experienced a 3.43% decline in pre-market trading, reflecting investor caution amid broader market trends. According to InvestingPro, the stock has shown strong momentum with a 111% return over the past six months, though it trades with notably high volatility.

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Key Takeaways

• Revenue surged by 52% year-over-year to $3.17 million.
• Achieved the first profitable EBITDA quarter in its public history.
• Stock price fell by 3.43% in pre-market trading.
• Gross margin decreased slightly from 68% to 64%.
• Strategic focus on AI-driven immersive technologies.

Company Performance

Glimpse Group demonstrated robust performance in Q2 FY2025, marking a pivotal moment as it achieved its first profitable EBITDA quarter. The company’s revenue increased by 52% compared to the same quarter last year, driven by advancements in immersive technology and strategic market positioning. The reduction in gross margin from 68% to 64% reflects increased investment in product innovation and market expansion efforts.

Financial Highlights

• Revenue: $3.17 million, a 52% increase year-over-year.
• Adjusted EBITDA: $280,000, compared to a loss of $1.33 million in Q2 FY2024.
• Net operating cash flow: $170,000.
• Gross margin: 64%, down from 68% in the previous year.
• Cash position: $8.5 million.

Outlook & Guidance

Glimpse Group provided optimistic guidance for the upcoming quarters, projecting Q3 FY2025 revenue between $1.5 million and $2 million, and Q4 FY2025 revenue between $3.3 million and $4 million. The company expects total FY2025 revenue to exceed $11 million, representing a 25%+ increase. This aligns with analyst expectations, as InvestingPro data shows analysts maintain a Strong Buy consensus with a price target of $4.67, suggesting significant upside potential. Additionally, Glimpse aims for breakeven adjusted EBITDA for the full fiscal year, highlighting its commitment to sustainable growth.

Executive Commentary

CEO Liron Bentovin emphasized the company’s strategic progress, stating, "We continue to make progress in our strategic plan and have achieved strategic and operational restructuring, revenue growth, profitable operations." Bentovin also highlighted the company’s role in advancing immersive technologies, particularly in collaboration with the Department of Defense, by converting 2D information into actionable 3D data.

Risks and Challenges

• Market volatility could impact stock performance.
• Competitive pressures in the immersive technology sector.
• Potential fluctuations in government contract revenues.
• Dependence on successful AI integration for future growth.
• Economic uncertainties affecting commercial sector demand.

Q&A

During the earnings call, analysts inquired about the company’s AI integration strategies and government contract opportunities. The management addressed revenue mix expectations and potential asset divestitures, indicating a proactive approach to optimizing their business model and exploring strategic acquisitions.

This comprehensive overview of Glimpse Group’s Q2 FY2025 performance underscores its significant revenue growth and first profitable EBITDA quarter, while also highlighting investor caution reflected in the stock’s pre-market decline. The company’s strategic focus on AI-driven immersive technologies positions it well for future growth, despite the challenges of a competitive and volatile market environment.

Full transcript - Glimpse Group Inc (VRAR) Q2 2025:

Jenny, Moderator/Operator: Welcome to The Glimpse Group’s Second Quarter Fiscal Year twenty twenty five Financial Results Webinar. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. The earnings release that accompanies this call is available on the Investors section of the company’s website at ir.

Theglimpsgroup dot com. That’s ir.theglimpsgroup.com. Before we begin the formal presentation, I’d like to remind everyone that statements made on today’s call and webcast, including those regarding future financial results and industry prospects, are forward looking and may be subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the call. Please refer to the company’s regulatory filings for a list of associated risks, and we would also refer you to the company’s website for more supporting industry information. I would now like to hand the call over to Liron Bentovin, President and CEO of The Glintz Group.

Liron, the floor is yours.

Liron Bentovin, President and CEO, The Glimpse Group: Thank you, Jenny, and thank you, everyone, for joining us. I’m pleased to welcome you to The Glims Group’s Q2 fiscal year twenty twenty five financial results investor call for a quarter ended 12/31/2024. I am very proud to announce that in addition to continued strong revenue growth, this quarter we achieved positive EBITDA, positive cash flow and positive net income. This is the first time we’ve achieved positive EBITDA in our history as a public company and is a direct result of our strategic and operational restructuring over the past several quarters. With our strategic transition to focus on special core mostly complete and with the increasing incorporation of enabling AI elements across our product base, we are well positioned to capture the vast potential in the immersive technology space over the coming years as the immersive technology cycle gets closer to mass adoption.

There are tremendous opportunities in front of us and to facilitate. In late December, we raised $6,800,000 in net proceeds from one investor in registered direct equity offering. We currently have approximately $8,500,000 in cash and a very clean capital structure. During the quarter, our subsidiary company BrightLine Interactive delivered the second phase of its large DoD contract, an achievement of significant performance and technological milestones. DLI entered into an initial contract with The U.

S. Navy for an immersive AI driven simulator system to be delivered in the coming months, setting the ground for potential follow on contracts in 2025 and beyond. BLI delivered a scalable immersive solution to a global government service integrator, positioning itself as a leading middleware for processing and visualizing complex information in three d space and setting what we believe has the potential to become an industry standard. The continued resolution and the for 2025 has delayed the potential awarding of multiple government and DoD opportunities. We hope this will be resolved promptly in March 2025 when the current continuing resolution and with the new administration and Congress now in place.

Led by our subsidiary FortelReality, we continue to make strong progress on commercializing our AI driven immersive training product and have experienced encouraging initial traction with our customers and partners. We have a strong long term revenue pipeline and expected contracts, but putting these aside, we already have a reasonable visibility as to the reminder of fiscal year ’20 ’20 ’5 ending in 06/30/2025. Driven by the timing of existing contacts, revenue recognition for Q3 FY twenty twenty five, we expect a decline in revenue and negative adjusted EBITDA to be more than offset by a very strong Q4 FY twenty twenty five with significant revenue growth, positive adjusted EBITDA and profitability. For the full fiscal year twenty twenty five ending 06/30/2025, we expect aggregate revenue to significantly exceed our FY 2024 revenue and to be about EBITDA breakeven for the full fiscal year versus a significant adjusted EBITDA loss in the prior fiscal year. With that, I will now turn it over to Meidan Rothbloom, Glimpse’s CFO and COO, to review the financial results.

Meidan?

Meidan Rothbloom, CFO and COO, The Glimpse Group: Thanks, Leron. I will limit my portion to a summary review of our financial results. A full breakdown is available in our 10 Q and press release that were filed before market opens today. Please note that I’ll refer to adjusted EBITDA and other non GAAP measures. For the calculation of adjusted EBITDA and other non GAAP measures, please refer to the MD and A section of our 10 Q filing, which you can find on our website under SEC filings.

Q2 fiscal year twenty twenty five revenue of approximately $3,170,000 reflecting a 52% increase compared to Q2 fiscal year twenty twenty four, which ended 12/31/2023, revenue of approximately $2,080,000 and B, the 30% increase compared to Q1 fiscal year twenty twenty five, ’5 of the quarter that ended 09/30/2024, revenue of approximately $2,440,000 The increase in both comparative periods was primarily driven by an increase in spatial core revenues as well as growth in our other businesses. Gross margin for Q2 fiscal year twenty twenty five was approximately 64 compared to 68% for Q2 fiscal year twenty twenty four. The decrease was driven by revenue mix, which tends to oscillate a bit between the quarters. On average, we expect our going forward gross margins to continue to be in the 60% to 70% range. Q2 fiscal year twenty twenty five positive adjusted EBITDA of approximately $280,000 compared to an adjusted EBITDA loss of approximately negative $1,330,000 for Q2 fiscal year ’twenty four.

Net operating cash provided from operations for Q2 fiscal year ’twenty five was approximately $170,000 compared to a net operating cash loss of approximately negative $1,680,000 for Q2 fiscal year twenty twenty four. Importantly, as Yaron mentioned, this is the first profitable EBITDA quarter in the company’s history as a public traded company, reflecting our significant restructuring efforts over the past few quarters combined with revenue growth. So specifics regarding the visibility that Yaron mentioned. For Q3 fiscal year twenty twenty five, we expect a decline in revenue to a range of $1,500,000 to $2,000,000 with negative adjusted EBITDA to be more than offset by a strong Q4 fiscal year twenty twenty five with expected revenue range of between $3,300,000 and $4,000,000 and positive adjusted EBITDA. For our fiscal year twenty twenty five ending 06/30/2025, we expect aggregate revenues to exceed $11,000,000 compared to $8,800,000 for fiscal year ’twenty four, a 25% plus increase in annual revenue and breakeven adjusted EBITDA for the fiscal year versus significant adjusted EBITDA loss in the prior fiscal year.

Our current cash operating expense base fee revenue is now less than $900,000 per month. Given our contracted and projected revenue cash in going forward, we expect to generate positive cash flow in each of the remaining quarters for fiscal year twenty twenty five. Company’s cash and equivalent position as of 12/31/2024 was approximately $8,500,000 dollars with an additional $1,400,000 in accounts receivable. The increase in our cash position was primarily a result of our December 24, registered direct equity financing, in which we raised $7,300,000 in gross cash proceeds from one investor and a clean structure. We continue to maintain a clean capital structure with no debt, no convertible debt and no preferred equity.

Lastly, on 12/24/2024, we received a written notice from NASDAQ informing the company that it had regained compliance with NASDAQ Listings, which requires listing securities to maintain a minimum bid price of $1 per share. This closed the matter that originated on 09/03/2024. I’d now like to pass it back to Liron for some closing remarks, after which we will begin our Q and A session.

Liron Bentovin, President and CEO, The Glimpse Group: Thank you, Meydan. As we guided in previous quarters, we continue to make progress in our strategic plan and have achieved strategic and operational restructuring, revenue growth, profitable operations, major contracts and key technological developments in the area of AI, spatial computing, cloud and immersive technologies. In parallel, we have bolstered and are well positioned to execute on our growth strategy and the huge opportunities in front of us. I thank you all for your interest in and support of The Williams Group. And now I’ll turn the call back over to the operator to take some questions.

Jenny?

Jenny, Moderator/Operator: Thank you, Now our first audio question is coming in from Casey Ryan of Westpark Capital. Casey, your line is live.

Casey Ryan, Analyst, Westpark Capital: Thank you. Good morning. Great quarter, gentlemen. It looks really good. I had a couple of questions.

Just high level, would you care to frame for everybody or for me, I guess, what the revenue split looks like between commercial and government and what you think the shape of that looks like moving forward? It feels like there’s a lot of positive activity obviously around the DoD and government opportunities, but I’m just wondering if you can give us some sense of the split for revenues.

Liron Bentovin, President and CEO, The Glimpse Group: Good morning, Casey, and thank you. At this point, we’re probably around 40% -ish government and 60% commercial.

Casey Ryan, Analyst, Westpark Capital: And what do you imagine as you look forward maybe just for the remainder of this fiscal year? Does that feel like it will stay steady or do you think that will change in some meaningful way as we go forward?

Liron Bentovin, President and CEO, The Glimpse Group: I think for the remainder of our fiscal year, we will be kind of around that range. And then as we look into 2025, we’re hoping to increase the government percent of this as kind of some of that business comes in.

Casey Ryan, Analyst, Westpark Capital: Yes. Okay. All right. Terrific. And then tell me what your perspective is.

It feels like there’s a lot of very clear use cases now being talked about around DoD and maybe other government and military applications specifically for your solutions. What’s the development

Meidan Rothbloom, CFO and COO, The Glimpse Group: of the end customer? I guess commercial versus government?

Casey Ryan, Analyst, Westpark Capital: Do you feel like commercial opportunities are or use cases are as clearly defined, I guess, for the commercial space?

Liron Bentovin, President and CEO, The Glimpse Group: Yes. No, I think the kind of the applications on the kind of military defense side are going to lead to even further kind of and larger opportunities on the commercial side. So we’re definitely levering work we’re doing on the kind of defense side to then put solutions in front and then it will take time to kind of commercial side, but those will be very significant applications over the same technologies.

Casey Ryan, Analyst, Westpark Capital: Okay, terrific. And then my third question is just around the operating expense line. I think there was a lot of progress or a big reduction there in the OpEx line versus last year, but even versus the prior quarter. Madan, I think you had mentioned $900,000 per month as sort of an OpEx run rate, but correct me if I misheard that. Are we thinking that OpEx will be in the same range per quarter moving forward?

And I think my math is sort of $1,900,000 type of number per quarter or do we think that those levels will start to rise a little bit as we move into the end of the year?

Meidan Rothbloom, CFO and COO, The Glimpse Group: Yes. Casey, that estimate is correct. I think it will be stable going forward for certainly the remainder of the year. We’ll see what happens going forward. We do have some capacity runway under that.

It really depends on the timing of some of these larger contracts that may hit in the coming months. So we’ll wait and see. But at the current level of revenue, this is an expected operating base going forward.

Jack Rubenstein, Analyst, Daika Partners: Okay. All

Casey Ryan, Analyst, Westpark Capital: right. Terrific. And then just to sort of round out on things that we talked about in the past, I guess, have there been anything any meaningful and maybe there haven’t been because you didn’t include them in the press release, but opportunities in terms of divestitures? And then I guess on the other side of the coin, are there any opportunities that you see to potentially acquire important or new assets out there that you guys are maybe working on in terms of business development?

Liron Bentovin, President and CEO, The Glimpse Group: The answer to both is yes. We see kind of opportunities to monetize and divest pieces of our business that we see as less critical for what we’re doing and kind of we’re exploring some of those avenues. And on the same time, we’re seeing a lot of interesting opportunities on the outside, and we’re always looking to see how we can structure deals that are accretive to the company and then productive in our kind of path forward. So there’s opportunities on both sides, but we’re not going to rush into anything that doesn’t make sense for shareholders.

Casey Ryan, Analyst, Westpark Capital: Okay. But, not putting any timing, it’s something that like we should continue to pay attention to as being potentially positive both ways in terms of monetizing assets and potentially acquiring new assets as we move forward.

Liron Bentovin, President and CEO, The Glimpse Group: Yes. That’s definitely something to pay attention to.

Casey Ryan, Analyst, Westpark Capital: Okay, good. Well, terrific quarter. Thank you for the time and the questions.

Liron Bentovin, President and CEO, The Glimpse Group: Thank you, Casey.

Jenny, Moderator/Operator: Thank you very much. Your next question is coming from Jack Rubenstein of Daika Partners. Jack, your line is live.

Jack Rubenstein, Analyst, Daika Partners: Hello, guys. I hope you can hear me. Anyway, I wanted to just go down to the basics, get an understanding of what your immersive technology is. From what I gather, the use of artificial intelligence is the use of is a predictive science. So using artificial intelligence, you ask questions.

The role that glimpse plays is in order to answer those questions, one must simulate possible outcomes. So for instance, in the military area, if there’s an issue, a place, for instance, where do I place my fleet, so on and so forth, their AI creates questions, creates predictions as to possibilities and your vision answers those questions vis a various simulations. Is that a proper or just description? And as AI grows, do we get more and more questions and that leads to the growth of more and more immersive simulations? Thank you.

Liron Bentovin, President and CEO, The Glimpse Group: Very good question and description. Let me try and put a little bit of color, Jack, into kind of some of our AI integration and kind of I’ll use a couple of kind of examples. Obviously, on the kind of the DoD side, I will be very kind of vague for obvious reasons. And I’ll try and be more specific kind of little bit on some of the commercial kind of utilization of AI in what we’re doing. So on the military side, if you think about information and information that exists right now in the military, it is mostly confined to two d.

And kind of you’ve got a lot of sources of information that is coming in a variety of ways. Some of it is visual, some of it is data driven, some of it is in a variety of kind of bands of sound and other elements. And what we’re kind of basically doing is helping the DoD take all this information and convert the two d information into actionable three d information that then AI can interact with and then humans can interact with and then other non NPC elements can interact with to kind of create value for the industry. And kind of I like to be vague, but kind of people that understand can really kind of visualize where it’s going. On the commercial side, one of the things we’re working right now is we’ve integrated AI into our multi person platform, allowing to simulate any scenario with AI.

So imagine you’re trying to simulate a sales call or a challenging HR situation or a doctor that has to give bad news to a patient. Our environments puts you in that room. You can be the doctor and you have a patient and you have to give them bad news and the AI will act with you based on information we’re providing it, allowing you to really kind of get that experience before you go do it in the real life. So hopefully that gave you a little bit of color.

Jack Rubenstein, Analyst, Daika Partners: Yes. Thank you very much. Yes. And that obviously is a hugely growing field. So I mean, if you maintain your preeminent position in that field, that’s a good thing for Glimpse.

Liron Bentovin, President and CEO, The Glimpse Group: Yes, definitely.

Jenny, Moderator/Operator: Okay. Thank you very much. Well, we don’t appear to have any more questions on the phone lines. I can hand back to Liron if you’ve got any questions through the webcast.

Liron Bentovin, President and CEO, The Glimpse Group: Thank you, Jenny. So there’s two questions in the webcast, and I’ll read them and try and answer them a little bit. And one of them kind of ties to what Jack just asked about. So the first one is, how do you plan to integrate AI into your offering in 2025 and beyond? So I think kind of that ties very well to Jack’s question that we just answered.

There is kind of the immersive world and AI kind of fully integrates kind of and I believe that the progress we’ve seen in AI over the last two years has really taken the ability to have all these interactions come into life using immersive technologies, virtual reality and augmented reality. And what we see is integrating AI into our full product set as we’re kind of evolving and finding all these use cases across military and defense, healthcare, education and commercial businesses and integrating that into there. The next question I have is, would the company be involved in more government contracts soon? I certainly hope so. We’ve been kind of working on building a pretty significant pipeline of opportunities that we are executing on.

Obviously, that requires the government to have a budget for 2025, which hopefully will be resolved in the coming weeks as the continued resolution expires in March. And once the budget is set, hopefully kind of the opportunities that we are working on will be budgeted and then kind of we will hear positive news and that will kind of drive our increase in our government business in 2025.

Jenny, Moderator/Operator: Okay, Liwan, do you have any emailed questions?

Liron Bentovin, President and CEO, The Glimpse Group: I think that’s what I have.

Jenny, Moderator/Operator: Okay. Brilliant. Well, now I will turn back over to you for your closing remarks.

Liron Bentovin, President and CEO, The Glimpse Group: So before we go to closing remarks, Meghan says that there’s another question. Meghan, if you can read it, I don’t see it on my end. I don’t try

Meidan Rothbloom, CFO and COO, The Glimpse Group: to answer it. Yes. I just want to ask, what kind of actions are you taking against the competitors? What makes VRAR better than any other company in the field?

Liron Bentovin, President and CEO, The Glimpse Group: I don’t like to brag and I see this as a great opportunity, kind of I see kind of competitors in the space as partners in building immersive technology. I think this industry has significant growth potential ahead of it. Obviously, we have our advantages in each one of our kind of solutions and technologies. And we’ve built over the last nine years kind of what is one of

Meidan Rothbloom, CFO and COO, The Glimpse Group: the

Liron Bentovin, President and CEO, The Glimpse Group: largest immersive technology companies in the world. But I think the growth is not by kind of beating our competitors, by kind of helping build the industry and use cases and thus will create significant opportunities for all of us.

Meidan Rothbloom, CFO and COO, The Glimpse Group: Okay. There’s another question. What is the timeframe for your project execution?

Liron Bentovin, President and CEO, The Glimpse Group: So we are continuing to execute on all of the opportunities. If we are referring to the large DoD contract that would be executed and finalized at the first period of performance by the second the fourth quarter in our fiscal year’s Q2 calendar year.

Meidan Rothbloom, CFO and COO, The Glimpse Group: And there’s another question. What can be the impact of Donnelidge, plain government spend as the majority of revenue outcomes from contracted government?

Liron Bentovin, President and CEO, The Glimpse Group: So I think there is a potentially positive impact from that because they’re diverting government spend from areas that have not been very efficient to future technology boosting kind of the new administration has already kind of highlighted AI as one of the initiatives that it’s pushing, and I expect that to have a positive impact on us in the mid to long term rather than a negative impact. I would like to thank each and every one of you for joining our earnings conference call. We look forward to continuing to update you on an ongoing process. And if we have any questions that we have not been able to answer, please reach out to us directly.

Jenny, Moderator/Operator: Thank you. This does conclude today’s webinar. Thank you for your participation and have a wonderful day.

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