Earnings call transcript: VirTra beats Q2 2025 forecasts with surprise EPS

VirTra reported its Q2 2025 earnings, surprising analysts with a positive EPS of $0.02 against a forecasted loss of $0.05. This 140% earnings surprise, coupled with a 20.9% revenue beat, pushed the stock up 3.86% in after-hours trading. According to InvestingPro data, the company maintains impressive gross profit margins of 76% and holds more cash than debt on its balance sheet, demonstrating strong financial fundamentals despite facing procurement challenges.

Key Takeaways

• VirTra posted a 140% EPS surprise, turning a forecasted loss into a profit.
• Revenue increased by 15% year-over-year, reaching $7 million.
• Stock price rose by 3.86% in after-hours trading following the earnings release.
• The company highlighted progress in its VXR platform and IVAS program.
• Funding delays continue to pose challenges in federal and international markets.

Company Performance

VirTra demonstrated a solid performance in Q2 2025, with revenue climbing 15% year-over-year to $7 million. Government revenue accounted for a substantial portion at $5.4 million, while international sales contributed $1.4 million. The company’s gross profit stood at $4.8 million, representing 69% of total revenue. These results underscore VirTra’s ability to navigate a challenging market environment and capitalize on its strong product offerings.

Financial Highlights

• Revenue: $7 million, up 15% year-over-year
• Earnings per share: $0.02, beating forecasts by 140%
• Gross Profit: $4.8 million, 69% of total revenue
• Net Income: $200,000
• Cash and Cash Equivalents: $20.7 million
• Bookings: $4.6 million, up from $3.6 million in 2024

Earnings vs. Forecast

VirTra’s EPS of $0.02 significantly outperformed the forecast of -$0.05, resulting in a 140% surprise. The company also exceeded revenue expectations, posting $7 million against a forecast of $5.79 million, marking a 20.9% surprise. This performance highlights VirTra’s operational efficiency and market adaptability.

Market Reaction

Following the earnings announcement, VirTra’s stock rose by 3.86% in after-hours trading, reaching $7.27. This increase reflects investor confidence in the company’s ability to exceed financial expectations and navigate market challenges. The stock remains within its 52-week range, with a high of $8.53 and a low of $3.57. InvestingPro’s Fair Value analysis suggests the stock is slightly overvalued at current levels, with a beta of 0.53 indicating lower volatility compared to the broader market. A detailed valuation analysis is available in the Pro Research Report, part of InvestingPro’s comprehensive coverage of 1,400+ US stocks.

Outlook & Guidance

Looking ahead, VirTra is optimistic about improved order activity in the coming quarters. The company plans to focus on converting its backlog into revenue and anticipates growth as funding flows improve. VirTra’s forward guidance projects continued revenue and EPS growth, with forecasts indicating further financial strength.

Executive Commentary

CEO John Givens emphasized the company’s resilience, stating, "While many of our customers are still working through funding complexities, their commitment to training and preparedness remains strong." CFO Alana Borgrew highlighted the strength of the STEP program, noting its 95% renewal rate as a key driver of recurring revenue.

Risks and Challenges

• Funding delays could impact future procurement and revenue.
• Dependency on government contracts may introduce volatility.
• Challenges in international markets could affect growth.
• Competitive pressures in the immersive training sector.
• Economic uncertainties influencing customer budgets.

Q&A

During the earnings call, analysts inquired about the IVAS program and the progress of the VXR platform. The company confirmed ongoing involvement in the IVAS program and highlighted the potential of the VXR platform in non-weapon training scenarios. Analysts also focused on the company’s strategy to leverage grants and regulatory changes to explore new market opportunities.

Full transcript - VirTra Inc (VTSI) Q2 2025:

Operator: Afternoon, and welcome to VirTra’s Second Quarter twenty twenty five Earnings Conference Call. My name is Ryan, and I will be your operator for today’s call. Joining us for today’s presentation are company’s CEO, John Givens and CFO, Alana Borgrew. Following their remarks, we will open the call for questions. Before we begin the call, I would like to provide VirTra’s Safe Harbor statement that includes cautions regarding forward looking statements made during this call.

During this presentation, management may discuss financial projections, information or expectations about the company’s products and services or markets or otherwise make statements about the future, which are forward looking and subject to a number of risks and uncertainties that could cause actual results to differ materially from the statements made. The company does not undertake any obligation to update them as required by law. Finally, I’d like to remind everyone that this call will be made available for replay via a link in the Investor Relations section on the company’s website at www.virtra.com. Now I would like to turn the call over to Vertra’s CEO, mister John Givens. Thank you, and over to you, sir.

John Givens, CEO, VirTra: Thank you, operator, and thank you everyone for joining us this afternoon. After the market closed today, we issued a press release that provided our financial results for the second quarter and six months ended 06/30/2025, along with highlighted business accomplishments. In Q2, VirTra delivered year over year growth in both revenue and bookings, maintained profitability and strengthened our cash position. While bookings were lighter sequentially due to the timing of orders and the ongoing funding delays, our operational discipline and customer engagement strategies continue to position us well for the back half of the year and into 2026. We remain confident in the strength of our solutions, our reoccurring revenue programs, and our ability to execute as funding flows improve.

The operating environment remains shaped by the federal and international funding delays. Agency procurement cycles are still slower than normal, and in some cases, funding is being held back entirely until the fiscal year budget’s reset. We believe these challenges are temporary, but they continue to influence our quarterly order patterns. That said, we are starting to see some movement. The Department of Justice COPS grant program reopened on June 1 and closed for submissions on June 30, a positive step that should help unlock some funding for agencies later in the year.

We’ve been actively engaged in Washington DC to help policymakers understand the value of immersive training and to support funding initiatives that benefit our customers. While the real impact of these programs will take time to flow through, we expect improved order activity in the quarters ahead. To this end, we continue to execute on our sales and marketing initiatives in the second quarter. Our marketing efforts remain a central focus with our redesigned website expected to launch in the coming weeks. We expect the new site to enhance lead capture, funnel visibility, and our conversion tracking.

Our regional sales model continues to improve accountability and responsiveness across all territories. We have made targeted personnel changes to ensure we have the right people in the right roles, strengthening our customer engagement and follow through. We also remain positioned to benefit from our reentry into the GSA procurement channel, which will streamline contracting for eligible agencies and shorten delivery time lines once live. Although this is expected to impact q four and beyond more meaningfully, it strengthens our long term go to market approach. STEP continues to be a strong selling point, especially in smaller markets.

Six customers renewed early in q two primarily for the v one eighty and the v 300 systems, signaling both the steps value and the customer satisfaction with our system’s performance. These renewals combined with the transition to three year agreements, improved visibility into future reoccurring revenue. Interest in our v r VXR extended reality platform continues to grow with strong pipeline active active quotes across public safety, academic, and health care markets. Customers are recognizing the flexibility and immersive fidelity of the system, and we expect to announce new developments with strategic partners in the coming quarters. Content conversion from our scenario library to the XR platform is progressing well too.

Our robust library of certified content will further expand the appeal and applicability of the platform. Following on the VXR discussion, our commitment to product quality continues to be a key driver for VirTra’s market position. In recent quarters, we have made deliberate investments to enhance our manufacturing processes, expand our reliability testing, and implement tighter quality control protocols. These actions combined with incorporating customer feedback directly into the product enhancements have meaningfully improved hardware durability, reliability, and overall performance. These improvements are being noticed in the field.

Customers consistently report that our systems not only deliver the superior training capabilities, but also withstand years of rigorous real world use. This validation reinforces our reputation as a trusted long term training partner and helps drive repeat business and renewals. We are sustaining these quality advancements while operating with efficiency, and this dynamic is allowing us to price our systems competitively without sacrificing performance or reliability. We continue to strengthen our value proposition, ensuring that VirTra remains well positioned to win and retain customers across multiple market segments. Our work on the IVAS program continues to advance.

We’ve completed additional recoil kit validations and reliability testing and remain in position for potential production opportunities. The recent innovation of the contract from Microsoft and or was a positive step in clarifying the program’s future. We are also tracking broader DOD initiatives that emphasize modular, scalable systems, an area where VirTra solution is well aligned. Overall, q two built on a progress made earlier in the year. We continue to strengthen our operations and maintain positive momentum despite funding delays remaining a near term challenge.

Our strong cash position, stable reoccurring revenue base and disciplined execution provide a solid foundation for the remainder of 2025. As funding flows improve, we are well positioned to convert opportunities into growth. With that, I’ll turn it over to Alana for a detailed financial review. Alana?

Alana Borgrew, CFO, VirTra: Thank you, John, and good afternoon, everyone. Now let’s review our unaudited financial results for the second quarter and six months ending 06/30/2025. Our total revenue for the second quarter was 7,000,000 compared to 6,100,000.0 in the prior year period. The 15% increase was primarily driven by the higher capital deliveries and stable reoccurring revenue from STEP and service contracts. Breaking this down by market, government revenue for the second quarter was 5,400,000.0 compared to 5,300,000.0 in the prior year period.

International revenue for the second quarter was 1,400,000.0 compared to 600,000.0 in the prior year period. Our total revenue for the six months was 14,100,000.0 compared to 13,400,000.0 in the prior year period. This 5% increase was was driven as well by the higher capital deliveries, stable reoccurring revenue from step and service contracts. Our gross profit for the second quarter was $4,800,000 or 69% of total revenue compared to $5,500,000 or 91% of total revenue in the prior year period. Last year’s unusually high gross margin reflected capitalized labor on the development of VXR and the IVAS program and a greater mix of high margin service and STEP revenue.

Our gross profit for the first six months was $10,000,000 or 71% of total revenue compared to 10,200,000 or 76% of total revenue in the prior year period. The change in gross margin reflects a higher mix of capital sales in 2025 relative to service and stuff revenue as well as the absence of the unusually low cost of sales recorded in 2024 due to that capitalized labor on those development projects. Our net operating expense for the second quarter was 3,900,000.0, an 11% decrease from 4,000,000 in the prior year period. Our net operating expense for the first six months was 7,700,000.0, a 9% decrease from the 8,500,000.0 in the prior year period. These decreases reflect the disciplined cost management while maintaining investment in core growth initiatives.

Our operating income for the second quarter was 900,000.0 compared to 1,100,000.0 for the prior year period, and our operating income for the first six months was 2,300,000.0 compared to 1,800,000.0 in the prior year period. Our net income for the second quarter was 200,000.0 or 1¢ per diluted share compared to 1,200,000.0 or 10¢ per diluted share in the prior year period. Our net income for the first six months was 1,400,000.0 or 12¢ per diluted share compared to 1,700,000.0 or 15¢ per diluted share in the prior year period. Our adjusted EBITDA, a non GAAP metric, was $700,000 for the second quarter and $2,400,000 for the first six months of twenty twenty five. As of June 30, cash and cash equivalents totaled 20,700,000.0 compared to 17,600,000.0 at March 31.

Our working capital was 33,500,000.0, and we maintained a debt light balance sheet. VirTra defines bookings as the total of newly signed contracts, awarded RFPs, and purchase orders received in a given period. Bookings for the second quarter totaled 4,600,000.0, up from 3,600,000.0 in 2024, but down from the 6,400,000.0 in q one twenty twenty five. The sequential decline was driven by the timing of awards and customer related deferrals rather than lost opportunities. VirTra defines our backlog as the accumulation of bookings from signed contracts and purchase orders that are not yet started or are have incomplete performance obligations and therefore cannot be recognized as revenue until delivered in a future period.

We segment this backlog into three primary categories, capital, which includes our simulators, our accessories, installation, training, custom content, and any design work. Our service is primarily our extended warranties and support contracts, and STEP is our long term subscription based program. Our backlog at 06/30/2025 stood at 18,800,000.0. This includes 7,100,000.0 in capital, 5,700,000.0 in service, and 6,000,000 in step contracts. Additionally, we continue to track renewable step contract options, which are not included in the backlog total.

Most new capital bookings from the first half are expected to convert to revenue within the current calendar year, though some orders, particularly from international customers, have requested a deferred delivery into early twenty twenty six. As always, our ability to convert backlog into revenue remains dependent on customer driven installation timelines, which can shift based on factors outside of our control. So in review, our backlog remains solid, and the stability of our recurring revenue base combined with a strong balance sheet provides us flexibility as we move into the second half of the year. Looking forward, we believe the combination of our disciplined cost management, enhanced contract structures, and ongoing demand recovery will support continued progress. Our updated STEP program with its three year commitments and strong 95% renewal trends transform what was once optional renewal potential into high confidence recurring revenue.

This not only strengthens our revenue visibility, but also reinforces long term customer relationships and positions VirTra for substantial growth. That concludes my prepared remarks. I’ll now turn the call back over to John for his closing comments. John?

John Givens, CEO, VirTra: Thank you, Alana. As we move through 2025, our focus remains on both agile and discipline. While many of our customers are still working through funding complexities, their commitment to training and preparedness remains strong. We stand ready to deliver as budgets open up, and we are dedicated to earning trust through reliable execution. The strides we’ve made in sales, product innovation, operational efficiency strengthen our foundation each quarter, and we’re confident in our ability to translate these efforts into growth as the year progresses and into 2026.

That concludes my prepared remarks. Operator?

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. You may press star and two if you’d like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. The first question comes from the line of Jason Smith from Lake Street Capital Markets.

Please go ahead.

Jason Smith, Analyst, Lake Street Capital Markets: Yes. Thanks for taking my questions. John, just wanna drill down a bit further on your comments on IVAS. And, obviously, with the move from Microsoft to Andro and sort of the headset getting reconfigured, just wanna make sure I’m clear that you guys still expect to be involved, or has your position in this program changed at all with the changes going on?

John Givens, CEO, VirTra: Yeah. That’s a great question. There is a bit of confusion out there. So we completed our r and d effort with the government canceling the last of the testing because it performed, in air quotes, flawless. So our product stands ready to meet and be able to be produced in a production quantity and production level.

What’s going on right now with IVAS, when they novated the contract from Microsoft to Andro, they still aren’t happy with the headset. So they did release a new contract. It’s under an OTA for one year, and they’ve opened it up, and it’s just for the headset. So they have to produce and demo. I believe it’s I don’t have it in front of me.

I believe it’s either March or April. They’ll demo another headset, and we expect that to be closed like stated on previous calls by September. And then they would most likely issue a production contract, which would include the entire system or kit. So that’s we’re still there. They’re just trying to work through the augmented reality and the headset goggles.

And just FYI, Andro and Meta have teamed together, and they’re going to fund most of it as a customer funded. So we’ll see where that competition goes. I’d I I would encourage everyone to watch that. And then as soon as that competition is over, it’s for one year, and it’s very aggressive. They’re gonna announce the winners of that quite soon, I believe, in August.

So stay tuned for that. But VirTra is much still in has still been approved, and there isn’t any competition for any further recoil kits.

Jason Smith, Analyst, Lake Street Capital Markets: Okay. That’s really helpful. And then just have a question here on recent news on the US Army, selecting sort of Bohemia and that virtual battle space. Just curious how that impacts you or what you guys think of that news.

John Givens, CEO, VirTra: Well, I think it’s great for for Bohemia and BAE. I think it’s also great for us. As I’ve reported since I got here, there is the virtual battle space, the product of Bohemia, is spread throughout probably a 132 countries around the world. So it’s a great distribution network that we should be part of. All that does is that furthers our opportunities going in the future.

That doesn’t mean they just automatically buy Virtua’s system. Somebody has to have a need for a marksmanship trainer, and it would give us we wouldn’t be out of the competition because there’s other competitors that also are using VBS as well. But it puts us right in the forefront with the solid products that we have and now running VBS. We’ve announced it, and it’s now running on our systems. And we’ve had inquiries from other military units for just such a system with VBS.

So they can leverage their current investment in the gaming engine. And now that it runs on ours, they all can connect, which is a big benefit for DOD.

Jason Smith, Analyst, Lake Street Capital Markets: Gotcha. And then the last one from me, and I’ll jump back in the queue. Just curious what you’re seeing with the VXR and kinda customer traction there and customer conversations.

John Givens, CEO, VirTra: Yeah. So I’ve been a for a very long time being a platform instructor in the military, the VXR is great for many, many things. The one thing that it’s not good at just yet is putting weapons in there because it creates a negative training effect. However, because VirTra leads in the certified training courses for law enforcement, it’s an absolute need and a must. We have strong interest in multiple different sectors to include health care for just such a system.

It’s very portable. They can get immersed, and they can get the certified training that they need and and then log and calculate or log and get credit for those training sessions. So the traction is there. People are now understanding what it does. They had a the industry had this perspective that they could just put on the headset and be just like being there and using the weapon.

And later, they found out that I talked about that negative training. It just didn’t stand up to the rigors of actual platform training and meeting a mission need. So they backed away and now are seeing the capability where it really has its biggest benefit, and we’re right there.

Jason Smith, Analyst, Lake Street Capital Markets: Perfect. Thanks a lot, guys.

John Givens, CEO, VirTra: Thanks, Jason, for your questions.

Operator: Thank you. We take the next question from the line of Richard Baldry from Roth Capital Partners. Please go ahead.

Richard Baldry, Analyst, Roth Capital Partners: Thanks. Just talk about any changes you’ve seen on STEP renewal rates and the changes in the customer preferences between STEP versus your sort of your traditional acquisition model?

John Givens, CEO, VirTra: Yeah. I’m I’m gonna there’ll be two parts to that. I’ll let Alana answer it after I do. So we chain person VirTra as a company changed its model from the five year to the three year. Initially, there was a bit of a pushback because they had already some of the STEP programs that were coming due had already set their budgets up for those for those systems coming out five years versus three.

So it was initial hurdle. We we managed to navigated through that. The step and the capital, it just depends on how where they’re getting their dollars and how they’re getting their dollars. We wanted to take advantage of operational budgets as well as capital, We haven’t seen any changes. And as we reported for the last several years, towards the ’24, most ’25 and into ’26, we have a lot of the five year renewals coming up, and we’re still seeing above a 95% renewal rate.

We have seen some conversions. We I think we have more than six that renewed early on the stem, and we have some that have converted to capital. And we’ve had some capital that’s converted to the step program. It just depends on their funding and what appetite their financial groups in those areas, how they’re getting that money. So we’ve seen it it’s been a real mix, Richard.

But, yeah, great question. Alana, did you have anything else?

Alana Borgrew, CFO, VirTra: No. I mean, you pretty much nailed what I was gonna say, which is I know we’ve been reporting about a 95% renewal rate, and that really hasn’t changed. You know, we had a couple customers towards the beginning of when we started reporting that that didn’t renew mostly because of their own budgets because they are a lot of smaller agencies that need this program. And everything in the last, you know, six months, we’re just seeing renewals into those three year programs. And when John talks about the six that are renewed early, they renewed early because they want some of our new tech.

Right? So they don’t wanna wait a whole year. They wanna get renewed for that new three year contract so they can get the new stuff.

Richard Baldry, Analyst, Roth Capital Partners: Got it. Does the new accelerated depreciation accounting have any impact, do you think, or could it have any impact? I’m not sure, you know, how applicable that is across government sector versus private sector, but sort of curious your thoughts there.

Alana Borgrew, CFO, VirTra: I don’t think it’s gonna have at this point, I don’t think it’s gonna have a a major effect on us, but I will let everyone know if it if we do we do see that.

Richard Baldry, Analyst, Roth Capital Partners: And then last for me. And where you were closing bookings in the quarter, is there any, you know, geographic end market, any other, you know, sort of trends inside of that, that that are sort of different or emerging? Thanks.

Alana Borgrew, CFO, VirTra: I’m I’m not sure. Can you clarify that last question?

Richard Baldry, Analyst, Roth Capital Partners: You know, whether that was, you know, federal agencies, municipalities, any any sort of variability within the closings, you know, where you saw successes or not.

John Givens, CEO, VirTra: Oh, yeah. I can I understand that now? Yeah. We hadn’t seen much of anything across any of those that require the federal funding. We are seeing the grants are opening now as as I mentioned.

So we have quite a few customers that were in that queue waiting that we assisted. We we produced a grant pamphlet and basically did everything we could to help them so that they could self file because that’s a requirement, their applications. So we we did follow that quite a bit. As far as there are some other industries now that have changed some laws that we’re starting to see a lot of inquiries. Washington State just all of the folks that do the concealed carry and security and all that need x number of training hours.

So we’re starting to see different areas open up. But as far as all of the federal were frozen, grants are the ones on top. We are seeing some private investment with foundations that are trying to get some of the police departments in their areas in need systems. So it I would say grants are probably the biggest one that are starting to open up and show us the the positive signs. And international, I know you didn’t mention that, Rich, but international is another one that is we’ve seen a lot of activity most recently.

Hope that answers your question.

Richard Baldry, Analyst, Roth Capital Partners: Yeah. Great. Thank you.

John Givens, CEO, VirTra: You’re welcome. Thank you, Rich, for the questions.

Operator: Thank you. Ladies and gentlemen, at this time, this concludes our question and answer session. I’d now like to turn the call back over to Mr. Givens for his closing remarks.

John Givens, CEO, VirTra: Yes. Thank you for joining us today and for your continued support of VirTra. We’ve made meaningful progress so far this year. We’ll stay focused on execution, our customer success, and advance our growth initiatives. We appreciate your trust and look forward to updating you on our continued progress in the corners to come.

God bless all of you, and let’s continue to make great strides together.

Operator: Thank you. Ladies and gentlemen, thank you for joining us today for Wordpress second quarter twenty twenty five conference call. You may now disconnect your lines.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.