The Glimpse Group (Ticker: VRAR), a company specializing in immersive software solutions, discussed its Q3 fiscal year 2024 financial results, highlighting a strategic shift towards providing enterprise-scale spatial computing solutions.
The company announced a significant $4 million contract with a Department of Defense entity and is in the process of securing additional multimillion-dollar contracts.
Despite a decrease in revenue due to the strategic transition, The Glimpse Group expects revenue growth in Q4 2024 and into 2025, with a target to reach cash flow profitability in the coming months.
Key Takeaways
- The Glimpse Group has secured a $4 million contract with a Department of Defense entity.
- Additional contracts in the $8 million to $12 million range are being negotiated, with potential closures before the end of 2024.
- Strategic shift to spatial computing solutions has led to a short-term revenue decrease.
- Revenue for Q3 FY2024 was approximately $1.9 million, a 48% decrease from the previous year.
- The company expects flat to increased revenues in the next two quarters and significant growth in Q4 FY2024.
- Gross margins remain strong at approximately 70% and are expected to stay within the 65% to 75% range.
- Adjusted EBITDA loss for Q3 FY2024 was approximately $0.89 million.
- The company has no outstanding corporate debt or preferred equity obligations and holds cash and cash equivalents of approximately $4.3 million.
Company Outlook
- Anticipated revenue growth in Q4 FY2024 and into 2025 due to new contracts.
- Expectation to reach cash flow profitability in the coming months.
- No need for external funding based on current cash balance and revenue projections.
Bearish Highlights
- Revenue decreased by 48% in Q3 FY2024 compared to the same quarter in the previous fiscal year.
- The strategic transition has resulted in a turnover in the historical customer base and divestiture of non-strategic assets.
Bullish Highlights
- Secured and prospective contracts with government and defense entities indicate potential for significant revenue increases.
- Partnerships with major tech industry players like NVIDIA (NASDAQ:NVDA) and Microsoft (NASDAQ:MSFT) support growth in enterprise-scale solutions.
Misses
- The company missed revenue targets due to strategic shifts and divestitures.
Q&A Highlights
- No specific questions and answers were provided in the transcript summary.
The Glimpse Group's pivot towards spatial computing solutions and its recent contract win with a Department of Defense entity mark a significant step in the company's strategic evolution.
With substantial contracts in the pipeline and a solid cash position, the company is poised for a return to revenue growth and cash flow profitability. However, the transition has not been without its challenges, as evidenced by the recent revenue decline.
As The Glimpse Group continues to execute on its new strategic direction, investors and stakeholders will be watching closely for signs of sustained growth and profitability.
InvestingPro Insights
The Glimpse Group's recent financial disclosures and strategic pivot have drawn attention to its future prospects. Here are some key insights from InvestingPro that may provide additional context to the company's situation:
InvestingPro Data metrics show a market capitalization of $18.82 million, indicating a relatively small player within the tech industry. The company's Price to Earnings (P/E) ratio stands at -0.67, reflecting its current lack of profitability. Additionally, revenue growth for the last twelve months as of Q2 2024 has been recorded at a modest 2.67%, with a more concerning quarterly revenue decline of -29.63%.
Among the InvestingPro Tips, it's notable that The Glimpse Group holds more cash than debt on its balance sheet, which aligns with the company's claim of having sufficient cash reserves and no need for external funding. However, the company is quickly burning through cash and analysts anticipate a sales decline in the current year, which could be a point of concern for investors considering the company's recent decrease in revenue.
The stock price has shown significant volatility, with a 1-year price total return of -70.95%, indicating a sharp decline in investor confidence over the past year. While the company does not pay a dividend, which is common for growth-focused tech companies, this could be a detractor for income-seeking investors.
For those interested in a deeper dive into The Glimpse Group's financial health and future prospects, InvestingPro offers additional tips. There are currently 9 more tips available, which can provide valuable insights into the company's performance and potential investment opportunities. To access these tips and more detailed data, visit https://www.investing.com/pro/VRAR and use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
Full transcript - Glimpse Group (VRAR) Q3 2024:
Operator: Welcome to The Glimpse Group Quarter Three Fiscal Year 2024 Financial Results Webinar. [Operator Instructions]. 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 https://ir.theglimpsegroup.com/. Before we begin the formal presentation, I'd like to remind everyone that the statements made on today's call and webcast include 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 Lyron Bentovim, President and CEO of The Glimpse Group. Lyron, the floor is ours.
Lyron Bentovim: Thank you, Kat, and thank you, everyone, for joining us. I am pleased to welcome you to The Glimpse Group's Third Quarter Fiscal Year 2024 Financial Results Investor Call for our quarter ended March 31, 2024. During this quarter, we've made concrete intangible strides that validate our strategic transition to focus on providing enterprise scale, spatial computing, cloud and AI-driven immersive recurring software solutions or Spatial Core, as we refer to it internally, led by our subsidiary company Brightline Interactive. We announced today that Brightline Interactive entered into a $4 million-plus 12-month contract with the Department of Defense, DoD entity, for a spatial computing ecosystem, integrating AI workflow, and accelerated compute for a variety of defense use cases. The ecosystem will empower users to combine massive data sets and perform complex calculations to analyze and process spatial data in order to derive insights, make predictions and perform calculations on one-for-one digital twins addressing challenges in infrastructure, maintenance, operations, training and simulations. In parallel, we are in the process of securing several additional multimillion dollar Spatial Core contracts with multiple government, Department of Defense and large enterprise customers. The shorter-term aggregate value of these contracts is in the $8 million to $12 million range. While there is no guarantee that some or all of these will come to fruition. We anticipate that a good portion of these will close before calendar year-end 2024 with additional potential in the pipeline for calendar year 2025. Each one of these potential contracts has significant growth elements built into them that could lead to significant annual recurring software revenue after the initial engagement. We believe that spatial computing represents a transformative leap forward in how enterprises interact with the digital world, seamlessly integrating it with their physical surroundings. For example, this immersive technology enable us to create comprehensive digital twins that not only mirror complex real-world environment, one-to-one, but also enhance our ability to interact, analyze and make informed decisions with potentially transformative applications across industries including industrial, military, public sector, infrastructure, training, simulations, robotic and many others. As discussed previously, we are working closely with some of the largest players in the tech industry such as NVIDIA and Microsoft as well as with some of the leading hardware players in the space. We serve as an essential and innovative middleware, connecting their cloud and AI technologies and services with the needs of enterprises and organizations to facilitate immersive solutions and use cases at large scale. To illustrate last week, our subsidiary Brightline Interactive together with Cesium and NVIDIA teamed at geospatial intelligence, GEOINT Symposium 2024 to introduce Brightline Spatial Core, which uses AI workflows or complex computation on top of realized data sets enabling powerful real-time massive, data-driven digital twin and simulation applications. As we discussed in our last call, we expected our strategic transition to result in short-term reduction in revenue as we divested and shut down noncore operating assets, while we reduced our expenses, targeting other noncore opportunities. Our other subsidiary companies, QReal, Sector 5 Digital, Foretell Reality, and Glimpse Learning continue to generate meaningful enterprise revenues, including recently from Snap, NHL, Galderma, Halliburton (NYSE:HAL), and many others. And our cash flow usual to positive from their internal operations. Looking forward, we expect revenues to be generally flat to up in the coming 2 quarters as we finalize our divestiture plans. And then we expect revenues to grow significantly in Q4 calendar year 2024 and continue to grow into 2025 as we start recognizing the revenues from the DoD entity contracts we've recently signed and the others we expect to follow. As Maydan will detail in his prepared remarks, given the developmental details we are positioned to reach cash flow profitability in the coming months. With that, I will now turn it over to Maydan Rothblum, Glimpse's CFO and COO, to review the financial results. Maydan?
Maydan Rothblum: Thanks, Lyron. 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 after market close today. Please note that I'll refer to adjusted EBITDA and other non-GAAP measures. For calculation of adjusted EBITDA and other non-GAAP measures, please refer to the MD&A section of our 10-Q filing, which you can find on our website under SEC filings. Revenue for Q3 fiscal year '24 was approximately $1.9 million compared to approximately $3.67 million for Q3 fiscal year '24, a decrease of approximately 48%. Revenue for the 9 months ended March 31, 2024, was approximately $7.1 million compared to approximately $10.6 million for the 9 months ended March 31, 2023, a decrease of 33%. The decrease for both period reflects our strategic shift to spatial computing, cloud, and AI-driven immersive software solutions which has resulted in a turnover in our historical customer base and the divestiture of non-significant -- non-strategic assets. Gross margin for Q3 fiscal year '24 was approximately 70% compared to 67% for Q3 fiscal year '23. We expect our gross margins to continue to remain in the 65% to 75% range. As previously discussed, we have made significant reductions in our operating cash expense base as reflected by a 62% reduction in our operating expenses this quarter compared to the same quarter of last year. Our operational cash breakeven point is now at approximately $3 million revenue per quarter or $12 million revenue annually. Adjusted EBITDA loss for Q3 fiscal year '24 was approximately $0.89 million compared to an EBITDA loss of approximately $1.13 million in Q3 fiscal year '23. Theoretically applying Q3 fiscal year '23 revenue which we believe is achievable again, would have resulted in a solidly cash flow positive quarter -- this quarter. Given our current level of revenues and subject to the signing of some of the contracts, Lyron mentioned, we expect to be cash flow positive from our operations commencing in September 2024 and onwards. In such a scenario, and given our current cash balance, we expect to be self-sufficient without needing any external fundings. As of March 31, 2024, the company has cash and cash equivalents of approximately $4.3 million. Company has no outstanding corporate debt or preferred equity obligations. And now I'd like to pass it back to Lyron for some closing remarks, after which we will begin our Q&A session.
Lyron Bentovim: Thank you, Maydan. Over the last couple of quarters, we have executed on the strategic transition plan we've outlined. This morning, we reap the first fruit of this execution. Over the coming months, we expect to make additional strong progress on our Spatial Core initiative and see significant progress, which we hope to publicly share with you. I thank you all for your interest and support of The Glimpse Group. And now I'll turn the call back over to the operator to take some questions. Kat?
Operator: [Operator Instructions]. At this time, I'd like to turn the call back to management for closing remarks.
Lyron Bentovim: I would like to thank each of you for joining our earnings conference call. We look forward to continuing to update you on our ongoing progress and growth. If we were unable to answer any of your questions, please reach out to us directly. Thank you, and have a great afternoon.
Operator: Thank you. This does conclude today's webinar. Thank you for your participation, and have a wonderful day.
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