Genasys Inc (GNSS) 2023 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Genasys Inc. Fiscal First Quarter 2023 Conference Call. (Operator Instructions) At this time, it is my pleasure to turn the floor over to your host, Kimberly Rogers. Ma'am, the floor is yours.

Thank you, Kat. Good afternoon, and welcome to Genasys Inc. Fiscal 2023 First Quarter Financial Results Conference Call. I'm Kim Rogers with Hayden IR, the Investor Relations firm for Genasys. With me on the call today are Richard Danforth, Chief Executive Officer; and Dennis Klahn, Chief Financial Officer.

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. Other than statements of historical facts, forward-looking statements made on this call are based only on information and management's expectations as of today. 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 and backlog, which we believe provide helpful information to investors with respect to evaluating the company's performance. For 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 in the next 12 months.

Finally, a replay of this call will be available in approximately 4 hours through the Investor Relations page on the company's website.

At this time, it's my pleasure to turn the call over to Genasys Chief Executive Officer, Richard Danforth. Please go ahead, Richard.

Thank you, Kim, and welcome to everybody. If you look on our website, you'll see the earnings release as well as a press release that has been hung up on the wire service that'll likely come out during this call announcing the win of a large enterprise SaaS award to a company called Aramco, which happens to be the largest company in the world from a market cap basis. So with that, we are off to a strong start in fiscal '23, with our largest SaaS booking quarter to date.

Our software business continues to gain momentum as evidenced by the $6.1 million in SaaS bookings in the first fiscal quarter of this year. The strong bookings included an enterprise award from, as I mentioned a moment ago, Aramco, the largest market cap company in the world and the California counties of San Diego, where they bought GEM; Riverside, where they bought Zonehaven. Subsequently, they had bought GEM and IMNS; San Mateo, which bought Zonehaven; and Monterey County, which bought both Zonehaven and GEM. These results, along with our rapidly growing SaaS pipeline, further reinforce our strategy of investing in software development, sales, marketing and customer support.

The addition of the world's largest oil and gas company and large California counties to our global automobile manufacturing and regional critical infrastructure customer base elevates our SaaS profile and demonstrates our ability to successfully close, cross-sell and support large enterprise and public safety clients.

Our international results were also robust this quarter as our strategy to rationalize business development by establishing sales offices in APAC, Europe and the Middle East have proven successful. During the first fiscal quarter, 50% of our bookings were international and APAC revenue more than doubled year-over-year as the entire region emerges from COVID-related lockdowns.

With the world economy picking up, we are seeing pipeline growth across all of our international sales regions. We expect strong fiscal year bookings in APAC, Europe and the Middle East, driven primarily by hardware orders as well as developing pipeline of SaaS opportunities. Total bookings for the quarter were $8.6 million, up 23% year-over-year. Hardware bookings for the quarter were $2.5 million as pending orders moved into our fiscal second quarter. Fiscal second quarter hardware bookings through January were already 40% higher than the total first quarter hardware bookings. We expect fiscal 2023 bookings to follow our typical pattern with a large step-up in fiscal Q3, driven by international hardware bookings in fiscal 2023 are expected to substantially exceed fiscal 2022 hardware bookings.

In what is typically our slowest quarter, fiscal first quarter revenue was $10.5 million, slightly lower than the prior year quarter and in line with our expectations. Following the usual pattern, we expect sequentially quarterly revenue to increase in the fiscal second quarter and then strengthen in fiscal Q3 and Q4, putting us on a solid footing for the seventh consecutive year of revenue growth.

Inflation resulted in increased hardware component cost and product mix was a factor in the decreasing first quarter gross margin to 43.3%. We expect our gross margin to return to more normal levels in the second half of fiscal '23.

As we discussed on our fiscal fourth quarter conference call, continued investment in our SaaS business drove a 10.5% sequential quarterly increase in operating expenses, in line with our expectations. Given the confidence in these investments to accelerate our SaaS business growth, we anticipate operating expenses in fiscal '23 to increase by approximately $5 million year-over-year.

While SaaS bookings and revenue are growing, hardware continues to be a majority of our business, representing 90% of the total revenues in the fiscal first quarter. Our commanding competitive position as the de facto global supplier of long-range acoustic devices gives our hardware business a compelling economic profile. We continue to diligently manage and dedicate resources to growing our global hardware business.

Recent attacks and increasing threats to critical infrastructure, particularly electrical substations are generating large business opportunities for our remotely operated LRAD 950NXT system. The NXT uses our proprietary technology to identify and respond to potential threats. Since the NXT launch last April, we have received orders from international navies and critical infrastructure orders for dams, data centers, ports and electrical substations. Large NXT critical infrastructure and international defense sales are expected to be a major contributor to hardware revenue this fiscal year and beyond.

Our hardware bookings are typically lumpy. We currently have a large number of hardware opportunities expected to close this fiscal year. The U.S. Army program of record and international orders are anticipated to drive bookings growth and substantially lift hardware backlog in the second half. Hardware will continue to be the economic engine that powers the self-funding of our SaaS business development in the future.

Our priority focus is fully integrating our SaaS solution and increasing the capabilities of our data-driven Protective Communication platform. Our SaaS system suite is evolving with the integration of GEM, Zonehaven and IMNS into a seamless platform, expanding our capabilities and empowering Genasys to address a much larger scope of enterprise and public safety crisises.

New platform features, including flood and traffic modeling, continue to expand our platform's multihazard capabilities to use during hurricanes, storm surges, tsunamis, avalanches, flooding, debris flow, wildfires, chemical plumes, active shooter and other natural and man-made disasters. Some of our new capabilities were developed during -- were deployed, excuse me, during the recent atmospheric river condition that inundated Northern California. Our Protective Communication platform was used in many counties to communicate the location and extent of flooding, avalanches, debris flows, road closures, hazard condition and recovery resources. During the severe weather events, hundreds of thousands of residents accessed the Genasys aware site to check the evacuation status of their neighborhoods and for other life-saving information.

Our land and expand strategy continues to grow our footprint with government public safety customers. Increasing demand for our Protective Communication platform has 16 California jurisdictions now using multiple Genasys platform elements with 3 counties using the entire platform. Riverside, one of California's largest and most populous counties recently purchased Zonehaven to integrate with the previously purchased GEM services and IMNS installations.

As we announced earlier this month, the City of Laguna Beach is a notable example of how to perform -- the performance of our IMNS network created another upselling opportunity. The successful use of IMNS during 2 wildfire last year, led the Laguna Beach City Council to prioritize the further expansion of its Genasys network.

In Marin County, California, we have provided emergency warning services for the City of Mill Valley since 2019. In 2021, IMNS installation equipment with solar power and battery backup were positioned in other areas within the county. The follow-on order announced last week further expands the county's IMNS network. We have also expanded our footprint in Alameda County with UC Berkeley's purchase of IMNS, which will be integrated with the City of Berkeley's Genasys network. As we announced last week, the extended network and the county's use of our Zonehaven evacuation platform will expand emergency warning coverage and notification channels during public safety threats for more than 45,000 students, staff and facility. We expect additional California jurisdiction to join Alameda, Marin and Riverside Counties in adopting the full Genasys platform this fiscal year.

In the enterprise market, the addition of Aramco, along with previously announced global auto manufacturers and critical infrastructure, elevates our SaaS profile and demonstrates our ability to successfully close large enterprise customers. Extending the capabilities of our software platform further differentiates us and opens doors for new and follow-on business opportunities.

Our approach to the vast enterprise sector is to target key verticals where we can reference our proven execution. We have spoken before about our ongoing investment in the SaaS platform and SaaS sales growth. Since late 2021, we've expanded our software development, sales, marketing and customer support teams and added new personnel with the skill set needed to achieve our revenue goals.

To build brand awareness and accelerate platform growth, we have recently appointed Avnita Gulati as Vice President of Marketing. Avnita is a highly successful enterprise marketing executive with extensive experience leading revenue-based marketing organizations. She has implemented global go-to-market strategies and led customer acquisition programs for leading companies in the software, semiconductor, medical and financial market. Avnita is a key addition to our leadership team, who will help us drive scale and growth.

The whole team here is energized and excited by the increasing adoption of our software SaaS platform and the burgeoning opportunities fueling growth in our pipeline. Our pipeline of qualified SaaS opportunities is now 25% greater than it was just a few months ago.

The SaaS bookings we delivered in the first quarter further validates the investments we are making in our Protective Communication platform, and we believe are a strong indicator of its potential.

With Genasys Software now in use in 23 and 7 countries, soon to be 8 with the addition of Aramco, we are gaining traction in new markets and building our software footprint globally. We are reiterating our expectations for continued revenue growth in '23 with strong international sales, continuing LRAD deliveries to U.S. military and increased software services, sales and significant SaaS revenue growth.

With that, I'll turn it over to Dennis.

Thank you, Richard. Revenues for the fiscal 2023 first quarter were $10.5 million, 2% less than the prior year quarter. As compared to the same prior year period, LRAD revenue increased 19% to $9.3 million. Software revenue increased 39% to $903,000. However, this was offset by a $2.3 million decrease in IMNS revenue, which was $300,000 in this year's quarter. IMNS revenue throughout fiscal 2022 benefited significantly from a single $10 million order from the U.S. Army.

Recurring SaaS revenue from North America increased 87% compared to last year's quarter. Gross profit margin was 43.3% this quarter compared to 48.2% in the prior year quarter. The gross margin percentage was impacted by inflationary pressures on product costs, the mix of revenue this year and increased software cost to support software revenue growth. We expect the Q2 gross profit margin to be similar before improving to closer to our historical margins in the second half of this year.

Operating expenses were $8 million, up from $6.5 million in the same period a year ago. The planned increase is largely due to greater sales, marketing and related travel expense, plus additional compensation expense this year, including a 14% increase in our engineering staff. Net loss for the quarter was $3.5 million or $0.10 per share compared to a net loss of $1.3 million or $0.04 per share in the fiscal '22 first quarter. The increased loss was largely due to the lower gross profit this year and the planned increase in operating expenses to support the software growth initiatives.

Adjusted EBITDA for the fiscal '23 first quarter was a loss of $2.4 million compared with an adjusted EBITDA loss of $412,000 in the prior fiscal year first quarter. We believe this information and comparisons of adjusted EBITDA enhances the overall understanding and visibility of our business performance. To that effect, a reconciliation of our GAAP results to non-GAAP figures has been included in our earnings release.

Cash, cash equivalents and marketable securities totaled $15.1 million as of December 31, 2022, compared with $19.9 million as of the prior year-end. Working capital totaled $17.4 million at December 31, '22 compared with $20.7 million at September 30, 2022. Cash used in operating activities for the first 3 months of fiscal year 2023 was $4.9 million. This compares to cash used in operating activities of $2.7 million in the same period last year. The fluctuation primarily reflects the higher negative adjusted EBITDA in this year's quarter.

We'll now open the call to Q&A. Operator?

(Operator Instructions) And our first question comes from Brian Colley from Stephens.

Congratulations, first off, on the Aramco deal. I'm curious if there's any numbers you could provide around that contract or just any qualitative information you could provide us with kind of help us size that up?

It was the largest SaaS bookings we've ever taken, by a lot, Brian. I think our largest one prior to that, Dennis is Riverside at $1.12 million $1.15 million.

$1.15 million, yes.

So this was substantially higher than that. I could give a little color on it. It was a competitive solicitation. There were competitors from the United States, from the U.K. and from Europe. And they selected Genasys, which was terrific. It's a testament to the team. We have a team here in the United States and the team in Europe, and it's a just a stunning win for us. We mentioned in the last call, Brian, we were going to begin to focus more on enterprise as well as continue with SLED, and we were able to go out and win the largest enterprise in the world. So that was terrific. We have a lot of work to do between now and when we go live, but we're all very, very pleased.

Absolutely. Definitely an impressive win. I'm curious, when do you expect to go live on that contract?

It will go live internally. It was booked in Q1. We signed the contract in December 27, I think. It's been an extended period of approvals for releasing the press release, which we received earlier today, the approvals finally. So they've had the process ongoing since early January. It's taken over a month to get their approval. It surprised us that it showed up this morning. So we scrambled a little bit to make sure we could get it out there as quickly as possible. But you started to say go live. So internal -- the current plan is that they go live internally at the end of March, but won't begin to use it in a public forum for about 60 days after that. Just training and practice.

Got it. And this is for the GEM software?

Yes.

And is it all SaaS?

All SaaS. It had an incumbent system, Brian, that was on-prem. So this is a big deal for Aramco holding this stuff up on the network.

Was the incumbent provider, was it one of the other large competitors like an Everbridge our OnSolve or any color you can provide there?

Yes, it was one of those.

Okay. I'm curious what you're seeing from your competitors more recently? I mean -- I mean, by the looks of this deal, it seems like your win rates are improving. But obviously, both Everbridge and OnSolve kind of have some other stuff going on at the companies. Everbridge is going through some restructuring. So I'm curious just if you're benefiting at all from, call it, maybe some distractions at your competitors?

I can't speak to that, Brian. I know we've picked up a handful of salespeople that have been laid off by those companies, particularly Everbridge. We booked $6.1 million in SaaS in our first quarter, which was the biggest we've ever done. And obviously, it's being driven by Aramco, but we also picked up several counties again here in California. I mentioned in my remarks, we're currently selling our software in 23 states in the union and now 7 countries, soon to be 8. And I also mentioned that our pipeline has grown by 25% over the last handful of months. So it's behaving the way we expected it to. And with all due respect to the competitors here in the United States, they might struggle some, but there's still formidable competitors.

Right. That makes sense. One last one, and I'll see the floor here. But I'm curious, Dennis, if you could provide any color on kind of why the outsized move in gross margins this quarter? And I guess, in the back half, you're expecting them to get closer to the 50% range. Is that correct?

Yes, we are. Quarter-over-quarter, the decrease as we saw over the last half of last year's fiscal year, the margin has decreased last year as well. They picked up in the fourth quarter of last year, but that was because of the volume. If you take a look, $16 million of revenue in the fourth quarter of last year versus $10.5 million this quarter. You pick up several points of -- just from additional absorption based upon that volume of revenue. So once we get probably through -- mostly through the second quarter, we should see that we'll have -- the orders that we'll be shipping will be based upon our -- chances that -- the orders that we have booked from the higher list prices of our products. We have repriced that. It just takes time to get into the system and be part of the backlog.

And our next question comes from Mike Latimore from Northland Capital.

Yes. Congrats on the strong SaaS bookings. That's exciting news for sure. Just to be clear, is the $6.1 million, is that an annual contract value or total contract value?

It's the contract value total. Multiple [voids], yes.

And then it doesn't seem like you guys have seen really any sort of macro effects on sales cycles or anything like that. I mean, it sounds like things are going very strongly. But any -- have you seen any kind of elongation of sales cycles in the enterprise market or public sector, for that matter? I guess it doesn't really seem like it, but I just want to check because so many other SaaS companies have seen that.

I'd say no from a SaaS perspective. From our hardware -- and I'd probably put a little color on that, Mike. Given where we came from with a very low number, we've been able to grow it very nicely. From a hardware perspective, the international was most affected in our bookings from a COVID kind of thing. So APAC, Middle East and even Europe, were terrible over the last 3 years. And frankly, they began coming down prior to that. So I'd say on a positive note, we see pipeline growth in all of our international markets. And we expect, as I mentioned in my remarks, significant uptick in international bookings this fiscal year.

Yes. Okay. That's great. In terms of the Aramco win, which was competitive add or replacement, are there 1 or 2 things that stand out here as to why you won the deal from a technical perspective?

I can't answer that. I have my own opinion, but I don't have the information from the Aramco folks. We're just getting started with them. Yes. Part of it, Mike, is from a technical perspective, our team in Madrid has been working and putting -- working with network providers around the world since the early 2012 time frame. So they're very comfortable with the large network providers. So we put a compelling technical case together, and they selected us. I'm sure we'll get more color from them as we continue to work with them over the coming months.

Yes. And just last, it sounds like the pipeline growth has been great. As you look at that pipeline, how -- is there a way to rank order the applications in terms of their representation in that pipeline? Is one clearly got a bigger chunk of the pipeline than another here among the 3 main ones you have?

Well, if you look at the 3 being GEM, Zonehaven and IMNS; IMNS by its nature will drive higher revenue, but lower SaaS. And GEM and Zonehaven, as I mentioned in my remarks, they're being combined. And we've seen many counties now buy both; have one and buy both. And as I mentioned, Monterrey bought both to begin with. And that's significant for us from a revenue perspective. So if you look at SaaS combined, both SLED and enterprise, it's a great opportunity for us.

And our next question comes from Ed Woo from Ascendiant Capital.

Congratulations on the quarter. My question is on the increase in operating expenses of $5 million. How much of that is in sales and marketing versus development? And when can you really begin to leverage the revenue growth on your margins?

I don't have it sitting here in front of me what was more R&D or sales and marketing. Dennis do you?

I don't -- I can't give you a breakdown. My sense would be that it's more sales and marketing oriented then with strictly R&D development. We've added since a year ago, we now have our first Chief Revenue Officer. And as Richard announced, we have Vice President of Marketing. So they're leading and building out their teams. So it's probably going to be -- we've added a substantial number of sales and marketing folks already this fiscal year. So it's more likely sales and marketing.

And in terms of when the leverage starts to hit, the revenue -- Dennis remark, our revenue for Q1 was $900,000 up. How much?

That's up cash, a couple hundred thousand.

Yes, that's a significant percentage. But as we book more orders at -- it's a curve that's sort of asymptotic. So it will begin to improve, certainly by the end of this year, I'd expect.

And our next question comes from Kris Tuttle from IPO.

Actually, I have a couple of them. Just out of curiosity, what was the time since when you first started selling or marketing on the Aramco deal to the close, what was the chronological time on that?

It was shockingly quick for the Middle East, particularly. It's just a rough order of magnitude, Kris, but our Dubai office became aware of the opportunity in the fall. There were multiple demonstrations and responses to RFIs. A proposal was submitted in December, I think, and the award was made on December 27. So that's shockingly fast for an enterprise of any size. Notwithstanding this was the largest enterprise in the world. So they were determined to get it under contract. I think they have some issues with their existing system that was the impetus to sort of fast track this. But it was, again, a great team win.

Yes, that's helpful. And that is, for an enterprise sale, that's a pretty quick.

Yes.

One other question just in terms of the overall business. You talked a lot about the strength in APAC, Europe, Middle East. It kind of begs the question, did you see some weakness or a slow ramp or any kind of delay pattern in the U.S. where deals may be needed longer approvals? Or you cited all the other geos, except for the U.S. in terms of strength. So I'm just curious if we should be thinking about that, what your observations are?

International, I mentioned a moment ago, has been poor for the last handful of years and most recently, driven by COVID shutdowns. So our bookings from international have been down substantially. So I see them returning to normal levels beginning of this year. Domestic orders have historically been somewhat lumpy, and they remain somewhat lumpy, where second half is typically substantially stronger than first half, and that's what we're seeing. So I think the U.S. is following the pattern it usually follows and international is improving a lot.

Okay. And then I had 2 questions on the technology side. One of them is, I know we've talked a little bit in the past about kind of a unified product category and name. Can you provide any kind of insight in where that is on the priority spectrum and what kind of timing there might be in terms of an upgraded unified product and branding around the software business?

Sure. We are endeavoring to do that. I mentioned in some of my remarks, the unified Protective Communication platform, that's what we're calling it. That will include all the functionality of GEM, Zonehaven and IMNS. We will be rolling out a campaign on this late spring, early summer.

Okay. And then one other question on the technology side that I'll hop off is one of your -- one of the bigger names in the space, Everbridge, it's been around for a while. My question is about interoperability. Like them, love them, they're failing, they're succeeding whatever, they signed a lot of large sort of contracts with governments and states to provide sort of emergency notification. And I'm wondering, is there an opportunity for Genasys on the interoperability side to come in and say, "Well, they won this award, you can't walk away from it because it would be embarrassing, but we could provide some of the functions that you need now in terms of evacuation and other sorts of deeper software and data services." What level of interoperability do you have with them? And is that all a good opportunity? Or is that -- does it not really hit your radar screen?

We have a handful of states in our -- I won't call it -- certainly not in our backlog yet, but we are pursuing multiple states across the union.

And so you'd be able to be interoperable with them or they'd have to replace them?

Well, we certainly want to replace them. But our system can operate the Everbridge channel, the Everbridge mass notification channel. In many cases, we have installed our IMNS systems here in California and other states and counties and cities may, in fact, have Everbridge or OnSolve. So it becomes a channel that's on the GEM platform.

(Operator Instructions) And our next question comes from Brian Colley from Stephens.

I'm curious if you could just talk about your visibility to returning to revenue growth from a hardware perspective in the second quarter through the fourth quarter. It seems like you have enough backlog to do that, but I'm just kind of curious how we should think about the growth trajectory --

Second half higher than first half for sure. Our first quarter revenue, by the way, was the second largest in company history. In my remarks, I told I think Q2, Brian will be higher than Q1 and then recovering very nicely in the second half.

Got it. And when you mentioned in the press release, like do you expect continued growth, does that include --

Year-over-year.

Year-over-year for -- like including 2Q, correct?

It's -- the comment is full year to full year.

Okay. Got it. I wanted to ask about just the go-to-market strategy for software and maybe some of the initiatives that Dennis Walsh is working on. Are you looking more at kind of partnering with any type of resellers or channel partners to kind of help you extend your sales reach without needing to hire a bunch of additional sales reps? Or is there -- I'm just kind of curious, what you're doing from a channel perspective and also what -- just any initiatives that Dennis has kind of put in place that might be working so far?

International channels for sure. And domestically, we -- I think we have one. So it's not a big piece of anything we do right now, but it's something we certainly are looking to go do. In terms of strategy, from an enterprise perspective, it's narrowing it down. We've been, frankly, taking a shotgun approach, Brian, on going after everything. But necking that down to very specific verticals. I mentioned we've hired a VP of Marketing. So our marketing effort will be then more pinpointed at large manufacturing, for example. With the automobile wins we've had and now Aramco, we'll be focusing on a handful of verticals as opposed to everything.

Got it. That's super helpful. And I wanted to ask lastly just about Zonehaven and the progress you're making just on expanding first of all, just beyond California, but also internationally and then also the integration with GEM, I wanted to get an update on how that's going.

The integration with GEM is ongoing. It's, as I mentioned to the prior caller, it's an initiative that we've called Protective Communication. It says all the functionality of mass notification and evacuation. We've recently released software feature sets that include flood modeling and traffic modeling, which further enhances the platform and enables the first responders to determining how -- what zones they want to evacuate running the fire model when the fire will hit that, and then how long is it going to take for all the cars in that community to get out. If the answer comes back that it'll -- the fire will be there in 3 hours and it takes 4 hours for evacuate, that doesn't work. So we've continued to put software feature sets that we think are very, very helpful to first responders in both the GEM and the Zonehaven platform, and we expect that platform to be combined and come out into the market as Protective Communication.

Okay. Got it. Then just one last thing. I mean, for the Aramco deal, are there any like startup costs or anything, any expenses we should expect to hit the model over the next quarter or so as that deal goes live? Or is it just kind of turning it on with SaaS?

We're not hiring anybody else to prosecute the Aramco deal, but it will be a significant focus of our software development team for the next handful of months, for sure. As part of the contract, there was a relatively small upfront fee that they pay us, but most of it will be -- most of the upfront stuff will be done as we typically do our SaaS stuff.

Okay. Perfect. Congratulations on the big win.

And our next question comes from Martin Yang from Oppenheimer.

Again, another question on Zonehaven. Can you maybe outline a longer-term vision for Zonehaven and sales process? Do you think that it will be in the future sold more through as a feature of GEM as opposed to a stand-alone software offering?

The combined platform will be our go-to-market, Martin. It's a process to redefine what mass notification is. It's not just getting notifications, but it's also getting relevant information of where and when the threat is coming from, whether it's a from a hurricane or river flooding or the disastrous things we've seen in California with the atmospheric rivers. In that period of time recently at the atmospheric rivers, the communities were using it for warning people and evacuating people for avalanche, for debris flow, for the location of sand bags, for the location of fresh water. The utility of the GEM and Zonehaven platform was on stage here in California during that horrific weather took about 2 weeks. So the application of the combined platform is not just forest fires. It's any emergent situation where lots of people -- lives may be at risk.

Yes, that's very clear. Another question on account sales process. Were they currently sold in different ways and supported by the same team or do they have like slightly different sales process between Zonehaven --

No, it's the same. So when the SaaS team -- SaaS sales team goes out, they're demonstrating the combined platform. And in the case of Monterrey, they bought the combined platform with both functions of GEM and Zonehaven. And Riverside, as I mentioned, they bought everything, but at 3 different times. So they have GEM, they have Zonehaven, they I have IMNS. As I said in my remarks, I think we'll see more and more of that out of the installed base as an upsell, cross-sell opportunity. And if I showed you the picture of the State of California, you'll see that I think we're in 34 of the 58 and 4 more in the contracting phase. So those counties that have GEM and not Zonehaven and not IMNS, it's all an opportunity.

And at this time, there are no further questions. I would now like to turn it back to management for any closing remarks.

Thank you. We regularly discuss our business at investor conferences throughout the year. Later this month, we will be participating in the Winter Wonderland Best Ideas Virtual Investor Conference. Additional investor conference presentations are planned throughout this fiscal year. Thank you for participating in today's call. We look forward to speaking with you again next quarter when we report fiscal second quarter 2023 results.

Thank you. This does conclude today's conference. We thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.