The Glimpse Group, Inc. (GGRP) Q3 2025 Earnings Report, Transcript and Summary

Welcome to The Glimpse Group’s Third Quarter Fiscal Year 2025 Financial Results Webinar. At this time, all participants are in a listen-only mode. [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 ir.theglimpsegroup.com. Before we begin the formal presentation, I would 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 Lyron Bentovim, President and CEO of The Glimpse Group. Lyron, the floor is yours.

Thank you, Kellen, and thank you, everyone, for joining us. I'm pleased to welcome you to the Glimpse Group's Q3 Fiscal Year 2025 Financial Results Investor Call for our quarter ended March 31st, 2025. In this quarter, we continue the strong momentum of the previous quarter. Our outlook for revenue is strong, led by Spatial Core’s traction with various DoD entities and increasingly with opportunities in the enterprise segment as well. This momentum is expected to be reflected in our upcoming quarter, which may be the highest revenue quarter for us over the past two fiscal years. In parallel, we delivered our second consecutive quarter of positive cash flow from operations, a major achievement and a direct result of our reorganization and cost control efforts over the past several quarters, as well as our strategic focus on Spatial Core. As a reminder, Spatial Core, led by our subsidiary company, Brightline Interactive, is an operating system for spatial computing, integrating data and AI into 3D environments, enabling cloud compute and creation of complex simulations while providing insights and valuable information that is presented in 3D form and based on real source of truth data. This has transformative applications in robotics, drones, and digital twins, to name a few. In essence, it supercharges big data. This is not a theoretical at this stage. Spatial Core is delivering in some of the most advanced and challenging environments, with tremendous potential to become an enabling technology in the 3D, big data, AI cloud space. Recent Spatial Core developments include, Brightline is expected to deliver its $4 plus million DoD contract this month, which would represent a fundamental achievement. During the quarter, Brightline successfully delivered to the U.S. Navy, its first full motion immersive simulator system. This milestone marks a significant achievement in adoption of immersive technologies to enhance the capabilities, effectiveness, and safety of the U.S. military service, setting the ground for potential phone on contracts. Last week, we received official confirmation for a new seven figure Spatial Core deal, which we expect will be signed in the coming weeks. The U.S. government's continuing resolution and the lack of a federal budget for 2025 has delayed the potential awarding of multiple government and DoD opportunities. However, we continue to be well positioned for multiple opportunities and expect to confirm a few additional seven figure Spatial Core opportunities in the coming months. While Spatial Core is our strongest growth driver, our other immersive companies are also performing well in their segments. Fortell Reality entered into several contracts for its AI-driven immersive training product. Sector 5 Digital entered into full on agreements with Halliburton, Ecolab, Galderma, Walmart and AT&T. Glimpse Lenses' Snap revenues grew significantly from the prior quarter and is tracking well. Glimpse Learning entered into multiple software license contracts in the healthcare and educational segments. However, despite all this, strong traction in Spatial Core's AI and cloud-driven revenues, a deep pipeline of revenues across our businesses, our position in the immersive industry, tier one customer base, positive cash flow, and solid cash balance and clean balance sheet, there continues to be a sharp disconnect between our intrinsic value and our current public company valuation, both standalone and versus our public and private comps. As such, we may seek to utilize our untapped $2 million common share buyback plan in order to protect our stock if circumstances warrant its utilization. With that, I will now turn it over to Maydan Rothblum, Glimpse's CFO and COO, to review the financial results. Maydan?

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 we filed before the market open today. Please note that I'll refer to non-GAAP measures for the calculation of which, please refer to the MD&A section of our 10-Q filing. Q3 fiscal year ‘25 revenue of approximately $1.4 million, a 25% decrease compared to Q3 fiscal year ‘25, ending March 31, 2024 revenue of approximately $1.9 million. This expected and previously discussed decrease was primarily driven by revenue recognition timing. Q4 fiscal year ‘25 revenues, ending June 30, 2025, is expected to be in the $3.2 million to $3.8 million range and profitable as we deliver and recognize the final stage of the large Department of Defense entities contract for Spatial Core. Revenue for the nine months ended March 31, 2025, was approximately $7 million, essentially flat compared to the same nine months period last year, despite divesting and consolidating multiple subsidiary companies. For fiscal year ‘25, ending June 30, 2025, we expect revenues in the $10 million to $11 million range, a 15% to 25% increase for fiscal year ‘25, again, despite divesting and consolidating multiple subsidiary companies during this fiscal year. Gross margin for Q3 fiscal year ‘25 was approximately 72% compared to 70% for Q3 fiscal year ‘24. We expect our going forward gross margin to be in the 55% to 75% range, an increase from our previous guidance due to a larger portion of revenue coming from Spatial Core and software license sales. Net operating cash provided for operations in Q3 fiscal year ‘25 was a positive cash gain of approximately $0.13 million compared to a net operating cash loss of approximately negative $0.92 million for Q3 fiscal year ‘24. This is our second consecutive positive quarter. Net operating cash loss from operations in the nine months period fiscal year ‘25 was approximately negative $0.13 million compared to approximately negative $4.3 million for the same nine months period last year, despite having similar level of revenue for the period. This turnaround reflects our significant reorganization efforts, cost reduction, and maintenance of high gross margins. Q3 fiscal year ‘25 adjusted EBITDA loss of approximately $1 million compared to an adjusted EBITDA loss of negative $0.9 million for Q3 fiscal year ‘24, primarily driven by lower recognized revenue this quarter. However, we expect the upcoming quarters Q4 fiscal year ‘25 EBITDA to be positive due to higher expected revenue. For the nine months period ending March 31, 2025, adjusted EBITDA loss of approximately $1.2 million compared to an adjusted EBITDA loss of approximately $3.5 million for the same period last year. Which means that for fiscal year ‘25 in total, we will likely have a slightly negative EBITDA compared to an EBITDA loss of negative $4.6 million in fiscal year ‘24, a marked improvement. The company's cash and equivalent position as of March 31, 2025 was approximately $7 million with an additional $0.65 million in accounts receivable. We continue to maintain a clean capital structure with no debt, no convertible debt, and no preferred equity. I'd like to pass it back to Lyron for some closing remarks, after which we will begin our Q&A session.

Thank you, Maydan. This was an impactful quarter. While Spatial Core has made impressive progress, I believe that it is only at the precipice of what it can become. But like all good things, this requires patience. As a company with a solid balance sheet, profitable operations, and several growth vectors, we are well positioned to capitalize on the immersive opportunities in front of us. I thank you all for the interest and support of The Glimpse Group, and now I'll turn the call back over to the operator to take some questions.

[Operator Instructions] : :

I am not showing any questions from the phone lines at this moment. We'll turn into some write-in questions, if available. Lyron?

There does not seem to be any questions out there, so I thank everyone for joining our conference call. We will continue 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.

Thank you, everyone. This does conclude today's webinar. Thank you for your participation. And have a wonderful day.