Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
> But the commentary "five fold compared to last year" is interesting. If there were no follow-up growth in the next 5 months (which they already know with benefit of foresight) why highlight it like that?
My guess? Because there is no other way to comment on a non-recurring military revenue stream. But comparing it to a prior year's number when the segment is super lumpy makes for a great piece of PR!
What's it for and how confident are you that they will continue to earn revenue from whatever this was going forward? The last thing the company said about the military was their prior contract with the military was over.
My Q1 expectations
Throwing this out there. As always, it's a lumpy business and the company doesn't give guidance so large error bars can be expected.
Revenue: $7.5 - 8.5m (Int'l: ~$2m, Installs: $0.20m, Commercial: $0.35m+)
Gross Profit: $3.9 - 4.8m
Gross Margin: 53% - 57%
R&D: $ 0.4m
Operating Expenses: $3.0m
net income: $0.9 - 1.8m
GAAP EPS: $0.08 - 0.16
bookings: $7m
backlogs: $ 21.5 - 22.5m
Cash: $20.5m
STEP revenue: $0.7m
https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/01/fact-sheet-president-bidens-safer-america-plan-2/
Below is the VirTra relevant part. Congress is squabbling over much smaller numbers already, so I'm not ready to believe that any of these dollar values will come to fruition:
I have 7.5 and 6.5m.
Have done a bit of modifying my estimates, but am on vacation and need to spend more time figuring out what came in and when.
There hasn’t been enough big wins and this military thing coming through at 700k and low/no margin should prevent any over the top revenue numbers. Maybe they’ll surprisingly work through more of their backlog one time, but they haven’t really shown that capability from what I have seen.
I asked this question to CEO Ferris. It sounded like nothing he had already done but instead his track record for success and the connections, work ethic, etc that he can bring to the company.
Duplicate
My thoughts for the next few weeks of earnings:
i had Q4 revs on the upper end of $5-7m. I’ll put Q1'22 at $8m and Q2 @ $6m revenues. There's also $3m of IVAS money from STP4 that probably flows through in one of these three quarters, but who knows with the delays that have occurred in that program.
Re: bookings— They already announced the $8.2m q4 bookings. I expect a good Q1 number as well fueled by their announced $2.7m international orders; I'm hoping somewhere around $7m. Q2 I have no idea as there's been scant news in the quarter; I'm hoping we stay above the $4m non-government/military threshold, but I woulnd't be shocked if it were lower. (IMO there's a small chance the $2.7m international orders announced on Jan 10 were actually received and booked in Q4 which would significantly lower the Q1 number)
for STEP, Q4 numbers i imagine will be somewhere around $600k. I wouldn't be shocked to see > $750k by Q2, but i'd think STEP is more likely to scale linearly @ 5-10 incremental customers per quarter rather than exponentially. Let's see if Bob makes any mention of % of customers ordering STEP vs upfront payments.
I think there's some one off OPEX or CAPEX in Q4 due to company bonuses and the new building . I'm going to estimate $3m/q as a baseline OPEX going forward (up from $2.6, $2.3, and $2.0 the previous three quarters) due to auditor changes, any staffing / hirings / overtime needed due to late filings, and SVT / IVAS demos were likely happening in Q1/Q2, so higher travel costs may add up.
Not going to guess on margins. I imagine we're much closer to 60% than the 50% from Q3, but I don't have a good feel for why this metric
Will be interesting to watch inventory and Machinery/Equipment line items. With IVAS delayed in October '21, I was hoping we see this level off, but the $2m decrease in cash balance at end of year means they're spending somewhere, so hopes it’s for growth rather than building expenses.
thanks for sharing
related to this, I've been eyeing "S.3860 - Invest to Protect Act of 2022" since earlier this year. $50m/yr from 2023-2027 for small agencies in a number of categories including de-escalation training, body cameras, and a few others.
https://www.congress.gov/bill/117th-congress/senate-bill/3860/text passed the Senate Judiciary and the commentary in the hearing seemed pretty positive; along the lines of "we know this isn't perfect or everything that needs to be done to solve policing, but we can all agree that it is moving us in the right direction so let's do this." Doubt the rest of the government can be this reasonable, though.
I think Invest to Protect Act has 80+ sponsors on the House version as well https://www.congress.gov/bill/117th-congress/house-bill/6448.
Who knows when either of these things will get called for a vote and/or pass.
If Military doesn't work out, we at least have these to fall back and hope for
related to this, I've been eyeing "S.3860 - Invest to Protect Act of 2022" since earlier this year. $50m/yr from 2023-2027 for small agencies in a number of categories including de-escalation training, body cameras, and a few others.
https://www.congress.gov/bill/117th-congress/senate-bill/3860/text passed the Senate Judiciary and the commentary in the hearing seemed pretty positive; along the lines of "we know this isn't perfect or everything that needs to be done to solve policing, but we can all agree that it is moving us in the right direction so let's do this." Doubt the rest of the government can be this reasonable, though.
I think Invest to Protect Act has 80+ sponsors on the House version as well https://www.congress.gov/bill/117th-congress/house-bill/6448.
Who knows when these things will get called for a vote and/or pass.
Looks like last year it closed July 22 and awards announced Oct 21, so maybe we get the announcement of recipients in late September this year.
FY21, < $9m of the up to $14.5m got distributed with a cap of $200k/award.
FY22, there is $11.1m up for grabs with a cap of $250k/award.
I should have clarified in my other post that not every awardee who purchased a simulator used their entire grant on the simulator. Therefore it's not as easy to say 25% of funding received did or will go to VirTra; it will probably be a bit less.
I'm still doing work on it, but of all of the agencies who received a grant from the 2021 COPS CDP de-escalation program, I estimate that VirTra received an order from ~25% of them. Of the 57 awards, 23 specifically called out that they would buy VR/simulation equipment, 20 I couldn't find any information on or their plan is unclear, and the remaining 14 i don't think will buy VR/simulator equipment. From the 11 I could find specific company details on, 6 ordered from VirTra, 5 ordered from competitors.
2025 is a long way away and there will probably be new tech beyond screened simulators available by then, but something to keep in mind if this money gets pulled forward a bit or funding becomes available through other means.
VA historically does not use VirTra all that much. Think they favor cheaper MILO versions
FAAC/Milo (30 orders since July 2017) -- https://www.fpds.gov/ezsearch/fpdsportal?q=faac+DEPARTMENT_FULL_NAME%3A%22VETERANS+AFFAIRS%2C+DEPARTMENT+OF%22&s=FPDS.GOV&templateName=1.5.2&indexName=awardfull&x=0&y=0&sortBy=SIGNED_DATE&desc=Y
VirTra (6 since July 2017) -- https://www.fpds.gov/ezsearch/search.do?q=virtra&s=FPDS.GOV&templateName=1.5.2&indexName=awardfull&sortBy=SIGNED_DATE&desc=Y
Re: Use of Force standards ---
two websites that I'm aware of that show awards are defense.gov & sam.gov. There might be others that i'm not aware of.
Is this directed at me? Reread what you said in your prior comment and my response to that.
I hope you're the only one who would vote for a $8 buyout today.
Thankfully, the company has very little incentive to boost short term share price. They are incentivized to make the company money and are rewarded in the long term as the stock price appreciates.
If there's no IVAS, then the question arises "why has the company been putting all their eggs in the US Army basket?" They started this conversation at least in 2018, if not sooner. SVT won't be in LRIP until, as of now, 2024. So that'd be 6 years until they've grown into a serious military revenue stream, assuming that works out.
So at this point, if you don't believe in IVAS, why are you invested?
A) You believe in growth in police training -- something something "insanity is expecting different results..."
B) IVAS-spinoff programs --- surely these are another 1+ years out to redefine and test and way smaller opportunity than IVAS
Neither of these are all that appealing IMO.
re: IVAS, all i'm saying is let's see. If it was so obvious that it won't work, they wouldn't be doing the testing and they wouldn't be spending the money to have different versions and continue to include it in PC and EDGE testing. If you have info from soldiers or industry, would love to hear that, otherwise this all sounds like an opinion. The fact is that lots of money is pouring into XR and likely in 2023 there will be viable consumer product; at 30x the cost of consumer device, the Army could in theory build something more functional. All this said, the Army is investing enough in STE and other training (LTS, SVT, RCVT) that even if IVAS doesn't get worn by 100% of soldiers in active battle, it can still be used for a subset of a squad or for training purposes with a different feature set. No, VirTra won't sell $20m/yr in recoil kits in that situation, but it could still end in a very favorable outcome if/when rolled out to the 1 million Army soldiers.
> getting VirTra's potential outside simulators
While they haven't made a ton of visible progress, I think they have or at least are trying to position themselves as the premier police/military VR training company. When one thinks of the SVT program and the US police training fervor, these seem like a better opportunity to focus on (both nearer term and larger opportunity) than focusing on kits+vests. Do you know how frequently those deals are put up for bid? I've seen both Saab and Bagira win a deal each in the past 6 months, but that's it. Assume they win 25% of opportunities, maybe we're talking 1/yr?
Would be an interesting topic to talk to with someone in the industry
isn't it too early to say IVAS is a blooper?
It's going through testing right now. MSFT doesn't need Alex Kipman, who doesn't even run the IVAS division, to stick around in order to build a functional product. And, as the article stated, re-orgs happen at big companies all the time.
Your last two paragraphs are spot on! I do wonder timing on roundless live training integrations, though. How frequent are program refreshes and how common will switching to recoil kits from blanks or simulated weapons be?
Very kind of you! I listened to the presentation hoping to learn more about how training is implemented and what companies the presenters used/liked. The only training they talked about was live training plus some classroom stuff. The former FBI guy mentioned VR headsets being the most scalable way to train nationally and nobody in the first 3 hours mention screened simulators at all.
From what I understand (and i'm sure this is obvious to anyone in LE), there are a few different types of training:
classroom: meant to learn the ideas
simulators: meant to get reps and reinforce the ideas learned in the classroom
live training: train your body to react/respond
In the case of active shooters, these guys on the call only brought up live training probably because it's the only thing that makes sense for situations like this. One can't train in a simulator for someone shooting bullets at you.
That said, these guys mentioned that, for the most part, the country isn't even at the point of trying to solve "what is the best way to train officers (live, simulator, etc)," but "how do we get people to go to training at all." Some of the presenters were instructors and mentioned that most people who go to their trainings are either the people who are overly qualified and likely not the ones who will be on the scene for ATAK situations (SWAT) or they're fresh hires; and then they spend the rest of their 10+ year career never going to training again because there are other agents in the department 5+ years later who have yet to go and are thus prioritized.
Tying this back to VirTra.... The company's business problem isn't salemenship, it's apathy in the industry towards training. If an agency has $50k annual budget to spend on training, does the chief buy a simulator and skip the live training? It seems that federal funding is the real trigger for growth. Is it a great business strategy to wait for government to change the industry? No. And the company is/has pivoted to focusing on long term military opportunities.
Uvalde Active Shooter: Preliminary Debrief and Discussion | Instructors' Roundtable --
A handful of Q2 V300 deliveries:
Ogden, UT - https://www.ksl.com/article/50414961/ogden-police-training-to-respond-to-incidents-involving-people-with-autism
San Mateo, CA - https://www.rwcpulse.com/local-news/crime/san-mateo-county-sheriffs-office-to-use-new-immersive-training-simulator-5427514
Lake County, IN - https://www.nwitimes.com/news/local/lake/crown-point/watch-now-lake-countys-new-virtual-training-puts-police-in-intense-realistic-scenarios/article_514ac069-88ad-527e-9cd0-7a2ddc8424de.html
Montreal, Canada - https://thecanadian.news/a-state-of-the-art-simulator-to-better-prepare-police-officers-for-risky-situations/
(V180) La Vega, TX - https://www.facebook.com/lavegaisdpolicedept/posts/pfbid02C1j1RMY3FaQNi2rTseuSyg2EoDiKFfn3WJcTwAnAtkqMbM3UzmDU7PktTw6oPZFRl
(V100) Close Quarters Tactical - https://www.facebook.com/watch/?v=707001267085667
I saw the same thing, but no idea what constitutes as "significant." Even a mediocre 5c quarter would put them at 50% EPS growth for the year, so i find it hard to read too much into this. And then for the 10q, they did 4.4m revenue and 8c eps; does $6.5m and 10c EPS count as "significant"?
I also spot checked 20 or so late notice filings and they all checked NO to this question, like you mentioned; this seems to be uncommon
https://www.sec.gov/edgar/search/#/q=%2522anticipated%2520that%2520any%2520significant%2520change%2520in%2522
Executive order: https://www.whitehouse.gov/briefing-room/statements-releases/2022/05/25/fact-sheet-president-biden-to-sign-historic-executive-order-to-advance-effective-accountable-policing-and-strengthen-public-safety/
Requires new standards that limit the use of force and require de-escalation for all federal agencies. The EO orders all Federal LEAs to adopt use of force policies with requirements that meet or exceed those in the Department of Justice’s updated use-of-force policy, which authorizes force only when no reasonably effective, safe, and feasible alternative appears to exist; authorizes deadly force only when necessary; and emphasizes de-escalation. The policy also imposes a duty to intervene to stop excessive force and a duty to render medical aid. Federal LEAs must conduct annual training on those policies, implement risk management tools to facilitate appropriate interventions before problematic behavior escalates, and ensure accountability for policy violations. The policy is publicly available on DOJ’s website.
Requires new standards for accreditation and for accrediting bodies. The EO requires the Attorney General, after consultation with stakeholders, to formulate standards for bodies that accredit law enforcement agencies. Those standards must include that the accrediting body requires policies consistent with those of the EO, and that the accrediting body conducts independent assessments of agency compliance rather than rely on the agency’s self-certification. The Attorney General must also incentivize and support agencies in seeking and obtaining accreditation, including through grantmaking.
Implements a new, evidence-informed annual anti-bias training requirement. The EO requires development of an evidence-informed training module for law enforcement on implicit bias and avoiding improper profiling based on the actual or perceived race, ethnicity, national origin, limited English proficiency, religion, sex (including sexual orientation and gender identity), or disability of individuals. Federal LEAs must conduct that training annually, implement procedures to respond meaningfully to complaints of bias, and reassess a 2014 guidance on use of certain protected characteristics by law enforcement.
Where did you see this??
> updated DOJ Use-of-Force policy will track the language in the National Consensus Policy on Use of Force paper
we're also 241 days since the last federal purchase of a simulator. Maybe the long CR has something to do with it, but this hasn't since 2015.
April 25th install & "There is only one such device in Canada and it has been in Montreal since April 25." and "In renting the device for its police officers, the objective of the Montreal police ..."
here's the list of nationally provided trainings https://iadlest-ncp.org/course-list/ or interactive list here (be sure to filter by nationally certified) https://www.firstforward.com/Marketplace/SearchGetAll
last year, i thought it would be $20m/yr to start. I think now, based on army budget docs and the number of kits being ordered, somewhere around $10m in 2023 and scaling with IVAS from there.
I think it's only partially about the immediate money, though. It's more about becoming a part of the Program of Record where you then have, essentially, recurring revenue throughout the program duration. With that, there should be higher multiples and maybe one day we'll even get guidance from the company!
The products don't sell themselves because agencies do not have unlimited funding and have a lot of competing priorities. A salesperson can't just waltz into LAPD or any other PD and say "Look at our simulator, sign here and we'll deliver it ASAP." It could take years before budget is allocated to training, let alone for the highest priced option in the market.
The strategy is to position themselves as the preferred vendor for federal agencies (which they have), generate a bunch of nationally certified content, and while selling agency-by-agency, wait for the federal government to ask the DoJ, who uses VirTra throughout their child-agencies, to create a certified training program and/or list providers who are certified. The DoJ will be forced to use these programs/providers because the federal government can tell them what to do while the federal gov can only suggest/persuade through funding to get state/local agencies to get training from these preferred programs/providers. When $120M/yr+ is about to be injected into the industry (I think current grants for training amount to $30-$50m), there's no need for door-to-door sales beforehand.
And from my previous post, we can see that the government continues to make forward progress on getting these grant programs initiated making the strategy above a perfectly reasonable one.
To add to my "they can succeed without a roadshow" stance, here are some useful resources to help understand the industry landscape (LE, not military)
https://anchor.fm/melissa-nee3/
https://www.judiciary.senate.gov/meetings/05/19/2022/executive-business-meeting-1
https://vimeo.com/647876890/8f22ed543c
The below quote is from the Vimeo link which was recording in November of last year.
“A lot of the focus and anticipated focus in the next month or two is going to be on federal agencies with the executive order that is being developed by the Whitehouse. Obviously the Federal governemnt can only control themselves and not local/state agencies in terms of policy. So we expect the exectuive order to define federal policies and then encourage state and locals to follow suit.
Yes, there are existing programs which can be used for training. In regards for new training for innovative policing tactics.. those are part of ongoing policing reform discussions both as the package of policing reform as well as stand-alone pieces of legislation to include de-escalation training. So anticipate that not only will you be able to use existing programs for training but you will also probably see, likely in the next year or two, probably some new dedicated programs to include de-escalation."
-----
Can investors be disappointed in how the company is selling today? Sure. Does it sound like any of the people trying to influence or wanting the company to change their strategy are, even in the slightest, aware of what is likely coming down the line and how VirTra is positioning themselves today as opposed to 5 years ago? No.
Very coherent, fish!
My perspective is that what you want isn’t necessary for the stock to succeed. I’m quite confident in the involvement with the military being more than enough to make shareholders happy.
Additionally, I’m skeptical that your proposed sales strategy could help grow the company beyond something probably near $30 revenue (prior to the George Floyd movement).
IR Contact info -- 949-574-3860
Matt Glover and Jeff Grampp, CFA
Gateway Group, Inc.
VTSI@gatewayir.com
949-574-3860
Glad to hear another confirmation of the slow government sales cycle
If nothing comes from federal gov, then fine, the strategy didn't work out. But if instead the government (biden or the DoJ) does end up requiring certified providers and VirTra is the only simulator company with certified content who has made partnerships with a lot of other national training agencies, I don't think not having door to door salesmen will be a big deal
All this said, I'm open to others having differing informed opinions. Instead, we get commentary like "In my opinion, VirTra requires an experienced and effective sales force in order to achieve," "Money spent on two separate CEOs could have perhaps been better spent..." and similar commentary doesn't seem like a valid reason to force change. Someone else talk to management about it, report back, and let's discuss!
I wonder if Adam has talked to anybody about the federal training proposals that are being pushed for? or is he still pushing for that the door to door sales method?
Richardson’s OptiTrack is used within VirTra’s simulators and seems to be an industry leader in motion tracking for AR/VR.
Anybody ever dig around to understand Board of Director appointments? Why was each person appointed or what value did they bring to the company historically or going forward?
There's something to be said about investing in companies when you as an investor know more than the general market. It's going to take 6-18 months for the story to fully play out anyway because government and military move slow, so I mostly don't care about anything you complained about as long as the business is executing.