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Good question. Care to expand on what difference it makes? Especially from tether perspective of 12 months from now
I don’t believe they are part of the MSFT contract as IVAS is simply a pair of XR capable goggles. All of the software that VirTra would integrate is built separately. You can find details of prototypes in a lot of TReX contracts issued in the past 24 months.
The similarity in timing IMO is that IVAS was a proof of concept and it may have, behind the scenes, been hit or miss whether this would actually go through as the long term solution. It seems that it now will. That said, all of the simulation software could have easily integrated into any other platform and actually will fit into a lot of other hardware like laptops or simulators. The whole idea of everything the Army is building right now, if you read docs (search TSIS as an example) is that everything be modular and not be a “black box.” Even some of the weapon prototypes were built specifically with off the shelf VR headsets.
My hunch is that VirTra is a sub of the 2018 ATMP contract (issued in March 2018) and with IVAS becoming a thing, the Army now needs simulation weapons that are better suited to be used at “point of need” as well as more accurate than their competition (read their patents and the technology they use vs competition). Bob has literally confirmed that military orders have already hit the backlog
I don’t believe they are part of the MSFT contract as IVAS is simply a pair of XR capable goggles. All of the software that VirTra would integrate is built separately. You can find details of prototypes in a lot of TReX contracts issued in the past 24 months.
The similarity in timing IMO is that IVAS was a proof of concept and it may have, behind the scenes, been hit or miss whether this would actually go through as the long term solution. It seems that it now will. That said, all of the simulation software could have easily integrated into any other platform and actually will fit into a lot of other hardware like laptops or simulators. The whole idea of everything the Army is building right now, if you read docs (search TSIS as an example) is that everything be modular and not be a “black box.” Even some of the weapon prototypes were built specifically with off the shelf VR headsets.
My hunch is that VirTra is a sub of the 2018 ATMP contract (issued in March 2018) and with IVAS becoming a thing, the Army now needs simulation weapons that are better suited to be used at “point of need” as well as more accurate than their competition (read their patents and the technology they use vs competition). Bob has literally confirmed that military orders have already hit the backlog
[Quote] I can confirm that we've made very real progress in the military market. In fact, the fruits of that labor have started to show up in our backlog in a material way. As long as the need for quality training exists, and as long as we're able to execute on our strategy, we believe that our success could well continue. It might even accelerate.
> .It is unclear how VirTra counts a STEP “order” in their backlog. My guess is “they don’t
Send an email to IR and figure it out. Or give them a call.
> Another metric VirTra should publish each quarter is the number of systems that shipped and their estimate of previously completed and active installations
Great idea! Include this in your email as well!
A couple reasons why i'm hopeful for next Q.
1) $1.5M FLETC order should be delivered in Q2 (https://www.usaspending.gov/award/CONT_AWD_70LGLY20FSSB00114_7015_GS02F0214P_4730) which means it should then be recognized as revenue
2) ADMIRE contract for $1.9M was for simulation scenario creation (https://govtribe.com/award/federal-contract-award/delivery-order-fa865020d6207-fa865020f6210). They haven't recognized $1.9M in content creation revenue yet since then yet and should continue to flow in. Would guess ~$0.5M.
3) STP #4 was ran in April/May. for the last two STP's, VTSI saw high bookings the prior quarter to go along with a solid revenue number and a drop/stable backlog the following quarter. This is speculation, but if you believe they are supplying for these STP's (and STP4 was supposed to be at battalion level which is 3x bigger than company level STP3), then we're likely going to see a good amount of backlog drop to revenue. Say another $1-2M.
4) employees are going back into offices in the US. That means deliveries should pick back up. Q2 2019 - Q4 2019, "install + Training" revenue were ~$300k. In Q2 2020 - Q1 2021, it averaged ~$150k. So roughly maybe they were installing half as many simulators as they were in the past which would lead to a growth in backlog. I don't know a good "X installation == Y revenue" conversion, but if we get back to installing like we were historically, we're likely going to see higher revenue.
5) Some other folks have linked to a handful of LE wins in Q2. I haven't done much dd on that to know how much it's worth, but it will at least add to bookings/backlog.
From the above, I see a base ~$2M in "lumpy" revenues. If you think q1 was the worst they could do in terms of delivery, then you're likely looking at ~$6M revenue as a good baseline.
In general though, your "If he lays another egg then its over" comment seems very shortsighted and unwarranted IMO.
Q1 saw $0 in STEP Sales
More evidence that VTSI had poor simulator sales in Q1 (but still somehow managed to significantly increase bookings).
from their 10q, they saw *0 change* in STEP equipment change q over q. Bob also mentioned in the call that "every single STEP customer has renewed their agreement." These two facts imply that not a single simulators was sold via their STEP program in Q1.
*NOTE: I'm mostly positive about this, since their 10Q shows 0 change in "STEP Equipment" quarter over quarter. But i haven't asked IR about what/how exactly this value means. But either way, 0 growth isn't great.
Q1 was nearly the largest Q in the history of the company.
BOOKINGS: the total of newly signed contracts and purchase orders received in a time period
BACKLOG: the accumulation of bookings from signed contracts and purchase orders that are not started or are uncompleted and cannot be recognized as revenue until delivered in a future period.
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Bob didn't mention a single simulator sale the entire conference call and even said
In late 2018 there was Army research that utilized the threatfire belt + VirTra simulator. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6277930/. After reading through it, i'm not smart enough to understand what the takeaway is.
That said, in theory, yes, ThreatFire seems on the surface to be useful and could be sold along with drop in recoil kits. Bob even made sure to point out in 2020 calls that ThreatFire was sold along with recoil kits. But it's been a few calls since he's mentioned them again so I'm less hopeful.
I haven't been around long enough to fully understand him. But this opportunity has been public since late 2018. Army was conducting research with VirTra V-300 simulators in mid-2018 (see https://www.arl.army.mil/cast/attributions?q=CASEL for research#1, https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6277930/ for research#2) and likely earlier. VirTra was clearly involved at that point.
Maybe his goal isn't to take over the police world. Maybe he's instead steering the company to win this contract instead. Assuming IVAS works well with the Army, there's no reason something similar wouldn't be adapted for other branches. US Army is like 1M soldiers alone. Who cares about police market if you can do this.
Additionally, 300 degree simulators aren't going to be around in 10 years. AR/VR will. Doesn't mean he can't still sell them while the market is hot, but police budgets aren't known to have hundreds of thousands sitting around and there's nothing he can do about that. If government makes training mandatory or gives stipends/tax credits or whatever and VirTra then doesn't add staff? Then i'll be disappointed.
you are correct and the opportunity is large enough that it doesn't really matter if it's 1:1 or 1:3. at any ratio, the share price jumps significantly from here.
Re: TaaS, I'm skeptical because it's going to the Army through a subcontractor. If they were selling to a mature product directly then maybe. But again, it doesn't matter re: share price and we can't really do any dd on it to find out.
and you're right re: the military opportunity. We don't know. But what we do know is that in mid-2018, V300 simulators were used by Army researchers. We also know that on q3 2018 call, Bob said
$300M would be if they charged the Army full price that comes with simulation setups. I'm guessing Army or subcontractor was able to negotiate price down a bit. But again, this is just the initial order through 2023. And MSFT has a 5 year contract with optionality for 5 addiitonal years. So there's going to be more..
I haven't been able to figure GM for each product, but say it comes to $100M through 2023. That's 50M per year. Company wide GM is 60%. Maybe hardware/recoil kits is only 30%? that's $15M profit per year on a recurring contract which is only a subcomponent of the larger business that did $11M profit last year.
So double the profit, adds more stability to revenues, and opens door for future work. I'll let you do the share price math
Subcontracting for the US Army IVAS contracts?
Bob has mentioned military work being a very large opportunity and that:
1) they are very well positioned with best in class product to win that work
2) they have patents that "ensure VirTra is the only company in the U.S. that can produce or sell our specially designed kit that affordably converts a live fire arm into a safe reliable training tool that can even simulate standard weapon functions"
3) they started thinking about this work just before the Microsoft contract was announced in 2018
4) the first conference call after MSFT announced their 22B contract, that the opportunity continues to grow "As long as the need for quality training exists, and as long as we're able to execute on our strategy, we believe that our success could well continue. It might even accelerate."
Everything Bob has ever mentioned since 2019 aligns with the fact that VirTra were involved early on in the research phase of the military's AR/VR exploration and everything they are doing is in hopes of winning that work.
From Q3 2018 cc
I'm not going to comment on LE revenues because I don't know how to project that. Contract wins don't seem to have anything outsized from what i see, but i also don't know if this is all of their wins
https://www.usaspending.gov/keyword_search/Virtra
As far as military contracts, I need to reread that last few transcripts still, but I believe, if we recognize revenue only upon delivery of goods, it's unlikely that we see outsized/significant revenue in Q2 from the military. For context, government fiscal year ends Sept 30 and budgets are usually spent down in their Q4, Virtra's Q3. So I would imagine Q4 will be when we see significant revenue.
That said, I think we should notice cost increases in Q3 as a precursor to recognizing revenue in Q4. Similarly in Q2 to a lesser extent i believe. So I guess that's what i'll be on the lookout for.
If VirTra is going to win military contracts for at least recoil kits and the opportunity is as big as Bob claims it to be, then I don't really care about Q2 revenues. 2022 revenues will make up for any "miss" in 2Q21.
IVAS, not Hololens
Has anybody done research into what weaponry holo lens users are using? In a simulated environment like holo lens, full functioning service weapons without ammo that interact with computers are exactly what is needed. And VirTra has been saying this exact thing since 2019. The military needs exactly what our recoil kits do and when we do not meet these needs, we are willing to buy the technology to make our product the best in class.
I don't know enough about the tech behind their simulator to understand how it tracks gunfire, but assuming they do it accurately (and they frequentlycall out how important it is for gunfire accuracy in training scenarios), then seems like it could be able to interact with holo lens which is just a smaller more mobile computer
I mean, I guess it could be anything except Simulators. In the StoryTrading groups, I really only hear about VTSI's police training opportunities. Everything is "_PD signed a simulator deal!", "so did that one!", "police training might be required which is a huge tailwind!", etc etc. And folks are thinking the police training tailwind alone is making this company a screaming buy. I haven't heard _anyone_ talk about the military wildcard.
But reading through the last few transcripts, it seems the military opportunity is potentially equally as big if not larger.
upcoming Military contract:
Rereading older posts, i realize my previous message re: recoil kits is already a running theory here. glad I'm not the only one who came to this conclusion besides Tim O'Connell.
Anyway, rereading previous messages saying Bob is holding back on contracts, I don't think anything needs to be disclosed until at least material revenue is recognized. If they only begun hiring between Feb and today, they likely have not completed anything of significance. That means assuming workers can come in and immediately produce recoil kits, it might even be pushed back to q3 report.
Lastly, Bob has previously said "Because we can only recognize revenues when product is physically delivered to a customer, the timing of product deliveries which again is at the discretion of the customer has a major impact on revenue recognition." If no contract is announced soon, i'll have to pay attention to the hiring trend and inventory amount, to try and see if products are being created at a higher rate.
What is second shift working on? From my understanding, VirTra produces a few products. #1 is Simulators. #2 is recoil kits. #3 is tasers.
For Simulators, Bob has mentioned that some of the delay and fulfilling this work is getting into buildings to install this work and that the company hasn't had a difficult time sourcing materials. This shows that the man power work required is likely minimal in house installation and then the actual in-police-office installation.
For Recoil Kits & Tasers, I believe the work to manufacture is all done in house. This means that second shift is likely for these products.
Taking a step back, why would VirTra need to take on a second shift in order to create recoil kits when their largest simulator can only take at most 15 concurrent recoil kits? If they had signficantly more simulator sales, wouldn't VirTra also need to hire installation workers? But they really only called out in house production. So it seems like they are ramping recoil kit production only.
Why is this an important distinction? CEO has mentioned many time that the military work they are hoping to win is tightly coupled to recoil kits. Let me give a couple quotes: