SNT earnings call analysis

NASDAQ:SNT Q4 2025 Earnings Call Transcript Generated on 6/6/2026 Operator | Conference Operator: Ladies and gentlemen, thank you for standing by. Welcome to the CINSTAR Technologies fourth quarter and full year 2025 results conference call. All participants are present in a listen-only mode. Following management's formal presentation, instructions will be given for the question and answer session. As a reminder, this conference is being recorded. I would now like to hand the call over to Corbin Woodhull of Hayden IR. Corbin, would you like to begin? Corbin Woodhull | Investor Relations, Hayden IR: Thank you, LaTonya. I would like to welcome everyone to the conference call and thank Senstar Technologies Management for hosting today's call. With us on the call today are Mr. Fabian Hobert, CEO of Senstar Technologies, and Ms. Alicia Kelly, the CFO. Fabian will summarize key financial and business highlights, followed by Alicia, who will review Senstar's financial results for the fourth quarter and full year of 2025. We will then open the call for a question and answer session. I would like to remind participants that all financial figures discussed today are in U.S. dollars and all comparisons are on a year-over-year basis unless otherwise indicated. Before we start, I'd like to point out this conference call may contain projections or other forward-looking statements regarding future events or the company's future performance. These statements are only predictions and Senstar cannot guarantee that they will in fact occur. Senstar does not assume any obligation to update that information. Actual events or results may differ materially from those projected, including as a result of changing market trends, reduced demand, the competitive nature of the security systems industry, as well as other risks identified in the documents filed by the company with the Securities and Exchange Commission. In addition, during the course of the conference call, we will describe certain non-GAAP financial measures, which should be considered in addition to and not in lieu of comparable GAAP financial measures. Please note that in our press release, we have reconciled our non-GAAP financial measures to the most directly comparable GAAP measures in accordance with Reg G requirements. You can also refer to the company's website at www.senstar.com for the most directly comparable financial measures and related reconciliations. And with that, I would now hand the call over to Fabian. Fabian, please go ahead. Fabian Hobert | CEO, Senstar Technologies: Thank you, Gordano. And thank you to those joining us today to review Sandstar Technology fourth quarter and full year 2025 financial results. We continue to deliver solid full year performance with growth and revenue, margin expansion, and continued profitability. In 2025, revenue was $36.4 million, gross margin expanded to 65.5%, and we delivered net income of $3.2 million while maintaining a strong balance sheet with $22.5 million in cash and no debt. Those results reflect steady demand across our business and the trends of our operating model. Importantly, revenue from our core verticals grew 5% for the year, supported primarily by continued strength in correction and energy, particularly in North America and EMEA. The performance reinforces the resilience of our business and the relevance of our solutions across critical infrastructure markets. Now, onto a review of quarterly and annual highlights. Moving to the fourth quarter, we encountered more challenging conditions than anticipated. Revenue declined 14% year-over-year to 8.8 million, which also impacted margins in the quarter. The fourth quarter was impacted by several non-recurring and timing-related factors, not a change in the underlying demand. Those factors include delays of government projects, mainly in the U.S. correction verticals following the U.S. federal government shutdown, and a non-recurring European telecom utility project, which will convert to further revenue regeneration in 2026. Most of these projects have shifted into 2026 and further period. This gives us confidence in the strength of our pipeline, which continues to grow, and the overall demand environment, as reflected in our full-year results, where our core verticals grew by 5% despite the fourth quarter timing impacts. Looking more closely at our verticals, we continue to see meaningful opportunities across data centers, energy, utilities, correction, airports, and solar farms. These key verticals are increasingly focused on security and operational intelligence, which aligns well with our technology and capability. Our strategy remains focused on repeatable deployment and scalable account expansion, where we can leverage our install base and deepen relationship with key customers over time to cross-sell our advanced technology solutions dedicated to demanding verticals. On the technology front, 2025 marked a breakout year for LiDAR adoption and customer engagement across multiple verticals, with LiDAR increasingly deployed alongside our traditional solutions with no canalization effects. This is translated into strong LiDAR sales growth, mainly in the fourth quarter. This is an important distinction as LiDAR is expanding our target market, creating new use cases across virtually all our verticals, and enabling SAMSTAR to address a broader range of customer applications. We saw strong growth in LIDAR-related sales and activity with continued momentum and solid pipeline creation. Customer acceptance of LIDAR for both security and operational applications has accelerated dramatically, driving robust pipeline expansion within the strategic initiative. Competing and enhanced at what unraveled peaks and software range. Our 3D LiDAR technology in security application does not compete directly with our current fence detection solution, but with alternative technologies such as thermal cameras, video and analytics, radar, 2D LiDAR, and others. It also addresses further surveillance needs for several other critical points within our vertical market, expanding considerably our addressable market and customer use cases. Our acquisition of Blackfield, completed in the beginning of 2026, represents a transformative step to enhance our competitive position and capture share of this rapid growth market. Our expectation for accelerated growth globally without requiring significant investment is supported by maximizing our global unrivaled sales and technical footprint across its current vertical markets to distillate this groundbreaking technology. On top of that, Blackfield offers high growth perspectives in volume monitoring and traffic application where Blackfield has already developed a footprint. Turning to our geographic performance, U.S. and LATAM remain our strongest market for the full year of 2025 with solid contribution from corrections and energy. Throughout 2025, we secured important new wins across healthcare, utilities, oil and gas, and energy while data centers airports, and increasingly LIDAR continue to generate meaningful pipeline creation. Revenue from the U.S. and LATAM region increased 5% for the year, but declined by 20% in the fourth quarter due to government funding delays following the government shutdown. Encouragingly, most of those projects are still alive, and we have seen some positive activity in support of our review that this was largely a timing issue. Canada was a stand-up performer, returning to growth with over 110% revenue increase in the fourth quarter and 22% for the full year, driven by strong wins in correction and utilities. Our methodical investment in the EMEA region over the last several years are positioning Sansar to capture new opportunities with Q-CAMP and targeted verticals. The region delivered low single-digit revenue growth for the year, reflecting underlying resilience and continued customer demands, though the fourth quarter was impacted by a difficult comparison related to a large-scale non-recurring utility telecom project in the prior year, which is expected to deliver revenue in 2026. We secured major wins in solar farms, energy, data centers, correction, and airports, and together, with from-by creation, we have renewed conviction behind the region's growth prospect in the coming quarters. We're encouraged by the steady demands we see in the region. Supporting a robust pipeline and favorable growth outlook, the EMEA region is experiencing a significant increase in requests for LIDAR applications as well. In Asia-Pacific, performance improved in the fourth quarter with 21% growth. On an annual basis, Asia-Pacific declined 9%, reflecting the impact of a material non-recurring project in Q2 2024. We're optimistic by recent wins and continued pipeline development across the key verticals, including solid wins in data centers and corrections serving as a great source of momentum for quarters and years to come. Across all regions, our business development strategy is gaining traction. We're expanding our presence with Q Council increasing cross-selling opportunities, and building a more diversified and resilient revenue base. Together with Blickfeld, we also secured several promising projects across military and government airport corrections and data centers. Looking ahead to 2026, we're enthusiastic about the opportunities in front of us. We're seeing continued activity across data centers, utilities, energy, and LIDAR, supported by growing pipelines. Our business development strategy is centered on high growth verticals, an appetite for complexity, opportunities for scalability worldwide, and leveraging our pre-existing footprint. Sensar is making inroads with new key accounts and deepening existing customer relationship. Our pipeline is growing, further supporting improved market penetration and enhanced revenue diversification. The addition of Blickfield to our current portfolio will further assist us in expanding our range of solutions and address more security and non-security applications to our current targeted vertical markets. We are also substantially broadening our current addressable markets and strengthening our ability to successfully approach verticals who were not historically present. Importantly, Senstar will actively support and further develop Blickfield's efforts to expand their position and volume in traffic monitoring applications, which are extremely attractive markets combining vertical excellence, high growth margins, and worldwide scalability. I will work together with Blackfield to develop positive synergies with the low group to accelerate its growth. We enter 2026 with an expanding pipeline and are focused on converting that activity into revenue. At the same time, we remain disciplined in cost, ensuring we balance investment and growth, with continued operational efficiency. In summary, we entered the new year with a strong balance sheet, steady demand across our core markets, exciting pipeline, and an enhanced technology portfolio. Our focus is on execution, converting our pipeline into revenue, expanding within key verticals, and driving sustained growth over time. Before turning the call over to Alicia, I would like to thank our employees for their continued dedication. our customers for their trust, and our shareholders for their ongoing support. I will now turn the call over to Alicia for a review of the financial results in more detail. Alicia Kelly | CFO, Senstar Technologies: Thank you, Vivian. Our revenue for the fourth quarter of 2025 was $8.8 million, which compared to $10.2 million in a year-ago quarter. This year-over-year reduction is related to non-recurring project timing and delays in government projects. following the federal government shutdown in the U.S., positively offset by stronger performance from the energy vertical. The Asia-Pacific region was the strongest performing geographic region in the quarter, with revenue increasing to 21% year over year. Growth in the region was fueled by steady demand in data centers, utilities, and healthcare. Revenue from the U.S. and LATAM declined by 20% in the quarter. As Fabian commented, the performance in the U.S. was impacted by challenging market dynamics, including the delays in government projects following the federal government shutdown. Canada delivered a positive offset to performance in North America in the quarter, with revenue increasing by 110% versus the fourth quarter of last year. The EMEA region declined by 24% in the quarter due to a challenging year-ago comparison, which included a large telecom project in the fourth quarter of 2024 that did not reoccur. The quarter included contributions from the government, airports, corrections, and data center verticals. The geographical breakdown of the percentage of revenue for the fourth quarter of 2025 compared to the prior year quarter is as follows. North America, 44% versus 42%. EMEA, 41% versus 46%. APAC, 15% versus 11%. And all other regions were immaterial for both periods. Fourth quarter gross margin of 61.5% compares to 64.5% in a year-ago quarter. The variation in gross margin is primarily the result of less favorable product mix, in addition to tariff impacts associated with a U.S.-based project, lower revenue, and overhead expense cadence. Our operating expenses were $5.6 million, 8% compared to $5.1 million in the prior year fourth quarter. and represented 63.3% of revenue versus 50.2% in the year-ago period. The increase was primarily driven by G&A expense growth of 30% due to the transaction costs associated with Blitzfield acquisition. As a positive offset to the research and development investments, we were awarded a one-time government subsidy for our AI development and initiative, validating our innovative technology solutions. Operating loss for the fourth quarter of 2025 was $159,000 compared to operating income of $1.5 million for the fourth quarter of last year. Operating loss for the quarter was primarily driven by revenue declines and higher G&A costs. The company's EBITDA for the fourth quarter was $35,000 compared to $1.6 million in the fourth quarter of last year. Financial loss was $150,000 in the fourth quarter of this year compared to financial income of $463,000 in the fourth quarter of last year. This is mainly a non-cash accounting effect we regularly report due to adjustments in the valuation of our monetary assets and liabilities, denominated in currencies other than the functional currency of the operating entities in the group, in accordance with GAAP. Net loss attributable since our technology shareholders in the fourth quarter was $33,000, or zero cents per share, compared to net income of $1.6 million, or $0.07 per share, in the fourth quarter of last year. Added to Sunstar's operational contribution are the public platform expenses and amortization of intangible assets from historical acquisitions. The corporate expenses for the fourth quarter were approximately $925,000, compared to roughly $680,000 in the year-go period. Turning now to the full-year results, revenue for the full year of 2025 was $36.4 million, an increase of 2% compared to $35.8 million in 2024. Growth in the year was driven by the North American region and LATAM, with strength in the corrections and energy verticals. The U.S. led the revenue growth of 9%, followed by stable single-digit growth in the media, offset by a 9% decline in Asia-Pacific. The geographical breakdown as a percentage of revenue for 2025 compared to 2024 is as follows. North America, 49% versus 45%. EMEA, 36%, the same as the prior year. APAC, 14% versus 15%, and Latin America, 1% versus 3%. 2025 gross margin was 65.5% compared to 64.1% in 2024. The roughly 150 basis point improvement in gross margin was largely attributable to the balanced product mix, product redesigns, and efficiency gains in our material purchase process. Our operating expenses were $20.8 million, up 9% compared to 2024. The increase is the result of investments made in business development, as well as transactional costs associated with Blixfield acquisition, which was announced in December of 2025, as well as the closing of a related cost for an entity. Operating income for 2025 was $3 million compared to $3.9 million in 2024. The decline in operating income was related to slower revenue growth and increases in general and administration costs associated with click-field transactions and the closing of the foreign entity. Financial income was $71,000 in 2025 compared to $731,000 in 2024. Net income attributable to Sunstar Technologies shareholders in 2025 was $3.2 million or $0.14 per share compared to $2.6 million or $0.11 per share in 2024. The company's EBITDA for 2025 was $3.7 million compared to $4.6 million in 2024. Added to Sunstar's operational contribution are the public platform expenses and amortization of intangible assets from historical acquisitions. The corporate expenses for 2025 were $3.2 million compared to $2.2 million in 2024. Turning now to our balance sheet, cash and cash equivalents and short-term bank deposits as of December 31, 2025 were $22.5 million, or $0.96 per share. This compares to $20.6 million, or $0.88 per share, as of December 31, 2024. The company had zero debt as of December 31, 2025. That concludes my remarks. Operator, we'd like to open the call now to questions. Operator | Conference Operator: Thank you. We will now conduct a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, that's star one to ask a question at this time. Operator | Conference Operator: One moment while we poll for questions. Operator | Conference Operator: Once again, ladies and gentlemen, to ask a question, please press star 1 on your telephone keypad at this time. The first question comes from Ted Liddy with Oppenheimer. Please proceed. Ted Liddy | Analyst, Oppenheimer & Co.: Hi. With regards to the Lickfield acquisition, is there a specific vertical or opportunity you see for their technology? Fabian Hobert | CEO, Senstar Technologies: Yeah, thanks, Ed. Yes, indeed. Today we're seeing three main paths for growth. First of all, the LIDAR within our current verticals, the one we are addressing, increases tremendously the addressable market in the sense that in a lot of cases, people don't go ahead with fence sensors or varied solutions that will privilege participants I would say cable-less or wireless solutions such as thermal cameras, such as, you know, radar, video and analytics, and with LiDAR, we're able, with the 3D LiDAR, we're able to address one part of that where we were not able to compete in the past when a decision from an end user was not to secure mechanically the fans. So that's the first part. Addressable market, which we see absolutely rising to us because the technology provides USPs which can defeat and beat other technologies. So that's the number one. Number two, I would say within our current verticals, that the LIDAR give us the possibility to address POTS, which we did not address before. Typically, when you have saliports or roofs or corridors or outside zones, without a fence. So that's increasing tremendously there. So within our verticals, we're already developing a pipeline there. On top of it, volume monitoring application to basically on the spot monitor bulk for petrochemicals, for fertilizer, for salt, for whatever that can be both, LiDAR gives the possibility to do live measure on the spot and it's a vertical on which Blickfield is already very active and we are committed to supporting them developing further the vertical. Last but not least, the traffic application with road cross monitoring and tunnels and whatever where Blickfield already has a footprint is a vertical where we see very close to ours, a very good path for growth. So there are the three main directions we want to leverage Blickfield and the LiDAR technology for. I hope I have answered your question, Ted. Ted Liddy | Analyst, Oppenheimer & Co.: Yes, you have. And as far as Blickfield is concerned, are the charges we saw in the fourth quarter, are you expecting more in the first quarter, or is that mostly behind you, or what can we expect Fabian Hobert | CEO, Senstar Technologies: So, Ted, I cannot comment on the first quarter. What I can tell you is that the LiDAR cells in the fourth quarter are only Senstar cells because we used to have an OEM partnership with a technology partnership with Blickfield. And so the cells of Blickfield are not part of the Q4 results. In Q1, there will be basically, we will present later on, the sales from Sandstar of our fly door and of course of the Blickfield entity. Alicia Kelly | CFO, Senstar Technologies: And Ted, just to clarify for your question there. So we have incurred the cost through 2025 for Blickfield and we expect that there will be some costs still in the future period, but not substantial. Ted Liddy | Analyst, Oppenheimer & Co.: OK, good. And One other question with regards to the projects that were delayed in the United States. Have any of those projects broke ground, or are you moving forward, or is that still pending? Fabian Hobert | CEO, Senstar Technologies: So all of them are moving forward. That's what I can say. All the ones we have identified in QR are still alive and working on, and we have good hopes to convert some of them in the quarters to come. I want to be careful because you're never protected against another shutdown whatsoever. But those projects are still alive. What I mean alive is we still work on them with the operational entity from the customers and whatsoever. So we did not encounter major losses there or project disparition or whatsoever. They're still on, and we still have good hope they will materialize in the quarters to come. Ted Liddy | Analyst, Oppenheimer & Co.: Andy, I think it was a telecom project in the EME area. You're expecting that to hit again in 2027? Fabian Hobert | CEO, Senstar Technologies: Absolutely. We expect some piece of it in 2026. We don't know exactly. It was a multi-phase project, basically. The first huge phase has occurred last year. The further phase got, I would say, delayed for some reason outside our... but yes, some of it will bring cure in the coming quarters, absolutely. Ted Liddy | Analyst, Oppenheimer & Co.: And I saw there were some charges with regards to closing of a foreign office. Where was that located? Fabian Hobert | CEO, Senstar Technologies: So that's the relocation of our, that's related to the relocation of the company which occurred early 2025 in Canada, and we've closed basically the previous entity, which was the legacy of the McGill office. Ted Liddy | Analyst, Oppenheimer & Co.: I understand. And what is your employee count? How much has that gone up with the Blackfield acquisition? Alicia Kelly | CFO, Senstar Technologies: It went up 28 people with the acquisitions. So we're around 160 people with Flintville. Ted Liddy | Analyst, Oppenheimer & Co.: Okay, great. Thank you. Operator | Conference Operator: Thank you. Thank you, Deb. Operator | Conference Operator: There are no further questions at this time. I would like to turn the call back to Mr. Huber. Would you like to make your concluding statement? Fabian Hobert | CEO, Senstar Technologies: On behalf of Census Management, I would like to thank our investors for their interest and long-term support of our business. Operator | Conference Operator: Have a great day. Operator | Conference Operator: Thank you, ladies and gentlemen, for your participation today. This does conclude today's teleconference. You may disconnect your lines at this time, and thank you for your participation. jsPDF 3.0.3 D:20260606090437-00'00'

NASDAQ:SNT Q3 2025 Earnings Call Transcript Generated on 6/6/2026 Operator | Conference Operator: Ladies and gentlemen, thank you for standing by. Welcome to Senstar Technologies' third quarter 2025 results conference call. All participants are in a listen-only mode. Following management's formal presentations, instructions will be given for the question and answer session. As a reminder, this conference is being recorded. I would now like to turn the call over to Corbin Woodhull of Hayden IR. Corbin, would you like to begin? Corbin Woodhull | Hayden IR – Investor Relations: and thanks Senstar Technologies Management for hosting today's call. With us on the call today are Mr. Fabian Hobert, Chief Executive Officer of Senstar Technologies, and Ms. Alicia Kelly, the Chief Financial Officer. Fabian will summarize key financial and business highlights, followed by Alicia, who will review Senstar's financial results for the third quarter of 2025. We will then open the call for a question and answer session. I would like to remind participants that all financial figures discussed today are in U.S. dollars, and all comparisons are on a year-over-year basis unless otherwise indicated. Before we start, I'd like to point out this conference call may contain projections or other forward-looking statements regarding future events or the company's future performance. These statements are only predictions and Senstar cannot guarantee that they will in fact occur. Senstar does not assume any obligation to update that information. Actual results or events may differ materially from those projected, including as a result of changing market trends, reduced demand, the competitive nature of the security systems industry, as well as other risks identified in the documents filed by the company with the Securities and Exchange Commission. In addition, during the course of the conference call, we will describe certain non-GAAP financial measures, which should be considered in addition to and not in lieu of comparable GAAP financial measures. Please note that in our press release, we have reconciled our non-GAAP financial measures to the most directly comparable GAAP measures in accordance with Reg G requirements. You can also refer to the company's website at www.senstar.com for the most directly comparable financial measures and related reconciliations. And with that, I will now hand the call over to Fabian. Fabian, please go ahead. Fabian Hobert | Chief Executive Officer: Thank you, Gordon. And thank you to those joining us today to review Senstar Technologies' quarter 2025 financial results. We continue to deliver on our strategic objectives throughout the first nine months of 2025, while balancing targeted investments to drive long-term market share gains across our key verticals and geographies. Revenue from our four core verticals increased by 12% in aggregate year over year, and 23% on a year-to-date basis, with notable strength from the correction and energy verticals. In parallel, our discipline operating models generated gross margin above our targets, as well as continued profitability, and a growing cash balance with no debt. Those results reflect our differentiated technology and strong execution in addressing the needs of our customers. Our performance is driven by an unwavering focus on generating sustainable growth across our core and emerging verticals. Now, moving on to a review of quarterly highlights. Revenue in the third quarter was relatively flat compared to the same quarter last year, reflating the impact of Ipsula's contract in the prior year that did not reoccur. On a year-to-date basis, revenue increased by 8%. We are prioritizing repeatable deployments and scalable account growth and experiencing increasing market demands for advanced, differentiated solutions as well as tailwinds from growing legislation around the security of critical infrastructure. Our growth margin of over 67% reflects the differentiation power of sensor technology in a competitive market and underscores the team's success in meeting the growing global demand for security modernization. We continue to invest in technological innovation to boost our competitive strength and gain market share in scalable verticals. Consistent with prior quarters, we maintain rigorous our margin objectives aimed at generating sustained profitability going forward. Operational leverage combined with stable revenue generation drove third quarter net income to $1 million and $3.2 million year-to-date, a significant improvement versus the comparable nine-month period in 2024. In terms of core geographic markets, Sunstar's diversified footprint continues to strengthen, with North America delivering broad-based double-digit gains across our key verticals. North America remains our largest as a percentage of our sales, with revenue increasing by 17% in the third quarter, mainly due to continued momentum in the correction and utilities verticals, as was the case in the prior quarter. Revenue from the USA was particularly strong, increasing by 22% in the third quarter, driven by the successful efforts of our business development team to gain market share across multiple high-growth verticals. Sales from Canada increased by 7% on a year-to-date basis, sustained by utilities and correction. Our methodical investments in the EMEA region over the last several years are positioning Senstar to capture new opportunities with key accounts in targeted verticals, transports, utilities, solar farms, logistics and data centers are continuing to show momentum and robust customer adoption leading to 15 percent revenue growth year to date the asia pacific region is stabilizing following a decline in the second quarter of 2025 our business development and qcan strategy is starting to deliver new wins across data centers utilities correction and logistic verticals APAC remains a key market presence and the achievements of our business development team are positioning the company for long-term gains in the region. Moving on to product updates. Technological innovation is the cornerstone of our playbook to advance our competitive positioning and capture market share. Our advanced proprietary technology translated to impactful wins for our AI-powered intrusion detection systems, multi-sensor Cascade Plus. Leveraging the first-generation sensor, Cascade Plus adds support for daisy-chaining up to 16 devices, as well as power over Ethernet, support for third-party devices, covering 100 meters distance for a single PoE connection. Our industry-leading technology virtually eliminates you nuisance alarm rate optimizes total cost of ownership and reduces installation and maintenance expenses, opening the door to significantly larger market opportunities. The momentum generated from multi-center is in full alignment with our focus on delivering disruptive security solution and the targeting of highly scalable projects and customers alike. Turning to other strategic initiatives, As discussed on the prior earning conference call, Sensor is actively working to broaden its addressable market by targeting the security of critical points within non-critical infrastructure, such as hospitals, museums, and educational institutions and logistic facilities. Our business development team is successfully expanding into new key accounts while deepening existing customer relationships through cross-selling. The team is fully ramped and increasingly converting pipeline opportunities into incremental sales across our target verticals and geographies. The sales strategy of our business development team is centered on high growth verticals, an appetite for complexity, opportunities for scalability worldwide, and leveraging our existing footprint. These efforts will be sustained as we build upon the development of large key accounts aimed at accelerating market shares gains across high potential sectors. In summary, our third quarter results demonstrate the resilience of our business model. Execution of our discipline strategy is expanding our market presence, strengthening competitiveness in core verticals, and accelerating growth in high-value solutions while upholding our 60% plus growth margin profile. With the momentum generated throughout the first nine months of this year and a growing pipeline of opportunities to capture, we reiterate our commitment to sustainable business and profitability. We remain dedicated to innovation, investing in next-generation security solutions that enhance our competitive position and support customers worldwide. Before turning the call to Alicia, I want to express my gratitude to our employees for their strong execution of our strategy to grow market share across key global verticals, to our valued customers for their continuous partnerships, and to our shareholders for their ongoing support. Thank you for your attention. I will now turn the call over to Alicia for a review of the financial results. Alicia Kelly | Chief Financial Officer: Thank you, Fabian. Our revenue for the third quarter of 2025 was $9.5 million, declining modestly by 2% compared to $9.7 million in the third quarter of 2024. On a year-to-date basis, revenue increased by 8%, driven by corrections, rapid gains in energy, coupled with growing momentum from utilities and data centers. The U.S. was the strongest performing geographic market in the quarter, with revenue increasing by 22% year-over-year and 19% on a year-to-date basis versus the prior year period. Growth in the region was fueled by steady demand in corrections and energy verticals, along with new customer wins resulting from our business development team's efforts to grow market share. Revenue from the EMEA region declined by 10% in the quarter, though increasing by 15% on a year-to-date basis. In the year-ago quarter, EMEA was awarded multiple large contract wins, leading to challenging comparisons in the third quarter of this year. New customer wins and increased cross-selling with existing customers drove the performance in the first nine months of the year, most notable the transport, utility, renewable energy, and data center verticals. Asia Pacific experienced continued pressure in the quarter, with sales declining by 14%, primarily resulting from the phase-out of a customer contract that did not contribute revenue in the current quarter. As Fabian discussed previously, the rate of decline improved as our business developed and focused on key account initiatives, helped to secure strategic wins in data center, utilities, corrections, and logistics. Similarly, revenue from Canada declined 21% in the quarter due to the normal quarterly fluctuations in the timing of contract awards. However, Canada's revenue increased 7% on a year-to-date basis on sustained traction with utility and correction verticals. LATAM continues to represent a growth opportunity for Sunstar, though the region remains smaller in terms of revenue contributions. As we have stated in prior quarters, demand for security modernization in LATAM remains, and we continue to be well positioned to capitalize on opportunities in the region. The geographical breakdown of the percentage of revenue for the third quarter of 2025 compared to the prior year quarter is as follows. North America, 51% versus 43%. EMEA, 36% versus 39%. APAC, 12% versus 14%. and all other regions were immaterial for both periods. Third quarter gross margin of 67.3% compared to 68% in a year ago quarter. The stability in gross margin is primarily the result of favorable product mix, diligent expense controls, and component and design optimizations. Our operating expenses were $5.2 million, up 10% compared to $4.8 million in the prior year and represented 55% of revenues versus 49.1% in a year-ago period. The increase was primarily driven by G&A expense growth of 47% due to an exceptional cost association with a consulting engagement in support of strategic growth, in addition to targeted selling expense in core and emerging vertical and markets. As a positive offset to research and development investments, we were awarded a one-time government subsidy for an AI development initiative, validating our innovative technology solutions. Relatively flat revenue and gross margin drove our operating income for the third quarter to $1.1 million, down 37% compared to $1.8 million in a year-ago period. Operating margin of 12.1% in the third quarter of 2025 compares to 18.8% in the year-ago period. On a year-to-date basis, operating income increased by 31% to $3.1 million, reflecting the value of our platform, solid execution in a competitive market, and disciplined operating model. The company's EBITDA for the third quarter was $1.3 million, compared to $2 million in the third quarter of last year. with EBITDA margins contracting to 13.9% from 20.7% in a year-goal quarter. Financial income was $282,000 in the third quarter of this year compared to financial income of $111,000 in the third quarter of last year. This is mainly a non-cash accounting effect we regularly report on due to adjustments to the valuation of our monetary assets and liabilities, denominated in currencies other than the functional currency, of the operating entities in the group in accordance with GAAP. Net income attributed to Senstar Technologies shareholders in the third quarter was $1 million or $0.04 per share compared to net income of $1.3 million or $0.06 per share in the third quarter of last year. Added to Senstar's operational contribution are the public platform expenses in amortization of intangible assets from historical acquisitions. The corporate expenses for the third quarter were approximately $890,000 compared to roughly $470,000 in a year goal period. Tuning to the balance sheet. Cash and cash equivalents in short-term bank deposits as of September 30th, 2025 were $21.7 million or $0.93 per share. This compares to $20.6 million or $0.88 per share as of December 31st, 2024. The company has zero debt as of September 30, 2025. Before opening the lines for Q&A, I'd like to remind those listening that we will be attending the 22nd Annual Security Investors Conference on December 17th and 18th, hosted by Raymond James in New York City. We encourage those who are interested to register with your Raymond James sales representative. That concludes my remarks. Operator, we would like to open the call for questions now. Operator | Conference Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. So that we may address questions from as many participants as possible, We ask that you limit yourself to one question and one follow-up. If you have additional questions, you may re-queue, and time permitting, those questions will be addressed. One moment, please, while we poll for questions. Thank you. Our first question comes from the line of Mike Distiller with AMX Holdings. Please proceed. Mike Distiller | Analyst, AMX Holdings: Yes. Good afternoon, folks. Thanks for taking my quick question and comment. The only question I had on the financials was just on the corporate expense side. You went from, I don't know, 430, I think, to 980. I was just wondering why there was such a tremendous jump over 100% is the simple question. Alicia Kelly | Chief Financial Officer: Yes, so the corporate expenses went from $470 to $890 this quarter, and that is the cost, the abnormal cost that we were speaking about in terms of consulting fees. Mike Distiller | Analyst, AMX Holdings: Okay, and the only other thing, I understand the consulting fee, having been cued in, I've been an almost 30-year member of the collection of shareholders. Just quickly, the interesting part about the AI development, and I'm not on the bandwagon necessarily, but I think you guys are already pursuing this in terms of not just sales. This is more a comment than a question. Not just sales, but partnerships. I know that your business development sales folks are already directed this way, whether it's the protection of actual facilities or energy behind those facilities. I just know that your legacy utility companies, your current 20-year relationships, those folks are also dipping their toes into providing that energy, not just all these newfangled decoys, et cetera. So I know you're on this, and I just thought if you had any comment, I'd be happy to hear it. Fabian Hobert | Chief Executive Officer: So related to AI in particular? Mike Distiller | Analyst, AMX Holdings: Yeah. spk04: Okay, let's put it this way. Mike Distiller | Analyst, AMX Holdings: And the energy involved, right, both of them. Fabian Hobert | Chief Executive Officer: Oh, okay, so I'm not sure. Okay, I'm going to try to, I think I understand. We use today, there are three ways which AI crosses our world. The first way is that, you know, we have sensors which analyzes data coming from the sensors on fences, buried, And we're developing, of course, we're working with AI models who are helping having 100% detection, reducing next to zero the false alarm rate, and helping us not only to classify the information, to provide not only alarms, but what we call situational awareness. That's the number one. The number two use of AI, like every company, we're taking steps ahead to use AI to smoothen our process, to be quicker, faster, more efficient. And of course, we're working and implementing, of course, following the compliance of all data protection, whatever, to improve our performance. On the third way, AI is translating into the building of a lot of new data centers. And those data centers that you refer need power. So yes, indeed the development of AI worldwide does translate as we see it in a multiplication of the data centers, in a complexification of the data centers, which lead themselves to the multiplication of new power generation, solar, it could be the small and modular reactors, it could be different source of generation, which we intend to ensure the protection of both the data centers themselves and their source of power. Does it answer your question? Mike Distiller | Analyst, AMX Holdings: Yes, sir. Thank you, Fabian. Just one more comment. It's just that your business development group, I'm sure, is already doing this, is working in tandem, in partnership with like-in-kind, meaning not only using AI to improve Senstar's products, but to actually integrate the construction of these facilities with you folks at the desk, helping them out and they helping you out. And I just think that kind of partnership would benefit both. Obviously, I'm a long-term player here, and I'm sure your people are doing this, and I just thought I'd stress that some of those like-and-kind sit-downs before shovels hit the ground are are super helpful. That's it. And I thank you for your continued success. And that's my comment. spk04: Thank you very much. Thank you for your support and trust in our company. Absolutely. Thank you. Operator | Conference Operator: Thank you. Our next question comes from the line of Ken Liddy with Oppenheimer. Please proceed. Ken Liddy | Analyst, Oppenheimer: Hi. You mentioned in the call that the multi-sensor is showing some progress. I wanted to see what customers, what verticals are most interested in deploying the multi-sensor and their solution, the security solution. Fabian Hobert | Chief Executive Officer: Okay, thank you for your question. So we have, I can answer without, we're not giving typically names of customers or whatever, but what I can tell is that We have two data multicenter. The first multicenter is the first generation is used as a standalone product. And we have been basically mainly broadening a lot of POCs in many verticals to secure cell reports of prison, to secure, I would say, cell report entrances of, I would say, utilities, power generation, whatever. We have deployed it as well to secure some logistic premises, and we're pushing it via distribution. So it's a bit hard to say everywhere it's been going because we have been starting to push it through distribution. So we have the water is starting to boil, generating more and more interest, and the product is broadly currently tested. to be evaluated as a standard or whatsoever. And that is happening in a lot of verticals. Some we have access because we know of, some we do not see. So yes, we see a movement happening here, which is very encouraging. On top of it, we have the multi-center daisy chains that you can use as a verbal defense using different technology, video, radar, PIR, accelerometer with all process with intelligence used in daisy chain like to secure a perimeter and we have basically had some very interesting first wins the product monthly is not long back and we had some very interesting first wins in the data center worlds with this solution okay that's that's helpful and um if a customer is uh trying to secure a prison Ken Liddy | Analyst, Oppenheimer: Are they ordering one multi-sensor or several multi-sensors? How does that work? Fabian Hobert | Chief Executive Officer: So you have two cases. When, you know, a lot of critical infrastructure business are rather conservative and evaluating. and standardizing some technologies before it becomes authorized to bid with because you go through lots of public tenders and so on. So in this case, the order typically one and two, two put in place, two stays for several months. That's one thing. When we work, it depends on the nature. Some are sold. It depends on the nature of the presence of the place. In some cases, you will have many saleports to be guarded, and depending on the size and the configuration and what you want to use it for, you might put two, three, four, five multiplied number of sides, or very often what happens is that people use it to secure a spot, which is showing some problems today, and to replace different technologies. In other words, to make it simple, when people build something from scratch, they will design it around the product. That can take several weeks or months before it happens. The way it's been used so far is these products solve problems with other technology have difficulty to solve other than using in combination. They buy basically one, two of those to basically fix their current issue before redesigning their systems. So when it's a fireman, a firefighter use, it's going to be a couple of units. spk04: When they think long term, then the units can be higher. Ken Liddy | Analyst, Oppenheimer: Understood. And then one other question. Typically, the fourth quarter tends to be one of your two biggest quarters of the year. Do you see that playing out that way this year? Fabian Hobert | Chief Executive Officer: I'm sorry. We're not giving forward-looking statements. I do regret there. It's not something we can share. What I can tell you is that the whole team is working as hard as they can to deliver the best result possible. Ken Liddy | Analyst, Oppenheimer: Is there a particular region or a vertical that is looking stronger than others at this point? The future, not for the quarter. I'm saying overall in your business. Fabian Hobert | Chief Executive Officer: Okay. Let's put it this way. I cannot give four looking statements. That being said, We have two strong areas, which are North America, USA mainly, and Europe, which we want to keep boosting and investing a lot. So we're working hard to develop those. On the verticals, our core verticals are heavily growing, and we want to keep basically investing on those. Some areas will show some verticals more than the others, so it's hard to give you an answer globally. But what we see that overall, those four verticals keep growing two-digit even when the turnover is rather stable, which is really proving that we're adopting the right strategy. Ken Liddy | Analyst, Oppenheimer: Okay, thank you. Operator | Conference Operator: Thank you. Our next question comes to the line of Noam Makash with IMA Value Fund. Please proceed. Noam Makash | Analyst, IMA Value Fund: Yeah. Hi, Fabian. Thank you for taking my question. The question is, without the ending of the Asia-Pacific contracts, what is the calculated growth for the company in the quarter? Yeah. Fabian Hobert | Chief Executive Officer: It's hard to say. I'm afraid I cannot comment. Let's put it this way. We had one very large one last year, which did not reoccur. It's hard to provide a comment, and we're not getting into this level of detail. But let's put it this way. It was sufficiently material last year that it has been hard to compensate with the growth associated by other verticals. Noam Makash | Analyst, IMA Value Fund: And just another follow-up, looking forward, you wrote about the operating model of 10% organic growth. Do you think it's still the run rate going forward? Fabian Hobert | Chief Executive Officer: We're striving and fighting for it, Noam. spk07: That's the only thing I can tell you. Okay. Thank you. spk04: Thank you, Noah. Fabian Hobert | Chief Executive Officer: Please apologize, but we're not authorized to provide some looking for statements. But what I can tell you is that the whole team has been and keep being extremely involved to work on developing a sustainable growth. spk07: All right. Thank you, Noah. Noam Makash | Analyst, IMA Value Fund: Another follow-up, if I may? Sure. The consulting fees, do you believe they will support future growth? Fabian Hobert | Chief Executive Officer: At least it's what we hope. We have invested substantial money to work on to work on different ways to grow. And absolutely, at least this investment we made on how to build our growth, we hope will translate into some future growth. spk04: It's a hope, it's a wish, and we work hard on it. spk07: Okay, thank you. Operator | Conference Operator: Thank you. Next question comes from the line of Ken Liddy with Oppenheimer. Please proceed. Ken Liddy | Analyst, Oppenheimer: Hi. In your operating expenses, your general administrators are up considerably in the quarter and for the year. Is that from hiring new people to develop your business? Fabian Hobert | Chief Executive Officer: So the major increase in our expenses has been in a large consulting fee to work on our future growth. On top of it, there are some investments being made, of course, to be able to sustain the growth. I will quote business development, where we have invested some. But I want to insist that most of this increase in operation came from the GMA around this consultant fee, around the growth focus. Ken Liddy | Analyst, Oppenheimer: Is there a specific region that is directed that you're trying to grow? Is there a specific region or specific vertical that you're trying to grow? Fabian Hobert | Chief Executive Officer: We want to keep growing globally. We believe that Our goal is to grow globally, by gaining market share in our verticals globally, by basically increasing our footprint in our verticals. Of course, working on cross-selling our solution by combining technologies, because we have a very ample portfolio, and on top of it, developing what we said, securing critical spots of non-critical infrastructure. But yes, globally, we want to address this globally. Ken Liddy | Analyst, Oppenheimer: Understood. The consulting fee, about how much was that in the quarter? Fabian Hobert | Chief Executive Officer: I'm afraid we cannot disclose in detail, but it was a substantial part of the vast majority of this expense raised. Ken Liddy | Analyst, Oppenheimer: And should we expect that in future quarters, or is this more of a one-time? Fabian Hobert | Chief Executive Officer: So it's something what you call exceptional. We cannot comment whether there will be further expenses like that so far. spk04: Okay, thanks. But it's not something which we want to make structural, okay? It's exceptional. Fabian Hobert | Chief Executive Officer: Sometimes exceptional could reoccur. spk07: Understood. Thanks for the clarification. Operator | Conference Operator: Thank you. There are no further questions at this time. Mr. Halber, would you like to make your concluding statement? Fabian Hobert | Chief Executive Officer: Thank you. On behalf of Sensor Management, I would like to thank our investors for their interest and long-term support of our business. spk04: Have a good day. Operator | Conference Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation. jsPDF 3.0.3 D:20260606090439-00'00'

NASDAQ:SNT Q2 2025 Earnings Call Transcript Generated on 6/6/2026 Operator | Conference Call Operator: Ladies and gentlemen, thank you for standing by. Welcome to the SEDNSTAR Technologies second quarter 2025 results conference call. All participants are at present in a listen-only mode. Following management's formal presentation, instructions will be given for the question and answer session. As a reminder, this conference is being recorded. I would now like to hand the call over to Corbin Woodhull of Hayden IR. Corbin, would you like to begin? Corbin Woodhull | Investor Relations, Hayden IR: Thank you, Paul, I would like to welcome everyone to the conference call and thanks 10 start technologies management for hosting today's call with us on the call today. Our Mr Fabian, who bear CEO of sensor technologies and miss Alicia Kelly, the CFO baby, and we'll summarize key financial and business highlights followed by Alicia, who will review sensors financial results for the 2nd quarter of 2025. we will then open the call for a question and answer session. I would like to remind participants that all financial figures discussed today are in U.S. dollars, and all comparisons are on a year-over-year basis, unless otherwise indicated. Before we start, I'd like to point out that this conference call may contain projections or other forward-looking statements regarding future events or the company's future performance. These statements are only predictions, and Senstar cannot guarantee that they will, in fact, occur. Senstar does not assume any obligation to update that information. Actual events or results may differ materially from those projected, including as a result of changing market trends, reduced demand, the competitive nature of the security systems industry, as well as other risks identified in the documents filed by the company with the Securities and Exchange Commission. In addition, during the course of the conference call, we will describe certain non-GAAP financial measures, which should be considered in addition to and not in lieu of comparable GAAP financial measures. Please note that in our press release, we have reconciled our non-GAAP financial measures to the most directly comparable GAAP measures in accordance with Reg G requirements. You can also refer to the company's website at www.senstar.com for the most directly comparable financial measures and related reconciliations. And with that, I would now hand the call over to Fabian. Fabian, please go ahead. Fabian Halberg | Chief Executive Officer, Senstar Technologies: Thank you, Corbin. Thank you for joining us today to review Senstar Technologies' second quarter 2025 financial results. We delivered strong second quarter results marked by the successful execution of our growth strategy and targeted investments to drive sales across our key verticals and geographies. Revenue for our four core verticals increased by 27% in aggregate year over year, which led to total consolidated revenue growth of 16.2% and robust expansion in both gross and EBITDA margins. Now, moving on to a review of quarterly highlights. Revenue in the second quarter was driven by a well-balanced mix of products with notable vertical market strength from energy and corrections. These results reflect the sustained customer demand, and when combined with our cost optimizations and focus on selling high-value-added solutions, drove a material growth margin expansion to 66.1% in the second quarter, comfortably above our targets. We're continuing to invest in technological innovation to protect our competitive positioning and fuel growth, while diligently managing costs to deliver margin expansions and sustainable profitability. In the second quarter, operating expenses remain relatively stable as a percentage of revenue at 56% compared to 55% in the prior year quarter, despite an 18% increase in absolute terms. This operational leverage combined with strong double-digit growth in revenue and gross profit drove EBITDA to 1.1 million. EBITDA margin expanded by 161 basis points to 11.8%, Net income increased significantly compared to the same period last year. In terms of the core geographic market we served, sensor global diversification continues to strengthen, with EMEA, North America and LATAM delivering broad-based double-digit gains across our key verticals. In EMEA, the region is becoming a larger contributor to revenue and grew by 52% in the second quarter, while also gaining over 800 basis points in share of total sales. Our sustained investments in Europe over the previous years are coming to fruition, with the EMEA region now representing 35% of total revenue, up from 27% in the year-ago period. The main verticals driving this record in the region include energy, particularly oil and gas, along with solar farms and electrical generation. In addition, there has been solid customer adoption in higher set value airport and data center infrastructure. In North America, which remains our largest market as a percentage of sales, revenue increased by 29% in the second quarter, mainly due to continued momentum in the correction and utilities verticals. North America delivered solid growth in the quarter despite moderate sales performance in Canada declining slightly in the second quarter after a strong first quarter. In the second quarter of this year, the Asia-Pacific region faced a challenging year-over-year comparison against exceptionally strong growth of 135% in the prior year quarter, resulting in a 47 revenue decline versus the same quarter last year. The year-ago quarter included a large customer contract, which did not repeat this quarter. Historically, APAC has been among the fastest growing regions for CENSA and we're continuing to experience strength from data centers, utility and airport perimeter security solutions. In contrast, the LATAM region returned to growth in the second quarter with revenue increased by 26% compared to the year-ago period. We attribute this turnaround to the successful execution of our strategy aimed at delivering industry-leading solutions to international markets, where security modernization is becoming an increasing priority. Looking at revenue contribution per vertical, our four key verticals grew 27% in aggregate in the second quarter, driven primarily by strong performance, correction, and energy. We're continuing to identify material growth opportunities across renewable energy, data centers, and utilities, and Sensas is reinforcing its commitment to further penetrate those verticals and capture market share. In terms of product updates, technological innovation is the cornerstone of our strategy to strengthen our competitive positioning in the market. We're continuing to make meaningful progress with multi-sensor, an important validation by our customers. Senstar is focused on delivering advanced and disruptive security solutions tailored to our targeted vertical markets. We aim to enhance security and operational efficiency by combining cutting-edge sensors with intelligent information management software. This strategy enables Senstar to grow its market share within core sectors while expanding its scope by offering differentiated, high-value solutions that sustain our growth margins of 60% and above. In addition, Sensor is actively working to broaden its addressable market by targeting the protection of critical points within non-critical infrastructure, such as hospitals, educational institutions, and logistic facilities. Leveraging our unrivaled multi-sensor, we deliver unique performance by eliminating use and slum rate, optimizing total cost of ownerships, and significantly reducing installation and maintenance costs, unlocking opportunities in a much larger market segment. Turning to other strategic initiatives, as discussed on the prior Earnings Conference call, we're pleased with the execution of our business development team, following the addition of several key hires earlier in this year. The team is now fully ramped and gaining traction with their core focus on driving growth through new customer acquisition and broader penetration within our core verticals. Based on encouraging initial results, we plan to expand the team further to support the development of several large key accounts and accelerate market share gain across high potential sectors. In summary, our second quarter results demonstrate the resiliency of our business model, with continued momentum in both revenue growth and margin expansion. We remain focused on differentiating ourselves from the competition by investing in innovative security solutions for our international customer base. I want to express my gratitude to our employees for the strong execution of our strategy to grow our market share across key global verticals, to our valued customers for their continued partnerships, and to our shareholders Alicia Kelly | Chief Financial Officer, Senstar Technologies: their ongoing support thank you for your attention i will now turn the call over to alicia for a review of the financial results in more detail thank you fabian our revenue for the second quarter of 2025 was 9.7 million representing a 16.2 percent increase compared to 8.3 million in the second quarter of 2024. the sales expansion was driven by holistic growth across our key geographic and vertical market, with corrections, energy, and utilities serving as strong contributors. EMEA led the geographic regions with 52% year-over-year revenue growth. New customer wins and increased cross-selling with existing customers drove the successful performance in the quarter, most notably the energy, data center, and airport perimeter security verticals. The U.S. followed with a 35% increase in revenue. fueled mainly by the continued demand in the corrections, energy, and utility industries, where customers are increasingly seeking innovative security solutions. The LATAM region experienced an important inflection point in the quarter, with revenue increasing by 26%. As we have stated in the prior quarters, demand for security modernization in LATAM remains, and we continue to believe the region represents an important growth opportunity. Asia Pacific region, on the other hand, experienced pressure in the quarter, with sales declining by 47%, primarily resulting from the phase-out of a customer contract that did not contribute revenue in the current quarter, in addition to the challenging year-ago growth comparison that Fabian discussed previously. Similarly, revenue from Canada declined in the quarter due to normal quarterly fluctuations in the timing of contract awards, but we remain well positioned to capture new projects through the remainder of this year. As mentioned in Q1, Canada was the strongest growing region, with sales primarily generated by the corrections and energy segments. The geographical breakdown as a percentage of revenue for the second quarter of 2025 compared to the prior year quarter is as follows. North America, 53% versus 47%. EMEA, 35% versus 27%. APAC, 11% versus 23%. Latin America is even at 1%, and all other regions were immaterial for both periods. Second quarter gross margin was 66.1%, compared to 63.2% in the year of both quarters. This 292 basis point margin improvement was primarily the result of strong expense controls, more favorable product mix, and component and design cost optimizations. Our operating expenses were $5.4 million, up 18% compared to $4.6 million in the prior year's second quarter. The increase was primarily driven by one-time, non-recurring administrative costs associated with finalizing the corporate regional affiliation from Israel to Canada, as well as the addition of key personnel to keep our company headcount and targeted selling spend in core growth verticals and markets with a positive offset from research and development investment optimization. Strong revenue and a sizable increase in gross margin drove our operating income for the second quarter to $1 million, a 46% improvement compared to $700K in the prior year period. Operating margin expanded by over 200 basis points, reaching 10.1% in the quarter. The company's EBITDA for the second quarter was $1.1 million compared to $846,000 in the second quarter of last year, with margins expanding by 161 basis points to 11.8% from 10.2% in the year-ago quarter. These gains underscore the operating leverage in Sunstar's operating model as we scale. Financial expense was $330,000 in the second quarter of this year compared to financial income of $103,000 in the second quarter of last year. This is mainly a non-cash accounting effect we regularly report due to adjustments to the valuation of our monetary assets and liabilities denominated in currencies other than the functional currency of our operating entities in the group, in accordance with GAAP. Net income attributable to Senstar Technology shareholders in the second quarter was $1.2 million, or $0.05 per share, compared to a net income of $493,000, or $0.02 per share, in the second quarter of last year. Added to Senstar's operational contribution are the public platform expenses and amortization of intangible assets from historical acquisitions. The corporate expenses for the second quarter were approximately $865,000, compared to roughly $400,000 in the year-ago period. Turning next to our balance sheet, cash and cash equivalents and short-term bank deposits as of June 30th, 2025 were $21.9 million or 94 cents per share. This compares to 20.6 million or 88 cents per share of December 31st, 2024. The company had zero debt as of June 30th, 2025. This concludes my remarks. Operator, we would like to open the call to questions now. Operator | Conference Call Operator: Thank you. We'll now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. The confirmation toggle will indicate your line is in the question queue. You may press star 2 to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Operator | Conference Call Operator: One moment, please, while we poll for questions. Operator | Conference Call Operator: Our first question is from Noam Natash with IMA Value. Noam Natash | Analyst, IMA Value: Hi, guys. Thanks for a great quarter. If you can elaborate about the one-time expense, what's the expense exactly, and if you can elaborate about border border control segment and biddings. Fabian Halberg | Chief Executive Officer, Senstar Technologies: Okay. If you agree, I'm fine with starting with the border control before to let Alicia comment on the one-time expense. So border control is not one of our main target verticals, but clearly as per current situation where tension between countries is very high, Yes, we're active in this sector. The main reason why we're not active in this vertical is that it is highly scalable because it depends basically on specific circumstances due to political or whatever scenarios. But as far as we can contribute to make them safer, we're happy to technologically contribute to those supporting our partners. I hope I answered your question. So we cover this market without being fundamental of our verticals. Alicia, are you fine with that? Alicia Kelly | Chief Financial Officer, Senstar Technologies: No, you're welcome. For the first part of your question, so the one-time administration fees were relating to consulting fees. for concluding the final processes related to our Israeli entity. Now that we've completed the flip and we have re-domiciled to Canada, there was a couple of outstanding activities that just needed to be closed up in order to finish with that legal entity. Operator | Conference Call Operator: Thank you very much. Thank you. Thank you. There are no further questions at this time. Operator | Conference Call Operator: Mr. Halberg, would you like to make your closing statement? Fabian Halberg | Chief Executive Officer, Senstar Technologies: On behalf of Sensor Management, I would like to thank our investors for their interest and long-term support of our business. Operator | Conference Call Operator: Have a great day. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation. jsPDF 3.0.3 D:20260606090440-00'00'