Full Transcript: Senstar Technologies Q4 2025 Earnings Call

Senstar Technologies (NASDAQ:SNT) reported fourth-quarter financial results on Thursday. The transcript from the company's fourth-quarter earnings call has been provided below. This transcript is brought to you by Benzinga APIs. For real-time access to our entire catalog, please visit https://www.benzinga.com/apis/ for a consultation. The full earnings call is available at https://viavid.webcasts.com/starthere.jsp?ei=1759681&tp_key=2a5c641eb6 Summary Senstar Technologies reported full-year 2025 revenue growth of 2% to $36.4 million, with a gross margin expansion to 65.5% and net income of $3.2 million. The company faced a 14% revenue decline in Q4 due to non-recurring factors like government project delays in the US, but anticipates these projects to contribute to 2026 revenues. Strategic initiatives include the acquisition of Blickfield to enhance LiDAR technology capabilities, which is expected to expand the addressable market and drive future growth. Strong performance in North America and EMEA regions, with significant wins in data centers, energy, and corrections; Canada saw a 110% revenue increase in Q4. Management expressed optimism about 2026, highlighting a robust pipeline and continued demand across key verticals, while emphasizing cost discipline and operational efficiency. Full Transcript OPERATOR Ladies and gentlemen, thank you for standing by. Welcome to the Senstar 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 Irving & Corbin. Would you like to begin? Corbin Woodhull 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's 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 US 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@www.Senstar.com for the most directly comparable financial measures and related reconciliat. And with that I would now hand the call over to Fabian. Fabian, please go ahead. Fabian Hobert (Chief Executive Officer) Thank you Corbin. And thank you to those joining us today to review Senstar Technologies 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 highlight 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. These factors include delays of government projects, mainly in the US Correction verticals following the US Federal government shutdown and a non recurring European telecom utility project which will convert to further revenue generation 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 result where our core verticals grew by 5% despite the fourth quarter timing impact. 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 cannibalization effect. 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 senstar to address the 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 this strategic initiative. Competing and enhanced our unrivaled PIDs and software range. Our 3D LiDAR technology in secure 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 Blickfeld completed in the beginning of 2026 represent 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, Blickfeld offers high growth perspectives in volume monitoring and traffic application where Blickfeld has already developed a footprint Turning to our geographic performance, US 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 while data center, airports and increasingly LiDAR continue to generate meaningful pipeline creation. Revenue from the US 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 standout 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 Senstar to capture new opportunities with steel camps in 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 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 strongpeop 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 few camps, 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 a growing pipeline. 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 TIO channels and deepening existing customer relationship. Our pipeline is growing further supporting improved market penetration and enhanced revenue diversification. The addition of Blickfeld to our current portfolio will further assist us in expanding our range of solutions and address more security and non security application to our current targeted vertical markets. We're also substantially broadening our current addressable market and strengthening our ability to successfully approach verticals who were not historically present. Importantly, senstar will actively support and further develop Blickfeld'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 Blickfelt to develop positive synergies with the loaded 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 costs, ensuring we balance investments in growth with continued operational efficiency. In summary, we enter the New year with a strong balance sheet, steady demand across our core markets, exciting pipeline and 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 review of the financial results in more detail. Alicia Kelly (Chief Financial Officer) Thank you Fabian. 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 US 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 US and Latam declined by 20% in the quarter. As Fabian commented, the performance in the US 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 as a percentage of revenue for the fourth quarter of 2025 compared to the prior year quarter is as 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 US 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 and a expense growth of 30% due to the transaction costs associated with Blickfield acquisition. As a positive offset to the research and development investment, we were awarded a one time government subsidy for our AI development and initiatives 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 and A cost. 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 to Senstar Technology shareholders in the fourth quarter was 33,000 or $0.00 per share compared to net income of 1.6 million or $0.07 per share in the fourth 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 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 MOTAM with strength in the corrections in energy verticals. The US led the revenue growth of 9% followed by stable single digit growth in EMEA 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% vs 45% EMEA 36% in the same as the prior year APAC 14% vs 15% and Latin America 1% vs 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 Blickfield acquisition which was announced in December of 2025 as well as the closing of a related cost for a foreign 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 Blickfield transaction and the closing of the foreign entity. Financial income was 71,000 in 2025 compared to $731,000 in 2024. Net income attributable to Semstar 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 Senstar'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 has zero debt as of December 31, 2025. That concludes my remarks. Operator, we'd like to open the call now to questions. 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. One moment while we poll for questions. Once again, ladies and gentlemen, to ask a question, please press Star one on your telephone keypad at this time. The first question comes from Ted Liddy with Oppenheimer. Please proceed. Ted Liddy (Equity Analyst at Oppenheimer) Hi. With regards to the Lickfield acquisition, is there a specific vertical or opportunity you see for their technology? Fabian Hobert (Chief Executive Officer) Yeah. Thanks, Ted. 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 buried solutions that will privilege, 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 a 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 fence. So that's the first 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 spots, which we did not address before, typically when you have sally ports 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. Bulk lidar gives the possibility to do live measure on the spot. And it's a vertical on which Blickfeld is already very active and we are committed to supporting them developing further diversity. Last but not least, the traffic application was road cross monitoring and tunnels and whatever. Where Blickfeld already has a footprint is a vertical. Where we see very close to ours a very, very good path for growth. So There are the three main directions we want to leverage. Blickfeld and the LiDAR technology 4. I hope I have answered your question, Ted. Ted Liddy (Equity Analyst at Oppenheimer) 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 (Chief Executive Officer) So Ted, I cannot comment on the first quarter. What I can tell you is that the LIDAR cell and the fourth quarter are only senstar sales because we used to have an OEM partnership. We have a technology partnership with Blickfield. And so the sales of Blickfield are not part of the Q4 results. In Q1 there will be basically we will present later on the sales from Senstar of our LiDAR and of course of the Blickfield entity. Alicia Kelly (Chief Financial Officer) And Ted, just to clarify for your question there, so we had incurred the cost through 2025 for Blickfeld and we expect that there will be some costs still in the future, period, but not substantial. Ted Liddy (Equity Analyst at Oppenheimer) Okay, 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, you know, pending? Fabian Hobert (Chief Executive Officer) So all of them are moving forward. That's what I can say, that all the one we have identified in Q4 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 expiration or whatsoever. They're still on and we still have good hope they will materialize in the quarters to come. Ted Liddy (Equity Analyst at Oppenheimer) And I think it was a telecom project in the EME area. You're expecting that to hit again in 2026, 27, I mean 26, absolutely. Fabian Hobert (Chief Executive Officer) We expect some piece of it in 26. We don't know exactly. It was a multi phase project. Basically the first huge phase has occurred last year. The further phase got delayed for some reason outside our control. But yes, some of it will bring revenue in the coming quarters. Absolutely. Ted Liddy (Equity Analyst at Oppenheimer) And I saw some charges with regards to closing of a foreign office. Where was that located? Fabian Hobert (Chief Executive Officer) 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 MAGAA office. Ted Liddy (Equity Analyst at Oppenheimer) Understood. And what is your employee account? How much has that gone up with the Blickfield acquisition? Fabian Hobert (Chief Executive Officer) It went up 28 people with the acquisition. So we're around 160 people with Blickfield. Ted Liddy (Equity Analyst at Oppenheimer) Okay, great. Thank you. Fabian Hobert (Chief Executive Officer) Thank you. Thank you Ted. OPERATOR There are no further questions at this time. I would like to turn the call back to Mr. Holbert. Would you like to make your concluding statement? Fabian Hobert (Chief Executive Officer) On behalf of management, on behalf of Senstar management I would like to thank our investors for their interest and long term support of our business. Have a great day. OPERATOR Thank you ladies and gentlemen for your participation today. This does conclude today's teleconference. You may disconnect your lines at this time. Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.