VirTra (NASDAQ:VTSI) executives said 2025 results were heavily influenced by an “extended and highly atypical disruption” in federal funding that delayed awards, procurements, and system deliveries, even as the company reported continued demand for its training simulators and related offerings.
On the company’s fourth-quarter and full-year 2025 earnings call, CEO John Givens said the funding freeze that began in 2024 persisted through the fourth quarter of 2025 and created a disconnect between customer activity and reported revenue. CFO Alanna Boudreau detailed lower revenue and profitability metrics year over year, while emphasizing bookings, backlog, and liquidity levels. Management also discussed product initiatives, sales and marketing investments, military market engagement, and how the company is using artificial intelligence internally and in product development.
Funding environment begins to reopen, but timing remains uncertain
According to Givens, multiple funding cycles are now progressing concurrently, with fiscal year 2026 and expected fiscal year 2027 allocations moving through the system at the same time. He said this is driving a “meaningful increase” in customer engagement and grant application activity, but he cautioned that revenue conversion depends on a multi-step process: customers apply, awards are determined, purchase orders are issued, and systems are delivered and accepted.
During the Q&A, Givens said quoting activity has increased and that many customers already have quotes and want systems, but the company cannot submit grants on customers’ behalf. He described VirTra’s internal process of supporting agencies in identifying likely-fit grants and helping them with available documentation, while noting that application-to-award timelines have varied widely in the past—ranging from roughly three months to as long as 18 months, depending on grant staffing and submission volumes.
Givens added that, in his view, Department of Homeland Security-related funding was the main area “not flowing,” citing pauses affecting activity with DHS components such as Customs and Border Protection, the Secret Service, and the Coast Guard.
Backlog and bookings highlighted amid delayed deliveries
Management emphasized that demand remained strong through the funding disruption. Givens said VirTra ended 2025 with $25.6 million in backlog and generated $26.7 million in bookings during the year. He said some orders have been placed but customers were not yet ready to take delivery due to funding timing or facility readiness, and he said similar delivery timing issues were occurring internationally in EMEA and Latin America.
Boudreau provided a breakdown of backlog at December 31, 2025:
- Total backlog: $25.6 million
- Capital: $13.8 million
- Service: $5.1 million
- STEP (subscription-based program): $6.7 million
In response to an analyst question, management said service and STEP backlog conversion cannot be simplified into a quarterly “divide by four” assumption because contract lengths vary. Boudreau said STEP contracts can be three to five years long, and warranty/service agreements can range from one to five years, with revenue conversion spanning from about one year out to as far as four years for STEP in some cases. She also noted that some capital backlog items, including international customers and development work, may not convert until later in 2026 through early 2027, depending on when customers can accept delivery.
Financial results reflect lower revenue volume and cost management
Boudreau reported fourth-quarter 2025 revenue of $2.9 million, down from $4.7 million in the prior-year period, attributing the decrease to government funding delays, procurement timing, and deferred deliveries in domestic and international markets.
For full-year 2025, total revenue was $22.4 million compared with $26.4 million in 2024. By market, full-year revenue included:
- Government: $17.8 million (vs. $22.9 million in 2024)
- International: $4.2 million (vs. $3.1 million in 2024)
- Commercial: approximately $0.4 million (consistent year over year)
Gross profit in the fourth quarter was $1.7 million, or 58% of revenue, compared to $2.9 million, or 62%, in the prior-year quarter. For the full year, gross profit was $15.2 million, or 68% of revenue, compared to $19.4 million, or 74%, in 2024, with Boudreau citing lower revenue volume as the primary driver.
Net operating expense declined to $3.3 million in the fourth quarter from $4.2 million a year earlier. For the full year, net operating expense was $14.8 million compared with $17.4 million in 2024, which Boudreau described as active cost management while continuing to invest in key areas to re-accelerate growth.
Operating loss for the fourth quarter was $1.6 million versus $1.3 million in the prior-year quarter. For the full year, operating income was $0.4 million compared with $2.0 million in 2024.
Net loss for the fourth quarter was $1.0 million, or $0.09 per diluted share, consistent with the prior-year period. For the full year, net income was $3.0 million, or $0.02 per diluted share, compared with $1.4 million, or $0.12 per diluted share, in 2024. Adjusted EBITDA for the full year was $1.6 million compared to $2.9 million in the prior year; during the Q&A, Boudreau said fourth-quarter adjusted EBITDA was negative $0.9 million.
On liquidity, Boudreau said the company ended 2025 with $18.6 million in cash and $30.8 million in working capital.
Operations, sales and marketing investments, and product updates
Givens said VirTra used the slower conversion period to align operations, including inventory and production capacity, to be able to fulfill orders quickly as funding clears and purchase orders are issued.
He also described targeted commercial investments, including adding a second dedicated federal sales resource and hiring a director of marketing with “deep simulation and defense industry roots.” Givens said marketing cadence increased at the start of 2026 following a website redesign completed in fall 2025, with early signs including higher inbound activity, more demo requests, increased time spent on the website, and more qualified leads. He added that VirTra plans to expand its presence at key industry events and continues working through a GSA re-entry process that he expects will be completed by the third quarter, which management believes will shorten the path from agency interest to order.
On the product side, Givens highlighted several developments:
- APEX analytics platform: Integrated across VirTra’s system to capture and analyze performance data in real time, including accuracy, reaction time, and decision making. Givens said APEX has been a differentiator in recent customer wins and may support additional revenue opportunities through customization and servicing over time.
- VBS4 integration: Continued advancement to enable more flexible and customized training environments; Givens said the company has demonstrated these capabilities with multiple U.S. military groups and received encouraging feedback.
- Drone defense training solution: Introduced for correctional professionals to address threats from unauthorized drones in secure environments, with early interest and engagement.
- V-XR platform: Givens said adoption continues to grow, with multiple systems sold in recent months and additional demand building in the pipeline.
Military pipeline and AI initiatives discussed in Q&A
Asked about military engagement, Givens said VirTra has multiple engagements across the Army, Navy, and Marine Corps, with evaluations underway and longer sales cycles than in law enforcement. He referenced programs such as the Soldier Virtual Trainer and said the company is also extending work with ADMIRE and special operations. He said interest has included the company’s “V100 Next Generation” portable system and described military interest in replacing aging systems.
On artificial intelligence, Givens said he does not view AI as a threat, describing it instead as an “igniter” that can enable the company to do more with less. He cited examples including using AI models to help create scenario-related assets and accelerate software debugging and performance analysis. He also described a potential “AI tutor” concept, where AI could analyze shooting performance based on inputs such as instructor notes and standard operating procedures to provide feedback. On monetization, he said the company is evaluating ways to monetize AI features but emphasized near-term benefits as cost savings and performance improvements.
In closing remarks, Givens said that early 2026 is showing shifting macro conditions with funding moving back into the system and increasing customer activity, while reiterating that conversion will depend on external timelines. Management said the company’s focus is converting backlog and heightened engagement into revenue “in a disciplined and efficient manner.”
About VirTra (NASDAQ:VTSI)
VirTra, Inc (NASDAQ: VTSI) develops and markets simulation-based training systems designed to enhance decision-making, marksmanship, and judgmental use-of-force skills for law enforcement, military, corrections, and commercial security organizations. The company’s virtual reality–based solutions integrate immersive video, scenario-based engagement, and live firearms training to create realistic, customizable exercises. By combining hardware, software, and content, VirTra aims to deliver comprehensive training environments that replicate real-world challenges faced by frontline professionals.
Key products in VirTra’s portfolio include the V-300 and V-150 immersive training simulators, which offer wraparound projection with touch-screen compatibility for weapon-mounted or handheld controls.
