Gatekeeper Systems Inc. (GSI) Earnings Call Transcript
October 20, 2026
Earnings Call Speaker Segments
Good afternoon, ladies and gentlemen, and welcome to the Gatekeeper Systems, Inc.'s Annual General Meeting. [Operator Instructions] This call is being recorded on Tuesday, October 20, 2026. I would now like to turn the conference over to Doug Dyment. Please go ahead.
Good afternoon, and thank you for joining us. My name is Doug Dyment. I'm the President and Chief Executive Officer of Gatekeeper Systems. I will act as the chairperson of the meeting. I wish to welcome you to the company's Annual General Meeting. Kelsey Chin, CFO and Corporate Secretary of the company, will act as Recording Secretary for this meeting and will be assisting by submitting motions and voting in order to move the meeting along. Marissa Beintema of Computershare Investor Services Inc. is present at the meeting to act as Scrutineer. Please note that only shareholders present in person or by proxy at the physical meeting location are entitled to vote. Shareholders attending by conference call, were encouraged to vote prior to the meeting. We will deal with the formal business of the meeting. Following the formal business, I'll provide a corporate update and answer any questions that you may have. I have received proof of the mailing of the notice calling this meeting, together with a copy of the information circular and form of proxy. I ask that a copy of each of these, including proof of mailing be retained by the Secretary with the records of this meeting. I note that only registered shareholders of common shares as of the close of business on September 15, 2026, or their duly appointed proxy holders are entitled to move motions, speak to them and vote on them. Voting at this meeting will be conducted by saying, I, unless a ballot or poll is requested at any time immediately prior to a vote on the relevant motion being called for or if otherwise required. The core requirements for a shareholders' meeting are set out in Section 11.3 of the articles of the company, a quorum for the transaction of the business at a meeting of shareholders shall be 1 person who holds or who represent by proxy shareholders, who hold in aggregate at least 5% of the issued and outstanding shares entitled to be voted at the meeting. The preliminary report of the Scrutineer indicates attendance at this meeting of the following shareholders. 0 shareholders in person holding 0 shares, and 75 shareholders present by proxy representing 11,226,356 shares for a total of 11,226,356 shares or approximately 10.03% of the number of shares issued outstanding, which as of the record date of September 15, 2026, was 111,902,621 common shares outstanding. I declare that there is a quorum present. This meeting is regulatory called and properly constituted for the transaction of business. The first item of business is the presentation of the financial statements of the company and the report of the auditors for the financial year that ended August 31, 2025. The financial statements and auditor's report were mailed to shareholders requesting a copy and are available on SEDAR. I now declare that the financial statements and auditors' report have been received by the shareholders as submitted to this meeting. The next item of business at this meeting is the ordinary resolution to set the number of directors of the company to 4 directors. The information circular mailed to shareholders contains the details of this resolution. I ask for a motion that the number of directors of the company to be set at 4 directors. May we have such a motion.
I so move.
I second the motion. Any discussion? If there's no further discussion, would all of those in favor, please indicate so by saying aye.
Aye.
Opposing, if any, I declare that the motion has been carried. The next item of business at this meeting is the election of directors to the Board of Directors of the company. The information circular mailed to shareholders contains the names of proposed nominees to the Board of Directors. Those nominees are Doug Dyment, Charlie Bruce, David Stumpo; and Hamish Dobson. As the company has not received notice of any further nominations in accordance with the advanced notice provisions of the articles of the company, I move that the nominations be closed and that the persons nominated be elected as directors. I declare that the individuals nominated are duly elected directors of the company. The next item of business is the appointment and remuneration of auditors of the company. I ask for a motion to reappoint Davidson & Company LLP as auditor of the company for the ensuing year and authorize the Board to fix the remuneration to be paid to the auditors. May we have such a motion.
I so move.
I second the motion. If there is no further discussion, would all in favor, please indicate by saying aye.
Aye.
Opposed, if any? I declare that the motion has been carried. The next item of business is the ordinary resolution to reapprove the company's 10% rolling stock option plan dated May 18, 2016, which was last approved by shareholders on September 16, 2025. The company's stock option plan and full text of the resolution is more particularly described on Page 10 of the information circular. To be effective, this resolution must be passed by the majority of the votes cast at the meeting. Unless there is any objections, I will ask for a motion from the floor. Would anyone care to make a motion with respect to this matter?
I move that the ordinary resolution approving the share option plan of the company, the full text of which is set out on Page 11 of the information circular be approved.
I second the motion. If there is any further discussion, would all those in favor, please indicate so by saying aye.
Aye.
Opposed, if any? I declare that the motion has been carried. The formal agenda for this meeting is now completed. I will ask for a motion that this meeting be concluded.
I move that this meeting be concluded.
I second the motion. Would all those in favor, please indicate so by saying aye.
Aye.
Against? I declare that the motion has been carried, and the formal business of this meeting is concluded. I will now provide a brief company update. So I noticed online that we have a, I believe, a few new shareholders. So the update is going to start with the Q3. We're in the process of filing our Q4 and year-end. So I won't be able to talk in detail about the results just yet. We will be having an earnings call once we file those -- file the 2026 year-end results. So at the end of Q3, Gatekeeper showed about $12.5 million in revenue, which was a 68% growth and $2.4 million in adjusted EBITDA, one of the strongest quarters in the company's history, and we had announced about $73 million in new contracts during the current fiscal year as of the end of Q3, and we had only shipped approximately $14 million. So that left a significant amount of back order, probably the largest back order in the company's history to be shipped and revenue recognized in following quarters. The Q3, we also announced that as of the end -- as of the end of August, end of our fiscal year, our subscriber growth had grown to 7,700 MDCs and the installed base of MDC is now approximately 72,000. So when we first invested in the data center a little over 2 years ago, some of you may remember that during the first few months, we had about 300 MDCs delivering recurring revenue. So this growth 2 years later has been significant. And to date, we're now approaching 8,000 MDCs. So this investment in our data center was a key piece of our our business strategy to evolve as a data company. And I couldn't be more happy with the growth. The investment was made in a way that allows us to scale margin, the more MDCs that we have under subscription. And so this growth is really showing that the current feature set that we provide our customers to streamline video, look at recorded video as well as give them a little bit of storage on our data center per fleet and built in AI for health check analytics, is really a strong feature set that our customers enjoy because, frankly, school districts in particular, don't necessarily want to invest in the amount of server hardware to manage the video that their systems are collecting out at the edge. So we're very pleased with this investment and how it's paying dividends for our shareholders. So I'm going to talk a little bit about the activity that goes on behind the scenes that really helps to drive revenue. And by the way, the momentum that we created in Q3 has spilled over into Q4. And I'm really excited to get this -- get our audit complete, so we can file our financials and talk in more detail about the 2026 fiscal year, which has shaped up to be one of our strongest years ever. So we're really excited about that. But the activity that goes on behind scenes is significant. So for instance, in the -- on the trade shows in the sales and marketing, the amount of conferences to build out Gatekeeper's brand has increased significantly. So as an example, this year alone, this fiscal -- or this calendar year alone, we will be exhibiting at 56 school bus transit shows or School Bus Shows and conferences and 16 transit. That's -- and again, that's leading into the 2026 calendar year. We recently were active at the -- which is the American Public Transportation Association, October 4 to the 7. There's over 12,000 attendees, representing 85 countries and over 800 exhibiting companies. And I must say that the work that, the great work we've done at [indiscernible] -- and now at Long Island Rail, where we're getting ready to start to recognize revenue under that $27 million contract that we announced, has really caught the attention of some of the largest train manufacturers. So we're engaged in conversations with Hitachi while we are in Chicago, so we're looking forward to getting our contracts and slowdown requirements as part of that contract that they won at SEPTA. And in addition to that, there's there's activity going on now that is accelerating with Alstom, which is really exciting. And this has to do with the political turmoil that's going on with with the political turmoil in the United States and Canada, where our Prime Minister has basically stated that there's going to be more there's going to be, I suppose, a favoritism to Canadian companies for some of these contracts that take place in Canada. And frankly, there's -- if you look at Alstom, a company called Hassler Rail, they're talking to us as well. There's a requirement for these OEM providers to source out Canadian technology companies for some of these large Canadian rail projects. So we couldn't be more excited about that. The timing is perfect with the build-out of our train platform and some of the wins that we've had down in the U.S. And now we -- our plan is to accelerate that process in Canada on the backs of some of these large OEM rail providers. I'd also like to touch base on the school bus market. The K-12 division in protecting kids in [indiscernible] transit, it's really starting to take hold. I know a lot of our investors are are interested in some of the large projects that we're working on in the Transit market. And quite frankly, we're now over $200 million in projects that are in some form of stage, either RFP or we're working on them. So you may remember that I mentioned -- I talked about bucket #1 and bucket#2 and bucket#3. Bucket #1 has announced contracts in 2026 fiscal, and that was in the neighborhood of $73 million. And then bucket#3 has spec deals that we are 99% sure we're going to win, and Hitachi would be one of those. There's around $50 million in that bucket. And then the third bucket is projects in the Transit side of things that are quite large that are at some stage. And we're seeing that growing significantly as we build out the business and work with some of these large OEMs. So really excited about the potential of of the future of the Transit side of things, particularly in the Rail space. But this K-12 group is really delivering some solid revenue. And you'll -- you have more visibility to that in when we file our financials after the audit. And further to that, the subscription adoption in the K-12 side of things, it's significant. And you can see it by the number of MDC. So we're looking at a significant increase in our subscription revenue with higher margins in 2027 fiscal. So really excited about the building blocks that we put in place in order to grow this business. But we've got to continue to invest. We've got to invest smartly, we did 2 bought deal financings in the last 12 months or so, raising around $25 million. If you look at our working capital at the end of Q3, we were sitting on about $37.5 million -- $37,500,000 million, including cash of about $6.2 million. As of today, that working capital is now over $40 million and about $15.2 million in cash. Receivables are about $7.1 million. So the working capital is over $40 million now. And we need -- like I say, we need to put that money to work smartly. So that's what we're in the process of doing, in order to accelerate the growth here at Gatekeeper. And I encourage investors, I'll just -- before we open it up to questions here, I would encourage investors to continue to look at Gatekeeper as a growth story and don't necessarily compare us quarter-to-quarter, right? Focus on a 12-month comparative. right? And the reason for that is that some of these projects that are coming out of the government there, we have no control over when they land. So the quarters can sometimes be a little bit lumpy. Now obviously, we're working hard to even out that lumpiness by launching that data center and getting more recurring revenue in, which typically is our recurring revenue contracts are 3 years to 5 years, right? So that growth should start to even out the revenue mix a little bit as it fluctuates from quarter-to-quarter. So that's all I've got for the moment. Operator, if you can open it up to questions. I appreciate that.
[Operator Instructions]
So the first question is, is the business on track for 10,000 MDCs on subscriptions by end of 2026? Well, by the end of 2026, that you're talking about the fiscal year, so that's already passed. If you're talking about the calendar year, I would focus your attention on the on our fiscal year. So we are currently around 8,000 MDCs. So if you look at the number of MDCs that we sold last year, we were around 7,700, right? So we're averaging anywhere from 5,000 MDCs to 8,000 MDCs each year. And we're seeing a percentage conversion rate to subscription of about 50%. So the answer to you is basically by August 31, 2027, fiscal, which we're now in the first quarter of 2027 it would be, I think it's logical to assume that we should be over 10,000 MDCs.
[Operator Instructions]
So next question, operator, is how close are the $50 million specified projects to formal customer orders and how mature is the $280 million pipeline? I'll answer the first part of that by just saying that we are working with Hitachi on the first project or I should say the second train line, first train line that was announced was with Alstom. And we don't have any hard coded date yet. There's typically -- there's a negotiation that goes on with Hitachi. What we have been told by Hitachi is that we will be dealing with Hitachi, not their subcontracted. So hopefully, that can speed things up. But we don't have any hard coated data at the moment. As far as the $280 million pipeline or the over $200 million in the pipeline, that is always fluctuating. And it's a typical -- it's just a typical number of projects that we're working on. And I will say that these train projects in transit, they can take some time. But if you can get them in the boat, they can be quite fruitful for the company. And you've seen that with Long Island Rail announcement. Operator, I'm not seeing any other questions.
Yes. It seems like we don't -- we have another question just came in right now.
Okay. Should investors expect meaningful awards in the next quarter, next 6 months or further into the 2027? As we don't see many news releases, we have to [indiscernible] on the guidance from these calls as an indicator. And I can say that Gatekeeper is on the K-12 side of things, there's a number of projects. We don't have a tendency to news release every project. It's landed. Otherwise, we've been news releases out probably daily. But as far as some of the more meaningful awards, I would think that our investors are going to see some meaningful contracts get awarded here certainly in the 2026 fiscal. So -- and like I said earlier, the award that Hitachi has where we're spec-ed on those trains at SEPTA, we're in conversations with them, right? And by the way, I mean, we're -- and I mentioned this earlier, we're also in conversations with some of the other large rail companies or OEMs for business in Canada. So hopefully, there's -- hopefully, we've got some announcements coming on some of the new relationships where we're partnering in order to leverage our business and accelerate growth.
[Operator Instructions].
Okay. Operator, I think that is the -- all the questions that we have to deal with. I'd like to thank all the investors that participated on the call and look forward to reporting our fiscal 2026 year-end. Thank you.
Ladies and gentlemen, this concludes today's Gatekeeper Systems, Inc. Annual General Meeting. We thank you for participating, and we ask that you disconnect your lines. Thank you for today.
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