Michael Bond

Thank you, Mickey, and good morning, everyone. Looking at our financial results for the third quarter. Revenue in the third quarter was $7.1 million compared to $7.2 million in the third quarter of 2023. Revenue for the 9 months ended September 30, 2024, was $24.4 million, an increase of 26% over the prior period. Gross margin was 51%, that's down from 54% in the prior year period.
Net loss for the quarter was $3 million or a negative $1.22 per share. That compares to a loss of $2 million or a negative $0.83 per share in the prior year period. This was a result of lower-than-expected revenue in the quarter and higher fixed costs across the organization. Total expenses were $10.3 million compared to $9.5 million in the prior year period. Our Q3 expenses reflected an increase in costs associated with personnel required for the ERP implementation, which ramped up during the quarter as well as higher expenditures for strategic R&D investments.
Turning to our profitability measures. Operating loss was a negative $3.3 million compared to a loss of $2.3 million in the prior year period. Net loss attributable to common shareholders was a negative $3 million or a negative $1.22 per share compared to a loss of $2 million or a negative $0.83 per share in the prior year period. Moving to our balance sheet. As of September 30, 2024, our cash and short-term investments stood at $9.2 million compared to $11.5 million in June 30 -- at June 30, 2024.
Working capital was $27.1 million at the end of third quarter compared to $31.8 million at June 30, 2024. The company expects to see improving working capital performance in the coming periods, primarily due to better vendor terms through consolidated purchasing, shorter installation and customer acceptance periods for large systems implementations and better inventory management, all driven by the new ERP system implemented in the third quarter. That concludes my prepared remarks. I'll now turn it back to Mickey.

Carleton Miller

Thanks, Mike. Returning to operational updates. Our MilGov markets remain on a strong growth trajectory. Our strategic initiatives to grow in this market are continuing to bear fruit. Currently, half of our sales funnel with a 40% or higher probability are MilGov opportunities.
This represents a significant shift for a market that historically accounted for less than 30% of our revenue. It is important to note that this is not a result of a decline in our Live Production funnel, opportunities in both markets continue to grow. We project over $9 million in MilGov bookings for 2024, which would represent year-over-year growth of over 60%. Our success in the MilGov sector is driven by our Airborne Video Downlink Systems which are market leaders in delivering real-time video intelligence for critical missions. AeroLink, our aircraft-based transmission unit has become the cornerstone of our Downlink solution.
In fact, the growing popularity of AeroLink is helping drive sales of other components in our Downlink system. Once law enforcement and defense organizations experience the enhanced image quality, lower latency and other capabilities of AeroLink, it often leads them to upgrade their ground infrastructure and other components of their transmit and receive systems, including migrating to our Air-to-Anywhere secure streaming platform, ensuring optimal situational awareness for all stakeholders. Further, the release of our Aero5 bonded cellular solution addresses the needs of those customers interested in leveraging the public cellular infrastructure. We believe the drone public safety and defense industry is well positioned for growth, driven by increased defense spending in formalized policy. Enhanced investment in R&D for autonomous systems, and secure communication technologies will drive innovation, positioning companies to lead in advancing global security and uncrewed solutions.
We view this as an exciting trend and believe that the increased investment we've made in drone command and control position us to capitalize on emerging opportunities in this sector. We are taking steps to enhance our visibility as a thought leader in the sector of uncrewed communications and to engage more with key players in the market. Turning to our services capability. We continue to focus on driving more recurring revenue through service level agreements for 24/7 support, depot repair and software upgrades. Less than 10% of our product base is covered by an SLA.
We see tremendous upside in this area, and we'll continue to invest to create a capability to support our global customer base. In December, we will introduce the LinkMatrix v2, which will provide a secure user-friendly interface to communicate and diagnose not only our cellular products, but our entire product portfolio. This will enable our service teams to remotely diagnose, manage and provide software updates to all Vislink customers.
Going forward, we plan to continue targeted R&D investments introducing incremental enhancements and major upgrades to sustain our competitive advantage. Among the noteworthy installations in our Live Production area in Q3, we won several bids from news agencies for Airborne Downlink Systems featuring the AeroLink transmitter. In these cases, our Downlink Systems will be used to deliver aerial coverage for breaking news and sports. This highlights how we are leveraging our expertise in supporting complex military and public safety missions to provide the broadcast and [ENG] market with high-quality video, reliable connectivity and seamless distribution across all broadcast and cloud platforms. We are also seeing exciting growth in the international markets for our Live Production solutions.
During the quarter, we secured a bid for our bonded cellular transmission system to support live telecast of Mexico Supreme Court. Additionally, our bonded cellular solutions were deployed to cover the elections in the country of Georgia at the end of October. We also won a project to upgrade Malaysia's national broadcaster, enhancing live news and sports coverage.
Overall, international quoting activity remains strong, and we expect continued robust contributions to our global revenues from non-North American markets. Our go-to-market strategy is continually evolving, yielding encouraging outcomes across our 4 primary focuses: live video connectivity; video data transport; AVDS; and Drone C2. Progress in Drone C2 has been especially notable. While still an emerging sector, we anticipate a rapid expansion in the coming years, particularly related to border security, and a focus on American-made defense platforms. Our bonded cellular technology continues to be a cornerstone for live video connectivity and video data transport, providing reliable, high-quality video transmission for a wide range of applications.
We are strengthening collaborations with key OEM partners to ensure our technology road map aligns with our evolving needs, further solidifying our leadership in meeting market demands. We look forward to engaging with companies in emerging technology fields, such as virtual and augmented reality and artificial intelligence, where our live video transmission technology can unlock new commercial applications and drive growth. Our collaboration with FocalPoint VR on the A2RL, Abu Dhabi Autonomous Racing League, is a prime example of this and has earned several awards for its innovation. Looking ahead, we remain committed to our 3-year strategy, though we may adjust the timeline to reflect the evolving market landscape, we have recalibrated our cost structure to align with this extended timeframe. With strong ongoing demand for our trusted solutions, a shift toward high-margin service revenue and a continued focus on cost efficiency, we are confident in our ability to execute our strategy and achieve sustainable, profitable growth over the long term.
We appreciate your continued support and confidence in Vislink. We look forward to keeping you updated on our progress in the coming quarters. Operator, please provide the appropriate instructions.

Question and Answer Session

Operator

(Operator Instructions)
Brian Kinstlinger, Alliance Global Partners.

Brian Kinstlinger

I might have missed it, did you share the total pipeline? I guess I was wondering if it's been impacted by some of your short-term challenges.

Carleton Miller

No, you didn't miss it, Brian. The pipeline is above where we were last -- I think we shared at $48 million. We're around $50 million weighted pipeline right now. As we mentioned, half of that above 40% of MilGov opportunities, which we think is very positive given that traditionally was a less than 30% revenue source for us. So we continue to see opportunities on the Live Production side as well.
So it's not that those are going down. It's just overall. We just saw some -- in this quarter, some softness on the Live Production side and a lot of it had to do with a lot of customers were busy for 1.5 months in Paris with the Olympics.

Brian Kinstlinger

So if we could start with MilGov business. In your prepared remarks, you mentioned it was lower than expected. You commented, there was a MilGov order in the Middle East that was delayed? How big was this order? And what are your expectations based on discussions as -- at least, it doesn't appear the heightened tension in that area are ending any time soon?

Carleton Miller

Yes. That's a good point. We had -- in August, we had a demonstration of the new technology that we're working with. And this is a customer, that particular opportunity you're talking about is a customer where we're the embedded incumbent source where they have over 200 rotary helicopters and fixed-wing as well as multiple receive sites to cover the entire country. In August, that was delayed.
We're seeing signs that, that will pick up at the early part of next year to be able to do that demonstration and trial and proceeds with executing on that project. So we're expecting about a 6-month delay to that.

Brian Kinstlinger

Got it. And then can you talk about the pipeline? You mentioned in MilGov about half. I think the goal was to eliminate shortfalls due to one order getting delayed, obviously. So are there a dozen opportunities in there?
Are there many more than that? I'm just trying to understand the diversification of the pipeline.

Carleton Miller

Yes. Great question. Yes, it's quite robust. Just to give you an example, in this past year alone, Baltimore -- we deployed Baltimore City, just looking at history and then we'll talk about the future. We deployed Baltimore City, Baltimore County, the New Jersey State Police, we mentioned D.C.
Metro on this call. We also got our first initial opportunity with Department of Homeland Security. So we've got quite a track record of high-profile, very meaningful customer engagements that have resulted in success and we're building on that. We just most recently, got an order from the Danish MOD. And so we're seeing pickup not only here in the U.S.
with state and local, which has been a strong point for us. But through our acquisition of BMS, now we're having much greater exposure to Middle Eastern, European and Asian opportunities where they were incumbents. And that's where we're seeing the big opportunities that traditionally weren't part of the Vislink portfolio of customers.

Brian Kinstlinger

Okay. And the last one on MilGov. Can you quantify the percentage of revenue actually in the third quarter? I know you gave some rough numbers, and what it historically has been, but maybe a third quarter number would be helpful to understand the growth trajectory of the entire business.

Michael Bond

Brian, just proportionately, out of the $7 million, we did, Live Production was $4.4 million and MilGov was $1.8 million, and then we had some service revenue in there for $700,000.

Brian Kinstlinger

Great. And then moving to live entertainment. Here we are 5 months after the Olympics. Are you starting to see a pickup? And is that more first half of the year and we'll see another sluggish fourth quarter?
Just kind of maybe with timing and expectations for investors.

Carleton Miller

Yes. I think, Brian, we're seeing a pickup in quoting and purchasing activity. That's for sure. We had a good start to this quarter. But again, we expect some of this will be back-end loaded.
So we will have a sluggish fourth quarter. One of the reasons we took proactive restructuring activity. Just to point out on that, when you saw around margins, we had acquired BMS last year. With that, we acquired the BMS production facility. And then we also had 2 production facilities within Vislink.
And so now we're consolidating to a single facility that's going to allow us to obviously improve our conversion cost, improve our management of inventory. So we expect to weather through this next quarter, but we're looking back to the kind of growth that we are looking at the beginning of the year in this quarter. We got a good start in October. November is looking good, and we hope to finish strong in December, but much of that will be for deliverables next year.

Brian Kinstlinger

Great. Last question, you started the answer that, $6 million is a large number to cut your business. Are you moving to 1 or 2 production facilities? And then how much is that reduced footprint saving versus equal or maybe anything else that you're doing?

Carleton Miller

Yes, we're moving to one, and Mike, can give you the detail.

Michael Bond

Yes, we're taking out costs associated with 2 facilities, one we're downsizing, one we're taking out completely. Those costs are around $800,000, and they'll come out in the next I would say, the next quarter, in fourth quarter or first quarter of next year. And then we're taking out a significant number of headcount. And just of that $6 million, the headcount alone is $3.7 million. And the majority of that is either notified and is leaving the business now or will leave in the fourth quarter with some remainder in the first quarter of next year.
But the vast majority will be going out at the end of the fourth quarter.

Brian Kinstlinger

Just doing the math here quickly. When you say $800,000 for the facility, is that per quarter, and then it adds up?

Michael Bond

Total. That's alleviation of rent, taxes, utilities, things like that, it's about $850,000. And then we've got other expenses that we're cutting in the business that will total out to probably another $1.1 million that will come out over time over the remainder of next year. There will be a ratable reduction in our run rate.

Operator

(Operator Instructions)
And at this time, we are showing no further questioners in the queue, and this does conclude our question-and-answer session. At this time, I would like to turn the conference back over to Mr. Mickey Miller for any closing remarks.

Carleton Miller

Thanks, Chris, and thank you, everyone, for joining us today. We look forward to continue to build this company and deliver those returns that you expect. So thanks very much.

Operator

The conference has now concluded. Thank you for joining us today for Vislink's Third Quarter 2024 Conference Call, and you may now disconnect.