Executive Summary

Q1 FY25 revenue rose 34% year over year to $1.20M; operating loss narrowed to $3.0M; Adjusted EBITDA improved to $(2.9)M; however, net loss to common stockholders widened to $(17.46)M due to a non-cash deemed dividend related to warrant modifications ($14.91M) .
Management executed a strategic pivot: exiting the DNA Tagging & Security Products segment (20% workforce reduction; ~13% payroll savings) to focus on LineaRx enzymatic DNA manufacturing; GMP Site 1 was completed and certified for commercial operation in January .
Initial GMP capacity is ~10 grams/year of IVT template DNA (management’s model: $10–$30M annual revenue potential depending on mix); first GMP order is anticipated in the quarter ending June 30, 2025 (late-stage process development under way) .
Cash and equivalents were $9.29M at 12/31/24 (vs. $6.43M at 9/30/24), with CFO noting “substantial doubt” about going concern remains; average monthly cash burn is just over $1.2M fiscal YTD .
No formal revenue/EPS guidance or Wall Street consensus estimates available via S&P Global for Q1 FY25; estimate comparisons are not presented. We attempted to retrieve S&P Global consensus but it was unavailable.

What Went Well and What Went Wrong

What Went Well
- Strategic refocus and execution: “We are focused on commercializing the DNA production capacity of our recently certified GMP Site 1 facility… a unique competitive advantage… and the lynchpin to our future success.” – CEO, Dr. James Hayward .
- Operational readiness and scale: “To our knowledge, we have today the largest manufacturing capacity for GMP-grade PCR-produced DNA in North America, implemented under budget.” – President, Judith Murrah .
- Product pipeline expansion and sales funnel: Launch of Linea Donor DNA (RUO; targeted GMP later in CY25) for CRISPR HDR use cases; robust GMP IVT sales pipeline with opportunities per project ranging from ~$50k–$1M (IVT only) or ~$150k–$3M (IVT+RNAP) .
What Went Wrong
- Going concern persists; liquidity still tight: CFO reiterated “substantial doubt” remains; cash $8.2M as of 1/31/25; special meeting to approve warrant exercisability reconvened due to lack of quorum .
- Net loss to common ballooned on non-cash deemed dividend ($14.91M) tied to warrant modifications, masking operating improvement (operating loss improved YoY) .
- Segment exit and cost cuts reflect pressure: Company exited DNA Tagging; 20% headcount reduction (~13% payroll) with $300k one-time separation costs expected in March quarter; some DNA Tagging customers retained but broader segment wound down .

Financial Results

Summary financials (oldest → newest)

Metric	Q3 FY24	Q4 FY24	Q1 FY25
Revenue ($)	$797,519	$813,106	$1,196,617
Gross Profit ($)	$245,232	$244,899 (calc from Revenue − Total cost of revenues: $813,106 − $568,207)	$684,107
Gross Margin (%)	30.8% (calc from $245,232 / $797,519)	30.1% (calc from $244,899 / $813,106)	57.1% (calc from $684,107 / $1,196,617)
Operating Expenses ($)	$3,591,925	$3,516,155	$3,648,108
Operating Income (Loss) ($)	$(3,346,693)	$(3,271,256)	$(2,964,001)
Net Income (Loss) ($)	$1,849,501	$(3,313,744)	$(2,668,713)
EPS (Basic & Diluted)	$0.47	$(0.32)	$(0.56)
Adjusted EBITDA ($)	$(3,182,295)	$(3,152,804)	$(2,888,877)
Adj. EBITDA Margin (%)	(399%) (calc from $(3.182)M / $0.798M)	(388%) (calc from $(3.153)M / $0.813M)	(241%) (calc from $(2.889)M / $1.197M)
Cash & Equivalents (period-end)	$10,442,131 (6/30/24)	$6,431,095 (9/30/24)	$9,294,365 (12/31/24)

Revenue mix (oldest → newest)

Revenue Mix	Q3 FY24	Q4 FY24	Q1 FY25
Product Revenues ($)	$246,644	$127,727	$495,847
Service Revenues ($)	$226,145	$359,899	$374,444
Clinical Laboratory Service Revenues ($)	$324,730	$325,480	$326,326
Total Revenues ($)	$797,519	$813,106	$1,196,617

Q1 year-over-year comparison (Q1 FY24 vs Q1 FY25)

Metric	Q1 FY24	Q1 FY25
Total Revenues ($)	$891,164	$1,196,617
Operating Loss ($)	$(3,789,066)	$(2,964,001)
Net Loss ($)	$(1,130,281)	$(2,668,713)
Net Loss to Common ($)	$(1,182,857)	$(17,456,635)
EPS (Basic & Diluted)	$(1.73)	$(0.56)
Adjusted EBITDA ($)	$(3,162,948)	$(2,888,877)

Context and drivers:

YoY revenue growth was driven primarily by a shipment of DNA taggant for cotton marking and higher isotopic testing, while operating loss improved on lower SG&A (including stock-based comp) and consulting costs .
Gross margin expanded sharply in Q1 FY25 on revenue mix and lower cost of revenues versus Q1 FY24; non-GAAP Adjusted EBITDA also improved YoY .
The large net loss to common reflects a non-cash deemed dividend related to warrant modifications, not core operations .

Guidance Changes

Metric/Item	Period	Previous Guidance/Commentary	Current Guidance/Commentary	Change
Business mix/strategy	FY25	Pursuing divestiture of CertainT; retain ADCL and non-GMP DNA; refocus on Linea DNA/IVT	Exiting DNA Tagging segment; retain certain customer contracts; focus on LineaRx GMP DNA	Accelerated to exit Tagging segment
OpEx/cost actions	FY25	Targeting OpEx reductions of 15% vs FY24; completion by Q2 FY25	Workforce reduction ~20% headcount; ~13% annual payroll savings; one-time ~$300k in Mar-qtr	Implementation details provided
GMP facility status/capacity	H1 CY25	Buildout expected complete by Jan 9, 2025; annual revenue capacity modeled at $4–$16M depending on mix	Buildout completed Jan 31, 2025; certified for commercial operation; ~10g/yr IVT DNA capacity; $10–$30M potential depending on mix (internal model)	Capacity framing updated upward on revenue opportunity
Commercial ramp	H1 CY25	GMP production runs expected to begin early CY25 to supply clinical trial materials	First GMP IVT template order anticipated in quarter ending Jun 30, 2025 (late-stage process dev)	New timing specificity
ADCL (PGx) footprint	FY24/25	CLEP/CLIA permit expansion; exploring reference lab opportunities	Certifications completed to expand TR8 PGx to all 50 U.S. states recognizing NY CLEP/CLIA	Expanded addressable footprint

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 FY24, Q4 FY24)	Current Period (Q1 FY25)	Trend
Enzymatic DNA manufacturing (LineaRx)	GMP launch targeted FY24 year-end; initial capacity “over 5g” for IVT templates; vendor approvals progressing	GMP Site 1 completed/certified; “largest” GMP-grade PCR DNA capacity in NA (to mgmt’s knowledge) under budget; focus on commercialization	Execution milestone achieved; commercialization push
Revenue capacity framing	$4–$16M annual capacity depending on mix (model)	~10g/yr IVT capacity with $10–$30M potential depending on mix (internal modeling)	Upward reframing of opportunity
New products	—	Launch of Linea Donor DNA (RUO), GMP targeted later CY25	Portfolio expansion
Customer pipeline	Multi-customer evaluations; approvals as GMP vendor	Over 25 customer projects in FY24; final stages with Boston mRNA developer; aim for GMP mfg by May–June	Pipeline maturing toward orders
Clinical validation	—	First-in-human CAR-T clinical use (IHBT, Prague) using Linea DNA; chosen over plasmid competitor	Early validation secured
Cost discipline/Going concern	—	Workforce reduction; going concern persists; cash burn ~>$1.2M/month FYTD; special meeting to enable warrant exercises	Tight capital; active measures
MDx (TR8 PGx)	CLEP/CLIA expansion and targeting	Certifications complete for all 50 states recognizing NY CLEP/CLIA; assessing reimbursement and new assays	Platform positioned, go-to-market refinement

Management Commentary

“We are preparing for initial orders of clinical grade materials… [and] believe our capacity for the GMP production of DNA in an economical, fast, and scalable manner… is the lynchpin to our future success.” – CEO, Dr. James Hayward .
“To our knowledge, we have today the largest manufacturing capacity for GMP-grade PCR-produced DNA in North America, implemented under budget.” – President, Judith Murrah .
“Initial revenue opportunity for IVT templates… ranges from about $50,000 to $1 million per opportunity for IVT templates alone, or about $150,000 to $3 million per opportunity for IVT templates sold with [Linea RNAP].” – Clay Shorrock, President, LineaRx .
“Our 10-Q maintains… substantial doubt [about] a going concern. Our ability to alleviate [it] is dependent on… generating revenues or [raising] capital.” – CFO, Beth Jantzen .

Q&A Highlights

CRISPR donor DNA opportunity: Management sees strong parallels with IVT template demand and the need for large-scale blunt-ended DNA; Linea Donor DNA leverages existing workflows and is available RUO now, with GMP targeted later in CY25 .
Q1 revenue drivers: Shipment of DNA taggant to a cotton customer and increased isotopic testing volumes; certain Tagging contracts retained post-restructuring given manufacturing synergies .
Clinical trial dynamics (AML CAR-T in Prague): Phase I expected ~18 months; selected over a plasmid competitor for speed and regulatory ease; limited direct revenue expected (hospital-based trial), but seen as critical validation .

Estimates Context

Wall Street consensus (S&P Global) for Q1 FY25 revenue/EPS/EBITDA was not available; therefore, we do not present comparisons to consensus. Management did not issue quantitative guidance.
Where estimates may adjust: As GMP orders convert and capacity utilization builds (target: first GMP order by the June quarter), revenue trajectory and margin outlook may need upward revision from currently depressed run-rate levels; however, execution and funding remain gating factors .

Key Takeaways for Investors

The strategic exit from DNA Tagging and completion of GMP Site 1 marks a decisive pivot to higher-value enzymatic DNA manufacturing with a potentially larger revenue opportunity per management’s model ($10–$30M per ~10g/yr capacity) .
Near-term catalysts: first GMP IVT template order by the June quarter; additional CDMO/therapeutics contracts; progress in Donor DNA toward GMP; expanded PGx commercialization steps .
Financial de-risking hinges on order conversion and capital flexibility; going concern persists with average monthly cash burn just over $1.2M fiscal YTD and $8.2M cash as of 1/31/25 .
Q1 showed operating improvement (YoY lower operating loss, better Adjusted EBITDA) and sharp gross margin expansion on mix, but headline net loss to common was inflated by non-cash warrant-related accounting .
Execution focus: scaling GMP output via modular, low-CapEx cleanrooms to align capacity with contracts; management believes this “copy-and-paste” approach can improve capital efficiency and margin profile .
Validation signals (Prague CAR-T, multiple evaluations, vendor approvals) support the thesis that Linea DNA/IVT is competitive on speed, quality, and regulatory ease vs. plasmid alternatives .
Stock reaction catalysts will be tied to tangible GMP contract wins, evidence of recurring orders, and clarity on funding runway/cap table actions.

Appendices

Additional KPIs and Balance Sheet Snapshot

KPI	Q3 FY24	Q4 FY24	Q1 FY25
Accounts Receivable ($)	$513,871 (6/30/24)	$362,013 (9/30/24)	$911,502 (12/31/24)
Deferred Revenue (current) ($)	$51,285 (6/30/24)	$58,785 (9/30/24)	$217,215 (12/31/24)
Warrants (liability) ($)	$186,000 (6/30/24)	$320,000 (9/30/24)	$76,000 (12/31/24)
Shares Outstanding (basic avg.)	4,014,261	10,301,831	31,518,861

Non-GAAP Note: Adjusted EBITDA excludes non-cash items such as stock-based comp and changes in warrant fair value; see company reconciliations in each period’s release .

Sources:

Q1 FY25 press release and financials (Form 8-K, Ex. 99.1) .
Q1 FY25 earnings call transcript -.
Q4 FY24 press release and financials (Form 8-K, Ex. 99.1) .
Q3 FY24 press release and financials (Form 8-K, Ex. 99.1) -.

APPLIED DNA SCIENCES INC (APDN)·Q1 2025 Earnings Summary