Executive Summary

Q2 FY2025 revenue was $33.5M (+32% YoY), backlog rose to $220M, but gross loss of $2.0M and higher SG&A drove a wider net loss of $17.4M (–$0.27 EPS) .
Management suspended earnings calls and financial guidance due to the pending all-cash acquisition by GHO/Ampersand at $12.50 per share (~$1.1B EV; 13.8% premium to the prior close; ~6.3x consensus FY2025E revenue) .
Operational momentum persisted in backlog and customer mix (manufacturing and process development revenue growth), but cost inflation and legal fees pressured margins .
Near-term stock catalyst is the transaction closing (shareholder approval obtained; closing expected in coming days) .

What Went Well and What Went Wrong

What Went Well
- Backlog increased 11% YoY to $220M with recognition over the next five fiscal quarters; revenue up 32% YoY on manufacturing and process development strength .
- Management noted “solid results in a competitive environment,” with increased revenues and backlog; transaction partners expected to “drive growth beyond the Company’s standalone plan” .
- Prior quarter momentum: record net new orders ($66M) and backlog ($219M), with PPQ campaigns including one Phase III and one commercial product, strengthening late-stage exposure .
What Went Wrong
- Gross loss of $2.0M in Q2 despite higher revenue; cost pressures (compensation/benefits, facility/manufacturing, depreciation) offset topline growth .
- SG&A escalated to $10.6M (+61% YoY) largely due to compensation/benefits and legal fees, contributing to the widened net loss (–$17.4M, –$0.27 EPS) .
- Revolving line of credit expired during Q2; coupled with suspended guidance and no earnings call due to the pending merger, near-term transparency reduced .

Financial Results

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD Millions)	$43.0	$40.2	$33.5
Gross Profit (Loss) ($USD Millions)	$5.5	$5.7	$(2.0)
Gross Margin %	13%	14%	–6.0% (derived from revenue and gross loss)
SG&A ($USD Millions)	$6.8	$8.2	$10.6
Net Income (Loss) ($USD Millions)	$(123.1)	$(5.5)	$(17.4)
Diluted EPS ($USD)	$(1.94)	$(0.09)	$(0.27)

Notes:

Q4 loss was driven by a $118.5M valuation allowance on deferred tax assets recorded in the quarter .
Q2 YoY comparisons: revenue +32%; gross loss improved versus prior year gross loss of $4.7M; SG&A +61%; net loss from $(9.5)M to $(17.4)M .

KPIs and Liquidity

KPI	Q4 2024	Q1 2025	Q2 2025
Backlog ($USD Millions)	$193	$219	$220
Cash & Cash Equivalents ($USD Millions)	$38.1	$33.4	$33.4

Additional context:

Q1 Adjusted EBITDA was $3.033M; Q4 Adjusted EBITDA was $3.885M; Q2 adjusted metrics were not disclosed in the press release .

Revenue composition (qualitative): Q2 revenue growth attributed to increases in manufacturing and process development revenues; no formal segment reporting provided .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2025	$160–$168M	Guidance suspended	Suspended

Management noted suspension of guidance and no earnings conference call in light of the proposed transaction .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024 and Q1 2025)	Current Period (Q2 2025)	Trend
Capacity utilization & margins	Gross margin roughly doubled in Q4 vs Q3, driven by onboarding in new facilities; PPQ campaigns expected to support future margins . Q1: “expect revenues and capacity utilization to increase… generating stronger margins” .	Gross loss persisted as costs rose despite revenue growth; no call held; margin commentary limited .	Improving utilization but margin pressure in Q2; near-term view muted by no call.
Backlog & bookings	Q4: $193M backlog; $30M net new orders . Q1: $219M backlog; $66M net new orders; record high .	Backlog reached $220M; significant recognition over next five fiscal quarters .	Stable to modestly increasing backlog; conversion expected over ~5 quarters.
Large pharma customer penetration	Q4/Q1: addition of another large pharma; long, involved sales cycles; audits/quality visits increasing .	No update beyond backlog growth; transaction focus .	Continuing strategic priority; cadence steady.
Onshoring/Biosecure Act tailwinds	Q4: rising onshoring interest; pipeline behind backlog growing . Q1: ~half of China-sourced opportunities had Biosecure associations; tailwind for U.S. CDMOs .	No call; policy tailwinds likely intact .	Supportive macro narrative; remains a tailwind.
Cell & Gene Therapy (CGT) demand	Q4: CGT capacity ~$80M of ~$400M; lagging mammalian demand by ~4–5 months . Q1: CGT demand still lagging; conversations ongoing .	No update; CGT commentary absent .	Lagging vs mammalian; gradual recovery expected.

Management Commentary

“We delivered solid results in a competitive environment, with increased revenues and backlog offset by increased costs.” — Nick Green, President & CEO .
“The [GHO/Ampersand] transaction… will provide our stockholders with significant, immediate and certain cash value… partners… to drive growth beyond the Company’s standalone plan.” — Nick Green .
Prior quarter tone: “We are encouraged by the strong revenues and new business signings, which continue to build our backlog and improve margins… our primary focus is on filling our remaining capacity.” — Q1 prepared remarks .

Q&A Highlights

Bookings/backlog conversion: Mix slightly more accelerating due to higher proportion of early-phase signings; conversion expected to modestly improve .
PPQ campaigns: One Phase III advancing to commercialization; one commercial product outsourced from internal manufacturing; attractive pre-commercialization drivers .
Large pharma strategy: Progress broadly in line with expectations; long sales cycles; audits/reputation-building activities ongoing .
Biosecure Act/onshoring: Increasing number of discussions tied to Biosecure; later-phase candidates more sensitive; supportive for U.S.-based capacity .
Margins outlook: Drop-through of 40–60% on incremental revenue remains a framework; depreciation increases could temper EBITDA .

Note: Avid did not host a Q2 FY2025 earnings call; highlights above reflect Q1 FY2025 Q&A .

Estimates Context

S&P Global consensus (Revenue/EPS) for Q2 FY2025 was unavailable due to a CIQ mapping issue; comparisons to Street estimates could not be made at this time (Values retrieved from S&P Global were unavailable).
Company-disclosed transaction metrics referenced “~6.3x multiple to consensus FY2025E revenue” for the $1.1B EV deal, implying Street expectations were embedded in the valuation discussion .

Key Takeaways for Investors

Near-term trading is dominated by the pending $12.50/share all-cash takeout; shareholder approval secured and closing expected imminently .
Operationally, backlog remains strong ($220M) with anticipated recognition over the next five fiscal quarters, supporting multi-quarter revenue visibility even without formal guidance .
Margin rebuild is contingent on capacity utilization and execution; Q2 showed cost pressure despite topline growth, and SG&A elevation (legal fees) is likely transaction-related .
Strategic mix continues to skew toward later-stage programs (PPQ/commercial), which should aid utilization and margins in future periods as campaigns convert .
Macro tailwinds (onshoring/Biosecure Act) appear supportive for U.S. CDMOs; Avid’s mammalian demand remains ahead of CGT, which is lagging but with improving dialogues .
Liquidity is steady but watch the expiration of the revolving line of credit; cash held at $33.4M at Q2 end .
Post-close, public-market catalysts will give way to private ownership dynamics; the operational thesis centers on backlog conversion, late-stage program execution, and margin normalization .

Other Relevant Q2 Materials

Acquisition announcement and merger agreement details (Nov 6, 2024); transaction not subject to financing condition; standard HSR/approval processes described .
Special meeting results and closing timing update (Jan 30, 2025) .

Avid Bioservices, Inc. (CDMO)·Q2 2025 Earnings Summary