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CHAMPIONS ONCOLOGY, INC. (CSBR)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 FY2025 delivered a solid rebound: revenue rose 17% year over year to $13.5M, GAAP diluted EPS was $0.05, gross margin reached 45%, and adjusted EBITDA was $1.1M, with management highlighting operational efficiencies and improved bookings conversion .
  • Sequential softness emerged versus Q1 FY2025 (revenue $14.1M, EPS $0.09, margin ~50%), with management guiding a slight sequential decline in Q3 followed by reacceleration in Q4 and into FY2026, while maintaining positive quarterly adjusted EBITDA .
  • Guidance introduced for FY2025: revenue growth of at least 10%–15%; management expects long-term research services margins to exceed 50% and plans to introduce a new data licensing revenue stream next quarter, potentially lifting revenue and margins .
  • Balance sheet improved: cash $2.8M, no debt, deferred revenue trended down as projects progressed; A/R increased alongside revenue and bookings conversion, while stockholders’ equity turned positive during Q2 .
  • Potential stock catalysts: launch of data licensing revenue, confirmation of Q4 reacceleration, sustained margins >50% longer term, and continued adjusted EBITDA positivity .

What Went Well and What Went Wrong

What Went Well

  • Strong top-line and profitability: revenue up 17% to $13.5M; GAAP net income ~$0.73M; adjusted EBITDA $1.1M; margin improved to 45% aided by efficiency initiatives and improved conversion .
  • Data monetization inflection: “we expect to introduce a new revenue stream through data licensing... with a significant positive impact on our revenue, margins and enterprise value” (CEO) .
  • Confidence in growth trajectory: management set FY2025 revenue growth at least 10%–15% and reiterated long‑term margin ambition >50% on research services (CFO) .

What Went Wrong

  • Sequential deceleration: revenue slipped q/q ($14.1M in Q1 vs $13.5M in Q2), with management guiding a “slight quarterly sequential decline” next quarter before reacceleration in Q4 .
  • Cost pressures: higher costs for humanized mice pressured gross margins despite efficiency gains (mouse cost inflation specifically flagged) .
  • G&A disclosure discrepancy: Q2 press release reports G&A $1.889M, while Q2 call remarks cited ~$1.6M—investors should treat the 8‑K as authoritative GAAP and assume call figure may reflect a normalized view .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$14.001 $14.061 $13.489
Diluted EPS ($)($0.01) $0.09 $0.05
Gross Margin %48% 49.7% 45%
Income from Operations ($USD Millions)($0.190) $1.329 $0.732
Adjusted EBITDA ($USD Millions)$0.884 $2.0 $1.1
Net Income ($USD Millions)($0.109) $1.313 $0.728

KPIs and Balance Sheet Highlights

KPIQ4 2024Q1 2025Q2 2025
Cash and Equivalents ($USD Millions)$2.618 $2.892 $2.754
Accounts Receivable, net ($USD Millions)$9.526 $9.032 $10.470
Deferred Revenue ($USD Millions)$12.094 $10.312 $10.220
Stockholders’ Equity (Deficit) ($USD Millions)($1.903) ($0.332) $0.681
Total Liabilities ($USD Millions)$28.035 $25.265 $24.559
DebtNone None None

Notes:

  • Q2 operating cash flow was approximately ($0.283)M due to higher A/R and lower payables; cash increased modestly q/q with option exercises .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue Growth (YoY)FY2025No numeric guidance; focus on profitability and volatility noted At least 10%–15% growth for FY2025 Initiated numeric guidance
Research Services Revenue TrajectoryQ3–Q4 FY2025Not specifiedSlight sequential decline in Q3; reacceleration in Q4 and into FY2026 New directional guidance
Adjusted EBITDAQuarterly FY2025Expected to remain profitable on adjusted EBITDA basis Quarterly adjusted EBITDA to remain positive Maintained
Long‑Term Research Services Margin TargetLong‑term>50% margin expectation >50% margin expectation reiterated Maintained
CapExFY2025No significant CapEx anticipated No update in Q2; cost discipline reiterated Maintained (implicit)
Data Licensing RevenueQ3 FY2025 onwardExploring monetization; no timing Expected introduction next quarter; positive impact on revenue and margins New, accelerated timing

Earnings Call Themes & Trends

TopicQ4 2024 (Prior-2)Q1 2025 (Prior-1)Q2 2025 (Current)Trend
Funding Environment (Pharma/Biotech)Early signs of loosening budgets; cancellations moderating Improving vs prior year; still tight for small biotech; conversion rates up, cancellations down “Cautiously optimistic” funding is improving; bookings accelerating Improving
Operational Efficiency & Revenue ConversionOperational teams/processes upgraded; Q4 margin rebound Efficiency gains driving margin to ~50% Sustained efficiency; margins 45%, expect >50% long-term Sustained/improving
Data/AI MonetizationBuilding differentiated multiomic data; strategic platform references Unique data emphasized; foundation for growth New data licensing revenue next quarter; AI demand rising Turning to monetization
Ex Vivo & Platform MixEx Vivo revenue >10%; capacity/scalability investments Continued platform strength Core services strong; humanized mouse studies growing Stable to positive
Regulatory/Macro (Biosecure Act)Not discussedPotential share gains if certain foreign CROs restricted Not discussedNeutral
R&D Spend/Corellia (Drug Dev Sub)Reducing R&D burden; pursuing licensing/capital raise Spend reduction; active licensing; funding environment tight Minimizing costs; bankers engaged; optimistic on capital raise Focused cost control; funding pursuit

Management Commentary

  • CEO on data monetization: “we expect to introduce a new revenue stream through data licensing... which will have a significant positive impact on our revenue, margins and enterprise value” .
  • CFO on trajectory: “we anticipate a slight quarterly sequential decline... next quarter with an expected reacceleration occurring in the fourth quarter and continuing into fiscal 2026... revenue growth for fiscal 2025 should be at least between 10% and 15%, and our quarterly adjusted EBITDA will remain positive” .
  • CEO on market backdrop: “We remain cautiously optimistic that the pharma and biotech environment is improving which will continue to contribute to our long‑term growth” .
  • CFO on margins: “our research service margins will fluctuate... but over the long term... we anticipate delivering research revenue margins in excess of 50%” .

Q&A Highlights

  • Market dynamics: management sees an improving funding backdrop versus last year—better in midsize/large pharma than small biotech, supporting sustained demand for preclinical services .
  • New offerings: company expects growth from monetizing deep, patient/tumor‑centric multiomic datasets; AI has increased demand for breadth/depth of biological data .
  • Conversion/cancellations: prior improvements persisted (higher revenue conversion, lower cancellations), supporting profitability trends .
  • Regulatory tailwind: potential benefit if certain foreign CROs face U.S. restrictions (Biosecure Act)—management expects some opportunity but magnitude uncertain .
  • Clarifications: management reiterated positive adjusted EBITDA each quarter and guided temporary sequential revenue softness in Q3 before reacceleration .

Estimates Context

  • Wall Street consensus via S&P Global for Q2 FY2025 revenue and EPS was not available at the time of this analysis; estimate-based beat/miss comparisons are therefore not included. Investors should rely on company-reported results and consider near-term volatility guidance when updating models .

Key Takeaways for Investors

  • The turnaround is taking hold: improved bookings conversion and operational efficiencies underpinned positive GAAP net income and adjusted EBITDA, despite cost pressures from humanized mice .
  • Expect near-term volatility followed by reacceleration: management guided slight sequential revenue decline in Q3 and reacceleration in Q4/FY2026, with positive quarterly adjusted EBITDA maintained .
  • New growth vector: data licensing is set to launch next quarter—if executed, it can be margin‑accretive and diversify revenue beyond services .
  • Margin path: gross margin strengthened to 45% in Q2; longer‑term >50% research services margin remains the target, contingent on cost stabilization and mix .
  • Balance sheet resilience: $2.8M cash, no debt; equity turned positive; A/R growth reflects higher activity, while deferred revenue declined as projects progressed .
  • Watch disclosures: treat the 8‑K as authoritative for GAAP; note G&A variance between press release ($1.889M) and call commentary (~$1.6M) and seek clarification in the 10‑Q .
  • Trading setup: confirmation of data monetization, Q4 reacceleration, and sustained adjusted EBITDA positivity are likely narrative drivers; any margin expansion above 50% could be an upside catalyst .