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CI

Castellum, Inc. (CTM)·Q3 2025 Earnings Summary

Executive Summary

  • Record revenue of $14.62M (+3.9% q/q, +26% y/y) and first-ever quarterly GAAP net income of $0.39M; gross profit $5.49M and EBIT $0.45M, reflecting operating leverage and cost discipline .
  • Beat on revenue and EPS vs Wall Street consensus: revenue $14.62M vs $14.13M*, EPS 0.012* vs -0.01*; management emphasized focus on positive cash flow and disciplined investment — a potential stock reaction catalyst on first GAAP profitability and strengthened balance sheet .
  • Liquidity strengthened: record cash $17.82M and total debt reduced to ~$2.4M during the quarter; net debt deeply negative, indicating ample capacity for growth initiatives .
  • Backlog robust at $220.66M, with ~21% expected to be recognized in 12 months and ~62% within 24 months, supporting medium-term visibility despite government shutdown risks .

What Went Well and What Went Wrong

What Went Well

  • Record revenue for third consecutive quarter of y/y organic growth, driven by the $103.3M PMA-290 NAVAIR award and direct labor growth on existing contracts .
  • Operating margin improvement: EBIT swung to positive $0.45M (from $(1.38)M y/y), aided by lower G&A and healthcare cost actions; Adjusted EBITDA reached $1.08M on non-GAAP basis .
  • Balance sheet strength: record cash $17.82M, total debt reduced to ~$2.4M; CFO highlighted readiness to invest for growth: “best performance and balance sheet strength to date” .

What Went Wrong

  • Operating cash flow negative YTD on AR build from program ramp; net cash used in operations of $(1.29)M for first nine months as PMA-290 ramp increased receivables .
  • Mix headwind: higher subcontractor usage on PMA-290 at lower margins, pressuring gross margin expansion relative to revenue growth .
  • Macro/government risks: potential prolonged U.S. government shutdown expected to negatively impact business if beyond Dec 1, 2025; revenue concentration with three customers at 72% heightens exposure .

Financial Results

P&L Snapshot and Margins (GAAP)

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($USD)$11.61M $11.66M *$14.02M $14.62M
Gross Profit ($USD)$4.96M $4.55M *$5.06M $5.49M
Gross Margin (%)42.7%*39.0%*36.1%*37.6%*
EBIT ($USD)$(1.38)M $(1.49)M *$(0.38)M $0.45M
EBIT Margin (%)(11.9%)*(12.7%)*(2.73%)*3.05%*
Net Income to Common ($USD)$(1.31)M $(1.16)M $(0.32)M $0.39M
GAAP EPS (Basic & Diluted)$(0.02) $(0.01) $(0.004) *$0.00

Notes: Cells marked with * are values retrieved from S&P Global.

Vs Wall Street Consensus (Q3 2025)

MetricConsensusActualSurprise
Revenue ($USD)$14.13M*$14.62M Bold beat: +$0.49M (3.5%)*
Primary EPS ($USD)-$0.01*0.012*Bold beat: +$0.022*

Values retrieved from S&P Global.

Non-GAAP KPI

MetricQ2 2025Q3 2025
Adjusted EBITDA ($USD)$0.50M $1.08M

Revenue Disaggregation (Contract Type)

Contract TypeQ3 2024Q3 2025
Time & Materials$6.25M $4.15M
Firm Fixed Price$0.81M $0.62M
Cost Plus Fixed Fee$4.54M $9.85M
Total$11.61M $14.62M

Balance Sheet & Liquidity KPIs

MetricQ1 2025Q2 2025Q3 2025
Cash & Equivalents ($USD)$13.29M *$14.73M $17.82M
Total Debt ($USD)$9.15M*$5.38M*$3.30M*
Net Debt ($USD)$(4.14)M*$(9.35)M*$(14.52)M*
Working Capital ($USD)$14.91M*$18.34M*$21.79M*

Values retrieved from S&P Global.

Backlog Snapshot (as of 9/30/2025)

CategoryAmount
Funded$18.28M
Unfunded$28.52M
Priced Options$173.86M
Total Scheduled Backlog$220.66M
Expected Recognition~21% in 12 months; ~62% in 24 months

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY/QuarterNone providedNone providedMaintained no formal guidance
EPS/Adjusted EBITDAFY/QuarterNone providedNone providedMaintained no formal guidance
OpEx/Margins/TaxFY/QuarterNone providedNone providedMaintained no formal guidance

Note: Management reiterated focus on positive cash flow rather than GAAP net income due to non-cash charges; no specific numeric guidance ranges were issued .

Earnings Call Themes & Trends

Note: No Q3 2025 earnings call transcript located; themes reflect press releases and 10-Q commentary.

TopicPrevious Mentions (Q1 2025)Previous Mentions (Q2 2025)Current Period (Q3 2025)Trend
Program Wins / PMA-290Began executing $103.3M PMA-290 award; key strategic win Revenue growth supported; deleveraging to strengthen flexibility Revenue ramp continues; mix shifts to CPFF; AR build from ramp Improving execution; ramp effects
Margin & Cost ActionsSmaller operating loss; improving leverage Operating loss narrowed; Adjusted EBITDA positive EBIT positive; Adjusted EBITDA up; healthcare plan shift reduced G&A Positive trajectory
Capital Structure & LiquidityRecord cash $13.3M; equity shelf in place Debt reduced by $3.7M; record cash $14.7M Record cash $17.8M; total debt ~$2.4M; negative net debt Strengthening
Backlog & VisibilityN/AN/ATotal backlog $220.66M; 12/24 month recognition expectations Strong visibility
Macro/Gov’t RiskN/AN/AGovernment shutdown risk; CRs and budget dynamics can delay awards Elevated risk
Strategic FocusFocused investment, product/IP development, disciplined M&A Build momentum; debt reduction to enable growth “Manage for positive cash flow”; invest in people, solutions, IP, timely M&A Consistent strategy

Management Commentary

  • CFO: “Our continued discipline in operating performance and cash management has resulted in our best performance and balance sheet strength to date, all of which prepares Castellum for additional investment in our growth” .
  • CEO: “Record revenue and solid operating margin improvement… we are committed to the long-term growth of CTM… we continue to manage the business for positive cash flow rather than GAAP net income due to the large amount of non-cash charges we take. This quarter, we happened to get both” .
  • CEO on strategy: drive organic growth via full and open prime wins; invest in products/solutions/IP; leverage timely M&A; momentum to create long-term value .

Q&A Highlights

  • Not available: no earnings call transcript was located for Q3 2025 in our document set; management disclosures are drawn from the 8-K press release and 10-Q .

Estimates Context

  • Revenue beat: Actual $14.62M vs consensus $14.13M*; magnitude +$0.49M (3.5%).
  • EPS beat: Primary EPS actual 0.012* vs consensus -0.01*. Note GAAP diluted EPS in the 10-Q rounds to $0.00; SPGI “Primary EPS” and GAAP presentation differ in methodology and rounding .
  • With three straight quarters of y/y organic growth and first GAAP profit, estimates may move higher for revenue and EBITDA, while GAAP EPS revisions could vary depending on non-cash charges.

Values retrieved from S&P Global.

Key Takeaways for Investors

  • Momentum inflection: first GAAP net income alongside record revenue and Adjusted EBITDA points to operating leverage materializing .
  • Balance sheet optionality: record cash and materially lower debt position CTM to invest in growth, product/IP, and selective M&A without near-term financing pressure .
  • Visibility: $220.66M backlog with near-term conversion (~21% in 12 months; ~62% in 24 months) supports revenue trajectory despite procurement timing risks .
  • Mix considerations: CPFF-driven growth and subcontractor utilization can dampen margin expansion; watch gross margin vs mix as PMA-290 ramps .
  • Cash flow focus: management prioritizes positive cash flow over GAAP EPS due to non-cash items; monitor operating cash conversion as AR from ramp normalizes .
  • Macro watch: potential prolonged government shutdown could delay awards and funding; concentration risk among major customers (72% of revenue) remains a key sensitivity .
  • Estimate path: revenue and EBITDA estimates likely to grind higher post-beat; GAAP EPS may remain sensitive to stock comp and derivative revaluation items*.

Values retrieved from S&P Global.

Appendix: Sources

  • Q3 2025 8-K 2.02 and Exhibit 99.1 press release .
  • Q3 2025 10-Q financials and MD&A .
  • Q2 2025 8-K press release and non-GAAP reconciliation .
  • Q1 2025 8-K press release .
  • Consensus data (revenue, EPS) from S&P Global; values marked with *.