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CI

Cycurion, Inc. (CYCU)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 revenue was $3.83M, down 13.9% YoY, with gross margin at 7.1% and net loss of $3.24M ($1.59 basic EPS), reflecting merger-related costs and integration; backlog exceeded $80M and cash rose to $3.65M, positioning for run-rate acceleration into Q4 and Q1 2026 .
  • Sequentially, revenue was slightly lower vs Q2 ($3.89M) while losses increased (Q2 basic EPS $(0.15) vs Q3 $(1.59)); gross margin improved modestly vs Q2 (7.1% vs 6.1%) .
  • The company forecast Q1 2026 run-rate revenue of ~$4.17M and highlighted specific monthly ramps from new SLG and Cycurion-branded contracts; management emphasized investments driving future margin expansion .
  • Corporate actions and regulatory milestones included a 1-for-30 reverse split (effective Oct 27), repayment of the term bank loan (Oct 1), and regained Nasdaq bid-price compliance (Nov 11), removing delisting risk and serving as a potential stock catalyst .

What Went Well and What Went Wrong

  • What Went Well

    • Backlog surpassed $80M with multi-year, recurring government revenue visibility; CEO framed Q3 as a “pivotal integration phase” setting up revenue inflection and margin expansion .
    • Cash increased to $3.65M alongside stronger balance sheet and equity base; goodwill growth reflects SLG integration synergies .
    • New telecom modernization award (1,300+ sites, 24–36 months, potential >$1M) adds execution pipeline in mission-critical infrastructure .
    • Regained Nasdaq bid-price compliance, canceling the hearing and stabilizing listing status; management highlighted refocus on strategic priorities and value creation .

  • What Went Wrong

    • Revenue declined YoY (−13.9%) and gross profits remained low, with Q3 gross margin 7.1%; sequential revenue was roughly flat but profitability worsened .
    • Operating expenses were elevated from business combination costs ($11.24M YTD) and stock-based compensation ($3.09M YTD), driving a YTD net loss of $18.78M .
    • Going concern risk persists with working capital deficit and operating cash outflows; receivables factoring and several loans remain in default, indicating financing reliance during integration .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD)$3,870,050 $3,887,915 $3,833,038
Gross Profit ($USD)$677,763 $235,937 $270,479
Gross Margin (%)—6.1% 7.1%
Net (Loss)/Income ($USD)$(10,248,486) $(5,290,414) $(3,240,017)
Basic EPS ($)$(0.56) $(0.15) $(1.59)
Diluted EPS ($)$(0.56) $(0.15) $(1.59)

YoY comparison (Q3 2024 vs Q3 2025):

MetricQ3 2024Q3 2025
Revenue ($USD)$4,450,447 $3,833,038
Net (Loss)/Income ($USD)$116,093 $(3,240,017)
Basic EPS ($)$0.23 $(1.59)
Diluted EPS ($)$0.11 $(1.59)

Segment revenue breakdown:

Segment ($USD)Q1 2025Q2 2025Q3 2025
Advisory Consulting$3,835,414 $3,848,688 $3,817,911
MSSP$31,513 $35,555 $12,027
SaaS$3,123 $3,672 $3,100
Total Revenue$3,870,050 $3,887,915 $3,833,038

Selected KPIs and balance sheet items:

KPI/Balance ($USD)Q1 2025Q2 2025Q3 2025
Cash and Cash Equivalents$2,269,195 $1,013,836 $3,652,074
Accounts Receivable, Net$3,937,771 $4,118,888 $3,097,054
Total Assets$31,527,131 $30,736,435 $32,309,280
Stockholders’ Equity$9,400,274 $10,448,853 $15,410,101
Goodwill$20,538,228 $20,788,299 $20,842,508
Factoring Liability$2,176,922 $2,309,160 $1,681,981
Backlog——$80M+

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Run-Rate RevenueQ1 2026—~$4.17M (annualized ~$16.66M) New
SLG Monthly RevenueNov 2025 → Jan 2026—$26,500 (Nov) → $283,042 (Jan) New
Cycurion-Branded Monthly RevenueDec 2025 → Jan 2026—$12,500 (Dec) → $58,333 (Jan) New
Cash Balance SnapshotQ3 2025—$3.65M Update
Nasdaq Listing StatusNov 2025At risk/delisting proceedings Regained bid-price compliance; hearing canceled Improved

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
AI/Technology initiativesDetailed AI-driven MDP SaaS discussion; platform integration with security stack Identity-centric cybersecurity focus; AI-enhanced ARx platform; investments in software (capitalized $4.42M) Increasing strategic emphasis
Regulatory/NasdaqNotices of bid-price/MVLS/MVPHS deficiencies; timeliness filing notice Regained bid-price compliance; hearing canceled; ongoing listing on Nasdaq Improved/regulatory risk reduced
Contracts/Backlog$22M and $6M awards announced in Apr 2025 Backlog >$80M; telecom modernization award (>1,300 sites) Expanding pipeline/backlog
R&D executionCapitalized software dev costs ($4.22M Q1; $4.33M Q2) Capitalized software dev costs $4.42M; third-party valuation planned Continued investment
Financial health/Going concernSubstantial doubt; working capital deficit; operating cash outflows Substantial doubt persists; operating cash outflows YTD; plan to raise capital Persistent risk, mitigated by capital access

Management Commentary

  • “The third quarter of 2025 marked a pivotal integration phase, where our investments in talent, AI innovation and technology have expanded margins, unlocked over $80 million in contract backlog and set the stage for revenue inflection in the fourth quarter and beyond.” — Kevin Kelly, CEO .
  • “We are pleased to have regained compliance with the Nasdaq Global Market’s listing requirements… This outcome reflects the continued support of our investors and allows us to maintain full focus on executing our strategic priorities and creating long-term shareholder value.” — Kevin Kelly, Chairman & CEO .

Q&A Highlights

  • No Q3 2025 earnings call transcript was available in the company’s filings. Management’s press release clarified revenue trajectory via monthly ramps (SLG $26,500 in Nov rising to $283,042 Jan; Cycurion-branded $12,500 in Dec to $58,333 Jan) underpinning the ~$4.17M Q1 2026 run-rate .
  • The press release emphasized backlog quality (multi-year, recurring government contracts) and near-term momentum, while the 10-Q detailed liquidity actions (term loan payoff, reverse split) and compliance status, effectively addressing listing risk and capital structure .

Estimates Context

  • S&P Global consensus estimates: EPS and revenue consensus for Q3 2025 were unavailable; we could not retrieve estimate counts or target price coverage. Values retrieved from S&P Global.*
  • Actual revenue reported was $3,833,038 ; management cited gross margin 7.1% and net loss $3.24M ($1.59 basic EPS) . Given absent consensus, we cannot assess a beat/miss; estimate models likely need to incorporate the backlog, monthly ramps, and improved gross margins indicated by management .

Key Takeaways for Investors

  • Backlog strength (> $80M) and specified monthly ramps support near-term revenue acceleration; watch Q4 conversion and Q1 2026 run-rate realization .
  • Margin trajectory improved slightly vs Q2; sustained mix shift to higher-margin government work and platform leverage is key to medium-term profitability .
  • Liquidity actions (term loan payoff) and regained Nasdaq compliance removed immediate listing overhang; reverse split completed and may aid institutional engagement .
  • Integration costs and stock-based compensation remain headwinds; monitoring OpEx normalization and cash generation is critical given going concern language .
  • Contract execution (telecom modernization) and SLG data modernization are catalysts; timely delivery should underpin backlog conversion and confidence in guidance .
  • Receivables factoring declined sequentially; continued progress on collections and defaulted loans would reduce financing risk and interest burden .
  • Absent analyst coverage suggests a potential information arbitrage; upcoming filings and tangible margin expansion could prompt estimate initiation and re-rating if execution is demonstrated .