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CID Holdco, Inc. (DAIC)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 marked DAIC’s first meaningful commercialization: revenue of $0.78M with gross margin 37.3%; net loss narrowed to $4.22M ($0.15 per share) as hardware shipments began, offset by a $196k revenue reversal tied to exclusivity contract recognition policy .
  • Operations ramped: production commenced at the Puerto Rico facility, initial distribution order shipped, SOC 2 Type 1 certification achieved, and Dot Matrix 3.0 multi-tenant SaaS architecture completed for testing .
  • Liquidity remains tight: $1.42M cash and $0.92M receivables; post-quarter, DAIC issued a SEPA purchase notice ($78.5k proceeds) and signed a non-binding term sheet for an $8M, 24‑month note at 7% interest to fund growth .
  • No formal numerical guidance and no S&P Global consensus estimates; narrative points to accelerating pipeline conversion and mix shift toward recurring SaaS through channel partners .

What Went Well and What Went Wrong

What Went Well

  • “We built and shipped our initial hardware platform orders, validating market demand” and launched production at the Barceloneta, Puerto Rico facility, enabling rapid iteration and quality control for ZIM Bridge and tags .
  • Dot Matrix 3.0 completed with multi-tenant architecture for complex multi-site deployments; SOC 2 Type 1 certification achieved, strengthening enterprise readiness and security posture .
  • Channel ecosystem expanding: first international distribution partner (CanTech Group, Australia) and new Director of Channels brought on to accelerate partner-led go-to-market .

What Went Wrong

  • Gross margin fell to 37.3% vs 90.2% YoY, reflecting hardware mix and timing; margins pressured by $196k revenue reversal tied to exclusivity-related variable consideration recognition and nascent SaaS contribution (~$21k) .
  • OpEx surge: G&A $2.74M (+441% YoY), Sales & Marketing $1.11M (+74% YoY), R&D $0.40M (+113% YoY) to build public-company infrastructure and commercial capabilities, driving continued losses .
  • Internal control weaknesses disclosed (COGS categorization, fair value review precision, staffing/segregation of duties); going concern risks noted given limited cash and need for additional financing .

Financial Results

Revenue, EPS, Margins vs Prior Periods and Prior Year

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($USD)$81,636 $352,498 $126,833 $778,482
Gross Profit ($USD)$73,639 $335,420 $59,639 $290,196
Gross Margin (%)90.2% —47.0% 37.3%
Basic & Diluted EPS ($USD)$(0.22) —$(2.00) $(0.15)
Net Loss ($USD)$(2,658,414) —$(28,859,203) $(4,216,555)

Notes:

  • Q3 margin compression driven by hardware mix and revenue reversal; CFO quantified hardware shipments “about $905k” and SaaS/services “roughly $21k,” with $196k reversal from exclusivity payment timing .
  • Revenue recognition adheres to ASC 606 combining exclusivity and partner agreements; $2.0M exclusivity payment is deferred and recognized proportionally over the five-year term, updated quarterly .

Segment Breakdown (Single Reportable Segment)

SegmentDescriptionQ3 2025 Revenue
Asset Intelligence (single segment)Hardware (ZIM Bridge, tags), feasibility/services, nascent SaaS$778,482

KPIs and Balance Sheet Highlights

KPIQ3 2025Commentary
Cash$1,418,834 Tight liquidity; subsequent $78,516 SEPA draw
Accounts Receivable$915,027 Concentrated among two customers (≈90%/10%)
Inventory$468,102 Puerto Rico manufacturing ramp
Deferred Revenue (Current)$2,772,178 Includes exclusivity deferral under ASC 606
Working Capital Deficit$(5,404,007) Going concern uncertainty

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY/Q4 2025Not providedNot provided; management emphasized accelerating pipeline conversion and SaaS growthMaintained (no formal guidance)
Gross MarginFY/Q4 2025Not providedExpect improvement as inventory converts, manufacturing scales, and SaaS mix increasesMaintained (narrative only)
Liquidity & CapitalNear term—Non-binding term sheet for $8M secured note, 24-month maturity at 7% simple interest; SEPA utilized for 30k shares ($78,516)New actions
Tax RateFY 20250% effective (loss position)0% effective (full valuation allowance)Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025 and Q2 2025)Current Period (Q3 2025)Trend
AI/Technology InitiativesFocus on feasibility work and internal-use software capitalization; SaaS not yet deployed Dot Matrix 3.0 completed for testing; rules engine, machine vision integration described Advancing platform readiness
Manufacturing/Supply ChainPuerto Rico lease commenced; manufacturing build-out; tariff-related COGS pressure Production commenced; first distribution order shipped; expansion in Puerto Rico Scaling operations, moving to shipments
Channel/PartnersPivot to sales & marketing; building pipeline Director of Channels hired; CanTech Australia partnership; enterprise engagements signed Partner-led GTM gaining traction
Security/Compliance—SOC 2 Type 1 certification achieved Governance strengthened
Liquidity/CapitalBusiness combination; PIPE $10.8M; SAFE conversion $8M note term sheet; SEPA cash proceeds post quarter Active financing toolkit
Internal ControlsMaterial weaknesses disclosed (Q2) Material weaknesses reiterated (Q3); remediation plans underway Remediation in progress
Revenue RecognitionASC 606 feasibility studies; deferrals Exclusivity payment recognition refined; $196k reversal; SaaS recognized over time Policy refinement as commercialization begins

Management Commentary

  • CEO: “We built and shipped our initial hardware platform orders…we have the right team and strategy in place to accelerate pipeline conversion and drive material revenue contribution” .
  • CEO on manufacturing: “In July, we began production at our approximately 32,000 sq ft…designed for full-scale production of our ZIM Bridge and smart asset tags” .
  • CFO: “Q3 revenue was $0.8 million…Gross margin was 37.3% versus 90.2% a year ago…we refined our estimate…reversed $196,000 tied to the $2 million exclusivity payment…SaaS and services were roughly $21,000” .
  • Strategy: “Our commercial approach is built on a channel and partner go-to-market strategy…ecosystem of relationships across the supply chain” .

Q&A Highlights

  • The call comprised prepared remarks and no recorded Q&A; key clarifications were provided by the CFO regarding revenue mix, exclusivity-related revenue recognition, and forward financing actions (SEPA, $8M term sheet) .

Estimates Context

  • Wall Street consensus via S&P Global was unavailable for DAIC for Q3 2025; comparisons to estimates cannot be made. Values retrieved from S&P Global were not provided due to lack of coverage.

Key Takeaways for Investors

  • Early commercialization underway: hardware shipments and initial enterprise agreements validate demand; watch for conversion of pilots to recurring SaaS deployments in 2026 .
  • Margin trajectory should improve with scale and SaaS mix, but near-term margins reflect hardware-heavy revenue and recognition adjustments; monitor gross margin progression .
  • Cash is limited; financing flexibility exists (SEPA, non-binding $8M note); execution on funding will be critical to sustain R&D and commercial ramp .
  • Internal control remediation and governance upgrades (SOC 2 Type 1) reduce operational risk over time; near-term risks remain until remediation is complete .
  • Customer concentration and channel expansion: revenue/AR concentrated among a few customers; partner ecosystem growth is a key lever to diversify revenue .
  • Narrative catalysts: Dot Matrix 3.0 testing, Puerto Rico capacity, Australia reseller, leadership additions, and evolving enterprise pipeline are potential stock drivers as bookings convert .
  • Focus on bookings, SaaS growth, new logos, and OpEx leverage (as guided by management) to track progress toward a more durable, recurring model .