Dragonfly Energy Holdings Corp. (DFLI)·Q3 2025 Earnings Summary

Executive Summary

• Q3 delivered in-line revenue and a clear EPS beat: Net sales $15.97M vs S&P consensus $15.97M* and diluted EPS $(0.20) vs $(0.49); gross margin expanded 710 bps YoY to 29.7% .
  S&P Global consensus estimates noted with asterisk.
• Mix shift and OEM strength (OEM +44% YoY to $10.68M) drove margin gains; Adjusted EBITDA improved to $(2.14)M from $(5.46)M YoY despite higher interest expense .
• Balance sheet reset is a key catalyst: ~$90M gross equity raised since July and a debt restructuring that prepaid $45M, converted $25M to preferred equity, and forgave $5M; term debt now ~$19M at lower rate with extended covenants, improving customer confidence and order flow .
• Q4 guide: net sales ~ $13.0M (seasonally slow quarter), Adj. EBITDA ~ $(3.3)M; management cited DTC visibility, government shutdown headwinds, and OEM seasonality; revenue guide is slightly above S&P consensus $12.94M* .

What Went Well and What Went Wrong

• What Went Well

  • OEM momentum: OEM net sales +44% YoY to $10.68M; multiple RV partnerships broadened, with increasing integration at the factory level .
  • Margin expansion: Gross margin rose 710 bps YoY to 29.7% on volume, product mix, and cost optimization initiatives .
  • Balance sheet de-risked: “For the first time as a public company, we feel we are playing offense” after ~$90M equity raises and debt restructuring (prepay $45M, convert $25M, forgive $5M), supporting order flow from larger customers .

• What Went Wrong

  • Higher net loss: Net loss widened to $(11.07)M vs $(6.78)M YoY due to higher interest expense and warrant revaluation swing; EPS improved to $(0.20) given higher share count .
  • DTC softness: DTC net sales declined 2.2% YoY to $5.04M amid macro pressure; management flagged limited Q4 visibility and noted industrial customers were impacted by a government shutdown .
  • Seasonality and macro headwinds: Q4 outlook incorporates OEM seasonality, low consumer sentiment, volatile tariffs, and shutdown effects on industrials .

Financial Results

Historical performance (YoY and sequential)

Q3 actual vs S&P Global consensus

• Note: Values with asterisk retrieved from S&P Global.*

Segment net sales mix

Additional KPIs

Non-GAAP adjustments: Adjusted EBITDA excludes stock-based comp, warrant fair value changes, separation expenses, lease/asset impairments, preferred stock financing and debt restructure costs .

Guidance Changes

Context vs S&P consensus: Q4 revenue guide ~$13.0M vs $12.94M*; EBITDA guide ~$(3.3)M vs $(3.43)M* (slightly better than consensus) .
Note: Values with asterisk retrieved from S&P Global.*

Earnings Call Themes & Trends

Management Commentary

• “This was a transformative quarter… we have significantly strengthened our financial foundation through decisive capital actions while delivering strong operational results” — Denis Phares, CEO .
• “Since July, we raised approximately $90 million… finalized a transformative restructuring of our term debt… total debt principal now stands at only $19 million” .
• “For the first time as a public company, we feel we are playing offense” .
• On order momentum post-restructuring: “It was like a flip of the switch… we’re starting to get POs now” as balance sheet concerns came off the table for large customers .
• On Q4 outlook: seasonally slow OEM, limited DTC visibility, and government shutdown impacts drove cautious guide .

Q&A Highlights

• Q4 outlook composition: OEM is seasonally slow; DTC visibility limited; some industrial customers paused by the government shutdown; hence conservative guide .
• 2026 growth drivers: heavy-duty trucking expected to be primary incremental driver as pilots convert and fleets resume orders .
• Pro forma capital structure: ~121–125M shares and ~($)30M cash after transactions; meaningful improvement vs quarter-end balances .
• Profitability path: margin structure improved; EBITDA breakeven needs volume; lower interest expense post-restructure should help as revenue scales .
• Early customer response post-restructuring: improved confidence and procurement progress with large fleets; “game changer” for sales cycle .

Estimates Context

• Q3 2025: Revenue essentially in-line ($15.97M actual vs $15.97M* consensus) and a meaningful EPS beat ($(0.20) vs $(0.49)) .
  Note: Values with asterisk retrieved from S&P Global.
• Q4 2025: Company guides revenue slightly above consensus ($13.0M vs $12.94M*), and Adj. EBITDA guide is marginally better than consensus ($(3.3)M vs ~$(3.43)M*). Coverage is thin (2 estimates for revenue/EPS), so small changes can move consensus materially .
  Note: Values with asterisk retrieved from S&P Global.*

Key Takeaways for Investors

• OEM-led growth and margin expansion continued, offsetting DTC softness; gross margin at 29.7% reflects progress on mix and cost actions .
• Balance sheet repair is a tangible commercial catalyst—management reports improved win rates and orders following the restructuring; expect this to shorten sales cycles with large counterparties .
• Q4 guide is conservative given seasonality and macro, but sits slightly above consensus on revenue; watch Black Friday/Cyber period and any reopening of paused industrial projects post-shutdown as potential swing factors .
• 2026 setup improves: trucking pilots converting to production orders and PACCAR validation raise confidence in a new growth leg beyond RV .
• Non-GAAP adjustments (warrants, impairments, financing/restructuring costs) matter—underlying Adj. EBITDA loss narrowed YoY, supporting the path to breakeven with additional volume .
• Monitor pro forma liquidity and share count (post-quarter actions) vs reported 9/30 balances when modeling cash runway and per-share metrics .
• Near-term catalysts: additional fleet order announcements, further OEM integrations, and continued margin progression as mix and cost initiatives scale .