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EI

ENCISION INC (ECIA)·Q3 2024 Earnings Summary

Executive Summary

  • Q3 FY2024 net revenue was $1.58M (product $1.56M; service $0.02M) with a net loss of $0.21M and diluted EPS of $(0.02); product gross margin was 46%, down from 53% in the prior-year quarter .
  • Sequentially, net revenue fell versus Q2 FY2024 ($1.83M), and profitability moved from a near break-even loss of $0.01M in Q2 to a $0.21M loss in Q3; operating income swung from +$0.01M in Q2 to $(0.19)M in Q3 .
  • Management highlighted ongoing demand recovery in surgical procedures and the effort to rebuild service revenue streams, noting early traction with partners; tone remained focused on recovery and channel/technology investments .
  • No formal guidance and no available consensus estimates to benchmark results; investors should watch for service revenue traction and margin execution as near-term stock catalysts (estimates unavailable via S&P Global due to data limitations).

What Went Well and What Went Wrong

What Went Well

  • Service revenue returned at $0.02M in Q3 after being zero in the prior-year quarter, reflecting early traction with partners on foundational technologies .
  • Management emphasized rebuilding revenue streams and pursuing collaboration opportunities, signaling strategic focus on monetizing technology beyond products: “we are starting to gain traction in recreating that revenue stream with a few new partners and opportunities to collaborate on our foundational technologies” .
  • Despite macro headwinds, Q3 gross profit of $0.73M and disciplined opex ($0.92M) demonstrate operating discipline amid recovery efforts .

What Went Wrong

  • Total revenue declined year-over-year to $1.58M (from $1.68M) with product gross margin compressing to 46% (from 53%), indicating pressure on core product profitability .
  • Sequential deterioration vs Q2 FY2024: revenue fell from $1.83M to $1.58M and operating income moved from +$0.01M to $(0.19)M, evidencing softer demand or mix in the quarter .
  • Continued net losses (Q3: $(0.21)M) and limited cash ($0.10M) at quarter-end underscore balance sheet constraints and the need for sustained margin/revenue improvement .

Financial Results

MetricQ3 2023Q2 2024Q3 2024
Total Revenue ($USD Millions)$1.68 $1.83 $1.58
Product Revenue ($USD Millions)$1.68 $1.75 $1.56
Service Revenue ($USD Millions)$0.00 $0.07 $0.02
Gross Profit ($USD Thousands)$898 $862 $727
Operating Income (Loss) ($USD Thousands)$(211) $6 $(190)
Net Income (Loss) ($USD Thousands)$(216) $(7) $(207)
Diluted EPS ($USD)$(0.02) $0.00 $(0.02)
Product Gross Margin (%)53% 47% 46%

Segment breakdown

Segment RevenueQ3 2023Q2 2024Q3 2024
Product ($USD Millions)$1.68 $1.75 $1.56
Service ($USD Millions)$0.00 $0.07 $0.02
Total ($USD Millions)$1.68 $1.83 $1.58

KPIs and Operating Detail

KPI / OpEx DetailQ2 2024Q3 2024
Sales & Marketing ($USD Thousands)$389 $414
General & Administrative ($USD Thousands)$366 $352
Research & Development ($USD Thousands)$101 $151
Total Operating Expenses ($USD Thousands)$856 $917
Cash ($USD Thousands)$306 $99
Inventories, net ($USD Thousands)$1,642 $1,554
Total Assets ($USD Thousands)$4,689 $4,287
Shareholders’ Equity ($USD Thousands)$2,373 $2,193

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ4 FY2024 / FY2024N/ANo formal guidance provided in Q3 releaseMaintained: No guidance
Product Gross MarginQ4 FY2024 / FY2024N/ANo formal guidance provided in Q3 releaseMaintained: No guidance
EPSQ4 FY2024 / FY2024N/ANo formal guidance provided in Q3 releaseMaintained: No guidance

Note: Encision did not issue formal quantitative guidance in the Q3 FY2024 press release; no guidance updates were disclosed .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 FY2024 and Q1 FY2024)Current Period (Q3 FY2024)Trend
Surgical procedure demand recovery“The demand for surgical procedures was diminished during the pandemic period and its rebound has been a slow process.” (Q2 FY2024) Reiterated slow rebound dynamic in Q3 commentary Stabilizing; gradual recovery signals but still a headwind
Service revenue initiatives“We are working to recreate that revenue stream with new partners…” (Q2 FY2024) “Starting to gain traction in recreating that revenue stream with a few new partners…” (Q3 FY2024) Improving traction; early partnerships progressing
Margin execution and pricing/efficiencyQ1 FY2024 product margin was 52% ; Q2 FY2024 product margin 47% Q3 FY2024 product margin 46% Mixed: YoY down; sequential modest compression; Q1 FY2025 later notes margin improvement from efficiencies and pricing
Sales channel and technology investmentQ1 FY2025: “beginning to reap the benefit from our investment in our sales channel and technology” Strategy continued; rebuilding revenue streams emphasized Positive execution commentary; results lagging in Q3

Management Commentary

  • “The fiscal 2024 third quarter presented significant challenges for Encision and for the medical device market in general… The market has seen a number of positive indicators for an increase in demand and Encision continues to drive toward them.” — Gregory Trudel, President & CEO .
  • “The service revenue that we were able to drive in the previous year was very helpful and we are starting to gain traction in recreating that revenue stream with a few new partners and opportunities to collaborate on our foundational technologies.” — Gregory Trudel .
  • Looking forward, management has emphasized investments in sales channels and technology to drive improved results: “we are beginning to reap the benefit from our investment in our sales channel and technology” — Q1 FY2025 context .

Q&A Highlights

  • No public earnings call transcript was available to extract Q&A for Q3 FY2024; the quarter’s disclosures are contained in the 8-K press release and exhibits .

Estimates Context

  • Wall Street consensus estimates (EPS and revenue) for Q3 FY2024 were unavailable via S&P Global for ECIA at the time of review; results cannot be benchmarked vs consensus. Values retrieved from S&P Global.*
  • Implication: Without coverage, the stock reaction may hinge on absolute/sequential trends (service revenue traction, margin stability) and any subsequent disclosures on distribution/channel partnerships .

Key Takeaways for Investors

  • Revenue softness and margin compression persisted in Q3 (total revenue $1.58M; product margin 46%), reinforcing that demand recovery remains gradual; watch for sequential re-acceleration in Q4/FY2025 .
  • Sequential deterioration vs Q2 (revenue $1.83M to $1.58M; operating income from $0.01M to $(0.19)M) raises near-term caution; focus on whether service revenue and product mix improve next quarter .
  • Service revenue reappeared ($0.02M) and management cited traction with partners—an incremental positive if it scales and diversifies revenue sources beyond product sales .
  • Balance sheet is tight (cash $0.10M; equity $2.19M), increasing the importance of sustained gross margin execution and working capital management to fund operations .
  • Without guidance or consensus estimates, the narrative that moves the stock will be updates on partner collaborations, channel progress, and margin recovery (pricing/efficiency) .
  • Medium-term thesis hinges on monetizing AEM technology via both product and service channels; milestones include service revenue scaling, improved product margins, and consistent operating income .
  • Trading stance: near-term inflection likely tied to proof of service revenue momentum and stabilization of product margins; absent these, continued variability in quarterly results may limit upside .