Executive Summary

Q1 2025 revenue was $19.3M, down sequentially from $21.7M in Q4 2024 and down year-over-year from $24.1M; GAAP gross margin expanded to 32% (from 21% in Q4), driven by completed restructuring and favorable mix .
Despite a GAAP net loss of $(5.5)M and GAAP EPS of $(0.60), EMCORE delivered positive non-GAAP EPS of $0.05 and positive Adjusted EBITDA of $1.1M, marking a notable inflection in profitability metrics .
Non-GAAP operating expenses tightened to $6.4M (vs. $6.1M in Q4 and $9.1M in Q3), with management crediting restructuring actions completed in the prior quarter; backlog “remains strong” into Q1 2025 .
Wall Street consensus from S&P Global was unavailable for EMKR in our system this quarter; estimate comparisons are not provided due to missing CIQ mapping.

What Went Well and What Went Wrong

What Went Well

Gross margin expansion: GAAP gross margin rose to 32% in Q1 (from 21% in Q4), and non-GAAP gross margin rose to 36% (from 23%) as restructuring cost reductions and mix benefits flowed through; “we achieved positive non-GAAP earnings and positive Adjusted EBITDA” (Interim CEO) .
Non-GAAP profitability inflection: Non-GAAP EPS turned positive to $0.05 and Adjusted EBITDA reached $1.1M in Q1, improving from Q4 $(0.22) and $(0.4)M, respectively .
Cost structure traction: Non-GAAP OpEx at $6.4M in Q1 (near Q4’s $6.1M and well below Q3’s $9.1M), reflecting sustained benefits from headcount reductions and site closures executed in 2024 .

What Went Wrong

Top-line softness: Revenue declined sequentially to $19.3M in Q1 (vs. $21.7M in Q4) and fell year-over-year from $24.1M, pressuring GAAP results despite margin gains .
GAAP net loss widened: Q1 GAAP net loss on continuing operations was $(5.5)M (vs. $(3.2)M in Q4), impacted by other expense, including loss on extinguishment of debt and change in fair value of warrant liability .
Elevated transaction-related costs: Q1 included higher-than-normal transition/M&A-related expenses due to the November 7, 2024 Merger Agreement, which management classified as non-GAAP add-backs .

Financial Results

Consolidated performance vs. prior quarters

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($USD Millions)	$20.435	$21.704	$19.305
Gross Margin (%)	25%	21%	32%
Non-GAAP Gross Margin (%)	24%	23%	36%
GAAP Operating Expenses ($USD Millions)	$14.276	$7.825	$9.749
Non-GAAP Operating Expenses ($USD Millions)	$9.071	$6.072	$6.395
GAAP Net Loss – Continuing Ops ($USD Millions)	$(14.527)	$(3.168)	$(5.461)
GAAP EPS – Continuing Ops ($USD)	$(1.60)	$(0.35)	$(0.60)
Non-GAAP EPS – Continuing Ops ($USD)	$(0.49)	$(0.22)	$0.05
Adjusted EBITDA ($USD Millions)	$(3.577)	$(0.437)	$1.065

Notes: Management highlights Q1 margin gains from restructuring completion and mix; Q1 other expense included loss on extinguishment/change in fair value of warrant liability .

KPIs and balance sheet snapshots

KPI / Metric	Q3 2024	Q4 2024	Q1 2025
Book-to-Bill (x)	1.24	N/A	N/A
Backlog ($USD)	>$60M	N/A	“Backlog remains strong” (qualitative)
Cash and Equivalents ($USD Millions)	$8.477	$10.291	$8.480
Loss on Extinguishment / Warrant FV Change ($USD Millions)	$5.069	$2.572	$1.946

Segment breakdown: Not disclosed in Q1 2025 8-K press release; no segment table provided in the filing .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	Q4 2024	$20M–$22M (provided in Q3 release/call)	Achieved $21.704M	Achieved
Non-GAAP OpEx	Q4 2024	“Likely under $8M” (management target)	Actual $6.072M	Beat internal target
Revenue	Q1 2025	None disclosed	None disclosed	Maintained (no guidance)

No formal guidance on margins, OpEx (forward), OI&E, tax, or dividends was provided in Q1 2025 filings/press release .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q1 2025)	Trend
Restructuring & Cost Actions	Q3 call detailed ~~120 headcount reductions (~~$17M annualized savings), Alhambra site closure, and CRO engagement; aim for adjusted operating cash flow breakeven by Q4 . Q4 release emphasized “significant progress” with positive cash flow and lower OpEx .	Restructuring completed in prior quarter; Q1 non-GAAP OpEx $6.4M and gross margin expansion reflect sustained benefits .	Improving cost structure, benefits realized
Gross Margin Drivers	Q3 non-GAAP gross margin improved on better yields in Concord, cost reductions, and favorable mix .	Q1 GAAP gross margin rose to 32%; non-GAAP to 36%; management cites completed restructuring and favorable mix .	Margin trajectory up
Bookings/Backlog & Demand Mix	Q3 book-to-bill 1.24; armored vehicle orders >$2M; backlog >$60M; stronger European/domestic pipeline; torpedo program timing mixed . Q4 release cited backlog growth on strong bookings .	Q1: backlog “remains strong”; no quantitative update disclosed .	Healthy demand; visibility improving but selective program delays persist
Liquidity & Financing	Q3: paid off Hale Capital obligations; exploring new credit facility options . Q4: loan payoff and reduced line of credit balance .	Q1 balance sheet shows cash $8.48M; warrant liability change recognized in other expense .	Liquidity managed; financing headwinds easing
Operational Execution	Q3: Concord yields improving; mix management key; operational systems across sites .	Q1 margin gains and non-GAAP profitability suggest execution traction .	Execution strengthening

Management Commentary

“Gross profit margins increased significantly in fiscal 1Q25… driven by the completion of all restructuring-related cost reduction activities during the prior quarter, as well as a favorable revenue mix… we achieved positive non-GAAP earnings and positive Adjusted EBITDA.” — Matt Vargas, Interim CEO .
“Record quarterly revenue for our Concord-based QMEMS product line… book-to-bill was 1.24… Strong bookings particularly for Tinley Park and Concord.” — Thomas Minichiello, CFO (Q3 call) .
“Headcount reductions… ~120 employees (~40% of workforce)… annualized savings of ~$17M… Alhambra site closure by end of August.” — Thomas Minichiello (Q3 call) .
“We paid off all outstanding obligations under our credit agreement with Hale Capital… frees us up to explore… a more favorable credit facility.” — Matt Vargas (Q3 call) .

Q&A Highlights

Breakeven model and OpEx targets: Management framed breakeven around non-GAAP OpEx “likely under $8M,” requiring ~$6.7–$6.8M gross profit (with ~$700k depreciation) to reach adjusted EBITDA breakeven .
Cash usage and restructuring: Expect peak cash payments in Q4 related to severance and Alhambra exit; after Q4, restructuring cash outflows moderate significantly .
Bookings sustainability and mix: Pipeline strengthening in Europe and domestically (Turkey, Israel, other European countries); mix improvement most pronounced at Concord; ongoing yield work to widen margin latitude .
Torpedo programs: One program’s delivery schedule clarified, aiding build plan; second program’s timing remains elusive; mix filled with non-torpedo orders to stabilize production .

Estimates Context

S&P Global consensus estimates for Q1 2025 were unavailable for EMKR in our system due to missing CIQ mapping; as a result, we cannot provide definitive vs-estimate comparisons this quarter.

Key Takeaways for Investors

Margin inflection is real: Q1 GAAP gross margin rose to 32% and non-GAAP to 36%, with non-GAAP EPS turning positive and Adjusted EBITDA at $1.1M; restructuring benefits and mix are flowing through .
Top-line volatility: Sequential revenue decline (to $19.3M) and widened GAAP loss highlight sensitivity to program timing (e.g., torpedo schedules), warranting caution on near-term growth trajectories .
Cost discipline durable: Non-GAAP OpEx at $6.4M suggests sustainable opex run-rate post restructuring, supporting breakeven math shared on the Q3 call .
Demand/backlog supportive: Book-to-bill was 1.24 in Q3 and backlog >$60M then; Q1 commentary affirms backlog remains strong, indicating potential revenue normalization as program timing resolves .
Liquidity progress: Prior debt payoff and reduced credit balances improve financing flexibility; monitor warrant liability/other expense and working capital to gauge cash trajectory .
Actionable: Near-term trading may hinge on evidence of sustained margin at Concord and clearer delivery schedules on defense programs; medium-term thesis rests on maintaining non-GAAP profitability while stabilizing revenues and continuing to compress OpEx .

Appendix: Prior Quarter Summaries (for trend analysis)

Q4 2024: Revenue $21.7M (+6% q/q), GAAP gross margin 21%, non-GAAP gross margin 23%; GAAP EPS $(0.35), non-GAAP EPS $(0.22); Adjusted EBITDA $(0.4)M; positive cash flow of $1.8M; backlog grew on strong bookings; line of credit/loan payoff reduced debt .
Q3 2024: Revenue $20.4M, GAAP gross margin 25%, non-GAAP gross margin 24%; GAAP EPS $(1.60), non-GAAP EPS $(0.49); Adjusted EBITDA $(3.6)M; book-to-bill 1.24; backlog >$60M; restructuring charges and debt extinguishment/warrant expense weighed on GAAP results .

Sources: EMCORE Q1 2025 8-K/Ex-99.1 press release and reconciliations ; EMCORE Q4 2024 8-K/Ex-99.1 ; EMCORE Q3 2024 8-K/Ex-99.1 and earnings call transcript .

EMCORE CORP (EMKR)·Q1 2025 Earnings Summary