Executive Summary

Q3 FY25 revenue grew 16% year over year to $16.74M with gross margin expanding 374 bps to 32%, driven by demand in material handling (units +10%) and ground support equipment (GSE; units +25%). Adjusted EBITDA loss narrowed to $(1.12)M; net loss was $(1.94)M .
Versus S&P Global consensus, revenue modestly beat ($16.74M vs $16.50M*) while EPS missed (−$0.12 vs −$0.06*). The EPS shortfall reflected higher SG&A tied to multi-year restatement costs and interest expense despite stronger gross profit; management targets further margin improvement .
Backlog ended the quarter at $16.90M (Apr 30 update: ~$15.1M), with a proactive response to tariff headwinds (price adjustments, supplier diversification, domestic assembly plans) and continued quote activity; management reiterated a near‑term gross margin target of ≥40% and a goal of “sustainable positive cash flow” in calendar 2025 .
Strategic narrative shifted toward software/recurring revenue: SkyEMS (cloud‑connected battery intelligence) entered pilots; Flux was awarded a patent for an AI-based battery life maximization algorithm; new G96‑G2 high‑voltage product launched for GSE with an initial major airline order .

What Went Well and What Went Wrong

What Went Well

Revenue and margin inflection: “Revenue up 16% to $16.7M” and gross margin to 32% (+374 bps YoY) on decreased warranty costs; Adjusted EBITDA loss improved to $(1.1)M .
Software/AI strategy gaining momentum: CEO highlighted SkyEMS pilots and plan to “have every battery…cloud connected”; patent for an AI algorithm underpins the shift to recurring software revenue .
Product innovation and traction: Launched G96‑G2 high‑voltage solution for GSE; reported six new airline customers with ~$6M orders over last calendar year and ~ $20M total GSE orders .

What Went Wrong

EPS miss vs consensus amid higher operating costs: GAAP EPS −$0.12 missed S&P consensus −$0.06*; SG&A rose to $5.7M on ~$0.5M restatement-related fees; net loss was $(1.94)M .
Balance sheet constraints: Cash was $0.51M; line of credit balance $11.00M; stockholders’ equity swung to a $(4.37)M deficit, highlighting reliance on credit facilities and need for continued cash flow improvement .
Tariff uncertainty and backlog compression: Tariff exposure (partial China content) led to immediate price list updates; backlog declined to $16.90M at 3/31 and ~$15.1M by 4/30; management is mitigating via supplier diversification/domestic assembly but near‑term visibility remains fluid .

Financial Results

Metric	Q1 FY25 (Sep 30, 2024)	Q2 FY25 (Dec 31, 2024)	Q3 FY25 (Mar 31, 2025)
Revenue ($USD Millions)	$16.13	$16.83	$16.74
Gross Profit ($USD Millions)	$5.22	$5.46	$5.29
Gross Margin (%)	32%	33%	32%
Net Loss ($USD Millions)	$(1.67)	$(1.89)	$(1.94)
Diluted EPS ($)	$(0.10)	$(0.11)	$(0.12)
Adjusted EBITDA ($USD Millions)	$(0.61)	$(0.95)	$(1.12)
Revenue YoY Change (%)	+9%	−8%	+16%

Notes: Adjusted EBITDA excludes interest, taxes, D&A, and stock‑based comp; reconciliation provided by the company .

KPIs and Order Flow

KPI	Q1 FY25 (Sep 30, 2024)	Q2 FY25 (Dec 31, 2024)	Q3 FY25 (Mar 31, 2025)
Beginning Backlog ($USD)	$17.87M	$21.19M	$17.48M
New Orders ($USD)	$19.45M	$13.12M	$16.16M
Shipments ($USD)	$16.13M	$16.83M	$16.74M
Ending Backlog ($USD)	$21.19M	$17.48M	$16.90M
Backlog (as-of date update)	—	—	~$15.1M (Apr 30)

Estimate Comparison (Q3 FY25)

Metric	S&P Global Consensus*	Actual	Beat/Miss
Revenue ($USD Millions)	$16.50*	$16.74	Bold: Beat
Primary EPS ($)	−$0.06*	−$0.12	Bold: Miss
# of Estimates (EPS / Rev)	5 / 5*	—	—

Values retrieved from S&P Global.

Segment breakdown: The company does not report revenue by segment; management cited unit growth of +10% in material handling and +25% in GSE .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance/Commentary	Change
Gross Margin Target	Near‑term	Not previously quantified	“Near‑term target of 40% or higher gross profit margin.”	New (Raised ambition)
Cash Flow	CY2025	Not previously quantified	“Well positioned to achieve sustainable positive cash flow this calendar year.”	New (Qualitative)
Tariff Impact	Q4 FY25	Not previously discussed	“Q4 will be very minimally impacted by the tariff increase” due to inventory; pricing updated	New (Qualitative)
Backlog Update	As of Apr 30, 2025	$19.5M as of Feb 28, 2025	~$15.1M	Lower

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1–Q2 FY25)	Current Period (Q3 FY25)	Trend
AI/software & recurring revenue	Telemetry features; development of ML/AI; emphasis on recurring revenue potential	SkyEMS pilots; plan for every battery to be cloud-connected; AI patent for life maximization; software as core value driver	Intensifying
Supply chain & tariffs	Focus on supply chain efficiency; some order delays linked to higher interest rates, not tariffs	Tariff pressures; pricing updated; supplier diversification incl. North America; domestic assembly roadmap	Elevated risk, active mitigation
Product performance	Heavy-duty models planned; UL EE private label with top forklift OEM	G96‑G2 high‑voltage launch; initial major airline order; unit growth in GSE +25%	Positive traction
Go‑to‑market	Added salespeople; marketing increase	CRO-led “solution selling”; positioning as software company with strong batteries	Evolving
Orders/backlog	Backlog $19.5M (Feb 28)	Ending backlog $16.9M (Mar 31); ~$15.1M (Apr 30); increased quote activity	Moderating backlog; pipeline active
Macro	Customer order delays linked to higher rates	Management notes tariff uncertainty; demand “business as usual” for GSE ESG commitments	Mixed: rates stabilizing earlier; tariffs now key variable

Management Commentary

“We are shaping the future of intelligent energy solutions, where every battery functions as part of a connected, self-optimizing network…We are planning to have every battery we ship to be cloud connected.” — CEO Krishna Vanka .
“We have a continued focus on product cost reduction…with a near-term target of 40% or higher gross profit margin.” — CFO Kevin Royal .
“Our product does contain a partial made in China content that is impacted by the latest tariffs…we are rapidly adapting sourcing tactics…onboarding qualified suppliers across alternative regions, including North America,” and working toward domestic assembly expansion. — VP Operations Jeff Mason .
“We believe our software will create a significant recurring revenue stream…well positioned to achieve sustainable positive cash flow this calendar year.” — CEO Krishna Vanka .

Q&A Highlights

Tariffs and pricing elasticity: Management updated price lists, sees potential competitive advantage if rivals face higher tariffs; expects minimal Q4 impact given existing inventory, but continues to assess demand elasticity with customers .
SkyEMS ROI: Anticipates fewer maintenance visits via remote diagnostics and integration with customer systems, improving ROI versus disconnected systems; battery intelligence central to value .
Lithium adoption/material handling: Some competitors have halted shipments due to higher tariffs; Flux sees increased interest and quotation activity, positioning for share gains .
Salesforce/go‑to‑market: CRO emphasized positioning as a software company with strong batteries, integrating into customer telematics and energy workflows to drive solution selling .

Estimates Context

Q3 FY25 results vs S&P Global consensus: Revenue $16.74M vs $16.50M* (beat); EPS −$0.12 vs −$0.06* (miss). Five estimates for both revenue and EPS*. The EPS miss was driven by restatement-related SG&A and interest expense despite improved gross profit .
Implications: Modest top-line beat with expanding gross margin supports stable revenue outlook; EPS estimates may drift lower near-term to reflect operating cost/tariff pass-through timing unless margin gains outpace cost pressures. Values retrieved from S&P Global.

Key Takeaways for Investors

Margin trajectory remains the core lever: 32% gross margin with a stated ≥40% near‑term target; warranty cost reductions and pricing should help, but tariff pass‑through and supplier shifts are key execution variables .
Software optionality is a narrative upgrade: SkyEMS pilots, a new AI patent, and a “cloud‑connected every battery” plan frame a recurring revenue layer that could expand TAM and valuation multiples if monetized effectively .
Product cadence supports GSE growth: The G96‑G2 launch and initial airline order position Flux for higher‑power GSE use cases; combined with 25% GSE unit growth, this is an incremental growth engine .
Balance sheet/capital discipline matter: Low cash ($0.51M), reliance on credit lines ($11.00M drawn), and stockholders’ deficit (−$4.37M) elevate the importance of working capital turns and cash generation milestones in CY25 .
Tariffs are both headwind and opportunity: While creating near‑term uncertainty, Flux’s price actions, supplier diversification, and potential rival disruptions could aid share gains if demand holds .
Trading setup: Near‑term stock moves likely hinge on evidence of continued margin expansion (gross margin >33%), backlog stability, and early proof points for software monetization; EPS volatility may persist while cost actions and tariff pass‑through normalize .
Medium‑term thesis: Execution on cost roadmap, recurring software adoption, and GSE/material handling share gains can drive operating leverage; watch for concrete KPIs on connected battery attach rates and software ARPU.

Additional References

Full Q3 FY25 8‑K and press release (financials, backlog, non‑GAAP reconciliation) .
Q3 FY25 call transcript (strategy, tariffs, margin targets, Q&A) .
Prior quarters (Q1–Q2 FY25) press release (trend analysis) .
G96‑G2 product launch and AI patent press releases .

Flux Power Holdings, Inc. (FLUX)·Q3 2025 Earnings Summary