Executive Summary

Profitability maintained despite tough comps: Revenue $37.22M and diluted EPS $0.65, down YoY vs the Mariner-driven prior-year quarter, but gross and EBIT margins improved sequentially on product mix and cost control .
Smart Water strength offsets Energy variability: Smart Water revenue rose 72% YoY to $7.29M on Hydroconn demand; Energy Solutions delivered a $17M OBX sale but fell YoY given a $30M Mariner sale in the prior year and lower OBX rental utilization .
Balance sheet/liquidity solid; buyback completed: Cash & ST investments $22.07M, undrawn $12M revolver; $7M repurchase program completed early in Q2 FY25 (716k shares at $9.72) .
No formal guidance; near-term catalysts: Additional node sales/rentals (including a $7.6M Mariner award slated for Q3), potential U.S. Border Patrol (Quantum) decision, and continued Smart Water uptake could drive stock reaction .

What Went Well and What Went Wrong

What Went Well
- Smart Water outperformed: revenue +72% YoY to $7.29M on Hydroconn demand; CEO: “We see significant future potential in the municipal and multi-family markets… and intend to grow both organically and through potential acquisition.” .
- Sequential margin improvement: Gross profit $20.15M on $37.22M revenue (gross margin ~54% vs ~45% in Q4 FY24), with operating income $7.84M (EBIT margin ~21% vs ~3% in Q4) .
- Capital allocation and liquidity: Completed $7M buyback; liquidity ~$34M (cash+ST investments plus $12M revolver) and debt-free balance sheet .
What Went Wrong
- Energy Solutions down YoY: segment revenue $24.28M vs $39.91M due to prior-year $30M Mariner sale comp and lower OBX rental fleet utilization; Q1 included $17M OBX sale .
- Higher OpEx: Operating expenses rose to $12.31M (+31% YoY) on personnel, agent commissions (Smart Water growth), and R&D project spend .
- Government/security revenue timing remains uncertain: Management cited ongoing monitoring of border security opportunities and Quantum/CBP testing, but no near-term revenue commitments; CCUS discussions ongoing with no revenue today .

Financial Results

Metric	Q1 2024 (Dec-23)	Q3 2024 (Jun-24)	Q4 2024 (Sep-24)	Q1 2025 (Dec-24)
Revenue ($M)	50.03	25.86	35.44	37.22
Gross Profit ($M)	22.24	8.53	15.93	20.15
Gross Margin % (calc.)	44.5% (22.24/50.03)	33.0% (8.53/25.86)	45.0% (15.93/35.44)	54.1% (20.15/37.22)
Operating Income ($M)	12.84	(2.39)	1.18	7.84
EBIT Margin % (calc.)	25.6% (12.84/50.03)	(9.3%) ((2.39)/25.86)	3.3% (1.18/35.44)	21.1% (7.84/37.22)
Net Income ($M)	12.68	(2.07)	(12.86)	8.38
Diluted EPS ($)	0.94	(0.16)	(1.00)	0.65

Revenue mix | Revenue Mix | Q1 2024 | Q3 2024 | Q4 2024 | Q1 2025 | |---|---|---|---|---| | Products ($M) | 43.71 | 20.22 | 32.60 | 32.65 | | Rental ($M) | 6.32 | 5.64 | 2.84 | 4.58 |
Segment performance (new reporting structure; YoY) | Segment | Revenue Q1 2024 ($M) | Revenue Q1 2025 ($M) | Op Inc Q1 2024 ($M) | Op Inc Q1 2025 ($M) | |---|---|---|---|---| | Smart Water | 4.23 | 7.29 | 1.10 | 0.37 | | Energy Solutions | 39.91 | 24.28 | 15.07 | 13.28 | | Intelligent Industrial | 5.81 | 5.58 | (0.19) | (0.94) | | Corporate (rev/op inc) | 0.07 / (3.14) | 0.08 / (4.88) | | |
Liquidity and capital allocation | KPI | Q4 2024 | Q1 2025 | |---|---|---| | Cash & Equivalents ($M) | 6.90 | 1.41 | | Short-term Investments ($M) | 30.23 | 20.66 | | Cash + STI ($M) | 37.12 | 22.07 | | Trade/Financing Receivables – Current ($M) | 21.87 | 40.65 | | Revolver Availability ($M) | 15.00 | 12.00 | | Capex (PP&E) in Quarter ($M) | 3.86 FY Q4 run-rate noted | 3.20 (PP&E), 0.37 (rental) | | Buyback ($) | None in Q4 noted | $0.20M in Q1; $7M program completed early Q2 |

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue/EPS	FY25	None provided	None provided	Maintained (no formal guidance)
Capex (PP&E)	FY25	n/a	“As much as $6M”	New disclosure
Rental Fleet Additions	FY25	“Do not anticipate significant increases” (qualitative)	No change	Maintained
Liquidity	Current	$15M revolver (FY24)	$12M revolver (Q1)	Lower committed availability
Share Repurchase	Program	$7M authorization (Aug-24 extended)	Completed early Q2 FY25 (716k shares @ $9.72)	Completed

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024, Q4 2024)	Current Period (Q1 2025)	Trend
Smart Water (Hydroconn, Aquana)	Record Adjacent/industrial revenue; Aquana backlog ~$0.9M, growth expected	Smart Water +72% YoY; strong Hydroconn demand; Aquana momentum incl. international discussions	Improving
Energy Solutions demand/OBX utilization	OBX rental gaps; cautious outlook; investing to fulfill existing Mariner contract	$17M OBX sale; YoY down vs $30M prior-year Mariner; expect quarterly variability	Variable
PRM (Permanent Reservoir Monitoring)	Active discussions; tenders possible beyond near term	No pressing PRM opportunities; competition from OBN; watch energy dynamics	Stable/Muted
Border security/Quantum (CBP)	DARPA project concluded; CBP contract extension to Apr-25; decision expected calendar 2Q25	Monitoring new administration; ongoing CBP testing; potential opportunities; no guidance	Awaiting decision
CCUS / Energy transition analytics	Early-stage discussions; limited near-term revenue	Discussions ongoing; no revenue today	Stable/Muted
Capital allocation	Buyback extended to $7M; no additional buyback planned near-term (Q4 call)	$7M program completed early Q2 FY25	Executed

Management Commentary

“Our companywide focus on driving profitability through strategic decisions continues to yield positive results. We just completed another profitable quarter…” (CEO Rich Kelley) .
“This quarter represents our first reporting period using our new business segments: Smart Water, Energy Solutions and Intelligent Industrial.” .
“Smart Water… shows an increase of 72% from the same period last year.” .
“Energy Solutions… included a $17 million OBX marine wireless product sale… [prior-year] included a $30 million sale of our Mariner shallow water ocean bottom nodes… [also] lower utilization of the OBX rental fleet.” .
“We will not provide any specific revenue or earnings guidance…” (CFO Robert Curda) .
“Our balance sheet… remains strong and debt-free with $22 million of cash and short-term investments… borrowing availability of $12 million… total liquidity $34 million.” .
“The company completed its $7 million stock repurchase program early in the second quarter… roughly 716,000 shares at an average price of $9.72.” .

Q&A Highlights

Government security opportunities: Management is “monitoring” the new administration; CBP project ongoing; no guidance; optimism tempered by budget timing .
CCUS: Ongoing discussions with partners; no current revenue; margin profile vs PRM unclear .
R&D: Elevated R&D spend on capital-intensive projects with longer lead times; pursuing future revenue streams aligned with new segments .
Smart Water detail: Hydroconn market uptake continues; Aquana gaining domestic and international traction; pipeline building .
PRM: Limited near-term activity; international reservoirs under discussion; competition from ocean bottom nodes .

Estimates Context

Wall Street consensus from S&P Global (EPS and Revenue) for Q1 2025 was unavailable at time of analysis due to data access limits; as a result, we cannot provide vs-consensus comparisons for this quarter (we will update when available).
Management does not issue formal revenue/EPS guidance, which also limits external benchmarking .

Key Takeaways for Investors

Mix-driven margin resilience: Despite YoY revenue decline versus a Mariner-heavy comp, sequential gross and EBIT margins expanded materially, aided by product sales mix and cost discipline .
Smart Water is becoming a second engine: 72% YoY growth and favorable end-market tailwinds (municipal and multifamily) suggest durable contribution beyond Energy Solutions cyclicality .
Energy Solutions remains lumpy but leveraged to awards: $17M OBX sale shows product strength; watch for additional OBX/Mariner awards and rental utilization recovery through FY25 .
Optionality in government/security: The forthcoming CBP/Quantum decision and DARPA-related opportunities represent upside optionality; timelines remain uncertain .
Capital returns executed with prudence: $7M buyback completion and net cash/liquidity position provide flexibility through cycles .
Near-term trading catalysts: Additional node awards (incl. $7.6M Mariner slated for Q3), update on CBP decision timing, and continued Smart Water order momentum could move shares .

Additional Supporting Details

Other relevant Q1 FY25-period press release: $7.6M Mariner ocean-bottom node contract (delivery expected in Q3 FY25) .
Prior two quarters for trend:
- Q4 FY24: Revenue $35.44M; net loss ($12.86M) driven by $17.3M non-cash charges; adjusted net income $4.44M; strong Smart Water (Hydroconn) momentum noted .
- Q3 FY24: Revenue $25.86M; net loss ($2.07M) on OBX rental gaps; record Adjacent (industrial) revenue; Aquana backlog ~ $0.9M .

Notes: All figures are as reported in company filings and earnings materials. Margins shown are calculated from reported revenue, gross profit, and operating income figures. Citations: press release and 8-K exhibit for Q1 FY25 – –; Q1 FY25 call transcript –; other referenced quarters and press releases – – – – – –.

GEOSPACE TECHNOLOGIES CORP (GEOS)·Q1 2025 Earnings Summary