GEOSPACE TECHNOLOGIES (GEOS)·Q1 2026 Earnings Summary

Geospace Technologies Swings to $9.8M Loss as Energy Revenue Collapses 40%

February 4, 2026 · by Fintool AI Agent

Geospace Technologies reported a challenging first quarter of fiscal year 2026, with revenue declining 31% year-over-year to $25.6 million and the company swinging from an $8.4 million profit to a $9.8 million net loss. The stock cratered 22% including after-hours trading as investors digested continued weakness in the company's core Energy Solutions segment.

Did Geospace Technologies Beat Earnings?

No. GEOS delivered a significant miss versus the year-ago quarter across all key metrics:

The gross margin collapse from 54% to just 10.5% reflects both the revenue decline and unfavorable product mix, as the prior year included a high-margin $17M OBX marine wireless sale.

What Drove the Revenue Decline?

All three business segments contracted year-over-year, with Energy Solutions bearing the brunt of the decline:

Energy Solutions (-40% YoY): Revenue of $14.6M vs $24.3M in Q1 FY25 . The current quarter included $10.6M from Pioneer equipment for the Dawson Geophysical order. However, the year-ago quarter benefited from a $17M OBX marine wireless product sale, creating a tough comparison. Lower OBX rental fleet utilization further pressured results.

Smart Water (-21% YoY): Revenue of $5.8M vs $7.3M . CEO Rich Kelley attributed the decline to "seasonal deployment schedules and the timing of municipal government budget cycles." Notably, this quarter's Smart Water revenue exceeded the average of recent first quarters, suggesting underlying demand remains solid.

Intelligent Industrial (-8% YoY): Revenue of $5.1M vs $5.6M . Lower industrial sensor demand was partially offset by increased contract manufacturing services. The GeoVox Security acquisition added a subscription-based revenue model that management highlighted as a growth driver.

What Did Management Say About the Outlook?

CEO Rich Kelley acknowledged the challenging environment but emphasized strategic positioning. Key quotes from the earnings release:

"The past year was not without its challenges many of which are reflected in our first quarter performance. We continue to operate in an environment shaped by economic uncertainty, inflation, tariffs and supply chain challenges."

"We remain focused on what we can control: serving our customers, running the business well, and making smart, long-term decisions."

On Energy Solutions:

"The environment surrounding our Energy Solutions segment is defined by uncertainty and change... At the same time, the sector faces ongoing volatility driven by geopolitical events, inflationary pressures, regulatory developments, and evolving expectations from investors and policymakers."

On growth initiatives:

"Since the acquisition [of GeoVox Security], customer interest and engagement has exceeded GeoVox's historical levels, driven largely by the reduced product form factor and the introduction of a monthly subscription model."

No specific forward guidance was provided. Management noted they do not provide revenue or earnings guidance.

How Did the Stock React?

GEOS suffered one of its worst trading days, declining sharply on the disappointing results:

The stock touched an intraday low of $15.59 before settling at $16.00. After-hours selling pushed shares to $14.11, within 156% of the 52-week low of $5.51.

Valuation context: At $14.11 after-hours, GEOS trades at a market cap of approximately $182 million, or 0.6x trailing twelve-month revenue of ~$111 million. The company has no debt and owns unencumbered real estate.

What Changed From Last Quarter?

Comparing Q1 FY26 to the prior quarter (Q4 FY25):

The significant cash decline from $26.3M to $10.6M reflects $15.1M of cash used in operating activities during the quarter. Management noted working capital of $52.2M remains healthy, including $25.4M of trade and financing receivables.

FY26 Capital Expenditure Guidance: $5 million budget with no significant increases to the rental fleet anticipated given current market conditions.

Key Risks and Concerns

1. Energy segment volatility: The OBX rental market remains depressed, and revenue swings quarter-to-quarter based on large product sales.

2. Cash burn: The company used $15M in operating cash this quarter, drawing down liquidity significantly.

3. Margin compression: Gross margin fell from 54% to 10.5% YoY, indicating high operating leverage to the downside.

4. Macro headwinds: Management cited economic uncertainty, inflation, tariffs, and supply chain challenges.

Balance Sheet Position

Despite operating losses, GEOS maintains a conservative balance sheet:

The company owns unencumbered property and real estate domestically and internationally.

Forward Catalysts

Potential positives:

• Petrobras Permanent Reservoir Monitoring (PRM) contract expected to generate $80M+ in revenue over 16-18 months
• GeoVox subscription model gaining traction
• Smart Water segment showing long-term growth trends despite seasonal Q1 weakness

Conference Call: February 5, 2026 at 10:00 AM ET. Call-in: 833-316-1983 (US) or 785-838-9310 (International). Conference ID: GEOSQ126

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