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GEOSPACE TECHNOLOGIES CORP (GEOS)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 revenue was $24.8M and diluted EPS was $0.06, up from a loss of $(0.16) in Q3 2024; sequential revenue increased meaningfully versus Q2 amid Smart Water growth and a gain on property sale .
  • Energy Solutions remained soft on OBN rental utilization, but management announced a major PRM award at Petrobras’ Mero Fields; equipment manufacturing revenue is expected to exceed $80M over 16–18 months, with no recognition in FY25 and potential start in Q1 FY26 (not yet finalized) .
  • Intelligent Industrial expanded with the Heartbeat Detector acquisition, which management plans to sell on a subscription basis to drive recurring revenue .
  • No formal guidance was provided; catalysts ahead include PRM ramp timing, border-security RFP expected early next calendar year, and continuing Smart Water adoption .

What Went Well and What Went Wrong

What Went Well

  • Smart Water revenue hit $10.5M (+6% YoY) and a record nine-month contribution, underpinned by Hydroconn connector demand; “Hydroconn… remain a reliable revenue and profit center” .
  • Strategic wins: PRM award for Mero 3 & 4 (nearly 500 km OptoSeis PRM), and first sale of Pioneer ultralight land node; “equipment manufacturing portion… should generate in excess of $80M” .
  • Balance sheet actions and portfolio focus: completed sale of adjacent property ($9.2M gross proceeds) and divested streamer recovery assets to Seis Gear .

What Went Wrong

  • Energy Solutions revenue fell to $8.1M (−14% YoY) on lower OBN rental utilization; Intelligent Industrial declined 5% YoY on weaker imaging demand and lapping a completed government contract .
  • Operating expenses rose (SG&A and R&D), pressuring margins; CFO cited higher personnel and sales/marketing costs in recent periods .
  • No revenue recognition from the PRM award in FY25; installation revenue largely recognized by a partner, limiting near-term contribution .

Financial Results

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$25.9 $37.2 $18.0 $24.8
Diluted EPS ($)$(0.16) $0.65 $(0.77) $0.06
Gross Profit ($USD Millions)$8.5 $20.1 $1.7 $7.5
Gross Margin (%)33.0%*54.1%*9.7%*30.3%*
EBITDA ($USD Millions)$1.1*$10.6*$(7.8)*$(1.8)*
EBITDA Margin (%)4.3%*28.5%*−43.3%*−7.4%*
Net Income ($USD Millions)$(2.1) $8.4 $(9.8) $0.8
Net Income Margin (%)−8.0%*22.5%*−54.4%*3.1%*
Total Operating Expenses ($USD Millions)$10.9 $12.3 $12.0 $11.8
  • Values marked with * retrieved from S&P Global.

Segment breakdown (Q3):

SegmentQ3 2024 Revenue ($M)Q3 2025 Revenue ($M)Q3 2024 Op Income ($M)Q3 2025 Op Income ($M)
Smart Water$9.9 $10.5 $2.6 $2.2
Energy Solutions$9.4 $8.1 $(0.1) $(1.2)
Intelligent Industrial$6.5 $6.1 $(1.3) $(1.0)
Corporate$0.1 $0.1 $(3.6) $0.4
Total$25.9 $24.8 $(2.4) $0.4

KPIs and liquidity:

KPIValuePeriod
Hydroconn cumulative connectors sold>27 million As of Q2 2025
Cash + Short-term investments$25.6M 6/30/2025
Working capital$74.5M 6/30/2025
Property sale proceeds$9.2M Q3 2025
PRM equipment revenue (expected)>$80M over 16–18 months Contract announced Q3

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Company revenue/EPS guidanceFY25NoneNone (company does not provide) Maintained no guidance
PRM revenue recognitionFY25N/ANo FY25 recognition; potential Q1 FY26 start, not finalized New detail provided
Border tunnel detection RFPCalendarN/ARFP anticipated early next calendar year (timing moved later) Timing update

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
PRM pipeline and awardFEED studies ongoing; strategic conversations with NOCs Petrobras Mero PRM awarded; >$80M equipment manufacturing; revenue recognition likely starts Q1 FY26 Positive inflection; execution/ramp timing in focus
OBN market utilizationOBN rental underperformed; receivable reversal $2.2M OBN headwinds persist; Energy Solutions down YoY Persistent headwind
Smart Water momentumRecord Q1 and Q2 performance; mainstream adoption; 10–15% TAM growth narrative Q3 growth continues; record nine-month revenue; strong Hydroconn demand Sustained growth
Aquana smart valvesEarly pilots; long municipal adoption cycles; single-digit mix Increased interest; launch of AquaLink IoT endpoint Building pipeline
Tariffs/macroTariff concerns impacting EXILE; supply chain optimization Macro/tariff impacts still cited; no formal guidance Ongoing
Security/DefenseBorder security optimism; Navy harbor protection interest (not specific yet) Heartbeat Detector acquisition; subscription model; CBP RFP timing pushed to next year Strategic expansion; timing risk

Management Commentary

  • “Strategic accomplishments defined our third quarter laying the foundation to further our revenue and profitability goals.” — CEO Rich Kelley .
  • “The equipment manufacturing portion of this contract should generate in excess of $80,000,000 in revenue and is anticipated to take sixteen to eighteen months to complete.” — CEO on PRM award .
  • “We will be recognizing this revenue throughout the project… We do not anticipate any revenue recognition in this fiscal year.” — CEO on PRM revenue timing .
  • “We intend to offer the Heartbeat Detector® on a subscription basis, aligning with our strategy to grow recurring revenue streams.” — CEO on acquisition strategy .
  • “We will not provide any specific revenue or earnings guidance during our call this morning.” — CFO Robert Curda .

Q&A Highlights

  • PRM economics and margins: CFO expects PRM project profitability with absorption; indicated 40–45% gross margin range historically achievable on high-absorption products .
  • PRM competitive dynamics: CEO highlighted reliability advantages (no in-water wet-mate connectors) and optical signal interpretation differentiation .
  • Receivables timing: CFO noted progress payment plans extend beyond calendar year; some this year and some next year .
  • Border security: CEO detailed Heartbeat Detector’s 99% effectiveness and subscription model; CBP tunnel detection RFP anticipated early next calendar year amid agency resource constraints .
  • Smart Water narrative: Hydroconn remains an industry standard amid mainstream adoption; partner Nicor’s acquisition by Hubbell viewed positively for growth .

Estimates Context

MetricQ3 2025 S&P Consensus# of EstimatesActualSurprise
Revenue ($M)N/A (coverage unavailable)*N/A*$24.8 N/A
EPS ($)N/A (coverage unavailable)*N/A*$0.06 N/A
  • S&P Global consensus coverage for GEOS in Q3 2025 was unavailable; no beat/miss determination can be made at the headline level.*

Key Takeaways for Investors

  • Smart Water continues to anchor results with resilient demand and expanding installed base, supporting margin quality and cash generation .
  • Energy Solutions headwinds persist short term; the Petrobras PRM award is a medium-term growth catalyst with high manufacturing absorption but no FY25 revenue recognition .
  • Subscription-led expansion via Heartbeat Detector positions Intelligent Industrial for recurring revenue and border/security tailwinds, though federal procurement timing is uncertain .
  • Liquidity remains solid ($25.6M cash/STI; $15M undrawn revolver) and working capital robust ($74.5M), creating flexibility for ramp and M&A .
  • Near-term stock catalysts: clarity on PRM revenue milestones, CBP RFP issuance, Smart Water growth trajectory, and potential further divestments/portfolio optimization .
  • Watch OPEX discipline and mix shifts; SG&A/R&D increases and underutilized OBN rentals pressured margins—operational leverage hinges on PRM and Smart Water scaling .
  • Guidance abstention suggests volatility remains; position sizing should reflect execution/timing risk around PRM start and border-security procurement cycles .
Notes:
- All document-based figures and quotes are cited to company press releases, 8-Ks, and transcripts as indicated.
- Cells marked with * are values retrieved from S&P Global.