Executive Summary

Q2 FY2025 revenue was $17.55M, up 8.9% YoY and 11.5% QoQ; gross margin expanded to 30.4% from 25.1% YoY (and from 29.4% in Q1), and net loss narrowed to $0.7M ($0.09/share) from $1.6M ($0.21/share) YoY, driven by operating leverage and manufacturing efficiencies .
Backlog/forward load stepped up to $7.2M (vs $6.6M at 1/31/25 and $5.7M at 10/31/24); international sales rose 27.1% YoY while U.S. sales grew 4.6% YoY, with particular strength in military markets .
Management reiterated no formal guidance but cited positive industry trends, seasonality favoring 2H, and ongoing margin expansion potential from operating leverage as volumes rise .
No S&P Global consensus estimates were available for EPS or revenue for Q2 FY2025; as a result, beat/miss vs Street cannot be determined (we attempted to retrieve consensus and found none; see Estimates Context) (Values retrieved from S&P Global).*

What Went Well and What Went Wrong

What Went Well
- Margin expansion and operating leverage: gross margin reached 30.4% (vs 25.1% YoY; 29.4% in Q1), attributed to “production efficiencies over higher production volumes” and significant operating leverage .
- Demand momentum and backlog: Q2 sales rose 8.9% YoY (11.5% QoQ), backlog increased to $7.2M, and international sales grew 27.1% YoY; military markets remain a source of strength .
- Loss narrowing: net loss improved to $0.7M ($0.09/share) from $1.6M ($0.21/share) YoY, aided by higher gross profit (+32.1% YoY) .
What Went Wrong
- Still loss-making: despite improved metrics, Q2 posted an operating loss of $0.43M and net loss of $0.70M; SG&A rose to $5.74M on higher personnel-related and shipping costs .
- Limited exposure to the hyperscale data center wave: management noted OCC does not target hyperscale; focus and opportunity lie in Tier 2/3 and enterprise data centers, with progress slower than hyperscale-led peers .
- Tariff and supply chain considerations persist: tariffs affect certain products and exports (though OCC believes less than peers), requiring ongoing adjustments .

Financial Results

Metric	Q4 FY2024 (oldest)	Q1 FY2025	Q2 FY2025 (latest)
Revenue ($M)	$19.49	$15.74	$17.55
Gross Profit ($M)	$6.53	$4.63	$5.34
Gross Margin (%)	33.5%	29.4%	30.4%
SG&A ($M)	$5.85	$5.46	$5.74
Operating Income ($M)	$0.66	$(0.85)	$(0.43)
Net Income ($M)	$0.37	$(1.11)	$(0.70)
Diluted EPS ($)	$0.05	$(0.14)	$(0.09)

YoY and QoQ deltas (Q2 FY2025):

Revenue: +8.9% YoY vs Q2 FY2024; +11.5% QoQ vs Q1 FY2025 .
Gross Margin: 30.4% vs 25.1% YoY; 30.4% vs 29.4% QoQ .
EPS: $(0.09) vs $(0.21) YoY; $(0.09) vs $(0.14) QoQ .

KPIs and Mix:

Backlog/Forward Load: $5.7M (10/31/24) → $6.6M (1/31/25) → $7.2M (4/30/25) .
Geography growth YoY (Q2 FY2025): International +27.1%, U.S. +4.6% .
SG&A as % of sales: 32.7% in Q2 FY2025; 33.0% in Q2 FY2024; 34.7% in Q1 FY2025 .

Actual vs Street (S&P Global):

Metric	Q2 FY2025 Actual	Q2 FY2025 Consensus	Beat/Miss
Revenue	$17.55M	N/A (no consensus) (Values retrieved from S&P Global).*	N/A
EPS (diluted)	$(0.09)	N/A (no consensus) (Values retrieved from S&P Global).*	N/A

Segment breakdown: OCC reports by market (enterprise vs specialty) qualitatively; specialty increased YoY and enterprise was stable; no quantified segment table disclosed .

Guidance Changes

OCC does not provide forward guidance. No numerical guidance updates were given this quarter .

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY2025	None	None	N/A
Gross Margin	FY2025	None	None	N/A
OpEx/SG&A	FY2025	None	None	N/A
EPS	FY2025	None	None	N/A
Other (segments/tax/dividends)	FY2025	None	None	N/A

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 FY2024, Q1 FY2025)	Current Period (Q2 FY2025)	Trend
Operating leverage and margins	Q4 FY2024: margin inflection with positive EPS; leverage cited as key profitability driver . Q1 FY2025: margin expansion with increased volume .	Continued margin expansion to 30.4% on higher volumes; leverage emphasized .	Improving
Demand/backlog	Q1 FY2025: backlog rose to $6.6M, momentum in enterprise/specialty .	Backlog up to $7.2M; international growth +27.1% YoY; military strength .	Improving
Seasonality	Noted historically; 2H typically stronger .	Reiterated; sales typically heavier in 2H .	Consistent
Data centers/AI	Data center opportunity referenced; not main driver previously .	Not targeting hyperscale; focus on Tier 2/3 and enterprise; added loose tube products to broaden offering .	Selective/Building
Tariffs/supply chain	Macro pressures in FY2024; industry weakness .	Tariff impacts present but believed less than peers; monitoring and adjusting .	Managed headwind

Management Commentary

Strategic message: “Strong execution… and significant operating leverage enabled improved gross profit margins as we realized improved manufacturing efficiencies over higher production volumes… we continue to see positive industry trends” .
Demand visibility: “Backlog and forward load increased to $7.2M vs $6.6M (1/31/25) and $5.7M (10/31/24)” .
Data center positioning: “What’s getting the most press… hyperscale… that is a different type of product set than what OCC provides. We haven’t really targeted hyperscale… we do have sales in Tier 2 and Tier 3 and enterprise… we’ve added loose tube products” .
Tariffs: “OCC has seen impact from tariffs… less… than others… we continue to monitor… and are making appropriate adjustments” .
Guidance policy: “OCC does not provide any forward-looking guidance” .

Notable quotes:

“Strong execution… coupled with our significant operating leverage… enabled us to deliver improved gross profit margins” .
“We haven’t really targeted hyperscale data centers… we are seeing opportunities… particularly in the Tier 2 and Tier 3 data centers” .

Q&A Highlights

Data centers/AI: Analyst pressed on capitalizing on the data center build-out; management clarified strategy focuses on Tier 2/3 and enterprise, not hyperscale; loose tube products broaden addressable use cases .
Operating leverage: Management pointed investors to historical results and CEO’s annual letter as best illustration of leverage potential at higher volumes .
Copper vs fiber mix: Fiber is the larger portion; company does not disclose precise mix; copper market remains significant .
Tariffs: Impacts exist but believed less than peers; ongoing monitoring and adjustments .
Seasonality and trajectory: 2H usually stronger; backlog and recent QoQ growth support constructive near-term outlook without formal guidance .

Estimates Context

We attempted to pull S&P Global consensus for Q2 FY2025; no consensus EPS or revenue estimates were available, and the number of estimates was not populated. Therefore, we cannot assess beat/miss vs Street this quarter (Values retrieved from S&P Global).*

Key Takeaways for Investors

Margin expansion is intact: gross margin rose to 30.4% (+530 bps YoY) on higher volumes and manufacturing efficiencies; operating leverage remains the core earnings driver as utilization improves .
Backlog and mix support near-term sales: backlog increased to $7.2M, with 27.1% international growth and military market strength pointing to demand resilience into 2H seasonally stronger months .
Profitability path hinges on scale and cost discipline: SG&A rose on personnel/shipping, but as a percent of sales it improved vs Q1; sustained volume growth should further leverage fixed costs .
Data center narrative is selective: OCC is not pursuing hyperscale; watch for incremental wins in Tier 2/3 and enterprise data centers aided by the loose tube portfolio expansion .
Macro/tariffs appear manageable relative to peers: domestic manufacturing base cushions tariff impact; continued monitoring and adjustments expected .
No formal guidance; seasonality favors 2H: Management tone constructive; company reiterates no guidance, but highlights positive industry trends and typical 2H strength .
Trading setup: In absence of Street estimates, the stock may trade on backlog conversion, gross margin trajectory, and any incremental data center or military wins communicated via subsequent updates .

Appendix: Additional Detail

Q2 FY2025 condensed P&L and balance sheet included in the press release and 8‑K exhibits .
Prior quarters for context: Q1 FY2025 revenue $15.74M, GM 29.4%, EPS $(0.14); Q4 FY2024 revenue $19.49M, GM 33.5%, EPS $0.05 .

Citations:

OPTICAL CABLE CORP (OCC)·Q2 2025 Earnings Summary