Executive Summary

Q2 2025 revenue was $0.362M, down sharply both sequentially (vs. Q1 2025: $2.065M) and year-over-year (vs. Q2 2024: $1.181M); management cited reduced deliveries to its Fortune 500 medical customer and emphasized a strategic shift toward aerospace/defense that may cause near-term revenue fluctuations .
Versus S&P Global consensus, revenue modestly beat ($0.362M actual vs. $0.300M estimate*) while EPS missed (-$0.25 actual* vs. -$0.12 estimate*), with only one covering estimate, underscoring limited sell-side visibility*.
Gross margin improved sequentially to 37% (Q1: 26%), though it declined year-over-year (Q2 2024: 44%); operating expenses were elevated at $4.6M as the company scaled operations and invested in Industry 4.0 and market penetration .
Backlog remained robust at $14.4M (vs. $14.8M in Q1) and cash was $33.2M at quarter-end, supported by the February 2025 uplisting and $23.7M offering; strategic wins include Heron TP deployment and a multinational technology partnership in defense/mining/agriculture/autonomous vehicles .

What Went Well and What Went Wrong

What Went Well

Strategic traction: delivered PHM system for the Heron TP UAV (Israeli MOD/IAF), signed a multinational technology partnership spanning defense/mining/agriculture/autonomous vehicles, and partnered with Israel Railways to deploy PHM for derailment prevention .
Sequential margin improvement: gross margin rose to 37% in Q2 from 26% in Q1, aided by mix and lower cost of revenues versus Q1 .
Liquidity and market positioning: cash balance of $33.2M at 6/30/25 and Russell Microcap® addition following Nasdaq uplisting, enhancing visibility and potential access to capital .
- CFO: “During the second quarter, we deepened our partnerships with tier-one customers... This supports our ongoing transition toward the aerospace and defense sectors, a shift initiated last year that may lead to short-term fluctuations in our quarterly revenues.”

What Went Wrong

Revenue contraction: Q2 revenue fell to $0.362M from $2.065M in Q1 and $1.181M in Q2 2024, driven primarily by reduced deliveries to the Fortune 500 medical customer .
Elevated operating expenses: Q2 OpEx of $4.6M, up from $2.9M YoY, reflecting scaling operations, development of Industry 4.0 products, and visibility initiatives .
Wider losses and YoY margin pressure: net loss was $4.075M (vs. $4.265M in Q1 and $2.182M in Q2 2024), and gross margin declined YoY to 37% from 44% .

Financial Results

Sequential Performance (Oldest → Newest)

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD Millions)	$1.304*	$2.065	$0.362
EPS (Primary, $USD)	N/A	-$0.29*	-$0.25*
Gross Margin (%)	N/A	26%	37%
Net Loss ($USD Millions)	N/A	-$4.265	-$4.075

Year-Over-Year (Q2 2024 vs. Q2 2025)

Metric	Q2 2024	Q2 2025
Revenue ($USD Millions)	$1.181	$0.362
Gross Margin (%)	44%	37%
Net Loss ($USD Millions)	-$2.182	-$4.075

Versus Wall Street Consensus (S&P Global) – Q2 2025

Metric	Consensus	Actual	Surprise
Revenue ($USD Millions)	$0.300*	$0.362	+$0.062*
EPS (Primary, $USD)	-$0.12*	-$0.25*	-$0.13*

Notes: Primary EPS - # of Estimates = 1*; Revenue - # of Estimates = 1*.

Segment Breakdown (Narrative – No quantified disclosure provided)

Segment/End-Market	Q4 2024 (Narrative)	Q1 2025 (Narrative)	Q2 2025 (Narrative)
Aerospace/Defense	Transition from medical to aerospace; backlog rose to ~$15M; secured agreements with defense contractor and IAF .	Building foundations; uplisting and capital raise to support aerospace strategy .	Heron TP deployment; multinational partnership to integrate PHM across platforms .
Transportation	Emerging; focus on Industry 4.0 revenues .	Israel Railways AI visualization project to prevent derailments .	Israel Railways PHM deployment to enhance safety .
Medical/Industry 4.0	Industry 4.0 drove 2024 growth .	Q1 revenue largely from $1.7M medical contract; margin 26% .	Q2 revenue decreased primarily due to reduced deliveries to the medical customer .

KPIs and Operating Metrics

KPI	Q1 2025	Q2 2025
Backlog ($USD Millions)	$14.8	$14.4
Cash & Cash Equivalents ($USD Millions)	$36.881	$32.910
Operating Expenses ($USD Millions)	$5.1	$4.6
Gross Profit ($USD Millions)	$0.538	$0.133

Cross-reference note: The press release text describes Q2 revenue “approximately $0.4M,” while the financial statements show $0.362M; the table above uses the statement line item .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY/Q2 2025	Not provided	Not provided	Maintained (no guidance)
Gross Margin	FY/Q2 2025	Not provided	Not provided	Maintained (no guidance)
Operating Expenses	FY/Q2 2025	Not provided	Not provided; qualitative drivers cited (expansion, uplisting costs)	Maintained (no guidance)
OI&E / Tax Rate	FY/Q2 2025	Not provided	Not provided	Maintained (no guidance)
Segment-Specific	FY/Q2 2025	Not provided	Not provided	Maintained (no guidance)
Dividends	FY/Q2 2025	Not provided	Not provided	Maintained (no guidance)

Earnings Call Themes & Trends

No Q2 2025 earnings call transcript or slides were found in our document catalog; themes below are derived from press releases and 8-Ks .

Topic	Previous Mentions (Q4 2024 & Q1 2025)	Current Period (Q2 2025)	Trend
Aerospace/Defense transition	Shift from medical to aerospace; backlog ~$15M; agreements with defense contractor and IAF .	Heron TP deployment; multinational technology partnership to integrate PHM on multiple platforms .	Strengthening
AI/Technology initiatives	Plan to offer AI-based video analytics/ML as SaaS .	Continued PHM deployments across industrial and transport use cases .	Expanding
Transportation safety	Initiatives emerging .	Israel Railways PHM deployment to prevent derailments .	Advancing
Customer concentration risk	Explicit risk: reliance on single customer .	Revenue decrease tied to medical customer; reliance risk reiterated .	Transitional exposure
Supply chain/single suppliers	Risk: reliance on single suppliers for components .	Risk reiterated; no change .	Unchanged
Macro/regulatory (Israel conflict)	Risk highlighted (Israel war) .	Risk reiterated (Hamas, Hezbollah, Iran) .	Ongoing
R&D execution	Elevated R&D to build Industry 4.0 products .	Continued R&D investment; OpEx elevated .	Sustained investment

Management Commentary

CFO (Q2 2025): “During the second quarter, we deepened our partnerships with tier-one customers… [transition] toward the aerospace and defense sectors… may lead to short-term fluctuations in our quarterly revenues… optimistic that early traction will translate into financial results.”
CFO (Q1 2025): “We’re making important strides in building the technological and operational foundations that will support our long-term growth… uplisting to Nasdaq and recent capital raise… strengthen our balance sheet… positioning ourselves for future success in Aerospace and new verticals.”
CEO (Q4 2024): “We are excited with the increasing recognition… in the Aerospace industry… Odysight.ai’s successful shift from the medical sector to the high-value aerospace sector is already yielding positive results… next step is to offer… on a SaaS model.”

Q&A Highlights

No Q2 2025 earnings call transcript was available in our sources; therefore Q&A themes and any guidance clarifications are not accessible for this period .

Estimates Context

Coverage is limited: one estimate for Q2 2025 EPS and revenue*.
Q2 2025 revenue beat consensus ($0.362M actual vs. $0.300M estimate*), while EPS missed (-$0.25 actual* vs. -$0.12 estimate*), suggesting near-term volatility may complicate modeling*.
Given management’s indication of short-term revenue fluctuations tied to sector transition, consensus may need to reflect lumpiness until aerospace/defense deployments scale .

Values retrieved from S&P Global. Items marked with * reflect S&P Global data.

Key Takeaways for Investors

Execution in aerospace/defense is tangible (Heron TP, multinational partner) and broadening into transportation (Israel Railways), but management warns of short-term revenue fluctuations during the transition .
Backlog remains sizable at $14.4M (slightly down from $14.8M), offering pipeline visibility, yet conversion timing remains a swing factor for quarterly results .
Liquidity is strong (cash $33.2M at 6/30/25), underpinned by February’s $23.7M offering, supporting continued product development and market penetration .
Customer concentration and single-supplier dependencies plus geopolitical risks in Israel are explicitly noted; diversification and resilient supply arrangements are investment focal points .
Near-term trading: limited sell-side coverage (one estimate*) and EPS miss versus consensus*, combined with revenue lumpiness, may drive volatility; revenue beat was modest*.
Medium-term thesis: incremental aerospace and transportation deployments plus potential SaaS monetization could stabilize and scale revenue as partnerships mature .
Monitoring priorities: new platform integrations, backlog updates, OpEx discipline as scaling continues, and any movement toward quantitative guidance in subsequent filings .

Appendix: Source Documents Reviewed

Q2 2025 8-K with press release and financials (first half and Q2 highlights) .
Q1 2025 8-K press release and financials .
FY 2024 8-K press release and annual financials .
No Q2 2025 earnings call transcript found .

Odysight.ai Inc. (ODYS)·Q2 2025 Earnings Summary