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OP

Ocean Power Technologies, Inc. (OPTT)·Q1 2026 Earnings Summary

Executive Summary

  • Q1 FY26 revenue was $1.18M, down 9% year over year; gross margin swung to a small loss (-$23K) and net loss widened to $7.39M, primarily due to a $2.1M increase in non-cash stock compensation within OpEx .
  • Backlog surged 184% to a record $15.0M and pipeline grew 45% to $133.5M, strengthening forward visibility and supporting an accelerating growth outlook .
  • Strategic execution advanced via a UAE Master Services Agreement (Unique Group), Washington D.C. office at AUVSI, and a digital twin partnership with Gradient Marine—each expanding capacity, policy access, and technology differentiation for maritime autonomy and ISR solutions .
  • No formal financial guidance was provided; estimate comparisons are unavailable as S&P Global shows no active consensus for EPS or revenue this quarter. Investors should anchor on backlog/pipeline and conversion pace while monitoring margin trajectory . Values retrieved from S&P Global.*

What Went Well and What Went Wrong

What Went Well

  • Record commercial traction: backlog reached $15.0M (+184% YoY), with pipeline at $133.5M (+45% YoY), indicating robust demand and improved multi-quarter visibility .
  • Strategic positioning: expanded UAE execution via Unique Group MSA (leasing WAM‑V 22, MRO hub plan), improving recurring revenue potential and regional scale with lower overhead .
  • Technology leadership: major upgrade to AI-capable Merrows MDAS (faster, more secure, broader interoperability) and Gradient Marine digital twin partnership, enhancing mission rehearsal and reducing operational risk .
  • CEO tone: “Momentum across our markets continues to accelerate… we believe OPT is exceptionally well positioned to capture new opportunities” .

What Went Wrong

  • Revenue and margin: Q1 FY26 revenue fell 9% YoY to $1.18M; gross profit flipped to a $23K loss and net loss widened to $7.39M, driven by higher non-cash stock comp within OpEx (+$2.1M) .
  • Gross margin pressure: management acknowledged prior declines tied to demonstration-focused programs; the shift toward operational deployments and services is expected to improve margins but timing remains execution-dependent .
  • Limited estimate context: No active Wall Street consensus available via S&P Global for Q1 FY26, constraining beat/miss framing for traders; reliance shifts to orders/backlog, pipeline conversion and contract delivery cadence. Values retrieved from S&P Global.*

Financial Results

Quarter-over-Quarter and Year-over-Year

MetricQ3 FY25Q1 FY26
Revenue ($USD Millions)$0.825 $1.182
Gross Margin ($USD Millions)$0.197 -$0.023
Operating Expenses ($USD Millions)$6.072 $7.055
Net Loss ($USD Millions)$6.720 $7.388
Basic/Diluted EPS ($USD)$(0.04) $(0.04)
MetricQ1 FY25Q1 FY26
Revenue ($USD Millions)$1.301 $1.182
Gross Margin ($USD Millions)$0.447 -$0.023
Operating Expenses ($USD Millions)$4.920 $7.055
Net Loss ($USD Millions)$4.453 $7.388
Basic/Diluted EPS ($USD)$(0.05) $(0.04)

KPIs and Balance Sheet

KPI / Balance SheetQ3 FY25 (Jan 31, 2025)Q4 FY25 (Apr 30, 2025)Q1 FY26 (Jul 31, 2025)
Backlog ($USD Millions)$7.5 $12.5 $15.0
Pipeline ($USD Millions)N/A$137.5 $133.5
Cash, equivalents, restricted, ST investments ($USD Millions)$10.2 $6.9 $10.0
Accounts Receivable ($USD Millions)$1.626 $1.191 $2.207
Inventory ($USD Millions)$3.949 $4.222 $4.865
Convertible Notes Payable ($USD Millions)N/AN/A$7.107

Segment/Offering Mix (qualitative)

  • Backlog composition characterized as “healthy split between buoys, vehicles and associated services,” with rising service/training revenues supporting higher gross margin potential over time .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY26/Q1N/AN/ANo formal guidance provided in Q1 FY26 release
MarginsFY26N/AN/ANo formal guidance; management targets margin improvement via services and operational deployments
OpExFY26N/AN/ANo formal guidance; Q1 OpEx increase driven by non-cash stock comp
Other items (OI&E, tax)FY26N/AN/ANo formal guidance

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2: Q3 FY25)Previous Mentions (Q-1: Q4 FY25)Current Period (Q1 FY26)Trend
Backlog & pipelineBacklog $7.5M; Latin America orders; cash used in ops down 59% YoY Entered FY26 with $12.5M backlog; pipeline $137.5M; ISO 9001; facility security clearance Backlog $15.0M (+184% YoY); pipeline $133.5M [+45% vs prior year] Improving visibility; multi-quarter conversion focus
Margin trajectoryMargin pressure; demo-centric programs; plan to shift to ops use and services CFO emphasized operating leverage, cost cuts; margin improvement via mix over time Management expects margins to improve as services grow and deployments move from demos to operations Gradual improvement potential
AI/technology initiatives (Merrows)WAM‑V multi-day autonomy; Merrows highlights at NAVDEX Strategic alliance with Red Cat; Teledyne OEM; ISO 9001 Merrows MDAS upgrade; Gradient Marine digital twin partnership Strengthening platform software stack
Regional expansion (UAE/LatAm)NAVDEX demos; LatAm partner orders ($5M) Exclusive distribution (UAE), reseller ($3M) in Mexico Unique Group MSA in UAE; WAM‑V shipments to RIG; planning UAE office Scaling presence; recurring leasing model
Regulatory/policyN/AISO 9001 certification; AUVSI Trusted Operator New office at AUVSI HQ in DC; legislative testimony on marine energy Enhanced policy engagement and credentials
Supply chainHighlighted resilience and cost control in 2025 Cost discipline; reduced third-party spend Capacity scaling with facility re-layout; working capital conscious inventory Process improvements to scale efficiently
Defense procurement timingElection-related delays slowed conversion Headwinds in defense procurement timing; profitability target shortfall Record backlog; conversion pace to drive growth; services recurring Improving setup; timing remains key

Management Commentary

  • CEO (Q1 FY26 release): “Momentum across our markets continues to accelerate… we believe OPT is exceptionally well positioned to capture new opportunities and expand our leadership in autonomous, persistent, and resident maritime systems.”
  • CEO (Q4 FY25 call): “We have turned the corner… We have become a multi solution platform company… diversify, scale and improve margins.”
  • On services/margins: “We’re seeing an uptick… as we transition further into operational use… service revenues… recurring… carry higher gross margin.”
  • On capacity: “We have redesigned the layout… so that we can scale up more quickly… conscious of working capital”
  • On market positioning: “ISO 9001… a globally standardized framework of quality… strengthens our position in upcoming opportunities”

Q&A Highlights

  • Pipeline definition and conversion: Qualified opportunities under negotiation with increased confidence in conversion as procurement cycles normalize; commercial team retooled under new leadership to accelerate conversion .
  • Capacity scaling: Facility re-layout in NJ, Bay Area prototyping; scaling aligned to working capital to avoid inventory front-loading .
  • Backlog composition: Healthy split across buoys, vehicles, and services; training services rising—supporting recurring revenue and higher margins .
  • Gross margin trajectory: Expect improvement as deployments shift from demonstrations to operational use; services carry higher margins .

Estimates Context

  • Q1 FY26 Consensus: S&P Global shows no active consensus for EPS and revenue this quarter; the database reflects actual revenue of $1.182M post-reporting with no consensus series populated. Values retrieved from S&P Global.*
  • Implications: Without formal consensus, buyside should gauge trajectory via backlog/pipeline growth, conversion pace, services mix expansion, and margin inflection commentary .

Key Takeaways for Investors

  • Backlog and pipeline growth are the core catalysts; monitor contract deliveries and conversion cadence into revenue over the next 2–3 quarters as the company executes multi-quarter fulfillment .
  • Margin recovery hinges on mix shift from demos to operational deployments and scaling of higher‑margin services/training; watch for sequential gross margin improvement commentary and services backlog growth .
  • Regional scaling under UAE MSA (Unique Group), UAE/RIG shipments, and DC presence at AUVSI should reduce sales friction, increase recurring leasing, and deepen defense/commercial access .
  • Cash/liquidity improved with recent financing; note new convertible notes and derivative liability on the balance sheet—track dilution risk and capital deployment against backlog conversion .
  • Near-term trading: With no consensus benchmarks, stock reactions likely tied to orders/backlog announcements, new deployments, and margin commentary; press releases around technology upgrades (Merrows, digital twin) may drive sentiment .
  • Medium-term thesis: Platform-plus-services strategy across PowerBuoy, WAM‑V, and Merrows, supported by ISO 9001 and policy engagement, positions OPT for persistent maritime ISR networks and recurring revenue streams .
  • Risk factors: Procurement timing in defense, demonstration-to-deployment transition risk, and execution on regional scaling; watch inventory/working capital discipline and OpEx normalization (non-cash stock comp) .