Sign in

You're signed outSign in or to get full access.

OP

Ocean Power Technologies, Inc. (OPTT)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 FY25 revenue fell to $0.83M (−54% YoY; −66% QoQ) amid delayed project activity, but backlog reached a record $7.5M (up from $3.3M YoY), positioning for future conversion as management expects momentum to return .
  • Operating discipline continued: OpEx declined 29% YoY to $6.07M; loss before taxes narrowed YoY to $(6.72)M; cash used in operating activities (YTD) improved materially (nine months: $(14.63)M vs $(24.71)M prior year) .
  • Liquidity improved to $10.03M cash/equivalents at quarter-end (vs $2.09M in Q2) driven by ATM issuance and note conversion; however, the 10‑Q raises substantial doubt about going‑concern absent additional financing through Mar‑2026 (a key risk to monitor) .
  • Strategic progress continued across defense/Middle East (NAVDEX demos with RIG), Latin America ($5M POs), and technology (multi‑day WAM‑V ops; Merrows/PowerBuoy advances), supporting medium‑term backlog conversion narratives despite near‑term revenue volatility .

What Went Well and What Went Wrong

  • What Went Well

    • Record backlog of $7.5M, supported by Latin America POs ($2M PowerBuoys, $3M WAM‑V) and broader pipeline opportunities .
    • Continued operating cost discipline: OpEx down 29% YoY (Q3: $6.07M vs $8.55M) and YTD operating cash burn down ~41% (nine months $(14.63)M vs $(24.71)M) .
    • Technology and biz dev milestones (NAVDEX demos with RIG; WAM‑V multi‑day ops; Merrows/Next‑Gen PowerBuoy) underpin future demand. “We remain confident that we will regain momentum, accelerate the conversion of backlog to revenues…” — CEO Philipp Stratmann .

  • What Went Wrong

    • Revenue dropped to $0.83M (−54% YoY; −66% QoQ) as decision‑making slowed during a “challenging macroeconomic and political environment,” delaying project activity and backlog conversion .
    • Gross profit compressed to $0.20M on the quarter (from $0.81M YoY), reflecting lower volume/mix; loss before taxes remained elevated at $(6.72)M despite YoY improvement .
    • Balance sheet risk remains: while cash improved, the 10‑Q cites substantial doubt about going‑concern through Mar‑2026 without additional financing (dilution risk) .

Financial Results

Quarterly P&L and key balance sheet items (oldest → newest)

MetricQ1 FY25 (Jul 31, 2024)Q2 FY25 (Oct 31, 2024)Q3 FY25 (Jan 31, 2025)
Revenue ($M)1.301 2.418 0.825
Gross Profit ($M)0.447 0.795 0.197
Operating Expenses ($M)4.920 4.710 6.072
Loss Before Income Taxes ($M)(4.453) (3.913) (6.720)
Basic & Diluted EPS ($)(0.05) (0.04) (0.04)
Cash & Equivalents ($M)3.182 2.092 10.026

Q3 FY25 product mix

Product Line (Q3 FY25)Revenue ($M)
WAM‑V (ASC 606 + 842)0.654
Buoy (ASC 606)0.171
Total0.825

KPIs and liquidity (oldest → newest)

KPIQ1 FY25Q2 FY25Q3 FY25
Backlog ($M)5.3 (as of Jul 31) ~3.6 (as of Oct 31) 7.5 (as of Jan 31)
Cash Used in Operating Activities$(6.12)M (3 months) $(10.89)M (6 months) $(14.63)M (9 months)
Cash, Restricted Cash & Equivalents ($M)3.336 (end Q1) 2.246 (end Q2) 10.180 (end Q3)

YoY context (Q3 FY25 vs Q3 FY24)

  • Revenue: $0.83M vs $1.79M (−54%); Gross profit: $0.20M vs $0.81M (compression on lower sales); OpEx: $6.07M vs $8.55M (−29%); Loss before taxes: $(6.72)M vs $(7.76)M (improved) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Profitability (breakeven/positive)Calendar Q4 2025“On track to reach profitability in 4Q CY25” (reaffirmed in Q2) “Remain confident… execute on strategic priorities” (no change to timing) Maintained
Operating ExpensesFY25“Reduced OpEx; 41% YoY reduction in Q2” Q3 OpEx down 29% YoY; continued efficiency focus Maintained downward trajectory
Revenue/Other Quantitative Guidance—None providedNone provided—

Note: No numerical revenue/margin guide was provided; management emphasized backlog conversion and disciplined OpEx as drivers to targeted CY25 profitability .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 FY25)Current Period (Q3 FY25)Trend
Path to profitabilityQ1: On track CY25; OpEx −39% YoY; backlog/pipeline growth ; Q2: Reaffirmed reaching profitability in 4Q CY25 CEO reiterates confidence in regaining momentum and converting backlog Stable commitment; timing maintained
Defense & Middle East expansionQ2: Partnerships (Unique Group, RIG, 3B) and demos; Project Overmatch exercises NAVDEX demos with RIG; pursue UAE broader opportunities Building activity; more demos and sales reach
Latin America tractionQ1: Backlog lift; reseller expansion ; Q2: ~$3M PO commitments over 36 months $5M combined POs (PowerBuoys + WAM‑V) referenced Expanding order visibility
Product capability/AI (Merrows, WAM‑V)Q1: Next‑Gen PowerBuoy with Merrows, 100% data uptime; docking/charging patent pending Multi‑day WAM‑V ops demonstrated; AI‑enabled Merrows showcased Maturing platform capabilities
Backlog conversion and revenue timingQ1: Delays pushed to Q2/Q3 ; Q2: Backlog ~3.6M, expected to tick up Backlog record $7.5M; conversion lag amid macro/political decision delays Backlog up, conversion temporarily slower

Management Commentary

  • “We achieved a significant reduction in cash used in operating activities… despite a challenging macroeconomic and political environment… which slowed decision‑making processes and delayed project activity across key sectors. Looking ahead, we remain confident that we will regain momentum, accelerate the conversion of backlog to revenues, and continue executing on our strategic priorities…” — Philipp Stratmann, CEO .
  • “Backlog: $7.5M… driven by… Latin America ($2.0M PowerBuoys, $3.0M WAM‑V)… Operating expenses: $6.1M (−29% YoY)… Loss before income taxes: $(6.7)M (vs $(7.8)M prior year)” .
  • NAVDEX with RIG highlighted AI‑enabled Merrows, PowerBuoy and WAM‑V demonstrations positioned for opportunities in UAE/Middle East defense markets .

Q&A Highlights

Note: A Q3 FY25 call transcript was not available in our document set. Key themes from the prior quarter (Q2) Q&A:

  • Recurring revenue strategy: Growing “as‑a‑service” deployments and formal service offering to add maintenance “tail” to equipment sales/leases .
  • Middle East pipeline maturation: Expect more bookings and some revenues in CY2025 leveraging hot‑weatherized systems, partners, and demos .
  • Profitability risks/mitigations: Focus on converting pipeline to backlog and backlog to revenue while maintaining cost effectiveness; scale hiring in step with demand .
  • Backlog level and cadence: ~ $3.6M at Q2 end, expected to increase with opportunities .

Estimates Context

  • Street coverage remains limited. For Q3 FY25, S&P Global showed actual revenue ($0.825M) and EBITDA (−$5.688M), but no quarterly consensus EPS/revenue estimates; Target Price Consensus Mean: $1.50* (coverage sparse). Values retrieved from S&P Global.*
  • Implication: With no consistent quarterly EPS/revenue consensus, “beat/miss” framing is not applicable. Expect analysts to reassess trajectory primarily through backlog conversion pace, order intake, and OpEx run‑rate stabilization.

Key Takeaways for Investors

  • Backlog inflection vs. revenue dip: Record $7.5M backlog supports forward revenue visibility even as Q3 revenue declined; watch conversion pace through Q4 FY25 and early FY26 .
  • Cost discipline intact: Structural OpEx reductions and lower YTD operating cash burn are offsetting part of the revenue volatility; monitor OpEx trajectory as volume returns .
  • Funding and dilution risk: Liquidity improved in Q3 via ATM and note conversion, but the 10‑Q cites substantial doubt about going‑concern through Mar‑2026 without additional financing; dilution remains a key risk factor .
  • Strategic momentum: Defense/Middle East demos (NAVDEX), Latin America orders, and WAM‑V/PowerBuoy/AI (Merrows) advances provide multi‑region, multi‑product catalysts for bookings .
  • Profitability target maintained: Management continues to aim for profitability in 4Q CY2025; execution depends on backlog conversion cadence and continued OpEx control .
  • Trading setup: Narrative likely driven by order announcements/backlog adds, backlog‑to‑revenue conversion, and financing updates. Positive surprises: incremental defense orders, accelerated LATAM/Middle East wins; Negatives: further revenue delays or equity raises.

Supporting Documents (Q3 FY25 and Prior Quarters)

  • Q3 FY25 8‑K/Press release and financials .
  • Q3 FY25 detailed financial statements in 10‑Q (product mix, revenue recognition, liquidity, going‑concern) .
  • Q2 FY25 press release and transcript (revenue record, OpEx, guidance, Q&A) .
  • Q1 FY25 8‑K press release and transcript highlights (pipeline/backlog, OpEx) .
  • Q3 FY25 additional press releases: NAVDEX with RIG (Feb‑2025), binding LOI for PowerBuoy demo (Mar‑2025), WAM‑V and PowerBuoy orders (Mar‑2025) .

Footnote: *Values retrieved from S&P Global.