Executive Summary

FY25 ended with record backlog of $12.5M (+155% YoY) and pipeline at $137.5M (+88% vs Apr-2024), while revenues grew 6% to $5.9M; OpEx fell 28% to $23.3M, narrowing net loss to $21.5M from $27.5M .
Q4 FY25 execution set up FY26 with DoD Facility Security Clearance, ISO 9001 certification, and expanded international partnerships (UAE, Latin America) to accelerate channel-driven scale .
Management cited defense procurement delays into late FY25 and demonstration-heavy revenue mix as drivers of softer margins; expects gross margin to improve as mix shifts to operational deployments and recurring services .
Stock-relevant catalysts: record backlog and reseller commitments ($3M Mexico; multi-million LATAM orders), defense alliances (Teledyne, Red Cat), and NPS deployment with AT&T 5G, positioning for services growth and margin uplift .

What Went Well and What Went Wrong

What Went Well
- Record backlog ($12.5M) and enlarged pipeline ($137.5M) provide revenue visibility; “we are entering fiscal 2026 with line of sight to transformational scale” — CEO .
- Operating discipline: OpEx down 28% to $23.3M; net loss improved by $6.0M YoY; CFO emphasized operating leverage from headcount and third-party cost optimization .
- Strategic credentials: Facility Security Clearance (Secret) and ISO 9001 certification broaden eligibility for defense work and institutional procurement — “strengthens our position in upcoming opportunities” .
What Went Wrong
- Gross profit fell to $1.7M for FY25 (vs $2.8M FY24) amid demonstration-oriented revenues; management flagged margin compression near-term .
- Quarterly volatility: Q3 FY25 revenue dropped to $0.8M (vs $1.8M prior-year), impacted by election-related defense delays; pipeline conversion slowed .
- FY25 revenue growth modest (+6%), with shift toward demos; margin recovery depends on accelerating deployments and services uptake .

Financial Results

Metric	Q2 FY25 (Oct 31, 2024)	Q3 FY25 (Jan 31, 2025)	Q4 FY25 (Apr 30, 2025)	Q1 FY26 (Jul 31, 2025)
Revenue ($USD)	$2.418M	$0.825M	$1.316M*	$1.182M *
Diluted EPS – Continuing Ops ($)	$(0.04)*	$(0.05)*	$(0.04)*	$(0.04)*
Net Income ($USD)	$(3.913)M	$(6.720)M	$(6.426)M*	$(7.388)M*
Gross Profit ($USD)	$0.795M	$0.197M	$0.221M*	$(0.023)M*
Gross Margin (%)	32.9%*	23.9%*	16.8%*	(2.0%)*
EBITDA ($USD)	$(3.630)M*	$(5.689)M*	$(7.229)M*	$(6.850)M*

Notes: *Values retrieved from S&P Global.

KPIs and backlog/pipeline

KPI	Q2 FY25	Q3 FY25	Q4 FY25
Backlog ($USD)	n/a	$7.5M	$12.5M
Pipeline ($USD)	n/a	n/a	$137.5M (vs $71.6M at Apr 30, 2024)

Segment breakdown (company-reported)

Segment	Commentary
Products/Services mix	Backlog is a “healthy split between buoys, vehicles, and associated services”; services (training) recurring with higher margins

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Profitability timing (non-GAAP)	CY2025	Reach profitability in Q4 CY2025	Reaffirmed Q4 CY2025 path; margin improvement expected as mix shifts to deployments/services	Maintained
Operating expense discipline	FY25/FY26	Ongoing reductions	FY25 OpEx down 28%; continued tight control entering FY26	Maintained

Earnings Call Themes & Trends

Topic	Q2 FY25 (Prior-2)	Q3 FY25 (Prior-1)	Q4 FY25 (Current)	Trend
Defense procurement environment	Record revenue; Project Overmatch exercises; partnerships in Middle East	Election transition delayed procurement; backlog $7.5M	FCL at Secret level; Overmatch participation; expecting conversion improvement	Strengthening access, conversion expected to improve
Cost discipline/OpEx	OpEx down 41% YoY	OpEx down 29% YoY; cash burn reduced	OpEx down 28% YoY; operating leverage	Sustained reductions
Gross margin trajectory	Record revenue; early services offering	Lower gross margin amid demos	Management expects margin uptick with services/operational use	Improving mix ahead
International expansion	LATAM $3M commitments; UAE partners	NAVDEX demos; multi-day WAM‑V capability	Mexico $3M reseller; Colombia $4M reseller; NPS 5G deployment	Accelerating channel-driven scale
Supply chain resilience	n/a	n/a	Majority domestic supply chain; no material impact expected	Stable operations
Certifications/quality	n/a	n/a	ISO 9001 achieved	Institutional readiness

Management Commentary

“We are entering fiscal 2026 with line of sight to transformational scale… With record backlog of $12.5 million… growing demand from allied nations.” — CEO .
“Operating expenses… down 27%… building a model with meaningful operating leverage, a critical step towards sustainable profitability.” — CFO .
“We achieved ISO 9001… often a prerequisite… strengthens our position in upcoming opportunities.” — CEO .
“Gross margins will start heading up as we transition to operational use… services are recurring and carry higher margins.” — CEO .
“Backlog is a healthy split between buoys, vehicles, and associated services; training services rising.” — CEO .

Q&A Highlights

Pipeline definition and conversion: Management emphasized qualified opportunities under negotiation and expects conversion rates to rise as administration appointees settle and hybrid unmanned operations gain traction .
Capacity to scale: Facilities reconfigured to scale quickly while staying working-capital efficient (60k sq ft NJ; Bay Area prototyping) .
Backlog composition: Balanced across PowerBuoys, WAM‑V vehicles, and services; services recurring with higher margins .
Gross margin outlook: Margins to improve with shift from demos to operational deployments and expansion of services/training .

Estimates Context

Coverage is limited; no quarter-specific EPS consensus available for Q4 FY25. For forward context:

Metric	Q1 FY26 (Actual/Est)	Q2 FY26 (Est)	Q3 FY26 (Est)	Q4 FY26 (Est)
Revenue ($USD)	$1.182M* (actual)	$2.507M*	$3.444M*	$4.066M*
EBITDA ($USD)	$(6.850)M* (actual)	$(2.671)M*	$(1.726)M*	$(1.475)M*
Target Price (USD)	$1.50*	$1.50*	$1.50*	$1.50*

Notes: *Values retrieved from S&P Global. Estimate counts are limited (often 1), indicating sparse sell-side coverage.

Implications: The absence of consensus for Q4 FY25 constrains formal beat/miss analysis; forward estimates suggest ramp in revenues through FY26 with improving but still negative EBITDA.

Key Takeaways for Investors

Backlog and pipeline inflection underpin FY26 revenue visibility; execution risk lies in defense procurement timing and conversion of demonstrations to deployments .
Margin recovery is a key thesis lever: services/training and operational deployments should lift gross margin vs FY25 demo-heavy mix .
Institutional readiness (ISO 9001, FCL) and strategic alliances (Teledyne, Red Cat, AT&T/NPS) broaden eligibility and reduce sales friction in defense and commercial channels .
International channel strategy (Mexico $3M reseller; Colombia $4M; multi-day WAM‑V capabilities; Sub‑Saharan trials) accelerates scale and diversifies demand beyond U.S. cycles .
Operating discipline is tangible (OpEx −28% YoY; improved cash burn), supporting path to Q4 CY2025 profitability, subject to revenue conversion and mix improvements .
Near-term focus: convert backlog, expand services, and deliver defense/commercial deployments to validate margin trajectory; monitor quarterly revenue cadence and gross margin trend.
Risk checks: defense budget/approval timing, demonstration-to-deployment conversion, and limited sell-side coverage (consensus) may add volatility; supply chain appears resilient with majority domestic sourcing .

Ocean Power Technologies, Inc. (OPTT)·Q4 2025 Earnings Summary