Executive Summary

Q3 FY2025 delivered another strong quarter: revenue $19.79M (+17.5% YoY, +4.7% QoQ), gross margin 34% (+450 bps YoY), operating income $0.72M, GAAP diluted EPS $0.04, non-GAAP EPS $0.10, and adjusted EBITDA $1.56M (8% of sales) .
Material beats vs S&P Global consensus: revenue $19.79M vs $18.52M* and EPS $0.10 vs $0.06*; strength driven by higher-margin mix (DAC cooling, small cell, aerospace) and operating leverage as volumes scale .
Bookings and backlog remained healthy: Q3 bookings $24.5M; backlog $19.7M at quarter-end and $16.1M currently, supporting near-term visibility .
Qualitative Q4 guide: management expects Q4 net sales similar to Q3 and gross margin to remain “north of 30%,” implying continued mix quality and cost discipline .
Catalysts: expanding pipeline (100+ venues), traction in edge data centers and transportation, and potential credit facility refinancing to lower interest costs .

What Went Well and What Went Wrong

What Went Well

Mix shift toward higher-value solutions (DAC thermal cooling, small cell, aerospace) lifted gross margin to 34% and supported adjusted EBITDA at 8% of sales; management believes 10% is within reach .
Diversification of customers and end-markets (aerospace, transportation, data centers, venues) reduced reliance on Tier 1 carrier CapEx and tapped OpEx budgets; bookings broad-based across products .
Execution and cost discipline: four consecutive operating-profit quarters, improved operating leverage from higher sales volumes, and process/IT enhancements to scale .

What Went Wrong

Tariff uncertainty persists; management increased inventory in certain categories to mitigate impacts, which can temporarily elevate working capital and complicate supply chain planning .
Debt remains in use: $7.8M drawn on revolver at Q3-end; while financing terms may improve, interest expense still weighs below the line .
Quarterly mix sensitivity: modest shifts in product timing can swing margins, limiting precision of near-term margin guidance despite confidence in 30%+ levels .

Financial Results

Quarterly Performance vs Prior Periods and S&P Global Consensus

Metric	Q1 2025	Q2 2025	Q3 2025
Net Sales ($USD)	$19.20M	$18.91M	$19.79M
Gross Profit Margin %	29.8%	31.5%	34.0%
Operating Income ($USD)	$0.056M	$0.106M	$0.720M
Net Income ($USD)	$(0.245)M	$(0.245)M	$0.392M
Diluted EPS (GAAP)	$(0.02)	$(0.02)	$0.04
Non-GAAP EPS	$0.04	$0.07	$0.10
Adjusted EBITDA ($USD)	$0.867M	$1.121M	$1.556M
Bookings ($USD)	$14.9M	$18.7M	$24.5M
Backlog at Quarter-End ($USD)	$15.2M	$15.0M	$19.7M
Backlog (Current, “as of today”) ($USD)	$15.0M	$18.4M	$16.1M

Actuals vs S&P Global Consensus

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue Estimate ($USD)	$18.458M*	$17.238M*	$18.520M*
Revenue Actual ($USD)	$19.20M	$18.91M	$19.79M
EPS Estimate ($USD)	$0.03*	$0.04*	$0.06*
EPS Actual (Primary/Non-GAAP) ($USD)	$0.04	$0.07	$0.10

Note: Values retrieved from S&P Global.*

Year-over-Year Reference (Q3 2024)

Metric	Q3 2024
Net Sales ($USD)	$16.84M
Gross Profit Margin %	29.5%
Operating Income (Loss) ($USD)	$(0.419)M
Net Income (Loss) ($USD)	$(0.705)M
Diluted EPS (GAAP)	$(0.07)
Non-GAAP EPS	$(0.01)
Adjusted EBITDA ($USD)	$0.460M

Segment breakdown: Not disclosed; revenue is reported on a consolidated basis .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales	Q3 2025	“Roughly in line with Q2” ($18.9M)	Actual $19.79M (delivered)	Beat prior guide
Net Sales	Q4 2025	None specific	“Similar to Q3” net sales	Initiated (qualitative)
Gross Margin %	Q4 2025	Target 30%+ (ongoing)	Expect “north of 30%”; low–mid 30% possible but mix-dependent	Maintained (qualitative)
Adjusted EBITDA Margin	Medium-term	Goal ≥10%	“Within reach,” driven by mix and leverage	Maintained

No explicit numeric guidance provided for OpEx, OI&E, tax rate, dividends in Q3 materials .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3)	Trend
DAC thermal cooling	Next-gen DAC launched; energy-efficient, NEMA 4; OpEx-funded; up to 70% opex savings vs HVAC; gaining momentum	Continued traction across telecom, energy, transportation; partner trials for edge data centers	Strengthening
Small cell & DAS (venues)	100+ pipeline; larger deployments moving forward	Pipeline >100 venues; positioned for Olympics/World Cup buildouts	Building
Tariffs/macro	Managed with diversified supply chain; delays minimal; plan to tweak pricing	Ongoing uncertainty; nominal price increases; proactive mitigation; inventory raised in certain categories	Persistent headwind but contained
Customer diversification	Broader end-markets (aerospace, public safety, OEM); less reliance on Tier 1 CapEx	Aerospace, transportation, data centers contributing; deeper relationships within carriers tapping OpEx budgets	Improving resilience
Edge data centers	Opportunity emerging with partners; DAC fit for edge cooling	Active market trials with major cabinet/enclosure partner	Advancing
Credit facility/financing	Exploring more favorable terms; lender interest	Actively assessing borrowing costs; expect more advantageous arrangements	Potential cost relief
Supply chain/process	Streamlining procurement; process/IT enhancements; inventory down in Q2, selective increases for tariffs	Real-time decisioning, stage gate discipline; aligning engineering with market demand	Operational maturity

Management Commentary

“Adjusted EBITDA was $1.6 million which is 8% of net sales… our goal of adjusted EBITDA of at least 10% is within reach.” — Rob Dawson, CEO .
“Higher value solutions like DAC thermal cooling and small cell products continue to gain traction… aerospace, transportation, and data center markets are now contributors in our sales pipeline.” — Rob Dawson, CEO .
“We expect that our fiscal fourth quarter net sales will be similar to what we delivered in Q3.” — Rob Dawson, CEO .
“We increased inventory levels in certain product categories to mitigate pending tariff impacts, while our ongoing cost reduction programs remain on track.” — Ray Bibisi, President & COO .
“Gross profit margin… driven by higher margin product mix and ongoing efforts to drive cost savings and operating efficiencies.” — Peter Yin, CFO .

Q&A Highlights

Gross margin drivers and outlook: Mix shift toward DAC/small cell/aerospace plus operating leverage at ~$19–20M sales levels; management expects margins “north of 30%,” with quarterly variability from mix/timing .
Pipeline breadth and bookings: Diversity across customers and product lines reduces concentration risk; multiple customers now contributing ~$1M+ quarterly, aiding stability .
Venues timing: Multi-quarter/multi-year deployments; contribution expected through FY2026 given Olympics/World Cup schedule and campus projects .
Path to 10% EBITDA: Combination of higher sales base, cost efficiencies, product mix, and expected reduction in financing costs from credit facility changes .
Tariffs: Exposure limited to certain components; nominal price increases; proactive inventory management and supply chain diversification to mitigate .

Estimates Context

Q3 FY2025 delivered a notable beat: revenue $19.79M vs $18.52M* and EPS $0.10 vs $0.06*, driven by higher-margin mix (DAC/small cell/aerospace) and operating leverage .
Trend of beats sustained: Q1 ($19.20M vs $18.46M*, $0.04 vs $0.03*) and Q2 ($18.91M vs $17.24M*, $0.07 vs $0.04*) .
Implication: Consensus likely to drift higher for near-term quarters on revenue/margins; FY adjustments should reflect sustained 30%+ GM and mix resiliency.
Note: Values retrieved from S&P Global.*

Key Takeaways for Investors

Mix-led margin expansion is durable: DAC and small cell, plus aerospace/custom assemblies, are lifting gross margins and EBITDA; management targets remain ≥10% EBITDA over time .
Near-term revenue visibility: Q4 sales guided “similar to Q3,” supported by $19.7M quarter-end backlog and continued bookings momentum .
Diversification mitigates carrier CapEx cycles: Deeper relationships tap OpEx budgets; growth in venues, transportation, and edge data centers broadens demand sources .
Operational leverage: At ~$19–20M revenue run-rate, fixed-cost absorption enhances profitability; process/IT improvements add scalability .
Tariffs a manageable headwind: Diversified supply chain and selective inventory build help mitigate; nominal pricing actions as needed .
Potential financing tailwind: Expected refinancing of credit facility could reduce interest burden, aiding EPS/EBITDA conversion .
Trading implications: Continued estimate beats and qualitative Q4 guide can support near-term momentum; watch for updates on venue pipeline wins and edge data center trials as narrative drivers .

No additional Q3 press releases beyond the earnings 8-K were found [ListDocuments: press-release none].

R F INDUSTRIES LTD (RFIL)·Q3 2025 Earnings Summary