374Water Inc. (SCWO)·Q3 2025 Earnings Summary

Executive Summary

• Q3 2025 revenue accelerated to $0.76M, up ~9x year over year, driven primarily by Waste Destruction Services (WDS) project activity; net loss was $4.35M and EPS was $(0.03) .
• Management guided 2025 revenue to ~$4M and introduced 2026 revenue guidance of $6–$8M, underpinned by WDS scaling at TSDF partners and municipal equipment deployments; cash runway extended into Q2 2026 via ~$7.0M ATM proceeds .
• Strategic catalysts include: completion of the DoD Clean Earth commercial-scale PFAS destruction demonstration, commencement of NC AFFF destruction (Phase 1), and a ~$4M AirSCWO-6 + dewatering order from Olathe, KS .
• OC San deployment timeline pushed to late Q4 2025/early Q1 2026 due to component supply and permitting delays; interim CEO emphasized throughput improvements (Lean Six Sigma) and prioritizing higher-return WDS opportunities .
• Street consensus appears unavailable; comparisons to estimates are not applicable this quarter. Values retrieved from S&P Global.*

What Went Well and What Went Wrong

What Went Well

• Commercial validation milestones: Completed Clean Earth Detroit DoD demo treating six concentrated PFAS waste streams over 80 hours runtime and ~900 gallons processed; final report expected by Q1 2026 .
• WDS scaling partnerships: Signed WDS collaboration with Crystal Clean to host AirSCWO systems and build a national TSDF network; management highlights recurring revenue potential and higher margin profile for WDS .
• New municipal sale: Secured Olathe, KS order (~$4M over two years) for an AirSCWO-6 and full-scale pre-treatment/dewatering system to assess scale-up for sustainable sludge management and PFAS removal .
• Quote: “I prefer the waste destruction services model as it produces stable, recurring revenues and higher EBITDA margins for 374Water.” – Stephen Jones, Interim CEO .

What Went Wrong

• OC San deployment delay: FAT and startup moved to late Q4 2025/early Q1 2026 due to supply chain and permitting issues in California, necessitating system upgrades ahead of acceptance .
• Operating expense growth: Total OpEx rose 64% YoY to $4.57M on higher compensation (+$0.9M), R&D (+$0.3M), and G&A (+$0.8M), sustaining quarterly net losses while commercialization ramps .
• Liquidity tightness and capital needs: Cash declined to $0.93M at quarter end; management used ATM (~$7.0M) and disclosed need for additional capital, along with a planned reverse split proposal to maintain NASDAQ listing .

Financial Results

Revenue mix and operating KPIs:

Liquidity metrics:

Guidance Changes

Note: No margin, OpEx, tax rate or dividend guidance provided this quarter .

Earnings Call Themes & Trends

Management Commentary

• “We successfully completed a commercial-scale waste destruction service project at Clean Earth’s Detroit, MI facility… demonstrating our ability to destroy PFAS-impacted waste streams.” – Stephen Jones, Interim CEO .
• “I prefer the waste destruction services model as it produces stable, recurring revenues and higher EBITDA margins for 374Water.” – Stephen Jones .
• “Based upon our current cash position, including the $7 million raised from the ATM facility… we project to have adequate cash to support our business plans into Q2 2026.” – Russell Kline, CFO .
• “We are undertaking throughput improvements using Lean Six Sigma… higher throughput means higher EBITDA margins.” – Stephen Jones .

Q&A Highlights

• TSDF pipeline: Management engaged with a “majority” of U.S. TSDF operators; Crystal Clean is first host site; strategy mirrors industrial gas “own-and-operate” on-site model to drive recurring, higher-margin WDS .
• NC AFFF phasing: Phase 1 (1,000 gallons) processing underway with UNC/NC State sampling; second phase could add up to 28,000 gallons; timing TBD by the state .
• 2026 revenue mix and profitability: Expect mix of WDS and equipment sales; long-term vision tilts toward WDS with O&M to create recurring revenue even for municipal equipment customers; cash flow positivity targeted around 2027 subject to deal pace and throughput gains .
• Reverse split and NASDAQ compliance: Special meeting Dec 15, 2025 to approve reverse split as contingency to regain >$1 bid; aim to preserve listing and access to capital markets .

Estimates Context

• Consensus availability: No published Street consensus found for Q3 2025 EPS or revenue; comparisons to estimates not applicable. Values retrieved from S&P Global.*
• Actuals (for context): Revenue $760,417; EPS $(0.03) .

*Values retrieved from S&P Global.

Key Takeaways for Investors

• Commercial momentum: Q3 revenue growth to $0.76M with strong WDS contribution and validation across DoD and municipal trials points to sustainable demand in PFAS destruction .
• 2026 growth setup: $6–$8M revenue guide supported by WDS scaling (Crystal Clean TSDF) and Olathe’s deployment; recurring WDS revenues preferred by management to enhance margin quality .
• Near-term catalysts: Final Clean Earth DoD report (by Q1 2026), OC San FAT/startup, NC AFFF Phase 1 completion and potential Phase 2 award .
• Liquidity managed but capital needs remain: ~$7.0M ATM proceeds extend runway into Q2 2026; management pursuing additional capital and reverse split approval to maintain NASDAQ listing and access markets .
• Operational execution risks: OC San delays (permitting/components) and OpEx growth continue to weigh on losses; throughput improvements and prioritizing high-ROI deals are critical to margin trajectory .
• Municipal adoption path: Olathe’s six-month assessment could inform larger-scale municipal adoption for sludge/PFAS solutions, unlocking broader city/regional opportunities .
• Strategy clarity: Clear pivot to WDS “own-and-operate” model with optional O&M for equipment customers to build recurring revenue, valuation, and margin consistency over time .