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TI

TECOGEN INC. (TGEN)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 revenue was $7.18M, up 27.6% YoY, but down 1.5% QoQ; gross margin compressed to 30.4% (vs 44.1% YoY, 33.8% QoQ) as service costs rose and the company invested ~$700k in engine upgrades in NJ/Manhattan to extend service intervals .
  • Revenue beat consensus by ~$0.50M (+7.6%), driven by strong chiller sales; EPS missed (actual -$0.07 vs -$0.05 consensus) as margins and OpEx weighed on results .
  • Cash improved to $15.25M after the July follow-on offering; backlog was ~$4M (excludes data center LOIs), with cannabis projects of $2.5–$3.5M expected late Q4 .
  • Strategic traction in data centers: LOI scope expanded (three sites), engagement with hyperscalers and AI chip makers, and momentum in Vertiv partnership—key near-term catalysts are converting LOIs to POs and scaling manufacturing capacity by year-end .

What Went Well and What Went Wrong

What Went Well

  • Revenue growth and mix: Q3 total revenue rose to $7.18M (+27.6% YoY), led by product revenue ($2.98M, +114.5% YoY) with strong chiller deliveries including hybrid-drive units .
  • Strategic progress in data centers and Vertiv: “the potential data center customer we have an LOI from is now considering us for three sites… The Vertiv relationship has also taken a positive turn and is building momentum” — Abinand Rangesh, CEO .
  • Balance sheet strengthened: cash and cash equivalents increased to $15.25M at quarter-end following the July offering, providing capital to expand factory output and marketing .

What Went Wrong

  • Margin pressure: overall gross margin fell to 30.4% (from 44.1% YoY and 33.8% QoQ), with service margin down to 25% (from 44% YoY and 38% QoQ) due to higher material/labor and $700k engine upgrades; Adjusted EBITDA loss widened to $(1.77)M .
  • EPS deterioration and OpEx: EPS was a loss of $(0.07) vs $(0.06) in Q2 and $(0.04) in Q3’24; OpEx increased 27.7% YoY to $4.28M on payroll, benefits, recruitment, and sales commissions .
  • Energy Production softness: revenue declined to $0.26M (-34% YoY) on contract expirations and temporary site repairs .

Financial Results

Consolidated P&L Snapshot (Sequential and YoY)

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($USD)$5,630,130 $7,277,770 $7,294,820 $7,183,121
Gross Profit ($USD)$2,480,914 $3,221,040 $2,462,492 $2,183,566
Gross Margin %44.1% 44.3% 33.8% 30.4%
Operating Expenses ($USD)$3,354,137 $3,815,284 $3,874,354 $4,284,270
Loss from Operations ($USD)$(873,223) $(594,244) $(1,411,862) $(2,100,704)
Net Loss ($USD)$(930,408) $(659,922) $(1,464,105) $(2,130,947)
Diluted EPS ($USD)$(0.04) $(0.03) $(0.06) $(0.07)
Adjusted EBITDA ($USD)$(746,000) $(381,394) $(1,160,898) $(1,766,684)

Segment Breakdown

SegmentQ3 2024 Revenue ($USD)Q2 2025 Revenue ($USD)Q3 2025 Revenue ($USD)Q3 2024 Margin %Q2 2025 Margin %Q3 2025 Margin %
Products$1,391,016 $3,155,323 $2,983,795 43% 29% 37%
Services$3,850,551 $3,965,168 $3,943,510 44% 38% 25%
Energy Production$388,563 $174,329 $255,816 45% 25% 34%

KPIs and Balance Sheet Highlights

KPIQ1 2025Q2 2025Q3 2025
Cash & Equivalents ($USD)$4,066,793 $1,640,864 $15,253,975
Backlog ($USD)$10.8M $4.7M $4.0M (incl. LV prepaid service; excludes LOIs)
Weighted Avg. Diluted Shares24,954,928 25,250,217 28,817,040
R&D Expense ($USD)$292,668 $268,724 $297,926
Service Cost InvestmentsN/A$400k cost uptick in NJ/Manhattan ~$700k engine upgrades in NJ/Manhattan

Actuals vs Consensus (S&P Global)

MetricQ3 2025 ConsensusQ3 2025 ActualSurprise
Revenue ($USD)$6,680,000*$7,183,121 +$503,121 (+7.5%) — bold revenue beat
Primary EPS ($USD)-0.05*-0.07 -$0.02 — bold EPS miss

Values marked with * retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Gross Margin TargetOngoing (QTD)>40% target (Q1/Q2 slides) >40% target reiterated (Q3 slides) Maintained
Factory ThroughputFY2025 YEModifying layout; contract mfg ramp (Q2 slides) Layout mods “expect to be completed by year end”; first articles before YE; working with Vertiv on supply chain Clarified timeline; operational
Revenue/ EPS/ OpExFY/Q4No formal numeric guidance No formal numeric guidance; call to discuss next steps on LOI->PO and Vertiv momentum Maintained no formal guidance

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3)Trend
Data center cooling strategyLOI for 100MW+ site; quoting 60–100 chillers for multiple projects; Vertiv marketing plan finalized; larger projects in pipeline LOI scope expanded to three sites and larger portion of AI load; presented to AI chip makers and hyperscalers; multiple developers provided drawings; plan to cap electric cooling and shift to natural gas Strengthening engagement and opportunity set
Manufacturing capacityPlan to use contract manufacturing, layout changes; target 80–100 chillers/yr scaling to 200+ with demand Layout modification “expect to be completed by year end”; first articles by YE; Vertiv collaboration on supply chain Execution progressing toward scale
Service fleet performanceManhattan/NJ suffering margin pressure due to upgrades and overtime; protocols to restore profitability ~$700k engine upgrades in NJ/Manhattan to increase service intervals and long-term margins; short-term margin hit Near-term headwind; long-term positive
Tariffs/RegulatoryLimited tariff impact; potential relative benefit vs competitors Reiterated risk factors include tariffs and regulatory changes (forward-looking statements) Stable, monitored
Vertiv partnershipMarketing/training plan; project manager assigned “Vertiv relationship… positive turn and building momentum” Improving relationship momentum

Management Commentary

  • “the potential data center customer we have an LOI from is now considering us for three sites and for a much larger portion of the AI load… This may result in significantly more chiller sales than the original LOI.” — Abinand Rangesh, CEO .
  • “We have also now attracted the interest of bigger, more established data center developers… power allocated to cooling is larger than we originally anticipated… The Vertiv relationship has also taken a positive turn and is building momentum.” — Abinand Rangesh, CEO .
  • “We have also increased our R&D spend to push our technical edge in natural gas cooling and increase service intervals… To test our product improvements… we invested $700k in new engines this quarter. Although this impacts service margin substantially in the short term, it will more than pay for itself in longer term benefits.” — Abinand Rangesh, CEO .

Q&A Highlights

  • The company scheduled its Q3 earnings call for Nov 13, 2025 (9:30am ET) and provided webcast/recording details; full transcript was not available in the current document set .
  • Management indicated they would “shed more light on next steps to convert our LOI… to a PO, next steps with some of the larger developers, and recent developments in the Vertiv relationship,” framing expected Q&A focus areas .

Estimates Context

  • Revenue beat: $7.18M actual vs $6.68M consensus* (+$0.50M, +7.5%), driven by chiller shipments and product revenue strength, including hybrid-drive chiller deliveries .
  • EPS miss: -$0.07 actual vs -$0.05 consensus*, reflecting gross margin compression (services) and higher OpEx (payroll/benefits/recruitment/commissions) .
  • Limited consensus history available for other Qs; where not available, we anchor comparisons to reported actuals.

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Revenue strength and data center traction provide upside optionality; the near-term stock catalyst is LOI conversion to PO and additional hyperscaler/AI chip maker wins .
  • Margin inflection depends on service cost normalization and scaling product volumes; watch Q4 for service margin recovery post engine upgrades and hybrid chiller volume effects .
  • Balance sheet is positioned to fund capacity expansion and growth initiatives post raise; monitor execution on factory layout changes and contract manufacturing ramp by YE .
  • Vertiv partnership momentum could accelerate market access and supply chain scaling; any formalized programs or joint marketing would be positive .
  • Energy Production remains a drag due to expirations/repairs; incremental focus should be on product/services mix and margin quality .
  • Dilution from the follow-on is evident in share count; longer-term valuation will hinge on converting pipeline into orders and achieving >40% gross margin target sustainably .
  • Trade tactically around catalysts (PO announcements, major developer wins) while underwriting medium-term thesis on natural gas cooling’s value proposition in AI data centers (freeing electrical power for compute and improving resiliency) .