TOMI Environmental Solutions, Inc. (TOMZ)·Q1 2025 Earnings Summary

Executive Summary

• TOMI delivered a solid Q1 2025, with revenue up 42% year over year to $1.58M and gross margin stable at 60.4%, driving sharply lower operating and net losses versus Q1 2024 .
• Versus Wall Street consensus, TOMI posted a revenue beat ($1.58M vs $1.54M*) and an EPS beat (-$0.01 vs -$0.05*) for Q1 2025; coverage remains sparse (one estimate). Values retrieved from S&P Global.
• Product revenue rose 35% to $1.00M and service revenue increased 56% to $0.58M, reflecting strong demand for SteraMist consumables and expanded iHP services; backlog grew to $1.23M (+$0.35M vs 12/31/24) .
• Catalysts: expanding SIS/CES pipeline and new partnerships (PBSC OEM, NASA deployment) and a $450k CES contract at a leading university add credibility and visibility to near‑term demand .
• Management expects similar positive trends through 2025 and highlighted April sales up 21% year over year and YTD BIT solution sales up 169% as momentum builds .

What Went Well and What Went Wrong

What Went Well

• Strong topline and margin resilience: Revenue +42% YoY to $1.58M; gross margin 60.4% vs 60.2% YoY; operating loss reduced by ~39% and net loss improved by ~80% YoY .
• Recurring and consumables traction: BIT solution sales nearly 200% increase in Q1, with YTD +169%, reinforcing “razor/razor blade” model; “we anticipate sustaining this momentum with a dedicated focus on SIS and CES” .
• Pipeline/backlog and new logos: Backlog rose to $1.23M; new SIS/CES opportunities and OEM integration (PBSC) and strategic deployment at NASA broaden applications and signal demand .

What Went Wrong

• Company remains unprofitable: Q1 operating loss of $(0.75)M and net loss of $(0.26)M; scale remains a constraint despite improvements .
• Q4 2024 volatility: prior quarter was impacted by significant non-cash charges, depressing GAAP margins and earnings, highlighting sensitivity to reserves and accounting adjustments .
• Tariff overhang: Minor distributor pressure from a 15% South Korea tariff; management expects limited impact but it adds uncertainty to international pricing .

Financial Results

Core Financials vs Prior Periods

Segment Breakdown

KPIs and Operating Metrics

Estimates vs Actual (Q1 2025)

Values retrieved from S&P Global.
Bold beat/miss indicates statistically meaningful deviation vs consensus.

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “In quarter 1 of 2025, we achieved a 42% increase in total sales compared to quarter 1 of 2024… year‑to‑date, we've experienced a 169% surge in BIT solution sales… we are optimistic about sustaining this momentum with a dedicated focus on our SteraMist integrated system, the SIS offerings, along with… custom engineered system” .
• “Our gross margin… was 60.4%… operating loss… ~$754,000… net loss… ~$256,000 or $0.01 per share… As of March 31, 2025… cash… ~$674,000, working capital $3.8M and shareholder equity $3.8M… accounts payable stands at approximately $700,000, lower than the $1.7 million reported for quarter 1 2025” .
• CEO press release: “We grew quarter‑over‑quarter revenue by 42%… increase in revenue, consistent gross profit and lower operating expenses all contributed to improved financial results… we expect to see similar trends for the remainder of 2025” .

Q&A Highlights

• Solution consumables strategy: Management reiterated the “razor/razor blade” model—expanding installed base drives higher solution usage—and expects continued growth in consumables through 2025 .
• Medical device disinfection pathway: Enclosed chamber approach seen as an easier path to replace ethylene oxide; building towards a 510(k) registration over time .
• Training/enablement: SPC program uses a learning management system for ongoing training and protocol development across industries; expected to deepen engagement and usage .
• Tariffs: Minor distributor request to share a 15% Korea tariff; management does not see broader international sales problems due to tariffs and hopes for easing within ~60 days .

Estimates Context

• Q1 2025 outcomes vs S&P Global consensus: Revenue beat ($1.58M vs $1.54M*), EPS beat (-$0.01 vs -$0.05*); both based on one estimate, indicating limited coverage. Values retrieved from S&P Global.
• Post‑Q1, coverage remains thin; given strong Q1 performance and momentum in SIS/CES and consumables, models may need to better reflect recurring solution revenue and service expansion as disclosed by management .

Key Takeaways for Investors

• Revenue and EPS beats in Q1 2025, with margin stability (60.4%) and substantial YoY loss reduction confirm improved operating execution .
• Demand mix improving: Product revenue +35% and service revenue +56% YoY, with strong consumables pull‑through (solution sales ~197% growth in Q1) supporting the business model .
• Pipeline visibility: Backlog up to $1.23M at quarter‑end, with SIS/CES opportunities and OEM partnerships (PBSC) and high‑profile NASA deployment likely to support future orders .
• Balance sheet watch‑items: Cash $674k, equity $3.84M, convertible notes $2.62M—continued working capital discipline and accounts payable normalization are key near‑term priorities .
• Commercial catalysts: $450k CES university win, SIS pending installs (~$950k accounted/pending), and expanding food safety and medical device use cases can drive recurring solution sales .
• International and training leverage: Growing distributor network and SPC program should enhance adoption and usage across regions and verticals over 2025–2026 .
• Risks: Profitability not yet achieved; tariff noise (e.g., Korea) and regulatory timelines (e.g., EO replacement/510(k)) remain uncertainties, though management commentary suggests manageable impact .