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TOMI Environmental Solutions, Inc. (TOMZ)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 revenue was $2.01M, up 95% sequentially vs Q2 but down 24% YoY; EPS was $(0.02). The miss vs S&P Global consensus ($2.74M revenue, $(0.01) EPS) was driven by a temporary timing reduction of IHP services from a key customer following reorganization . Revenue Consensus Mean and EPS Consensus Mean values marked with * are from S&P Global.
  • Gross margin held at 61% (vs 66% in Q2 and 61% in Q3 2024), reflecting resilient product mix; operating loss was $(0.32)M and net loss $(0.45)M .
  • Backlog and pipeline expanded: order backlog was $0.9M at quarter-end, rose to $1.3M by Oct 31; ~$3M in pending integration contracts targeted to close by year-end; active pipeline >$15M (with $7M high-priority) .
  • Strategic catalysts: FDA broadened permitted use of hydrogen peroxide in food—opening RTE opportunities; new franchise service providers onboarded; an equity line of up to $20M provides flexible capital to fund growth and hiring; first OEM collaborative installation expected in Q4 2025 .

What Went Well and What Went Wrong

What Went Well

  • Recurring BIT solution sales up 21% YTD; management emphasized the razor/razor-blade model and recurring revenues as growth engine .
  • Backlog/pipeline momentum: $0.9M backlog at quarter-end expanding to $1.3M by Oct 31; ~$3M pending integrations expected to close; active pipeline >$15M across domestic/international customers .
  • Notable market/regulatory tailwinds: FDA ruling on hydrogen peroxide creates direct food-related protocol opportunities; management called it “game-changing” for SteraMist .

What Went Wrong

  • Miss vs consensus: Q3 revenue $2.01M vs $2.74M consensus*, EPS $(0.02) vs $(0.01) consensus*; primarily due to a temporary timing reduction in IHP services from a key customer reorganization * .
  • YoY decline: Q3 2025 revenue fell 24% YoY alongside a swing to $(0.45)M net loss from $0.06M net income in Q3 2024 .
  • Operating leverage still negative: Operating loss $(0.32)M; management signaled OpEx will rise with scaling (though as % of revenue not materially higher), implying near-term margin/FCF pressure as the company invests in growth .

Financial Results

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($USD)$2,542,251 $1,576,558 $1,031,115 $2,011,556
Diluted EPS ($USD)$0.00 $(0.01) $(0.06) $(0.02)
Gross Margin %61% 60.4% 66% 61%
Operating Income (Loss) ($USD)$149,102 $(754,465) $(1,132,689) $(321,415)
Net Income (Loss) ($USD)$58,962 $(255,593) $(1,237,516) $(450,348)
Estimates vs ActualsQ1 2025Q2 2025Q3 2025
Revenue Consensus Mean ($USD)$1,537,000*$1,769,000*$2,740,000*
Revenue Actual ($USD)$1,576,558 $1,031,115 $2,011,556
EPS Consensus Mean ($USD)$(0.05)*$(0.03)*$(0.01)*
EPS Actual ($USD)$(0.01) $(0.06) $(0.02)
# of Estimates (EPS/Revenue)1 / 1*1 / 1*1 / 1*

Values marked with * are retrieved from S&P Global.

KPIs and Mix

KPIQ2 2025Q3 2025
International Revenue Mix (%)20% 36%
BIT Solution Sales Growth (YTD)40% (H1 YoY) 21% (9M YoY)
Sales Order Backlog ($USD)~$1.4M (as of Jun 30) $0.9M at Q3-end; $1.3M as of Oct 31
Pending Integration Contracts ($USD)~$2M targeted to close ~$3M expected to close by year-end
Active Pipeline ($USD)~$15M; $7M high-priority >$15M; $7M high-priority

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Gross Margin (%)Near-termNot specified“Around 60%” with potential 1–2 pt dip; margins “not under too much pressure” Maintained (with minor dip)
Operating Expenses (% of Revenue)Near-termNot specifiedOpEx to increase with scaling, but OpEx as % of revenue “will not significantly go up” Clarified leverage
OEM InstallationQ4 2025Not specifiedFirst collaborative installation expected in Q4 2025 New timing detail
Integration Contracts ClosingQ4 2025~$2M (Q2) ~$3M expected to close by year-end Raised
Capital Access24 monthsNot applicableEquity line up to $20M over 24 months; intent to file $50M universal shelf including equity line New facility

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1–Q2 2025)Current Period (Q3 2025)Trend
Recurring revenue (BIT solution)197% QoQ growth in Q1; 40% YoY H1; model emphasis 21% YoY solution growth YTD; recurring sales framed as growth engine Positive, sustained
Service demand & pipelineService revenue +33% YoY in Q2; quotes +35% YoY; backlog ~$1.4M Q3 quotes/pipeline +35% YoY; backlog $0.9M → $1.3M; pending ~$3M closings Strengthening
OEM/automation (SIS/CES)PBSC OEM partnership; SIS-SA debut; university wins SIS integrations at VCU/UMiami; OEM first installation expected Q4 Execution progressing
Regulatory tailwinds (FDA)Pursuing FDA paths (FCN, 510k); food safety entry points FDA broadened H2O2 use; management sees “game-changing” RTE opportunities Material tailwind
International expansionGermany, Netherlands, Italy pipelines pending EU/UK approvals 36% of Q3 revenue international; distributors advancing pipelines Improving mix
Defense/governmentNASA validation; USAMRIID collaboration; BSL-3/4 capabilities Formaldehyde-replacement studies ongoing at key defense site; potential 2026 deal Longer-cycle opportunity
Franchise service providersEarly wins; healthcare/mold remediation group onboarding SteriClean and T.A.C.T. purchases; rapid adoption and expansion plans Building network

Management Commentary

  • “We delivered a 95% sequential revenue increase… driven by strong equipment sales and… recurring BIT Solution sales.” — Halden Shane (CEO) .
  • “Gross profit margins remained strong at 61%… underscoring the resilience of our product mix and disciplined cost management.” — David Vanston (CFO) .
  • “The FDA’s final order… is game-changing for SteraMist… providing a clear regulatory framework with a competitive edge in the multi-billion-dollar food safety market.” — E.J. Shane (COO) .
  • “On Nov 5, we entered into an equity purchase agreement… up to $20M… providing flexibility for on-demand access to capital without upfront commitments or heavy dilution.” — Halden Shane (CEO) .

Q&A Highlights

  • FDA ruling go-to-market: Management is educating the market and targeting processing, storage, packaging, and transportation; expects meaningful RTE adoption but notes many food companies are still learning about the change .
  • Margin/OpEx outlook: CFO expects only a 1–2 pt gross margin dip and limited OpEx growth as a percentage of revenue; scaling may increase absolute OpEx but with leverage .
  • International sales strategy: Utilizing distributors and global partners to expand SteraMist use; visibility improving with broader deployments .
  • Solution sales visibility: Solution sales up ~21% YTD; management expects a year-end pop as customers procure before year-end; model is “more equipment → more solution sales” .
  • Vertical expansion: Data centers and EO replacement in medical device sterilization are targeted; resource additions needed to pursue at scale .

Estimates Context

  • Q3 2025 missed consensus: Revenue $2.01M vs $2.74M consensus*; EPS $(0.02) vs $(0.01) consensus*. Management attributed the shortfall to timing of IHP services at a key customer amid reorganization, expected to normalize * .
  • Prior quarters: Q1 slightly beat on revenue and materially beat EPS (less negative); Q2 missed both materially due to deferred CapEx amid tariff-related supply chain uncertainty, consistent with press release commentary * * .
  • Coverage depth: Only one estimate for EPS and revenue per quarter, implying limited Street coverage; estimate dispersion unavailable*.

Values marked with * are retrieved from S&P Global.

Key Takeaways for Investors

  • Sequential recovery with resilient margins but continued YoY pressure; near-term narrative hinges on converting ~$3M pending contracts and executing OEM installation in Q4 to sustain momentum into 2026 .
  • The FDA hydrogen peroxide ruling is a tangible catalyst for food safety/RTE protocols—expect increased outreach, pilots, and eventual recurring solution flows as adoption ramps .
  • Franchise ramp (SteriClean, T.A.C.T.) creates distributed demand for mobile equipment and recurring solution sales; watch for broader network rollouts and case study-driven expansion .
  • Capital flexibility via $20M equity line and planned $50M shelf reduces funding risk for hiring, R&D, regulatory, and market expansion; monitor dilution cadence vs growth ROI .
  • Estimate misses reflect timing/CapEx cycles; with limited analyst coverage, narrative-driven catalysts (FDA, OEM, backlog conversions) may be more impactful on stock than consensus beats/misses near term *.
  • International mix rising (36% in Q3) diversifies demand; pending EU/UK approvals could unlock additional growth vectors .
  • Risk factors: dependence on key customers/services timing, tariff/CapEx sensitivity, execution on OEM/integration timelines, and working capital constraints until scale is achieved .