Executive Summary

Q3 delivered a sharp top-line rebound on Infrastructure strength: revenue rose 43.3% YoY to $347.1M, Adjusted EBITDA increased to $19.8M; net loss narrowed to $9.4M (–$0.71/sh) as tax benefits and higher gross profit offset higher SG&A and interest .
DBM Global’s backlog continues to compound (reported $1.5B; adjusted $1.6B) with $431M of new awards post-quarter, but margins compressed (GM –510 bps YoY; Adj. EBITDA margin –200 bps YoY) as mix/timing shifted to large projects .
Spectrum remained a drag (revenue $5.6M; Adj. EBITDA $1.0M) amid ad softness and customer churn, though Q4 ad sales show early recovery; several network launches and ATSC 3.0 datacasting initiatives progressed .
Balance sheet actions extended maturities but introduced milestone covenants; as milestones were missed, the company initiated a sale process for DBM Global and a strategic process for HC2 Broadcasting to comply with note requirements—key near-term stock catalysts .
Life Sciences momentum: MediBeacon received full NMPA approval in China for Lumitrace®, enabling TGFR commercial launch before year-end; R2 posted 3.3% YoY revenue growth and strong unit/backlog KPIs .

What Went Well and What Went Wrong

What Went Well

Infrastructure-led growth: Consolidated revenue +43.3% YoY to $347.1M; Infrastructure revenue +45.4% YoY to $338.4M as major projects advanced; Total Adjusted EBITDA rose to $19.8M .
Backlog momentum and awards: DBM Global reported $1.5B backlog and $1.6B adjusted backlog at 9/30, +~$0.5B vs YE’24; added $431M to adjusted backlog for two new projects post-quarter .
Life Sciences regulatory and growth milestones: MediBeacon obtained full China approval for Lumitrace® (completing TGFR package) with sales expected before year-end; R2 worldwide system unit sales +39.8% YoY and YTD revenue +~65% .
- “MediBeacon’s regulatory approval to sell their product in China is a major milestone that broadens the scope of our addressable market.” — Interim CEO Paul Voigt .

What Went Wrong

Margin compression at DBM Global: Gross margin 13.6% (–510 bps YoY) and Adj. EBITDA margin 6.9% (–200 bps YoY) on project mix/timing, partially offset by SG&A reductions .
Spectrum headwinds: Revenue fell to $5.6M (–$0.8M YoY) and Adj. EBITDA to $1.0M (–$0.7M YoY) from customer terminations and direct-response ad downturn .
Higher leverage and covenant milestones: Total principal outstanding reached $700.4M; current portion of debt rose to $571.8M (from $162.2M YE’24), and the company triggered mandated strategic processes at DBM Global and Spectrum following missed refinancing milestones .

Financial Results

Consolidated performance vs prior year and prior quarter; estimates not available (S&P Global)

Metric	Q3 2024	Q2 2025	Q3 2025	Vs S&P Cons.
Revenue ($M)	$242.2	$242.0	$347.1	N/A (not available via S&P Global)
Gross Profit ($M)	$48.2	N/A	$49.7	N/A
Net Loss ($M)	$(15.3)	$(22.0)	$(9.4)	N/A
Diluted EPS ($)	$(1.18)	$(1.67)	$(0.71)	N/A
Total Adjusted EBITDA ($M)	$16.8	$15.7	$19.8	N/A
Gross Margin (%)	19.9% (48.2/242.2)	N/A	14.3% (49.7/347.1)	N/A
Net Margin (%)	–6.3% (–15.3/242.2)	–9.1% (–22.0/242.0)	–2.7% (–9.4/347.1)	N/A
Adj. EBITDA Margin (%)	6.9% (16.8/242.2)	6.5% (15.7/242.0)	5.7% (19.8/347.1)	N/A

Note: S&P Global consensus estimates were not available for VATE for Q3 2025 as of this analysis. Values referenced as “N/A” reflect unavailability via S&P Global. Values retrieved from S&P Global.*

Segment breakdown (Q3 2025 vs Q3 2024)

Segment	Revenue Q3’24 ($M)	Revenue Q3’25 ($M)	YoY ($/%)	Adj. EBITDA Q3’24 ($M)	Adj. EBITDA Q3’25 ($M)	YoY ($/%)
Infrastructure	232.8	338.4	+105.6 / +45.4%	20.9	23.5	+2.6 / +12.4%
Life Sciences	3.0	3.1	+0.1 / +3.3%	(3.0)	(2.6)	+0.4 / NM
Spectrum	6.4	5.6	–0.8 / –12.5%	1.7	1.0	–0.7 / –41.2%
Total	242.2	347.1	+104.9 / +43.3%	16.8	19.8	+3.0 / +17.9%

Additional KPIs and balance sheet

KPI	Prior/Ref	Current	Notes
DBM Global Backlog ($B)	Reported: $1.0 (12/31/24); Adjusted: $1.1 (12/31/24)	Reported: $1.5; Adjusted: $1.6 (9/30/25)	Added $431M to adjusted backlog post-quarter for 2 projects
Spectrum: Operating stations	—	257 total; 201 LPTV, 53 Class A, 3 Full Power; ~2.7B MHz POPs	Network launches: MovieSphereGold, Sports First; Black Vision upcoming
R2 backlog/throughput	—	~70 units backlog; patient treatments +102% YoY; avg. monthly utilization +24% YoY	Q3 revenue $3.1M (+3.3% YoY); YTD +~65%
Cash & Cash Equivalents	$48.8M (12/31/24)	$35.5M (9/30/25)	Corp standalone cash: $1.9M (9/30/25)
Debt (Total principal)	$668.3M (12/31/24)	$700.4M (9/30/25)	Current portion of debt $571.8M (9/30/25) vs $162.2M YE’24

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Consolidated Revenue/Adj. EBITDA	FY/Q4 2025	No formal quantitative guidance disclosed	No formal quantitative guidance disclosed	Maintained (no formal guidance)
Spectrum Advertising	Q4 2025	“Outlook for Q4 looking very promising” (Aug call)	“Q4 advertising sales are starting to pick up” (seasonally strongest)	Directionally raised (qualitatively improving)
DBM Global	2H25/2026	Pipeline robust; margin discipline focus	EBITDA expected slightly below 2024; 2026 momentum building with backlog	Tempered near-term, improving medium-term
MediBeacon TGFR China	4Q 2025	TGFR monitor/sensor approved; Lumitrace under review; launch expected 4Q	Full NMPA approval incl. Lumitrace; TGFR available for sale in China before year-end	Raised (approval achieved)

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1’25, Q2’25)	Current Period (Q3’25)	Trend
Strategic alternatives / asset sales	Exploring alternatives; engaged Jefferies	Initiated sales process for DBM and strategic process for HC2 Broadcasting due to missed note milestones	Escalating actions
Debt refinancing / capital structure	Executed refinancing steps; extended maturities	Principal $700.4M; covenant-driven milestones now binding	Mixed: maturities extended but constraints tighter
DBM backlog and execution	Backlog grew to ~$1.4B in Q1; +$0.3B YoY adj backlog Q2	Reported $1.5B; adjusted $1.6B; +$431M post-quarter	Improving visibility
DBM margins	Q1 gross margin up 110 bps; Q2 margin compression	Q3 GM –510 bps YoY; Adj. EBITDA margin –200 bps YoY	Deteriorated YoY
Spectrum advertising	Q1 stable; Q2 softness with promising Q4 outlook	Q3 weak; Q4 “starting to pick up”	Near-term improving
ATSC 3.0 / 5G broadcast	Petition to allow 5G LPTV conversion; tests with carrier	Ongoing trials with major carrier; FCC process delayed by shutdown	Progressing, regulatory delay
MediBeacon TGFR	FDA (US) and China device approvals earlier; Lumitrace pending	Full China approval incl. Lumitrace; launch expected before year-end	Positive inflection
R2 growth	Q1 +210% YoY; Q2 +88% YoY	Q3 +3.3% YoY; strong utilization and global expansion KPIs	Growth moderating QoQ; KPIs strong

Management Commentary

“DBM Global's strong year-to-date revenue and robust backlog showcases their disciplined execution and ability to secure complex projects.” — Interim CEO Paul Voigt .
“MediBeacon's regulatory approval to sell their product in China is a major milestone that broadens the scope of our addressable market.” — Interim CEO Paul Voigt .
“We… initiated a sales process for DBM [and]… a strategic process for HC2 Broadcasting… in accordance with… requirements.” — Interim CEO Paul Voigt (prepared remarks) .
“We anticipate EBITDA to come in slightly below 2024 levels, [but]… are encouraged by the momentum building for 2026, driven by the growing adjusted backlog.” — Interim CEO Paul Voigt .

Q&A Highlights

The Q3 call had no analyst questions; management concluded the call without Q&A .
Clarifications from prepared remarks included: covenant-driven strategic processes (DBM sale; Spectrum alternatives) ; DBM 2026 momentum despite near-term margin compression ; Spectrum Q4 ad recovery signs and continued ATSC 3.0/5G broadcast collaborations .

Estimates Context

Wall Street consensus (S&P Global) for revenue, EPS, and EBITDA was not available for Q3 2025; therefore, no beat/miss analysis versus consensus can be provided at this time. Values retrieved from S&P Global.*
Actuals: Revenue $347.1M; Diluted EPS –$0.71; Total Adjusted EBITDA $19.8M .

Key Takeaways for Investors

Infrastructure is the engine: strong revenue growth and expanding backlog should support 2026 visibility, but investors must underwrite near-term margin compression at DBM Global .
Balance sheet is the swing factor: refinancing extended runway but imposed milestones; active DBM sale and Spectrum strategic process introduce binary outcomes and timeline risk—potential catalysts for the stock .
Spectrum remains challenged; watch Q4 seasonality and new network traction to validate ad recovery and any datacasting monetization in 2026+ .
Life Sciences optionality improving: MediBeacon’s full China approval could unlock initial commercialization; R2 KPIs (utilization, international mix, backlog) support continued growth, albeit from a small base .
Liquidity/leverage require monitoring: cash $35.5M (corp cash $1.9M) and elevated current portion of debt ($571.8M) constrain flexibility; asset monetization outcomes will be pivotal .
Near-term trading setup: headlines around DBM Global process outcomes, Spectrum alternatives, and Q4 ad trends are likely to drive volatility and narrative resets.
Medium-term thesis: if DBM monetization is value-accretive and Spectrum stabilizes while Life Sciences progress continues, sum-of-the-parts could improve; execution and capital structure resolution are critical.

Appendix: Additional Detail and Cross-References

Consolidated income statement and balance sheet excerpts are provided in the company’s 8-K press release, including revenue, EPS, and cash/debt balances .
Segment revenue and Adjusted EBITDA by quarter and YoY comparisons are sourced from the 8-K and earnings supplement .
Backlog and strategic process disclosures (DBM, Spectrum) are from the 8-K highlights and call remarks .
Spectrum operational metrics/station counts and network launches are from the earnings supplement and press release .
Life Sciences updates (MediBeacon NMPA approval, R2 performance) are from the 8-K and press releases .

Footnote: *Values retrieved from S&P Global.

INNOVATE Corp. (VATE)·Q3 2025 Earnings Summary