• Total Revenue: $5.2 million, up 16.8% from $4.5 million in Q1 2024.
• Marine Technology Business Revenue: $2.3 million, down 35.8% from Q1 2024.
• Acoustic Sensors and Materials Business Revenue: $1.3 million, newly added in October 2024.
• Marine Engineering Business Revenue: $1.6 million, up 77% from $0.9 million in Q1 2024.
• Gross Profit: $3.4 million, compared to $3.1 million in Q1 2024.
• Consolidated Gross Margin: 65.8%, down from 69.2% in Q1 2024.
• Operating Expenses: $2.8 million, up from $2.5 million in Q1 2024.
• Operating Income: $0.7 million, up 19.2% from $0.6 million in Q1 2024.
• Net Income: $0.91 million, or $0.08 per diluted share, up from $0.6 million, or $0.06 per diluted share in Q1 2024.
• Cash and Cash Equivalents: $22.54 million as of January 31, 2025.
• Acoustic Sensors and Materials Business Contribution: 25.2% of group revenue, with a gross margin of 61.7%.

• Warning! GuruFocus has detected 2 Warning Signs with CODA.

Release Date: March 17, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Coda Octopus Group Inc (NASDAQ:CODA) reported a 16.8% increase in total revenue for the first quarter of 2025, reaching $5.2 million compared to $4.5 million in the same period of 2024.
• The newly acquired Acoustic Sensors and Materials business contributed significantly, accounting for 25.2% of the consolidated revenue and 33.3% of the operating income.
• The Marine Engineering business saw a substantial revenue increase of 77% in the first quarter.
• The company achieved a pivotal milestone with the DAVD Untethered System, receiving its first order for $800,000 for 16 systems, indicating strong potential for future growth.
• Coda Octopus Group Inc (NASDAQ:CODA) maintains a strong financial position with $22.54 million in cash and no debt as of January 31, 2025.

Negative Points

• The Marine Technology Business experienced a 35.8% decrease in revenue, attributed to weak demand due to global policy uncertainties.
• The company's gross margin decreased to 65.8% from 69.2% in the first quarter of the previous year.
• Operating expenses increased to $2.8 million, largely due to the addition of the new business unit, impacting overall profitability.
• The uncertain global policy environment, including changes in US administration policies, has led to reduced momentum in several Defense Programs.
• The company anticipates a softer second quarter due to customers holding off on purchases amid policy uncertainties, potentially impacting short-term revenue.

Q & A Highlights

Q: What needs to happen for the marine products to recover, and should we expect demand to remain depressed for a few quarters? A: Annmarie Gayle, CEO, explained that customers are currently on standstill due to the uncertain policy environment. She anticipates a quiet Q2 but expects revenues to be back-ended this year, with a robust Q3 and Q4.

Q: Can you provide a timeline for the DAVD tethered and untethered markets, especially regarding revenue targets? A: Annmarie Gayle, CEO, stated that the DAVD Tethered System is operational, and they are targeting $4.5 million in revenues for DAVD this year, up from $1.5 million last year. Blair Cunningham, President of Technology, added that the untethered systems will be delivered in Q2 and Q3, with significant interest from both US and foreign navies.

Q: How does the market uncertainty impact demand for Acoustic Solutions? A: Annmarie Gayle, CEO, noted that while the market is not immune to global uncertainties, the medical sector, where Precision Acoustics operates, is less exposed. She feels confident that this business will provide revenue diversification in the short run.

Q: Has the global uncertainty affected your M&A strategy? A: Annmarie Gayle, CEO, mentioned that while they are still excited about a potential acquisition, they have deliberately slowed down the process to better understand the global policy environment before proceeding.

Q: Why wasn't there a press release for the $800,000 untethered order, given its significance? A: Annmarie Gayle, CEO, explained that the order was received very late in the quarter, and due to certain protocols and customer approval requirements, it was more appropriate to announce it during the earnings call.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.