B.O.S. Better Online Solutions Ltd. Q2 FY2025 earnings call

• Revenue growth: Sales jumped 36% year-over-year to $11.5 million, driven by Supply Chain division's 57% revenue increase.
• Profitability: Net income surged 53% to $765,000, EBITDA increased to $900,000. Earnings per share in Q2 was $0.13.
• Backlog: Contracted backlog was $24 million as of June 30, 2025, up from $22 million in March. Cash and equivalents grew to $5.2 million.
• Margin focus: Overall gross profit margin was 23% (lower than previous quarter), with RFID division's margin temporarily down but expected to normalize by Q4 2025. Supply Chain's margin is within expected parameters.
• Working capital: Efficiently managing working capital, with deferred revenue up to $3.2 million indicating strong advanced booking.

The company's total revenue for the second quarter of 2025 was $11.5 million, a 36% year-over-year increase. The Supply Chain division was the main driver, with revenues jumping 57% to $8.3 million, contributing approximately 72.17% of the total revenue. The RFID division faced temporary challenges but has a positive overall trajectory. Gross profit margin for RFID was 19.1% (down from 21.1%) due to service line challenges, while Supply Chain had a 24% gross profit margin. Deferred revenue increased to $3.2 million from $2 million at year-end.

• Raised full-year revenue guidance to $45 million to $48 million (previously $44 million), midpoint is 16% year-over-year organic growth.
• Raised net income guidance to $2.6 million to $3.1 million (previously $2.5 million), midpoint is 24% year-over-year growth, reflecting confidence in converting revenue to bottom line and profit leverage as business scales.

• Temporary challenges in RFID division due to service line issues.
• Potential supply chain issues affecting timely revenue recognition.
• Seasonal headwinds with second half of the year expected to have lower revenue rate compared to first half, and caution needed with supply chain to ensure on-time delivery and revenue recording.

Q: What percent of your revenue is now defense based?

A: More than 60% of total consolidated revenues, and anticipated to grow in 2026 due to growing demand in the Defense segment.

Q: Is the Defense business mostly directly with the IDF or through other companies?

A: Mostly through Rafael, Elbit, and the Israeli aircraft industry, and recently bidding directly with the IDF with help from a new Board member with IDF experience.

Q: Why wouldn't Elbit acquire BOS to take advantage of tax loss carryforward?

A: No apparent limitations, it's likely a strategic decision for Elbit on which company to acquire.

Q: Any new major customers in the quarter?

A: More about expanding offerings to existing customer base, with wiring products for clients in Israel and India being a growth engine.

Q: Second half of year expected revenue compared to first half?

A: Second half expected to have lower revenue rate than first half due to exceptional first quarter and supply chain cautionary factors.

Q: Robotics division details and U.S. market plans?

A: Robotics division backlog is ~$3 million, focusing on defense clients like Elbit, with potential to expand to U.S. market through clients, and plans to open a local office in India for business expansion. Also, plans to visit U.S. in October for marketing.