Coda Octopus Group, Inc. Q3 FY2025 earnings call

• Core business is Marine Technology, which drives growth. Echoscope and DAVD are key technologies. The Echoscope PIPE NANO GEN Series was launched, with successful trials and upcoming trials in Q4 with naval forces. The Ship Hull scanning solution received additional funding. - DAVD untethered system was delivered to US Navy and foreign navy, with a new order from a European navy. Integration with DSEND system is underway. - Marine Engineering business had revenue decrease due to delayed contract awards but saw increased inquiries on defense programs. - Acoustics Sensors and Materials business unit added diversification, contributing 20.6% to net revenue.

The company has three main segments. The Marine Technology business generated $4.0 million in revenue in Q3 2025, accounting for 56.4% of net revenue. Its gross margin was 77.0% in Q3 2025, down from 82.9% in 2024 due to the mix of sales (more hardware vs. rental). The Marine Engineering business had revenue of $1.6 million in Q3 2025, a 33.2% decrease from Q3 2024, with a gross margin of 58.9% (down from 62.6% in 2024) reflecting the mix of engineering projects. The newly added Acoustics Sensors and Materials business unit contributed $1.5 million to revenue in Q3 2025, making up 20.6% of net revenue and 18% of operating income, with a gross margin of 54.8%.

• Revenue in Q3 2025 increased 29%. - DAVD target revised to $3.5M-$4M for fiscal year, with Annmarie Gayle stating still aiming for $4M as it grew from $1.2M last year. - Continued focus on M&A strategy, aiming to pivot Marine Technology to a multiyear multiple sales model.

• Supply chain: No significant exposure to China, but export licenses to China are difficult. - Marine Engineering: Delays in contract awards due to funding delays in defense programs. - Marine Technology: Impact of global policy environment on offshore renewables affecting rentals, causing lower gross profit margins.

Q: What type of feedback have you guys received so far on the launch of the Echoscope PIPE NANO GEN Series and its trials?

A: Most striking feedback is the remarkable reduction in form factor, size, and weight, enabling integration into smaller platforms where previous sonars couldn't fit.

Q: Can you talk about the change in the DAVD revenue target?

A: Still aiming for $4M in DAVD revenues for the fiscal year, with significant growth from $1.2M last year.

Q: What about exposure to China and supply chain?

A: No significant exposure to China in supply chain; export licenses to China are hard.

Q: Thoughts on a stock buyback program?

A: That's a board decision; currently focused on building M&A pipeline for value-accretive technologies.