Coda Octopus Group, Inc. Q1 FY2026 earnings call

• Anne-Marie Gale mentioned revenue in first quarter 2026 increased by 28.8% despite challenging global policy environment. Core business is marine technology business, which generated 50% of consolidated net revenue in Q1 2026. - Marine technology business saw 47.4% revenue increase in Q1 2026, with hardware sales up 31% to $2.3 million and rental revenue up 232.8% to ~$0.7 million. - Defense engineering services business revenue up 9.2% in Q1 2026 but impacted by defense programs funding delays due to continuing resolutions. - Acoustic sensors and materials business revenue up 20.7% in Q1 2026 with gross profit margin at 66.8%. - Blair Cunningham discussed milestones like David Untethered variant completion of hardening program, awaiting ANU assessment, site acceptance test training with European Navy in Q2, and NanoGen series expected initial adoption in third quarter through defense-funded product improvement programs.

Total revenue in first quarter 2026 was $6.7 million, up 28.8% from $5.2 million in first quarter 2025. Marine technology business generated $3.4 million revenue, up 47.4%; acoustic sensors and materials business had $1.6 million revenue, up 20.7%; defense engineering services business had $1.8 million revenue, up 9.2%. Marine technology business gross margin was 75.3% in Q1 2026 vs 73.1% in prior period; acoustic sensors and materials business gross margin was 66.8% vs 61.7%; defense engineering services business gross margin was 44.1% vs 58.9%.

• Aim to achieve sea milestones in fiscal year 2026 including expanded David adoption in global commercial market and foreign navies, and deployment of Ecoscope technology including Nano on next generation autonomous AI-enabled platforms. - Continue to prosecute M&A strategy in fiscal year 2026 and build M&A pipeline of opportunities, keen to close another acquisition. - Pivot marine technology business revenue model towards multi-year program-based adoption.

• Statements made may be forward-looking statements involving risks and uncertainties. Factors beyond control could cause actual results to differ materially from forward-looking statements. Risks and uncertainties detailed in earnings release and public filings with SEC, including those in Form 10-K and Form 10-Q. - Defense engineering services business impacted by delays in receiving contract awards due to continuing resolutions and pending line items appropriations in federal budget.

Q: Size the total addressable market in dollar terms in the U.S. for the David?

A: Difficult to size as it's predicated on fee price being negotiated; past military diving system price was ~$50,000 per unit but depends on customer acceptance.

Q: Timing for unmanned underwater vehicle market opportunity for CODA from revenue perspective, design wins, production start?

A: NanoGen series expected initial adoption in third and fourth quarters under product improvement programs; conversations ongoing for design wins with new vehicle platforms, and shorter timeline expected with European defence community pivoting to smaller quantity, shorter cycle purchases.

Q: How does rising oil prices impact demand for products?

A: Not really as development cycle isn't responsive to oil price changes, so not seeing increased demand currently.

Q: Thoughts on why marine technology product hasn't scaled back to prior levels and long-term growth potential?

A: Bread and butter currently in commercial marine market; long-term growth potential relies on programs maturing, with focus on near-term opportunities in product improvement programs and pull-through sales from David product line.