Flux Power Holdings, Inc. Q4 FY2026 earnings call

Cost Reduction and Operational Efficiency Initiatives

• Reduced Q4 FY2026 operating expenses by 33% year-over-year, and full year FY2026 operating expenses by 28% year-over-year, versus FY2025, via headcount reductions, broad cost containment, and efficiency streamlining.
• Ongoing efforts to improve product margins include near-term supply chain optimization, vendor pricing negotiations, product redesign, and long-term evaluation of vendor partnerships in low-cost regions to reduce component costs.

Sales and Customer Base Diversification Strategy

• Added senior sales leadership, including new Vice President of Sales for Material Handling Stu Jacover, who brings 25+ years of industry experience.
• Launched a hybrid go-to-market strategy for material handling: retaining the existing core dealer network as a foundation, while adding a complementary direct enterprise sales channel focused on large national fleet operators to unlock new growth.
• Key product differentiators for large enterprise clients include a fully documented, name-certified end-of-life battery recycling program with a written take-back guarantee, supporting customer sustainability goals, plus best-in-class post-sale customer support to maximize fleet uptime.
• New lead generation and marketing programs are already driving increased customer activity, supporting the goal of reducing reliance on any single large customer.

OEM Partnership Progress

• One existing OEM white-label customer increased their annual order commitment by 50%, marking the first such increased long-term commitment and validating the OEM program's success.
• Secured full official certification from Hysterail Material Handling, a leading global lift truck OEM, for Flux Power batteries across all Hysterail Class 1, 2, and 3 forklifts — a segment representing $3.5 billion in Hysterail annual revenue, representing a major growth opportunity.
• Flux Power now sells to the top four material handling OEMs, which collectively hold over 60% of the North American market, creating multiple avenues for growth alongside the new direct enterprise sales strategy.

New Product and Platform Launches

• Launched AI-driven SkyMS 3.0, a fundamental platform redesign (not just a minor update) for energy asset management. The platform adds AI-powered predictive analytics and customizable dashboards to every deployed battery, turning fleet energy data into an operational command center.
• 100% of new GSE batteries are now shipped with SkyMS 3.0 access, and the platform will be rolled out to all material handling battery sales. Key customer benefits include 15-40% faster issue detection and 10-30% improved fleet uptime, a measurable productivity gain.
• The software platform creates competitive moats that hardware-only vendors cannot quickly replicate, deepens customer retention, creates a foundation for future recurring software revenue, and positions Flux Power as a technology company rather than just a battery manufacturer.

New Vertical Market Expansion

• Entered the fast-growing robotics vertical via a partnership with a large global technology platform company. The partner has already deployed over 70 Flux Power batteries for testing, with full-scale production deployment expected to begin in 1-2 quarters.

Flux Power operates two core product segments: Ground Service Equipment (GSE) batteries and material handling lithium-ion batteries, with an emerging robotics battery segment. For Q4 FY2026, total company revenue was $8.2 million, up 25% sequentially from $6.6 million in Q3 FY2026, but down 50.9% year-over-year from $16.7 million in Q4 FY2025. Full year FY2026 total revenue was $42.1 million, down 36.6% from $66.4 million in full year FY2025. Year-over-year revenue declines were concentrated in the material handling segment, driven by a capital freeze at the company's largest material handling customer. The GSE segment saw improving order patterns during Q4, and the emerging robotics segment had an initial 70-unit deployment for testing with a large global technology platform customer. Revenue contribution percentages for individual segments were not disclosed in the call.

• Near-term revenue guidance: Management expects Q1 FY2027 revenue to decline to a range of $6 million to $7 million, followed by a rebound in Q2 FY2027 to a range of $8 million to $9 million, matching Q4 FY2026 levels.
• Gross margin guidance: Meaningful gross margin expansion back above 30% is expected once quarterly revenue reaches a $12 million to $14 million run rate. Modest gross margin degradation from Q4 FY2026's 27.4% level is expected in the first half of FY2027 before revenue rebounds; long-term gross margin target remains in the mid-30% range.
• Growth outlook: Management expects the ground service equipment (airline) segment to see a pickup in demand over the next 2-3 quarters, following recent quarters of reduced spending due to high fuel prices. The robotics partnership has potential for multi-year significant revenue if testing is successful and full-scale deployment proceeds.
• Strategic outlook: With a lower cost base and multiple new growth engines in place, management expects the company to return to renewed growth and profitability as broader economic conditions improve.

• The company's largest material handling customer remains under a capital freeze, which has driven significant year-over-year revenue declines for the company, and while management expects the relationship to remain strong and business to resume eventually, the timing of the resumption remains uncertain.
• Broader macroeconomic headwinds, including tariff disruptions and elevated fuel prices, have negatively impacted both demand and gross margins.
• Lower revenue volumes have reduced operating leverage, leading to higher unabsorbed labor and overhead costs, which has pulled gross margins down below historical levels, and margins will remain depressed until revenue grows to a $12 million+ quarterly run rate.
• The company ended Q4 FY2026 with only $0.3 million in cash and cash equivalents, indicating limited near-term liquidity.

Q: What is the SkyMS 3.0 deployment pipeline and near-term revenue opportunity? / A: SkyMS 3.0 is already the default option for all new GSE battery shipments to airline customers. The company has also begun rolling it out to key material handling customers, with a goal of 100% deployment across all new battery sales, including the new robotics vertical. It is currently offered as an add-on to hardware sales, not as a standalone paid product yet. / Q: What is the revenue potential of the new robotics vertical for FY2027 and beyond? / A: The initial 70-unit deployment is for testing with one large leading global robotics technology company. If testing goes well, full-scale production could lead to significant multi-year revenue from this customer, not just one or two quarters of sales, making it a marquee new account. Management will share more details once testing is complete and large-scale deployment is confirmed. / Q: When should we expect meaningful gross margin improvements, and at what revenue level? / A: Management expects gross margins to return above 30% once the company hits a quarterly revenue run rate between $12 million and $14 million. Modest margin degradation from Q4 FY2026's 27.4% level is expected in the first half of FY2027 prior to hitting that revenue threshold. / Q: What is the visibility for resumption of orders from the large material handling customer that currently has a capital freeze? / A: Management stays in constant close communication with the customer, who is currently planning for the next calendar year. Management sees positive signs and expects to receive good news on resumed orders soon. / Q: When will demand recover in the airport ground service equipment segment? / A: After several quarters of weak demand driven by high fuel prices, management has begun seeing renewed customer buying interest, and expects GSE demand to pick up over the next two to three quarters.