TOMI Environmental Solutions, Inc. Q2 FY2025 earnings call

• Completed key projects driving revenue growth; combined total recognized revenue, deferred revenue, and sales order backlog was ~$4.6 million with active projects on schedule for 2025 delivery.
• Negotiating ~$2 million in new custom and integrated contracts with bids expected to close prior to year-end; open opportunities for 3 product offerings totaled ~$15 million, with $7 million as high priority.
• Service revenue from iHP service deployments and validation support services grew 33% QoQ and 46% YTD; iHP corporate service revenue from long-term and new customers.
• Successfully validated NASA project; OEM partnership with PBSC enhancing SteraMist Integrated System offerings.
• Food Safety division expanding in service jobs; collaboration with US Army Medical Research Institute; surge in service pipeline demand.

In the second quarter of 2025, TOMI's total recognized and deferred revenue reached approximately $1.8 million, with recognized revenue for the quarter exceeding $1 million. Service revenue from iHP service deployments and validation support services grew by 33% compared to the same period last year and by 46% over the first 6 months. Total revenue in Q2 2025 was $1.031 million, a decline from $3 million in Q2 2024 (a 66% decrease in sales) due to customers deferring CAPEX product projects. Service-based revenue for the 3 months ended June 30, 2025, was $378,000, an increase of 33% over the same period last year, and for the 6 months was $955,000, a 46% increase compared to the same period last year. Gross margin as a percentage of sales improved to 66% in Q2 2025 from 62% in the same quarter last year.

• Expect continuing higher growth in service revenue in the second half of 2025.
• Anticipate onboarding new partners with strong remediation and government background for a substantial project in September.
• Confidence in EU and UK registration approvals for international partners very shortly.
• Upcoming opportunity with a multinational food and drink processing empire to expand order of SteraPak.

• Uncertain economic environment causing customers to defer CAPEX product projects.
• Regulatory hurdles for FDA approvals impacting market entry for certain applications.
• Impact of tariffs on supply chains affecting long-term planning for customers.

Q: Could you give a high-level on the margins realized in solution sales compared to the rest of the business?

A: Solution sales have high margins, and it's shown by increasing gross margins to 66% in Q2 2025.

Q: Talk about the opportunity for the company with Trump's strategy in bringing back pharma manufacturing to the United States?

A: Regulatory standards are high, new plants and opportunities in various industries like pharma, server, microchip will open up opportunities; many large companies are aware of the product.

Q: Are any specific customers that had deferred CapEx projects in Q2 come back and notified of moving ahead?

A: Deferred revenue is $700,000, customer deposits show significant increase; at least 2 customers to come back in Q1 2026, some projects already delivered or set for current quarter/beginning of Q4.

Q: Describe how SteraMist would be used if FDA approvals are obtained?

A: For 510(k) medical device approvals related to decon chambers, and FCN for food safety applications, like in avocado industry for mold, Salmonella, Listeria control.

Q: Any new uses developed for SteraMist?

A: Internal tests on spray on flowers to increase florist delivery time, but hurdles to enter new industries remain.