TOMI Environmental Solutions, Inc. Q3 FY2025 earnings call

• Revenue in Q3 2025 reached $2 million, a 95% increase from Q2 2025, driven by equipment sales and recurring BIT solution sales. • Year-to-date service demand in life sciences and food safety areas was robust, with quote activity and pipeline volume up ~35% year over year. • Sales order backlog was $900,000 at quarter end, grew to $1.3 million by October 31, with ~$3 million in pending integration contracts expected to close by year-end. Active pipeline surpassed $15 million. • SteraMist IHP technology gained industry recognition, named Disinfection and Decontamination Products Company of the Year 2025. • Focus on existing customer base, implementation usage, and tailored protocol development. • Onboarded specialized service providers, expanded partnerships, and saw momentum in capital equipment sales and pipeline for automation solutions.

In Q3 2025, TOMI's revenue was $2 million, a 95% increase from Q2 2025. This growth was driven by strong equipment sales and recurring BIT solution sales, which have risen 21% year to date. For the nine months ended September 30, 2025, solution revenue was $760,000, an increase of 21% year over year. Gross profit remained strong at 61% as a percentage of sales for Q3 2025. Revenue in Q3 2025 was down 24% from Q3 2024 due to a timing reduction in IronHP services sales from a key customer.

• Temporary impact from customer reorganization on service sales is expected to be short-term, with customer operations-related service activity resuming to normal soon. • Year-to-date service demand remains robust, supporting expectation of continued growth in Q4 and beyond. • Expect continued growth in solution sales within the customer base, leveraging momentum from Q3. • Strategic focus on scaling automation integrations, exploring untapped opportunities in sustainable agriculture and public infrastructure, and fostering R&D partnerships.

• Temporary reduction in service sales due to a key customer's operational reorganization. • General risk factors from SEC filings related to potential differences between anticipated and actual results, as outlined in the company's 10-Q for the quarter ended September 30, 2025.

Q: Good afternoon. Doc, David, E.J. Really good quarter. Congratulations on the nice turnaround and progress. One of the key things I think you announced was the FDA approval or clearance for the hydrogen peroxide usage. It opens the food, RTE, and prepackaged as E.J. outlined. What are your sales and marketing efforts towards this, and have you identified initial targeted customers that you would pursue?

A: So it's relatively new, this approval. And we foresee that the food industry in itself, both whether it's in processing, storage, packaging, transportation, etc., can be a key marketing vertical for us. And I'm really excited about it because, especially our type of technology does not have any residue. And it's gonna be a game changer. But you know, in order to go ahead and tell you how much and who, it's a little too early, I think. And I find that a lot of the food companies themselves are not aware of the change. But things are changing in this industry. They're leaning away from old established disinfection and parasitic acids and things like that, and dips, etc., that they've been using. And our technology is definitely should be on top of their list as a choice.

Q: On the Q3 performance, again, as I said, congrats on the nice turnaround. The operating expenses were also contained, despite the nice revenue increase. Should we expect these operating expenses at the operating expense level as well as the gross margin level to continue to sort of improve financially?

A: So for your model, I think your expenses are gonna increase. And, you know, I think they're gonna be positive in relationship to revenue. David might have something to add to this if you'd like, David. Yeah. I think for the gross margin, you may get one or 2%, but nothing significant. Already seen that over the year on year, we're holding around the 60% margin. I mean, that helps us with the continuing solution sales that come in. So I don't expect our margin to be under too much pressure. But as Doc pointed out, if we're going to scale up, I would expect, you know, the revenue line will go up at the same time, but the percentage of the total operating expenses as a percentage of our total revenue will not significantly change.

Q: Last question, on the international front, I think you did mention Morocco, Africa. What kind of sales effort is in place? Do you have representatives in these countries? How should we think about how the sales are going to be realized?

A: So we have different distributors in some of these countries that are focused on them. I think that a lot of our global partners, where we mentioned one in the food industry on the call earlier, is implementing this in many of their facilities globally. Similar to that, you see other types of partners that we have that have a global footprint in various countries that are interested in increasing their demand and use for SteraMist going forward.

Q: Is there anything updates you can give me on what's going on with servicing or trying to service the military and defense markets?

A: I don't have one. Maybe E.J. has something to say about that. Hey, John. Yes. This past quarter, a lot of our service was directly attributed to one key site. I can't really go into too much detail, but they are looking to replace formaldehyde and have been, and we're working with them. We did quite a few studies with them in Q3. We went there eight or nine times and had positive results. I don't expect that one to show a close before the end of the year, but we are definitely expecting it to be a pretty big deal in 2026.

Q: Any updates on the CAR-T cell disinfection business?

A: No, Doc. Don't think we have anything, sir.

Q: You mentioned in the press release that you've now onboarded all three of the top major service provider companies in healthcare mold remediation? And I was curious as to any expectations that we should have for a rapid versus slow rollout by these parties?

A: So yes, and I know you've been asking. You know, it wasn't ServiceMaster, but bringing on SteraClean and Tact and this other group was definitely a big deal in Q3. Especially with their quick assessment to add more units pretty quickly thereafter their initial buy. They do have a focus more on biohazard and mycotoxin remediation, and we expect to really keep working with them and gain live case studies to be able to bring on the rest of their facilities and then, of course, additional franchises. So I do see a dramatic shift in our service providership. I think it's the way we've now outlined the way we train and support them with the program and the learning management system we offer to them. And we're a little more aggressive in the correspondence and staying up to date with everything they're doing. It is proving good outcome. I'd expect more.

Q: Google just announced that they were planning on investing $40 billion in new data centers in Texas. So could you comment at all on any plans to try to penetrate the disinfection market for those types of facilities?

A: Sure, John. That's one of our reasons that we are expanding and want to expand our sales teams. In multiple verticals, and that's one that makes a huge amount of interest and potentially success for us because they do need disinfection. They're large facilities. And we will handle their materials tremendously. So we are gonna work on that. We just do not have the employees at the moment to focus on that. And that's one of the reasons for capital needs and to increase our existing sales force.

Q: On the FDA, you know, broadening the permitted use of peroxide in the food industry, and I was wondering if you could maybe give us a few more details on how you're increasing your awareness for that market?

A: So we are doing it on social media. And we do have plans to increase it further. Like I said earlier, with the call from the analysts, we know who they are that need our product, and sometimes they don't even know they can use our product. So it's more in an educational mode at the moment. But I think that, you know, also in the medical supply, medical sterilization end of medical materials, medical processing, sites that have huge ethylene oxide sterilization. Our products are great replacements. So there's a lot of work. A lot of low-picking fruit for us to work at in those areas and those verticals. And as the team gets bigger and moves forward, we will be focused on them.

Q: And in marketing, are you targeting the companies that have had problems in the past?

A: Are you targeting companies first that have had problems in the past with infections and disease? We are, John, but we did start our initial beginning point was to start with our current database and the correspondence that we have had with food safety customers, probably the past year and a half or two that couldn't come on board because, prior to the ruling, it had different restrictions for the EPA label. So we're now in correspondence with those with the new FDA petition and reaching out how to create protocols under that guideline. So we did start with individuals that we were already talking with.

Q: Any progress or developments in the use of SteraMist for replacing ethylene oxide in the medical instrument sterilization market?

A: Yeah. I mean, those kind of go hand in hand. With under both accounts, in food and in medical device treatment. The other partnerships that we're starting to build in device manufacturing will also lead to that replacement being able to have IHP streamlined into different enclosures to decontaminate these devices. And another large machinery that's used in both industries. So it's definitely all being high prioritized and discussed.