Geospace Technologies — Third Quarter 2026 Earnings Summary

Financial Performance

• Q3 2026 revenue was $15.8 million, a decrease from $24.8 million in Q3 2025; nine-month 2026 revenue was $61.1 million, down from $80.1 million in the prior year period.
• Q3 2026 net loss was $9.7 million ($0.75 per diluted share), compared to net income of $0.8 million ($0.06 per diluted share) in Q3 2025; nine-month 2026 net loss was $30.5 million ($2.37 per diluted share), compared to a net loss of $0.7 million ($0.05 per diluted share) in the prior year period.
• Gross profit for Q3 2026 was $0.5 million versus $7.5 million in Q3 2025; nine-month gross profit was $3.9 million versus $29.4 million in the prior year period.
• Operating loss for Q3 2026 was $10.1 million versus an operating income of $0.4 million in Q3 2025; nine-month operating loss was $31.8 million versus an operating loss of $2.1 million in the prior year period.
• Cash used in operating activities for the nine months ended June 30, 2026, was $27.3 million; cash generated from investing activities was $6.2 million.
• Working capital as of June 30, 2026, was $40.6 million, including $17.5 million in trade accounts and financing receivables.
• Cash and cash equivalents decreased to $2.8 million as of June 30, 2026, from $26.3 million as of September 30, 2025.
• Deferred contract liabilities increased to $11.4 million as of June 30, 2026, from $0 in the prior period.

Guidance and Future Outlook

• Management expects PRM delivery to occur in the third quarter of fiscal year 2027 despite short-term manufacturing delays.
• The company aims to convert pipeline opportunities into revenue and improve operating performance.
• Strategic priorities include executing existing programs, expanding markets for technology, improving Smart Water performance, and allocating capital prudently.
• Management stated that financial performance does not reflect the strength of long-term opportunities across diversified markets.

Business Segments and Product Lines

• Smart Water: Revenue was $4.6 million for Q3 2026 (down 56.1% from $10.5 million in Q3 2025) and $14.1 million for nine months (down from $27.3 million). The decline is attributed to reduced demand for Hydroconn Series III connectors. The company launched the Series V connector in June to address supply chain challenges.
• Energy Solutions: Revenue was $5.9 million for Q3 2026 (down 28% from $8.1 million) and $30.1 million for nine months (down 13.9% from $35.0 million). Lower demand for seismic acquisition equipment and ocean bottom nodal products drove the decline, partially offset by PRM contract revenue and Pioneer wireless land node sales. The PRM contract period of performance was extended to account for scope changes.
• Intelligent Industrial: Revenue was $5.2 million for Q3 2026 (down 14% from $6.1 million) and $16.7 million for nine months (down from $17.6 million). Decreases were driven by lower demand for industrial sensors and contract manufacturing services.
• The subsidiary Quantum Technology Sciences, LLC received a $10.8 million firm-fixed price contract from the U.S. Navy to deliver a seismic acoustic detection and ranging system, expected to be completed by December 2027.
• The U.S. Department of Homeland Security exercised an extension option on an existing contract for ongoing maintenance for an additional six months.

Market and Competitive Landscape

• Challenging market conditions, including geopolitical uncertainty, project timing, sales volumes, and customer access to capital, impacted short-term financial performance.
• Product mix, inflation, raw material costs, and component availability significantly impacted margin performance.
• The company noted reduced demand for Hydroconn connectors and industrial sensors as key market drivers for revenue declines.

Risks and Challenges

• Forward-looking statements highlight risks including geopolitical conflicts (Russia/Ukraine, U.S./Iran), commodity price volatility, and potential delays or cancellations of customer orders.
• Specific risks include the failure of Quantum and OptoSeis or Aquana technology transactions to yield positive results, product obsolescence, credit losses, and inability to collect on financing receivables.
• The company faces risks related to the adoption of security solutions and the health of management personnel.

Management Commentary and Tone

• CEO Richard "Rich" Kelley acknowledged challenging market conditions and stated that revenue was impacted by multiple external factors.
• Management emphasized offsetting some negative impacts through cost reduction efforts and manufacturing productivity improvements.
• The tone remains focused on strengthening the foundation for future performance, maintaining financial discipline, and investing in innovation.
• Management expressed confidence that the underlying business is well-positioned with a diversified solutions portfolio and strong technology offerings.

Other Key Points

• The company generated $9.4 million in proceeds from the sale of rental equipment during the nine-month period, partially offset by $3.3 million in additions to property, plant, and equipment.
• Inventory obsolescence expense was $2.3 million for the nine months ended June 30, 2026.
• The company maintains full access to its credit facility and is in compliance with loan covenants as of June 30, 2026.
• A conference call to review results was scheduled for August 7, 2026, at 10:00 a.m. Eastern Time.
• The company has more than 400 employees globally and trades on the NASDAQ under the ticker symbol GEOS.