Coda Octopus Group Q4 Earnings Call Highlights

Coda Octopus Group (NASDAQ:CODA) reported fiscal year 2025 results showing higher revenue and earnings, while management emphasized progress on new products and defense-market adoption as key drivers of the company’s long-term growth strategy.

Revenue grew 30.7% as Precision Acoustics added a new business line

Interim CFO Gayle Jardine said total revenue rose to $26.6 million in fiscal 2025 from $20.3 million in fiscal 2024, an increase of 30.7%. Management attributed a meaningful portion of the growth to the company’s Acoustic Sensors and Materials business, added to the group in October 2024 through the acquisition of Precision Acoustics Limited.

By segment, Jardine said:

• Marine Technology revenue increased 3.2% to $13.2 million from $12.8 million.
• Defense Engineering revenue increased 5.6% to $7.9 million from $7.5 million.
• Acoustic Sensors and Materials recorded $5.4 million of revenue in fiscal 2025, contributing 20.4% of consolidated net revenue.

Margins dipped as mix shifted and rentals declined

Gross profit increased to $17.7 million from $14.2 million, but consolidated gross margin declined to 66.5% from 69.8%. Jardine said the 3.3 percentage-point decrease was mainly driven by the addition of the lower-margin Acoustic Sensors and Materials unit (about 2 percentage points of the decline), along with sales mix and geography in the core Marine Technology business.

In Marine Technology, gross margin fell to 74.5% from 77.9%, which management linked to a shift toward more hardware sales and fewer rentals. Jardine cited a 30.5% increase in hardware units sold and a 36.6% reduction in higher-margin rental sales. CEO Annmarie Gayle connected underutilization of rental assets to a change in U.S. policy on funding for offshore renewables, which she said led to projects being shelved and reduced rental and associated services demand.

By business unit, Jardine reported gross margin of 58.6% for the Acoustic Sensors and Materials segment and an increase in Defense Engineering gross margin to 58.6% from 55.8%, driven by the mix of engineering projects.

Earnings improved; cash increased to $28.7 million with no debt

Operating expenses rose 24.0% to $13.1 million, which Jardine said reflected the addition of Precision Acoustics and currency translation impacts from a weaker U.S. dollar versus the British pound and Danish krone. Selling, general and administrative expenses increased 27.9% to $10.7 million, driven by the new business unit and an earn-out provision tied to the Precision Acoustics acquisition agreement. SG&A was 40.2% of net consolidated revenue, compared with 41.1% the prior year.

Operating income rose to $4.5 million from $3.6 million, while pre-tax income increased to $5.5 million from $4.6 million. Net income after taxes was $4.1 million, or $0.37 per diluted share, compared with $3.6 million, or $0.32 per diluted share, in fiscal 2024. The company recorded a current tax expense of $1.1 million, up from $0.7 million.

On the balance sheet, Jardine said cash and cash equivalents totaled $28.7 million as of October 31, 2025, up from $22.5 million a year earlier, and the company had no debt. Total assets increased $6.9 million to $64.5 million.

Management focused on scaling Marine Technology in defense markets

CEO Annmarie Gayle described the company as comprising three operations: Marine Technology, Defense Engineering Services, and the recently added acoustics, sensors, and materials unit. She called Marine Technology the core business and said it generated 49.8% of consolidated net revenue in fiscal 2025.

Within Marine Technology, management highlighted an increased emphasis on defense. Gayle said the segment’s revenue mix in fiscal 2025 was 46% defense and 54% commercial marine, with 71.9% of the segment’s revenue tied to the Echoscope product line and 28.1% related to DAVD. She also noted hardware sales rose to $9.5 million from $7.2 million, and hardware sales to Asia increased to $5.9 million from $5.5 million.

President of Technology Blair Cunningham said sales increased for both Echoscope and DAVD in fiscal 2025 and described “strong interest” from the defense community, particularly as defense subsea markets adopt smaller, more autonomous platforms. Cunningham highlighted the launch of the Echoscope NanoGen Series, a smaller form-factor real-time 3D imaging sonar intended for emerging underwater platforms. He said the company has conducted successful trials with defense customers including the U.S. Navy and allied foreign navies, and he anticipates procurement and program decisions for active opportunities where demonstrations and operational trials have been completed could be made in early 2026, with initial deliveries beginning in the company’s 2026 fiscal year if contracts are awarded.

DAVD milestones: hardening program completed; approvals and international adoption in focus

Management repeatedly pointed to DAVD (Diver Augmented Vision Display) as a major growth opportunity, particularly an untethered variant aimed at special forces divers. Cunningham said the company completed the funded DUS hardening program in fiscal 2025, describing it as jointly funded by the U.S. and a leading foreign navy. He said the company delivered an initial production run of 16 new generation untethered DAVD systems for U.S. Special Forces fleet evaluation and that the system is undergoing the U.S. Navy’s authorization for Navy use (ANU) approval process.

Gayle said DAVD revenue totaled $3.7 million in fiscal 2025. When asked about fiscal 2026 expectations, she said the company’s internal plan assumes it will beat that figure, but emphasized that DAVD revenue may be “lumpy” and potentially weighted toward the third and fourth quarters, citing timing around approvals and visibility into U.S. budget allocations under continuing resolutions.

Internationally, Gayle said the company delivered two untethered DAVD systems to an “influential” European navy in the fourth quarter and expects training in the second quarter, with potential procurement discussions developing later in the year. Cunningham added that the sales cycle for international adoption can take years, citing work with that European navy over the last two years leading up to initial deliveries.

On capital allocation, Gayle said the company intends to continue its M&A strategy in fiscal 2026 and is “very keen” to close another acquisition, arguing that value-added, accretive acquisitions are the best way to grow the business and generate shareholder returns.

About Coda Octopus Group (NASDAQ:CODA)

Coda Octopus Group, Inc is a technology company that develops and sells real-time 3D sonar systems and related solutions for underwater applications. Its flagship Echoscope® real-time 3D sonar system enables clients to visualize subsea structures and seabed conditions in unprecedented detail. The company’s product portfolio also includes BathyCORR® geophysical survey processing software, a range of ROV and USV inspection tools, and advanced subsea positioning and motion reference units. These technologies support tasks such as inspection, maintenance, salvage, survey, and security in challenging marine environments.

The company serves a broad set of industries, including offshore oil and gas, marine mining, defense, civil engineering, telecommunications, and scientific research.