Flux Power (FLUX) Q1 2026 Earnings Call Transcript

Image source: The Motley Fool.

DATE

Thursday, November 13, 2025 at 4:30 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Krishna Vanka
• Chief Financial Officer — Kevin Royal

Need a quote from a Motley Fool analyst? Email pr@fool.com

RISKS

• Temporary pause in customer orders — CEO Krishna Vanka said revenue reflected "a temporary pause in the customer orders" mainly due to "uncertainty surrounding the tariff situation" and "near-term caution regarding the macroeconomic situation."
• Gross margin decline — CFO Kevin Royal reported gross margin fell to 28.6% from 32.4%, attributing it to lower sales and a shift to lower-margin product types.
• Increase in net loss — CFO Kevin Royal reported net loss widened to $2.6 million or $0.15 per share, compared to a net loss of $1.7 million or $0.10 per share in the prior year period.

TAKEAWAYS

• Revenue -- $13.2 million in Q1 2026, down from $16.1 million in Q1 2025, attributed primarily to a pause in customer orders driven by tariff and macroeconomic uncertainty.
• Gross Margin -- 28.6% in Q1 2026, down from 32.4% in Q1 2025, impacted by lower sales volumes and product mix shift toward lower energy capacity batteries.
• Operating Expenses -- $5.9 million in Q1 2026, reduced from $6.4 million in Q1 2025 due to headcount cost cuts and workforce efficiency initiatives.
• Net Loss -- $2.6 million or $0.15 per share, up from $1.7 million or $0.10 per share.
• Non-GAAP Net Loss -- $2.4 million or $0.14 per share for the first quarter, compared to non-GAAP net loss of $1.1 million or $0.06 per share in the prior year period.
• Adjusted EBITDA -- Negative $1.7 million for the first quarter, compared to negative $400,000 in the same quarter a year ago, reflecting decreased revenue and margin.
• Cash and Cash Equivalents -- $1.6 million at quarter end, up from $600,000 a year prior and $1.3 million sequentially from the prior quarter.
• Capital Raises -- $13.8 million raised post quarter end ($9.2 million from secondary stock offering and $4.6 million from private placement of warrants); proceeds allocated to working capital and product portfolio acceleration.
• Order Momentum -- $2.4 million in new material handling orders reported post-quarter, plus a major airline order, doubling airline clientele to eight compared to the previous year.
• Workforce Reduction -- Total headcount cost reduced by 20% since CEO's arrival with maintained production levels.
• Certifications and Listings -- Achieved UL EE listing for entire material handling portfolio and UL 1973 certification for 80V intelligent batteries, unlocking access to additional sectors.
• Software Recurring Revenue -- Graduated SkyMS 2.0 SaaS platform from beta, with multiple airlines now paying customers and more interest anticipated.
• NASDAQ Listing Compliance -- Company confirmed continued compliance with NASDAQ Capital Markets listing requirements.

SUMMARY

The company completed a $13.8 million capital raise through both secondary offering and private placement, with stated plans to use funds primarily for working capital and product development. Management reported the successful completion of UL EE and UL 1973 certifications, enabling entry into previously inaccessible market segments such as chemical, agriculture processing, oil and gas, and pharmaceutical industries. The customer base among North American airlines doubled following a significant order, bringing the total to eight, while SkyMS 2.0 SaaS transition from beta to paid use marks early traction in software-driven recurring revenue. The company maintained NASDAQ compliance through operational and cost control measures while targeting accelerated growth in future quarters.

• CEO Krishna Vanka stated, "We achieved this by implementing another limited workforce reduction" when commenting on operational efficiency progress.
• CFO Kevin Royal said, "Proceeds will primarily be used for working capital and to accelerate the redesign of our product portfolio in order to lower costs and improve gross profits."
• The company received certification from a major multinational OEM for its batteries, enabling use in new lift truck models and supporting partnerships with manufacturers.
• CEO Krishna Vanka described upcoming AI-driven features on the SkyMS platform, indicating a strategy of expanding cloud-connected offerings as a recurring revenue source.

INDUSTRY GLOSSARY

• UL EE: Underwriters Laboratories Electrical Equipment listing, certifying product safety and compliance with industry electrical safety standards.
• UL 1973: Underwriters Laboratories standard for batteries used in stationary and motive applications, verifying performance and safety for energy storage systems.
• GSE: Ground Support Equipment, referring to vehicles and machinery supporting aircraft operations on the ground.
• OEM: Original Equipment Manufacturer, a company producing equipment used in another company's product.
• SkyMS 2.0: Flux Power's proprietary cloud-based battery monitoring and management software offered as a SaaS subscription.
• AGVs: Automated Guided Vehicles, mobile robots used in industrial applications for material handling and transport.
• AMRs: Autonomous Mobile Robots, self-navigating robots used in warehouses and industrial settings for material transport.
• SaaS: Software as a Service, a licensing model delivering software via a subscription over the internet.
• Prefunded Warrant: A financial instrument giving holders the right to purchase stock at a nominal exercise price, usually issued in capital raises.

Full Conference Call Transcript

Krishna Vanka, Flux Power Holdings, Inc.'s CEO, and Kevin Royal, Chief Financial Officer. Now before I turn the call over to Krishna, I'd like to remind our listeners that during the course of this conference call, the company will provide financial guidance, projections, comments, and other forward-looking statements regarding future market developments, the future financial performance of the company, new products, or other matters. These statements are subject to the risks and uncertainties that we discuss in detail in our documents filed with the SEC, specifically our 10-K and our most recent 10-Q, which identify important risk factors that could cause actual results to differ materially from those contained in the forward-looking statements.

Also, the company's press release and management statements during this conference call will include discussions of certain adjusted or non-GAAP financial measures. These financial measures and related reconciliations are provided in the company's press release and related current report on Form 8-Ks. They can be found in the investor relations section of Flux Power Holdings, Inc.'s website at www.fluxpower.com. For those of you unable to listen to the entire call at this time, a replay will be available via webcast on the company's website. And now it's my great pleasure to turn the call over to Flux Power Holdings, Inc.'s CEO, Krishna Vanka. Krishna? Please go ahead.

Krishna Vanka: Thank you, and welcome, everyone, to our Q1 2026 conference call. As we announced in our press release earlier today, revenue in the quarter reflected a temporary pause in the customer orders. This was mainly due to the uncertainty surrounding the tariff situation during the quarter, and also due to the near-term caution regarding the macroeconomic situation. With the uncertainty that tariffs had on pricing, customers held back on placing orders until there was more clarity. This dynamic also temporarily impacted our gross margins during the quarter. Lately, however, we have begun to see order rebound in our second fiscal quarter, and this is highlighted by multimillion-dollar orders from top material handling customers totaling $2.4 million.

In addition to these repeat orders, we also recently secured a large order with another major airline for ground service equipment. With this new customer, we now supply to eight major North American airlines, and this represents a doubling of our airline customer base compared to last year. As I have shared with you on the prior earnings calls, the leadership here has established five strategic initiatives to guide our execution and performance. As a reminder, these initiatives include profitable growth, operational efficiencies, solution selling, building the right products, and integrating value-added software across our battery portfolio to generate recurring revenue streams. Let me provide you with an update on these initiatives.

During the quarter, we made additional progress on the operational efficiencies. We achieved this by implementing another limited workforce reduction. Since my arrival, we have reduced our headcount cost by a total of 20% while maintaining consistent production levels. In October, we were also pleased to receive confirmation that we retained our listing on the NASDAQ Capital Markets. So this is now behind us. We remain committed to maintaining the integrity of our listing for broad access to our common stock. I'm also thrilled to announce that we have completed two capital raises totaling $13.8 million in proceeds, net of underwriters discount fees and expenses.

These funds will be efficiently used for working capital needs and to accelerate our product development roadmap. We believe this product acceleration will create more opportunities and ultimately lead to better margins. We are excited that we recently received UL EE listing across our entire material handling portfolio of products. This will also open new market segments representing around a billion dollars in total addressable market, and these new market segments include chemical, agriculture processing, oil and gas, and pharma industries. During the quarter, we also achieved UL 1973 listing for our 80-volt intelligent batteries.

This marks our first globally recognized certification for a mobile battery energy storage system best in the GSE industry and also unlocks new opportunities in AGVs and AMRs. Overall, these key safety standards provide assurance to customers that our products are reliable and safe. Our batteries were also certified recently by a world-leading multinational industrial equipment OEM for use in their new lift truck models. This showcases our commitment to working closely with OEMs and our partners as we continue to build the right products and solutions to meet our customers' needs. Another key initiative is to expand our software offerings to improve recurring revenue.

During the quarter, we graduated our SkyMS 2.0 SaaS platform and converted a major airline from beta testing to a paying customer. We now have multiple paying customers on this software platform and continue to receive strong interest. We also started working on adding new AI-driven operational features to SkyMS that you'll hear about on future calls. It is our goal that every battery shipped be cloud-connected, and we are working hard towards this goal. With that, let me now hand the call over to our CFO, Kevin Royal, to discuss our first quarter financial results in more detail. Kevin? Please go ahead.

Kevin Royal: Good afternoon, everyone. Revenue for 2026 was $13.2 million compared to $16.1 million in the same quarter last year. As Krishna outlined earlier, the decrease in revenue was driven mainly due to a pause in customer orders as a result of the tariff uncertainty and macroeconomic concerns. Gross margin in the first quarter was 28.6%, compared to 32.4% in the prior year period. The decrease in gross margin resulted mainly from lower sales combined with a shift in mix to our lower energy capacity products, which have lower gross margins. Operating expenses in 2026 were $5.9 million compared to $6.4 million in 2025.

The decrease in operating expenses reflects the benefits of our cost reduction initiatives, including rightsizing the workforce to match current operating levels. The net loss for the first quarter was $2.6 million or $0.15 per share compared to a net loss of $1.7 million or $0.10 per share in 2025. Excluding costs associated with stock-based compensation, first quarter non-GAAP net loss was $2.4 million or $0.14 per share compared to a non-GAAP net loss of $1.1 million or $0.06 per share in the prior year period. Adjusted EBITDA for the first quarter was negative $1.7 million compared to negative $400,000 in the same quarter a year ago. Reflecting the lower revenue and margins in the quarter.

Turning to the balance sheet. We ended the quarter with cash and cash equivalents of $1.6 million compared to $600,000 a year ago and $1.3 million in the prior quarter. Subsequent to quarter end, as Krishna highlighted earlier, we raised $9.2 million in proceeds net of fees and underwriters discount from the secondary offering of common stock. And we also raised $4.6 million in proceeds net of fees from a private placement of prefunded warrants and common stock warrants. Proceeds will primarily be used for working capital and to accelerate the redesign of our product portfolio in order to lower costs and improve gross profits. I will now turn the call back over to Krishna for his final remarks.

And then we will open it up for questions. Krishna? Thank you, Kevin.

Krishna Vanka: In closing, despite the challenges we faced during the quarter, I'm really proud of the progress we have made. This includes streamlining our cost structure, completing the capital raises that we need to support our business, regaining compliance with Nasdaq listing requirements, accelerating our product roadmaps, receiving key certifications with UL, and an important OEM, delivering SkyMS 2.0 with paying customers. With these actions and the new leadership in place, we are well-positioned to achieve profitable growth in the coming quarters. With that, let's open the call to questions. Operator?

Operator: Thank you. We will now begin the question and answer session. To join the question queue, you may press star then 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing any keys. We will pause for a moment as the callers join the queue. We have the first question on the line of Rob Brown from Lake Street Capital Markets. Please go ahead.

Rob Brown: Hey, Krishna. First question on the order trends sort of post-quarter. You talked about some recovery in orders, I guess, and you've announced some bigger orders. But how are the order trends coming through? And are you seeing that strength to continue into the end of the fourth quarter?

Krishna Vanka: Yeah. So while we are seeing some evidence of a rebound, you know, we highlighted $2.4 million in orders for the material handling industry as well as a significant airline order. We really are still seeing some headwinds, which we continue to attribute to recent tariffs as well as some impact in the quarter from the government shutdown. However, we are seeing more promising trends in the second half of the year. And in particular, seeing some strengthening in our third fiscal quarter, which is 2026.

Rob Brown: Great. And then in the ground support equipment market, you've had good progress there in terms of adding customers and expanding penetration in the customers. How is that market sort of looking from an investment standpoint on their part in terms of rolling out product and what sort of further penetration can you get there?

Krishna Vanka: Yeah. They continue to adopt the clean energy solutions in the GSE. So I'm not seeing any pushback from the overall goal and how the airlines are thinking about going lithium, so that trend is very supportive. It was really this short-term tariff that paused some of the progress. But as Kevin mentioned, early next year, calendar-wise, we'll start seeing more activity. As you noticed, we doubled the airlines we now serve. And some of the airlines are just getting started, like the first order, literally, in the case, as I mentioned on the call. So we look forward to them taking more and more orders as they start deploying lithium.

Rob Brown: Great. Thank you. I'll turn it over.

Operator: Thank you. Participants who wish to ask a question may press star 1 on their telephone keypad. As there are no further questions, I would like to hand the conference back over to Mr. Krishna Vanka for closing remarks.

Krishna Vanka: Sure. Thank you again for joining us on the call today. We look forward to reporting our continued progress throughout the quarter and on our next earnings call in mid-February. Operator, you may now disconnect.

Operator: Thank you. This brings us to a close to today's conference. You may now disconnect your lines. Thank you for participating, and have a pleasant day.

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. Parts of this article were created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.