Coda Octopus Q3 Revenue Jumps 29 Percent

Coda Octopus Group(NASDAQ:CODA) reported earnings for the third quarter of fiscal 2025 on September 15, 2025, with revenue rising 29% year-over-year to $7.1 million and net income holding steady at $1.28 million ($0.11 per share). Core marine technology revenue grew 30.7% year-over-year, driven by hardware sales, while the recent acquisition of Precision Acoustics contributed 20.6% of consolidated revenue. Key product milestones, major defense engagements, and ongoing M&A strategy signal distinct long-term shifts in growth strategy and market focus.

Hardware sales accelerate in Coda Octopus marine technology

Precision Acoustics, acquired in October 2024, supplemented group revenue and operating income, while marine technology hardware sales surged 103.6% year-over-year to $2.7 million. Rental activity remained weak due to lower U.S. renewables funding, with hardware displacement offsetting some lost services revenue.

"Hardware sales increased by 103.6% and were $2.7 million compared to $1.3 million in the third quarter 2024. Hardware sales to Asia decreased by approximately 27.9% and were $1.1 million compared to $1.5 million in the third quarter 2024. This resulted in lower commission costs. Rental assets were significantly underutilized in the third quarter resulting in lower units of rentals and associated services. This also impacted on the gross profit margins of this business. This reflects the change in US policy on funding for renewables, which caused many projects to be shelved as reported byShell(NYSE:SHEL),Orsted(CPH:ORSTED), andBP(NYSE:BP)."
-- Annmarie Gayle, CEO

The shift from rentals to hardware sales increases near-term revenue but compresses gross margins, as seen in the marine technology business where gross margin decreased to 77% compared to 82.9% a year earlier, highlighting both resilience to shifting end-market conditions and evolving product mix risks.

Defense adoption increases for Coda Octopus key technologies

Coda Octopus launched the highly miniaturized Echoscope Pipe NanoGen sonar, achieving integration trials with U.S. and international navies, while also initiating DAVID untethered system deliveries to special forces. Q3 marked the first major European DAVID order and advanced live-mission naval use in both the U.S. and abroad.

"Firstly, the initial order of 16 complete DAVID untethered systems received in Q1 was successfully delivered in Q3. And is now ready for fleet evaluation by US special forces. These systems are the culmination of extensive field tests and direct feedback from operational divers, funded under the dust hardening program. The advancement in the specific deployments is the system's seamless integration with the US Navy's Mark 16 underwater breathing apparatus. This integration allows real-time life support data including system status and alerts to be projected directly into the DAVID augmented reality head-up display. The second key milestone achieved during the quarter was the completion of all remaining system component deliveries to the foreign navy sponsor of the dust hardening program. This marks a significant step forward in demonstrating international alignment and growing global interest in our DAVID technology. Together, these milestones validate the technological maturity of both the DAVID tethered and untethered systems and marks a critical inflection point in our trajectory."
-- Blair Cunningham, President of Technology and Director

Successful transition from development to operational defense deployment substantially increases the probability of recurring, multi-year defense program revenue, mitigating reliance on cyclical commercial and rental markets.

Precision Acoustics drives Coda Octopus revenue diversification

Precision Acoustics, integrated into the group in October 2024, contributed $1.5 million in revenue and $800,000 to gross profit, representing 20.6% of consolidated revenue and 18% of operating income. Precision Acoustics delivered a gross margin of 54.8%, lower than marine technology, and broadened addressable markets and end-user diversity.

"Now turning to highlights relating to the newly acquired business unit Precision Acoustics Limited. In the third quarter, this newly added business unit contributed 20.6% to our net revenue and 18% to our operating income. This business unit has added some diversification and resilience to our revenue structure. We continue to be very pleased with this acquisition which we made in October 2024 and reiterate that it positions the group to collectively respond to larger defense requirements particularly in the underwater acoustic space."
-- Annmarie Gayle, CEO

This acquisition buffers the group against volatility in individual business lines and unlocks access to increasingly large and technologically demanding defense opportunities in the underwater acoustic sector.

Looking Ahead

Management expects DAVID product line revenue to reach approximately $4 million in FY2025, up from $1.2 million in FY2024. Three additional NanoGen sonar trials with U.S. and international naval forces are scheduled in Q4. The company will continue to pursue M&A as a core strategic priority while awaiting outcomes of four pending U.S. Department of Defense program proposals for integrated DAVID and Echoscope technologies.

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