Loop Industries Narrows Q1 Loss

Key Points

• GAAP revenue of $0.25 million fell short of the $10.63 million analyst estimate, driven mostly by engineering fees rather than product sales.

• Net loss (GAAP) narrowed to $3.45 million, but EPS (GAAP) of ($0.07) missed the expected positive $0.11 mark.

• Cash operating expenses were cut by $2.2 million year over year, with liquidity at $9.75 million at quarter end.

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Loop Industries (NASDAQ:LOOP), an innovator in sustainable plastics recycling, released its results for the first quarter of fiscal 2026 on July 15, 2025. Loop reported revenue below analyst expectations, as actual revenue reached $0.25 million compared to the $0.72 million consensus forecast. EPS came in at ($0.07), in line with expectations. While the net loss narrowed from the prior-year period, the lack of substantial product revenue and reliance on engineering fees spotlighted ongoing commercialization challenges. Overall, the quarter showcased effective cost controls, but underscored the need for successful project execution and revenue growth to support Loop's ambitious expansion plans.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q4 2025 earnings report.

Company Overview and Recent Focus

Loop Industries is a company specializing in technology that recycles PET plastics and polyester fiber into virgin-quality resin. It uses proprietary depolymerization technology to break down plastic waste and remake it into high-quality material for new bottles and packaging. The goal is to offer an alternative to traditional recycling, enabling so-called “infinite recycling” without a loss of quality.

Recently, Loop Industries has concentrated on deploying its flagship Infinite Loop™ technology. Its main areas of focus include validating the technology at an industrial scale, expanding through global partnerships, and signing long-term contracts with customers in sectors like consumer goods and apparel. Success for Loop hinges on its ability to scale production, commercialize product offerings, and secure stable revenue streams both through sales and licensing.

Quarterly Developments and Performance Highlights

The quarter saw GAAP revenue rise sharply year over year, but absolute figures were small and fell far below analyst forecasts. The $0.25 million in reported revenue came mainly from engineering services for the Infinite Loop™ India project, rather than from selling resin products. Resin sales contributed only $8,000 (GAAP), showing that product commercialization remains limited. Compared to the prior-year quarter, these results represent a jump in GAAP revenue, but the heavy shortfall versus estimates highlights slow progress in bringing products to market.

The company continued to make progress with key projects. In India, Loop signed a $1.5 million engineering agreement with Ester Industries under their joint venture in June 2025, supporting project design for a facility in Gujarat. The total targeted investment for the India plant is $176 million. Negotiations for off-take agreements -- contracts with brands to purchase recycled resin -- continued, though none were finalized during the period. In Europe, Loop advanced plans with Reed Societe Generale Group to expand through modular construction, which aims to speed up deployment and reduce costs.

Cost control was a notable aspect of the quarter, with research and development and general administrative expenses for the three-month period ended May 31, 2025, both decreasing compared to the same period in 2024. Cash operating expenses, which include research and development and general administrative costs (after excluding stock-based compensation), fell by $2.2 million, reaching $2.6 million. Research and development spending (GAAP) decreased from $11,379,000 for the year ended February 28, 2024 to $6,864,000 for the year ended February 28, 2025, and general administrative expenses (GAAP) fell 43.4% from $2,911,000 to $1,649,000 for the three-month period ended May 31, 2025 compared to the same period in 2024.

On the balance sheet, Loop ended the quarter with $9.75 million in cash and cash equivalents, up from $5.29 million a year ago but down from $12.97 million (GAAP, as at Q4 FY2025) at the end of February. Net cash used in operations (GAAP) was $3.08 million, and the company’s equity position (GAAP) turned negative at minus $2.72 million, down from positive $0.37 million at the end of February. This reflects ongoing losses and continued dependence on outside financing to support project investments and operating costs, and product revenues remain negligible.

Looking Ahead

The company’s focus in the near term is on finalizing customer agreements and securing funding for its India project, including site selection and debt syndication. Loop expects construction to begin on the India facility by the end of calendar 2025, with ongoing talks for supply contracts with apparel and consumer brands.

For investors and stakeholders, the critical areas to watch are the company’s ability to secure off-take contracts, demonstrate scaled industrial production, and finalize project financing. Loop Industries continues to face execution and commercialization risks alongside elevated cash burn and negative equity. As no recurring product revenue has yet materialized, successful project execution and customer uptake will be central to determining its financial and operational trajectory. LOOP does not currently pay a dividend.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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