Nanalysis Scientific (NSCI) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue was CAD 10.6 million, down 5% year-over-year, with improved gross margins and positive adjusted EBITDA for the fourth consecutive quarter.

• Net loss improved to CAD 1.3 million, a CAD 1.2 million reduction from Q1 2024, driven by margin gains and cost reductions.

• Achieved positive operating cash flow and adjusted EBITDA despite macroeconomic headwinds, focusing on operational excellence and cost efficiency.

• Launched new 60 MHz Benchtop NMR product and advanced automation software, supporting innovation and future growth.

Financial highlights

• Gross margin on product sales rose to 66% from 47% year-over-year, reflecting higher average selling prices, manufacturing efficiencies, and cost reductions.

• Security services gross margin was 6%, down from 8% in Q1 2024, due to higher service costs and overtime.

• Adjusted EBITDA reached CAD 180,000, up from a loss of CAD 104,000 in Q1 2024, reflecting margin improvements and cost controls.

• Product sales declined 13% year-over-year to $3.7M; security services revenue rose 6% to $5.0M; flow-through inventory revenue fell 15%.

• Net loss narrowed to CAD 1.3 million, aided by higher margins and lower depreciation.

Outlook and guidance

• Management remains confident in the 2025 forecast, expecting to recover much of the Q1 revenue shortfall over the remainder of the year.

• Maintains a strong sales funnel into Q2 and the full year, but acknowledges potential headwinds from tariffs and economic uncertainty.

• Expects continued positive Adjusted EBITDA through 2025, with further margin improvements targeted in Security Services.

• Implementing risk mitigation by strengthening distributor relationships outside the U.S. and focusing on operational improvements.

• No anticipated impact from U.S. tariffs due to USMCA compliance.