Nanalysis Scientific (NSCI) Q3 2024 Q&A earnings summary

Executive summary

• Revenue for Q3 2024 reached CAD 10.6 million, a 50% year-over-year increase, driven by both product sales and security services, including a large medical imaging sale in a seasonally slow quarter.

• Positive Adjusted EBITDA of CAD 264K was posted for the second consecutive quarter, up from a negative CAD 1.4 million in Q3 2023.

• Net loss narrowed to CAD 1.6 million in Q3 2024 from CAD 6.3 million in Q3 2023, reflecting operational improvements and cost reductions.

• Growth was supported by both product and service segments, with all Canadian airport service accounts consolidated under the company in January 2024.

• Safe Capital issued a buy recommendation following the results.

Financial highlights

• Product sales increased 28% year-over-year to CAD 4.2 million; service revenue more than doubled to CAD 5.4 million.

• Gross margin on product sales improved to 52%, up from 41% in the prior year; service gross margin rose to 15% from negative 3%.

• Sequential revenue trend: Q4 2023 (CAD 9.8M), Q1 2024 (CAD 11.2M), Q2 2024 (CAD 11.5M), Q3 2024 (CAD 10.6M), with Q3 reflecting seasonal slowdown.

• Adjusted EBITDA improved by CAD 1.6 million year-over-year; net loss reduced by CAD 4.6 million.

• Total service revenue grew to CAD 6.3 million from CAD 3.1 million year-over-year.

Outlook and guidance

• Q4 is expected to be the strongest quarter due to seasonality and sales rollover from Q3, with management anticipating continued strong sales and further margin expansion into 2025.

• Focus on launching new products, developing software, and pursuing vertical market partnerships in Scientific Equipment.

• Security Services segment pursuing new customer opportunities and operational efficiencies.