Castellum (CTM) Q3 2024 earnings summary

Executive summary

• Focused on cybersecurity, IT, electronic warfare, and information operations for defense, federal, and commercial markets.

• Primary customers are U.S. government agencies, with services supporting national security and modernization.

• Sequential revenue growth in Q3 2024, reaching $11.6 million, up from $11.5 million in Q2 and $11.3 million in Q1.

• Gross profit increased to $5.0 million in Q3 2024, compared to $4.7 million in Q2 and $4.5 million in Q1.

• Leadership emphasizes a focus on new contract wins and strategic investments to drive future growth.

Financial highlights

• Revenue for Q3 2024 was $11.6M, down 1% year-over-year; nine-month revenue was $34.5M, up 1%.

• Net loss for Q3 2024 was $1.3M, a significant improvement from $9.2M loss in Q3 2023; nine-month net loss was $7.3M, down from $15.7M year-over-year.

• Gross profit for Q3 2024 was $5.0M, up 3% year-over-year; nine-month gross profit was $14.1M, up slightly.

• Operating expenses for Q3 2024 decreased 53% year-over-year, mainly due to the absence of a prior goodwill impairment.

• Cash at period end was $2.7M, with $470K unused borrowing capacity.

Outlook and guidance

• Backlog as of September 30, 2024, was $87.6M in funded, unfunded, and scheduled priced options; total backlog including unscheduled options was $116M.

• Approximately 38% of remaining performance obligations expected to be recognized as revenue in the next 12 months.

• Management expects continued pressure from federal budget constraints and competitive contract bidding.

• Strategic focus on securing new contracts in 2025 to accelerate growth.

• Leadership expects significant improvements in quarterly and long-term performance through targeted investments.