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 from a CAD 2.5 million loss in Q1 2024, driven by margin gains and cost reductions.

• Operating cash flow was positive at CAD 2.7 million, supporting ongoing business objectives.

• Achieved positive Adjusted EBITDA and operating cash flow despite global macro headwinds, focusing on operational excellence and margin improvement.

Financial highlights

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

• 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.

• Product sales were CAD 3.7 million, down 33% sequentially and 13% year-over-year.

• Security services revenue was CAD 5.0 million, flat year-over-year.

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.

• Focused on margin improvement in Security Services and leveraging new sales channels and partnerships.

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

• Risk mitigation includes strengthening distributor relationships outside the U.S.