today? Thanks,
Rod
EPS of ($0.01) missed estimates of $0.013 and sales of $35.23M beat estimates of $34.21M. Sales grew 25.1% year-over-year, and its recurring revenue expanded 4.5%. Gross margins declined by 1.5% due to product mix and contract timing with US Navy, but this is expected to be a temporary pressure on margins. Adjusted EBITDA grew significantly reflecting operational leverage. It aims to achieve double-digit sales growth and a 20% EBITDA margin by FY2027, management reaffirmed full-year sales guidance of double-digit growth expected, and it is expecting a stronger second half despite short-term procurement delays. The stock has fallen on the day following the results, and we think most of this is due to the EPS miss, but much of this is expected to be a temporary concern due to contract timing and delays. We continue to like it, the growth is there, the secular theme is still intact, and we think margins should improve overall, although since its sales are dependent on contracts, it can be volatile quarter-to-quarter.