GEOS 10-Q
Geospace Technologies Corp (GEOS)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
for the Quarterly Period Ended
for the transition period from ____ to ____
Commission file number
GEOSPACE TECHNOLOGIES CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
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| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
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| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| | | The |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | | ☒ | ||||
| Non-accelerated filer | ☐ | Smaller reporting company | | ||||
| Emerging growth company | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of July 31, 2025 the registrant had
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| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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| Item 3. Quantitative and Qualitative Disclosures about Market Risk |
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| Item 1A. Risk Factors | 23 | |
PART I - FINANCIAL INFORMATION
GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands except share amounts)
(unaudited)
| June 30, 2025 | September 30, 2024 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Short-term investments | ||||||||
| Trade accounts and financing receivables, net | ||||||||
| Inventories, net | ||||||||
| Assets held for sale | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Non-current inventories, net | ||||||||
| Rental equipment, net | ||||||||
| Property, plant and equipment, net | ||||||||
| Non-current trade accounts and financing receivables | ||||||||
| Operating right-of-use assets | ||||||||
| Goodwill | ||||||||
| Other intangible assets, net | ||||||||
| Other non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable trade | $ | $ | ||||||
| Operating lease liabilities | ||||||||
| Other current liabilities | ||||||||
| Total current liabilities | ||||||||
| Non-current operating lease liabilities | ||||||||
| Deferred tax liabilities, net | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 12) | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, shares authorized, shares issued and outstanding | ||||||||
| Common Stock, $ par value, shares authorized; and shares issued, respectively; and and shares outstanding, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Retained earnings | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Treasury stock, at cost, and shares, respectively | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of the consolidated financial statements.
GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
(unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| June 30, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | |||||||||||||
| Revenue: | ||||||||||||||||
| Products | $ | $ | $ | $ | ||||||||||||
| Rental | ||||||||||||||||
| Total revenue | ||||||||||||||||
| Cost of revenue: | ||||||||||||||||
| Products | ||||||||||||||||
| Rental | ||||||||||||||||
| Total cost of revenue | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative | ||||||||||||||||
| Research and development | ||||||||||||||||
| Provision for (recovery of) credit losses | ( | ) | ( | ) | ||||||||||||
| Total operating expenses | ||||||||||||||||
| Gain on disposal of property | ||||||||||||||||
| Income (loss) from operations | ( | ) | ( | ) | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest income | ||||||||||||||||
| Foreign currency transaction gains (losses), net | ( | ) | ( | ) | ( | ) | ||||||||||
| Other, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total other income, net | ||||||||||||||||
| Income (loss) before income taxes | ( | ) | ( | ) | ||||||||||||
| Income tax expense (benefit) | ( | ) | ||||||||||||||
| Net income (loss) | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||
| Income (loss) per common share: | ||||||||||||||||
| Basic | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||
| Diluted | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||
| Weighted average common shares outstanding: | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
(unaudited)
| Three Months Ended |
Nine Months Ended |
|||||||||||||||
| June 30, 2025 |
June 30, 2024 |
June 30, 2025 |
June 30, 2024 |
|||||||||||||
| Net income (loss) |
$ | $ | ( |
) | $ | ( |
) | $ | ||||||||
| Other comprehensive income (loss): |
||||||||||||||||
| Change in unrealized losses on available-for-sale securities, net of tax |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Foreign currency translation adjustments |
( |
) | ||||||||||||||
| Total other comprehensive income (loss) |
( |
) | ||||||||||||||
| Total comprehensive income (loss) |
$ | $ | ( |
) | $ | ( |
) | $ | ||||||||
The accompanying notes are an integral part of the consolidated financial statements.
GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE nine months ended June 30, 2025 and 2024
(in thousands, except share amounts)
(unaudited)
| Common Stock |
Accumulated |
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| Additional |
Other |
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| Shares |
Paid-In |
Retained |
Comprehensive |
Treasury |
||||||||||||||||||||||||
| Outstanding |
Amount |
Capital |
Earnings |
Loss |
Stock |
Total |
||||||||||||||||||||||
| Balance at October 1, 2024 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||
| Net income |
— | |||||||||||||||||||||||||||
| Other comprehensive loss |
— | ( |
) | ( |
) | |||||||||||||||||||||||
| Issuance of common stock pursuant to the vesting of restricted stock units |
( |
) | ||||||||||||||||||||||||||
| Purchase of treasury stock |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
| Stock-based compensation |
— | |||||||||||||||||||||||||||
| Balance at December 31, 2024 |
( |
) | ( |
) | ||||||||||||||||||||||||
| Net loss |
— | ( |
) | ( |
) | |||||||||||||||||||||||
| Other comprehensive income |
— | |||||||||||||||||||||||||||
| Issuance of common stock pursuant to the vesting of restricted stock units |
( |
) | ||||||||||||||||||||||||||
| Purchase of treasury stock |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
| Stock-based compensation |
— | |||||||||||||||||||||||||||
| Balance at March 31, 2025 |
( |
) | ( |
) | ||||||||||||||||||||||||
| Net income |
— | |||||||||||||||||||||||||||
| Other comprehensive income |
— | |||||||||||||||||||||||||||
| Issuance of common stock pursuant to the vesting of restricted stock units |
||||||||||||||||||||||||||||
| Stock-based compensation |
— | |||||||||||||||||||||||||||
| Balance at June 30, 2025 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||
| Balance at October 1, 2023 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||
| Net income |
— | |||||||||||||||||||||||||||
| Other comprehensive income |
— | |||||||||||||||||||||||||||
| Issuance of common stock pursuant to the vesting of restricted stock units |
( |
) | ||||||||||||||||||||||||||
| Stock-based compensation |
— | |||||||||||||||||||||||||||
| Balance at December 31, 2023 |
( |
) | ( |
) | ||||||||||||||||||||||||
| Net loss |
— | ( |
) | ( |
) | |||||||||||||||||||||||
| Other comprehensive loss |
— | ( |
) | ( |
) | |||||||||||||||||||||||
| Issuance of common stock pursuant to the vesting of restricted stock units |
||||||||||||||||||||||||||||
| Stock-based compensation |
— | |||||||||||||||||||||||||||
| Balance at March 31, 2024 |
( |
) | ( |
) | ||||||||||||||||||||||||
| Net loss |
— | ( |
) | ( |
) | |||||||||||||||||||||||
| Other comprehensive income |
— | |||||||||||||||||||||||||||
| Purchase of treasury stock |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
| Stock-based compensation |
— | |||||||||||||||||||||||||||
| Balance at June 30, 2024 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| Nine Months Ended | ||||||||
| June 30, 2025 | June 30, 2024 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income (loss) | $ | ( | ) | $ | ||||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
| Deferred income tax expense (benefit) | ( | ) | ||||||
| Rental equipment depreciation | ||||||||
| Property, plant and equipment depreciation | ||||||||
| Amortization of intangible assets | ||||||||
| Accretion of discounts on short-term investments | ( | ) | ( | ) | ||||
| Stock-based compensation expense | ||||||||
| Provision for (recovery of) credit losses | ( | ) | ||||||
| Inventory obsolescence expense | ||||||||
| Gross profit from sale of rental equipment | ( | ) | ( | ) | ||||
| (Gain) loss on disposal of property, plant and equipment | ( | ) | ||||||
| Realized gain on investments | ( | ) | ||||||
| Effects of changes in operating assets and liabilities: | ||||||||
| Trade accounts and financing receivables | ||||||||
| Inventories | ( | ) | ( | ) | ||||
| Other assets | ( | ) | ( | ) | ||||
| Accounts payable trade | ( | ) | ( | ) | ||||
| Other liabilities | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of property, plant and equipment | ( | ) | ( | ) | ||||
| Proceeds from the sale of property, plant and equipment | ||||||||
| Investment in rental equipment | ( | ) | ( | ) | ||||
| Proceeds from the sale of rental equipment | ||||||||
| Purchases of short-term investments | ( | ) | ||||||
| Proceeds from the sale of short-term investments | ||||||||
| Payments received on note receivable related to sale of subsidiary | ||||||||
| Net cash provided by investing activities | ||||||||
| Cash flows from financing activities: | ||||||||
| Purchase of treasury stock | ( | ) | ( | ) | ||||
| Net cash used in financing activities | ( | ) | ( | ) | ||||
| Effect of exchange rate changes on cash | ( | ) | ||||||
| Increase (decrease) in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents, beginning of period | ||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||
| SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||
| Cash paid for income taxes | $ | $ | ||||||
| Financing receivable related to sale of rental equipment | ||||||||
| Inventory transferred to rental equipment | ||||||||
The accompanying notes are an integral part of the consolidated financial statements.
GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
1. Significant Accounting Policies
Basis of Presentation
The consolidated balance sheet of Geospace Technologies Corporation and its subsidiaries (the “Company”) at September 30, 2024, was derived from the Company’s audited consolidated financial statements at that date. The consolidated balance sheet at June 30, 2025 and the consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for the three and nine months ended June 30, 2025 and 2024 were prepared by the Company without audit. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary to present fairly the consolidated financial position, results of operations and cash flows were made. All significant intercompany balances and transactions have been eliminated. The results of operations for the three and nine months ended June 30, 2025, are not necessarily indicative of the operating results for a full year or of future operations.
Certain information and footnote disclosures normally included in financial statements presented in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") were omitted pursuant to the rules of the Securities and Exchange Commission. The accompanying consolidated financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended September 30, 2024.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires the use of estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company considers many factors in selecting appropriate operational and financial accounting policies and controls, and in developing the estimates and assumptions that are used in the preparation of these financial statements. The Company continually evaluates its estimates, including those related to revenue recognition, credit loss, collectability of rental revenue, inventory obsolescence reserves, self-insurance reserves, product warranty reserves, useful lives of long-lived assets, impairment of long-lived assets, impairment of goodwill and other intangible assets and deferred income tax assets. The Company bases its estimates on historical experience and various other factors that are believed to be reasonable under the circumstances. While management believes current estimates are reasonable and appropriate, actual results may differ from these estimates under different conditions or assumptions.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with an original or remaining maturity at the time of purchase of three months or less to be cash equivalents. At June 30, 2025 and September 30, 2024, cash and cash equivalents included $
Concentration of Credit Risk
The Company sells products to customers throughout the United States and various foreign countries. The Company’s normal credit terms for trade receivables are
The Company had trade accounts and financing receivables from customers of $
Impairment of Long-lived Assets
The Company's long-lived assets are reviewed for impairment whenever an event or circumstance indicates that the carrying amount of an asset or group of assets may not be recoverable. The impairment review, if necessary, includes a comparison of the expected future cash flows (undiscounted and without interest charges) to be generated by an asset group with the associated carrying value of the related assets. If the carrying value of the asset group exceeds the expected future cash flows, an impairment loss is recognized to the extent that the carrying value of the asset group exceeds its fair value. During the quarter ended June 30, 2025, no events or changes in circumstances were identified indicating the carrying value of any of the Company's asset groups may not be recoverable.
Research and Development
We incur significant future research and development expenditures. These efforts are primarily aimed at the development of additional products for each of our business segments. The majority of our product research and development costs relates to the Company's engineers. The Company's engineering staff have been key to our past success. Research and development expense includes personnel costs of the Company's engineers, project expenditures, on-going product maintenance and improvements to our existing products, as well as general and administrative expenses associated with the engineering department. Research and development expense for the three and nine months ended June 30, 2025 was $
Recently Issued Accounting Pronouncements
In November 2024, the Financial Accounting Standards Board ("FASB"), as further amended in January 2025, issued guidance requiring enhanced disclosures in financial statements by requiring detailed disclosures of specific expenses like inventory purchases, employee compensation, depreciation, and intangible asset amortization. The guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the provisions of this guidance and the impact on its consolidation financial statements.
In November 2023, the FASB issued guidance which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The guidance is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The guidance shall be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the provisions of this guidance and the impact on its consolidated financial statements.
In December 2023, the FASB issued guidance improvements on income tax disclosure which will require the Company to disclose specified additional information in its income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. The guidance will also require the Company to disaggregate its income taxes paid disclosure by federal, state and foreign taxes, with further disaggregation required for significant individual jurisdictions. The Company will adopt this guidance in its fourth quarter of fiscal year 2026. The guidance allows for adoption using either a prospective or retrospective transition method. The adoption of this guidance is not expected to have any material impact on its consolidation financial statements.
All other new accounting pronouncements that have been issued, but not yet effective, are currently being evaluated and at this time are not expected to have a material impact on the Company's financial position or results of operations.
2. Revenue Recognition
In accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), the Company recognizes revenue when performance of contractual obligations are satisfied, generally when control of the promised goods or services is transferred to its customers, in an amount that reflects the consideration it expects to be entitled to in exchange for those goods or services.
The Company primarily derives product revenue from the sale of its manufactured products. Revenue from these product sales, including the sale of used rental equipment, is recognized when obligations under the terms of a contract are satisfied, control is transferred and collectability of the sales price is probable. The Company records deferred revenue when customer funds are received prior to shipment or delivery or performance has not yet occurred. The Company assesses collectability during the contract assessment phase. In situations where collectability of the sales price is not probable, the Company recognizes revenue when it determines that collectability is probable or when non-refundable cash is received from its customers and there is not a significant right of return. Transfer of control generally occurs with shipment or delivery, depending on the terms of the underlying contract. The Company’s products are generally sold without any customer acceptance provisions, and the Company’s standard terms of sale do not allow customers to return products for credit.
Revenue from engineering services is recognized as services are rendered over the duration of a project, or as billed on a per hour basis. Field service revenue is recognized when services are rendered and is generally priced on a per day rate.
As permissible under ASC 606, sales taxes and transaction-based taxes are excluded from revenue. The Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected duration of one year or less. Additionally, the Company expenses costs incurred to obtain contracts when incurred because the amortization period would have been one year or less. These costs are recorded in selling, general and administrative expenses. The Company has elected to treat shipping and handling activities in a sales transaction after the customer obtains control of the goods as a fulfillment cost and not as a promised service. Accordingly, fulfillment costs related to the shipping and handling of goods are accrued at the time of shipment. Amounts billed to a customer in a sales transaction related to reimbursable shipping and handling costs are included in revenue and the associated costs incurred by the Company for reimbursable shipping and handling expenses are reported in cost of revenue.
The Company also generates revenue from short-term rentals under operating leases of its manufactured products. Rentals of the Company’s equipment generally range from daily rentals to minimum rental periods of up to one year. Rental revenue is recognized within the scope of ASC 842, Leases ("ASC 842"). The Company regularly evaluates the collectability of its lease receivables on a lease-by-lease basis. The evaluation primarily consists of reviewing past due account balances and other factors such as the credit quality of the customer, historical trends of the customer and current economic conditions. In accordance with ASC 842, rental revenue is recognized as earned over the rental period if collectability of the rent is reasonably assured. When collectability of amounts are no longer probable the Company records a direct write-off of the rent receivable to rental revenue and limits future rental revenue recognition to cash received. During the second quarter of fiscal year 2025, the Company determined the collectability of receivables from a rental customer was less than probable. As a result of this determination, the rent receivable balance due from this customer of $
At June 30, 2025 and September 30, 2024, the Company had deferred contract liabilities. At June 30, 2025 and September 30, 2024, the Company had deferred contract costs of $
For the three and nine months ended June 30, 2025 revenue of $
At June 30, 2025, the aggregate amount of transaction price allocation to unsatisfied performance obligations on contracts with a duration in excess of one year was $
| Three Months Ended | Nine Months Ended | |||||||||||||||
| June 30, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | |||||||||||||
| Smart Water | $ | $ | $ | $ | ||||||||||||
| Energy Solutions | ||||||||||||||||
| Intelligent Industrial | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
See Note 13 for more information on the Company’s operating business segments.
For each of the geographic areas where the Company operates, the following table presents revenue (in thousands) from the sale of products and services under contracts with customers. The table excludes all revenue earned from rental contracts:
| Three Months Ended | Nine Months Ended | |||||||||||||||
| June 30, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | |||||||||||||
| Asia (including Russian Federation) | $ | $ | $ | $ | ||||||||||||
| Canada | ||||||||||||||||
| Europe | ||||||||||||||||
| Mexico | ||||||||||||||||
| United States | ||||||||||||||||
| Other | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
Revenue is attributable to countries based on the ultimate destination of the product sold, if known. If the ultimate destination is not known, revenue is attributable to countries based on the geographic location of the initial shipment.
3. Short-term Investments
The Company classifies its short-term investments as available-for-sale securities. Available-for-sale securities are carried at fair market value with net unrealized gains and losses reported as a component of accumulated other comprehensive income (loss) in stockholders’ equity.
The Company’s short-term investments were composed of the following (in thousands):
| As of June 30, 2025 | ||||||||||||||||
| Amortized Cost | Unrealized Gains | Unrealized Losses | Estimated Fair Value | |||||||||||||
| Short-term investments: | ||||||||||||||||
| Corporate bonds | $ | $ | $ | ( | ) | $ | ||||||||||
| As of September 30, 2024 | ||||||||||||||||
| Amortized Cost | Unrealized Gains | Unrealized Losses | Estimated Fair Value | |||||||||||||
| Short-term investments: | ||||||||||||||||
| Corporate bonds | $ | $ | $ | $ | ||||||||||||
| U.S. treasury securities and securities of U.S. government-sponsored agency | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
The Company had securities in a material unrealized loss position at June 30, 2025 and September 30, 2024 and does not believe the unrealized losses associated with these securities represent credit losses based on the evaluation of evidence, which includes an assessment of whether it is more likely than not it will be required to sell or intend to sell the investment before recovery of the investments amortized cost basis. During the three and nine months ended June 30, 2025, a loss of ($
4. Fair Value of Financial Instruments
The Company’s financial instruments generally include cash and cash equivalents, short-term investments, trade accounts and financing receivables and accounts payable. Due to the short-term maturities of cash and cash equivalents, trade accounts receivable and accounts payable, the carrying amounts of these financial instruments are deemed to approximate their fair value on the respective balance sheet dates. The Company measures its short-term investments at fair value on a recurring basis.
The following tables present the fair value of the Company’s short-term investments, note receivable on sale of subsidiary and Emerging Markets asset group intangible assets by valuation hierarchy and input (in thousands):
| As of June 30, 2025 |
||||||||||||||||
| (Level 1) |
(Level 2) |
(Level 3) |
Totals |
|||||||||||||
| Short-term investments: |
||||||||||||||||
| Corporate bonds |
$ | $ | $ | $ | ||||||||||||
| As of September 30, 2024 |
||||||||||||||||
| (Level 1) |
(Level 2) |
(Level 3) |
Totals |
|||||||||||||
| Recurring: |
||||||||||||||||
| Short-term investments: |
||||||||||||||||
| Corporate bonds |
$ | $ | $ | $ | ||||||||||||
| U.S. treasury securities and securities of U.S. government-sponsored agency |
||||||||||||||||
| Total |
$ | $ | $ | $ | ||||||||||||
| Nonrecurring: |
||||||||||||||||
| Note receivable on sale of subsidiary |
$ | $ | $ | $ | ||||||||||||
Assets and liabilities Measured on a Nonrecurring basis
In August 2024, the Company performed a fair value analysis on its $
At September 30, 2024, the Company performed a recoverability assessment on its long-lived assets of its Emerging Markets asset group in which its carrying value was compared to the estimated undiscounted cash flows over the remaining useful life of the asset group's primarily asset, its developed technology. Accordingly, a fair value analysis was performed. Based on the assessment, the Company determined the fair value of the asset was less than its carrying value and recorded an impairment charge of $
5. Trade Accounts and Financing Receivables
Trade accounts receivable, net, reflected in the following table (in thousands):
| June 30, 2025 |
September 30, 2024 |
|||||||
| Trade accounts receivable |
$ | $ | ||||||
| Allowance for credit losses |
( |
) | ( |
) | ||||
| Total |
||||||||
| Less current portion |
( |
) | ( |
) | ||||
| Non-current trade accounts receivable |
$ | $ | ||||||
The Company determines the allowance for credit losses through a review of several factors, including historical collection experience, customer credit worthiness, current aging of customer accounts and current financial conditions of its customers. Trade accounts receivable balances are charged off against the allowance whenever it is probable that the receivable balance will not be recoverable.
Allowance for credit losses related to trade accounts receivable are reflected in the following table (in thousands):
| Three Months Ended |
Nine Months Ended |
|||||||||||||||
| June 30, 2025 |
June 30, 2024 |
June 30, 2025 |
June 30, 2024 |
|||||||||||||
| Allowance for credit losses: |
||||||||||||||||
| Beginning of period |
$ | $ | $ | $ | ||||||||||||
| Provision for credit losses |
||||||||||||||||
| Recoveries |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Charge-offs, net |
( |
) | ( |
) | ||||||||||||
| Currency translation |
||||||||||||||||
| End of period |
$ | $ | $ | $ | ||||||||||||
Financing receivables, net, are reflected in the following table (in thousands):
| June 30, 2025 |
September 30, 2024 |
|||||||
| Promissory notes |
$ | $ | ||||||
| Sales-type lease |
||||||||
| Total financing receivables |
||||||||
| Discount to fair value and unearned income |
( |
) | ( |
) | ||||
| Total financing receivables, net |
||||||||
| Less current portion |
( |
) | ( |
) | ||||
| Non-current financing receivables |
$ | $ | ||||||
In November 2024, the Company entered into a sales-type lease with a customer on wireless seismic equipment from its rental fleet. The lease matures in October 2025. During the three and nine months ended June 30, 2025 interest income of $
In August 2024, the Company entered into a $
In August 2024, the Company entered into a $
Credit quality indicators used for the financing receivables consisted of historical collection experience, internal credit risk grades and collateral. The Company determined the allowance for credit losses through a review of several factors, including historical collection experience, customer credit worthiness, current aging of customer accounts and current financial conditions of its customers.
6. Inventories
Inventories consist of the following (in thousands):
| June 30, 2025 | September 30, 2024 | |||||||
| Finished goods | $ | $ | ||||||
| Work in process | ||||||||
| Raw materials | ||||||||
| Obsolescence reserve (net realizable value adjustment) | ( | ) | ( | ) | ||||
| Total | ||||||||
| Less current portion | ||||||||
| Non-current portion | $ | $ | ||||||
Inventory obsolescence expense for the three and nine months ended June 30, 2025, was $
7. Property, Plant and Equipment
In June 2025, the Company sold its property located at 4318 Northfield Lane in Houston, Texas. The
| June 30, 2025 |
September 30, 2024 |
|||||||
| Land and land improvements |
$ | $ | ||||||
| Building and building improvements |
||||||||
| Machinery and equipment |
||||||||
| Furniture and fixtures |
||||||||
| Tools and molds |
||||||||
| Construction in progress |
||||||||
| Transportation equipment |
||||||||
| Accumulated depreciation and impairment |
( |
) | ( |
) | ||||
| $ | $ | |||||||
Property, plant and equipment depreciation expense for the three and nine months ended June 30, 2025 was $
8. Rental Equipment
The Company leases equipment to customers which generally range from daily rentals to minimum rental periods of up to year. All of the Company’s current leasing arrangements for which the Company acts as lessor, are classified as operating leases, except for one sales-type lease. The majority of the Company’s rental revenue is generated from its marine-based wireless seismic data acquisition systems.
The Company regularly evaluates the collectability of its lease receivables on a lease-by-lease basis. The evaluation primarily consists of reviewing past due account balances and other factors such as the credit quality of the customer, historical trends of the customer and current economic conditions. The Company suspends revenue recognition when the collectability of amounts due are no longer probable and concurrently records a direct write-off of the lease receivable to rental revenue and limits future rental revenue recognition to cash received. Also see Note 2.
As of June 30, 2025, the Company’s trade accounts receivable included lease receivables of $
Future minimum lease obligations due from the Company’s leasing customers on operating leases executed as of June 30, 2025, were $
Rental equipment consisted of the following (in thousands):
| June 30, 2025 |
September 30, 2024 |
|||||||
| Rental equipment, primarily wireless recording equipment |
$ | $ | ||||||
| Accumulated depreciation |
( |
) | ( |
) | ||||
| $ | $ | |||||||
Rental equipment depreciation expense for the three and nine months ended June 30, 2025 was $
9. Long-Term Debt
On July 26, 2023, the Company entered into a credit agreement (the “Agreement”) with Woodforest National Bank, as sole lender. The Agreement refinanced the Company's credit agreement dated May 6, 2022, with Amerisource Funding, Inc., as administrative agent and as a lender, and Woodforest National Bank, as a lender. The Agreement provides a revolving credit facility with a maximum availability of $
10. Stock-Based Compensation
During the nine months ended June 30, 2025, the Company issued
For the three and nine months ended June 30, 2025, stock-based compensation expense was $
11. Earnings (Loss) Per Common Share
The following table summarizes the calculation of net earnings (loss) and weighted average common shares and common equivalent shares outstanding for purposes of the computation of earnings (loss) per share (in thousands, except share and per share data):
| Three Months Ended | Nine Months Ended | |||||||||||||||
| June 30, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | |||||||||||||
| Net income (loss) | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||
| Weighted average number of common share equivalents: | ||||||||||||||||
| Common shares used in basic earnings (loss) per share | ||||||||||||||||
| Common share equivalents outstanding related to RSUs | ||||||||||||||||
| Total weighted average common shares and common share equivalents used in diluted earnings (loss) per share | ||||||||||||||||
| Earnings (loss) per share: | ||||||||||||||||
| Basic | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||
| Diluted | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||
For the calculation of diluted earnings (loss) per share for each of the three and nine months ended June 30, 2025, there were
12. Commitments and Contingencies
Contingent Compensation Costs
In July 2021, the Company acquired Aquana, LLC (“Aquana”). Pursuant to the merger agreement with Aquana, as amended ("the Merger Agreement"), the Company is subject to additional contingent cash payments to the former members of Aquana over a -year earn-out period. The contingent payments, if any, will be derived from certain eligible revenue generated during the earn-out period from products and services sold by Aquana. There is no maximum limit to the contingent cash payments that could be made. The Merger Agreement requires the continued employment of a certain key employee and former member of Aquana for the first years of the -year earn-out period in order for any of Aquana’s former members to be eligible for any earn-out payments. Due to the continued employment requirement,
Legal Proceedings
The Company is involved in various pending legal actions in the ordinary course of its business. Management is unable to predict the ultimate outcome of these actions, because of the inherent uncertainty of such actions. However, management believes that the most probable, ultimate resolution of current pending matters will not have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.
13. Segment Information
Effective October 1, 2024, the Company changed the composition of its operating business segments and changed its methodology for allocating manufacturing costs including overhead and other costs of revenue to the segments.
The Company's business segments are now comprised of: Smart Water, Energy Solutions and Intelligent Industrial. The Smart Water segment emphasizes the Company’s targeted approach in the water management industry. This business segment contains the Hydroconn® smart water connectivity offerings and the Company's Aquana products. The Energy Solutions segment encompass' the Company’s traditional business in oil and gas land and marine exploration products, reservoir monitoring solutions, and will additionally incorporate emerging energy solutions and microseismic monitoring. This segment will include energy-related business from Quantum’s SADAR® products and associated analytics. The Intelligent Industrial segment includes seismic sensor products used for vibration monitoring geotechnical applications such as mine safety applications and earthquake detection, designs seismic products targeted at the border and perimeter security markets, imaging products, as well as providing contract manufacturing services. The change in methodology for allocating manufacturing costs affected each business segment's operating income (loss) but had no effect on consolidated operating income (loss).
The following table summarizes the Company’s segment information (in thousands). Segment information for the three and nine months ended June 30, 2024 has been recast for comparability.
| Three Months Ended |
Nine Months Ended |
|||||||||||||||
| June 30, 2025 |
June 30, 2024 |
June 30, 2025 |
June 30, 2024 |
|||||||||||||
| Revenue: |
||||||||||||||||
| Smart Water |
$ | $ | $ | $ | ||||||||||||
| Energy Solutions |
||||||||||||||||
| Intelligent Industrial |
||||||||||||||||
| Corporate |
||||||||||||||||
| Total |
$ | $ | $ | $ | ||||||||||||
| Income (loss) from operations: |
||||||||||||||||
| Smart Water |
$ | $ | $ | $ | ||||||||||||
| Energy Solutions |
( |
) | ( |
) | ||||||||||||
| Intelligent Industrial |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Corporate |
( |
) | ( |
) | ( |
) | ||||||||||
| Total |
$ | $ | ( |
) | $ | ( |
) | $ | ||||||||
The Company's manufacturing operations for its operating business segments are combined. Therefore, the Company does not segregate and report separate balance sheet accounts for each of its segments and therefore, no total asset information is presented in the table above.
14. Income Taxes
Consolidated income tax expense for each of the three and nine months ended June 30, 2025, was $
15. Subsequent Event
On August 1, 2025, the Company acquired all the outstanding common stock of Geovox Security, Inc. (“Geovox”). Geovox, which can detect human traffic in vehicles with it Heartbeat Detector, will operate in the Company's Intelligent Industrial segment.
T The acquisition purchase price for Geovox consists of (i) cash of $
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following is management’s discussion and analysis of the major elements of our consolidated financial statements. You should read this discussion and analysis together with our consolidated financial statements, including the accompanying notes, and other detailed information appearing elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended September 30, 2024.
Forward-Looking Statements
This Quarterly Report on Form 10-Q and the documents incorporated by reference herein contain “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements can be identified by terminology such as “may”, “will”, “should”, “could”, “intend”, “expect”, “plan”, “budget”, “forecast”, “anticipate”, “believe”, “estimate”, “predict”, “potential”, “continue”, “evaluating” or similar words. Statements that contain these words should be read carefully because they discuss our future expectations, contain projections of our future results of operations or of our financial position or state other forward-looking information. Examples of forward-looking statements include, among others, statements that we make regarding our expected operating results, the timing, adoption, results and success of our rollout of our Aquana smart water valves and cloud-based control platform, future demand for our Quantum security solutions, the adoption and sale of our products in various geographic regions, potential tenders for permanent reservoir monitoring systems, future demand for OBX rental equipment, sales or rentals for our Mariner™ or Mariner Deep® nodes, the adoption of Quantum's SADAR® product monitoring of subsurface reservoirs, the completion of new orders for channels of our Pioneer™ system, the fulfillment of customer payment obligations, the impact of the current armed conflict between Russia and Ukraine, our ability to manage changes and the continued health or availability of management personnel, volatility and direction of oil prices, anticipated levels of capital expenditures and the sources of funding therefor, and our strategy for growth, product development, market position, financial results and the provision of accounting reserves. These forward-looking statements reflect our current judgment about future events and trends based on the information currently available to us. However, there will likely be events in the future that we are not able to predict or control. The factors listed under the caption “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2024, as well as other cautionary language in such Annual Report and this Quarterly Report on Form 10-Q, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. Such examples include, but are not limited to, the failure of the Quantum and OptoSeis® or Aquana technology transactions to yield positive operating results, decreases in commodity price levels, the failure of our products to achieve market acceptance (despite substantial investment by us), our sensitivity to short term backlog, delayed or cancelled customer orders, product obsolescence resulting from poor industry conditions or new technologies, credit losses associated with customer accounts, inability to collect on financing receivables, lack of further orders for our OBX rental equipment, failure of our Quantum products to be adopted by the border and security perimeter market or a decrease in such market due to governmental changes, and infringement or failure to protect intellectual property. The occurrence of the events described in these risk factors and elsewhere in this Quarterly Report on Form 10-Q could have a material adverse effect on our business, results of operations and financial position, and actual events and results of operations may vary materially from our current expectations. We assume no obligation to revise or update any forward-looking statement, whether written or oral, that we may make from time to time, whether as a result of new information, future developments or otherwise.
Available Information
We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission (“SEC”). Our SEC filings are available to the public over the internet at the SEC’s website at www.sec.gov. Our SEC filings are also available to the public on our website at www.geospace.com. From time to time, we may post investor presentations on our website under the “Investor Relations” tab. Please note that information contained on our website, whether currently posted or posted in the future, is not a part of this Quarterly Report on Form 10-Q or the documents incorporated by reference in this Quarterly Report on Form 10-Q.
Overview
Unless otherwise specified, the discussion in this Quarterly Report on Form 10-Q refers to Geospace Technologies Corporation and its subsidiaries. We design and manufacture sophisticated technology solutions for applications in energy exploration, smart water management as well as industrial and Internet of Things. Our seismic equipment and services are marketed to the energy exploration industry and used to locate, characterize and monitor hydrocarbon producing reservoirs. We also market our seismic products to other industries for vibration monitoring, border and perimeter security and various geotechnical applications. We design and manufacture other products of a non-seismic nature, including water meter connector cables, imaging equipment, remote shutoff water valves and Internet of Things ("IoT") platform. Additionally, the company provides specialized contract manufacturing services. In recent years, the revenue contribution from our non-energy related products has grown to represent nearly half of our total revenue. Our business diversification strategy has centered largely on translating expertise in ruggedized engineering and technology manufacturing into expanded customer markets.
Effective October 1, 2024, the Company changed the composition of its three operating business segments and changed its methodology for allocating manufacturing costs including overhead and other costs of revenue to the segments. The business segments are now comprised of: Smart Water, Energy Solutions and Intelligent Industrial. The change methodology for allocating manufacturing costs affected each segment's operating income (loss) but had no effect on consolidated operating income (loss).
Products and Product Development
Smart Water
Our Smart Water business segment comprises our market dominant water meter connector cable series known as Hydroconn®, and our Aquana branded remote shut-off water valves and cloud-based IoT Platform. In municipal and utility applications, our smart water products support the global smart meter connectivity water utility market. These products provide our customers with highly reliable automated meter-reading and automated meter infrastructure with our robust water-proof connectors. Our highly-ruggedized outdoor valves include the AquaFlex™ and AquaFlow™ remote shut off valves.
In commercial applications for multi-family and real estate property management, our remote sensing water valves offer asset managers the ability to gather accurate usage information, implement occupancy-based billing and submetering as well as guard against costly leak and burst events. The AquaSense remote disconnect valve and AquaControl smart water IoT platform allow customers that manage multi-family and commercial properties to monitor their properties for leak and burst events, with real-time notifications, complimented with our remote-shut off to stop water damage. These products also allow water utilities to control and monitor water use remotely, discontinue or limit service without placing its employees in potential harm or danger.
Energy Solutions
Our Energy Solutions business segment has historically accounted for the majority of our revenue. Geoscientists use seismic data primarily in connection with the exploration, development and production of oil and gas reserves to map potential and known hydrocarbon bearing formations and the geologic structures that surround them. This segment’s products include wireless seismic data acquisition systems, reservoir characterization products and services, and traditional seismic exploration products such as geophones, hydrophones, leader wire, connectors, cables and various other seismic products.
Our seismic sensor, cable and connector products are compatible with most major competitive seismic data acquisition systems currently in use. Revenue from these products results primarily from seismic contractors purchasing our products as components of new seismic data acquisition systems or to repair and replace components of seismic data acquisition systems already in use.
We have developed multiple versions of a land-based wireless (or nodal) seismic data acquisition system including our most recent launch of the Pioneer™, an ultralight wireless sensor product. We believe our wireless sensor systems allows our customers to operate more effectively and efficiently because of its reduced environmental impact, lower weight, ease of operation, and which require less maintenance.
We have also developed an ocean bottom seismic data acquisition system called the OBX, and recently released Mariner™ and Mariner Deep®. Similar to our land-based wireless systems, these ocean bottom systems may be deployed in virtually unlimited channel configurations and do not require interconnecting cables between each station. Through June 30, 2025, we have sold 28,000 OBX stations and we currently have 9,000 OBX stations in our rental fleet. The Mariner® is a continuous, cable-free, four channel autonomous, shallow water ocean bottom recorder designed for extended duration seabed ocean bottom seismic data acquisition. Through June 30, 2025, we have sold 7,600 Mariner® nodes and currently have 3,000 Mariner® nodes in our rental fleet.
Additionally, we have developed high-definition permanent reservoir monitoring systems ("PRM") for land and ocean-bottom applications in producing oil and gas fields. Our primary offering, OptoSeis® fiber optic sensing technology, provides high-definition seismic data acquisition systems with a flexible architecture allowing them to be configured as a subsurface system for both land and marine reservoir-monitoring projects.
We also have a derivative of the OptoSeis® technology for high temperature downhole applications. The product known as Insight by OptoSeis offers a passive, all-optical downhole sensor network - no electronics downhole - resulting in years long operational lifetime at 150 °C.
We also produce a seismic borehole acquisition systems that employ a fiber optic augmented wireline capable of very high data transmission rates. These systems are used for several reservoir monitoring applications, including an application pioneered by us allowing operators and service companies to monitor and measure the results of hydraulic fracturing operations.
Lastly, our SADAR® technology provides passive seismic real-time monitoring in emerging energy applications such as Carbon Capture and Storage (CCS) and geothermal energy. Our customers include various agencies of the U.S. government including the Department of Defense, Department of Energy, Department of Homeland Security and other agencies as well as energy companies needing real-time monitoring of seismic data.
Intelligent Industrial
Our Intelligent Industrial segment is comprised of diverse software and hardware solutions leveraging decades of sensor technologies for use by the U.S. Federal government, specialized contractors and academia. This segment also includes specialized contract manufacturing in the United States along with solutions for industrial screen printers.
For more than a decade our sensor products have been used for national security and homeland defense applications. More recently our SADAR® technology, has been used for border and perimeter security surveillance, cross-border tunneling detection and other products targeted at movement monitoring, intrusion detection and situational awareness. Our seismic sensors provide unique high definition, low frequency sensing that allows for vibration monitoring in industrial machinery, mine safety and earthquake detection.
Our imaging products include electronic pre-press products that employ direct thermal imaging, direct-to-screen printing systems, and digital inkjet printing technologies targeted at the commercial graphics, industrial graphics, textile and flexographic printing industries.
Our robust manufacturing capabilities have allowed us to provide specialized contract manufacturing services for printed circuit board manufacturing, cabling and harnesses, machining, injection molding and electronic system assembly. We are certified to the latest revisions of ISO9001, 14001, 13485, and AS9100 standards and are committed to quality manufacturing, document and process control, qualification, non-conformance handling as well as continuous improvement. We maintain environmentally sound working conditions in all of our facilities.
Consolidated Results of Operations
We report and evaluate financial information for three segments: Smart Water, Energy Solutions, and Intelligent Industrial Markets. Summary financial data by business segment follows (in thousands):
| Three Months Ended |
Nine Months Ended |
|||||||||||||||
| June 30, 2025 |
June 30, 2024 |
June 30, 2025 |
June 30, 2024 |
|||||||||||||
| Smart Water |
||||||||||||||||
| Product revenue |
$ | 10,518 | $ | 9,913 | $ | 27,278 | $ | 20,558 | ||||||||
| Income from operations |
2,233 | 2,611 | 4,023 | 5,372 | ||||||||||||
| Energy Solutions |
||||||||||||||||
| Product revenue |
6,612 | 3,862 | 29,837 | 43,948 | ||||||||||||
| Rental revenue |
1,495 | 5,520 | 5,140 | 16,380 | ||||||||||||
| Total revenue |
8,107 | 9,382 | 34,977 | 60,328 | ||||||||||||
| Income (loss) from operations |
(1,234 | ) | (117 | ) | 5,380 | 13,003 | ||||||||||
| Intelligent Industrial |
||||||||||||||||
| Product revenue |
6,097 | 6,448 | 17,465 | 18,928 | ||||||||||||
| Rental revenue |
39 | 41 | 131 | 123 | ||||||||||||
| Total revenue |
6,136 | 6,489 | 17,596 | 19,051 | ||||||||||||
| Loss from operations |
(1,041 | ) | (1,282 | ) | (3,268 | ) | (2,181 | ) | ||||||||
| Corporate |
||||||||||||||||
| Rental revenue |
82 | 74 | 238 | 223 | ||||||||||||
| Income (loss) from operations |
411 | (3,605 | ) | (8,212 | ) | (10,256 | ) | |||||||||
| Consolidated Totals |
||||||||||||||||
| Product revenue |
23,227 | 20,223 | 74,580 | 83,434 | ||||||||||||
| Rental revenue |
1,616 | 5,635 | 5,509 | 16,726 | ||||||||||||
| Total revenue |
24,843 | 25,858 | 80,089 | 100,160 | ||||||||||||
| Income (loss) from operations |
$ | 369 | $ | (2,393 | ) | $ | (2,077 | ) | $ | 5,938 | ||||||
Business Overview
Growing industry acceptance of our water meter cables and connectors provides a strong enabler for additional revenue from our Smart Water segment. Automatic meter reading efficiencies in operations and improved customer service has begun to be understood by the municipalities of the United States. We expect this portion of our business to continue to grow for the foreseeable future. Additionally, we anticipate this segment to see revenue contributions from our Aquana smart water valve and IoT technology products as market traction and increased sales backlog continues to gather. Given the well-known and often extreme volatility experienced in our Energy Solutions segment, careful expansion of products and market diversity in our Smart Water and Intelligent Industrial segments has been a longstanding part of our strategic vision and reflects our on-going diversification efforts.
Our Energy Solution segment saw a shift from rentals of our ocean bottom nodes to purchases of the equipment in fiscal year 2024, of which trend has continued in fiscal year 2025. This shift signifies our customer’s recognition of future backlog to justify ownership versus renting the nodes. We do not expect significant expansion of the ocean bottom nodal market, for we expect the market is saturable and future rental fleet use will come from our customers' need to temporarily expand their nodal fleet. We expect our Energy Solutions segment to provide a significant portion of our revenue for years to come, but in diminishing portion to our other segments. During the third quarter of fiscal year 2025, we entered into a PRM contract. The duration of the contract is expected to be approximately 18 months. Revenue will be recognized in our Energy Solutions segment over the duration of the contract.
We continue to maintain a strong balance sheet with no debt. Our current liquidity enables our ability to seek out business acquisitions, allows us to continue investments in capital assets and product research and development, which have historically driven revenue growth.
Three and nine months ended June 30, 2025, compared to the three and nine months ended June 30, 2024
Consolidated revenue for the three months ended June 30, 2025, was $24.8 million, a decrease of $1.0 million, or 3.9%, from the corresponding period of the prior fiscal year. The decrease was primarily due to lower utilization of our ocean bottom nodes rental fleet from our Energy Solutions segment. The decrease was largely offset by an increase in demand for our traditional seismic products, partly from the sale of our marine retrieval and steering device product line completed in the third quarter of fiscal year 2025. Consolidated revenue for the nine months ended June 30, 2025, was $80.1 million, a decrease of $20.1 million, or 20.0%, from the corresponding period of the prior fiscal year. The decrease was primarily due to lower product revenue from our Energy Solutions segment. Revenue for the nine months ended June 30, 2025, included a $17 million sale of ocean bottom nodes structured as a sales-type lease. However, in comparison, revenue for the nine months ended June 30, 2024 included a $30 million sale of our Mariner™ shallow water ocean bottom nodes. The decrease was also attributable to lower wireless marine rental revenue. The decrease in consolidated revenue for both the three and nine months ended June 30, 2025 was partially offset by an increase in demand for our Hydroconn® cable and connector products from our Smart Water segment.
Consolidated gross profit for the three months ended June 30, 2025, was $7.5 million, a decrease of $1.0 million, or 11.6%, from the corresponding period of the prior fiscal year. The decrease in gross profit was primarily due to a decrease in ocean bottom nodes rental revenue from our Energy Solutions segment. The decrease was partially offset by an increase in traditional seismic revenue, partly due to the sale of our marine retrieval and steering product line and related gross profits. Consolidated gross profit for the nine months ended June 30, 2025, was $29.4 million, a decrease of $7.2 million, or 19.7%, from the corresponding period of the prior fiscal year. The decrease in gross profit was primarily due to a decrease in ocean bottom nodes product revenue and rental revenue. This decrease was partially offset by a high gross profit margin on a $17 million sale of ocean bottom nodes in the first quarter of fiscal year 2025. The decrease in gross profit for both three and nine months ended June 30, 2025 was also due to an increase in tariffs on the raw materials we purchase.
Consolidated operating expenses for the three months ended June 30, 2025, were $11.8 million, an increase of $0.9 million, or 7.9%, from the corresponding period of the prior fiscal year. Consolidated operating expenses for the nine months ended June 30, 2025, were $36.1 million, an increase of $5.4 million, or 17.7%, from the corresponding period of the prior fiscal year. The increase for both the three and nine months ended June 30, 2025 was primarily due to (i) higher personnel costs, including severance costs and acceleration of stock-based compensation expense and (ii) an increase in and sales and marketing costs.
In June 2025, we sold our property located at 4318 Northfield Lane in Houston, Texas. The 17.3-acre property served as additional parking for our main campus and contained legacy structures used to support our manufacturing and warehousing operations. The property had been classified as assets held on our consolidated balance sheets since September 30, 2024. We recognized a gain on disposal of property of $4.6 million during the third quarter of fiscal year 2025. The gain is included as a component of income (loss) from operations on our accompanying consolidated statements of operations.
Consolidated other income was $0.5 million for the three months ended June 30, 2025, compared to $0.3 million from the corresponding period of the prior fiscal year. Consolidated other income was $1.5 million for the nine months ended June 30, 2025, compared to $0.5 million from the corresponding period of the prior fiscal year. The increase for both periods was principally due to higher interest income attributable to our financing receivables.
Segment Results of Operations
Smart Water
Revenue
Revenue from our Smart Water segment for the three months ended June 30, 2025, increased $0.6 million, or 6.1%, from the corresponding period of the prior fiscal year. Revenue from our Smart Water segment for the nine months ended June 30, 2025, increased $6.7 million, or 32.7%, from the corresponding period of the prior fiscal year. The increase for both periods was primarily due to an increase in demand for our Hydroconn® cable and connector products.
Operating Income
Operating income from our Smart Water segment for the three months ended June 30, 2025, was $2.2 million, a decrease of $0.4 million, or 14.5% from the corresponding period of the prior fiscal year. Operating income from our Smart Water segment for the nine months ended June 30, 2025, was $4.0 million, a decrease of $1.3 million, or 25.1% from the corresponding period of the prior fiscal year. The decrease for both periods was due to an increase in selling and marketing and research and development costs associated with our increase in revenue.
Energy Solutions
Revenue
Revenue from our Energy Solutions segment for the three months ended June 30, 2025, decreased $1.3 million, or 13.6%, from the corresponding period of the prior fiscal year. Revenue from our Energy Solutions segment for the nine months ended June 30, 2025, decreased $25.4 million, or 42.0%, from the corresponding period of the prior fiscal year. The components of this decrease were as follows:
| ● |
Product Revenue – For the three months ended June 30, 2025, product revenue increased $2.8 million, or 71.2%, from the corresponding period of the prior fiscal year. The increase was primarily due to an increase in demand for our traditional seismic products, largely from the sale of our marine recovery device product line. For the nine months ended June 30, 2025, product revenue decreased $14.1 million, or 32.1%, from the corresponding period of the prior fiscal year. The decrease was primarily due to a decrease in demand for our ocean bottom nodes. Revenue for the nine months ended June 30, 2025 included a $17 million sale of ocean bottom nodes structured as a sales-type lease. However, in comparison, revenue for the nine months ended June 30, 2024 included a $30 million sale of our Mariner™ shallow water ocean bottom nodes. |
| ● |
Rental Revenue – For the three months ended June 30, 2025, rental revenue from our wireless exploration products was $1.5 million, a decrease of $4.0 million, or 72.9%, in comparison to the corresponding period of the prior fiscal year. Consolidated rental revenue from our wireless exploration products for the nine months ended June 30, 2025, was $5.1 million, a decrease of $11.2 million, or 68.6%, from the corresponding period of the prior fiscal year. The decrease for both periods was due to lower utilization of our ocean bottom nodes rental fleet. The decrease for the nine months ended June 30, 2025 was also attributable to the reversal of a $2.2 million receivable from a rental customer against rental revenue during the second quarter of fiscal year 2025. We determined the collectability of this receivable was less than probable. Any future cash received from this customer will be recognized as rental revenue. |
Operating Income (Loss)
Operating loss associated with our Energy Solutions segment for the three months ended June 30, 2025, was $(1.2) million, compared to $(0.1) million for the corresponding period of the prior fiscal year. The increase in operating loss was largely due to the decrease in revenue and related gross profits. Operating income associated with our Energy Solutions segment for the nine months ended June 30, 2025, was $5.4 million, a decrease of $7.6 million from the corresponding period of the prior fiscal year. The decrease in operating income for the nine months ended June 30, 2025, was primarily due to (i) lower revenue and related gross profits. The decrease in operating loss for both the three and nine months ended June 30, 2025 was primarily due to (i) the decrease in revenue and related gross profits and (ii) higher research and development expense, primarily personnel costs.
Intelligent Industrial
Revenue
Revenue from our Intelligent Industrial segment for three months ended June 30, 2025, decreased $0.4 million, or 5.4%, from the corresponding period of the prior fiscal year. Revenue from our Intelligent Industrial segment for nine months ended June 30, 2025, decreased $1.5 million, or 7.6%, from the corresponding period of the prior fiscal year. The decrease in revenue for both the three and nine months ended June 30, 2025, was primarily due to (i) revenue recognized for the three and nine months ended June 30, 2024 on a government contract completed in the fourth quarter of fiscal year 2024 and (ii) lower demand for our imaging products. The decrease for both periods was partially offset by an increase in demand for our contract manufacturing services.
Operating Loss
Operating loss from our Intelligent Industrial segment for the three months ended June 30, 2025, was $(1.0) million, a decrease of $0.2 million, or 18.8%, million from the corresponding period of the prior fiscal year. The decrease was primarily due to lower operating expenses incurred during the three months ended June 30, 2025. The decrease in operating loss was partially offset by (i) decrease in revenue and related gross profits. Operating loss from our Intelligent Industrial segment for the nine months ended June 30, 2025, was $(3.3) million, an increase of $1.1 million, or 49.8%, from the corresponding period of the prior fiscal year. The increase in operating loss for nine months ended June 30, 2025 was primarily due (i) the decrease in revenue and related gross profits and (ii) higher research and development costs.
Liquidity and Capital Resources
At June 30, 2025, we had $25.6 million in cash and cash equivalents and short-term investments. For the nine months ended June 30, 2025, we used $18.1 million of cash from operating activities. Uses of cash included (i) our net loss of $0.7 million, offset by non-cash charges of $9.8 million resulting from deferred income taxes, depreciation, amortization, accretion, inventory obsolescence, stock-based compensation and provision for credit losses, a (ii) $5.6 million increase in inventories for the strategic purchase of long lead-time components needed for use in wireless products, valves and contract manufacturing, (iii) $4.2 million decrease in trade accounts payable due to timing of payments to our suppliers and (iv) $0.6 million increase in other assets, primarily for the prepayment of insurance premiums. These uses of cash were partially offset by a (i) $2.2 million decrease in trade accounts receivables due to timing of collections from customers and (ii) $2.0 increase in other liabilities primarily related to accrued compensation costs.
For the nine months ended June 30, 2025, we generated cash of $35.4 million in investing activities. Sources of cash consisted of (i) $28.4 million from the sale of short-term investments, (ii) $8.7 million of proceeds from the sale of property, plant and equipment and (iii) $5.1 million of proceeds from the sale of rental equipment. These sources of cash were partially offset by (i) $5.8 million for additions to our property, plant and equipment and (ii) $1.1 million for additions to our equipment rental fleet. We expect fiscal year 2025 cash investments in property, plant and equipment will be approximately $7 million. We expect fiscal year 2025 cash investments into our rental fleet will be limited unless we experience an expansion of customer demand of our rental fleet. Our capital expenditures are expected to be funded from our cash on hand, short-term investments, internal cash flows, cash flows from our rental contracts or, if necessary, borrowings under our new credit agreement.
For the nine months ended June 30, 2025, we used $0.6 million from financing activities for the purchase of treasury stock pursuant to a stock buy-back program authorized by our board of directors. The program authorized us to repurchase up to $7 million of our common stock in open market transactions. The program was completed in the second quarter of fiscal year 2025.
On July 26, 2023, we entered into a credit agreement (the “Agreement”) with Woodforest National Bank ("Woodforest"), as sole lender. The Agreement refinanced our credit agreement dated May 6, 2022, with Amerisource Funding, Inc., as administrative agent and as a lender, and Woodforest, as a lender. The Agreement provides a revolving credit facility with a maximum availability of $15 million. Availability under the Agreement is determined based upon a borrowing base comprised of certain of our domestic assets which include (i) 80% of eligible accounts receivable, plus (ii) 90% of eligible foreign insured accounts, plus (iii) 25% of eligible inventory plus (iv) 50% of the orderly liquidation value of eligible equipment, in each case subject to certain limitations and adjustments. Interest shall accrue on outstanding borrowings at a rate equal to Term SOFR (Secured Overnight Financing Rate) plus a margin equal to 3.25% per annum (7.65% at June 30, 2025). We are required to make monthly interest payments on borrowed funds. The Agreement is secured by substantially all of our assets, except for certain excluded property. The Agreement requires us to maintain a minimum (i) consolidated tangible net worth of $100 million, (ii) liquidity of $5 million, and (iii) current ratio no less than 2.00 to 1.00, in each case tested quarterly. The Agreement also requires us to maintain a springing minimum interest coverage ratio of 1.50 to 1.00, tested quarterly whenever there is an outstanding balance on the revolving credit facility. Effective July 26, 2025, the Agreement was amended to extend the maturity date from July 26, 2025 to August 26, 2025. The Company is currently negotiating a long-term maturity extension on the Agreement.
At June 30, 2025 we had no outstanding borrowings under the Agreement and our borrowing base availability under the Agreement was $14.9 million after consideration of a $0.1 million outstanding letter of credit. We were in compliance with all covenants under the Agreement. We do not currently anticipate the need to borrow under the Agreement, however, we may decide to do so in the future, if needed.
Our available cash, cash equivalents and short-term investments was $25.6 million at June 30, 2025, which included $1.0 million of cash and cash equivalents held by our foreign subsidiaries and branch offices. In the absence of future profitable results of operations, we may need to rely on other sources of liquidity to fund our future operations, including executed rental contracts, available borrowings under the Agreement assuming a long-term maturity extension in reached, sales or leveraging real estate assets, sales of rental assets and other liquidity sources which may be available to us. We currently believe that our cash and short-term investments will be sufficient to finance any future operating losses and planned capital expenditures through the next twelve months.
We do not have any obligations which meet the definition of an off-balance sheet arrangement, and which have or are reasonably likely to have a current or future effect on our financial statements or the items contained therein that are material to investors.
Contractual Obligations
Contingent Compensation Costs
In July 2021, the Company acquired Aquana, LLC (“Aquana”). Pursuant to the merger agreement with Aquana, as amended ("the Merger Agreement"), the Company is subject to additional contingent cash payments to the former members of Aquana over a seven-year earn-out period. The contingent payments, if any, will be derived from certain eligible revenue generated during the earn-out period from products and services sold by Aquana. There is no maximum limit to the contingent cash payments that could be made. The Merger Agreement requires the continued employment of a certain key employee and former member of Aquana for the first five years of the seven-year earn-out period in order for any of Aquana’s former members to be eligible for any earn-out payments. Due to the continued employment requirement, no liability has been recorded for the estimated fair value of earn-out payments for this transaction. Earn-outs achieved are recorded as compensation expense when incurred.
See Note 12 to our consolidated financial statements in this Quarterly Report on Form 10-Q for more information on our contractual contingencies.
Critical Accounting Estimates
During the nine months ended June 30, 2025, there has been no material change to our critical accounting estimates discussed in Item 7 of our Annual Report on Form 10-K for the fiscal year ended September 30, 2024.
Recent Accounting Pronouncements
Please refer to Note 1 to our consolidated financial statements contained in this Quarterly Report on Form 10-Q for a discussion of recent accounting pronouncements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item, in accordance with Item 305(e) of Regulation S-K.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management is responsible for establishing and maintaining a system of disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified under the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”). Notwithstanding the foregoing, there can be no assurance that our disclosure controls and procedures will detect or uncover all failures of persons within our Company and consolidated subsidiaries to report material information otherwise required to be set forth in our reports.
In connection with the preparation of this Quarterly Report on Form 10-Q, we carried out an evaluation under the supervision and with the participation of our management, including the CEO and CFO, as of June 30, 2025, of the effectiveness of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on that evaluation, the CEO and CFO concluded that our disclosure controls and procedures were effective as of June 30, 2025.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the fiscal quarter ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Increases in Tariffs, Trade Restrictions or Taxes on our Products Could Have an Adverse Impact on our Operations.
Approximately half of our revenue is generated from customers outside of the U.S. We also purchase a portion of our raw materials from suppliers in China and other foreign countries. The commerce we conduct in the international marketplace makes us subject to tariffs, trade restrictions and other taxes when the raw materials we purchase, and the products we ship, cross international borders. Trade tensions between the United States and China, as well as those between the U.S. and Canada, Mexico and other countries have been escalating in recent years. In addition, the transition to a new presidential administration in the United States could further impact our business and operations, due to potential trade wars as a result of the implementation of tariffs or otherwise. Historically, trade tensions have led to a series of tariffs imposed by the U.S. on imports from China, as well as retaliatory tariffs imposed by China on imports from the U.S. If the U.S. and China are able to negotiate the issues to restore a mutually advantageous and fair trading regime, the increased tariffs could be eliminated. Certain raw materials we purchase from China are subject to these tariffs which has increased our manufacturing costs. Products we sell into certain foreign markets could also become subject to similar retaliatory tariffs, making the products we sell uncompetitive to similar products not subjected to such import tariffs. Further changes in U.S. trade policies, tariffs, taxes, export restrictions or other trade barriers, or restrictions on raw materials including rare earth minerals, may limit our ability to produce products, increase our manufacturing costs, decrease our profit margins, reduce the competitiveness of our products, or inhibit our ability to sell products or purchase raw materials, which could have a material adverse effect on our business, results of operations or financial conditions. Moreover, the change in presidential administration, as well as a transition of control in the U.S. House of Representatives and U.S. Senate, creates regulatory uncertainty and it remains unclear as to the tariff related impact the future geopolitical climate will bring to our operations.
The following exhibits are filed with this Report on Form 10-Q or are incorporated by reference
| 3.1 |
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| 3.2 |
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| 10.1* | First Amendment to Credit Agreement dated July 26, 2025 among the Company, and each other person from time to time party thereto as borrower, and Woodforest National Bank, as lender. | |
| 31.1* |
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| 31.2* |
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| 32.1** |
Certification of the Chief Executive Officer pursuant 18 U.S.C. Section 1350. |
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| 32.2** |
Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350. |
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| 101* |
The following financial information from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2025, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) the Consolidated Balance Sheets at June 30, 2025 and September 30, 2024 , (ii) the Consolidated Statements of Operations for the three and nine months ended June 30, 2025 and 2024, (iii) the Consolidated Statements of Comprehensive Income for the three and nine months ended June 30, 2025 and 2024, (iv) the Consolidated Statements of Stockholders’ Equity for the three and nine months ended June 30, 2025 and 2024, (v) the Consolidated Statements of Cash Flows for the nine months ended June 30, 2025 and 2024 and (vi) Notes to Consolidated Financial Statements. |
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| 104* |
The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2025 formatted in Inline XBRL and contained in Exhibit 101. |
* Filed with this Quarterly Report on Form 10-Q
** Furnished with this Quarterly Report on Form 10-Q
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| GEOSPACE TECHNOLOGIES CORPORATION |
| Date: |
August 8, 2025 |
By: |
/s/ Richard J. Kelley |
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| Richard J. Kelley, President |
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| and Chief Executive Officer |
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| (duly authorized officer) |
| Date: |
August 8, 2025 |
By: |
/s/ Robert L. Curda |
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| Robert L. Curda, Vice President, |
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| Executive Vice President, Chief Financial Officer and Secretary |
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| (principal financial officer) |