Coda Octopus Group, Inc.

Coda Octopus reported second-quarter fiscal 2026 revenue of $6.9 million, down 1.6% from $7.0 million in the prior-year quarter. Gross profit was $4.6 million versus $4.5 million, and consolidated gross margin improved to 66.3% from 64.1%. Operating income rose to $1.8 million from $1.1 million, pretax income was $2.1 million versus $1.3 million, and net income was $1.7 million, or $0.15 per diluted share, compared with $900 thousand, or $0.08 per diluted share. By segment, Marine Technology revenue was $2.8 million, down 26.8%; Acoustics, Sensors, and Materials revenue was $1.5 million, up 17.5%; and Defense Engineering Services revenue was $2.5 million, up 37.9%. As of April 30, 2026, cash and cash equivalents were $30.6 million with no debt. The company did not give formal next-quarter or full-year financial guidance, but management said it expects some DAVID orders in the third quarter and noted that NanoGen and DAVID opportunities could scale if evaluations and procurement progress as expected.

Annmarie Gayle said the quarter showed resilience despite geopolitical disruption, pointing to improved gross profit margin, net income, and EPS even with slightly lower consolidated revenue. She emphasized that weakness in the Middle East and parts of Asia is a timing issue, not a structural one, and said the company is focused on expanding market share in underwater imaging sensors within defense. Her tone was constructive and strategic, with repeated emphasis on long-term growth, program-based adoption, and building recurring revenue through technologies like DAVID and Echoscope.

Gayle Jardine walked through the financials and highlighted that revenue was $6.9 million, gross profit was $4.6 million, and consolidated gross margin reached 66.3%, helped by rental revenue and lower commission costs. She said operating expenses fell 18.3% to $2.8 million, with SG&A down 21.4% to $2.1 million, driven mainly by a roughly $400 thousand FX swing, lower stock-based compensation, and about $100 thousand lower wages due to reduced headcount. She also noted cash and cash equivalents of $30.6 million, up $1.9 million from October 31, 2025, with no debt, and mentioned a significant gain on a vessel sale recorded in other income.

Analysts pressed management on how quickly DAVID demand might ramp after Navy approval, whether there was a BPA or IDIQ in place, and how fast demand could recover in the Middle East once geopolitical conditions improve. Management said DAVID funding is in the budget, expects some third-quarter orders, and does not anticipate an IDIQ for the untethered system, with orders placed directly. On regional weakness, they said the slowdown is tied to timing and security rather than a structural issue. On NanoGen and underwater vehicles, management said the initial order was not material to the quarter’s revenue, but could become a recurring production opportunity if evaluations succeed; they also said there are 2 active M&A opportunities in due diligence.