Coda Octopus Earnings Call: Growth Amid Challenges

Coda Octopus Group ((CODA)) has held its Q2 earnings call. Read on for the main highlights of the call.

The recent earnings call of Coda Octopus Group painted a mixed picture for investors. While the company celebrated significant revenue growth and exciting new technology launches, it also faced challenges such as decreased operating income and increased costs due to exchange rate fluctuations and higher operating expenses. This dual sentiment was evident throughout the call, reflecting both optimism and caution in the company’s financial outlook.

Significant Revenue Growth

Coda Octopus Group reported a remarkable 31.8% increase in total revenue for Q2 2025 compared to the same period in 2024. The Marine Technology business was a key driver, with its revenue rising by 10%. This growth underscores the company’s strong market position and its ability to capitalize on emerging opportunities.

Strong Performance in Asia

The company’s hardware sales to Asia surged by approximately 105%, significantly contributing to the overall revenue growth. This impressive performance highlights the growing demand for Coda Octopus’s products in the Asian market, positioning the company for further expansion in the region.

Launch of NanoGen Series

Coda Octopus is gearing up for the launch of its NanoGen series, a line of compact 3D sonars designed for smaller underwater vehicles. This new product line is expected to open up new market opportunities, further solidifying the company’s innovative edge in the marine technology sector.

Increase in Marine Engineering Business

The Marine Engineering business saw a 2.3% increase in revenue, with its gross profit margin improving from 50.7% to 55.5%. This growth reflects the business unit’s resilience and its contribution to the company’s overall financial health.

Introduction of Precision Acoustics Limited

The acquisition of Precision Acoustics Limited has proven beneficial, contributing 18.5% to consolidated revenue and 13.4% to operating income. This strategic acquisition has strengthened Coda Octopus’s market position and diversified its revenue streams.

Growth in DAVD Orders

Orders for the DAVD system exceeded $1.5 million in Q2 2025, indicating a growing adoption of this technology. The company is optimistic about the potential of the DAVD system, particularly with ongoing trials for its untethered variant.

Decreased Operating Income and Margins

Despite the revenue growth, operating income decreased by 19.5%, primarily due to higher commission costs and lower gross profit margins. This decline highlights the challenges the company faces in maintaining profitability amidst rising costs.

Impact of Exchange Rates

The weakening of the US dollar against the British pound and Danish kroner led to increased operating costs, impacting the company’s financial performance. This currency fluctuation poses a challenge for Coda Octopus as it navigates the global market.

Underutilization of Rental Assets

Rental assets were significantly underutilized, affecting gross profit margins due to lower rental income. This underutilization points to potential inefficiencies that the company may need to address to optimize asset use.

Increased Operating Expenses

Operating expenses rose to $3.4 million, up from $2.4 million in Q2 2024. This increase was partly due to exchange rate impacts and the integration of new business units, highlighting the cost pressures the company faces.

Forward-Looking Guidance

Looking ahead, Coda Octopus remains optimistic about its future prospects. The company is particularly excited about the upcoming NanoGen series of 3D sonars, which are expected to capture new opportunities in the underwater vehicle markets. Additionally, the DAVD system continues to show promise, with substantial orders and ongoing trials for its untethered variant.

In summary, the earnings call of Coda Octopus Group reflected a balanced sentiment of optimism and caution. While the company celebrated significant revenue growth and promising new product launches, it also faced challenges such as decreased operating income and increased costs. Investors will be keen to see how Coda Octopus navigates these challenges while capitalizing on emerging market opportunities.