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Innovative Solutions And Support (ISSC)
:ISSC
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Innovative Solutions And Support
(NASDAQ:ISSC)
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Rating:75Outperform
Price Target:
$14.00
▲(22.06% Upside)
Innovative Solutions And Support's strong financial performance and strategic growth initiatives are key strengths, driving a solid overall score. However, mixed technical indicators and valuation metrics, along with challenges highlighted in the earnings call, moderate the score.
Innovative Solutions And Support (ISSC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$194.00M
Dividend YieldN/A
Average Volume (3M)305.49K
Price to Earnings (P/E)17.3
Beta (1Y)1.32
Revenue Growth72.82%
EPS Growth80.22%
CountryUS
Employees133
SectorIndustrials
Sector Strength72
IndustryAerospace & Defense
Share Statistics
EPS (TTM)0.14
Shares Outstanding17,636,625
10 Day Avg. Volume268,845
30 Day Avg. Volume305,487
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap1.39
Enterprise Value/Revenue3.49
Enterprise Value/Gross Profit7.72
Enterprise Value/Ebitda13.75
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
Innovative Solutions And Support Business Overview & Revenue Model
Company DescriptionInnovative Solutions And Support (ISSC) is a technology-driven company specializing in providing advanced software solutions and support services to various industries, including aerospace, defense, and commercial sectors. The company focuses on delivering cutting-edge systems for mission planning, logistics, and data analysis, ensuring clients achieve operational efficiency and enhanced decision-making capabilities. ISSC is committed to innovation, leveraging state-of-the-art technology to meet the evolving needs of its customers.
How the Company Makes MoneyISSC generates revenue primarily through the sale of software licenses, subscription services, and maintenance contracts for its technological solutions. The company also earns money by providing consulting services, training, and technical support to its clients, which are critical for the successful implementation and use of their products. Key revenue streams include long-term contracts with government and defense agencies, as well as partnerships with major technology firms that enhance their service offerings and market reach. Additionally, ISSC may benefit from recurring revenue through software-as-a-service (SaaS) models, which provide ongoing income as clients subscribe to their solutions.
Innovative Solutions And Support Earnings Call Summary
Earnings Call Date:Aug 14, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Dec 10, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong revenue growth and strategic investments in facility expansion and acquisitions, supported by a new credit facility. However, challenges such as declining gross margins and expected temporary revenue dips due to transition activities were also evident.Q3-2025 Updates
Positive Updates
Significant Revenue Growth
The company delivered revenue growth of 105% compared to the third quarter of 2024, driven by momentum from new military programs, notably the F-16 program.
Backlog and Strategic Growth
The company reported a backlog of approximately $72 million as of June 30, 2025, indicating strong business momentum and future growth potential.
Expansion and Strategic Investments
Progress on the expansion of the Exton facility was completed, with expectations for increased manufacturing capacity by more than threefold. This is a key element of the long-term strategy to achieve revenues exceeding $250 million.
New Credit Facility
The company closed a new 5-year $100 million credit agreement with JPMorgan Chase, replacing a $35 million line of credit, providing additional liquidity and flexibility for strategic acquisitions.
Positive Financial Performance
Net income for the quarter was $2.4 million, compared to $1.6 million last year, with GAAP earnings per share of $0.14, up from $0.09.
Negative Updates
Gross Margin Decline
Gross margin for the third quarter was 35.6%, down from 53.4% last year, impacted by lower-than-anticipated gross margins on the F-16 product line from Honeywell and higher depreciation expenses.
Temporary Revenue Dip Expected
A temporary dip in revenues related to the F-16 product line is expected during the fourth quarter due to the transition of production to the Exton facility.
Increased Operating Expenses
Operating expenses increased to $5.1 million from $4.2 million last year, driven by incremental depreciation, employee-related costs, and acquisition expenses.
Company Guidance
During the third quarter of fiscal year 2025, Innovative Solutions & Support reported a remarkable revenue growth of 105% compared to the same period in 2024, largely driven by the F-16 program, which contributed $12.6 million. However, the gross margin decreased to 35.6% from 53.4% the previous year, mainly due to lower margins on the F-16 product line inherited from Honeywell. The company experienced a 43% increase in adjusted EBITDA, highlighting strong operational leverage despite facing margin pressures. With a backlog of approximately $72 million, the company anticipates further revenue growth and aims for a mid-40s gross margin once efficiencies from recent integrations are realized. The recent completion of an expanded Exton facility is expected to triple manufacturing capacity, aligning with their strategy to exceed $250 million in revenues. Additionally, the company secured a new $100 million credit facility, enhancing its ability to pursue strategic acquisitions, which remain a key growth focus alongside organic expansion.Innovative Solutions And Support Financial Statement Overview
Summary
Innovative Solutions And Support exhibits strong financial performance with robust revenue growth and healthy profitability margins. The balance sheet is stable, with manageable leverage and strong returns on equity. Cash flow generation is impressive, supporting future growth initiatives. However, careful monitoring of cost pressures and debt levels is essential.Income Statement
Innovative Solutions And Support has demonstrated strong revenue growth with a 19.03% increase in the TTM period, indicating robust demand for its products. The company maintains healthy profitability with a gross profit margin of 45.18% and a net profit margin of 15.11%. The EBIT and EBITDA margins are also solid at 20.88% and 25.39%, respectively, showcasing efficient cost management. However, the slight decline in gross profit margin compared to previous years suggests potential cost pressures.85
Very Positive
Balance Sheet
The balance sheet reflects a stable financial position with a debt-to-equity ratio of 0.41, indicating moderate leverage. The return on equity is strong at 22.85%, reflecting effective utilization of shareholder funds. The equity ratio stands at 61.88%, suggesting a solid equity base. However, the increase in total debt over the years warrants monitoring to ensure it does not impact financial flexibility.78
Positive
Cash Flow
The company has shown impressive free cash flow growth of 119.02% in the TTM period, highlighting strong cash generation capabilities. The operating cash flow to net income ratio is 0.96, indicating efficient conversion of earnings into cash. The free cash flow to net income ratio is 0.48, suggesting a balanced approach to reinvestment and shareholder returns. Continued focus on cash flow management will be crucial for sustaining growth.82
Very Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 77.43M | 47.20M | 34.81M | 27.74M | 23.04M | 21.60M |
| Gross Profit | 34.99M | 25.91M | 21.31M | 16.67M | 12.78M | 11.80M |
| EBITDA | 19.66M | 11.89M | 8.73M | 7.71M | 4.33M | 3.18M |
| Net Income | 11.70M | 7.00M | 6.03M | 5.52M | 5.06M | 3.27M |
Balance Sheet | ||||||
| Total Assets | 91.78M | 82.38M | 62.96M | 34.71M | 27.09M | 41.55M |
| Cash, Cash Equivalents and Short-Term Investments | 601.76K | 538.98K | 3.10M | 17.25M | 8.27M | 12.60M |
| Total Debt | 23.26M | 28.03M | 19.51M | 28.68K | 28.68K | 45.13K |
| Total Liabilities | 35.00M | 35.74M | 24.32M | 3.96M | 2.50M | 13.78M |
| Stockholders Equity | 56.79M | 46.64M | 38.64M | 30.75M | 24.59M | 27.77M |
Cash Flow | ||||||
| Free Cash Flow | 5.13M | 5.14M | 1.80M | 5.93M | 4.25M | 2.07M |
| Operating Cash Flow | 10.78M | 5.80M | 2.10M | 6.09M | 4.59M | 2.19M |
| Investing Cash Flow | -24.10M | -16.88M | -36.16M | 2.59M | -340.68K | -118.80K |
| Financing Cash Flow | 13.40M | 8.53M | 19.91M | 301.15K | -19.77M | -705.33K |
Innovative Solutions And Support Technical Analysis
Neutral
11.47
Price Trends
12.47
Negative
13.31
Negative
10.71
Positive
Market Momentum
-0.33
Positive
45.29
Neutral
31.66
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ISSC, the sentiment is Neutral. The current price of 11.47 is below the 20-day moving average (MA) of 11.86, below the 50-day MA of 12.47, and above the 200-day MA of 10.71, indicating a neutral trend. The MACD of -0.33 indicates Positive momentum. The RSI at 45.29 is Neutral, neither overbought nor oversold. The STOCH value of 31.66 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for ISSC.
Innovative Solutions And Support Risk Analysis
Innovative Solutions And Support disclosed 37 risk factors in its most recent earnings report. Innovative Solutions And Support reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Innovative Solutions And Support Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $194.00M | 17.30 | 23.40% | ― | 72.82% | 80.22% | |
68 Neutral | $1.43B | 36.20 | 5.86% | ― | 2.42% | 72.72% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
63 Neutral | $4.62B | ― | -2.57% | ― | 9.19% | 72.88% | |
59 Neutral | $791.02M | 18.50 | 11.68% | 0.90% | 31.27% | 26.36% | |
43 Neutral | $1.35B | ― | -320.52% | ― | ― | -30.78% | |
25 Underperform | $485.74M | ― | ― | ― | ― | ― |
* Industrials Sector Average
ISSC
Innovative Solutions And Support
11.47
4.28
59.53%
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Innovative Solutions And Support Corporate Events
Private Placements and FinancingBusiness Operations and Strategy
Innovative Solutions Secures $100 Million Credit Agreement
Positive
Jul 22, 2025
On July 18, 2025, Innovative Solutions and Support, Inc. entered into a new five-year, $100 million credit agreement with JPMorgan Chase Bank, replacing its previous $35 million line of credit. This agreement includes a $30 million revolving credit facility, a $25 million term loan, and a $45 million delayed draw term loan, with an option for additional loan commitments. The new credit facilities are intended to provide expanded liquidity and flexibility, supporting the company’s long-term growth strategy and capital allocation priorities.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.