Reconciliations to the most directly comparable GAAP financial measures can be found in today's earnings press release, which is available in the Investor Relations section of our website. Revenue from continuing operations was $14 million, down 4% year over year and up 8% sequentially. Growth was driven this quarter by our FTIR devices, which accounted for 42% of revenue, as we continue to see very strong demand for our Explorer Gas Identification device. Considering our year-to-date progress, revenues from continuing operations for the first nine months totaled $38.8 million, representing an increase of 16% year over year.
Growth in this channel and in our recurring revenues are key parts of our strategy to enhance predictability, as this is more run-rate business versus large enterprise device deals, which can be lumpy. We also made excellent progress towards our adjusted EBITDA target for 2025. Overall, I'm pleased with our execution this quarter as we continue to build momentum towards our growth and profitability goals. While our transform strategy is taking hold and our Q4 pipeline remains healthy, we continue to gauge the effects from the protracted U.S.
First, demand from state and local customers remains strong, supported by multi-year federal grant programs that remain active. Third, while smaller federal and defense orders have continued to move forward, larger awards have experienced delays due to constrained staffing and contracting authorities. We estimate that approximately $4 million of our Q4 revenue could be potentially impacted by delays in these areas. However, our base case remains that we are on track to achieve our full-year guidance, and we view any near-term impact as a timing issue as our strategic alignment remains strong.
| Metric | Period | Current guidance |
|---|---|---|
| FY2025 revenue from continuing operations | FY2025 | maintained at $54-$56 million (13%-17% growth) |
| FY2025 handheld product & service revenue | FY2025 | grow 16%-20% ($51.5-$53.5M); trimmed ~$0.5M on a defense service-coverage funding pause |
| FY2025 OEM & funded partnerships (incl. contract revenue) | FY2025 | ~$2.5 million (+$0.5M, incl. KAF contribution) |
| FY2025 adjusted gross margin | FY2025 | mid-to-high 50% range (56% for the nine months) |
| Q4 adjusted EBITDA | Q4 FY2025 | still targeting positive, assuming the government resumes normal contracting; ~$4M of Q4 revenue at risk from the shutdown |
| Metric | YoY | Note |
|---|---|---|
| Total revenue (continuing ops) | -4% to $14.0 million (+8% sequentially) | Fewer large multi-unit MX908 federal/defense orders, offset by state and local momentum |
| Handheld product & service revenue | -5% to $13.2 million | Lower federal MX908 orders (176 devices shipped vs. 178) |
| OEM & funded partnership revenue | +$0.3M to $0.8 million | Pharma and industrial QA/QC customers plus KAF component sales |
| Recurring revenue | +10% to $4.8 million (~35% of revenue) | Consumables, accessories and service growth |
| Adjusted EBITDA | loss of $1.8 million (-32% YoY, -53% sequentially) | Aggressive cost initiatives across facilities, R&D and professional fees |
| Adjusted gross margin | 58%, down ~60 bps | Product mix and unabsorbed new-machining costs |
| Installed base | +27% to 3,512 (>4,200 incl. legacy FTIR) | 176 devices placed |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| 908 Devices 2.0 transformation | Executing three focus areas | Best adjusted EBITDA since IPO; portfolio expanded from one to five handheld products; customer concentration reduced | — |
| U.S. government shutdown | Not a factor last quarter | ~$4M of Q4 revenue potentially delayed; state/local and international more insulated than large federal awards | — |
| VipIR ramp | Launched in July | First unit shipped to a Southeast Asian intelligence agency; >35 units secured for Q4; a rising 2026 contributor | — |
| Autonomous / unmanned platforms | Early interceptor use at events | Thales Group UGV collaboration; extending analytical platforms to ground robots and drones | — |
| Recurring revenue and state/local mix | Building predictability | State/local = 47% of nine-month revenue; Team Leader >700 users as a future recurring contributor | — |