The following is a summary of the Frequency Electronics, Inc. (FEIM) Q2 2025 Earnings Call Transcript:

Financial Performance:

• Q2 2025 revenue increased to $30.9 million, up from $26 million year-over-year.

• Gross margin rate improved, attributed to successful completion of major milestones in large space programs and nearing completion of older, lower-margin programs.

• Operating income rose to $5 million, reflecting efficient project completion and increased operational efficiency.

• Net income for the six months ending October 31, 2024, was $5.1 million, or $0.53 per share, compared to $2.8 million, or $0.30 per share, for the same period last year.

Business Progress:

• Significant growth driven by U.S. government space business, with more than half of the revenue and operating income in this sector.

• R&D expenditure increased to 10% of revenue to develop targeted products for the proliferated small satellite market.

• Held the Quantum Sensor Summit, strengthening positioning in the quantum technology market.

• Expecting government funding for quantum technology R&D in the coming quarters.

• Engaged in Cooperative Research and Development Agreements (CRADAs) to leverage external expertise.

Opportunities:

• Anticipate continuous revenue growth and potential expansion in the small satellite and quantum technology sectors supported by internal developments and government-funded R&D.

• Backlog reaching a record high of $81 million suggests sustained demand and potential for significant future earnings.

Risks:

• Dependence on government contracts and funding could lead to variability in financial performance and operational delays, particularly evident in non-space U.S. government and DOD business segments which have shown inconsistency.

More details: Frequency Electronics IR

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