SEC Form 10-Q filed by Geospace Technologies Corporation
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
for the Quarterly Period Ended
for the transition period from ____ to ____
Commission file number
GEOSPACE TECHNOLOGIES CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
| | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| | | The |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | | ☒ | ||||
| Non-accelerated filer | ☐ | Smaller reporting company | | ||||
| Emerging growth company | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of January 30, 2026 the registrant had
| Page Number |
||
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
||
| Item 3. Quantitative and Qualitative Disclosures about Market Risk |
||
PART I - FINANCIAL INFORMATION
GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands except share amounts)
(unaudited)
| December 31, 2025 | September 30, 2025 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Trade accounts and financing receivables, net | ||||||||
| Inventories, net | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Non-current inventories, net | ||||||||
| Rental equipment, net | ||||||||
| Property, plant and equipment, net | ||||||||
| Non-current financing receivables | ||||||||
| Operating right-of-use assets | ||||||||
| Goodwill | ||||||||
| Other intangible assets, net | ||||||||
| Other non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable trade | $ | $ | ||||||
| Operating lease liabilities | ||||||||
| Other current liabilities | ||||||||
| Total current liabilities | ||||||||
| Contingent consideration | ||||||||
| Non-current operating lease liabilities | ||||||||
| Deferred tax liabilities, net | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 11) | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, shares authorized, shares issued and outstanding | ||||||||
| Common Stock, $ par value, shares authorized; and shares issued, respectively; and and shares outstanding, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Retained earnings | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Treasury stock, at cost, shares | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of the consolidated financial statements.
GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
(unaudited)
| Three Months Ended |
||||||||
| December 31, 2025 |
December 31, 2024 |
|||||||
| Revenue: |
||||||||
| Products |
$ | $ | ||||||
| Rental |
||||||||
| Total revenue |
||||||||
| Cost of revenue: |
||||||||
| Products |
||||||||
| Rental |
||||||||
| Total cost of revenue |
||||||||
| Gross profit |
||||||||
| Operating expenses: |
||||||||
| Selling, general and administrative |
||||||||
| Research and development |
||||||||
| Change in fair value of contingent consideration |
||||||||
| Recovery of credit losses |
( |
) | ||||||
| Total operating expenses |
||||||||
| Income (loss) from operations |
( |
) | ||||||
| Other income (expense): |
||||||||
| Interest expense |
( |
) | ( |
) | ||||
| Interest income |
||||||||
| Foreign currency transaction gains (losses), net |
( |
) | ||||||
| Other, net |
( |
) | ( |
) | ||||
| Total other income, net |
||||||||
| Income (loss) before income taxes |
( |
) | ||||||
| Income tax expense |
||||||||
| Net income (loss) |
$ | ( |
) | $ | ||||
| Income (loss) per common share: |
||||||||
| Basic |
$ | ( |
) | $ | ||||
| Diluted |
$ | ( |
) | $ | ||||
| Weighted average common shares outstanding: |
||||||||
| Basic |
||||||||
| Diluted |
||||||||
The accompanying notes are an integral part of the consolidated financial statements.
GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
(unaudited)
| Three Months Ended |
||||||||
| December 31, 2025 |
December 31, 2024 |
|||||||
| Net income (loss) |
$ | ( |
) | $ | ||||
| Other comprehensive income (loss): |
||||||||
| Change in unrealized losses on available-for-sale securities, net of tax |
( |
) | ||||||
| Foreign currency translation adjustments |
( |
) | ||||||
| Total other comprehensive income (loss) |
( |
) | ||||||
| Total comprehensive income (loss) |
$ | ( |
) | $ | ||||
The accompanying notes are an integral part of the consolidated financial statements.
GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE three months ended December 31, 2025 and 2024
(in thousands, except share amounts)
(unaudited)
| Common Stock |
Accumulated |
|||||||||||||||||||||||||||
| Additional |
Other |
|||||||||||||||||||||||||||
| Shares |
Paid-In |
Retained |
Comprehensive |
Treasury |
||||||||||||||||||||||||
| Outstanding |
Amount |
Capital |
Earnings |
Loss |
Stock |
Total |
||||||||||||||||||||||
| Balance at October 1, 2025 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||
| Net loss |
— | ( |
) | ( |
) | |||||||||||||||||||||||
| Other comprehensive income |
— | |||||||||||||||||||||||||||
| Issuance of common stock pursuant to the vesting of restricted stock units |
||||||||||||||||||||||||||||
| Common stock exchanged for withholding taxes on stock-based compensation |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
| Stock-based compensation |
— | |||||||||||||||||||||||||||
| Balance at December 31, 2025 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||
| Balance at October 1, 2024 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||
| Net income |
— | |||||||||||||||||||||||||||
| Other comprehensive loss |
— | ( |
) | ( |
) | |||||||||||||||||||||||
| Issuance of common stock pursuant to the vesting of restricted stock units |
( |
) | ||||||||||||||||||||||||||
| Purchase of treasury stock |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
| Stock-based compensation |
— | |||||||||||||||||||||||||||
| Balance at December 31, 2024 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| Three Months Ended |
||||||||
| December 31, 2025 |
December 31, 2024 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income (loss) |
$ | ( |
) | $ | ||||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: |
||||||||
| Deferred income benefit |
( |
) | ||||||
| Rental equipment depreciation |
||||||||
| Property, plant and equipment depreciation |
||||||||
| Amortization of intangible assets |
||||||||
| Amortization of discount on note receivable |
( |
) | ( |
) | ||||
| Accretion of discounts on short-term investments |
( |
) | ||||||
| Stock-based compensation expense |
||||||||
| Recovery of credit losses |
( |
) | ||||||
| Inventory obsolescence expense |
||||||||
| Gross (profit) loss from sale of rental equipment |
( |
) | ||||||
| (Gain) loss on disposal of property, plant and equipment |
( |
) | ||||||
| Realized gain on investments |
( |
) | ||||||
| Effects of changes in operating assets and liabilities: |
||||||||
| Trade accounts and financing receivables |
( |
) | ( |
) | ||||
| Inventories |
( |
) | ( |
) | ||||
| Other assets |
( |
) | ( |
) | ||||
| Accounts payable trade |
( |
) | ||||||
| Other liabilities |
( |
) | ||||||
| Fair value of contingent consideration |
||||||||
| Net cash used in operating activities |
( |
) | ( |
) | ||||
| Cash flows from investing activities: |
||||||||
| Purchase of property, plant and equipment |
( |
) | ( |
) | ||||
| Proceeds from the sale of property, plant and equipment |
||||||||
| Investment in rental equipment |
( |
) | ( |
) | ||||
| Proceeds from the sale of rental equipment |
||||||||
| Proceeds from the sale of short-term investments |
||||||||
| Payments received on note receivable related to sale of subsidiary |
||||||||
| Net cash (used in) provided by investing activities |
( |
) | ||||||
| Cash flows from financing activities: |
||||||||
| Taxes payments on stock-based compensation for exchange of common stock |
( |
) | ||||||
| Purchase of treasury stock |
( |
) | ||||||
| Net cash used in financing activities |
( |
) | ( |
) | ||||
| Effect of exchange rate changes on cash |
( |
) | ||||||
| (Decrease) in cash and cash equivalents |
( |
) | ( |
) | ||||
| Cash and cash equivalents, beginning of period |
||||||||
| Cash and cash equivalents, end of period |
$ | $ | ||||||
| SUPPLEMENTAL CASH FLOW INFORMATION: |
||||||||
| Cash paid for income taxes |
$ | $ | ||||||
| Financing receivables related to sale of rental equipment |
||||||||
| Inventory transferred to rental equipment |
||||||||
The accompanying notes are an integral part of the consolidated financial statements.
GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
1. Significant Accounting Policies
Basis of Presentation
The consolidated balance sheet of Geospace Technologies Corporation and its subsidiaries (the “Company”) at September 30, 2025, was derived from the Company’s audited consolidated financial statements at that date. The consolidated balance sheet at December 31, 2025 and the consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for the three months ended December 31, 2025 and 2024 were prepared by the Company without audit. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary to present fairly the consolidated financial position, results of operations and cash flows were made. All significant intercompany balances and transactions have been eliminated. The results of operations for the three months ended December 31, 2025, are not necessarily indicative of the operating results for a full year or of future operations.
Certain information and footnote disclosures normally included in financial statements presented in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") were omitted pursuant to the rules of the Securities and Exchange Commission. The accompanying consolidated financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended September 30, 2025.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires the use of estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company considers many factors in selecting appropriate operational and financial accounting policies and controls, and in developing the estimates and assumptions that are used in the preparation of these financial statements. The Company continually evaluates its estimates, including those related to revenue recognition, credit loss, collectability of rental revenue, inventory obsolescence reserves, self-insurance reserves, product warranty reserves, useful lives of long-lived assets, impairment of long-lived assets, impairment of goodwill and other intangible assets, contingent consideration and deferred income tax assets. The Company bases its estimates on historical experience and various other factors that are believed to be reasonable under the circumstances. While management believes current estimates are reasonable and appropriate, actual results may differ from these estimates under different conditions or assumptions.
Reclassifications
Certain amounts previously reported in the consolidated financial statements have been reclassified to conform to the current year presentation. Such reclassifications had no effect on our previously reported net loss, stockholders' equity or cash flows.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with an original or remaining maturity at the time of purchase of three months or less to be cash equivalents. At December 31, 2025 and September 30, 2025, cash and cash equivalents included $
Concentration of Credit Risk
The Company sells products to customers throughout the United States and various foreign countries. The Company’s normal credit terms for trade receivables are
The Company had trade accounts and financing receivables from customers of $
Impairment of Long-lived Assets
The Company's long-lived assets are reviewed for impairment whenever an event or circumstance indicates that the carrying amount of an asset or group of assets may not be recoverable. The impairment review, if necessary, includes a comparison of the expected future cash flows (undiscounted and without interest charges) to be generated by an asset group with the associated carrying value of the related assets. If the carrying value of the asset group exceeds the expected future cash flows, an impairment loss is recognized to the extent that the carrying value of the asset group exceeds its fair value. During the quarter ended December 31, 2025, no events or changes in circumstances were identified indicating the carrying value of any of the Company's asset groups may not be recoverable.
Goodwill
The Company conducts its evaluation of goodwill at the reporting unit level on an annual basis as of September 30 and more frequently if events or circumstances indicate that the carrying value of a reporting unit exceeds its fair value. The Company first assesses qualitative factors to determine if the fair value of a reporting unit exceeds its carrying amount. If, based on the qualitative assessment of events or circumstances, the Company determines it is more likely than not that the fair value of a reporting unit is more than its carrying amount then it does not perform a quantitative assessment. However, if the Company concludes otherwise, then it performs a quantitative assessment. If, based on the quantitative assessment, the Company determines that the fair value of a reporting unit is less that its carrying amount, a goodwill impairment is recognized equal to the difference between the carrying amount of the reporting unit and its fair value, not to exceed the carrying amount of the goodwill.
Business Acquisitions
The Company accounts for its business acquisitions under the acquisition method of accounting. The total value of the consideration paid for acquisitions is allocated to the underlying net assets acquired, based on their respective estimated fair values. The Company uses multiple valuation methods to determine the fair value of assets and liabilities acquired, including discounted cash flows, external market values, valuations on recent transactions or a combination thereof, and believes that it uses the most appropriate measure or a combination of measures to value each asset or liability. The Company utilized the excess earnings method to value its fourth quarter fiscal year 2025 acquisition of Geovox Securities, Inc. ("Geovox"). The Company recognizes measurement-period adjustments in the reporting period in which the adjustment amounts are determined.
Contingent Consideration
The Company established an earn-out liability in connection with its acquisition of Geovox in the fourth quarter of fiscal year 2025. The Company engaged the services of a valuation firm to measure the fair value of the liability. The valuation technique used to measure the fair value of the liability was a Monte Carlo simulation. The primary inputs included revenue forecast, risk free rate, revenue volatility, revenue discount rate and payment discount rate. The Company reviews and assesses the value of the liability on a quarterly basis. Adjustments, if any, will be included as a component of earnings in the consolidated statements of operations.
Research and Development
We incur significant future research and development expenditures. These efforts are primarily aimed at the development of additional products for each of our business segments. The majority of our product research and development costs relates to the Company's engineers. The Company's engineering staff have been key to our past success. Research and development expense includes personnel costs of the Company's engineers, project expenditures, on-going product maintenance and improvements to our existing products, as well as general and administrative expenses associated with the engineering department. Research and development expense for the three months ended December 31, 2025 and 2024 was $
Recently Issued Accounting Pronouncements
In November 2024, the Financial Accounting Standards Board ("'FASB"), as further amended in January 2025, issued guidance requiring enhanced disclosures in financial statements by requiring detailed disclosures of specific expenses like inventory purchases, employee compensation, depreciation, and intangible asset amortization. The guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the provisions of this guidance and the impact on its consolidation financial statements.
In December 2023, the FASB issued guidance improvements on income tax disclosure which will require the Company to disclose specified additional information in its income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. The guidance will also require the Company to disaggregate its income taxes paid disclosure by federal, state and foreign taxes, with further disaggregation required for significant individual jurisdictions. The Company will adopt this guidance in its fourth quarter of fiscal year 2026. The guidance allows for adoption using either a prospective or retrospective transition method. The adoption of this guidance is not expected to have any material impact on its consolidation financial statements.
All other new accounting pronouncements that have been issued, but are not yet effective, are currently being evaluated and at this time are not expected to have a material impact on the Company's financial position or results of operations.
2. Revenue Recognition
In accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), the Company recognizes revenue when performance of contractual obligations are satisfied, generally when control of the promised goods or services is transferred to its customers, in an amount that reflects the consideration it expects to be entitled to in exchange for those goods or services.
The Company primarily derives product revenue from the sale of its manufactured products. Revenue from these product sales, including the sale of used rental equipment, is recognized when obligations under the terms of a contract are satisfied, control is transferred and collectability of the sales price is probable. The Company records deferred revenue when customer funds are received prior to shipment, or delivery or performance has not yet occurred. The Company assesses collectability during the contract assessment phase. In situations where collectability of the sales price is not probable, the Company recognizes revenue when it determines that collectability is probable or when non-refundable cash is received from its customers and there is not a significant right of return. Transfer of control generally occurs with shipment or delivery, depending on the terms of the underlying contract. The Company’s products are generally sold without any customer acceptance provisions, and the Company’s standard terms of sale do not allow customers to return products for credit.
The Company occasionally recognizes revenue from contracts throughout the manufacturing or service process, even prior to delivery of the completed product or service to the customer. This overtime recognition of revenue requires that either (i) the customer simultaneously receives and consumes the economic benefits the Company provides, (ii) the Company creates or enhances an asset controlled by the customer or (iii) the Company’s performance does not create an asset for which the it has an alternative use and has an enforceable right to payment for performance completed to date.
Revenue from engineering services is recognized as services are rendered over the duration of a project, or as billed on a per hour basis. Field service revenue is recognized when services are rendered and is generally priced on a per day rate.
As permissible under ASC 606, sales taxes and transaction-based taxes are excluded from revenue. The Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected duration of one year or less. Additionally, the Company expenses costs incurred to obtain contracts when incurred because the amortization period would have been one year or less. These costs are recorded in selling, general and administrative expenses.
The Company has elected to treat shipping and handling activities in a sales transaction after the customer obtains control of the goods as a fulfillment cost and not as a promised service. Accordingly, fulfillment costs related to the shipping and handling of goods are accrued at the time of shipment. Amounts billed to a customer in a sales transaction related to reimbursable shipping and handling costs are included in revenue and the associated costs incurred by the Company for reimbursable shipping and handling expenses are reported in cost of revenue.
The Company also generates revenue from short-term rentals under operating leases of its manufactured products. Rentals of the Company’s equipment generally range from daily rentals to minimum rental periods of up to one year. Rental revenue is recognized within the scope of ASC 842, Leases ("ASC 842"). The Company regularly evaluates the collectability of its lease receivables on a lease-by-lease basis. The evaluation primarily consists of reviewing past due account balances and other factors such as the credit quality of the customer, historical trends of the customer and current economic conditions. In accordance with ASC 842, rental revenue is recognized as earned over the rental period if collectability of the rent is reasonably assured. When collectability of amounts are no longer probable the Company records a direct write-off of the rent receivable to rental revenue and limits future rental revenue recognition to cash received. During the second quarter of fiscal year 2025, the Company determined the collectability of receivables from a rental customer was less than probable. As a result of this determination, the rent receivable balance due from this customer of $
At December 31, 2025 and September 30, 2025, the Company had
For the three months ended December 31, 2025 and 2024 revenue of $
At December 31, 2025, the aggregate amount of transaction price allocation to unsatisfied performance obligations on contracts with a duration in excess of one year was approximately $
| Three Months Ended | ||||||||
| December 31, 2025 | December 31, 2024 | |||||||
| Smart Water | $ | $ | ||||||
| Energy Solutions | ||||||||
| Intelligent Industrial | ||||||||
| Total | $ | $ | ||||||
See Note 12 for more information on the Company’s operating business segments.
For each of the geographic areas where the Company operates, the following table presents revenue (in thousands) from the sale of products and services under contracts with customers. The table excludes all revenue earned from rental contracts:
| Three Months Ended | ||||||||
| December 31, 2025 | December 31, 2024 | |||||||
| Asia (including Russian Federation) | $ | $ | ||||||
| Canada | ||||||||
| Europe | ||||||||
| Mexico | ||||||||
| South America | ||||||||
| United States | ||||||||
| Other | ||||||||
| Total | $ | $ | ||||||
Revenue is attributable to countries based on the ultimate destination of the product sold, if known. If the ultimate destination is not known, revenue is attributable to countries based on the geographic location of the initial shipment.
3. Fair Value of Financial Instruments
The Company’s financial instruments generally include cash and cash equivalents, short-term investments, trade accounts and financing receivables and accounts payable. Due to the short-term maturities of cash and cash equivalents, trade accounts receivable and accounts payable, the carrying amounts of these financial instruments are deemed to approximate their fair value on the respective balance sheet dates. The Company measures its contingent consideration at fair value on a recurring basis.
The following tables present the fair value of the Company’s contingent consideration and note receivable on sale of subsidiary by valuation hierarchy and input (in thousands):
| As of December 31, 2025 | ||||||||||||||||
| (Level 1) | (Level 2) | (Level 3) | Totals | |||||||||||||
| Recurring: | ||||||||||||||||
| Contingent Consideration | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||
| As of September 30, 2025 | ||||||||||||||||
| (Level 1) | (Level 2) | (Level 3) | Totals | |||||||||||||
| Recurring: | ||||||||||||||||
| Contingent consideration | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||
In connection with the Company's acquisition of Geovox in August 2025, it recorded an initial contingent earn-out liability of $
| Contingent consideration balance at October 1, 2025 | $ | |||
| Fair value adjustments | ||||
| Contingent consideration at December 31, 2025 | $ | |||
Assets and liabilities Measured on a Nonrecurring basis
4. Trade Accounts and Financing Receivables
Trade accounts receivable, net, reflected in the following table (in thousands):
| December 31, 2025 | September 30, 2025 | |||||||
| Trade accounts receivable | $ | $ | ||||||
| Allowance for credit losses | ( | ) | ( | ) | ||||
| Total trade accounts receivable | $ | $ | ||||||
The Company determines the allowance for credit losses through a review of several factors, including historical collection experience, customer credit worthiness, current aging of customer accounts and current financial conditions of its customers. Trade accounts receivable balances are charged off against the allowance whenever it is probable that the receivable balance will not be recoverable.
Allowance for credit losses related to trade accounts receivable are reflected in the following table (in thousands):
| Three Months Ended | ||||||||
| December 31, 2025 | December 31, 2024 | |||||||
| Allowance for credit losses: | ||||||||
| Beginning of period | $ | $ | ||||||
| Provision for credit losses | ||||||||
| Recoveries | ( | ) | ||||||
| End of period | $ | $ | ||||||
Financing receivables, net, are reflected in the following table (in thousands):
| December 31, 2025 | September 30, 2025 | |||||||
| Promissory notes | $ | $ | ||||||
| Sales-type lease | ||||||||
| Total financing receivables | ||||||||
| Discount to fair value and unearned income | ( | ) | ( | ) | ||||
| Total financing receivables, net | ||||||||
| Less current portion | ( | ) | ( | ) | ||||
| Non-current financing receivables | $ | $ | ||||||
During the first quarter of fiscal year 2026, the Company entered into three promissory notes totaling $
During the fourth quarter of fiscal year 2025, The Company entered into two promissory notes totaling $
In November 2024, the Company entered into a sales-type lease with a customer on ocean bottom equipment from its rental fleet. The lease, which matured in October 2025, had a remaining unpaid principal balance of $
In August 2024, the Company entered into a $
In August 2024, the Company entered into a $
Credit quality indicators used for the financing receivables consisted of historical collection experience, internal credit risk grades and collateral. The Company determined the allowance for credit losses through a review of several factors, including historical collection experience, customer credit worthiness, current aging of customer accounts and current financial conditions of its customers.
5. Inventories
Inventories consist of the following (in thousands):
| December 31, 2025 | September 30, 2025 | |||||||
| Finished goods | $ | $ | ||||||
| Work in process | ||||||||
| Raw materials | ||||||||
| Obsolescence reserve (net realizable value adjustment) | ( | ) | ( | ) | ||||
| Total | ||||||||
| Less current portion | ||||||||
| Non-current portion | $ | $ | ||||||
Inventory obsolescence expense for the three months ended December 31, 2025 and 2024 was $
6. Property, Plant and Equipment
Property, plant and equipment consist of the following (in (thousands):
| December 31, 2025 | September 30, 2025 | |||||||
| Land and land improvements | $ | $ | ||||||
| Building and building improvements | ||||||||
| Machinery and equipment | ||||||||
| Furniture and fixtures | ||||||||
| Tools and molds | ||||||||
| Construction in progress | ||||||||
| Transportation equipment | ||||||||
| Accumulated depreciation and impairment | ( | ) | ( | ) | ||||
| $ | $ | |||||||
Property, plant and equipment depreciation expense for the three months ended December 31, 2025 and 2024 was $
7. Rental Equipment
The Company leases equipment to customers which generally range from daily rentals to minimum rental periods of up to year. All of the Company’s current leasing arrangements for which the Company acts as lessor, are classified as operating leases, except for one sales-type lease. The majority of the Company’s rental revenue is generated from its ocean bottom nodes.
The Company regularly evaluates the collectability of its lease receivables on a lease-by-lease basis. The evaluation primarily consists of reviewing past due account balances and other factors such as the credit quality of the customer, historical trends of the customer and current economic conditions. The Company suspends revenue recognition when the collectability of amounts due are no longer probable and concurrently records a direct write-off of the lease receivable to rental revenue and limits future rental revenue recognition to cash received.
At each of December 31, 2025 and 2024 and September 30, 2025, the Company’s trade accounts receivable included lease receivables of $
Future minimum lease obligations due from the Company’s leasing customers on operating leases executed as of December 31, 2025, were $
Rental equipment consisted of the following (in thousands):
| December 31, 2025 | September 30, 2025 | |||||||
| Rental equipment, primarily wireless recording equipment | $ | $ | ||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| $ | $ | |||||||
Rental equipment depreciation expense for the three months ended December 31, 2025 and 2024 was $
8. Long-Term Debt
The Company had
On August 29, 2025, the Company amended its credit agreement (“the Agreement”) with Woodforest National Bank. The Agreement extended the Company’s revolving loan agreement, dated as of July 26, 2023, with Woodforest. The Agreement is for a three-year term and provides a revolving credit facility with a maximum availability of $
At December 31, 2025, the Company was in compliance with all covenants under the Agreement.
9. Stock-Based Compensation
During the three months ended December 31, 2025, the Company issued
For the three months ended December 31, 2025 and 2024, stock-based compensation expense was $
10. Earnings (Loss) Per Common Share
The following table summarizes the calculation of net earnings (loss) and weighted average common shares and common equivalent shares outstanding for purposes of the computation of earnings (loss) per share (in thousands, except share and per share data):
| Three Months Ended | ||||||||
| December 31, 2025 | December 31, 2024 | |||||||
| Net income (loss) | $ | ( | ) | $ | ||||
| Weighted average number of common share equivalents: | ||||||||
| Common shares used in basic earnings (loss) per share | ||||||||
| Common share equivalents outstanding related to RSUs | ||||||||
| Total weighted average common shares and common share equivalents used in diluted earnings (loss) per share | ||||||||
| Earnings (loss) per share: | ||||||||
| Basic | $ | ( | ) | $ | ||||
| Diluted | $ | ( | ) | $ | ||||
For the calculation of diluted income (loss) per share for the three months ended December 31, 2025 and 2024, non-vested RSU's of
11. Commitments and Contingencies
Contingent Compensation Costs
In August 2024, the Company acquired Geovox Security, Inc. In connection with the acquisition, the Company recorded an initial contingent earn-out liability of $
In July 2021, the Company acquired Aquana, LLC (“Aquana”). Pursuant to the merger agreement with Aquana, as amended ("the Merger Agreement"), the Company is subject to additional contingent cash payments to the former members of Aquana over a -year earn-out period. The contingent payments, if any, will be derived from certain eligible revenue generated during the earn-out period from products and services sold by Aquana. There is no maximum limit to the contingent cash payments that could be made. The Merger Agreement requires the continued employment of a certain key employee and former member of Aquana for the first years of the -year earn-out period in order for any of Aquana’s former members to be eligible for any earn-out payments. Due to the continued employment requirement, no liability has been recorded for the estimated fair value of earn-out payments for this transaction. Earn-outs achieved are recorded as compensation expense when incurred.
Legal Proceedings
The Company is involved in various pending legal actions in the ordinary course of its business. Management is unable to predict the ultimate outcome of these actions, because of the inherent uncertainty of such actions. However, management believes that the most probable, ultimate resolution of current pending matters will not have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.
12. Segment Information
The Company's business are comprised of: Smart Water, Energy Solutions and Intelligent Industrial. The Smart Water segment emphasizes the Company’s targeted approach in the water management industry. This business segment contains the Hydroconn® smart water connectivity offerings and the Company's Aquana products. The Energy Solutions segment encompasses the Company’s traditional business in oil and gas land and ocean bottom exploration products, reservoir monitoring solutions, and will additionally incorporate emerging energy solutions and microseismic monitoring. This segment will include energy-related business from Quantum’s SADAR® products and associated analytics. The Intelligent Industrial segment includes seismic sensor products used for vibration monitoring geotechnical applications such as mine safety applications and earthquake detection, designs seismic products targeted at the border and perimeter security markets, imaging products, as well as providing contract manufacturing services.
The Company defines its segments as those operations our chief operating decision maker (“CODM”) regularly reviews to analyze performance and allocate resources. The Company’s CODM is the Chief Executive Officer. The CODM regularly reviews revenue, gross profit, operating expenses and operating income (loss) by segment as the primary measures of segment performance. The CODM reviews revenue as a primary indicator of operational performance, assessing how much revenue is brought in from core business activities, which reflects demand and execution of each segment’s strategy. Gross profit, is reviewed by the CODM as a diagnostic metric and is particularly useful in evaluating margin trends. Operating income is the key profitability metric used to assess performance across segments and make decisions related to resource allocation, including capital expenditures, headcount, and other investment initiatives. Each of these metrics are considered in budgeting, forecasting, and operational planning decisions.
For financial reporting purposes, we are organized into these reportable segments and “Corporate”, which includes the remainder of our businesses. The following table summarizes the Company’s segment information (in thousands).
| Three Months Ended | ||||||||
| December 31, 2025 | December 31, 2024 | |||||||
| Revenue: | ||||||||
| Smart Water | $ | $ | ||||||
| Energy Solutions | ||||||||
| Intelligent Industrial | ||||||||
| Corporate | ||||||||
| Cost of revenue: | ||||||||
| Smart Water | ||||||||
| Energy Solutions | ||||||||
| Intelligent Industrial | ||||||||
| Corporate | ||||||||
| Gross profit (loss): | ||||||||
| Smart Water | ||||||||
| Energy Solutions | ( | ) | ||||||
| Intelligent Industrial | ||||||||
| Corporate | ( | ) | ||||||
| Operating expenses: | ||||||||
| Smart Water | ||||||||
| Energy Solutions | ||||||||
| Intelligent Industrial | ||||||||
| Corporate | ||||||||
| Income (loss) from operations: | ||||||||
| Smart Water | ( | ) | ||||||
| Energy Solutions | ( | ) | ||||||
| Intelligent Industrial | ( | ) | ( | ) | ||||
| Corporate | ( | ) | ( | ) | ||||
| ( | ) | |||||||
| Other segment disclosures: | ||||||||
| Interest income: | ||||||||
| Smart Water | ||||||||
| Energy Solutions | ||||||||
| Intelligent Industrial | ||||||||
| Corporate | ||||||||
| Interest expense: | ||||||||
| Smart Water | ||||||||
| Energy Solutions | ( | ) | ||||||
| Intelligent Industrial | ||||||||
| Corporate | ||||||||
| ( | ) | |||||||
| Depreciation and amortization expenses: | ||||||||
| Smart Water | ||||||||
| Energy Solutions | ||||||||
| Intelligent Industrial | ||||||||
| Corporate | ||||||||
| Inventory obsolescence and stock-based compensation expenses: | ||||||||
| Smart Water | ||||||||
| Energy Solutions | ||||||||
| Intelligent Industrial | ||||||||
| Corporate | ||||||||
The Company's manufacturing operations for its operating business segments are combined. Therefore, the Company does not segregate and report separate balance sheet accounts for each of its segments and therefore, no such segment balance sheet information is presented in the table above.
"Corporate" expense from operations primarily consists of the Company's Houston headquarters general and administrative expenses.
The Company generates revenue from product sales, product rentals and services from its subsidiaries located in the United States, Canada and the United Kingdom. Revenue generated by the Company's subsidiaries is as follows (in thousands):
| Three Months Ended | ||||||||
| December 31, 2025 | December 31, 2024 | |||||||
| United States | $ | $ | ||||||
| Canada | ||||||||
| United Kingdom | ||||||||
| $ | $ | |||||||
A summary of revenue by Geographic area is as follows (in thousands):
| Three Months Ended | ||||||||
| December 31, 2025 | December 31, 2024 | |||||||
| Asia (including Russian Federation) | $ | $ | ||||||
| Canada | ||||||||
| Europe | ||||||||
| Mexico | ||||||||
| South America | ||||||||
| United States | ||||||||
| Other | ||||||||
| $ | $ | |||||||
Revenue is attributable to countries based on the ultimate destination of the product sold, if known. If the ultimate destination is not known, revenue is attributed to countries based on the geographic location of the initial shipment.
Long-lived asset balances are as follows (in thousands):
| December 31, 2025 | September 30, 2025 | |||||||
| United States | $ | $ | ||||||
| Canada | ||||||||
| Colombia | ||||||||
| United Kingdom | ||||||||
| $ | $ | |||||||
13. Income Taxes
Consolidated income tax expense for each of the three months ended December 31, 2025 and 2024 was $
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following is management’s discussion and analysis of the major elements of our consolidated financial statements. You should read this discussion and analysis together with our consolidated financial statements, including the accompanying notes, and other detailed information appearing elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended September 30, 2025.
Forward-Looking Statements
This Quarterly Report on Form 10-Q and the documents incorporated by reference herein contain “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements can be identified by terminology such as “may”, “will”, “should”, “could”, “intend”, “expect”, “plan”, “budget”, “forecast”, “anticipate”, “believe”, “estimate”, “predict”, “potential”, “continue”, “evaluating”, or similar words. Statements that contain these words should be read carefully because they discuss our future expectations, contain projections of our future results of operations or of our financial position or state other forward-looking information. Examples of forward-looking statements include, among others, statements that we make regarding our expected operating results, the timing, adoption, results and success of our rollout of our Aquana smart water valves and cloud-based control platform, future demand for our Quantum security solutions, the adoption and sale of our products in various geographic regions, potential tenders for permanent reservoir monitoring systems, sales or rentals for our ocean bottom nodes, the adoption of Quantum's SADAR® product monitoring of subsurface reservoirs, the completion of new orders for channels of our Pioneer™ system, the fulfillment of customer payment obligations, the impact of the current armed conflict between Russia and Ukraine, our ability to manage changes and the continued health or availability of management personnel, volatility and direction of oil prices, anticipated levels of capital expenditures and the sources of funding therefor, and our strategy for growth, product development, market position, financial results and the provision of accounting reserves. These forward-looking statements reflect our current judgment about future events and trends based on the information currently available to us. However, there will likely be events in the future that we are not able to predict or control. The factors listed under the caption “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2025, as well as other cautionary language in such Annual Report and this Quarterly Report on Form 10-Q, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. Such examples include, but are not limited to, the failure of the Quantum and OptoSeis® or Aquana technology transactions to yield positive operating results, decreases in commodity price levels, the failure of our products to achieve market acceptance (despite substantial investment by us), our sensitivity to short term backlog, delayed or cancelled customer orders, product obsolescence resulting from poor industry conditions or new technologies, credit losses associated with customer accounts, inability to collect on financing receivables, lack of further orders for our ocean bottom rental equipment, failure of our Quantum products to be adopted by the border and security perimeter market or a decrease in such market due to governmental changes, and infringement or failure to protect intellectual property. The occurrence of the events described in these risk factors and elsewhere in this Quarterly Report on Form 10-Q could have a material adverse effect on our business, results of operations and financial position, and actual events and results of operations may vary materially from our current expectations. We assume no obligation to revise or update any forward-looking statement, whether written or oral, that we may make from time to time, whether as a result of new information, future developments or otherwise.
Available Information
We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission (“SEC”). Our SEC filings are available to the public over the internet at the SEC’s website at www.sec.gov. Our SEC filings are also available to the public on our website at www.geospace.com. From time to time, we may post investor presentations on our website under the “Investor Relations” tab. Please note that information contained on our website, whether currently posted or posted in the future, is not a part of this Quarterly Report on Form 10-Q or the documents incorporated by reference in this Quarterly Report on Form 10-Q.
Overview
Unless otherwise specified, the discussion in this Quarterly Report on Form 10-Q refers to Geospace Technologies Corporation and its subsidiaries. We design and manufacture sophisticated technology solutions for applications in smart water management and energy exploration. Our seismic equipment and services are marketed to the energy exploration industry and used to locate, characterize and monitor hydrocarbon producing reservoirs. We also market our seismic products to other industries for vibration monitoring, border and perimeter security and various geotechnical applications. We design and manufacture other products of a non-seismic nature, including Hydroconn® connector cables, imaging equipment, remote shutoff water valves and Internet of Things ("IoT") platform. Additionally, the company provides specialized contract manufacturing services. In recent years, the revenue contribution from our non-energy related products has grown to represent nearly half of our total revenue. Our business diversification strategy has centered largely on translating expertise in ruggedized engineering and technology manufacturing into expanded customer markets.
Products and Product Development
Smart Water
Our Smart Water segment emphasizes our targeted approach to growing its footprint in the water management industry. This business segment contains the highly successful Hydroconn® smart water connectivity offerings along with the Aquana products.
The adoption of advanced technology in water management has been bolstered by U.S. Federal funding programs such as Water Infrastructure Finance Act funding, which provides $7.5 billion for water-related infrastructure projects.
Over the last decade, we have seen an increase of over 400% in sales volume of our Hydroconn® connector cables used in Automated Meter Reading (AMR) applications. These cables play a role in Advanced Metering Infrastructure (AMI) by enabling remote collection of usage data from utility meters, thereby eliminating the need for manual meter reading.
Our remote disconnect valves and water IoT platform allows customers that manage multi-family and commercial properties to monitor their properties for leak and burst events, with real-time notifications, complimented with our remote-shut off to stop water damage. These products also allow water utilities to re-claim non-revenue water at a lower energy and field service cost through remote control of water service without placing their employees in potential harm or danger.
Energy Solutions
Our Energy Solutions business segment has historically accounted for the majority of our revenue. Geoscientists use seismic data primarily in connection with the exploration, development and production of oil and gas reserves to map potential and known hydrocarbon bearing formations and the geologic structures that surround them. This segment’s products include wireless seismic data acquisition systems, reservoir characterization products and services, and traditional seismic exploration products such as geophones, hydrophones, leader wire, connectors, cables and various other seismic products. We believe our Energy Solutions products are among the most technologically advanced instruments and equipment available for seismic data acquisition.
Our seismic sensor, cable and connector products are compatible with most major competitive seismic data acquisition systems currently in use. Revenue from these products results primarily from seismic contractors purchasing our products as components of new seismic data acquisition systems or to repair and replace components of seismic data acquisition systems already in use.
We have developed multiple versions of a land-based wireless (or nodal) seismic data acquisition system including our most recent launch of the Pioneer™, an ultralight wireless sensor product. We believe our wireless sensor systems allow our customers to operate more effectively and efficiently because of their reduced environmental impact, lower weight, ease of operation and fewer maintenance requirements.
We have also developed an ocean bottom seismic data acquisition system called the OBX, and recently released Mariner® and Mariner Deep®. Similar to our land-based wireless systems, these ocean bottom systems may be deployed in virtually unlimited channel configurations and do not require interconnecting cables between each station. The Mariner® is a continuous, cable-free, four channel autonomous, shallow water ocean bottom recorder. Mariner™ is the next generation node designed for extended duration seabed ocean bottom seismic data acquisition. The slim profile nodes, which are part of our shallow water stations, are ideally deployed as deep as 750 meters. The device continuously records for up to 70 days and offers more rapid recharging times. Its slim profile creates space savings on seismic survey vessels, allowing contractors to fit up to 25% more nodes into a download/charge container. Mariner Deep® is a deepwater, wireless seismic acquisition node capable of operating for 200 days in water as deep as 3,450 meters.
Additionally, we have developed high-definition permanent reservoir monitoring systems ("PRM") for land and ocean-bottom applications in producing oil and gas fields. Our primary offering, OptoSeis® fiber optic sensing technology, provides high-definition seismic data acquisition systems with a flexible architecture, allowing them to be configured as a subsurface system for both land and marine reservoir-monitoring projects.
We also have a derivative of the OptoSeis® technology for high temperature downhole applications. The product, known as Insight by OptoSeis, offers a passive, all-optical downhole sensor network - no electronics downhole - resulting a year's long operational lifetime at 150°C.
We also produce seismic borehole acquisition systems that employ a fiber optic augmented wireline capable of very high data transmission rates. These systems are used for several reservoir monitoring applications, including an application pioneered by us allowing operators and service companies to monitor and measure the results of hydraulic fracturing operations.
Our SADAR® technology provides energy companies real-time monitoring of seismic data.
Intelligent Industrial
Our Intelligent Industrial segment consists of industrial sensors, electronic pre-press solutions and specialized contract manufacturing. The growing defense and security applications offered by Quantum and Heartbeat Detector® will also be reflected in this segment.
Our robust manufacturing capabilities have allowed us to provide specialized contract manufacturing services for printed circuit board manufacturing, cabling and harnesses, machining, injection molding and electronic system assembly.
Our seismic sensors provide unique high definition, low frequency sensing that allows for vibration monitoring in industrial machinery, mine safety and earthquake detection.
Imaging Products
Our imaging products include electronic pre-press products that employ direct thermal imaging, direct-to-screen printing systems, and digital inkjet printing technologies targeted at the commercial graphics, industrial graphics, textile and flexographic printing industries.
Defense and Security
Our Quantum product line includes SADAR®, a proprietary detection system which detects, locates and tracks items of interest in real-time. Using the SADAR® technology, Quantum designs and sells products used for border and perimeter security surveillance, cross-border tunneling detection and other products targeted at movement monitoring, intrusion detection and situational awareness. Quantum’s customers include various agencies of the U.S. government including the Department of Defense, Department of Energy, Department of Homeland Security and other agencies.
In August 2025, we acquired Heartbeat Detector® by purchasing all of the outstanding common stock of Geovox Securities, Inc. ("Geovox"). Heartbeat Detector® is a heartbeat detection security technology developed by the United States Department of Energy’s Oak Ridge National Laboratory which bolsters our perimeter security and surveillance offerings. Used in more than a dozen countries to address human trafficking and prison security, the Heartbeat Detector® uses proprietary sensors to rapidly identify people hidden in vehicles, providing a modern, user-friendly interface in as little as 10 seconds. The product, which relies on geophones we manufacture, has been proven 99% effective by Oak Ridge, Sandia and Thunder Mountain national laboratories.
Consolidated Results of Operations
We report and evaluate financial information for three segments: Smart Water, Energy Solutions, and Intelligent Industrial Markets. Summary financial data by business segment follows (in thousands):
| Three Months Ended |
||||||||
| December 31, 2025 |
December 31, 2024 |
|||||||
| Smart Water |
||||||||
| Product revenue |
$ | 5,756 | $ | 7,288 | ||||
| Income (loss) from operations |
(801 | ) | 370 | |||||
| Energy Solutions |
||||||||
| Product revenue |
13,573 | 19,826 | ||||||
| Rental revenue |
1,063 | 4,456 | ||||||
| Total revenue |
14,636 | 24,282 | ||||||
| Income (loss) from operations |
(3,434 | ) | 13,282 | |||||
| Intelligent Industrial |
||||||||
| Product revenue |
5,060 | 5,531 | ||||||
| Rental revenue |
51 | 46 | ||||||
| Total revenue |
5,111 | 5,577 | ||||||
| Loss from operations |
(813 | ) | (940 | ) | ||||
| Corporate |
||||||||
| Rental revenue |
83 | 76 | ||||||
| Loss from operations |
(5,199 | ) | (4,877 | ) | ||||
| Consolidated Totals |
||||||||
| Product revenue |
24,389 | 32,645 | ||||||
| Rental revenue |
1,197 | 4,578 | ||||||
| Total revenue |
25,586 | 37,223 | ||||||
| Income (loss) from operations |
$ | (10,247 | ) | $ | 7,835 | |||
Business Overview
Growing industry acceptance of our water meter cables and connectors provides a strong enabler for additional revenue from our Smart Water segment. Automatic meter reading efficiencies in operations and improved customer service has begun to be understood by the municipalities of the United States. We expect this portion of our business to continue to grow for the foreseeable future. Additionally, we anticipate this segment to see revenue contributions from our Aquana smart water valve and IoT technology products as market traction and increased sales backlog continues to gather. Given the well-known and often extreme volatility experienced in our Energy Solutions segment, careful expansion of products and market diversity in our Smart Water and Intelligent Industrial segments has been a longstanding part of our strategic vision and reflects our on-going diversification efforts.
Our Energy Solution segment saw a shift from rentals of our ocean bottom nodes to purchases of the equipment in fiscal years 2024 and 2025. This shift signifies our customer’s recognition of future backlog to justify ownership versus renting the nodes. We do not expect significant expansion of the ocean bottom nodal market, because we expect the market is saturable and future rental fleet use will come from our customers' need to temporarily expand their nodal fleet. We expect our Energy Solutions segment to provide a significant portion of our revenue for years to come, but in diminishing portion to our other segments. During the third quarter of fiscal year 2025, we entered into a PRM contract. The majority of the contract is expected to be completed in approximately 18 months. Revenue will be recognized in our Energy Solutions segment over the duration of the contract.
We continue to maintain a strong balance sheet with no debt. Our current liquidity enables our ability to seek out business acquisitions and allows us to continue investments in capital assets and product research and development, which have historically driven revenue growth.
Three months ended December 31, 2025, compared to the three months ended December 31, 2024
Consolidated revenue for the three months ended December 31, 2025, was $25.6 million, a decrease of $11.6 million, or 31.3%, from the corresponding period of the prior fiscal year. The decrease for the three months ended December 31, 2025 was primarily due to a decrease in revenue from our Energy Solutions segment attributable to (i) a $17 million sale of ocean bottom nodes in the first quarter of fiscal year 2025 and (ii) lower utilization of our ocean bottom nodes rental fleet. The decrease was largely offset by an increase in demand for our wireless land-based Pioneer™. The decrease in consolidated revenue was also attributable to lower demand for our Hydroconn® cable and connector products from our Smart Water segment.
Consolidated gross profit for the three months ended December 31, 2025, was $2.7 million, a decrease of $17.5 million, or 86.6%, from the corresponding period of the prior fiscal year. The decrease in gross profit for the three months ended December 31, 2025 was primarily due to the decrease in revenue from our Energy Solutions segment coupled by a high gross margin on our $17 million sale of ocean bottom nodes in the first quarter of fiscal year 2025. The decrease in gross profit was also attributable to a lower utilization of our ocean bottom rental fleet, in addition to an increase in tariffs on the raw materials we purchase.
Consolidated operating expenses for the three months ended December 31, 2025, were $12.9 million, an increase of $0.6 million, or 5.1%, from the corresponding period of the prior fiscal year. The increase for the three months ended December 31, 2025 was primarily due to (i) an increase in sales and marketing costs and (ii) a change in the fair value of contingent consideration. The increase was partially offset by (i) a decrease in personnel costs, primarily severances and (ii) lower research and development project expenditures.
Consolidated other income decreased $0.1 million, or 13.9% for the three months ended December 31, 2025, from the corresponding period of the prior fiscal year. The decrease for the three months ended December 31, 2025 was principally due to a decrease in interest income on short-term investments, partially offset by an increase in interest income on our financing receivables.
Segment Results of Operations
Smart Water
Revenue
Revenue from our Smart Water segment for the three months ended December 31, 2025, decreased $1.5 million, or 21.0%, from the corresponding period of the prior fiscal year. The decrease was primarily due to a decrease in demand for our Hydroconn® cable and connector products.
Operating Income (Loss)
Operating loss from our Smart Water segment for the three months ended December 31, 2025, was $(0.8) million, in comparison to operating income of $0.4 million from the corresponding period of the prior fiscal year. The decrease was primarily due the decrease in revenue and higher research and development costs.
Energy Solutions
Revenue
Revenue from our Energy Solutions segment for the three months ended December 31, 2025, decreased $9.6 million, or 39.7%, from the corresponding period of the prior fiscal year. The components of this decrease were as follows:
| ● |
Product Revenue – For the three months ended December 31, 2025, product revenue decreased $6.3 million, or 31.5%, from the corresponding period of the prior fiscal year. Revenue for the three months ended December 31, 2024 included a $17 million sale of ocean bottom nodes. The decrease for the three months ended December 31, 2025 was partially offset by an increase in demand for our wireless land-based Pioneer™. |
| ● |
Rental Revenue – For the three months ended December 31, 2025, rental revenue from our wireless exploration products was $1.1 million, a decrease of $3.4 million, or 76.1%, in comparison to the corresponding period of the prior fiscal year. The decrease was due to lower utilization of our ocean bottom nodes rental fleet. |
Operating Income (Loss)
Operating loss associated with our Energy Solutions segment for the three months ended December 31, 2025, was $(3.4) million, compared to operating income of $13.3 million for the corresponding period of the prior fiscal year. The decrease was primarily due to the decrease in revenue coupled by a high gross margin on our $17 million sale of ocean bottom noted in the first quarter of fiscal year 2025.
Intelligent Industrial
Revenue
Revenue from our Intelligent Industrial segment for the three months ended December 31, 2025, decreased $0.5 million, or 8.4%, from the corresponding period of the prior fiscal year. The decrease in revenue for the three months ended December 31, 2025, was primarily due to a decrease in demand for our industrial sensor products. The decrease was partially offset by higher demand for our contract manufacturing services.
Operating Loss
Operating loss from our Intelligent Industrial segment for the three months ended December 31, 2025 decreased $0.1 million, or 13.5%, from the corresponding period of the prior fiscal year. The decrease for the three months ended December 31, 2025 was primarily due to a decrease in operating expenses. The decrease was largely offset by a decrease in revenue and related gross profits incurred during the period.
Liquidity and Capital Resources
At December 31, 2025, we had $10.6 million in cash and cash equivalents. For the three months ended December 31, 2025, we used $15.1 million of cash from operating activities. Uses of cash included (i) our net loss of $9.8 million, offset by non-cash charges of $3.6 million resulting from deferred income taxes, depreciation, amortization, accretion, inventory obsolescence, stock-based compensation and provision for credit losses, a (ii) $4.0 million increase in inventories largely due to raw material purchases for use in our PRM contract, (iii) $4.1 million decrease in other liabilities due to a decrease in deposits held from customers on product sales and lower accrued compensation costs, a (iv) $3.2 million increase in notes receivable on product sales and (v) $3.0 million increase in other assets, primarily due to prepaid product purchases related to our PRM contract. These uses of cash were partially offset by a $5.1 million increase in trade accounts payable in large part due to raw material purchases for our PRM contract.
For the three months ended December 31, 2025, we used cash of $0.4 million in investing activities. Uses of cash included (i) $2.5 million for additions to our property, largely offset by $2.1 million of proceeds from the sale of rental equipment. We expect fiscal year 2026 cash investments in property, plant and equipment will be approximately $5 million and do not anticipate a significant increase to its rental fleet.
For the three months ended December 31, 2025, we used $0.3 million from financing activities for tax payments on stock-based compensation for the exchange of common stock.
On August 29, 2025, we amended our credit agreement (“the Agreement”) with Woodforest National Bank. The Agreement extended our revolving loan agreement, dated as of July 26, 2023, with Woodforest. The Agreement is for a three-year term and provides a revolving credit facility with a maximum availability of $25 million. Interest shall accrue on outstanding borrowings at 30 Day Term SOFR plus a margin equal to 2.75% per annum. We are required to make monthly interest payments on borrowed funds. The Agreement is secured by substantially all of our assets, except for certain excluded property. The Agreement requires us to maintain (i) a minimum consolidated tangible net worth of $85 million, (ii) minimum liquidity of $10 million, which includes cash and amounts available to borrow and (iii) a minimum asset coverage ratio of 2.00 to 1.00. The Agreement also requires us to maintain a springing minimum interest coverage ratio of at least 1.50 to 1.00, tested quarterly whenever (a) there is an outstanding balance on the revolving credit facility or (b) have letter of credit exposure greater than $1 million. Effective December 31, 2025, we entered into a limited waiver agreement with Woodforest which waived our springing minimum interest coverage ratio through February 16, 2027.
At December 31, 2025 we were in compliance with all financial and non-financial covenants under the Agreement. We had no debt outstanding at December 31, 2025 and had a borrowing availability of $25 million.
Our available cash and cash equivalents decreased $15.8 million during the first quarter of fiscal year 2026, in large part due to equipment and raw materials need for our PRM contract. However, we received our first installment payment from our PRM customer of $6.8 million in February 2026 and expect to receive another $9.5 million by the end of the month.
In the absence of future profitable results of operations, we may need to rely on other sources of liquidity to fund our future operations, including our backlog, executed rental contracts, available borrowings under the Agreement through its expiration in July 2028, sales or leveraging real estate assets, sales of rental assets and other liquidity sources which may be available to us. We currently believe that our cash, and amounts available under the Agreement if needed, will be sufficient to finance any future operating losses and planned capital expenditures through the next twelve months.
We do not have any obligations which meet the definition of an off-balance sheet arrangement, and which have or are reasonably likely to have a current or future effect on our financial statements or the items contained therein that are material to investors.
Contractual Obligations
Contingent Consideration
In August 2025, we acquired Geovox. In connection with the acquisition, we recorded an initial contingent earn-out liability of $2.5 million. Contingent payments, if any, will be based on eligible revenue generated during a four-year earn-out period. The maximum amount of contingent payments is $3.3 million.
In July 2021, the Company acquired Aquana, LLC (“Aquana”). Pursuant to the merger agreement with Aquana, as amended ("the Merger Agreement"), the Company is subject to additional contingent cash payments to the former members of Aquana over a seven-year earn-out period. The contingent payments, if any, will be derived from certain eligible revenue generated during the earn-out period from products and services sold by Aquana. There is no maximum limit to the contingent cash payments that could be made. The Merger Agreement requires the continued employment of a certain key employee and former member of Aquana for the first five years of the seven-year earn-out period in order for any of Aquana’s former members to be eligible for any earn-out payments. Due to the continued employment requirement, no liability has been recorded for the estimated fair value of earn-out payments for this transaction. Earn-outs achieved are recorded as compensation expense when incurred.
See Note 11 to our consolidated financial statements in this Quarterly Report on Form 10-Q for more information on our contractual contingencies.
Critical Accounting Estimates
During the three months ended December 31, 2025, there has been no material change to our critical accounting estimates discussed in Item 7 of our Annual Report on Form 10-K for the fiscal year ended September 30, 2025.
Recent Accounting Pronouncements
Please refer to Note 1 to our consolidated financial statements contained in this Quarterly Report on Form 10-Q for a discussion of recent accounting pronouncements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item, in accordance with Item 305(e) of Regulation S-K.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management is responsible for establishing and maintaining a system of disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified under the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”). Notwithstanding the foregoing, there can be no assurance that our disclosure controls and procedures will detect or uncover all failures of persons within our Company and consolidated subsidiaries to report material information otherwise required to be set forth in our reports.
In connection with the preparation of this Quarterly Report on Form 10-Q, we carried out an evaluation under the supervision and with the participation of our management, including the CEO and CFO, as of December 31, 2025, of the effectiveness of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on that evaluation, the CEO and CFO concluded that our disclosure controls and procedures were effective as of December 31, 2025.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the fiscal quarter ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
The following exhibits are filed with this Report on Form 10-Q or are incorporated by reference
| 3.1 |
||
| 3.2 |
||
| 10.1* | Limited Waiver dated December 31, 2025 to First Amended and Restated Credit Agreement among the Company and each other person time to time party thereto as a borrower, and Woodforest National Bank, as lender. | |
| 31.1* |
||
| 31.2* |
||
| 32.1** |
Certification of the Chief Executive Officer pursuant 18 U.S.C. Section 1350. |
|
| 32.2** |
Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350. |
|
| 101* |
The following financial information from the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2025, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) the Consolidated Balance Sheets at December 31, 2025 and September 30, 2025, (ii) the Consolidated Statements of Operations for the three months ended December 31, 2025 and 2024, (iii) the Consolidated Statements of Comprehensive Income (Loss) for the three months ended December 31, 2025 and 2024, (iv) the Consolidated Statements of Stockholders’ Equity for the three months ended December 31, 2025 and 2024, (v) the Consolidated Statements of Cash Flows for the three months ended December 31, 2025 and 2024 and (vi) Notes to Consolidated Financial Statements. |
|
| 104* |
The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2025 formatted in Inline XBRL and contained in Exhibit 101. |
* Filed with this Quarterly Report on Form 10-Q
** Furnished with this Quarterly Report on Form 10-Q
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| GEOSPACE TECHNOLOGIES CORPORATION |
| Date: |
February 12, 2026 |
By: |
/s/ Richard J. Kelley |
||
| Richard J. Kelley, President |
|||||
| and Chief Executive Officer |
|||||
| (duly authorized officer) |
| Date: |
February 12, 2026 |
By: |
/s/ Robert L. Curda |
||
| Robert L. Curda, Vice President, |
|||||
| Executive Vice President, Chief Financial Officer and Secretary |
|||||
| (principal financial officer) |