Q1 2026 Coda Octopus Group Inc Earnings Call

March 17, 2026

Good morning, and welcome to Dakota Octopus groups first quarter fiscal 2026 earnings Conference call. My name is Melissa and I'll be your operator today.

Before this call quota octopus issued its financial results for its first quarter ended January 31st 2026, including a press release, a copy of which will be furnished and a report filed with the SEC and will be available in the Investor Relations section of the company's website.

Joining us on today's call from coda, Octopus, Orange chair and CEO and Murray Gill.

In terms CFO gals are doing it.

Its president of Technology, Blair Cunningham, and Darren King from their Investor Relations team.

Following their remarks, we will open the call for questions before we begin drilling came from the company's internal Investor Relations team will make a brief introductory statement.

Please go ahead.

Dillon King: Thank you, operator. Good morning, everyone, and welcome to Coda Octopus's Q1 fiscal 2026 Earnings Conference Call. Before management begins their formal remarks, we'd like to remind everyone that some statements we're making today may be considered forward-looking statements under securities law and involve a number of risks and uncertainties. As a result, we caution you that there are a number of factors, many of which are beyond our control, which could cause actual results or events to differ materially from those described in the forward-looking statements. For more detailed risks, uncertainties, and assumptions relating to our forward-looking statements, please see the disclosures in our earnings release and public filings made with the Securities and Exchange Commission.

Thank you operator.

Morning, everyone and welcome to cobalt prices first quarter fiscal 'twenty 'twenty earnings conference call.

Before management begins their formal remarks, we'd like to remind everyone that some statements. We're making today may be considered forward looking statements under securities law and involve a number of risks and uncertainties.

As a result, we caution you that there are a number of factors many of which are beyond our control, which could cause actual results or events to differ materially from those described in the forward looking statements.

For more detailed risks uncertainties and assumptions relating to our forward looking statements.

Please see the disclosures in our earnings release and public filings made with the Securities and Exchange Commission.

Dillon King: We disclaim any obligation or undertaking to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made, except as may be required by law. We refer you to our filings with the Securities and Exchange Commission for detailed disclosures and descriptions of our business, as well as uncertainties and other variable circumstances, including, but not limited to, risks and uncertainties identified in our Form 10-K for year ended October 31, 2025, and Form 10-Q for the first quarter of our fiscal year 2026. You may get Coda Octopus's Securities and Exchange Commission filings free by visiting the SEC website at www.sec.gov. I would also like to remind everyone that this call is being recorded and will be made available for replay via a link in the investor relations section of Coda Octopus's website.

We disclaim any obligation or undertaking to update forward looking statements to reflect circumstances or events that occur. After the date. The forward looking statements are made.

Except as may be required by law.

We refer you to our filings with the Securities and Exchange Commission for a detailed disclosure and descriptions bought the stuff.

As well as uncertainties and other variable circumstances.

But not limited to the risks and uncertainties identified in our Form 10-K for year ended October 31 2025.

And Form 10-Q for the first quarter of our fiscal year 'twenty to 'twenty six.

You may get pulled off because the securities and exchange Commission filings free by visiting the FCC website at W.

W. W. S.

C C.

I would also like to remind everyone that this call is being recorded and will be made available for replay via a link in the Investor Relations section called the auspices website.

Dillon King: Finally, as a reminder, this is our Q1 fiscal 2026 reporting and all comparisons, unless explicitly stated otherwise, are with our Q1 fiscal 2025. Now, I will turn the call over to the company's Chair and CEO, Annmarie Gayle. Annmarie.

Finally, as a reminder, this is our first quarter fiscal 'twenty 'twenty six reporting and all comparison unless explicitly stated otherwise.

With our first quarter fiscal 2025.

Now I will turn the call over to the company's chairman and CEO.

Gail.

I'm sorry.

Annmarie Gayle: Thanks, Dylan, and good morning, everyone. Thank you for joining us for our Q1 fiscal year 2026 earnings call. Despite the challenging global policy environment, our revenue in the Q1 2026 increased by 28.8%, and I believe that we have delivered a solid set of results. For those who are new to the Coda Octopus story, our business is made up of three discrete business operations. The Marine Technology Business, the Defense Engineering Services Business, and our Acoustics Sensors and Materials Business Unit. Within our group, our core business is the Marine Technology Business. This business generates most of our revenue, and in the Q1 2026, it generated 50% of our consolidated net revenue. It is around this business that we're building our growth strategy.

Thanks Kelly.

And good morning, everyone.

You for joining us for our first quarter fiscal year 'twenty 'twenty.

Earnings call.

Despite the challenging global policy environment, our revenue in the first quarter 'twenty 'twenty shakes it increased by 28.8% and I believe that we have delivered a solid set of results.

For those who are new to the Codell. The story our business is made up of three discrete business operation.

Cause marine technology business.

In engineering services space.

Go ahead, Chris.

Sensors and materials business unit.

What did they know cool our cold based it is the marine technology business.

This business generates most of our revenues and in the first quarter 'twenty 'twenty shakes out.

And you're right Kid, 50% of our consolidated net revenue.

It is around 50 states naphtha that we are building our gross strategy.

Annmarie Gayle: The Marine Technology Business operates in the subsea market and is home to key disruptive underwater technologies. These technologies are bringing the smartphone revolution underwater by providing a comprehensive real-time information platform which provides vision underwater and allows our customers to make real-time decisions. This technology is a key enabler for the AI-enabled autonomous capability required by the subsea market as it provides real-time 3D perception, enabling these autonomous systems to perceive, navigate, and make decisions independently underwater. This technology reduces the cost of these operations and increases safety. The specific addressable markets that we operate in are the imaging sonar market and diving market. It is these market segments that our growth strategy is built around. Turning to our imaging sonar, the Echoscope. The Echoscope is a real-time, three-dimensional volumetric imaging sonar that can generate real-time, three-dimensional images underwater in zero visibility water conditions.

Marine Technology business operates in the subsea market and it's a key disruptive on the water technologies.

These technologies are bringing the smartphone revolution on the water by providing a comprehensive real time information platform, which provides fishing on the water and allow our customers to make real time decisions.

This technology is a key enabler for the AI enabled autonomous capability required by the subsea market as it provides real time sweetly perception, enabling these autonomous systems to perceive navigate and make decisions.

Independently on the water.

This technology reduces the cost of these operations and increase the safety.

The specific addressable markets that we operate in odd the imaging sonar market and diving market. It is these market segments that our growth strategy is built around.

Turning to our imaging so not the Edgar scoop the eggs.

The scope is a real time three dimension old volumetric imaging sonar that can generate real time three dimensional images on the war chest in zero visibility water conditions.

Annmarie Gayle: This is widely used in the commercial offshore marine market for a range of underwater applications. A significant part of our annual revenue is derived from the commercial offshore marine market. To achieve the growth that shareholders want to see from our company, we have to increase our market share for underwater imaging sensors in the defense space. There are many ongoing defense programs globally where new classes of underwater vehicles are being adopted. Significant budgets are appropriated for this. The Echoscope's uniqueness of being a single sensor for multiple undersea activities presents a significant advantage over other technologies. It allows the consolidation of multiple sensors into a single power-efficient unit without compromising the various missions to be executed. We recently launched our next generation of ultra-small form factor, three-dimensional sonars, the NanoGen series, which expands the suite of the imaging sonar market we can address, large and small payloads.

This is widely used in the commercial offshore marine market for a range of all the water applications.

A significant part of our annual revenue is derived from the commercial offshore marine market.

To keep the gross debt shareholders wanted to see from our company, we have to increase our market share for underwater imaging fences.

The defense space.

There are many ongoing defense programs globally, where new classes of underwater vehicles are being adult Kid significant budgets are appropriated for best the Edgar skills uniqueness of being a single sensor for multiple on the sea activities presents a significant.

It's on th over all the technology is that.

It allows the consolidation of multiple sensors into a single power at Fisher and Q&A.

Without compromising the various missions to be executed.

We reached recently launched our next generation of Ultra small form factor three dimension also nars, the nonrecurrent sea rays, which expands the suite of the imaging sonar, Marquis we couldn't address large and small payloads.

Annmarie Gayle: Our second key technology is the DAVD, the Diver Augmented Vision Display system. The DAVD provides a real-time information platform for diving operations, increasing safety and efficiency. The addressable market for the DAVD technology includes both the defense and commercial diving sectors. The untethered DAVD variant addresses the special forces type of divers, and we believe constitutes the largest addressable market for the technology. This variant is now going through approved Navy use assessment, and we are hopeful that this will be concluded in our Q2 2026. Once approved, this paves the way for broader adoption of the DAVD technology by the military diving market. Now turning to Q1 2026 highlights relating to our core business, the marine technology business. This business sells its products and solutions worldwide, and increased revenue in the Q1 2026 by 47.4%.

Our second key technology is the David the diaper, Oh man cave fishing display system.

But Dave data provides a real time information platform for diving operations, increasing safety and efficiency.

The addressable market for that David Technology includes both the defense and commercial diving sectors.

Tampa, David Fair in dresses, the special forces type of Guy.

And we believe constitute the largest addressable market for the technology.

Fair and just now going through a true Navy use assessment and we are hopeful that this will be concluded in our second quarter 2026.

Once approved this paves the way for broader adoption of the David technology by the military market.

Okay.

Yeah.

Now turning to first quarter 'twenty 'twenty six highlights relating to our core business the marine technology baseband.

This basically says it's products and solutions worldwide and increased revenue in the first quarter 'twenty to 'twenty, 654% to 7.4% <unk>.

Annmarie Gayle: Key highlights include hardware sales increased by 31% and were $2.3 million compared to $1.7 million in Q1 2025, with a strong focus on Echoscope sales from the Asia region. Rental assets utilization improved, increasing rental revenue by 232.8% to approximately $0.7 million, compared to approximately $0.2 million in the previous quarter, and was a factor in the increase in gross profit margin for this business unit. Now turning to highlights relating to the Defense Engineering Services business. In Q1 2026, our Defense Engineering Services business revenue increased by 9.2%. This business has long-standing relationships with prime defense contractors and has served the defense market for over 48 years. It is reliant on receiving funding under defense programs.

Key highlights include hardware sales increased by 31% and were $2 3 million compared to 1.7 million in the first quarter 'twenty 25, with a strong focus on it just after school scenes from the Asia region.

Wrenches asset utilization improved increasing rental revenues by 232, 8% to approximately 0.7 million compared to approximately 0.2 million in the previous quarter.

And what's the factor in the increase in gross profit margin for this business unit.

Now turning to highlights relating to the defense engineering services space NASA and the first quarter 'twenty 'twenty six our defence Engineering services business revenue increased by nine 2%.

This has long standing relationships with Prime defense contractors and have served the defense market for all of US 48 here.

It is reliant on receiving funding on the defense group.

Annmarie Gayle: Many defense programs are currently being funded through the use of continuing resolutions. In practical terms, this reduces the funding available for many programs, and as such, this business has experienced delays in receiving contract awards. Although a federal budget is in place, line items appropriations are still pending, and this continues to impact our Defense Engineering Services Business. Now turning to highlights relating to our Acoustics Sensors and Material Business. This business sells its products and solutions worldwide, and increased revenue in Q1 2026 by 20.7%. Gross profit margin was higher at 66.8% compared to 61.7%. We continue to be very pleased with the performance of this unit. Blair Cunningham, our President of Technology, who is the market maker for our technologies, will be updating you on progress and various milestones around our core technologies.

Many defense programs are currently being funded through the use of continuing resolution.

In practical terms this reduces the funding available for many programs and as such it. This business has experienced delays in receiving contract awards.

Although our federal budget, even place line items appropriations are still pending and this continues to impact our defense engineering services business.

Now turning to highlights relating to our acoustic sensors and material.

This business sells its product and solutions worldwide and increased scrapping you in the first quarter 'twenty 'twenty shakes by 27%.

Gross profit margin was higher at 66, 8% compared to 61, 7%. We continue to be very pleased with the performance of this unit.

Blair Cunningham, our president of Technology, who is the market may come for our technologies will be updating you on progress in various milestones around our core technologies.

Annmarie Gayle: Blair will also be available to answer any questions you have about our technologies. I will now turn the call over to Blair Cunningham.

Blair will also be available to answer any questions you have about our technologies I will now turn the call over to Claire Cunningham.

Blair Cunningham: Thank you, Annmarie Gayle, and good morning, everyone. Our core business focus is expanding market share for our disruptive underwater technologies, specifically our real-time 3D sonar systems and our DAVD technology. Today, I will keep my remarks brief and concentrate on the key milestones that will help us achieve this objective. As we have noted on previous earnings calls, the DAVD Untethered variant represents the largest market opportunity for this technology. In the US alone, there are approximately 14,000 divers across the government and defense community who are potential users of this DAVD Untethered system. We successfully completed the hardening program for the DAVD Untethered variant in fiscal year 2025. Based on this, we delivered the first batch of the new generation of DAVD Untethered system to our Navy customer. This delivery has now placed the US Navy in a position to commence the safety qualification for the product.

Thank you Anthony and good morning, everyone.

Our core business focus is expanding the market share for our disruptive under water technologies.

Our real time, CDP soon our systems and our data and technology.

Today I will keep my remarks brief and concentrate on the key milestones that will help us achieve this objective.

As you May have noted on previous earnings calls the David Untethered Zealand represents the largest market opportunity for this technology.

In the U S alone there are approximately 14000 diverse across the government and defense community.

Angel users office, David Untethered system.

Successfully completed the hardening program for the David Untethered variant in fiscal year 2025.

Based on this we delivered the first batch of the new generation of David Untethered system to our Navy customer.

This delivery is a nice place to U S. Navy in a position to commence the safety qualification for the product. We are therefore currently awaiting the authorization for navy use or any assessment to be completed.

Blair Cunningham: We are therefore currently awaiting the authorization for Navy use or ANU assessment to be completed. We are hopeful that this will be in place in our Q2. ANU approval is an important milestone as is a key prerequisite for the broader adoption within the military untethered diving community. We are on schedule to perform DAVD's site acceptance test training with a key European Navy in the Q2, which we expect will serve as a precursor to broader technology adoption discussions. This naval diving group represents an influential European defense customer, and we are encouraged that they have already made an initial investment in DAVD Tethered systems and are evaluating the DAVD technology platforms for wider fleet adoption.

We are hopeful that this will be in place in our second quarter.

I only wish approval is an important milestone.

E P requisite for the broader adoption within the military Untether diving humility.

We are on schedule to perform David site acceptance test training.

With a key European Navy in the second quarter, which we expect will serve as a b cursor to broader technology adult and discussions.

This naval diving group represents an influential European defense customer and we are encouraged that they have already made an initial investment and David hazards systems and are evaluating the data technology platforms for wider fleet adoption.

Blair Cunningham: We continue to work on several defense programs which are seeking to leverage DAVD as a critical life support and visualization component, and which we believe are strong indicators that DAVD is now considered a mature technology. We continue to see strong global momentum around our NANO Gen Series, and we believe that in Q3, we will begin to see initial adoption of NANO through several defense-funded product improvement programs. The initial quantities will be a small batch for continued fleet assessment. NANO represents an important step forward for our business. Its ultra-compact form factor, built on the proven Echoscope technology lineage, is capable of supporting multiple mission profiles with a single system.

We continue to work with several defense programs, which are seeking to leverage David.

Critical life support and visualization component.

Which we believe are strong indicators that David is now considered a mature technology.

We continue to see strong global momentum around our novel J M series, and we believe that in the third quarter. We will begin to see initial adoption of nano several defense funded product improvement programs. The initial quantities will be a small batch for continued fleet assessment.

No no represents an important step forward for our business.

It's ultra compact form factor.

On the proven efficacy.

What would the lineage is capable of supporting multiple mission profiles with a single system.

Blair Cunningham: This positions it well for a market increasingly seeking to consolidate imaging sonar capabilities while also addressing the growing demand from foreign navies for multi-utility sensors capable of performing multiple independent tasks rather than relying on the traditional one sensor per task approach. The Nano technology further advances our business through its inherent AI readiness and ability to deliver deployable 3D data for AI workflows. This aligns well with the new generation of subsea AI platforms, which are smaller, lower powered, and often operate in swarms to cover large areas quickly and efficiently. Nano's AI readiness goes beyond simply providing 3D perception data. It generates multiple real-time 3D data sets and imaging that can be tailored to specific AI tasks, enabling more efficient and accurate analysis and real-time decision-making.

<unk> well for a market increasingly seeking to consolidate imaging sonar capabilities, while also addressing the growing demand from foreign navies from multi utility sensors.

The whole of performing multiple independent tasks, rather than relying on the traditional one sensor for task approach. The novel Technology further advances our business is in Heaven, AI readiness and ability to deliver deployable freebee data for AI workflow.

<unk>.

This aligns well with the new generation of subsea AI platforms, which are smaller lower power and often the operates in swarms to cover large areas quickly and efficiently.

Nanos AI readiness goes beyond simply providing three the perception data.

It generated multiple real time streaming data says and imaging that can be tailored to specific AI tasks, enabling more efficient and accurate analysis and real time decision, making.

Blair Cunningham: For example, an autonomous platform inspecting a seabed pipeline may need to detect structural damage, identify unsupported spans or burial, and locate leaks. Nano can provide 3 separate AI-ready real-time data sets and 3D images optimized for each task without additional sensors or processing, rather than relying on a single image that must first be processed and segmented to extract the required information. At the same time, Nano continues to provide its standard real-time imaging and 3D forward-looking obstacle avoidance. Another strong area of customer engagement for us is the protection of undersea cables and subsea infrastructure, which are increasingly at risk and are paramount for national connectivity and security. The Echoscope technology is uniquely positioned to support continuous monitoring of these critical assets through real-time 3D visualization while also enabling rapid damage assessment, repair support, and protection, further reinforcing the multi-mission capability of our technology.

For example on the autonomous platform inspecting a feedback pipeline may need to detect structural damage identify unsupported spans our burial and locate leaks.

Who can provide three separate AI ready realtime datasets and three D images optimized for each task without additional sensors of ball session.

Rather than relying on a single image that must first be processed and segmented to extract the required information at the same time non who continues to provide a standard real time imaging and three the forward looking obstacle avoidance.

Another strong area of customer engagement for US is the protection of undersea cables and subsea infrastructure, which are increasingly at risk and are part of life for national connectivity and security.

The technology is uniquely positioned to support continuous monitoring.

Critical access to real time streaming visualization, while also enabling rapid damage assessment repair support and protection.

Further reinforcing the multi mission capability of our technology.

Blair Cunningham: By way of example, Japan relies on subsea cables for approximately 99% of its international communications, underscoring both the importance of these assets and the challenge of monitoring, protecting, and rapidly repairing them. Sabotage, increased heavy shipping traffic, and natural disasters all present growing risks to this critical infrastructure. For fiscal year 2026, our goal is to achieve key milestones with our disruptive technologies, including expanded DAVD adoption in the global commercial market and by foreign navies, and the deployment of our Echoscope technology, including NANO on next generation autonomous AI-enabled platforms as a primary perception sensor for navigation, obstacle avoidance, and target guidance. I will turn the call over to Annmarie Gayle, and I will be available to take your questions during the Q&A session of this call.

By way of example, Japan relies on subsea cables for approximately 99% of international Communications underscoring both the importance of these assets and the challenge of monitoring protecting and rapidly repairing them.

Sabotage.

These hedges shipping traffic and natural disasters, all present risks to this critical infrastructure.

For fiscal year 2026, our goal is to achieve key milestones with our disruptive technologies, including expanded David adoption in the global commercial markets and by foreign navies and the deployment of our Episcope technology, including nano.

Our next generation autonomous.

<unk> enabled platforms as a primary perception sensor for navigation obstacle avoidance and target guidance.

I will turn the call over to Anne Marie and I will be available to take your questions. During the Q&A session of this call.

Annmarie Gayle: Thank you, Blair. Let me now turn the call over to our interim CFO, Gayle Jardine, to take you through our financials for our Q1 2026 before I provide my closing remarks. Gayle?

Thank you Blair, let me now turn the call over to our interim CFO came charging to take you through our financials for our first quarter 2026 before I provide my closing remarks Gail.

Gayle Jardine: Thank you, Annmarie Gayle, and good morning, everyone. Let me take you through our Q1 2026 financial results, starting with revenue. In the Q1 2026, we recorded total revenue of $6.7 million compared to $5.2 million in Q1 2025, an increase of 28.8%. Our core business, the Marine Technology Business, generated revenue of $3.4 million compared to $2.3 million, representing a 47.4% increase over Q1 2025. Our Acoustics Sensors and Material Business recorded revenue of $1.6 million this period, compared to $1.3 million in Q1 2025, an increase of 20.7%.

Thank you Anthony and good morning, everyone.

Let me take you to our first quarter 'twenty 'twenty six financial results.

Starting with revenue.

In the first quarter 2026, we recorded total revenue of $6 $7 million compared to $5 2 million in first quarter 2025, an increase of 28.8%.

Our core business and marine technology business generates you're facing a <unk> 4 million compared to $2 3 million, representing a 47, 4% increase over first quarter 2025.

Our acoustic sensors and materials business recorded revenue of 1.6 million this period.

Compared to one <unk> million in first quarter 'twenty to 'twenty five an increase of 27%.

Gayle Jardine: Our Defense Engineering Services Business generated revenue of $1.8 million compared to $1.6 million, representing a 9.2% increase over Q1 2025. Moving on to gross profit and margin. In Q1 2026, we generated gross profit of $4.4 million compared to $3.4 million in Q1 2025. Consolidated gross margin was 65.1% versus 65.8% in Q1 2025. This reduction reflects the composition of revenue derived from the Defense Engineering Services Business. In our Marine Technology Business, gross margin increased to 75.3% in Q1 2026 compared to 73.1% in the prior period, largely reflecting the increase in rental sales, which grew by 232.8% over Q1 2025.

Okay fence engineering services business generated $1 8 million comp.

Compared to one 6 million, representing a 9.2% increase over first quarter 2025.

Moving on to gross profit and margin.

In the first quarter 2026 mid January she gross profit of four 4 million compared to $84 million in the first quarter 'twenty to 'twenty five.

Consolidated gross margin of 65, 1%.

Actually 65, 8% in the first quarter exchange 25.

This reduction reflects the composition of revenue derived from the defense Engineering services business.

And now moving technology business gross margin increased to 75.6% in first quarter 'twenty to 'twenty six compared to 71% in the prior period.

Largely reflecting the increase in rental sales, which grew by 232.8% over the first quarter of 2025.

Gayle Jardine: The Acoustics Sensors and Materials Business increased gross margin to 66.8% in Q1 2026 compared to 61.7% in Q1 2025, reflecting the mix type of sale. In our Defense Engineering Services Business, gross margin decreased to 44.1% in Q1 2026 versus 58.9% in the prior period, reflecting the change in the mix of engineering projects during Q1 2026. Now looking at our operating expenses. Total operating expenses for Q1 2026 increased by 21.3% to $3.4 million, compared to $2.8 million in Q1 2025. The main factor for the increase in total operating expenses was the weakening of the US dollar against both the British pound and Danish kroner.

Yeah, Christy census, and materials business increased gross margin to 66, 8% fourth quarter 2026.

Compared to 61, 7% in first quarter 'twenty to 'twenty, five reflecting the mix type of sale.

And our Defence Engineering services business gross margin decreased to 44, 1% in the first quarter 'twenty to 'twenty six.

The eight 9% in the prior period, reflecting the change in the mix of engineering project during first quarter 2026.

Now looking at tariff expenses.

Total operating expenses for the first quarter 2026 increased by 21, 6% to <unk> 4 million.

$2 8 million in the first quarter of 2025.

The main factor for the increase in total operating expenses with a weakening of the U S dollar against both the British pound and Danish kroner.

Gayle Jardine: This impacted on our costs when translated into dollars from the base currencies for reporting purposes. Our selling, general, and administrative costs in Q1 2026 totaled $2.8 million, an increase of 23.7% from $2.2 million in Q1 2025. This is reflecting a swing of $0.5 million from an exchange rate gain in Q1 2025 to an exchange rate expense in Q1 2026. SG&A as a percentage of consolidated net revenue in Q1 2026 was 41.0% compared to 42.7% in Q1 2025. Operating income in Q1 this year was $1.0 million compared to $0.6 million in Q1 2025, an increase of 52.6%.

This impacted on our costs when translated into dollars and that these currencies are reporting purposes.

Our selling general and administrative costs in the first quarter of 2026 total $2 8 million.

An increase of 27% from $2 2 million in first quarter 2025.

This is a flight in the swing of 0.5 million from an exchange rate gain in the first quarter going to 25, the next things eight Spain and first quarter 2026.

SG&A as a percentage of consolidated net revenue in first quarter 'twenty to 'twenty six with 41.0%.

Compared to 42, 7% in first quarter 2025.

Operating income in first quarter. This year was 1.0 million compared to zero point $6 million in first quarter 2025, an increase of 52, 6%.

Gayle Jardine: Operating margin was 15.1% compared to 12.7% in Q1 2025, reflecting the increase in our consolidated net revenue in the first quarter. Pre-tax income in Q1 2026 was $1.2 million compared to $0.9 million in Q1 2025. Net income after taxes this period was $0.93 million or $0.08 per diluted share compared to $0.91 million, also $0.08 per diluted share in Q1 2025. In this period, we provided for a tax expense of $0.3 million compared to $0.05 million in Q1 2025. Moving now to our balance sheet. As of 31 January 2026, we had $30.5 million in cash and cash equivalents on hand and no debt.

Operating margin was 15, 1% compared to 12.7% in first quarter 2025.

The increase in our consolidated net raising it in the first quarter.

Pre tax income in first quarter 2026, with 1.2 million compared to 0.9 million in first quarter 'twenty to 'twenty five.

Income after taxes SPD at zero point, 19 million or eight cents per diluted share compared to zero point $91 million also eight cents per diluted share and first quarter 2025.

In this period with a need for a tax expense of zero point $3 million compared to you know point you need a $5 million in first quarter 2025.

Moving now to our balance sheet as of January 31st 2026, we had $35 million in cash and cash equivalents on hand and no debt.

Gayle Jardine: This represents an increase of $1.8 million from 31 October 2025, where the comparable figure was $28.7 million. Total assets increased by $1.1 million to $65.6 million in Q1 2026. Now let me turn the call back over to Anne Marie for her closing remarks.

This represents an increase of 1.8 million from October 31st thing tie it compiled thicker was $28 7 million.

Total assets increased by $1 1 million to $55.6 million in the first quarter of 2026.

Now, let me turn the call back over to Anne Marie for her closing remarks.

Annmarie Gayle: Thank you, Gayle. I am very pleased with the increase in revenue in Q1 2026, and our overall financial results. I am also pleased with the progress we're making against our key milestones for growing our business, both around our DAVD and Echoscope technologies. We believe real progress is being made in getting broader adoption of these technologies in the defense space. In terms of cash deployment, we will also continue to prosecute our M&A strategy in fiscal year 2026, and are continuing to build our M&A pipeline of opportunities. We're very keen to close another acquisition in fiscal year 2026. Through our strategy, we aim to pivot the revenue model of the Marine Technology Business towards a multi-year program-based adoption, supporting a multiple sale model over the life of major programs, as we have started to see with our DAVD product line.

Thank you Gail I am very pleased with the increase in revenue in the first quarter 2026, and our overall financial results.

I'm also pleased with the progress, we're making against our key milestones for growing our business both around our with David and after school technologies.

We believe real progress is being made in getting broader adoption of these technologies in the defense space.

In terms of cash deployment, we will also continue to prosecute our M&A strategy in fiscal year, 'twenty 'twenty shakes and are continuing to build our M&A pipeline of opportunities. We're very keen to close another acquisition in fiscal year 'twenty.

Two six.

Through our strategy, we aim to pay for the revenue model of the marine technology basis towards a multiyear program based adoption supporting a multiple sales model over the life of major programs as we have started to see with our D var product.

Line.

Annmarie Gayle: We continue to work to create stable, long-term shareholder value and execute against our strategy to grow the business, which is our single biggest priority as a group. To conclude, we would like to thank our shareholders for their continued support. We're now happy to answer any questions. Operator?

We continue to work to create stable long term shareholder value and execute against our strategy to grow the business, which is our single biggest priority asset group.

To conclude we would like to thank our shareholders for their continued support we are now happy to answer any questions operator.

Operator: Thank you. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, it's star one to join the question queue. Our first question comes from the line of Brian Kinstlinger with Alliance Global Partners. Please proceed with your question.

Thank you if you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question. Kim You May press star two if you'd like to remove your question from Mckim for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys once again it's.

Star one to join the question queue.

Our first question comes from the line of Brian Kinsell Linger with Alliance Global Partners. Please proceed with your question.

Brian Kinstlinger: Thanks so much for taking my questions. You've highlighted there are 14,000 divers in the United States. With that said, can you size the total addressable market in dollar terms in the US for the DAVD?

Thanks, so much for taking my questions. You've highlighted there are 14000 diverse in the United States. So with that said can you size. The total addressable market in dollar terms in the U S for the damage.

Okay.

Yeah.

Annmarie Gayle: Hi, Brian. Thank you very much for that question. Look, that's a difficult question actually, Brian, because that is predicated on our ceiling price, what the Navy accepts as the purchase price for the item. This is still being negotiated, so it's very difficult for us to provide a number at this stage. Although in the past, for the military diving system, we have been providing this at a price of $50,000 per unit. As I said, we're always looking at how to sharpen our pencil on that, and it really depends on the customer accepting that price.

Yeah, Hi, Brian. Thank you very much for that question look that's a difficult question actually Brian because then that is predicated on our feed price what the navy accept as the <unk> the <unk>.

It's priced for the item. So this is still being negotiated so it's very difficult for us to provide a number at big states.

Though in the Pos for the military dieting space than we have in them.

Providing the asset price at 50000 U S dollar per unit, but as I said, we're always looking at.

How to sharpen our pencil on that and it really depends on the customer accepting that price.

Brian Kinstlinger: Got it. Thank you. You highlighted, and you've been for a bit, the unmanned underwater vehicle market is going through some exciting changes. What is the timing as to when this could be an opportunity for Coda from a revenue perspective? Are there any design wins to speak of for Coda? When do you see production for UUVs possibly beginning?

Got it. Thank you and then you highlighted and you've been in for a bit the unmanned underwater vehicle market.

Is going through some exciting changes.

What is the timing as to when this could be an opportunity for coda from a revenue perspective are there any design wins to speak of for coda and when do you see production for you you vs, possibly beginning.

Annmarie Gayle: Well, you know, as Blair has reported to the markets in our fifth or last earnings call and today's, really, for the NANO Gen Series, we're seeing some very near-term opportunities under the product improvement program, the so-called PIPs. We would expect in Q3 and Q4 to see small batches of NANO being acquired under some of these programs.

Well you know actually.

Narrowly supported to the markets in first in our last earnings call and to be really for the manager in theory. It's we're seeing some very near term opportunities on the product improvement program. The so-called pips. So we would expect in third and fourth.

Quarter to see small batches of nano being acquired on the some of these programs.

Brian Kinstlinger: Those are replacements under existing vehicles? Is that what you're saying?

So those are replacements are under existing vehicles is that would you is that what you're saying.

Annmarie Gayle: I wouldn't say replacement, but they're certainly going on some of these existing vehicles that are looking for more capabilities.

I wouldn't say replacement, but theyre sarokin meet going on some of these existing vehicles that are looking for more capabilities.

Brian Kinstlinger: If you look to

And you need to spend on backing me a bit more.

Annmarie Gayle: Blair can expand on that a little bit more.

Brian Kinstlinger: Yeah. I was complete.

Yes, yes, I would completely.

Blair Cunningham: Yeah. Hi, Brian. I completely echo that point, actually. There's gonna be a combination of new platforms that are coming online that are looking for 3D perception, which is where we really fulfill a significant gap in the market. As well as Anne Marie said, there's existing platforms through this PIP program where they're looking to enhance the fleet they have. When they're adding new vehicles to that same fleet, then they're gonna be adding this with this new capability. That's what we're seeing, as Anne Marie noted, in the kind of Q3 and Q4. That's what we're seeing starting to come in.

Hi, Brian.

<unk> not points agile and so there's going to be a combination of new platforms that are coming online that are looking for three D perception, which is super we really fulfill a significant gap in the market as well as as Anne Marie said this existing platforms.

Program, where they're looking to in the <unk>.

<unk> the fleet they have on when they're adding new vehicles to that same fleet, then theyre going to be adding this with this new capability and that's what we're seeing as Emily noted in the third and fourth quarters, that's where most of them starting to come in.

Brian Kinstlinger: Blair, maybe you could help us understand, do you need to be part of a design win for the new generation of vehicles? Are those conversations ongoing? When is the targeted date for some of these vehicles? Are we a year out? Are we two years out?

Or maybe you could help us understand do you need to be part of a design win for a new generation of vehicles are those conversations ongoing and when is the targeted date for some of these vehicles are we a year out or we two years out.

Blair Cunningham: It's an interesting question. I think, you know, obviously, as people are designing new vehicles and platforms, generally we'll be in the discussion, you know, realm in terms of what sensors they need, you know, upfront. We're seeing that increasing at the moment. That's encouraging that people are looking, we're not being added to the vehicle after all the decisions are made. You know, as an afterthought, we're now being built into, you know, the up front of the vehicles. I think there's probably two or three platforms I can think of right now that are in design phase, where that is gonna be a consideration.

It's an interesting question.

You know obviously as people are designing new new vehicles on platforms generally will be under discussion.

In terms of what sensors they need.

And we're seeing that increasing and increasing at the moment. So that's encouraging that people are looking at.

<unk> added to the vehicle after all the decisions are made.

And after adult we're now being built into the out front of the vehicle. So I think there's probably two or three platforms. I can think of right now or in design phase for that as gigabit consideration.

Blair Cunningham: In terms of the timeline, I think the defense community, especially in Europe, is pivoting from a long duration design phase where perhaps they go through a cycle of two, three years, and they're looking to try and say, "Well, let's buy smaller quantities and then we can develop those on in further years." I believe that's going to, you know, benefit us from having some initial sales in the shorter period. You know, certainly I expect to see that picking up by beyond the Q4.

Terms of the timeline I think the defense community, especially in Europe is pivoting from a long duration design freeze for perhaps they go through a cycle of two or three years on their own.

Welcome to try and say well, let's buy smaller quantities and then we can develop developers on ins and for the year. So I believe that's going to benefit us from having some initial sales in the short in the short term periods. So you know certainly I expect to see that picking up I beyond the fourth quarter.

Brian Kinstlinger: Great.

Annmarie Gayle: Yeah. I guess just as a footnote, Brian, just to say the programs we are most excited about currently are those under the so-called PIP, because they are more nearer term opportunities. When there's a program at the design phase that can be multi-year program, right? We're particularly excited about the PIP opportunities because they are already established programs looking to improve their capability.

Yeah.

Yes.

No Brian.

The programs we are most.

Excited about currently like those only the so called pitch because theyre more nearer term opportunities. When there is a program designed to ease that that can be multiyear appropriately right. So we're particularly excited about the opportunities because they are already established.

Programs looking to improve their capability.

Brian Kinstlinger: Great.

Blair Cunningham: Yeah, that's great.

Great.

Brian Kinstlinger: How does rising oil prices impact demand for your products? Are you seeing any changes this quickly on demand right now?

How does rising oil prices impact demand for your products and are you seeing any changes this quickly on demand right now.

Annmarie Gayle: Well, not really because then, it is really just think about development cycle is not that responsive. It's saying we're gonna start this new development because price of oil. Not, not really. It's not as fluid as that. We're not seeing any increased demand because of what's happening today.

Well not really because then it is really just think about development cycle is not responsive, it's saying we're going to start with maybe development because the price of oil so no not really it's not as fluid as that so we're not seeing any.

Increased demand because of what's happening today.

Brian Kinstlinger: Great. Kind of a more difficult question. Sorry. If I look to fiscal 2021, Marine Technology peaked at almost $16 million. Here we are five years later, Echoscope sales haven't gotten back to that level and maybe haven't even got back to fiscal 2022 contribution. We know the impact of COVID, but the technology seems so differentiated and so value add. I'm curious your thoughts. What's holding back the product from scaling today, and how do you think about the long-term growth potential of this product?

Great and then.

And have a more difficult question sorry.

If I look in fiscal 2021 Marine technology peaked at almost $16 million here. We are five years later echo scope scales haven't gotten back to that level and maybe have you been got back to fiscal 'twenty two contribution.

The impact of Covid.

Knowledge, he seems so differentiated and show value add I'm curious your thoughts what's holding back the product from scaling today and how do you think about the long term growth potential of this product.

Annmarie Gayle: Yeah, you know, as I've said over and over, Brian, you know, the bread and butter for the business currently is in the commercial marine market. That we do very well, and we're well-known in the commercial offshore marine market. But as I've always said, for the business to grow, because if you really want multiple recurring sales, we need to get onto these programs. Now, these programs can take a very long time to mature, and I think that this is mainly a reflection of the gestation period for a lot of these programs. Again, I come back and I say, well, yes, but if I think of this quarter's sales, within the mix, there's a very, very strong bias towards Echoscope sales.

Yeah. So you know as I've said over and over Brian you know sued the bright any buckets with the business. Currently is in the commercial marine market and that we do very well and we are well known in the commercial offshore marine market, but as I've always said for the business to grow.

Because if you really want multiple recurring fee is we need to get onto these programs. Now. These programs can take a very long time to mature and I think that this is mainly a reflection of the gestation period for a lot of eastgroup.

So again I come back and I see well, yes, I think of this quarter's fees.

Within the mix there was a very very strong bias towards episcope seen so I'm heartened and I continue to see.

Annmarie Gayle: I'm heartened, and I continue to see the progress we're making on some of these defense programs. Some of these are closer than others, but again, our focus then is on the near-term opportunity for the PIP, where we can start seeing a little bit of volume. In addition to that, really where we see with like the DAVD product line, where we're seeing pull-through sales of Echoscope from the DAVD. The long and short is that I feel that the overriding barrier has been the time that it takes for some of these programs to mature. You know, we still have lots of opportunities that we are pursuing for these newly designed programs, but they can be quite long-winded.

The progress we're making on some of these defense programs. Some of these are closer than others, but again our focus there is on the near term opportunity for the pit, where we can start seeing a little bit of volume. In addition to that really where we see with like the David.

That line, where we're seeing pull through sales of epic scope from the deep. It. So that's the long and short is that I feel that the overwriting battery. It's been the time that it takes for some of these programs to mature.

And you know we still have lots of opportunities that we are pursuing for the newly designed programs, but they get they can be quite long winded, but we also have now within the mix.

Annmarie Gayle: We also have now within the mix, closer term or nearer term opportunities under some of these PIP programs.

The shower more nearer term opportunity on some of these programs.

Brian Kinstlinger: Great. Thank you so much for responses.

Great. Thank you so much for responses.

Annmarie Gayle: Thank you, Brian.

Thank you Brian.

Operator: Thank you. Ladies and gentlemen, as a reminder, it's star one to join the question queue. We'll pause a moment to allow for any other questions. Ladies and gentlemen, at this time, this concludes our question and answer session. I'd now like to turn the call back over to Annmarie Gayle.

Thank you, ladies and gentlemen, as a reminder, its star one to join the question queue will pause a moment to allow for any other questions.

Ladies and gentlemen at this time this concludes our question.

And the answer session I'd now like to turn the call back over to Anne Marie Gail.

Annmarie Gayle: Thank you, operator. Thank you everyone for your attendance. Have a great day. Thank you.

Thank you operator, thank you everyone for your attendance have a great day. Thank you.

Operator: Thank you. This concludes today's call. You may now disconnect your lines. Thank you for your participation.

Thank you. This concludes today's call you may now disconnect. Your lines. Thank you for your participation.

Q1 2026 Coda Octopus Group Inc Earnings Call

Request a DemoDemo

CODA

Coda Octopus Group

Earnings