What Management Said
Read the full Q4 2025 transcript ↗On this call, we will be discussing our financial results for the fourth quarter and full year ending December 31st, 2025, which were released earlier this morning. The non-GAAP reconciliations can be found in today's earnings press release, which is available in the investor relations section of our website. I'm pleased to report that we achieved $17.4 million in revenue from continuing operations in Q4, representing robust 21% year-over-year growth. One, continued demand for our XplorIR gas identification device by firefighters and hazmat response teams.
Two, strong initial demand for VipIR, our new product that provides simple and fast chemical analysis of solids and liquids. Most importantly, we achieved positive Adjusted EBITDA in the fourth quarter of $0.7 million, which is a remarkable improvement from the prior year's loss of $4 million. For the full year 2025, I'm proud to report that we delivered $56.2 million in revenue from continuing operations, representing strong 18% year-over-year growth and in line with our five-year CAGR performance. A key highlight was our team's execution of replacing outdated FTIR equipment with modern devices, one of our growth catalysts.
In 2025, more than 50% of device placements came from FTIR, led by the full year impact of our XplorIR device. Another highlight is our achievement of 22% year-over-year growth in recurring revenue, which represents 35% of our 2025 revenues. This growth reflects our ongoing efforts to offer more value to our customers through service, support, software, and accessory offerings, strengthening revenue visibility and long-term predictability. Our number one focus has been to increase adoption of our devices to address global threats to public health and safety.
- Fourth-quarter revenue was $17.4 million, up 21% year over year, and the company achieved its first-ever quarter of positive adjusted EBITDA at $0.7 million (versus a $4.0 million loss a year earlier).
- Full-year 2025 revenue was $56.2 million, up 18%, with net loss from continuing operations narrowing to $33.3 million from $53.1 million and the full-year adjusted EBITDA loss down 39% to $9.6 million.
- Q4 net income from continuing operations was $4.4 million, versus a $16 million loss in the prior-year period.
- VipIR shipped more than 40 units (over $3 million of revenue) in Q4; XplorIR more than doubled its placements year over year in Q4 and grew more than 40% for the full year.
- Q4 gross margin rose to 53% from 47%, and adjusted gross margin expanded about 530 basis points to 57% on higher volume and favorable channel mix.
- U.S. state and local revenue grew 38% to approximately $24 million (43% of full-year revenue, up from 37%); full-year recurring revenue grew 22% to $19.5 million.
- International revenue rose to 27% of the total (from 25%) with strong demand along NATO's eastern flank; the company consolidated four federal contracting partners into one (Mountain Horse Solutions) for procurement predictability.
- Ended 2025 with $113 million in cash and no debt, and entered 2026 with a late-stage pipeline roughly double its size at the start of 2025.
- Full-year net loss from continuing operations remained large at $33.3 million, driven by non-cash goodwill impairment and contingent-consideration revaluation charges.
- Full-year gross margin was flat year over year at 51%.
- The full-year adjusted EBITDA was still a loss of $9.6 million, and 2026 guidance implies continued adjusted-EBITDA losses.
- 2026 guidance assumes increased selling and marketing investment (targeted headcount) that will weigh on near-term profitability.
- The AVCAD next phase still awaited government feedback on Smiths Detection's RFP response, with 908 Devices' component contributions likely only in the second half of 2026.
- Recurring revenue mix dipped to 32% of revenue in Q4 as higher device placements diluted the percentage.
Guidance Changes
| Metric | Period | Current guidance |
|---|---|---|
| FY2026 revenue | FY2026 | $64.5-$67.5 million, representing 15%-20% growth over FY2025 |
| FY2026 handheld product & service revenue | FY2026 | grow 13%-17% ($59.5-$61.5 million), reflecting a full year of VipIR and MX908 growth |
| FY2026 OEM & funded partnerships (incl. contract revenue) | FY2026 | ~$3 million |
| FY2026 AVCAD program revenue | FY2026 | $2-$3 million, likely in the second half of 2026 |
| FY2026 adjusted gross margin | FY2026 | mid-to-high 50% range, targeting at least 100 bps of expansion on higher volume |
| FY2026 adjusted EBITDA | FY2026 | cut the loss roughly in half to mid-single-digit millions |
Performance Breakdown
| Metric | YoY | Note |
|---|---|---|
| Q4 revenue | +21% to $17.4 million | XplorIR, strong initial VipIR demand and state/local adoption |
| Full-year revenue | +18% to $56.2 million | FTIR products (VipIR, XplorIR) plus a full year of RedWave ownership vs. 8 months in 2024 |
| Q4 adjusted EBITDA | +$4.7M to positive $0.7 million | Structural cost reductions across headcount, facilities, R&D and professional fees |
| Q4 adjusted gross margin | 57%, +~530 bps | Higher volume and a shift toward higher-ASP state/local and defense sales |
| State and local revenue | +38% to ~$24 million (43% of revenue) | More frequent, smaller, more predictable deals |
| Recurring revenue (full year) | +22% to $19.5 million | FTIR service and OEM revenues |
| Installed base | 3,736 devices (224 shipped in Q4) | Continued placements across FTIR and mass spec |
Earnings Call Themes & Trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Transformation delivering structural profitability | Targeting Q4 adjusted-EBITDA positive | Achieved positive Q4 adjusted EBITDA of $0.7M; cost structure now 'right-sized, disciplined and fully within our control' | — |
| 2026 strategic focus areas | 908 Devices 2.0 execution | Scale proven platforms, extend platform leadership, and strengthen revenue durability | — |
| FTIR replacement cycle | Early modernization traction | >50% of 2025 device placements were FTIR; XplorIR +40% full year; management says it has 'only made a dent' | — |
| International / NATO demand | Emerging | International 27% of revenue; shipments to Poland, Czech Republic, Finland, Ukraine and others along NATO's eastern flank | — |
| Program revenue / AVCAD | Awaiting next phase | Smiths Detection responded to an RFP for ~a few hundred systems; 908 component contributions potentially in H2 2026 | — |
Q&A Summary
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