Geospace Technologies NASDAQ: GEOS reported third-quarter fiscal 2026 revenue of $15.8 million and a net loss of $9.7 million, or $0.75 per diluted share, as challenging conditions across its operating segments weighed on sales volumes and margins.
The company’s revenue for the quarter ended June 30 fell from $24.8 million a year earlier, while it swung from net income of $800,000, or $0.06 per diluted share, in the prior-year quarter. For the first nine months of fiscal 2026, Geospace reported revenue of $61.1 million and a net loss of $30.5 million, or $2.37 per diluted share, compared with revenue of $80.1 million and a net loss of $700,000 in the comparable prior-year period.
President and Chief Executive Officer Rich Kelley said geopolitical uncertainty, project timing, sales volumes and customers’ access to capital affected revenue during the quarter. He said margins were pressured by product mix, inflation, raw-material costs and component availability, though cost-reduction efforts and manufacturing productivity improvements offset part of the impact.
“Our financial performance this quarter does not reflect the strength of our long-term opportunities across our diversified markets,” Kelley said. “We remain focused on the factors within our control and on strengthening the foundation of our future performance.”
Segment demand remained uneven
Geospace said its Smart Water segment continued to experience lower revenue, principally because of reduced orders for its Hydroconn connector product line. The company attributed declines in both quarterly and nine-month Smart Water revenue to lower demand for Hydroconn products.
In June, Geospace introduced its Series V connector, which Kelley said is intended to give customers more flexibility in addressing supply-chain challenges. He said the release expands the company’s offering of domestically available Smart Water meter connectors and adapters and is designed to better align with evolving infrastructure needs.
Energy Solutions generated $5.9 million in third-quarter revenue, down 28% from $8.1 million a year earlier. Chief Financial Officer Robert Curda said the quarterly decrease reflected, in part, the prior-year sale of assets associated with the Streamer Recovery Device product line. The company also cited continued lower demand for seismic acquisition equipment.
Revenue from the company’s Permanent Reservoir Monitoring, or PRM, contract was below Geospace’s expectations during the quarter because of customer-requested project-scope changes. Kelley said the customer agreed to extend the contract’s period of performance to accommodate the changes, and that Geospace has entered full production on the goods contract.
During the question-and-answer session, Kelley said the PRM contract’s total value has not changed and that the modifications involved changes to the planned equipment layout, including rerouting sensors and cables and adjusting spacing. He said the changes did not alter the technical equipment Geospace is providing.
Geospace now expects final PRM revenue recognition to occur between the third and fourth quarters of fiscal 2027, according to Kelley. The company said it has no firm timetable for a subsequent PRM opportunity, although it expects to participate in any proposal issued by Petrobras and remains in discussions with other major companies that view PRM systems as viable solutions.
Navy contract supports Intelligent Industrial outlook
The Intelligent Industrial segment generated $5.2 million in quarterly revenue, down from $6.1 million a year earlier. Curda attributed the decline to lower demand for industrial sensors and, for the quarter, reduced demand for contract manufacturing services.
However, Geospace highlighted a $10.8 million U.S. Navy contract awarded to its Quantum Technology Sciences subsidiary near the end of the third quarter. Under the contract, Quantum Technology Sciences will provide a Seismic Acoustic Detection and Ranging system, with completion expected by December 2027.
Kelley said the project combines Quantum Technology Sciences’ technology with Geospace’s PRM technology to provide an in-water detection solution for potential threats. He described the work as being conducted under a Small Business Innovation Research, or SBIR, arrangement, through which the Navy will assess whether the system meets its technical expectations before considering a larger-scale deployment.
Curda said revenue from the Navy project will be recognized over time, independently of the payment milestones, and will span fiscal 2027 and fiscal 2028.
Kelley also said the company’s Heartbeat Detector business is progressing as planned. Geospace has conducted several pilots and has a pipeline of prospective customers, he said, adding that the company believes the initiative is slightly ahead of its internal plan. He cautioned that converting sales can take time because customers include government agencies.
Cost controls and liquidity focus
Operating expenses declined by $1.2 million in the third quarter and by $400,000 over the first nine months of fiscal 2026. Curda said quarterly expense reductions reflected lower personnel costs, agent commissions, and legal and professional fees. For the nine-month period, lower research and development costs and agent commissions contributed to the reduction.
Geospace invested $3.3 million in plant equipment during the first nine months of the fiscal year. At the end of the third quarter, the company had $25 million of available borrowings under its credit agreement with Woodforest National Bank and working capital of $41 million, including $17 million of trade accounts and financing receivables.
Addressing a question about cash usage, Curda said management is closely managing cash, reviewing expenses and monitoring cash inflows and outflows. He said the company expects its bank relationship and credit facility to help support operations until it receives its next anticipated milestone payment from Petrobras.
Geospace did not provide specific revenue or earnings guidance during the call. Kelley said the company will continue to invest in innovation, support customers, maintain financial discipline and work to convert pipeline opportunities into revenue as market conditions improve.
About Geospace Technologies (NASDAQ:GEOS)
Geospace Technologies Corporation specializes in the design, manufacturing and marketing of geophysical instrumentation for seismic data acquisition. The company's solutions address the needs of oil and gas exploration and production companies by enabling detailed subsurface imaging through advanced sensor and acquisition systems. Geospace serves both land and marine seismic markets, offering equipment that meets the rigorous demands of contemporary seismic surveys.
In its Land Products segment, Geospace Technologies offers a range of components including geophones, accelerometers, cable and recorder accessories designed to collect high-quality seismic signals in onshore environments.
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