Inquiring about the likelihood and timing of future PRM contracts, specifically with Petrobras or other majors.

Petrobras still has a long-term strategy for PRM but timing is influenced by geopolitical situation and oil prices; no firm date for next proposal. Geospace intends to participate. Ongoing discussions with other majors, but nothing firm on the calendar. “Petrobras, as we've stated in the past, I mean they still have a long-term strategy for using PRM systems on their fields. But obviously, they're monitoring the greater geopolitical situation, the volatility in oil prices and their internal decision is driven by a lot of those factors. So they have not put forward when they anticipate releasing the next proposed PRM system.”

Requesting more details on the $10.8 million U.S. Navy contract, its purpose, and potential for additional contracts.

The project marries Quantum Technologies' STAR tech with Geospace's PRM tech for an in-water solution for threat detection. It's under an SBIR envelope, aiming to meet the Navy's technical performance expectations. This is an initial contract, not a proof of concept, and will determine future larger-scale moves by the Navy. Additional contracts are not expected before this one is fulfilled. “Essentially, the project marries our star technology from Quantum Technologies with our PRM technology from Geospace to provide an in-water solution for the U.S. Navy for detection of potential threats. And so this is under an SBIR envelope, and we're working closely with them to make sure the project is fully vetted out and as I said in the announcement, plan to deliver our solution by the end of next calendar year.”

How revenue for the Navy contract will be recognized.

Revenue will be recognized over time, similar to percentage completion, independent of payment milestones. It will span fiscal years 2027 and 2028. “We will recognize revenue independent of the milestones we're paid, and we'll recognize revenue over time that's similar to percentage completion. We'll have revenue recognition in fiscal year 2027. And given that we'll finish it in fiscal year '28, so you'll -- similar to the PRM contract, it will bridge a couple of fiscal years for us with regards to...”

GEOS

Geospace Technologies (GEOS) Q3 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q3 FY26)· Energy· Aug 7, 2026

Source: earnings call transcript

Executive summary

Geospace Technologies Q3 FY26 — Challenging Market Conditions Impact Performance

Geospace Technologies reported a challenging Q3 FY26 with significant revenue declines across all segments and a net loss, primarily due to geopolitical uncertainty, project timing, and reduced demand for seismic and Smart Water products. Despite these headwinds, the company secured a $10.8 million U.S. Navy contract and entered full production on its PRM contract, while also implementing cost reduction efforts and maintaining liquidity. Management is focused on converting pipeline opportunities and improving operating performance for long-term growth.

Highlights

Quantum Technology Sciences received a $10.8 million contract from the U.S. Navy.
Operating expenses decreased by $1.2 million for the quarter.
Maintained available borrowings of $25 million from credit agreement.
Successfully entered full production of the PRM contract.

Concerns

Revenue of $15.8 million, down from $24.8 million YoY.
Net loss of $9.7 million or $0.75 per diluted share, compared to net income of $800,000 or $0.06 per diluted share YoY.
Smart Water segment revenue decreased 56% YoY to $4.6 million.
Energy Solutions segment revenue decreased 28% YoY to $5.9 million.
Intelligent Industrial segment revenue decreased 14% YoY to $5.2 million.

Guidance & targets

Category	Target	Timeline	Confidence
U.S. Navy contract completion	December 2027 medium materiality	CY27 · FY28	High
PRM contract period of performance	Q3 FY27 to Q4 FY27 medium materiality	FY27	High
Heartbeat detector revenue growth	Ramped up low materiality	Coming periods	Medium

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Smart Water Decrease in revenue for both the 3-month and 9-month periods is due to lower demand for the Hatton connector product line. 9-month Revenue: $14.1 million9-month Revenue YoY: -48.4% (from $27.3 million)	$4.6 million	-56%	—	—
Energy Solutions The 3-month decrease was due in part to the sale of assets associated with the streamer recovery device product line in the prior year. The 9-month decrease is attributed to lower demand for ocean bottom nodal products, partially offset by revenue recognized on the PRM contract and increased land wireless product sales. Speaker stated 9-month revenue was an 'increase of 14%' which contradicts the stated figures. 9-month Revenue: $30.1 million9-month Revenue YoY: -14% (from $35 million)	$5.9 million	-28%	—	—
Intelligent Industrial The decrease in revenue for both periods was driven by lower demand for industrial sensors. The 3-month period also saw decreased demand for contract manufacturing services. 9-month Revenue: $16.6 million9-month Revenue YoY: -5.7% (from $17.6 million)	$5.2 million	-14%	—	—

Orderbook & backlog

U.S. Navy contract for seismic acoustic detection and ranging system $10.8 million Q3 FY26

new award

Expected to be completed by December 2027. Revenue will be recognized over time, similar to percentage completion, spanning FY27 and FY28.

Deals & partnerships

U.S. Navy Deliver seismic acoustic detection and ranging system, marrying STAR technology from Quantum Technologies with PRM technology from Geospace for in-water threat detection. $10.8 million Expected completion by December 2027

Contract received by subsidiary Quantum Technology Sciences under an SBIR envelope. This is an initial contract to prove technical performance for potential larger-scale deployment.

Risks & headwinds

Geopolitical uncertainty Current, ongoing

Impacted revenue and PRM contract timing.

Mitigation:Focus on factors within company's control and strengthening foundation for future performance.

Project timing delays Q3 FY26, with extension to Q3/Q4 FY27 for PRM.

Lower PRM contract revenue than expected in Q3 FY26.

Mitigation:Customer agreed to extend PRM contract period of performance to account for modifications.

Reduced sales volumes and customer access to capital Q3 FY26

Impacted overall revenue.

Mitigation:Positioning the company for long-term profitable growth as market conditions improve.

Margin pressure Q3 FY26

Pressured margins.

Mitigation:Offset by cost reduction efforts and improvements in manufacturing productivity.

Cash burn rate Current

Implied by net loss and analyst question.

Mitigation:Managing cash very closely, analyzing expenses, utilizing $25 million credit facility, and awaiting next milestone payment from Petrobras.

What to watch in Q4 FY26

PRM contract revenue recognition

Next quarter (Q4 FY26) and into FY27

Current Full production entered, Q3 FY26 revenue lower than expected due to scope changes.

Target Continued revenue recognition, progress towards Q3/Q4 FY27 completion.

Why it matters

Key revenue contributor; impact of scope changes and extension on revenue flow is important for overall financial performance.

Importantly, our customer agreed to extend the PRM contract period of performance to account for these modifications. We have now successfully entered full production of the goods contract.

Find out whether GEOS delivers this. Inve re-checks your case every morning.

Q&A highlights

Seeking detailed explanation of PRM contract changes, financial impact, and competitive implications.

No financial impact, total value remains the same. Changes were related to equipment layout and rerouting sensors/cables, not technical changes to equipment. This led to a delay and contract extension. There are no competitive implications for future contracts.

“There's no financial impact to the contract. The total value remains the same. The -- it was -- regarding the structure of the equipment, our customer decided to change some of the layout, so we went through some engineering changes, and that led to a delay. Obviously, our customer was willing to accept that, and they gave us a contract extension.”

asked by William Dezellem · answered by Richard Kelley

2 min read 6 chapters

Detailed narrative

Market Headwinds and Cost Management

Geospace's Q3 FY26 revenue was impacted by geopolitical uncertainty, project timing, reduced sales volumes, and customer access to capital. Margins faced pressure from product mix, inflation, raw material costs, and component availability. The company partially offset these impacts through previously stated cost reduction efforts and improvements in manufacturing productivity, focusing on factors within its control.

Smart Water Segment Initiatives

The Smart Water segment experienced a dip in revenue, primarily driven by lower demand for the Hydro con Connector. In response, Geospace announced the release of the Series 5 connector in June, designed to provide increased flexibility for customers and address ongoing supply chain challenges. This new product aims to strengthen the company's competitive position and better align with evolving customer infrastructure needs.

Energy Solutions Segment Dynamics

The Energy Solutions segment saw reduced revenue due to continued lower demand for seismic acquisition equipment. Revenue contribution from the permanent reservoir monitoring (PRM) contract was lower than anticipated in Q3 FY26 due to customer-requested changes to the project scope. However, the customer agreed to extend the PRM contract's period of performance, and the company has successfully entered full production.

Intelligent Industrial Segment & Security Portfolio

The Intelligent Industrial segment remained a consistent revenue contributor, with expected future growth from its security portfolio. Notably, the subsidiary Quantum Technology Sciences secured a $10.8 million contract from the U.S. Navy to deliver a seismic acoustic detection and ranging system. This contract is expected to be completed by December 2027, leveraging the company's STAR and PRM technologies.

Strategic Priorities and Financial Discipline

Geospace continues to execute its strategic priorities by investing in innovation, supporting customers, and maintaining financial discipline. The company's focus remains on converting opportunities within its pipeline into revenue, improving operating performance, and positioning itself for long-term profitable growth amidst challenging market conditions.

Cash Management and Liquidity

The company is actively managing its cash position, analyzing expenses, and eliminating non-essential items. With $25 million in available borrowings from its credit agreement and $41 million in working capital, Geospace aims to maintain financial stability until the next milestone payment from Petrobras, which is crucial for its ongoing operations.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.