Breaking Down Coda Octopus Group, Inc. (CODA) Financial Health: Key Insights for Investors

You're looking at Coda Octopus Group, Inc. (CODA) because the subsea defense and technology space is heating up, and you want to know if their recent financial performance justifies the risk. The short answer is they're growing revenue fast, but you need to watch their margins. For the fiscal third quarter of 2025 (TQ2025), the company pulled in approximately $7.1 million in total revenue, which is a solid 29.0% jump from the prior year, primarily fueled by a massive 103.6% surge in equipment sales within their core Marine Technology Business. Here's the quick math: that revenue growth is not translating directly to the bottom line, as net income after taxes only saw a tiny 0.7% increase, landing at $1.28 million, and the gross margin dipped from 73.9% to 68.3%. Still, they have a rock-solid balance sheet with a cash balance of $26.2 million as of July 31, 2025, giving them the dry powder to defintely execute on their strategic initiatives, like the Diver Augmented Vision Display (DAVD) program, which is targeting 2025 fiscal year sales of up to $4.0 million. The growth is real, but it's getting more expensive.

Revenue Analysis

You need to know where Coda Octopus Group, Inc. (CODA)'s growth is coming from, and the picture is one of successful diversification coupled with a sharp shift in product mix. The overall revenue growth is strong, with the fiscal third quarter (TQ2025) total revenue hitting approximately $7.1 million, an increase of 29.0% over the same quarter in the prior year. This acceleration is impressive, but you have to look past the top-line number to see the underlying changes in the business structure.

The biggest story for fiscal year 2025 is the diversification of revenue streams (the sources of a company's income) following the acquisition of the Acoustics Sensors and Material Business in October 2024. This new segment immediately contributed to the top line, adding $1.5 million in TQ2025, which was about 20.6% of the consolidated revenue for the quarter. This is a deliberate move to build resilience and access larger defense contracts in the underwater acoustic space.

Here's the quick math on the segment contributions for the third quarter of 2025 (TQ2025):

• Marine Technology Business (Core) revenue grew 30.7% to $4.0 million.
• Marine Engineering Business revenue decreased 33.2% to $1.6 million.
• Acoustics Sensors and Material Business revenue was $1.5 million.

The core Marine Technology Business is where the real product shift is happening. Its revenue growth is now overwhelmingly driven by equipment sales, which surged by 103.6% to approximately $2.7 million in TQ2025 compared to the prior year's period. This is a great sign for the adoption of key technologies like the Diver Augmented Video Display (DAVD) system, which management expects to generate between $3.5 million and $4.0 million in sales for the full fiscal year 2025, a significant jump from $1.2 million in fiscal year 2024.

Still, this positive shift has a flip side: the Marine Engineering Business, which provides services and rentals, saw revenue drop by 33.2% in TQ2025. The decline is tied to a significant reduction in higher-margin rental activity, largely because of policy shifts that caused offshore renewable energy projects in the U.S. to be shelved. The core business is selling more hardware, but the services side is feeling the pinch of changing end-market conditions. This is a classic trade-off: higher upfront sales but a dip in recurring service revenue. For more on the strategic implications of these shifts, you can read our full analysis at Breaking Down Coda Octopus Group, Inc. (CODA) Financial Health: Key Insights for Investors.

To be fair, the trailing twelve months (TTM) revenue ending July 31, 2025, shows a solid overall trajectory, totaling $24.35 million with a year-over-year growth of 11.1%. This is defintely a stronger growth rate than the US Aerospace & Defense industry average. You need to watch the gross margin (which fell to 68.3% in TQ2025 from 73.9% in TQ2024) to see if the higher volume of equipment sales and the lower margin of the new Acoustics segment will stabilize the overall profitability profile.

Here is a summary of the quarterly segment performance for a clearer view:

Your next step is to drill into the profitability of the new Acoustics Sensors and Material segment to confirm its long-term value against the margin compression it's causing.

Profitability Metrics

You're looking for a clear picture of Coda Octopus Group, Inc. (CODA)'s earning power, and the 2025 data tells a story of high-level efficiency facing near-term margin pressure. The headline is that CODA still operates with margins far superior to its industry peers, but the cost of growth and strategic shifts is defintely showing up in the numbers.

For the trailing twelve months (TTM) ended July 2025, CODA generated revenue of $24.35 million, translating into a Gross Profit of $16.05 million and Net Income of $3.43 million. Here's the quick math on the core profitability ratios, which are excellent on an absolute basis:

• Gross Profit Margin: 65.9% (TTM)
• Operating Profit Margin: 14.0% (TTM)
• Net Profit Margin: 14.1% (TTM)

Margin Trends and Operational Efficiency

While the TTM margins are strong, the quarterly trend shows a clear contraction. In the third quarter of fiscal 2025 (Q3 2025), the Gross Margin was 68.3%, down from 73.9% in the comparable prior-year period. Similarly, the Operating Margin fell from 25.4% to 19.5%. This isn't a sign of core business failure, but rather the cost of executing a growth strategy and navigating market shifts.

The margin pressure stems from two key operational factors. First, the product mix is changing: the company is seeing a shift from higher-margin rental revenue to lower-margin hardware sales, exacerbated by reduced funding for U.S. renewables projects. Second, the recent acquisition of Precision Acoustics, a new business unit, contributed revenue but at a lower gross margin than the core Marine Technology Business. Plus, Selling, General and Administrative (SG&A) costs and R&D investment are up significantly as the company invests in its Digital Array of Velocity Detectors (DAVD) program.

CODA's Profitability vs. Industry Averages

This is where CODA's unique technology and market position shine. Despite the internal margin compression, the company's profitability ratios are vastly superior to its industry's benchmarks. The high Gross Margin reflects a strong pricing power and product differentiation, especially in its core Marine Technology Business.

To be fair, the Electronic Components industry average Gross Profit Margin is around 34.4%, and the Aerospace & Defense sector-a key CODA end-market-averages about 28.8%. CODA's TTM Gross Margin of 65.9% is nearly double these averages, a powerful indicator of its competitive moat.

Here is a comparison of CODA's TTM performance against its primary peer group:

The TTM Net Profit Margin of 14.1% is also substantially higher than the 3.1% industry average. This means that for every dollar of revenue, CODA keeps significantly more profit after all expenses, taxes, and interest. This exceptional profitability is the core strength you're buying into, even as the company navigates a temporary period of cost-heavy, growth-focused investment. You can find a deeper dive into the full financial picture in our main article: Breaking Down Coda Octopus Group, Inc. (CODA) Financial Health: Key Insights for Investors.

Debt vs. Equity Structure

You're looking at Coda Octopus Group, Inc. (CODA) and wondering how they fund their growth in a capital-intensive sector like marine technology. The direct takeaway is this: Coda Octopus Group, Inc. is a textbook example of a debt-averse company, relying almost entirely on shareholder equity and retained earnings, not borrowing.

As of the end of the third fiscal quarter of 2025 (July 31, 2025), the company reported having no debt on its balance sheet. This is a powerful statement about financial stability. Instead of relying on interest-bearing loans, Coda Octopus Group, Inc. leverages its strong cash position, which stood at $26.2 million as of the same date, an increase of $3.7 million from the start of the fiscal year.

Here's the quick math on leverage: The Debt-to-Equity (D/E) ratio is essentially 0. To be fair, if you look closely at the total liabilities-which include non-debt items like deferred revenue and operating lease liabilities-the picture is still exceptionally clean. As of April 30, 2025, Total Stockholders' Equity was approximately $55,888,497. The total long-term liabilities were only $454,873, which is mostly non-current operating lease liabilities and deferred taxes, not traditional debt.

This capital structure is defintely a conservative approach, especially when compared to the industry average. For context, the average Debt-to-Equity ratio for the Aerospace & Defense sector-a highly relevant benchmark given Coda Octopus Group, Inc.'s work with the U.S. Navy-is around 0.38. Coda Octopus Group, Inc.'s near-zero ratio means they have virtually no financial leverage risk.

The company is funding its growth and strategic initiatives, like the Diver Augmented Vision Display (DAVD) program, purely through internally generated cash flow and equity. They don't have to worry about credit ratings or refinancing activity because there is no debt to service. This strategy means slower, but more stable, growth. They are not using financial engineering to juice returns, but relying on Mission Statement, Vision, & Core Values of Coda Octopus Group, Inc. (CODA). and their core business performance.

• Short-term Debt: $0 (No short-term or long-term debt reported).
• Long-term Debt: $0 (Official earnings reports confirm a debt-free balance sheet).
• Debt-to-Equity Ratio: 0 (Significantly below the industry average of 0.38).

This preference for equity funding over debt financing is a clear signal to investors: Coda Octopus Group, Inc. prioritizes balance sheet resilience over maximizing leveraged returns. It's a low-risk, high-liquidity profile, which is great for weathering economic storms but might cap the growth rate compared to highly leveraged peers.

Liquidity and Solvency

You want to know if Coda Octopus Group, Inc. (CODA) has the cash flow and balance sheet strength to weather any near-term economic chop. The short answer is yes, absolutely. Based on the most recent unaudited fiscal year 2025 data as of July 31, 2025, Coda Octopus Group, Inc. maintains an exceptionally strong liquidity position, which is a significant competitive advantage.

Current and Quick Ratios: A Fortress Balance Sheet

The company's liquidity ratios are not just good; they are phenomenal. The Current Ratio, which measures the ability to cover short-term debt with short-term assets, sits at an impressive 11.37. Here's the quick math: Total Current Assets of approximately $47.41 million divided by Total Current Liabilities of about $4.17 million gives you that figure. For context, a ratio of 2.0 is often considered healthy, so 11.37 signals a massive buffer.

Even the Quick Ratio (or acid-test ratio), which strips out inventory-typically the least liquid current asset-is robust at around 8.08. This means Coda Octopus Group, Inc. could cover its entire short-term debt load over eight times using only its most liquid assets, like cash and accounts receivable. That is defintely a gold-standard liquidity profile.

Analysis of Working Capital Trends

Working capital (Current Assets minus Current Liabilities) is the lifeblood for day-to-day operations, and Coda Octopus Group, Inc. has a substantial and growing cushion. As of July 31, 2025, the company reported a net working capital of approximately $43.24 million. This trend suggests excellent financial management and a low reliance on external, short-term funding, which is critical in a high-interest-rate environment. The consistent growth in this metric provides the flexibility to fund new research and development or pursue strategic acquisitions without stressing the core business.

Cash Flow Statements Overview

Looking at the cash flow statement for the nine months ended July 31, 2025, provides a clear picture of where the cash is coming from and going. This is where you see the quality of earnings-whether profit is turning into real cash.

• Operating Cash Flow: Net cash provided by operating activities was strong at approximately $4,307,865. This is a key strength, indicating the core business is highly profitable and efficiently converting sales into cash.
• Investing Cash Flow: The net cash used in investing activities was a modest ($822,191). This negative figure is generally a positive sign for a growth-focused technology company, as it reflects capital expenditures, like purchasing property and equipment, which support future revenue generation.
• Financing Cash Flow: Net cash used in financing activities was near $0. The company is not taking on new debt or issuing significant new equity, nor is it spending heavily on share buybacks or dividends for the reported period, reflecting a self-funding business model.

Potential Liquidity Strengths and Actions

The primary strength is the sheer size of the cash and cash equivalents, which stood at roughly $26.2 million at the end of Q3 2025. This cash balance alone is more than six times the company's total current liabilities. This level of liquidity virtually eliminates any near-term solvency concerns. The clear action for management is to deploy this capital efficiently, perhaps by increasing investment in the high-growth Diver Augmented Vision Display (DAVD) program, which is targeting $3.5 million to $4.0 million in related sales for fiscal year 2025. For a deeper dive into the company's full strategic position, you should review the full analysis in Breaking Down Coda Octopus Group, Inc. (CODA) Financial Health: Key Insights for Investors.

Valuation Analysis

You're looking at Coda Octopus Group, Inc. (CODA) and wondering if the market has priced it fairly, or if there's a misstep you can capitalize on. The short answer is that the stock appears to be trading at a slight premium based on trailing earnings, but future growth expectations suggest the valuation is much more reasonable. It's a classic growth-versus-value tension.

As of mid-November 2025, the stock is trading around $8.13, which is a significant drop from its 52-week high of $10.54, but still well above the 52-week low of $5.76. This volatility, plus a -7.8% price return over the last year, tells you the market is still trying to figure out the long-term impact of their recent acquisitions and their core technology growth.

Here's the quick math on the key valuation multiples:

• Price-to-Earnings (P/E): The trailing P/E is about 26.63. This is higher than what you'd typically want to pay for a company with its recent earnings growth, suggesting a slight overvaluation based on past performance.
• Forward P/E: Looking ahead, the forward P/E drops to approximately 19.05. That's a much more palatable number, reflecting the expectation of significantly improved earnings in the coming year, which is a key signal for growth investors.
• Price-to-Book (P/B): The P/B ratio sits at about 1.6. For a technology-driven company, this is quite low and often signals that the market isn't fully valuing the intellectual property or future earning power embedded in the balance sheet, especially when compared to the tangible book value ratio of 1.81.
• Enterprise Value-to-EBITDA (EV/EBITDA): The EV/EBITDA is around 14.07. This metric is capital-structure neutral and gives us a clean look. Compared to its industry peers, this multiple suggests the company is priced competitively, not excessively cheap, but not wildly expensive either.

Honestly, the valuation story hinges on their ability to execute on the defense and marine technology contracts. Their Q3 2025 revenue was strong at $7.1 million, but the gross margin dropped to 68.3% from 73.9% a year ago, which is a detail you can't ignore. Increased costs or pricing pressures can quickly erode that forward P/E advantage.

You also need to know that Coda Octopus Group, Inc. doesn't pay a regular dividend. The dividend yield is 0.00% and the payout ratio is 0.00%. This isn't a stock for income investors; all profit is being reinvested into the business, which is typical for a company focused on M&A and R&D, like their new NanoGen series.

The analyst consensus is currently a Moderate Buy. One analyst has a 'Buy' rating, while another maintains a 'Hold'. This split view reinforces the idea that the stock's future is tied to execution-it's not a screaming buy, but it's defintely not a clear sell either. Before making a move, you should look deeper into their strategic direction, especially their Mission Statement, Vision, & Core Values of Coda Octopus Group, Inc. (CODA).

Risk Factors

You want to know the real risks for Coda Octopus Group, Inc. (CODA), not just the boilerplate. The direct takeaway is that while the company is growing revenue-Q3 2025 revenue hit $7.1 million-it faces significant margin pressure and customer concentration that could limit its long-term profitability. You need to map these near-term headwinds to your investment thesis.

The core external risk is the highly competitive market for underwater imaging and sonar technology, which is subject to rapid technological change. Plus, a big internal strategic risk is customer concentration: a substantial portion of the Marine Engineering Business revenue, between 20% to 30% of consolidated revenues, comes from a handful of prime defense contractors like Raytheon or Northrop. That's a lot of eggs in a few baskets.

Here's the quick math on profitability: The gross margin dropped to 68.3% in the third quarter of fiscal year 2025, down from 73.9% in the comparable period a year ago. This decline signals increased costs or pricing pressure, plus the integration of the lower-margin Acoustics Sensors and Material Business. Also, the Return on Capital Employed (ROCE) was only 6.1% for the trailing twelve months to April 2025, which is notably below the Electronic industry average of 10%. That's a low return on invested capital.

Operational risks are also clear in the segment performance. The Marine Engineering Business revenue saw a decrease of 33.2% in Q3 2025. Even more striking is the massive 75.9% drop in rental revenue in Q2 2025, a direct hit from reduced offshore renewable projects due to shifts in U.S. energy policy. This shows a vulnerability to regulatory and policy changes.

• Gross margin compression: 68.3% in Q3 2025, down from 73.9%.
• Rental revenue collapse: 75.9% decline in Q2 2025.
• Low ROCE: 6.1%, underperforming the 10% industry average.

To be fair, Coda Octopus Group, Inc. is taking clear steps to mitigate these risks. They are actively diversifying the revenue structure, evidenced by the Acoustics Sensors and Material Business contributing $1.5 million in Q3 2025 revenue. They are also focusing heavily on the defense sector, with successful deliveries of the DAVD Program to the U.S. Navy and a foreign navy, and new orders from a major European Navy. The launch of new products like the Echoscope PIPE NANO GEN SERIES is intended to open up new opportunities in defense and underwater robotics. For a deeper dive into the company's long-term vision, you should review their Mission Statement, Vision, & Core Values of Coda Octopus Group, Inc. (CODA).

Still, investors are defintely cautious. Despite Q3 2025 earnings beating analyst forecasts, the stock dropped 5.2% in pre-market trading, reflecting a market concern about the sustainability of future growth and the pressure on margins. The company's strong cash position of $26.2 million as of Q3 2025 does provide a solid buffer for R&D and strategic acquisitions.

Growth Opportunities

You're looking at Coda Octopus Group, Inc. (CODA) and wondering where the real growth is coming from, which is the right question. The company's future isn't just about incremental sales; it's anchored in a few high-margin, proprietary technologies that are seeing critical adoption in the defense sector. The near-term opportunity is defintely tied to their unique product moat and strategic acquisitions.

The core growth driver is CODA's proprietary subsea intelligence technology. This includes the Echoscope real-time 4D/5D/6D imaging sonar, which is the only one of its kind, letting users image moving objects underwater even in zero visibility conditions. Plus, the new NanoGen series enhances their 3D sonar capabilities, keeping them ahead of the curve. This is a technical advantage that competitors can't easily replicate.

Here's the quick math on recent performance and projections:

The biggest strategic initiative is the Diver Augmented Vision Display (DAVD) system, which is essentially an augmented reality platform for divers. This is a game-changer for safety and efficiency, and it's a key focus for defense expansion. The company is actively moving this from evaluation to broader adoption, having secured orders worth $1.53 million for tethered systems and preparing to deliver 16 untethered systems for integration into the U.S. Navy's MK16 Underwater Breathing Apparatus (UBA) system for SPECWAR and EOD applications. The untethered variant alone addresses the largest market, which includes approximately 4,000 active U.S. Navy divers and an estimated 10,000 Public Safety and Law Enforcement divers.

Also, the strategic acquisition of Precision Acoustics in October 2024 is already paying off, contributing $1.5 million in Q3 2025 revenue, which is 20.6% of consolidated revenue. This acquisition diversifies the revenue structure and positions Coda Octopus Group, Inc. to collectively respond to larger, more complex defense requirements in the underwater acoustic space. This is smart, as it buffers the group against volatility in individual business lines, like the recent decline in higher-margin rental revenue from offshore renewable projects.

What this estimate hides is the potential for long tail recurring revenue. The DAVD Program's customer adoption model, which includes the Echoscope, is designed to generate ongoing revenue, not just one-time sales. This is the kind of sticky revenue stream that a seasoned analyst like me looks for. The competitive advantages are clear:

• Proprietary 4D/5D/6D sonar technology (Echoscope).
• Disruptive Diver Augmented Vision Display (DAVD) system.
• Strong focus and established supplier status in the Defense Sector.
• Diversified revenue via the Precision Acoustics acquisition.

If you want to dig deeper into the company's recent financial performance, you can read more at Breaking Down Coda Octopus Group, Inc. (CODA) Financial Health: Key Insights for Investors. Your next step should be to model the DAVD adoption curve to quantify that recurring revenue potential.