Kraken Robotics Reports Strongest Quarter in History
Kraken Robotics has filed strong financial results for the third quarter ended September 30, 2023.
“With Q3 being our strongest quarter in history and Q4 expected to show further improvement, we are on track to hit our financial guidance for 2023,” said Kraken President and CEO Greg Reid. “More importantly, we are confident that our momentum will continue in 2024 as our sonar and subsea power business are seeing strong growth opportunities.
“There is a clear uptick in demand for uncrewed underwater vehicles (UUVs) where we sell both sonar and batteries to AUVs and provide minehunting solutions to Navies with our KATFISH towed synthetic aperture sonar solution. The emergence of a new class of UUVs, the Extra Large UUV (XLUUV) is driving much higher energy requirements in UUVs and our subsea battery business is benefitting.
“Many countries and Navies around the world are in various stages of upgrading their subsea surveillance equipment, with underwater solutions such as towed sonar or autonomous underwater vehicles (AUVs) that are deployed from crewed or uncrewed surface vessels (USVs). Kraken’s technology portfolio and product and service offering are well positioned to ride this demand wave. Our second largest market, offshore wind, has seen continued solid demand for sub-seabed services. The offshore wind and offshore oil and gas market represents 15-20% of our overall revenue stream.”
During the quarter, the company eliminated most of its long-term debt including the PanGeo acquisition debt, and almost doubled its credit facilities to $12 million.
“We believe we have all the cash we need to execute on our business plan, and expect cash balances to improve as orders are executed and we hit various payment milestones,” Reid said.
Q3 2023 Financial Highlights
• Consolidated revenue for Q3 2023 was $20.3 million compared to $12.3 million, an increase of 66% over the comparable quarter and was Kraken’s strongest revenue quarter to date. Revenue mix was 85% products / 15% services.
• Product revenue in the quarter was $17.2 million, an increase of 126% over the comparable quarter. The increase was the result of continued sales of subsea batteries, work with the Canadian Navy on its Remote Minehunting and Disposal Systems (RMDS) program, the production of our KATFISH product as well as the sale of synthetic aperture sonar (SAS) systems.
• Service revenue in the quarter was $3.2 million, a decrease of 32% over the comparable quarter due to a large Acoustic Corer project in the comparable quarter a year ago.
• Gross margin percentage in Q3 2023 was 49% compared to 36% in Q3 2022. The improvement was due to increased sales volumes of higher margin products during the quarter compared to the prior year.
• Adjusted EBITDA for the quarter was $4.4 million compared to an Adjusted EBITDA of $1.7 million in the comparable quarter. Adjusted EBITDA margin in the quarter was 22% compared to 11% in the comparable quarter with the increase due to higher revenue and improved gross margin.
• Net income in the quarter was $2.3 million, compared to net loss of $0.9 million in Q3 2022.