Odysight.Ai Inc. (ODYS) - Q2 2025 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended June 30, 2025. Odysight.Ai Inc. is a developer of vision-based platform solutions for Predictive Maintenance (PdM) and Condition Based Monitoring (CBM) markets, utilizing AI and machine learning. The company operates primarily in Israel with subsidiaries in the U.S. and Italy. As of August 13, 2025, there were 16,330,827 shares of common stock outstanding. The company is listed on the Nasdaq Capital Market under the symbol "ODYS."
Key Financial Metrics
| Metric | Q2 2025 (3 Months) | Q2 2024 (3 Months) | YTD 2025 (6 Months) | YTD 2024 (6 Months) |
|---|---|---|---|---|
| Revenue | $362,000 | $1,181,000 | $2,427,000 | $1,368,000 |
| Gross Profit | $133,000 | $514,000 | $671,000 | $291,000 |
| Operating Loss | $(4,438,000) | $(2,364,000) | $(8,998,000) | $(5,728,000) |
| Net Loss | $(4,075,000) | $(2,182,000) | $(8,340,000) | $(5,344,000) |
| Cash & Equivalents | $32.9 million (as of June 30, 2025) | |||
| Accumulated Deficit | $54.3 million (as of June 30, 2025) | |||
| Backlog | $14.4 million (as of June 30, 2025) |
Material Changes vs. Prior Period
- Revenue Volatility: Q2 2025 revenue decreased 69% year-over-year to $362,000, primarily due to the cessation of revenue from a Fortune 500 medical customer. However, YTD revenue increased 77% to $2.4 million, driven by the derecognition of a contract liability ($1.69 million) associated with that same customer in Q1 2025.
- Expense Growth: Operating expenses increased significantly. R&D expenses rose 67% in Q2 and 63% YTD due to new product development and hiring. Sales and marketing expenses surged 179% in Q2 and 123% YTD to penetrate new markets. G&A expenses increased 27% in Q2 and 47% YTD, partly due to Nasdaq listing costs and executive compensation.
- Liquidity Improvement: Cash and cash equivalents increased from $18.2 million at year-end 2024 to $32.9 million in Q2 2025. This was driven by a public offering in February 2025 that generated net proceeds of approximately $20.9 million.
- Inventory Write-down: The company recognized an inventory impairment of $203,000 related to the medical customer in the first half of 2025.
Guidance, Outlook, and Risks
- Outlook: Management expects expenses to continue growing as the company scales R&D and commercialization efforts. The company believes current cash resources will fund operations for at least the next 12 months but anticipates a need for additional capital to reach profitability.
- Geopolitical Risks: The company highlighted the impact of the ongoing conflict in the Middle East, including "Operation Rising Lion" and retaliatory strikes in June 2025. While offices in Israel were temporarily closed and executives called to reserve duty, management does not expect a substantial long-term impact on operations. However, the conflict has caused delays in some customer purchase orders.
- Trade Risks: New U.S. trade tariffs implemented in 2025 may increase supply chain costs and reduce profit margins, as products are manufactured outside the U.S.
- Customer Concentration: Revenue remains dependent on a limited number of customers. The loss of the Fortune 500 medical customer's 2025 purchase order significantly impacted Q2 results.
Key Facts for Investor Verification
- Capital Raise: Verify the utilization of the $20.9 million net proceeds from the February 2025 public offering and the timeline for future fundraising needs.
- Medical Customer Status: Confirm the status of the relationship with the Fortune 500 medical customer and the likelihood of future orders, given the derecognition of $1.69 million in contract liabilities.
- Backlog Realization: Assess the convertibility of the $14.4 million backlog into recognized revenue, noting that orders can be cancelled or delayed.
- Geopolitical Exposure: Monitor the operational continuity of the Israel-based headquarters and the impact of military reserve duty on key executives.
- Expense Trajectory: Track the burn rate relative to the $32.9 million cash balance to validate the 12-month liquidity runway.