Castellum, Inc. (CTM) - Q3 2025 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended September 30, 2025. Castellum, Inc. is a technology company focused on cybersecurity, information technology, electronic warfare, and information operations, primarily serving the U.S. government, financial services, and healthcare sectors. The company operates as a single reporting segment and is classified as a smaller reporting company and an emerging growth company.
Key Financial Metrics
| Metric | Q3 2025 | Q3 2024 | YTD 9M 2025 | YTD 9M 2024 |
|---|---|---|---|---|
| Revenue | $14.62M | $11.61M | $40.31M | $34.47M |
| Gross Profit | $5.49M | $4.96M | $15.11M | $14.15M |
| Gross Margin | 37.6% | 42.7% | 37.5% | 41.1% |
| Operating Income (Loss) | $0.45M | ($1.38M) | ($1.42M) | ($5.62M) |
| Net Income (Loss) | $0.42M | ($1.28M) | ($1.08M) | ($7.24M) |
| Cash & Equivalents | $17.82M (as of Sept 30, 2025) | |||
| Total Debt (Notes Payable) | $2.40M (as of Sept 30, 2025) | |||
| Contract Backlog | $220.66M (Total Scheduled) |
Material Changes vs. Prior Period
- Revenue Growth: Q3 2025 revenue increased 26% year-over-year, driven by a $103.3M contract award to subsidiary GTMR for the NAVAIR PMA-290 program and direct labor growth. This offset revenue reductions from the September 2024 sale of subsidiary MFSI.
- Profitability: The company returned to profitability in Q3 2025 with a net income of $0.42M, compared to a net loss of $1.28M in Q3 2024. Operating expenses decreased 20% due to reduced healthcare costs (transition to fully insured plan) and lower stock-based compensation.
- Debt Reduction: Total notes payable decreased significantly from $8.0M at year-end 2024 to $2.4M as of September 30, 2025. The company fully repaid its $2.0M revolving credit facility and a $2.4M related-party note during the period.
- Liquidity: Cash on hand increased from $12.0M (Dec 31, 2024) to $17.8M (Sept 30, 2025), bolstered by equity raises and warrant exercises.
Guidance, Outlook, and Risks
Outlook and Capital Activities: Management highlighted two significant public offerings in 2025 (March and June) raising approximately $9.5M in gross proceeds, with substantial warrant exercises adding further liquidity. The company expects to recognize approximately 21% of its $220.7M backlog over the next 12 months.
Risks and Contingencies:
- Government Shutdown: A federal government shutdown began on October 1, 2025. While not materially impacting operations as of the filing date, a prolonged shutdown (beyond December 1, 2025) is expected to negatively impact business and results.
- Budgetary Uncertainty: Risks include potential spending cuts, the impact of the "DOGE" Service Temporary Organization on government spending, and delays in the FY 2026 budget process.
- Customer Concentration: Three U.S. government customers represented 72% of revenue for the nine months ended September 30, 2025.
- Security Clearances: The company's ability to perform depends on employees obtaining and maintaining necessary security clearances.
Investor Verification Checklist
- Backlog Realization: Verify the funded portion of the $220.7M backlog ($18.3M funded vs. $28.5M unfunded) and the risk of unfunded portions not being appropriated.
- Government Shutdown Impact: Monitor the duration of the October 2025 government shutdown and its specific effect on the NAVAIR PMA-290 contract and other federal task orders.
- Debt Covenants: Review the terms of the remaining $2.0M note payable (maturing Dec 2027) and the $400k related-party note to ensure compliance with interest and principal payment schedules.
- Customer Concentration: Assess the financial stability and contract renewal likelihood of the top three customers representing 72% of revenue.
- Warrant Expirations: Note that a significant portion of warrants issued in the March and June 2025 offerings expired unexercised; verify the remaining warrant balance and exercise trends.