OPTT Stock Plunges 29% on Severe Q2 Revenue and Earnings Miss
Ocean Power Technologies' revenue fell 83% short of estimates, with the company citing delays from a U.S. government shutdown as losses nearly tripled.
Shares of Ocean Power Technologies (NYSE: OPTT) plummeted nearly 29% on Tuesday after the marine energy solutions company announced second-quarter financial results that fell dramatically short of analyst expectations, raising investor concerns about its path to profitability.
The stock closed at $0.30, wiping out tens of millions in market capitalization, as investors reacted to a severe top- and bottom-line miss. For the quarter ending October 31, OPTT reported revenue of just $0.4 million, missing Wall Street's consensus estimate of $2.5 million by a staggering 83%. The company posted a net loss of $10.8 million, or $0.06 per share, which was triple the estimated loss of $0.02 per share and significantly worse than the $3.9 million net loss recorded in the same period last year.
In a statement, company executives attributed the sharp decline in revenue primarily to timing impacts from a U.S. federal government shutdown during the quarter. Chief Executive Officer Philipp Stratmann said the shutdown "shifted several deliverables and development activities into subsequent quarters." During an investor call, Stratmann stated, "Despite the federal government being shut down for nearly half of our fiscal quarter, we continued to expand our pipeline and strengthen our position across our key markets... With operations now fully reopened, we are confident in the conversion of that pipeline into backlog."
Despite the dismal quarterly performance, management directed attention towards its growing book of future business. The company highlighted that its backlog grew by nearly 300% year-over-year to $15.0 million. Even more striking was the growth in its sales pipeline, which a company press release noted had swelled to $137.5 million, a 63% increase from the prior year.
"These levels reflect broad engagement across defense, government security, offshore energy and commercial applications, and they demonstrate the strengthening demand for persistent maritime surveillance and autonomous surface vehicles," Stratmann explained, referencing the company's WAM-V® autonomous surface vehicles and PowerBuoy® platforms.
However, the yawning gap between future potential and current results dominated the market's reaction. The reported gross loss of $1.4 million—a stark reversal from a gross profit of $0.8 million a year ago—underscores the financial pressures facing the New Jersey-based company. The near-tripling of its net loss highlights an accelerating cash burn rate at a time when investor appetite for speculative, pre-profitability companies has waned.
The results leave investors in a difficult position: weighing a robustly growing pipeline against a stark failure to execute in the present quarter. While management is confident that the revenue shortfall was a temporary delay caused by external government factors, the significant widening of losses presents a fundamental challenge. The market's brutal verdict suggests deep skepticism about when, or if, the company's impressive-sounding backlog will translate into the substantial and profitable revenue needed to sustain its operations.
Looking ahead, OPTT's ability to quickly convert its pipeline into recognized revenue in the coming quarters will be critical. Investors will be closely watching for proof that the second-quarter collapse was an anomaly and not a sign of deeper operational issues, as analysts deciphered from the earnings call. The company’s performance in the next six months will serve as a key test of management’s turnaround narrative.