Core Viewpoint - FatPipe, Inc. has reported solid financial performance in its first quarter as a public company, highlighting growth in product revenue and a strong business model that positions the company for future success [3][4]. Q1 Highlights - The first quarter of fiscal year 2026 marked a pivotal moment for FatPipe as it was the company's first quarter post-IPO, showcasing strong execution and growth [3]. - The company experienced a 16.2% increase in total product revenue compared to the same quarter in fiscal 2025 [4][8]. - Total revenue, including professional services, reached $3.9 million, reflecting a 5% increase from $3.8 million in the same period last year [4][8]. - Gross margin improved to 94%, up from 92% in Q1 FY25, attributed to customer contract extensions [4]. Financial Performance - Net income for the quarter was $0.7 million, a 22% increase from $0.6 million in Q1 FY25, driven by strong top-line growth [5]. - Adjusted EBITDA was reported at $1.1 million, a 10% increase from $1.0 million in Q1 FY25 [5]. - Cash and cash equivalents stood at $5.9 million as of June 30, 2025, significantly up from $2.9 million on March 31, 2025, due to IPO proceeds [5]. Strategic Developments - FatPipe completed a significant deployment of 252 sites for a large customer, enhancing its presence in critical infrastructure sectors and high-growth verticals [3]. - The company has made strategic investments in expanding its sales organization and enhancing its cybersecurity offerings [3]. - FatPipe was added to the Russell 3000E and Russell Microcap Indexes, indicating its growing market presence [8]. - The company appointed key sales Vice Presidents and a CFO with extensive experience in networking technology, cybersecurity, sales, and finance [8]. Awards and Recognition - FatPipe received the 2025 MSP Today Product of the Year Award for its Total Security 360 cybersecurity product, underscoring its commitment to innovation and excellence in the cybersecurity space [8].

Part I. Financial Information [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The company's financial statements for the quarter ended June 30, 2025, reflect significant changes primarily due to its April 2025 IPO, boosting assets and equity [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased to $32.0 million, driven by a doubling of cash post-IPO, while equity grew significantly Consolidated Balance Sheet Highlights (Unaudited) | Account | June 30, 2025 (USD) | March 31, 2025 (USD) | | :--- | :--- | :--- | | **Assets** | | | | Cash | $5,906,988 | $2,920,550 | | Total current assets | $16,337,553 | $12,962,684 | | Total assets | $32,018,369 | $28,287,769 | | **Liabilities & Equity** | | | | Total current liabilities | $6,303,286 | $6,489,080 | | Total liabilities | $11,623,144 | $12,362,452 | | Total stockholders' equity | $20,395,225 | $15,925,317 | | Total liabilities and stockholders' equity | $32,018,369 | $28,287,769 | [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) For the three months ended June 30, 2025, the company reported a 5.0% increase in revenues to $3.94 million and a 7.0% growth in gross profit Consolidated Statements of Operations Highlights (Unaudited) | Metric | Three Months Ended June 30, 2025 (USD) | Three Months Ended June 30, 2024 (USD) | | :--- | :--- | :--- | | Revenues | $3,935,923 | $3,750,319 | | Gross Profit | $3,708,989 | $3,466,639 | | Income from Operations | $1,002,677 | $859,843 | | Net Income Attributable to Stockholders | $741,195 | $625,493 | | Net Income per Common Share (basic and diluted) | $0.05 | $0.05 | [Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity) Total stockholders' equity increased to $20.4 million, primarily driven by the April 2025 IPO and the period's net income - The company's Initial Public Offering in April 2025 resulted in the issuance of **800,004 shares**, generating proceeds of **$3,935,522** and significantly increasing additional paid-in capital[18](index=18&type=chunk) - As of June 30, 2025, the company had **13,826,468 shares** of common stock issued and outstanding, an increase from 13,026,464 at the end of the previous quarter[18](index=18&type=chunk)[93](index=93&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the three months ended June 30, 2025, the company experienced negative operating cash flow but a significant net increase in cash due to IPO proceeds Consolidated Statements of Cash Flows Highlights (Unaudited) | Cash Flow Activity | Three Months Ended June 30, 2025 (USD) | Three Months Ended June 30, 2024 (USD) | | :--- | :--- | :--- | | Net cash used in operating activities | ($508,604) | ($252,465) | | Net cash used in investing activities | ($42,449) | ($4,955) | | Net cash provided by financing activities | $3,593,250 | $0 | | Net change in cash and cash equivalents | $2,986,438 | ($344,676) | | Cash and cash equivalents, end of period | $5,906,988 | $767,843 | - The company received **$3,784,472** in cash from its initial public offering during the quarter[20](index=20&type=chunk) [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies, the April 2025 IPO, debt structure, and significant customer concentration - The company is a developer of software-defined wide area network (SD-WAN) solutions, holding **thirteen patents**, with core offerings including SD-WAN, SASE, and NMS software solutions[22](index=22&type=chunk)[23](index=23&type=chunk) - The company closed its IPO on April 9, 2025, selling **791,024 shares** and receiving net proceeds of approximately **$3.7 million**, with stock trading on The Nasdaq Capital Market under "FATN"[26](index=26&type=chunk)[27](index=27&type=chunk) Disaggregated Revenue (Three Months Ended June 30) | Revenue Type | 2025 (USD) | 2024 (USD) | | :--- | :--- | :--- | | Product revenue | $2,392,303 | $2,105,347 | | Service revenue | $953,287 | $868,231 | | Consulting revenue | $590,333 | $776,742 | | **Total** | **$3,935,923** | **$3,750,319** | - In March 2025, the company obtained a new **$5 million term loan** from Fortis Bank, with an interest rate of Prime Rate plus 1% (**8.75%** at reporting date)[86](index=86&type=chunk) - The company has significant customer concentration, with three major partners accounting for **43.51%** of consolidated revenues for the three months ended June 30, 2025, down from 54.11% in the same period of 2024[78](index=78&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's performance, highlighting a 5% year-over-year revenue increase to $3.9 million, improved gross margin, and strengthened liquidity post-IPO [Results of Operations](index=28&type=section&id=Results%20of%20Operations) For the quarter ended June 30, 2025, revenue increased 5% YoY to $3.9 million, driven by product sales, with gross margin expanding to 94% - Net revenue increased by **$185,604 (5%)** YoY, driven by a **$372,012** increase in product and service revenue attributed to core business execution post-IPO[132](index=132&type=chunk) - Gross margin improved to **94%** from 92% in the prior-year period, reflecting higher net revenue and a **20% decrease** in the cost of revenue due to lower hardware costs[133](index=133&type=chunk)[134](index=134&type=chunk)[135](index=135&type=chunk) - Product development expenses increased by **$50,957** YoY as the company ramped up development for its cybersecurity products following the IPO[138](index=138&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity was significantly boosted by the April 2025 IPO and a new $5 million term loan, despite negative operating cash flow - The company believes cash generated by operations and cash raised from the IPO are sufficient to meet business requirements for the next **12 months**[144](index=144&type=chunk) - Net cash used in operating activities was **$508,604** for the quarter, an increase from $252,465 in the prior year, partly due to NASDAQ listing fees and related expenses[152](index=152&type=chunk) - Net cash provided by financing activities was **$3,593,250**, consisting of **$3,784,472** in IPO proceeds offset by **$191,222** in debt repayment[154](index=154&type=chunk) [Critical Accounting Policies and Estimates](index=33&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) The company identifies critical accounting policies and estimates related to intangible assets and deferred taxes, requiring significant judgment - The valuation and amortization of IP-related intangible assets, primarily patents, involve significant judgments regarding projected cash flows and estimated useful lives[161](index=161&type=chunk) - The company continually assesses the need for a valuation allowance against deferred tax assets based on a 'more likely than not' realization threshold, considering forecasts of profitability and other factors[163](index=163&type=chunk)[164](index=164&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a "smaller reporting company," FatPipe, Inc. is not required to provide quantitative and qualitative disclosures about market risk - The Company is a "smaller reporting company" and is not required to provide the information for this item[174](index=174&type=chunk) [Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[177](index=177&type=chunk) - There have been no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[178](index=178&type=chunk) Part II. Other Information [Legal Proceedings](index=38&type=section&id=Item%201%20Legal%20Proceedings) The company reported no legal proceedings during the period - None[184](index=184&type=chunk) [Risk Factors](index=38&type=section&id=Item%201A%20Risk%20Factors) There were no material changes to the risk factors previously disclosed, except concerning ongoing liquidity needs - No material changes in risk factors were disclosed since the Annual Report on Form 10-K filed on June 30, 2025, except concerning on-going liquidity needs[185](index=185&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=38&type=section&id=Item%202%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities and confirmed the closing of its April 2025 IPO, which raised approximately $3.7 million net proceeds - The company reported no unregistered sales of equity securities for the period[186](index=186&type=chunk) - The company closed its IPO on April 9, 2025, receiving net proceeds of approximately **$3.7 million** from the sale of **791,024 shares** of common stock[188](index=188&type=chunk) [Other Information](index=38&type=section&id=Item%205%20Other%20Information) The company reported no other information for the period - None[194](index=194&type=chunk) [Exhibits](index=39&type=section&id=Item%206%20Exhibits) This section lists the exhibits filed as part of the Quarterly Report, including underwriting agreements, articles of incorporation, bylaws, and various certifications - A list of exhibits filed with the report is provided, including governance documents, material contracts, and certifications by the CEO and CFO[196](index=196&type=chunk)

Market Growth and Projections - The SD-WAN market is estimated to be approximately $4.5 billion in 2023, projected to grow to over $17.6 billion by 2030, with a CAGR of 18% in North America and over 60% in APAC[25]. - SASE software and platform revenues are expected to grow from $6.4 billion in 2022 to $27.2 billion by 2030, resulting in a CAGR of almost 20%[26]. - The total NMS market is projected to grow at a CAGR of 10% from $2.0 billion in 2022 to approximately $4.4 billion by 2030, with cloud-based solutions accounting for almost 85% of the total market[27]. Company Overview and Operations - FatPipe has over 2,500 end-user customers across various sectors, with no single customer accounting for over 10% of total revenue in fiscal years 2024 and 2025[53]. - The company is headquartered in Salt Lake City, Utah, with additional operations in Chennai, India, highlighting its international presence[64]. - The company has 154 full-time employees, with 57 in the U.S., 92 in India, and 5 in the Philippines, reflecting a diverse workforce[62]. Financial Performance - For the fiscal year ended March 31, 2025, net revenue was $16,288,881, a decrease of $1,572,028, or 9%, from the prior fiscal year[180]. - Gross profit for the fiscal year ended March 31, 2025, was $15,227,234, a decrease of $1,564,101, or 9%, from the prior fiscal year[182]. - Net income for the fiscal year 2025 was $1,952,895, down from $4,279,681 in 2024, indicating a significant decline[208]. Revenue Sources and Contracts - FatPipe's revenue is derived from software solutions and services, with customer contracts typically ranging from 36 to 60 months[170]. - Recurring billings from monthly and annual subscriptions increased by 23% in 2025, up from a growth of 14% in the previous fiscal year[209]. - The addition of a new cybersecurity product is anticipated to contribute to new revenues and recurring billings going forward[209]. Strategic Partnerships and Market Expansion - Three channel partners accounted for approximately 53.77% of total revenue during fiscal year 2025, highlighting the importance of strategic partnerships[53]. - FatPipe plans to expand its presence in Mexico and Asia markets with geography-specific software license bundles[21]. - The company is in discussions with potential partners to address local market needs in Southeast Asia, excluding China[52]. Intellectual Property and Competitive Edge - The company holds a portfolio of 13 patents covering a range of SD-WAN and related capabilities, enhancing its competitive edge[41]. - As of June 30, 2025, the company holds 13 U.S. patents and seven U.S. trademarks, indicating a strong intellectual property portfolio[58]. Risks and Challenges - The company operates in a highly competitive market, with significant risks related to the introduction of new solutions and the ability to maintain its competitive position[65][66]. - The company faces risks from supply shortages and fluctuating costs of materials, which could adversely affect its financial condition[66][67]. - Increased competition in the market poses risks to the company's ability to acquire new customers and maintain market share[75]. Governance and Management - The company plans to structure employment agreements for co-founders and other employees once independent board members are elected, indicating a focus on governance[63]. - The company is dependent on the continued services of its senior management, and any loss could adversely affect its business and financial condition[80]. Initial Public Offering (IPO) - The company completed its initial public offering on April 9, 2025, selling 791,024 shares at an initial price of $5.75 per share, generating gross proceeds of approximately $4,500,000[59][60]. - The company received net proceeds of approximately $3,700,000 from the IPO after deducting discounts and expenses[60]. Operating Expenses and Financial Management - Operating expenses include marketing and sales, general and administrative, and product development, with expectations for G&A expenses to increase as the company hires more personnel[175]. - The company anticipates continued reliance on operating cash flows and cash raised from the public offering conducted in April 2025 to meet its capital requirements[194]. Cybersecurity and Risk Management - FatPipe's cybersecurity risk management is integrated into its overall risk management framework, ensuring cybersecurity considerations are part of decision-making processes[148]. - The company has not encountered any cybersecurity challenges that materially impaired its operations or financial standing during the year ended March 31, 2025[151]. Compliance and Regulatory Risks - Non-compliance with laws and regulations could result in fines and penalties, negatively impacting the company's ability to contract with public sector clients[123]. - The company relies on various regulatory and contractual requirements when selling solutions to the U.S. government, with non-compliance potentially leading to severe penalties[124].

Company Overview - FatPipe, Inc. has been added to the Russell 3000E™ and Russell Microcap® Indexes, effective after the US market closed on June 27, 2025, as part of the 2025 Russell Indexes annual reconstitution [1][2] - The inclusion in these indexes signifies a milestone for the company, reflecting strong execution and momentum as it scales its high-margin software platform and expands globally [2] Industry Context - Russell indexes are widely utilized by investment managers and institutional investors for index funds and as benchmarks for active investment strategies, serving as a benchmark for approximately $10.6 trillion in assets as of June 2024 [3] - FTSE Russell, the global index provider, calculates thousands of indexes that cover 98% of the investable market globally, with about $18.1 trillion benchmarked to its indexes [5] Product and Innovation - FatPipe pioneered the concept of software-defined wide area networking (SD-WAN) and hybrid WANs, allowing companies to control multi-link network traffic without the need for hardware or cooperation from ISPs [4] - In May 2025, FatPipe introduced Total Security 360, a comprehensive cybersecurity and network security solution that provides control over data within company and sovereign boundaries [4]

Company Overview - FatPipe, Inc. is a pioneer in enterprise-class, application-aware, secure software-defined wide area network (SD-WAN) solutions, providing high levels of reliability, security, and optimization for Wide Area Networks (WANs) [1] - The company holds 12 U.S. patents related to multipath, software-defined networking, and its products are sold by over 200 resellers worldwide [3] Event Announcement - Dr. Ragula Bhaskar, Chairman and CEO of FatPipe, will present at the virtual Northland Capital Markets Growth Conference on June 25, 2025 [2] - Interested participants are encouraged to contact their Northland Capital Markets sales representative for additional details and meeting opportunities [2]

Core Points - Fatpipe Inc./UT (FATN) opened at $6.50 on its first day of trading, above the IPO price of $5.75 per share [1] Company Summary - The IPO price was set at $5.75 per share, indicating a positive market reception as the opening price exceeded this benchmark [1]