B.O.S. Better Online Solutions .(BOSC) - 2025 Q2 - Quarterly Report

Executive Summary & Business Highlights BOS Better Online Solutions Ltd. reported strong Q2 2025 financial results with significant revenue and net income growth, a growing backlog, and raised full-year guidance, driven by strategic focus and customer diversification Q2 2025 Performance Overview BOS Better Online Solutions Ltd. reported strong financial results for Q2 2025, continuing its growth trajectory with significant increases in revenue and net income, alongside a growing contracted backlog and improved cash position Q2 2025 Financial Performance | Metric | Q2 2025 | Q2 2024 | Change (%) | | :-------------------------------- | :------ | :------ | :--------- | | Revenue | $11.5 million | $8.5 million | 36.4% | | Net income | $765,000 | $501,000 | 52.7% | | Basic net income per share | $0.13 | $0.09 | 44.4% | | EBITDA | $898,000 | $817,000 | 9.9% | - Contracted Backlog as of June 30, 2025, was $24 million, up from $22 million on March 31, 2025, but down from $27 million on December 31, 2024[8] - Cash and Equivalents increased to $5.2 million as of June 30, 2025, from $3.6 million as of December 31, 2024[8] Management Commentary CEO Eyal Cohen attributed robust Q2 revenue growth to a strategic focus on the defense sector, customer diversification, and expanded product offerings. CFO Moshe Zeltzer acknowledged temporary margin pressures in the RFID division due to operational inefficiencies, which are being addressed through restructuring, and noted a significant gain from the appreciation of the New Israeli Shekel offsetting a goodwill impairment charge - Strategic focus on the defense sector, combined with efforts to diversify the customer base and expand product offerings, delivered robust 36% revenue growth in Q2[3] - Consolidated gross profit margin was 22.8% in Q2 2025, down from 26.0% in Q2 2024, primarily due to temporary challenges in the RFID division[6] - The RFID division's gross profit margin decreased to 19.1% from 21.1% in Q2 2024, with restructuring initiatives expected to return it to approximately 21% gross margin by Q4 2025[7] - A non-cash goodwill impairment charge of $700,000 was recorded in connection with RFID restructuring, largely offset by a $696,000 gain from NIS appreciation against the US dollar[9] Full-Year 2025 Guidance Based on strong year-to-date results and contracted activity, BOS raised its full-year 2025 financial outlook for both revenue and net income Full-Year 2025 Financial Guidance | Metric | Previous Guidance | Revised Guidance | | :---------------- | :---------------- | :--------------- | | Revenues | $44 million | $45 million - $48 million | | Net Income | $2.5 million | $2.6 million - $3.1 million | Company Overview BOS Better Online Solutions Ltd. specializes in integrating advanced technologies to optimize supply chain operations through its Intelligent Robotics, RFID, and Supply Chain divisions, and provides investor relations information About BOS BOS Better Online Solutions Ltd. specializes in integrating advanced technologies to optimize supply chain operations for global clients in aerospace, defense, industrial, and retail sectors, operating through three specialized divisions: Intelligent Robotics, RFID, and Supply Chain - BOS integrates cutting-edge technologies to streamline and enhance supply chain operations for global customers in the aerospace, defense, industrial, and retail sectors[11] - - Intelligent Robotics Division: Automates industrial and logistics inventory processes through advanced robotics technologies - - RFID Division: Optimizes inventory management with state-of-the-art solutions for marking and tracking - - Supply Chain Division: Integrates franchised components directly into customer products to meet evolving needs[12] Investor Relations BOS hosted a video conference meeting on August 21, 2025, to discuss financial results, with a recording available on its website. Contact information for investor inquiries is also provided - BOS hosted a video conference meeting on August 21, 2025, at 8:30 a.m. EDT, with a recording available on the company website[10] - Investor inquiries can be directed to Matt Kreps of Darrow Associates or Eyal Cohen, CEO of BOS[12] Financial Statements The financial statements highlight significant revenue and net income growth for Q2 and H1 2025, an increase in total assets and shareholders' equity, and improved EBITDA, despite a goodwill impairment charge Consolidated Statements of Operations The consolidated statements of operations show significant revenue and net income growth for both the second quarter and first half of 2025 compared to the prior year, despite an increase in operating costs including a goodwill impairment charge Consolidated Statements of Operations (in thousands) | Metric (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | :------------------------------- | :------------------------------- | | Revenues | $26,553 | $19,734 | $11,527 | $8,447 | | Gross profit | $6,219 | $4,758 | $2,631 | $2,198 | | Total operating costs and expenses | $4,408 | $3,253 | $2,561 | $1,539 | | Operating income | $1,811 | $1,505 | $70 | $659 | | Financial income (expenses), net | $424 | $(262) | $696 | $(157) | | Net income | $2,114 | $1,242 | $765 | $501 | | Basic net income per share | $0.36 | $0.22 | $0.13 | $0.09 | - A goodwill impairment charge of $700,000 was recorded in both the three and six months ended June 30, 2025, which was not present in the prior year periods[17] Consolidated Balance Sheets The consolidated balance sheets show an increase in total assets and shareholders' equity as of June 30, 2025, compared to December 31, 2024, driven by higher cash and trade receivables, despite a decrease in goodwill Consolidated Balance Sheets (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $5,170 | $3,368 | | Trade receivables | $15,689 | $11,787 | | Inventories | $6,917 | $7,870 | | Total current assets | $29,006 | $24,360 | | Goodwill | $3,488 | $4,188 | | Total assets | $38,431 | $34,343 | | Total current liabilities | $11,679 | $10,665 | | Total long-term liabilities | $2,522 | $2,347 | | Total shareholders' equity | $24,230 | $21,331 | Condensed Consolidated EBITDA EBITDA significantly increased for both the second quarter and first half of 2025 compared to the prior year, reflecting adjustments for non-cash items like goodwill impairment, amortization, stock-based compensation, and depreciation Condensed Consolidated EBITDA (in thousands) | Metric (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | :------------------------------- | :------------------------------- | | Operating income | $1,811 | $1,505 | $70 | $659 | | Impairment of Goodwill | $700 | - | $700 | - | | Amortization of intangible assets | $30 | $95 | $15 | $47 | | Stock-based compensation | $20 | $42 | $10 | $21 | | Depreciation | $204 | $179 | $103 | $90 | | EBITDA | $2,765 | $1,821 | $898 | $817 | Segment Information Segment performance for H1 and Q2 2025 shows strong growth in Supply Chain and Intelligent Robotics, while RFID Solutions faced revenue decline and operating losses due to a goodwill impairment charge Six Months Ended June 30, 2025 vs. 2024 For the first half of 2025, the Supply Chain and Intelligent Robotics divisions showed strong revenue and gross profit growth, while the RFID Solutions segment experienced a decline in revenue and gross profit, leading to an operating loss after goodwill impairment Segment Performance: Six Months Ended June 30 (in thousands) | Metric (in thousands) | RFID Solutions (2025) | RFID Solutions (2024) | Supply Chain (2025) | Supply Chain (2024) | Intelligent Robotics (2025) | Intelligent Robotics (2024) | | :-------------------------------- | :-------------------- | :-------------------- | :------------------ | :------------------ | :-------------------------- | :-------------------------- | | Revenues | $6,168 | $6,662 | $19,734 | $12,687 | $868 | $401 | | Gross profit | $1,261 | $1,620 | $4,753 | $2,988 | $205 | $150 | | Income (loss) from operations | $(499) | $517 | $2,647 | $1,305 | $64 | $28 | - The RFID Solutions segment recorded a $700,000 impairment of goodwill and intangible assets in H1 2025, contributing to an operating loss[25] Three Months Ended June 30, 2025 vs. 2024 In Q2 2025, the Supply Chain division continued its robust performance with significant revenue and gross profit increases. The RFID Solutions segment, however, saw a decrease in revenue and gross profit, resulting in an operating loss due to the goodwill impairment charge, while Intelligent Robotics maintained positive operating income Segment Performance: Three Months Ended June 30 (in thousands) | Metric (in thousands) | RFID Solutions (2025) | RFID Solutions (2024) | Supply Chain (2025) | Supply Chain (2024) | Intelligent Robotics (2025) | Intelligent Robotics (2024) | | :-------------------------------- | :-------------------- | :-------------------- | :------------------ | :------------------ | :-------------------------- | :-------------------------- | | Revenues | $2,910 | $2,979 | $8,344 | $5,330 | $371 | $152 | | Gross profit | $555 | $629 | $1,997 | $1,503 | $79 | $66 | | Income (loss) from operations | $(676) | $91 | $940 | $729 | $6 | $6 | - The RFID Solutions segment incurred a $700,000 impairment of goodwill and intangible assets in Q2 2025, leading to an operating loss of $676,000[27] Additional Information This section details the use of non-GAAP financial measures for investor analysis and internal evaluation, alongside a safe harbor statement regarding forward-looking statements and associated risks Use of Non-GAAP Financial Information BOS provides non-GAAP financial measures to supplement its GAAP results, intending to assist investors in financial analysis consistent with research analyst models and for internal operational evaluation, with reconciliation to comparable GAAP measures - Non-GAAP measures are provided to supplement GAAP results, assist investors in financial analysis, and for internal operational evaluation[13] - Reconciliation of non-GAAP financial measures with the most directly comparable GAAP financial measures is provided in accordance with Regulation G[13] Safe Harbor Regarding Forward-Looking Statements This section serves as a disclaimer, indicating that forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially, and BOS undertakes no obligation to publicly update or revise these statements - Forward-looking statements reflect management's current views but are subject to risks and uncertainties that could cause actual results to differ materially[14] - - Dependency on major customers - - Uncertainty of maintaining gross profit margins - - Inability to keep up with technology and succeed in a competitive industry - - Inability to maintain marketing/distribution and expand overseas markets - - Uncertainty regarding legal claims - - Effect of exchange rate fluctuations - - General worldwide economic conditions - - Effect of regional conflicts - - Continued availability of financing[14] - BOS undertakes no obligation to publicly update or revise any forward-looking statements[14]