Prepared remarks
Good day, ladies and gentlemen, and welcome to the Nauticus Robotics 2025 Q1 Earnings Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. This call is being recorded on Thursday, May 15, 2025. I would now like to turn the conference over to Kristin Moorman. Please go ahead.
Thank you, and good morning, everyone. Joining me today and participating in the call are John Gibson, CEO and President; Vickie Hay, Interim CFO; and other members of our leadership team. On today's call, we will first provide prepared remarks concerning our financial and operational results. Following that, we will answer questions. We have now released our results for the first quarter of 2025, which are available on our website. In addition, today's call is being webcast, and a replay will be available on our website shortly following the conclusion of the call. Please note that comments we make on today's call regarding projections or our expectations for future events are forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control. These risks and uncertainties can cause actual results to differ materially from our current expectations. We advise listeners to review our earnings release and the risk factors discussed in our filings with the SEC. Also, please refer to the reconciliations provided in our earnings press release as we may discuss non-GAAP metrics on this call. I will now turn it over to John.
Good morning, and thank you for joining us. Today's call comes at an exciting time for Nauticus Robotics. With the successful acquisition of SeaTrepid in March, we've entered a new chapter marked by operational scale, expanding commercial opportunities and growing demand for our autonomous subsea technologies. Over the next few minutes, you're going to hear from our executive team on our first quarter financials, operational progress and our emerging pipeline of offshore work, all pointing to a business gaining momentum and maturing rapidly. While Q1 results reflect the seasonal nature of offshore work and the timing of our acquisition, the quarter also marked the beginning of our 2025 offshore season and the formal start of our integration efforts. Early signs are encouraging. We've mobilized equipment, secured extended contracts and are seeing enthusiastic interest in our Aquanaut platform from both existing and new customers. The conversations have shifted from what if to how soon, and that signals real traction. Now to turn it over to team Nauticus to explain how we intend to meet the growing demand for safer, smarter and more sustainable subsea solutions. With that, I'm going to hand it to Vickie, our Interim CFO, and let her get us started on the financial side for Q1. Vickie?
Thank you, John, and good morning. I will now discuss our financial results for the first quarter of 2025. The SeaTrepid acquisition closed on March 20 and has so far proved impactful to the organization with revenue being recognized from it in the first quarter and has continued to grow over the past six weeks following the end of the quarter. Other key milestones this quarter included further reducing our debt and associated interest by $3 million as a result of lowering the conversion price of the term loan and subsequent conversions. We also had a $20 million raise from our at-the-market facility to fund the acquisition of SeaTrepid and current year capital investments and operations. Revenue for the first quarter was $0.2 million, which is down $0.3 million sequentially and down $0.3 million from the same quarter last year. The Gulf of America offshore season just kicked off at the end of March, and we are now under contract.
Operating expenses for the quarter were $6 million, which is flat from Q1 2024 and down $0.5 million sequentially. G&A costs for the quarter were $4.3 million, which is an improvement of $0.9 million compared to Q1 2024. Sequentially G&A has increased $0.4 million due to nonrecurring professional fees in Q1 2025, primarily related to the acquisition of SeaTrepid, which included preparing financials for a two-year order that was needed as part of the transaction and other professional fees related to the restatement of 2024 quarterly financials that was completed in early April. Net loss for the quarter was $7.6 million. This is a $76.9 million decrease in net loss sequentially and a $65.3 million decrease from the net loss in Q1 2024. This large variance is attributable to the loss on extinguishment of debt recognized in 2024. Adjusted net loss for the quarter was $6.8 million compared to $6.9 million for the fourth quarter of '24.
When removing the nonrecurring professional fees that occurred in Q1 2025, there would have been an improvement sequentially of $1.1 million quarter-on-quarter. Cash at the end of Q1 '25 was $10.1 million compared to $1.2 million at the end of '24. This is primarily a result of funding received through the aftermarket offering, offset by the recent acquisition of SeaTrepid and cash used in operations. With the second quarter already well underway, we are excited about having a full quarter of operational revenue to report for the first time in Q2 while continuing to keep a strong focus on cost control and value-added activities. I will now pass the call back to John.
Well, thank you, Vickie. I just want to really thank Vickie and the finance team for doing an incredible job ensuring that we filed our requirements timely, especially as we were required to file a 10-Q and then just a few weeks later file a 10-K. The restatement caused a delay in getting everything done. And so they've been really hard at it and did an outstanding job, and I'm excited that we're shifting from a focus on reporting here to a focus on executing in the field. And so it's a welcomed change for us. Now I'd like to turn it over to Daniel Dehart, our Field Operations Lead; and Steve Walsh, our Sales Lead to discuss the emergence of Nauticus' first backlog of offshore commercial work. Daniel?
Thank you, John. I'm excited to provide an update on our current operations. We recently completed a mobilization of one of our Comanche ROVs onboard a vessel, and we are currently on hire completing a platform inspection off the Gulf Coast. The integration of SeaTrepid and Nauticus operations teams has gone better than expected and continues to expand the commercial forecast for our company. We will mobilize the Aquanaut vehicle once the ROV completes its inspection job in the coming weeks. And then the vessel will roll right into multiple scheduled inspection jobs. We will continue to execute our existing contracts and will utilize any idle time between these projects to complete our 3,000-meter test with the Aquanaut vehicle. We have now reached a phase of our company that will become a new norm, scheduling current contracts and new opportunities to maximize utilization, margins, and continue to diversify our customer base throughout the season.
Our goal is to continue to provide autonomy throughout the industry, utilizing our combined services with the Aquanaut system and ROV. We are currently negotiating contracts with multiple new customers that are excited about the benefits autonomy can bring to their subsea operations. After significant discussions with our current clients, our technology has the potential to significantly decrease the environmental footprint of offshore operations, utilizing an Autonomous Surface Vessel or ASV. We will progress these discussions into funded testing opportunities this summer that include pairing the second Aquanaut vehicle with an ASV. Our current clients see extreme value in this operation by completing inspection work without the use of a large vessel, eliminating personnel from dangerous offshore environments and reducing the CO2 footprint exponentially. With that, I will now turn it over to Steve for an update on our 2025 offshore commercial pipeline.
Thanks, Daniel, and good morning, everyone. I'm Steve Walsh, Vice President of Sales at Nauticus Robotics. I officially joined the team on March 21 through the SeaTrepid acquisition, and it's been full throttle from day one. Let me tell you, the momentum here isn't just buzz. It's real, it's growing, and it’s translating directly into opportunity. The offshore energy market is surging now, and Nauticus is right at the center of it. We're actively supporting oil and gas operations while making serious inroads into emerging sectors. What's driving this? A clear industry shift towards smarter, safer, lower emissions propelled by autonomous solutions, and that's exactly what we deliver. The response from customers since the merger has been overwhelmingly positive. Combining SeaTrepid's operational legacy with Nauticus' next-gen tech has created a powerful offering. Technologies like the Aquanaut aren't just impressing people; they're changing the conversation.
Operators are now thinking differently about risk, efficiency, and how robotics can reshape offshore operations. There is a strong appetite to remove personnel from hazardous environments, and Aquanaut is opening the doors that weren't available before. Since the acquisition, we've been hard at work transferring SeaTrepid's existing Master Service Agreements into the new Nauticus framework while also signing new MSAs with major industry players. That's a clear signal of confidence from the market in what we're building. And here's the key point: Demand isn't our bottleneck—scaling is. Right now, the only thing holding back revenue acceleration is equipment and personnel capacity. That's a high-quality problem, and we're tackling it aggressively with smart investments and a laser focus on execution. We're also honing our sales strategy around high-impact sectors like deepwater energy, offshore infrastructure, and defense, areas where our expanded portfolio truly stands out.
To wrap it up, the market is ready for the future we're building. Our pipeline is growing, our technology is gaining traction, and our customers are leaning in. It's an incredibly exciting time at Nauticus, and this is just the beginning. We're working towards the shift from selling to order taking. And with that, I will turn it back over to you, John.
I appreciate that, Steve. We made a big shift here from last year to this year. We've really gotten a lot of customer diversification here and have reduced our customer concentration. The number of calls coming in are exciting because it looks as though we can continue to diversify our customer base. And so it's an exciting time for us. I mean, it's a great market, and we really like the equipment we have. I do want to introduce Jason Close, our Software Lead, to talk about our equipment and some updates from their departments so you can see what's going on in the belly of the beast. So with that, I'll turn it over to you, Jason.
Thanks, John. Working with SeaTrepid over the past few months has expanded our market reach and introduced us to a wider range of customers and prospects, helping us refine our value proposition and better respond to industry-wide needs. In the first quarter, we made meaningful progress advancing ToolKITT across both our primary product line, Aquanaut, and ToolKITT-enabled world-class ROVs. For Aquanaut, our efforts were centered on releasing the latest version of ToolKITT in support of commercial operations for the remainder of the year. In parallel, we continue developing capabilities for near-term field deployment and established a structured program for 2025 to broaden Aquanaut's operational envelope and further expand supervised autonomy across the subsea industry. We also reached an important milestone in the development of ToolKITT for world-class ROVs. Following early vehicle integration and a rigorous round of hardware in the loop testing, ToolKITT is now prepared for tool trials as the final step towards our first commercial deployment.
We see strong demand for this capability and expect to integrate ToolKITT onto our own ROV fleet in the near future as part of this initial commercial release. That said, our assets remain heavily engaged in offshore work, reflecting the growing customer activity we're seeing across the business. As we move through the year, we're focused on delivering value through Aquanaut operations while preparing ToolKITT for broader field adoption, setting the stage for long-term growth across both our service and product offerings. I'll now hand it over to Amin for an update on Aquanaut and our electric manipulators.
Thank you, Jason. The engineering team is collaborating closely with the operations and software teams to maximize uptime across both Aquanaut vehicles. This joint effort ensures consistent, reliable performance throughout the year with minimal operational disruption. The engineering team has been transitioning from a traditionally R&D-focused approach to a commercially driven development model. This shift is essential for enabling scalable growth and aligning our capabilities with evolving market demand. For Aquanaut, design improvements are being implemented to boost vehicle reliability and reduce the maintenance cycle. These upgrades are critical in transitioning Aquanaut into a robust and reliable platform that can meet redress field demand. In tandem with our design improvements, the team is enhancing our design documentation and validation protocols to streamline assembly and support reliable maintenance and servicing.
Looking ahead, we are developing a capital deployment strategy and actively seeking manufacturing partnerships to scale production of the next Aquanaut fleet in alignment with anticipated market demand. With the manipulators, we are making steady progress on the design of our next-generation fully electric autonomous manipulators. This system is intended for integration not only with Aquanaut, but also with world-class ROVs, expanding our product capabilities and market applications. I will now hand the call back to John.
Thank you, Amin. Thank you, Jason. As you've heard throughout this call, Nauticus Robotics is entering a period of significant opportunity. The integration of SeaTrepid has not only expanded our operational capacity; it's unlocked meaningful customer relationships that have accelerated the deployment of our technology, though we are trying to stay disciplined and balanced upgrading equipment with getting revenue. And so we will bring it in, making changes as long as it doesn't interrupt revenue. We're now seeing real traction in the market with a growing backlog, expanding pipeline, and the clear demand for autonomous solutions that improve safety, lower costs, and reduce environmental impact. Our focus moving forward is clear: execute with precision, scale with discipline, and deliver on the promise of autonomy in subsea operations. We're confident in the team, the strategy, and the momentum we're building, and we believe 2025 is shaping up to be a transformative year for Nauticus and its stakeholders. It really does feel like we've made it through the inflection point. And with that, I'll turn it back over to the operator and we'll take any questions that are on the line. Thank you.
Questions and answers
Ladies and gentlemen, we will now begin the question-and-answer session. Your first question comes from Kunal Madhukar from Water Tower Research. Please go ahead.
Hi, thank you for taking the question. Two, if I could. One, on the broader oil and gas industry, with oil prices kind of declining, what's your view on consumer demand and/or the demand for your vehicles? How is that changing?
Well, Kunal, I appreciate you joining the call and asking a question. It's interesting. For the larger clients that have established bases at higher price points, I think that the decline in oil and gas prices is going to be more difficult. For us, it really gives us an opportunity to displace incumbents and change the market, because we're going to be looking for more efficient solutions that are more cost-effective. And so I think it opens up conversations for us. I'm glad to see oil prices come down. I think it stimulates the economy, and the combination of stimulating the economy and fixed energy demand is sort of an interesting combination. But for us, I think we're at least 20% to 25% below the current price points of alternatives, and with as good or better margins. And so I think it gives us a great opportunity to knock on doors, and what's happening now in the market is that we are starting to see our clients knock on our doors as the pressure increases on them as prices go down. So I'd probably be in favor of a little bit further decline in order to help accelerate our business.
That's a very interesting view. And then again, you talked about how the offshore season really hasn't started when we're looking at Q1 revenue numbers. So last quarter, when you were reporting Q4 results, you had talked about like about $16 million in revenue is the outlook you provided for 2025. So help us bridge the revenue from Q1 '25 to the full-year revenue outlook that you have provided.
Well, this is a great question, Kunal. The fundamental reason I should never give forward-looking statements is that you then have to go back and explain them. We actually have a tremendous pipeline, and we have proposals being generated that cover the $16 million. More than three-fourths of the pipeline is day-rate type work, where you can take a look at the amount of equipment we have, what our day rate is, and you can create a model for it pretty easily. But we still have about a quarter of the $16 million that is tied up in doing software sales and other proposals regarding both defense and the advancement of our technology that have yet to close. And so when you start doing the model, we have work to do. Our sales team is talking to customers every day. We've got proposals that are being generated. You're going to see a couple of lumpy things that are mixed in next quarter with what the day rates bring in so that you can do a pretty simple model there and then add in the lumpy proposals that are associated with other activities. And I still feel like we're going to have a tremendous year. It is an inflection point, and we're going to deliver good results compared year-over-year.
Great. As a follow-up, John, if I could. Last quarter, you had talked about 40,000 to 60,000 in day rates. Should we look at approximately $50,000 as a base case for Q2 revenue?
I really like that $50,000 price point, but it is dependent upon several factors: the size of the boat we're using, the use of the ROV, and the use of the Aquanaut. Unfortunately, as you pointed out, in the oil price market, the folks with all the heavy assets that have the much higher price points in down markets will discount. So we could come under some discounting pressure as a result of doing that. We have the margin in place to be able to still hit those guys; they have to lose quite a lot of money to get to our price point. So I think we could see some pressure on pricing, but I don't think it will be very much, and we can hold pricing for a long time, possibly throughout the entire year, without having any impact whatsoever with them lowering their pricing. It will take them a while to get down to us. So I think we're in pretty good shape on the pricing. But I think $50,000 is a good number, although it’s going to vary. It's a question that should be asked every quarter because it will depend upon hurricanes, boat availability, and competitive pressures from the likes of Oceaneering and others. So we just monitor the market.
Great. Thank you so much.
You're welcome.
Thank you. Your next question comes from Robert from an investment firm. Please go ahead.
Good morning. Thank you for the update. I appreciate the color on the revenue for this year being around $16 million. It was a smart pivot definitely earlier this year with SeaTrepid. I have a question: how confident are you in achieving $16 million this year? What is the breakdown on the software and the command center? I think that area is very crucial. What do you think the revenue will be over the next year or two with the software sales?
Excellent questions. I appreciate you dialing in. On the $16 million, the reason I made a statement earlier that I hate giving forward-looking information is because you never know what the market is going to do or how your equipment is going to perform. However, we are trying to make sure we manage the budget and activities hence we have something to plan towards. So we went ahead and shared it. Okay, so how does that break down? As I said earlier, about three-fourths of it will fall into the utilization of current assets, and about a quarter will flow into software sales and proposals to advance solutions that are of high interest to our customers, both in oil and gas and potentially in wind as well as in the defense sector. We've got some pretty exciting opportunities and are working on non-boat driven solutions. If you think about reducing the real cost in this industry, if we can deploy a USB with an Aquanaut, no boat whatsoever, if we can deploy from the bank for nearshore fails and go out and come back without requiring any boat, completely autonomous, that's the best solution ever.
You wouldn't have to worry about launching and recovering the vehicle, etc. So we believe there are proposals to advance that, and we are working jointly with partners on those that have real upside potential. The movement towards full autonomy is something we are extremely advanced in compared to any other firm. There's no competitor looking to accomplish what we are. I think that's something that will gain momentum. This is likely a proposal for a group of companies that want to lower costs in 2026 or 2027. The software landscape, wow. Everyone talks about AI, AI, AI. While it is important and certainly utilized here, autonomy is what is really driving changes in the marketplace today, and that's about taking people off the vessels, enhancing efficiency, and lowering total reported incident rates; also, reducing carbon footprints. We're positioned on all these fronts with our solution.
The maturity of the software is progressing well. We have commercial releases coming for our ROV software. There’s nothing better than using it on our equipment to demonstrate it before we market it. Great conversations are happening, and I think we will see really good traction. We also continue to maintain our platform agnostic approach, ensuring our software can operate on any robot. I think that's why I'm confident in our ability to deliver great results this year.
Thank you, John. One last question. The patents that you have on the software and hardware are basically for 20 years plus, right? How do you see the Leidos partnership rolling out? Secondly, do you see it possibly leading to an exit down the road?
The fact that I can't answer this does not change the nature of the great question. I can't talk about exit strategies as a public company. But I can say that we are very interested in Leidos and in our partnership with them. There's a tremendous amount of capabilities we possess that have great value for both the maritime industry and defense sector. We're excited as that develops. I said this a year ago: I find the defense sector particularly fascinating given the uncertainties in Washington regarding spending and budgets. We made a really good decision focusing on the commercial side because of the speed at which these contracts will be awarded; they're going to be significant. You want to be there and participate, and we work with a great partner like Leidos. However, when you're small, such lumpiness is not something you can easily endure. So we're very excited about all the commercial pipeline developing because it will carry us forward. On Leidos' side, they have contractual commitments to us, and we're working with them. The timing on that is extended over a long period, and we will announce updates as we reach them. We're pleased to have a great partner and continue looking forward to closely working with them.
Thank you. I look forward to your email, John. Okay.
Not a problem. Take care.
Thank you. There are no further questions at this time. I will now turn the call over to John for closing remarks. Please go ahead.
I appreciate all of you joining today. It's really hard to do an announcement like this where you're talking about a quarter to come as opposed to a quarter you completed. Q2 really is our first quarter where we'll be operational for the whole of the quarter. I think you'll have a great opportunity at the end of Q2 to come in and construct models to understand how we're executing and what the margins are going to be and who we're working for. It's an exciting time to be at Nauticus. In the next call, in August, we're going to seriously discuss the business and its quality—the quality of the work as well as our progress. Then we'll have strong statements to make about our direction because we will have a track record. Thank you for sticking with us all this time, and I look forward to discussing concretely instead of abstractly about our progress in the ocean, the value we are bringing, and how customers perceive us. We appreciate your ownership of shares, and we are trying to create as much value as possible as quickly as we can. Take care.
Ladies and gentlemen, this concludes today's conference call. Thank you all for your participation. You may now disconnect.