Prepared remarks
Good morning, ladies and gentlemen, and welcome to the Nauticus Robotics 2025 Q3 Earnings Call. This call is being recorded on Friday, November 14, 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; Jimena Begaries, 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 third 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.
Well, thank you, Kristin, and good morning, and thanks to all of you for joining us this morning. This quarter marked a turning point for Nauticus. Across the organization, we saw progress that reflects the company moving beyond early-stage development into scalable commercial deployment. Our field operations, technical milestones, and customer response all signal real traction for the company. Now rather than previewing the details, I'm going to let the team walk you through the accomplishments of Q3 and outline the road ahead. I think you'll enjoy it. With that, I'm going to turn it over to Dr. Yamokoski, our CTO, to begin the updates. JD?
Thank you, John, and good morning, everyone. As we've noted in prior quarters, we remain committed to securing new government contract awards. We continue to work closely with both long-standing and new partners across the industry as we evaluate opportunities that align with Nauticus' long-term strategic roadmap. I have had the distinct pleasure of serving Nauticus for over a decade. With that historical perspective, I can say that Nauticus has pursued a deliberate strategy, combining private investment with government-funded research to accelerate the development of advanced autonomous robotics. Having been here through that journey, I'm excited to say that the result is a mature technology foundation now ready to scale commercially and lead the maritime industry's transition towards autonomous operations. Today, that foundation is converging into a clear vision for the future of ocean work. We're moving beyond single-vehicle autonomy toward coordinated teams of unmanned systems, surface and subsea, working together to execute complex missions. Our previously announced partnerships and collaborations in the surface maritime autonomy space represent early steps in bringing this vision to life. Another major trend reshaping our market is the reduction of personnel deployed offshore, driven by safety, sustainability, and cost considerations. This shift plays directly to Nauticus' strength. Our surface vehicles require a level of autonomy that will enable remote provisioning and control from land-based centers, dramatically reducing the need for personnel at sea. We recently announced a new $250 million equity facility that strengthens our ability to pursue other emerging opportunities, such as those in the deep-sea mining sector. The same autonomous capabilities that have defined our defense and asset integrity work are directly applicable to this market where safe and cost-efficient operations are critical to success. This strategic expansion underscores the versatility of our technology and its relevance across multiple ocean industries. In defense, this strategy aligns directly with evolving operational priorities, distributed and persistent maritime presence without the risk of crew deployments. In commercial markets, it opens a door to entirely new cost structures for subsea asset integrity, maintenance, and nearshore monitoring, domains that have long been constrained by the economics of large manned service ships. We remain confident that we are building the infrastructure and technology base for a new era of intelligent ocean operations, one where autonomy amplifies human capability, reduces offshore risk, and fundamentally changes the economics of working in the sea. I will now turn the call over to Jimena to update our quarterly financials. Jimena?
Thank you, JD, and good morning, everyone. I will now discuss our financial results for the third quarter of 2025. Revenue for the third quarter was $1.9 million, which is down $0.1 million sequentially and up $1.6 million from the same quarter last year. Against our original expectations, revenue in the third quarter was slightly lower than Q2. The revenue shortfall in Q3 was a strategic decision of the company made in cooperation with customers to defer work. We observed an increase in customer base, which Steve will cover later in the call. Operating expenses for the quarter were $7.8 million, which is up $1.9 million from Q3 2024, but down $0.6 million sequentially. G&A costs for the quarter were $2.9 million, which is a decrease of $1.4 million sequentially and a $0.1 million increase compared to Q3 2024. Nonrecurring transaction costs related to the SeaTrepid acquisition weighed down in the first half of 2025, but G&A costs are now trending back to pre-acquisition levels. Net loss for the quarter was $6.6 million. This is a $0.8 million decrease in net loss sequentially and a $24.5 million increase in net loss from Q3 2024. This large variance is attributable to the gains in fair value of our convertible debentures reported last year. Adjusted net loss for the quarter was $6.7 million compared to $7.4 million for the second quarter of 2025 and $6.4 million for the same quarter in 2024. Cash at the end of Q3 2025 was $5.5 million compared to $2.7 million last quarter. This is driven by funding received through an at-the-market offering. During the last week of October 2025, we reissued our at-the-market offering and raised further funds to support our ongoing operations. In October, some of our lenders converted a portion of our outstanding debt into equity, further deleveraging our balance sheet. In addition, we received a letter of intent from another lender willing to do the same if needed to address any shareholder equity requirements. These actions, along with the ATM, put us in a solid position to maintain our NASDAQ listing. We entered Q4 financially stronger, thanks in part to the confidence shown by our lenders and our long-term strategy. I will now pass the call back to John.
Thank you very much, Jimena. I'm not losing any sleep over the delisting. We have a plan, we have support, and we're executing that plan, and we're on track. So now I'd like to turn it over to the sales and operation leads to discuss activities in their departments. First is up, Daniel Dehart, our field operations lead for an update on the 2025 commercial season and plans for the remainder of the year. Daniel?
Thank you, John. In the third quarter in cooperation with our customers, we made a strategic decision to defer near-term revenue in order to enhance the vehicle for specific deepwater workflows that position us for longer-term contracts. A major highlight this quarter was completing our deepest subsea test to date, successfully operating our Aquanaut system to 2,300 meters water depth in the Gulf of America. This milestone demonstrates the operational advancement and industry differentiating capability of our platform in complex underwater environments. We believe we are the only company operating an untethered drone down to these depths. Our customers remain fully engaged and excited about the technology. While some 2025 project work has been pushed into 2026, we've seen continued enthusiasm and commitment from our clients who want to be part of this next phase of success. We are currently working on defining even more capabilities for the Aquanaut system. We have one vehicle located in Stuart, Florida, and the second will be on its way soon. In collaboration with Sea Robotics, we have identified a lake that is ideal for testing the capabilities of the Aquanaut and at a fraction of the operational cost that it takes to test offshore. The cost of testing at the lake is an order of magnitude less than the cost of operating a vessel. We mobilized and began testing in October. One of the key targets being worked on is a launch system design that can be easily used to launch and recover the Aquanaut from shore, which leads directly into conducting inspections offshore without the use of a vessel. We are refining operational procedures to disintermediate vessels for nearshore operations, which will provide material cost reduction for our clients. We are now integrating specific customer-funded workflows into our lake testing for commercial implementation in 2026, specifically focused on autonomous mooring line and riser inspections. There are numerous clients that will be joining us in Florida over the next several weeks to witness the advancements that have been made that will directly impact the scope of works offshore. There will be opportunities over the next few months to host more clients to visit and witness the revenue-generating workflows that will be brought to the market in 2026. We're making real progress in improving our technology, expanding our operational capabilities, and building momentum for a strong year ahead. With that, I will now turn it over to Steve Walsh, our sales lead for an update on our offshore commercial pipeline.
Thank you, Daniel, and good morning. During the third quarter, our customer base continued its growth in our ROV systems delivering consistent results, with customer feedback being overwhelmingly positive. We are seeing growing interest in our solutions from the commercial and government sectors, and our sales team is actively converting that interest into long-term engagements. In fact, our 2026 pipeline is beginning to fill and the early signs are encouraging. We're seeing stronger demand signals, deeper conversations, and more strategic alignment with partners who recognize the value of autonomy and subsea operations. We continue to sharpen our go-to-market strategies. The sales team is focused on expanding into adjacent markets, accelerating commercial adoption, and ensuring that Nauticus Robotics is positioned not just as a technology provider, but as a trusted operational partner. At this point, I would like to mention how excited I am to tell you of the successful integration of new technology into our existing ROV fleet. The Nauticus ToolKITT operating system has been installed and tested in the field with great results. Jason will discuss later in this call how this enhancement to our current ROV fleet will increase our abilities and differentiate us from our competitors. With that, I'll turn it over to Jason Close, our software lead, for an update on Nauticus ToolKITT progress.
Thank you, Steve. The experience and data we collected during ultra-deepwater testing led to targeted software improvements that are already being tested on the Aquanaut. We continue to have strong support from our existing customers, and this quarter will demonstrate new functionality for them, making meaningful progress in improving Nauticus ToolKITT's reliability and performance to meet their commercial needs. Additionally, this quarter, we worked closely with customers and partners to enhance our simulation environment to improve our testing and reduce overall testing costs. Importantly, we also achieved a major milestone in Nauticus ToolKITT's product expansion beyond Aquanaut. Following the quarter close, we successfully demonstrated Nauticus ToolKITT operating on a third-party ROV, completing pool testing, open water testing, and the first deployment of our autonomy software on a world-class vehicle performing a commercial operation. The system performed exceptionally well, validating our approach and opening new opportunities for software licensing and partnership. Our ROV operators are excited to continue to use the current implementation of Nauticus ToolKITT and also to test and deploy additional autonomy to these legacy ROVs. This success underscores Nauticus ToolKITT's flexibility and scalability, key elements of our long-term successful software growth strategy. Our recent technical success has strengthened the foundation for 2026 with a more capable product, broader platform reach, and a clear path towards recurring software revenue. I'll now hand it over to Ameen Albadri, our engineering lead, for an update on Aquanaut and electric manipulators.
Thank you, Jason. In the third quarter, our team achieved a significant milestone with a successful deep dive of the Aquanaut to 2,300 meters. This operation provided us with an invaluable amount of data and operational experience, further validating our technology and expanding our capabilities in ultra-deepwater environments. The mission also helped us identify key areas for improvement as we continue to mature this new technology. Our engineering and operations teams are now working diligently with both suppliers and industry experts to enhance Aquanaut's efficiency and reliability, particularly in the harsh and dynamic open water environment. On the manipulator front, our engineering team made significant progress in the design of the new manipulator system. We have officially begun parts and tooling procurement, making an important step forward in our mission to bring the next-generation manipulator into testing. Global trade turbulence continues to pose risks to our procurement and logistics efforts. However, our team has taken proactive measures to mitigate these challenges. We have identified high-risk, long-lead components and are working closely with suppliers to secure critical spare parts well ahead of the 2026 offshore season. This proactive approach will help ensure operational readiness and minimize disruption to project timelines. The insights from our deepwater operations, coupled with ongoing technological improvements and strategic supply chain management position us well for the future. I will now hand the call back to John.
Well, thank you, team, and I'm really excited. And before we move to questions, I just want to acknowledge this entire Nauticus team. The achievements we've discussed today, from deepwater operations to ToolKITT expansion to our growing customer pipeline, are a direct result of their commitment and capability. We have a very talented workforce here at Nauticus that I'm proud to be a part of. And we've made so much progress, and we've got the customer visits lined up in Stuart, Florida, that we're excited to tell you that we're planning for early 2026 an Investor Day that we think we'll also have in Stuart, where we'll invite you to come down and see this equipment, this software, this technology at work. I think it's an eye-opening opportunity and takes us from listening to us on calls to those that are available to come down and really see it put through its paces. Now we are entering the final quarter of the year with more momentum than at any point in the company's history. The foundation is in place, the technology is maturing, and our customer confidence is growing. We still have work ahead, but the trajectory is clear and it's upward. With that, operator, I'd like to turn it over to you for questions.
Questions and answers
One moment for your first question, which comes from Peter Gastreich, Water Tower Research.
Peter Gastreich here from Water Tower Research. So congratulations to John and the team on your results and execution. Like last quarter, I really do appreciate hearing from your whole team on these calls. I think it's very effective to hear straight from the horse's mouth, so to speak. So thank you very much for that. Just a few questions from me. First, it's great to see your successful integration and first paid operation of ToolKITT on a retrofitted ROV. This does look like a very critical step in your capital-light strategy. I just want to ask, when compared to the full stack new build vehicle sales like Aquanaut, how should we think about the enhanced margin potential for these software-only retrofits?
Well, it's good to have you on the call, Peter. Software is going to be a big part of our future. Gross margins on it are in the 80-plus percent range. As a result, it doesn't take nearly as much of that for us to get to cash flow breakeven as it does for the services side of the business. And so we're very excited. The ToolKITT implementation on an ROV that we completed and did commercial work with, we've identified a market of 300-plus vehicles that can benefit from it in the very near term. And so we're working on the go-to-market strategy for those 300 vehicles and a tremendous opportunity for us. So very excited about software. The other good part about it is that it's not the full implementation of ToolKITT it's only a portion of the ToolKITT that's necessary to bring this tremendous advantage to the ROV operators. And the validation of this software comes from the ROV operators and not just a customer or our view of the market. It's just how much easier this made them for them to be able to do their jobs and how much improvement that they're going to see in terms of loss of nonproductive time and the fatiguing part of just simply holding the vehicle in place, we take that over, and we basically provide all the hovering and maneuvering of the vehicle when it's near the bottom. So a very exciting opportunity for us. Clear customers that we know to go and sell to. So this is a straightforward strategy for us to execute through the end of the year so that they can be ready to deploy this software for the coming '26 season. So I think the software sales efforts where you see us focused in the near term.
Okay. My next question, you do have a pretty long lead time to build the quant. Taking what you've just discussed, would you be able to accelerate scaling your operations by acquiring existing vehicles in operation? You mentioned the 300 or so that are out there now, like it may not be quite as good as your Aquanaut, but maybe they can do the job. Would that be a possible use of funds?
Yes. The 300 in question are actually ROVs, high-quality ROVs that we are considering selling software to. They are tethered, unlike the untethered Aquanaut. However, there are some untethered vehicles available that lack the full capabilities of Aquanaut. We are exploring whether we could acquire these vehicles to incorporate them into our fleet, which would allow us to scale more quickly instead of waiting for the builds. Depending on the supply chain, building additional Aquanauts could take between 9 to 18 months. Given the demand for our services and the success of our software, we believe acquiring other vehicles that may not be as capable but could help us enter the market and increase our market share is a strategy worth pursuing. We are excited about discussions with what might be seen as competitors, as we are performing exceptionally well. This presents an opportunity for us to scale the business rapidly. So we are actively looking into that, Peter.
Okay. That's great. In your second quarter call, you talked a bit about some supply chain risks and tariff risks. I just want to ask sort of as we've moved on here into the third quarter, what does that environment look like today, especially for those long lead items? And how is the company addressing tariff and supply chain risks?
The toughest aspect of this business is managing the supply chain, much of which relies on international suppliers. I'm very pleased with the proactive approach taken by Ameen and his team. We have ordered the necessary parts, and we expect them to be delivered, but it's important to note that you have to order parts today for needs that arise in May. If those decisions haven't already been made, it's essentially too late, and you could end up with the required parts arriving later in 2026. Everything is on order, and we believe we have what we need. We are optimistic about having effectively managed a challenging supply chain. As we grow larger and achieve more scale, it should become easier, allowing us to gain higher priority with some suppliers. In our specific case, we've actively engaged in this process and even invested capital to purchase the spare parts necessary to ensure a successful commercial year in 2026.
Okay. That's very clear. Just regarding the SeaTrepid acquisition, now a few months into that integration, which expanded your ROV capacity. Clearly, you have a lot that's working very well there. Have there been any unexpected bottlenecks that you've needed to address in that integration?
We currently don't have enough equipment to meet the demand for ROVs. Our focus is on advancing towards autonomy and tetherless operations. If we had more ROVs, we could generate more revenue. The key question will be whether the autonomous ROV can help us expand our fleet and show potential customers the value of using our software. I believe we will be more in demand than those without autonomous capabilities. Next year, our ROVs should have a very productive season, as we will be ahead of other suppliers. I'm really looking forward to that. Regarding SeaTrepid, we're fortunate to have Bob and Steve with us, as they represent our current sales team. Bob brings significant industry experience and practical knowledge, helping us solve tough maritime challenges. He's been actively involved, even attending the Ocean Minerals Conference this week. We're getting up to speed on how to expand our work in ocean minerals while the market is thriving and there are opportunities for us to explore.
Okay. Great. On that, I'd like to ask some questions about the deep-sea rare earth exploration strategy. The first one is just in terms of how we should think about the customer type. Are these going to be private contracts you're going after with exploration companies? Or is this government contracts? How should we think about the customer type in this instance?
Where we excel really is in inspection and observation, and we're not into the mining equipment. And the first phase of anything in ocean minerals is going to be trying to identify those resources that can be produced economically. And so we're investigating how we can use our software and how we can expand our hardware platform to the vehicles that go to the depths that they require. That's another reason for us looking into investing in potentially some deeper vehicles that aren't quite as capable, but give us the ability to go to the depths that the ocean minerals exploration companies are exploring. And so we are doing that. I think we have some really unique capabilities and the ability to potentially sample while we're on the seafloor, add that capability to a vehicle to enhance the exploration phase, which I believe will go for the next decade and then before you really get the infrastructure in place to begin the mining. So we're going to focus on what we think is immediate and where we think we can add value. And we think there's some good opportunities for the company to look at that. It does sort of point to why we got the ELOC. If we see something that is a perfect fit that has immediate accretive value to us from an ocean minerals bolt-on technology capability, we'll have the ability to pursue that if we choose.
And on that, how should we think about the timeline and roadmap to commercialization? So for example, you have oil and gas and wind energy opportunities that are right in front of you today. And then you talked about the future opportunities in things like carbon capture and sequestration and space analog missions. Where would the deep sea mining sit in a timeline with these other opportunities in front of you? Is it do you have imminent opportunities today? Or is this something more that's going to take a bit more time to kind of get there? Because you mentioned about, for example, needing to potentially test deeper with your Aquanaut and so forth.
So it's a great question of priorities. Right now, the workflows that we're building in Florida associated with mooring lines and risers have immediate customer opportunities and contracts that are pending. And so I don't want to take our focus off that. So our primary focus is going to be on booking all of the time that we have available to doing what we know people are ready to pay for. On the ocean mineral side, there's great opportunities for us to enhance other people's platforms. And so we'll be exploring that and seeing how to partner with people. But we've got a really strong customer support for the work that we're doing, and we want to go out and take long-term contracts on doing that in 2026 as opposed to chasing new opportunities. We're really focused on let's execute with what we've got now that we've gotten the maturity of the platform.
And is this a U.S. strategy? Are you talking with people globally? Sort of what will be your focus going forward?
That's an insightful question. Let me think about how to respond quickly, Peter. We're seeing significant interest internationally in our platform, along with potential financial backing. While we are exploring this opportunity, we don't have anything imminent at the moment. We've shifted our focus from primarily the Gulf of America to gaining considerable international interest for both defense and commercial applications.
Okay. Got it. I'll just ask one more question here, if I may. Regarding the equity line of credit, which is $250 million, quite substantial. Given that structure for financing the growth and acquisitions, are there any specific milestones or triggers that investors should consider for the optimal timing for drawing down that capital?
We have an ongoing effort where we brought in a consultant that is doing the acquisition planning for us. And the main thing that you should take away from the ELOC is unless we see something that's immediately accretive and cash flow generating for us, that is the very first filter that it has to pass before we would consider using the ELOC. So we are not looking at anything that is futuristic or has a 2-year R&D lead time or any of that. This is about being accretive to the business now, right? And so that's our focus on the ELOC, and we're not going to pursue anything that looks like it enhances technology. We're no longer in the technology business. We're in the moneymaking business.
Our next question comes from Robert Mendrala, private investor.
This is Bob Mendrala, I'm a shareholder, and thank you for the update for the quarter. I wanted to ask about the NASDAQ compliance issue. What is the plan or steps to address that noncompliance issue? Additionally, one of the requirements is a market cap of $35 million, but currently, it is at $8 million. What can be done to reach that benchmark?
Thank you for your question, Robert. I'm glad to address it. First, the market cap you are referencing does not account for the total number of shares we have outstanding. Currently, it would be in the range of about 12% to 15%, depending on the current share count as we work on conversions, which will help improve our market cap. Regarding maintaining our listing, while market cap is a factor, it is more challenging to manage since it’s tied to share price, which can fluctuate and is influenced by the broader market environment. What we can control and are focused on is shareholder equity. As Jimena mentioned, we have the necessary converter agreements in place and a commitment to convert the remaining amounts needed to comply with the shareholder equity requirement of $2.5 million outlined in the regulations. We are actively working towards achieving over $2.5 million in shareholder equity and have support from our lenders to do so. This plan is clear, manageable, and under our control, and we simply need to execute it.
Okay. What is the timeline? Do you have a hearing coming up with the NASDAQ?
The NASDAQ hearing is sometime in early December, but I think we will get all the information to them before then. Everything that we're doing, including the ELOC supports our ability to maintain the listing.
Okay. And then last question. The company is doing some wonderful stuff. I really don't think that the capital marketplace out there understands it. And so what can be done to improve the communication with the capital markets and specifically Investor Relations. I mean, the share price shouldn't be sitting at $1.35 a share. I mean, come on.
I strongly agree with you. We haven't been in promotion mode; we're focused on delivering rather than overpromoting. Promoting too early in a new venture can lead to setbacks. We're being disciplined and have released several press announcements in the past 6 to 8 weeks. Our main emphasis is on the adoption of our technology and the related contracts. We already have more technology than anyone else in this field, so we don't need to announce more. What we really need is to see the initial stages of commercial adoption of groundbreaking technology that replaces current legacy systems. I believe we're heading in that direction, and we have an exciting 2026 ahead. Regarding your point, I'm particularly enthusiastic about the Investor Day in Florida because it will allow people to witness firsthand what we’re doing. It's difficult to fully grasp the advancements we’re making compared to legacy systems in terms of software, hardware, and our operational expertise. We believe that bringing people to the event and making an announcement will significantly enhance awareness of our initiatives.
Yes. And Peter brought up — yes. Okay. Well, I appreciate the invite, John. But Peter brought up some great questions around milestones. And I do think to communicate more effectively with the investors who really don't — I mean, they probably don't have the big picture that I'm seeing and you're seeing, but to have Investor Relations just maybe put out PRs a little more frequently around milestones and it doesn't have to be — oh, we have this, we have this, but just communicate more effectively because the share price personally, I think, should be at least $10, if not higher. I mean it's way undervalued. A similar robotics company in comparison. I mean they have less revenue than Nauticus does, and their market cap is tremendously higher. What are they doing differently?
Probably a more attractive CEO. I don't know. I'm not very photogenic. There is — I guess I'm in this — to say it like this, Robert, I'm in this for the long term and not just a pop and pump. I'm not doing that at all. And I take your comments and your suggestion, and we will see if we can't do better. But the main thing for us is we're not trying to promote the shares. We think that if we can start delivering results that we'll get a sustainable upward trend in the shares, and it's not going to be something where it goes way up and then we disappoint on a contract not being as big as people thought it should be or wanted. I think we're on the right trajectory. We're trying to stay disciplined about it. And when it starts up, I think it just keeps going up. It's not going to be something where we're trying to have just bumps as a result of people getting excited about technology. But your comment is taken under advisement. We — you can always do better. I would never say otherwise. And so let's see if we can improve in that category as well.
Yes. And last comment. I agree, and I look forward to regaining NASDAQ compliance and keeping it that way because the last 2 splits wasn't good. Anyway, I'll leave it at that, John.
You're quite welcome. And I would agree with you. I do not like doing reverse splits. I had taken most of my remuneration in shares. So it hurts me just the way it hurts you, and you can assume I don't want to do that. It just — it's absolutely necessary. Otherwise, we wouldn't have executed it.
Okay. This concludes the question-and-answer session. There are no further questions at this time. I'll now turn the call over to John Gibson. Please continue.
Thank you. I appreciate everybody that joined us on the call today. And I particularly want to thank our team here. Enduring through this is a challenge. And this is an incredible team who are focused on delivering results, and they benefit from the results. They also are interested in the equity value of the company as well. And so I appreciate our team here, and I appreciate all of you that own shares. I mean, I look at this as a long-term strategy, and I've got shares and I'm holding them. And you'll notice there's no sales for me of any of the shares that I hold. I am here until we get this thing where it can be. And it's a great privilege to be here and to work with this team of people. We look forward to bringing you an update at the end of the year. And so thank you, and take care, and be safe.
All right. Ladies and gentlemen, this concludes the conference for today. Thank you so much for your participation. You may now disconnect.