All right. Good morning, everyone. Thanks for joining us today. We have an update with Tantalus Systems. They just reported their Q4 and year-end results, which were fantastic. For those of you that have not listened to the earnings webinar or gone through the financials, we're not gonna do a deep dive. We're just gonna hit on the high level and really just open it up for Q&A. Feel free to access those materials. There is a replay available, and as well, you can check out the financials on SEDAR or on the company's website. With that out of the way, I'd like to introduce Peter Londa, President and CEO, and Azim Lalani, CFO of Tantalus Systems. Thanks for your time, gentlemen.
Deb, thanks for having us.
Yeah, great results. Maybe you can walk us through some of the high-level points.
Absolutely. I'll just cover the high-level financials and commercial highlights from the quarter and the year. Then as we go, Azim can certainly dive in more detail for those that have questions as it relates to the financial performance of the business. Deb, to your comments, we were really pleased with both the quarter and the way 2025 ended for our team. As referenced in the materials that were presented last week, we achieved a number of significant milestones for the company. In no particular order, but sort of income statement top-down, for the quarter, we generated the most revenue we ever have done in a quarter at $14.9 million.
I just remind everybody that everything that we put out in the public domain is in U.S. dollars. The $14.9 million of revenue in Q4 not only being a milestone, but also represented 19% growth year- over- year. For the full year 2025, we delivered $54.1 million of revenue, also an all-time high for Tantalus in our history. Year- over- year, that represented 22% growth, which is a great barometer for the visibility that we were building throughout the year, and certainly the traction that we continue to gain for all of our solutions and capabilities. With respect to gross profit margin, it remained strong and above our long-time trajectory or long-time target of over 50%.
The gross profit margin for the quarter was fairly significant at 56% on a net basis for the full year, 54%, which was pretty much right in line with last year. From an EBITDA perspective, we continue to trend favorably and delivered another quarter of positive adjusted EBITDA for the business at $1.3 million. For the full year 2025, strong results as well at $3.4 million, which was a record for us in terms of aggregate dollars of EBITDA generated in a calendar year. Year-over-year, EBITDA was up 156%.
That's not only a reflection of our revenue increasing, it's also a reflection of, operating expenses, growing at a slower rate than revenue, and certainly in line with what we would have expected, as the R&D dollar spend really ramped down after commercializing the TRUSense Gateway. Cash flow from operations and free cash flow were also positive, in a material way. $4.7 million of cash flow from operations, for the full calendar year. When we take a step back, and from an executive perspective within the organization, we're not only demonstrating continued progress in securing new opportunities and expanding with our existing customers that lead to strong financial results, but we're doing that profitably.
We're doing that by generating cash flow instead of consuming cash flow to drive growth. I think that's a great reflection of the operating leverage in our business, and the opportunity for us to continue to drive shareholder value as we scale this company. Incremental to the financials, we also had a record year in orders, at just under $65 million converted out of the pipeline. That's 27% growth year-over-year. A book-to-bill ratio of 1.2, which is incredibly strong when we look at our peers and competitors in the grid modernization space. Sort of the barometer that a lot of the other larger players in this market point to is a 1.0 book-to-bill, meaning they're converting just enough orders to deliver revenue and maintain flat backlog.
We're at 1.2, so almost 20% above where the rest of the industry is, for the calendar year. Also from a commercial perspective, we were excited to announce, as of last week, 66 utilities that have placed orders and started to deploy the TRUSense Gateway, that covers the fiber, the Ethernet, and the cellular versions of the gateway. Some of those utilities are just trials, initial devices to test and evaluate. Some of those are existing customers that are actually upgrading their existing system with us. It's not a trial, it's actually a deployment, particularly as it relates to upgrading the network communications infrastructure that they've relied on. Some of those are new utilities that are ordering solutions from us for the first time.
What we're finding in the new pursuits is that the TRUSense gateway is absolutely a path of differentiation over other competitors, and gives us an opportunity not only to sell individual gateways, but more importantly, all of the other solutions. We're really pleased with the progress that we've made and the trajectory that continues to extend for our company. A few other items that we noted both through materials and the call following the calendar year, I referenced the addition of Susanna Zagar to our board of directors. For those of you who are not familiar with her name or saw that announcement, Susanna was most recently the CEO of the Ontario Energy Board. That's the regulatory authority that oversees all electric utilities in Ontario.
She's most recently taken on a new role that oversees gas production and distribution of gas across Canada. Having someone of her stature in the electric utility industry, particularly out of Ontario, really expands the depth and core competencies and skills matrix of our board as we start to evaluate an expansion into our Home Market in Canada. We also were pleased to announce further capitalization of the balance sheet with the support of Cormark and a large contingent of the banks that cover us. We were able to secure CAD 23 million in a bought deal financing that did activate the greenshoe at CAD 5.35.
The incremental financing, we've sort of outlined some of the intended uses of proceeds, but most importantly, it enables us to manage this business with the strongest balance sheet the company has ever had and really puts us in a position not only to accelerate ongoing growth initiatives, but really start to think about more strategic initiatives as we continue to look at multiplying growth over the coming years. With that, I'd say, Deb, and try to summarize briefly here and certainly allocating as much time as possible for Q&A. 2025 was pivotal. A great demonstration of what our team is capable of delivering.
The financial results speak for themselves from our point of view, and we're entering 2026 with not only great visibility, but the strongest balance sheet to navigate anything that's outside of our control at this point in time without disrupting operations or the support and services we provide to an increasing number of communities, towns and utilities across the United States. Azim, anything else you'd wanna highlight that I may have missed or screwed up?
No, you got it. Bang on. Way to go, Pete.
You never screw up, Peter.
Well, Deb, anyway, I think that's the update.
No, that's a good summary. Jumping into some questions, and audience members, feel free to submit your questions in the Q&A box, or you can email them to me. First question, great results and congrats on the recent TRUSense announcement. Could you walk us through what the TRUSense deployment roadmap looks like for the year for the announced deals?
Deb, can you repeat that? I'm not sure I fully understand what the question's trying to get to.
I think he's trying to ask, like, in terms of where utilities are in their roadmap in terms of deployments and pilots and what that looks like.
Yeah.
If that's not correct, please feel free to submit a follow-up question.
Yeah. I'd say it really varies. I'm trying to think how we can provide some additional color and perspective relative to information that's publicly available. I'd also say that there is a balance between helping investors better understand the opportunity in front of us relative to our competition and not unnecessarily sharing insights with them so that we can maintain the swim lane we've created and ultimately maximize the benefit associated with being a first to market new offering. I think let me try to bifurcate it in a few ways. We have a broad spectrum of scenarios within the 66 utilities that have placed orders. I think there may be a misperception that all 66 utilities are just in pilot.
The question begs, well, when do those pilots convert to deployment? Maybe we can try to clarify at least that point. We have, I'll basket it. We have within the 66 utilities, the numbers were not provided publicly, but it's still a fair guesstimate that about 66% or two-thirds of the utilities that have placed orders are customers that have been deploying something from Tantalus as an existing customer. I'll give an example of that. We have a utility in Kentucky that has been a long-standing customer of Tantalus. They are very active on our advisory committees to help us drive our strategic roadmap and solution offering.
As we have over the years, it's a utility that relied on something called 220 MHz for their communications network to connect our intelligent devices that are embedded in meters and other sensors across their distribution grid. For those not in the communications networking space, I'm gonna go down a rabbit hole here to try to again provide some context. 220 is a very narrow band. What that means is it's incredibly reliable over long distances and really difficult terrain. 10, 15 years ago, when this utility in Kentucky started to automate their distribution grid with us, there was no prolific access to cellular networks. Like 3G, not available. As 4G LTE and now 5G have materialized, there are still areas within that utility's footprint where there is no cellular coverage whatsoever.
What the utility has done over the past decade is, they've started to deploy some fiber with, I think they received some government funding and local funding for electric co-ops, to try to improve communications networking capabilities, not only for their distribution grid, but also to deliver broadband services to people in their community that are relying on DSL. Think about that. I don't think I've had DSL since the 1990s. As the utilities made those investments, as the cellular companies in the state of Kentucky have improved coverage, the utility is migrating off of the 220 MHz network, really reliable, but also narrow band, meaning not as much data can flow through that network. They're migrating to the cellular TRUSense Gateway.
The first case study for that utility is tied to migrating to an IP-based communications network. They'll still have some 220 MHz because there are just certain areas where there's no fiber and no cellular accessible. In that circumstance, the full deployment for that utility out of the gate is tied to a specific business case around upgrading their communications networking. We're seeing an increasing number of long-standing customers with utilities that have our 220 MHz network to port that network now to something that can rely on fiber and cellular. Those are not trials, those are not pilots, those are full deployments. The number of TRUSense Gateways there varies from the hundreds to the few thousands.
Our goal is not only to continue to extend the relationship with those utilities like the one in Kentucky I'm referencing, but also bring new features and functionality. Case study one for them, and use case one is a migration from 220 to IP-based communications networking. They're simultaneously getting the benefit of power quality data and behind the meter control as they leverage those TRUSense Gateways. Case study two, over a 10+ year horizon as we think long term of driving sustainable and profitable growth for our shareholders, is then to convince that utility not only to upgrade their communications networking, but then deploy more TRUSense Gateways to enhance power quality measurement, and then eventually to have more control behind the meter to shift peak load, which is becoming an increasing issue for that organization, for that utility.
I think that's the modeling that is really tough. What works in Kentucky relative to a rural footprint is gonna be fundamentally different than what works in the city of Riverside, California, which is a densely populated urban footprint. What I'd say is we have a mix of existing customers that are finding a specific use for the TRUSense Gateway and adopting it. We'll work in anticipation of Investor and Analyst Day at TUC in May towards providing some additional clarity as to what does that mean in the aggregate. A data point that might be helpful today that's incremental is that those 66 utilities represent about 1.6 million m.
We can extrapolate out ratios for communications network, ratios for number of meters per distribution transformer, ratio number of meters per pole top transformer, and start to extrapolate what is the aggregate opportunity across those 66 utilities. I think that's the way, as we try to be prudent and educate investors, I think that's the way we'll think about it, and that's the incremental information and granularity that we're working to, and towards. I'd also say we are so early stage in this. Our focus as a team is land grab. Get to as many utilities deploying the TRUSense Gateway as quickly as possible. To go from zero to 66 in 15-ish months is beyond our expectations. The goal is to go from 66 to fill-in-the-blank number in next quarter and end of year 2026.
We've got some internal objectives that we're trying to get to. As we get land grab, it not only validates the benefits of the technology, it also presents an immediate opportunity for our sales team to activate with those customers to then expand. I'll draw a parallel to that. Azim shared during our earnings call that 85%-87% of revenue in 2025 was generated from our existing customer base. That's consistent with what we've seen in the last three years. If we can get more utilities deploying TRUSense Gateways, it increases the probability of success that we have as we generate such a high percent of revenue from that customer base and continue to see that customer base spend incremental dollars with us.
That's a whirlwind response to the question because it's a really complex question, and one that's very hard to extrapolate without providing some non-public competitive insights to what we're seeing. I hope that answers the question that the investor asked, Deb, and aligns to some other questions that maybe are coming in on the TRUSense Gateway. Azim, I don't know if there's anything else you'd want to add to that.
No, that was good, Pete.
I think that was helpful in that data point as well. Looking through some other questions. Of the 66 utilities using TRUSense, can you give us a profile of these? Like, meaning how small to how large are these utilities?
The largest one is United Illuminating that still is part of this effort. They are an example of a new utility to Tantalus that had never purchased anything. They are also unique as they are an investor-owned utility in the state of Connecticut. The progress that we've made on that pilot is publicly available through filings with the regulators. I'd say the findings are very favorable. We are at a point where we are awaiting review and presentation to the regulators.
The feedback from the utility that's also public is, they see value, particularly as with respect to power quality data, and are recommending extending the amount of time they have access to the devices through the pilot that the regulators overseeing that IOU have provided to really understand how to integrate that data and utilize that data such that, their words, it's not disruptive to their operations. That's the mindset of an IOU. It's an example from our perspective, extending the pilot, codifying our return on investment, providing a direct path for the utility to go to the regulators and ask for more, is a great example.
It is impossible to predict how the regulators are going to respond, and it is impossible to predict when that means pilot to something broader. Our goal right now at United Illuminating is to continue to demonstrate value, and if they need more time to figure out how to integrate that data, we are 100% supportive of that. You know, at United Illuminating over around 350,000 m, so that would be the largest. EPB of Chattanooga, obviously a milestone contract for us. That alone generates a return on total investment in the TRUSense Gateway over the life of that project. EPB is roughly 200,000 m. I'm rounding. That'll scale all the way down to some utilities that have fewer than 10,000 m.
That's really the breadth of diversity within our customer base that swings ratios. You know, full deployment at a smaller utility could be 500 devices. That's still a success in our opinion, because it locks us in for another 10 years. It locks us into recurring revenue. It locks us into furthering grid modernization at that organization for a smaller utility.
Peter Londa, some utilities are not so much trialing, but rather deploying. For the utilities that really are viewing it as a pilot, are you still standing by the 12- 18 month, like let's test it out window, or are you seeing that remains true?
The 12-18 months is based on my experience of selling technology to utilities dating back to 2008. It is based on the experience of our sales organization, collectively, decades of experience selling into utilities. It is. The 12-18 month window is still very relevant. What I'd say, though, is don't lose sight of the fact, or we can't lose sight of the fact that the world is a very different place today than it was 12 and 18 months ago. As we shared a little bit on the earnings call, the events unfolding in the Middle East have a direct impact on the price of oil.
The price of oil has a direct impact on costs utilities incur, whether that's tied to our shipping costs, meaning our costs go up to rolling one of their bucket trucks, especially for a public power and electric cooperative utility, where a round trip to one account may be 50 mi in a fairly heavy-duty truck. Higher oil, higher gas prices, fewer dollars to spend. I'm mindful of the fact that timing may get disrupted by macroeconomic or geopolitical events that are completely out of our control. I'd say that's something we shared during the earnings call, and I'd say we're mindful of that.
If at the 18-month mark, a utility says they need some more time or they're still trying to figure out budgeting, as long as we can demonstrate that the pilot is providing value and the utility continues to demonstrate an interest in moving forward, we're gonna continue to allocate the resources to support them.
On the flip side, energy costs go up, like that affects utilities and probably prompts them to wanna do more grid modernization.
That's the benefit associated with what's unfolding for us as well, is how do we help utilities prioritize where they're spending dollars, and how do they drive improved efficiency and reliability when the term affordability is up front and center, certainly in Canada and the United States as it relates to electric utility rates that individuals are paying. I think nothing's changed with respect to the tailwinds and the long-term opportunity of trying to help utilities upgrade their infrastructure. To that end,
Seeing 27% growth year-over-year in bookings out of our pipeline, and hitting an all-time high at $65 million, coupled with adding new utilities, coupled with expanding the number of utilities deploying, I think those are pretty good data points for investors to dig into to say the team is executing, the opportunity is real, and we are scaling as fast as we possibly can.
You mentioned on the conference call that none of the utilities who are utilizing the TRUSense Gateway have dropped out of any trials. Within the industry, is this common?
Yeah. Thanks for the question. I'd say, twofold, where we've seen utilities, in the context of their trials, it's a very few. The only gating item that we've seen is access to funding. We have not seen one utility that has put these devices in the field for whatever period of time, come back to us and say, "It's just not the right device," or, "It doesn't do what we think it can." It's tied to funding. That gives us a lot of confidence that we've hit the market at the right time with the right solution. As it relates to, I think, the broader question, embedded there, we haven't seen one utility pull a device out of the field yet. It's very uncommon.
I'll tie it specific to Tantalus. It's the first time that's ever happened in this company's history where we've brought some new technology into the market and it either didn't hit the mark for a utility that could not articulate a value proposition to move forward, or the technologies didn't work. We've got, you know, over several decades of innovation at Tantalus, where certain pilots of new technology just don't hit the market every utility.
I'd say with respect to the TRUSense Gateway, the breadth of capabilities that it delivers through the multi-use purpose of a single device and the data, most importantly, that comes from the TRUSense Gateway is giving us a path to really find a pathway within each utility to justify its investment. That is a very unique thing at Tantalus. I can't really speak to the introduction of new technology from other competitors or other companies. In the near 20 years I've been involved in selling technology to utilities, I've never seen that dynamic unfold the way it's unfolding today for us with the TRUSense Gateway.
Very impressive. During the conference call, there was a good bit of talk around semiconductor pricing and supply. My impression of Tantalus products and services is that they are not semi-heavy, and this is more of a light infrastructure and data business. How significant are the risks in the business relative to the semiconductor supply chain, and why is that?
Let me answer the technical side of that. Azim can add sort of how we think the inflationary pressures on components may impact margin in 2026. I'm gonna do a show and tell. Hopefully, a lot of investors recognize this device. This is the smaller version, so it's a little bit easier to show on a camera screen. The piece of silver aluminum there. You can kind of maybe get a little depth, right? That is a custom system on chip. It has six processors. It is effectively what we would refer to as the computing platform of our company. We have that fabricated by a semiconductor company out of Taiwan today. All of the data and all of the sensing resides in that chip. All of our intelligence resides in that chip.
Where we're seeing some pressure is memory. You're absolutely right. The individual that asked the question is absolutely right. We are a lightweight in terms of the dollar allocation to the piece of hardware and the cost of that chip, non-public, not something that we really share for competitive purposes. But embedded in that chip is memory. For us, flash. We have both flash and some RAM. Where we're seeing pressure unfold is the shortage of DDR high bandwidth memory that's being driven by organizations that are building data centers at an accelerated rate.
As fabrication gets prioritized to the high bandwidth DDR memory, that puts a corresponding pressure on the lower bandwidth memory that would reside in something like this or reside in your iPhone, for those that are iPhone or for that matter, even a Galaxy phone user. There's a cascading impact on lead times and a cascading impact on prioritization, and that leads to inflation. The semiconductor companies also fabricate memory, and so as they allocate their time, resources, and components to building more memory, that has a cascading impact to lead times and fabrication space for semiconductors. Since our ASIC is fabricated by a semiconductor company, that's where we start to see some pressure. Azim, do you wanna maybe talk about what we're seeing in a little bit more detail or further from the earnings call on how that manifests in terms of gross profit margin?
Yeah, absolutely. Just a reminder that we have two segments. We've got connected devices and software and services. This really only impacts the connected devices segment. The software and services is much higher margin at 75%, and that provides some insulation in terms of impacts to overall margins. What we're expecting is really the impact to be in the second half of 2026 and carrying into the first half of 2027. In terms of overall margin impacts, as we noted on the call, it's between 1%-2% on overall margin. We still expect total gross margins to be in excess of 50%, which is our target level for gross profit margin.
Hopefully that addresses the question, Deb.
Yeah. It looks like there's a follow-up one. What process node does your SoC use? I'd assume it's not 2 nm. Do you need to find a new fabrication partner?
That's beyond my pay grade.
I was gonna say the same.
Yeah. What I would say is, at least the back half of that question is, tied to vendor risk and geographic risk. I think we're very mindful of that. We are, I'd say prioritizing. In addition to, Faraday Technology Corporation, and a very substantial fabrication firm, that's the vendor we use today. We also have a single contract manufacturer, and rely heavily on their factory in the Philippines. As we try to, mitigate risk and think long term for the company, we've shared and are continuing to make progress to diversifying, our contract manufacturing, both the vendor as well as the geographic location, so that we're not tethered to just one factory for everything.
As we set in motion the path to diversify contract manufacturing in conjunction with that expansion, we'll leverage some of our contract manufacturing existing and new partners to really think about mitigating single source components of which we have a few, and then sole source components of which we have a few. I'd say we're not yet at a size, in our opinion, where we can get the attention of a second fabricator relative to the cost of that ASIC. As we scale, I think that changes. It's on the list of to-dos.
I think the way we're thinking about supply chain continuity is diversifying at the contract manufacturer first and then leveraging their design teams, their supply chain teams to help us think about how we could either modify the design of the ASIC and/or modify the fabrication locations for us. Where we have sole source, like the ASIC, I'd say Harold Hankel, who runs our manufacturing team, has been a part of this organization for over 25 years, and so is a phenomenal resource in terms of thinking through how we manage risk on the supply chain.
As we see either lead times, pricing, or geopolitical issues emerge, I think Harold is very proactive with his team in thinking about placing orders well in advance, and maintaining continuity and supply of the components that we need. Yeah, it's 100% on the list of to-dos. I think we're taking a very systematic approach from sort of a top-down perspective.
That's helpful. Also, thanks, Chris. Five years I haven't seen him stumped before, so appreciate that. Last question here from the audience. TRUSense is now enabling utilities the ability to see behind the meter for the first time. You mentioned in your conference call that any M&A would be for software that can add functionality to the right of the meter into the home. What capabilities does TRUSense currently provide versus what you're looking to add in the future?
The TRUSense Gateway has a unique ability to send a utility-grade communications signal into the home, either through the Wi-Fi chip that we've embedded and/or the power line communications capability that the sort of high-level summary there is HomePlug 2.0. It's a standard that supports communication through the electric wires inside a house. First and foremost, the TRUSense Gateway is the pathway to connect to devices. We've highlighted an initial two partners, GE Appliances and Savant Systems, device smart home appliance companies that are building the devices and sell to consumers. We use what's called APIs to do a system-to-system integration, so our software system integrates to a Savant software system or GE Appliances software system to send and receive data.
What we can do is the TRUSense Gateway is the communicator, if you will. We're tracking what's happening on the grid to start to see a spike in power or some issue emerge at a transformer. Utility dispatches message through our system to the TRUSense Gateway. TRUSense Gateway then dispatches that message to the device behind the meter. That's where we sit today. We have a view that over the next two, three, five, seven and 10 years, depending on the region in the U.S. or province in Canada, the need to throttle load is only going to increase for the utility. Throttling more, dialing it back based on asset protection, based on storm damage, based on other issues. Looks like we may have lost Azim there inadvertently, so hopefully he's able to dial back.
Where the area for us to grow is expanding the core competencies and intelligence behind the meter. The TRUSense Gateway is that point of sort of the traffic cop, if you will. Expanding the set of devices that we can integrate system to system is an area on the software side and integration side that we would benefit from. There are some tools that really deliver core competencies around load forecasting and load management. We do some of that today through TRUFlex, but I think we can bolster the core competencies and intelligence in TRUFlex organically through development or acquisition.
The view is really be able to provide the utility much more granular control of what's happening down to the appliance, down to the circuit breaker to troubleshoot things as they unfold in the grid. That's where we sit today. As we think about behind the meter, that's where we're thinking strategically to bolster the capabilities and get there faster beyond what we can develop internally.
Thanks. You've got a nice balance sheet to do some stuff if you so choose. I don't see any additional questions. Did you wanna have some final thoughts on the quarter or anything else?
Azim, welcome back. Anything else you would like to comment on as we sort of think about wrapping up 2025 and focusing on high priorities, at least from a financial perspective, on 2026?
No. The only comment I would add is, we're starting on a very strong balance sheet and really just focus on executing for 2026.
You know, Deb, I'd add we have some very clear priorities for 2026. First and foremost, I think one of the most important metrics that we're tracking is the number of utilities that have, are, or planning to put the TRUSense Gateway into the field. It just increases the probability of hit rate for scale. That is a high priority for our organization. The second is bringing forward the use cases tied to our advanced analytics. The device is what creates the physical moat. The data is what drives long-term value, not only for the utility but our shareholders. The reference data-driven grid modernization is of high priority to Tantalus.
It is a fundamental shift in the utility industry, which has always been device-centric. I think being able to demonstrate case studies around transformer monitoring, grid analytics, and a few more analytics tools that are gonna get announced and introduced at our upcoming Users Conference, great way for us to diversify revenue stream and really demonstrate how we can monetize the value from any device we put in the field. The third is just continuing to add to the user community. You know, last year, 17 utilities. The year before that, 31. 50 over the last two years. I'm rounding up a little bit there. How do we add the next 15, 20 and 30 utilities in 2026 and beyond?
last but not least, I'd say, it's a little bit more internally focused. The balance sheet helps us, but we got to make sure the foundation at Tantalus, the Team, the Tools, the Resources, the reporting capabilities that Azim and his team need are all starting to get upgraded, in going from, you know, where we are today to something much more significant. That's an area of focus for us as well as we think about leveraging some of the balance sheet, and investing internally to support the growth that we anticipate seeing in 2026 and beyond. Those are some of the priorities, and I think we can address those and certainly hopefully some additional commercial announcements along the way to support it.
Well, appreciate both your time. Congrats on a great quarter and a fantastic year, and it looks like you're well set up for execution in 2026. If anyone has any follow-up questions, please feel free to reach out. I think you all have my email. Yeah, just appreciate your time.
Deb, thank you for facilitating and, thanks for your time as well. Hope everyone has a great day.
Yeah. Have a good day.
Bye-bye.