Good morning, everybody. I've put everybody on mute for the introduction here. Thank you for joining us. Sean and Randall will be with us momentarily. So good afternoon and good morning, depending where everybody is. What I'll have is, thank you for coming on the Nanalysis Q&A session. I will ask Randall to give a brief summary of the call yesterday, and from there, we'll open it up for questions. So everybody's on mute at the current time. What we'll do is, if you'd like to ask a question, just pull yourself off mute or stick your hand up. You can also raise your hand electronically at the top of the screen. So we'll get started here in just a moment. Just bear with us.
Great. Hi, everyone.
Good morning, Randall.
My sound's working. That's what I wanted to check.
Yeah. It is a little quiet.
That's because I've got kids upstairs still sleeping, so I'm going to be a little quiet today.
Okay.
Good afternoon, everyone. Sorry, I just had difficulty. Been traveling, and I just found a good spot to do the meeting.
Fantastic. So everybody else is on mute at this time, and I did ask everybody either to raise your hand, raise your hand electronically, or put yourself off mute to ask a question. Randall, would you mind, I'm not sure if everyone was able to listen to the call yesterday, but would you mind maybe giving a high-level financial overview of the quarter, and then we'll just dive right in, and then, if so, Sean, if you wanted to give any color beyond that. B ut obviously, this call is meant to give access and opportunity for investors to ask questions to both Randall and Sean, so that's really the purpose of this call, but we are happy to give as much color as we can, and I thought it might make sense, Randall, if you wanted to kind of start.
Absolutely. So the three months ended September 30, 2024. We did CAD 10.6 million in revenue, which is a 50% increase of revenue over the prior year. That was made up of CAD 4.2 million of product sales and CAD 5.4 million of service revenue and about CAD 1 million of flow-through inventory revenue. Gross margins on product sales were 52%. So that's up from 41% in the three months ended September 30, 2024. Gross margin on services was 15%, which is up 18% over the negative 3% we had a year ago. So on product sales, we've done a lot of work to reduce our costs, and we've also had improved selling prices here. And that's allowed us to bring that margin up higher.
In terms of service revenue, we've taken over all the airport's accounts in January 2024, and that's allowed us to obviously deploy all of our technicians into servicing roles, and also, we're working on increasing revenue and managing our efficiency in that project to increase margins there, and we think there's still an upward trajectory available to us in both cases.
Right. So things are trending. I'm sorry, go ahead.
Yeah. We're trending in the right direction. For EBITDA, we posted a second quarter of positive EBITDA, which is important for us. We intend for that to continue. That's up CAD 1.6 million over the negative CAD 1.4 million, excuse me, that we posted in Q3 2023. So again, trending in the right direction. And then finally, net loss has been continuously trending lower and eventually towards net income. So again, trending in the right direction.
Fantastic. Sean, I don't know if you wanted to give any other color at this point, or we can open it up. It's up to you.
Let's just open it up.
Okay. Fantastic. Are there any questions? Feel free to pull yourself off mute. You can put your hand just in the air, and I'll pull you off mute. Or you could even digitally raise your hand here on the system.
Walter, I see that you're high volume.
I'm not in the right place to listen to the conference, but I just managed to. I had only one question. Was the reason for the decline in the gross margin on the service centers? Because I saw it was going down from 18% to 15%.
I think we're up from 10%, Walter. We were at 10% in the second quarter and up to 15% here.
I mean, the gross margin was down. I mean, the percentage, no? Compared to
No, thank you. Compared to what?
No, and Walter, are you referring to sequential from Q2 to Q3, or are you referring to the year over year?
I don't' know. I saw something going down from 18% to 15%, the gross margin percentage.
Oh, it's the opposite.
It's the opposite.
Yeah. Sorry, Walter. It was an 18% increase over last year.
Oh, sorry. Sorry. Okay.
Yeah. No, we were at negative 15% or negative 3% last year because we were only servicing a handful of airports. And we've gone up 18% to positive 15% in.
Okay. Sorry.
It's just a bit of a, it's tricky to follow.
As I said, I'm not in the right place.
Yeah. Yeah. No, no, for sure. Like I said, it's tricky to follow because we were actually still negative last year because we were generating revenue, but we had so many undeployed workers who were doing training and things like that last year, and we were eating all of those training costs. Whereas this year, everybody's working. A great amount of the training that we're still—we still do training, but a lot of it we actually bill back to the customer now, just because of the nature of the contract. So that helps us as well.
I just saw that five minutes ago that Safe Capital had a buy recommendation. So I think they must be. I've been very pleased with the results.
We certainly were. Yeah. We certainly were as well. Things are all trending in the right direction for us. All the key metrics, right? EBITDA was down a little bit, admittedly, from the second quarter, but that was expected because summer is always very slow on our product sales business. We expect Q4 to be strong coming out of Q3.
Yeah. Keep it going.
Yeah. It's positive. That's what I was happy about. It's still positive EBITDA, and like I said, it's trending the right way.
A couple of items. I'm sorry. Go ahead. Randall, a couple of items we did point up is that because of the quarter, because it is seasonally slow in part of it due to summer, then it gets accelerated, right, in September. We did mention, obviously, that some of the sales spilled into the Q4. And then again, Q4 is seasonally our strongest quarter. So we're moving into. We're mid into Q4. And as Sean has said on the call, things look very good.
I just popped open the press release here on my screen so everybody can see it. And I want to highlight the, thanks to Walter's question, I want to highlight the quarterly trend just to show those trends going in the right direction. So we've got total revenue from Q4 2023. I'm going to go from 2023 into Q3 of 2024. So CAD 9.8 million to CAD 11.2 million to CAD 11.5 million, and then to CAD 10.6 million. Now, yes, Q3 2024, as I said, is lower, and that's expected due to seasonality. What I want to show here is things are moving very much in the right direction. And if I go back to the previous table, Q3 revenue was CAD 7 million in 2023. So 50% increase in revenue year over year.
But particularly, I want to show EBITDA moving from negative CAD 774,000 to two consistent quarters of positive EBITDA, and then our net loss for the period, and very importantly, going from a CAD 2 million net loss to a CAD 1.6 million net loss. So moving again in the right direction and towards our target of continuous positive EBITDA and positive net income eventually.
Okay.
So in the right way. Q3 is tricky, always seasonality, as Matt said, but we're expecting a good Q4. And again, as Matt just mentioned, we had some rollover of sales into Q4 that came in at the very, very end of Q3. Quite a good number. And unfortunately, due to accounting rules, we weren't able to pull those sales into the quarter, so they'll be part of Q4. Walter, do you have any other deep-dive questions?
Does anybody else have any other questions? Anybody else? Okay.
Sean, do we still have you, or did you... Sean's dealing with... you are here. Great. Your video's frozen, Sean, but we still have you.
Yeah. I've got you on audio with my phone. So I'm having some Wi-Fi challenges here in the conference center lobby.
Okay. All right.
If we don't have any other questions, Sean, did you? Sorry, I'm taking over your job, Matt.
Please go ahead.
Sean, did you want to provide any kind of overview remarks?
Yeah. I'll just let people know that we're working very hard to increase our benchtop NMR product revenue. We're really excited about the rest of the year and 2025, including new product launches. And we know that most investors got involved in the business because of that product family. And I just want to let everyone know that that's still the core of our business, and we're working very hard to make that successful.
Okay. Well, with that, if we don't have any other questions, we can end the call and let everybody carry on with their day or evening. Thank you.
Thanks very much. Have a great day.
Thank you, everyone. Have a nice afternoon.
Bye-bye.
Thanks, Walter. Have a nice day.