[Management View]
Key metrics: Revenue increased by 31.8% YoY to $7 million. Marine Technology revenue grew by 10% to $3.9 million. Hardware sales surged by 65%, with significant contributions from Precision Acoustics.
Strategic priorities: Focus on expanding defense market share, integrating proprietary technologies, and launching the NanoGen series.

[Outlook]
Performance guidance: Management expects gross margins to rebound in the marine technology business for the remainder of FY2025.
Future plans: Continued focus on defense adoption, multi-year rental models, and integrating new sensors into DAVD technology.

[Financial Performance]
YoY trends: Revenue increased by 31.8% to $7 million. Gross profit margin decreased to 64.1% from 70.2% due to higher commission costs and underutilized rental assets. Net income fell to $900,000 from $1.4 million.
QoQ trends: Operating income decreased by 19.5% to $1.1 million due to increased operating costs and foreign exchange effects.

[Q&A Highlights]
Question 1: What led to the stronger than expected second quarter demand from Marine Products? Did orders pull forward quicker than expected? Or is it something more broadly that's changed from a demand perspective?
Answer: Strong inquiries around Echoscope technology, particularly from Asia, and increased DAVD program sales. European developer inquiries were low in Q2 but are expected to pick up in Q3.

Question 2: Did you share the expected timing of the new NanoEchoscope release? How does this new release address customer feedback and lead to increased adoption in use cases?
Answer: NanoEchoscope trials are scheduled for the end of June 2025. The new release addresses smaller underwater vehicles and robotic platforms, expanding market opportunities.

Question 3: Can you provide a range of sizes for the different opportunities of the five development programs and their timelines?
Answer: Programs focus on integrating DAVD with existing equipment and new applications like deep saturation dive suits. The largest opportunity remains the untethered space, with integration into various UBAs.

Question 4: What progress is Coda making in securing design wins for next-generation underwater vehicles? What milestones or timing should we watch out for?
Answer: Various programs are in different stages of maturity. The Echoscope is being evaluated for integration into defense programs, with some promising opportunities pending budget appropriations and evaluations.

Question 5: Do you still expect the third and fourth quarters to be your two strongest quarters of the year?
Answer: Yes, the marine technology business is expected to continue improving, with strong rental opportunities and hardware sales from Asia.

Question 6: Should we model the gross margin percentage for the back half of the year to remain the same or change?
Answer: Gross margins are expected to improve, with the current quarter being an outlier due to higher commission costs from Asia.

Question 7: Should we expect SG&A as a percentage of sales to remain the same or change in the back half of the year?
Answer: SG&A percentage may be slightly lower, with noncash items and exchange rate variances impacting the current quarter.

Question 8: What kind of revenue might the delivery of 16 DAVD untethered systems generate in Q3?
Answer: The contract value is approximately $800,000, with delivery expected in Q3.

[Sentiment Analysis]
Tone of analysts: Inquisitive and focused on understanding demand drivers, product launches, and financial metrics.
Tone of management: Optimistic about future growth, confident in addressing current challenges, and focused on strategic priorities.

[Quarterly Comparison]
| Metric | Q2 FY2025 | Q2 FY2024 |
|-------------------------------|-----------|-----------|
| Total Revenue | $7 million| $5.3 million|
| Marine Technology Revenue | $3.9 million| $3.5 million|
| Gross Profit Margin | 64.1% | 70.2% |
| Net Income | $900,000 | $1.4 million|
| Operating Income | $1.1 million| $1.4 million|

[Risks and Concerns]
- Higher commission costs from increased hardware sales in Asia.
- Underutilization of rental assets.
- Increased operating costs due to foreign exchange effects.
- Dependence on defense program funding and inquiries.

[Final Takeaway]
Coda Octopus reported strong revenue growth in Q2 FY2025, driven by increased hardware sales and contributions from Precision Acoustics. Despite a decrease in gross profit margins due to higher commission costs and underutilized rental assets, the company remains optimistic about future growth. Management is focused on expanding its defense market share, launching the NanoGen series, and integrating new sensors into DAVD technology. The outlook for the remainder of FY2025 is positive, with expectations of improved gross margins and continued strong demand in the marine technology business.