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Geospace Stock Skyrockets After Major Petrobras Contract

Geospace Technologies (NASDAQ:GEOS) reported second-quarter fiscal 2026 revenue of $19.7 million and a net loss of $11.1 million, as the company navigated what executives described as near-term market pressure while continuing efforts to diversify beyond its traditional oil and gas exposure.

On the company’s earnings call, President and CEO Richard Kelley said the quarter included “encouraging signs through new contract wins and expanding opportunities,” highlighting early revenue recognition from a Permanent Reservoir Monitoring (PRM) project, ongoing progress in recurring revenue initiatives such as the Heartbeat Detector subscription model, and efforts to expand contract manufacturing and “white label” opportunities in Smart Water.

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Chief Financial Officer Robert Curda said Geospace ended the March 31 quarter with revenue of $19.7 million, up from $18.0 million in the year-ago period. Net loss widened to $11.1 million, or $0.86 per diluted share, compared with a net loss of $9.8 million, or $0.77 per diluted share, a year earlier.

For the first six months of fiscal 2026, Curda reported revenue of $45.3 million, down from $55.2 million in the comparable prior-year period. Net loss for the six-month period was $20.8 million, or $1.62 per diluted share, compared with a net loss of $1.4 million, or $0.11 per diluted share, last year.

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Curda also provided balance sheet details, stating the company had $13.4 million in cash at quarter-end and “available borrowings of $25 million” under its credit agreement with Woodforest National Bank. Working capital was $45 million, including $19 million of trade accounts and financing receivables. Capital investments into plant and equipment totaled $3.0 million for the six-month period.

In Smart Water, Curda said quarterly revenue was $3.7 million, down from $9.5 million in the year-ago quarter, a 61% decline. For the six-month period, Smart Water revenue was $9.5 million versus $16.8 million a year earlier. Curda attributed the weakness primarily to lower-than-expected demand for the HydroConn connector as customers worked through excess inventory, adding that as inventory levels normalize the company expects “gradual revenue improvement in the coming quarters.” Kelley said the broader slowdown appeared to be market-wide rather than a loss of share, noting Geospace sells to “almost every OEM” and is “seeing that same drop across really all the players.”

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Energy Solutions revenue totaled $9.6 million in the quarter, up from $2.6 million in the year-ago period. Curda said the quarter reflected revenue recognized related to the PRM contract and final deliveries of the Pioneer land wireless product purchased by Dawson Geophysical, partially offset by lower demand for traditional seismic products. For the six-month period, Energy Solutions revenue was $24.3 million, down 10% from $26.9 million in the prior-year period, which Curda attributed to lower utilization of the company’s ocean bottom nodal rental fleet, offset by the Pioneer sale and PRM-related revenue recognition.

The Intelligent Industrial segment posted revenue of $6.3 million in the quarter, compared with $5.9 million a year earlier, while six-month revenue was $11.4 million versus $11.5 million in the prior-year period. Curda said the quarterly increase was driven by higher demand for industrial sensors and contract manufacturing services.

Kelley said Geospace implemented a workforce reduction of approximately 20% as part of ongoing efforts to align costs with market conditions and long-term priorities. Combined with other cost reduction initiatives, he said management expects “annualized cost savings of roughly $12 million.”

Responding to questions from Tieton Capital’s Bill Dezellem, Kelley said the reductions “impacted all departments across the organization” and were aimed at operational efficiency and resource needs going forward. He added that the actions also included a voluntary early retirement plan similar to one offered the prior year, and said the reductions were “a mix” of direct and indirect labor rather than being focused primarily on direct labor.

Curda said operating expenses increased by $100,000 in the quarter and by $700,000, or 3%, for the six-month period. He attributed the six-month increase to higher legal fees and facility costs, offset by lower research and development project costs.

Kelley said the company recognized its first revenue from the previously announced PRM project as initial manufacturing began in Houston, calling it an important execution milestone. He also said Geospace has procured many long-lead components and started the manufacturing process to meet the expected delivery schedule.

Curda discussed how the company expects to recognize revenue over the life of the PRM work, explaining that while there are two separate contracts—products and services—Geospace views them as “one performance obligation.” As a result, Curda said revenue recognition should continue “throughout the end of the entire endeavor” and will not stop “until the system is completely deployed.” He described the anticipated pattern as “a nice bell curve” that increases as manufacturing ramps and then tapers off as cables are deployed.

Asked about timing, Curda said the contract would not be finished until “late in 2027 or early of 2028,” and agreed that peak revenue would likely occur roughly around the midpoint between now and late 2027. Kelley later affirmed that midpoint estimate as “a pretty good estimate at this point to use as the peak timing.”

Kelley said lower utilization of the ocean bottom node fleet continued during the quarter, though he added that the company is “seeing increased interest for the summer survey season.” On the call, he elaborated that Geospace has seen an uptick in requests for quotes and rental availability compared with last summer, although “very few” have converted to orders so far.

In land, Kelley said North American interest remains positive for the Pioneer node solution and that Geospace is providing proposals to new and existing customers. He noted Pioneer “has been and is currently deployed in numerous basins across North America.” Kelley also said the conflict in the Middle East has delayed potential future business due to travel restrictions and regional uncertainty.

On Smart Water, Kelley said Geospace is leveraging contract manufacturing capabilities to pursue “white label” developments. He told Dezellem that because the opportunities are white label, he could not provide extensive detail, but described interest from Smart Water companies looking to expand their portfolios without investing heavily in R&D, using Geospace solutions that can be packaged and sold as part of a broader offering. Kelley said the white label efforts are “specific to the Aquana solutions,” including “the remote pump,” and characterized them as a way to reach distribution channels where Geospace has been less successful previously.

Looking ahead in Smart Water, Kelley acknowledged the current year has been “a little bit of a step back,” but said long-term drivers such as water scarcity, quality, management, and loss should continue to support adoption of automated metering infrastructure (AMI). He also pointed to what he described as an emerging replacement cycle for early AMR/AMI deployments as first-generation equipment ages.

Geospace did not provide specific revenue or earnings guidance. Kelley said the company plans to update investors again on its fiscal third-quarter call.

Geospace Technologies Corporation specializes in the design, manufacturing and marketing of geophysical instrumentation for seismic data acquisition. The company's solutions address the needs of oil and gas exploration and production companies by enabling detailed subsurface imaging through advanced sensor and acquisition systems. Geospace serves both land and marine seismic markets, offering equipment that meets the rigorous demands of contemporary seismic surveys.

In its Land Products segment, Geospace Technologies offers a range of components including geophones, accelerometers, cable and recorder accessories designed to collect high-quality seismic signals in onshore environments.

The article "Geospace Technologies Q2 Earnings Call Highlights" was originally published by MarketBeat.

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