Summary of Dragonfly Energy (DFLI) Q4 2025 Earnings Call

1Key Financial Results and Metrics

Q4 2025 Results:

Net sales increased by 6.9% to $13.1 million.

OEM revenue grew approximately 30% year-over-year, while DTC revenue declined from $5.7 million to $4.7 million.

Gross profit was $2.4 million with a gross margin of 18.2%, down from 20.8% in Q4 2024.

Operating expenses rose by 29.9% to $12.6 million, influenced by one-time expenses from debt restructuring.

Net loss widened to $45 million, compared to a loss of $9.8 million in the prior year, resulting in a net loss per share of $14.92.

Adjusted EBITDA was negative $3.8 million, worsening from negative $2.3 million.

Full Year 2025 Results:

Total net sales increased by 16% to $58.6 million, driven by a 34% rise in OEM revenue.

Gross margin improved to 26.7%, up 370 basis points year-over-year.

Adjusted EBITDA loss improved to negative $11.4 million from negative $18.5 million.

2Strategic Updates and Business Highlights

Capital Structure: Successfully completed several capital-raising transactions and a significant debt restructuring to enhance liquidity and simplify the balance sheet.

Commercial Growth: Expanded partnerships in the OEM channel, particularly in the RV and heavy-duty trucking sectors. Notably, Werner Enterprises placed its first order for the Battle Born DualFlow power pack.

Product Development: Continued to innovate with nearly 90 patents in battery technology and system integration. New products, including solar panels, have been introduced to enhance the Battle Born ecosystem.

Cost Structure Realignment: Implemented a series of cost-saving measures, including a 20% reduction in executive compensation and workforce adjustments, expected to save approximately $4.9 million annually.

3Forward Guidance and Outlook

Q1 2026 Expectations: Revenue is projected to be approximately $9.5 million with an adjusted EBITDA loss of $4.6 million.

Long-term Goals: Aiming for positive adjusted EBITDA as the business approaches an annual revenue run rate of approximately $70 million, with expectations of improved operating leverage as commercial channels scale.

4Challenges and Points of Concern

Market Headwinds: The RV market experienced a weaker demand in January, leading to inventory adjustments by OEMs. Although recovery signs were noted in February and March, overall market conditions remain challenging.

Heavy-Duty Trucking Delays: Revenue contributions from the trucking segment are slower than anticipated, with the timeline for meaningful revenue pushed back.

Increased Operating Expenses: Rising operating expenses due to restructuring costs and ongoing market pressures could impact profitability.

Lithium Price Volatility: The company remains exposed to potential fluctuations in lithium carbonate prices, which could affect production costs.

5Notable Q&A Insights

RV Market Recovery: Management acknowledged a decline in RV demand in January but noted signs of recovery in subsequent months, with expectations for expanded energy storage capacity among existing OEMs.

Heavy-Duty Trucking Outlook: There is optimism for a pickup in the trucking market, driven by pent-up demand and new emissions regulations, which could enhance the relevance of Dragonfly's products.

DTC Business Decline: The company is deprioritizing its direct-to-consumer (DTC) business, which has been in steady decline, focusing instead on OEM and fleet partnerships.

Customer Feedback on New Products: Early feedback on expanded product lines, including solar panels, has been positive, with customers appreciating the full system offerings. Overall, Dragonfly Energy is navigating a challenging market environment while strategically positioning itself for future growth through cost management and expanded partnerships.