FLUX — Flux Power Holdings, Inc.

Flux Power Q2 2026 Earnings Call Summary

1. Key Financial Results and Metrics:

• Revenue: $14.1 million, up from $13.2 million in Q1 2026, but down from $16.8 million in Q2 2025.
• Gross Margin: 34.7%, an increase from 28.6% in the prior quarter and 32.5% year-over-year.
• Operating Expenses: $4.1 million, significantly reduced from $5.9 million in Q1 2026 and $6.9 million in Q2 2025.
• Net Income: $0.6 million ($0.03 per share), compared to a net loss of $2.6 million in Q1 2026 and $1.9 million in Q2 2025.
• Adjusted EBITDA: Positive $1.5 million, improving from a loss of $1.4 million in Q1 2026 and positive $130,000 in Q2 2025.
• Cash Position: $0.9 million, down from $1.3 million at the end of Q1 2026.

2. Strategic Updates and Business Highlights:

• Achieved profitability for the first time in company history, attributed to expense optimization and revenue growth.
• Focused on five strategic initiatives: profitable growth, operational efficiencies, solution selling, product development, and integrating value-added software.
• Launched the next-generation SkyLNK telematics device, enhancing battery management systems with AI capabilities.
• Released the GAT 315 battery to meet growing demand in the Ground Support Equipment (GSE) market.
• Continued development of SkyEMS software, introducing features like intelligent alerting and a mobile interface to enhance customer productivity.

3. Forward Guidance and Outlook:

• Anticipates lower revenue in Q3 2026 due to a capital freeze from its largest customer, which may impact results for a significant portion of the year.
• Despite short-term challenges, the lithium-ion battery market is projected to grow at an 8.8% CAGR through 2035, indicating a strong long-term opportunity.
• The company is proactively reducing expenses and focusing on filling the revenue gap left by the customer’s capital freeze.

4. Bad News, Challenges, or Points of Concern:

• The capital freeze from the largest customer poses a risk to revenue and profitability for the upcoming quarter.
• Ongoing tariff impacts are causing cautious behavior among customers, potentially affecting demand.
• While gross margins improved, future fluctuations may occur based on product mix and cost structures.

5. Notable Q&A Insights:

• The capital freeze is specific to one customer, not indicative of broader industry trends.
• Demand remains stable, but customers are cautious due to tariff uncertainties.
• The SkyLNK product rollout will be across the entire customer base, with positive initial feedback indicating potential for new business opportunities.
• The company plans to monetize new software features at a premium, which could significantly enhance gross margins.
• The reversal of $0.5 million in incentive compensation was primarily reflected in SG&A and R&D, with minimal impact on cost of goods sold.

Overall, Flux Power has made significant strides towards profitability and operational efficiency, but faces immediate challenges due to customer-specific issues and external market pressures.