Summary of TOMI Environmental Solutions Q1 2026 Earnings Call

1Key Financial Results and Metrics

Revenue: Q1 2026 revenue was $1.6 million, a 5% increase year-over-year and a significant 67% increase sequentially from Q4 2025.

Applicator Sales: Achieved 139% year-over-year growth, surpassing total sales for 2025 in just Q1.

BIT Solution Sales: Grew by 21% annually since 2024, maintaining levels above 2025 in Q1 2026.

Gross Profit: $832,000, approximately 50% of revenue, down from $952,000 (approximately 63% of revenue) in Q1 2025, attributed to strategic discounts and a shift towards lower-margin sales.

Operating Expenses: Reduced by 15% to $1.48 million compared to Q1 2025.

Net Loss: Reported at $811,000 ($0.04 per share), compared to a net loss of $256,000 in Q1 2025, which included a nonrecurring employee retention credit.

Operating Cash Flow: Positive cash flow of $296,000, an improvement of $572,000 from Q1 2025.

2Strategic Updates and Business Highlights

Backlog Growth: Increased from $1.6 million at the end of 2025 to $2.2 million by the end of Q1 2026, indicating strong demand.

New Contracts: Secured a significant contract for decontamination services with a global medical technology company, totaling 440,000 annual purchase orders.

Regulatory Approvals: Received authorization for BIT solutions and SteraMist iHP products in the UK and several EU countries, enhancing market access.

Merger Announcement: Executed a nonbinding letter of intent to merge with Carbonium Core, a producer of nuclear-grade graphite, aiming to diversify TOMI's business and leverage growing domestic demand for non-Chinese graphite.

3Forward Guidance and Outlook

Revenue Growth: Management expects continued revenue growth through 2026, driven by increased BIT Solution sales and a robust project pipeline.

Integration Pipeline: Current integration sales pipeline valued at $4 million with potential for $22 million to $33 million in total opportunities.

Profitability Goals: Aiming for profitability within 2026, supported by a strong customer base and expanding service contracts.

4Bad News, Challenges, or Points of Concern

Gross Margin Pressure: Decline in gross margins due to strategic pricing discounts and a shift towards lower-margin equipment sales, although management views this as temporary.

Service Revenue Decline: Service revenue decreased by 41%, reflecting timing issues with decontamination project completions, which management considers a temporary setback.

Net Loss: Increased net loss compared to the previous year, influenced by nonrecurring items in Q1 2025, indicating ongoing financial challenges.

5Notable Q&A Insights

Gross Margin Recovery: Management confirmed expectations for margin recovery without the need for continued discounts on hardware.

Revenue Recognition: Anticipated steady revenue growth with no significant lumpiness expected in revenue recognition.

Carbonium Merger Diligence: Due diligence is underway, with management confident in their ability to assess the technology and potential investments needed post-merger.

Market Penetration: Discussed potential applications of SteraMist technology in various sectors, including the honeybee industry and autonomous vehicles, highlighting ongoing efforts to engage with relevant associations and customers. Overall, TOMI Environmental Solutions reported a solid start to 2026 with significant revenue growth and strategic initiatives, despite facing challenges related to margins and service revenue. The planned merger with Carbonium Core presents an opportunity for diversification and growth in a promising market.