Frequency Electronics (FEIM) delivered a solid QQ2 2025 (six months ended Oct 31, 2024) with notable top-line momentum, margin expansion, and a historically high backlog of $81 million. The quarter’s revenue of $15.82 million rose 4.9% QoQ and 16.5% YoY, aided by a stronger mix of U.S. government space programs. Gross margin improved to 48.2%, contributing to a 16.55% operating margin and a net income of $2.65 million ($0.28 per share). Management attributes the year-to-date strength to the U.S. government space segment, which accounts for more than half of revenue and operating income in the first half of FY2025, and signals ongoing momentum through quantum sensing initiatives and Proliferated Small Satellite (PSS) opportunities. FEIM reiterated a healthy R&D cadence (~10% of revenue) to position for future wins in the growing small-satellite and quantum-tech domains, while maintaining a robust cash position and a debt-free balance sheet. Near-term visibility rests on continued government funding and backlog conversion, as the company scales investment in internal R&D and explores CRADAs with national laboratories. Investors should monitor (1) backlog evolution and revenue realization, (2) progress in Quantum Sensors initiatives and related government funding, (3) the trajectory of non-space government revenue, and (4) the competitive dynamics of the proliferated small satellite market.