Executive Summary
Sonoma Pharmaceuticals reported QQ1 2025 revenue of $3.391 million, marking a modest sequential decline (-1.40% QoQ) and a year-over-year drop of 1.05%. Despite a Browning gross margin expansion to 38.5% (gross profit of $1.306 million), the quarter remained meaningfully unprofitable with EBITDA of $(1.134) million and net income of $(1.143) million, translating to an EPS of $(1.3424). The company’s operating performance continues to reflect scale challenges typical of a small-cap HOCl-based wound care and dermatology portfolio, even as some margin lessons begin to take hold. YoY gross profit grew about 8.5% and operating income improved roughly 5.4% on a per-quarter basis, but negative absolute profitability persists due to high SG&A and fixed cost absorption at a small revenue base.
Liquidity remained adequate for near-term needs, with cash and cash equivalents of $2.589 million and a net cash burn from operations of $(0.912) million for QQ1 2025. Free cash flow was $(0.917) million, underscoring the ongoing need for either further revenue scale, cost discipline, or external financing to sustain operations absent a material improvement in profitability. Management commentary is not provided in the supplied data, limiting the ability to assess narrative shifts around channel expansion, product acceptance, or strategic partnerships. The landscape remains a micro-cap HOCl specialty space with limited clinical trial activity and a focus on wound care, animal health, eye care, and dermatology, where growth hinges on distribution expansion, regulatory considerations, and competitive positioning.
Key Performance Indicators
Key Insights
Revenue: $3.391 million; YoY -1.05%, QoQ -1.40%
Gross Profit: $1.306 million; Gross Margin 38.51%; YoY +8.47%, QoQ +19.71%
Operating Income: $(1.173) million; Operating Margin (34.59%) approx; YoY +5.40%, QoQ +16.75%
EBITDA: $(1.134) million; EBITDA Margin about (33.44%)
Net Income: $(1.143) million; Net Margin about (33.70%)
EPS (diluted): $(1.3424); YoY +53.27%, QoQ +1.81%
Cash Flow: Net cash provided by operating activities $(0.912) million; Free cash flow $(0.917) million
Liquidity: Cash and...
Financial Highlights
Revenue: $3.391 million; YoY -1.05%, QoQ -1.40%
Gross Profit: $1.306 million; Gross Margin 38.51%; YoY +8.47%, QoQ +19.71%
Operating Income: $(1.173) million; Operating Margin (34.59%) approx; YoY +5.40%, QoQ +16.75%
EBITDA: $(1.134) million; EBITDA Margin about (33.44%)
Net Income: $(1.143) million; Net Margin about (33.70%)
EPS (diluted): $(1.3424); YoY +53.27%, QoQ +1.81%
Cash Flow: Net cash provided by operating activities $(0.912) million; Free cash flow $(0.917) million
Liquidity: Cash and cash equivalents $2.589 million; Current ratio 3.12; Quick ratio 2.41; Cash burn from operations $(0.912) million; Net change in cash $(0.539) million for the period
Balance Sheet Health: Total assets $13.673 million; Total liabilities $8.698 million; Total stockholders’ equity $4.975 million; Debt total $0.42 million; Cash debt position largely negligible; Retained earnings negative $(195.492) million; Net working capital positive; Receivables turnover 1.04x; Inventory turnover 0.78x; DSO 86.18 days; DIO 114.73 days; Payables turnover 2.78x
Valuation/Multiples (period-end): Price-to-book 0.787x; Price-to-sales 1.155x; Enterprise value multiple negative; Price-to-earnings negative; Price-to-cash flows negative.
Key takeaways: Margin expansion exists against a backdrop of persistent losses; liquidity is tight relative to ongoing cash needs; revenue growth is modest and likely hinge on distribution scale and product acceptance; the company remains dependent on outside financing or significant top-line progress to move toward sustainable profitability.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
3.39M |
-1.05% |
-1.40% |
| Gross Profit |
1.31M |
8.47% |
19.71% |
| Operating Income |
-1.17M |
5.40% |
16.75% |
| Net Income |
-1.14M |
19.39% |
-7.12% |
| EPS |
-1.34 |
53.27% |
1.81% |
Key Financial Ratios
operatingProfitMargin
-34.6%
operatingCashFlowPerShare
$-1.07
freeCashFlowPerShare
$-1.08
Management Commentary
Note: The provided data includes an empty earningsTranscript field. No management quotes or transcript themes are available in the supplied material. Once the transcript is provided, a themes-by-quotes section (strategy, operations, market conditions) with context and significance can be added here.
Forward Guidance
No formal forward guidance is presented in the provided data. In the absence of issued management targets, the outlook rests on qualitative expectations inferred from the QQ1 2025 results and sector dynamics. Investors should monitor:
- Revenue trajectory and product mix: stabilization or growth in HOCl-based wound care and dermatology lines, potential new distribution agreements, and geographic expansion.
- Gross margin evolution: continued margin improvement on product mix, pricing, or manufacturing efficiency versus fixed cost absorption at a small scale.
- Cost discipline: SG&A and R&D investments aligned with near-term revenue opportunities; any scaling of SG&A should be tied to revenue milestones.
- Cash burn and capital needs: runway given current liquidity; potential need for additional equity or debt facilities if operating losses persist beyond near term.
- Working capital management: receivables and payables dynamics, inventory turns, and potential changes in deferral of revenue or costs.
Overall: The stock’s near-term outturn hinges on whether Sonoma can translate modest top-line gains into positive operating leverage, or whether it must rely on external financing to sustain operations until scale is achieved.