Sonoma Pharmaceuticals reported QQ2 2025 results reflecting a modest improvement in top-line performance alongside ongoing profitability challenges. Revenue for the quarter stood at $3.58 million, up 31.1% year over year and 5.5% quarter over quarter, driven by continued demand for its stabilized HOCl portfolio across wound care, dermatology, eye care, and animal health. However, operating losses persisted (EBITDA of -$0.82 million and net income of -$0.61 million), with an implied cost base that continues to outpace revenue growth. The company maintained a solid balance sheet with ample liquidity, ending the period with cash and cash equivalents of $4.08 million and net debt of -$3.83 million, signaling substantial runway for near-term initiatives. Free cash flow remained positive at $0.33 million, underscoring the potential for cash-accretive actions as revenue scales. Management commentary is not available in the supplied transcript dataset, limiting direct quotes from the earnings call. Nevertheless, the quarterly trajectory suggests a company transitioning from early-stage revenue expansion to stabilization, with a focus on margin optimization and portfolio expansion to sustain longer-term value creation.
Key Performance Indicators
Revenue
3.58M
QoQ: 5.54% | YoY:31.05%
Gross Profit
1.36M
38.03% margin
QoQ: 4.21% | YoY:37.47%
Operating Income
-850.00K
QoQ: 27.54% | YoY:29.64%
Net Income
-610.00K
QoQ: 46.63% | YoY:58.89%
EPS
-0.59
QoQ: 56.05% | YoY:79.47%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $3.58 million in QQ2 2025, up 31.1% YoY and 5.5% QoQ. YoY growth aligns with a broader trend of modest demand for HOCl-based wound care and dermatology products.
Gross Profit: $1.36 million with a gross margin of 38.0%, up 37.5% YoY and 4.2% QoQ, indicating improved product mix or pricing realization within the quarter.
EBITDA: -$0.82 million, reflecting ongoing investment to scale the business; EBITDA margin at -22.8% (EBITDARatio -0.228).
Operating Income: -$0.85 million, with an operating margin of -23.75% for QQ2 2025, improvement vs. prior periods but still negative.
Net Income: -$0.61 million, with a net margin of -17.04%; EPS of -$0.59 for the quarter. YoY EPS improved meaningfully (+79.5%), but the company remains unprofitable on a quarterly basis.
Financial Highlights
- Revenue: $3.58 million in QQ2 2025, up 31.1% YoY and 5.5% QoQ. YoY growth aligns with a broader trend of modest demand for HOCl-based wound care and dermatology products.
- Gross Profit: $1.36 million with a gross margin of 38.0%, up 37.5% YoY and 4.2% QoQ, indicating improved product mix or pricing realization within the quarter.
- EBITDA: -$0.82 million, reflecting ongoing investment to scale the business; EBITDA margin at -22.8% (EBITDARatio -0.228).
- Operating Income: -$0.85 million, with an operating margin of -23.75% for QQ2 2025, improvement vs. prior periods but still negative.
- Net Income: -$0.61 million, with a net margin of -17.04%; EPS of -$0.59 for the quarter. YoY EPS improved meaningfully (+79.5%), but the company remains unprofitable on a quarterly basis.
- Cash Flow: Operating cash flow $0.354 million; free cash flow $0.328 million. Net change in cash was +$1.489 million driven by financing activities and FX effects.
- Balance Sheet: Cash and equivalents $4.078 million; total debt $0.244 million; net debt of -$3.834 million indicating net cash; total assets ~$13.685 million; stockholders’ equity ~$5.352 million; current ratio 3.69 and quick ratio 2.84, signaling solid near-term liquidity.
- 4-Quarter Trend: Four-quarter revenue trajectory shows growth from Q3 2024 through QQ2 2025, with trailing twelve-month metrics implying improving scale but ongoing profitability challenges.
- Key qualitative implications: The firm’s HOCl portfolio supports differentiated wound care and dermatology offerings; the gross margin advantage (38.0%) vs. many peers suggests solid product economics; the critical task remains converting top-line momentum into sustained profitability through cost discipline and portfolio expansion.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
3.58M
31.05%
5.54%
Gross Profit
1.36M
37.47%
4.21%
Operating Income
-850.00K
29.64%
27.54%
Net Income
-610.00K
58.89%
46.63%
EPS
-0.59
79.47%
56.05%
Key Financial Ratios
currentRatio
3.69
grossProfitMargin
38%
operatingProfitMargin
-23.7%
netProfitMargin
-17%
returnOnAssets
-4.46%
returnOnEquity
-11.4%
debtEquityRatio
0.05
operatingCashFlowPerShare
$0.34
freeCashFlowPerShare
$0.32
priceToBookRatio
0.59
priceEarningsRatio
-1.3
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Note: The provided dataset does not include earnings call transcript content. Therefore, thematic highlights and management quotes from the QQ2 2025 call could not be extracted. A complete synthesis of management commentary will require the transcript file or a summary from Sonoma’s investor relations materials. If you can supply the transcript or a link to the call, I can add targeted quotes and thematic insights (strategy, operations, market conditions) with precise attributions.
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Forward Guidance
No explicit forward guidance was provided in the supplied dataset. Based on QQ2 2025 results, the following forward assessment is offered:
- Revenue trajectory: Expect modest continued YoY revenue growth driven by existing HOCl product lines (dermatology, wound care, eye care, animal health) and potential new indications or geographic expansion. Management would likely target mid-single-digit to low-double-digit topline growth as product adoption increases and cross-selling expands.
- Margins and cost control: Gross margin of ~38% is favorable in this micro-cap space; focus will be on sustaining pricing/tromotion discipline and improving manufacturing efficiency to lift EBITDA. Expenses (R&D ~$0.506 million and SG&A ~$1.705 million) are key levers; a path to profitability will hinge on achieving operating leverage as revenue scales and fixed costs dilute.
- Cash and liquidity: The company ends QQ2 2025 with ~$4.08 million cash and minimal debt, implying sufficient runway for near-term product and distribution initiatives. Potential financing needs would arise if growth requires larger capex or if operating losses persist longer than anticipated.
- Catalysts to monitor: (1) new product launches or line extensions within the HOCl-based portfolio; (2) strategic partnerships or licensing arrangements to broaden distribution; (3) cost optimization programs and potential restructuring if required; (4) regulatory and competitive dynamics in wound care and dermatology that could impact pricing and adoption.
- Investment risk: The company remains unprofitable on a quarterly basis with negative net income and a small revenue base; hence upside is contingent on achieving sustainable profitability and volume growth, as well as potential strategic collaborations that can accelerate scale.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
SNOA Focus
38.03%
-23.70%
-11.40%
-1.30%
CPHI
-1.21%
-1.50%
-19.40%
-6.95%
UPC
25.20%
-13.50%
-49.00%
-91.42%
ACOR
89.70%
-12.20%
-13.80%
-43.10%
AKAN
-29.20%
-4.93%
-58.70%
-39.80%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Investment thesis: Sonoma is a high-pork risk, high-potential micro-cap with a differentiated HOCl portfolio in wound care and related segments. The QQ2 2025 results show meaningful topline growth and a strong gross margin, but the company remains unprofitable on a quarterly basis. The balance sheet is comfortably liquid with net cash, which provides runway for portfolio expansion, R&D, and potential partnerships. The key for investors is whether Sonoma can convert topline momentum into sustained profitability through scaling, cost discipline, and product line expansion. If management executes on partnerships, geographic expansion, and margin improvement, the stock could re-rate on growth and cash-flow generation. However, the stock remains exposed to execution risk, competition, and ongoing losses. Recommended stance: watchful with a bias toward upside in the event of visible margin improvement and a clear path to profitability; ongoing quarterly results and any new partner or product announcements should be the primary catalysts to monitor.
Key Investment Factors
Growth Potential
Moderate growth potential driven by continued demand for HOCl-based wound care and dermatology offerings, potential geographic expansion, and portfolio diversification (e.g., animal health and eye-care segments). Margin upside may come from product mix optimization, pricing actions, and manufacturing efficiencies as scale increases.
Profitability Risk
Persistent quarterly losses and negative EBITDA; dependence on a limited product portfolio; competitive intensity in wound care and antiseptics markets; potential requirement for additional funding to support growth initiatives; regulatory and supply-chain risks in global operations; limited liquidity cushion if operating cash flow deteriorates.
Financial Position
Strong near-term liquidity with net cash position (-$3.834 million net debt) and modest debt load; positive operating cash flow and free cash flow generation in QQ2 2025; negative accumulated earnings (retained earnings of -$196.1 million) indicating long-running losses and equity base challenges.
SWOT Analysis
Strengths
Solid gross margin of 38.0% in QQ2 2025, indicating favorable product economics for HOCl-based offerings
Strong liquidity position with cash and equivalents of $4.08 million and net cash of $3.83 million
YoY revenue growth of 31.1% and QoQ growth of 5.5% indicating improving demand for the portfolio
Low leverage with total debt only $244k and debt-to-capitalization near zero
Diverse HOCl portfolio spanning wound care, dermatology, eye care, oral care, and animal health providing cross-selling opportunities
Weaknesses
Persistent quarterly losses and negative EBITDA (-$0.82 million)
Negative net income (-$0.61 million) and negative retained earnings (-$196.10 million)
Small revenue base relative to larger peers; limited scale to drive material operating leverage
Reliance on a relatively narrow product line which increases exposure to competitive and regulatory risk
Some data irregularities in the reported liabilities (e.g., negative otherCurrentLiabilities) that may complicate liquidity interpretation until clarified
Opportunities
Portfolio expansion through new HOCl-based products and line extensions
Geographic expansion and scalable distribution partnerships to drive volume
Strategic collaborations or licensing agreements to accelerate market access and reduce go-to-market costs
Manufacturing efficiency improvements and supply-chain optimization to lift margins
Threats
Competitive pressure from larger antiseptic and wound-care players; pricing competition
Regulatory changes affecting HOCl product claims, labeling, or approvals in key markets
Supply-chain disruptions or increases in raw material costs impacting margin
Liquidity and funding risks if growth outpaces cash generation; potential need for equity raises or debt incurrence