Cavitation Technologies reported a standalone Q4 2024 result with a pronounced top-line expansion despite its microcap footprint. Revenue of $652 thousand generated a year-over-year increase of approximately 1,153.9%, reflecting a lumpy but positive base effect as the company progresses commercialization of its patented Nano Reactor/Nano Neutralization technologies. Gross margin stood at an exceptionally high 82.36%, yielding a gross profit of $537 thousand and contributing to a quarterly operating income and EBITDA of $369 thousand (margin ~56.6%). Net income for the quarter was reported at $375 thousand, translating to a net margin near 57.5% and EPS of $0.0013.
Key Performance Indicators
Revenue
652.00K
QoQ: 25.63% | YoY:1 153.85%
Gross Profit
537.00K
82.36% margin
QoQ: 4.88% | YoY:13 325.00%
Operating Income
369.00K
QoQ: 10.81% | YoY:214.60%
Net Income
375.00K
QoQ: 13.29% | YoY:126.22%
EPS
0.00
QoQ: 8.33% | YoY:126.00%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $652,000; YoY growth 1,153.85%; QoQ growth 25.63% (driven by early-stage commercialization and/or customer engagements in oil processing/industrial fluids).
Gross Profit: $537,000; Gross Margin 82.36% (benefiting from favorable product mix and relatively low cost of revenue given the small scale).
Operating Income / EBITDA: $369,000; Operating Margin 56.60%; EBITDA Margin 56.60% (operating leverage evident at this scale).
Net Income / EPS: $375,000; Net Margin 57.52%; EPS $0.0013 (basic and diluted reported as $0.0013).
Cash Flow: Net cash from operating activities $7,000; Change in working capital negative $368,000; Cash at end of period $179,000; Free Cash Flow $7,000.
Financial Highlights
Key quarterly metrics and trend insights:
- Revenue: $652,000; YoY growth 1,153.85%; QoQ growth 25.63% (driven by early-stage commercialization and/or customer engagements in oil processing/industrial fluids).
- Gross Profit: $537,000; Gross Margin 82.36% (benefiting from favorable product mix and relatively low cost of revenue given the small scale).
- Operating Income / EBITDA: $369,000; Operating Margin 56.60%; EBITDA Margin 56.60% (operating leverage evident at this scale).
- Net Income / EPS: $375,000; Net Margin 57.52%; EPS $0.0013 (basic and diluted reported as $0.0013).
- Cash Flow: Net cash from operating activities $7,000; Change in working capital negative $368,000; Cash at end of period $179,000; Free Cash Flow $7,000.
- Balance Sheet health: Total assets $248,000; Cash $179,000; Total current liabilities $598,000; Total liabilities $728,000; Long-term debt $130,000; Total debt $185,000; Net debt $6,000; Stockholders’ equity reported as $(480,000). Retained earnings show a large accumulated deficit of $(26,847,000).
- Liquidity & efficiency: Current ratio 0.326; Quick ratio 0.326; Asset turnover 2.63; Fixed asset turnover 15.52; Price-to-book ratio at approximately -5.54 (negative book value). Revenue productivity per unit of asset is elevated due to the small asset base, but liquidity and leverage indicators raise red flags for sustainability.
- Notes on tax and earnings quality: Income tax expense is null in the period, suggesting potential NOL utilization or tax attributes; this warrants further disclosure in subsequent filings to confirm ongoing tax position.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
652.00K
1 153.85%
25.63%
Gross Profit
537.00K
13 325.00%
4.88%
Operating Income
369.00K
214.60%
10.81%
Net Income
375.00K
126.22%
13.29%
EPS
0.00
126.00%
8.33%
Key Financial Ratios
currentRatio
0.33
grossProfitMargin
82.4%
operatingProfitMargin
56.6%
netProfitMargin
57.5%
returnOnAssets
151.2%
returnOnEquity
-78.1%
debtEquityRatio
-0.39
operatingCashFlowPerShare
$0
freeCashFlowPerShare
$0
priceToBookRatio
-5.54
priceEarningsRatio
1.77
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Transcript data not provided in the input. As a result, no verbatim management quotes or theme-by-theme call insights can be extracted here. If transcripts or management remarks are supplied, we can map them to themes such as commercialization progress, cost controls, geographic/vertical expansion, and capital strategy. Deliverables would include direct quotes, context, and significance aligned to the quarterly results.
N/A
— N/A
N/A
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Forward Guidance
No explicit forward guidance was disclosed in the provided data. Given the quarter’s revenue growth from a very small base and a hydrogenously high gross margin, the company could pursue several paths to sustain upside: (1) scale commercial deployments of Nano Reactor/Nano Neutralization systems across additional edible oil processing, renewable fuels, and water-treatment markets; (2) pursue licensing or collaboration agreements to convert R&D intensity into recurring revenue; (3) tighten working capital management to improve liquidity metrics and reduce reliance on external financing. Investors should monitor: (a) quarterly revenue trajectory and rate of new contract/installation activity, (b) management’s commentary on contract wins and revenue timing, (c) cadence of capital needs or debt amendments, and (d) any updates on tax attributes or NOL utilization that influence net income quality.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
CVAT Focus
82.36%
56.60%
-78.10%
1.77%
CRVW
51.80%
-53.70%
4.66%
-4.06%
TKOI
50.30%
-20.90%
-39.20%
-1.91%
WARM
0.00%
0.00%
7.11%
-5.42%
CAPC
-1.26%
-4.47%
21.50%
-43.40%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
The QQ4 2024 results portray a paradox: a lean, highly profitable quarter on a very small revenue base versus a fragile balance sheet and limited liquidity. The strong gross margin and solid quarterly profitability suggest meaningful potential if Cavitation Technologies can scale its Nano Reactor/Nano Neutralization contracts and convert them into recurring revenue streams. The key investment question is sustainability: can revenue growth be realized without compromising liquidity or equity positioning? If the company executes a prudent growth plan—emphasizing licensing, multi-market deployments, and improved working capital management—the stock could offer upside for risk-tolerant investors. Conversely, if financing becomes constrained or if contract wins stall, the negative equity and liquidity constraints pose meaningful downside risk. Given the data, the investment thesis hinges on execution of scale with prudent capital management and transparent disclosures around tax attributes and revenue visibility.
Key Investment Factors
Growth Potential
Strong near-term margin realization on a small but expanding contract base with potential multi-market deployment (oil refining, renewable fuels, water treatment, algae oil extraction, and other fluid processing). Licensing and system deployments could provide recurring revenue streams and steady profitability if scale improves. The highly specialized Nano Reactor technology positions Cavitation Technologies to capitalize on efficiency gains in high-value liquid processing markets, contingent on customer adoption and supply chain execution.
Profitability Risk
Key risks include liquidity stress indicated by a current ratio well below 1 and negative stockholders’ equity, which implies potential funding needs or equity dilution to sustain growth. Revenue remains highly lumpy with execution risk and customer concentration risk at microcap scales. Tax positions are unclear given null tax expense, which could reflect NOLs or tax attributes that may not persist. Additionally, the company operates in niche industrial machinery with technology risk and potential competitive disruption as larger players or new entrants pursue similar cavitation-based processing approaches.
Financial Position
Strengths include very high gross margins and a low debt burden relative to assets in this quarter, with net debt of only $6k. However, negative equity and limited working capital capacity challenge balance sheet resilience. The company’s cash position is modest ($179k) against total current liabilities of $598k, suggesting an ongoing need for working capital optimization or external financing to support scaling and R&D investments.
SWOT Analysis
Strengths
Very high gross margin (82.36%) in QQ4 2024, indicating strong value capture on products or services with low incremental costs.
Low absolute debt and minimal cash burn; net debt of $6k supports a lightweight balance sheet at quarter end.
Asset-light characteristics with solid asset turnover (2.63) given a small asset base, suggesting efficient use of capital.
Weaknesses
Negative stockholders’ equity (-$0.48 million) and accumulated deficits (retained earnings -$26.85 million) raise sustainability and fundraising concerns.
Liquidity constraint: current ratio 0.326 and cash of $0.179 million against $0.598 million of current liabilities.
Revenue visibility is limited due to a small base and potential reliance on a narrow set of customers or contracts.
Opportunities
Expand Nano Reactor/ Nano Neutralization technology into broader markets (oil processing, renewable fuels, water treatment, wines/spirits enhancement, algae oil extraction) to drive recurring revenue.
Licensing and partnerships could convert R&D into scalable, recurring revenue streams with lower working capital requirements.
Potential operational improvements in working capital and cost management could enhance liquidity and fund growth without excessive external financing.
Threats
Scale-up risk: transitioning from pilot/small-scale deployments to broader commercial adoption could affect short-term profitability and cash flow.
Market and regulatory risks in industrial processing sectors may impact demand cycles and pricing power.
Financial structure vulnerabilities, including the negative equity position, could necessitate dilutive fundraising or debt restructuring.