Tomi Environmental Solutions (TOMZ -6.92%), a provider of disinfection and decontamination solutions for various industries, released its second quarter earnings results on August 14, 2025. The company reported a sharp revenue decline to $1.03 million (GAAP), significantly under the consensus estimate of $1.8 million and well below the $3.01 million posted in the comparable quarter last year. Earnings per share (GAAP) was $(0.06), compared to the analyst expectation of $(0.03), and represented a notable swing from breakeven in Q2 2024. The quarter was marked by lower capital equipment sales, continued growth in service-based revenues for the quarter and the first half of 2025, and an improvement in gross margin to 66% (GAAP). Management indicated customer delays in capital spending and supply chain uncertainties were key challenges, yet highlighted positive developments in service growth and international outreach. The overall performance indicates ongoing volatility but some early signals of progress on strategic priorities.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (GAAP) | $(0.06) | $(0.03) | $0.00 | -$0.06 |
| Revenue (GAAP) | $1.03 million | $1.8 million | $3.01 million | (65.8%) |
| Gross Margin | 66% | 62% | +4.0 pp | |
| Operating Income (Loss) | $(1.13 million) | $0.12 million | N/A | |
| Service-Based Revenue | $0.38 million | N/A | N/A |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Business Snapshot and Recent Focus
Tomi Environmental Solutions specializes in developing and selling advanced decontamination technologies, most notably its SteraMist line. The flagship SteraMist platform is built on Binary Ionization Technology, which uses a hydrogen peroxide-based mist to achieve disinfection in healthcare, laboratory, food processing, and a range of other settings where infection control is critical.
In recent years, the company has focused on expanding the scope of its products and services, such as customized solutions for high-containment environments and recurring decontamination services. Key success factors for Tomi Environmental Solutions include product innovation, the ability to meet evolving regulatory requirements, growing its service and consumables business, and effective expansion into new markets both domestically and abroad.
Quarter in Detail: Financial and Operational Developments
During the quarter, the most striking outcome was a fall in revenue to $1.03 million (GAAP), which management attributed to customers deferring capital expenditure projects because of supply chain disruption and announced or implemented tariffs. The decline represented a steep drop in GAAP sales, from $3,013,000 in Q2 2024 to $1,031,000 in Q2 2025, which had benefited from major sales in mobile equipment and Custom Engineered Systems. Net loss was $(1,238,000) (GAAP), compared to net income of $30,000 (GAAP) in Q2 2024, and an operating loss of $(1.13) million after posting a small profit a year earlier.
Despite the revenue drop, service-based and consumables revenue was a bright spot. Service and training sales grew 33% year over year, rising to $0.38 million. SteraMist solution sales rose 40% year over year in the first half of 2025, indicating that while equipment sales softened, demand for engagement and ongoing decontamination remains robust.
Gross margin improved to 66%, up 4 percentage points year-over-year (GAAP). Management credited this change to a more favorable sales mix—specifically, higher sales of BIT solution and service offerings. Operating expenses (GAAP) increased compared to Q2 2024, while general and administrative spending was largely steady.
The international business represented nearly 20% of revenue, confirming some traction in the company's expansion plans. Order backlog as of June 30, 2025, stood at approximately $1.4 million, with Total recognized revenue, deferred revenue, and sales order backlog was approximately $4.6 million as of August 7, 2025. Pipeline of open opportunities was approximately $15 million as of August 14, 2025, about $7 million of which are viewed as high priority as of August 14, 2025. Tomi Environmental Solutions also installed its first SteraMist Integration System Standalone unit with a major contract development and manufacturing partner, establishing a new client reference and use case for its expanded product suite, which is an integration of the company’s core SteraMist decontamination technology.
Looking Ahead: Guidance and Key Watchpoints
Management did not provide explicit financial guidance for the next quarter or for the remainder of fiscal 2025. While leadership pointed to a healthy pipeline, multiple active projects scheduled for delivery in 2025, and ongoing negotiations for new custom and integrated contracts valued near $2 million as of August 7, 2025, no detailed revenue or earnings targets were offered.
Given the lack of specific targets, investors are expected to watch closely for conversion of the reported pipeline and backlog into realized revenue in the upcoming periods. Other items to monitor include continued expansion of service revenue, adoption of the new SteraMist Integration System products, progress in international markets, and management of operating costs and liquidity. TOMZ does not currently pay a dividend.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
