Tantalus Systems Q2 Earnings Call Highlights

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Mon, August 10, 2026 at 2:03 AM GMT+3 6 min read

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Record revenue and improved profitability: Second-quarter revenue rose 18% year over year to $15.4 million, while adjusted EBITDA increased 35% to $690,000. Recurring revenue reached $3.6 million for the quarter, with annual recurring revenue up 13% to a record $15 million.
TRUSense Gateway adoption accelerated: Orders came from 77 utilities, including 37 that had moved beyond pilots into scaled deployments. The company had shipped about 6,200 gateways, with aggregate orders approaching 30,000 units.
Liquidity strengthened despite working-capital cash use: Tantalus ended the quarter with approximately $41.3 million in liquidity and no debt maturities over the next three years. A refinancing lowered average term-loan interest below 6%, while inventory investments and deferred-revenue seasonality contributed to $5.7 million in quarterly operating cash use.

Tantalus Systems (TSE:GRID) reported record second-quarter revenue as utilities increased spending on distribution-grid modernization, while the company expanded adoption of its TRUSense Gateway platform and strengthened its liquidity position.

Revenue for the quarter ended June 30 rose 18% year over year to $15.4 million, according to President and Chief Executive Officer Peter Londa. First-half revenue reached $30 million, while trailing-12-month revenue was approximately $60 million. The company reported gross profit margin of about 55% and adjusted EBITDA of $690,000, up 35% from the prior-year quarter.

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"The second quarter demonstrated growth across both our connected devices and infrastructure and our utility software applications and services segments while improving the overall quality and visibility of our revenue," Chief Financial Officer Azim Lalani said.

Segment Growth and Recurring Revenue

Connected devices and infrastructure revenue was $10.4 million in the second quarter, up $1.6 million year over year. Software and services revenue increased $770,000 to $5 million. Lalani said growth reflected expanding deployments among existing customers, additions of new utilities, continued TRUSense Gateway adoption, and higher software and maintenance revenue.

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Recurring revenue rose to approximately $3.6 million, representing 23% of quarterly revenue. Annual recurring revenue, measured on a forward-looking 12-month basis, reached a record $15 million, up 13% from a year earlier. On a trailing-12-month basis, recurring revenue increased 16% to $14.7 million, or about 25% of total revenue.

The company's software and services segment generated gross margin of approximately 78%, compared with consolidated gross margin of roughly 55%. Lalani said the growth of software and services is expected to support the company's overall margin profile.

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Tantalus reported a net loss of $1 million, compared with a $903,000 loss a year earlier, as increased gross profit was offset by investments in research and development and sales and marketing. The company added about 11 employees during the first half, mostly in the second quarter and primarily in R&D, Lalani said.

TRUSense Gateway Deployments Expand

Londa said 77 utilities had placed orders for the TRUSense Gateway as of the call, up from 70 at the time of the company's first-quarter call. The number of utilities moving beyond pilot programs into scaled deployments increased to 37 from 28 over the prior three months. Tantalus has shipped roughly 6,200 gateways, while aggregate orders were approaching 30,000 units, he said.

The platform provides circuit-level power-quality visibility at the grid edge and can be used to supplement existing metering infrastructure rather than requiring utilities to replace entire systems. Londa said the company sees three primary applications developing for the gateway:

Enhancing existing advanced metering infrastructure systems;
Providing power-quality measurement and circuit-level visibility; and
Supporting load management and behind-the-meter capabilities.

Tantalus also introduced two software offerings during the quarter. TRUGrid Verify is an AI-enabled analytics application intended to identify data errors in geographic information system and advanced metering infrastructure data. TRUGrid Advantage is a managed service combining the company's analytics tools with Tantalus data specialists.

Londa said the products were developed in response to feedback from utilities and are intended to create additional software and analytics opportunities from the company's installed device base. Recurring revenue from TRUSense Gateway deployments begins in month 13, when it is tied to software maintenance and related services, he added.

Order Pipeline and Market Conditions

Tantalus converted approximately $30 million of orders during the first half, producing a book-to-bill ratio of approximately 0.97x. Londa said the company views rolling book-to-bill metrics as more meaningful than a single-quarter figure because utility sales cycles average about 18 months and are influenced by budget cycles, regulatory approvals and project schedules.

The company had eight utilities in active contracting as of the call, compared with four at the end of the second quarter of 2025. Londa said management expected those late-stage opportunities to convert before year-end, while the qualified order pipeline was at a record level.

Management said utilities have become more deliberate amid macroeconomic volatility and inflation concerns. Londa said some customers are seeing price increases from other vendors, which can pressure annual budgets at public-power, municipal and cooperative utilities. However, he said those conditions also increase interest in technologies that can extend the life and value of existing infrastructure.

Tantalus also said it was expanding its Canadian operations. Londa cited Ontario's integrated energy plan, which contemplates between C$103 billion and C$120 billion of distribution-system upgrades, and said the company's Canadian presence and Aclara meter integration supporting Measurement Canada could position it for that market.

Cash Use, Supply Chain and Balance Sheet

Cash used in operating activities totaled $5.7 million during the quarter, which Lalani attributed entirely to working-capital timing. The company used about $2 million for inventory, including edge computing modules, TRUSense Gateways and custom ASICs, to protect supply continuity and margins amid semiconductor and memory-market pricing pressure.

Tantalus said it has supply visibility into mid-2027 and expects most of the inventory investment to convert into revenue during the second half of 2026. Deferred revenue seasonality also contributed approximately $2.6 million to the quarterly cash use, Lalani said.

On a trailing-12-month basis, operating cash flow was approximately $1.1 million and free cash flow was positive, according to the company.

During the quarter, Tantalus restructured its lending arrangements with Fifth Third Bank, increasing its revolver to $12 million and adding a $3.5 million term loan. The company subsequently repaid its EDC term loan using the new loan proceeds and cash on hand. Lalani said the changes reduced the average term-loan interest rate from 11.75% to below 6%, creating expected annualized cash-interest savings of approximately $200,000.

Liquidity totaled approximately $41.3 million at quarter-end, including $29.3 million in cash and $12 million of available revolver capacity. The company said it had no debt maturities over the next three years.

About Tantalus Systems (TSE:GRID)

Tantalus is a technology company dedicated to helping utilities modernize their distribution grids by harnessing the power of data across all their devices and systems deployed throughout the entire distribution grid. The Company offers a grid modernization platform across multiple levels: intelligent connected devices, communications networks, data management, enterprise applications and analytics. Our solutions provide utilities with the flexibility they need to get the most value from existing infrastructure investments while leveraging advanced capabilities to plan for future requirements.

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