Energy Recovery (ERII) Q4 2025 earnings summary

Executive summary

• Focus has shifted fully to the water business, a large and profitable market with strong technology and market position.

• Q4 2025 revenue was $66.9 million, down $0.2 million from Q4 2024, mainly due to timing of contracted project revenue.

• The CO2 retail grocery business is being wound down due to lack of scalable adoption, resulting in $7 million annual savings.

• Management is prioritizing performance optimization, cost control, and capital allocation.

• Operating expenses dropped 36.5% to $13.6 million in Q4 2025, driven by lower employee, consulting, and restructuring costs.

Financial highlights

• Q4 shortfall attributed to two major projects being pushed into 2026.

• Full-year 2025 revenue was $135.0 million, down 7% from 2024.

• 2026 revenue guidance is $45 million at the midpoint, with three large projects expected to shift into 2027.

• Operating expenses reduced from $77 million to $64 million, mainly due to CO2 business exit.

• Cash and investments totaled $83.3 million at year-end 2025.

Outlook and guidance

• 2025 and 2026 are impacted by delays in several large desalination projects, causing a temporary slowdown.

• Growth expected to resume in 2027 based on pipeline and demand trends.

• 2026 revenue cadence anticipated to be heavily back-end weighted, similar to 2025.

• Guidance assumes major projects will slip, with a range reflecting additional at-risk projects.

• Management released a shareholder letter discussing business and financial updates and the outlook for 2026.