Why did DHAI's operating profit decline sharply in Q3 2025?

The decline in DHAI's operating profit in Q3 2025 can be attributed to a combination of factors: 1. **Revenue Decline**: The most significant factor contributing to the decline in operating profit is the 21% revenue decrease to $15.1 million compared to the previous year. This decline is primarily due to lower sales volumes in EMEA and the Americas, which dropped by 29% and 7%, respectively. The decrease in device revenue, which fell 26% to $11.7 million, is a critical component of this revenue decline. While service revenue grew 4% to $3.1 million, it was not enough to offset the substantial decline in equipment sales. 2. **Gross Profit Decrease**: The gross profit decreased by 30.4%, which outpaces the revenue decline, suggesting pricing pressures or an unfavorable product mix. This indicates that the company may have been selling fewer units or may have had to reduce prices to stimulate sales, both of which can negatively impact profit margins. 3. **Operating Expenses Increase**: The company's operating expenses increased, with SG&A rising by 50.6% to $8.2 million. This increase is driven by higher headcount and public company costs, which creates significant operating leverage challenges. The rise in operating expenses without a corresponding increase in revenue contributes to the decline in operating profit. 4. **Market Challenges and Operational Inefficiencies**: The company faces significant market challenges, including import restrictions due to the Russia-Ukraine conflict, which have affected sales in Eastern Europe. Additionally, operational inefficiencies deserve careful scrutiny, indicating that there may be underlying issues with management or operations that are impacting profitability. In summary, DHAI's operating profit decline in Q3 2025 is primarily due to a 21% revenue decrease, gross profit decrease due to pricing pressures or unfavorable product mix, increased operating expenses, and market challenges and operational inefficiencies. These factors combined create a challenging operating environment for the company, leading to a substantial decline in operating profit.