Genie Energy's Q3 2025 Earnings Call: Contradictions in Blackwell Production, Gross Margins, and Retail/Wholesale Performance

Date of Call: September 30, 2025

Financials Results

• Revenue: $138.3M, up 24% YOY
• EPS: $0.26 per share, down from $0.38 a year earlier (down ~31.6% YOY)
• Gross Margin: 21.7%, compared to 33.9% in the prior year (down 1,220 bps YOY)

Guidance:

• Full-year 2025 adjusted EBITDA expected $40M–$50M, likely at the low end.
• Expect GRE margins to begin strengthening in Q4 and to continue improving into 2026.
• GREW Diversity targeted to contribute $5M–$6M to GREW's bottom line in 2026 (about twice 2025).
• Genie Solar Lansing project expected to begin generating revenue in Q4 2025.

Business Commentary:

* Revenue Growth and Margin Volatility: - Genie Energy Limited reported record revenue of $138.3 million for Q3 2025, up 24% year-over-year. - The growth was driven by increased per-meter electricity consumption and rising commodity prices, but margin compression was significant, leading to a 41% decrease in consolidated income from operations.

• Impact of Market Volatility on Fixed Price Contracts:
• The large municipal aggregation deal drove significant sales volumes at lower margins, contributing to the 40% decrease in adjusted EBITDA.

• Rapidly rising energy commodity prices and increasing fixed price contracts amplified the financial impact on Genie Energy's retail business.

• Renewables Segment Expansion and Growth:

• Genie Renewables, GREW, is expected to commence revenue generation from the Lansing Community solar project in Q4 2025.

• The company's Diversegy energy advisory and brokerage business has exhibited strong growth, with potential to contribute $5 million to $6 million to GREW's bottom line in 2026.

• Shareholder Returns and Financial Guidance:

• Genie Energy repurchased approximately 124,000 shares for $2 million and paid a regular quarterly dividend of $0.075 per share in Q3.
• The company aims to achieve the lower end of its annual guidance range of $40 million to $50 million in adjusted EBITDA.

Sentiment Analysis:

Overall Tone: Neutral

• Company reported record revenue (+24% YOY) but EPS fell to $0.26 from $0.38 and gross margin compressed to 21.7% from 33.9%. Management expects to hit FY adjusted EBITDA guidance at the low end and sees margins improving in Q4 and into 2026.

Contradiction Point 1

Blackwell Production and Supply Chain Constraints

It directly impacts expectations regarding the production timeline and delivery capabilities of a key product, potentially influencing company revenue and investor expectations.

No specific question was posed? - Operator

20251103-2025 Q3: Blackwell production is in full steam, and more Blackwells will be delivered this quarter than previously estimated. - Jensen Huang(CEO)

What changes have been made to the Blackwell GPU, and what impact do they have on revenue and customer response? - Vivek Arya (Bank of America Securities)

2025Q1: The change to the Blackwell GPU mask is complete without functional changes. Production is expected in Q4. - Jensen Huang(CEO)

Contradiction Point 2

Gross Margin Expectations

It involves changes in financial forecasts, specifically regarding gross margin expectations, which are critical indicators for investors.

What is the trajectory for Blackwell's ramp this year and how will it impact gross margins? - Timothy Arcuri (UBS)

20251103-2025 Q3: Gross margins may initially dip to low 70s due to the Blackwell ramp but are expected to recover to mid-70s quickly. - Jensen Huang(CEO), Colette M. Kress(CFO)

Will Q4 revenue from Blackwell be additive, and what is the expected gross margin exit rate? - Stacy Rasgon (Bernstein Research)

2025Q1: Gross margins for Q3 are expected around 75%, with full-year guidance in the mid-70s. - Colette M. Kress(CFO)

Contradiction Point 3

Retail and Wholesale Margins

It involves the company's expectations and outlook for retail and wholesale margins, which are crucial for financial forecasting and investor expectations.

What gives you confidence that your wholesale margins will return to normal? - Unknown Attendee

20251103-2025 Q3: We have been able to generate $22 million of operating income in retail. And remember that the market prices that we see are down roughly 1/3 from where they were a year ago, and yet we've been able to produce $22 million of operating income in retail. So we think that our model is working, and we're not -- we're very confident that the way we position our business and diversify our contract base will enable us to once again generate very high margins. - Unknown Executive

What gives you confidence that your wholesale margins will return to normal? - Unknown Attendee

2025Q2: Our margins were hurt in the quarter by definitely some political factors, but I think mostly by weather. It has been a particularly hot end of spring and beginning of summer, which kind of pushed prices higher. We think things are starting to calm down on the wholesale front, and that's what gives us confidence that we should be able to pull off our guidance. - Unknown Executive

Contradiction Point 4

GRE and Diversegy Performance

It involves the performance and progress of GRE (Genie's Retail Energy) and Diversegy, which are key business segments. Inconsistencies in the reported performance could impact investor expectations and strategic planning.

(No question to simplify) - Operator

20251103-2025 Q3: GRE achieved the high end of its adjusted EBITDA guidance. GRE performed well throughout the year, with a 17% increase in net new meters and a 120% increase in gross profit for GREW. - Michael Stein(CEO)

(No specific question was posed) - Operator

2024Q4: GREW achieved $5.3 million in gross profit, up 146% year-over-year and 117% sequentially, as net new meters grew by 24% year-over-year and 3% sequentially. - Michael Stein(CEO)