ClearSign's Q3 2025: Contradictions Emerge in Eye Sensor Commercialization, Sales Growth, Regulatory Strategy, Zeeco Partnership, and Product Diversification

Date of Call: November 19, 2025

Financials Results

• Revenue: $1.0M in Q3 2025, down from ~$1.9M in Q3 2024 (YOY decrease driven by a large multi-burner shipment in prior-year Q3)
• Gross Margin: Q3 2025 gross margin increased ~6.1 percentage points vs Q3 2024 (YTD Q3 gross profit margin up ~5.3 ppts); targeting long-term gross margins of 40%–45%

Guidance:

• Ship 26 burners at Zeeco by year-end; shipment expected to recognize well north of $2M in revenue when shipped
• California flare project starting up before year-end
• Expect continued quote flow and potential conversions for M Series, flares and process burners into 2026; increased promotion of DOE/SBIR hydrogen-capable burner
• Shorter-cycle products (M Series, sensors, spare parts) expected to provide quicker, higher-margin revenue to smooth lumpy process-burner cadence

Business Commentary:

* Revenue Decline Amidst Increased Order Volume: - ClearSign Technologies reported revenues of $1 million for Q3 2025, a decrease from $1.9 million in the same period in 2024. - Despite the decline, the order volume increased, shifting from a single large order in 2024 to multiple orders, highlighting a diversification strategy.

• Improved Gross Margin and Financial Strategy:
• The company's gross margin increased by 6.1 percentage points for Q3 2025 compared to the same period in 2024.
• This increase was attributed to ClearSign's long-term strategy to target gross margins between 40% and 45%, indicating a successful operational improvement.

• Increased Cash Usage and Financial Position:
• Net cash used in operations for Q3 2025 was $1.8 million, a $400,000 unfavorable change from the previous year.

• This was primarily driven by the increase in net loss, though ClearSign maintained a strong cash position with approximately $10.5 million in cash and cash equivalents.

• Regional Shift and Order Demand:

• ClearSign observed increased order flow from the U.S. Gulf Coast region, with significant orders in Texas and California.
• This trend was driven by ongoing regulatory pressure, new regulations, and a heightened interest in ClearSign's products due to industry experience and acceptance.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • Management highlighted multiple new orders across burners, flares and M Series, Q3 gross margin improvement of ~6.1 ppts YOY, $10.5M cash on hand and a 26-burner shipment on track to generate >$2M revenue by year-end; CEO described SBIR hydrogen burner tests as successful and nearly complete.

Q&A:

• Question from Matthew Selinger (FirmIR): What's fueling the uptick in order flow across product lines?
  Response: Field deployments and customer trust, regional regulatory pressure (Texas, California) and product maturation are driving cross‑product order growth.

• Question from Matthew Selinger (FirmIR): What is specifically driving process burner demand?
  Response: Process burner demand is driven by large orders, regulatory NOx requirements and a strong cost advantage versus SCR installations.

• Question from Matthew Selinger (FirmIR): What's driving the flare orders?
  Response: Repeat customer experience plus California NOx rules and the need for production-enabling flaring capacity are driving flare demand.

• Question from Matthew Selinger (FirmIR): What are the drivers for the M Series product line?
  Response: M Series targets midstream gas retrofits (M25) with a standardized form factor enabling quicker sales cycles and faster delivery timelines (10–12 weeks).

• Question from Matthew Selinger (FirmIR): Explain the 100% hydrogen-capable burner testing order announced for a petrochemical client.
  Response: A repeat petrochemical client funded extensive Zeeco testing (including up to 100% hydrogen); demonstration is virtually complete and DOE/SBIR-derived burner performed well.

• Question from Matthew Selinger (FirmIR): Details on the engineering order from a new super major (32 Core burners retrofit)?
  Response: The PO is an initial engineering phase of a full-scope retrofit proposal; ClearSign bid the full project and this is the first PO from that super major.

• Question from Matthew Selinger (FirmIR): Details on the 36-burner order from an integrated petroleum producer for the U.S. Gulf Coast?
  Response: Client issued an initial engineering PO for a nonstandard heater; ClearSign's CFD and bespoke engineering capabilities were key selection factors.

• Question from Matthew Selinger (FirmIR): Why doesn't ClearSign name customers in releases?
  Response: Customer PO contracts include strict nondisclosure requirements; releases use descriptive labels (e.g., global super major) to convey customer stature.

• Question from Matthew Selinger (FirmIR): Update on the ClearSign Eye sensor product and pilots?
  Response: Sensors shipped and are operating at a super major pilot site with positive feedback and follow‑on quoting for a sister refinery; additional site installs planned.

• Question from Matthew Selinger (FirmIR): Update on the Zeeco partnership?
  Response: Zeeco provided extensive test-facility support and is fabricating burners; relationship also generating RFPs from Zeeco's sales team.

• Question from Matthew Selinger (FirmIR): What is the near-term outlook into year-end and 2026?
  Response: Near-term focus is shipping 26 burners by year-end (> $2M revenue recognition on shipment); pipeline includes many M Series, flare and process quotes expected to convert in 2026.

• Question from Sameer Joshi (H.C. Wainwright): Do shorter-cycle products help you predict 2026 revenue cadence versus lumpy process-burner projects?
  Response: Yes; M Series, flares, sensors and spare parts provide quicker, more predictable revenue to supplement larger, lumpier process-burner projects.

• Question from Sameer Joshi (H.C. Wainwright): Are there other product opportunities under development?
  Response: Yes; the SBIR-derived burner platform is versatile and management expects to develop additional products and applications from it.

• Question from Sameer Joshi (H.C. Wainwright): Any EPA/federal regulatory headwinds risking NOx-driven demand?
  Response: Management does not expect NOx regulation rollbacks to create headwinds; Texas proposals are EPA-driven and NOx remains a regulatory focus.

• Question from Matthew Selinger (FirmIR): What role do spare parts play in revenue?
  Response: Spare parts are a steady, high‑margin revenue stream tied to installed base; Q3 included ~$300k of spare parts within $1.0M total revenue.

• Question from Matthew Selinger (FirmIR): Why increased activity in the Gulf Coast?
  Response: Uptick reflects industry acceptance, large market concentration in Gulf Coast, and regulatory momentum in Texas—California demand remains strong as well.

Contradiction Point 1

ClearSign Eye Sensor Commercialization Timeline

It involves differing timelines for the commercialization of the ClearSign Eye Sensor, which could impact investor expectations and revenue forecasts.

What are your expectations for the remainder of the year and into 2026? - Matthew Selinger(Firm IR Group)

2025Q3: The first large-scale deployment for demonstration purposes is at a refinery of a major super major customer. - Colin James Deller(CEO)

What is the commercialization timeline for the ClearSign Eye Sensor? - Matthew Selinger(Firm IR Group)

2025Q1: We now expect to be shipping the first ClearSign Eye sensors in the next couple months, with increased production as installations ramp up over the next 3 to 6 months. - Jim Deller(CEO)

Contradiction Point 2

Order and Sales Growth Trends

It highlights a discrepancy in the company's projection of order and sales growth trends, which could impact investor expectations and strategic planning.

What factors are driving the increase in order flow in Q4? - Matthew Selinger(Unidentified Company)

2025Q3: The increase in orders is coming across multiple product lines, driven by several factors. Key factors include equipment installation, customer trust, regulatory pressure, new regulations both in California and Texas, and the maturing of ClearSign's products. The involvement of major customers in projects is also influential. - Colin James Deller(CEO, Corporate Secretary & Director)

How has the pipeline evolved since the last call? - Matthew Selinger(Unidentified Company)

2025Q2: The level of proposals has held, with consistently received quotes and proposals at a rate 2x the previous year and 5x the project value. Some of these proposals involve requested technology evaluations for super major refineries. - Colin James Deller(CEO, Corporate Secretary & Director)

Contradiction Point 3

Regulatory Pressure and Market Opportunities

It highlights differing perspectives on the impact and opportunity presented by regulatory pressures and market conditions, which can affect strategic planning and investor expectations.

What is driving the increase in order flow in the last quarter? - Matthew Selinger

2025Q3: The increase in orders is coming across multiple product lines, driven by several factors. Key factors include equipment installation, customer trust, regulatory pressure, new regulations both in California and Texas, and the maturing of ClearSign's products. - Colin James Deller(CEO, Corporate Secretary & Director)

Could you break down the components and factors behind the record revenue year? - Matthew Selinger (Firm IR Group)

2024Q4: The large refinery burner process order was driven by regulatory requirements, and after years of evaluation, our customer's engineering team is satisfied that our technology meets their needs. - Jim Deller(CEO)

Contradiction Point 4

Zeeco Partnership and Sales Strategy

It highlights differences in the perceived value and impact of the partnership with Zeeco, which could influence strategic decision-making and investor expectations.

How is the relationship with Zeeco progressing? - Matthew Selinger

2025Q3: The relationship is strong, with Zeeco providing significant support in testing and fabrication. They are supportive as ClearSign's partner and are now even sending proposals independently. - Colin James Deller(CEO, Corporate Secretary & Director)

Can you discuss the recent Zeeco announcement and its implications for the company? - Matthew Selinger (Firm IR Group)

2024Q4: The co-branded Zeeco, ClearSign burner line allows our technology to be offered globally through Zeeco's sales team. This means the large Zeeco sales team can discuss and present ClearSign's technology to their customers. We have developed joint marketing materials and conducted teach-ins for Zeeco's sales team. - Jim Deller(CEO)

Contradiction Point 5

Product Development and Diversification Strategy

It indicates differing views on the company's product development and diversification strategy, which could impact its long-term growth and market positioning.

Are there new product opportunities for ClearSign? - Sameer Joshi(Unidentified Company)

2025Q3: There is potential for new product development, especially in process applications. The SBIR project's burner structure is versatile, and ClearSign is focused on understanding customer needs to develop new products. - Colin James Deller(CEO, Corporate Secretary & Director)

Can you share any recent developments not publicly disclosed? - Matthew Selinger(Unidentified Company)

2025Q2: We've also spent time developing new products for our diversification initiative. - Colin James Deller(CEO, Corporate Secretary & Director)