Flux Power's Q3 2025: Unpacking Contradictions on Tariffs, Lithium-Ion Adoption, and Market Dynamics

Impact of tariffs on customer commitment, lithium ion adoption among Tier 1 customers, potential market share shifts, commitment of GSE customers to ESG goals, impact of interest rates on order dynamics, and market interest in lithium-ion adoption are the key contradictions discussed in Flux Power's latest 2025Q3 earnings call.



Revenue Growth and Diversification:
- Flux Power reported a 16% increase in revenue to $16.7 million for the third fiscal quarter of 2025, compared to $14.5 million in the same quarter of the previous year.
- Growth was driven by higher demand in the material handling and ground support equipment markets, with unit growth of 10% and 25%, respectively.

Operational Efficiencies and Cost Management:
- Gross profit for the third fiscal quarter of 2025 increased 32.5% to $5.3 million compared to $4 million in the previous year's quarter.
- Gross margin improved to 32% in the third fiscal quarter of 2025, up from 28% in the same quarter last year.
- The increase in gross profit margin was primarily due to a decrease in warranty-related costs.

SkyBMS and Software Strategy:
- Flux Power is evolving from a battery manufacturer to a technology-driven energy solutions provider, with its SkyBMS intelligent battery platform playing a central role.
- The company aims to have every battery shipped be cloud-connected to support a broader recurring revenue strategy.

Tariff Challenges and Supply Chain Adaptation:
- Flux Power is dealing with tariff pressures on its products containing partial made-in-China content.
- The company is adapting its supply chain by accelerating the evaluation of new suppliers, particularly for battery cells and raw materials, to mitigate these challenges.

Strategic Initiatives and Expansion:
- Flux Power has aligned its operations around five strategic initiatives: profitable growth, operational efficiencies, solution selling, building the right products, and software and recurring revenue.
- These initiatives are aimed at scaling responsibly while expanding its product offerings and customer base.