Innovative Solutions and Support 2025 Q3 Earnings Strong Performance as Net Income Surges 57.4%

Innovative Solutions and Support (ISSC) reported robust results for fiscal 2025 Q3, with both revenue and earnings growing significantly year-over-year. The performance exceeded expectations, and the company maintained its guidance for continued growth in the coming fiscal periods.

The total revenue of Innovative Solutions and Support increased by 105.2% to $24.14 million in 2025 Q3, up from $11.77 million in 2024 Q3. This substantial growth reflects strong demand for the company’s products and services, particularly in the defense sector.

Innovative Solutions and Support's EPS rose 55.6% to $0.14 in 2025 Q3 from $0.09 in 2024 Q3, marking continued earnings growth. Meanwhile, the company's profitability strengthened with net income of $2.44 million in 2025 Q3, marking 57.4% growth from $1.55 million in 2024 Q3. The impressive net income increase underscores the company's operational efficiency and its ability to convert higher revenue into stronger profits.

The stock price of Innovative Solutions and Support has tumbled 10.41% during the latest trading day, has plummeted 18.42% during the most recent full trading week, and has tumbled 10.77% month-to-date.

The strategy of buying Innovative Solutions and Support (ISSC) shares after its revenue raise quarter-over-quarter on the financial report released date and holding for 30 days delivered impressive returns over the past three years. The strategy achieved a total return of 130.94%, surpassing the benchmark return of 46.48% by a significant margin of 84.46%. With a CAGR of 33.45% and a maximum drawdown of 0.00%, the strategy demonstrated robust performance in terms of both returns and risk management.

Shahram Askarpour, CEO, highlighted that Q3 revenue grew 105% year-over-year driven by new military programs, particularly the F-16 product line. He noted that adjusted EBITDA rose 43%, though lower-than-expected gross margins from Honeywell on the F-16 program impacted growth. The CEO emphasized strategic investments in the Exton facility expansion, which will triple manufacturing capacity, and the integration of acquired product lines, which are expected to boost margins in fiscal 2026. He expressed optimism about the long-term growth outlook, citing the company’s vertically integrated U.S. manufacturing as a competitive advantage in the reshoring environment and the recent $100 million credit facility as enabler for strategic acquisitions and organic growth.

Shahram and CFO Jeff DiGiovanni guided to continued revenue and EBITDA growth of over 30% compared to fiscal 2024, with normalized gross margins expected in the mid-40s. They anticipate a temporary dip in F-16 revenue during Q4 and Q1 2026 due to transition challenges, with a rebound forecasted thereafter. The CEO also mentioned targeting a net leverage ratio of around 3x, and Jeff reiterated disciplined financial management and operating leverage as the business scales, with capital expenditures primarily focused on the Exton expansion.

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