Innovative Solutions and Support, Inc.: Key Contradictions in Q3 2025 Earnings Call on F-16 Revenue, Acquisitions, and Margin Profiles

F-16 revenue and backlog, acquisition strategy and pipeline, foreign military sales and margin profiles, backlog conversion timeline are the key contradictions discussed in Innovative Solutions and Support, Inc.'s latest 2025Q3 earnings call.



Revenue and EBITDA Growth:
- Innovative Solutions and Support, Inc. reported revenue growth of 105% for Q3 2025 compared to Q3 2024, with adjusted EBITDA increasing by 43%.
- This growth was driven by new military programs, particularly the F-16 program, although lower-than-anticipated gross margins from Honeywell impacted EBITDA growth.

Backlog and Strategic Investments:
- IS&S maintained a strong backlog of approximately $72 million as of June 30, 2025.
- The growth of the backlog and strategic investments, such as the expansion of the Exton facility and acquisition integration, are part of the company's long-term growth strategy to exceed $250 million in revenues.

Gross Margin and Profitability:
- IS&S' third-quarter gross margin was 35.6%, down from 53.4% in the same period last year.
- The lower gross margins were attributed to the F-16 program and investments in growth initiatives, with expectations for improved margins once transitions are completed.

New Credit Facility for Growth:
- IS&S secured a new 5-year $100 million committed credit agreement with JPMorgan Chase, providing expanded liquidity for long-term growth.
- The credit facility supports strategic acquisitions and capital allocation, enabling IS&S to execute its growth strategy more effectively.