Tantalus Systems (TSE:GRID) reported nearly flat adjusted revenue for the third quarter of 2026 as meter supply constraints and a customer’s decision to delay shipments offset growth in software and services.
Adjusted revenue rose to $14.3 million from $14.2 million a year earlier, the company’s highest total for a third quarter. Adjusted EBITDA was $1.2 million, consistent with the prior-year period. The adjusted figures exclude the effects of one-time tariff refunds and related customer credits. All figures are in U.S. dollars unless otherwise noted.
President and CEO Peter Londa said the slower growth reflected shipment timing rather than lost business. One meter partner was unable to deliver meters during September because of component shortages, while another reduced factory capacity allocations in the second half of the quarter. Tantalus also faced longer lead times for memory and other components used by its contract manufacturer.
Customer Delays and Supply Constraints
Londa said a large utility customer asked to move slightly more than $1 million in shipments from the second half of 2026 into 2027. The timing of those shipments next year remains uncertain and will depend partly on the utility’s budget, he said. The customer is continuing its deployment and contributing revenue in the fourth quarter and the first half of 2027, but at a slower pace.
One meter partner has returned to full capacity after a roughly six-week disruption that began in early September, Londa told analysts. He said Tantalus expects to recover a good portion of the affected revenue in the fourth quarter, although the manufacturer is also accommodating other partners. Capacity allocations remain constrained at another supplier.
To address component availability and inflation, Tantalus has been purchasing key components in advance and building inventory. CFO Azim Lalani said the company also raised prices on connected devices effective Oct. 1, its first such increase in three years.
Utilities continue to invest in their distribution grids, but inflation, fuel costs and interest-rate uncertainty are prompting closer scrutiny of capital spending, Londa said. He added that the company was seeing deployment extensions rather than cancellations.
Tariff Refunds Complicate Quarterly Comparison
Lalani said Tantalus received approximately $2.6 million in refunds during the quarter related to tariffs imposed under the International Emergency Economic Powers Act. That included about $2.5 million in tariffs previously paid and $100,000 in interest income.
The company decided to provide approximately $1.4 million in credits toward future purchases to eligible customers for tariff charges they had previously paid. Under the accounting treatment described by Lalani, the credits reduced connected devices revenue, while the tariff refunds reduced cost of sales. Together, those items increased gross profit by $1.1 million and lifted the reported gross profit margin to 70%.
Excluding the refund and credit effects, adjusted gross profit margin was 56%, up approximately 110 basis points from a year earlier. Management said the adjusted measures provide a more useful comparison with prior periods, although they are non-IFRS measures and may not be comparable with similarly named measures used by other companies.
Recurring Revenue and Gateway Adoption Grow
Connected devices adjusted revenue edged down to $9.2 million from $9.3 million a year earlier, while software and services revenue rose 4% to $5.1 million. Quarterly recurring revenue increased 14% to $3.9 million, or 27% of adjusted revenue.
Annual recurring revenue reached a record $15.4 million at Sept. 30. Lalani described that figure as a forward-looking estimate and said the company’s retention rate over the past five years was approximately 99%.
As of the Nov. 12 earnings call, 92 utilities representing approximately 2.7 million deployed meters had ordered the TRUSense Gateway, up from 77 utilities reported during the second quarter. Of those, 53 had moved from pilots into scaling deployments, compared with 37 in the prior quarter. Tantalus had shipped roughly 10,800 gateways as of the call.
Londa said the gateway’s use as a collector within a smart metering system has been validated, while applications involving power-quality analysis and behind-the-meter load control remain at earlier stages. Recurring revenue for each connected device begins in the 13th month of deployment, he said.
The company has also sold additional analytics to approximately 20 utilities, five of which opted for its TRUGrid Advantage managed service. Tantalus expects to open its first U.S. service center in the Southeast in the second quarter of 2027 to support managed services, network operations, repairs and device refurbishment.
Liquidity and Longer-Term Results
Tantalus added 11 utilities to its user community during the third quarter and 19 in the first nine months of 2026. Its book-to-bill ratio for the nine-month period was 0.9 times. Existing customers accounted for approximately 85% of revenue over the trailing 12 months, with no single customer contributing more than 8%, Londa said.
For the trailing 12 months, adjusted revenue rose approximately 15% to $59.7 million, while adjusted EBITDA increased 15% to about $4 million. The company reported income of $189,000 over that period, compared with a loss of $881,000 in the preceding 12 months.
At Sept. 30, liquidity was approximately $33 million, including $21.3 million in cash and about $12 million available under a line of credit. Tantalus repaid a $6 million term loan in July using cash and a new $3.5 million loan, reducing the interest rate on its term debt from 11.75% to approximately 6%.
About Tantalus Systems (TSE:GRID)
Tantalus is a technology company dedicated to helping utilities modernize their distribution grids by harnessing the power of data across all their devices and systems deployed throughout the entire distribution grid. The Company offers a grid modernization platform across multiple levels: intelligent connected devices, communications networks, data management, enterprise applications and analytics. Our solutions provide utilities with the flexibility they need to get the most value from existing infrastructure investments while leveraging advanced capabilities to plan for future requirements.
