February 11, 2025
Orion’s Revenue Drops, Full-Year Outlook Cut
LED lighting revenue declined 29% year over year in the latest quarter
Orion Energy Systems, Inc. (NASDAQ: OESX), a provider of LED lighting, EV charging solutions, and maintenance services, reported a gross margin increase and a reduced net loss for the third quarter of fiscal year 2025 (Q3’25) despite a year-over-year decline in revenue.
With the company's fiscal fourth quarter already underway, Orion also revised its full-year FY’25 revenue outlook downward to a range of $77 million to $83 million, reflecting continued project delays and market softness. This revised range represents about a $20 million downgrade from Orion’s initial revenue expectations for the year which was approximately $99.7 million to $104.2 million, based on a targeted growth rate of 10-15% from its $90.6 million revenue in 2024.
Revenue Drops, but Profitability Improves
Orion’s total revenue for Q3’25 was $19.6 million, a 24.6% decline from $26.0 million in Q3’24. The revenue shortfall was primarily driven by delays in launching new LED lighting projects and general market softness, particularly in the electrical contractor distribution channel.
- Segment-wise, LED lighting revenue fell 29% year over year to $13.2 million, compared to $18.5 million in Q3’24.
- EV charging revenue also declined 13% to $2.4 million from $2.8 million in the prior-year quarter.
- Maintenance services revenue decreased 15% to $3.9 million from $4.6 million in Q3’24.
- Orion’s total revenue for the first nine months of FY’25 stood at $58.9 million, slightly down from $64.2 million in the same period last year.
However, the company posted a significant improvement in gross profit margins. Gross margin reached 29.4% in Q3’25, up 490 basis points from 24.5% in Q3’24. The increase was attributed to pricing strategies, cost reductions, and product sourcing improvements, particularly in LED lighting and maintenance services.
Orion reduced its net loss to $1.5 million, or $0.05 per share, in Q3’25, compared to a loss of $2.3 million, or $0.07 per share, in Q3’24.
Strategic Reorganization and Future Business Pipeline
Orion announced a strategic restructuring, consolidating its business into two commercial business units (CBUs):
- Solutions CBU will focus on full-service offerings across LED lighting, EV charging, and maintenance services for corporate, government, and private sector clients.
- Partner CBU will prioritize LED lighting and EV charging product sales through energy service companies (ESCOs) and distribution partners.
The restructuring is set to be fully in effect by April 1, 2025, the start of its 2026 fiscal year.
Previously, Orion operated its business with a segmented approach, primarily focusing on three key product and service revenue streams: LED lighting, EV charging, and maintenance services. This new structure shifts the focus toward a channel-based approach, blurring the lines on how LED lighting revenue and other product/service segments are specifically reported.
New Contracts
Additionally, Orion has secured new contracts with an estimated revenue potential of $100 million to $200 million over the next five years. Key contracts include:
- A three-year LED lighting and energy efficiency contract for a major U.S. university, valued at over $13 million.
- A five-year extension with a major retailer for interior and exterior LED lighting, with an expected total value of $23 million to $30 million.
- A nationwide ESCO contract expected to generate $5 million to $10 million annually starting in Q1’26.
- EV charging projects under Eversource Energy’s “EV Make Ready” program, which were delayed in Q3’25 but are anticipated to drive revenue in Q4’25 and beyond.
Orion demonstrated some resilience in Q3’25 by improving profitability metrics and cutting costs despite revenue headwinds. While the company’s financial position has strengthened, continued project delays and market uncertainty have led to a downward revision of full-year revenue expectations. Management restated their focus on increasing efficiency and leveraging new contract wins to drive future growth.
