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Introduction & Market Context
Tecogen Inc . (NYSE American:OTC:TGEN) reported a substantial 54.3% year-over-year revenue increase in its Q2 2025 presentation delivered on August 13, 2025. The company is strategically positioning its natural gas cooling technology for the rapidly expanding AI data center market, where cooling demands are intensifying due to higher power densities.
Building on momentum from Q1 2025, when the company reported 17.6% revenue growth, Tecogen’s second quarter results demonstrate accelerating growth as its data center cooling strategy gains traction. The company’s stock has shown strong performance in 2025, trading near $5.78 after rising from lows of $0.65 within the past year.
Quarterly Performance Highlights
Tecogen reported total revenue of $7,294,000 for Q2 2025, a 54.3% increase from $4,728,000 in Q2 2024. Gross profit rose to $2,462,000, up 18.4% from $2,079,000 in the prior year period. The company narrowed its operating loss to $1,412,000, an improvement of $62,000 compared to Q2 2024.
As shown in the following financial results summary:
Despite the revenue growth, Tecogen’s gross margin contracted year-over-year, with gross profit growth (18.4%) lagging significantly behind revenue growth (54.3%). The company attributed this to several factors, including selling a prototype unit at a discount and operational inefficiencies in its service segment.
The adjusted EBITDA reconciliation provides additional context for the company’s performance:
Segment Performance Analysis
Tecogen’s product segment showed exceptional growth, with product revenues increasing by 2,529% year-over-year. This dramatic rise was primarily driven by chiller sales, which reached $2,016,000 for the quarter. Meanwhile, service revenues declined slightly by 4%, and energy production revenue fell by 64%.
The following breakdown illustrates the performance across Tecogen’s business segments:
The company noted that its hybrid chiller margins are expected to improve as production volumes increase. Service margin challenges stemmed from increased costs in New Jersey and Manhattan operations, engine upgrades, overtime labor, and operational inefficiencies, collectively impacting profitability by approximately $650,000.
Strategic Focus on Data Center Cooling
Tecogen’s presentation emphasized its strategic pivot toward data center cooling solutions, highlighting the efficiency advantages of its natural gas cooling technology compared to conventional electrical cooling systems. According to the company, its solution enables data centers to allocate 90MW for IT equipment while requiring only 5MW for cooling, compared to 70MW for IT and 25MW for cooling with traditional electrical systems.
This efficiency comparison is illustrated in the following slide:
The company reported significant market interest in its data center cooling solutions, with multiple Letters of Intent (LOIs) and quotations for large-scale projects. These include evaluations for a 100MW+ data center and quotes for "giga scale" facilities requiring 60-100 chillers.
The market interest pipeline is detailed in this slide:
Product Innovation
A centerpiece of Tecogen’s data center strategy is its new Dual Power Data Center Chiller, which can operate on natural gas, electricity, or both simultaneously. This flexibility provides data centers with enhanced resilience and long-term fuel options while improving power utilization efficiency (PUE).
The company’s dual power technology is explained in the following diagram:
Tecogen highlighted that its technology is patented (US Patent 11,936,327, issued March 2024) and builds on proven systems with over 8 million hours of operational experience. The company emphasized that its solutions can be retrofitted to existing data centers, potentially expanding its addressable market.
Manufacturing Capacity and Growth Plans
To meet anticipated demand, Tecogen outlined plans to expand its manufacturing capacity. Current factory capacity stands at 40-60 chillers per year, with planned expansions to reach 80-100 units annually through contract manufacturing and factory layout changes. The company is exploring further capacity increases to support potential demand of 200+ chillers per year.
Tecogen also mentioned exploring strategic options including licensing and hybrid drives as alternative approaches to scaling production. The company’s recent capital raise has strengthened its balance sheet, providing resources to fund these expansion initiatives.
Financial Position and Outlook
Following a recent capital raise, Tecogen reported a cash position of $18.6 million, a significant increase from the $3 million reported at the end of Q1 2025. The company’s current backlog stands at $4.7 million, not including potential data center projects under LOI. Additionally, Tecogen expects $2.5-3.5 million in cannabis projects to close in Q3/Q4 2025.
The company indicated it may repay its outstanding note early to achieve a debt-free balance sheet. Tecogen’s near-term milestones include converting LOIs to purchase orders, launching marketing initiatives with partner Vertiv in Q3/Q4, and securing larger unit orders to eliminate supply chain and capacity bottlenecks.
In summary, Tecogen’s Q2 2025 results show accelerating revenue growth driven by its strategic pivot to data center cooling solutions. While the company continues to operate at a loss, its strengthened balance sheet and growing pipeline of potential data center projects position it to capitalize on increasing cooling demands in AI infrastructure. However, margin pressure and operational inefficiencies remain challenges that management will need to address as the company scales its manufacturing capacity.
Full presentation:
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