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Electromagnetic Geoservices ASA (EMGS), with a current market capitalization of $25.26 million, reported its financial results for the second quarter of 2025, showcasing a total revenue of $9.6 million. Despite the revenue increase, the company’s stock price decreased by 1.5% following the announcement, closing at $1.97, closer to its 52-week low of $1.6. According to InvestingPro analysis, EMGS is currently trading below its Fair Value, suggesting potential upside opportunity for investors.
Key Takeaways
- EMGS reported Q2 revenue of $9.6 million, driven largely by operations in India.
- Operational costs decreased by $500,000 from the previous quarter.
- The company’s stock price fell by 1.5% post-earnings announcement.
- Free cash position decreased significantly by $2.5 million.
Company Performance
EMGS showed a strong operational performance in Q2 2025, with total revenue reaching $9.6 million. The majority of this revenue was generated from a significant acquisition survey in India, contributing $9.4 million. The company maintains a healthy gross profit margin of 60.13% and an impressive return on assets of 25.18%. Despite this, the company’s stock experienced a decline, reflecting investor concerns over cash flow and vessel utilization. InvestingPro data reveals two key challenges: a high Price/Book ratio of 6.3x and short-term liquidity concerns with a current ratio of 0.71.
Financial Highlights
- Revenue: $9.6 million for Q2 2025.
- EBITDA: $2.8 million.
- Adjusted EBITDA: $2.1 million.
- Operational Cost Base: $7.5 million, down from $8 million in the previous quarter.
- Free Cash Position: Decreased by $2.5 million to $3.5 million.
Outlook & Guidance
EMGS plans to complete its MultiClient campaign within the third quarter. The company has extended its convertible bond loan to November 2030 and has the option to issue up to $13.5 million in additional bonds. These measures are part of EMGS’s strategy to support exploration and development in emerging markets, particularly in India.
Executive Commentary
Bjorn Petter, EMGS Executive, expressed gratitude for the partnership with Cairn Oil and Gas, highlighting the strategic importance of their collaboration. Sam Algar, Cairn’s Chief Exploration Officer, emphasized the value of the acquired data in supporting future exploration and development.
Risks and Challenges
- Decreased free cash position could impact future operations.
- Low vessel utilization at 44% may affect revenue generation.
- Limited revenue from late sales suggests potential market challenges.
EMGS remains focused on strategic partnerships and operational efficiency as it navigates the challenges of the current market environment. Trading at an attractive P/E ratio of 3.48x and showing strong profitability metrics, the company presents an interesting investment case. For comprehensive analysis and detailed valuation metrics, access the full EMGS research report on InvestingPro, part of their coverage of 1,400+ stocks with deep-dive analysis and actionable insights.
Full transcript - Electromagnetic Geoservices ASA (EMGS) Q2 2025:
Bjorn Petter, Presenter/Executive, EMGS: Welcome to the presentation of EMG S’ second quarter twenty twenty five results. As usual, I’m here with our CFO, Anders Amstad, and together we will present these results. Please take note of our disclaimer. During the second quarter, the Atlantic Guardian completed the second of the two proprietary contracts in the Krishna Godavari Basin offshore East Coast of India. After the completion, the vessel started the transit towards Norway for a multi client campaign, where the vessel is currently acquiring data on the first of these multi client surveys.
We would also like to inform that the previously announced CMD transaction has not been completed, and EMGIS continues to work towards closing this transaction. Further information will be provided if and when it happens. The financials for the quarter came in as follows. Our revenue came in at 9,600,000.0, our EBITDA was 2,800,000.0, and the adjusted EBITDA came in at $2,100,000. The company’s convertible bond loan in the amount of USD $19,500,000 with a maturity of May 2025 was extended until November 2030, An option to issue up to 13,500,000 in additional bonds through one or more TAP issues was included in the amended terms.
Moving on to our operations and markets section. It is not often that we are allowed to talk about our proprietary projects, but Cairn Oil and Gas, which is part of the Pedanta Group, has allowed us to share some information about their use of EM. Within the second quarter, we completed a large three d EM survey for them in the deep waters of the Krishna Godavari Basin, more specifically, in the KGDWHP twenty seventeen slash one block. This was after completing a similar survey for another customer in the same basin. The cairn block spans about 4,500 square kilometers in water depths ranging from 500 meters to 2,500 meters.
We used a DeepRule source system, and the acquired EM data has been merged with the reprocessed three d seismic data, and they are in the process of high grading their prospectivity and aim to progress to drilling. The chief exploration officer at Cairn Oil and Gas, Mr. Sam Algar, is commenting that the acquired data will support their definition of locations for exploration, appraisal, and subsequent development. And their CFO, mister Hitesh Vaid, is further commenting that through their partnership with EMGS, they will fast track development of the deepwater block in line with their vision to contribute 50% of India’s oil and gas production. We are very grateful for the opportunity to work closely with Cairn and for their willingness to talk about their partnership with EMGIS in public.
The KN project is a good example of how EMGIS is working with most customers, but it’s not often that they’re willing to be as open as KN has been. We would also like to say a few words about our ongoing projects on the Norwegian continental shelf. The MultiClient campaign consists of three survey areas: two in the North Sea and one in the southern part of the Norwegian Sea. The first project is the equivalent of a converted contract, meaning that the survey has been designed together with and specifically for a license group. It is acquired as a MultiClient survey, but it is at contract rates.
The two other surveys are traditional MultiClient surveys in mostly open acreage, where we target a wider customer base. Both surveys are fully pre funded and we see good potential for future late sales. The business drivers for the two MultiClient service are the 2025 APA licensing round, with expected awards in January 2026 and as well as future similar APA license rounds. The total secured prefunding for the campaign is approximately $3,500,000 and we expect to complete the campaign well within the third quarter. All surveys are in shallow water, so we are using our Shelf Express source.
With that, I will pass it on to Anuj to go through our numbers in more detail.
Anders Amstad, CFO, EMGS: Thank you, Mehrbetter. The total revenue for the second quarter was $9,600,000. The graph on the upper right, which is the quarterly revenue development. From this graph, you can see that the revenue has been relatively consistent over the last three quarters. Of the $9,600,000 in revenue in the second quarter, dollars 9,400,000.0 was from acquisition survey in India, while $200,000 is related to late sales.
We had one vessel on charter in the second quarter. During the quarter, the Atlantic Guardian completed the second of two Indian proprietary survey acquisitions and started transit back to Norway. The vessel utilization in the quarter was 44%. We recorded an EBITDA of $2,800,000 in the second quarter. EBITDA excludes the capitalized multiclient expenses as well as the vessel and office lease expenses.
If we add these expenses to the EBITDA, we get an adjusted EBITDA. The quarterly development of the adjusted EBITDA is shown on the graph at the bottom right of the slide. The adjusted EBITDA in the second quarter was $2,100,000. The next slide details the movement in the operational cost base. In the graph to the left, you can see the quarterly development and the components of EMGS’ operational cost base.
The components are charter hire, fuel and crew expenses, employee expenses, and other operational expenses. In addition, the capitalized multi client expenses and vessel and office lease expenses are added to the cost base. The operational cost base for the second quarter was $7,500,000 compared to an operational cost base of $8,000,000 in the previous quarter. Charterhire fuel and crew expenses were 800,000 lower in the second quarter as compared to the first quarter. However, in the first quarter, 1,500,000.0 related to transit cost to India, which was capitalized in the fourth quarter, was expensed.
Other operational expenses increased by $500,000 The increase is mostly related to costs associated with the operations in India as well as the Centimeters Day transaction. The next slide details the movement of free cash in the second quarter. Free cash decreased in the second quarter by $2,500,000 This is illustrated in the graph to the left. The light blue bar to the left shows a free cash position at the end of the first quarter of $6,000,000 The components increasing the cash position during the second quarter are shown in dark blue, whilst the components reducing cash position in the colored red. Free cash at the end of the second quarter was $3,500,000 The EBITDA of $2,800,000 increased to cash this quarter.
Vessel and office leases decreased cash by $700,000 The increase in trade receivables from $9,000,000 to $12,200,000 decreased the cash this quarter by $3,200,000 The increase in trade payables from the previous quarter in the amount of $300,000 increased free cash. Changes in other working capital decreased cash by $1,500,000 Interest paid in the second quarter on the convertible bond and other interest expense amounted to $500,000 in the second quarter. Now back to Bjorn Petter.
Bjorn Petter, Presenter/Executive, EMGS: Thank you Anders. That concludes our presentation. And as always, please submit your questions to EMGS@EMGS.com. Thank you.
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