Finance News

Kraken Robotics Reports Record 2023 Financial Results with Strong Momentum Continuing

“2023 was a very strong year for Kraken, with 70% growth in revenue and 166% growth in Adjusted EBITDA. We expect our strong growth trajectory to continue in 2024. To use a baseball analogy, we are in the second inning of a nine-inning ball game,” said Kraken President and CEO Greg Reid. “We have a strong pipeline of opportunities and a unique competitive position. In 2023, we made significant improvements in our business, including strengthening our technical and commercial depth, adding specific skillsets to our board of directors, and making significant investments in headcount and infrastructure. While not always apparent to external parties, these changes are positioning us to capture significant new business and improve our execution in the future. Below, I highlight several points that give us confidence that our future looks bright as the Kraken team brings our world class solutions to existing and new customers across the defense and commercial markets.”

  • There is a notable acceleration in demand for dual use defense and commercial technologies for subsea security, surveillance, and infrastructure inspection. Kraken provides advanced technology solutions to these markets.
  • In the mine countermeasures (MCM) market, Kraken is one of a small number of companies with proven operational solutions, solid reference customers, and has the best price/performance offering. This is against a backdrop where existing Navy equipment is often dated, and a natural industry upgrade cycle is underway.
  • This MCM renewal cycle is now being accelerated by challenging geopolitical situations across the globe (the Middle East, the Black Sea, the Baltic, China/Taiwan and other Asia-Pacific areas, and the Arctic). Most navies around the world are in various stages of planning and executing these upgrades with multiple significant tenders in the market or coming to market in the next 12-36 months. Kraken has worked hard for the last 10 years throughout the naval defense community, working with end users, OEMs, shipbuilders, and policy makers to help shape the requirements for this upgrade cycle. While we have primed some programs ourselves, we are often involved as a subcontractor as a part of larger consortium bid processes. Often, we are part of multiple consortiums bidding on a program. We believe we are well positioned for success with maritime defense spending programs through the end of this decade.
  • Defense industry spending is growing and the allocation of spending to unmanned maritime platforms is growing. Kraken provides sonar and energy solutions to some of the strongest positioned Uncrewed Underwater Vehicles (UUVs) manufacturers in the world such as HII, Teledyne, and Anduril. These companies are benefiting as demand grows for reasons noted above but also as technical capabilities improve and new classes of subsea vehicles emerge as force multipliers, such as the XLUUV.
  • Commercial market activity is also strong, driven by the development and maintenance of offshore wind and offshore oil and gas infrastructure. In these markets, we offer technology differentiating solutions for seabed and sub-seabed intelligence, that is needed in both the buildout phase as well as operations and maintenance phase of offshore energy. Momentum in this market is visible as numerous suppliers to this market post strong financial results and growth outlooks and M&A activity grows.

Q4 2023 Financial Highlights

  • Consolidated revenue for Q4 2023 was $28.0 million compared to $8.8 million, an increase of 218% over the comparable quarter and marked the Company’s strongest quarter to date for both the product and service businesses. Revenue mix was 70% Product / 30% Service.
  • Product revenue in the quarter was $19.6 million, an increase of 287% over the comparable quarter. The increase was the result of continued delivery of subsea batteries, work with the Canadian Navy on its Remote Minehunting and Disposal Systems program, the production of our KATFISHTM product as well as the sale of Synthetic Aperture Sonar systems.
  • Service revenue in the quarter was $8.4 million, an increase of 124% over the comparable quarter due increased work with Sub-Bottom ImagerTM and Acoustic CorerTM technologies.
  • Gross margin percentage in Q4 2023 was 42% compared to 50% in Q4 2022 with the change related to revenue mix by project in the quarter when compared to the prior year.
  • Adjusted EBITDA for the quarter was $5.7 million compared to an Adjusted EBITDA of $0.9 million in the comparable quarter. Adjusted EBITDA margin in the quarter was 20% compared to 10% in the year ago quarter.
  • Net income in the quarter was $2.6 million, compared to net loss of $1.3 million in Q4 2022.
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