Atomos Faces Margin Pressure from US Tariffs and Inventory Write-Downs
Atomos Ltd reported a 9% revenue decline to $32.7 million for FY25 but improved its loss after tax by 35%, driven by cost restructuring and tighter expense control amid challenging market conditions.
- Revenue declined 9% to $32.7 million, impacted by US tariffs and soft demand
- Loss after tax improved 35% to $14.5 million
- EBITDA loss narrowed 32% to $11.8 million with underlying EBITDA loss of $7.4 million
- Inventory obsolescence and US tariffs reduced gross profit margin to 26%
- Completed cost restructure reduced headcount from 90 to under 55
Revenue and Market Challenges
Atomos Ltd, a player in the consumer electronics sector, released its preliminary unaudited results for the fiscal year ended 30 June 2025, revealing a 9% decline in revenue to $32.7 million. The drop was largely attributed to ongoing global economic headwinds, increased tariffs in the United States introduced in February 2025, and intensifying competition from lower-cost rivals. Notably, the company paused sales into the US market during April and May amid tariff uncertainties, which contributed to a 24% revenue drop in the second half of FY25 compared to the first half.
Profitability and Cost Management
Despite the revenue setback, Atomos demonstrated significant progress in tightening its financial performance. The loss after tax narrowed by 35% to $14.5 million, while the EBITDA loss improved by 32% to $11.8 million. When excluding non-recurring items such as a $3.2 million inventory obsolescence provision and $2.7 million in employee restructure costs, the underlying EBITDA loss was $7.4 million, a 37% improvement over the prior year. This turnaround was supported by a comprehensive cost restructure that reduced headcount from approximately 90 employees in December 2024 to under 55 by year-end, with full benefits expected to materialize in the first half of FY26.
Margins and Inventory Challenges
Gross profit fell by $2.7 million to $8.5 million, with the gross margin contracting to 26% from 31% in the previous year. This decline was significantly influenced by the $3.2 million inventory obsolescence charge and rising US tariffs. However, on an underlying basis excluding these non-recurring costs, the gross margin held steady at 34%, consistent with FY24 levels. The company anticipates margin improvements in FY26 following repricing efforts in the US market. Additionally, new product launches such as the Ninja Phone and Sun Dragon failed to gain traction, resulting in further inventory write-downs.
Balance Sheet and Cash Flow Highlights
Atomos ended FY25 with net tangible assets per share at a negative 0.9 cents, down from a positive 0.3 cents the previous year. The company’s total debt increased to $14.4 million, reflecting drawdowns on new debt facilities to support operations. Cash flow from operating activities was negative $13.3 million, impacted by lower sales and working capital movements. The company also completed the closure of several offices, including locations in Melbourne, Germany, the US, and the UK, contributing to a reduction in right-of-use assets and associated lease liabilities.
Outlook and Governance
Atomos has not declared any dividends and does not currently have a dividend reinvestment plan. The company’s Annual General Meeting is scheduled for 14 November 2025, where shareholders will receive further updates. While the final audit report is pending, an unmodified opinion is expected, albeit with a material uncertainty related to the company’s going concern status. Looking ahead, Atomos is focused on stabilizing margins through US market repricing and realizing the full benefits of its cost restructuring in FY26.
Bottom Line?
Atomos’s FY25 results reflect a company navigating tariff pressures and product challenges, with cost discipline offering a pathway to improved profitability in FY26.
Questions in the middle?
- Will Atomos’s new product pipeline gain traction to drive future revenue growth?
- How will the company manage ongoing US tariff impacts and competitive pressures?
- What is the outlook on Atomos’s going concern status following the final audit?
