Recon Technology, Ltd Financial Update: Key Insights for Investors

Recon Technology, Ltd Reports Financial Results for Fiscal Year 2025

Recon Technology, Ltd (NASDAQ: RCON), an independent solutions integrator in the oilfield service sector, has announced its financial results for the fiscal year ending June 30, 2025. In the past year, the company faced challenges amid fluctuations in oil prices.

Financial Year Highlights

The financial year highlighted several critical areas impacting the company's performance:

• Total revenue fell by approximately RMB2.5 million (USD 0.4 million), a decline of 3.7%, resulting in revenue of RMB66.3 million (USD 9.3 million) compared to RMB68.8 million (USD 9.6 million) in 2024.
• Gross profit decreased to RMB15.2 million (USD 2.1 million), down from RMB20.9 million (USD 2.9 million) the previous year.
• Gross margin contracted to 23.0%, down from 30.3% in 2024, indicating tighter profit margins.
• Net loss was reported at RMB44.2 million (USD 6.2 million), an improvement from a loss of RMB51.4 million (USD 7.2 million) last year.

Management Insights

CEO Shenping Yin expressed concern over the performance of primary clients in the domestic oil sector, indicating that many have become cautious about expenditures due to recent oil price instability. However, financial management has yielded positive results with new clients acquired outside the oilfield sector, diversifying the company's portfolio.

Despite these challenges, the company is actively progressing on the construction of its Chemical Circular Factory. With all necessary approvals obtained by local authorities, construction officially commenced on April 28, 2025. This facility is expected to significantly contribute to business operations starting in 2026.

Revenue Breakdown Analysis

For the fiscal year that just ended, total revenues encompassed several distinct categories:

• Revenue from automation products and software increased by RMB7.3 million (USD 1.0 million), a rise of 27.1%, owing largely to enhanced sales efforts.
• Revenue from equipment and accessories saw a reduction of RMB2.0 million (USD 0.3 million) or 10.0%, attributed to stringent budget controls exercised by oilfield customers.
• Revenue from environmental protection services decreased sharply by RMB7.3 million (USD 1.0 million) or 41.4%, primarily due to a permit expiration impacting operations.
• Revenue from platform outsourcing services dwindled by RMB0.5 million (USD 0.1 million) due to reduced demand.

Cost Management Strategies

Cost management strategies yielded a decrease in cost of revenues from RMB48.0 million in 2024 to RMB51.0 million (USD 7.1 million) recently. Efforts to mitigate the rise in costs of automation product revenues resulted in an increase of 20.0%. Developing the existing infrastructure for cost-effectiveness profiles remains crucial.

Projected Future Developments

The company anticipates a revitalization of business performance with the expanded client base and the forthcoming launch of the Chemical Circular Factory. Enhancing capabilities in plastic recycling will facilitate new profit streams. Management remains optimistic about positioning Recon for robust growth in 2026 and beyond.

Frequently Asked Questions

1. What were the total revenues for Recon Technology in FY 2025?

The total revenues for FY 2025 were approximately RMB66.3 million (USD 9.3 million).

2. How did the net loss for FY 2025 compare to FY 2024?

The net loss in FY 2025 was RMB44.2 million (USD 6.2 million), which is an improvement from the RMB51.4 million (USD 7.2 million) loss in FY 2024.

3. What contributed to the revenue decline in FY 2025?

Key factors included the shrinking revenues from environmental protection services and the conservative budgeting from oilfield customers affecting equipment sales.

4. When is the Chemical Circular Factory expected to be completed?

It is projected that the Chemical Circular Factory will be fully completed by the end of 2025.

5. How does Recon Technology plan to enhance profitability moving forward?

By expanding its client base outside the oilfield sector and launching the new Chemical Circular Factory, Recon Technology aims to boost profitability and streamline operations.

About The Author

Dedicated Author and financial expert Logan Wright here, 29 years old. After earning an economics degree, I spent a number of years working in different financial industries. My great passion is enabling everyone, from any background or experience level, to understand and be literate in financial matters.

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