AstroNova's Q2 Loss Grows as Product ID Struggles Persist

AstroNova, Inc. Faces Significant Stock Decline Following Earnings Report

AstroNova, Inc. (ALOT) has experienced a notable decline in its stock price following the release of its quarterly earnings for the period ending July 31, 2025. The stock has dropped by 12.9% during this time, while the S&P 500 index saw a modest gain of 1.5%. Over the past month, ALOT’s performance has been even more troubling, with a 10.5% drop compared to the S&P 500’s 2.9% increase. This underperformance indicates that investors are reacting cautiously to the company's recent financial results.

Financial Performance Highlights

In the second quarter of fiscal 2026, AstroNova reported a net loss of 16 cents per share, which is significantly worse than the 4 cents per share loss recorded in the same period last year. On a non-GAAP basis, the company posted a net loss of 4 cents per share, compared to a net income of 8 cents per share in the prior-year period.

Revenue for the quarter fell to $36.1 million, a decrease of 10.9% from $40.5 million in the previous year. Gross profit also declined, dropping by 18.8% to $11.6 million, with gross margins compressing to 32.2% from 35.3%. The company’s net loss widened to $1.2 million, up from $0.3 million in the previous year. On a non-GAAP basis, the net loss was $0.4 million, compared to a net income of $0.6 million a year ago. Adjusted EBITDA fell by 46.6% to $2.1 million, reflecting weaker profitability across the business.

Segment Performance

The Product Identification (Product ID) segment generated $24.8 million in revenue, down 8.9% year over year. This decline was attributed to delays in new technology rollouts, longer sales cycles due to capital investment decisions for higher-value printers, and weaker sales of legacy products like QuickLabel and TrojanLabel. Operating income for the segment fell to $1.9 million, with operating margins slipping to 7.7% from 8.6%.

The Aerospace segment reported revenues of $11.3 million, a 15.1% drop from $13.4 million in the previous year. This decline was largely due to elevated sales in the prior year driven by unusual large orders. Aerospace operating profit decreased by 37.1% to $2.4 million, with margins narrowing to 21.2% from 28.7%.

Orders and Backlog

Orders for the quarter remained steady at $35.9 million compared to the same period last year, with the backlog standing at $25.3 million at the end of the quarter, slightly down from $25.5 million in the previous quarter. The Product ID segment had a book-to-bill ratio of 95%, while the Aerospace segment maintained a stronger ratio of 110%.

Management Commentary

President and CEO Jorik Ittmann described the quarter’s results as “disappointing,” acknowledging ongoing challenges in the Product ID segment. He emphasized the need to rebuild customer relationships, secure new clients, and improve execution. The CEO, who was appointed earlier in the year, is focusing on organizational change with an emphasis on urgency and accountability.

CFO Thomas DeByle noted that the first half of the year was impacted by weak sales and restructuring charges. However, the company expects modest revenue growth in the second half, citing improvements in product mix and cost-cutting efforts as potential drivers of margin recovery.

Key Factors Influencing Results

AstroNova’s revenue decline was primarily due to shipment delays in the Product ID segment and a challenging comparison against last year’s unusual Aerospace orders. Gross margin compression was driven by lower volumes and an unfavorable product mix. While operating expenses were reduced by approximately $0.9 million, these savings were not enough to offset the impact of weaker sales and gross profit. Interest expenses remained flat at $0.9 million, further weighing on the bottom line.

Revised Guidance

Management has revised its fiscal 2026 revenue guidance downward to a range of $149 to $154 million, down from the previous range of $160 to $165 million. At the midpoint, this suggests revenues will be roughly flat with fiscal 2025. Adjusted EBITDA margin expectations have also been trimmed to 7.5-8.5%, down from 8.5-9.5% previously. The company also expects an effective tax rate of about 32.8% for the year.

Recent Developments

During the quarter, AstroNova shipped redesigned printers using MTEX’s autonomous ink printheads, including the QL-425 and QL-435 professional label presses. The company also began shipping its AJ-800 direct-to-packaging solution in August. In the Aerospace segment, shipments of the ToughWriter 640 printer to a major aircraft manufacturer were initiated, supporting the company’s transition away from legacy flight deck printers. Additionally, AstroNova amended its credit agreement after breaching a covenant and is negotiating a restructuring into a real estate-backed loan expected within 60 days.