Champions Oncology Inc (CSBR) Q2 2025 Earnings Report

Revenue and margin trajectory:
- Q2 2025 revenue: $13.489 million, up 16.56% YoY and down 4.07% QoQ. The quarterly revenue implies a continued rebound from late-2024, aided by stronger bookings and expanding data-driven demand.
- Gross profit: $6.417 million; gross margin 47.57% for Q2 2025, up from 43% YoY, reflecting better cost control and favorable product mix.
- Operating income: $0.732 million; operating margin approximately 5.43%. YoY operating income surged due to stronger top-line and cost discipline, while QoQ profitability remained positive.
- EBITDA: $1.131 million; EBITDARatio ~8.38%. Adjusted EBITDA for the quarter was $1.11 million (excluding non-cash items), versus a year-ago adjusted loss, signaling a continuing cash-flow-friendly trajectory.
- Net income and earnings per share: Net income $0.728 million; net margin ~5.40%. Basic EPS $0.0536 and diluted EPS $0.0519; weighted-average shares outstanding: 13.5938 million (basic) and 14.0169 million (diluted).
- First-half performance: H1 2025 revenue of $27.6 million, up 14% YoY; gross margin improved to 48% from 41% in H1 2024; total operating expenses declined by roughly $3.1 million, driving a $3.2 million adjusted EBITDA in H1 2025.
- Cash and liquidity: End of quarter cash of $2.754 million with no debt; net cash used in operating activities was $0.283 million; free cash flow was negative at $(0.377) million. Net debt stood at $(4.021) million, with total debt of $6.775 million and cash balance supporting near-term liquidity needs. Current ratio 0.747 and cash ratio 0.146 indicate liquidity headwinds, but balance sheet improvements and a data-revenue ramp could improve liquidity in coming quarters.
- Deferred revenue: $10.222 million (non-current) and other current liabilities of $3.787 million reflect a substantial deferred revenue component that can provide visibility into future revenue and cash generation as performance obligations are satisfied.

Key takeaways from management commentary on the earnings call:
- Data strategy and monetization: Management emphasized monetizing the unique multi-omic data asset via data licensing, anticipating a material positive impact on revenue, margins, and enterprise value in the coming quarters. Ronnie Morris stated, "In the coming quarter, we expect to introduce a new revenue stream through data-licensing, which will have a significant positive impact on our revenue, margins and enterprise value."
- Market environment and funding: Management acknowledged an improving yet still uneven funding backdrop, noting that while not back to pre-2022 levels, funding has started to rebound, with signs of better appetite from big pharma and biotechnology sectors. Morris commented, "we are cautiously optimistic that the funding is coming back, certainly from the big pharma, there is funding from the biotech sector."
- Core business momentum: The company highlighted ongoing strength of the core CRO services, including the PDX bank and the deep multi-omic data assets, which are expected to drive bookings and reduce cancellations, reinforcing a longer-term growth trajectory.
- Operational discipline and cost control: The call highlighted a renewed emphasis on the bottom line, with R&D reduced by about $0.8 million YoY, and G&A lower by $0.5 million, contributing to positive quarterly results despite higher cost of sales due to expanded mouse costs in humanized studies.
- Capital strategy for Corellia: Management referenced ongoing discussions to raise capital for Corellia and noted active engagement with bankers to support their capital-raising efforts, highlighting the company’s focus on capital-efficient drug development while prioritizing core business profitability.

Base-case thesis: Champions is transitioning from a traditional CRO with solid services revenue to a data-centric platform, where the data licensing initiative could unlock higher-margin, longer-duration revenue streams. The Q2 2025 results show a positive revenue trajectory and an expanding gross margin, supported by disciplined cost management. If the data licensing model scales as anticipated and Corellia fundraising progresses, the company could see meaningful upside in FY2025–FY2026. Risks include near-term liquidity constraints, reliance on successful monetization of a relatively nascent data business, and the broader biotech funding environment. Investors should monitor the cadence of data-revenue contracts, the timing of working capital normalization, and the progress of Corellia's funding round. Given the current multiples (e.g., P/S around 3.9x, P/E around 18x in the data), the stock may offer optionality if data licensing accelerates and operating leverage improves, but remains a higher-risk, growth-oriented exposure in the healthcare services/subsector.