Richardson Electronics Ltd (NASDAQ:RELL) stock fell 11.03% (As on April 10, 11:32:28 AM UTC-4, Source: Google Finance) after the company missed the topline expectations for the third quarter of FY25. Backlog totaled $134.1 million at the end of the third quarter of fiscal 2025 versus $142.6 million at the end of the second quarter of fiscal 2025. The sequential decrease was primarily in GES, Canvys, and Healthcare. The Company’s sales pipeline remains solid; however, the timing of new orders can vary quarter-to-quarter. Gross margin for the third quarter was 31.0% of net sales compared to 29.5% during the third quarter of fiscal 2024. GES gross margin increased to 32.8% from 26.6% due to product mix. PMT also posted an increase in gross margin to 30.8%, compared to 28.3%, due to favorable product mix. Canvys gross margin decreased to 33.2% from 34.4% primarily due to product mix. Richardson Healthcare’s gross margin declined to 15.5% from 41.6%, as a result of product mix, manufacturing under absorption and higher scrap costs. Operating loss was $2.7 million and non-GAAP operating income was $2.2 million for the third quarter of fiscal 2025, compared to an operating income of $1.0 million in the prior year’s third quarter. Net loss was $2.1 million and non-GAAP net income was $1.6 million for the third quarter of fiscal 2025, compared to a net income of $0.8 million in the third quarter of fiscal 2024.

RELL in the third quarter of FY25 has reported the adjusted earnings per share of 11 cents, beating the analysts’ estimates for the adjusted earnings per share of 8 cents, according to the Zacks Consensus Estimate. The company had reported the adjusted revenue growth of 2.7 percent to $53.8 million in the third quarter of FY25, missing the analysts’ estimates for revenue by 1.70%. Year-over-year net sales growth was due to higher sales in the Power and Microwave Technologies Group (PMT) and Canvys. PMT sales increased $2.1 million, or 6.6% from the third quarter of fiscal 2024 primarily from higher demand from the Company’s semiconductor wafer fab customers. Canvys sales also increased year-over-year by $2.6 million or 39.5%, reflecting improved market conditions in North America. Healthcare sales decreased by $1.0 million, or 32.3%, from lower net sales in February 2025 after the sale of the majority of Healthcare assets. GES sales decreased $2.2 million, or 19.4%, driven by lower sales of wind turbine battery modules, which are project-based and can vary by quarter.