DUG Faces HPC Challenges but Boosts Services Order Book by 30% Amid Expansion
DUG Technology reported a 23% surge in software revenue and a 15% rise in EBITDA for FY25-Q3, underpinned by strong services order growth and strategic expansion into Brazil.
- 23% software revenue growth in FY25-Q3
- 15% increase in EBITDA to US$5.3 million
- Services order book expands 30% to US$42.7 million
- Brazilian joint venture established to boost market access
- HPC segment underperforms but remains profitable after cost cuts
Financial Performance Highlights
DUG Technology Ltd (ASX: DUG) has delivered a robust FY25-Q3 performance, with total revenue of US$16.5 million, slightly down 6% year-on-year but marked by a standout 23% growth in its Software division. EBITDA rose 15% to US$5.3 million, reflecting operational efficiencies and a stable cost base. Operating cash inflows of US$3.3 million and a healthy cash balance of US$16.3 million underpin the company’s solid financial footing.
Services Segment: Order Book Expansion and New Technology Adoption
Despite a 9% dip in Services revenue to US$13.2 million, DUG’s Services order book surged 30% to US$42.7 million, fueled by US$22.7 million in new project awards during the quarter. Notably, the company secured its first Elastic Multi-Parameter Full Waveform Inversion (MP-FWI) contracts, a milestone following the product’s August 2024 launch. Early pilot projects have exceeded expectations, positioning elastic MP-FWI as a potential game-changer in seismic imaging.
Strategic Expansion: Brazilian Joint Venture
In a strategic move to accelerate growth in a key oil and gas region, DUG finalized a joint venture in Brazil in early April 2025. Partnering with a seasoned Brazilian oil and gas executive, the JV aims to fast-track market entry and tender submissions to major national and independent players. This local presence is expected to enhance DUG’s competitive positioning in one of the world’s most active energy markets.
Software Momentum and HPC Challenges
The Software business continues to impress, driven by strong sales of the DUG Insight processing and imaging modules. These tools, widely used internally, are gaining traction among independent oil and gas companies and geoscience firms, reinforcing DUG Insight’s reputation for technical excellence. Conversely, the High Performance Computing (HPC) unit underperformed, with revenue down 32%. Management has implemented cost-cutting measures to maintain profitability, and new on-demand clients have been signed, laying groundwork for future revenue stability.
Innovations and Industry Partnerships
DUG’s immersion cooling technology, licensed to Baltimore Aircoil Company under the COBALT brand, continues to advance the company’s edge computing capabilities. Meanwhile, the DUG Nomad sales pipeline is progressing steadily, with efforts to expand channel partnerships ongoing. Managing Director Dr Matthew Lamont highlighted the company’s confidence in elastic MP-FWI as the seismic processing future, emphasizing the strong software growth as just the beginning of DUG’s potential.
Bottom Line?
DUG’s FY25-Q3 results signal a pivotal shift towards software-led growth and strategic market expansion, setting the stage for the next phase of innovation and commercial traction.
Questions in the middle?
- How will the Brazilian joint venture impact DUG’s revenue and market share in FY26?
- Can elastic MP-FWI technology scale rapidly enough to offset Services revenue softness?
- What is the outlook for HPC segment recovery amid ongoing cost rationalization?
