8-K: Dragonfly Energy Unveils Cost Cuts, Reports Mixed 2025 Results

Dragonfly Energy announced significant cost reductions and preliminary 2025 financial results, showing revenue growth but increased net losses, alongside Q1 2026 guidance.

Summary

• Dragonfly Energy reported preliminary full year 2025 net sales of $58.6 million, a 15.8% increase year-over-year, driven by a 33.8% growth in OEM net sales to $36.9 million.
• The company's full year 2025 net loss increased to $(69.9) million, compared to $(40.6) million in 2024, while Adjusted EBITDA improved to $(11.8) million from $(18.5) million.
• Fourth quarter 2025 net sales were $13.1 million, up 6.9% year-over-year, with OEM net sales growing 30.1% to $8.1 million, but DTC net sales declined 18.0% to $4.7 million.
• Q4 2025 net loss was $(45.0) million, significantly higher than $(9.8) million in Q4 2024, and Adjusted EBITDA was $(3.8) million, compared to $(2.3) million in Q4 2024.
• Dragonfly Energy implemented a strategic cost realignment expected to generate approximately $8.9 million in annualized savings, effective April 1, 2026.
• Key elements of the cost realignment include a 20% reduction in cash compensation for executive leadership and the Board of Directors, a 20% reduction in total payroll expense through workforce reductions and salary adjustments, reduced discretionary spending, and facility consolidation expected to save $4.0 million.
• In lieu of cash compensation, executives, directors, and other employees received equity-based incentives (options for Named Executive Officers and COO, RSUs for directors and other employees).
• For the first quarter of 2026, the company anticipates net sales of approximately $9.5 million and an Adjusted EBITDA loss of approximately $(4.6) million, reflecting softer RV market conditions and a slower ramp in the trucking segment.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this filing with cautious optimism. While the company is taking decisive steps to improve its cost structure and focus on high-growth commercial channels, the significant net losses and negative Q1 2026 guidance indicate ongoing financial challenges that require careful monitoring.

Positives

• Full year 2025 net sales increased 15.8% to $58.6 million, demonstrating overall revenue growth.
• OEM net sales showed strong growth, increasing 33.8% for the full year 2025 to $36.9 million and 30.1% for Q4 2025 to $8.1 million, indicating successful penetration in commercial channels.
• Full year 2025 gross margin expanded by 370 basis points to 26.7%, reflecting higher sales volumes.
• Adjusted EBITDA for full year 2025 improved to $(11.8) million from $(18.5) million in 2024, indicating better operational efficiency on an adjusted basis.
• The strategic cost realignment is expected to generate approximately $8.9 million in annualized savings, improving the company's cost structure.
• Facility consolidation is projected to result in a $4.0 million reduction in expenses.
• Cash and cash equivalents increased significantly to $18.270 million as of December 31, 2025, from $4.849 million in 2024, and total liabilities decreased from $84.618 million to $52.763 million, strengthening the balance sheet.

Negatives

• Net loss for full year 2025 significantly increased to $(69.9) million from $(40.6) million in 2024.
• Net loss for Q4 2025 was $(45.0) million, a substantial increase from $(9.8) million in Q4 2024.
• DTC net sales declined 8.5% for the full year 2025 to $20.7 million and 18.0% for Q4 2025 to $4.7 million, reflecting macroeconomic pressures and reduced corporate focus.
• Q4 2025 gross margin declined to 18.2% from 20.8% in the prior-year period, attributed to a year-end inventory adjustment and lower volumes.
• Operating expenses increased to $12.6 million in Q4 2025 from $9.7 million in Q4 2024, primarily due to one-time expenses associated with debt restructure, lease impairment, and settlements.
• Adjusted EBITDA for Q4 2025 worsened to $(3.8) million from $(2.3) million in Q4 2024, impacted by an inventory valuation adjustment.
• First quarter 2026 guidance anticipates a net sales of approximately $9.5 million and an Adjusted EBITDA loss of approximately $(4.6) million, reflecting continued market softness.

Risks

• The company's ability to achieve improved recovery in its core markets, including the RV market.
• The ability to successfully increase market penetration into target markets and penetrate new markets like heavy-duty trucking.
• The ability to retain members of its senior management team and other key personnel.
• The ability to maintain relationships with key suppliers, including those in China.
• The ability to maintain relationships with key customers.
• The ability to protect its patents and other intellectual property.
• The ability to successfully utilize its patented dry electrode battery manufacturing process and optimize solid-state cells, and to produce commercially viable solid-state cells in a timely manner or at all, and to scale to mass production.
• The ability to timely achieve the anticipated benefits of its licensing arrangement with Stryten Energy LLC.
• The ability to achieve the anticipated benefits of its customer arrangements with THOR Industries and its affiliated brands.
• The ability to maintain the listing of its common stock and public warrants on the Nasdaq Capital Market.
• Impacts from the Russian/Ukrainian conflict.
• The ability to generate revenue from future product sales and to achieve and maintain profitability.
• The ability to compete with other manufacturers in the industry and to engage target customers and successfully convert them into meaningful orders.

Future Outlook

Dragonfly Energy anticipates first quarter 2026 revenue of approximately $9.5 million and an Adjusted EBITDA loss of around $(4.6) million. This outlook reflects softer than anticipated conditions in the RV market, particularly in January, and a slower-than-expected ramp in the trucking segment. However, the company expects operating leverage to improve as the year progresses, with a continued focus on expanding OEM relationships, improving operational efficiency, and strengthening its financial foundation to support a path to sustainable profitability. The company targets positive Adjusted EBITDA at a $70 million annual revenue run rate.

Management Comments

• Dr. Denis Phares, CEO, commented, "The fourth quarter capped a year of meaningful progress for Dragonfly Energy. In 2025, we strengthened our balance sheet through decisive capital actions, expanded key RV and heavy-duty trucking partnerships, and delivered solid year-over-year revenue growth despite continued market headwinds."
• Dr. Phares also stated, "Earlier this month, we implemented a series of actions intended to significantly improve our cost structure and sharpen our focus on commercial markets as our customer base continues to evolve toward OEM, trucking, and industrial channels."
• Dr. Phares concluded, "As we approach the second quarter of 2026, we remain focused on expanding OEM relationships, improving operational efficiency, and strengthening our financial foundation to support our path to sustainable profitability."
• Regarding Q1 2026, Dr. Phares noted, "First quarter results are expected to reflect softer than anticipated conditions in the RV market, particularly in January, along with a slower-than-expected ramp in the trucking segment. Activity has shown signs of stabilizing, and we expect operating leverage to improve as the year progresses."

Industry Context

StockSavvy.ai notes that Dragonfly Energy's strategic shift towards OEM, trucking, and industrial channels, coupled with a reduction in DTC-focused marketing, aligns with a broader industry trend where specialized B2B relationships can offer more stable and scalable growth compared to direct-to-consumer sales, especially in niche technology markets. The reported softness in the RV market, particularly in January, reflects ongoing macroeconomic pressures impacting discretionary consumer spending, a challenge faced by many companies in related sectors. The company's focus on improving operational efficiency and achieving profitability is a common imperative for growth-stage technology companies navigating competitive landscapes.

Management Changes

Corporate Governance

Legal Proceedings

• Litigation Fees and Loss on Settlement of $862 thousand were incurred in fiscal year 2025, and $3.124 million in fiscal year 2024, as noted in the Adjusted EBITDA reconciliation.

Related Party Transactions

• In fiscal year 2024, the company received proceeds from a note payable, related party, of $2.700 million and made a repayment of a note payable, related party, of $2.700 million.

Stakeholder Impact

• **Shareholders**: Potential for long-term value creation through cost savings and strategic focus, but also dilution from equity awards and past capital raises. The shift to positive stockholders' equity is a positive.
• **Employees**: Workforce reductions and salary adjustments impact job security and immediate cash compensation, but equity-based incentives aim to align interests with company performance.
• **Customers**: Reduced DTC-focused marketing may impact direct retail customers, while increased focus on OEM, trucking, and industrial channels aims to strengthen relationships with commercial clients.
• **Creditors**: Reduced total liabilities and improved cash position strengthen the company's financial health, potentially reducing credit risk.

Next Steps

• Host an earnings call on March 16, 2026, at 4:30 p.m. (Eastern Time) to discuss financial results.
• Finalize and adjust preliminary financial results in connection with the audit of financial statements for fiscal year ended December 31, 2025, and prepare the Annual Report on Form 10-K.
• Expand OEM relationships and improve operational efficiency.
• Strengthen the financial foundation to support the path to sustainable profitability.
• Continue advancing strategic initiatives across product development and manufacturing.
• Work towards the future deployment of proprietary, nonflammable, all-solid-state battery cells.

Key Dates

Recommendation

Dragonfly Energy's filing presents a mixed picture. While the company achieved significant revenue growth in 2025, particularly in OEM sales, and has taken aggressive steps to reduce costs and strengthen its balance sheet, the substantial net losses and negative Q1 2026 guidance indicate ongoing profitability challenges. The strategic shift towards commercial channels and the cost realignment are positive long-term moves, but their impact on sustainable profitability is yet to be fully realized. Investors should hold to observe the effectiveness of these initiatives and the company's ability to execute on its path to profitability amidst a soft RV market and slower trucking segment ramp.

Keywords

Dragonfly Energy, DFLI, lithium battery, energy storage, Battle Born Batteries, OEM sales, financial results, cost reduction, equity incentive, corporate governance, RV market, trucking industry, solid-state battery, Nasdaq