Recon Technology FY 2025: Full-Year Results Reveal Revenue and Margin Trends

BEIJING, Oct. 15, 2025 /PRNewswire/ -- Recon Technology, Ltd (NASDAQ: RCON) ("Recon" or the "Company"), a China-based independent solutions integrator in the oilfield service and environmental protection, electric power and coal chemical industries, today announced its financial results for fiscal year 2025.

Fiscal Year Ended June 30, 2025 Financial Highlights:

• Total revenue decrease by approximately RMB2.5 million ($0.4 million) or3.7% to RMB66.3 million ($9.3 million) for the year ended June 30, 2025 from RMB68.8 million ($9.6 million) for the same period in 2024.
• Gross profit decreased to RMB15.2 million ($2.1 million) for the year ended June 30, 2025, from RMB20.9 million ($2.9 million) for the same period in 2024.
• Gross margin decreased to 23.0% for the year ended June 30, 2025 from 30.3% for the same period in 2024.
• Net loss was RMB44.2 million ($6.2 million) for the year ended June 30, 2025, a decrease of RMB7.2 million ($1.0 million) from net loss of RMB51.4 million ($7.2 million) for the same period of 2024.

Management Commentary

Shenping Yin, Founder and CEO of Recon said, "During the 2025 financial year, our primary clients, domestic oil companies, have experienced declining performance due to the impact of oil price fluctuations. Consequently, they have adopted more cautious and cost-conscious approaches to capital expenditures and expense management. This has had a negative impact on our profitability. Fortunately, we have secured several new clients outside of the oilfield industry and expanded our order book with offshore oilfield customers. These developments have stabilized our business operations. During the 2025 financial year, we also successfully expanded our overseas oilfield client base, which will significantly contribute to our business in the new financial year.

At the same time, we are pressing ahead with construction of our Chemical Circular Factory. For the 2025 fiscal year, we have completed all pre-approval procedures required by local authorities, obtained the construction project planning permit, and officially started the construction work on April 28, 2025. It is anticipated that the project will be fully completed by the end of 2025. We believe that the plastic chemical recycling business will enhance the company's operations significantly in the 2026 financial year."

Fiscal Year Ended 2025 Financial Results:

Revenue

Total revenues for the year ended June 30, 2025 were approximately RMB66.3 million ($9.3 million), a decrease of approximately RMB2.5 million ($0.4 million) or3.7% from RMB68.8 million ($9.6 million) for the same period in 2024.

• Revenue from automation product and software increased by RMB7.3 million ($1.0 million) or 27.1%. The increase in revenue was primarily driven by the company's enhanced sales activities and successful expansion into markets beyond oilfields, partially offset by declining sales to certain oilfield clients.
• Revenue from equipment and accessories decreased by RMB2.0 million ($0.3 million) or 10.0%. The main reason for the decline in revenue is that oilfield customers, in order to safeguard their earnings, have strictly controlled their extraction budgets and implemented low-cost operational strategies.
• Revenue from oilfield environmental protection decreased by RMB7.3 million ($1.0 million) or 41.4% primarily due to the expiration of Gansu BHD's hazardous waste operation permit. As a result, no revenue was recorded. The company is currently engaged in the active application process for the renewal of relevant qualifications. Besides, some customers request and we agreed to a lower price for a portion of our wastewater business in order to establish a long-term relationship, resulting in a decrease in revenue from that portion of the business.
• Revenue from platform outsourcing services decreased by RMB0.5 million ($0.1 million) or 13.0%. The decrease in revenue was primarily driven by a RMB0.8 million drop caused by reduced demand from former gas-station customers upgrading their in-house online systems and by lower cooperation with third-party partners. This decrease was partly offset by a RMB1.30 million increase driven by higher transaction volumes from diesel users and improved settlement rates with freight-exchange-platform customers.
• As of June 30, 2025, he factory for the chemical recycling is still under construction and has not started production and sales yet.

Cost of revenue

Cost of revenues decreased from RMB48.0 million for the year ended June 30, 2024 to RMB51.0 million ($7.1 million) for the same period in 2025.

For the years ended June 30, 2024 and 2025, cost of revenue from automation product and software was approximately RMB23.9 million ($3.3 million) and RMB28.6 million ($4.0 million), respectively, representing increase of approximately RMB4.7 million ($0.7 million) or 20.0%. The increase in cost of revenue from automation product and software was primarily attributable to increased revenue of automation products and software.

For the years ended June 30, 2024 and 2025, cost of revenue from equipment and accessories was approximately RMB14.1 million ($2.0 million) and RMB13.2 million ($1.8 million), respectively, representing a decrease of approximately RMB0.9 million ($0.1 million) or 6.2%. The decrease in costs of revenue was primarily driven by reduced business activity, mirroring the same factor behind the drop in revenue.

For the years ended June 30, 2024 and 2025, cost of revenue from oilfield environmental protection was approximately RMB9.2 million ($1.3 million) and RMB8.5 million ($1.2 million), respectively, representing a decrease of approximately RMB0.7 million ($0.1 million) or 7.5%. The decrease in the cost of revenue from oilfield environmental protection was in line with decrease in revenue.

For the years ended June 30, 2024 and 2025, cost of revenue from platform outsourcing services remained stable at RMB0.6 million ($0.09 million).

For the years ended June 30, 2024 and 2025, cost of revenue from chemical recycling was RMB0.1 million ($0.01 million) and nil, which was business and sales related tax. As of June 30, 2025, the factory for the chemical recycling is still under construction and has not started production and sales yet.

Gross profit

Gross profit increased to RMB15.2 million ($2.1 million) for the year ended June 30, 2025 from RMB20.9 million ($2.9 million) for the same period in 2024. Our gross profit as a percentage of revenue decreased to 23.0% for the year ended June 30, 2025 from 30.3% for the same period in 2024.

• For the years ended June 30, 2024 and 2025, our gross profit from automation product and software was approximately RMB3.0 million ($0.4 million) and RMB 5.5 million ($0.8 million), respectively, representing an increase in gross profit of approximately RMB2.5 million ($0.4 million) or 84.9%. The increase in gross margin was primarily due to the elevated proportion of high-margin service businesses.
• For the years ended June 30, 2024 and 2025, gross profit from equipment and accessories was approximately RMB6.4 million ($0.9 million) and RMB5.2 million ($0.7 million), respectively, representing a slight decrease of approximately RMB1.2 million ($0.2 million) or 18.5%. The decline in gross margin was primarily driven by the oilfield customers' shift to a low-cost operating model and tighter budget controls, compounded by an unexpected rise in after-sales expenses.
• For the years ended June 30, 2024 and 2025, gross profit from oilfield environmental protection was approximately RMB8.3 million ($1.2 million) and RMB1.7 million ($0.2 million), respectively, representing a decrease of RMB6.6 million ($0.9 million) or 79.1%. The main reason for the decrease in gross margin is that one of our customers reduced the settlement price.
• For the years ended June 30, 2024 and 2025, gross profit from platform outsourcing services was approximately RMB3.3 million ($0.5 million) and RMB2.8 million ($0.4 million), respectively, representing a decrease of approximately RMB0.5 million ($0.1 million) or 15.7%. The decrease in gross profit was consistent with the change in revenue.
• For the years ended June 30, 2024 and 2025, gross profit losses from chemical recycling was RMB0.1 million ($0.01 million) and nil, respectively. As of June 30, 2025, the factory for the chemical recycling remains under construction and has not started production and sales yet.

Operating expenses

Selling expenses decreased by 9.9%, or RMB1.1 million ($0.1 million), from RMB10.4 million ($1.4 million) in the year ended June 30, 2024 to RMB9.3 million ($1.3 million) in the same period of 2025.

General and administrative expenses decreased by 22.1%, or RMB14.2 million ($2.0 million), from RMB63.8 million ($8.9 million) in the year ended June 30, 2024 to RMB49.6 million ($6.9 million) in the same period of 2025.

Net provision for credit losses of RMB4.1 million ($0.6 million) for the year ended June 30, 2024 as compared to net recovery of credit losses of RMB2.9 million ($0.4 million) for the same period in 2025.

Research and development expenses increased by 15.0%, or RMB2.1 million ($0.3 million) from RMB14.3 million ($2.0 million) for the year ended June 30, 2024 to RMB16.4 million ($2.3 million) for the same period of 2025.

Loss from operations

Loss from operations was RMB57.3 million ($8.0 million) for the year ended June 30, 2025, compared to a loss of RMB71.6 million ($10.0 million) for the same period of 2024. This RMB14.3 million ($2.0 million) decrease in loss from operations was primarily due to the decrease in operating expense as discussed above.

Change in fair value changes of warrant liability

The Company classified the warrants issued in connection with common share offering as liabilities at their fair value and adjusted the warrant instrument to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our statement of operations. Gain in change in fair value of warrant liability was RMB0.9 million ($0.1 million) and RMB0.01 million ($0.001 million) for the years ended June 30, 2024 and 2025, respectively. The primary reason for the decrease of loss in the fair value of the warrant liability was that on December 14, 2023, we redeemed an aggregate of 17,953,269 warrants (equivalent to 997,404 warrants post the 2024 Reverse Split) from the Sellers. Following this transaction, only 863,333 warrants remained outstanding (47,964 post-split), and the smaller outstanding balance directly lowered the magnitude of fair value changes.

Impairment loss on goodwill and intangible assets

The Company recognized the excess of purchase price over the fair value of assets acquired and liabilities assumed of the business acquired was recorded as goodwill and fair value of identified intangible assets, which is customer relationship as a result of the step acquisition of FGS. In conjunction with the preparation of our consolidated financial statement for years ended June 30, 2024 and 2025, the management performed evaluation on the impairment of goodwill and intangible assets and recorded an impairment loss on goodwill and intangible assets of nil and nil for the years ended June 30, 2024 and 2025, respectively. As of June 30, 2023, goodwill and intangible assets of FGS had fully accrued for impairment. The impairment was mainly due to the decision of the major customers to develop their own autonomous unified system and to significantly reduce the procurement of third-party services.

Interest income

Net interest income was RMB12.3 million ($1.7 million) for the year ended June 30, 2025, compared to net interest income of RMB21.8 million ($3.0 million) for the same period of 2024. The RMB9.5 million ($1.3 million) decrease in net interest income was primarily attributable to reduced third-party loan balances and lower allocations to short-term investments during the year ended June 30, 2025.

Other income (expenses), net.

Other net income was RMB1.3 million ($0.2 million) for the year ended June 30, 2025, compared to other net expenses of RMB0.7 million ($0.1 million) for the same period of 2024. The RMB2.0 million ($0.3 million) increase other net income was primarily due to a decrease in subsidy income of RMB0.2 million. The increase in other net income was attributable to a decrease in subsidy income and an asset write-off gain of approximately RMB0.1 million. Additionally, following the closure of the Qinghai office, RMB0.5 million in payables that could no longer be settled was recognized as income, RMB0.2 million in receivables that could not be collected was written off as a loss and an increase in foreign exchange transaction income of RMB1.8 million due to the fluctuation of exchange rate of RMB against US dollars during the year ended June 30, 2025 compared to the same period of 2024.

Net loss

As a result of the factors described above, net loss was RMB43.7 million ($6.1 million) for the year ended June 30, 2025, a decrease of RMB7.7 million ($1.1 million) from net loss of RMB51.4 million ($7.2 million) for the same period of 2024.

Cash and short-term investment

As of June 30, 2025, we had cash in the amount of approximately RMB98.9 million ($13.8 million) and short-term investment in bank fixed income product of approximately RMB3.6 million ($0.5 million). As of June 30, 2024, we had cash in the amount of approximately RMB110.0 million ($15.4 million) and short-term investment in bank fixed income product of approximately RMB88.1million ($12.3 million).