Reliability Incorporated Reports $4.746 Million Revenue in Q1 2025, Net Loss of $333,000

Reliability Incorporated reported a revenue of $4.746 million for the first quarter of 2025, a decrease of 10.4% from $5.295 million in the same period of 2024. The decline was primarily driven by a significant drop in service revenue from the Employer of Record (EOR) segment, which fell by 17.9% to $4.572 million, largely due to reduced election-related activities from a key client. In contrast, the Staffing segment saw a notable increase in revenue, rising 39.7% to $932,000, primarily attributed to a government agency client. Overall, the company recorded a net loss of $333,000 for the quarter, compared to a loss of $132,000 in the prior year.

The company's gross profit for the quarter was $641,000, down from $709,000 in the first quarter of 2024, reflecting a 9.6% decline. However, gross margins improved slightly to 13.5%, up from 13.4% year-over-year, indicating a positive shift in revenue mix, particularly from the Staffing segment, which contributed to margin enhancement. General and administrative expenses increased by 8% to $1.023 million, driven by higher salaries and non-salary costs, including payroll processing fees.

In terms of operational developments, Reliability's total assets decreased to $9.914 million as of March 31, 2025, down from $11.556 million at the end of 2024. Current liabilities also fell to $2.895 million from $4.198 million, primarily due to a reduction in factoring liabilities. The company reported a significant concentration of revenue, with 56.9% coming from two major clients, highlighting a reliance on a limited customer base. As of the end of the quarter, the company had 300 million shares of common stock outstanding, with no changes in the number of shares since the previous year.

Looking ahead, management remains optimistic about the company's financial outlook, citing a 52-week cash flow forecast that projects sufficient liquidity to meet operational needs. The company anticipates a reduction in legal expenses and expects to collect on notes receivable from related parties, which could enhance cash flow. Additionally, a new financing arrangement with JPMorgan is expected to improve cash conversion cycles significantly. Despite the challenges faced in the first quarter, management believes that the company is well-positioned to navigate its financial obligations in the coming months.