Reliability Incorporated reported a decline in financial performance for the second quarter and first half of 2025, as detailed in its latest 10-Q filing. For the three months ended June 30, 2025, the company generated $4.7 million in service revenue, a decrease of 21.9% from $6.0 million in the same period last year. The net loss for the quarter was $205, compared to a loss of $134 in Q2 2024. For the six-month period, total revenue was $9.5 million, down 16.5% from $11.3 million in the first half of 2024, with a net loss of $538, compared to a loss of $267 in the prior year.
The decline in revenue was primarily driven by the Employer of Record (EOR) segment, which saw a significant drop in revenue due to reduced spending from key clients, particularly in a non-election year. EOR revenue fell to $3.6 million in Q2 2025 from $5.2 million in Q2 2024. Conversely, the Staffing segment experienced growth, with revenue increasing by 54% to $1.1 million, attributed to new contracts and a shift in client needs. The company also noted a modest decline in Direct Hire and Video Production revenues.
Operationally, Reliability Incorporated has been focusing on restructuring its cost base and improving margins. The gross profit for the second quarter was $713,000, down from $804,000 a year earlier, but the gross margin improved to 15.1% from 13.3%, reflecting a shift towards higher-margin services. The company has also suspended employee bonuses for 2025 to align costs with revenue fluctuations. As of June 30, 2025, the company had total assets of $9.4 million and total liabilities of $2.6 million, resulting in stockholders' equity of $6.8 million.
Looking ahead, the company remains cautiously optimistic about its financial outlook. Management believes it can meet its financial obligations through August 2026, supported by a 52-week cash flow forecast and ongoing collection efforts related to notes receivable from related parties. The company is also exploring additional financing options to enhance liquidity and has access to a factoring facility that provides immediate cash advances against eligible receivables. Despite the challenges faced in the first half of 2025, management anticipates a potential recovery in client spending in the latter half of the year.
About RELIABILITY INC
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