RF Industries Posts Record Revenue as Cooling Demand Builds

RF Industries cleared a financial threshold it has been pointing toward for years. Quarterly revenue reached $23.96 million, pushing above $20 million for the first time and giving the San Diego-based connectivity manufacturer enough scale to widen margins sharply. Shares nevertheless fell roughly 12% on September 14, suggesting investors were focused less on the quarter itself than on how much of the improvement is already priced in.

Revenue climbed 21% from a year earlier and 16% sequentially, while gross margin expanded to 35.6% from 34%. Operating income more than doubled to $1.8 million, and adjusted EBITDA rose 71% to $2.7 million, or 11.1% of sales. That cleared management’s long-standing 10% margin target. Non-GAAP earnings were $0.19 a share, a penny below the MarketBeat consensus, although revenue topped expectations by roughly $680,000.

The more important change is in the mix. Custom cabling remained the leading contributor, while interconnect products recovered from the second quarter and integrated systems gained traction. Those offerings typically carry more engineering content and larger project scopes than standard components, which helps explain why incremental revenue is now flowing through at a faster rate. RF Industries is also broadening its customer base across aerospace, defense, industrial manufacturing, medical imaging, edge data centers and AI infrastructure rather than relying exclusively on wireless carriers.

Forward indicators were constructive, though not explosive. Third-quarter bookings totaled $22.5 million, below shipments on a book-to-bill basis, but year-to-date bookings remained ahead of sales. Backlog rose to $19.8 million by the call, from $18.6 million at July 31. Management expects fiscal fourth-quarter sales to be roughly equal to or above the third-quarter level.

The longer-range pitch centers on direct air cooling, which management said now generates millions of dollars per quarter and should exceed $10 million in sales. Edge deployments may require less power and cooling infrastructure than large centralized data centers, creating an opening for RF Industries as AI workloads spread outward. The company also said its small-cell business is recovering after delays, but meaningful acceleration may not arrive until fiscal 2027, while wireless carrier capital spending is expected to remain broadly flat.