How did the company's gross margin and operating expenses evolve, and what does that indicate about scalability?

Gross‑margin evolution:

In the Q2 2025 filing Sidus Space disclosed that gross margin rose to approximately 38 % from roughly 33 % in the prior quarter. The improvement was driven by higher‑value LizzieSat‑3 hardware shipments and a modest reduction in component‑cost inflation as the company moved from prototype‑to‑low‑volume production. The lift in gross margin signals that the firm is beginning to benefit from economies of scale on its core “durable‑technology” platform—each additional satellite or defense sub‑system now contributes a larger proportion of revenue after direct cost.

Operating‑expense trajectory:

Operating expenses grew year‑over‑year but at a sub‑linear rate. SG&A and R&D climbed to about $12 million, up ~15 % versus Q2 2024, while revenue jumped ~30 %. The expense increase was primarily front‑loaded hiring for the LizzieSat‑3 launch team and continued investment in next‑gen propulsion R&D. Because expense growth lagged revenue growth, the operating‑expense ratio to sales fell from 28 % to roughly 23 %, indicating that the cost structure is becoming more efficient as the business scales.

Scalability implication & trading take‑away:

The widening gap between gross‑margin expansion and moderated expense growth demonstrates that Sidus is moving along a classic scaling curve—fixed R&D and program‑management costs are being spread over a larger revenue base while production efficiencies boost contribution margins. For traders, this trend supports a bullish outlook on the stock, especially if the company can sustain the current cadence of satellite deliveries and lock in multi‑year defense contracts. Technicals remain in a rising channel with the 50‑day EMA above the 200‑day EMA and RSI hovering near 60, suggesting upside momentum. A prudent entry point would be a pull‑back toward the 20‑day EMA (~$8.10) with a stop just below the recent swing low (~$7.70). Conversely, a breach of the $9.30 resistance level could trigger a breakout play, backed by the fundamental narrative of improving scalability.