Tecogen Inc (TGEN) Efficiency and Growth Potential

Tecogen Inc (TGEN) has gained significant momentum in its data center strategy, receiving increased interest from prominent co-location data center developers.

The company has received positive feedback from large players such as Nvidia, AMD, and hyperscale developers for the solutions it offers. Tecogen Inc (TGEN) is confident in its ability to succeed in the data center market and has significant sales growth potential.

The company continues to work on increasing its production capacity through factory layout changes and partnerships with contract manufacturers. Tecogen Inc (TGEN) has a strong cash position valued at approximately $140 million and carries no debt on its balance sheet.

However, the net loss in the third quarter of 2025 rose to $2.13 million compared to the third quarter of 2024. This increase was due to declining service margins and rising operating expenses. The total gross profit decreased by 12%, dropping from 44.1% in 2024 to 30.4% in 2025.

Operating expenses increased nearly 28% quarter over quarter. This increase was due to reasons such as administrative and R&D personnel salaries. Additionally, the company's energy production revenue declined by 34.2% due to contract expirations and temporary space closures.

There is uncertainty in the timing of data center orders, as many factors are beyond Tecogen Inc (TGEN)'s control; these include tenant acquisition and verification processes.

The company's CEO, Afnan Rangesh, provided updates on the timing of the pilot for the 6-unit start and expansion. Projects are progressing in the development phase, and the developer is actively seeking tenants. Timing may occur soon or take several months, depending on tenant acquisition. Rangesh stated that they are in the engineering design phase and emphasized that details about evolving opportunities are confidential.

Rangesh also reported that they are continuing efforts with their Vertive relationship to scale the production process and provide necessary test data for verification. The relationship with Vertive has accelerated with a new point of contact. He noted that necessary data is being collected in their test cells, which is critical for the operation of data centers under various conditions.

The company plans to outsource the sheet metal assembly for the contract manufacturing of dual energy source units, with final assembly and testing to be conducted in-house. The verification of the first unit is expected to be completed soon.

Speaking about further issues, Rangesh said that there is a possibility that service margins could be affected by the introduction of new engines, and that these new engines could play a significant role in improving margins.

Tecogen's feedback from large companies confirmed that current chip power limitations and high cooling loads are concerns. It indicates that chiller options are more cost-effective than energy production in the field.