Will KRMN's G&A as a percentage of revenue remain above 15% in Q4 FY2025?

Q3 FY2025 G&A was $20M (16.4% of revenue). Q4 will add Five Axis G&A costs for a full quarter, likely pushing G&A to $20-22M. For the ratio to drop below 15%, revenue would need to exceed ~$133M at $20M G&A or ~$147M at $22M G&A. While revenue should be $120-130M based on guidance math, reaching $133M+ is uncertain. Public company cost ramp should stabilize (not a new cost), but Three simultaneous integrations and Five Axis first full quarter add expense. The ratio improvement depends on revenue growth outpacing G&A growth, which requires strong Q4 shipments. Probability favors above 15% given the incremental Five Axis G&A burden.

The key variable is whether public company costs and SBC stabilize in Q4 after the initial IPO ramp. Q1 FY2025 included $8M in IPO-triggered SBC that was one-time. If ongoing SBC is lower and public company costs plateau, G&A could actually decline from Q3's $20M to $18-19M. At $18M G&A and $120M revenue, the ratio is 15.0% — right at the threshold. At $19M and $125M, it is 15.2%. The arithmetic is very tight around the 15% threshold. Five Axis adds G&A but may not contribute a full quarter of overhead if integration is still ramping. The probability is moderately above 50% but not overwhelming — it depends on whether G&A stabilizes or continues to rise.

The trend is clear: G&A growing faster than revenue (78.7% vs 41.7%). This trend does not reverse in one quarter, especially with Five Axis adding another integration workstream. Public company costs, SOX compliance, integration consultants, and expanded corporate overhead create a structurally higher G&A base than pre-IPO. However, the company's adjusted EBITDA margins have expanded despite this, suggesting revenue growth is absorbing the G&A increase at the EBITDA level even if not at the G&A percentage level. For the G&A ratio specifically, Q4 is likely to remain above 15% because the Five Axis integration is too early to show efficiency gains.

Q3 G&A of $20M at 16.4% is the baseline. Five Axis closed October 2025 and will contribute a full quarter of G&A in Q4. Even if Five Axis adds only $1-2M in G&A, total G&A of $21-22M against revenue of $120-130M yields 16.2-18.3% — above 15%. For the ratio to drop below 15%, revenue would need to be $140M+ with G&A at $21M, which exceeds the guidance-implied Q4 level. The math strongly favors staying above 15% in Q4. The ratio improvement is more likely to occur in Q1-Q2 FY2026 as integrations complete and Five Axis revenue ramps.

I note that the $20M Q3 G&A includes share-based compensation which can be lumpy. If Q4 SBC is lower than Q3 (no new IPO-related vesting triggers), G&A could drop to $17-18M. At $18M G&A and $125M revenue, the ratio is 14.4% — below 15%. This scenario is plausible if the one-time IPO SBC in Q1 has wound down and Q4 SBC is at a normalized run-rate. The question is whether the G&A includes SBC or not — if G&A on the income statement includes SBC, it depends on the vesting schedule. If SBC is excluded from G&A, then the $20M is primarily cash G&A and Five Axis adds to it. Given the uncertainty around SBC timing, I give more weight to the YES outcome but less than 70%.

The structural drivers of elevated G&A (public company costs, 3 integrations, SOX compliance) don't reverse in one quarter. Five Axis adds incremental G&A. Revenue would need to be materially higher than guidance-implied to drive the ratio below 15%. The most likely outcome is G&A of $19-21M against revenue of $120-130M, yielding a ratio of 14.6-17.5%. The midpoint of these ranges produces 15.5-16.2%, above 15%. The probability favors YES but the range of outcomes includes both YES and NO depending on assumptions about SBC and Five Axis G&A magnitude.

Q3 G&A was 16.4% and Five Axis adds more costs in Q4. Revenue growth alone is unlikely to push the ratio below 15% in one quarter. Structural G&A costs from public company, integrations, and expanded corporate overhead are persistent. Probability favors remaining above 15%.

G&A has been growing faster than revenue. Five Axis adds cost. But revenue is also growing strongly and Five Axis adds revenue too. The ratio is tight around 15% depending on exact G&A and revenue amounts. More likely above 15% given the recent trajectory. Some chance of dropping below if SBC normalizes and revenue beats expectations.

The trajectory favors elevated G&A continuing in Q4. Three integrations plus Five Axis equals rising corporate overhead. Revenue would need to surprise significantly to the upside for the ratio to drop below 15%. Base case is G&A of $19-21M against $120-130M revenue, yielding ratios in the 15-17% range. YES is the more likely outcome.