Tecogen (OTCMKTS:TGEN) reported lower second-quarter revenue and a wider net loss as product sales declined from the prior-year period, while management highlighted increased engagement with large data-center operators and a growing base-business backlog.
Total revenue for the second quarter of 2026 fell 21% to $5.8 million, compared with $7.3 million in the second quarter of 2025. Chief Financial Officer Roger Deschenes said the decline was driven mainly by lower product-segment revenue. Net loss widened to $2.2 million from $1.5 million a year earlier, while adjusted EBITDA loss increased to $1.7 million from $1.2 million.
Data-center demonstrations expand
Chief Executive Officer Abinand Rangesh said Tecogen has gained traction with larger data-center developers after pursuing a strategy that initially focused on smaller facilities. During the past two months, the company hosted 12 product demonstrations, including six in-person and six virtual demonstrations.
Rangesh said eight of the 12 demonstrations involved prospective direct end customers, while the remaining visitors included engineers, partners and a chip manufacturer. The data centers represented by attendees collectively have more than 8 gigawatts of operating capacity and multiple gigawatts under construction, according to the company.
“The feedback has been extremely positive across the board,” Rangesh said, adding that the discussions included specific projects and delivery dates. He said the company is beginning to build inventory of its dual power source chillers and power-generation modules in an effort to shorten delivery lead times for potential customers.
Management did not provide details on the size or cost of the inventory build. Rangesh said the company is attempting to balance working-capital requirements with the ability to respond quickly when projects advance to purchase orders and deposits.
The company believes its equipment can address several issues facing data centers, including grid-power constraints, water use, noise and emissions. Rangesh said Tecogen’s closed-loop dual power source chiller does not use water evaporation, while its equipment is designed to operate in noise-sensitive environments and has low nitrogen oxide and carbon monoxide emissions.
Product sales fall while service revenue rises
Product revenue declined 64% to $1.1 million in the second quarter from $3.2 million a year earlier. Deschenes said the 2025 comparison benefited from shipments of cogeneration systems to customers seeking tax credits under the Inflation Reduction Act of 2022. He noted that product revenue can vary substantially from quarter to quarter.
Product gross margin, however, rose to 48.5% from 29.3%, which Deschenes attributed to price increases and product mix.
Services revenue increased 10% to $4.4 million from $4 million in the prior-year period, supported by higher billable activity and operating hours across existing service contracts and contracts acquired through Aegis. Service gross margin was essentially flat year over year.
Deschenes said service operations incurred approximately $300,000 in one-time costs at several sites during the quarter, including repairs and rental cooling after an electric chiller suffered a catastrophic failure at the start of the cooling season. Excluding those costs, service gross margin would have been 7 percentage points higher during the quarter, according to management.
Energy production revenue increased 35% to $240,000, from $170,000 in the year-earlier period, as uptime improved at certain sites. Energy-production gross margin declined to negative 29% from 25.2%, primarily due to recognition of a guaranteed shortfall of just under $100,000.
Backlog supports third-quarter expectations
Tecogen said its base-business backlog exceeded $8 million at the end of the quarter. Management expects an additional $2 million to $3 million of projects to close over the next several months.
Rangesh said the company expects product revenue to increase in the third quarter and anticipates collecting more deposits, which it expects to support cash flow. He also said that power constraints, long lead times for electrical equipment and high utility rates are creating demand in the company’s non-data-center markets, including multifamily buildings and other facilities considering cogeneration and power-generation equipment.
Operating expenses rose 11.6% to $4.3 million from $3.9 million a year earlier, reflecting higher costs in product and service operations, manufacturing-capacity expansion, and continued dual source chiller development. However, expenses were about $400,000 lower than in the first quarter after the company reduced headcount at several service centers.
Rangesh said the full benefit of service cost reductions, which were implemented mid-quarter, should begin to be reflected in third-quarter results. The company is also making contract-pricing adjustments and working with larger service customers on changes intended to increase equipment operating hours, service revenue and margins.
About Tecogen (OTCMKTS:TGEN)
Tecogen Inc designs, manufactures and sells on‐site power generation and combined heat and power (CHP) systems for commercial, industrial and institutional markets. The company’s natural gas–fueled cogeneration units produce electricity while capturing and reusing waste heat for space and water heating, providing enhanced energy efficiency over traditional utility‐supplied electrical systems. Tecogen’s portfolio also includes ultra‐low NOx emission technologies, absorption chillers and ancillary equipment tailored to meet the specific demands of manufacturing facilities, hospitals, universities and other energy‐intensive customers.
Central to Tecogen’s product lineup is its InVerde e+ series of cogeneration modules, which integrate internally developed low‐emission combustion systems with advanced controls to optimize performance and reliability.
