Energy and renewable energy projects company Ameresco (NYSE: AMRC) reported Q1 CY2025 results beating Wall Street’s revenue expectations, with sales up 18.2% year on year to $352.8 million. The company’s full-year revenue guidance of $1.9 billion at the midpoint came in 0.9% above analysts’ estimates. Its non-GAAP loss of $0.11 per share was 56.5% above analysts’ consensus estimates.
Is now the time to buy Ameresco? Find out by accessing our full research report, it’s free.
Ameresco (AMRC) Q1 CY2025 Highlights:
- Revenue: $352.8 million vs analyst estimates of $307.2 million (18.2% year-on-year growth, 14.9% beat)
- Adjusted EPS: -$0.11 vs analyst estimates of -$0.25 (56.5% beat)
- Adjusted EBITDA: $40.63 million vs analyst estimates of $35.32 million (11.5% margin, 15.1% beat)
- The company reconfirmed its revenue guidance for the full year of $1.9 billion at the midpoint
- Management reiterated its full-year Adjusted EPS guidance of $0.80 at the midpoint
- EBITDA guidance for the full year is $235 million at the midpoint, above analyst estimates of $230 million
- Operating Margin: 3.9%, up from 2.7% in the same quarter last year
- Free Cash Flow was -$28.73 million compared to -$85.78 million in the same quarter last year
- Market Capitalization: $631.2 million
CEO George Sakellaris commented, “The first quarter represented an excellent start to the year with both our Projects and Energy Asset businesses delivering strong double-digit growth. We also increased future revenue visibility through robust contract conversion and asset deployments. During the quarter, we added over $367 million to awarded backlog while converting $334 million of awards into contracts. At quarter end our contracted backlog stood at $2.6 billion, almost 80% ahead of the previous year, driving our total project backlog to $4.9 billion up 22% compared to last year. Revenue visibility across our businesses now stands at almost $10 billion, adding to our long-term resilience.
Company Overview
Having played a role in upgrading the energy solutions of Alcatraz Island, Ameresco (NYSE: AMRC) provides energy and renewable energy solutions for various sectors.
Sales Growth
A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Thankfully, Ameresco’s 14.4% annualized revenue growth over the last five years was exceptional. Its growth beat the average industrials company and shows its offerings resonate with customers.
Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Ameresco’s recent performance shows its demand has slowed significantly as its annualized revenue growth of 6.1% over the last two years was well below its five-year trend. 
This quarter, Ameresco reported year-on-year revenue growth of 18.2%, and its $352.8 million of revenue exceeded Wall Street’s estimates by 14.9%.
Looking ahead, sell-side analysts expect revenue to grow 5.5% over the next 12 months, similar to its two-year rate. This projection is underwhelming and suggests its newer products and services will not catalyze better top-line performance yet.
Software is eating the world and there is virtually no industry left that has been untouched by it. That drives increasing demand for tools helping software developers do their jobs, whether it be monitoring critical cloud infrastructure, integrating audio and video functionality, or ensuring smooth content streaming. Click here to access a free report on our 3 favorite stocks to play this generational megatrend.
Operating Margin
Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.
Ameresco was profitable over the last five years but held back by its large cost base. Its average operating margin of 6.7% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.
Looking at the trend in its profitability, Ameresco’s operating margin decreased by 1.2 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. Ameresco’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.
This quarter, Ameresco generated an operating profit margin of 3.9%, up 1.2 percentage points year on year. The increase was encouraging, and because its gross margin actually decreased, we can assume it was more efficient because its operating expenses like marketing, R&D, and administrative overhead grew slower than its revenue.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Ameresco’s EPS grew at an unimpressive 4% compounded annual growth rate over the last five years, lower than its 14.4% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.
We can take a deeper look into Ameresco’s earnings to better understand the drivers of its performance. As we mentioned earlier, Ameresco’s operating margin improved this quarter but declined by 1.2 percentage points over the last five years. Its share count also grew by 8.3%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders. 
Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.
For Ameresco, its two-year annual EPS declines of 12.3% show it’s continued to underperform. These results were bad no matter how you slice the data.
In Q1, Ameresco reported EPS at negative $0.11, in line with the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Ameresco’s full-year EPS of $1.18 to shrink by 11.6%.
Key Takeaways from Ameresco’s Q1 Results
We were impressed by how significantly Ameresco blew past analysts’ EPS expectations this quarter. We were also excited its EBITDA outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this was a good print with some key areas of upside. The stock traded up 16% to $13.42 immediately following the results.
Sure, Ameresco had a solid quarter, but if we look at the bigger picture, is this stock a buy? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.
