Acorn Energy, Inc. Q3 FY2025 earnings call

• Q3 2025 revenue was lower than Q3 2024 due to timing of hardware revenue from a large cell phone provider contract; final deliveries pushed to Q4 2025 and Q1 2026.
• High-margin recurring monitoring revenue grew $422,000 to $1.560 million in Q3 2025.
• Growth initiatives include: 1) Larger commercial and industrial opportunities via direct sales team across sectors. 2) Strategic OEM relationships to bundle technology and services. 3) Expanding residential market penetration through over 600 generator dealers. 4) Developing new products and enhancing existing ones. 5) Accretive M&A transactions.
• New product launches: Beta launch of next-generation monitors Omni (residential) and OmniPro (commercial/industrial), redesigned RAD for pipeline segment with added measurement capability, and updates to OmniView 2 UI.

In Q3 2025, monitoring revenue was a record $1.560 million, a $422,000 increase. Hardware revenue was significantly lower than Q3 2024 due to the timing of hardware revenue from a large cell phone provider contract. Q3 2025 revenue was $2.478 million vs $3.050 million in Q3 2024. Year-to-date revenue was $9.101 billion, a 22% year-over-year increase. Gross margin improved to 75.9% year-to-date. Monitoring revenue contributed a high proportion, driving gross margin expansion.

• Believes 20% average annual revenue growth is achievable over the next 3 to 5 years, driven by growth initiatives across commercial, industrial, residential, OEM, new products, and M&A.
• Growth is not expected to be straight line but achievable with execution of growth initiatives.

• General risks such as potential disruptions to business operations, changes in consumer or customer demand.
• Specific risks related to ability to execute operating plan, maintain strong customer renewal rates, expand customer base.
• Risks from changes in technology, competition, macroeconomic and financial environment.

Q: Are recurring revenues on the software monitoring side sustainable?

A: Yes, it is sustainable and expected to have consistent growth.

Q: Regarding hardware, are there still more deliveries on the large contract?

A: The majority of deliveries to the customer were finished in Q2 2025, but there's still tail end of the contract with no date yet.

Q: Possibility of additional purchase orders from the large customer?

A: Yes, but no indication yet of forthcoming additional orders.

Q: Percentage of new products for existing customers when launching new products?

A: Omni and OmniPro replace existing TrueGuard and TrueGuard PRO; RAD EX is a brand-new product for corrosion protection side. Existing customers typically don't replace functioning units, but new orders from dealers and customers will be fulfilled with new generation products.

Q: Issue with hardware revenue in Q3?

A: No order and no PO to ship, no inventory issue.