Acorn Energy, Inc. Q4 FY2025 earnings call

Core Initiatives - Larger commercial industrial opportunities: Internal sales teams pursue across sectors like healthcare, telecom, etc., with complex sales cycles. - Strategic relationships with OEMs: Ongoing dialogues to integrate technology, e.g., white labeling products. - Expanding residential and small business markets: Optimistic for rebound in 2026 due to factors like winter storms and moderating interest rates. - Investment in R&D: To enhance existing products and develop new ones. - Pursuit of accretive opportunities: Motivated to identify acquisitions, recent strategic partnership with AIO. - AIO Partnership: AIO is global leader in remote monitoring, partnership expands product offerings and addressable market, first demo unit to be installed by end of month, no revenues expected until second half of 2026. - Product Launches: Launched next-generation generator monitors for residential and commercial/industrial, and enhanced product for Pipeline segment.

In 2025, Acorn achieved record revenue. Monitoring revenue grew 22% due to expansion of monitored endpoints, with 95% gross margin. Total hardware revenue declined 8% due to timing of deliveries for a large cell phone customer and a decrease in noncash deferred revenue amortization. Excluding deferred revenue amortization impact, new hardware revenues rose ~8%. Gross margin improved to 76.8% from 72.8%. Diluted earnings per share was $0.99 in 2025. Cash flow from operations more than doubled to $2.090 million. Year-end cash position improved. Monitoring revenue contribution was significant due to growth in monitored endpoints, hardware revenue had fluctuations based on contract timing and deferred revenue amortization.

- Believes 20% average annual revenue growth over 3 - 5 years is achievable. ### - Believes ~50% of each incremental revenue dollar from existing business should flow to operating income. ### - AIO partnership revenues not expected until second half of 2026.

- General risks such as potential disruptions to business operations or 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 or shifts in macroeconomic or financial environment.

Q: Asked about status of talking to three OEMs and if still on track.

A: Jan Loeb said still true, long sales cycle, likely to get one.

Q: Asked about updates on acquisitions, three in mind with three term sheets out, status of others.

A: Jan Loeb said had discussions with two others, price not agreed yet, too far apart.

Q: Asked about bottlenecks for growth drivers, personnel or sales.

A: Jan Loeb said #1 bottleneck is customer base, sales cycle longer for bigger customers, internal team excellent, need to stay on top of customers.

Q: Asked about monitoring revenue decrease in 4Q '25 compared to 3Q '25.

A: Tracy Clifford said due to nonrecurring revenue recognition policy impact in 3Q '25, 4Q was above 3Q ongoing.

Q: Asked about market receptivity to AIO and on demand response.

A: Jan Loeb said too early to tell market receptivity for AIO, ongoing discussions with utilities on demand response but unclear on money flow.

Q: Follow-up on AIO, asked about sharing monitoring revenue and hardware sales.

A: Jan Loeb said getting hardware sale, structure is small upfront fee and earn-out in ongoing monitoring fee.

Q: Follow-up on AIO, asked about right to South America business.

A: Jan Loeb said built into contract for potential opportunities in South America.