Acorn Energy, Inc. Q1 FY2026 earnings call

Q1 2026 results reflect continued expansion of monitoring endpoints offset by anticipated decrease in year-over-year hardware revenue from a major customer. Non-cash management and board compensation in Q1 due to 2025 performance and AIO partnership. Actively working on AIO solutions for infrastructure with two live demo sites in Atlanta. Focus on telecom customers first for AIO, then data centers and utility substations. Omnimetrics segment was solidly profitable in Q1 with operating income of $395,000.

Total revenue in Q1 2026 was $2,227,000, down 28.1% from $3,098,000 in Q1 2025. The decrease was driven by a $1,019,000 (55.7%) decline in hardware revenue, partially offset by a $1,417,000 (11.7%) increase in monitoring revenue. Hardware revenue was $810,000, including new hardware sales and amortization of deferred hardware revenue. Gross margin improved 510 basis points to 80.2% from 75.1% in Q1 2025. Omnimetrics segment operating income was $395,000. The Infrastructure Solutions segment had no revenues in the first half of 2026.

Expects incremental hardware revenue from the major customer in 2026 in the range of $350,000 to $500,000. Believes 20% average annual revenue growth over a three- to five-year period remains achievable. High-margin recurring revenue model positions well for growth and value to shareholders.

Factors such as potential disruptions to business operations, changes in consumer or customer demand, ability to execute operating plan, maintain strong customer renewal rates, expand customer base, changes in technology, competition, and shifts in the macroeconomic or financial environment.

Q: Good morning, Jan and Tracy. I'll start off by saying I'm suffering with a bad head cold. So if I point on inaudible or cough, please let me know and bear with me. First, just a comment in that your option package, you know, I'm an investor in a lot of other public companies, and I don't think it's in any way unreasonable given the success that Omnimetrics and Acorn has had. I think it's wonderful that your leadership is going to participate in the future success of the company, and I don't think the number of options is in any way out of line. So that's my opinion. Question, we've seen very long sales cycles for the omnimetric generator monitoring equipment. Given that your new infrastructure solutions partnering with AIO are going to maybe, you know, be even greater outlays, Is there a chance that we're also going to see a very long sales cycle there, or do you feel that the solutions that you're offering in this infrastructure segment are so compelling and urgent that we'll see a shorter sales cycle?

A: Joel, thank you very much for your comments, and I hope you feel better. The answer is we're not 100% sure yet. Yes. Typically, I would say that the cell tower solution will have as long a sales cycle as our generating monitoring solution. It's just because we're dealing with large corporations and so there's just a lot of hate to get through with large corporations. Offsetting that is that theft is really a very big problem that they are now beginning to address. So, it could be that because of the need, the sales cycle will be quicker. I just don't know yet because we haven't really started to get into the weeds with our customers. But, you know, certainly the technicians that we've spoken to in the field as we were putting up these units, they certainly feel that there's a strong and very current need for the product.

Q: Hi. Okay, well, so you've got a lot of new initiatives that are interesting. I just wanted to ask about, you know, you had that big sale about a year ago to the large customer, and then they didn't renew in September. Can you just give us some background on what happened there? Was it the product that didn't really work, or why that one did not get considered?

A: Hi, James. Your basic assumptions need to be corrected. So, you know, the contract was for approximately between 5 and 10,000 monitoring units. They wanted us to ship it to them within a year. Initially, when we were negotiating with them, it was two years, but then they changed it. They wanted to have it all within a year, and so we did that, and so Q3, Q4 of 2024, and Q1 and Q2 of 2025, we basically shipped all the product to them, which doesn't actually mean that that's when all of the total revenue of that was recognized because they need to go into the system, whatever. But we finished that major contract, and that's that. Now, and what I've said in my prepared remarks here is that they have come back to us in 2026, and that I anticipate that we'll have another $350,000 to $500,000 worth of equipment sales. Now, this is not monitoring because we continue to monitor everything. So, you know, that's approximately, you know, call it 7% to 10% of the original order. They now come back for additional stuff. So we have a very good relationship with them. The product works very well. They're very happy with it, and they continue to be a very big and happy customer of ours.

Q: Hey, Jen, Tracy, good morning. Another great quarter. Love seeing the monitoring revenue continue to trend upward. Sorry, I did get on the call really, really late. Just on the AIO, did you guys discuss, and I can go back to the notes afterward, but did you discuss the go-to-market strategy for the product?

A: We mentioned it briefly that our main focus is going to be telecom customers because we already have them as customers. So, that's going to be our first target. And, you know, we have these two demo sites up and live that we take people to. So, that's going to be our first strategy. Data centers is going to be our second strategy. AO has a very good data center product, and that will be, you know, after telecom, we're going to focus on data centers, and then third is utility substations. So, that's kind of how we see it. You know, we've already put out some initial phone calls to our customers. the pricing models, CapEx model and an OpEx model that we're going to roll out in the next few weeks. And so that's kind of our game plan.

Q: Hello again, Jan and Tracy. Just a couple of quick follow-ups. One is sort of leveraging off of Richard's question. I'm curious, this may be a little nitpicky, but your partnership with AIO, is that with ACORN, the parent, or with Omnimetrics? So, in other words, I know the branding is going to be Omnimetrics. I don't know whether that means it falls under Omnimetrics and we owe 99% of what we wind up getting from that partnership or whether it's under ACORN and we get 100%. That's the first question.

A: It's going to be under, I mean, everything's going to be done under On Demetrics. I mean, the sales, the sales manager that we've hired for AIO is under On Demetrics and is resident in Atlanta. So, and it's going to have an On Demetrics brand name. So, review it as an Omnimetrics product. The other question is, can you tell us whether, I expect the answer is yes, but whether the existing AIO sales model is also a subscription model where there are customers overseas, they make money from both certainly from hardware sales, but do they also get continuing revenue from monitoring and maintenance and whatnot?

A: Yeah, so their model is that they mainly sell the equipment and then they have a, what they call SLA, they have an ongoing revenue stream as well. We don't think it's going to be as big as our monitoring revenue because we're going to be offering, you know, more services. And we also, as I said, might have an OpEx model where we will roll in the complete package, meaning equipment, monitoring, et cetera, for one price, one monthly price. So, our model is going to be a little bit different than their model because we think our market's a little bit different than the markets that they address.

Q: Yeah, so they have their own generated mine solution, and we have our own generated mine solution. Ours is a little bit more comprehensive than theirs, and we will be integrated in the software. So, for example, the two cell towers that we are on, as the demo models happen to have our generator monitors in them. And so they are integrated into the software system of AIO. Right. So your customers will get the best of both worlds. They'll get the maybe slightly more advanced and feature-driven current omnimetrics generator monitoring together with the new infrastructure solutions provided by AIO, if I understand correctly.

A: Yeah. Yeah. We hope our customers believe the same thing.

Q: Sure. So, as I said in previous calls, And our metrics have not been focused on the data center market because our product is a remote monitor, and most of the data centers have 24-7 people onsite monitoring their equipment, their servers, et cetera. And we only had one product, a generator monitor. And so, that was not a focus of ours. With the AIO product, AIO has a, again, a full suite of products for a data center. And one of the other things we are getting with the AIO partnership is a NOC. So, we think that the data center market is a market that we can address and we hope to address it. But again, as I said before, we want to first tackle the cell power market, and then we would go after the data center market.

A: Excellent.

Q: I have no update. We continue to have discussions with two OEMs, but no update to report.

A: Yeah