Duos Technologies Group, Inc. Q3 FY2025 earnings call

• The company is strategically pivoting towards focusing on Edge Computing and the data center space, with progress being made in Edge Data Center deployments aiming to reach 15 by year-end. - There have been senior management changes, including Adrian Goldfarb stepping down as CFO, Leah Brown taking over as CFO, and Doug Recker joining as President. - Financially, the company achieved adjusted EBITDA profitability in Q3, 1 quarter earlier than originally projected. Gross margin improved due to the Asset Management Agreement with APR Energy. - Plans for the future involve expanding the Edge Data Center business and growing Duos Technology Solutions as a strategic sourcing partner for data center infrastructure equipment.

In Q3 2025, total revenues increased 112% to $6.88 million compared to $3.24 million in Q3 2024. For the 9 months ended 2025, total revenues surged 202% to $17.57 million from $5.82 million in the same period the previous year. A substantial portion of Q3 2025 revenue, approximately $6.59 million, stemmed from recurring services and consulting, with $5.15 million originating entirely from Duos Energy's Asset Management Agreement with APR Energy. The company is also making strides in Edge Data Center deployments and is venturing into new data center-related businesses like Duos Technology Solutions.

• The company remains on track for 2025 consolidated revenue, expecting it to fall between $28 million and $30 million. - The company is confident in maintaining profitability moving forward and anticipates better results in 2026, including full-year adjusted EBITDA profitability.

• Supply chain challenges exist, such as lengthy processing times for smaller items like fiber, medium voltage cabling, etc. - There is a reliance on the Asset Management Agreement with APR Energy which is set to conclude in 2026, though the company is working to replace it with other revenue streams.

Q: How is the growing demand from AI and cloud customers affecting your business? Are you noticing any changes in what customers need or the size of the deals?

A: Charles Ferry and Doug Recker responded, stating that the growing demand from AI and cloud customers is positively impacting the business. Hyperscalers and data center developers are seeking alternatives like Edge Computing due to power constraints. Customers' needs are shifting towards more modular and scalable data center solutions, with initial deal sizes being smaller in Tier 3/4 markets but expanding in scope.

Q: You reported a 112% year-over-year revenue increase and positive adjusted EBITDA this quarter. Can you elaborate on what drove this performance and how sustainable this trajectory looks heading into 2026?

A: Charles Ferry explained that the Asset Management Agreement with APR Energy was a key driver of the revenue growth. The company is confident in the sustainability of this trajectory as it is working to replace the revenue from the expiring Asset Management Agreement with growth in the Edge Data Center business and new initiatives like Duos Technology Solutions.

Q: You've highlighted progress toward 15 Edge Data Center deployments this year. Can you update us on the current progress and timing for the remaining installations? And are there any constraints on the supply chain?

A: Doug Recker stated that 6 Edge Data Centers are already in place. 4 are set to be installed this month, and 5 more will be installed by the end of the month and early December. There are no major supply chain constraints as the modular design of the 300 kW pods allows for relatively quick procurement.

Q: With your new modular data center patent now granted, how does this technology enhance your competitive advantage, and how do you intend to monetize it?

A: Doug Recker explained that the patent provides a clean room environment protection, ensuring dust, dirt, and moisture are kept out, which is crucial for equipment warranty and compliance. This technology enhances competitive advantage by enabling SOC 2 compliance, allowing the company to serve industries like finance and healthcare. Monetization will come through offering secure and efficient data center solutions to these industries.

Q: Where are you prioritizing your target markets for Edge Deployments? And what factors guide your regional expansion strategy?

A: Doug Recker mentioned that the initial focus is on the education sector in Texas, with the first contract outside Texas secured in Illinois. The factors guiding regional expansion include the need for connectivity in Tier 3/4 markets and the demand for better access to cloud platforms in those areas.