Elauwit Connection, Inc. Common Stock Q1 FY2026 earnings call

• Business Model Overview

  • Elowit is a technology-driven broadband infrastructure provider focused on multifamily and student housing communities, installing end-to-end gigabit fiber and Wi-Fi 6 networks across entire properties.
  • The company uses two primary long-term revenue models: (1) Managed Services: property owners pay an upfront installation fee, with ongoing monthly service fees split between the owner and Elowit under 5-7 year contracts; (2) NaaS: Elowit owns the network via its public balance sheet, and collects higher monthly recurring fees from property owners under 8-10 year contracts.
  • Both models deliver high-margin long-term recurring revenue, integrate property owners into the revenue stream, and offer residents lower-cost, faster service activated at move-in.

• Sales and Pipeline Growth

  • Investments in the expanded sales team and AI-enabled marketing/sales stack have delivered strong early results. As of 1Q 2026, the company has secured verbal commitments for over 11,000 new units across 40 properties in 16 states + Washington DC, held by 14 property management groups, most of which have additional untapped properties in their portfolios.
  • All core unit metrics grew dramatically year over year: contracted units +29%, activated units +110%, billed units +115%.

• Operational Scaling Initiatives

  • Invested in next-generation ERP and advanced inventory platforms for real-time business visibility and cost control, plus system integrations to eliminate redundant work and free leadership time.
  • Scaled the Network Operations Center (NOC) and account management teams, added AI/LLM tools to streamline vendor management and issue resolution, and launched a dedicated quality team to eliminate costly repeat site visits.
  • Restructured the Project Management Office into specialized pods for new construction and retrofits, targeting a project kickoff time of under 14 days (more than double prior speed to market).
  • Expanded the subcontractor network fivefold to support nationwide deployment, and added automation tools to speed up network provisioning and activation.

Elowit tracks core business performance through three nested unit metrics (as of March 31, 2026): Contracted units (waiting for installation or currently in service) increased 29% year over year to 36,720 units. Activated units (fully installed but not yet fully billing) increased 110% year over year to 24,530 units. Billed units (fully generating recurring revenue under contracts) increased 115% year over year to 20,059 units. Financially, total 1Q 2026 revenue was $4.4 million, a 19% year-over-year decrease from $5.4 million in 1Q 2025, driven by lumpy timing of large construction contracts. Cost of revenue decreased to $3.6 million from $4.2 million year over year. Gross profit was $0.8 million, down from $1.3 million year over year. Operating expenses increased to $3 million from $1.6 million year over year, reflecting planned sales and marketing expansion and new public company costs. Operating loss and net loss both widened to $2.2 million from $0.4 million year over year. Adjusted EBITDA loss was $2.2 million, compared to a $0.4 million loss in 1Q 2025. Total contracted backlog (construction + long-term recurring revenue) grew to over $38 million, up from $15.6 million at March 31, 2025. As of quarter-end, the majority of new contract units remain under the managed services model, as proactive sales of the Network-as-a-Service (NaaS) model only launched following the company's 4Q 2025 IPO.

• Full year 2026 revenue guidance remains consistent with prior communications: construction revenue is lumpy in 1Q 2026, and stronger revenue is expected in Q3 and Q4 2026.
  • Gross margins for network construction are targeted to stabilize around 15%, with ongoing system improvements and efficiency initiatives expected to continue driving margin improvement through 2026.
  • Management expects the first NaaS projects to launch in 2026, allowing the company to refine the model before accelerating penetration of the small developer/retrofit market, which is the target segment for NaaS.
  • Recurring revenue contribution is expected to increase over time as the installed base of activated units ramps and the NaaS model scales, reducing the impact of construction revenue lumpiness on overall quarterly results.

• Forward-looking projections (including growth and revenue targets) are not guaranteed, and actual results may differ materially due to unforeseen risks and uncertainties, as detailed in the company's SEC filings.
  • Rapid scaling of the NaaS model would create significant near-term capital requirements, so management is prioritizing a controlled ramp to avoid overstretching the balance sheet.
  • Construction revenue timing is dependent on third-party developer and construction timelines, leading to inherent quarterly lumpiness that can cause year-over-year revenue fluctuations in the near term, before recurring revenue becomes a larger share of total revenue.
  • Margin compression can occur in the near term on the recurring service side, as fixed network costs are recognized up front before service revenue fully ramps over the 12-month onboarding period.

Q: Can you share details on the 11,000 units with verbal commitments, what marketing channels are driving these wins, and what is the conversion timeline to contracted and billed units? / A: The wins come from a mix of legacy and new sales efforts. Details on larger groups will be released in the next 1-2 months as negotiations conclude. A portion of the units will convert to activated units and begin ramping to billed status in 2026 (following the standard 12-month ramp), with the balance converting to activated units in 2027.

Q: How does Elowit plan to win additional properties from existing contracted property ownership groups? / A: Management targets ownership groups with large multi-property portfolios from the start. Typically, owners first award available off-contract properties, then move additional properties to Elowit as existing third-party contracts expire, including some owners that buy out existing contracts early to switch. Winning additional portfolio business depends entirely on strong execution on initial projects, which builds trust with ownership leadership.

Q: What drove the year-over-year gross margin decline, how will cost initiatives impact margins going forward, and what is the expected cadence of construction revenue for 2026? / A: Full-year 2026 construction revenue guidance remains unchanged from prior communications, with stronger revenue expected in H2 2026. Ongoing system implementations (real-time project performance tracking) and SG&A efficiency initiatives are expected to continue improving margins through 2026, bringing network construction margins back to the targeted 15% range.

Q: What is the split of managed services vs NaaS in the current pipeline, and when will the first NaaS project launch? / A: The current pipeline has more managed services opportunities than initially expected, as many property owners prefer to carry network assets on their own balance sheets. NaaS is still early, targeted to the small developer and retrofit segment. The first NaaS projects will launch in 2026, allowing the company to refine the model with a controlled ramp that avoids excessive near-term capital needs.