This article first appeared on GuruFocus .
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Revenue:Approximately $1.2 million, a 13% increase year-over-year.
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Recurring Subscription Revenue:Increased 164% year-over-year to approximately $764,000.
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Hardware Revenue:Declined 49% year-over-year.
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Installation Revenue:Declined 32% year-over-year.
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Gross Profit:Increased 51% year-over-year to approximately $610,000.
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Gross Margin:Expanded to approximately 49%, up from approximately 37% in the prior year period.
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Operating Expenses:Totaled approximately $2.7 million, compared to approximately $2.3 million in the prior year period.
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Loss from Operations:$2.1 million, compared to approximately $1.9 million in the prior year period.
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Net Loss:Approximately $1.8 million, compared to approximately $2.2 million in the prior year period.
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Adjusted EBITDA Loss:Approximately $3.8 million, compared to approximately $3.1 million in the prior year period.
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Cash Position:Ended the quarter with approximately $3.8 million in cash and approximately $4.5 million in working capital.
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Annualized Recurring Revenue Run Rate:Increased to approximately $3.1 million exiting Q2, compared with approximately $2.6 million exiting Q1.
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Customer Retention Rate:Approximately 99%.
Release Date: August 17, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Recurring subscription revenue surged 164% year-over-year to approximately $764,000, now representing 62% of total revenue, up from 27% a year ago.
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Gross profit increased 51% year-over-year, with gross margin expanding by approximately 13 percentage points to nearly 50%.
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Customer retention rate is approximately 99%, ensuring that most new revenue is net new and not replacing lost business.
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Expansion within existing accounts is strong, exemplified by a third deployment with a Houston multifamily operator, reaching 38% of that customer's Texas portfolio.
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The company is gaining traction in new verticals, including a five-building commercial office portfolio in Southern California where AI surveillance replaces on-site guards, and a new construction project in Baltimore.
Negative Points
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Total revenue growth was modest at 13% year-over-year, with hardware revenue declining 49% and installation revenue declining 32%.
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The company filed a Form 12b-25 with the SEC, indicating it needs additional time to complete the review of its financial results, and the results discussed are preliminary and subject to change.
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Operating expenses increased to approximately $2.7 million, up from $2.3 million in the prior year, driven by investments in sales, marketing, and operational capacity.
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Adjusted EBITDA loss widened to approximately $3.8 million, compared to a $3.1 million loss in the prior year period.
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The company completed a 1-for-30 reverse stock split to maintain compliance with Nasdaq's minimum bid price requirement, which may indicate concerns about stock price stability.
Q & A Highlights
Q: Can you provide an update on your confidence in the second half of 2026 versus the first half, and how the pipeline has changed in the last month? A: James McCormick, CEO, stated that while the company does not provide revenue guidance, the pipeline continues to build, especially with the addition of senior sales members and new Chief Revenue Officer Nile Coates. He expressed strong optimism, noting that the second half of the year is expected to equate to "substantially more revenue" than the first half, driven by a growing pipeline and a strengthened sales organization.
Q: Has anything changed in your approach to the installation and hardware side of the business, or is the shift towards SaaS a deliberate focus? A: James McCormick, CEO, clarified that the model remains a hybrid. The company is not specifically seeking out "takeover" deals to boost recurring revenue. The recent trend toward takeovers, where customers adopt the platform on existing cameras, reflects the ease of demonstrating their differentiation. For customers needing new infrastructure, such as in Southern California and Baltimore, the company still provides installation and hardware. The mix shift is a result of the types of deals closed, not a fundamental strategic change.
Q: Can you break down the gross margin levels for the cloud video and remote guarding segments as you gain scale? A: Greg Smitherman, CFO, explained that service-side margins improve as revenue scales against fixed infrastructure costs. Hardware margins are substantial, generally north of 50%, while installation revenue margins are small, around 10%. The company has already ordered additional infrastructure equipment to support customer growth, and as the mix shifts further towards pure SaaS, overall margins are expected to continue moving upward.
Q: Regarding the Houston luxury multifamily operator, now at 38% of their Texas portfolio, is this a good case study for penetration across your entire installed base? A: James McCormick, CEO, said it is too early to assume 38% is a benchmark for all multifamily partners, as each customer moves at its own pace. However, the company has a concerted effort to build relationships at the highest levels of its largest customers to facilitate expansion. He expects to see additional expansion opportunities across a broad range of the customer base in the second half of 2026.
Q: Are there any bottlenecks to accelerating growth, such as installation capacity or personnel? A: James McCormick, CEO, noted that installation time and capacity are a focus, with Ed Burnett, Chief Security and Operations Officer, leading those efforts. The company outsources most installations to trusted third-party providers, which is easy to scale. They are also in early conversations with a third party to tap into a nationwide installation network. The theoretical monthly installation capacity is around 45 installations, indicating significant untapped capacity to support new sales.
Q: What does the appointment of Nile Coates as Chief Revenue Officer signify for the go-to-market strategy? A: James McCormick, CEO, explained that Nile's appointment is about both improving the existing playbook and adding new elements. Nile brings experience from ECAMSECURE and Stealth Monitoring, companies in the same space generating significantly more revenue. His guidance is already showing demonstrable actions and results. The core focus remains on understanding the product, getting in front of customers, and being "professionally persistent."
Q: Can you quantify how much of the recurring revenue growth is from new deployments versus expansion with existing customers? A: Greg Smitherman, CFO, stated the company does not break out the numbers that way, but noted that deployed sites are up 150% year-over-year. Anecdotally, the growth is split evenly between "land and expand" within existing accounts and new logo growth. The company continues to build from all aspects, as any customer is a good customer in a tremendously large market.
Q: Can you provide an update on the progress of verticals beyond multifamily, such as transportation, logistics, and retail? A: James McCormick, CEO, confirmed that critical infrastructure, commercial properties, transportation and logistics, and construction are already contributing, though the dollar amounts are smaller. He highlighted a commercial property deal with five open-air shopping malls and deployments at high-end remote truck parking lots, where the customer plans to grow exponentially. These verticals are still nascent but are gaining momentum while multifamily continues to perform.
Q: Regarding the operating expenses, is the lower G&A level a new normal base, or just a snapshot of this quarter? A: Greg Smitherman, CFO, explained that last year's G&A was substantially higher due to costs associated with the direct listing and transitioning from a private to a public company. The current lower level reflects better cost control, which is always a focus. He indicated that the expenses have smoothed out, suggesting the current level is a more sustainable base.
Q: When will the Form 10-Q be filed? A: Greg Smitherman, CFO, confirmed that the 10-Q will be filed "imminently," within the five-calendar-day extension period provided under Rule 12b-25. The company filed the Form 12b-25 to allow additional time to complete the review of its financial results for the quarter.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
