ACORN ENERGY, INC. Q1 FY26 Results

Q1’26 results reflect continued growth in our installed base of monitored endpoints – the core value driver of our business––offset by a decrease in hardware revenue largely due to our material cellphone provider contract, which contributed hardware revenue of $876,000 in Q1’25 vs. $93,000 in Q1’26. Given our size, large enterprise deployments are likely to create material variability in our quarterly hardware revenue comparisons, while contributing to our growing base of high-margin, recurring, monitoring revenue. Reflecting the increase in monitoring revenue as a percentage of total revenue, Q1’26 gross margin improved to 80.2% from 75.1% in Q1’25. Turning to our growth drivers, we continue to pursue both residential and enterprise deployments of our monitoring solutions and remain optimistic regarding our growth potential as customers take action to protect their homes and businesses against sudden power outages. We are also advancing our new Infrastructure Solutions segment pursuant to our technology partnership with AIO Systems, through which we secured exclusive North American rights to a comprehensive IoT monitoring solutions suite for telecommunications towers, energy sites and data centers. This solution suite addresses a much broader range of functions and capabilities and as such we expect revenue from an average site to be 5-6x that of our current average sale. Accordingly, we see significant potential as infrastructure operators seek to modernize and harden their monitoring scope and capabilities. We are advancing our program to launch these products in the U.S., fine-tuning product features and alerts, and developing customer materials and sales and training collateral. We’ve also gone live with two full telecom tower sites for use in customer demonstrations. We are still working out final hardware and services pricing models so it’s still too early to project margins in this segment. Nonetheless, the AIO partnership significantly expands both our scope of capabilities as well as our addressable markets. We are confident there is no better existing suite of monitoring solutions. Therefore, we feel this segment has the potential to transform our company. The Infrastructure Solutions opportunity, combined with expected growth in our existing Power Generation segment, has us well-positioned with a high-margin, capital-light business model. We remain focused on our objective of achieving three-to-five year average revenue growth of 20% or more. In addition to our pursuit of larger commercial and industrial customer opportunities, we continue to work toward potential strategic relationships with power generator manufacturers and other OEMs. We also remain active in our pursuit of strategic M&A opportunities aligned with our business model and with the potential to be meaningfully accretive to our earnings. Q1 is typically our lowest-revenue quarter so we expect stronger performance as we progress through the year, though we do expect that hardware revenue comparisons in Q2’26 will again be below Q2’25 due to the impact of the material cell phone provider contract in Q2’25.”