Summary of Duos Technologies Q1 2026 Earnings Call

1Key Financial Results and Metrics

Total Revenue: Approximately $2.7 million, down from $4.9 million in Q1 2025.

Revenue Breakdown:

Technology Systems: $44,000

Technology Solutions: $562,000

Services and Consulting: $532,000

Related Party Services: $1.5 million

Hosting Revenue: $30,000

Gross Profit: $1.6 million, achieving a gross margin of approximately 59%.

Net Loss: $3.5 million, compared to a net loss of $2.1 million in Q1 2025.

Adjusted EBITDA: Negative $1.5 million, with expectations for improvement in subsequent quarters.

Cash Position: Ended Q1 with $33 million in cash, bolstered by a $65 million capital raise in March.

2Strategic Updates and Business Highlights

Transition Focus: Continued shift from legacy rail operations to a data center-focused tech platform, with the Duos Edge AI Technology Solutions division as a primary growth driver.

Partnerships: Strategic collaboration with Hydro Host for GPU-as-a-Service, expected to generate $176 million in revenue over 36 months, with anticipated margins exceeding 80%.

Backlog Growth: Increased backlog to approximately $14 million in Technology Solutions, with a total of $43.5 million in contracted bookings expected to be recognized in 2026.

Expansion Plans: Geographical expansion into multiple U.S. regions, including Maryland, Iowa, Georgia, and Texas, to serve both enterprise and hyperscale customers.

3Forward Guidance and Outlook

Revenue Target for 2026: Reconfirmed expectation to exceed $50 million, driven by GPU-as-a-Service and Technology Solutions.

Revenue Recognition: Significant revenue expected to ramp in the second half of 2026 as projects come online.

Operational Goals: Continued focus on acquiring new customers and optimizing capacity utilization in existing edge data centers.

4Bad News, Challenges, or Points of Concern

Declining Revenue: Notable decrease in revenue compared to the previous year, primarily due to the wind-down of the Duos Energy and new APR asset management agreement.

Increased Operating Expenses: Higher operating costs contributing to net losses, with a need for ongoing investment in marketing and operational separation from the rail business.

Competitive Pressures: Emerging competition in the modular data center space, although management expressed confidence in their unique offerings and partnerships.

Execution Risks: The transition from legacy operations to a new business model poses risks, particularly in maintaining operational efficiency and customer acquisition during the shift.

5Notable Q&A Insights

International Expansion: While there is interest in international markets, management indicated a focus on proving the model in the U.S. first.

Customer Demand: Strong demand for 5 to 10-megawatt data center solutions driven by the need for localized computing for AI workloads.

GPU Ownership Model: Discussion on the potential resale of GPUs after contract expiration, with expectations of maintaining value due to high demand.

Strategic Partnerships: Management is actively seeking strategic investors and partnerships to support growth and capitalize on market opportunities.

Market Positioning: Confidence in the company’s unique modular data center approach, which differentiates it from competitors focused on larger, less flexible solutions. Overall, Duos Technologies is navigating a significant transition towards a data center-focused business model, with promising growth prospects despite current revenue declines and operational challenges.