DAIC

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to Dot Ai's 1st quarter 2026 earnings conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. This conference is being recorded today, Monday, May 11th, 2026, and the earnings press release accompanying this conference call was issued after the market close today. On our call today is Dot Ai's Co-Founder and CEO, Ed Nabrotzky, and CFO, Charlie Maddox. This conference call may contain, in addition to historical information, forward-looking statements within the meaning of the Federal Securities laws regarding Dot Ai. Forward-looking statements include, but are not limited to, statements that express the company's intentions, beliefs, expectations, strategies, predictions, or any other statements relating to its future earnings, activities, events, or conditions.

These statements are based on current expectations, estimates, and projections about the company's business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Actual outcomes and results may, and are likely to, differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors discussed from time to time in the company's Form 10-K and other documents which the company files with the U.S. Securities and Exchange Commission. Throughout today's call, the company may refer to adjusted EBITDA, a non-GAAP financial measure, which it believes provides helpful information to investors about the performance of the business on an ongoing basis.

A reconciliation of adjusted EBITDA to its most directly comparable GAAP financial measure is included in today's earnings release, which is available on the Dot Ai website under the Investors tab. At this time, I'd like to turn the call over to Co-Founder and CEO, Ed Nabrotzky. Ed, the floor is yours.

Thank you, operator, and thank you to everyone for joining us today. I'd like to welcome you to our first quarter 2026 financial results conference call. Dot Ai offers a solution built on two pillars: a unique IoT implementation for in-process data collection and a modern cloud-based software suite that takes advantage of this new source of data to implement AI workflows. Our solutions give every physical asset a persistent virtual identity, an intelligence of how it fits in the process, and a real-time 3-D location. This is what we mean by asset intelligence. Today, that data serves humans primarily through dashboards. Tomorrow, it will serve autonomous systems through APIs. The same infrastructure, exponentially larger emerging market as the AI disruption continues in our industrial verticals. 2025 was a foundational year that marked our transition to commercial operations and public company reporting.

We discussed in our previous Form 10-K call that the roughly $5.8 million in hardware revenue over the last two quarters of 2025 was a leading indicator for deployments in 2026. That significant revenue would not be realized in those deployments until the last two quarters of the year. As discussed, the first quarter of 2026 has been characterized by low revenue as we work through pilots and testing in preparation for those rollouts. Our focus has been on hardening the solution and executing a disciplined plan we laid out for the year, preparing to convert pipeline into recurring subscription revenue, scaling our hardware deployments, and strengthening our financial profile.

Our commercial interest continues to validate our go-to-market strategy, and although we've seen slower project movement than expected, we are deploying and demonstrating our IoT systems across a growing base of customers in multiple applications in preparation for enrollment into our SaaS services. As our subscription model is built on enrollment of devices feeding data to our cloud-based software, hardware deployments remain a forward indicator of subscription revenue growth through 2026 and beyond. On a technology front, with the completion of our generation 3 SaaS platform in 2025, we now have a commercial-grade platform with full multi-tenant architecture. We've made several updates to this platform in Q1 as we exercise it in pilots and prepare for rollout at scale. This software is the backbone of our recurring revenue model. It enables enterprise-scale deployments with real-time asset visibility, predictive analytics, and seamless integration with existing customer infrastructure.

A substantial portion of the development is done with talented teams in Bangalore that have been with us for some time and have leveraged AI tools to be incredibly efficient in developing and testing our platform. As disclosed in our filings, we're in the midst of a capital raise required to bridge the gap to future revenue we've outlined. Our annual shareholders meeting this week will vote on measures to enable that raise. Shortly after quarter end on April 1, we co-hosted an industry webinar with Wiliot and Würth Industry North America titled Ambient IoT: The Intelligence Nobody Talks About But Everyone Depends On, which explored how Ambient IoT and AI are moving industrial operations beyond the basic asset tracking into true operational intelligence.

These joint activities are helping educate the market, build our pipeline, and reinforce our position as the full stack asset intelligence platform of choice for our partners. We also took steps during and after the quarter to strengthen our capital markets presence. In the first quarter, we engaged MZ Group, an international investor relations firm, to lead a strategic investor relations and financial communications program across our key markets. MZ will help us tell the Dot Ai story to a broader audience of institutional investors, brokers, analysts, and private investors and coordinate roadshow and investment conference participation as we work to drive better visibility in the public markets. We will also be participating in the upcoming Noble and Planet MicroCap events in June as we continue to broaden our base of institutional and micro cap investors.

Speaking to the recent negative shift in the semiconductor market on which we draw for our hardware products, this will not have a significant impact on us in the short term as we have sufficient inventory of both components and finished assemblies on hand to accomplish our goals this year. The broader market for asset intelligence and real-time supply chain visibility continues to grow rapidly. Industry tailwinds around IoT adoption, AI-driven logistics optimization, and the increased need for real-time asset tracking across multiple verticals are all working in our favor. Tariff policy in the U.S. is driving more business our way as we take advantage of our Made in America position. Our competitive differentiation lies in the combination of our proprietary hardware, IoT bridges, and Smart Industrial Tags with our Dot Matrix SaaS platform and AI analytics capabilities.

This full stack approach allows us to deliver end-to-end solutions that integrate with customers' existing infrastructure, which we believe is a meaningful competitive advantage. Our channel model enables us to scale quickly and leverage the expertise of partners in adopting our technology to many applications, verticals, and use cases. Looking ahead to the balance of 2026, we're reaffirming guidance of revenue of $6 million to $seven and a half million. These bookings and revenue results will be back-end weighted, as we discussed, occurring mostly in the third and fourth quarter of 2026. This outlook reflects our strategic shift towards recurring subscription revenue and long-term margin expansion, consistent with the plan we communicated on our Q4 2025 call.

We expect to book 3-5-year subscription contracts with strong customer retention profile as our industrial base relies on our installed hardware for in-process data collection and our software solution for operational execution. The 2026 revenue guidance reflects the strategic shift to long-term contracts and ARR, as well as our confidence in the pipeline we've built, the partnerships we've established, and the operational capacity we now have in place. Note that we have implemented reductions in labor as well as cost controls to constrain spend to align with the achievement of important subscriber milestones this year. Our priorities for 2026 are clear: convert pipeline into revenue, expand our customer base, deepen existing customer relationships, scale our partner ecosystem, and continue to build recurring SaaS revenue as proportion of the total mix.

We are laser-focused on execution and building a sustainable high growth and ultimately profitable business in the quarters to come. I'd now like to turn the call over to CFO Charlie Maddox to walk through some key financial details for the first quarter of 2026. Charlie?

Thank you, Ed. Revenue for the first quarter of 2026 was as expected de minimis as compared to $0.4 million in the same year-ago quarter. The year-over-year decrease primarily reflected the back-end weighted nature of our 2026 revenue plan, with subscription contracts and hardware deployments expected to ramp up in the second half of the year, as well as our strategic transition from one-time hardware-led sales towards longer-term recurring subscription revenue. Gross profit for our revenue in the first quarter saw a gross margin of 78.2%, reflecting the inherent strength of our model. Operating expenses for the first quarter of 2026 totaled $4.1 million as compared to $2.1 million in the same year-ago quarter.

The increase was primarily driven by costs associated with operating as a public company, expansion of our commercial team and partner ecosystem, and continued investment in our Gen 3 Asset Intelligence platform, partially offset by cost controls implemented during the quarter. Net loss for the first quarter of 2026 was $4.5 million or $0.15 per basic and diluted share as compared to a net loss of $1.3 million or $0.11 per basic and diluted share in the same year-ago quarter. Adjusted EBITDA, a non-GAAP measure, totaled negative $3.9 million in the first quarter of 2026 as compared to negative $1.3 million in the same year-ago quarter. The U.S. GAAP net loss to adjusted EBITDA reconciliation table can be found in our earnings press release, which crossed the wire earlier today.

Our capital allocation priorities remain focused on investing in revenue-generating activities, including expanding our commercial team, co-marketing and partner onboarding, as well as technology priorities developing our software platform. We will continue to evaluate capital sources thoughtfully and remain focused on aligning capital access with revenue-generating milestones and long-term shareholder value. This completes my prepared comments. Before we begin our question and answer session, I'd like to turn the call back to Ed for some closing remarks. Ed?

Thank you, Charlie. In summary, the first quarter of 2026 laid the foundation for commercial momentum in the second half of this year. Our pipeline is growing, our partner ecosystem is expanding, and our Dot Matrix 3.0 Asset Intelligence platform is in the hands of our enterprise customers. We remain confident in our full year 2026 revenue guidance of $6 million-$7.5 million, although we expect these results to be back-end weighted as subscription contracts ramp. We have the team, the technology, and the partnerships in place to execute. We're building something special here at Dot Ai, and we appreciate your support as we continue this journey. With that, operator, let's open the line for questions.

Thank you, sir. We will now begin the question and answer session for telephone participants. If you have a question, please press the star followed by the one on your touch tone telephone. If you would like to withdraw your question, please press the star followed by the two. Again, that is the star followed by the one if you have a question. If you are using speaker equipment, you will need to lift the handset before making your selection. I will now pause as we assemble a queue. Again, that is star one if you would like to ask a question. It appears we have no questions. I will now hand the call back to Co-Founder and CEO Ed Nabrotzky for his closing remarks.

Thank you everyone for joining us today. We're grateful that you could be part of our journey and that you're continuing to have interest in working with us as we go forward. We look forward to reporting our second quarter as scheduled.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may now disconnect your lines and have a wonderful day.

Note this conference is being recorded. I will now turn the conference over to Ed Nabrotzky, CEO. Thank you. You may begin.

Thank you, operator, and thank you to everyone for joining us today. I'd like to welcome you to our fourth quarter and full year 2025 financial results conference call. Dot Ai offers a solution built on two pillars: a unique IoT implementation for in-process data collection and a modern cloud-based software suite that takes advantage of this new source of data to implement AI workflows. Our solutions give every physical asset a persistent virtual identity, an intelligence of how it fits in the process, and a real-time 3D location. This is what we mean by asset intelligence. Today, that data serves humans primarily through dashboards. Tomorrow, it will serve autonomous systems through APIs. Same infrastructure, exponentially larger emerging market as the AI disruption continues in our industrial verticals. 2025 marked our transition to commercial operations and public company reporting.

As we move into 2026, our focus is disciplined execution, recurring revenue conversion, and strengthening our financial profile. As you look at our filings, we completed our business combination in June, began trading on Nasdaq, and transitioned from a development-stage company into a commercial enterprise, generating meaningful revenue. Our full year 2025 revenue of $5.8 million from effectively no revenue in the prior year is a testament to the market demand for our asset intelligence platform and the team we've built to capture it. Our fourth quarter capped a year of accelerating momentum and is a leading indicator of progress in our commercial outlook for 2026. Our commercial traction in 2025, particularly in the second half of the year, validated our go-to-market strategy.

We are deploying our IoT systems across a growing base of customers in multiple applications in preparation for enrollment into our SaaS services. Amongst the strong hardware sales, it's also important to note that our Q4 revenue closed with the first subscription of quarterly recurring revenue, building a strong base to expand subscriptions in 2026. As our subscription model is built on enrollment of devices feeding data to our cloud-based software, hardware sales are a forward indicator of subscription revenue in 2026 and beyond. On the technology front, 2025 saw the completion of our generation three SaaS platform with full multi-tenant architecture. This is the backbone of our recurring revenue model. It enables enterprise-scale deployments with real-time asset visibility, predictive analytics, and seamless integration with existing customer infrastructure.

We achieved our SOC 2 Type 1 cybersecurity certification during the year, which is a critical requirement for enterprise and government customers. We're also continuing investing in our next generation IoT tracking technology, leveraging UHF, 5G RF, and BLE capabilities. Our manufacturing subsidiary, Dot Works, based in Barceloneta, Puerto Rico, significantly expanded operations during the year. Inventory grew as we built up stock to support the growing order pipeline. This operational build-out positions us to meet the materially high production volumes we expect in 2026 as we execute our plan. We also continue to expand and solidify our software teams in India. A substantial portion of programming is done with talented teams in Bangalore that have been with us for some time and who leverage AI tools to be incredibly efficient in developing and testing our platform. We made significant progress expanding our partner ecosystem in 2025.

We secured our first international distribution partnership with CanTech Group in Australia, extending our commercial reach into the Asia Pacific region. We announced a strategic partnership with Wiliot to innovate industrial-grade ambient IoT solutions, expanding the capabilities of our platform. We also partnered with Wrth Industry North America to bring our asset intelligence technology to the industrial supply chain market. These partnerships validate our platform and extend our go-to-market reach well beyond what our direct sales team can achieve alone. One of the most important accomplishments in 2025 was building the executive team to scale this business. We brought in Delores "Del" Rochester as our Chief Revenue Officer to lead commercial execution. Dr. Ansgar Thiede joined us as Chief Strategy Officer to guide our long-term strategic direction.

Charles Maddox, one of our co-founders, serves as our Chief Operating Officer and Chief Financial Officer with the assistance of an experienced fractional CFO in Robyn D'Elia to strengthen our financial operations and report as a public company. Our CTO, Vijay Nambiar, is a proven leader of engineering departments and technology companies large and small, most recently coming from the 5G group at Verizon. This team, combined with other talented professionals across the company, give us the horsepower and experience discipline to execute on our ambitious growth plans. The broader market for asset intelligence and real-time supply chain visibility continues to grow rapidly. Industry tailwinds around IoT adoption, AI-driven logistics optimization, and increasing need for real-time asset tracking across multiple verticals are all working in our favor. Tariff policy in the U.S. is driving more business our way as we take advantage of our Made in America position.

Our competitive differentiation lies in the combination of our proprietary hardware, IoT bridges, and Smart Industrial TAGS with our SaaS platform and AI analytics capabilities. This full stack approach allows us to deliver end-to-end solutions that integrate with customers' existing infrastructure, which we believe is a meaningful competitive advantage. Our channel model enables us to scale quickly and leverage the expertise of partners in adapting our technology to many applications, verticals, and use cases. Looking ahead to 2026, we're affirming bookings guidance of $12 million-$15 million and revenue of $6 million-$7.5 million. These bookings and revenue results will be back-end weighted, occurring mostly in the third and fourth quarter of 2026. While this revenue outlook is more measured than earlier projections, it reflects our strategic shift towards recurring subscription revenue and long-term margin expansion from the earlier hardware transactions reported in the period.

We expect to book three to five year subscription contracts with a strong customer retention profile as our industrial base relies on our installed hardware for in-process data collection and our software solution for operational execution. The 2026 revenue guidance reflects the strategic shift to long-term contracts in ARR, as well as our confidence in the pipeline we've built, the partnerships we've established, and the operational capacity we now have in place. Note that we've implemented reductions in labor as well as cost controls to constrain spend to align with achievement of important subscriber milestones. Our priorities for 2026 are clear: convert pipeline into revenue, expand our customer base, deepen existing customer relationships, scale our partner ecosystem, and continue to build recurring SaaS revenue as a proportion of the total mix.

We are laser-focused on execution and building a sustainable, high-growth and ultimately profitable business in the quarters to come. I'd now like to turn the call over to Charles Maddox to walk through some key financial details from the fourth quarter of 2025. Charlie?

Thank you, Ed. Our 2025 annual results include approximately $27 million of expenses primarily related to our IPO and de-SPAC process earlier this year, including the changes in fair value of SAFE notes and convertible notes, loss on debt extinguishment, transaction costs, and acquisition and integration costs. These are specific to this reporting year. In our reported results today, we have included adjusted EBITDA, a non-GAAP measure, for all periods presented as a supplemental disclosure, excluding the effect of these non-recurring transactions. For the fourth quarter of 2025, adjusted EBITDA totaled a $2.2 million loss as compared to $1.9 million loss in the same year-ago quarter. Revenue for the fourth quarter of 2025 grew to $4.5 million as compared to 0 in the same year-ago quarter.

The increase was primarily driven by the company's transition from development stage operations to commercial revenue generation following the completion of its business combination in June 2025. Gross profit for the fourth quarter of 2025 grew to $2 million, representing a gross margin of 43.7%, as compared to a gross profit of $0 in the prior year period. The increase in gross profit reflects significant growth in revenue gained almost entirely from hardware sales. Operating expenses in the fourth quarter of 2025 totaled $4.2 million, as compared to $2.4 million in the same year ago quarter. The increase was primarily due to cost of compliance as we worked through the de-SPAC actions and the requirements of operating in a public market.

Net loss for the fourth quarter of 2025 shrank to $2.4 million, or $0.08 per basic and diluted share, as compared to a net loss of $2.7 million, or $0.22 per basic and diluted share in the same year-ago quarter. Turning to capital allocation and our financial position going forward, as previously disclosed, we have access to an equity line of credit which provides us with meaningful financial flexibility as we scale operations in 2026. Our capital allocation priorities remain focused on investing in revenue-generating activities, including expanding our commercial team, co-marketing, and partner onboarding, as well as technology priorities developing our software platform.

We will continue to evaluate capital sources thoughtfully and remain focused on aligning capital access with revenue-generating milestones and long-term shareholder value, as shown in our recent S-1 filing outlining a potential secondary capital raise in 2026. This completes my prepared statements. Now, before we begin our question and answer session, I'd like to turn the call back to Ed for some closing remarks. Ed?

Thank you, Charlie. In summary, 2025 was a foundational year. We went from development stage to nearly $6 million in revenue. Our Q4 momentum is carrying into 2026 and will show up later in the year as subscriptions. We have the team, the technology, and the partnerships in place to execute on our revenue guidance. We're building something special here at Dot Ai, and we appreciate your support as we continue this journey. With that, operator, let's open the line for questions.

Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from this queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Hunter Diamond with Diamond Equity Research. Please proceed.

Hi, congrats on the results. I guess near term, where are you seeing the best opportunity? Is it upselling? Is it developing new products? Is it just expanding, geographically? I guess where do you see the most near-term opportunity?

Our best opportunity, Ed will probably chime in, is what we call our land and expand strategy. We've solved initial problems for our customers. Once we've solved that initial problem, we typically expand and solve additional problems within the same facility. Then we go multiple facilities. So the share of customer is the larger metric, as well as, of course, adding subscribers. The near-term opportunity is the increased share of customers for the existing customers in our pipeline.

Okay. In terms of new product development, is there a thought, I guess, how much to expend on a new software development versus how much to outsource or use other platforms? What's kind of your take on that high level, in the spending on, because that can run quite a bit of amount, you know, developing new software and AI capabilities.

Exactly. That's why we brought on Dr. Ansgar Thiede, as we mentioned in the call. Dr. Thiede is our Chief Strategy Officer, and one of his major focuses is building partnerships, both development partnerships and market partnerships. We started this journey intending to build the basic platform, but we recognized we'd have to add in partner modules from different companies and different sources. We're not trying to invent the wheel ourselves. We do recognize there's an ecosystem we can rely on. You'll see in this year a number of strategic relationships in addition to those we announced last year as we build out the platform with additional partner modules.

Great. No, it makes sense. Thank you for taking my question.

There are no further questions at this time. I would like to hand the conference back over to Ed for some concluding comments.

First of all, thank you all for joining us and taking the time to listen to this earnings call. We're very proud of our fourth quarter in our 2025 as the first foundational year for us. We are laying the foundation for disciplined scaling, recurring revenue expansion, and we think we have long-term value creation in our sights. We look forward to updating you on our progress in the quarters ahead. Thank you all, and have a great evening.

Thank you. This will conclude today's conference. You may disconnect at this time, and thank you for your participation.