ELWT

Good day, welcome to the Elauwit first quarter 2026 results call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Matt Kreps, investor relations for Elauwit. Please go ahead.

Thank you. Good morning, everyone, thank you for joining us today to discuss Elauwit's first quarter 2026 financial results and business update. The earnings release covering our 1Q 2026 results is now available on the investors page of our website at investors.elauwit.com. We plan to file our form 10-Q for the quarter in the next couple of days as well. I would encourage you to view the full text of the release and accompanying financial tables in conjunction with today's discussion. This conference call is being webcast live and will be available for replay on our investors page. Speaking on the call today are Executive Chairman, Dan McDonough, Chief Executive Officer, Barry Rubens, Chief Financial Officer, James Di Bartolo, and Taylor Jones, our Chief Technology Officer.

We will cover our prepared remarks on the business and financial results, open the call for questions from our analysts and institutional investors. Please note that during this call, management will make projections and other forward-looking statements regarding our future performance. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those noted in the earnings release, as well as other risks that are more fully described in Elauwit's filings with the SEC. Our actual results may differ materially from those projected in the forward-looking statements. We encourage you to review our filings with the SEC for additional information on factors that could cause actual results to differ from our current expectations. Elauwit specifically disclaims any intent or obligation to update these forward-looking statements except as required by law. Additionally, we will also reference adjusted EBITDA, which is a non-GAAP financial measure.

A description of adjusted EBITDA, along with reconciliation of adjusted EBITDA to the most comparable GAAP financial measure, can be found in our earnings release. With that, I will now turn the call over to Dan. Please go ahead.

Thank you, Matt, and thank you to everyone who's joined today's call. I'll begin today with an overview of our business, and then Taylor will update us on the readiness programs for expansion. Barry will have a discussion around our operations, and James will provide a few highlights from the financial results. We'll open it for questions from our analysts. The first quarter was excellent across the board and demonstrated our execution on the most important growth drivers in our long-term business model. While revenue declined, this was due to the timing of our construction contracts for new networks, which is lumpy. While these are important to our short-term business, they are simply the first step of our long-term recurring revenue stream.

All of our key customer metrics, new contracts, activated units, and build units, increased significantly year-over-year, and our contracted backlog for long-term services continues to grow quickly. Add to that the significant new contract additions that have been indicated and Elauwit is positioned for success in 2026 and the coming years. Stepping back a moment to remind you of our business and its fundamental drivers. Elauwit is a differentiated, technology-driven broadband infrastructure provider focused on delivering high-speed internet to multifamily and student housing communities. As opposed to residents choosing a service provider for just their unit through an inconvenient, expensive, and outdated process, we install and activate ubiquitous carrier-grade gigabit service via fiber and Wi-Fi 6 access throughout an entire property. We then generate long-lived recurring revenue from these properties under 2 financial models, managed services and Network as a Service, which we refer to as NaaS.

What particularly differentiates us as a provider is that we integrate the property owner into the revenue chain, driving new revenue and value creation for them. We target a win-win-win scenario where we generate high margin revenue streams for Elauwit, elevate the resident experience, and unlock value for property owners. This is a proven model with a large number of units already under contract, plus a rapidly growing pipeline of new installations ahead, supported by a scalable operating model that we believe can grow to handle almost any number of units nationwide as we take share in a large and fragmented addressable market. At its core, the Elauwit model provides simplicity, service, and profit. The property is pre-wired with enterprise-grade network equipment, offering the resident immediate access to better service and faster speeds than conventional providers.

The internet fee is included in the rent invoice as a standard cost, but usually at 10%-15% less expense than market rate offerings. When the resident gets their keys, they get the Wi-Fi access code and log in within seconds. Their connectivity arrives before their first piece of furniture. That alone is a compelling case, but we take it one step further by integrating the property owner into the monthly recurring revenue stream, which provides a source of profit, increased recurring cash flow, and higher value for the property. We offer 2 approaches for property owners to deploy Elauwit in this more than $25 billion market opportunity. Option 1 is a managed network approach, whereby the property owner pays us an upfront fee to construct and install the network throughout the property.

The property owner then collects a monthly fee from the resident that goes in part to them for their installation cost and profit, and partly to us for our services under a 5- to 7-year contract. This model works well in new construction or with large and financially sophisticated properties seeking retrofit upgrades. Option 2 is Network as a Service or NaaS. This is ideal for retrofits or smaller property owners. Under this model, we can use our public company balance sheet to install and own the network, then collect a higher recurring monthly fee from the property owner to operate under an 8- to 10-year contract. Both models result in what we expect will be long-lived, high-margin service revenue. We are now moving ahead quickly to expand our pipeline of targeted managed services and Network-as-a-Service opportunities with a major marketing and sales campaign.

On our last earnings call, we spent time with our Chief Growth Officer discussing the sales team investments we have made and which are already paying off with immediate effect. This quarter, we have our Chief Technology Officer joining to discuss those outcomes and our increasing readiness for rapid growth. The short version, we're making strong early strides on sales, and it's only May. As of the end of Q1, we have locked in a 114% increase in billed units year-over-year, 110% increase in activated units. That's just the beginning. Our sales team has secured verbal commitments on about 40 additional properties across 16 states and District of Columbia so far this year, having just fully started in the first quarter. In total, that is more than 11,000 new units already this year and more than 36,000 contracted units to date.

This has pushed backlogs to more than $38 million in construction and recurring revenue, giving us increasing clarity for both growth and sustained recurring revenue. With that, I'd like to turn it over to Taylor to talk through our operating updates and those factors in a little bit more detail.

Thanks, Dan. Last quarter, Sebastian Shahvandi, our Chief Growth Officer, detailed the exciting updates we had made to the sales team in the first quarter and the immediate benefits we are seeing from that investment. The sales programs are powered by a modern AI-enabled marketing and sales stack, custom designed not just for speed and scale, but for relevance and personalization across multiple ICP and persona-driven channels. We are also executing on an aggressive 2026 industry event calendar with 22 regional events and conventions where we are investing in pre-event outreach to identify and schedule one-on-one meetings with decision makers before we ever arrive. The early results reported last quarter were staggering, with 2,000 new business accounts representing an addressable base of roughly 12 million units just a couple of months into this effort.

As Dan mentioned, the early wins are impressive, to say the least, with more than 40 properties and 11,000 units out of the gate. This is across 16 states, including the District of Columbia and 14 property management groups. What is perhaps the most exciting aspect, those property managers all have additional properties that we can win, giving us a fast path to additional wins down the road. Those numbers have only continued to grow. For us, winning an account is step one, we are doing that with increasing speed. While we have proven adept at installation, we are not resting on our laurels. Instead, we are using the experience to date to enhance and expand our implementation capabilities to support an even faster growth rate.

Starting with our financial and operational infrastructure, we have invested in enhanced business intelligence, such as next generation ERP and advanced inventory platforms to provide real-time visibility into business health and rigorous cost controls. We are optimizing deployment of resources through organizational process mapping to eliminate administrative bottlenecks and keep our teams focused on the resident experience. We are also partnering with software development experts to bridge the separate systems, reducing duplicative data entry and reclaiming valuable leadership time. To ensure we maintain excellent performance as we grow, we are scaling our network operations center, our NOC, and our account management teams to provide a consistent customer experience. We are also implementing AI and LLM tools to integrate vendor platforms into a single pane of glass, accelerating root cause analysis and proactive service level resolution.

We have also established a new quality team to ensure every project launch is successful on day one, eliminating the need for costly repeat site visits. With more properties comes the need for more rapid project execution to stay resource efficient. We have restructured our project management office, our PMO, into pods specializing in new construction and conversion retrofits that pair our senior project managers with our on-site and in-market construction managers for seamless stakeholder reporting and on-site management. We are also developing ways to streamline the project kickoff phase to under 14 days, which would be more than double our previous speed to market. We are increasing our subcontractor network fivefold to maintain agile deployment capabilities across the lower 48. We are also prioritizing automation through custom and commercial off-the-shelf tools, COTS, to allow our network engineering teams to provision and activate properties with unprecedented efficiency.

All of these programs and more are focused on one thing, managing the incredible growth opportunity that we see ahead seamlessly and with the consistent level of excellent service our customers have come to know and expect from Elauwit. With that, I'll turn the call over to Barry.

Thank you, Taylor. Good morning, everyone. We're excited to be here and share the exciting progress as the vision for growth that drove us to become a public company comes into full perspective.

While Elauwit built a strong base as a private company, proving out our ability to innovate, deliver, and drive value from our services, we were scale-constrained to fully tap into the massive market opportunity we saw ahead. Being a Nasdaq-listed company provides the access to capital to expand our market reach and drive growth. This includes the ability to pursue the 70% of our market opportunity that was available, but not accessible to us before, by virtue of the Network as a Service model. While Dan and Taylor have described our rapidly growing customer base and sales pipeline, we track our revenue-generating business across three nested metrics once a property is under contract. The first, contracted units, those waiting to be built or are in the process of installation.

Activated units that are fully installed and turned on for service, but may not be fully billing yet due to onboarding. Billed units that are fully generating revenue under our managed services or Network as a Service contracts. As a reminder, activated units represent the rollover period throughout the 12 months following installation, and we onboard their costs pro rata to align with property lease renewals. In short, when we complete an installation, we know that we have 12 months of growth ahead, then long-term, stable, and sticky recurring revenue for years to follow. Giving some numbers to the categories based on March 31st, 2026, counts.

Contracted units, those waiting to be built or are in the process of installation, along with units we currently serve, increased 29% to 36,720 from 28,375 at the end of the prior year period. Activated units that are fully installed and on but may not be fully billing yet due to onboarding, increased 110% to 24,530 from 11,674 at the end of the prior year period. Billed units that are fully generating revenue under our managed services or NaaS contracts increased 115% to 20,059 from 9,339 at the end of the prior year period. Our pipeline continues to grow as Taylor mentioned.

I should again remind everyone that the majority of our new contract units remain as managed services, since we only began selling the Network as a Service product proactively as a model following our IPO in the fourth quarter last year. Added our sales team in the first quarter of this year. I should also note, and James will elaborate more, that our revenue includes the recurring services sales as well as installation sales. The first quarter illustrates this a bit as construction revenue can be lumpy, and was in the first quarter, although we expect this to become less of an effect as the recurring base in our business continues to rise, and longer-term increased contribution from Network as a Service properties. I'd also like to take a moment to note that our sales universe is vast.

We are currently in about half the states, and our business model uses a highly scalable call center for service to residents, plus contracted installation teams that we can easily flex and scale as needed with minimal cost to us. This approach means rather than targeting specific markets, we can readily go anywhere when our property owner clients want us to provide service. The contracts referenced by Dan in our PR and comments today are a good example. For more than properties in contracting phase now, we are working across 16 states for properties owned by 14 different management groups.

These properties range in size from about less than 100 units to 500 units, and these owner groups all represent additional opportunity from other locations, driving new growth opportunities by simply delivery of high-quality service and good economic value, such that these owners will want to put their other properties with Elauwit over time. With that, I'll hand this over to James to briefly recap some of our business highlights from the quarter and year to date.

Thank you, Barry. Today, I'll walk through a few of the financial highlights of our first quarter of 2026. Revenue for the first quarter decreased 19% year-over-year to $4.4 million, compared to $5.4 million for the prior year period. The change, as noted, was primarily the reduction in new construction activity, which is variable from quarter-to-quarter, and was partially offset by increased recurring revenue from our managed service and Network as a Service implementation. The cost of revenue decreased to $3.6 million for the first quarter, compared to $4.2 million for the prior year period. Gross profit was $0.8 million for the first quarter, compared to $1.3 million for the prior year period. As noted last quarter, we have implemented cost reduction actions intended to bring our network construction gross margin back into our expected range of approximately 15%.

Operating expenses were $3 million for the first quarter, compared to $1.6 million for the prior year period. As planned, we are investing in sales and marketing expansion in 2026 to drive additional growth in top-line sales and recurring revenue. The increase in costs reflect our overall increased scale and new listing as a public company on the Nasdaq. We reported an operating loss of $2.2 million for the first quarter, compared to operating loss of $0.4 million for the prior year period. The net loss was $2.2 million, compared to $0.4 million for the first quarter last year, driven by our investment in our sales and marketing teams, as well as public company-related expenses. Adjusted EBITDA for the fourth quarter was a loss of $2.2 million, compared to a loss of $0.4 million for the prior year quarter.

With our Nasdaq IPO and related capital raise, we now have a balance sheet capable of funding increased network as a service activity and other initiatives designed to drive our growth and increase the contribution from long-term recurring revenue sources. The balance sheet remains strong with cash and cash equivalents of $3.5 million plus accounts receivable of $3.2 million and inventories of $1 million. Deferred revenue was $3.8 million, and we have contracted backlog of new installations along with recurring revenue from services of more than $38 million, compared to $15.6 million in March 31st, 2025. With that, I'll turn the call back to Dan.

Thank you, James. A few final comments before moving into the Q&A. First, we're excited with our progress so early in 2026, especially with regard to new sales activity. While the first quarter revenue was down a bit on the timing of large construction contracts, we are booking new business at a rapid pace and seeing increased contribution of onboarding recurring services activity. Our sales team investments are clearly paying off well, and we continue to diligently focus on executing well to deliver the promised levels of service and value that will, in their own right, drive our continued growth and expansion in a massive addressable market. I'd like to also remind everyone that we are available to meet with institutional investors.

If you would like to arrange a meeting, please do so through one of the investor events, if you're attending it, or through Matt Kreps, our investor relations contact. His contact information is on our results release and on our IR website. With that, I'd like to ask the operator to open the call for questions.

We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw the question, please press star then two. Our first question comes from George Sutton with Craig-Hallum. Please go ahead.

Hey, guys. Logan on for George. Thanks for taking the question. I wanted to start on the 11,000 units where you talked about having verbal awards. I wondered if you could just give us some more color there. Any detail on where you're seeing those wins? It sounds like the new sales organization is kind of driving that. Maybe any detail on what marketing channels seem to be working, I guess? How should we think about those units converting to contracted units?

Great question. Thank you for calling in too. I'll say that there's a mix there. Some of it's from our legacy efforts, and some of it's from our new efforts. What we will do is, as some of those larger groups come into contract, we'll release details of those in the coming month or two, I would say. I don't want to go into too much detail about them just because they're still in negotiation. The second piece of that question, I think was, how that will convert into billable units. What I'll say is, with some of these are deals that would go live this year, so they turn into activated units this year. There would be a ramp of 12 months like we have with most of our contracts. The balance of them would be switched over to activated units in 2027.

Does that answer your question?

Yeah, it does. That's helpful.

Good.

Maybe another one kind of on the same topic. You talked about those units representing a much bigger opportunity over time with those ownership groups. I think that the same can be said for your entire contracted unit base. I wonder if you could just talk about sort of the process of going to win a bigger part of the portfolio with those property ownership groups that you're already contracted with. How do those opportunities come in over time? I think in some cases there's existing marketing agreements or maybe contracts that they're already under that come up for RFP. I wonder if you could just help us understand how you attack that opportunity going forward.

Sure. That's an excellent question. Our focus has always been to go work our marketing efforts towards organizations that don't just have one property, but many properties, or they have a number of properties and they're growing. Almost in every instance, as you mentioned, there's additional opportunities that sit behind the ones that were awarded. Typically, what we find is that when we have an opportunity, an owner group will take the properties that are available and not on contract right now and give us an opportunity to bid on those. Over time, their other opportunities will fall off of contract. We even have had some owners buy out their existing agreements to move over to Elauwit.

Our goal is to get what properties we can at the front end and perform excellently for the property owner so that as the opportunity comes for additional properties within their portfolio, they can roll them to us.

If I can add to that, Dan?

Yes, Brad, please.

The denominator really comes down to execution and who is going to execute on these properties in the best manner for them. They can make whatever financial calculations, but as I sit in a room with a COO or a CFO and we're talking about their portfolio, it really comes down to who they believe can do the best job in executing against their property portfolio. Recognizing that there's a move to make good decisions that are also safe decisions. Elauwit has executed well for these people in the past, which is how we've created these opportunities.

Got it. Last one from me, I'll maybe direct to James. Nice to have you on the call this morning, by the way. It looked like gross margin bounced back a bit this quarter. It seems like you're kind of talking about some new resource planning and inventory platforms kind of directed at cost control. I wonder if you could just give some more detail there and sort of help us understand maybe where gross margin goes, then any comments on just sort of the cadence of installation revenue here, throughout the rest of the year.

Sure. Thanks. It's great to speak to you on this call as well. I think for cadence and construction revenue, our forecast for full year 2026 remains consistent with what we had communicated previously. Lisa, we expect a stronger Q3 and Q4. As discussed, there was some lumpiness in construction revenue, mostly deriving from what we were able to recognize on revenue from a milestone perspective. Our projection for full year 2026 remains robust. With respect to gross margins, there's been a number of different things that we've done in order to improve margins, and we'll continue to do so over the course of 2026. Some of that is systems implementation, so making improvements to firm-wide software and systems so that we're better able to communicate project performance to the network construction team in real time.

We've also looked for efficiencies on the SG&A side, both in the operations department as well as at the company more broadly.

Got it. Congrats on the continued success, guys. Thanks for taking the questions.

Thank you.

Thank you.

Our next question comes from Derek Greenberg with Maxim Group. Please go ahead.

Hey, guys. Thanks for taking my questions. My first is just continuing off the last, with relation to gross margins. I was wondering if you could point out if construction costs are also lumpy in terms of maybe realizing those upfront before getting the actual revenue. I'm just trying to parse out the year-over-year contraction despite a higher proportion of services revenue to construction revenue. I was wondering if that's the correct way to think about it.

Yeah.

Sure. Yeah, sure. For the most part, construction costs are largely recognized in line with revenue. One of the things that does create some lumpiness in terms of cost recognition versus revenue recognition is on the recurring revenue service side, where there are some costs, for example, circuit or bandwidth costs, which are relatively fixed for us, that are then paired with a service revenue stream which ramps for the end client. You'll sometimes see that this will have an effect on overall margin as we realize a certain amount of fixed costs upfront once the networks are activated, but we ramp into the revenue. We then expect those margins to stabilize once we fully ramp on the service side.

Okay. That makes sense. On G&A, I was wondering if you could just call out how much of the first quarter maybe was either beginning of the year costs or one-time costs that you don't expect to recur. And then with the investments in new systems, if you're expecting incremental costs from that as well.

Sure. The new systems that we are targeting add some incremental costs, but on an annualized basis, would be fairly negligible. We're talking less than a couple hundred thousand dollars across the full suite of systems implementation. For SG&A costs, we identified a number of efficiencies in the network construction group. Those have been implemented, but those costs will not really be reflected in the financial results until Q2. We have additional SG&A save opportunities, which we've identified, but those will be implemented starting this quarter and extending through the end of the year. They would not have been reflected in the Q1 results.

Okay. Got it. Could you remind us just if there's any, I mean, you had called out the cadence for the rest of this year in terms of construction, I was wondering, going forward, just the general thoughts on seasonality throughout the year. For this quarter specifically, I was wondering if there was any weather impact that you had seen.

So the-

Okay, go ahead.

Go ahead, James. Perfect. No, go ahead.

No, I was just going to say that, no, there was not a pronounced effect due to weather in Q1. The lumpiness of the construction revenue really has to do with the process of negotiating the contracts and when we're able to begin our projects in coordination with the developers and other construction teams that have to work at the property, particularly with new construction. That tends to be a far greater driver than any seasonality that you see with respect to the overall calendar. It tends to be fairly project specific and has to do more so with the life cycle of a given project than for broadly seasonal effects.

Okay. Got it. Then just my last question. I was wondering with the pipeline, if you could maybe call out what you're seeing in terms of the opportunities that are managed network versus NaaS. When you expect your first Network as a Service project to potentially start.

Certainly, Derek. We have quite a few opportunities for Network as a Service in our pipeline. I will say, considering if you pair it back to where we were when we were talking about this in our roadshow, I would say that the pipeline is more managed services than NaaS than we expected. I think that there is a big push in our space for carrying this stuff on the balance sheet for the property owners. There's an obvious benefit to that if they can do it. I think we're still very early the process is very nascent in terms of us reaching out to retrofit opportunities with smaller developers, where I think NaaS is going to be a little bit more successful.

In a sense, I'm actually kind of pleased with that, because if we scaled NaaS too quickly, the capital need would have been pretty obscene. I think we're in a good position now that we'll be able to bring some of those projects on board this year and learn from that process and start really penetrating the smaller developers and the retrofit opportunities.

Yeah. Great. Thanks for taking my question.

Thank you.

This concludes our question and answer session. Thank you for attending today's presentation. You may now disconnect.