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Welcome to the WTR Small Cap Spotlight Podcast.
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I'm your host, Tim Gerdeman, Vice Chair and Co-Founder and Chief Marketing Officer of Water Tower Research.
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Today I'm joined by James McCormick, Chairman and CEO, and Greg Smitherman, Chief Financial Officer of CloudAstructure, NASDAQ TickerSymbol C S AI.
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Also joining is my WTR Equity Research Colleague, James Kisner.
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CloudASTructure provides cloud native, AI-powered video surveillance and remote guarding solutions.
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Its platform can work with customers' existing camera infrastructure or new installations, combining cloud video, AI analytics, and live remote intervention.
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The company serves multifamily property managers and is expanding into commercial real estate, construction, critical infrastructure, transportation, and logistics.
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Good morning, and thanks for joining us, both James's and Greg.
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Good morning.
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Good morning, Tim.
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James, great to see you again.
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And I'm excited to get an update from our last podcast recording.
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For listeners who may not know Kata Structure, can you please provide a 30,000-foot overview of the company and what it does and perhaps talk about either major clients or major end market sectors the company is serving or pursuing?
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Yeah, sure.
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Sure, Tim.
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Well, you, you, you, you, you took all of my summary in your introduction, but I'll try it a slightly different way.
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So we are a ultimately we're a video surveillance company using sophisticated artificial intelligence to identify potential threatening activities and coordinating with uh remote guards or humans in the loop to uh evaluate what the AI has identified.
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And what we find is that 98% of the time when those remote remote guards get involved, we stop the event from becoming something um uh more threatening, I guess you would say, which is one of the numbers we're incredibly uh proud of as a company.
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And you know, as far as customers, you alluded to it at the front end.
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Our main beachhead, if you will, is multifamily properties.
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We work with eight of the top 10 and nine of the top 11 property management firms in the United States, including the top two.
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We're in a small percentage of the portfolios of those people right now, today.
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So in 2026 and beyond, we're we're both securing new logos as well as expanding into existing accounts.
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And we think that holds a lot of future revenue potential for us.
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Great.
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Well, thank you for that overview.
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And I'd be remiss if I didn't say I think of the firm quite often since our last podcast because I'm starting to notice almost everywhere I travel around Miami, um, the portable, um, I don't know what they're properly called, you can speak to, but the portable uh devices where they elevate them a couple stories high.
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They're in construction sites, concert venues, you name it.
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Yeah, trailers.
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Trailers.
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Yes, yep.
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Easiest, easiest way to put it, right?
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Yeah.
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Yes.
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And basically, right?
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I mean, we offer trailer trailers.
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We have some new products that are in the pipeline uh that will uh that we think will be very, very popular in in some of the verticals you mentioned, like construction sites, those sorts of things.
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But in essence, all those trailers are doing, they're doing exactly what we do in a fixed multifamily environment.
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On top of that mast is where the brains reside, right?
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So when we have the trailer system that we offer, on top of the mast is our cloud video recorder, cameras, uh strobe lights, speakers.
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So it's it's it's it's a it's a mobile um uh it's a mobile solution that uses the exact same technology as our fixed solutions.
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Without the hassles of human resource worrying about uh humans doing it.
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So with that, I'll turn it over to James Kisner.
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Thanks, Tim.
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So um, and again, uh welcome to James and Greg.
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So um, you know, let's talk about Q2.
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So subscription subscription revenue grew 164% year over year uh to around uh 764,000.
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It's about you know 62% of the total revenue um that you just reported.
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So uh up to 27% versus a year ago um in terms of uh percentage of revenue.
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Um while your annual revenue run rate uh for recurring revenue reached around 3.1 million.
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So, what did the quarter tell you about how that business model is evolving?
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Yeah, that's it's a very good question.
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And I I think you'll find the answer perhaps a little bit strange.
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Uh, it doesn't tell us much.
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That's the easiest way to put it.
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Uh Greg will get into it a little bit more, I think, later, but um I think what we saw in the first half of the year is that we had a significant number of takeover opportunities.
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And that's exactly what it sounds like.
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As opposed to new construction or a new installation, we actually are inserting our brains on top of existing customer infrastructure.
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And um, right, so we we we don't get certain components of revenue, but we get the recurring revenue piece.
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And frankly, that's just the way things went in the first half of the year.
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We expect that it will change in the second half of the year uh to more traditional metrics that we have shown in the past.
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And, you know, again, just to reiterate, our business model or our revenue model, there's there's basically three components, right?
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There's hardware, which is cameras and speakers, which we get pretty decent margins on.
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There's installation, which generally through third parties that that that we utilize to do the installations.
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Then there's the curring recurring revenue piece as well.
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So um those are the three components.
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We think in the first half of the year, the recurring revenue went up because frankly, we we we because of the takeover scenario, we had less hardware sales and less installation revenue.
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Right.
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And we think we think that that'll shift in the second half of the year.
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I'm gonna kind of drill down a little more on this sort of uh takeover dynamic.
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Um, I think you said that 77% of the cameras signed in new contracts during the first half were were takeovers from another vendor, up from 57% in 2025.
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So pretty big jump.
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Um, is the ability to use a customer's existing cameras uh an advantage in competitive displacements?
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And and you know, pressures were directed towards Greg, just how the economics of a takeover differ from a ground up installation.
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And uh sounds like you don't think this is gonna be uh necessarily a lasting change, but you know, in the short term, but maybe with the long term, if you comment kind of on the trend.
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Sure.
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So um well, as James alluded to, this wasn't something we targeted to do to say, gee, we want to do a lot more takeovers in in the first half of this year than we did last year.
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That was um, you know, at the end of the day, there it's it's deals come in, you win the deals as they they uh as you get your customers excited.
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And it was just the way it uh happened.
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It was just so starting, startlingly different, right?
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From 57% last year to 77% this year, that was a big shift uh that we didn't anticipate.
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Right.
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Now, as James said, and based on what our you know, the pipeline that we see, we don't believe that this trend is going to continue.
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Um but it will other than it will continue to bounce around quarter to quarter, year to year.
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Right.
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So uh now longer term, as that recurring revenue just continues to build, that is the ultimate engine that drives uh our company and drives any SaaS company.
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Um and over time, yes, that will become a larger and larger component of our revenue because as James said earlier, right?
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We are deterring 98% of threatening activities.
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That 98%, one of the reasons we're so proud of us is it leads to 99% customer attention.
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People see the difference, they feel the difference at their properties.
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Um we had a one of my favorite stories, a a property manager before we came in, uh a little bit of a rougher neighborhood, said every Monday he would walk around the property and pick up shell casings.
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And once our system was installed, he said, I don't have to do that anymore.
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And that that's a huge change in the quality of life at that location, right?
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That's the kind of impact we have, and because of that, that's that's what leads to the 99% customer attention.
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So, yes, over time, we think long term uh the the recurring revenue stream or services will be a larger and larger percentage.
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But in the near term, and and and in the near term, certainly for the next couple of years, we've got huge growth potential.
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Uh, we expect to be adding uh site after site after site, and you know, a lot of those will have camera installs um and and hardware sales.
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Now, to your second part of the question about the economics, um, the the the great thing about a takeover is generally you can get to the service revenue quicker, right?
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All they need to buy is a small um uh a small appliance from us, it's relatively inexpensive, that they put in their network closet, they plug their cameras into it, and we're off to the races.
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Right.
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And so the services can get going pretty quickly.
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Where you know, our largest install, our largest deal that we signed, which was almost a half million dollar contract, and had a three-month planned installation.
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Now we actually did it in two months, customer was super pleased by that.
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Uh, but that just delays the service component.
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So um yeah, we we miss out a little bit on the margins of of the hardware, and and there's a small margin on the installation, but it's it's uh it's not huge.
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Uh but the core thing is we continue to add that SaaS revenue, which moves our SaaS revenue margins, you know, continues to inch up and inch up uh quarter by quarter.
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So in the in the in the we're happy with any new business.
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Whether it's a takeover or not, uh, and we will be doing both going forward.
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Yeah, that's helpful.
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That showcasing is very illustrative of the impact that that you guys are having.
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That that's pretty cool.
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Um so just relatedly here, so gross margin uh was up 13 points year for year to 49%.
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I think that was your your highest ever, um, if I recall correctly.
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But um, knowing that mix is kind of you know not fully predictable, just how should we think about the gross margin profile from here?
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Well, you know, I think if you uh our gross margin, again, going back to as you continue to build that SaaS, that's naturally going to move your gross margin up.
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And so, and we'd said this in in you know earlier talks, uh, earnings calls.
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Yes, we expect our gross margins to continue to increase over time as the SaaS component continues to build.
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This quarter it was, as you said, the highest it's been.
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It was a big jump from where it was.
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Um, a lot of that had to do with the particular mix this quarter.
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Uh I so I don't expect it to remain there uh every quarter as the mix continues, but over time, we'll actually not only hit that, you know, be there, we'll exceed it, but as the SaaS component gets larger and larger and and and those customers continue to pay us.
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Got it.
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That's helpful.
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So one more uh pretty CFO focused question, I think.
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Um Greg, you missed a quarter with around 3.8 million of cash.
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Just how are you thinking about your cash runway and and funding your investment in growth from here?
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Yeah.
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So um, and again, every quarter varies a little bit and and as we're hiring right.
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We there is so much growth.
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We do continue to uh invest in people, and people are our biggest expense.
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Right.
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So we do expect salaries to go up.
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But we've been kind of um you know somewhere a little north of half a million a month in in in burn, net burn.
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Um again, that will vary by quarter.
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Uh so if if you look at that, you kind of do the math, and that kind of gives you runway.
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Do we have enough cash to get to cash flow break-even?
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No, we will be doing a little bit of uh fundraising.
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We don't think we have to do significant fundraising.
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We think we've got um uh things in place to get us the funds we need to get to cash flow break-even.
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While we don't give revenue guidance per se, you know, we're we are targeting being cash flow back break-even by you know the end of next year.
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Um that's uh that's that's our goal.
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And and we think that's achievable.
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Uh and we think we've got, like I said, everything in place from both our cash on hand and and our fundraising um lines of credit and and such to get there.
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All right, that's helpful.
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So um this could be early for either one of you.
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Um so uh there are two recent announcements that sort of stood out to me anyway.
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Um in Southern California, you're building camera camera infrastructure from the ground up across a five-building office portfolio and replacing the on-site jar program outright.
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Um and in Baltimore, uh, you're specified into a multifamily development while it is still under construction.
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So those are pretty you know, different entry points.
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Just what does that say about how the platform lets you engage a property at the various stages of its life cycle and about the momentum you're seeing beyond multifamily?
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Sure.
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Yeah, I'll I'll take that one, James.
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So uh I A all great announcements, all different types of opportunity, right?
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And I think what it speaks to is the flexibility of our application.
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Right.
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Depending, you know, if if it's if it's new construction, we can deal with it.
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Greg mentioned earlier, right?
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Last year, largest contract we ever had, 30-story uh high-rise luxury high-rise facility that that was new construction, and we went right along with them and right, installed across the entire uh the entire property.
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So we can do that.
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We can go in after the fact and and and retrofit, if you will, right, existing buildings like the uh the five property campus that you mentioned.
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And again, I think that just speaks to the flexibility, right?
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We we don't we work, we obviously sell cameras from a takeover standpoint.
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We work with virtually any camera that's out there, including older analog cameras.
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Um, and you know, our one piece of proprietary equipment is a cloud video recorder that takes the AI images that we're capturing, sends them up to the cloud, and then down into our AI servers for further processing, right?
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So flexibility is the key from that standpoint.
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You mentioned uh additional, you know, additional verticals, additional traction, those sorts of things.
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Let's just let's just very quickly talk about some of the areas that we have active installations in.
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Critical infrastructure, think um uh a remote solar farm, large solar farm in the middle of nowhere that wants to protect potentially against theft, safety issues, those sorts of things.
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Uh, active construction sites, I think that we were talking about at the front end, right?
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We have a variety of existing solutions and new solutions that we're that we're launching that will be perfect for construction sites, particularly after hours when there's an increased risk of uh tool and material thefts and safety issues as well.
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Uh, transportation and logistics, I can't begin to tell you how excited we are about that.
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Um, right, we've now have some internal expertise in this area and some initial deployments uh that are uh really doing a couple things.
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They're giving us a chance to uh work closely with the operators of certain types of properties and getting us um additional knowledge, I guess you would say, right, in understanding these different verticals and what's important to these customers.
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So, yeah, there's a number of ways, other than multifamily, that we continue to, uh I guess you would say, extend the business to?
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And we're just really excited about all of them.
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James, I'm gonna uh I rarely jump in on these calls, but I'm going to for just a minute because my brain is very active because I think of all the incredible amount of opportunities or the total addressable market for you.
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Um, having been a marketing professor for two years at a college after I left Lehman Brothers, I'm putting that hat back on for a second.
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Does your firm do a deep dive into crime stats and then try to really aggressively sort of solicit business in those areas?
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Or is that just an afterthought at this point?
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Yeah, great, great, great question.
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So specifically transportation and logistics, let's use that as an example, right?
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Reported cargo theft in the United States is$30 billion a year.
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Reported.
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Um when you when you extrapolate unreported cargo theft, replacement costs, et cetera, it's over$50 billion a year in the US.
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So there's a perfect example where uh we're taking internal expertise, external statistics, and using it specifically to target additional opportunities in that space, be it distribution centers, be it secure truck lots, be it individual truckers.
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I mean, there's there's a lot of ways that you can address that um that uh uh that market.
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And that's indeed how we're doing it.
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Yeah, that's great to know.
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And uh the FBI has not been shy in the last year about being very public, actually, about uh gang activity with both both um rail railways as well as 18-wheel truck lots.
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Absolutely.
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And you know, kind of interesting if you think about what's happening in the world now AI components, whatever it might be, chips, servers, you know, whatever, uh, that's becoming a big, big, big target, right?
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And if we think about a tractor, the value of a tractor, because you don't know if it's vegetables or iPhones on there, right?
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Is$150 to$300,000 value on average.
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Well, AI components keep going.
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So so it is it it's an area that we're uh uh very cognizant of and very clearly targeting.
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Yep.
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To use uh military uh nomenclature high value targets, and with that, I'll turn it back over to James Kisner and be quiet.
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All right.
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All right.
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Um so uh yeah, you had two pretty significant hires recently.
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Um I think I'm gonna ask them about both of them at once.
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Very, you know.
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So Nile Coates is uh your new chief register revenue officer, uh, you know, joined from ECAM.
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So led one of the sales force for the largest physical security services organizations in the world.
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And you also uh early this year at Ed Burnett, um, you know, from uh you spent several decades at UPS um Chief Security and Operations Officer.
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So those are both just two pretty amazing hires, and I think potentially, you know, validations um that people like what you're doing.
00:20:51.920 --> 00:21:01.599
But can you kind of say you know more about what each of these folks um you know brings your organization, what kind of impact you expect them to have where they're already having uh cloud structure?
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Yeah, absolutely.
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Um let's start with the CRO.
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Let's start, let's start with with Nile codes.
00:21:10.319 --> 00:21:31.119
So uh we had the opportunity to be introduced to Nile, and it just became abundantly clear that his background and experience were yeah, if if we wrote down a list of items that would you know generate the perfect CRO profile, he has it.
00:21:31.440 --> 00:21:42.640
So, right when he was at ECAM, uh he was responsible for US revenue of over$350 million in a sales force approaching 100 people.
00:21:42.880 --> 00:21:45.119
We got a little bit less than that right now.
00:21:45.359 --> 00:21:56.799
But all the same thoughts, all um the processes, the sales playbook, whatever you wanna call it, it it's transferable from company to company.
00:21:56.960 --> 00:21:59.519
Let's talk about Ed, and then I'll circle back to both of them.
00:22:00.079 --> 00:22:05.279
Ed Burnett, Chief Security and Operations Officer, 30 years at UPS.
00:22:05.440 --> 00:22:12.880
Last 10, he was responsible for all of US security and global fraud investigations.
00:22:13.359 --> 00:22:23.279
He was responsible for the safety of uh hundreds of thousands of employees and multiple millions uh of package deliveries.
00:22:23.680 --> 00:22:27.839
So, what is it that drew both of these individuals to cloud structure?
00:22:28.000 --> 00:22:33.759
Jokingly, I like to start by saying that both of them, I think it was the opportunity to work with me.
00:22:33.920 --> 00:22:47.279
But other than that, other than that, I think what they both realized, Niall, when he was at ECAM, he saw this upstart cloud structure taking business away from him.
00:22:47.440 --> 00:22:58.640
When we talk about takeovers, honestly, eCamm is one of the customers that we've had some success in uh in doing in winning takeover opportunities from.
00:22:59.839 --> 00:23:01.119
He saw that.
00:23:01.359 --> 00:23:24.480
And also, I think at this stage in Hinck's career, he realized that maybe he doesn't have too many opportunities to come in close to ground floor and really make a difference in an organization and build a sales organization and structure to his uh vision and uh and and prior experience.
00:23:24.640 --> 00:23:25.519
So that's Nile.
00:23:26.160 --> 00:23:34.960
Ed, uh, as you might expect, coming from a company like UPS, uh very process-oriented individual.
00:23:35.279 --> 00:23:49.839
And I will say, right, when you're in a startup, a restart, a growth environment, process is one of the things that usually gets pushed to the side, to be quite honest with you.
00:23:50.079 --> 00:24:02.000
And it's been refreshing to work with someone like Ed, who um he he he doesn't care what level of growth the company is in.
00:24:02.160 --> 00:24:10.960
When it comes to process, holding people accountable and and demanding results, he is an absolute taskmaster.
00:24:11.039 --> 00:24:21.039
And I will tell you, it has helped our business uh just incredibly since he's been on board to help us add that level of discipline.
00:24:21.119 --> 00:24:31.680
And that's all on top of him being one of the leading experts on cargo theft, transportation and logistics, safety issues, et cetera.
00:24:32.079 --> 00:24:40.000
So we were very fortunate to get the caliber of individuals that we did in both Ed and Nile.
00:24:40.480 --> 00:24:44.240
And we looked forward, we we looked forward to working with them going forward.
00:24:44.400 --> 00:24:49.920
And honestly, we'll stack our management team right now up against anybody that's out there.
00:24:50.640 --> 00:24:53.599
Yeah, really impressive, like I said, really impressive hires.
00:24:53.680 --> 00:24:54.640
Um, all right.
00:24:54.720 --> 00:25:01.920
So wrapping up here, um, you know, you've said that uh you think the second half is gonna be you know stronger than than the first half in terms of revenue.
00:25:02.079 --> 00:25:11.839
Just um in general, what milestone should listeners watch for over the balance of of the year and through early next year in terms of showing that you're that your strategy is working.
00:25:12.160 --> 00:25:12.720
Yeah.
00:25:12.880 --> 00:25:23.440
Uh let me start and then I'll I'll let Greg uh you know wrap up with his thoughts and uh probably use an opportunity to correct whatever I'm gonna say next.
00:25:23.680 --> 00:25:26.480
Um here's what I would here's what I would say.
00:25:26.640 --> 00:25:36.240
We don't provide revenue guidance, as you know, James, but you know, 270% revenue growth 2025 over 2024.
00:25:36.400 --> 00:25:42.079
It would be great if we could sustain that and and roll with that into 2026.
00:25:42.240 --> 00:25:43.599
We don't think that's realistic.
00:25:43.759 --> 00:25:58.079
And frankly, we need to give the new chief revenue officer uh some time to figure a few things out and and and and help us figure out how to grow quicker, right?
00:25:58.240 --> 00:25:59.200
If you will.
00:25:59.519 --> 00:26:08.799
So do we think that you you know the the external community can expect revenue growth year over year, 26 over 25?
00:26:09.039 --> 00:26:09.599
Yes.
00:26:09.920 --> 00:26:13.680
Will it be akin to what we saw 25 over 24?
00:26:14.000 --> 00:26:14.319
No.
00:26:14.799 --> 00:26:25.200
Uh milestones and and things that people should look for, look for additional press releases announcing wins, not just in multifamily, right?
00:26:25.279 --> 00:26:35.200
Not just expansion in existing accounts and getting new logos, but particularly in additional verticals, because that's where we get the diversification.
00:26:35.440 --> 00:26:46.160
That's where we get a different set of customers, and and that gives us multiple paths or multiple uh avenues to additional revenue growth.
00:26:46.319 --> 00:26:48.079
That's what I would say, Greg.
00:26:49.119 --> 00:26:50.880
Uh absolutely.
00:26:51.119 --> 00:27:04.960
And you know, what you will see and what what we have seen in the past, right, Q3 uh is usually pretty good, but Q4 really packs it in, right?
00:27:05.039 --> 00:27:08.240
People are trying to get their budgets finished for the end of the year.
00:27:08.480 --> 00:27:17.279
Um but the expansion, right?
00:27:17.599 --> 00:27:22.720
I think you will see more expansion within our existing customer base.
00:27:23.920 --> 00:27:26.319
I think you will see new verticals.
00:27:27.359 --> 00:27:33.759
Uh and those two that's our core strategy, right?
00:27:34.079 --> 00:27:35.359
Continue to expand.
00:27:36.480 --> 00:27:40.400
Take what we've got, expand within, and add new things, right?
00:27:40.480 --> 00:27:50.960
It's the the opportunities are so rich that we're gonna be able to kind of get things from from everywhere.
00:27:51.279 --> 00:28:02.000
And and that's going to just continue to position us for a great 2027 and and hopefully get into cash flow break-even in 2027.
00:28:03.039 --> 00:28:05.039
That's that's that's a great summary by both of you.
00:28:05.119 --> 00:28:08.000
So um I'll hand it back to uh to Tim.
00:28:08.079 --> 00:28:09.119
Thanks again, guys, for coming.
00:28:09.359 --> 00:28:09.680
Thank you.
00:28:10.240 --> 00:28:10.480
Appreciate it.
00:28:10.640 --> 00:28:14.559
Thanks, James Kisner, and thanks, James McCormick and Greg Smithherman, for joining us today.
00:28:14.720 --> 00:28:23.519
I'm not envious of your CRO because I do believe in my heart of hearts that there's so many opportunities in this very large addressable market that he's probably very busy trying to force rank.
00:28:23.599 --> 00:28:24.640
What do I go after first?
00:28:24.960 --> 00:28:25.440
100%.
00:28:28.400 --> 00:28:44.160
Thank you for listening, and don't forget to subscribe, as well as visiting www.watertowerresearch.com to stay up to speed on the company's small cap written research reports, podcasts, fireside chats, industry specific symposiums, and conference schedules.
00:28:44.559 --> 00:28:49.359
We will see you next time for another edition of the WTR Small Cap Spotlight Podcast.
00:28:49.839 --> 00:28:55.039
Finally, a special thanks to the producer and editor of the podcast, Krista Fitzpatrick.
00:00:01.120 --> 00:00:04.080
Welcome to the WTR Small Cap Spotlight Podcast.
00:00:04.240 --> 00:00:10.000
I'm your host, Tim Gerdeman, Vice Chair and Co-Founder and Chief Marketing Officer of Water Tower Research.
00:00:10.720 --> 00:00:20.000
Today I'm joined by James McCormick, Chairman and CEO, and Greg Smitherman, Chief Financial Officer of CloudAstructure, NASDAQ TickerSymbol C S AI.
00:00:20.239 --> 00:00:24.320
Also joining is my WTR Equity Research Colleague, James Kisner.
00:00:24.559 --> 00:00:30.160
CloudASTructure provides cloud native, AI-powered video surveillance and remote guarding solutions.
00:00:30.399 --> 00:00:40.000
Its platform can work with customers' existing camera infrastructure or new installations, combining cloud video, AI analytics, and live remote intervention.
00:00:40.240 --> 00:00:49.600
The company serves multifamily property managers and is expanding into commercial real estate, construction, critical infrastructure, transportation, and logistics.
00:00:49.840 --> 00:00:52.960
Good morning, and thanks for joining us, both James's and Greg.
00:00:53.520 --> 00:00:54.000
Good morning.
00:00:54.399 --> 00:00:55.200
Good morning, Tim.
00:00:55.679 --> 00:00:57.119
James, great to see you again.
00:00:57.200 --> 00:01:00.799
And I'm excited to get an update from our last podcast recording.
00:01:01.200 --> 00:01:13.120
For listeners who may not know Kata Structure, can you please provide a 30,000-foot overview of the company and what it does and perhaps talk about either major clients or major end market sectors the company is serving or pursuing?
00:01:13.439 --> 00:01:14.079
Yeah, sure.
00:01:14.319 --> 00:01:15.040
Sure, Tim.
00:01:15.200 --> 00:01:23.439
Well, you, you, you, you, you took all of my summary in your introduction, but I'll try it a slightly different way.
00:01:23.920 --> 00:01:44.959
So we are a ultimately we're a video surveillance company using sophisticated artificial intelligence to identify potential threatening activities and coordinating with uh remote guards or humans in the loop to uh evaluate what the AI has identified.
00:01:45.120 --> 00:02:03.200
And what we find is that 98% of the time when those remote remote guards get involved, we stop the event from becoming something um uh more threatening, I guess you would say, which is one of the numbers we're incredibly uh proud of as a company.
00:02:03.439 --> 00:02:07.439
And you know, as far as customers, you alluded to it at the front end.
00:02:07.599 --> 00:02:11.360
Our main beachhead, if you will, is multifamily properties.
00:02:11.599 --> 00:02:18.719
We work with eight of the top 10 and nine of the top 11 property management firms in the United States, including the top two.
00:02:19.039 --> 00:02:25.520
We're in a small percentage of the portfolios of those people right now, today.
00:02:25.680 --> 00:02:34.960
So in 2026 and beyond, we're we're both securing new logos as well as expanding into existing accounts.
00:02:35.120 --> 00:02:39.360
And we think that holds a lot of future revenue potential for us.
00:02:39.759 --> 00:02:40.000
Great.
00:02:40.080 --> 00:02:40.960
Well, thank you for that overview.
00:02:41.039 --> 00:02:55.599
And I'd be remiss if I didn't say I think of the firm quite often since our last podcast because I'm starting to notice almost everywhere I travel around Miami, um, the portable, um, I don't know what they're properly called, you can speak to, but the portable uh devices where they elevate them a couple stories high.
00:02:55.680 --> 00:02:58.400
They're in construction sites, concert venues, you name it.
00:02:58.639 --> 00:02:59.520
Yeah, trailers.
00:02:59.680 --> 00:03:00.080
Trailers.
00:03:00.159 --> 00:03:00.479
Yes, yep.
00:03:00.719 --> 00:03:02.400
Easiest, easiest way to put it, right?
00:03:02.479 --> 00:03:02.719
Yeah.
00:03:02.879 --> 00:03:03.199
Yes.
00:03:03.759 --> 00:03:05.439
And basically, right?
00:03:05.599 --> 00:03:07.840
I mean, we offer trailer trailers.
00:03:07.919 --> 00:03:19.439
We have some new products that are in the pipeline uh that will uh that we think will be very, very popular in in some of the verticals you mentioned, like construction sites, those sorts of things.
00:03:19.680 --> 00:03:26.639
But in essence, all those trailers are doing, they're doing exactly what we do in a fixed multifamily environment.
00:03:26.800 --> 00:03:31.280
On top of that mast is where the brains reside, right?
00:03:31.759 --> 00:03:42.319
So when we have the trailer system that we offer, on top of the mast is our cloud video recorder, cameras, uh strobe lights, speakers.
00:03:42.560 --> 00:03:53.919
So it's it's it's it's a it's a mobile um uh it's a mobile solution that uses the exact same technology as our fixed solutions.
00:03:54.240 --> 00:03:57.520
Without the hassles of human resource worrying about uh humans doing it.
00:03:57.680 --> 00:03:59.759
So with that, I'll turn it over to James Kisner.
00:04:00.560 --> 00:04:01.199
Thanks, Tim.
00:04:01.360 --> 00:04:04.000
So um, and again, uh welcome to James and Greg.
00:04:04.240 --> 00:04:07.120
So um, you know, let's talk about Q2.
00:04:07.840 --> 00:04:15.039
So subscription subscription revenue grew 164% year over year uh to around uh 764,000.
00:04:15.120 --> 00:04:18.959
It's about you know 62% of the total revenue um that you just reported.
00:04:19.040 --> 00:04:25.199
So uh up to 27% versus a year ago um in terms of uh percentage of revenue.
00:04:25.439 --> 00:04:32.000
Um while your annual revenue run rate uh for recurring revenue reached around 3.1 million.
00:04:32.079 --> 00:04:35.920
So, what did the quarter tell you about how that business model is evolving?
00:04:36.480 --> 00:04:39.519
Yeah, that's it's a very good question.
00:04:39.680 --> 00:04:43.519
And I I think you'll find the answer perhaps a little bit strange.
00:04:43.920 --> 00:04:46.000
Uh, it doesn't tell us much.
00:04:46.319 --> 00:04:48.319
That's the easiest way to put it.
00:04:48.560 --> 00:05:03.759
Uh Greg will get into it a little bit more, I think, later, but um I think what we saw in the first half of the year is that we had a significant number of takeover opportunities.
00:05:04.079 --> 00:05:06.240
And that's exactly what it sounds like.
00:05:06.319 --> 00:05:17.680
As opposed to new construction or a new installation, we actually are inserting our brains on top of existing customer infrastructure.
00:05:18.079 --> 00:05:25.839
And um, right, so we we we don't get certain components of revenue, but we get the recurring revenue piece.
00:05:26.079 --> 00:05:30.079
And frankly, that's just the way things went in the first half of the year.
00:05:30.319 --> 00:05:39.040
We expect that it will change in the second half of the year uh to more traditional metrics that we have shown in the past.
00:05:39.360 --> 00:05:47.839
And, you know, again, just to reiterate, our business model or our revenue model, there's there's basically three components, right?
00:05:48.000 --> 00:05:53.199
There's hardware, which is cameras and speakers, which we get pretty decent margins on.
00:05:53.439 --> 00:06:00.079
There's installation, which generally through third parties that that that we utilize to do the installations.
00:06:00.240 --> 00:06:04.399
Then there's the curring recurring revenue piece as well.
00:06:04.720 --> 00:06:07.680
So um those are the three components.
00:06:07.839 --> 00:06:22.240
We think in the first half of the year, the recurring revenue went up because frankly, we we we because of the takeover scenario, we had less hardware sales and less installation revenue.
00:06:22.399 --> 00:06:22.639
Right.
00:06:23.279 --> 00:06:27.199
And we think we think that that'll shift in the second half of the year.
00:06:27.759 --> 00:06:31.040
I'm gonna kind of drill down a little more on this sort of uh takeover dynamic.
00:06:31.199 --> 00:06:40.079
Um, I think you said that 77% of the cameras signed in new contracts during the first half were were takeovers from another vendor, up from 57% in 2025.
00:06:40.160 --> 00:06:41.600
So pretty big jump.
00:06:41.839 --> 00:06:48.000
Um, is the ability to use a customer's existing cameras uh an advantage in competitive displacements?
00:06:48.079 --> 00:06:54.319
And and you know, pressures were directed towards Greg, just how the economics of a takeover differ from a ground up installation.
00:06:54.399 --> 00:07:03.439
And uh sounds like you don't think this is gonna be uh necessarily a lasting change, but you know, in the short term, but maybe with the long term, if you comment kind of on the trend.
00:07:03.920 --> 00:07:04.480
Sure.
00:07:04.800 --> 00:07:16.480
So um well, as James alluded to, this wasn't something we targeted to do to say, gee, we want to do a lot more takeovers in in the first half of this year than we did last year.
00:07:16.720 --> 00:07:25.680
That was um, you know, at the end of the day, there it's it's deals come in, you win the deals as they they uh as you get your customers excited.
00:07:25.839 --> 00:07:28.639
And it was just the way it uh happened.
00:07:28.800 --> 00:07:31.920
It was just so starting, startlingly different, right?
00:07:32.079 --> 00:07:41.920
From 57% last year to 77% this year, that was a big shift uh that we didn't anticipate.
00:07:42.319 --> 00:07:42.480
Right.
00:07:43.680 --> 00:07:51.040
Now, as James said, and based on what our you know, the pipeline that we see, we don't believe that this trend is going to continue.
00:07:51.519 --> 00:07:59.360
Um but it will other than it will continue to bounce around quarter to quarter, year to year.
00:08:00.000 --> 00:08:00.240
Right.
00:08:00.399 --> 00:08:12.720
So uh now longer term, as that recurring revenue just continues to build, that is the ultimate engine that drives uh our company and drives any SaaS company.
00:08:12.879 --> 00:08:23.680
Um and over time, yes, that will become a larger and larger component of our revenue because as James said earlier, right?
00:08:25.199 --> 00:08:29.199
We are deterring 98% of threatening activities.
00:08:29.600 --> 00:08:35.519
That 98%, one of the reasons we're so proud of us is it leads to 99% customer attention.
00:08:36.960 --> 00:08:41.840
People see the difference, they feel the difference at their properties.
00:08:42.480 --> 00:08:58.159
Um we had a one of my favorite stories, a a property manager before we came in, uh a little bit of a rougher neighborhood, said every Monday he would walk around the property and pick up shell casings.
00:08:59.519 --> 00:09:04.320
And once our system was installed, he said, I don't have to do that anymore.
00:09:05.039 --> 00:09:08.879
And that that's a huge change in the quality of life at that location, right?
00:09:09.039 --> 00:09:14.720
That's the kind of impact we have, and because of that, that's that's what leads to the 99% customer attention.
00:09:14.960 --> 00:09:25.759
So, yes, over time, we think long term uh the the recurring revenue stream or services will be a larger and larger percentage.
00:09:25.919 --> 00:09:31.919
But in the near term, and and and in the near term, certainly for the next couple of years, we've got huge growth potential.
00:09:32.159 --> 00:09:42.080
Uh, we expect to be adding uh site after site after site, and you know, a lot of those will have camera installs um and and hardware sales.
00:09:42.240 --> 00:09:54.799
Now, to your second part of the question about the economics, um, the the the great thing about a takeover is generally you can get to the service revenue quicker, right?
00:09:54.879 --> 00:10:08.080
All they need to buy is a small um uh a small appliance from us, it's relatively inexpensive, that they put in their network closet, they plug their cameras into it, and we're off to the races.
00:10:08.399 --> 00:10:08.639
Right.
00:10:08.720 --> 00:10:11.039
And so the services can get going pretty quickly.
00:10:11.679 --> 00:10:22.320
Where you know, our largest install, our largest deal that we signed, which was almost a half million dollar contract, and had a three-month planned installation.
00:10:23.360 --> 00:10:26.639
Now we actually did it in two months, customer was super pleased by that.
00:10:27.279 --> 00:10:30.399
Uh, but that just delays the service component.
00:10:30.720 --> 00:10:40.960
So um yeah, we we miss out a little bit on the margins of of the hardware, and and there's a small margin on the installation, but it's it's uh it's not huge.
00:10:41.440 --> 00:10:54.639
Uh but the core thing is we continue to add that SaaS revenue, which moves our SaaS revenue margins, you know, continues to inch up and inch up uh quarter by quarter.
00:10:55.200 --> 00:11:00.960
So in the in the in the we're happy with any new business.
00:11:02.799 --> 00:11:08.399
Whether it's a takeover or not, uh, and we will be doing both going forward.
00:11:09.759 --> 00:11:10.399
Yeah, that's helpful.
00:11:10.480 --> 00:11:14.879
That showcasing is very illustrative of the impact that that you guys are having.
00:11:14.960 --> 00:11:16.000
That that's pretty cool.
00:11:16.159 --> 00:11:22.320
Um so just relatedly here, so gross margin uh was up 13 points year for year to 49%.
00:11:22.639 --> 00:11:26.720
I think that was your your highest ever, um, if I recall correctly.
00:11:26.879 --> 00:11:34.159
But um, knowing that mix is kind of you know not fully predictable, just how should we think about the gross margin profile from here?
00:11:34.639 --> 00:11:45.279
Well, you know, I think if you uh our gross margin, again, going back to as you continue to build that SaaS, that's naturally going to move your gross margin up.
00:11:46.000 --> 00:11:53.440
And so, and we'd said this in in you know earlier talks, uh, earnings calls.
00:11:53.519 --> 00:11:59.919
Yes, we expect our gross margins to continue to increase over time as the SaaS component continues to build.
00:12:01.360 --> 00:12:04.480
This quarter it was, as you said, the highest it's been.
00:12:04.639 --> 00:12:07.440
It was a big jump from where it was.
00:12:07.919 --> 00:12:11.360
Um, a lot of that had to do with the particular mix this quarter.
00:12:11.919 --> 00:12:34.080
Uh I so I don't expect it to remain there uh every quarter as the mix continues, but over time, we'll actually not only hit that, you know, be there, we'll exceed it, but as the SaaS component gets larger and larger and and and those customers continue to pay us.
00:12:35.200 --> 00:12:35.440
Got it.
00:12:35.679 --> 00:12:36.080
That's helpful.
00:12:36.240 --> 00:12:39.120
So one more uh pretty CFO focused question, I think.
00:12:39.200 --> 00:12:42.720
Um Greg, you missed a quarter with around 3.8 million of cash.
00:12:42.879 --> 00:12:47.679
Just how are you thinking about your cash runway and and funding your investment in growth from here?
00:12:48.399 --> 00:12:48.799
Yeah.
00:12:49.120 --> 00:12:55.840
So um, and again, every quarter varies a little bit and and as we're hiring right.
00:12:56.080 --> 00:12:57.679
We there is so much growth.
00:12:57.759 --> 00:13:02.159
We do continue to uh invest in people, and people are our biggest expense.
00:13:02.639 --> 00:13:02.879
Right.
00:13:03.120 --> 00:13:06.720
So we do expect salaries to go up.
00:13:06.799 --> 00:13:15.759
But we've been kind of um you know somewhere a little north of half a million a month in in in burn, net burn.
00:13:16.240 --> 00:13:19.600
Um again, that will vary by quarter.
00:13:20.159 --> 00:13:27.919
Uh so if if you look at that, you kind of do the math, and that kind of gives you runway.
00:13:28.320 --> 00:13:32.080
Do we have enough cash to get to cash flow break-even?
00:13:32.720 --> 00:13:35.919
No, we will be doing a little bit of uh fundraising.
00:13:36.080 --> 00:13:38.720
We don't think we have to do significant fundraising.
00:13:38.960 --> 00:13:47.039
We think we've got um uh things in place to get us the funds we need to get to cash flow break-even.
00:13:48.080 --> 00:13:58.799
While we don't give revenue guidance per se, you know, we're we are targeting being cash flow back break-even by you know the end of next year.
00:13:59.600 --> 00:14:02.639
Um that's uh that's that's our goal.
00:14:03.919 --> 00:14:05.679
And and we think that's achievable.
00:14:06.720 --> 00:14:19.120
Uh and we think we've got, like I said, everything in place from both our cash on hand and and our fundraising um lines of credit and and such to get there.
00:14:20.399 --> 00:14:21.679
All right, that's helpful.
00:14:21.759 --> 00:14:24.879
So um this could be early for either one of you.
00:14:24.960 --> 00:14:29.759
Um so uh there are two recent announcements that sort of stood out to me anyway.
00:14:29.840 --> 00:14:40.159
Um in Southern California, you're building camera camera infrastructure from the ground up across a five-building office portfolio and replacing the on-site jar program outright.
00:14:40.320 --> 00:14:45.919
Um and in Baltimore, uh, you're specified into a multifamily development while it is still under construction.
00:14:46.000 --> 00:14:48.080
So those are pretty you know, different entry points.
00:14:48.159 --> 00:14:56.240
Just what does that say about how the platform lets you engage a property at the various stages of its life cycle and about the momentum you're seeing beyond multifamily?
00:14:56.879 --> 00:14:57.120
Sure.
00:14:57.279 --> 00:14:59.600
Yeah, I'll I'll take that one, James.
00:14:59.840 --> 00:15:06.320
So uh I A all great announcements, all different types of opportunity, right?
00:15:06.720 --> 00:15:11.519
And I think what it speaks to is the flexibility of our application.
00:15:12.000 --> 00:15:12.320
Right.
00:15:12.559 --> 00:15:16.159
Depending, you know, if if it's if it's new construction, we can deal with it.
00:15:16.320 --> 00:15:17.600
Greg mentioned earlier, right?
00:15:17.759 --> 00:15:32.799
Last year, largest contract we ever had, 30-story uh high-rise luxury high-rise facility that that was new construction, and we went right along with them and right, installed across the entire uh the entire property.
00:15:32.960 --> 00:15:34.080
So we can do that.
00:15:34.320 --> 00:15:43.519
We can go in after the fact and and and retrofit, if you will, right, existing buildings like the uh the five property campus that you mentioned.
00:15:43.679 --> 00:15:46.320
And again, I think that just speaks to the flexibility, right?
00:15:46.399 --> 00:15:51.840
We we don't we work, we obviously sell cameras from a takeover standpoint.
00:15:52.000 --> 00:15:57.679
We work with virtually any camera that's out there, including older analog cameras.
00:15:57.919 --> 00:16:12.639
Um, and you know, our one piece of proprietary equipment is a cloud video recorder that takes the AI images that we're capturing, sends them up to the cloud, and then down into our AI servers for further processing, right?
00:16:12.960 --> 00:16:16.080
So flexibility is the key from that standpoint.
00:16:16.320 --> 00:16:22.399
You mentioned uh additional, you know, additional verticals, additional traction, those sorts of things.
00:16:22.559 --> 00:16:28.399
Let's just let's just very quickly talk about some of the areas that we have active installations in.
00:16:28.639 --> 00:16:41.360
Critical infrastructure, think um uh a remote solar farm, large solar farm in the middle of nowhere that wants to protect potentially against theft, safety issues, those sorts of things.
00:16:41.519 --> 00:16:46.080
Uh, active construction sites, I think that we were talking about at the front end, right?
00:16:46.159 --> 00:17:04.240
We have a variety of existing solutions and new solutions that we're that we're launching that will be perfect for construction sites, particularly after hours when there's an increased risk of uh tool and material thefts and safety issues as well.
00:17:04.400 --> 00:17:10.079
Uh, transportation and logistics, I can't begin to tell you how excited we are about that.
00:17:10.240 --> 00:17:22.160
Um, right, we've now have some internal expertise in this area and some initial deployments uh that are uh really doing a couple things.
00:17:22.400 --> 00:17:39.039
They're giving us a chance to uh work closely with the operators of certain types of properties and getting us um additional knowledge, I guess you would say, right, in understanding these different verticals and what's important to these customers.
00:17:39.279 --> 00:17:47.680
So, yeah, there's a number of ways, other than multifamily, that we continue to, uh I guess you would say, extend the business to?
00:17:47.839 --> 00:17:50.319
And we're just really excited about all of them.
00:17:50.640 --> 00:18:00.799
James, I'm gonna uh I rarely jump in on these calls, but I'm going to for just a minute because my brain is very active because I think of all the incredible amount of opportunities or the total addressable market for you.
00:18:01.039 --> 00:18:07.039
Um, having been a marketing professor for two years at a college after I left Lehman Brothers, I'm putting that hat back on for a second.
00:18:07.279 --> 00:18:15.680
Does your firm do a deep dive into crime stats and then try to really aggressively sort of solicit business in those areas?
00:18:15.759 --> 00:18:17.599
Or is that just an afterthought at this point?
00:18:17.920 --> 00:18:19.759
Yeah, great, great, great question.
00:18:20.000 --> 00:18:24.880
So specifically transportation and logistics, let's use that as an example, right?
00:18:25.200 --> 00:18:29.519
Reported cargo theft in the United States is$30 billion a year.
00:18:29.759 --> 00:18:30.640
Reported.
00:18:31.279 --> 00:18:41.519
Um when you when you extrapolate unreported cargo theft, replacement costs, et cetera, it's over$50 billion a year in the US.
00:18:41.920 --> 00:19:04.000
So there's a perfect example where uh we're taking internal expertise, external statistics, and using it specifically to target additional opportunities in that space, be it distribution centers, be it secure truck lots, be it individual truckers.
00:19:04.079 --> 00:19:11.359
I mean, there's there's a lot of ways that you can address that um that uh uh that market.
00:19:11.599 --> 00:19:13.200
And that's indeed how we're doing it.
00:19:13.519 --> 00:19:14.319
Yeah, that's great to know.
00:19:14.400 --> 00:19:23.519
And uh the FBI has not been shy in the last year about being very public, actually, about uh gang activity with both both um rail railways as well as 18-wheel truck lots.
00:19:24.400 --> 00:19:25.119
Absolutely.
00:19:25.279 --> 00:19:43.279
And you know, kind of interesting if you think about what's happening in the world now AI components, whatever it might be, chips, servers, you know, whatever, uh, that's becoming a big, big, big target, right?
00:19:43.440 --> 00:19:50.079
And if we think about a tractor, the value of a tractor, because you don't know if it's vegetables or iPhones on there, right?
00:19:50.240 --> 00:19:54.400
Is$150 to$300,000 value on average.
00:19:54.640 --> 00:19:57.599
Well, AI components keep going.
00:19:57.920 --> 00:20:06.000
So so it is it it's an area that we're uh uh very cognizant of and very clearly targeting.
00:20:06.319 --> 00:20:06.559
Yep.
00:20:06.640 --> 00:20:12.319
To use uh military uh nomenclature high value targets, and with that, I'll turn it back over to James Kisner and be quiet.
00:20:13.039 --> 00:20:13.599
All right.
00:20:13.839 --> 00:20:14.240
All right.
00:20:14.480 --> 00:20:20.079
Um so uh yeah, you had two pretty significant hires recently.
00:20:20.720 --> 00:20:23.359
Um I think I'm gonna ask them about both of them at once.
00:20:23.440 --> 00:20:24.000
Very, you know.
00:20:24.160 --> 00:20:29.519
So Nile Coates is uh your new chief register revenue officer, uh, you know, joined from ECAM.
00:20:30.000 --> 00:20:34.799
So led one of the sales force for the largest physical security services organizations in the world.
00:20:34.880 --> 00:20:44.240
And you also uh early this year at Ed Burnett, um, you know, from uh you spent several decades at UPS um Chief Security and Operations Officer.
00:20:44.319 --> 00:20:51.839
So those are both just two pretty amazing hires, and I think potentially, you know, validations um that people like what you're doing.
00:20:51.920 --> 00:21:01.599
But can you kind of say you know more about what each of these folks um you know brings your organization, what kind of impact you expect them to have where they're already having uh cloud structure?
00:21:02.079 --> 00:21:04.079
Yeah, absolutely.
00:21:04.319 --> 00:21:06.640
Um let's start with the CRO.
00:21:06.720 --> 00:21:10.000
Let's start, let's start with with Nile codes.
00:21:10.319 --> 00:21:31.119
So uh we had the opportunity to be introduced to Nile, and it just became abundantly clear that his background and experience were yeah, if if we wrote down a list of items that would you know generate the perfect CRO profile, he has it.
00:21:31.440 --> 00:21:42.640
So, right when he was at ECAM, uh he was responsible for US revenue of over$350 million in a sales force approaching 100 people.
00:21:42.880 --> 00:21:45.119
We got a little bit less than that right now.
00:21:45.359 --> 00:21:56.799
But all the same thoughts, all um the processes, the sales playbook, whatever you wanna call it, it it's transferable from company to company.
00:21:56.960 --> 00:21:59.519
Let's talk about Ed, and then I'll circle back to both of them.
00:22:00.079 --> 00:22:05.279
Ed Burnett, Chief Security and Operations Officer, 30 years at UPS.
00:22:05.440 --> 00:22:12.880
Last 10, he was responsible for all of US security and global fraud investigations.
00:22:13.359 --> 00:22:23.279
He was responsible for the safety of uh hundreds of thousands of employees and multiple millions uh of package deliveries.
00:22:23.680 --> 00:22:27.839
So, what is it that drew both of these individuals to cloud structure?
00:22:28.000 --> 00:22:33.759
Jokingly, I like to start by saying that both of them, I think it was the opportunity to work with me.
00:22:33.920 --> 00:22:47.279
But other than that, other than that, I think what they both realized, Niall, when he was at ECAM, he saw this upstart cloud structure taking business away from him.
00:22:47.440 --> 00:22:58.640
When we talk about takeovers, honestly, eCamm is one of the customers that we've had some success in uh in doing in winning takeover opportunities from.
00:22:59.839 --> 00:23:01.119
He saw that.
00:23:01.359 --> 00:23:24.480
And also, I think at this stage in Hinck's career, he realized that maybe he doesn't have too many opportunities to come in close to ground floor and really make a difference in an organization and build a sales organization and structure to his uh vision and uh and and prior experience.
00:23:24.640 --> 00:23:25.519
So that's Nile.
00:23:26.160 --> 00:23:34.960
Ed, uh, as you might expect, coming from a company like UPS, uh very process-oriented individual.
00:23:35.279 --> 00:23:49.839
And I will say, right, when you're in a startup, a restart, a growth environment, process is one of the things that usually gets pushed to the side, to be quite honest with you.
00:23:50.079 --> 00:24:02.000
And it's been refreshing to work with someone like Ed, who um he he he doesn't care what level of growth the company is in.
00:24:02.160 --> 00:24:10.960
When it comes to process, holding people accountable and and demanding results, he is an absolute taskmaster.
00:24:11.039 --> 00:24:21.039
And I will tell you, it has helped our business uh just incredibly since he's been on board to help us add that level of discipline.
00:24:21.119 --> 00:24:31.680
And that's all on top of him being one of the leading experts on cargo theft, transportation and logistics, safety issues, et cetera.
00:24:32.079 --> 00:24:40.000
So we were very fortunate to get the caliber of individuals that we did in both Ed and Nile.
00:24:40.480 --> 00:24:44.240
And we looked forward, we we looked forward to working with them going forward.
00:24:44.400 --> 00:24:49.920
And honestly, we'll stack our management team right now up against anybody that's out there.
00:24:50.640 --> 00:24:53.599
Yeah, really impressive, like I said, really impressive hires.
00:24:53.680 --> 00:24:54.640
Um, all right.
00:24:54.720 --> 00:25:01.920
So wrapping up here, um, you know, you've said that uh you think the second half is gonna be you know stronger than than the first half in terms of revenue.
00:25:02.079 --> 00:25:11.839
Just um in general, what milestone should listeners watch for over the balance of of the year and through early next year in terms of showing that you're that your strategy is working.
00:25:12.160 --> 00:25:12.720
Yeah.
00:25:12.880 --> 00:25:23.440
Uh let me start and then I'll I'll let Greg uh you know wrap up with his thoughts and uh probably use an opportunity to correct whatever I'm gonna say next.
00:25:23.680 --> 00:25:26.480
Um here's what I would here's what I would say.
00:25:26.640 --> 00:25:36.240
We don't provide revenue guidance, as you know, James, but you know, 270% revenue growth 2025 over 2024.
00:25:36.400 --> 00:25:42.079
It would be great if we could sustain that and and roll with that into 2026.
00:25:42.240 --> 00:25:43.599
We don't think that's realistic.
00:25:43.759 --> 00:25:58.079
And frankly, we need to give the new chief revenue officer uh some time to figure a few things out and and and and help us figure out how to grow quicker, right?
00:25:58.240 --> 00:25:59.200
If you will.
00:25:59.519 --> 00:26:08.799
So do we think that you you know the the external community can expect revenue growth year over year, 26 over 25?
00:26:09.039 --> 00:26:09.599
Yes.
00:26:09.920 --> 00:26:13.680
Will it be akin to what we saw 25 over 24?
00:26:14.000 --> 00:26:14.319
No.
00:26:14.799 --> 00:26:25.200
Uh milestones and and things that people should look for, look for additional press releases announcing wins, not just in multifamily, right?
00:26:25.279 --> 00:26:35.200
Not just expansion in existing accounts and getting new logos, but particularly in additional verticals, because that's where we get the diversification.
00:26:35.440 --> 00:26:46.160
That's where we get a different set of customers, and and that gives us multiple paths or multiple uh avenues to additional revenue growth.
00:26:46.319 --> 00:26:48.079
That's what I would say, Greg.
00:26:49.119 --> 00:26:50.880
Uh absolutely.
00:26:51.119 --> 00:27:04.960
And you know, what you will see and what what we have seen in the past, right, Q3 uh is usually pretty good, but Q4 really packs it in, right?
00:27:05.039 --> 00:27:08.240
People are trying to get their budgets finished for the end of the year.
00:27:08.480 --> 00:27:17.279
Um but the expansion, right?
00:27:17.599 --> 00:27:22.720
I think you will see more expansion within our existing customer base.
00:27:23.920 --> 00:27:26.319
I think you will see new verticals.
00:27:27.359 --> 00:27:33.759
Uh and those two that's our core strategy, right?
00:27:34.079 --> 00:27:35.359
Continue to expand.
00:27:36.480 --> 00:27:40.400
Take what we've got, expand within, and add new things, right?
00:27:40.480 --> 00:27:50.960
It's the the opportunities are so rich that we're gonna be able to kind of get things from from everywhere.
00:27:51.279 --> 00:28:02.000
And and that's going to just continue to position us for a great 2027 and and hopefully get into cash flow break-even in 2027.
00:28:03.039 --> 00:28:05.039
That's that's that's a great summary by both of you.
00:28:05.119 --> 00:28:08.000
So um I'll hand it back to uh to Tim.
00:28:08.079 --> 00:28:09.119
Thanks again, guys, for coming.
00:28:09.359 --> 00:28:09.680
Thank you.
00:28:10.240 --> 00:28:10.480
Appreciate it.
00:28:10.640 --> 00:28:14.559
Thanks, James Kisner, and thanks, James McCormick and Greg Smithherman, for joining us today.
00:28:14.720 --> 00:28:23.519
I'm not envious of your CRO because I do believe in my heart of hearts that there's so many opportunities in this very large addressable market that he's probably very busy trying to force rank.
00:28:23.599 --> 00:28:24.640
What do I go after first?
00:28:24.960 --> 00:28:25.440
100%.
00:28:28.400 --> 00:28:44.160
Thank you for listening, and don't forget to subscribe, as well as visiting www.watertowerresearch.com to stay up to speed on the company's small cap written research reports, podcasts, fireside chats, industry specific symposiums, and conference schedules.
00:28:44.559 --> 00:28:49.359
We will see you next time for another edition of the WTR Small Cap Spotlight Podcast.
00:28:49.839 --> 00:28:55.039
Finally, a special thanks to the producer and editor of the podcast, Krista Fitzpatrick.
