Knightscope, Inc. Class A Common Stock 2026 Q2 Earnings Call

second quarter 2026 earnings call. I'm Apoorv Dwivedi, Executive Vice President and Chief Financial Officer, and I'm joined by William Santana Li, Founder, Chairman, and Chief Executive Officer. By now, you should have had a chance to review our second quarter 2026 earnings release, which was published at 1:05 P.M. Pacific Time, just after markets closed. Before we begin, please note that today's discussion contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our goals, growth, prospects, product roadmap, and outlook. Actual results may differ materially due to the risks and uncertainties described under Risk Factors in our most recent annual report on Form 10-K, as updated by our other SEC filings. Forward-looking statements speak only as of today, and we undertake no obligation to update them except as required by law.

With that, it is my pleasure to turn this call over to Bill.

Thank you, Apoorv, and good afternoon, everyone. Thank you for spending part of your day with us. I'm going to start with the business and marketing highlights from the second quarter, what we won, what we built, and how we're setting up the second half of the year. Then I'll hand the call back over to Apoorv, who will take you through the financials in detail. So let's dive right in. The second quarter of 2026 was the best quarter in Knightscope's history. Revenue came in at $9 million, up more than 200% from $2.7 million in the same quarter last year, and a new quarterly record for the company. We now serve 434 clients across 42 states. That marks two consecutive record quarters following first-quarter revenue that was up 106% year-over-year.

Back in May, I stood in front of institutional investors in New York and made a simple commitment. Each quarter, better than the last. We have delivered exactly what we said we would do. In the second quarter, we built on the momentum from the first quarter of 2026, and we believe that we have laid the groundwork to keep it going forward. This compounding effect is the result of relentless commitment to execution across the entire organization. Apoorv will walk you through the drivers behind those numbers in just a few minutes. The integration of our recent acquisition, now known as our Knightscope Security Force, is proceeding as planned, and the collaboration between the teams is amazing to witness. Seeing firsthand the team collaborate on our new H1 wearable that will define the future augmented security agent, or ASA, is truly invigorating.

The teams are operating and beginning to work as one as we look to expand our offerings with our current client base. This was our second acquisition as a public company, and the discipline the team has shown, closing it, filing it, and now integrating it without missing a beat tells you a lot about the caliber of the team. More importantly, it strengthens exactly how we intend to differentiate Knightscope, the unique combination of hardware, software, and humans delivered as one managed service. This team has been working on efficiencies and delivering tangible results, including cutting the assembly time for one of our product lines by almost 80%. We've grown the depth of our technical team significantly as we're seeing interest in Knightscope grow significantly.

We restructured our field service network in Northern California and the Northeast region by building relationships with local service providers and by insourcing field services in Southern California to provide better services while lowering our service delivery costs. We also strengthened the leadership in the company, recruiting multiple senior executives with a track record of scaling companies. Growth with discipline. That is the operating model. The K7, our all-new autonomous security robot, passed its alpha prototype gate review, and we remain on track for initial deployments in the fourth quarter of 2026 as we move into the beta prototype phase. in April, we announced our partnership with Carnegie Mellon University, the top robotics institution in the country, whose graduate robotics program is now working directly on autonomous patrol technology under the guidance of our engineering team.

We're taking a disciplined approach to the K7's market introduction focused on success in the field. Client interest in the K7 deployment continues to grow. Simultaneously, significant work is well underway on an all-new Signals platform designed to orchestrate our autonomous robots, stationary devices, sensors, augmented security agents, and our mission intelligence remote monitoring. An industry first that combines pioneering proprietary 3D digital twin technology with AI agents to eliminate blind spots and provide an auditable trail for proof of work. Hardware, software, and humans working as one. One team, one force. Now let me spend a few minutes on the brand, because security is not sold, it is adopted through trust. Building trust at a national scale requires showing up everywhere. With clients, with the media, with communities, with recruits, and with Wall Street. This quarter, we sharpened our positioning.

Knightscope is a managed service provider, the only company uniquely combining hardware, software, and humans into one integrated offering. We are building the nation's first Autonomous Security Force. That message resonated strongly with institutional investors during our non-deal roadshows in New York, and its momentum is building. The team has been hard at work preparing for GSX 2026, the security industry's largest gathering, September 14th through the 16th in Atlanta, Georgia, where we'll officially launch the Autonomous Security Force on the biggest stage in our industry. If you're attending, come and see us. One more signal of momentum. In June, we hosted a career night at our headquarters here in Silicon Valley, and there was literally a line around the building to get in. The best people in the country want to work on this mission, and we're hiring the best of the best.

With that, I'll turn it over to Apoorv to take you through the numbers.

Thanks, Bill. Revenue for the second quarter was $9 million, an increase of 228% compared with $2.7 million in the second quarter of 2025 and a new quarterly record. Growth was driven by the full quarter contribution from the Security Force acquisition, in addition to our core ASR subscriptions and ECD deployments. Gross margin was $0.7 million, or approximately 7% of revenue, compared with a gross loss of $0.9 million in the prior year period. This marks our second consecutive quarter of positive gross margin, driven by full quarter impact of the immediately accretive Security Force acquisition and margin expansion across both technology product lines, demonstrating that our integrated technology plus services model is structurally more profitable than either business alone. Operating expenses were $13.8 million, compared with $5.4 million in the second quarter of 2025.

Primarily driven by investments in R&D to support the development of our next generation technology, as well as increased headcount across all departments and the integration of the Security Force. Despite the $3.9 million increase in R&D expenses from last year, the acquisition improved our operating leverage by adding higher margin revenue and leveraging our existing operating infrastructure. We expect these benefits to continue and strengthen as we achieve our new product development milestones. Net loss for the quarter was $14.1 million, or $0.79 per share, compared with a net loss of $6.3 million, or $0.90 per share in the prior year period. This was primarily due to the higher OPEX highlighted earlier, as well as approximately $1 million in other expenses related to the fair value and the change in the fair value of the contingent consideration or earn-out due to the seller of the recent acquisition.

Turning to the balance sheet, we ended the quarter with cash and cash equivalents of $8.2 million. This is flat to prior year and with an improving cash conversion cycle due to the effects of the acquisition. In summary, record revenue, immediately accretive margins from the acquisition, expanding margins from maturing machines and network and service efficiencies, and continued discipline in expense management. The financial profile of the company is strengthening in step with the operational execution Bill described earlier. Now we'll open it up to Q&A. Bill, what I'll do is I'll read the questions to you.

You'll give me all the easy questions.

I'll give you all the easy questions.