Rank One Computing Corporation Common stock 2026 Q2 Earnings Call

Please go ahead. Thank you, Betsy, and good afternoon, everyone.

We thank you for joining ROC's second quarter 2026 financial results call. Presenting on today's call are B. Scott Swann, ROC's CEO, and Cody Barnes, ROC's CFO. Brendan Klare, ROC's co-founder and chairman of the board of directors, and David Ray, ROC's head of capital markets and general counsel, will also be available during the question and answer portion of the call. Before we begin, I remind everyone that this call may contain certain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include remarks about management's future expectations, beliefs, estimates, plans, and prospects. Such statements are subject to a variety of risks, uncertainties, and other factors that could cause actual results to differ materially from those indicated or implied by such statements.

Such risks and other factors are set forth in the company's quarterly report on Form 10-Q filed with the Securities and Exchange Commission, and it does not undertake any duty to update such forward-looking statements. Additionally, during today's call, certain non-GAAP measures will be discussed. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with US GAAP. Now, my pleasure to turn the call over to ROC's CEO, B. Scott Swann. Scott? Thank you, Jules.

Good afternoon, and thank you for joining ROC's second quarter 2026 earnings call. The second quarter marked ROC's first full quarter operating as a public company, and it was reflected measurable progress in two areas we outlined on our first quarter call. We have seen improving government contracting activity and broad commercial adoption across the ROC product portfolio. We are pleased to report sequential growth nearly doubling our revenue compared to the first quarter. We have also successfully monetized the entire ROC Vision AI platform ahead of our plan. Second quarter revenue was $5.1 million. This is up 2% year-over-year, as I mentioned, nearly double first quarter revenue, primarily driven by a 41% increase in R&D contract revenue, which more than offsets the decline in product revenue attributed to the completion of a ROC Watch deployment recognized in prior year periods.

In May, we said government procurement activity appeared to be improving, with awards and revenue to follow incrementally through the remainder of 2026. The second quarter provided initial evidence that funding and program activity are actually beginning to return to normal and develop. Additionally, we advanced our newer ROC products across the Vision AI platform. ROC SDK, ROC ABIS, and ROC Enroll each generated strong year-over-year revenue growth, and ROC Evidence produced its first commercial revenue. Combined, these developments indicate early progress on the path to growth we've outlined. That does not mean growth for the business will follow strictly a linear trajectory. Government awards and deployment schedules are unpredictable, and they create quarterly variability.

However, we believe the second quarter performance demonstrates that the underlying government procurement activity level has increased, the contract awards that we target are beginning to be executed, and a go-to-market strategy is advancing. Taking a closer review of ROC's government-driven activity, R&D contract revenue increased to approximately $3 million from $2.1 million in the prior year quarter. This initial contract revenue growth is encouraging, but activity has still not returned to a normalized rate. Government program timing remains variable and business activity is informed by appropriations, procurement schedules, and the timing of individual awards. That being said, we believe ROC is well-positioned to capture growth opportunities through the second half of this year. Importantly, the value of these programs extends beyond the initial contract revenue.

Government-funded work allows ROC to demonstrate its technology in demanding operating environments that deepen our customer relationships and position us to pursue expanded programs with our Vision AI solutions. Our overall strategic growth objective for our R&D contract business is straightforward. Converting research into successful mission deployments or proof of concepts that lead to larger, longer duration recurring revenue, and ultimately establishing ROC's American-built technology as the identity infrastructure of government customers. Turning to our product segment. Overall product revenue declined year-over-year due to the completion of a significant ROC Watch deployment, which was recognized in prior year quarterly revenue. To be clear, this was a profoundly successful project for ROC. Under the construct, the ROC Watch solution was selected for an initial short-term contract period with a strict timeline and a tailored to really highly sensitive mission for a government agency.

Based on rigorous intelligence results, it validated that mission and that critical utility, and ROC Watch outperformed customer expectations, and that deployment was subsequently expanded and ultimately completed successfully with high customer satisfaction. This ROC Watch mission is an important example of contract economics because certain ROC product programs are phased and finite Revenue may be concentrated in particular periods depending on program and deployment milestones. Excluding the ROC Watch year-over-year comparison, the broader product portfolio showed strong progress. ROC SDK revenue increased 84% to approximately $1.6 million, supported by growth in new customers. ROC ABIS revenue increased 723% off a marginal base in the prior year quarter. The current ABIS revenue contribution was a result of our early go-to-market process to advance these initial customer programs to commercial deployment, and we are continuing discussions with their consequential potential beachhead customers.

Our newest product brought to market, ROC Evidence, generated its first commercial revenue following an early deployment completed ahead of original commercialization timeline. ROC Enroll revenue increased 125%, also from a small base, reflecting continued adoption by our key enterprise customer, MTN in South Africa, as it activates an expanded rollout plan for identity enrollment and verification. Our commercial growth model remains consistent across our Vision AI platform. We introduce ROC products with a defined use case, prove our performance, and successfully expand across additional users, workflows, locations, and products. The ultimate objective is to secure beachhead customers that require capacity to deliver multiyear identity intelligence programs with ROC's technology and support for a recurring, repeatable revenue stream. Before shifting away from a product performance, I'd like to touch on our digital evidence growth strategy. During the quarter, we pursued a strategic initiative designed to enhance our ROC Evidence product.

As announced in June, we entered into an agreement to acquire ZTC, a legacy strategic partner of ROC. Consolidating ZTC into ROC's business and operations was a natural next step in our collaboration with this uniquely skilled engineering team. We see this as a strategic acquisition intended to build a robust version of ROC Evidence with ZTC's additional digital forensic capabilities, their domain expertise, and government customer relationships. We have already made a lot of progress on aligning our companies in advance of closing the transaction. Integration across our engineering, products, and business development is well underway and showing promising results, with the business operation integration to be completed quickly upon closing. We will provide further details once the transaction is complete with greater visibility into the financial profile and full scale of the integrated company. We anticipate closing the transaction by the end of the third quarter.

I'd like to spend a moment to revisit ROC's differentiator. It is not simply that we are American-built. It's that we combine this U.S. ownership and development with technical performance validated by top-tier performance in independent industry benchmarks. We believe that combination is increasingly relevant to national security, public safety, and critical identity infrastructure. Our commercialization efforts are also supported by this independent validation as a key consideration in both government and commercial procurement processes. During the quarter, ROC achieved NIST results, including the fastest latent fingerprint search speed in the evaluation of latent fingerprint technologies benchmark, and leading identification accuracy results across multiple friction ridge image and features friction fingerprint technology evaluations. These results matter because our customers require this objective evidence of accuracy, speed, and scalability, and they frequently support their acquisition decisions.

We also continue to strengthen the platform and organization as we deepen our public market heritage. We appointed Dr. Kathleen Kiernan, former Assistant Director for the ATF Office of Strategic Intelligence and Information, to our board of directors. We also added Steven McQueen, former Director of the FBI's Threat Screening Center, as a senior advisor establishing our Homeland Security and intelligence market strategy. Additionally, our ROC Watch suite of solutions received a DT&E designation under the Department of Homeland Security SAFETY Act and were named Facial Recognition System of the Year in the 2026 AI Breakthrough Awards. As a newly public company, our mandate is to deliver on the objectives within our control to our shareholders, and we acknowledge that our credibility we build as we demonstrate execution against our expressed strategic priorities. The first quarter, we said government activity was beginning to improve.

In the second quarter, R&D contract revenue increased materially. We indicated that we were advancing ROC ABIS and ROC Evidence toward commercial use. In the second quarter, ROC ABIS revenue expanded. We covered multiple new customers, and ROC Evidence generated its first commercial revenue ahead of our internal planning. We invested in talent across product development, business development, and deployment capacity, as well as investing in our AI ML algorithm development engine, our technology hardware, and processing infrastructure to drive durable growth and scale. Our responsibility now is to convert those investments into larger customer programs for a more durable revenue profile and scale. With that, I'll turn the call over to Cody Barnes, our Chief Financial Officer.