ACORN ENERGY, INC. (ACFN)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 revenue rose 54.9% year over year to $3.525M, with diluted EPS of $0.28; gross margin expanded to 74.9% on operating leverage as OpEx fell to 48% of revenue from 62% a year ago .
• Hardware revenue grew 89.3% to $2.205M, aided by ~$1.4M from the Material Contract with a national cellular provider; monitoring revenue grew 18.9% to $1.320M as endpoints increased .
• Management reiterated a long-term target of ~20% average annual revenue growth and expects ~50% of incremental revenue to drop to operating income; EPS excluding non-cash tax would have been ~$0.36 for Q2, highlighting underlying profitability .
• Subsequent uplisting to Nasdaq Capital Market (July 24, 2025) is a near-term visibility/liquidity catalyst and supports potential M&A and OEM partnerships; company remains debt free with quarter-end cash of $3.253M .

What Went Well and What Went Wrong

What Went Well

• Strong top-line growth: Total revenue +54.9% YoY to $3.525M, with hardware +89.3% and monitoring +18.9%; gross margin expanded to 74.9% on scale benefits .
• Operating leverage: Operating expenses rose 20% YoY yet fell to 48% of revenue from 62% as revenue growth outpaced costs; operating income reached $947K vs. $258K YoY .
• Strategic contract execution: “The contract contributed $1.4M of revenue in Q2’25 and a total of $4.1M since inception in Q4’24, approximately 95% of which relates to hardware sales thus far,” positioning larger future opportunities .

What Went Wrong

• Non-cash tax provision diluted reported EPS: Income tax expense of $242K (~$0.10 per share) reduced Q2 reported EPS to $0.28; management noted EPS would be ~$0.36 excluding the non-cash component .
• Residential demand softness: Management indicated residential end-market has been “relatively flat over the past two quarters,” with growth tied to macro factors like rates and employment .
• Demand response remains nascent: Despite a strong CPower/NRG relationship, grid operators’ incentive structures are not yet in place; current revenue impact is limited in the near term .

Financial Results

Segment revenue breakdown:

KPIs and operating metrics:

Guidance Changes

No formal quarterly revenue/EPS guidance, OpEx targets, OI&E, tax rate range, segment-specific guidance, or dividends were provided .

Earnings Call Themes & Trends

Management Commentary

• “We expect approximately 50% of each incremental revenue dollar to drop to our operating income line for the foreseeable future.”
• “The contract contributed $1.4M of revenue in Q2’25 and a total of $4.1M since inception in Q4’24, approximately 95% of which relates to hardware sales thus far.”
• “OmniMetrix remains the largest independent provider of remote generator monitoring solutions in North America.”
• “Based on our current trajectory and industry dynamics, we believe we can sustain 20% average annual revenue growth over the next three to five years.”
• “Subsequent to quarter-end, we completed an uplisting to the Nasdaq Capital Market, a significant milestone for our company.”

Q&A Highlights

• Pipeline/large contracts: Management is responding to more and larger RFPs, including beyond generators, with a broader and more varied pipeline vs. six months ago, but timing remains hard to predict; confidence in achieving ~20% average annual growth over 3–5 years .
• Telecom contract cadence: Shipments are ahead of installations; revenue recognition depends on customer activation/acceptance; management aims to expand the scope with the customer over time .
• Monitoring vs. hardware trajectory: Monitoring should grow in step with hardware as activations catch up; historically hardware ~80% of initial sale value, monitoring ~20% .
• Demand response economics: Partnership with CPower (now owned by NRG) remains strong; revenue currently small due to grid operator incentive structures; long-term potential viewed as “almost all profit” once program frameworks mature .

Estimates Context

Wall Street consensus (S&P Global) appears unavailable for EPS and revenue for Q2 2025 and upcoming quarters for ACFN at this time; only actuals are present in the feed. Values retrieved from S&P Global.*

Note: With limited/no published consensus, we cannot quantify beats/misses vs. Street for Q2 2025. Values retrieved from S&P Global.*

Key Takeaways for Investors

• Execution on the Material Contract drove outsized hardware growth (+89.3% YoY) and supported 74.9% gross margin, validating operating leverage as OpEx fell to 48% of revenue .
• Underlying profitability is stronger than reported EPS suggests; excluding non-cash tax, management indicated Q2 EPS would have been ~$0.36 versus reported $0.28 .
• Product innovation (Omni/Omni Pro) and targeted C&I sales should support endpoint growth and monitoring attach over time, offsetting near-term residential softness .
• Uplisting to Nasdaq enhances visibility and provides a more attractive currency for accretive M&A and OEM partnership opportunities, potentially accelerating growth .
• Demand response is a real long-term optionality; near-term revenue contribution is modest until grid operator incentives are aligned, but margin potential is compelling .
• Liquidity strengthened (cash $3.253M; debt free), with operating cash flow of $900K in 6M’25 and net working capital up to $5.661M excluding deferred items, supporting continued investment .
• With Street estimates unavailable, the near-term stock narrative is likely driven by contract execution pace, C&I pipeline disclosures, and visible catalysts like OEM deals/M&A; watch for further contract activation and monitoring revenue catch-up in 2H’25 .