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DUOS TECHNOLOGIES GROUP, INC. (DUOT)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue was $5.74M, up 280% year over year and up 16% sequentially; revenue beat consensus by ~16% while EPS missed as non-cash stock comp and one-time items weighed on results .
  • Gross margin improved to $1.52M (≈26.5%) from negative in Q2 2024, driven by high-margin AMA revenue and equity income tied to the 5% stake in New APR Energy .
  • Management reiterated FY 2025 revenue guidance of $28–$30M and indicated a goal to achieve adjusted EBITDA profitability in Q4 2025; backlog stood at ~$40.7M with ~$18M expected to be recognized in 2025 (contracted + near-term awards) .
  • Strategic catalysts: first Edge Data Center (EDC) fully commercialized with five more installing, expanded FiberLight partnership enabling faster deployments, and AMA execution including a 150MW power plant in Mexico; post-quarter liquidity increased (~$40M cash) to fund EDC rollout without further equity dilution .

What Went Well and What Went Wrong

  • What Went Well

    • Strong top-line outperformance: revenue $5.74M vs. $4.94M consensus; services and consulting (incl. related-party AMA) drove results with $4.76M from New APR Energy [GetEstimates:Q2 2025 Revenue Consensus*].
    • Margin inflection: gross margin rose to $1.52M (≈26.5%) aided by ~$0.904M equity revenue recognized at 100% margin from the 5% non-voting stake in New APR .
    • EDC commercialization and pipeline acceleration: first EDC producing revenue; five additional sites in installation; expanded FiberLight partnership to speed deployments across Texas and beyond .

  • What Went Wrong

    • EPS missed: -$0.30 vs. -$0.215 consensus due to ~$1M quarterly non-cash stock comp and one-time commissions/bonuses tied to AMA closing [GetEstimates:Q2 2025 EPS Consensus*].
    • Legacy rail technology delays persisted, with customer-related site readiness pushing out revenue recognition for two high-speed RIPs; management is reassessing strategy for this line .
    • Higher operating expenses (+65% YoY to $4.96M) from SBC and one-time comp, offsetting some margin gains despite AMA-driven efficiencies .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD Millions)$1.510 $4.952 $5.736
Gross Margin ($USD Millions)-$0.215 $1.314 $1.519
Gross Margin %-14.2% 26.5% 26.5%
Operating Expenses ($USD Millions)$3.002 $3.103 $4.960
Net Loss ($USD Millions)$3.204 $2.080 $3.518
Diluted EPS ($USD)-$0.43 -$0.18 -$0.30

Q2 2025 vs. Consensus

MetricActualConsensus*Surprise
Revenue ($USD Millions)$5.736 $4.935*+$0.801 (+16.2%) — bold beat [GetEstimates]*
Diluted EPS ($USD)-$0.30 -$0.215*-$0.085 — MISS [GetEstimates]*

Values retrieved from S&P Global.*

Segment Breakdown (Revenue)

SegmentQ2 2024Q1 2025Q2 2025
Technology Systems ($)$264,999 $64,684 $41,397
Services & Consulting ($)$1,245,497 $972,751 $926,241
Services & Consulting — Related Parties ($)— $3,914,750 $4,760,403
Hosting Revenue ($)— — $8,000

KPIs and Balance Sheet Highlights

KPIQ2 2025
Backlog (Revenue) ($M)$40.7
2025 Expected from Backlog/NT Awards ($M)~$18.0 ($12.3 contracted + ~$5.7 near-term)
Cash & Equivalents ($M)$1.47
Receivables + Contract Assets ($M)>$2.34
Total Short-Term Liquidity ($M)~$3.81
Shareholders’ Equity ($M)>$4.7
Fully Diluted Shares (Q&A)~25M
Post-Quarter Cash after ATM/Secondary“Just under $40M”

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total RevenueFY 2025$28–$30M $28–$30M Maintained
Adjusted EBITDA ProfitabilityQ4 2025Not providedAchieve profitability in Q4 on adjusted EBITDA basis New
EDC DeploymentsCY 202515 pods targeted On track to 15 pods (first commercialized; 5 installing) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24 and Q1’25)Current Period (Q2’25)Trend
Edge Data Centers (EDC) expansionInitial EDC in Amarillo; 15 pods targeted . Showcased first production EDC in Q1; orders for 4 additional (total 10) First EDC fully commercialized; five more installing; unit economics ~$350k–$500k annual revenue per pod; FCF ≈$300k after year one Accelerating
AMA with New APR EnergySigned AMA up to $42M; early power consulting; 390MW secured $4.76M related-party services; 150MW Mexico install; turbines to U.S. hyperscaler; recurring revenue stabilizer Scaling
Railcar Inspection Portal (RIP)Delays, expected installation in 2025–2026; strong scans and interest Flat; customer delays continue; reassessing strategy Slow/strategic review
Capital & LiquidityATM ~$7.5M; stronger balance sheet $40M offering + $12.5M ATM; post-quarter cash ~ $40M; no further equity expected for 2026 plan Significantly improved
MarginsGM improved with AMA/equity revenue in Q1 GM $1.52M; ~$0.904M equity income at 100% margin; further improvements expected Improving
Opex/SBCLower opex in 2024 vs. 2023 Opex +65% YoY on ~$1M SBC and one-time comp; SG&A expected flat forward Elevated short-term; stabilizing

Management Commentary

  • “We have recorded higher revenues in the first half than at any other time in the Company’s history… I am anticipating that we will be recording the first quarter of breakeven or better in the Company’s history.” — Chuck Ferry, CEO .
  • “Our strategy to pivot to the Edge Data Center business is gaining momentum… the steady recurring revenues from the asset management agreement have stabilized our financials in a very positive way.” — Chuck Ferry .
  • “We expect to record between $28 million and $30 million in consolidated revenue… and achieve profitability in Q4 of this year on an adjusted EBITDA basis.” — Adrian Goldfarb, CFO .
  • “Each pod should earn around $350,000 and potentially as high as $500,000 on an annual basis… free cash flow on those units after year one is expected to be around $300,000 per year.” — Chuck Ferry; Adrian Goldfarb .

Q&A Highlights

  • Capital position: fully diluted shares ~25M; post-quarter cash “just under $40M”; ATM terminated; management does not anticipate further equity raises through 2026 plan .
  • EDC unit economics and rollout: ~$1.2–$1.4M capex per pod; ~90 days manufacturing; ~2 weeks install; full commercialization within 1–2 months; mid-70% gross margin target; EBITDA just above 50% per pod .
  • Revenue mix trajectory: AMA recurring revenue stabilizes near term; EDC revenue to broaden sources in H2; SG&A expected flat despite revenue ramp .
  • Geographic opportunities: power projects primarily U.S.-focused; opportunistic Mexico/Canada/Puerto Rico; preference for lower-risk jurisdictions .

Estimates Context

  • Q2 2025 actual revenue of $5.736M beat consensus of $4.935M by ~$0.801M (+16.2%); EPS of -$0.30 missed consensus of -$0.215 by ~$0.085 [GetEstimates]*.
  • Looking forward, consensus pointed to Q3 2025 revenue of ~$7.3M and EPS of -$0.12; management expected continued revenue growth with AMA plus EDC deployments broadening mix [GetEstimates]*.

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Revenue momentum and margin recovery are intact, underpinned by AMA execution and high-margin equity income, with EDC commercialization adding incremental recurring revenue — constructive for multiple expansion if EBITDA profitability materializes in Q4 .
  • EPS volatility likely persists near term given SBC and one-time costs; monitor opex normalization vs. SG&A flat commentary to gauge non-GAAP earnings trajectory .
  • Liquidity and capital plan de-risk EDC rollout (15 in 2025, pathway to 65 by end-2026); no additional equity anticipated through 2026 — supportive of shareholder dilution concerns .
  • Rail business remains a strategic optionality; near-term narrative and valuation drivers are EDC growth and AMA recurring revenues; watch for updates on rail strategy reassessment .
  • Near-term trading: potential positive reaction to revenue beat and margin inflection; offset could come from EPS miss optics; catalysts include EDC deployment updates, additional AMA wins, and backlog-to-revenue conversion pace .
  • Medium-term thesis: edge compute colocation economics (mid-70% gross margin; >50% EBITDA per pod) plus power solutions to data centers form a synergistic flywheel; backlog and capital position support visibility into FY25 guidance .

Appendix: Additional Operational Press Releases (Q2 2025)

  • Expanded strategic partnership with FiberLight to accelerate EDC deployments across Texas (and broader U.S.), enabling rapid permitting/installation and connectivity economics; on track to contract 15 EDCs by year-end .