Sign in

You're signed outSign in or to get full access.

KI

Knightscope, Inc. (KSCP)·Q1 2024 Earnings Summary

Executive Summary

  • Q1 2024 revenue fell 22.2% year over year to $2.254M, with gross margin at -64% vs -7% in Q1 2023; diluted EPS was -$0.08 vs -$0.06 a year ago, driven by higher service costs, K5 v3 discontinuation write-offs, and lower ECD installations .
  • Sequentially, revenue declined 32.2% vs Q3 2023 ($3.324M) and gross margin deteriorated from +2% to -64% as maintenance/repair and depreciation rose and Q1 saw structural transitions in ECD operations .
  • Management reiterated a stretch target to achieve profitability in Q4 2024 and plans to exceed 10,000 machines-in-network in 2024, alongside facility consolidation (13→1) and outsourced field services to reduce costs .
  • Catalysts to watch: Nasdaq minimum bid price non-compliance and delisting appeal process, ongoing ATM equity raises, and bond financing; estimate comparison to Street is unavailable (S&P Global consensus not accessible) .

What Went Well and What Went Wrong

What Went Well

  • Cost and operating structure actions commenced: “streamlining management size, eliminating positions, automation and strategic outsourcing,” and manufacturing consolidation to one primary facility aimed at long‑term efficiency .
  • Backlog held at ~$4.3M (ASR $1.9M; ECD $2.4M) as of May 14, 2024, supporting visibility into upcoming deployments despite near-term variability .
  • Strategic roadmap reiterated: “Our stretch target is to achieve profitability for the 4th quarter 2024,” with plans to exceed 10,000 machines-in-network during 2024 to scale recurring revenues .

What Went Wrong

  • Gross margin deterioration and service cost inflation: Q1 service cost of revenue increased to $3.083M, including ~$0.4M write-off for K5 v3 units and ~$0.4M obsolete inventory write-off; depreciation and outside field service costs also rose .
  • Product revenue timing slippage: ECD installations fell due to organizational restructuring, driving product revenue down to $0.563M from $1.149M in Q1 2023 .
  • Liquidity and listing risks: going concern language and active reliance on ATM/bonds; Nasdaq delisting determination for minimum bid price with an appeal underway .

Financial Results

Revenue, EPS, Margins – YoY and QoQ

MetricQ1 2023Q3 2023Q1 2024
Revenue ($USD Millions)$2.897 $3.324 $2.254
Diluted EPS ($)-$0.06 -$0.11 -$0.08
Gross Margin (%)-7% 2% -64%

Segment/Revenue Mix (point-in-time vs over-time)

SegmentQ1 2023 Total ($USD Millions)Q1 2024 Total ($USD Millions)
ASR (lease + services)$1.022 $0.990
ECD (products + services)$1.875 $1.264
Total Revenue$2.897 $2.254

KPIs and Financial Position

KPIQ3 2023Q1 2024
Backlog ($USD Millions)$4.1 (as of Oct 29, 2023) $4.3 (as of May 14, 2024)
Cash & Equivalents ($USD Millions)$4.611 $2.487
Deferred Revenue (current, $USD Millions)$1.884 $1.659
Bonds (carrying amount, $USD Millions)$0.421 issued Oct 2023 (disclosed subsequently) $3.898 (net carrying amount)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Profitability targetQ4 2024Stretch target to achieve profitability (introduced March 14, 2024) Reiterated in Q1 filings commentary Maintained
Machines-in-networkFY 2024Planned to exceed 10,000 in 2024 Reiterated (execution actions underway) Maintained
Cost structureFY 2024Consolidate facilities from 13 to 1; outsource field services Active implementation (year of transition expected) Executing
Capital plans2024ATM equity program; Regulation A bonds Continued ATM ($7.1M net in Q1) and bonds ($2.6M net in Q1) Maintained/Expanded

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2023)Current Period (Q1 2024)Trend
AI/Robotics product roadmapK1 Hemisphere and 5th-gen K5 released; “robots will be everywhere” Replacing K5 v3 with improved K5 v5; continued KSOC/KEMS evolution Execution challenges with legacy units; upgrading fleet
Cost optimization“Road map to profitability” with pricing/BOM/labor efficiency focus Streamlining org, outsourcing service, consolidating manufacturing/facilities Accelerating restructuring actions
Federal/governmentBond offering and expansion narrative; advancing commercialization FedRAMP ATO achieved; enables federal deployments (VA sponsorship) Strategic channel opening
Supply chain/installsBacklog reduction progress ECD installs slowed by reorg; deferred revenue recognition shifts Near-term friction; expected normalization
Listing/financingConvertible notes extinguished; ATM utilization Nasdaq minimum bid deficiency; ATM and bond financing ongoing Heightened listing/liquidity risk

Management Commentary

  • “The Company began consolidating its manufacturing operations from 3 facilities down to 1 primary facility in Mountain View, California to improve process flow, quality, purchasing efficiencies and labor flexibility.”
  • “Knightscope has… begun closing K1B satellite facilities to reduce footprint from 13 to 1 rooftops… [and] expects 2024 to be a year of transition.”
  • “Our stretch target is to achieve profitability for the 4th quarter 2024… we are working to significantly improve our manufacturing throughput this year… and maintaining focus on ‘Made in the USA’.”
  • “We opted to align with key service and maintenance organizations… better able to efficiently support our clients.”

Q&A Highlights

  • No Q1 2024 earnings call transcript was available in our document catalog; the prior town hall format (Q3 2023) indicated a live Q&A segment, but detailed Q&A content was not captured in the transcript we reviewed .

Estimates Context

  • Wall Street consensus estimates (S&P Global) for Q1 2024 were unavailable during retrieval; therefore, formal beat/miss vs consensus cannot be assessed. Values would have been sourced from S&P Global if accessible.

Key Takeaways for Investors

  • Q1 2024 was a transition-heavy quarter: revenue down and margins compressed as legacy K5 v3 write-offs and higher service/depreciation impacted P&L; watch for margin recovery as fleet upgrades to K5 v5 progress .
  • ECD installation timing slipped amid reorganization; monitor execution in Q2/Q3 to see product revenue normalization and deferred revenue amortization re-accelerate .
  • Liquidity actions are active (ATM and bonds); track cash burn vs backlog conversion and capital market access; bonds at $3.898M carrying and ATM net ~$7.1M in Q1 strengthened cash but raise dilution/interest considerations .
  • Strategic cost reductions (facilities, outsourcing) are tangible; if successful, these should reduce service costs and improve gross margin trajectory over 2–3 quarters .
  • Federal channel opening via FedRAMP ATO (VA sponsorship) is a medium-term growth lever; watch for federal deployments impacting ASR subscription revenue .
  • Listing risk is a near-term overhang (Nasdaq minimum bid price); outcomes from the appeal and potential corporate actions (e.g., reverse split) could drive stock volatility .
  • Management’s Q4 2024 profitability stretch goal sets a clear milestone; operational execution on backlog conversion, cost-outs, and fleet quality is key to credibility on this target .

Supporting Data Details

  • Revenue and EPS from the Q1 2024 10-Q: total revenue $2.254M; service $1.691M; product $0.563M; diluted EPS -$0.08. Prior-year Q1 2023: revenue $2.897M; diluted EPS -$0.06 .
  • Gross margin percentages: Q1 2024 -64% vs Q1 2023 -7%; Q3 2023 2% .
  • Disaggregated revenue by product line and timing (ASR vs ECD) for Q1 2024 and Q1 2023 are as shown above .
  • Backlog: $4.3M (May 14, 2024); $4.1M (Oct 29, 2023) .
  • Cash & equivalents: Q1 2024 $2.487M; Q3 2023 $4.611M .
  • Deferred revenue (short-term): Q1 2024 $1.659M; Q3 2023 $1.884M .
  • Bonds: net carrying amount $3.898M Q1 2024; issuance detail for Regulation A bonds disclosed (Q1 net proceeds ~$2.6M) .

All figures are sourced from Knightscope’s SEC filings and company documents as cited.