Duos' Q3 2025: Contradictions Emerge on Edge Data Center Deployment Timelines, AI and Cloud Customer Demand Impact, and Revenue Source and Growth Strategy

Date of Call: November 13, 2025

Financials Results

• Revenue: $6.88M in Q3 2025, up 112% YOY (Q3 2024: $3.24M); 9M 2025 revenue $17.57M, up 202% YOY (9M 2024: $5.82M)
• EPS: Net loss per share negative $0.49 for 9 months 2025 vs negative $0.98 in prior year; no quarterly EPS disclosed (Q3 net loss $1.04M)
• Gross Margin: $2.52M gross margin in Q3 2025, up 174% YOY (Q3 2024: $0.919M); included $904k revenue from 5% equity interest recognized at 100% margin
• Operating Margin: Net operating loss $1.12M in Q3 2025 vs $1.92M in Q3 2024; operating expenses $3.63M for Q3 2025, up 28% YOY

Guidance:

• 2025 consolidated revenue guidance of $28M–$30M.
• Maintain adjusted EBITDA profitability after achieving a full quarter of adjusted-EBITDA profit in Q3 and expect to remain profitable going forward.
• Backlog nearly $26M with ~ $9.5M expected to be recognized in Q4 2025 and $4–5M in near-term awards & renewals.
• Expect full-year adjusted-EBITDA profitability and higher margins in 2026 as AMA winds down and Edge/Technology Solutions scale.

Business Commentary:

* Revenue Increase and Adjusted EBITDA Profitability: - Duos Technologies reported a 112% increase in total revenues for Q3 2025, reaching $6.88 million, compared to $3.24 million in Q3 2024. - The company achieved positive adjusted EBITDA for Q3 one quarter ahead of projections. - The growth was driven by Duos' execution of the Asset Management Agreement with APR Energy, providing recurring services and consulting revenues.

• Data Center and Edge Computing Expansion:
• Duos is on track to deploy 15 Edge Data Centers by the end of 2025, with 6 already installed and 4 more planned for this month.
• The company is expanding its data center offerings, including new initiatives like Duos Technology Solutions to provide infrastructure equipment services.
• The expansion is supported by the growing demand for AI computing power and Edge Data Centers in underserved rural markets.

• Financial Stability and Shareholder Equity:
• Duos' cash and short-term receivables increased to over $35 million in Q3 2025, up 422% year-over-year from $6.7 million in Q3 2024.
• Shareholder equity stands at nearly $50 million, reflecting growing investor confidence and positive sentiment.

• This improvement is due to Duos' successful capital raises and the strategic pivot to the data center market.

• Leadership and Management Changes:

• Adrian Goldfarb, the CFO, will retire but remain as a strategic advisor for a year to ensure a smooth transition with Leah Brown taking over as the new CFO.
• Doug Recker was named President of Duos Technologies Group, bringing extensive data center experience and expertise.
• These changes are part of Duos' strategy to strengthen its management team and execute its growth plans in the data center market.

Sentiment Analysis:

Overall Tone: Positive

• Q3 revenue rose 112% to $6.88M and 9M revenue rose 202% to $17.57M; company achieved a full quarter adjusted EBITDA profit of ~$491k; cash and short-term receivables exceed $35M; all debt paid off and shareholders' equity grew to nearly $50M; backlog ~ $26M with substantial near-term recognition.

Q&A:

• Question from Analyst (Firm Not Provided): How is the growing demand from AI and cloud customers affecting your business? Are you noticing any changes in what customers need or the size of the deals?
  Response: AI demand is accelerating Edge opportunities — hyperscalers face power constraints so customers seek smaller, faster-to-deploy modular pods and Duos is building Tier 3/4 network infrastructure to capture that demand.

• Question from Analyst (Firm Not Provided): You reported a 112% year-over-year revenue increase and positive adjusted EBITDA this quarter. Can you elaborate on what drove this performance and how sustainable this trajectory looks heading into 2026?
  Response: Q3 growth was driven primarily by the Asset Management Agreement (AMA) with APR Energy; management is diversifying into Edge Data Centers and a new Technology Solutions sourcing business to replace AMA revenue when it concludes and expects improved profitability thereafter.

• Question from Shareholder (Retail): You've highlighted progress toward 15 Edge Data Center deployments this year. Can you update us on the current progress and timing for the remaining installations? And are there any constraints on the supply chain?
  Response: On track for 15 pods: 6 installed, 4 shipping this month, 5 more by end of month/early December; pods are 300 kW using largely off‑the‑shelf components with short lead times and no material supply constraints reported.

• Question from Analyst (Firm Not Provided): With your new modular data center patent now granted, how does this technology enhance your competitive advantage, and how do you intend to monetize it?
  Response: The patented clean-room/mantrap design enables SOC 2 compliance and hardware protection (reducing dust, enabling audits), which differentiates the pods for regulated customers (finance, healthcare) and supports premium deployments and faster commercial adoption.

• Question from Analyst (Firm Not Provided): Where are you prioritizing your target markets for Edge Deployments? And what factors guide your regional expansion strategy?
  Response: Priority is underserved Tier 3/4 markets (education and rural healthcare proof points); expansion is driven by carrier peering opportunities, local demand (e.g., school districts), and repeatable quick-deploy use cases to attract carriers and hyperscalers.

Contradiction Point 1

Edge Data Center Deployment Timeline

The contradictions involve different timelines and progress updates for Edge Data Center deployments, impacting expectations and potential revenue.

Can you update us on the progress and timing for the remaining Edge Data Center installations? Are there any supply chain constraints? - [Adrian Goldfarb](CFO)

20251113-2025 Q3: We are on track to achieve 15 deployments by year-end. Currently, 6 are installed, and 4 more are scheduled for this month. - [Doug Recker](CEO)

What is the current progress and timeline for the remaining 15 Edge Data Center deployments this year? Are there any supply chain constraints? - [Adrian Goldfarb](CFO)

2025Q3: Duos is on track with Edge Data Center deployments, with 6 centers already on the ground. The remaining centers are scheduled for installation this month and early December. - [Doug Recker](CFO)

Contradiction Point 2

AI and Cloud Customer Demand Impact

The contradictions involve differing perspectives on how AI and cloud customers are impacting Duos' business, which affects strategic planning and market positioning.

How is the growing demand from AI and cloud customers impacting your business? Are you seeing shifts in customer needs or deal sizes? - [Adrian Goldfarb](CFO)

20251113-2025 Q3: The demand from AI and cloud customers is affecting Duos and APR Energy positively. Hyperscalers are seeking alternatives, focusing on Edge solutions due to power constraints. - [Charles Ferry](CEO)

How is AI and cloud demand growth impacting your business, and are customer needs or deal sizes changing? - [Adrian Goldfarb](CFO)

2025Q3: The growing demand from AI and cloud customers is affecting Duos and APR Energy positively. The large hyperscalers are seeking more computing power, but face challenges in finding adequate power. Duos is positioned to address this demand through Edge Computing solutions. - [Charles Ferry](CEO)

Contradiction Point 3

Revenue Source and Growth Strategy

It highlights inconsistencies in the explanation of revenue sources and the company's growth strategy, which are crucial for investor understanding and decision-making.

What drove the 112% YoY revenue growth and positive adjusted EBITDA this quarter, and how sustainable is this growth through 2026? - [Adrian Goldfarb](CFO)

20251113-2025 Q3: The revenue increase is attributed to the Asset Management Agreement with APR Energy. This agreement has been successful due to high demand for power. Duos is aiming to replace the agreement with new revenue streams from Edge Data Center deployments and related infrastructure businesses. - [Charles Ferry](CEO)

Are you now generating recurring revenues, excluding the railroad business, after reporting $5.8 million? - [Rick Jackson](True North Financial)

2025Q2: Large majority of $5.8 million revenue is from APR asset management agreement, with Edge Data Center revenues ramping up as installs complete. - [Charles Parker Ferry](CEO)