Duos Technologies Group Inc's Expansion Priorities, EDC Deployment Timelines, and Revenue Projections Don’t Match in 2025 Q4 Earnings Call

Date of Call: Mar 31, 2026

Financials Results

• Revenue: $27 million for 2025, up over 270% YOY from $7.3 million in 2024
• Gross Margin: 29% for 2025, a significant YOY improvement

Guidance:

• Revenue for 2026 expected to be $50 million-$55 million.
• A significant portion of revenue expected to be recognized in the second half of the year, coinciding with positive EBITDA.

Business Commentary:

Revenue Growth and Strategic Focus:

• Duos Technologies reported a 270% increase in revenue from $7.3 million in 2024 to $27 million in 2025.
• The growth was primarily driven by services and consulting revenue from the asset management agreement with New APR Energy, which increased from $900,000 in 2024 to $22.4 million in 2025.

Divestiture and Resource Reallocation:

• The company decided to divest its rail division within the next 60 days, as it has become less important to the future strategy.
• This decision was driven by the lack of growth and regulatory hurdles in the rail business, allowing Duos to free up resources and cut significant SG&A expenses.

Expansion into Data Center and Technology Solutions:

• Duos Technology Solutions reported $10 million in new business sold in the first quarter, expected to be recognized as revenue in 2026.
• The division was established to provide strategic sourcing and product distribution, replacing the revenue from the New APR AMA with better margins.

High-Density Data Center Demand:

• Duos Edge AI deployed 15 edge data centers in 2025 and plans to expand with 20 MW of additional deployed capacity by year-end.
• The demand for high-density power and compute, particularly for AI workloads, is driving the need for more powerful EDCs, with a focus on faster deployment and lower costs.

Financial Performance and Profitability Improvements:

• The company achieved a significant year-over-year improvement in net loss, decreasing from $10.8 million in 2024 to $9.8 million in 2025.
• This improvement was driven by higher revenue and stronger gross margins, with positive adjusted EBITDA delivered for the second consecutive quarter in Q4 2025.

Sentiment Analysis:

Overall Tone: Positive

• Statements include '2025 is a year marked by significant revenue growth, strategic investment, and meaningful progress' and 'the consecutive improvement from Q3 to Q4 reinforces our confidence in the direction of the business.' Also noted is 'the demand in this niche is unbelievable' and 'we are poised for great success.'

Q&A:

• Question from Ed Wu (Ascendiant Capital Markets): Are there any worries of competitors entering this market? What can Duos do to be able to compete if new entrants come in?
  Response: Management cites a key competitive advantage from its patented clean room technology for modular data centers and its proven deployment experience, inviting competition but confident in its position.

• Question from Ed Wu (Ascendiant Capital Markets): Is there plans to go into bigger markets or internationally?
  Response: Focus remains on Tier 3 and Tier 4 U.S. markets for speed and scale; international expansion is a future possibility but not current priority.

• Question from Dan Weston (Weston Capital Management): Are the 5 new EDCs in production specific to the GPU-as-a-Service contract?
  Response: No, they are for contracted markets and are the same standard pods as previously deployed.

• Question from Dan Weston (Weston Capital Management): When do you expect to have the larger pods for the GPU-as-a-Service contract in the ground and generating revenue?
  Response: On track for an August 2026 timeframe.

• Question from Dan Weston (Weston Capital Management): Can you give a sense of how the 2026 revenue guidance breaks down?
  Response: Company does not disclose specifics by business line but anticipates meeting the aggregate $50M-$55M guidance.

• Question from Dan Weston (Weston Capital Management): What is the breakdown of the increased PP&E?
  Response: The majority is for edge data centers, including the 15 deployed and pre-bought units for 2026.

• Question from Dan Weston (Weston Capital Management): What is the delta between the 10 MW site and the 4.8 MW contracted for the GPU-as-a-Service?
  Response: The site is built for 10 MW, with 4.8 MW currently contracted; additional capacity up to 10 MW is available for quick deployment.

• Question from Dan Weston (Weston Capital Management): Will the first GPU-as-a-Service customer take the whole 10 MW?
  Response: Yes, the primary customer is expected to take the 4.8 MW, with potential for more sites later.

• Question from Dan Weston (Weston Capital Management): Will you be able to disclose the first GPU-as-a-Service customer?
  Response: Currently under strict NDA; disclosure may be possible after proving performance, but the customer is a tier one entity.

• Question from Dan Weston (Weston Capital Management): Is the $10 million backlog in technology solutions typical?
  Response: Yes, it represents a strong start, with the business expecting greater run rates, and all backlog is expected to be recognized as 2026 revenue.

• Question from Nico Sacchetti (RBC): Is the $10 million a quarter typical for the technology solutions business?
  Response: The $10 million was over two months; the funnel suggests the potential for much greater annual revenue, potentially multiples of prior lost revenue.

• Question from Nico Sacchetti (RBC): Can you clarify the metrics and moving parts of the business?
  Response: The business has two parts: edge data centers (including GPU-as-a-Service) and the Technology Solutions division; models differ, with GPU-as-a-Service offering higher revenue per megawatt.

• Question from Carl Weiss (Grow Funds): What does the model look like for gross margin and OpEx going forward?
  Response: Gross margin expected to improve to around 6%-7% in H2 2026; OpEx should decrease due to rail divestiture, with revenue recognized in Q3/Q4.

• Question from Carl Weiss (Grow Funds): How long do you think this demand environment will last?
  Response: High demand expected to remain strong for 3-10 years, driven by need for distributed compute and edge infrastructure.

• Question from Tom Leonard (River Bay Investments): What is the revenue value per megawatt for high-density colocation versus GPU-as-a-Service?
  Response: For the GPU model, revenue is targeted at $2 million per megawatt per year.

Contradiction Point 1

Market Expansion Focus

Shift in stated priority from domestic to international expansion.

Ed Wu (Ascendiant Capital Markets) - Ed Wu (Ascendiant Capital Markets)

2025Q4: International expansion is possible after scaling domestically, but the immediate priority is the U.S. market. - Doug Recker(CEO)

What are the company's long-term plans beyond rural underserved markets, including potential expansion into larger markets or international opportunities? - Anonymous Shareholder/Analyst

20251113-2025 Q3: The company is now expanding to other Tier 3 and Tier 4 markets, including its first contract outside Texas in Illinois. - Doug Recker(CEO)

Contradiction Point 2

Deployment Timeline for Edge Data Center Pods

Inconsistent timeline for deploying the 15 planned Edge Data Center pods.

Dan Weston (Weston Capital Management) - Dan Weston (Weston Capital Management)

2025Q4: The company is still building its core model but is also starting to build pods with greater power capacity to meet high-density demand. - Doug Recker(CEO)

Are the five new EDCs in production specific to the recent GPU-as-a-Service contract? - Anonymous Shareholder/Analyst

20251113-2025 Q3: The company is on track to deploy 15 Edge Data Centers by year-end. Currently, 6 are installed, 4 are being shipped this month, and 5 more are scheduled for shipment at the end of this month/early December. - Doug Recker(CEO)

Contradiction Point 3

Unit Economics and Revenue Model for Edge Data Centers (EDCs)

Contradiction on the revenue per EDC and associated costs.

Tom Leonard (River Bay Investments) - Tom Leonard (River Bay Investments)

2025Q4: For the GPU model, the target is $2 million per megawatt per year in revenue. - Doug Recker(CEO)

What is the revenue per megawatt for high-density colocation customers compared to the GPU-as-a-Service model? - Nico Sacchetti (RBC Wealth Management)

2025Q2: Once operational, each pod is expected to generate $350,000 to $500,000 annually in revenue. - Charles Parker Ferry(CFO)

Contradiction Point 4

Timing of Revenue Recognition (2026 Guidance)

Contradiction on when the majority of 2026 revenue is expected to be recognized.

Dan Weston (Weston Capital Management) - Dan Weston (Weston Capital Management)

2025Q4: A significant portion is expected to be recognized in the second half of the year... - Leah Brown(CFO)

What's the breakdown of the $50-$55 million 2026 revenue guidance? - Richard Jackson (True North Financial)

2025Q2: The revenue from the AMA is recognized upfront, while EDC revenue is recognized on a straight-line basis over the contract term. - Charles Parker Ferry(CFO)

Contradiction Point 5

Business Focus and Expansion Strategy

Contradiction on prioritizing U.S. markets versus exploring international opportunities.

Ed Wu (Ascendiant Capital Markets) - Ed Wu (Ascendiant Capital Markets)

2025Q4: International expansion is possible after scaling domestically, but the immediate priority is the U.S. market. - Doug Recker(CEO)

What are the company's long-term plans for expansion beyond rural underserved markets, including potential entry into larger domestic or international markets? - Dan Weston (West Capital Management)

2025Q1: The ramp will be a combination of both. The current focus is on school districts in Texas... However, discussions with hyperscalers are active, as they explore using distributed Edge Data Centers... - Chuck Ferry(CEO)