Knightscope, Inc. (KSCP) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call revealed strong financial performance with a 106% revenue increase and positive gross margins. Despite a wider net loss, optimistic guidance on margin improvement, strategic acquisitions, and potential M&A opportunities suggest positive future prospects. The Q&A highlighted a focus on operational improvements and strategic growth, boosting investor confidence. However, concerns about cash position and lack of clarity in some management responses temper the outlook slightly. Overall, the positive financial trends and strategic initiatives outweigh the negatives, leading to a positive sentiment.
Key Financial Performance
Revenue Revenue increased by 106% year-over-year to $6 million for Q1 2026, compared to $2.9 million in Q1 2025. This growth was driven by contributions from the Event Risk acquisition and fulfillment of previously constrained orders due to supply chain issues.
Service Revenue Service revenue rose by 98% year-over-year to $4.2 million, primarily due to $2.4 million in contributions from the Event Risk acquisition.
Product Revenue Product revenue increased by 128% year-over-year to $1.8 million, driven by the fulfillment of orders that were previously delayed due to supply chain constraints in the second half of 2025.
Gross Margin Gross margin turned positive at 7.7% of revenue, compared to a gross loss of 22.9% in Q1 2025. This improvement was driven by volume, mix, and contributions from the acquired Security Force segment, which had a 17.5% margin.
Operating Expenses Operating expenses increased by 59% year-over-year to $10.8 million, driven by investments in R&D, acquisition-related costs, and new headquarters expenses. R&D expenses rose by 120% to $4.7 million, while SG&A expenses increased by 51% to $6.1 million.
Net Loss Net loss widened to $10.3 million in Q1 2026 from $6.9 million in Q1 2025, primarily due to higher operating expenses, partially offset by gross margin improvements and lower interest expenses. On a per-share basis, the loss improved by 42% year-over-year.
Cash Position Cash and cash equivalents stood at $11.4 million as of March 31, 2026, down from $20.6 million at year-end 2025. The decline was due to cash outlays for the Event Risk acquisition, transaction costs, and investments in operations.
Event Risk Acquisition The acquisition closed on February 27, 2026, with a total purchase consideration of approximately $18 million. In its first 32 days, the acquired segment contributed $2.4 million in revenue, $400,000 in gross margin, and $100,000 in net income.
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Operating Highlights
K7 Autonomous Security Robot: Designed to patrol larger environments at higher speeds, securing perimeters effectively. Limited release to select clients planned for summer 2026.
Next-Generation Security Agent Technology: Development of wearable technology for security agents, integrating capabilities from robots to enhance efficiency and data collection.
Orchestration Software: A platform combining video gaming technology, digital twins, and data from devices and agents to provide a comprehensive 3D view of facilities. Internal release planned for Q4 2026.
Autonomous Security Force: Targeting a $230 billion total addressable market by integrating autonomous machines, remote monitoring, orchestration software, and licensed agents.
Event Risk Acquisition: Acquisition completed for $18 million, contributing $2.4 million in revenue and $400,000 in gross margin in its first 32 days. Integration underway.
Revenue Growth: Q1 2026 revenue increased by 106% year-over-year to $6 million, with service revenue up 98% and product revenue up 128%.
Gross Margin Improvement: Achieved positive gross margin of 7.7% in Q1 2026, compared to a negative margin in Q1 2025.
Transition to Managed Service Provider: Shift to offering integrated solutions combining hardware, software, and human agents for improved outcomes and cost efficiency.
GSX Conference Unveiling: Plan to unveil the Autonomous Security Force as a single managed service provider at the GSX conference in September 2026.
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Risk or Challenges
Operating losses and going concern: The company faces substantial doubt about its ability to continue as a going concern due to ongoing operating losses and the need for additional capital.
Integration of Event Risk acquisition: Challenges related to the integration of the Event Risk acquisition, including additional expenses and operational complexities, could impact financial performance and strategic execution.
Customer concentration: Dependence on a limited number of customers poses a risk to revenue stability and diversification.
Supply chain and labor conditions: Potential disruptions in supply chain and labor conditions could affect product delivery and operational efficiency.
Competition: Intense competition in the security and technology sectors could impact market share and profitability.
NASDAQ listing requirements: Failure to meet NASDAQ listing requirements could affect the company's stock market presence and investor confidence.
Recurring service costs: The acquired business introduces $1.8 million in recurring contracted labor costs, which could pressure margins if not managed effectively.
R&D investment risks: Significant R&D expenses, including $4.7 million in Q1 2026, may not yield expected returns, impacting financial performance.
Integration complexities: The integration of acquired businesses and new technologies presents operational and strategic challenges.
Cash position and liquidity: Declining cash reserves, from $20.6 million at year-end 2025 to $11.4 million as of March 31, 2026, highlight liquidity concerns.
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Guidance & Outlook
K7 Autonomous Security Robot Deployment: The company plans to deploy a limited release of the K7 autonomous security robot to select clients later this summer to gain real-world deployment experience and further refine the product.
Integration of Event Risk Acquisition: The integration of the Event Risk acquisition is progressing well, with the company potentially ahead of schedule. The focus remains on creating a unified Autonomous Security Force.
GSX Conference Unveiling: Knightscope plans to unveil its Autonomous Security Force as a single managed service provider at the GSX conference in mid-September in Atlanta, marking a significant industry milestone.
Investor Day Event: An Investor Day is planned for the fourth quarter at Knightscope headquarters, providing stakeholders an opportunity to engage with the team and technology.
Orchestration Software Release: The company intends to release its orchestration software for internal use during the fourth quarter of 2026, enhancing its security solutions.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:How does the company plan to improve gross margins over time?
A:The company plans to improve gross margins through operational scale, improved manufacturing absorption, supply chain normalization, and integration of their managed services platform. They also aim to utilize fixed manufacturing and support infrastructure better as volume increases, cross-sell higher-margin software and technology, and integrate AI and autonomous hardware to enhance efficiency and margin expansion.
Q:What is the status of the Knightscope security force integration?
A:The integration involves three steps: financial accounting and audit-related items, IT and HR system integration, and go-to-market strategies. Progress is ahead of schedule, with efforts focused on combining systems, recruiting, and experimenting with client proposals. The company aims to create a superior and elite team by overlaying technology on a strong management platform.
Q:What is the company's approach to capital formation and cash burn?
A:The company plans to continue investing in product development, AI and software capabilities, operational infrastructure, and integration initiatives. They aim to achieve operating leverage, better utilization of their technology platform, and increased attachment of higher-margin recurring services to normalize and reduce cash burn. Long-term investments are being made to reach $1 billion in annual recurring revenue.
Q:What is the company's broader strategic outlook, including commercial opportunities, government opportunities, and M&A?
A:The company is pursuing M&A opportunities, focusing on quality over quantity, and considering acquisitions in remote monitoring. They aim to create a federal-grade cybersecurity standard and are advocating for a national robotic strategy. They have partnered with Carnegie Mellon University to establish a national security robotics lab and are making long-term investments in technology and operations.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the timeline or measurable milestones for achieving gross margin improvements, Knightscope security force integration, and cash burn reduction. Additionally, the discussion on government opportunities and the national robotic strategy lacked clarity on concrete steps or expected outcomes.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Autonomous Security
CFO Executive
Event Risk
Executive VP
Force segment
Risk acquisition
Secretary CFO
Security Force
VP Secretary
cash
chain
combination
consideration
facility
field view
filing
highlight
improvement
increase
integration
item
loss
monitoring
outcome
purchase
robot
security agent
segment margin
service provider
share
software human
technology
transaction
KSCP Transcript
Knightscope, Inc. (KSCP) Q1 2026 Earnings Call Transcript
Positive5-18
The earnings call revealed strong financial performance with a 106% revenue increase and positive gross margins. Despite a wider net loss, optimistic guidance on margin improvement, strategic acquisitions, and potential M&A opportunities suggest positive future prospects. The Q&A highlighted a focus on operational improvements and strategic growth, boosting investor confidence. However, concerns about cash position and lack of clarity in some management responses temper the outlook slightly. Overall, the positive financial trends and strategic initiatives outweigh the negatives, leading to a positive sentiment.
Knightscope, Inc. (KSCP) Q4 2025 Earnings Call Transcript
Unknown4-1
The earnings call summary lacks financial data, making it difficult to assess financial health. The focus on operational updates and strategic initiatives like the Autonomous Security Force Day and new headquarters suggests potential growth, but the absence of financial metrics and the competitive Silicon Valley environment present risks. The lack of discussion on shareholder returns and unclear management responses in the Q&A further contribute to a neutral sentiment.
Knightscope, Inc. (KSCP) Q3 2025 Earnings Call Transcript
Unknown11-19
The earnings call provided mixed signals. While the company is confident in its product development and compliance, it faces challenges in technology adoption and past execution. The Q&A revealed uncertainties in management's responses and challenges in achieving goals. No strong positive or negative catalysts were identified, leading to a neutral sentiment.
Knightscope, Inc. (NASDAQ:KSCP) Q1 2025 Earnings Call Transcript
Unknown5-16
The earnings call summary shows improved revenue and gross loss, but the company still operates at a loss with cost management challenges and reliance on service revenue. The Q&A reveals macro uncertainties and vague management responses about profitability timelines. The lack of a share buyback program and the absence of strong guidance further dampen sentiment. Overall, despite some positive revenue growth, concerns about financial health and competitive pressures lead to a negative outlook.
KSCP Report
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