Duos Technologies Group Q2 Earnings Call Highlights

Duos Technologies Group said its second-quarter results reflected the completion of its shift from rail technology toward edge data centers, AI infrastructure and technology solutions, supported by divestitures, new customer agreements and a substantially larger cash balance. The company completed the sale of its legacy rail business, Duos Technologies Inc., on Aug. 5. The divested business now operates independently under the DuosTI brand, led by President Javier Acosta. Duos will provide transition services for a period following the closing, but the transaction completes the company’s repositioning as an AI infrastructure and edge data center operator. Separately, New APR Energy sold substantially all of its assets during the quarter. Duos held a 5% interest in APR’s parent company and received $50.4 million in cash from the transaction, with another $10 million subject to a 12-month holdback that has been recorded as a receivable. The sale generated a $53.2 million gain against a $7.2 million carrying value. Revenue from continuing operations rose 30% to $6.18 million in the second quarter, compared with $4.77 million a year earlier, excluding the divested rail business. Technology Solutions generated $3.23 million in revenue, becoming the company’s largest revenue line. Related-party services and consulting revenue totaled $2.91 million, including $2.71 million of one-time accelerated recognition of remaining APR deferred revenue. Future asset management agreement revenue related to APR is expected to be minimal as it winds down through the third quarter, while hosting revenue is only beginning to build. Cost of revenue declined 9% year over year to $2.73 million. Gross margin increased to $3.45 million, or 55.8% of revenue, from $1.78 million, or 37.3%, a year earlier. Operating income was about $50,000, compared with an operating loss of $1.54 million in the prior-year quarter. Adjusted EBITDA was positive at approximately $500,000, excluding the investment-sale gain and stock-based compensation. Consolidated net income was $47.8 million, compared with a $3.5 million net loss a year earlier, largely reflecting the APR-related investment gain. The company ended the quarter with $112.3 million in cash, up from $15.5 million at the end of 2025, and stockholders’ equity of $207.4 million. The cash increase reflected APR sale proceeds, a March public offering and a $55 million registered direct offering completed in June. Duos is effectively debt-free, aside from a small insurance financing balance. Cash provided by operating activities from continuing operations was $11.9 million for the first half of 2026. Long-term deferred revenue totaled $18.8 million, including customer contracts for services and hosting. Management reaffirmed 2026 revenue above $50 million and outlined preliminary 2027 revenue of at least $160 million.