Elauwit Connection, Inc. Common Stock (NASDAQ:ELWT) Q4 2025 Earnings Call Transcript

Elauwit Connection, Inc. Common Stock (NASDAQ:ELWT) Q4 2025 Earnings Call Transcript March 31, 2026

Elauwit Connection, Inc. Common Stock misses on earnings expectations. Reported EPS is $-0.69 EPS, expectations were $-0.03.

Operator: Good day, and welcome to the Elauwit Fourth Quarter and Full Year 2025 Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Matt Kreps with Darrow Associates. Please go ahead.

Matthew Kreps: Good morning, and thank you all for joining us today to discuss Elauwit’s Fourth Quarter and Full year 2025 financial results and business update. The earnings release covering our 2025 results is now available on the Investors page of our website at investors.elauwit.com. We plan to file our Form 10-K for the full year today as well. I would encourage you to review the full text of the release and accompanying financial tables in conjunction with today’s discussion. This conference call is being webcast live and will be available for replay on our Investors page. Speaking today on the call are Executive Chairman, Dan McDonough; Chief Executive Officer, Barry Rubens; Chief Financial Officer, Sean Arnette; and Sebastian Shahvandi, our Chief Growth Officer.

We will cover our prepared remarks on the business and financial results, then open the call for questions from our analysts and institutional investors. Please note that during this call, management will make projections and other forward-looking statements regarding our future performance. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those noted in the earnings release as well as other risks that are more fully described in Elauwit’s filings with the SEC. Our actual results may differ materially from those projected in the forward-looking statements. We encourage you to review our filings with the SEC for additional information on factors that could cause actual results to differ from our current expectations.

Elauwit specifically disclaims any intent or obligation to update these forward-looking statements, except as required by law. We will also reference adjusted EBITDA, which is a non-GAAP financial measure. A description of adjusted EBITDA, along with a reconciliation of adjusted EBITDA to the most comparable GAAP financial measure can be found in our earnings release. And with that, I will now turn the call over to Dan. Please go ahead.

Daniel McDonough: Thank you, Matt, and thank you to everyone who has joined today’s call. I’ll begin today’s call with an overview of the business, then pass to Sebastian for an update on our rapidly expanding sales program. Barry will have a discussion around our operations, and then Sean will provide a few highlights from the financial results. Since we are still a newer company to Nasdaq, let me give a quick summary of our business. Elauwit is a technology-driven broadband infrastructure provider focused on delivering high-speed Internet to multifamily and student housing communities. We install and activate carrier-grade gigabit service via fiber and WiFi 6 access throughout the entire property. We then generate long-lived recurring revenue from these properties under 2 financial models: managed service and Network as a Service, which we refer to as NaaS.

Uniquely, we integrate the property owner into the revenue chain, driving new revenue and value creation for them. Ultimately, we expect to create a win-win-win scenario, where we generate high-margin revenue streams for Elauwit, elevate the resident experience and unlock value for property owners. In addition to a growing number of units already under contract, we have a robust and quickly expanding pipeline of new installations, giving us visibility into our growth ahead. To deliver on this, we have built a scalable operating model that we believe can grow to handle almost any number of units and in any location as we take share in a large and fragmented addressable market. At its core, the Elauwit model represents simplicity, service and profit.

When a resident moves into an apartment or other multifamily housing unit, they sign a lease, then begin the arduous process of securing Internet access. This usually means a lengthy sign-up process, waiting several days for a technician to be available and then taking a day off work for an open-ended install appointment. Typically, the property owner isn’t even participating in this revenue stream. Elauwit simplifies and improves every facet of this experience. The property is prewired with enterprise-grade networking equipment, offering the resident better service and faster speeds. When the resident signs their lease, the Internet fee is included on their rent invoice as a standard cost, but usually at a 10% to 15% less expense than the conventional products I just described.

Instead of waiting days for an install, they get their log on credentials when they get their keys, providing immediate Internet access, not just in their unit, but property-wide in all of the amenities. That alone is a compelling case, but we take it one step further by integrating the property owner into the monthly recurring revenue from the service, which provides a source of profit and the increased recurring cash flow that can increase the value of their property. We offer 2 approaches to this incredible service in what we estimate is more than a $25 billion market opportunity. For both approaches, the entire property is turned on and serviced and the monthly fee is included in the resident’s cost by default, ensuring full subscription to the services.

Option 1 is a managed network approach, whereby the property owner pays us an upfront fee to construct and install the network throughout the property. The property owner then collects a monthly fee from the resident that goes in part to them for their installation cost and profit and partly to us for our services under a 5- to 7-year contract. This model works well in new construction or with large and financially sophisticated properties seeking retrofit upgrades. Option 2 is Network-as-a-Service, or NaaS, a deal for retrofits for smaller property owners. Under this model, we can use our public company balance sheet to install and own the network, then collect a higher recurring monthly fee from the property owner to operate under an 8- to 10-year contract.

Both models mirror the data center or alarm company model where customers stay for years, generating what we expect will be high-margin service revenue. We are now moving ahead quickly to expand our pipeline of targeted managed services and Network-as-a-Service opportunities with a major marketing and sales campaign. Sebastian will speak more to this point in a moment, but I’m very pleased with the initial results of our newly unleashed revenue engine, and I look forward to what the year ahead can bring. And that brings me full circle to my opening comment that Elauwit represents a compelling growth case of high-value recurring and long-lived revenue. And with that, I’ll turn it over to Sebastian to talk through our new sales and marketing program to deliver on that opportunity.

Sebastian Shahvandi: Thanks, Dan. We’ve built a fully integrated go-to-market engine that brings together inbound and outbound strategies into a single coordinated system. At the center of this model is a clear, consistent focus on customer experience, ensuring that every interaction from the first touch to long-term partnership is intentional, seamless and value-driven. Our approach is powered by a modern AI-enabled marketing and sales stack, custom designed not just for speed and scale, but for relevance and personalization. We’re leveraging a broad set of AI tools to enhance data quality, improve targeting precision and deliver a more meaningful engagement at every stage of the journey. Our programs span multiple ICT and persona-driven channels, including our website, targeted account-based outreach, organic and paid social media and structured outbound campaigns.

Let me give some additional detail to illustrate just some of the diverse channels we’re using to identify and engage property owners. A central pillar of our 2026 strategy is an aggressive industry event calendar, 22 regional events and conventions. However, our approach is not focused on booths and exhibiting. Instead, we invest in pre-event outreach to identify and schedule one-on-one meetings with decision-makers before we ever arrive. And early results are encouraging. With just 3 of the 22 events completed, event source deals currently represent approximately 1,800 units in our active pipeline. Adding to this, paid media efforts are gaining attraction with about 6,000 units in active bidding sourced via paid ads and 127,000 impressions across Google, LinkedIn and Meta ads.

Our channel partner program is also demonstrating significant forward motion with almost 7,000 units of new business pipeline attributed to the partner activity. All in, we’re actively targeting approximately 2,000 new business accounts right now, representing an addressable base of roughly 12 million units through these and other strategies. And I want to remind everyone, the results reflect only a couple of months of initial work given our RevOps organization was only formally launched at the beginning of Q1. Even so, business attributed to the new RevOps organization now represents 63 opportunities, 13,000 units in discussion and an addressable base of roughly 315,000 units in total across the property owner portfolios. New business sales currently represents 254 opportunities.

The continued momentum in new logo growth reflects both increased marketing activity and deeper alignment with customer needs driven by stronger engagement over the last 90 days. But it isn’t just about new properties. We can also mine our existing customer base for more properties. Our current customer base represents approximately 387,000 addressable units for expansion, and our focus remains on deepening relationships and continuously improving the customer experience. From a solution mix perspective, approximately 88% of our pipeline is comprised of managed services, 9% on managed services finance and 5% as Network-as-a-Service. While many early-stage opportunities are currently positioned as managed services, we see a strong opportunity to expand NaaS adoption as deals progress, particularly with smaller portfolio customers where flexibility and ease of deployment are critical components of the customer experience.

As we continue to scale this engine, we’re already seeing improvement in both deal creation and pipeline velocity. Just as importantly, we’re creating a more efficient and customer-centric sales process. This includes a soft quote process built for our Network-as-a-Service offering, enabling us to reach consideration in the funnel weeks faster than before. Our goal is to reduce the sales cycle, while improving the overall buying experience. We’re already seeing a strong indicator of traction, pipeline growth and increased alignment between our go-to-market efforts and the needs of our customers. With that, I’ll turn the call over to Barry.

Barry Rubens: Thank you, Sebastian, and good morning, everyone. We’re excited to be here and to deploy our expanded balance sheet for growth. Elauwit built a strong base as a private company, but being a listed company provides the access to capital to expand our market reach and drive growth. With our enhanced balance sheet, we are now funded to pursue the 70% of the market opportunity that was available, but not accessible to us before by virtue of the Network-as-a-Service model. While Sebastian described our rapidly growing sales opportunity set, once signed, we track our revenue-generating business across 3 nested metrics. Those are contracted units or those waiting to be built or in the process of installation, activated units, units that are fully installed and turned on for service, but may not be fully billing yet due to onboarding and billed units, units that are fully generating monthly recurring revenue under our managed service or NaaS contracts.

As a reminder, Activated units represent the rollover period throughout the 12 months following installation, and we onboard their costs pro rata to align with property lease renewals. In short, when we complete an installation, we know that we have 12 months of growth ahead, then long-term sticky recurring revenue for years to follow. Giving some numbers to the categories based on December 31, 2025 counts, contracted units, those waiting to be built or in the process of installation, along with units we currently serve increased 34% to 34,067 from the 25,375 at the end of the prior year period. Activated units, units that are fully installed and on but may not be fully billing yet due to onboarding increased 92% to 22,255 from 11,588 at the end of the prior year period.

Build units, units that are fully generating revenue under our managed services or Network-as-a-Service contracts increased 77% to 16,445 from 9,279 at the end of the prior year period. And our pipeline continues to grow, taking a slightly different filter on the numbers Sebastian presented, — of the 121,000 units in our pipeline, we now have 9,221 units in the contracting process. Those have been verbally awarded to us by the property owner. And we have 32,968 in the proposal phase. I should remind everyone that the majority of new contracted units remain as managed services, since we only began selling NaaS proactively as a model following our IPO in the fourth quarter last year and added our sales team in the first quarter of this year.

I should also note, and Sean will elaborate more, that our revenue includes the recurring services sales as well as installation sales. While we have largely been focused on managed services to date, we expect recurring revenue to increase as a percentage of total revenue over the coming years due to: 1, the rising number of billed units on long-term multiyear contracts; and 2, the rising contribution of network installation — Network as-a-Service installations that bill typically at a higher monthly rate. We anticipate that recurring revenue will grow steadily because of the sticky nature of these contracts and may be enhanced further by the shift in favor of Network-as-a-Service throughout 2026 and well into 2027. I’d also like to take a moment to note that our sales universe is vast.

We’re currently in about half the states and our business model uses a highly scalable call center for service to residents, plus contracted installation teams that we can easily flex and scale as needed with minimal cost to us. This approach means that rather than targeting specific markets, we can readily go anywhere our property owner clients want us to provide service. We believe we have good growth visibility just from the business we have already contracted and exciting upside from the new sales team to expand our growth prospects, providing a compelling business built on a growing percentage of recurring revenue under long-term profitable contracts. And with that, I’ll hand it over to Sean to briefly cap some of our business highlights from the quarter and year-to-date.

Sean Arnette: Thank you, Barry. Today, I’ll walk through financial highlights of our fourth quarter and full year 2025 that continue to show robust growth. Revenue for the fourth quarter increased 85% to $6.1 million compared to the $3.3 million for the prior year period. Cost of revenue increased to $5.5 million for the fourth quarter compared to $3 million for the prior year period. As noted in our previous call, network construction activity, both in terms of cost and margin can be lumpy and incur substantial costs upfront, but leads to long-lived recurring revenue. Gross profit increased to $0.5 million for the fourth quarter compared to $0.3 million for the prior year period. Our gross margin for the fourth quarter period remained at 8.6% compared to the prior year period.

Management is currently implementing cost reduction actions intended to bring our network construction gross margin back into our expected range of approximately 15%. Operating expenses were $2.8 million for the fourth quarter compared to $1.3 million for the prior year period. As planned, we are investing in sales and marketing expansion coming into 2026 to drive additional growth in top line sales and recurring revenue. We reported an operating loss of $2.2 million for the fourth quarter compared to an operating loss of $1 million for the prior year period. Net loss was $2.3 million compared to $1.1 million for the fourth quarter last year, driven by our investment in our sales and marketing teams as well as public company-related expenses.

Adjusted EBITDA in the fourth quarter was a loss of $2.2 million compared to a loss of $1 million for the prior year period. On a full year basis, revenue increased 154% to $21.6 million compared to $8.5 million for the prior year period, demonstrating increased network construction and activation activities driving the ramp in our recurring service revenues. Cost of revenue increased to $17.6 million for the year compared to $7.3 million for the prior year period. Gross profit increased 244% to $4.0 million for the year compared to $1.2 million for the prior year period. Our gross margin for the full year increased to 18.5% compared to 13.7% for the prior year period, primarily due to increased network activations and greater recurring services revenue in which we realized higher gross margin levels than with our network construction activities.

Operating expenses were $7.7 million for 2025 compared to $4.4 million for the prior year period. Growth in our network construction and operations teams, investment in sales and marketing and expenses associated with the preparation for an existence as a publicly traded company drove the increase. With our NASDAQ IPO and related capital raise, we now have a balance sheet capable of funding increased Network-as-a-Service activity and other initiatives designed to drive growth and increase the contribution from long-term recurring revenue sources. With that, I’ll turn the call back over to Dan.

Daniel McDonough: Thanks, Sean. I’d like to remind everyone that we are available to meet with institutional investors. If you would like to arrange a meeting, please do so through one of the investor events, if attending or via Matt Kreps, our Investor Relations contact, whose contact information on our results release and on the IR website. And with that, I’d like to ask the operator to open the call for questions.

Operator: [Operator Instructions] The first question today comes from George Sutton with Craig-Hallum.

Unknown Analyst: This is Logan on for George. I want to start with the — I believe it was 9,000 units in the contracting phase and 32,000 units in the proposal phase, if I got those numbers right.

Q&A Session

Barry Rubens: You are correct.

Unknown Analyst: Okay. Great. How fast would we expect those to potentially move to being contracted units? And I would extend that question to the 8,000 units of incremental bidding opportunities that you called out in the press release. Just how long would it take to potentially win those?

Barry Rubens: The majority of the 9,200 units in the contracting process will be complete in — by the end of April. And the majority of those units are to be completed by the end of 2026. If I look at the 33,000 units in the proposal process, — and I simply apply the success rate we indicated we had last — in earlier periods of 25% to that, which I think is going to be low. That would represent another 8,000 units that we’d expect to have contracted before the end of the year.

Unknown Analyst: Got it. Helpful. I’m curious if you could talk about what you’re seeing or hearing with some of the really large property managers out there who have shown a desire to potentially move portfolios over to a managed WiFi structure. Just is it an area that you feel like you’re making some progress? And how material are some of those opportunities right now?

Barry Rubens: I’ll take that question. The process of larger companies moving their portfolios over to typically managed services because they are larger companies with established balance sheets is accelerating throughout the marketplace. We are actively involved with conversations with several parties that have a desire to move their portfolios rapidly over to managed services over the course of the next several years. And we believe it could have a material impact on our results looking at 2026 and 2027. So — in addition to that, as we’re seeing larger companies very rapidly make this move over to managed services, it’s not lost on me that midsize and smaller companies are paying attention. I literally was in a meeting this past week where someone indicated they felt like they would be at a disadvantage, if they did not move forward with this and capture the 200 basis points of NOI that’s available to them.

So what we’re seeing is an accelerating movement to managed services, led by larger companies. We think that’s going to be followed by medium and small-sized companies.

Unknown Analyst: Got it. So it certainly sounds like there’s a lot of early success with kind of the new sales and marketing efforts. I’m curious, as we sit here today with, I think you said 5% of the pipeline being Network-as-a-Service, how do you go about trying to increase that share over the next year from a sales and marketing perspective? And just any color on kind of the strategy to expand that part of the business would be helpful.

Barry Rubens: Sebastian, would you like to handle that?

Sebastian Shahvandi: Yes, absolutely. Great question. Look, as we have a focused approach to where we’re targeting and how we’re going about it, our — some of our focus is going towards the smaller customer base or the smaller prospects that have moved to lighter portfolios and capital is not readily available for them. In order to get to the kind of NOI increase that they want, the Network-as-a-Service offering is the best offering for them that they can start quicker with real capital out of their pockets. And so by targeting those specific size portfolios, we’re able to have more penetration into that growth side of that business as well.

Operator: The next question comes from Derek Greenberg with Maxim Group.

Derek Greenberg: Just continuing off the last one. I was wondering maybe how you view the potential time line in terms of beginning to generate revenue from the Network as a Service offering.

Sebastian Shahvandi: Well, Barry, I can take this as well. Sure. Look, Network-as-a-Service offering is a conversion, right? It’s not like new builds that we have to wait after the contract is signed for the property to be built up and so on. Network-as-a-Service, typically, if you look at from contracting being done inside, you can look at 3 to 6 months for it to get started depending on the size of the property and the kind of the work that needs to go into it. We’re also seeing on a lot of these conversations that we’re having with the Network-as-a-Service offering with the current prospects is the conversation moves a little bit faster than new builds as well. So all in all, as I mentioned, post contract signing, you can think about 3 to 6 months to starting the revenue side.

Derek Greenberg: Okay. Great. And then in terms of just your expenses. I was curious looking at the fourth quarter this year, how much of G&A was like onetime expenses related to the IPO? And what do you expect expenses to kind of revert to or hover around going forward?

Barry Rubens: Sean, I’m going to let you handle that question, if that’s okay.

Sean Arnette: Sure, absolutely. Derek, we certainly did have an increase in our SG&A in the fourth quarter due to the offering. I think, it was in between 15% and 20% of that was onetime in nature that we don’t anticipate continuing. Fully expecting SG&A to come down a bit as we move into 2026 here with a slow ramp through the year in line with the growth of the business.

Derek Greenberg: Got it. That’s helpful. And then in terms of sales and marketing and specific with the new team investments in that area, I was wondering maybe at scale, what you project it could represent as maybe a percent of sales or percent of total expenses? What do you expect the investments in that to get to over time?

Barry Rubens: Sebastian, you and I have gone through that before. Why don’t you talk about kind of what the target run rate is for new sales and marketing expenses. And then, Sean, we can put it into a perspective with respect to overall cost of the organization.

Sebastian Shahvandi: Sure. I mean for 2026, I think it’s around $1.5 million for sales and marketing combined.

Sean Arnette: And in terms of overall SG&A, we’re looking for that to be about 20% of the expense of the business.

Derek Greenberg: Okay. Great. That’s super helpful. My last question is just on gross margins. I was wondering if you could maybe talk a little bit about the potential for the business overall as recurring revenue scale.

Barry Rubens: Sean, I’m going to let you handle that question. I think it’s still in line with what we discussed during the IPO.

Sean Arnette: Yes, absolutely, Barry. Derek, the long-term forecast hasn’t changed from the discussions at the end of last year during the IPO process. Ultimately, we expect around 15% gross margin on our network construction activities, whereas the recurring service revenue is really where we’re going to generate the gross margin for the business with managed service projects realizing in the neighborhood of 60% gross margin over time and Network-as-a-Service projects closer to 75% over time.

Operator: The next question comes from [ Deane Pernis ] with Pernis Research.

Unknown Analyst: Congrats on the quarter. Had a couple of questions. Number one was in regards to Network as a Service with your sales and marketing. So when you first, I guess, start conversations with these customers, do they — are they aware of your services? Does it kind of start from a level of 0? Or are they already kind of familiar with services you provide? I’d love to just know more about that. And secondly, on kind of future financing, I would love to know how you’re planning on financing future growth through equity versus debt and if you’re in talk with any capital partners or facilities that you’re in talks with? And just how you feel about the balance sheet as of right now?

Barry Rubens: Dean. Thanks for joining the call. Good to hear from you. Sebastian’s team has been engaged most recently with folks. So I think on that first part of the question in terms of the familiarity that our customers have, maybe Sebastian, you can add some color to that. And then I thought Sean could handle the balance of that.

Sebastian Shahvandi: Happy to. So as far as your first question, do they know us as far as what offerings we have? The way we approach it is this. When we are going after prospects, as I mentioned earlier on our earnings kind of report, the approach is very strategic. It’s very well targeted. So we have a really good idea of the portfolio size of customer base we’re going after. And in that way, as we approach them, we know which ones to position first and second. That being said, we don’t exclude any of the offerings that we have. But if we’re going after someone who has a smaller portfolio, we let them know that the NaaS offering with 0 capital expenditures from their side could be more attractive to them. And then if they have funding available or capital available for themselves, we provide them the managed service offering as well.

So it’s not a one or the other. It’s more of here’s everything that we have available, starting with the size of the customer, the persona we’re going after and who we’re talking to at that point.

Sean Arnette: Sorry, Dan, I’ll address the rest of the question in terms of the balance sheet, which for Elauwit is stronger than it’s ever been right after the IPO. We feel great about the position we’re in and the ability to leverage that balance sheet for project financing. So when we look out, we certainly expect to be able to fund Network-as-a-Service projects predominantly from debt with a small bit of equity capital off the balance sheet. We are talking with a variety of different type of capital partners working to tease out the most efficient way of delivering financing for these type of projects. But we do have one existing relationship as disclosed in our filings with Endurance Financial, a debt partner that has supported us from the early days and ability to move very quickly should Network-as-a-Service opportunities come about quickly, but certainly looking to find a bit of efficiency in terms of how we fund projects moving forward.

Operator: This concludes our question-and-answer session and concludes the conference call today. Thank you for attending today’s presentation. You may now disconnect.