Earnings call transcript: Acorn Energy Q2 2025 sees revenue surge, EPS climbs

Acorn Energy Inc. (NASDAQ:ACFN) reported a robust financial performance in its Q2 2025 earnings call. The company highlighted a significant revenue increase of 55% year-over-year, reaching $3.53 million, and an impressive rise in fully diluted EPS to $0.28 from $0.11 in Q2 2024. The company’s stock price remained stable in pre-market trading, reflecting investor confidence in its growth trajectory and strategic initiatives. According to InvestingPro data, ACFN has delivered an exceptional 220% return over the past year, with a current market capitalization of $74 million. The company maintains a "GREAT" financial health score of 3.72 out of 5, suggesting strong operational fundamentals.

Key Takeaways

• Revenue increased by 55% year-over-year to $3.53 million.
• Operating income surged 267% to $947,000.
• Fully diluted EPS rose to $0.28, a significant improvement from $0.11 in the previous year.
• Acorn Energy remains debt-free with a growing cash balance.
• The company launched new products targeting residential and commercial markets.

Company Performance

Acorn Energy demonstrated strong growth in Q2 2025, with a notable 55% increase in revenue compared to the same quarter last year. The company’s operating income rose sharply, reflecting improved operational efficiencies and a focus on high-margin products. As the largest independent remote generator monitoring provider in North America, Acorn Energy continues to capitalize on industry trends such as grid instability and the adoption of smart IoT systems.

Financial Highlights

• Revenue: $3.53 million, up 55% year-over-year
• Gross margin: Expanded to 75%
• Operating income: $947,000, up 267%
• Net income: $1.18 million, up 252%
• EPS: $0.28, up from $0.11 in Q2 2024
• Cash flow from operations: $900,000
• Cash balance: $3.25 million, increased to $3.43 million as of August 5, 2025

Outlook & Guidance

Looking forward, Acorn Energy targets a 20% average annual revenue growth over the next three to five years, building on its impressive 41.58% revenue growth in the last twelve months. The company is exploring mergers and acquisitions, OEM partnerships, and new monitoring applications to sustain its growth momentum. With a scalable model and high-margin recurring revenue (gross margin of 73.08%), Acorn Energy is well-positioned to leverage emerging market opportunities. InvestingPro analysis reveals 12 additional investment tips for ACFN, available to subscribers along with comprehensive valuation metrics and peer comparison tools.

Executive Commentary

CEO Dan Lowe emphasized the growing importance of remote monitoring as a cost-effective tool for risk mitigation. He noted, "Remote monitoring is increasingly being seen as a necessary and cost-effective tool to mitigate risks." Additionally, Lowe highlighted the company’s expanding opportunities beyond generator monitoring, stating, "We’re getting requests for our solution for monitoring that’s not even in generators."

Risks and Challenges

• Market Saturation: The residential market remains flat, posing challenges for growth in this segment.
• Cybersecurity: Ongoing enhancements in cybersecurity protocols are crucial to protect the company’s technology infrastructure.
• Competition: As a leading provider, Acorn Energy must continue to innovate to maintain its competitive edge.
• Economic Conditions: Broader economic factors, such as inflation and interest rates, could impact consumer spending and business investments.

Acorn Energy’s Q2 2025 earnings underscore its strong operational performance and strategic positioning in the market. With ambitious growth targets and a focus on innovation, the company is poised to navigate both opportunities and challenges in the coming years.

Full transcript - Acorn Energy Inc (ACFN) Q2 2025:

Conference Call Operator: Good morning, and welcome to Inkorn Energy’s Second Quarter twenty twenty five Earnings Conference Call. All participants are currently in listen only mode. Following management’s prepared remarks, we will open the call for questions. As a reminder, today’s call is being recorded. I’ll now turn the call over to Tracy Clifford, CFO of Acorn Energy and COO of its Omni Natural subsidiary.

Tracy Clifford, CFO, COO of OmniNatural, Acorn Energy: Thank you, operator, and thank you all for joining us today. Before we begin, I’d like to remind everyone that today’s remarks, including responses to questions, may contain forward looking statements. These statements involve a number of risks and uncertainties that could cause actual results to differ materially from those projected. Factors that may impact our future operating and financial performance include general risks such as potential disruptions to business operation or shifts in consumer demand and customer demand, as well as specific risks related to our ability to execute our operating plan, maintain strong customer renewal rates and expand our customer base. Additional risks may arise from changes in technology, increased competition or shifts in the macroeconomic or financial environment.

These forward looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are based on management’s current beliefs, assumptions and information available as of today. There can be no assurances that the company will meet its growth targets or other strategic objectives. The company undertakes no obligation to update or revise these statements to reflect future events or circumstances after this call. For a more detailed discussion of the risks and uncertainties that may affect our business, please refer to the risk factors section of our most recent Form 10 k available on the SEC’s website at www.sec.gov or on our own website. With that, I’ll now turn the call over to Dan Lowe, CEO of Acorn Energy and OmniMetrix.

Dan?

Conference Call Operator: Thanks, Tracy, and thank you all for joining us. Q two twenty twenty five was a milestone quarter for Acorn. We delivered record remote monitoring and control revenue, strong operating cash flow, and EPS of $0.28 And last month, we uplifted the NASDAQ Capital Market, enhancing our visibility and positioning us for future growth. Let’s start with some numbers. Second quarter revenue rose 55% year over year to $3,500,000 driven by an 89% increase in hardware sales and a 19% increase in monitoring revenue.

Gross margin expanded 75% from 73% last year. Operating income increased 267% to $947,000 and fully diluted EPS rose to 28¢, up from 11¢ in q two twenty twenty four. Importantly, our EPS is now reported on a fully taxable basis. If we exclude our noncash tax expense in q two twenty twenty five, our EPS would have been 36¢ and be more comparable to our year ago EPS of 11¢, which included no tax provision. Our growth continues to be fueled by a strategic contract with a major US cell phone provider, which has provided a material benefit to our financial results since the 2024.

This approximate $5,400,000 contract covers monitoring revenue monitoring partner and first year’s year of monitoring services for the telecom provider’s Dell Power backup generators. To date, we’ve recognized $4,100,000 in revenue, of which approximately 95% is hardware. We expect to complete the hardware shipments under this contract in 2025, while deferred monitoring revenue will extend into 2026 based on the rollout of the monitoring service activations. Given our over 90% renewal rate and cost prohibitive nature of switching to a competing offering, we expect this rate to generate recurring revenue well beyond the initial term. We believe this contract does not represent the total potential opportunity with this customer, and we’re working to expand the scope of our work with this customer when the opportunity arises.

Now I’d like to talk about our market position and competitive advantage. OmniMetrix remains the largest independent provider of remote generator monitoring solutions in North America. Our technology supports four major generator brands and our industry leading solutions are known for valuable features such as ease of installation, comprehensive diagnostic and reporting, a state of the art user interface, and support for all major generator brands. These advantages and other advantages have earned us the trust of over 600 generator dealers, many of whom consider us the best in class solution. Additionally, while some backup generator OEMs offer some type of remote monitoring solution, dealers are often reluctant to use those services because they do not want to jeopardize their customer relationships and service revenue line by enabling a direct relationship between the OEM and their customers.

As the pioneer of remote generator monitoring, we are committed to maintaining our competitive edge through ongoing investments in product innovation. In June, we launched our next generation monitors, Omni for residential and Omni Pro, for commercial and industrial use. These devices feature sleek design and smaller footprint, multicolor LEDs for real time diagnostics, remote exercising programming, compliance reporting, over the year updates and other software enhancements. These innovations improve installation speed, reduce service costs and enhance reliability, further further strengthening our value proposition. Turning to growth opportunities.

We are actively pursuing growth in hardware sales and monitoring endpoints by supporting our network of over 600 generated dealer customers and through our internal direct sales efforts targeted at large and commercial industrial accounts. While we have a strong position in the residential market, our growth is more a function of overall economic factors such as interest rates, inflation, and employment outlook, as well as region specific conditions that drive households in prioritizing their investment in backup generated power. The residential market has been relatively flat over the past two quarters, but expect that it will eventually return to its growth trend in the coming years. Larger commercial and industrial opportunities are where we feel best positioned. As it is in this market where our technology and service leadership are most valued and where we have the potential to pursue much larger opportunities across a variety of areas.

We have a range of ongoing discussions with C and I prospects, but it tends to be a longer sales cycle and so it’s harder to predict the outcome. We are also increasingly being asked to look at other potential areas of monitoring activity that would require some amount of new product development, but are largely are largely rooted in our core strength and capabilities. We will continue to evaluate such opportunities that align most closely with our core strengths and capabilities. Beyond organic growth, we are actively evaluating M and A prospects that complement our focus on remote monitoring, recurring revenue models and could be accretive in year one. Our NASDAQ listing enhances our ability to pursue these opportunities as it provides a more attractive currency for such transactions.

We also see potential in the OEM partnerships where our marketing solutions could be bundled with new equipment sales, offering OEMs a turnkey solution while allowing us to scale efficiently. It is difficult to know if any of these efforts will prove successful, but we believe they offer a great deal of potential to help us drive incremental growth. Longer term, it seems natural that monitoring will become an embedded component in standby generators and other industrial equipment. Given our service and technology leadership, we are working to position OmniMetrix as the obvious partner for commercial, industrial and residential markets and enabling OEMs to focus on their core business. Importantly, several secular trends are expected to drive growing demand for our solutions, including increasing gradient stability in extreme weather events, growing adoption of smart residential and commercial industrial IoT systems, and the prevalent need for predictive maintenance and operational analytics.

The key takeaway is that remote monitoring is increasingly being seen as necessary and cost effective tool to mitigate risks of operational disruption in the commercial and industrial segment and a liability and comfort in the residential segment. And OmniMetrix is ideally positioned to meet this demand. Based on our current trajectory and industry dynamics, we believe we can sustain 20% average annual revenue growth over the next three to five years. Our scalable model, lean operating structure and high margin recurring revenue model give us confidence in our ability to deliver long term shareholder value. With that, I’ll turn the call back to Tracy for a deeper dive into our financials.

Tracy?

Tracy Clifford, CFO, COO of OmniNatural, Acorn Energy: Thanks, Dan. As Dan mentioned, q two revenue rose 55% to 3,525,000, including 1,400,000.0 from the cell phone provider contract, leading to 89% growth in hardware revenue and 19% growth in monitoring revenue. Gross profit increased 58% to 2,639,000 with gross margin expanding to 75%. Operating expenses rose 20% to 1,692,000, but decreased as a percentage of revenue to 48% in Q2 twenty five from 62% in Q2 twenty four, demonstrating our strong operating leverage. Net income to stockholders rose 156% to $720,000 or $0.28 per fully diluted share despite a $242,000 tax provision, of which $206,000 is noncash federal tax provision.

First half highlights include revenue of 6,623,000, which is a 50% higher year over year, net income of $100,000,184,000, an increase of 252% year over year, cash flow from operations of 900,000, and a quarter end cash balance of 3,253,000, which has increased to 3,428,000 as of 08/05/2025, and we continue to be debt free. We continue to invest in research and development and product development. Q two r and d rose 17% to 265,000, supporting the launch of Omni and OmniPro, continued enhancement of our remote AC mitigation disconnect product or RAS within our cathodic pipeline industry segment and exploration of new product lines. With respect to tariffs, our position remains that we don’t view them as a significant impact on our cost or margin structure as we source a small fraction of our components from outside The US and assemble our product in The US. We are monitoring the situation, but currently believe we could adjust pricing to minimize any tariff related cost increases if we deem this necessary to maintain our historical margins.

We also continue to focus resources on enhancements to our OmniView two or o v two user interface, which we launched in 2024 to provide more features such as custom self reporting options as well as streamlining our back end operations and database processing to ready us to meet the anticipated demand and future growth in monitoring connections and to address any potential barriers to such growth. Additionally, we routinely enhance our cybersecurity protocols to mitigate the risks facing us as an IoT company. To facilitate these efforts, we recently hired a seasoned principal systems architect to further expand our internal technology resources and enable us to continue to build on our strong IT infrastructure. We remain focused on delivering best in class solutions and listening to our customers to identify unmet needs that we can incorporate into future offerings and to continue to align our ourselves as a true partner to our customers and not just a vendor. In closing, our solutions provide significant value by improving reliability and reporting, offering peace of mind and reducing service costs.

We’re excited about the opportunities ahead and look forward to updating you on our progress. Operator, please open the line for questions.

Conference Call Operator: We will now begin the question and answer session. To ask a question, you may press star then one on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw it, please press star then 2. At this time, you will pause momentarily to assemble our roster.

Hello, Alex? Could you on be muted? Sure. Alex, can we take the questions? You want me to speak now?

Yes, sir. You may go. Sure. Congratulations on the great quarter and a great year. I’m a long time shareholder.

The the expectation of 20% growth for the next several years implies a a pretty substantial pipeline, on the hardware side. I understand that increasing the size of the the telecom deal is part of that, but I wanted to hear some more color on pipeline in other, for other deals. Okay, Alex. Thank you for being a long time shareholder. Firstly, I I wanna just make sure that you heard.

I say that we expect 20% on average. So, you know, in in this business, we we can’t really project, you know, big contracts, what’s happening. You know, it’s not like we have a large backlog. For example, on the telecom order, I mean, we basically shipped, you know, within practically a year and a quarter of a very significant amount of fraud. So I will say that, you know, we’re talking to a number of OEMs.

We’re responding to a number of RFPs. And so I I do have a, you know, a a very good feeling that we can achieve this 20% on average annual growth rate going out of three to five years. Thank you and great work. Thank you. Our next question comes from Yash Grupparayta of David Budget Car Group.

Please go ahead.

Dan Lowe, CEO, Acorn Energy and OmniMetrix: Yep. Congratulations on a great quarter. Yeah. Now that you’ve mentioned that you have already accomplished 4,100,000.0 out of the 5,400,000, what’s your outlook for the next two quarters? And I had the same question as as Alex.

Are there any new deals or contracts in the next couple of months that we should be looking forward to?

Conference Call Operator: So same answer. I can’t tell you, you know, when contracts come in or just general flow of business, but but I have a high degree of confidence that things are happening just because of our industry leadership. In terms of the telco contract, a lot depends on them. We we are ahead of them in shipping product versus them installing product. So at some point in time, they’ll catch up, but I think that they wanna get more product installed, which is obviously good for us because we don’t book our revenues until the product’s installed and activated and accepted.

So a lot depends on them in terms of the timing when they want more product shipped to them.

Dan Lowe, CEO, Acorn Energy and OmniMetrix: Got it. And one more question. In terms of monitoring revenue, how much do you see it growing in the just like in terms of the monitoring revenue, how much do

Conference Call Operator: you see it growing in

Dan Lowe, CEO, Acorn Energy and OmniMetrix: the next couple of years?

Conference Call Operator: I would I would say it would be, you know, similar to hardware. Because if if if you think about it, our monitoring follows hardware. Now hardware is a much bigger number. We’ve said in the past that hardware generally represents about 80% versus month per tier monitoring versus 20% in when somebody buys a a product. But, you know, as that is established, the two should work hand in hand.

Again, back to the telecom contract, we’ve shipped more stuff than they’ve installed, so monitoring will catch up to that. But in general, they should they should move generally lockstep. Got it. Yeah. Thanks and congratulations, sir.

Thank you. As a reminder, if you have a question, please press star then 1. Our next question comes from Chris Ottel of ICO Candy. Please go ahead. Thanks very much.

Nice nice job, folks. Really executing well. My question is a little bit on I I know that it’s a it’s a business that’s hard to that’s going to ebb and flow and appreciate your long term views on growth and profitability. But maybe you could talk a little bit about your your pipeline or your you know, what you’re seeing in terms of opportunities that you can bid on, whether they’re RFPs or or other. Because I sent you some info about, you know, the forecast of the reliability of the grid is not good, which would suggest that there’s a lot more interest in the type of, you know, the type of technology and products that you guys are providing.

So maybe you could talk about, you know, what does your pipeline look like now versus six months ago or a year ago in terms of opportunities that you’re going after? So I’ll say that the the number of opportunities today are larger than they were six months ago, and they’re more varied. So we’re we’re getting requests for our solution for our monitoring solution that’s not even in generators. People are coming to us and say, you know, we see that you’re a leader in remote monitoring. We need remote monitoring of this technology sophisticated item.

Would you be interested in doing that? So as as I mentioned in my remarks, there’s some new and interesting RFPs that are coming out that are coming to us and asking us to provide a solution for them. Again, I don’t know that I’m gonna win the RFP, but this is the first time that we’ve had, you know, people of size and difference reaching out to us if we can provide a solution. That’s that’s number one. And then just in general, you know, what’s going on in the industry, We’re getting, you know, a bunch of inbound calls, and then, obviously, our salesmen are getting more more interest in what we’re doing than we’ve had before.

So, you know, again, the the new the number of requests and interest is up. How that translates into actual product or sales, it’s very hard for me to say at this point in time. Okay. Yeah. That’s just that’s exactly what I was what I was looking for.

Thanks a lot, James. Okay. Thank you, Chris. Once more, if you have not had an opportunity to ask a question, you may press Our next question comes from Joel Sklar, a private investor. Please go ahead.

Great job on the progress that Acorn has shown. Question on demand response. Any update there, especially with CPower’s parent company being acquired? I know that you had a have a partnership with them. So can you provide any update specifically on on what’s going on with c the CPower relationship and more generally on the future of demand response and generators?

Thank you. Sure. Thank you, Joe, and thank you for your continued support. So c Power was bought from a private equity firm, l Power, and it’s now owned by NRG. And our partnership is very much intact.

We speak to them on a weekly basis. In in general, in terms of revenue, we’re not seeing much of revenue today. We see a drop of revenue today, but not much. And, you know, we we think long term demand response is a you know, could be a very big area for us because it’s almost all profit. And it’s really the grid operators themselves don’t have their act together in terms of demand response.

Meaning, what does it take to incent a company, a residential, you know, to put their system into the program that when the the demand for electricity is is up, that they can quickly or we can quickly switch on their generators and take the demand their demand off the grid. So it’s it’s really our our partnership is strong in place, but the grid operators still haven’t gotten their act together in terms of their payment and their plan on the man response. So we’ll when that happens, we’re gonna be there, and it could be very exciting, but it’s not happening yet. Okay. But it sounds like you’re still very bullish on on the future potential of that marketplace.

Correct? Correct. I think so. With based on the all the things that you’ve said, you’ve read, you know, and and people have sent an article, as Chris said, you know, the the grid needs help. And one of the ways is backup generators.

Thank you. This concludes the question and answer session. I would like to hand the conference back over to mister Jamie Labobbe for any closing remarks. Thank you all for joining today’s call. We appreciate your continued support.

For follow-up questions, please reach out to our IR team listed in today’s press release. We look forward to speaking with you again next quarter. All the best. The conference has now concluded. Thank you for attending today’s presentation.

You may now disconnect.

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