Knightscope, Inc. (KSCP) on Q2 2024 Results - Earnings Call Transcript

William Li: Welcome. Thank you, everyone, for attending the Knightscope Town Hall as well as the 2024 Annual Stockholder Meeting. We're grateful to each and every one of our investors and genuinely appreciate you taking time to tune in today. Let me get straight to the point. Almost every company goes through difficult times, and the last couple of years have been quite challenging for Knightscope as a public company. I can tell you it's an odd situation because, internally, we believe we're doing profoundly better than when we were private. But as I often say, I believe Wall Street can be wrong in the short term and typically right in the long term. In the meantime, we'll continue to relentlessly work the issues, and I am confident, highly confident, we'll have a very, very bright future. This too shall pass. We're making solid progress on all our internal goals and key ingredients to reach profitability, and I'm excited about the future of Knightscope in driving long-term stockholder value. A good amount of that has to do with the sweeping changes we're making to the business. Honestly, some days, it feels like we're changing everything except the color of the logo. Our aim is to leave no stone unturned and we are focusing on various opportunities to improve the company and its financial position. We still have a lot of work ahead for us, and we believe that we just need to focus on execution. As Knightscope's largest stockholder, I have an unwavering belief in and support for the Knightscope team because our team shows up every day no matter how hard or how complex the challenges that we face maybe and just keep pushing forward our progress towards a brighter future. That relentless nature is what helped -- actually helped get Knightscope off the ground 11 years ago and led to us being one of the 5% of start-ups that succeed in getting off the ground and staying off the ground. Listen, the sky is blue, tomorrow is just another sunset away, we just need to work the solutions, including instilling investor confidence and executing our plans. We have a plan, we have the right team working the plan and are making progress every single day. I believe the future is extremely bright for Knightscope, and I love our company, our team and our investors. I don't want to be working on anything else, and it's my honor and privilege to be fighting for Knightscope in our country every single day. Today, I'll focus on my four personal reasons why I'm long on Knightscope and absolutely certainly short on the criminals: market, technology, operations and people. So let's get into that now. Market, investors love to hear, love to hear that there's a large market ripe for disruption, especially if there is a unique technology and a business model to go with it. Well, in our case, we believe we're not just targeting a very large market, but one that has a recurring need. The public safety law enforcement and security markets are not only ripe for disruption, but we believe they're ripe for disruption utilizing robotics, AI and automation. So let's work through maybe three different angles on sizing what we believe can be a multibillion dollar opportunity. So first, we often say, or I often say, robots will be everywhere. We believe the market's potential is very large. And in our case, we think it's a market that will not only -- will not collapse as crime is an ongoing recurring problem, unlike markets that can disappear. Think about typewriters, pagers, fax machines, flip phones and station wagons. Remember, a property crime occurs every 4 seconds in our country and a violent crime every 26 seconds. We do not have to live this way. I believe every American has a basic and fundamental right to live in a safe community in a safe country. Second, another angle will be some sort of unique triangulation or taking a few different data points to help draw a conclusion. So let me give you some numbers. There are approximately 1 million law enforcement professionals, about 1.5 million security guards, approximately 300,000 law enforcement vehicles and about 80 million security cameras in operation in the U.S. The answer in my eyes is certainly not small. It requires a large technology portfolio that we're just getting started building. So I don't believe it's tens or hundreds or thousands of robots. Millions is where we're focused in the long term. Third, you can take a percent augmentation approach to some of the numbers above and long term in our eyes, there's a potential for a $40 billion recurring revenue opportunity once everything is in place. And you can download the deck at knightscope.com/rise. If you want to take a closer look, but here is a screenshot of the relevant slide for you. Now that you understand this is a huge opportunity, how do we tackle it and what progress have we made? Well, here are some things for you to think about. Potential for recurring revenue. Well, with our machine as a service subscriptions, we're demonstrating that a recurring revenue business model for recurring societal problem can work and has already generated millions and millions of dollars of revenue. High margins. We've demonstrated greater than 60% margins over a five-year period by analyzing data from numerous, numerous of our longest-serving clients for our autonomous security robots, which is a major, major milestone confirming our projections with real-world results. Now we just need to scale things up. Renewals. Clients have renewed our subscription services, including for 2, 3, 4, 5, 6, 7, even 8 years, 8 consecutive years. Clients don't stick around that long without us providing real value for them. Dwindling competition. We believe every major effort by a competitor, either a major corporation or a start-up, has effectively failed thus far, granting Knightscope a genuine first-mover advantage. Federal. We believe we are currently the only autonomous security provider authorized to do business with the U.S. Federal Government. And we have successfully deployed our first K5 gov machine at a U.S. Department of Veterans Affairs Hospital in Texas. Super excited about that. Moat. We've begun to build a strong moat with a combination of approximately 3 million hours of operating in the field, the federal authorization I just mentioned from the U.S. Federal Government, a growing technology and advanced technology portfolio in more than a decade of real-world experience. Crime fighting wins. Our machines have done a lot of good for society already, and we're just getting started. We've helped apprehend an armed gunman, helped with a domestic abuse case, aided a victim of kidnapping, helped issue an arrest warrant for a sexual predator, stopped numerous car thefts and list goes on and on and on. You can check it out at knightscope.com/crime. We envision that in the future, we'll be required to have autonomous security, no different than having a, I don't know, a smoke alarm or a fire detector. And that will be the tipping point for robots to be everywhere. RTX, our newly established Risk & Threat Exposure department has proven to be a resounding success with [Technical Difficulty] keeping your loved ones safe. And the number of robot selfies continues to grow. So to sum it up, what's not to love? A massive market with a real problem every American can relate to. A potential path to recurring revenue with potential for high margins at scale, proven technology and a competitive landscape where none of our competitors have not yet succeeded. Interesting times. Let's move on to technology. Knightscope is a technology company focused on public safety, building new tools to fight against those that seek to cause harm to everyday Americans. What we have achieved is not only technologically extremely difficult to build, but even more challenging to operate 24/7, 365 across an entire nation. To emphasize this fact, literally, three major corporations, and just as many funded start-ups, have failed, given up or gone bankrupt. We now have a real advantage. We believe we've got it working, now we just need to optimize. Now it's time to scale things up with a focus on driving growth, cost reductions, efficiencies, process improvements, et cetera. Kind of maybe the less glamorous stuff, but extremely important, and we'll continue to build our moat as we develop our portfolio of software, hardware and unique services that combine together will uniquely position us as leaders of public safety technology. We believe that in order to address the nation's public safety problem, we need to put at least 1 million machines in network that can see, feel, hear, smell, speak and autonomously cooperate. They need to work 24/7, 365 and give the 2.5 million officers and guards real tools for them to be able to do their jobs effectively and keep you and your loved ones safe. I'll say it again. I believe that robots will be everywhere. And anyone who thinks that, that is not the case is in for a very, very rude autonomous awakening. To give you a flavor of the future that we're planning for Knightscope, I thought it would be helpful to highlight our current portfolio of technologies and equally as important, as a technology company, share what the future might hold for Knightscope. We currently have eight different machines and devices in the field as well as two software platforms. K1 Hemisphere. When size and price matter, the K1 Hemisphere can be had for as low as $0.75 per hour, including being monitored remotely by our RTX team. K1 Tower has been popular at ingress and ingress points where there's a good amount of human or vehicle traffic. K3 Indoor has been proudly patrolling indoors at a large hospital in Houston for many, many years. K5 Outdoor, our most popular ASR and now on our fifth generation of the technology, providing both physical deterrent to negative behavior but also given officers and guards eyes, ears and voice on the ground in multiple locations at the same time. K1 Blue Light Tower, a beacon of public safety across schools and corporate campuses. K1 Blue Light Emergency Phone, it's a compact emergency calling solution, very popular in parking structures. K1 Call Box. Thousands and thousands of these are deployed for emergency roadside assistance in remote locations. He, listen, no cellular? No problem. That's our thing with our K1 Call Boxes. K1 Retrofit Kit. It's an opportunity to upgrade solar power, wireless connectivity with self-monitoring software and support. And on the software side of things, we've got the Knightscope Security Operations Center. This is our browser-based user interface that provides a unique format for humans to interact with our autonomous security robots and the over 90 terabytes of data they generate annually. Knightscope Emergency Management Systems, or KEMS, launched a year ago that helps monitor our nearly 10,000 fleet of K1B devices in the field operating 24/7. Additionally, and through strategic partnerships, we've added Automated Gunshot Detection, 100% automated for indoor or outdoor usage reporting a gunshot within 2 seconds, providing the 3D shooter location accuracy within 2 meters. Autonomous drones, a partnership with our friends at Draganfly, forming a unified offering both in the air and on the ground. And the recently announced K1 Laser, using lasers to fight against criminals, especially for perimeter security. The K1 Lasers operate under adverse weather conditions and low or no lights, reliably delivering advanced details that the 80 million-plus security cameras in the U.S. cannot. All of these actions enhance our offerings for our clients on our mission to better securing our country. This is just the start of what we anticipate will be a wide, a very wide portfolio of technologies to better protect the places people live, work, study and visit. We plan to do that by building new technologies organically through partnerships and through acquisitions. In the near future, we're focused on two key strategic initiatives. First one being platform commonality. To drive engineering efficiencies, improve quality, speed up manufacturing throughput, increase economies of scale and drive innovation, we must, we must consolidate our wide ranging of technical architectures, hardware, software, firmware, telecom and electrical systems into a single common company-wide platform. To that end, we've kicked off a very ambitious project called ICM, or Intelligence Control Module, that we intend to eventually become the backbone of the entire lineup, handling all things AI, all things video, audio, lighting control and telecommunications. We believe this software-firmware-hardware platform designed to provide a seamlessly unified customer and operating experience across all our products will not only drive significant, significant cost reductions, but numerous benefits in manufacturing quality and operations at scale. We're targeting the ICM to go into production during 2025. Portfolio expansion. In the medium term, we intend for the aforementioned ICM module to go into the future K1 Super Tower and the all-new and super exciting K7 ASR that we highlighted during our Innovation Week. Concurrently, we intend to tackle additional growth opportunities through a methodical approach long term. In some cases, organically, and as I mentioned, in other cases, through partnerships and acquisitions. We certainly have our sights set on the K10 Patrol and future K15 Tactical vehicles. Although the industry is not yet ready for this level of technology, Knightscope seeks to become that trusted adviser that trusted technology adviser over time for our clients to help bridge the gap between those on the front lines and cutting-edge new technologies. We need to work in the future to deliver the future. This is an exciting time where we think technology can genuinely and positively help society, help our communities and help your community and your loved ones. And we believe all that we envision is technically possible with the right people, cash and time to execute. So you may be asking, what about artificial intelligence? How does AI play a role in Knightscope's future? Well, first, some of the basics involved in AI already have been implemented at Knightscope and working in the field. I often kid around or tease folks, like do you think there's like a little guy inside of robots and pedaling away like crazy to get the machine to move around by itself? That's all AI. That is real-world practical implementation of AI, and so is autonomous recharging, facial recognition, license plate detection, people detection, object tracking. All that is AI. We intend to integrate AI into everything we do as we have already, and it is part of our core. The exciting part in my mind is the latest breakthroughs in AI are only going to accelerate our efforts at Knightscope. When we say we need 1 million machines in network and they need to see, feel, hear, smell, speak and autonomously cooperate, we believe that will all, all of it will be accelerated dramatically by AI. So let's go through them. What do we mean by see? Well, process vast amounts of video data for object and scene classification to detect humans, vehicles, animals, bicycles, behaviors and threats. Feel. Run machine learning models on live-streaming thermal data or analyze emotions in a crowd of people or detect a fire. Hear, automatically conduct sound classification and localization for acoustic event detection, which could include gunshots, cars starting, glass breaking, a yell for help or an accident. Smell, figuratively place a dog's nose on a chip to detect pathogens or chemical, biological, radiation or other similar risks. Speak. Utilize generative AI to allow the public to conduct a value-added conversation with the robots, which could be used for basic information, directions, call for help or details on a point of interest. And what do we mean by autonomously cooperate? Well, utilize AI to enable autonomous cooperation, swarming, data transfer and data sharing for scene or incident analysis, planning and investigation amongst all the machines. For example, imagine the FBI putting up their Most Wanted List and the machine is being able to track that suspect down anywhere in the country within minutes. Here's another example. We need to build a state-of-the-art AI-driven mission control software platform to be able to facilitate cooperation between all these machines. Today, there is a stand-alone user interface for each of the autonomous security robots, our K1B portfolio, the drones, automated gunshot detection and the recently announced K1 Laser. For our clients and our team to get the most out of all these systems, we need them to be able to effectively communicate, share data, plan missions, conduct investigations and autonomously cooperate with each other. That is going to be a hell of a software marvel to build. We think the opportunities with AI are endless and the possibility to build game-changing technology for the benefit of our communities and our country is invigorating and what gets us up every morning here in Silicon Valley. Operations, the team spent years and years getting all this stuff to work, and we were not necessarily focused on optimizing for material costs, labor efficiencies, processes, et cetera. Honestly, the priority was just to get all this stuff to work and prove that a client would pay for it. Now having done that, we can now focus on refining. The work to optimize things is not glamorous as I mentioned, but it is a known quantity. We know what to do and are doing it. Now we simply need to increase revenue, reduce costs and scale up, after which we believe the profits will come. Let me provide you some specifics so you get a better understanding of flavor of where we're focused and the progress we're making. Reduction in machine downtime across the fleet through design changes, material changes, improved quality assurance, burn-in testing and software and firmware improvements. Reduction in service costs through more carefully managing the service process, documentation and escalation procedures. Reduction in service costs through more outsourcing technician work and eliminating our fleet of trucks. Reduction in false positives through improvements in machine learning and algorithms as well as diagnostics. Reduction in the bill of materials through changing suppliers, changing materials, eliminating parts and significant design changes. Reduction in labor hours through improved processes, documentation and use of contract manufacturing for select subassemblies. A reduction in number of facilities through ongoing consolidation. A reduction in cellular costs through contract negotiations and technical changes as well as an increased usage of private LTE. Reduction in operating expenses through numerous optimization techniques, elimination of processes and head count optimization. At the same time as we're making all those reductions, we've also made the following improvements. Improvement in purchasing controls and improvements in production planning and sign-off authorities, improvements in production throughput where, for example, we used to ship maybe one K5 perhaps every week, or 2, and now consistently shipping about 3 a week. Improvements in QA processes throughout the production process and the line test documentation. Again and again, again, strict controls on authority to ship. Improvement in decision-making by eliminating a significant portion of the management team. Improvement in root cause analysis by driving decisions based on collection of data from the field and not just going to fix the problem and not analyzing it. Improvement in client retention through both upgrades to the fifth generation K5, but also implementation of the aforementioned RTX team, or the Risk & Threat Exposure team. Improvement in team alignment, which is really important, where we now have a solid cadence of engineering and production changes underway. We want to work to squeeze out as many efficiencies as possible, cleaning house, improving business and technical processes while focusing on the bottom line. As a result, we think that these improvements will begin to show up in the financials in the coming months, quarters and years, setting ourselves for what we believe will be profitable growth and in a very exciting future. People, one of the keys to success here is the absolute relentless nature of the Knightscope team. We've made a lot of changes, but not limited to, cutting a third of the management team to streamline decision-making, recruited an all-new board of directors, on track to cut up to 30% of the payroll expense and we're focused on building a very cohesive team. One team, one fight. And did you know that third of Knightscope employees have been with the company between 3 and 11 years? Frankly, that is a bit of a miracle here in Silicon Valley, where typically folks last maybe a year or 2 max at an employer. These are smart-driven people that could work anywhere but they're given that they're all against all odds to make Knightscope successful and achieve our mission. My bet is and will always be on the Knightscope team. I also consider our thousands of retail investors part of our team. Without your steadfast support, we wouldn't have been -- had the fuel to build the company and get this far in the first place. A heartfelt thank you to you all. My model has been, life is short, do what you love and make a big impact. And what I love is working on our honorable mission here at Knightscope that everyone says is impossible. That fuels a deep fire within me and the entire team. This country gave my parents a chance for a better life, coming from South America and Asia. My mom was from Bogota, Colombia and my dad was from outside of Shanghai, China, and they met in the melting part of New York City, where I was born. And here in America, they were able to build a positive life together and provide me a chance to grow, learn and succeed. I feel a deep need to repay that debt to our country. I believe in America, and I believe we can make it the safest in the world. Well, for that to potentially happen, I need you to continue to believe in Knightscope and the Knightscope team. Together, we can do this. What many investors don't understand is that, after 9/11, I committed to dedicate the rest of my life to better securing the U.S. And so the drive here is deeply personal with me. We're not going away no matter how hard so many try to trip us up. I'm going to do whatever it takes so long as it's legal, ethical and moral to force a win for our country and for our stockholders. If we can't run, we will walk. If we can't walk, we will crawl, but nothing is going to stop us from moving forward. And I mean nothing. Having put in over a decade working the same problem over and over and over again gets us several steps closer to a victory. What is crazy is it's actually indeed possible to achieve the mission, as crazy as that might sound, and making the U.S. the safest country in the world sounds outrageous. But that deep change in public safety requires investment in building of new technologies. You're not just going to download the solution off the cloud and the federal, state and local government are not going to fix this problem. It requires real work by serious people, backed by serious investors, and I know we can do it together. Listen, Americans love a comeback story, and I hope you'll be a meaningful part of it. So join us, and be a force for good. Onward. Apoorv Dwivedi: Thanks, Bill. We know that this journey is challenging, but Knightscope is well positioned for long-term success. With that, let's jump into our second quarter financial performance results. I'm Apoorv Dwivedi, EVP and CFO at Knightscope. For the second quarter of 2024, we reported total net revenues of $3.2 million. This represents a decrease of $0.4 million or a 10% decline compared the same period prior year, primarily because the gain in our services business was offset by lower year-over-year product revenue. Services revenue increased by $0.1 million to reach approximately $2 million for the quarter, primarily due to ASR subscriptions and as more clients in the K1B product line signed up for recurring maintenance. However, total product revenue, which currently consists mainly of the K1B product, declined by $0.5 million, coming in at approximately $1.3 million because a large onetime sale in the prior year did not repeat. Moving on to costs. If you recall, the company made a few strategic changes in the first quarter aimed at setting a path to profitability. Many of these were directly aimed at reducing our cost of goods and our cost of services. We also acknowledged that these initiatives would initially result in higher short-term costs and that we also expect the disruptions in the impacted activities at the business to directly affect our P&L throughout the year. As a result, we fully expect 2024 to continue to be a transition year. Our cost of revenues came in at $3.8 million, which is an increase of approximately $200,000 from the prior year. This was driven primarily by cost savings that include $0.5 million in lower cost of materials and $0.5 million -- $0.4 million in head count savings that were offset by $0.6 million in higher third-party costs, $0.3 million in scrap fees and $0.2 million in other costs associated with the transition. On to gross profit. This quarter, we recorded a gross loss of $0.6 million, a significant change from the gross profit of 9,000 reported in the prior year second quarter. The decrease in gross margin was driven by $0.4 million in lower year-over-year revenues and $0.2 million in higher cost of revenues. It's important to note that our gross loss would have been between $0.1 million and $0.3 million if we exclude the onetime scrap fees of $0.3 million and the onetime transition costs of $0.2 million. Moving on to OpEx. Total operational expenses came in at $6.2 million for the quarter ended June 30. Excluding the $0.3 million in restructuring charges that we took, our OpEx was flat to prior year as it came in at $5.9 million for this quarter. Overall, we saw head count savings of $0.6 million offset by $0.4 million in higher third-party expenses, primarily legal and financial support costs and $0.2 million in higher R&D costs related to product development as the firm explores a new generation of product design. Restructuring charges of $0.3 million were primarily related to severance costs and moving fees as we closed down the Irvine, California facility to move our production to Mountain View, California. Loss from operations of $6.8 million was approximately $0.9 million higher than prior year because of the drivers discussed earlier. It's important to note that excluding the onetime restructuring costs of $0.3 million and the scrap fees of $0.3 million and investment in new product development of $0.2 million, our OpEx -- or operating loss would be flat to prior year on $0.4 million in lower revenues, indicating that the company is working hard to deliver on its operational efficiencies. Net loss of $6.3 million for the quarter came in approximately $1.5 million higher than prior year, primarily due to the $0.7 million increase in other expenses, coupled with the $0.8 million higher OpEx versus prior year. The increase in other expenses includes $0.5 million in higher non-cash warrant valuation losses and $0.2 million in interest on the bonds that we closed in the first quarter. Finally, Knightscope's basic and diluted net loss per common share was $0.05 as compared to a loss per share of $0.08 prior year. With that, I'll pass it back to Bill. Stacy Stephens: Good afternoon, everybody. Thank you so much for joining the Knightscope Q2 Town Hall. I'm Stacy Stephens, Executive Vice President and Chief Client Officer here at Knightscope. I want to thank Bill and Apoorv. They're going to be joining us live momentarily. I want to go through some quick housekeeping measures. First and foremost, all of your questions, please put them into the chat window so that we can address them. If it's stuff that are just comments and things like that, if you see your comments disappear, it's only because I'm deleting them so I can keep track of the questions. And then I will tee those up for Bill and Apoorv, so you guys can ask them the live questions. So to go ahead and get started. Bill, why don't you, and Apoorv, talk about some of the highlights and accomplishments for the quarter that we're talking about right now, just so people kind of know some of the positive stuff. Obviously, we've got to go through all the financials and everything else. But it's not all doom and gloom. So let's talk about some of the positive changes that have been made. Bill? William Li : Good to see you, Stacy and Apoorv. Thanks, everybody. Only a few hundred people online with only a few hundred questions, so we're going to be here a little bit. We'll try to answer as many as possible. As we mentioned, we're -- this year is kind of a clean house turnaround year to make a lot of fundamental changes. We expect that those numbers will be choppy. It's not going to be a linear kind of progression as we make substantial changes throughout the entire organization. And as I mentioned in the video, some days, honestly, it feels like we're changing everything except the color of the logo. But I think Apoorv and I and the team are pretty excited despite all the red stuff that you see. On the share price side of things, I think the future is looking pretty good, and we're excited to move things forward. There are things that are less obvious that don't show up in regulatory filings. Obviously, we're not going to share any material nonpublic information here, but we may highlight a few things. Sometimes in all the regulatory filings, things get lost, or frankly, a little too complicated. But I'll turn it over to Apoorv, if you want to kick off some things that will help answer a ton of questions that are flying in here, on things that we have changed that may not be so obvious for folks. Apoorv Dwivedi : Absolutely. Absolutely. We started off this quarter by focusing on cleaning up our cap table. Primarily when we looked at our balance sheet, you look at prior years, you saw that there was this -- on our shareholders' equity section, there was this about $34 million in preferred shares that kind of sat there. And what that did is that's normally not common when you are a public company. Most preferred shares convert automatically into common upon an IPO liquidation event. In our case, because we did a direct listing, that did not occur. So that kind of made us a little bit of an anomaly in being a public company. So the first thing we did in the second quarter was convince all the majority of the preferred shareholders to -- both to convert. By doing so, a couple of things happened. One, we got -- we aligned ourselves more with the -- with public company structure. Secondly, we also were allowed to or able to put that $34 million into our stockholders' equity number. So that wasn't -- before that wasn't being calculated. So we had this negative stockholders' equity or stockholders' deficit on our balance sheet. By making that change and cleaning that up, we were able to now show, as you guys can probably see on our recent filings, we had $11.2 million of shareholders' equity. Now what's good about that is that, one, again, it cleans up our balance sheet; two, on a NASDAQ perspective, it allows us to qualify for or continue listing under their stockholders' equity requirement. NASDAQ has three requirements: revenue requirement -- sorry, market cap requirement and equity requirement and a net income requirement. We were previously only able to qualify into the market cap requirement, now we have this equity requirement, which is great for us. On top of that, we also, on NASDAQ, moved to Capital Markets tier, which better aligns us for our company. We raised over $5 million in funding. We continue to do so. I see many questions on how do you continue to stay funded. We have an active ATM program that we use whenever we can. And we continue to find that to be useful. It's the cheapest form of capital that you can get without going into some of the more exotic types of fundings that are available sometimes. We have some of the best quarter this quarter. Actually, in terms of revenue, the best quarter in the last three quarters. 40% growth versus prior quarter. Again, this is -- some of this is choppiness that we're seeing, timing, but we think we're taking the right steps to get there. And then some of the things, Bill, maybe you want to talk about our partnerships and product developments and some of the things we're doing on the experience side. William Li: Yeah. I think we need to obviously get the revenues up and the cost down and you can't just put Band-Aids on some of the stuff. Some of this through acquisition or through our own organic technology development. We're a technology company, and there are significant opportunities as we scale up, where perhaps we were 3D printing stuff before, now we should do something a little bit more efficient and low cost and better for higher volumes and get some consistency. One of the things I'm super excited about is the Intelligence Control Module. Because if you look at the -- all the products that we have that are behind me here, we have different architectures, different software, different firmware and everything else. And that requires a lot of staff and a lot of engineering, maintenance, service support, production, QA. And it's a huge drag on throughput, on addressing service issues, service costs, et cetera. And so with one fell swoop, we're looking to commonize that across the entire platform so we can build faster, we can QA faster, we can ship faster, we service a lot less, and then that starts and has with the K5 v5, replacing the K5 v3. I saw a question on here, well, how are you going to do all this with no massive incremental resources? Well, if we can be a lot more efficient with what we're doing here, and not have people working on older technology that needs a lot of babysitting, and we can permanently fix that stuff, that alleviates and relieves the team to go work on actual new product development. And I think that's going to be certainly one of the most exciting things for me. I used to be an engineer in a former life. It gets me kind of excited, but it's going to have a dramatic effect, I think, on overall quality, throughput and our financial performance. As we keep saying, this is going to be a little choppy because you go make a change like that, but it doesn't necessarily time with when we're going to shut down a certain facility. And then when that lease is up versus when you terminated that person, and so it's going to be a little messy. But overall, I think we're trending in the right direction, and we're going to take some lumps along the way, but we need to set this up for long-term success. And I think we've got the right strategy with the right team, now it's just time to execute. Stacy Stephens: Let's get into some of the questions then. William Li: Yes, because there is a lot questions, and thanks, everybody, for tuning in. I know all of you are pretty busy and have pretty busy lives. So we are grateful for that. The two videos that we just played will show up on YouTube here in a couple of hours or so, on our YouTube channel, and we'll post them on social media. So in case you missed something or you wanted to go back, or like what did Apoorv say? Rewind, you'll be able to do that here shortly. But let's get to the questions you've got here. A - Stacy Stephens: All right. So just everybody knows, I'm not going to be coming back on video just simply because I'm navigating multiple screens here, and I don't want to be a distraction. Starting at the top, what were the orders for, I'm assuming this means Hemisphere H1 -- K1 Hemisphere versus a year ago? William Li: A year ago, we didn't have it in production. So it's been an initial growth driver. I think we're also learning where the best applications might be. We've had apartment complexes, warehouses, monitoring mailboxes for HOAs, and there's more coming. So we've delivered more than a bunch, and there's a bunch more to go out. And we want to make improvements to that. But I think there's a genuine market there for the Hemisphere. It took a little longer than we wanted to get out the door. But I guess versus last year, last year was zero. Stacy Stephens: For those of you raising your hands, please just put your questions into the chat window. We do not have the video enabled this time like we have in times past. So raising your hand, unfortunately, will not get us to be able to interact with you directly. What percentage of sales are ASRs versus the Blue Light products? William Li: So obviously, we would refer you to, for the specific numbers, to our regulatory filings. And this varies every quarter, but plus or minus, just to give you a flavor about, and Apoorv is going to correct me here in a minute, about two thirds of the business is K1B-related and about a third of it is ASR-related. It will be fascinating what that looks like three or five years from now. Depending on how things mature, but two thirds versus one third. Did I get that right? Apoorv Dwivedi: Yeah, you did. It's about 68% for this quarter. And the reality is our K1 base of customers is much higher. So the sales team does a really great job of going out and selling to existing clients, selling more services and continuing to expand on that just because of the branding. The ASR side is still a new technology, and we continue to sell those as well. But from a revenue perspective, the check sizes sometimes seem to be bigger on the K1B. Stacy Stephens: How much cash on hand on the balance sheet at the end of Q2? William Li: Again, we refer you to the regulatory filings for the exact number. But I think the cash on hand over the last 18 months, or every filing that we've had, has oscillated somewhere between $2 million plus to maybe $5 million and kind of oscillates along the way. And everyone keeps like, you guys don't have enough cash. You don't have enough, yes, we need more funding. But I've heard this line of attack of you're going to run out of money, you're going to -- we're not running out of money. Everyone needs to just calm down, and we have been public for two and half years, we haven't run out money. We were private for nine years, we haven't run out of money. We continue to try to raise capital as efficiently as possible and try to reduce our burn. And I would remind folks that three major corporations and three funded large start-ups have failed at this. And so there is a level of technical difficulty to get all this stuff to work and commercialized. We're at the bleeding edge of technology and everyone expecting some sort of overnight change, very quickly done in 30 days and everything is going to be fine is kidding themselves. This is going to take some time, but I think the fundamental thesis of what we're trying to do and where we're going to go and now really focused on profitable growth is really important. And I said in the video, I'll just restate it for the group here, first 10-plus years, we're focused on just getting the technology to work. Remember what I just said. Half a dozen companies failed at this and including three major corporations. And probably, I'm going to guess, $0.25 billion to $0.5 billion burned and nothing to show for it. That speaks a little bit to the level of difficulty here. Now that we've got it working, now it's time to do the blocking and tackling, like, okay, can we optimize what material we use for that part? Did we pick the right architecture? Maybe we should change how we build these machines. So now we're in the optimization mode, now that we've proven that there is a market there, now we just need to do it more efficiently. And this is going to sound a little odd, that's actually the easier part, right, where there's not a -- I don't know how to get from A to B. I don't know how to cost-reduce that part. That's not the case. So let's just work on this to get done. And folks just ask you to continue to be supportive and be patient. We are working very hard to turn this into a big success. And like I often say, Wall Street is typically, in my opinion, wrong in the short term and right in the long term. And our goal here is to make for a lucrative business, but also make a big impact on the country. Apoorv Dwivedi: And I'll just follow up, Bill. It was $2.6 million of cash at the end of the quarter. Again, as you mentioned, that's kind of where we hovered, just between five and two every quarter. William Li: Yeah, I think maybe now would be a good time to talk about cleaning up some -- the balance sheet and some toxic financings that were put in place. And without getting too much into the weeds here, we had a convertible debt offering or financing that was done a few years back and had a lot of toxicity that was not helpful overall. And then there are some blockers in those agreements that precluded us from doing normal financings or raising capital that like any other company would be able to do. You can refer to the 8-K that we filed maybe a few weeks back. We have now kind of cleared that up. And now we have freedom to raise capital in any form that we deem favorable for our shareholders and not pigeonholed only to be able to rely on one or two forms of capital. I don't know if you want to add anything else to that, Apoorv. Apoorv Dwivedi: Yeah, absolutely. I think I saw a question come up earlier about this. It's very important to kind of talk through this. So what we did is we had this fund that we had given warrants out to as part of other convertible note. It was 1.3 million warrants struck at $3.25. What we found is that as we look through the details of this transaction was that the warrants themselves were actually extremely toxic for the company. Toxic, how, in that they have these clauses -- there's one clause called the reset clause. So basically, if we do financing their warrants, the strike price comes down to whatever we finance at. The second part of that warrant language was that as -- if we do a financing event and the price of the stock -- the strike price drops, we have to keep the value of that arrangement the same. So if you think about $3.25, 1.3 million shares or warrants equals $3.7 million of value, right? We would have had to essentially award them $3.7 million worth of warrants divided by whatever the strike -- the new strike price is. And as we looked at that, we thought that in terms of dilution, that's a highly dilutive instrument, and we had to get rid of that not only for ourselves, but also for our shareholders who are concerned about this dilution. So yes, we -- the 8-K states that we were able to basically convince and get an agreement with the fund to extinguish the warrants. They also had things like participation rights. So if we did a funding deal in the future, they could step in and participate, which we didn't think was a great idea for us. And as a result of that, we were able to convince them to take about $3 million of this debt that we have on our books, but get rid of those warrants. And we think it's the best deal that the company could come up with and do. And now it frees us to go out and have the freedom to do, as Bill said earlier, to go out do other types of funding to be able to attract other investors, to work with partners and our bankers to capitalize the company in a way that's potentially less dilutive than what that arrangement was contemplating. William Li: All right. Stacy, what do you got next? Stacy Stephens: They keep flooding in. Can you give me a status -- or give us the status, sorry, of the investigation into the possible legal actions of the short seller? William Li: This is regarding the Capybara suit. It's an ongoing investigation and an ongoing lawsuit. There is no update to provide other than that. When and if something does change, we will certainly let you know, but nothing new to report. Stacy Stephens: Most of the Knightscope press releases mention new contracts or new sales, but it gives zero indication of impact on profit loss. William Li: Okay. So an announcement is a fun internal discussion because we have a lot of investors, which is awesome, but we also get a lot of inputs and opinions. And in some cases, folks like I don't want to hear anything until like it's actually deployed and the money is coming in the door. Okay. Well, that's the financial statements. Well, I want to know where these are deployed, okay. Well, that's a different thing. Well, I want to know when a contract is signed. And so we've played around with different when and how we do this. But what we kind of -- the best thing was for us to announce when we have a new contract. And then in a lot of cases, it's not for the Investor Relations perspective. It's actually to help the sales team so that the contract happened in, I don't know, North Carolina, that might help the Client Development team that might be talking to another prospective client in that area. So we typically do the announcement of that. Then there's this whole process of getting the site ready or doing site surveys, or what have you, building all the machine or devices and then deploying it. So there is a time difference between when it shows up in the financials and when we announce. What we're hoping to do as we increase production is: one, to get rid of -- finish retiring all the v3 K5s that have been a financial drain and operational drain on us; second, clear out as much as the backlog as we can, and we've made a good amount of progress on that; and the third is to actually build some finished goods inventory. So one of the ways to improve the financial performance of the company is thinking through the order to cash. When do you get an order and when do you deliver? And you don't want this to be a very long period. So if we had some finished goods inventory or subassemblies completed, the dream here is get a contract on Friday and ship the next Friday, right? So we're working our way towards that, and that's one of the other reasons why we're focused on throughput and cycle times and efficiencies and in, some cases, having to redo the technology so we can actually see that. But all those contracts that we sign, especially since Apoorv began on board here, very much focused on making sure it's lucrative for the company, makes sense for us to do, and frankly, in a lot of cases, going back to some of the existing clients where we have some very ancient, old contracts that need to get redone. So we're going through that process as well. Stacy Stephens: Okay. So we're getting a lot of questions about specific numbers, how many robots, how many Blue Lights, how many -- where is the profit, where is this, where is that on the numbers side? As Bill said earlier, and Apoorv also echoed, if you're looking for those specific numbers, be sure to go to the Knightscope Investor Relations site and look at the SEC filings. The 10-Q was filed yesterday. So we got to make sure that you're pulling that information directly from the legally available - William Li: Yeah. It's ir.knightscope.com, ir.knightscope.com, and then you can just click there and all the regulatory filings are there and all the specifics are there, to a nauseating level of detail, with 32,000 footnotes to go along with them. It's an arduous process to do all this stuff. So we -- if you have that level of interest, I kindly ask you to go, please, look at the numbers directly. Stacy Stephens: Yeah. I just didn't want anybody thinking it was -- when they see their question disappeared, that's the reason because you can find that without taking this time. Next question is, given that you'll probably do a reverse stock split -- okay, that's an assumption. Sorry, but that's not a definite yet, what actions will Knightscope take to prevent the stock from being driven back down to a penny stock by sellers and/or short sellers after the split? William Li: Okay. So Apoorv and I will do this one together. And I know it's top of mind for everyone. So we have until October 4. Stacy Stephens: Sorry. Also, Bill, just reading the next question, and it dovetails into this, also explain what the vote was because I think there's still misconception as to the vote being for the split versus the -- William Li: So a few bullet points on this, and we're going to take a little extra time because there's a flood of questions on this. One, we have a deficiency notice with NASDAQ that basically in order to cure, we need the stock price to be over $1 for a minimum 10 trading days in a row in order to cure that. We have until October 4, as negotiated with NASDAQ, to do that. And you've got to kind of back up from that time, and there's some processes and the like to enact it if we decide to go forward. So that's bullet point one. Bullet point two is the Annual Shareholder Meeting, the formal part, is actually tomorrow at 1:00 Pacific. And that's kind of the formal forum where we count all the votes for all the resolutions that are in the proxy statement. With respect to the reverse stock split itself, what NASDAQ requested, and we agreed to and the Board agreed to, is we are requesting the shareholders to approve and delegate the authority to do a reverse stock split to the board. It is not to enact the reverse stock split. So this is basically the shareholders saying, okay, it looks like we may have to do this. We support management and the board. Here's the authority to go do this, only if you have to do it and you have no other choice. And we still obviously have some time before that. I, as the, on the personal side, as the largest shareholder, I am the -- significantly not interested in doing a reverse stock split unless we absolutely have to. And the primary reason is a majority of the time, and we can argue as to how often. So a minority of the time, it goes fine and the stock may trade up. After a reverse stock split, you can look at the numbers, I don't know, 10%, 20%, 30% of the time, let's just say, big round numbers, it works out fine and actually in favor of the shareholders. But there is that 50%, 60%, 70% of the time, like it doesn't work well. And in some cases, the companies did it themselves, like they did a financing right on top of a reverse stock split or put out a bunch of bad news or whatever it is, and kind of shot themselves in the foot. And then every company is different, right? There's all kinds of circumstances. So we're trying to avoid this if we can. So the vote tomorrow is to give the authority to the board and delegate if we need it. And then there's a ratio as to what that number should be. Is it a 5 to 1 or 50 to 1? And that's another thing that the board will need to decide based on market conditions and the like. I'll pause there, Apoorv, if you wanted to kind of add anything else to that. Apoorv Dwivedi: Yeah. I think the goal here is not to rush into a reverse stock split, right? I know someone just asked how can investors help prevent this. Really, it's about three things, right? One, buy more shares. Two, hold those shares. Three, direct to your brokers to basically that they should be prevented or stop them from borrowing your shares to short sellers. One of the things we did this deal that we put together with the fund, to the promissory note fund, actually will help us in the long term against further dilution of that share price. One of the things that would keep happening is because they were all -- because they had this exploding warrant feature, they could always just continue to short sell because they knew that they would get their shares back from us whenever there was a financing event. Now effectively by doing this deal, we've been able to effectively stop them from actively short-selling those shares. So those type of things are things we're hoping to continue to keep doing. They take time, unfortunately, but we have until October 4. Actually, we probably have about, we'll say, until mid-September to get the share price above $1 organically. After that, we'll have to make some tough decisions. But again, our goal is not to go down the path. Our goal is to continue to be successful organically. Stacy Stephens: And there are several questions related to, well, what are you guys doing about it? William Li: There's effectively only three things that we can do. Again, we don't directly control the share price, not to be funny about it, but you all do. It's supply and demand. If a bunch of people buy more shares and very few are selling, then likelihood the price goes up and the opposite is likely true. The three things that we can do, we are doing: improving the financial performance of the company; setting ourselves up for a successful long-term growth; and then lastly, just communicate, communicate, communicate. The more we inform you, the more we answer your questions, the more we spend time like this, the better you're informed and then you can decide if you believe in the management team, do you believe in the market and do you believe in the technology and either decide to hold your shares, buy more shares or decide you'd rather sell them. And that will have a direct impact on the price. So this is not a -- just a Knightscope team on their own is going to turn this around. We're going to need the active support of our investors, and supporters, and fans and the like to make this a success. But again, this is a kind of a two-way street. It's not just us. And we are working very hard to do our part. Stacy Stephens: All right. Next up, can you describe the background of your sales force? William Li: So our Head of Sales, Jason Gonzalez, has been with us now six years. He's ex-Honeywell. He's the COO of a guarding company. We've got folks that have spent almost their entire career selling K1 kind of Blue Light Tower stuff. Most of the folks on the team, in some form or fashion, have law enforcement, security or military veteran background. I think on the K1B side-- Stacy Stephens: Bill, sorry, as well as technology. William Li: Yeah, obviously, and as well as technology. I think on the K1B side, the sales process is a lot more straightforward, I don't know, I'd say commodity-like. But the transaction is easier, the implementation sometimes is a little bit of a project. The ASR side of things does require a very technologically astute salesperson that also understands public safety, law enforcement and security. The complexities of the technology and the questions you get from clients and where it's applicable and a lot is somewhat an intense process. And having personally sold a few of these, it can be a bit challenging. Stacy Stephens: How does Knightscope plan to help mitigate the risk of school shootings? Love that one. William Li: So I think there's two answers. One, more technically focused and then the other one is cash or budgets. So the technology side of things, I think you need to provide more of a deterrence. Putting up a camera somewhere above your head is not going to deter anybody from doing anything. So that's why the robots can be very important, doing automated gunshot detection, adding visible weapon detection in the future and treating that school, I like to think like, more like a data center, in my view. Only the people authorized should be there, meaning the parents, the faculty and the students. Anyone else should be flagged. And there's technologies to be able to do that both outdoors and indoors. I think my bigger concern, especially K-12, put the universities aside, is the budgets. I mean, to be frank, we as a country don't pay our schools, our teachers anywhere near what they're actually contributing to society. And in a lot of cases, the teachers themselves are covering for school supplies and all kinds of needs that the students have. And where exactly is that school supposed to come up with a six-figure or seven-figure budget to now properly harden and secure the facility? So I think there's a fundamental budget problem, both a budget problem and a technical solution. And I think as Knightscope grows at some point in time, not now, we're going to need to spend some time in Washington, D.C. and speaking to Congress. And there's no way the, I forgot how many it is, 22,000 schools are going to fend for themselves and figure this out by themselves. I think that private schools might be a little bit different, but budget is a huge, huge problem. Stacy Stephens: Also the fact that many cities are not enforcing and prosecuting criminal activities, i.e., shoplifting, et cetera, impacting the sale of the robots? So I'll speak from a law enforcement standpoint -- William Li: Stacy, I think you need to answer this one because I'm going to lose my temper. Stacy Stephens: I'll speak from a law enforcement standpoint for a moment on that. First and foremost, the number of cities that are doing that are very, very, very small in the grand scheme of things. Secondly, we've not seen an impact primarily because our focus on end users, the primary is not law enforcement. They are secondary, tertiary as far as the targets are concerned for many of the same reasons as the schools that Bill just mentioned a moment ago. So we're not seeing a lot of that, but what we are seeing are private companies taking the security more seriously now and being more proactive about how they are able to collect information and deliver that information to law enforcement professionals so that we have, we, law enforcement, have better tools to investigate those crimes and prosecute them when able to do so. So we've not seen that impact, and I haven't -- I'm still obviously very close to the sales process and everything that's going on there. But I've not seen anybody say, well, this is not important. It's quite the opposite. Anything to add, Bill? Okay. How do we get the t-shirt that you're wearing in the video? William Li: That one I made personally for our internal -- for our employees. So that one's not in the store. But if you're interested in getting some swag, go to Knightscope.com and just hit the swag button. There's a bunch of stuff there. And at some point in time, we'll put up some new stuff as well. And I think about maybe seeing if we can add that one, Stacy. Stacy Stephens: What efficiencies are being implemented in Q3 to reduce cost and improve earnings per share? William Li: Executing all the stuff that was in the video. We don't want to keep hammering the same thing over and over again, but with massive change in telecommunications and what does that mean. Okay. Well, imagine you had 4 cell phones. And you wanted to live-stream high-definition video of YouTube kind of 24/7. Your -- the bill you're going to get from Verizon or T-Mobile or Sprint or whoever is going to be rather large at the end of the month. So we go through terabytes of data a year, a month actually. And we made a ton of significant technical changes and contractual changes that are going to go literally straight to the bottom line. There's some head count impacts that will start hitting. There are some throughput QA type of things and kind of reduction in cost. In a lot of cases, it's not always the bill of material that is important, like how much does it cost to build the machine or the labor hours. But remember, these things are running 24/7. And the field service work, the maintenance and service, the parts, the shipping parts, if stuff is breaking like it costs a lot of money. And that was a huge driver for why we wanted to retire the K5 v3 some time ago because it was costing a lot of money to build, it's taking too long to build. And by the way, when it's out in the field, it's kind of eating up a lot of the team's time, back to someone's question on how the heck are you going to go work on new stuff, and needing a lot of money. So we're still in transition, right? We retired well over 50% of the v3. There's still more to go. So I think that will also go -- end up going to the bottom line. Apoorv, anything else you want to add? Apoorv Dwivedi: Yeah. I mean I think, obviously -- or somebody mentioned this, right? We're taking a multi-pronged approach. And I think Bill had put together a 2024 path to profitability, which I think would be a great framework for you guys to look at on what we're trying to do. If you think about it, we need top line growth that's going to continue to happen as we invest in sales and invest in our products and invest in our -- the suite of product designs and product development that we're working in. Simultaneously, we have to cut costs. It still costs us quite a bit to build these things because we're doing it by hand, because we're doing it at low scale. So changing that out and as we continue to start investing in that scale, we'll start to increase our margins, and those margins will then help drive some of that path to profitability. Finally, becoming more efficient on the OpEx side, right? I think we did a really good job, Bill, of cutting our head count and our expenses down. If you look at just the second quarter, I think we saved over, I think, $0.5 million in just cost where we thought it was a good idea to do so. And we'll continue to evaluate those. So again, it's both. You've got to grow your top line and you got to decrease your cost and you've got to run lean, and we'll continue to hit on those fronts while introducing products that we think are going to be successful in this industry. William Li: Yeah. And I was just glancing on one of the questions earlier, some folks are worried that we might have terminated folks that spent a lot of time with us during innovation week. I think from memory, I don't think anyone that was on camera has left the team. So everyone is kind of waking up every morning, putting their heart and soul into the company and taking all the inbound beatings that we get. I don't think you'd probably want to see my inbox. I can take the criticisms and all that. I don't appreciate the death threats. I can pass on those. But we are working genuinely very hard to make this a big success. It will take some time. We do have a path. We are not going to run out of money. And we're doing an honorable thing for the country, and this will work out. It's just going to take a little bit of time to get a very difficult set of technologies to work at scale now that we've got them working in low volume. Stacy Stephens: What do -- what's your IP or patents deck? William Li: We've got maybe a dozen patents. I'm not a huge fan of patents. This is not a pharmaceutical industry where your recipe is like the most important thing and you're going to protect it for 17 years. Like, the technology changes so fast. When we first started, I often say we had one Intel i7 or i8 in the CPU, in the machine, we're like, How the heck are we going to use all this stuff? And now we don't have enough compute, and we've got like 2 NVIDIA GPUs, a CPU, and we're wanting to add more capability. And in a lot of cases, the technology changes so fast, it's not really worth spending staff time, legal time to go get a large portfolio of IP -- or patents rather. Could we have patented probably 100 items? Sure, not a good use of shareholder money. Stacy Stephens: I'm surprised we still get this question. How do you plan to incorporate AI into your business? Sorry, not poking fun at the question, it's a legitimate question. But I just don't think people realize how much is already there. William Li: Yeah. I think maybe there's a different way to answer the question. So there's a ton of AI just to get the machines to do what they do today, right? They move on their own. They're replanning. They're remapping. They autonomously recharge on their own. There's no one sitting around remote controlling them. So this is the automotive equivalent of Level 5 completely hands off. So there's a ton of AI to be able to do that. It requires AI and machine learning to detect a license plate and then read the license plate. It takes AI to detect a person. It takes AI to do facial recognition, for example. If you're speaking of generative AI, I think now that -- I think there still needs some work on telecom speeds and the speeds of the LLMs, but I think enabling the machines to be able to have a thoughtful, relevant conversation with someone would be something that's certainly on our road map where instead of just a button or just looking for an alert or something, you can actually have a conversation with the machine. And that could be a citizen out in the wild, out in public somewhere, or could be internally for us, for our own risk and threat exposure people to have a dialogue with the next future version of a user interface where instead of typing away what we're looking for in an investigation is to be able to do that real time via speech. So there's a ton of opportunities. But yeah, I think for

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Knightscope, Inc. (KSCP) Announces Strong Q1 2025 Financial Results

Knightscope, Inc. (NASDAQ: KSCP) Delivers Strong Q1 2025 Results

Earnings Per Share (EPS) of -$1.28, beating the estimated loss of $1.47.
Revenue of $2.92 million, surpassing estimates of $2.49 million with 29% year-over-year growth.
Gross loss improved to $700,000, with a negative gross margin of -34.2%; net loss narrowed to $6.9 million.

Knightscope, Inc. (NASDAQ: KSCP), a leader in autonomous security robots and AI-powered technologies, develops solutions to enhance public safety across sectors like commercial real estate, universities, and municipalities. Competing with firms like Iveda Solutions and Evolv Technologies, Knightscope’s innovative robots, such as the K5 and K1, provide real-time monitoring and incident detection. On May 14, 2025, the company announced its Q1 2025 financial results, with CEO William Santana Li and CFO Apoorv Dwivedi highlighting operational progress during a conference call.

Knightscope reported a quarterly loss of $1.28 per share, outperforming the Zacks Consensus Estimate of a $1.47 loss and improving from a $4.00 loss per share in Q1 2024. Revenue reached $2.92 million, a 29% increase from $2.25 million the prior year, exceeding the consensus estimate of $2.49 million. The growth was driven by a 25% rise in service revenue ($2.1 million) and a 44% increase in product revenue ($809,000).

Over the past four quarters, Knightscope has surpassed EPS estimates twice and revenue estimates twice, signaling consistent improvement.

The company reduced its gross loss to $700,000 from $1.4 million, though the gross margin remained negative at -34.2%, reflecting ongoing profitability challenges. The net loss narrowed by 9% to $6.9 million from $7.6 million, supported by a 9% reduction in operating expenses to $6.2 million. Investments in the next-generation K5 v5 platform and a new 33,000-square-foot headquarters in Sunnyvale, California, underscore Knightscope’s focus on long-term growth.