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DUOT
Earnings call · Jun 2026 (Q2 FY26)

DUOS TECHNOLOGIES GROUP Q2 FY26 earnings call DUOT

Aug 17, 2026 Source

Executive summary

Duos Technologies Q2 FY26 — Strategic Pivot Complete with Strong AI Infrastructure Growth and Strengthened Balance Sheet

Duos Technologies has successfully completed its strategic transformation, divesting its legacy rail business and monetizing its APR Energy stake to become a focused AI infrastructure and edge data center company. The quarter saw significant contract wins, including a major expansion with Axe Compute, substantially strengthening the balance sheet and positioning the company for accelerated growth in recurring revenue streams. Management is now focused on execution and scaling its modular data center deployments.

Highlights

5

  • Completed divestiture of Rail business, streamlining focus to AI infrastructure.

  • Received $50.4 million cash from APR Energy stake sale, generating a $53.2 million gain and strengthening cash position to $112.3 million.

  • Signed 5-year colocation agreement with Axe Compute for 55 MW, valued at over $500 million in contracted revenue, in addition to an initial 10 MW deal.

  • Achieved positive Adjusted EBITDA of $0.5 million in Q2 FY26, ahead of plan.

  • Operating cash flow from continuing operations was positive $11.9 million for the first half, a $20 million swing YoY.

Concerns

2

  • Loss from operations for the 6 months was $3.13 million, reflecting first-quarter investment ahead of revenue ramp.

  • AMA revenue declined $4.2 million in the first half due to wind-down, impacting total revenue.

Guidance & targets

CategoryTargetConfidence
Total revenue
exceed $50 million
high materiality
High
Adjusted EBITDA
$8 million to $10 million
high materiality
High
Annualized Recurring Revenue (ARR) exit run rate
in excess of $70 million
high materiality
High
Total revenues
at least $160 million
high materiality
Medium
Adjusted EBITDA margins
expand very significantly
high materiality
Medium
Contracted capacity deployment
approximately 25 megawatts
medium materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Technology Solutions
Contributed $3.23 million in Q2 2026, compared to $0 in Q2 2025. Backlog increased to $25 million, demonstrating continued demand for services from enterprise, contractors, data center operators, and AI infrastructure players. This business generates revenue with relatively low capital requirements and supports the company's own infrastructure deployments.
Backlog: $25 million
$3.23 million———
Duos Edge AI (Colocation/Hosting/GPU-as-a-Service)
The initial 10 MW colocation agreement with Axe Compute is expected to become operational in Q4 2026. An additional 55 MW expansion with Axe Compute was announced, bringing total contracted capacity with Axe to 65 MW. The Nistar agreement for 2 MW is progressing. HydraHost deployment activities and customer onboarding are also advancing, with revenue recognition expected to increase as systems become operational. The company's goal for 2026 is to deploy approximately 25 MW of capacity.
Contracted capacity (Axe Compute initial): 10 MWContracted capacity (Axe Compute expansion): 55 MWContracted capacity (Nistar): 2 MWTotal contracted capacity: >75 MW
————

Orderbook & backlog

Technology Solutions backlog $25 million Q2 FY26

Increased during the quarter.

Total bookings $43.5 million Q2 FY26

Expected to be recognized during FY26, including contracted backlog and near-term anticipated awards.

Contracted revenue (Axe Compute 10 MW) more than $111 million Q2 FY26

Over initial 5-year term, expected to become operational during Q4 2026.

Contracted revenue (Axe Compute 55 MW expansion) more than $500 million Q2 FY26

Aggregate base payments over initial 5-year term. Initial project readiness targeted late 2026/early 2027.

Zero Latency opportunity up to 15 sites, 225 cabinets Q2 FY26

Non-binding term sheet for a 10-year deal.

Deals & partnerships

Duos Technologies, Inc. (Rail business) Sale of legacy rail business

Sale completed on August 5, 2026. Duos Technologies, Inc. is now an independent privately held company operating under the Duos TI brand.

New APR Energy Sale of 5% stake in APR parent company $60 million

New APR Energy sold substantially all of its assets in May, crystallizing the value of Duos' 5% interest.

Axe Compute, Inc. 5-year colocation agreement for critical IT load capacity more than $111 million 5 years

Initial agreement to provide 10 megawatts of critical IT load capacity at Duos' Columbus, Georgia campus.

Axe Compute, Inc. Expansion of AI data center capacity and joint ownership more than $500 million 5 years

New service orders adding up to 55 megawatts of AI data center capacity across multiple U.S. locations. Initial project readiness targeted late 2026 and early 2027.

0LAT (Zero Latency company) Opportunity for colocation services 10 years

Covering up to 15 sites and 225 cabinets, representing a bare metal provider looking for lower power density cabinets.

Nistar Colocation agreement for contracted capacity

Represents approximately 2 megawatts of contracted capacity, validating Duos' edge data center platform.

HydraHost Deployment activities and customer onboarding

Deployment remains a significant opportunity and cornerstone of growth strategy, with meaningful expansion opportunities beyond initial deployment.

Capital programs

Columbus, Georgia data center acquisition closed $30 million
Funding: $15 million cash, $15 million zero-coupon seller note
Start: subsequent to Q2 FY26

Acquisition completed subsequent to quarter end. Seller note repaid only as incremental power is delivered to the site.

Axe Compute Joint Venture announced
Funding: up to $140 million cash equity investment by Axe Compute
Start: Q2 FY26

Benefit:55 MW AI data center capacity

Axe Compute will make cash equity investments of up to $140 million in the project, subject to approvals and financing. Duos will hold 51% ownership, providing a non-dilutive financing model.

Risks & headwinds

AMA revenue wind-down H1 FY26

$4.2 million decline in H1 FY26

Mitigation:Shift of revenue base towards higher-margin technology solutions and infrastructure services.

Increased operating expenses in H1 FY26 H1 FY26

$7.63 million in H1 FY26 vs $5.11 million in H1 FY25

Mitigation:Costs were one-time in nature, due to deliberate investment, growth hiring, public company costs, and stock-based compensation ahead of H2 revenue ramp. Expect OpEx growth to be muted going forward.

What to watch in Q3 FY26

GPU-as-a-Service revenue ramp

H2 FY26
Current Just beginning to build
Target Approximately $26 million contribution in H2 FY26

Why it matters

This is the primary driver for achieving full-year revenue targets and expanding profitability.

Our GPU-as-a-Service business is the primary driver, which we expect to contribute approximately $26 million as the deployment comes online and utilization ramps in the second half.

Q&A highlights

Clarification on whether the 55 MW Axe Compute deal is incremental to the previous 10 MW, and if it refers to IT load or gross capacity.

Doug Recker confirmed the 55 MW is gross capacity and is incremental to the initial 10 MW, bringing the total with Axe Compute to 65 MW.

“Yes, that's gross. The 55 megawatt is gross. So that's in addition to the 10 meg that we already signed. So the 10 meg that's being deployed in Georgia, then you have another 50 megawatts plus contracted recently, actually this week.”

asked by Brett Knoblauch · answered by Doug Recker

2 min read 5 chapters

Detailed narrative

Strategic Repositioning and Balance Sheet Strengthening

Duos Technologies completed its strategic repositioning by divesting its legacy Rail business on August 5, 2026, and selling its 5% stake in APR Energy, which yielded $50.4 million in cash and a $53.2 million gain. This transition allows the company to focus entirely on scaling its Duos Edge AI and Technology Solutions platforms, significantly strengthening its balance sheet with $112.3 million in cash and $207.4 million in stockholders' equity, and becoming effectively debt-free.

Expanded Axe Compute Partnership and Joint Venture

Building on an initial 10 MW colocation agreement, Duos and Axe Compute announced an expansion for an additional 55 MW of AI data center capacity across multiple U.S. locations under a 5-year agreement, representing over $500 million in aggregate base payments. Axe Compute will also make cash equity investments of up to $140 million in the project, with Duos holding a 51% joint ownership in the new data centers, providing a non-dilutive financing model.

Technology Solutions Business Growth

The Technology Solutions business generated $3.23 million in revenue during Q2 FY26, a significant increase from zero in the prior year, with backlog increasing to $25 million. This segment provides critical equipment and services for data center deployments, offering revenue with relatively low capital requirements and supporting the company's own infrastructure build-out. The company emphasizes its ability to navigate supply constraints and meet demand in a booming industry.

Edge Data Center Deployment Strategy and Differentiators

Duos is executing a nationwide deployment strategy, targeting approximately 25 MW of capacity in 2026. The company focuses on Tier 3 and Tier 4 markets with 'stranded power' and existing transmission infrastructure, allowing for rapid deployment. For example, the Columbus facility saw 7 MW of new infrastructure installed in under 60 days. Key differentiators include modular deployment expertise and a patented 'clean room' technology, crucial for sensitive GPU environments.

HydraHost and Nistar Project Progress

Deployment activities and customer onboarding for HydraHost are progressing, with revenue recognition expected to increase as systems become operational and GPU capacity is placed into service. The Nistar agreement, representing 2 MW of contracted capacity, is also on track, expected to contribute recurring colocation revenue. These projects, alongside the Axe Compute deals, validate Duos' edge data center strategy and support future growth in recurring infrastructure revenue.

AI-generated summary of the company's earnings call. Not investment advice.