What is the appetite for additional M&A, what criteria are used, and is incremental revenue the priority?

William Li outlined three M&A buckets: bolt-on acquisitions for the Security Force (targeting 8,000 guarding firms, many with retiring owners), remote monitoring companies (highly synergistic, cash-flowing, with client bases), and technology assets (algorithms, sensors, teams) from failed Silicon Valley startups. The priority is to build the most powerful ASF offering to fix client problems, with revenue growth being a natural outcome of strategic acquisitions that enhance capabilities. “I think it probably sits in three buckets. The first bucket, there's probably -- somebody is going to do the research here, but plus or minus maybe 8,000 guarding firms in the U.S., plus or minus, maybe 6,000 have more than 100 employees, I believe most of them owned by boomers that are retiring.”

Can you provide perspective on client retention and renewals among the legacy Security Force client base?

William Li stated that the Security Force rarely lost a client, often firing clients instead, indicating strong retention. With 434+ clients across 42 states, the focus is on leveraging existing relationships, as the top 5 clients alone represent about $850 million in security spend. The company aims to expand within its current client base by offering technology solutions and cross-selling, seeing this as a unique opportunity to build a managed service provider for physical security. “I'm sure this is not 100% accurate, but one of the reasons we made the acquisition was very rarely to 0 have the Security Force lost the client. They may have fired a client, which is different. But the retention has been really strong there, I think, one.”

Can you expand on the meaningful synergies from the Security Force acquisition?

William Li highlighted three types of synergies: financial (triple-digit revenue growth), cross-selling (offering technology to Security Force clients and human agents to existing tech clients), and cultural. The cultural synergy involves blending the disciplined 'command and control' approach of the Security Force with the innovative 'Silicon Valley' mindset of Knightscope's original tech side, aiming for a 2/3 command and control, 1/3 innovation balance. Apoorv added that shared services integration (finance, HR) also drives OpEx synergies. “So in terms of the synergies, there's 434 clients. So you might imagine a large portfolio of nationwide blue-chip clients that have only had Security Force kind of footprint, I guess, pun intended, and no technology. So there's a significant opportunity for -- we already landed. Let's go expand and be very thoughtful about, okay, please tell us what issues you're having, not by generalities, that particular address in that particular location, what incidents have you had?”

KSCP

Knightscope (KSCP) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Industrials· Aug 12, 2026

Source: earnings call transcript

Executive summary

Knightscope Q2 FY26 — Record Revenue and Strategic Integration

Knightscope delivered a record-breaking Q2 FY26, driven by significant revenue growth and the successful integration of its Security Force acquisition, which also contributed to positive gross margins. The company is focused on leveraging its unique hardware, software, and human-agent model to address client needs in the security market, with ongoing product development and strategic M&A efforts aimed at long-term scale and profitability. Management reiterated its commitment to continuous quarterly improvement.

Highlights

Revenue reached a new quarterly record of $9 million, up more than 200% year-over-year from $2.7 million in Q2 2025.
Achieved second consecutive quarter of positive gross margin at 7% ($0.7 million), compared to a gross loss of $0.9 million in the prior year.
Successfully integrated the Security Force acquisition, contributing to revenue growth and margin expansion.
Reduced assembly time for one product line by almost 80% through efficiency improvements.
K7 autonomous security robot passed Alpha Prototype gate review, on track for initial deployments in Q4 2026.

Concerns

Net loss for the quarter was $14.1 million, an increase from $6.3 million in Q2 2025.
Net loss per share was $0.79, compared to $0.90 per share in the prior year period, despite higher revenue.
Operating expenses increased to $13.8 million from $5.4 million in Q2 2025, driven by R&D and headcount investments.
Approximately $1 million in other expenses related to the change in fair value of contingent consideration from the recent acquisition.

Guidance & targets

Category	Target	Timeline	Confidence
Quarterly Financial Performance	Each quarter better than the last high materiality	Ongoing	High
K7 Autonomous Security Robot Deployments	Initial deployments high materiality	Q4 · FY26	High
Autonomous Security Force Launch	Official launch high materiality	September 2026 · FY26	High
Signals Platform Launch	Initial launch high materiality	H2 FY26	High
Financial Performance (H2 FY26)	Same thing you've seen in the last 2 quarters high materiality	H2 FY26	High

Product announcements

Product	Type	Timeline
H1 wearable	roadmap	shortly
K7 Autonomous Security Robot	milestone	Q4 2026 (initial deployments)
Signals platform	launch	initial launch in H2 FY26

Deals & partnerships

Security Force Acquisition of a guarding firm, now known as Knightscope's Security Force.

This was Knightscope's second acquisition as a public company. Integration is proceeding as planned, with collaboration on new products like the H1 wearable. The acquisition strengthens the company's managed service offering by combining hardware, software, and humans.

Carnegie Mellon University Partnership for autonomous patrol technology development.

Knightscope announced a partnership with Carnegie Mellon University, a top robotics institution. Their graduate robotics program is now working directly on autonomous patrol technology under the guidance of Knightscope's engineering team.

Risks & headwinds

Increased Operating Expenses Q2 FY26

Operating expenses were $13.8 million, up from $5.4 million in Q2 2025.

Mitigation:Investments in R&D and headcount are expected to drive future growth and product development. The acquisition improved operating leverage by adding higher-margin revenue and leveraging existing infrastructure.

Higher Net Loss Q2 FY26

Net loss for the quarter was $14.1 million, compared with $6.3 million in Q2 2025.

Mitigation:The increase was primarily due to higher OpEx and $1 million in other expenses related to contingent consideration. Management expects benefits from the acquisition and new product development to strengthen the financial profile.

Contingent Consideration Expense Q2 FY26

Approximately $1 million in other expenses related to the change in fair value of the contingent consideration (earn-out) due to the seller of the recent acquisition.

Mitigation:This is a non-recurring item related to the acquisition's earn-out structure. The acquisition itself is immediately accretive and contributes to margin expansion.

Market Perception and Stock Price Ongoing

Despite triple-digit growth and strategic advancements, the stock price has not yet reflected the company's progress.

Mitigation:Management's strategy is to continue improving financial performance, grow the company, and communicate effectively. They believe the market will eventually recognize the value as numbers are consistently delivered.

What to watch in Q3 FY26

K7 Autonomous Security Robot Deployments

Q4 FY26

Current Passed Alpha Prototype gate review, moving to Beta Prototype phase

Target Initial deployments in the field

Why it matters

Successful deployment of the K7 will validate new product development and expand the company's autonomous robot offerings, driving future revenue.

The K7, our all-new autonomous security robot, passed its Alpha Prototype gate review, and we remain on track for initial deployments in the fourth quarter of 2026 as we move into the Beta Prototype phase.

Find out whether KSCP delivers this. Inve re-checks your case every morning.

Q&A highlights

Why is the blended ASF contract more profitable per client than a stand-alone robot lease, and what are the unit economics?

William Li explained that the ASF bundles humans and technology to solve client problems holistically, rather than optimizing for discrete items. While traditional guarding has 10%-20% gross margins and software can reach 67%-80%, the blended ASF model aims for 50%-65% gross margins over a 5-year period for long-standing clients. The focus is on deterring, detecting, responding, learning, and improving algorithms to provide effective outcomes, which ultimately drives profitability.

“The Jedi mind trick is to be able to land with what a Chief Security Officer would [Technical Difficulty] today, which are licensed armed and unarmed agents, and then over time, become that trusted adviser, hey, we've operated at your facility for quite some time now. I wouldn't really stretch the staff that way. You might want to consider based on the data that we have. You might want to shuffle some things around and add some technology, maybe pay the team more appropriately.”

asked by Apoorv Dwivedi · answered by William Li

2 min read 6 chapters

Detailed narrative

Record Revenue Growth and Margin Expansion

Knightscope achieved record revenue of $9 million in Q2 FY26, marking a 228% year-over-year increase from $2.7 million in Q2 FY25. This follows a 106% YoY revenue growth in Q1 FY26, demonstrating two consecutive quarters of triple-digit growth. The company also reported its second consecutive quarter of positive gross margin at 7% ($0.7 million), a significant improvement from a gross loss of $0.9 million in the prior year, driven by the Security Force acquisition and efficiencies in technology product lines.

Strategic Acquisition and Integration

The integration of the Security Force acquisition is proceeding as planned, with teams collaborating on new product development like the H1 wearable. This acquisition is the company's second as a public entity and has been immediately accretive, adding higher-margin revenue and leveraging existing operating infrastructure.

Management emphasized that the acquisition strengthens Knightscope's differentiation through the unique combination of hardware, software, and humans delivered as a managed service.

Product Development and Innovation

Significant progress was made on new product development, including the K7 autonomous security robot, which passed its Alpha Prototype gate review and is slated for initial deployments in Q4 FY26. The company also announced a partnership with Carnegie Mellon University for autonomous patrol technology.

Work is underway on the 'Signals' platform, an industry-first software designed to orchestrate robots, stationary devices, sensors, augmented security agents, and remote monitoring with 3D digital twin technology and AI agents.

Brand Positioning and Market Strategy

Knightscope is sharpening its positioning as a managed service provider, uniquely combining hardware, software, and humans to build the nation's first Autonomous Security Force. This message resonated with institutional investors and will be officially launched at GSX 2026 in September.

The company aims to solve client problems by offering a holistic security solution, moving beyond selling discrete 'widgets' to focus on positive outcomes and improved quality.

M&A Strategy and Synergies

The company's M&A strategy focuses on three buckets: bolt-on acquisitions for the Security Force, synergistic remote monitoring companies, and technology assets from failed startups. The Security Force acquisition brought significant financial synergies, including triple-digit revenue growth and cross-selling opportunities to 434 existing clients.

Cultural integration is also a key synergy, blending the disciplined approach of the Security Force with the innovative spirit of Silicon Valley to create a more effective operating model.

Client Retention and Expansion Opportunities

Client retention for the legacy Security Force client base has been strong, with very few client losses. Knightscope now serves 434 clients across 42 states. Management views existing clients as the 'easiest sale' and is focused on leveraging this base for expansion, estimating the total annual security spend of these clients to be between $3 billion and $6 billion.

The strategy involves understanding specific client issues to offer tailored technology solutions and cross-sell services.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.