Knightscope, Inc. Q3 FY2023 earnings call

• Revenue growth: Net revenue for the nine months ending September 2023 was $9.8 million, a significant increase from $3.3 million in 2022, with an annual revenue run rate of ~$13 million.
• Backlog details: As of October 29, 2023, total backlog was $4.1 million, with $2.4 million from ASRS and $1.7 million from K1B products; backlog reduction efforts noted with K1B backlog decreasing by $1.1 million.
• Product releases: The K1 hemisphere and fifth-generation K5 ASR were released for commercial production, with first units shipping out at the end of September 2023.
• Bond offering: Launched a public safety infrastructure bond offering, with rolling closings on a monthly basis and initial closing completed; bonds at $1,000 per bond with 10% interest for up to five years.
• Profitability roadmap: Focus on scaling the business efficiently, optimizing pricing strategy, reducing variable costs, and scrubbing discretionary operating expenses to achieve profitability.
• Autonomous robots: Autonomous security robots deployed fully autonomously, with over $2.5 million hours in the field generating revenue, and continued expansion with new clients nationwide.
• Robot Roadshow: Over 100 stops across the country, with information available at knightscope.com/roadshow.

For the nine months ending September 30th, 2023, Knightscope booked approximately $9.8 million in net revenue, which is almost triple the $3.3 million booked in 2022 over the same period, putting the company on an approximately $13 million annual revenue run rate. As of October 29th, 2023, the total backlog was approximately $4.1 million, with $2.4 million related to autonomous security robots (ASRS) and $1.7 million related to K1B products (including K1 blue light towers, ePhone, and call boxes). Compared to the backlog of $4.9 million as of July 30th, 2023, the backlog has changed with ASRS backlog increasing slightly by $0.3 million and K1B backlog decreasing by approximately $1.1 million. The gross loss for the first nine months of 2022 was $2.1 million, improving to a small loss of just $154,000 in 2023. On a per-share basis, the loss improved from $0.40 per common share in 2022 to $0.26 per common share in 2023.

• Focus on scaling the business with efficient processes to cover fixed costs.
• Optimize pricing strategy to account for inflation and costs, including encouraging clients to switch to private LTE solutions.
• Reduce variable costs by redesigning parts, subsystems, processes, and scrutinizing supplier selection to lower bill of material costs and service/maintenance costs.
• Scrub discretionary operating expenses while weighing investments in new tools to improve efficiencies, with these efforts ongoing into 2024 towards profitability.

• Challenges in perfecting autonomous and self-driving technologies: Acknowledged that perfecting such technologies is a challenge for many, but Knightscope is proud of its fully autonomous deployed security robots providing 24/7, 365 services across the country.