SKYX Platforms Corp. (SKYX) Earnings Call Transcript

Good afternoon and welcome to SkyX Platforms Corp. Third Quarter Earnings Conference Call. Before we begin, I would like to remind everyone that during today's call, management may make forward-looking statements within the meaning of the federal security laws. These statements are based on current expectations and assumptions and involve risk and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. For a discussion of these risks and uncertainties, please refer to SkyX Platforms Corp.'s filings with the Securities and Exchange Commission. The company undertakes no obligation to update any forward-looking statements except as required by law. During today's call, management may also discuss certain non-GAAP financial measures where applicable. Reconciliations to the most directly comparable GAAP measures can be found in the company's earnings release and SEC filings. I would now like to turn the call over to Ronnie Kohen, founder and executive chairman of SkyX Platforms. Ronnie, please go ahead. Thank you.

Good afternoon. Welcome to our third quarter earnings call. Today, we have here our president, Steve Schmidt, our CEO, Lenny Sokolow, and Derek Richardson, CEO of Deako and SkyX Growth and Builder segment, Builder and Hotel segment, and each one of them, including myself, will have a statement. Steve Schmidt will start the call. Thank you. Ronnie, thank you very much, and good afternoon to everyone. As you will hear today, we are significantly advancing and continuing our market penetration growth. Before I go through some growth and financial improvement highlights, I'd like to say the following. Through my business career, I was involved with many public companies, including my CEO role at Nielsen and international president of Office Depot. But I must say, there is a total disconnect right now between our performance as a company and our stock price. With that said, as you will see, our growth and performance is outstanding since we have closed our merger with Deako as well as prior months. With that said, let me share some business highlights. We're reporting record revenue of $25.7 million in Q3 2026, compared to $23.9 million in Q3 2025, and 11 consecutive quarters of growth year on year. Gross profit rose in Q3 by 11% to a record $8.1 million as we continue to expand our market penetration. We maintain a strong cash position with $21 million in cash, cash equivalents, and restricted cash as of September 30, 2026. We believe we have sufficient cash to support our path to cash flow positive. The SkyX-Deako merger expands the builder channel pipeline to approximately 4 million units with an expected average selling price of $50 per product over the next three to four years. Since the merger, SkyX and Deako have announced we expect to supply more than 210,000 units to three prominent builders, including, first, Maronda Homes. We announced our first major builder program with more than 80,000 units of our smart home technologies to more than 1,000 homes, including projects in Ohio, Georgia, Maryland, and Pennsylvania. Second, Home Creations. We announced the second major builder program with more than 60,000 units expected for more than 700 homes in Oklahoma and Texas. Third, Stone Martin Builders. We announced a third builder program with approximately 70,000 units expected for more than 850 homes in Alabama and Georgia. We have also announced a signed agreement to supply our technologies to two 65-story luxury Trump Towers in Hyderabad, India, comprising more than 2.1 million square feet. The company expects to deploy tens of thousands of units in this project over the next couple of years. Lastly, on the business highlight side, our TurboHeater ceiling fan: we've reported that based on growing sales and winter demand of our patented all-in-one TurboHeater ceiling fan, we will launch an additional four models in larger and smaller sizes and in five different colors in addition to our original 24-inch model across national retailers and our e-commerce platform comprised of multiple websites in the fourth quarter. The retail channel includes The Home Depot, Lowe's, Target, Walmart, and Amazon. A lot of great things going on. So with that, let me turn the call over to Lenny Sokolow, our CEO, who will give you more clarity around our financials. Lenny?

Thank you very much, Steve. Appreciate it very much. And just again, really, I'm very pleased with what we had to report this quarter. Our revenue increased 7.4% to $25.7 million from $23.9 million in the third quarter of 2025. Our gross profit increased 11% to $8.1 million from $7.3 million in the second quarter of 2025. Our gross margin increased 9% to 31.4% compared to 28.9% in the second quarter of 2026. We had $21 million in cash, as Steve stated, in cash, cash equivalents, and restricted cash as of September 30, 2026, compared with $10 million on December 31, 2025. A majority of our company's inventory payments to vendors are paid after the company receives payments from its customers, continuing to leverage its rapid conversion of its e-commerce sales into cash, advancing its cash position using the Dell working capital model and lowering our cost of capital. Net cash used in operating activities decreased by 15.5% to $4.2 million from $5 million in the third quarter of 2025. Again, management believes it has sufficient cash to support its path to cash flow positive. Interest-bearing debt, which is after debt discounts, decreased $3.6 million to $14.7 million, which matures in 2030, from $18.3 million at year end. Adjusted EBITDA loss, which is a non-GAAP measure, decreased 18.7% to $2.9 million from $3.5 million in the second quarter of 2026. And adjusted EBITDA loss per share, a non-GAAP measure, decreased to $0.02 compared to $0.03 in the second quarter of 2026. And with that... Ronnie? Yes. We will in one minute transfer it to Derek. And I would like to say that, you know, since we have closed the merger, we have a lot of interest from major companies, both in the tech world and in the building world, that see eye-to-eye with us on our A-to-Z capability to control the electrical outlet boxes in every home. As we said before, we're going to be the only company that has an A-to-Z solution for all those boxes in the home. The average boxes today in the U.S. market are around 90 outlet boxes, electrical wall outlets, and ceiling outlets in a home. There's no one company today in the world that has the complete solution for all of those 90 boxes. Usually, it's three to four companies. We're the only company that has the A-to-Z solution for all of those electrical outlet boxes. And all our competitors that need to be three or four companies have a wired solution. It would take them weeks to do what we can do with ours. And with that being said, we're already experiencing with Derek's leadership a lot of interest in our products and to this A-to-Z solution, and we are also working on some strategic relationships with major tech companies, as well as other builders that we hope to be able to talk about sometime soon. Actually, Derek Richardson is leading one of those discussions with a major player that sees the opportunity to join what Deako and SkyX are doing in the builder market and to be part of it. So we hope we can talk about this more. With that being said, I want to give Derek a lot of credit on his ability to penetrate the builder market and show the value proposition that Deako brings to the table and now on the plug-and-play concept that is a platform that can grow to much more once you install the wall switches with the same concept of the ceiling, the same builders that liked his concept a lot doing a great job introducing it to the market with our product. We strongly believe here all of us with Derek's leadership that there's a potential of increasing a home revenue from what Deako had to up to 5x. So with that being said, I would like to please have Derek join us and give his overview and how he sees things and some background about Deako and what he's doing in the market and experiencing. Derek?

Thank you, Ronnie. Man, I'm so excited about this future of the combination of our two companies. As Ronnie said, I'm Derek Richardson. I'm the founder and CEO of Deako. I started Deako about 11 years ago. Before that, I led sales, product, and engineering teams at Cypress Semiconductor, and I began my career as an engineer at BlackBerry. In the next few minutes, I'd like to share what Deako does and why I'm so excited about this merger. Deako makes plug-and-play smart switches and simple light switches with matching USB, GFCI, and standard outlets for builders of new single-family homes. During construction, the builder's electrician installs a Deako connector at every light switch location in the home and plugs in a smart or a simple switch. Later, the homeowner can upgrade to additional smart switches, a simple dimmer, a motion sensor, or any of our other light switch products, and they can do this safely in seconds with no wiring and no electrician. We've shipped more than 32 million products in the past 11 years, and over the past year, we've extended our supply agreements with Stone Martin Builders, Maronda Homes, and America's largest single-family home builder, D.R. Horton. Builders choose Deako because we can easily transform homes to become smart, and we make installing and selling upgrades effortless. Every switch location is ready for an upgrade, so buyers can choose to upgrade to additional smart switches before or after they move in. And Deako and our builder partners make high margins on those upgrades. It's a classic razor-and-blade business model, same as SkyX. We sell the base when the home is built, and we earn each time the homeowner upgrades for the entire life of the home. SkyX runs the same model from the ceiling, and together we have far more to offer. Now with the SkyX-Deako merger complete, we're able to offer builders many more options, including the SkyPlug and outlet safety products, along with SkyX smart lighting fixtures, fans, including the SkyHeater fan, and many more products that are under development. I see a significant opportunity to bring SkyX's products to single-family builders. Together with SkyX and Deako's offerings and the new products we plan to add, we're going to be able to grow our revenue in each home to as much as five times what Deako is already earning. But what really excites me the most is the platform underneath. Deako's platform connector is in the wall; SkyX's platform is in the ceiling. Together they sit where power, control, and sensing naturally live in a home. And because it's all plug-and-play, we can offer almost anything through them, including delivering an intelligent home. Because, as we all know, AI is coming into the home. Today, most of us use AI in our phones and computers, but the next big move will be AI into the home itself. As the home becomes more intelligent, our vision for the intelligent home needs sensors, speakers, and other devices in every room in the house. Our connectors are already at every light switch and soon every light fixture in the home so new devices can plug in safely in seconds. We plan to play a big role in the AI intelligent home. There's much more to this story than we can even cover at this point, but I'm confident you'll be able to see it in the near future. Thank you, Ronnie, for the opportunity.

Thank you, Derek, and really great job what Derek's leadership is doing for us in so many aspects. And we really are not only excited about what Derek mentioned on penetrating the building market, but lifetime upgrades with upgrades for fashion or for better lights or better smart features. And remember that we're also part of our mission here that we are very confident we'll accomplish is as we have this A-to-Z solution, the next stage is going to be recurring revenues from AI services, monitoring, subscriptions, and security features that we are looking into down the road. So this is just the beginning. I ask everyone to stay tuned; there's a lot more to come. And we really feel that in the past, if you look at our press releases in the past 18 months, starting with the smart city in Miami, projects in Austin, Texas, and San Antonio and in North Carolina and New York, and in many other places, those projects we will take Deako with us to those projects as well, is what – like Derek is taking us, actually Derek is going to take us to our projects, too, because that's under his leadership, including in the smart city in Miami, and there's much more to come. So the model is the razor and the blade, okay? The razor starts with Deako's wall receptacles, SkyX's ceiling receptacles, then the blades are all the products, and there's a lot of products, Derek mentioned some of them, on the SkyX side and on the Deako side. There's much more to come in plug-and-play. Because once it's plug-and-play and it's replaceable within seconds, a consumer can do so many things that some of them we shared, some of them we did not. But that's the next play. It's after the razor. Those are the blades and much more to come. And after the blades, we have the residuals, the recurring revenues that we expect down the road to be a big factor in our business. So that's the big picture. We're progressing on many fronts, including with the mandatory code. We're proceeding with this. We hope to get some good development on several fronts, on hotels too. We're trying to become brand standard in more places. And the mandatory code and down the road, we really feel and have discussions with insurance companies that the safety aspects of everything we mentioned here – we talked about how good those features are, how easy it is to replace, okay? And everything we're doing, including Deako, is major in safety, preventing consumers from wiring wall outlets and us preventing consumers from wiring ceiling fixtures. The safety is big, and with all the safety features to come in the smart platform that we have and other things, we again emphasize that the insurance play can be quite significant for us down the road as well. So with that being said, thank you very much, and we'll open for questions here. Thank you.

[Operator Instructions] The first question comes from Jacob Stephan with Lake Street Capital. Please proceed.

Thanks for taking the questions. Congrats on the transaction and all the recent wins. Maybe just first on the B2B side of things, in August last quarter, you guys said that first builder hotel deliveries were going to begin in Q3. Just kind of curious if you could confirm that, and maybe if you wanted to talk more specifically on which projects have begun shipping, that'd be helpful.

Yes, we actually have shipped, I believe, to two projects already in Texas, Austin, Texas, and Dallas area already, and we are starting – hopefully starting to ship to a hotel this quarter. So we're beginning to ship, and that's you're asking from SkyX's perspective. Be aware that Deako is shipping their product consistently and every month before we acquired them and after the merger took place. So definitely the shipment department today after this merger is actually picking up a lot. So we're very happy in our progress on these fronts.

Okay, great. And maybe just on Deako, I know the transaction closed after the quarter, but would you be willing to kind of just talk high level, what their revenue was or maybe margin profile as it relates to Q3 or even a run rate number?

So we're very happy with the revenues. We did not disclose them yet. We will disclose them soon. But the first three quarters look good, and they're in a rhythm that satisfied what we announced earlier in last year's revenues. And I think that this year there's still the last quarter potential for some growth – we can't say, but there's some potential. It's again, a razor and the blade model. So as Derek mentioned, the razors go first, and some of the smart plugs go immediately, but then Deako has the 12 and 24 packs of smart switches, and they have a whole team, an upgrade team, that calls the consumers and helps them and guides them. And it's really, to see it, it's unbelievable how they ship a 12 or 24 box – you just go, unplug a switch, put a new one, okay, and you can do it 12 switches or 24, then just go to your app and everything is connected and you can sit in one place and control your entire home. So that's a significant part in Deako's business plan and model that they're going to utilize with the same upgrade team to SkyX projects – to their product, with SkyX products where, for example, on the heater fans that Derek mentioned, there's interest in other plug-and-play ceiling fans and smart products and fixtures that we can bring to the table. So this upgrade division is really promising for us, and we're already starting to feel how significant it is. And also what we like about this is direct-to-consumer and our gross margins there are quite significant.

Got it. Very helpful. Maybe just last one for me on the TurboHeater fan launch. This is kind of the first big box winter that you guys are having with several different styles and sizes. Maybe if you could kind of help us think through Q3 as it relates to any selling to some of these larger department stores and how does that compare to plan versus what's actually shipping? Thanks.

So for our summer plan, we did way over what we expected during the summer. And now we're starting the winter plan. We can tell you that two big boxes are very interested in trying to put something for the winter together. We can't say names yet. And, you know, some people saw videos some places, other things; we can't talk about things until we get approvals and we don't get something that we can sign and talk about, but we're very happy. And as you know, we increased, we added four models and five different colors. So today we have a total of five models and five different colors as part of our assortment. That's actually today – not today, today, weeks from today, it's going to be in the market, but it's already underway here and we expect to launch it and it's all based on demand. We added, as we mentioned, the 20-inch, we added the 44-inch with a different model look, and 52-inch as well as the 60-inch for big rooms. We had a lot of demand with customer service doing a great job on our e-commerce and others understanding what consumers are looking for, and some were asking for smaller rooms, mostly people were asking for larger rooms. So we came with a solution and we have reservations for those solutions, so we're quite excited about this and I think that's going to open even more big box opportunities. So we're growing, we're happy with this, and we hope that this winter is going to be significant. And once we can, we'll talk about those things.

Great. I appreciate it, guys. Thanks.