Good afternoon. Welcome to Duo Technologies' fourth quarter and full year 2025 earnings conference call. Joining us for today's call are Duo's president, Doug Recker, and CFO, Leah Brown. Following the remarks, we will open the call to your questions. Then before we conclude today's call, I'll provide the necessary cautions regarding the forward-looking statements made by management during this call. Now I'd like to turn the call over to Mr. Doug Recker. sir, please proceed.

Welcome, everyone. Thank you for joining us. Earlier today, we issued our earnings press release and our 10K for 2025. Copies are available in the investor relations section of our website. I encourage all listeners to view press releases and our 10K filing to better understand some of the details we'll be discussing during this afternoon's call. Before I begin, I would like to take a minute to personally thank Chuck Ferry for his leadership and guidance. Chuck has served the DUOS organization and provided personal mentorship to me. I value Chuck and the opportunity has provided me at DUOS. It is not every day that you get to be mentored by a war hero and a corporate champion, and for that I will be forever grateful. I look forward to your continued mentorship and guidance as you continue to serve on our Board of Directors. Thank you, Chuck, for all you have done and continue to do for the DUOS organization. As your newly appointed CEO, I am honored and excited to discuss the focus of DUOS Technologies We are now fully dedicated to the data center market through our DUOS Edge and Tech Solutions division, driven by accelerating customer demand. I will get into more of that in a minute, but want to give you an update on the rail technology and DUOS Energy subsidiaries. first let me talk to you about our legacy business which is the rail car inspection portal in the previous calls we had discussed that this line of business has become less important to our future at duos we also talked about diversifying our business strategy to edge computing thus we have made the decision to completely divest the rail division this divestiture is expected to take place over the next 60 days this decision did not come lightly and i know the rail technology has a rich history with duo shareholders in fact my involvement goes back many years before enjoying duos and i was intimately involved in the design and building of the edge data centers that the portal uses today however the lack of growth and regulatory hurdles for that business has proved to be extremely challenging to manage. The decision to invest frees up company resources and cuts significant SG&A expenses. For more details will be made available on a few divestitures in the near future. Second, I would like to talk about DUAS Energy Corporation. As many of you may remember from last year, DUAS entered into an asset management agreement with new APR Energy to help find new contracts to engineer, procure, construct, and operate fast power plants. DUAS also was giving a 5% equity stake in the parent of APR Energy. The AMA provided the interim financial ability to execute and pivot to our data center strategy. We announced on the Q3 earnings call that the AMA would conclude in 2026, but DUAS will remain or will retain the 5% equity stake. Now I would like to discuss our data center strategy and our new line of businesses at Duos Technology Solutions. Part of our strategy in building and deploying data centers at a rapid pace has always been focused on cost savings, lowering our capital expenditures. Building data center infrastructure is very capital intensive. As Duos is a relatively small buyer compared to the larger hyperscalers and co-location companies, we needed a way to buy products cheaper. So we created Duos Technology Solutions. This brand new division allows us to do just that, as well as provide a new stream of revenue for us. We started by hiring an industry veteran with a proven track record who understands our business as well as the data center market overall. Kristen Sanderson joined Duos and will serve the senior vice president of duos technology solutions kristin has over 18 years of data center product experience vast market distribution knowledge relationships with all the key supplier partners that duos needs to work with and a wealth of relationships in the data center industry this new division allows duos to procure materials for its own builds at a much lower rate than the a legacy way of purchasing through traditional distribution. Duos Technology Solutions offers the same strategic sourcing and product distribution to new customers, including large scale enterprise organizations, hyperscalers, large co-location companies, low voltage contractors, and general contractors across the United States. I'm very pleased to report that through the first quarter, Duos Tech Solutions has already sold 10 million in new business, which currently sits as backlog, all of which I expect to be recorded as revenue this year. This new line of business has low overhead and is simple to execute while having strong commitments by the end client. The revenue generator from Tech Solutions is expected not only to replace the revenue from the new APR AMA, but also provide better margins, thus further contributing to the overall future profitability and growth of Duos Technologies Group. Kristen has built a seasoned team with a talent and short three-month build, tremendous sales pipeline, and we expect amazing things from this new venture. Now, I want to shift our discussion to the core of our new data center-focused organization, Duos Edge AI. The demand for edge computing continues to grow at a rapid pace, and I'm pleased to share that Duos Edge AI is in a great place to meet this demand. The second half of 2025 proved to be extremely busy for Duos Edge. In July 2025, we successfully completed a capital raise of $45 million with Titan Partners to fund the construction and deployment of 15 EDCs to further broaden the connectivity and compute needs of underserved tier three and tier four markets. U.S. Edge AI was also awarded a patent for clean room technology for modular data center deployments, which gives us a strategic competitive advantage in the space. Our goal in 2025 was to procure, manufacture, deploy 15 edge data centers. This goal was extremely aggressive and unheard of in our industry. We are proud to report today that we have accomplished that goal. Our focus for the first half of 2026 is to continue executing our sales strategy to acquire new customers in our markets to fully utilize the capacity of each EDC. In March 2026, we completed a 65 million capital raise to deploy approximately 2,300 GPUs as a service, a 4.8-megawatt high-density EDC deployment for a leading hyperscaler and to expand our high-density EDC footprint to support growing demand for power and compute across AI inference, training, enterprise, and hyperscale AI workloads. We also have five new EDCs in production with plans for an additional 20 megawatts of deployed capacity by year-end. Having inventory for our EDCs to deploy is crucial for our continued growth and success in this market. The Duo's Edge AI story and its initial success is garnering tremendous excitement and demand, so inventory will allow us to react quickly to new market requests. part of this new demand we now see is for higher density power which serves ai and high power compute needs while duo's edge ai is committed to sticking to our original model of deploying in the tier 3 and tier 4 markets we are seeing unprecedented demand for power in megawatts compared to kilowatts the data center market is experiencing a boom like we've never seen before and building at scale is costly and it takes years to complete. During the course of this deployment, our 15 EDCs, we saw an influx of calls requesting more power in the markets where we are formed organizations all across the country. There is such a shortage of data center space and power that companies are turning to dual edge AI. So we are going to start to build our new EDCs with greater power capacity to meet this demand. We have shown the market we can deploy at lower costs with an incredibly faster speed to market. Duos Edge AI will now be able to cater to customers that have the high-density needs, like the neoclouds providers and hyperscalers, for their remote edge sites. These higher power capacity EDCs should provide much higher monthly recurring revenue for Duos, which we will explain in our financial update coming up shortly. Before I transition to the financials, I would like to touch on our start of the year in our first partnership in deploying high-density power EDCs. This month, DUIS executed its first contract across two newly launched business lines, GPU as a Service and High Power Colocation Service for AI infrastructure. Under our GPU-as-a-Service agreement, Duis will deploy 2,304 NVIDIA GPUs across our Edge Data Center platform, generating reoccurring revenue through a GPU rental model purpose-built for enterprise and AI workloads. This contract is expected to generate approximately $176 million in revenue over a 36-month term, with margins exceeding 80 percent, an expected annual EBITDA of approximately 40 million. Separately, DUOS was awarded a high-power co-location contract to deliver 4.8 megawatt of critical compute power to support a leading hyperscaler's high-density NVIDIA GPU cluster housed within DUOS Edge data centers. This contract represents DUOS' entry into the market of high-power co-location where demand for AI-grade infrastructure continues significantly, outpacing supply. Together, these contracts mark a significant commercial inflection for DUOS, establishing two distinct and complementary revenue streams within our data center platform and validating edge data center infrastructure at the highest level of the AI compute market. Since announcing these contracts, we have received strong incremental inbound interest from hyperscalers, neocloud providers, and other large-scale compute customers seeking high-density EDC solutions, we see a significant opportunity to scale the high-power EDC model through 2026 and beyond. Now I would like to turn it over to our CFO, Leah Brown, who will go over our financials for 2025. Thea?

Thank you, Doug. This has been an exciting year for Duos. 2025 is a year marked by significant revenue growth, strategic investment, and meaningful progress toward building a stronger, more scalable company. I am truly excited to walk through our full year financial performance and highlight key operational drivers that shaped our results for 2025 total consolidated revenue was approximately 27 million the company previously projected revenue in 2025 of 28 million although that target was not met we recorded a little over 1 million in deferred revenue for technology solutions which is contracted cash was received and we will record as revenue in 2026. in 2025 the 27 million in revenue was a significant increase compared to 7.3 million in 2024 which is over a 270 increase year over year this growth was primarily driven by services and consulting revenue from the asset management agreement with new APR energy, totaling $22.4 million in 2025 versus $900,000 in 2024. The company delivered materially stronger gross margin in 2025, generating $7.9 million in gross profit achieving approximately 29 percent a significant year-over-year improvement this was driven by improved cost absorption and continued operating efficiency the company reported net loss of approximately 9.8 million in 2025 an improvement from the 10.8 million net loss loss in 2024. The year-over-year improvement was driven primarily by higher revenue and significantly stronger gross margin. As we discussed on our Q3 earnings call, achieving positive adjusted EBITDA was an important milestone for the company, reflecting the early benefits of revenue scale and margin improvement. I'm pleased to report that we've built on that progress in Q4, delivering positive adjusted EBITDA for the second consecutive quarter. This consistency is meaningful and demonstrates that the Q3 result was not a one-time event, but rather the continuation of improving operating performance as the business scales. The consecutive improvement from Q3 to Q4 reinforces our confidence in the direction of the business, driving higher revenue volume, improved gross margin, and more efficient cost structure. Let's shift to the balance sheet. The company ended 2025 with approximately $63 million in total assets, reflecting meaningful growth year over year. Cash increased significantly compared to the prior year driven by capital raise during the year, which strengthened liquidity and enhanced our ability to support operations and planned investments. Another strong position on the balance sheet is property and equipment, each which significantly increase year over year, reflecting continued investment in infrastructure and assets required to support the program execution and long-term growth initiative. The current contract liabilities, over $5 million, supports the company's future revenue recognition. On the equity side, capital raised during the year strengthened our balance sheet and liquidity, while ongoing investment in the business aligns our strategy to scale operations, and drive longer-term value creation. 2025 was a transformative year for Duo Technologies Group. We significantly scaled revenue, strengthened our liquidity position, and made strategic investments that positioned the company for increased operating leading leverage and margin expansion going forward as previously reported the rail segment remains relatively flat in response we are divesting the rail business and reallocating resources to support the continued expansion of our edge data center segment turning to our 2026 outlook. The company is providing revenue guidance of $50 to $55 million in total revenue across all business lines. This forecast reflects growth from both our core operations and newer initiatives, which Dove will cover, and we believe positions us for a strong year. Due to the timing of revenue recognition, a significant portion of revenue is expected to be recognized in the second half of the year, coinciding with the periods in which we expect to achieve positive EBITDA. Our investment and expanded revenue opportunities give us confidence in our ability to execute and continue building a stronger, more profitable company. Doug, I'll turn it back to you for additional comments.

Leah, thank you. Before we open this up for questions, I wanted to say again how honored I am to serve as your new CEO. The new data center focus strategy is the new Duos Technologies Group, and we are poised for great success. We have been awarded global recognition with the Innovation of the Year Award at the largest data center and telecom conference at Pacific Telecom Council, 2026 in January. We have also been nominated for breakout success in North America Digital Infrastructure Leader of the Year from the Tech Capital Global Awards coming up in May. The global recognition only solidifies we are on the right path at Duos with a prosperous future ahead. We understand we have a new focus and this is a departure from our legacy business past we are taking steps to ensure the new messaging is related to the market and that we will be given the appropriate market coverage moving forward we will be retaining an IR firm to assist and expect several analysts to report on our new focus and business activities in the near future and with that I will open it up to questions Operator?

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions.

Thank you.

Our first question comes from the line of Ed Wu with Ascended Capital Markets. Please proceed.

Yeah, I'd just like to give my congratulations to you, Doug, and to the entire Duos team. The growth that you guys had has just been amazing. My question is, as you mentioned, that demand remains very, very strong. Are there any worries of competitors entering this market? And what can duals do to be able to have the advantages to be able to compete if new entrants come in?

That's a great question. And that's why we manage the business appropriately. So you're going to see some people come into the market, like you just probably saw the press release from Caruso. They're entering the market as far as building 5 to 10 to 20 megawatt modular data centers. They're one of the largest in the business. They build Stargate. They're huge. So that in itself tells us we're in the right market. But what we've done, and this is an incredible piece, I just got back from GTC and everybody was talking about how they're concerned about deploying with modular because gpus are extremely sensitive to back to particles to dust and ironically in the best part about our business we obtained a patent in september called the clean room we actually have a patent that goes on top of our it connects to our modular data center that cleans the air before you come in so all the particles on your body on your equipment are blown off filtered off then you walk actually into the data center that is huge when it comes to deploying because what's going to happen is the gpu providers like nvidia and and uh you know everybody that makes chips everybody makes servers they won't honor they won't honor their warranties if the fans get dirty and dust in them so that is a huge win for us and it's going to help us you know differentiate us from the competitors coming in the market You will see them, but we are the only ones that have deployed, for example, 15 pods. I challenge everybody that comes into this business that doesn't have a 3D rendering to go physically look at their pods. We had a customer fly in from China last week, and they flew into Corpus Christi and toured our pods just to see our manufacturing capabilities. So it looks like there will be a new customer of ours on the hyperscale side possibly. So we have the experience. We've done it. We can actually show people our markets. They can physically go there, see our customers, see gear burning, and see how the facility works. So we welcome the competition, but we're strong where we sit.

That sounds good. And my last question is, you know, kind of like longer term plans. I know you guys kind of been focused on the rural underserved markets. Is there plans to go into the bigger markets? And also, you mentioned China customers or China partners. Do you anticipate possibly going international? Thank you.

Great question. Right now our focus is Tier 3 and Tier 4 markets, and let me tell you why. The demands to deploy in a Tier 3 market, I can deploy my pods and get access to power in 90 to 120 days. If I go into a Tier 1 market, I'm competing against the larger data centers and the infrastructure that's already in place. we're going to build infrastructure fast so where do you do that you go into markets that have accessible power they built substations that have 5 to 10 meg available on them and permitting is a lot quicker so our focus is going to continue to tier 3 to tier 4 markets and that business sector is is huge and it's going to be huge for the next 10 years and international international yeah Yeah, and to answer your international question, once we start deploying at scale here and move on, we'll be open to international. But right now, our number one focus is in the U.S. into the Tier 3 and Tier 4 markets.

Great. Well, thank you, and I wish you guys good luck.

Thank you, sir. Thank you so much.

Thank you. Our next question comes from the line of Dan Weston with West Capital Management. Please proceed.

Yeah, hi. Good afternoon, everyone. Thanks for taking the questions, and congrats on the quarter. Doug, a couple of quick points of clarification. I think you mentioned you were expecting to have, or you do have, five new EDCs in production to be deployed by year-end, if I heard that right. Are those five EDCs specific to the GPU-as-a-service contract you just signed?

No, those five EDCs are committed to markets that have been contracted. So there are markets in Georgia, and we're working with a utility to deploy on their network as well. So those are our normal pods that we deploy and that we've deployed. Like the 15 we've deployed, they're identical. So let me give some clarification because this might help answer a lot of questions for other folks too. We're still building our same model. Our core is you go after the education, health care, and local government in these markets. But what we're doing at the factory is we're building the pod with more power. So we're deploying these units, the same concept, the same places, but we're building them more at scale so we can bring in higher density users. So, yeah, so that's the model.

Got it. Thank you for that clarification. Back to the first GPU as a service customer that you just recently signed. And when do you expect to have those larger pods, if you will, in the ground and expected to generate revenue?

We're on track for July, August. So, you know, with permitting and things like that, I want to say August to you, but we're looking good. So more August time frame.

That's amazing. And as it just kind of ties into the guidance that Leah provided, Leah, if you're there, I think I wrote down $50 to $55 million of revenue expected for this year. Could you give us a sense of how that revenue breaks down, please?

So, yeah, thank you for that question. So, the revenue line that we anticipate for this year, we're expecting definitely on a holistic view to achieve that aggregate. As a company, we don't go into specifics for each business line, but overall, we do anticipate to meet that guidance.

Okay. I understand. And while you're there, you mentioned the PP&E up at $27 million and change. That's obviously a massive increase from last year, but also up $12 million from your Q3. Could you give us a breakdown of what that PP&E is, please?

Absolutely. So the majority of our PPE is our edge data centers. So we have 15 edge data centers, and we've also started pre-buying for the next lot that is coming online in 2026. So you, the majority of that, yes.

Great stuff. And then last one for me, I'll jump back in. Doug, I think you mentioned that you'd secured the 4.8 megawatts of power for, I assume you're talking about the GPU as a service contract. uh the initial loi i think you mentioned 10 megawatts dedicated to that project could you explain a little bit what the delta is there between the 4.8 and the 10 megawatts sure so the site is built to 10 megawatts so there's 10 megawatt available so they're taking down 4.8 to for critical load so that means i can add to that site quickly up to 10 meg now that site can go to 20 meg but it might take another year to get access to another 10 so that so the

the winner here is that site has a capability that's already been uh transformed down at 10 meg so there's 10 meg physically available today if i wanted to sell it so i would just build the pods i build another section of pods to get to the 10 meg so another 5 meg cluster of pods uh and in terms of you know real estate if you will there's plenty of space there to just drop another two three or five pods down if needed yes so there's three acres there and what we've noticed is three acres is plenty basically if you look at our model you know if we're deploying five meg it's really like looking at five school buses understood completely do you anticipate

that your first technology, global technology customer for the GPU as a service will end up taking the whole 10 megs?

Yes, the actual, there's two customers that are, yes, absolutely. They're looking at five more sites at five megs with us right now. Obviously, we've researched, we found five sites with the power there, but we're going to get this one installed and the one in Iowa installed first. And then we'll report on how quickly we did it and how the revenue looks. But the demand, I mean, I came back from GTC and there was 21, we had 21 inquiries on five to 10 mag sites. That's amazing. The demand in this niche is unbelievable. So like I said, I'm not real worried about other people coming in. Our secret sauce is how we deploy quickly, how we find the power. We have a secret to that. and the other piece is the clean room I don't see you prime example in one of these pods you're talking 10 to 12 million dollars just in GPU in a pod so with a clean room I don't understand why you wouldn't go to it somebody has a clean room it doesn't cost them more so understood I keep yeah by the way do you anticipate that you'll be able to disclose who that first technology customer is in the near future? I'm not sure. It's a very, very, very strict NDA right now. So I think maybe once we prove ourselves to them, it might be an option. But I'll put it this way. They're tier one, so we're good.

I appreciate that. You know, let me get squeezed one last one and I'll hop back. You mentioned that there was a $10 million backlog in the tech solutions business that you expect to record as revenue for this year is that typical for this business where where the the booking of the contract could take several quarters to actually run through the revenue line yes exactly so let me give an example so we sell a lot of and we have a lot of um you know our funnel is huge so we have a lot of like cabinets pdus um fiber connectors those are 60 days, 90 days max, right?

Well, we book that, we ship it out quickly, but UPSs and other switch here are six to eight, some of them are nine months out. So that's, you know, we had a big booking towards the end of the year, but it took three months for us to bill it, right? So a lot of the bigger products take longer, but everything that we're booking that's in the funnel and that you see us report in this quarter, next quarter, we'll all bill this year. Because the majority of it is, I wouldn't say off the shelf, but it's more UPS, PDUs, cabinets, cold aisle containment, that kind of stuff. And there's a lot of it. That's incredible.

I really appreciate you taking the time to answer the questions. Congrats to everybody.

Thank you. That's why I'm here. I love the questions. Thank you, sir.

Thank you. Our next question comes to the line of Nico SAC study with RBC. Please proceed.

Hey, Doug.

Nico, sir, how are you? Good to hear your voice.

Yeah, I'm good. Maybe I'll piggyback on Dan's last question here. Okay. So not only is that 10 million of the distribution business, you know, going to have someone actually recognizing revenue, is $10 million like a quarter a typical run rate for that business? Is that a huge quarter? Is that low? You know, obviously not looking for a definitive guidance, just trying to get an idea of what you're, like, expecting or what the capability of that business could be in just, like, a normalized situation.

Yeah, and we're new to the business, but what we're seeing is, you know, when we can recognize it and how stable it is so you know let's say the funnel is over 150 million if we you know depending on what the product is Sorry, just to clarify, you said the funnel, like annual capacity, is that like your high-end number that you could do in a year? The $10 million was over two months, and that was when they first started. So, obviously, we're looking at a lot greater than that.

Yeah.

If I could hear that.

I thought you said the funnel is $150 million. Is that like an annual time or capacity that you could do? Did I hear that number right?

Yeah, that number is from two sales reps that she's hired. That's in their funnel.

Okay, I got you.

For this year, and that's only for three months of doing business. We just started that group. I mean, look, one data center buys $1.6 billion worth of product, right? So that's normal, believe it or not, in this industry.

So it would be fair to say, you know, if there was any kind of the opportunity here, you mentioned it's replacing that revenue, but it sounds like this could be a multiple of that in a normalized situation?

That's exactly right. Right. That's why we brought it on. And Nico, just real quick about that division. Remember, the main reason we brought that division on is in the marketplace right now, everybody knows to build a megawatt, it's anywhere from 10 to $13 million, right, to build a megawatt. Why they're looking at us is I can build a megawatt for six and a half million. And how do we do that? It's because an infrastructure group has direct to the manufacturer now so I'm not buying through a Wesco or a Graybar so 20 to 30 percent comes off the line because I buy direct.

So you are offering something that can be set up substantially quicker than like a traditional football field size data the center and at a lower cost is what it sounds like that's right right we can deploy quicker remember that so in the capex isn't as intensive so you're deploying five megs at 25 million dollars it's a big difference so a lot of what I have are just clarification questions obviously there's a lot of moving parts just trying to make sense of you know what was the company you had the AMA the equity and then you know it's going towards this modular data center you know school hospital and for tenant you know the metrics around that were very black and white like what the revenue opportunity is and then you know it seems like we're kind of pivoting again and so um i just want to make sense of all of these moving parts and maybe the the it would be helpful if um we could clarify the the deck that you have available on your website from february i think it is is this like good information there's just some differences in metrics from what's on the slide versus like what was reported and I just have some clarification questions I'm just curious like how set in stone the numbers were off of that specific presentation yes we're actually after obviously after the call we're going to update because now we've we've recognized and told some information we're going to update that but just remember there's two and I don't want to make it confusing I'm That's why I'm trying to change the model here a little bit.

There's two pieces to our business. One is the edge data center business, and the one is the infrastructure. The edge data center business, the GPU business falls under the edge data center business. Remember, it's the same pod. It's the same concept. It's just I'm building them bigger. Just look at the GPU as a different type of customer. So I'm just bringing in different types of customers. So it's the same model. The revenue is a lot higher, obviously, because they're taking power. We make money off of power space and cross-connects, right? So the more power we sell, the more money we make. But obviously, the CapEx goes up in the pod cost. The model, and I'm pretty sure we shared that, the model on the GPU is a big difference. Prime example, remember, our pod model at 15 cabinets is $350,000 to $400,000 a year. That's the goal, right, out of that? what out of if you compare it to the gpu model you know one mag you're you're at a million dollars a year so at at 4.8 megawatt you're now at almost a million dollars a month so why not build the pod bigger and take the customers in that need that power when all it is for us is at the factory we just put bigger panels in and you show your cut here you're cutting out it's

hard to hear you you know I just want to get like it totally depends on what the metrics are where it was much more standardized with the other version of the original model and then we say the same model and they're going in the same locations where instead of it being a co-location where you still have the hospital and the school hall and it's in a rural area and you're just having the rest of it available to be leased out essentially by maybe other businesses in that town now that

Yep, you're exactly right, Nico. That's exactly right. So our core customers are anchor customers, which are education, healthcare, and then enterprise in that market, right? The carriers coming in to take space so they can peer and cross-connect to each other. You there?

Yep.

Someone's cross-talking. I'm sorry about that. But, yeah, Nico, if you can hear me, that's the original model, and that's why we're sticking with that model. We're just adding more capacity to bring those customers in that need higher density. So we're always servicing that market, and that's what helps us get into those Tier 3 and Tier 4 markets, especially with permitting and everything, because we're low on the radar. We're not 10, 20, 30, 40 megawatt that they have to build out that's draining the community. We're going after power that's already there that's in excess that the utility wants to make money on. So in return, it helps the local community as well. in tax dollars. So, they're actually welcoming us.

Thank you. Our next question comes from the line of Carl Weiss with Grow Funds. Please proceed.

Good, sir. How are you? Long time no see.

Yeah.

We'll talk real quick. Let me take over the rail. So, the rail business, We're hoping to offload or decommission that business, offload it in the next 60 days. That's the goal on that. So there's no burn on that business for us right now. So hopefully we'll exit that. It frees up a lot of SG&A. So we'll obviously not carry that load of employees and all the other expense. So that's a good thing. And that should happen in the next 60 days. But I'll turn it over to Leah on your numbers there.

Sure. So, Carl, good afternoon. Yeah, so we should expect to see a gross margin improve the second half of the year. Just a reminder, with the revenue recognition for some of our business lines, you are going to see that revenue recognized in the second half of the year. So, we're looking at gross margin, you know, around 7% to 6%. yes exactly so we should see around for gross margin you're about 7 million 6 million yeah exactly so just you know when we report here in May you'll see our Q1 but you'll be able to see that our revenue picking up in Q3 and Q4 and

And OPEX should actually be coming down at the same time.

The OPEX, yes, yes.

Yeah, how long?

I think the high demand, like what we're seeing now, like when I go to GTC and there's 21 people trying to talk to me to sign contracts, I think that is going to be strong for the next three to four years. And then what's critical about our business is the main data centers that are out there, and I think we might have talked about this before, the main data centers that are out there are going to look to us as a hub and spoke. because they're going to want to capture those markets that were in, like the Dumas, like the Corpus Christi, Lubbock, these tier three markets that we're going in. They need to have compute out there. So does the mobile operators. When we go to, you know, 6G, we're at 5G, we're going to 6G now. They need to compute out at what we call the eyeballs. So all that data is going to take a lot of fiber to get back, a lot of network, right? So they want to be able to own that network, and they want to own that customer. The best way to do that is obviously buy these mini data centers everywhere, bring them back to the core, because to be honest with you, they're all going back to a core anyway, so it makes complete sense. So I think, you know, the growth is going to be very strong and extremely strong in the 3 to 10 mag range, because right now, and I just did this exercise for another potential client, he needed 2 mag worth of power, 2 mag, which doesn't sound like a lot nowadays, but it's a lot. I couldn't find it throughout the country in one data center. I'm talking about a legacy data center. So the market is looking past the need of the 10 to 15 MAG data centers. And prime example, like Johnson & Johnson, they keep their stuff at a local data center. They go to like a QTS. They go to a Flex Central. That's where they house. They don't go to a hyperscale. They don't go to these big ones they're building. We're losing sight that the demand is there, and they're still growing. So I think you're going to see the market for the next 5 to 10 years focusing on that 10 to 15 megawatt range. So we have a long haul, but we do have to build quickly. Yes, sir.

I'll tell the operator one more question and that's it.

Our next question comes from the line of Tom Leonard with River Bay Investments. Please proceed.

Hey, dark tower calling. sir how are you you're doing great you provided a lot of color on the GPU as a service the economics the revenue of that I'm trying to think about the revenue exit run rate this year and so could you put more color on the high density EDC how many total megawatts and what's the revenue value per megawatt for that high-density co-location customer versus the, you know, leafing on GPUs that you purchased?

Sure. On the GPU model, let me back up. The goal for this year is to deploy 25 megawatt. Now, that can be through, you know, 300 kW pods that we deployed. Right now we have 15 of them on the ground at 300 kW. But the total megawatt, because that's what we're being judged by right now, everybody's being judged by megawatts not by kilowatts or cabinets so the plan is 25 megawatt and when we look at the gpu model for every megawatt we're looking at two million dollars a year in revenue that that's that's right on the head that's what that's what they're billing that's what the industry shows and that's what we're building to so it obviously is a a very strong model to house GPU for customers thank you and with that that concludes today's

question-and-answer session I'd like to pass the call back over to Doug for any closing remarks well I'd like to thank everybody for joining today and we look forward to speaking with you and to one earnings thank you so much for your time before we conclude today's call I would like to provide duo safe harbor statement that includes important cautions regarding forward-looking statements made during this call. The earnings call contains forward-looking statements within the meanings of the Securities Litigation Reform Act of 1995. Forward-looking terminology such as believe, expects, may, will, should, anticipates, plans, and their opposites or similar expressions are intended to identify forward-looking statements. We caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties, risks, and other influences, many of which are beyond our control, which may influence the accuracy of the statements and the projections upon which the statements are based and could cause DUO's technologies groups' actual results to differ materially from those anticipated by the forward-looking statements. These risks and uncertainties include, but are not limited to, those described in the Item 1A in DUO's annual report on Form 10-K, which is expressed incorporated herein by reference, and other factors as may periodically be described in Duo's filings with the SEC. Thank you for joining us today for Duo's Technologies Group fourth quarter and full year 2025 earnings call. You may now disconnect.