Rank One Computing Corp Q1 FY2026 Earnings Call

Greetings, and welcome to the ROC First Quarter 2026 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be a question and answer session. To ask a question, you may press star then 1 on a touch-tone phone. To withdraw your question, please press star then 2. As a reminder, this conference is being recorded. I would now like to turn the conference over to Rory Remore with Core IR Investor Relations. Please go ahead.

Thank you, and good afternoon, everyone. We thank you for joining ROCKS' first quarter 2026 financial results call. Presenting on today's call are Scott Swan, ROCKS CEO, and Cody Barnes, ROCKS CFO. Bryden Clare, ROCKS co-founder and chairman of the Board of Directors, will also be available during the question and answer portion of the call. Before we begin, I remind everyone that today's call may contain certain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include remarks about management's future expectations, beliefs, estimates, plans, and prospects. Such statements are subject to a variety of risks, uncertainties, and other factors that could cause actual results to differ materially from those indicated or implied by such statements. Such risks and other factors are set forth in our quarterly report on Form 10-Q filed with the Securities and Exchange Commission. We do not undertake any duty to update such forward-looking statements. Additionally, during today's call we may discuss certain non-GAAP measures which we believe are useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with U.S. GAAP. It's now my pleasure to turn the call over to ROC's CEO, Scott Swan.

Thank you, Rory. Good afternoon, and thank you for joining us for ROC's first quarter 2026 earnings call, our first as a public company. Before Cody reviews our financial results, I want to spend a few minutes introducing ROC, explaining how we think about the market opportunity in front of us, and framing the strategy we are executing as a newly public company. ROC is a U.S.-built, owned, and operated vision AI company focused on identity, security, and digital forensics. At its core, our technology helps customers transform visual data into operational intelligence we help verify identity detect threats analyze evidence and support faster more informed decisions in mission critical environments said another way rock's technology is analyzing extracting meaning from raw pixels and visual data that includes biometrics video analytics object detection and digital evidence these capabilities support military law enforcement national security, financial technology, public safety, and commercial security customers tasked with protecting people, infrastructure, and sensitive systems. We operate in markets where accuracy, speed, trust, and control of the technology stack are critical. Our customers are not buying experimental or proof-of-concept AI. They're deploying operational technology in environments where performance matters and where failure is not acceptable. The simplest way to understand ROC is this. We combine biometrics, video analytics, object detection, and digital evidence into a unified Vision AI platform. Instead of offering a single-point solution, our platform is designed to support multiple identity and intelligence use cases utilizing the same layer underlying technology architecture. That matters because the market is moving toward convergence. Identity, video, physical security, digital evidence, and mission intelligence are no longer separate categories. Customers increasingly need systems that work together, share intelligence, and scale across agencies, facilities, and operating environments. ROC was built for that environment. A major part of our differentiation is that our technology is developed here in the United States. In national security, public safety, and identity infrastructure, that is not just a branding point. It is a strategic requirement. Much of the global identity and biometric technology market has historically been served by large foreign incumbents. ROC was founded to provide a domestic alternative with accuracy, efficiency, security, and scalability required for the most demanding applications, and our solutions have been built by the people who have lived the mission. Our team was forged in real-world crisis from September 11th to the Boston Marathon bombing, to Iraq and Afghanistan, and covert operations with operators, scientists, and engineers from the military and FBI, people who carried the mission and now build the tools to win it. Our platform serves four major mission areas, national security, public safety, digital identity, and physical security. Within those markets, we commercialize a portfolio of products built on the same underlying technology foundation. ROC SDK is the foundation of our platform. It allows customers and partners to integrate our biometric and recognition technology directly into their own applications. Rock Watch is our video intelligence platform. Cameras are everywhere, but most camera systems remain passive. Rock Watch turns video into actionable intelligence through real-time analytics, visitor management, threat detection, and post-event investigation capabilities. Rockwatch is one of the largest contributors to our product revenue, and in the first quarter, Rockwatch revenue increased 77% year over year. Driving this growth were two expanded programs within the Department of War, demonstrating our land and expand business model. In addition, we secured a new Rockwatch contract with the United States, with U.S. University, signaling early traction from the growing demand in the early security market. ROC-ABIS is our automated biometric identification system. This is a national-scale biometric identity platform designed for large-scale matching and verification. We believe ABIS represents one of the most important long-term opportunities for ROC because these systems can become deeply embedded infrastructure for government and public safety customers. In the first quarter, ROC-ABIS revenue increased 255% year over year. from a small base reflecting early commercialization and deployment activity in march we launched the first rock abis forensics capability pilot with a state and local law enforcement customer rock evidence is our digital investigations platform it is designed to help customers manage analyze and act on evidence in real world investigative environments we believe rock evidence can become an important part of our public safety and digital forensic strategy as customers look for more efficient ways to handle growing volumes of digital information. In fact, in April, we deployed our first ROC evidence program for the United States Drug Enforcement Agency to support the agency's digital evidence management procedure. ROC and Roll supports identity onboarding and verification, turning a simple image capture into a secure biometric identity workflow. And finally, ROC Access is our entry into the intelligent physical access control. Our first hardware device, ROC Access Phase 1, combines biometric identity verification with embedded security intelligence at the point of entry. In March, ROC Access Phase 1 was recognized by the ISC West, which we believe reinforces the market relevance of bringing ROC's Vision AI capabilities into access control. Importantly, these products are not disconnected offerings. They are built to operate on the same underlying platform, and the platform structure is central to how we believe ROC can scale. Our financial model is moving toward a product-led, programmatic, recurring revenue profile. R&D contracts will remain an important part of our business, particularly because they help fund innovation and deepen our relationships with government customers. But over time, our objective is to materially increase the contribution from productized software, platform deployments, and longer-duration customer programs. That shift is important because it enables the broad scalability of the business. In the first quarter, product revenue represented the majority of total revenue. Within product revenue, RockWatch grew 77% year-over-year and RockAbus grew 255% year-over-year, demonstrating continued adoption in the two product areas we believe will become meaningfully long-term growth drivers and where we expect to emerge as dominant market leaders. At the same time, our 79% gross margin reflects the software-driven economics of our platform and the operating leverage we believe will follow as product deployment scale. The way we build our product-driven revenue base is straightforward. We land, we expand, and then we compound. We often begin with a pilot, an initial deployment, or a specific customer use case. As those deployments prove their value, they can expand into broader programs across additional locations, agencies, workflows, or product modules. Over time, the goal is for ROC identity and intelligence technology to become the embedded operating infrastructure for our customers. It is not a one-time tool, but a system they rely on every day. That is how pilots become programs. Our women can become systems of record, and systems of record can create long-duration, more predictable revenue opportunities. This is also why contract durability matters. Across our product portfolio, certain opportunities support multi-year contract structures, including three-to-five-year and five-to-ten-year contractual programs, depending on the product, customer, and deployment model. We believe that creates a foundation for improved visibility, recurring or repeatable revenue, and stronger long-term operating leverage as a business scales. our capital allocation strategy is closely aligned with that model we are investing to scale what is already working engineering product development customer success deployment capacity business development and compute infrastructure the objective is to shorten time to deployment accelerate time to long duration recurring revenue support larger programs and preserve the margin discipline that is central to our model so when investors think about rock we want them to understand the model clearly mission critical technology software level gross margins product-led expansion longer duration program opportunities and a platform designed to compound over time the first quarter began a transition period for rock we completed our ipo commence trading on the NASDAQ, strengthened our balance sheet, and continued advancing our product and commercial growth strategy. At the same time, our reported revenue was impacted by lower R&D contract activity and public sector procurement timing, including the lingering effects from the late 2025 federal funding lapse resulting from U.S. government shutdown. We believe the resolution of the government shutdown and the approval of DHS appropriations in April were important, positive developments for the broader federal procurement environment. Earlier this year, many agencies were operating under continuing resolution dynamics and broader budget uncertainty, which slows procurement, new program starts, and award execution. Since appropriations were finalized, we have seen what we would describe as a healthier and more normalized federal budget environment across several areas relevant to ROC. Importantly, we are now operating within typical federal fiscal year window where agencies are actively working to obligate fiscal year 2026 funding prior to September 30th year end. Historically, that environment accelerates procurement activity, evaluations, pilot transitions, and contract execution timelines, and particularly in mission-critical areas tied to national security, public safety, identity modernization, and AI-enabled operational capabilities where ROC operates. From a demand standpoint, we continue to see strong interest across our core markets, including biometrics, digital evidence, real-time video and analytics, border and access control applications, and broader Vision A platform opportunities. We believe the strategic relevance of trusted and sovereign AI solutions is continuing to gain traction within sensitive government environments where performance, transparency, and operational trust matter. We also continue to monitor developments on Capitol Hill and broader national security funding priorities, but overall, we view the current funding backdrop as constructive for our industry's customer engagement, pipeline activity, and demand momentum through the balance of 2026. Crucially, we do not view the long-term demand any differently. We continue to see strong demand for our trusted American-built Vision AI across government, public safety, digital identity, and commercial security markets. Our focus now is execution, converting product adoption into larger deployments, expanding active programs, and judiciously deploying capital to support scale across the enterprise. with that overview i'll turn the call over to cody barnes our chief financial officer to review

the first quarter financial results thank you scott and good afternoon everyone i will now provide a brief overview of our financial results for the first quarter ended march 31st 2026 total revenue for the first quarter of 2026 was 2.5 million compared to 3.2 million in the first quarter of 2025, a decrease of approximately 0.6 million or 20 percent. Product revenue was 2.3 million compared to 2.4 million in the prior year quarter, a decrease of 0.1 million or 5 percent. The decrease in product revenue primarily reflected lower revenue from ROC SDK and ROC and Roll, partially offset by growth in ROC Watch and ROC Abus. ROC Watch revenue in the first quarter increased 77 percent year-over-year reflecting continued customer adoption and expansion of active deployments. ROC-ABIS revenue in the same period increased 255 percent year-over-year reflecting early commercialization and customer deployment activity. R&D contract revenue was 0.2 million compared to 0.7 million in the first quarter of 2025, a decrease of 0.5 million or 69 The decrease was primarily attributed to the completion of a significant prior year R&D program, with new R&D contract activity in the current quarter occurring at a smaller scale. As Scott mentioned, the pace of new contract awards and customer order placement during the quarter was affected by the lingering effects of the U.S. federal government funding lapse that occurred from October 1, 2025 through November 12, 2025. Although the funding lapse ended prior to the start of the first quarter, it constrained federal procurement and contracting activity through late 2025, which delayed certain customer purchasing decisions, contract awards, and program authorizations that we believe would have otherwise advanced during the quarter. Gross profit was $2 million in the first quarter of 2026 compared to $2.5 million in the first quarter 2025. Gross margin was 79% consistent with the prior year period. We believe this reflects the strength of our software-driven revenue model and the efficiency of our Vision AI platform. Operating expenses were $5 million in the first quarter of 2026 compared to $3.5 million in the first quarter of 2025. Selling general administrative expenses were $2.9 million compared to $2 million in the prior year period. The increase was primarily driven by higher personnel-related costs across product development, business development and operations, and incremental public company costs. Research and development expenses were $2.1 million compared to $1.6 million in the first quarter of 2025. The increase reflects continued investment and product development and platform enhancement. Net loss for the first quarter of 2026 was $3 million compared to a net loss of $0.7 million in the first quarter of 2025. Basic and diluted net loss per share was $0.18 compared to $0.05 in the prior year period. As of March 31, 2026, we had $16.6 million in cash. Net proceeds from our IPO and the partial exercise of the underwriter's overall allotment option total $21.5 million. We believe our balance sheet provides the flexibility to continue investing in product development, deployment capacity, customer acquisition, and the infrastructure required to support larger, longer-duration programs. With that, I'll turn the call back to

Scott. Thank you, Cody. So in closing, with a strengthened balance sheet, we continued investing in the people, the products, and the infrastructure needed to support ROC's next phase of growth. During the quarter, we saw continued momentum in key areas of our product portfolio, particularly ROC Watch and ROC Abus. While R&D contract revenue was lower in the first quarter, the underlying demand environment for trusted identity, security, and intelligence technology remained strong. Our strategy is straightforward. Deploy our mission-critical vision AI and markets for performance, trust, and control of the technology stack matter. Focus on providing American-built technology in areas that are central to national security, public safety, digital identity, and physical security. Implement a land and expand model designed to convert initial deployments into broader programs with durable recurring revenue and invest with discipline to support high-margin, long-duration revenue opportunities over time. We believe this is the right model for ROC. It is a product-led, it is platform-driven, and it's focused on turning customer adoption into durable programs that compound revenue over time. ROC's opportunity is not simply to sell software modules. Our opportunity has become part of the operating infrastructure that customers rely on to verify identity, detect threats, analyze evidence, and make decisions. This is the long-term value proposition of ROC. We believe we have the technology, the team, the customer base, and balance sheet to execute against that opportunity. We appreciate the support of our shareholders, customers, partners, and employees as we continue building ROC as a public company, and we look forward to providing updates on our developments in due course. Thank you for joining us today, I'd like to now hand the call to the operator to begin the question and answer sessions

with our covering analyst. Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. The first question today comes from Yifu Lee with Stonex. Please go ahead. Thank you for taking my question.

Congrats on the strong growth on the Rockwatch and Avis product despite navigating through a challenging partial government shutdown while balancing obviously the IPO as a public company. So, Scott, I just want to start with you first on the macro environment. Obviously, we're navigating through, you know, ongoing geopolitical conflict, high oil prices, interest rate that doesn't seem to go anywhere. However, you know, as of April 30th, the longest partial government shutdown impacting, you know, the Department of Homeland Security has officially ended. Just want to get your sense on, like, Scott, like the market, you know, after the government shutdown has ended, You know, has the public sector been stabilized? What are you seeing now that we're in midway through the second quarter in terms of, you know, things turning?

Yes, thank you. We're very optimistic about the current signals that we are seeing. As you alluded, not only was there a government shutdown, but there was also no official budget passed in 2025. And now we are on a routine fiscal year where there is, you know, budgets that are, seem to be very healthy within the federal government. And they will, you know, need to obligate funds, much of those funds before September 30th of this year. So while we see internally some lumpiness in the awards here at ROC, we do feel very optimistic about the communications and the growth of our pipeline for being able to be well positioned to support the federal government and public sector

Is it fair to say, like, Scott, like, I know, like, you know, like, after the, you know, reopening, I guess, right, that, you know, like, you need to build a momentum pipeline, right? It doesn't, things, contract doesn't get signed the next day, right, obviously, right? Is it fair to say because the federal government budget, as we all know, we cover software, like in September 30th, that in terms of the timing perspective, does it make more sense that you would expect the flush to come in the third quarter and just like, I'm just trying to match the expectations?

Yeah, I think that's very observant. I think we can likely see much more activity in Q2 with probably more of a surge in Q3. as you allude to it takes time for the government money to move you know as a new budget was finally released you know that has to work itself from treasury to the department level down to the specific agencies that actually execute against that money that process takes time and then there's the interaction with the vendor to actually get the contracts or funding on existing contracts in some cases moved all that takes time and the government doesn't move you know incredibly fast so I think you're very observant to recognize that it will probably for 2026 for most federal contractors there'll be more late awards than you would see in other years but but you would

envision the budget is if not the same as last year even more healthier is that correct Scott

Yeah, that information is all public information, and from our observations, it looks as if that the federal agencies are well-funded this year, even more so than last year.

Yeah, and they're – I'm sorry, just to add, I mean, they're further focused on our priorities that we're developing for national security and U.S. nascency and the reauthorization the cyber program, you know, which have been stopped, you know, is pretty important signal

for us as well. Okay. Thanks, guys. And then let's move on to the pipeline. Obviously, like RockWatch up 77% and ABIS up 2.55x. So, it's looking strong there. And obviously, you have your first deployment on evidence as well as the launch of Rock Access. Just want to get your sense, Scott, Cody, Brendan, and team, on the pipeline, what are you seeing in your pipeline right now that you're working on? What are the near-term opportunities you intend to, let's just say, convert? Because we all understand this is your year of IPO. You're still laying the foundation. Chances are there's going to be greater momentum next year. But what are the low-hanging fruits, let's just say, that you feel more confident that you could get in the near term? Can you comment on those?

Yes, I can. In 2025, at the end of 2025, we were at market with one product, which was Rockwatch. And so we landed some of our early wins in that space. And this year, we're still in a LAN phase, but we are starting to expand with that particular product to really achieve what we hope to be some of that longer duration ARR-type contracts. But we come to market this year with three additional products. Our goal for this year is to establish the beachhead contracts and players in that space. So we will be in that land phase for our other product elements. As we mentioned, we do have some early ROC ABUS wins. We had our first ROC Evidence customer in April of this year. And we're looking for expansion into those particular areas and into larger contracts. So, I think our goal is to have, you know, beachhead customers across our entire product portfolio within the Vision AI platform in 2026.

Because, Scott, I know, like, during the IPO process, when we do our food villages, Avis is the product where if you land, you're going to win big. These could be seven, even eight-figure contracts. We weren't expecting, like, you know, you guys already make great headway into this product. Can you, you know, elaborate, you know, what, you know, how did you pull forward, like, the adoption of Avis? You just launched it, and it's already gaining, like, great traction there.

That's right. We achieved a lot of our development of the Vision AI platform prior to going public. So, as we have been able to start applying that capital, we've been able to scale the business and more complete those particular products and go to market. But we have been working on our pipeline opportunities for some amount of time, even pre-IPO. And, you know, a lot of our opportunities are tied to the government's natural process for recompeting contracts. A majority of the federal contracts right now, especially in the Avis market, are in some stage of market research or already starting recompete efforts. So we have our targets in mind within the federal space, especially of the areas where we are trying to win business in 2026. And then across the rest of the sectors and the other products, we also have very specific targets in mind that we will be working toward in 2026.

So is it fair to say, like, Scott, like most of your portfolios are government heavy? And then on the commercial side, I remember you mentioned like telecom as well as fintech or certain engagements you're working on. Maybe give us a little bit more color if you can on those as well.

Yes, late in 2025, we hired our channel manager within the commercial security market. And we have had some early wins in that space. As we mentioned, we won the Innovation Award for biometrics at the ISC West with our face access product. We are well into further business development in those particular spaces in the commercial market, expanding. Several of the channel partners have been established, and now we are looking to grow that channel in those spaces. In the telecom space, we have seen some uptick in volumes with one of our large customers for the telecom SIM card registration process. And we will continue to monitor that market to understand how that might impact our growth in 2026.

Is there any timing on that on the telecom?

like would be our second half quarter quarter quarter there's no key timing that we're eyeing there um you know we see um sustained growth in that side but it's not the area that um we consider most optimistic you know relative to watch avis and the evidence um you know and sdk always has exposure there you know if you look at the the latent effects of the government shutdown You know, what that hit the most was SDK and R&D contracts. So, you see, you know, our SDK has always been spotty and transactional in nature, really outside of the telecoms and the fintech use cases that we support there. And then that has fit a nice pattern, you know, continued incremental growth.

Got it. And then, Gary, relax. I just want to, you know, get some color. Like, you know, obviously, he's a veteran. may have worked with you guys at Adentia previously. Can you comment on maybe his priorities, first 100 days? It sounds like you guys want to, I guess, institutionalize the sales and marketing function. How will he play an instrumental role in this?

Yes, Gary Lack has a tremendous amount of experience within the entire identity ecosystem, but specifically in the APIS market. He has worked at many of the larger foreign providers in this particular space. Gary is also technical in nature. I think an area of particular importance is the go-to-market strategies that Gary will assist us with. His ability to bridge between our engineers and our marketing team to ensure that we have the right go-to-market messaging, the right components to really represent the products that we're building, I think will go quite a way. And then very specific strategy in the APHIS, APHIS space to assist us in how that go-to-market will really come to fruition in 2026 and beyond.

Got it, got it. And then, Scott, I understand, you know, you previously worked at Idemia, and obviously the recent headline, obviously, you know, a travel agent, travel management software company, Amadeus Acquisition. Have you seen any change of control disruption that you may think that ROC can take advantage of because of M&A disruptions in the market?

yeah we view this as as optimistic uh you know our focus is on our strategy and uh given that particular acquisition i think it it only strengthens our strategy with respect to trying to create the domestic capability to be able to uh provide identity technologies to um the rest of the world um as as american uh growing capabilities i think in that particular space You know, acquisition tends to have a slowness in research, a slowness in really being able to get a lot accomplished. That particular, you know, activity probably won't be complete until summer of next year. So there's a window here of opportunity for ROC to really accelerate our go-to-market, focus on the strategy that we've always laid out here for us, and we still remain, to our knowledge, really the only U.S. provider of these identity technologies across the capabilities that we're trying to serve with this Vision AI platform.

thanks for that Scott and I just want to squeeze in one technology question for Brendan before I move on to Cody on the financial side hey Brendan you know like obviously AI Labs has you know I would say like command a lot of the mind shares lately how would you for for the newer investors on the call like how would you characterize the defensibility of Rock's platform against the likes of, you know, the LLM providers in terms of technology modes?

Yeah, absolutely. You know, what we build is different architecturally from a machine learning perspective than large language models. They're much, much more efficient and precise at the computer vision tasks that our customers need us to perform, where, you know, massive skill identity databases or hundreds of thousands of cameras, you know, looking for weapons, you know, we see just, you know, the cost of compute, the cost of memory, all these things continue to run higher. It's because LLMs are very inefficient. They're also not that precise in general as well. You know, this is our core pedigree. There are areas that we use LLMs currently. They're part of our strategy, but we don't see anything changing anywhere in the foreseeable future in terms of how we build our algorithms. We see this as a strength to, you know, relative to legacy competitors of ours out there that, you know, we're much further down, you know, sort of the deep tech, you know, compute stack. And then we're pulling in some of these nascent capabilities as well. But we're not following what we see as maybe pitfalls for solutions to certain problems on the resource intense nature of large language models.

That makes sense. Thanks for that, Brendan. And, Cody, just to wrap it up on the financial side, obviously, we've seen some headwinds on the government contract, but the shutdown has reverted. It's been government's back in business. I was wondering if you could give us some, like, you know, like soft guardrails in terms of, like, you know, what do you expect, your expectation for 2026 now that, you know, the government's back in business? And final question is, obviously, with the capital raised, I think you still have $16.6 million on your balance sheet. Your thoughts on the capital allocation? I know Scott mentioned about hiring talents as well as investing in the infrastructure. Just wanted to get your take, and that's it for me. Thank you, guys.

Yeah, thanks for that question. So, you know, I think, you know, Scott, I think spoke to it really, really well. There's just going to be some inherent lumpiness, especially driven by some of the more legacy, you know, SDK component business and the government R&D contracts. Overall, we're encouraged as we look forward to the subsequent quarters from our perspective. And I think, again, Scott and Brennan spoke really, really well about this. We don't see any sort of structural changes in the opportunity funnel. So, overall, you know, we're encouraged, you know, as the government dynamics play out. And, you know, we are encouraged to see some more activity, you know, pick up in Q2 and throughout later this year. From an overall capital allocation perspective, you know, I think, you know, overall, like, we transformed our balance sheet with the IPO. We're very well capitalized. We're focused in deploying capital into really four primary areas, engineering and R&D, business development and sales, deployment infrastructure, and algorithm compute capability. So, you know, our investment is focused on scaling what is working. We'll continue to pay attention to how, you know, the Opportunity Fundal converts over multiple quarters, but we're encouraged on the direction.

Thank you for that, team. And just a reminder for the general public, we are hosting the management team of ROC tomorrow. So, if you want to get connected with the team, I'm happy to facilitate. Thank you, guys, and congrats on the IPO.

Thank you. Thank you.

This concludes our question and answer session as well as our conference. Thank you for attending today's presentation. You may now disconnect.