Elauwit Connection, Inc. ($ELWT)

Good day, and welcome to the IAccess Alpha Virtual Best Ideas Spring Investment Conference 2026. Our next presenting company is Elauwit Connection. [Operator Instructions] I'd now like to turn the floor over to today's host, Dan McDonough, Founder and Executive Chairman with Elauwit Connection. Please go ahead.

Thanks, a bunch, and thanks, everybody, for being here and being interested in learning about our company Elauwit. I'll tell you something interesting about this opportunity is that we -- this is a second iteration of what we've done in the past. We built a small managed service provider from 2012 to 2018 in the student housing space. And in 2018, sold it to Boingo Wireless for a total combined value of $43 million. A bunch of us went to go work for Boingo but Boingo shifted gears and was sold and ended up not wanting to pursue this space. So we got the band back together. So myself, and Barry Rubens and Taylor Jones were all part of the original team, and we decided to execute on the business plan that we were going to do with Boingo, but just on our own and this time with our focus being on primarily conventional multifamily, not student housing. A big reason for that is because student housing Internet service is a cost of goods sold, so there's a lot of margin compression, whereas in the conventional multifamily space, it's an opportunity for NOI improvement. And these are themes I hope to hit on in a little bit more detail as we get through the deck here. One of the things that we find really, really interesting about this is that it's a win-win-win opportunity. In this instance, we can take end users, the tenants of our clients and give them a really robust internet connection with a great customer experience at a price that's cheaper than market. For our clients, the owners of apartment buildings in the United States, we're able to give them an improvement on their NOI, a way to market their property as something different than other folks in the market in terms of the quality of the Internet experience. And it's a win for Elauwit because, we basically are a simple organization like the utility, but we have the margins of a SaaS company when it comes to monthly recurring revenue. Now let me dive into some of these details. When we provide service for our owners, we're charging them a rate that then they mark up and put into the invoice for rent, most cases, that gives them 200 to 300 basis points of NOI improvement. Anybody here who understands the real estate space knows that, that could be the difference between a deal that pencils and a deal that does not. So it's a meaningful amount of NOI improvement. We also see that, that gives them the ability to borrow more because their property value goes up overnight when they sign a contract with us, it's really interesting aside that there's a lot of financial value that's unlocked by doing business with Elauwit not just service quality. For us, the second point, we can get 60% to 75% gross margin contracts which is just a remarkable return for a company like us. We also have a highly fragmented growing market. We can reach multifamily properties that have at least 100 units, and there's no 1 in this space that has more than 1% share, managed service provider. We're primarily going and disrupting the space that AT&T and Verizon and such [ inhabit ]. As of last Q3, we had roughly 32,000 units under contract with a $36 million backlog. I can tell you we're growing our unit count significantly. We'll be releasing results later this month that will underline that. Our pipeline is strong and it's only gotten stronger since we've built out a sales team that I'll go into detail later. And our IPO on November 6 was a seminal moment for us as it gave us the cash we need to take this business to the next level. Now to dive into the business a little bit. I mentioned this that the conventional multifamily market was very attractive to us. It's a $26 billion market for us, basically just under $5 billion of new construction and for existing properties, it's roughly $21 billion, $22 billion. 95% of those properties have done this the same way that they've done it since the invention of cable TV, which is they give an easement to the local cable company to go in and have a direct relationship with their tenants. The disruption that we provide is that we allow the building owner to participate in the wallet share of the telecom space, but also the service quality share. And what I mean by that is when Internet first came out, it was a nice amenity. Eventually, it became the most important amenity. Then it became a utility. And I would argue today the most important utility. Some people kind of shake your head when I say it's the most important utility. But if you have a family and you asked them, hey, would you rather us have no water for 6 hours or no WiFi for 6 hours. I think you know what the answer would be. So I do believe it's the most important utility. However, the building owners today are still doing businesses though it's acute amenity. And the problem is that if the Internet doesn't work and you're building in some areas you can't just say, well, it's not our fault, it's Comcast, give them a call because people will move out of your apartment. So the time has come that multifamily owners have to pay more attention to the service quality of the Internet. In addition, we're seeing major players who are publicly traded, even say in our earnings calls that this is a key focus of theirs for both service quality and for NOI improvement. So we believe that the market is huge, and it's there for the taking for a company like us. So what is it that we provide? I'll tell you we have 1 product and 2 financial solutions that wrap around that product. So the product for us is the last 100 feet. You might know that back in the day, we used to talk about the telecom space, that the most valuable piece was the last mile. And we decided a while ago that if the last mile was worth a lot, then the last 100 feet should be worth really a lot. So what we do when a building signs up with us is we design the network, engineer the network, and we do put in a headend and we get a metro circuit from a carrier that's dozens in any market that we go to, and we connect that metro circuit to our headend and we build an enterprise-grade network within the apartment building. Now think about that. The conventional setup is that there's a very thin network in the building from an incumbent cable company. and every single resident gets $50 toaster appliance that produces their WiFi. These are retail grade devices and it creates a lot of network congestion within a building, especially a dense building like multifamily. And it's just basically taking the single-family experience and layering it into a multifamily environment, which is not optimal. We build a network like you'd have at Morgan Stanley. We're running fiber to the risers. We're running them to enterprise-grade switches. Cat 6 to each wireless access point, enterprise-grade access points. Your Internet experience is the same everywhere you go in the building, then it feels like you're at work, not at home. It's very powerful, very robust solution. And we designed it in a way that it's not very complex to manage because, we'll guess what? We're the ones managing it. So again, service offering being the big piece of it, right? What are we providing for our property owners? The financial impact. WiFi now is something that's working way better in your building and you're making money off of it. We're enabling smart building technology. For instance, if you do business with 1 of the cable company incumbents, you might not be able to have access to the network to use it for building IoT. With us, you do. We also have no geographic limitation because of the breakup of Bell franchise agreements from 100 years ago, a lot of the major cable companies are restricted in terms of geography, Elauwit go to all 50 states, which is really nice when you're a national apartment building owner because you can use us to go everywhere. And lastly, and we'll get into this later, but we provide a capital solution. A lot of managed service providers, including us in the past before our IPO would require building owners to put up the money for the network upfront. We now have a product that allows them to not have to do that, which is going to be really useful as we grow in the retrofit space. At the end of the day, the best part about this is that we enable the apartment building owners to be heroes to their tenants. Immediate connectivity is 1 of my favorite ones. When the conventional multifamily experience is that when you move into your apartment, they give you a flyer for 2 different providers, and you get to call them up and schedule an appointment between 10 and 2 next Thursday and maybe then you'll get your Internet setup. When you move into an Elauwit property, your Internet on before your couch gets moved in. It's just always on, always connected. Our service is remarkable. We have a live human on the phone if you need any help calling our 800 number within 60 seconds. Our price clarity is great. We don't have all the different FCC fees because we're a bulk service provider. We don't have all the weird taxes when we tell an apartment building owner that we're going to charge you $40 per unit or $30 per unit. That's how much we charge. And everything that we do is next-gen, being fiber-based. We are planning for the future and not working off of old technology. I won't stay on this slide very long. I call this our brag slide. The best part of it is down at the bottom, just looking at like our average answer time, 34 seconds. First touch resolution is over 80%. Those numbers are actually improving. So the point is, we provide incredible service to our tenants. Here's where I'll break down the 2 financial models. On the left side is what we call managed service. In this instance -- and this is designed primarily for new construction or well-heeled large apartment building owners. And what I mean by that is these are folks who have a balance sheet or borrowing capacity that's very strong or in the new construction moment, you're actually borrowing money at that time for your construction. So to add a few points for the network is a smart move. These folks who usually borrow cheaper than we can. So therefore, they can capitalize the network. In that instance, we're getting the -- in this instance, we're getting $67,500 per year in our managed service fee. And this is for like the average building. So our estimated incremental gross profit is $42,500 per year. There is no capital expenditure outlined by us. So there's no IRR calculation, and our gross margin is roughly 60% on our MRR. In that instance, the property owner is getting $255,000 in retail revenue to them, underwritable revenue for them. Well, the underwritable part would be the $187,000 that is an NOI increase. That calculates to about a 45% IRR for the building owner. I remember being in the Board of 1 of our REITs and the Board members saying that their return on investment on their telecom investment is way higher than it ever has been for their bricks. That was a great thing for me to hear. The big thing is that it also increases the property value because if you apply the cap rate to the NOI increase, that's where you get, so $3.1 million on average. On the right side is what we call Network as a Service. This is an incidence where it might be a smaller owner, not as robust a balance sheet or a retrofit opportunity where they don't have a construction loan open. In that instance, we're going to charge them a small design fee so that they have some skin in the game, $18,750. Our managed service fee at this point, because we're providing the financing, is up significantly, and that's $135,000 per year. Even with the cost of capital, our incremental gross profit is about $105 million, and that's on a $250,000 capital outlay on our part, which generates a 35% unlevered IRR. And I say unlevered IRR because that's where we are today, but we're looking at our capital structure to figure out how we can apply some debt to increase that IRR. And also, our gross margin on those contracts is roughly 75%, and once again, it's still a really big opportunity for the property owner. So they're getting $120,000 in NOI increase. So it increases the value of their property by $2 million, and this is within having an $18,000 capital outlet. So those are our 2 financial products that wrap around our 1 technical product. I'll talk more about this towards the end, but essentially, the pre-IPO, all the sales for the organization were done by executives through relationships. We used some of the IPO funds to build out a sales organization. And actually, you know what I'll do this now. I'll tell you we built that organization out starting in November. The last few hires were a couple of account executives that were about a month ago. The activity that we've seen from this organization considering that we really have a -- we only turned on the marketing machine maybe in January. The activity has exceeded all of our expectations. I can tell you that we have eyes on about 8,200 units that we never -- people who we've never talked to before, just from this new sales and marketing organization. Now those 8,200 units are specific opportunities for us but they're owned by companies that represent closer to about 50,000 to 60,000 units. So that's the activity we've got in about 6 to 8 weeks and we're really, really pleased with that activity. We're going to continue to monitor how these things move through the pipeline but we are bullish on our sales organization and how they're going to be able to scale us. This provides a case study, the pipeline detail I've already gone into, but GoldOller is a real estate company based in Philadelphia. And we did 1 Network as a Service product before our IPO to try to get an idea of how this would work. And the results were wild. We put in $500,000 into this building. Keep in mind, this is a larger building than average. It's 450-unit community in Fort Wayne, Indiana. So $500,000 investment by Elauwit, generated $195,000 in annual gross profit to us, so a 2.5-year payback. On a 10-year contract, and it gave GoldOller $200,000 in NOI increase, which added $3.1 million to the property value. And once again, there's that 35% unlevered project IRR. We're excited to see how leverage could get us further. So once again, this explains a little bit about what we've been doing since our IPO. We've got some funds to go ahead and fund these Network as a Service projects, which we're in the process of selling now. We paid some debt, but the biggest exciting piece of this investment was building out our sales and marketing team. That consists of the head of the organization, which is our Chief Growth Officer. VP of Marketing, who is very much focused on AI tools for marketing. We hired an AI marketing firm that's managing our outbound and inbound touch points. We have a few clerical people in the sales organization and IT specialists in the sales organization, 2 account executives that we recently added and BDR who's working the phones. So all in, we're -- that's the team that's put a sort of net around 8,200 units of opportunity in just the last couple of months. We also had a put call that we settled and some deferred compensation. But our balance sheet now is much stronger than it was before our IPO, and we're equipped to go ahead and execute on these Network as a Service deals. With that said, I'll wrap us up here before Q&A. We are excited about the large, growing and fragmented markets. Once again, $25 billion opportunity now, with new multifamily properties being built every year. We can capture an absolutely infinitesimal amount of the TAM, and become a $1 billion company. So that gets us quite excited. We're providing a disruptive managed service. And what I like about that is it's not so disruptive that it's hard to understand. We have a business that I can explain to Grandma and it's structured like the utility, but we do have those network -- excuse me, Software as a Service margins. We're providing new cash flow for customers. It's something that like not a lot of businesses can talk about. They go in and they cost a customer money, we actually make them money. We also think that at the end of the day, what we're selling is a service -- excuse me, customer experience more than an Internet experience. Notoriously Internet companies are horrible with customer service, and we've built our organization to be the exact opposite. Our contracts are long term. There are 7 to 10 years. Low churn, it's not really easy to switch from 1 provider to the next, and we're 1 of those things that if it isn't broke, they're not trying to fix it. And it's high margin, 60% to 75% gross margins. And lastly, our IPO capital really has been a clear catalyst for us to set up the company on an accelerated growth trajectory. And with that said, we can open it up for questions.

Thanks, Dan. This is Matt. I'll join Dan for Q&A to help sort through some of the questions that several of them coming in. And let's just start going back in the slides, to the state map. It looks like Elauwit is in about half the states in the U.S. Is there any limitation on where Elauwit can go in terms of states? And how does the company do the installations? Do we have our own teams? Or do we have contracted teams? Is the first question we got.

Good question. So we are not limited by where we can go, being a managed service provider and a bulk service provider, we are not constricted by the franchise agreements. So in our last iteration as a company, we were in 43 states. And -- but we can go to all 50. So that is a kind of a big selling point for the big national providers -- excuse me, national apartment building owners. We are not restricted. And we are growing, I think we might be in more than 30 states today. Maybe we're just right now also saying that where are our growth opportunities? Where are we focusing? We're focusing more on the type of client than the region. So for instance, we love companies that have like 4,000 to 6,000 units and that they're growing, and we like to grow with them. And we know where they take us. If they're building something in Fort Wayne, Indiana we go there. And that's been our approach, both in the last iteration of this company and this one. Matt, what was the second part of that question? Oh, how we actually do the installation, I'm sorry. So every project has an Elauwit W-2 project manager who's on site, not on site every day, but on site managing the product. Our network engineers are based in Colombia, South Carolina. They design the network. The network gets provisioned and deployed from there. The project manager oversees the installation and we use local electric subcontractors for low-voltage poles and such in the market. So it gives us a lot of ability to scale on the operational side because we are using a big network of subcontractors.

Great. And then you referenced going where the customers have properties in these large apartment owners of 4,000, 6,000 units. We had a question that kind of related to that, asking about what was the minimum number of units that would make sense for an Elauwit install?

Right. So we're targeting -- and in fact, I should say, when we talk about our total addressable market, we're not talking about the entire multifamily space. We're just talking about the ones that fit within our sweet spot. And our sweet spot is 100 units plus. I will say that if we have a partner of ours where we're doing 20 of their properties and the 21st property has 65 units, we'll provide service there because we're going to take care of our customer, but we're not targeting those. So our target would be 100 units or more. I know the follow-up question that typically is what about density. Density does make us a little bit more efficient, but we can do garden style or can do high rises. So we can -- either one and 100 units is where it starts to make sense.

Excellent. And then kind of following from that, -- what's the expected payback period on a typical brownfield deployment? And then perhaps related to that, how does brownfield deployment differ from a greenfield in terms of the payback to Elauwit, might be a follow-up to that query.

Sure. So the payback in our GoldOller example was 2.5 years, and I think that's pretty close to going to be the standard. So 2.5 years we get capital payback on our Network as a Service financial product, and it's on a 10-year contract. And keep in mind on the managed WiFi side, there is no payback because we don't have any capital outlay because in that instance, in using that financial product, the customers paying for the network upfront. So we don't have any capital invested in the deal. But Network as a Service is going to be about a 2.5-year payback. It's not going to be -- it's going to be a de minimis difference between new construction and retrofit.

Okay. And then we have a question that came in -- so you referenced the pipeline or the backlog of units to be installed. Can you say that number again? And then over what time do you expect those units to be installed.

Yes. So our backlog, I should explain, we reported that our contracted units at the end of Q3 was 32,000. That's the latest number we've reported. I can tell you we're growing it significantly, and we'll report those numbers with our earnings. But our backlog, I want to be clear, is not because we're operationally trying to catch up. Our backlog is really dictated by our customers. So for instance, using the new construction as an example, if we sign a contract on a property, it might be towards the end of the development phase. We're kind of at the mercy of the schedule of the GC and such. And it can take upwards of a year before we're actually billing for units in that building. What we do know is that when we have a contracted deal, that revenue is going to come at some point. We just don't know exactly when. On a retrofit, it could be as fast as 6 months from when we sign the contract because there's nothing holding us back. and we can do those kinds of deals, and we can build out those networks and land those circuits in 3 to 4 months. So we can move pretty quickly. But for new construction, depending on the development cycle, the construction cycle, any problems with the GC faces or whatnot, it could take a year to 1.5 years. So but that backlog, again, is driven by our customers and not by us. We are always ready to go as soon as somebody is ready for us to build out our network.

We've about 3, 4 minutes. We've got some good questions in the list here. I'll try to pound through a few of them real quickly. So why would AT&T or Verizon not get into a similar approach to wiring complexes and compete with Elauwit in this model?

Really great question. So 1 of the key metrics by how these big telcos are valued is by their passes and their subscribers, right? So there's a metric that says if they've got so many passes or so many subscribers that they had a value based on that. The problem for AT&T is using Woodbridge as an example, it is senseless for them to turn 450 customers into 1 because it would set their market valuation. And what I've learned about the big telco companies is that they're very disciplined they're not going to make bad decisions. And the fact is, if I build Elauwit a $1 billion company, it would be a remarkable feat in a huge organization. AT&T did $44 billion last quarter. They're not going to make bad decisions to capture a tiny low piece of the market that they're losing. And for them to convert 450 customers into 1 would stack them from a market cap standpoint.

And then this is a really important question here. I think how should investors think about recurring growth versus onetime installation revenue over the next few years?

Well, I mean, I'm not exactly sure how to frame that answer. What I'll tell you is like our sole focus is on building out our MRR. The construction revenue is icing on the cake, but we know that the recurring revenue stream is way more valuable than the construction stream. And I think also considering up to day, all of our projects were managed WiFi and had that construction revenue. I think over time, we're going to see us doing a lot more of the Network as a Service deployments, which will not have construction revenue, but increase our MRR and increase our gross profit.

And just a good follow-up to that. What would be the driving decision points for a property owner if they were choosing between the managed service versus the Network as a Service, what's the critical differentiator or decision point for the property owner?

The cost of capital, right? So -- or the access to capital. If you have access to capital and it's sub-70%, it makes a lot more sense for you pay for your network upfront, capitalize it and get a higher NOI, which increases the property value evermore. As you can see in those 2 financial models in both instances, the property value goes up, but the ones where they're putting the -- putting the dollars in for the infrastructure, it goes up a lot more. So the Network as a Service is really for folks who don't have access to capital or whose access to capital is expensive, which I would assume a lot of the retrofit situations are going to be folks who don't have easy access to capital because they don't have a construction loan open, et cetera.

Great. We have a few other questions, but I think we're running short on time, so I will catch those in the one-on-ones. So Dan, do you have any last comment for 30 seconds here or else we'll turn the floor back to the conference team.

I just want to say thank you. The investor community has been really -- really has sharpened our approach to business, and I've appreciated these kinds of opportunities in the one-on-ones. So thanks for taking the time to listen to what we're doing. And I can turn this over to the -- oh, there we go.

That concludes Elauwit Connection's presentation. You may now disconnect. Please consult the conference agenda for the next presenting company.