SKYX Platforms Corp. (SKYX) Earnings Call Transcript & Summary

Good afternoon, and welcome to the earnings call for our third quarter. Joining us today are our president, Steve Schmidt; our CEO, Lenny Sokolow; and Derek Richardson, CEO of Deako and SkyX Growth and Builder segment, Builder and Hotel segment. Each of them, myself included, will make a statement. Steve Schmidt will get the call started. Thank you. Ronnie, thanks so much, and good afternoon, everyone. As you'll hear today, we're making significant progress and continuing to grow our market penetration. Before I walk through some highlights on growth and financial improvement, I want to say the following. Over the course of my business career, I worked with many public companies, among them my role as CEO at Nielsen and as international president of Office Depot. But I have to say, at this moment there is a complete disconnect between how our company is performing and where our stock price sits. That said, as you'll see, our growth and performance have been outstanding since we closed the merger with Deako, as well as in the months before it. With that, let me share some business highlights. We're reporting record revenue of $25.7 million in Q3 2026, versus $23.9 million in Q3 2025, marking 11 consecutive quarters of year-on-year growth. Gross profit climbed 11% in Q3 to a record $8.1 million as we keep expanding our market penetration; we hold a strong cash position, with $21 million in cash, cash equivalents, and restricted cash as of September 30, 2026. We believe that cash is sufficient to support our path to cash flow positive. The SkyX-Deako merger grows the builder channel pipeline to roughly 4 million units, with an expected average selling price of $50 per product across the next three to four years. Since the merger, SkyX and Deako have announced that we expect to supply more than 210,000 units to three prominent builders, including, first, Maronda Homes; we announced our first major builder program, with more than 80,000 units of our smart home technologies going into more than 1,000 homes, including projects in Ohio, Georgia, Maryland, and Pennsylvania. Second, Home Creations; we announced the second major builder program, with more than 60,000 units expected for more than 700 homes in Oklahoma and Texas. Third, Stone Martin Builders; we announced a third builder program, with approximately 70,000 units expected for more than 850 homes in Alabama and Georgia. We've also announced a signed agreement to supply our technologies to two 65-story luxury Trump Towers in Hyderabad, India, comprising more than 2.1 million square feet. The company expects to deploy tens of thousands of units on this project over the next couple of years. And finally, on the business highlights front, our TurboHeater ceiling fan: we've said that given rising sales and winter demand for our patented all-in-one TurboHeater ceiling fan, we're going to introduce four more models in bigger and smaller sizes and in five distinct colors, along with our original 24-inch model, through national retailers and our e-commerce platform, which consists of multiple websites, in the fourth quarter. That retail channel covers The Home Depot, Lowe's, Target, Walmart, and Amazon. Plenty of exciting developments. So with that, I'll hand the call over to Lenny Sokolow, our CEO, who'll provide more clarity on our financials. Lenny? Thanks so much, Steve. Really appreciate it. And once again, truly, I'm very pleased with what we had to report this quarter. Revenue rose 7.4% to $25.7 million, up from $23.9 million in the third quarter of 2025. Gross profit grew 11% to $8.1 million from $7.3 million in the second quarter of 2025. Gross margin climbed 9% to 31.4% versus 28.9% in the second quarter of 2026. We held $21 million in cash, as Steve mentioned, in cash, cash equivalents, and restricted cash as of September 30, 2026, versus $10 million on December 31, 2025. Most of our company's inventory payments to vendors are made after the company collects payments from its customers, continuing to take advantage of its rapid conversion of e-commerce sales into cash, strengthening its cash position through the Dell working capital model and reducing our cost of capital. Net cash used in operating activities fell by 15.5% to $4.2 million from $5 million in the third quarter of 2025. Once again, management believes it has enough cash to support its path to cash flow positive. Interest-bearing debt, which is after debt discounts, dropped $3.6 million to $14.7 million, maturing in 2030, from $18.3 million at year end. Adjusted EBITDA loss, a non-GAAP measure, declined 18.7% to $2.9 million from $3.5 million in the second quarter of 2026. And adjusted EBITDA loss per share, a non-GAAP measure, fell to $0.02 compared with $0.03 in the second quarter of 2026; and with that... Ronnie? Yes. We'll transfer it to Derek in one minute. And I'd like to say that, you know, since we closed the merger, we've had a lot of interest from major companies, both in the tech world and in the building world, that see eye-to-eye with us on our A-to-Z capability to control the electrical outlet boxes in every home. As we've said before, we're going to be the only company with an A-to-Z solution for all those boxes in the home. The average boxes today in the U.S. market are around 90 outlet boxes, electrical wall outlets, and ceiling outlets in a home. No company in the world today has the complete solution for all of those 90 boxes. Usually, it's three to four companies. We are the sole firm offering an end-to-end answer across every one of those electrical outlet boxes, while any rival would need to be three or four separate companies to deliver a wired solution. What takes them weeks, we can accomplish with ours. That said, under Derek's leadership we are already seeing considerable interest in our products and in this end-to-end answer, and we are likewise pursuing strategic relationships with major tech companies along with other builders, which we hope to discuss before long. In fact, Derek Richardson is heading one of those conversations with a major player who sees the chance to join what Deako and SkyX are doing in the builder market and to be part of it. So we hope to share more on this. That said, I want to give Derek considerable credit for his ability to penetrate the builder market and demonstrate the value proposition Deako brings, and now for the plug-and-play concept, a platform that can grow to much more once you install the wall switches with that same concept of the ceiling, with the same builders who liked his concept a lot doing a great job introducing it to the market with our product; all of us here, with Derek's leadership, strongly believe there is potential to increase home revenue from what Deako had by up to 5x. So with that said, I would like to ask Derek to join us and give his overview, how he sees things, some background about Deako, and what he is doing in the market and experiencing. Derek?

Thanks, Ronnie. I have to say, the prospect of these two companies joining forces gets me really fired up. I'm Derek Richardson, as Ronnie mentioned, and I serve as founder and CEO of Deako. Deako got its start roughly 11 years back under my leadership. Prior to founding it, I headed up sales, product, and engineering groups at Cypress Semiconductor, and my first job out of school was as an engineer with BlackBerry. Over the next few minutes, I want to walk you through what Deako does and explain why this merger has me so enthusiastic. Deako builds plug-and-play smart switches along with simple light switches, plus matching USB, GFCI, and standard outlets, all aimed at builders of new single-family homes. While a house is under construction, the builder's electrician puts a Deako connector at each light switch location throughout the home and then plugs in either a smart switch or a simple one. Down the road, the homeowner can move up to more smart switches, a simple dimmer, a motion sensor, or any other light switch product we offer, and doing so is safe and takes just seconds, with no wiring work and no need for an electrician. Over the past 11 years, we've shipped over 32 million products, and during the last year we expanded supply agreements with Stone Martin Builders, Maronda Homes, and D.R. Horton, which is America's largest single-family home builder. The reason builders pick Deako is that turning homes smart is easy for us, and we make both installing upgrades and selling them effortless. Each switch location stands ready for an upgrade, which means buyers can opt for additional smart switches either before or after moving in. What's more, Deako and the builder partners we work with earn high margins on those upgrades. It follows a classic razor-and-blade model, the same as SkyX: we sell the base at the time the home is built, and then we earn money every time the homeowner upgrades throughout the home's entire life. SkyX applies that identical model from the ceiling, and combined we can offer far more. With the SkyX-Deako merger now closed, we can give builders many additional options, such as the SkyPlug and outlet safety products, plus SkyX smart lighting fixtures, fans, including the SkyHeater fan, and many other products currently under development. I see a major opportunity in bringing SkyX's products to single-family builders. With SkyX and Deako's offerings combined and the new products we intend to add, we'll be positioned to grow our revenue per home to as much as five times what Deako already earns. What excites me most, though, is the platform sitting underneath it all. Deako's platform connector lives in the wall, while SkyX's platform lives in the ceiling. Together, they occupy the places in a home where power, control, and sensing naturally belong. And since everything is plug-and-play, we can offer nearly anything through them, including an intelligent home. After all, as everyone knows, AI is making its way into the home. Most of us today use AI on our phones and computers, but the next big shift will be AI moving into the home itself. With homes getting smarter, the intelligent home we envision requires sensors, speakers, and other devices placed in each room throughout the house. At every light switch—and before long, at every light fixture in the home—our connectors are already present, which means new devices can be plugged in safely within seconds. In the AI intelligent home, we intend to play a major part. This story goes well beyond what we can even address right now, but I'm confident that in the near future you'll be able to see it. Ronnie, thank you for the opportunity.

Appreciate that, Derek—and Derek's leadership is genuinely delivering strong results for us in a lot of areas. What Derek mentioned about making inroads in the building market is exciting, and so are lifetime upgrades—whether that's upgrading for fashion, improved lighting, or better smart features. And keep in mind another piece of our mission that we're highly confident we'll achieve: because we offer an A-to-Z solution, the next phase will bring recurring revenues from AI services, monitoring, subscriptions, and security features we're exploring down the road. So we're just getting started. I'd ask everyone to stay tuned—there's much more ahead. We genuinely believe that, looking back—if you review our press releases from the last 18 months, beginning with the Miami smart city, efforts in Austin, Texas, plus San Antonio, North Carolina, New York, and numerous other locations—we'll bring Deako along to those initiatives too, which is what—just as Derek is bringing us in, Derek will actually bring us into our own projects as well, since that falls under his leadership, including the Miami smart city, and there's plenty more ahead. So the approach is the razor-and-blade model, right? The razor begins with Deako’s wall receptacles and SkyX’s ceiling receptacles; after that, the blades are essentially all the products — and there are plenty of them, several of which Derek named, both on the SkyX side and on the Deako side. Plug-and-play has a lot more coming. Since it’s plug-and-play and can be swapped out in seconds, a consumer is able to do a great many things — some we’ve talked about, some we haven’t. That, though, is the next stage of the strategy. It comes after the razor. Those are the blades, with far more still ahead. Following the blades, we move on to residuals—the recurring income streams we anticipate will become a significant contributor to our business over time. So that's the overall picture; we're making headway on numerous fronts, including the mandatory code. We're continuing to move forward on this. We're hopeful for positive developments across several areas, hotels included. We're working to achieve brand standard status in additional locations. And regarding the mandatory code, looking ahead, we genuinely believe—and we've had conversations with insurance providers—that the safety elements of all the things we've discussed here, we spoke about how strong those features are, how simple the replacement process is, correct? Every initiative we're pursuing—Deako included—centers heavily on safety: stopping homeowners from handling the wiring of wall outlets themselves, and stopping them from wiring ceiling fixtures too. Safety matters a great deal, and given all the protective capabilities headed for our smart platform plus other developments, we want to stress once more that insurance could become a meaningful opportunity for us later on. That covers what I wanted to say—thanks so much; we'll now take your questions. I appreciate it.

Appreciate you taking our questions. Congrats on the deal and all the recent wins. Maybe starting with the B2B piece, back in August last quarter, you said the first builder hotel deliveries would kick off in Q3. Just curious whether you can confirm that, and if you'd like to get more specific about which projects have started shipping, that would be helpful.

Yes, we've actually shipped, I believe, to two projects already in Texas — Austin, Texas, and the Dallas area already — and we're starting, hopefully starting, to ship to a hotel this quarter; so we're beginning to ship, and that's from SkyX's perspective that you're asking. Keep in mind that Deako has been delivering its product steadily, month in and month out, both prior to our acquisition and following the merger. So without question, the shipping department now, after this merger, is really gaining a lot of momentum. We're quite pleased with how we're advancing on these fronts.

All right, great. And perhaps regarding Deako, I realize the deal closed following the quarter, but could you be willing to speak at a high level about what their revenue was, or perhaps the margin profile in relation to Q3, or even a run rate figure?

We're quite pleased with the revenues. We haven't disclosed them as of yet. We'll be disclosing them shortly. But the first three quarters appear solid, and they're in a rhythm that met what we announced earlier in last year's revenues. And I believe this year there's still potential in the last quarter for some growth — we can't say for certain, but some potential exists. It comes back to that same razor-and-blades approach. Derek said it earlier — the razors move first, and a number of the smart plugs sell immediately too, but then Deako offers smart switches in 12 and 24 packs, and they've got a whole team, an upgrade team, that phones customers, helps them out, and walks them through it. Seeing it happen is honestly hard to believe — how they deliver a box of 12 or 24: you just pull out an old switch, drop in a new one, fine, and you can repeat that for 12 or 24 switches, then open your app and it's all linked up, and you can stay in one spot while running your whole home. That's a major component of Deako's business strategy and framework that they'll leverage, using the existing upgrade team for SkyX projects — for their product line, with SkyX offerings where, for example, regarding the heater fans Derek referenced, there's appetite for additional plug-and-play ceiling fans along with smart products and fixtures that we're able to offer; so this upgrade division looks quite promising to us, and we're already beginning to sense how substantial it is; plus what appeals to us here is direct-to-consumer, and our gross margins in that area are fairly substantial.

Got it, that's very helpful. Maybe just one more question from me about the TurboHeater fan launch; this is kind of the first big-box winter season where you've got multiple styles and sizes. Could you help us think through Q3 in terms of any sales to some of those larger department stores, and how that compares with plan versus what's actually shipping? Thanks.

Well, as far as our summer plan goes, we went well beyond what we expected over the summer. And now we're starting the winter plan. What we can say is that two big boxes are pretty interested in trying to put something together for the winter. We can't name names yet. So, look, a few people came across videos in certain areas and other items; we’re unable to talk about anything until approvals come through, and we don’t have something we can sign and speak about, but we’re really happy. And as you’re aware, we expanded—we brought in four models plus five distinct colors. So at present we offer five models and five distinct colors within our assortment. That’s actually today—not today, today, a few weeks out from today, it’ll be available in the market, but it’s already in progress here and we anticipate launching it, and everything is driven by demand. As we noted, we introduced the 20-inch model, plus a 44-inch version with a distinct design, along with the 52-inch and the 60-inch for larger spaces. Demand has been strong, with customer service performing excellently across our e-commerce channels and other teams grasping what shoppers want; some customers requested options for smaller rooms, though the majority wanted bigger ones. So we delivered a solution, and we already have reservations for these products, which has us very enthusiastic, and I believe it will unlock even more big box opportunities. We're expanding, we feel good about it, and we expect this winter to be significant. Once that becomes possible, we can discuss those matters.

That's great. I appreciate that, guys. Thank you.

Good afternoon.