Acorn Energy (NASDAQ:ACFN) reported first-quarter 2026 results that reflected continued growth in recurring monitoring revenue and a higher gross margin profile, offset by a sharp year-over-year decline in hardware revenue tied primarily to the completion of a major customer deployment. Management also highlighted progress on its recently announced AIO technology partnership and provided initial details on its go-to-market plans for a new Infrastructure Solutions offering.
Major customer hardware shipments roll off, monitoring revenue increases
CEO Jan Loeb said the quarter showed “continued expansion of our base of monitoring endpoints,” but results were “offset by an anticipated decrease in year-over-year hardware revenue related to our material cell phone provider contract.” Acorn recognized $93,000 of hardware revenue from that customer in Q1 2026, compared with $876,000 in Q1 2025, as shipments tied to the original contract are “largely complete,” Loeb said.
During the Q&A, Loeb addressed an investor’s question about whether a prior large order was “not renewed.” Loeb said that assumption was incorrect, explaining that the contract called for shipping approximately 5,000 to 10,000 monitoring units within a year. The company fulfilled those shipments across late 2024 and the first half of 2025, Loeb said, and the customer has since come back for additional units as it adds new cell towers. “We have a very good relationship with them,” Loeb said. “The product works very well. They’re very happy with it.”
Financial results: revenue down year over year, margins improve
CFO Tracy Clifford said the “headline takeaway” from the quarter was the strength of recurring monitoring revenue and improved gross margin, “set against a challenging year-over-year hardware comparison driven by the timing of our largest contract.”
For Q1 2026, Acorn reported total revenue of $2.227 million, down 28.1% from $3.098 million in Q1 2025. Clifford attributed the decrease to a $1.019 million, or 55.7%, decline in hardware revenue, partially offset by a $148,000, or 11.7%, increase in monitoring revenue.
Hardware revenue totaled $810,000, including $556,000 of new hardware sales and $110,000 from amortization of deferred hardware revenue. Clifford noted deferred hardware amortization was $315,000 in the prior-year period and said the company is approaching “the final recognition of the remaining deferred hardware balance later this year.”
Gross margin improved 510 basis points to 80.2% from 75.1% a year earlier. Clifford said the improvement reflected a higher mix of monitoring revenue, which carried a 94% gross margin in the quarter, and a lower contribution from the major contract’s hardware shipments.
Operating expenses increased 11.2% to $1.914 million, driven by higher SG&A. Clifford said SG&A rose primarily due to a $136,000 increase in non-cash stock-based compensation tied to officer and director option grants and $111,000 in higher OmniMetrix SG&A for personnel and technology investments, partially offset by lower commissions. R&D declined $36,000 after completion of the new OMNI and OMNIPRO development programs.
On a consolidated basis, the company reported a net loss of $77,000, or $0.03 per share, compared with net income of $464,000, or $0.19 per share, in Q1 2025. Clifford said Q1 2026 included $197,000 of non-cash stock compensation expense versus $61,000 in the year-ago quarter. Acorn recorded an income tax benefit of $25,000 in Q1 2026 compared with income tax expense of $154,000 in Q1 2025.
Cash, backlog and non-cash compensation
Loeb said the board increased 2026 stock option awards “to compensate management and the board in lieu of additional cash compensation or board fees,” citing the company’s 2025 financial performance, its Nasdaq up-listing, and completion of the AIO partnership agreement effective Jan. 1. Loeb said the 50,000 management options vest over 12 quarters, meaning higher stock compensation expense will affect results through the third quarter of 2028. Excluding the impact of non-cash compensation, Loeb said Acorn’s consolidated results would have been profitable in Q1.
The company ended the quarter with $4.257 million in cash, compared with $4.454 million at year-end 2025, and remained debt-free, Clifford said. Cash provided by operating activities was $53,000. Investing cash outflows totaled $260,000, including $250,000 as the upfront payment for the exclusive commercialization and distribution rights under the AIO technology partnership agreement.
Clifford said OmniMetrix’s deferred revenue, which the company refers to as backlog, was $3.269 million at quarter end, with $2.934 million expected to be recognized over the next 12 months.
AIO partnership and Infrastructure Solutions segment launch
Loeb said Acorn is working to bring AIO’s “industry-leading, multifaceted suite of products for cell towers, data centers, and utility substations to North America for the first time,” describing the offering as a way to protect infrastructure against theft, power issues, environmental risks, and to maximize energy utilization. The company has established a separate reporting segment called Infrastructure Solutions (IS) to track the business, and Loeb said the company does not expect IS revenue in the first half of 2026.
As part of the launch, Loeb said Acorn has two AIO-based tower sites live in the Atlanta area for demonstrations with an existing telecom customer. The sites monitor the tower shelter as well as the front gate, and the dashboard includes power system statistics, fuel levels, battery voltage, temperature and humidity, HVAC runtime, flood detection, and live security camera feeds, Loeb said.
Loeb told investors the company is still finalizing hardware and services pricing models, but expects the “average AIO sale to be 5 to 6 times the average sale of existing OmniMetrix products.” He said theft is “perhaps the most pressing issue facing cell tower operators today,” adding it is “a growing and largely unaddressed problem” in the U.S.
Go-to-market priorities, sales cycle expectations, and model
In response to questions, management outlined an initial commercial plan for Infrastructure Solutions:
- Telecom first: Loeb said the company will initially target tower operators, leveraging existing customer relationships and the two live demo sites.
- Data centers next: Loeb said AIO has a data center product suite and that Acorn plans to pursue that market after telecom.
- Utility substations third: Loeb said substations are the third priority market.
Asked about potential sales-cycle length for AIO-based solutions, Loeb said the company does not yet know. He said the cell tower solution could have a sales cycle as long as the company’s generator monitoring business due to the pace of large corporate buying processes, but added that theft concerns could accelerate decisions.
Loeb also said the AIO initiative will be handled under OmniMetrix, including branding and staffing. On monetization, Loeb said AIO’s existing model is primarily equipment sales plus an SLA-based ongoing revenue stream, but Acorn’s approach may differ, including the possibility of an OpEx model that bundles equipment and monitoring into a single monthly price.
Regarding integration, Loeb said AIO has its own generator monitoring product, while OmniMetrix’s generator monitoring is “a little bit more comprehensive.” He said OmniMetrix generator monitoring is integrated into AIO’s software at the two demo sites.
Finally, asked about OEM white-label and bundling initiatives previously discussed, Loeb said the company continues to have discussions with two OEMs but had “no update to report.”
About Acorn Energy (NASDAQ:ACFN)
Acorn Energy, Inc, through its subsidiaries, develops and markets wireless remote monitoring and control systems for various markets in the United States and internationally. It operates through two segments, Power Generation (PG) Monitoring and Cathodic Protection (CP) Monitoring. The PG segment provides wireless remote monitoring and control systems, and services for critical assets, which include stand-by power generators, compressors, pumps, pumpjacks, light towers, turbines, and other industrial equipment; and Internet of Things applications.
