Morning, and welcome to Otovo's second quarter 2026 results presentation. I am Rodney McMahan, Head of Investor Relations. Joining me today are John Berger, Chief Executive Officer, and Jennifer Santoscoy, Chief Financial Officer. Before we begin, please review the disclaimer on slide two. Today's presentation contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially. With that, I will hand over to John.
Thank you, and good morning, everyone. I will start with the headline numbers for the quarter, then walk you through Otovo 2.0, what this company is now, and why the model works. Jennifer will take you through the financials. I will come back for the business highlights, and we will close with outlook and guidance before opening for questions. Q2, and specifically the month of June, marked a point of transition. Total revenue was $10 million, up 8% quarter-on-quarter at constant currency, and that is despite deliberately winding down the Legacy New build business. The engine that increased that number is Field Services revenue, which grew approximately 200% sequentially at constant currency on the ramp-up of the service businesses and the consolidation of EnergyAid. Adjusted group gross profit moved up 28% quarter-on-quarter on improved revenue mix consisting of an increase in Field Services revenue.
Adjusted OpEx was down 9% quarter-on-quarter at constant currency, even while absorbing EnergyAid, thanks to cost reductions. Adjusted EBITDA improved $1.1 million sequentially at constant currency and $1.5 million year-on-year. The story for the second quarter was our execution, especially in the month of June, as during the month we integrated EnergyAid quickly, saw additional significant Endurance-driven cost cuts, and U.S. sales move materially higher. U.S. sales towards the end of July were materially higher and continue to grow at a torrid pace. Equally important, the steps we took in the second quarter are poised to drive a strong second half for Otovo when the financial benefits take hold, leading to the increase in guidance I will discuss later in the call.
It is possible that the combination of rapidly increasing sales in the United States and cost cuts due to Endurance being deployed in the global areas of sales, customer support, procurement, scheduling and dispatch, and marketing have moved us into adjusted EBITDA positive over the last few days. With new acquisitions soon being added to the mix, we expect to see similar success in Europe in the coming weeks, thereby cementing our profitability and unlocking operating leverage, resulting in significant cash flow potential. In addition, we are hiring additional technicians in the U.S. and Europe to handle the increase in growth without having to add support staff, thanks to Endurance. These strong tailwinds have continued into Q3 and are expected to grow even stronger in Q4.
On the business side, approximately 55,000 customers as of July 31 , up over 80% from Q1 and up over 200% from the end of 2025. The Endurance rollout remains on track for company-wide completion in Q3. We identified more than $1 million of cost avoidance from Endurance this quarter, taking the total well above $5 million. We have recently closed the SST acquisition, announced the Green Panel acquisition, and have three additional acquisitions, one in the U.S. and two in Europe, expected to be announced in the coming days and weeks. Let me frame what this company is now, because it is a different business than the one many of you first knew. Otovo is an AI-Native behind-the-meter energy services company servicing homes and businesses in Europe and the United States. We combine equipment monitoring, rapid repairs, dependable power supply, and grid participation into one service.
Endurance, Otovo's AI platform, monitors installed equipment, optimizes service from problem detection to resolution, and coordinates repairs around the clock. For 2026, we are guiding to $105 million - $115 million of revenue, an increase of $25 million from our last guide last quarter, and $15 million- $20 million of adjusted EBITDA, an increase of $12.5 million, both on a Q4 annualized run rate basis. Three things make this work. First, a large orphaned installed base. Over 37 million behind-the-meter power asset installations across Europe and the United States, of which more than 13 million have no service partner to call because roughly half of installers have gone bankrupt or exited. Second, Endurance, our margin engine, which automates intake, diagnosis, dispatch, and scheduling, and which we expect to lift EBIT margins from a 10% - 20% industry average into the 20% - 30% range. Third, we are a proven consolidator.
Seven deals have been closed and integrated since the December 2025 merger, with four additional transactions, including the announced Green Panel deal expected to close this year. Step back and there are three secular waves converging here, and they reinforce each other. Power, a long-term global bull market in behind-the-meter energy driven by AI, electrification, data centers, and reshoring. Service, U.S. home services, HVAC, pool, pest, plumbing, are consolidating for scale. In our category, the installer collapse has left an orphan gap of over 13 million customers. AI. Applied AI is the next phase of the megatrend, and it drives real productivity gains in service businesses. Otovo converts that into margin through Endurance. You rarely get to sit at the intersection of three tailwinds at once. We do.
To size it, 37+ million installations across the U.S. and Europe, more than 13 million orphan customers, and annual service TAM north of $55 billion. The supply side is fragmented and distressed. In the U.S. alone, there are an estimated 300 service-only companies and over 10,000 installers with some service operations, most running expensive SaaS software stacks and serving one local market. Roughly half of the residential solar installers operating in 2020 have gone bankrupt or exited. Depressed valuations plus stranded customers are close to an ideal M&A environment, and we are moving through it deliberately. The unit economics are straightforward. Five revenue streams per customer, targeting roughly $1,400 of annual average revenue per user in residential at a 45% blended gross margin. The Otovo Care membership, monitoring plus fast response access, is about $250 of that.
Repairs and field service billed per job with priority response for members is the largest piece at roughly $650. Equipment upgrades, batteries, EV chargers, load management is around $400. Retail power and VPP/grid services is on top. On the commercial side, average revenue per user is closer to $4,900. One clarification we always make. Otovo Care is not a warranty and not insurance. It is monitoring, priority response, and repair discounts. The bundle exists because service earns loyalty, and loyalty is what makes upgrades, retail, and VPP land at high margin. Endurance is one proprietary tech stack with AI agents running across every part of the business, marketing, sales, operations, and supply chain. For security control, we utilize our own servers with continuous internal audits and full lockdown capability.
What that means in practice is one record per customer, work orders, appointments, membership, territory, and billing on a single screen, on one proprietary data layer. The AI does the work. Every call, email, and text on one thread, with Endurance confirming the inspection appointment with the customer itself unprompted. Our vision is that the technician becomes the only human touch point for our customers. The cost impact identified to date is over $5 million annualized and growing. These are distinct and non-overlapping. We expect the number to keep rising with both organic and inorganic growth. One more point, Endurance now improves its own software. System issues and feature requests are picked up, investigated, fixed, and merged by the platform itself. 1,113 of 1,362 actionable engineering tickets resolved and 696 code changes merged in the last 30 days. The team sets the direction, the system does the work.
Three growth channels ranked by impact. First, M&A, rolling up service companies and customer books. We acquire local service companies and get vans, technicians, and customer contracts in one stroke. We buy customer books from failed installers at cents on the dollar, and we deploy Endurance post-close to strip out SaaS, dispatch, and call center costs. Second, OEM and asset owner deals. Multi-geography contracts with OEMs, solar funds, utilities, and leasing platforms. Each new geography compounds the value of the relationships we already have. Third, direct organic acquisition into our 1.9 million legacy customers inherited from predecessor brands and companies. Slide 16 sets out our strategic transactions. Green Panel is our latest announced transaction that will greatly bolster our European operations with a purchase price of $11 million against 2026 expected revenue of approximately $12.8 million and EBIT of approximately $2.9 million.
While it is Israel's number one solar O&M provider, Green Panel reaches well beyond Asia into the attractive European markets of Austria, Italy, and Hungary, with around 280 MW under management and roughly 100 commercial and industrial customers. Its O&M playbook is directly transferable to our U.S. and European markets and is expected to close in Q3. With that, I will hand the call over to Jennifer for the financials.
Thank you, John, and good morning, everyone. Revenue in Q2 was $10 million, up 8% versus the first quarter at constant currency. Field services contributed $3.3 million, up approximately 200%. Recurring services was $600,000, up 20% at constant currency, driven by subscription growth. We continue to shift our focus from New builds to service and the migration of the continuing New build business from installation to upgrades. Looking forward, we expect service revenues to accelerate into the third quarter with SST now closed and four other M&A transactions expected later this year. Recurring services will continue to grow alongside the subscriber base. Adjusted gross profit for the group was up 28% quarter-on-quarter on improved revenue mix and the trajectory throughout the quarter was positive. Adjusted OpEx was $6.8 million, down 9% quarter-on-quarter at constant currency as cost reductions more than offset the consolidation of EnergyAid.
One-time costs included $1.1 million of severance and M&A plus $900,000 of non-cash expenses. Adjusted EBITDA was - $4.5 million, an improvement of $1.1 million sequentially at constant currency and an improvement of $1.5 million year-on-year. For me, I think this is one of the most interesting slides in the deck. Field services gross margin was 18% in the second quarter versus - 12% in the first quarter. This is a 30 point swing in a single quarter. The June margin was 34%, and our model forecast gross margin approaching 45% at the end of 2026. Operating cost per customer is being reset structurally. For the second half of 2026, we expect OpEx per customer of approximately $402. That's a significant decline from the $1,268 we saw in the first half of 2025.
Cash was $3.9 million at the end of the second quarter, down $15.6 million at the end of the first quarter, after funding the cash portion of EnergyAid and one-time M&A and severance payments and operating losses. Since quarter end, the July raise added approximately $7 million. The numbers have been converted from NOK to U.S. dollars at the fixed rate of NOK 9.424 per USD. On the same fixed-rate basis, total equity rose 11% quarter-on-quarter to $36.4 million, reflecting shares issued as consideration for EnergyAid, partially offset by period losses. Total assets were $56.9 million, and total liabilities were $20.5 million, of which other current liabilities of $7.2 million included $5.9 million of trade payables. I'll hand back to John for the business highlights.
Thank you, Jennifer. We ended 2025 with 18,000 customers. As of 31 July, we're at approximately 55,000 customers, driven by acquisitions and organic growth in existing markets. We're targeting 90,000 by year-end 2026, raised from 60,000, then 170,000 by year-end 2027, and 275,000 by year-end 2028, all net of churn. The logic is density. Cover the top solar markets in the U.S. and Europe, build density in each, and every incremental customer costs less to serve than the last. The rollout is on schedule. Platform build and migrations completed across Q4 2025 and first half 2026. Rollout is underway across all organizations and acquisitions to date. Company-wide completion and legacy SaaS retirement in Q3, with savings landed visibly in the P&L in Q4. Identified savings are now well over $5 million annualized, up from about $4 million in Q1, and we regard that as subject to upward revision.
Technicians are the revenue engine, so we track the ratio closely. Since the start of the year, the technician share of our workforce has risen sharply, and by year end, we model technicians to become more than half of all FTEs. That shift from overhead-heavy to technician-heavy is the whole thesis in one metric. The transformation is well underway, cutting costs while accelerating an already profitable service business. Slide 27 bridges where we are today to the Q4 annualized run rate we are guiding to. What breaks the cost curve is AI. The traditional relationship between field and office labor has been severed by aggressive Endurance deployment delivered by a six-person core AI team with an M&A integration cadence of roughly three weeks.
Revenue, excluding new build, is expected to rise to $27.5 million in Q4, more than 7x what was reported in Q2, while core G&A slightly declines over the same period of time. As I noted earlier, it is the steps we have taken to date that gives us confidence in such strong financial growth in such a short period of time. It is expected to materialize in our numbers once severance is paid out and reductions from SaaS terminations and office terminations take hold. Accordingly, we are raising guidance. Revenue, $105 million-$115 million, up from $80 million-$90 million. Adjusted EBITDA, $15 million-$20 million, up from $2.5 million-$7.5 million. Year-end customers, 90,000, net of churn, raised from 60,000.
These are Q4 annualized run rate figures, include Green Panel full effect from Q4, three additional smaller acquisitions in 2026 that are near LOI, more B2B potential, incremental Endurance savings, and a faster legacy business wind down. On the pipeline, we are in active definitive discussions with five companies representing over $118 million of revenue potential and over $18 million of EBIT potential. With a further shortlist of four companies representing more than $17 million of revenue potential. Front and center of this pipeline are three companies I just mentioned, two European and one American, that are expected to have letters of intent in the coming days at attractive multiples. These three additions, plus Green Panel, as well as our organic growth, further increase our number of techs in the field, thus increasing our operating capacity both in the United States and Europe.
In addition, this additional M&A and organic growth is expected to be highly accretive to both our adjusted EBITDA and net income, well-positioning Otovo for 2027. We expect the M&A landscape to remain robust beyond 2026, and based on what we have closed to date, will generate more cost savings than expected. To recap, Otovo is a leader in using AI to break the cost curve by ending the age-old practice of having to add significant office personnel when the in-the-field labor skyrockets to meet the surging demand. We are capturing the addressable market through aggressive acquisitions at attractive multiples. Costs continue to come down, driven by our Endurance platform, and we look forward to connecting with you on future earnings calls when the benefits of the changes made earlier this year comes to fruition, as made clear in the financial statements. Now we will take questions.
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Okay, John, our first question comes from Phil Shen of Roth Capital. Can you expand on your approach to acquisitions and how your Endurance platform is one of the fundamental drivers of value creation of your strategy?
Yes. Thank you for the question. When you look at Endurance, what it can do is essentially take the SaaS, or what we call software-as-a-service cost and the associated staffing of that software out of the equation. But also, what it goes to is we can create agents and have created agents to take the cost out of the office staff or more efficiency in customer support, scheduling and dispatch, marketing, et cetera. What this has enabled us to do is take out quite a bit of cost structure, but also we have begun to be able to sell to customers directly as well, and that has an additional reduction in our customer acquisition cost and improved customer service.
Indeed, this week we started to automate our scheduling and dispatch in a way that no human could do just because of the complexity of it, and our customers were able to be better served by being able to pick the time and date that they wanted to be served.
Thanks, John. Can you elaborate on what you're doing and how it compares with what some private equity firms are trying to do? AI is the great equalizer, enabling anyone from developing world-class code. If it is so easy to code the Endurance software, why can't anyone simply replicate your strategy? What is and will be your enduring competitive advantage?
Good question. Never said it was easy to do. It's certainly a lot of work that goes into putting the software together in the first place. Endurance is more than just software. Endurance is, again, creating agents and using the agentic AI to go and do tasks that were formerly done by humans, people, staffing, but also be able to serve the customers better. We have a lot of room to go and to serve our customers better, and the industry as a whole has been very deficient in service. We're quite a bit focused on and very focused on serving the customer. If you look at what other private equity or private equity companies have done, implementing AI is tough. It's very tough. It's not just developing software, it's not just developing agents, it's restructuring the entire company and organization around AI.
That's very, very difficult to do as a large-scale company. What you've seen some private equity firms do is start to roll up certain service industries and then look how they take a small AI team, just like Otovo has done, and inject them into the company as they're acquiring these other companies to essentially create, just as we have done at Otovo, an AI-enabled company from the ground up. This is very difficult to perform, execute. There is obviously an ability to do it with other competitors, and we expect to do that, but we are far ahead of the competition at this point in time. When you look at our footprint, geographic footprint, and the size, nobody is bigger in behind-the-meter power services than Otovo and globally.
This gives us a huge benefit with acquiring customers and partners, such as large manufacturers of equipment, large asset owners of solar, generator, and other assets behind the meter for both residential and commercial. We have a huge competitive lead at this point in time.
Thank you, John. Next question: You recently highlighted how you are taking out as many as 60 SaaS packages, including Salesforce and DocuSign. Can you provide some additional color on what happens when you acquire a new service company in a new region? How do you integrate, how long does it take to wean the target company off its software systems, and how long does it take to make a full transition to the Endurance platform? What are some of the problems that can arise from the transition, and how do you deal with them?
Thank you. That is a lot of questions, Rodney. Let me take each one of those. When we acquire a company, we have been able to take the acquisition from the signing into almost complete, if not complete, integration within about three weeks. So right away, we transfer and rip out all of the SaaS software, and we put Endurance in its place. That puts all of the data in one repository for the company and then has everybody working on the same system. This immediately provides quite a bit of integration with regards to the staffing of the new company in with Otovo, but it also brings everybody together on one single platform, as well as our new customers onto one single platform. So when you look at weaning, there is not much weaning that goes on. It is pretty rapid, and that pushes us ahead very quickly.
What that also does is the relationships that come with these new members of the Otovo family, we are able to take those relationships and spread them over the wide geography that now Otovo has. As we continue to increase our geographic footprint, then we are able to take those relationships and further grow our sales. That is a lot of what you have seen in July and so far in August, which is taking relationships, multiplying those relationships over wider geographies, and then continuing to increase the growth off that base by, when you have Otovo as being a brand name, further marketing the company, building that brand up. We are seeing a lot of traction in a growing number of our geographies with business to consumer directly. What are some of the problems that can arise from the transition?
Anytime you do integration, there is always going to be issues, and what we have to do is just work with those issues very quickly. We are very fortunate that all of our acquisitions come with some good leaders, and we are able to take those leaders and integrate them into the management team. Of course, our technicians. Every acquisition is coming with more fantastic technicians we are add to our base. Having that welcomed new great leadership and great technicians and other people into the company really helps us smooth over any sort of issues that are inevitably going to come by doing acquisitions and in such a rapid fashion as we are doing now.
Thank you, John. Next question: Do you foresee further capital increases the coming 12 months? If yes, which are the approximate amounts and the planned use of the proceeds?
Well, I cannot answer legally the questions of approximate amounts or planned use of proceeds, of course. But what I will say is we have had a very consistent strategy of searching out and finding very low multiple or very value-oriented acquisitions, highly accretive, especially in the near term. And when you are doing that, we have also been very clear that we would be very disciplined in our capital. So we are not going to take on a whole lot of debt to do that, and we have been able to use a lot of our stock as currency in these acquisitions, and we continue to see more and more the availability of doing that in these acquisitions. But we will continue to make sure that we have the appropriate amount of equity and, again, avoid certainly a large scale amount of any debt in these acquisitions.
I think the capital discipline strategy is in place and has been working quite well, and we are going to continue to follow that.
Next question: Do you see a market opportunity for using Otovo Care support platform app for other segments, such as EV charger networks?
Absolutely. We are in discussions with at least one potential acquisition to enter that market in a pretty large-scale fashion.
Thank you, John. Next question. EnergyAid contributed NOK 12.8 million in revenue and NOK 14.5 million loss in Q2. How quickly will EnergyAid and the newly acquired SST reach EBITDA breakeven, and what specific steps are driving that turnaround?
Well, we talked a bit about this in the prepared remarks. The rebound in June with revenues, we can talk about the cost structure here in just a minute, but in July, but particularly in August, it has been a torrid pace of growth in the United States. That is continuing. We see with the new acquisitions that we will be integrating here in the next few weeks and months that we talked about, Green Panel and three other acquisitions that we will name in due course here. We are working on signing LOIs with them in the next few days and weeks, and then look to close them in quite rapid fashion.
When you look at that kind of growth and ability to build up the base, if you will, technicians in Europe, it gives us quite a bit of comfort that there is going to be a large amount of good, profitable growth in the European market. The U.S. right now is doing quite solid and continues to see, like I said, more growth, more profitable growth. If you look at the number of customers that we are serving per day, we estimate, given the cost structure, that we have been able to rapidly cut down.
A lot of that you don't see in the Q2 numbers, but we've been able to do that in June and July and August. We continue to see large amounts of opportunity to cut the fixed cost, as you've seen in that slide where we have revenues going up in Q4, then the cost being relatively flat. We see a pretty good deal of signs, if you will, in terms of the number of customers we're serving just in the last couple of weeks, and our cost structure that we believe that we have right now, continuing to cut costs further, that we're there.
That we are most likely at that point of turning the transition and being profitable on an adjusted EBITDA basis and continuing to drive forward with additional acquisitions I just mentioned and additional organic growth, additional global partnerships to build up that cash flow as we've laid out in our guidance.
Thanks, John. Next question. Does the NOK 64 million net proceeds from the July equity raise fully fund the Green Panel acquisition and the three upcoming LOIs, or will additional capital be required?
The raise, if I got the question right, sorry, it broke up a little bit. If I got the raise correct, and the question correct, rather, that amount that we raised in early July will go against the Green Panel acquisition, as we've stated before.
Thank you, John. A couple more questions. Gross margins and field services are currently burdened by onboarding and density cost. When do you expect field services gross margins to normalize, and at what level?
We have a fixed cost portion of our COGS in the service. That is primarily surrounding the service cost, the support cost, which we are reducing with Endurance and expect to continue to reduce those costs with Endurance. We have the fleet cost. We have more, say, roughly around 20 vans at this point in time that will start to be taken up that are open, and so that has a drag on, essentially available vans, that has a drag on our margins. We do think that that will start to rapidly scale this month. We will be able to push down that impact, if you will, that negative impact of that fixed cost to the COGS.
That gives us confidence of seeing that instead of just 34%, which is quite a huge turnaround from Q1, and frankly, it was a huge turnaround from May, move forward and go towards, if not exceed, our 45% gross margin target that we laid out from the very beginning.
Thank you, John. Here is our last question. You are targeting August or September as your first profitable month. Is this target based on organic trajectory alone, or does it depend on closing Green Panel on schedule?
It does depend on closing Green Panel on schedule, is our assumption. We have these three other acquisitions that have just as much near-term accretive and annualized net income. These multiples collectively, on average, we estimate to be about a 3x multiple on net income, so quite attractive valuations. However, going back to my previous comments about how strong the growth is and how successful we have been taking Endurance and taking out the cost structure in the last few weeks, it is possible that we could and have reached that adjusted EBITDA breakeven and moving into the positive even without the Green Panel acquisition.
That is all the questions we have. Thank you to everybody for joining us, and we look forward to talking to you next quarter.