Good day, welcome to the iAccess Alpha Virtual Best Ideas Spring Investment Conference 2026. Our next presenting company is Elauwit Connection. If you would like to ask a question during the webcast, you may do so at any point during the presentation by clicking the Ask Question button on the left side of your screen. Type your question into the box and click Send. 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, 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 this is a second iteration of what we've done in the past. We built a small managed service provider from 2012- 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. We got the band back together.
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. 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 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 interconnection 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 the other folks in the market in terms of the quality of the internet experience. It's a win for Elauwit because we basically are a simple organization like a 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 basis points- 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. 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 a 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 get 60%-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 one 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. Our IPO on November 6th 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. Excuse me. 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 in the service quality share. What I mean by that is, when internet first came out, it was a nice amenity. Eventually, it became the most important amenity.
It became a utility, and I would argue today, the most important utility. Some people kind of shake their head when I say it's the most important utility, but if you have a family and you ask them, "Hey, would you rather us have no water for six hours or no Wi-Fi for six hours?" I think you know what the answer would be. I do believe it's the most important utility. However, the building owners today are still doing business as though it's a cute amenity. The problem is that if the internet doesn't work in your 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.
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 their earnings calls that this is a key focus of theirs, for both service quality and for NOI improvement. We believe that the market is huge, and it's there for the taking for a company like us. What is it that we provide? I'll tell you, we have one product and two financial solutions that wrap around that product. The product for us is the last 100 ft. You might know that back in the day, they used to talk about in the telecom space that the most valuable piece was the last mile.
We decided a while ago that if the last mile was worth a lot, then the last 100 ft should be worth really a lot. What we do when a building signs up with us is we design a network, engineer the network, and we go put in a headend, and we get a metro circuit from a carrier. There's dozens in any market that we go to. We connect that metro circuit to our headend, and we build an enterprise-grade network within the apartment building. 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 a $50 toaster appliance that produces their Wi-Fi.
These are retail-grade devices, and it creates a lot of network congestion within a building, especially a dense building like multi-family. It's just basically taking the single-family experience and layering it into a multi-family 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, Cat6 to each wireless access point, enterprise-grade access points. Your internet experience is the same everywhere you go in the building, and it feels like you're at work, not at home. It's a very powerful, very robust solution, and we design it in a way that it's not very complex to manage because, well, guess what?
We're the ones managing it. Excuse me. Again, service offering being the big piece of it, right? What are we providing for our property owners? The financial impact. Wi-Fi 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 one 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 can 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. 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 one of my favorite ones.
The conventional multi-family experience is that when you move into your apartment, they give you a flyer for two different providers, and you get to call them up and schedule an appointment between 10 and two next Thursday, and maybe then you'll get your internet set up. When you move into an Elauwit property, your internet's 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. 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 our average answer time, 34 seconds.
First touch resolution is over 80%. Those numbers are actually improving. The point is, we provide incredible service to our tenants. Here's where I'll break down the two financial models. On the left side is what we call managed service. In this instance, this is designed primarily for new construction or well-heeled, large apartment building owners. 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.
To add a few points for the network is a smart move. These folks can usually borrow cheaper than we can, so therefore, they can capitalize the network. In this instance, we're getting $67,500 per year in our managed service fee. This is for the average building. Our estimated incremental gross profit is $42,500 per year. There's no capital expenditure outlayed 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, underwrite-able revenue for them.
Well, the underwrite-able 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 one of our REITs, and the Board member 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 to $3.1 million on average.
On the right side is what we call Network as a Service. This is an instance 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 $105,000, and that's on a $250,000 capital outlay on our part, which generates a 35% unlevered IRR.
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. Also our gross margin on those contracts is roughly 75%. Once again, it's still a really big opportunity for the property owner. They're getting $120,000 in NOI increase, so it increases the value of their property by $2 million, and this is with them having an $18,000 capital outlay. Those are our two financial products that wrap around our one 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. 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 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 of people who we've never talked to before, just from this new sales and marketing organization. Those 8,200 units are specific opportunities for us, but they're owned by companies that represent closer to about 50,000- 60,000 units. That's the activity we've gotten in about six to eight weeks, and we're 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, GoldOller is a real estate company based in Philadelphia, and we did one Network- as- a- Service product before our IPO to try to get an idea of how this would work. The results were wild. We put in $500,000 into this building. Keep in mind, this is a larger building than average. It's a 450-unit community in Fort Wayne, Indiana. A $500,000 investment by Elauwit generated $195,000 in annual gross profit to us. A two-and-a-half-year payback on a 10-year contract. It gave GoldOller $200,000 in NOI increase, which added $3.1 million to their property value. Once again, there's that 35% unlevered project IRR.
We're excited to see how leverage can get us further. 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's very much focused on AI tools for marketing. We hired an AI marketing firm that's managing our outbound and inbound touchpoints.
We have a few clerical people in the sales organization, an IT specialist in the sales organization, two account executives that we recently added, and a BDR who's working the phones. All in, that's the team that's put a 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 $1 billion company. That gets us quite excited. We're providing a disruptive managed service. 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. It's structured like a utility, but we do have those Software- as- a- Service margins. We're providing new cash flow for customers. It's something that 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, a 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. They're seven to 10 years. They're low churn. It's not really easy to switch from one provider to the next, and we're one of those things that if it isn't broke, they're not trying to fix it. It's high margin, 60%-75% gross margins. Lastly, our IPO capital really has been a clear catalyst for us to set up the company on an accelerated growth trajectory. With that said, we can open it up for questions.
Thanks, Dan. This is Matt. I will join Dan for Q&A to help sort through some of the questions. We have several of them coming in. 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? How does the company do the installations? Do we have our own teams, or do we have contracted teams? This is the first question we got.
Good question. 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. In our last iteration as a company, we were in 43 states. We can go to all 50. That is a big selling point for the big national providers, excuse me, national apartment building owners. We are not restricted. We are growing. I think we might be in more than 30 states today. It may be worth just right now also saying that where are our growth opportunities? Where are we focusing?
We are focusing more on the type of client than the region. For instance, we love companies that have 4,000- 6,000 units and that they are growing, and we like to grow with them. We go where they take us. If they are building something in Fort Wayne, Indiana, we go there. That has 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 am sorry.
Yeah.
Every project has an Elauwit W2 project manager who is on site. Not on site every day, but on site managing the project. Our network engineers are based in Columbia, 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. It gives us a lot of ability to scale on the operational side because we are using a big network of subcontractors.
Great. Then you had referenced going where the customers have properties, these large apartment owners with 4,000, 6,000 units. We had a question that kind of relates to that, asking about what was the minimum number of units that would make sense for an Elauwit install.
Right. We're targeting, 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, we're not targeting those. 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, we can do garden style or we can do high-rises. We can either one, 100 units is where it starts to make sense.
Excellent. Then kind of following from that, what's the expected payback period on a typical brownfield deployment? Then perhaps related to that is how does a brownfield deployment differ from a greenfield in terms of the payback to Elauwit? Might be a good follow-up to that query.
Sure. The payback in our GoldOller example was two and a half years, I think that's pretty close to going to be the standard. Two and a half years, we get capital payback on our Network- as- a- Service financial product. It's on a 10-year contract. Now keep in mind on the managed Wi-Fi side, there is no payback because we don't have any capital outlay, because in that instance, in using that financial product, the customer's paying for the network upfront. We don't have any capital invested in the deal. Network- as- a- Service is going to be about a two-and-a-half-year payback. It's going to be a de minimis difference between new construction and retrofit.
Okay. We have a question that came in. Let me just read this real quick. You had referenced the pipeline or the backlog of units to be installed. Could you say that number again, and then over what time do you expect those units to be installed?
Yeah. Our backlog, I should explain. We've 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. We'll report those numbers with our earnings. 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. For instance, using a 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 six 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 three to four months. We can move pretty quickly. For new construction, depending on the development cycle, the construction cycle, any problems with the GC phases or whatnot, it could take a year to a year and a half. That backlog, again, is driven by our customers, not by us. We are always ready to go as soon as somebody's ready for us to build out our network.
Great. With about three, four minutes, we've got some good questions in the list here. I'll try to pound through a few of them real quickly.
Sure.
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. One of the key metrics by how these big telcos are valued is by their passes and their subscribers, right? There's a metric that says if they've got so many passes or so many subscribers that they get 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 one because it would sack their market valuation.
What I've learned about the big telco companies is that they're very disciplined. They're not going to make bad decisions. The fact is, if I built Elauwit to $1 billion company, it would be a remarkable feat and a huge organization. AT&T did $44 billion last quarter. They're not going to make bad decisions to capture a tiny little piece of the market that they're losing. For them to convert 450 customers into one would sack them from a market cap standpoint.
Perfect. This is a really important question here, I think. How should investors think about recurring growth versus one-time installation revenue over the next few years?
Well, I'm not exactly sure how to frame that answer. What I'll tell you is 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. I think also considering up to date, all of our projects were managed Wi-Fi 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.
Just as a 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. The access to capital. If you have access to capital and it's sub 7%, it makes a lot more sense for you to pay for your network upfront, capitalize it, and get a higher NOI, which increases the property value even more. As you can see in those two financial models, in both instances, the property value goes up. The ones where they're putting the dollars in for the infrastructure, it goes up a lot more. The Network- as- a- Service is really for folks who don't have access to capital or whose access to capital is expensive.
Excellent.
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 c.
Great. We have a few other questions, but I think we're running short on time, we might go catch those in the one-on-ones. Dan, do you have any last comment for 30 seconds here? Otherwise, we'll turn the floor back to the conference team.
I just want to say thank you. The investor community really has sharpened our approach to business, and I've appreciated these kinds of opportunities in the one-on-ones. Thanks for taking the time to listen to what we're doing.
Thank you.
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.