Prepared remarks
Hello, everyone. Thank you for joining us, and welcome to the Nauticus Robotics Incorporated second quarter 2026 earnings call. After today's prepared remarks, we will host a Q&A session. If you would like to ask a question, please press 1 to raise your hand. To withdraw your question, press 1 again. I will now hand the conference over to Kristin Moorman, corporate development lead. Kristin, please go ahead.
Thank you, and good morning, everyone. Joining me today and participating in the call are John Gibson, CEO and President, Jimena Begaries, Interim CFO, and other members of our leadership team. On today's call, we will first provide prepared remarks concerning our financials and operations. Following that, we will answer questions. We have now released our results for the quarter ending 06/30/2026, which are available on our website. In addition, today's call is being webcast, and a replay will be available on our site shortly following the conclusion of the call. Please note that comments we make on today's call regarding projections or our expectations for future events are forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control. These risks and uncertainties can cause actual results to differ materially from our current expectations. We advise listeners to review our earnings release and the risk factors discussed in our filings with the SEC. Also refer to the reconciliations provided in our earnings press release, as we may discuss non-GAAP metrics on this call. I will now turn it over to John.
Thank you, Kristin, and good morning, everyone. Glad you are joining us today. I am going to save my remarks until the conclusion of the call today. And so at this point, I would like to just turn it over to Jimena to walk through the financials. Jimena?
Thank you, John. Good morning, everyone. During our second quarter, we remained focused on strengthening the company's capital structure and preserving our Nasdaq listing. We completed several important financing initiatives, including finalizing the registration process for our equity line of credit, filing the series B certificate of designation, and executing additional debt-to-equity exchanges that reduced outstanding debt by $5.5 million while supporting stockholder equity. I will now discuss our financial results for the second quarter of 2026. Revenue for the second quarter was $900 thousand, an increase of $700 thousand sequentially and a decrease of $1.2 million compared to the same quarter last year. Operating expenses for the quarter were $6.9 million, a decrease of $1.6 million from 2025 and an increase of $1 million sequentially. This reflects our continued focus on cost management, partially offset by increased activity levels compared to the first quarter of 2026. G&A costs for the quarter were $3.3 million, representing an improvement of $1.1 million from the same quarter last year. Sequentially, G&A has remained mostly flat, increasing by less than $100 thousand quarter over quarter, demonstrating continued discipline in managing our corporate overhead. Net loss for the quarter was $11.1 million, compared to $9.3 million in the first quarter of 2026 and $7.4 million in the second quarter of 2025. The increase was driven mostly by noncash losses recognized on debt extinguishment transactions related to the exchange of outstanding debt for equity securities. Adjusted net loss for the quarter was $7 million, compared to $7.4 million for the second quarter of 2025 and $6.4 million in Q1 2026. Cash at the end of Q2 2026 was $2 million compared to $7.6 million at the end of 2025. This decrease is related to cash used in operating activities. As we enter the second half of the year, our priorities remain clear: continuing to strengthen the balance sheet, maintaining disciplined cost management, and ensuring we have the financial flexibility to support commercial execution and future growth opportunities. With that, I will now hand the call over to Steve Walsh, our sales lead, for an update.
Thank you, Jimena, and good morning. Entering the year, many operators based their capital spending plans on oil prices in the mid $50 to $60 per barrel range, which led to a more cautious approach to offshore activity in the Gulf of Mexico. As a result, several projects we had anticipated moving forward this year have been deferred into 2027 and, in some cases, beyond. In response to these market conditions, we have adjusted our operating model to better align our cost structure with current demand. Our objective has been to maintain flexibility to rapidly deploy our personnel and equipment when projects move forward while avoiding the expense of maintaining a fully mobilized vessel throughout the entire work season. This disciplined approach allows us to remain responsive to customer needs while managing costs and preserving financial flexibility. While these market dynamics have impacted the timing of work in the Gulf, we have made meaningful progress in diversifying our business. We have expanded our presence in the offshore wind market along the East Coast, successfully completed work with one of the world's largest subsea cable-lay companies, have projects scheduled on the West Coast in the coming months, and currently have international tendering opportunities. We also achieved an important operational milestone by successfully deploying a Comanche ROV integrated with our Nauticus Toolkit software. The combined system performed exceptionally well for our client, demonstrating the value of integrating intelligent software with proven subsea hardware. Nauticus Toolkit demonstrated the ability to improve the ROV's operating efficiency while reducing pilot workload, allowing missions to be executed more effectively and consistently. This successful deployment further validates our technology strategy and provides another example of how our software-enabled solutions can help customers improve productivity, reduce operating costs, and enhance the overall efficiency of subsea operations. In addition, we are actively pursuing opportunities outside the United States where we believe our technology and capabilities are well aligned with growing demand for efficient, autonomous offshore operations. We are also seeing growth in the number of opportunities in the defense sector. While these efforts remain in the early stages, we are making strategic investments in marketing, capabilities, alliances, and business development to position Nauticus to compete effectively for this work. We believe our autonomous subsea technologies and software-driven solutions are well suited to support evolving defense and national security missions, creating another avenue for long-term growth and diversification. Although the near-term offshore oil and gas market remains challenging, we are encouraged by the strength of our opportunity pipeline, the continued expansion of our customer base across multiple offshore markets, and the progress we are making in positioning the company for long-term growth. We remain focused on executing our strategy, expanding our commercial footprint, and creating sustainable value for our shareholders. With that, I will turn it over to Brian Allen, our revenue lead, for his thoughts on 2026.
Thanks, Steve. Jimena's taken you through the numbers, and I want to cover why this business has been hard to forecast and what we are doing about it. Looking at our revenue the way an investor would, I see a business that is hard to model. There are four reasons for that, and we are changing all of them. First, where we sit in the contracting chain. Our services business is mostly time-and-materials oriented and we normally bid as a subcontractor. That means we win work only if the company above us wins theirs first; their timing sets hours, their price affects hours, and when their contract slips, our revenue moves with it. That is what has been happening. Second, time-and-materials pricing hands the customer the efficiency our technology creates. So we finish faster, they pay for fewer days, and we earn less overall. Third, our software has only recently become a defined product. While it was maturing, it was not able to be sold easily. Lastly, pipeline coverage. You carry more opportunity than you need, because not everything converts. And in a soft market, that coverage has to be higher. So here's what changes. We are targeting a significant increase in pipeline coverage for 2027 and widening where it comes from, starting up sales activity internationally and across the defense sector. Defense inquiries are already up, and those use cases align well with what our technology does reliably today and have active proposals out now. The services business that we are building internationally will bid as the main contractor on work where our autonomy gives us a real advantage. When we hold the contract, we set the price and the scope, and we keep the margin our technology creates. We are putting the quality systems in place to bid at that level. Those contracts will be fixed price. When our autonomy takes days out of the job, that shows up in our margin. Finally, I am extremely pleased to announce the first formal release of our Nauticus Toolkit software for ROVs, now on sale to underwater fleet operators across the energy sector and defense groups. Jason will tell you a little bit more about that shortly, but for the business it starts bringing in recurring, predictable revenue from 2027. We will communicate our bookings and backlog in future calls. I will now hand you over to Jason.
Thank you, Brian. While we move towards growing product revenue, we continue to make meaningful progress across the technical validation and commercial pathways supporting our product portfolio this quarter. One of the clearest examples was the continued use of Nauticus Toolkit in active ROV projects. The software exceeded expectations in customer operations, particularly improving vehicle stability, survey consistency, and the quality of the resulting data. Feedback from both our operators and the customer was highly positive and reinforced that Nauticus Toolkit can deliver meaningful operational value on existing ROV fleets. These deployments provide important field validation and proof points and help us refine and continue to deploy the commercial adoption model. With Aquanaut, we completed the planned freshwater phase of an autonomous mooring line and riser inspection workflow for our customers at the Florida test location. We will continue to leverage the lake for our mission training, while further progress for a mooring line and riser inspection now requires access to a suitable offshore test environment. We remain engaged with participating organizations and other interested parties regarding the next phase, and the timing will depend on customer budget cycles and site availability. We also reached an important milestone in our manipulation program by completing the prototype of our next-generation electric manipulator, which has a much lower capital requirement for manufacturing supported by our strategy to manufacture in the UAE. We have validated movement through our software controls architecture, and now functional load testing is underway, with further prototype builds and design refinement planned. This provides an important foundation for future commercial and defense missions requiring autonomous subsea interaction. As we look at the near-term market, we are placing greater emphasis on defense and government opportunities. This is not a change in our underlying technology strategy or a move away from commercial markets. Aquanaut, Nauticus Toolkit, and our manipulation technologies can be configured and trained around different commercial, government, and defense missions. What is changing is where we see the strongest near-term environment for revenue. Defense and government customers are focused on autonomous systems, subsea awareness, and infrastructure security, and their programs are often structured to fund phased development which match our product strategy. This gives Nauticus an opportunity to advance reusable software, sensing, vehicle, and manipulation capability through funded mission work. Aligned with this focus, we have prioritized our defense and government opportunities. During the quarter, Nauticus completed an initial scope of work intended to support the evaluation of a broader multi-phase defense project. If awarded, we anticipate revenue this year and into 2027. In parallel, we expanded our participation in next-generation ocean sensing opportunities. Nauticus is currently involved in multiple collaborative proposal efforts with government, commercial, defense, and academic participants evaluating autonomous approaches to deploying and operating persistent subsea sensing infrastructure. These activities bring together Aquanaut, Nauticus Toolkit, manipulation, and advanced sensing technologies into broader customer solutions. They illustrate how Nauticus addresses missions that are difficult and costly to perform using traditional vessel-based approaches. Our solution offers a platform to deploy infrastructure that supports new forms of long-term value for persistent subsea data. Together, these activities represent progress across multiple routes to broad product revenue. Nauticus Toolkit is being validated in real customer operations, Aquanaut is being developed around specific commercial and defense applications, and our manipulation technology is advancing through internal product development and industry collaboration. The work completed during this quarter expanded the way we can bring high-value technology to the market. Our increased near-term focus on defense and government work is intended to accelerate our progress through markets that are actively interested in development and deployment of autonomous subsea systems. Importantly, the resulting technology remains not only applicable for defense, but also across the commercial markets that we serve. I will now hand the call back to John.
Well, thank you, team, for the updates. Before we open the lineup for questions, I would like to step back from the individual updates you have heard today and try to put them into perspective. There is no question that 2026 has been a challenging year. The offshore markets developed more slowly than we anticipated. Customer projects have shifted to the right, and our financial results reflect that. Rather than waiting for the market to improve, we have taken decisive action. We've reduced our cost structure. We have strengthened our balance sheet. We have broadened our addressable markets and sharpened our focus on the opportunities where we believe Nauticus can create the greatest long-term value. Just as importantly, our technology has continued to advance. Nauticus Toolkit has now been successfully deployed in customer operations and we are formally taking that product to market. Aquanaut continues to mature around specific commercial and defense missions, and our next-generation electric manipulator has entered functional testing. Increasingly, these technologies are coming together as an integrated autonomous platform capable of addressing larger opportunities in subsea autonomy, critical infrastructure protection, and persistent ocean sensing. We're also evolving how we go to market. As Brian discussed, our objective is to build a business with more predictable, higher-margin revenue by expanding software sales, pursuing fixed-price projects where we capture the economic benefits of autonomy, and ultimately growing recurring product and service revenue. That transition is fundamental to creating a more scalable and valuable company over time. Defense and government markets are becoming an increasingly important part of our strategy. Around the world, governments are investing in autonomous maritime capability, subsea infrastructure security, and persistent maritime domain awareness. We believe Nauticus has developed technologies that are well aligned with those priorities and position us to compete in markets that we expect to grow for many years. Internationally, we are progressing in the United Arab Emirates. We have secured a facility, we are expanding our business entity, and are planning for future operations in manufacturing. More importantly, we have developed an outstanding relationship with our partners there, and I remain very optimistic that the UAE will become an important regional hub for Nauticus as we expand internationally. So while the first half of the year presented challenges, I believe Nauticus enters the second half of 2026 a stronger, more focused company with a clear commercial strategy, an expanding product portfolio, and opportunities across commercial, defense, and international markets. Our priorities are straightforward: execute, deliver for our customers, convert our pipeline into contracts, and continue building long-term shareholder value. Now before we conclude, I would like to briefly address a topic that many shareholders have asked about. We have seen discussion regarding the possibility of another reverse stock split. We have no desire to undertake another reverse split. We are pleased that our recent share price recovery has improved our position. Based on where we stand today, a reverse split is not required to maintain our Nasdaq listing. At the same time, we continue to monitor and prepare for any changes to Nasdaq's listing standards to ensure we remain in compliance and well positioned for the future. Finally, I want to thank our employees for their dedication, our customers for their trust, our partners for their collaboration, and our shareholders for their continued confidence and support. We appreciate your commitment to Nauticus. We look forward to updating you on our continued progress in the quarters ahead. With that, I am happy to open up the line for questions. Operator?
Questions and answers
Thank you. We will now begin the Q&A session. If you would like to ask a question, please press 1 to raise your hand. To withdraw your question, press 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Your first question comes from the line of Peter Gastreich with Water Tower Research. Peter, your line is open. Please go ahead.
Thank you very much. Good morning, and thanks for taking my questions. With the Nauticus team, I really always appreciate hearing from the expanded team on these calls. So thanks for the detail there. Just a few questions. Starting out, it feels like you have been building toward this in the previous calls, but I believe it is the first time that you have kind of stated primary contractor explicitly in terms of a strategy. If I understand it correctly, serving as a primary contractor internationally means that you would be taking on maybe vessel commitments and more execution risk. Could you talk about the trade-offs in that primary contractor strategy and what they mean for your margins and capital intensity?
Yes. Brian, why don't you take that question from Peter? It is good to hear from you, Peter. Go ahead, Brian.
Yeah. So this was one of the things which the team brought in as a strategy change relatively recently. With regards to the risk element, yes, if you look at primary contracting where you are actually running your own vessel, it is a lot riskier, but we are not looking to do that in the long term. We are not looking at taking long-term charter commitments. Essentially, we can operate in a position of vessels of opportunity. We can bring a boat in for a particular project, mobilize it, and then move it on to other projects for the season, and then demobilize it for the winter, thereby minimizing risk with shorter-term contracts. The reason why we get that flexibility is because the more we use our own software systems in our projects, the greater the margin we actually have to play with. We are starting to work on focusing on two particular types of contract types so we can actually specialize on things which fit to Nauticus Toolkit. That further reduces risk because we are limiting our contract types as well as limiting the use of external vessels.
Okay. Great. Thank you. So regarding the broader multi-phase defense opportunity mentioned with the potential revenue in 2026 and 2027 if awarded, can you frame the decision timeline and what needs to happen from here to convert that opportunity?
Let's see what I can do, Peter. Steve's here with me. I might get Steve to chime in. A couple of things have happened, and we do have a limited amount of assets. So we are really focused on deploying those assets to larger, longer-term opportunities. We did forego some short transactional work because it would have required us taking a loan or contract for a boat, and we did not want to do that unless we had work for that boat because that would be taking on negative margin at the outset. We focused instead on getting everything outfitted for some of the larger defense opportunities that we see, particularly with Aquanaut. We are working towards those and have active proposals in place for Aquanaut and the defense sector. We are excited about those. We think those are longer-term commitments, typically two to three years and longer. We also have some opportunities with ROVs for longer-term contracts, none of which we are prepared to announce on the call today, but we are out looking at proposals that give us sustained revenue. We are trying to be disciplined and not take a shotgun approach where you go out and take short-term jobs that do not produce margin. We will take profitable short-term contracts, but it takes a pretty sizable contract for us to mobilize and demobilize and put the equipment offshore. Go ahead, Steve.
I would also point out that we are seeing more opportunities where the end clients are requesting us by name for projects that they have coming up. Performing excellent work is always critical; it is what we will do. The addition of Nauticus Toolkit and the performance of the Toolkit with the ROV in particular has proven to be very successful, and that will only get better. We are really excited about the future and the opportunities we are currently pursuing.
You know, I really like what is happening with Nauticus Toolkit because we are not out selling a product we have not used. We are, as they say, eating our own dog food. It is exciting to see that the pilots—the operators—feel it makes them more efficient and more effective. The answer to that is yes. When you get the person holding the controller to give you the thumbs up, I think that is really going to be what drives this market for us on Toolkit.
Okay. Thank you. There was some news last month that autonomous underwater systems are being used operationally in the Middle East, including on mine clearance in the Strait of Hormuz. Where do you see Nauticus fitting into that picture, and has it changed the nature of the defense conversations you have been having?
Well, Peter, that is interesting. We are actually refurbishing Aquanaut. We have taken this down period to get them refurbished and ready to go so that we have good opportunity long term with them. Immediately upon getting them completed, they go back to testing in Stuart, Florida, specifically on mine countermeasures. One of the more difficult things to do right now is to get a dummy for you to actually go out and image, and so we have been working and secured those recently with a little ingenuity. We will be producing results and hope to have the end customer from the Department of Defense come down and see what we are doing in the near future. I think we have some work to do on Toolkit and a bit of work to do to just prove it. This is the specific task that Aquanaut is best suited for. Our imaging and hovering capability is excellent.
Great. Thank you. I just have one final question before I get back in the queue. You described that the Gulf of Mexico oil and gas activity is challenging. Previously, there was an expectation that we would see some improvement in line with what larger operators were signaling. Does this change or signal any change in terms of strategy and appetite structurally for oil and gas? Can this be something nudging you further toward the other customer types you have been talking about in terms of resource allocation and how you envision business building in the coming years?
It is a great question. I think the oil and gas market is going to be strong for the foreseeable future. We have no idea how much change there will be from global events over the last year, and so I think prices will be strong and they will be enthusiastic about developing their resources. However, I think margin could be much better for us on the port security and defense side of the work, and so we are seeking margin and not just work. While I think oil and gas will be a strong market, we see stronger margins in defense. I also wanted to address the UAE: I could not be happier with the discussions going on with our partners in the UAE, the master investment group. It is highly collaborative and long-term focused. We are excited about the new manufacturing facility we are leasing, the entity we are putting in place, and the strong support there. It is a tremendous relationship and I think that is an area where our solutions will be practical and provide value to the region over the long term as well. I am excited to be opening up in Ras Al Khaimah. Our manipulators are absolutely critical. There are no autonomous underwater vehicles in the class of Aquanaut that have manipulators. The ability to interact with the environment is differentiated; you cannot find that on an untethered robot at the moment, and I think that is where we excel. There is tremendous opportunity for us. Okay. Great. Well, thanks, John and team, and congrats on executing your strategy so far this year, and I will get back in the queue.
Thank you.
If you would like to ask a question, please press 1 to raise your hand. To raise your hand, please stand by while we compile the Q&A roster. There are no further questions at this time. I will now turn the call back to John Gibson, CEO, for closing remarks.
We have come to the end of another quarter, and I am incredibly grateful to our employees for their dedication and their commitment, to our shareholders for sticking the course with us. This company has phenomenal potential, and we intend to deliver it. I want to thank the lenders; it has been a phenomenal effort here and it feels close. We are all-in and focused on creating value for everyone that has put their trust in us. I appreciate it, and we are going to do our absolute best for you. I hope we have another call before the next quarterly call to talk about our progress. In fact, I will commit now that we will schedule an interim call as opposed to waiting until the end of the quarter. So that puts work on Kristin and Jimena, but we look forward to speaking to you again. Take care.
This concludes today's call. Thank you for attending. You may now disconnect.