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Good day, and welcome to the Beam Global First Quarter 2026 Operating Results Conference Call. Operator Instructions: Please note this event is being recorded. I would now like to turn the conference over to Ms. Lisa Potok, Chief Financial Officer. Please go ahead, ma'am.
Hi. Good afternoon, and thank you for participating in Beam Global's First Quarter 2026 Operating Results Conference Call. We appreciate you joining us today. Desmond Wheatley, President, CEO and Chairman of Beam Global, is joining me by phone. Desmond will be giving his thoughts on 2026 and providing an update on recent activities at Beam Global, followed by a question-and-answer session. But first, I'd like to remind you that during this call, management will be making forward-looking statements, including statements that address Beam's expectations for future performance or operational results. Forward-looking statements involve risks and other factors that may cause actual results to differ materially from those statements. For more information about these risks, please refer to the risk factors described in Beam's most recently filed Form 10-K and other periodic reports with the SEC. The content of this call contains time-sensitive information that is accurate only as of today, May 15, 2026. Except as required by law, Beam disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. I'm going to go ahead and start with a few key highlights. Our backlog grew 50% during the quarter from $6 million at December 31, 2025 to $9 million at March 31, 2026, with more than half attributable to smart city applications, approximately one-third to energy storage and the balance to the EV ARC and related products. And perhaps most importantly, our Q2 2026 revenue through today has already exceeded our first quarter results, a clear signal that the business is accelerating. Operationally, the quarter was active. We made our first EV ARC sale in Abu Dhabi for public EV charging. We launched a patented autonomous wireless charging system for autonomous vehicles. We were selected to supply patented battery systems for drones, supporting life-saving aerial operations globally. Beam Europe achieved a record $1.7 million in smart city infrastructure orders in a single week across Romania, Croatia, Montenegro, Serbia and Italy, approximately doubling the strongest weekly order volume achieved in 2025. And we secured the largest residential EV ARC orders to date in New York. We continue to operate with no debt, no going-concern issues and an unused $100 million line of credit. Turning to the financials. Our first quarter revenue was $3.1 million, a decrease of 51% compared to $6.3 million in Q1 of 2025. The decline reflects order timing with two large orders moving out of the quarter, a seasonally slow period for our European operations and the ongoing reduction in federal government EV spending. Our international customers comprised 51% of revenues in Q1 of 2026 versus 25% in Q1 of 2025, and revenues from nongovernment commercial entities increased 48% year-over-year to represent 78% of our total revenues, continuing the diversification trend we have been executing against. On gross profit, we reported a gross loss of $0.4 million or negative 13.3% compared to a gross profit of $0.5 million or 7.9% in Q1 of 2025. Our gross results included $0.7 million of noncash depreciation and intangible amortization in cost of revenues. Excluding these items, the adjusted non-GAAP gross margin was 9.4%, compared to 20.6% in the prior year period. The decline reflects the impact of our fixed overhead allocations against the lower product volume and is not indicative of deterioration in our underlying unit economics, which continues to improve. Our operating expenses were $6.3 million compared to $16 million in Q1 of 2025. The prior period includes a noncash goodwill impairment charge of $10.8 million, not represented this quarter. Excluding that charge, our operating expenses increased approximately $1 million year-over-year. This is primarily due to a $1.8 million noncash provision for credit losses related to a single customer balance that was reserved in accordance with our policy. When we remove these one-timers, our reductions in compensation, facilities and other G&A expenses partially offset the increase. Our net loss was $6.9 million compared to $15.5 million in Q1 of 2025. The Q1 of 2026 net loss includes $3.5 million of noncash charges. Excluding these items, the non-GAAP net loss was $3.7 million compared to $3 million in Q1 of 2025. We believe the relative consistency of our non-GAAP net loss across both periods despite a 51% decline in revenue reflects our disciplined cost structure and is indicative of our meaningful operating leverage as revenue recovers. On liquidity, our working capital decreased $2.7 million to $6.2 million at March 31, 2026. Excluding the $1.8 million noncash credit loss provision, the underlying operational decrease was approximately $0.9 million. Our cash increased $1 million during the quarter. We remain debt-free, and we have an unused $100 million credit facility. And we believe we are well positioned to fund operations. In closing, our Q1 was a challenging quarter on revenue. Desmond, do you want to go ahead? Let me go ahead and hand it over to Desmond.
Okay. And thanks all of you for tuning into this first quarter. Lisa, maybe you could mute your phone just for a moment. Yes. Thanks, everybody, for tuning into the call. It was only about a month ago that we had the earnings call for the release of our 10-K. And during that call, I went through a pretty comprehensive update on the happenings of 2025 and the first quarter of 2026, both operationally and financially. So I'm going to keep my comments fairly brief today and leave plenty of time for any questions that you may have. Well, as Lisa said, our first quarter revenues in 2026 were not what we'd like them to have been; they are in no way an indication of an underlying or fundamental weakness in the business or our strategic plan. First quarter has historically always been a slow quarter for us, and that's particularly true of the contributions from our Beam Europe offices, where the Orthodox Christmas and New Year push well into January. Weather and other considerations tend to slow down the deployment of the traditional infrastructure products, which we manufacture and sell across Europe, like streetlights, traffic portals and other street furniture. Coincidentally, and unfortunately from a timing point of view, we also had two large deployments of EV ARC systems pushed from the first quarter into the second, which have had an outsized impact on our Q1 revenues. At present, we haven't lost those orders, both good orders, and we expect to recognize the revenue from them. Also has to be said that the war in the Middle East has not helped our efforts because we were actually anticipating some material revenues to come in from our new operations, Beam Middle East. But those, like everything else in the region, seem to have been put on hold while the authorities and decision-makers prioritize dealing with the immediate impact of the war. I've just spent a significant amount of time on our Beam Middle East operations. While I certainly observed a lack of momentum where all business dealings are concerned, it's also very clear that the United Arab Emirates and the Gulf region in general are determined to get through this conflict and come out on the other side stronger with even more aggressive plans for future growth. In fact, we did make our first sale of EV ARC for public charging in Abu Dhabi while I was there a couple of weeks ago. We've already got it deployed for some purposes, but this was for public charging. So while we didn't get the material contribution to revenues that we've been hoping for in the first quarter, we have managed to make some sales in the Middle East since that time. I'll spend a few minutes on my time in the Middle East later in the call. Back to our results. Like any manufacturing company with facilities across the world, we have fixed overhead costs, which do not reduce when the volumes of products that we deliver reduce. Those costs — rent, insurance and other day-to-day operational costs associated with owning and maintaining our factories — stay pretty much the same whether we do a small volume of products or a very large volume. The result of this, as you've seen in the first quarter, is that our gross profits can be negatively impacted by the allocation of fixed overhead across a smaller number of units produced and delivered to the customer. That explains the decline that you see in the gross profits which we reported during the quarter. But that's a metric that works both ways. As our sales volumes return to growth, and we certainly believe they will, the allocation of those fixed overheads becomes less and less burdensome. In fact, we get a great deal of operating leverage because we do not need to invest in new infrastructure to produce higher volumes of products; we're already set up to do that. I consider the most important metric from an operational point of view are our unit economics. Those, I'm happy to report, continue to improve and are currently running at greater than 30% across our entire portfolio, with some products doing much better than that. That's to say at the unit level, we're spending less and less money to produce an individual product while our revenue numbers stay fixed or in some cases have even increased. That, in turn, means that as our volumes increase and our overhead allocations are diluted over larger volumes of products, improved unit economics will return even better gross margins in the future. We've demonstrated this to some extent over the last couple of years as you've seen improving gross margins when our volumes have been consistent or growing. So while our revenues and gross margins declined during the first quarter, this is not part of a broader trend. I can say this with a high degree of confidence because, as Lisa said, our contracted backlog was 50% higher at the end of the first quarter than it was at the beginning, showing growth in sales. Furthermore, I can tell you that as of today, we've already generated the same amount of revenue in just half of the second quarter as we generated in all of the first, and we now have the second half of the second quarter to continue this trend — the same trend which we demonstrated so materially in the fourth quarter of 2025, which, if you remember, was 50% higher than the previous quarter. Also worth pointing out that we often generate more revenue late in any given quarter than we do at the beginning. So that's another metric to consider. Incidentally, the SEC is currently considering a move away from quarterly filing for companies like ours, believing, as I do, that biannual reporting would be just as useful for the investment community and much less impactful and expensive for the reporting companies. We spend an enormous amount of time and money going through this quarterly reporting. Had we already moved to biannual reporting, I'm pretty confident that we could report a first half of this year which would not raise eyebrows for anything other than growth. Our sales and backlog numbers are increasing at a time when, as I've already mentioned in previous calls, we're responding to a complete cessation of orders of our electric vehicle charging products from what was previously our largest customer, the U.S. federal government. I think this is proof positive that our strategy of diversifying our product portfolio and also the geographic markets into which we're selling is working. Simply put, even absent what was previously our largest customer contributing to our revenues, we're returning to growth in sales and backlog. Revenue contribution from international customers was over half of our first quarter revenues, up from under a quarter during the same period last year. That's a trend which I think we're going to see continuing and even growing as the year progresses. This shows that without a doubt, it was the right move for us to expand internationally through our acquisitions in Europe and also the joint venture we created in Abu Dhabi with the Platinum Group. The largest opportunities that we are currently addressing are all coming from our international expansion. Similarly, our efforts to broaden selling beyond federal, state and municipal government customers are continuing to bear fruit. Sales to nongovernment entities in the first quarter were actually up by almost 50% and now comprise 78% of our total revenues in the quarter. When you consider that just two years ago almost all of our revenues came from government contracts and the majority also from the federal government, you can see that our efforts to broaden our sales funnel have really paid off. I'm particularly enthusiastic about the way our products are being used by new customers and in ways that we haven't previously seen. For example, it's a new development for us to have our teams of battery engineers and scientists now perfecting battery solutions for top-secret weapons and highly specialized drones and robots. We now have U.S. law enforcement using our BeamPatrol product, which is a bundle of four electric motorcycles and rapidly deployed off-grid charging products. Incidentally, this is a very popular solution in the Middle East. We recently presented this product to the Chief of Police of Dubai and a cadre of senior ranking officers. Our Beam Middle East team is now putting together a proposal at the request of that law enforcement agency. We now have BeamBike solutions operating in North America, Europe and the Middle East. This product bundle, which comprises 12 Beam-branded electric bicycles, rapidly deployable and highly scalable charging infrastructure and an application for Android or iOS which controls the bikes and allows for billing, geolocation and other functionality, is also creating recurring revenue opportunities for us that we've never had before. I actually believe that this new opportunity will increasingly provide a source of recurring and very profitable revenue. Another good example of a new technology solution which we've recently introduced in the market is our patented wireless autonomous charging for autonomous vehicles. Autonomous vehicles have been around for a long time, but as with so many things, solving for the last 5% of true autonomy has probably taken as much investment and work as the first 95%. But it looks as though we're there now. Millions of miles have been safely and successfully driven by autonomous vehicles on city streets across the world, and the level of mainstream user adoption has surprised even many of the so-called experts in the field. While solving for that last 5% of autonomy used to be the biggest hurdle facing the industry, now, not surprisingly, the biggest challenge faced by operators of fleets of autonomous vehicles is actually how to charge them. It might seem surprising that developers of this futuristic and very challenging technology have so far settled for predictable and traditional methods to charge autonomous vehicles. At the moment, operators of fleets have all their vehicles come to a central location where a human has to plug them in and try to charge them as quickly as possible so they can get back into service. This is inefficient, very expensive and certainly not autonomous. Beam Global's patented wireless off-grid charging technology allows an autonomous fleet operator to deploy charging throughout their service area so that an autonomous taxi might never be more than two minutes away from the nearest wireless EV ARC. Our research shows that we're able to keep autonomous taxis active throughout the day by simply having them charged for short periods of time between each ride. This means that taxis no longer have to go back to a central location where there's an expensive and inefficient infrastructure waiting for them. It also means that the infrastructure they rely on to fill their vehicles is not vulnerable to centralized failures such as blackouts or other disruptions. Finally, it means that we can provide about twice as many rides per vehicle as the current traditional taxi model provides in the markets we've studied. I think what that does to the cost and revenue model of those operators will quickly make clear why we're so bullish on this opportunity. This patented Beam technology is a game changer. I'm not alone in thinking that autonomous vehicles are going to be the next big thing in transportation, and a unique, simple and highly efficient way of charging these vehicles will bring very significant opportunities for growth. This is particularly true in the Middle East where the regulatory environment and general appetite for new technologies is more favorable for the rapid and scaled growth that we expect to see. So it's clear that this geographic and product portfolio diversification and expansion has been crucial to us, not just for surviving the EV slowdown in the United States, but actually enabling us to take advantage of a whole new set of fantastic opportunities for which our products and technologies are ideally suited. I've said before that I'm convinced the United States will reaccelerate electrification of transportation at the federal level. When it does, we'll be ready to take advantage of that returning opportunity as well. What will be different next time is that it will come on top of and be accretive to all the other revenue and profit opportunities that we've created in its absence. This level of diversification will not only create opportunities for more revenue and profits, but it will also insulate us from the kinds of swings that we've just witnessed in this quarter where one or two large sales moving right can have an outsized impact on our results. We're going to continue these diversification efforts as we evolve, and as usual, we're going to continue to do so with an extreme sense of financial discipline. On the product side, you can see us continue to create new intellectual property. In the first quarter, we were granted patents that are important to defending our position with some of the unique and very relevant technologies we produce. These patents were granted both in the United States and Europe for products which enable us to maximize off-grid energy generation in markets across the world. We also received another patent for our battery portfolio, which, as I've said previously, is now creating opportunities in generating revenue for us in high-growth military and commercial applications, not least of which are diverse and highly specialized unmanned vehicles or drones for which we are developing bespoke, highly energy-dense and safe battery pack solutions. The drone market appears to still be in its infancy, it's growing very rapidly, and it's probably just a tiny fraction of what it's set to become. Beam Global is producing batteries for unmanned vehicles which operate in the air, on the ground and both on and under the surface of the sea. Combining those activities with what we expect to see in terms of opportunity generation through our Beamflight product, I think you should anticipate ever-increasing contributions to our business from our focus on the drone market. One of the most impressive attributes of our product portfolio is its universal appeal. Anywhere I've traveled across the globe, the enthusiasm and genuine need for our products is universal. I've just returned from a six-week business trip through Europe, the Middle East and Africa. I visited London, Dubai, Abu Dhabi, Nairobi in Kenya, Dar es Salaam and Zanzibar in Tanzania, Kigali in Rwanda, then returned to the Middle East and ended in New York City. Those are all very diverse environments, and yet the need for our products is consistent. Our products create a lot of value in New York City, where since 2015 they have provided rapidly deployed off-grid electric vehicle charging and crucial backup power during grid failures caused by hurricanes or lack of grid capacity. The requirement for uninterrupted, robust and reliable electricity and the provision of mobility are universal needs in the markets I visited. In East Africa, I met with senior government ministers, officials from the United Nations, NGOs and commercial enterprises. Our ability to deploy transportation and energy infrastructure without construction or electrical work turns out to be just as important in East Africa as in New York City, though sometimes for different reasons. When talking to the United Nations about deploying capital to democratize access to electricity and transportation in the region, Beam Global products' ability to provide that infrastructure without an ecosystem of service providers, regulators and permitting processes is a real game changer. It was encouraging to see the UN and other NGOs become excited when they realize how much impact our products could have without the usual hurdles, risks and drawn-out processes. An indication of how much excitement there was around Beam Global and the impact our products could have in East Africa was the mainstream national press coverage my trip received. I was often at the airport early in the morning with press eager to question me about our energy and mobility products. I also did interviews in-studio and on-location discussing the merits of our approach and the enthusiasm of both government and enterprise in East Africa for these types of solutions. Beam Global already has product deployed across broad swaths of Africa as a result of our acquisition of what is now Beam Europe. That team in Serbia has a great deal of experience in deploying infrastructure across many nations in Africa. That experience will be essential and a significant differentiator for us as we start to deploy our portfolio of innovative energy and transportation solutions. I look forward to bringing news of our first wins in Africa and the positive impact our products enable in environments where people have not previously had access to reliable electricity and affordable transportation. Just as there was never universal adoption of landline telephones in Africa, yet now everyone has a mobile phone, I believe there will be broad adoption of electric mobility in Africa. The young and growing population on the African continent will have access to mobility, and much of it will be electric. We intend to provide solutions to cater to that enormous opportunity for growth. Products like our BeamBike and BeamPatrol are a perfect fit along with our energy storage and generation solutions. I also think Africa will not necessarily adopt a mass centralized utility grid like we see in the West. The continent has an opportunity to leapfrog that outdated model and develop energy infrastructure that is disaggregated and dispersed, generating and storing electricity close to where it's used in a scalable manner without reliance on vast centralized power stations and transmission infrastructure. That's a last-century approach to energy infrastructure. I firmly believe the future in Africa will have widespread access to electricity, much of it from renewable sources generated and stored close to the load. Of course I'm describing an energy future in Africa that matches products Beam Global patents and manufactures today, and I firmly believe that market, where over 60% of the population is under 25 years old, will be a significant opportunity for our future growth. We opened Beam Middle East not only because the market there is committed to spend heavily on sustainable energy infrastructure over the next decade, but also because the location of the Beam Middle East headquarters provides an excellent gateway to Africa. There's already significant investment from the United Arab Emirates into sub-Saharan Africa. The politics, economics and geography of that region make it an excellent portal for us. While on the subject of the Middle East, we've just exhibited alongside our partners, the Platinum Group, at the Make It in the Emirates event. This is one of the largest trade events in the Gulf States. We had a prominent and highly visible booth, and we also had real-world deployment of our EV ARC and BeamBike products working at the event. This was an excellent opportunity to get in front of influential decision-makers and purchasers in the region. It was also an opportunity to further test the validity of our relationship with the Platinum Group, which is tied to His Highness Sheikh Mohammed Sultan Bin Khalifa Al-Nahyan. They repeatedly demonstrated their ability to bring influential leaders in the region to the Beam Middle East booth. Our products are compelling and unique, and once introduced to influential people we do not have much difficulty keeping their attention. While there were many fantastic solutions on display at this event, few were more relevant or better suited to the Gulf markets than the solutions Beam Global presented. As a result, even during a time when the war could have made the event less successful, we were encouraged by the volume and quality of attendees who visited our booth. High-ranking members of government, the military, the police and industry — particularly oil and gas — visited and spent meaningful time learning about our solutions. I can't go into details at this point, but oil and gas is now using our products in the Middle East, as surprising as that might sound. I look forward to releasing more information about this as permitted by our very large customer over there. The Beam Middle East team has a significant amount of follow-up work to prosecute all of these opportunities. If sales are the best possible metric to judge one of these events, and I believe they are, then we were certainly not disappointed. In fact, we actually sold one of the units that we had on display and deployed it for a customer the following day. It's a testament to the robust and dynamic nature of our products that we can demonstrate electricity and mobility solutions at a trade show and then have those products operating in the field for a customer in less than 24 hours. Now before I wrap up, I want to come back to the financials for a moment and echo a couple of things Lisa started with. During 2025, we had to take a significant noncash impairment of goodwill, which was reflected in our net loss. This impairment was driven by accounting rules and not by any belief on our part that there's been any decline in the value of our acquisitions. On the contrary, it should be obvious from my comments that our acquisitions are performing well and contributing significantly to the most material opportunities for growth that we have ahead of us. In the first quarter of 2026, we've taken another significant hit to the bottom line, again driven by accounting rules rather than by what we actually believe is going on with the business. In this instance, we've reserved for a couple of million dollars of accounts receivable because accounting rules require it. The fact is we believe we will collect these monies; we have an excellent working relationship with the company to whom the AR is attributed. In fact, I just met with them in New York this week to discuss a range of new opportunities which we hope to close together. This reserve has significantly impacted our bottom line and our working capital. Last year's impairment was driven by our share price, but in both cases these are noncash items and in my belief not truly reflective of what we're doing with the business. I encourage you to look at our financial performance absent these noncash impacts because it will give you a much better understanding of what's actually going on with the business and particularly where you're looking at earnings per share, which are distorted by these items. We continue to be debt-free, except for a couple of vehicle leases, and have sufficient cash and working capital to continue to execute on all of the opportunities I've outlined. Hence, no going concern. As a measure of our financial discipline, we've managed to hold our net loss essentially flat even in the face of what I believe is an anomalous decline in revenue in the first quarter. We can only have done that through continuation of the rigorous discipline that we bring to all our financial activities. When our revenue cadence returns to growth, as I certainly expect it will, we believe that we'll see a significant improvement in both gross and net profitability, just as we have in the past. Please remember that we've already generated the same amount of revenue in the first half of the second quarter that we did in all of the first quarter. So we have good reason to believe that we will return to growth this year, particularly since we often get much more revenue in the second half of any given quarter than we do in the first. To sum up, while we are disappointed in the first quarter revenue number, which was largely driven by order timing and the war, we were nevertheless able to continue to create an environment and set foundations for significant growth throughout the rest of this year. We're delivering products for incredibly relevant segments of the economy both in the United States and around the world. The work that we're doing with drones and autonomous vehicles is setting us up for potentially catalytic change, while our diversified product portfolio and geographic expansion is laying the foundation for credible and sustainable growth with upside associated with each value proposition and downside protection against political or market volatility. I'm looking forward to future earnings calls this year in which I can report more successes coming from each of the new verticals we've developed and many others. For now though, I'll return the call to the operator and look forward to taking your questions. Thank you very much. Operator, over to you.
分析師問答
Operator Instructions: And our first question for today will come from Tate Sullivan with the Maxim Group.
On the UAE, I think you said you had a UAE sale and delivery on the same day of the conference. Is that correct? And was it an EV ARC? And what was the timing around that delivery?
Yes. So I want to start out by saying that that is not actually the first deployment of our products in the region. I'm just not really able to go into detail on the other deployment because of customer sensitivity so far. We don't believe that situation will persist because they're actually delighted with what we're doing. You are quite right. Yes, we had a customer who was so impressed by the product and whose need was urgent that they bought the product right there essentially off the show, and we deployed it rather than taking it back to a different location. What's interesting is that it's actually for public EV charging. We believe there's going to be a massive opportunity. More details on this customer will come later, but they are a significant and central player in public electric vehicle charging in the region and they've got an awful lot of work to do. There's a rapid increase in the deployment of electric vehicles, many of which are Chinese models in the region, but there's a heavy push toward electrification and they need a fast infrastructure solution. Our ability to solve for this customer in that location, where they had urgency to deploy literally within 24 hours at the end of the event, was a record that none of them had seen before, and I think bodes very well for us as we continue to advance our sales there.
Do you have storage infrastructure? Do you have inventory available in the Middle East already with the joint venture partner? Was that just related to the trade show?
No. We actually had to reallocate inventory from another opportunity which we believe will materialize. We are able to ship quickly from our facilities in Serbia — about four weeks on the water to get there. What we did is we approached the other opportunity and asked for permission to help this urgent customer out quickly, and they gave us that permission. We have promised them that we would expedite shipping another product for them from our Serbian facilities, and they subsequently asked us to ship a few more for them. It was an excellent experience. There's nothing like selling product directly at a show, and there's nothing like being able to fulfill a customer requirement with breathtaking speed. They have a lot of experience deploying large infrastructure where they have to go through permitting, planning, engineering, trenching and electrical work. We were able to get them up and running in less than 24 hours from the receipt of the purchase order.
Your next question will come from Craig Irwin with ROTH Capital Partners.
It was nice to see the backlog come up so quickly in the first quarter. So congratulations there. I appreciate the really thorough commentary upfront. One of the areas I'm very interested in is the drone market. I spent a week at the XPONENTIAL Conference in Detroit, where most of the drone makers gather to meet customers and regulators. You work with Ray Systems and then another unnamed drone customer — are those your only two publicly announced contracts? I assume the customer engagement is substantial in that market as well. I met many companies there doing business with end customers that are off-grid, everything from safari game-farm owners using drones to help stop poaching to people doing daily 3D mapping of construction sites and oil and gas surveillance and security surveillance. Many applications are off-grid and you bring a credible solution. Can you flush out what your engagement is with customers in the drone market? Do you see this as additive to where you already have traction? And is there another permutation of the EV ARC or your existing portfolio that would help you be super competitive in this market?
That's a great question. I'm really sorry I couldn't make that event; I hope to be there next time. You actually brought up a couple of interesting things, like anti-poaching activities. While I was in East Africa, I met with Kenya Wildlife Services, and they are desperate for drone technologies to do anti-poaching work and to do censuses of wildlife. They need off-grid charging infrastructure like our Beamflight product because where they operate they don't have electricity and they don't want to run generators. There's no better solution for those environments. So yes, we have a very viable and competitive solution for those types of applications. That's equally true in contested environments where you want drones to remain active on mission without infrastructure support. We have a game-changing product in Beamflight to make that happen. Additionally, we are currently manufacturing batteries for drones. The drone market is often secretive about certain aspects of their operations, so we don't always get permission to disclose exactly what we're doing for all customers. But as I said earlier, we're in drones in the air, on land and on and under the sea, and we're at the early stages of that. Our ability to make bespoke, highly energy-dense batteries that are form-factor agnostic is a differentiator. Most drone operators don't want a bulky rectangular pack; they want energy storage integrated into useful form factors, and we can deliver that. That's a big part of why we are selected by OEMs and operators. We're at the beginning of this opportunity, and I see it as a huge growth area for us, particularly given the demand for American-made batteries at a time when supply chain and provenance matters. I also want to emphasize that it's not just drones. In Kenya, the wildlife services share common needs with many other operators for mobility solutions that don't rely on liquid fuels. The U.S. military likewise increasingly prefers electric mobility to avoid the cost and logistic burden of fuel supply to forward operating areas. One of the solutions generating excitement is our BeamPatrol product. Anti-poaching agents, who are often in dangerous situations, can benefit greatly from electric motorcycles which are rapid, quiet and require less logistical support. We presented this to Dubai and Abu Dhabi police departments, and our teams are preparing proposals. I believe you'll see us increasing drone penetration and deploying more electric mobility solutions — motorcycles, bikes, off-road electric vehicles — in environments where liquid fuels are expensive or unavailable. Fuel prices are a real problem in some East African markets right now, which makes our timing favorable. So expect more activity in the drone market and in other mobility segments that do not require conventional fuel logistics.
You mentioned fuel prices. There's no coincidence that used EV sales in the U.S. were up about 40% as far as unit sales this last month. U.S. consumers face a much more expensive proposition when filling their gas tanks. EVs are out of favor with the investment public, but value buyers are buying EVs. I assume this translates into healthy utilization across charging networks. Can you comment on utilization levels of EV ARCs in the field? Has the swing in interest for used EVs impacted the volume of incoming calls related to EV ARC sales? Do you see this bending the curve for you in 2026?
When you travel as much as I do, you see how phenomenal EV adoption is around the world. Even in petrol-exporting states like the UAE, Bahrain, Kuwait and Saudi Arabia, people are adopting EVs because it makes economic sense to export oil rather than burn it domestically. We're seeing a massive increase in adoption rates globally. In the U.S., EVs may have been out of favor with some investors for a time, but consumer adoption continues as people realize the benefits and the volatility of liquid fuel markets reappears. There's been commentary about oil prices remaining artificially low because reserves have been drawn down, and many expect more price volatility later in the year. A fuel tax holiday is a temporary measure and has trade-offs. The short answer to your question is yes: we are seeing increased interest. You can see that in the increase in the percentage of sales to commercial customers even as federal buying has paused. Those two EV ARC orders that moved out of Q1 were significant and were heading into environments where customers are feeling the strain from increased fuel prices and don't want that vulnerability. Adoption acceptance is increasing — many consumers now find 300-plus miles of range acceptable, vehicles are fun to drive and lower maintenance, so adoption can accelerate quickly. Regarding utilization of our existing EV ARCs, many are at capacity because they are often deployed where traditional infrastructure cannot be installed and are therefore vital to meeting demand. That creates repeat sales opportunities for us to expand deployments where utilization shows the initial deployment was the right decision.
Your next question will come from Ryan Pfingst with B. Riley FBR.
I'll start on the backlog. Lisa mentioned that half of backlog is comprised of smart city solutions, one-third battery storage and the balance largely EV ARC. Is this how you're envisioning the revenue mix going forward? Or are you more excited about certain segments or products outpacing the others?
Two things excite me most right now that could be catalytic for the business. First, autonomous vehicles. You don't see it as much in much of America except in markets like Austin where Waymo is operating, but in cities like London autonomy has progressed a long way despite complex streets. Autonomous vehicles are much safer to operate, and when combined with lower insurance, reduced parking requirements and electric drivetrains, it will be transformative. Right now what's broken is charging for autonomy: centralized charging depots are expensive, vulnerable and inefficient. Our attended wireless autonomous charging solution solves that problem, and I feel confident we'll make meaningful announcements around that opportunity, which could be catalytic. Second, the drone market. Valuations and interest show how important drones are across industries: inspections, agriculture, surveillance, mapping and more. We do unique things for drones in charging and energy storage, so expect growing participation there. Regarding revenue mix, the quarter was somewhat distorted by two large orders that moved; had that not occurred you'd have seen a different percentage makeup. My goal is to diversify the company so the percentage contribution of any single business line becomes immaterial, insulating us from volatility. We're effectively a three-legged stool: mobility, energy and intelligent infrastructure. We expect growth across all three. But the two areas that currently excite me most are autonomy and unmanned systems, and Africa is also an extremely promising growth market given demographics and the opportunity to deploy off-grid solutions at scale. Overall, our international expansion and expanded product portfolio have positioned us well, and we have the financial discipline to manage swings while capitalizing on these opportunities.
I appreciate that detail. It sounds like revenue has really picked up here in the first half of the second quarter. Is it fair to expect further acceleration if the conflict in the Middle East is resolved, given your opportunity there?
If the conflict is not resolved, it will be damaging for many companies, not just Beam Global. The timing of the war has been unlucky for us because we were making strong progress in the region. Our partners in the Platinum Group have put us in front of very relevant people, and we have the right products, but it's tough for decision-makers to commit to major investments during such uncertainty. While I was there I had several sleepless nights with warnings and alerts. It's disruptive rather than a direct threat in most cases, but it causes people to pause. We need the conflict to end for business to fully normalize. If it does, I expect to see meaningful contributions to our revenue and bottom line from that market. That's why we went there: the UAE is positioning for a post-oil world and is investing heavily in sustainable infrastructure. They've pulled themselves out of OPEC limits and have capacity to produce more oil, which could generate significant cash to invest in technology and sustainable projects. We intend to contribute to and benefit from that transition.
The next question will come from Noel Parks with Touhy Brothers Investment.
I apologize if you already touched on this; I got on a little late. For EV ARCs, as we see energy security back on the front pages, one product line that has been robust for the charging industry is return-to-base fleet charging. What is the status of that business line for you in the U.S. and in emerging markets?
Fleet has always been a big part of our business and continues to be. Fleet operators are adept at figuring total cost of ownership and are often the easiest group to convince to go electric once range anxiety is addressed. With a product like ours, we can go to a fleet operator and say, how would you like to have predictable energy costs? That makes budgeting far easier for them compared to volatile fuel prices. Return-to-base charging is appropriate for certain kinds of fleet operations — police, municipal fleets, construction fleets — where vehicles return to a base and spend long idle periods. An EV ARC can charge multiple vehicles overnight from battery storage and replenish daily range needs. But I'm more excited about diversified charging infrastructure, especially for autonomous fleets that don't return to base. We want autonomous taxis to be never more than a couple minutes away from a wireless EV ARC, allowing top-off charging between rides so they can run nearly continuously. Our research shows that top-off charging with distributed EV ARC infrastructure can enable autonomous taxis to provide about twice as many rides per vehicle as a traditional return-to-base model. Charging should be ubiquitous like Wi-Fi for such fleets, and that dramatically improves unit economics.
Great. Another question on your newer generation of product lines. Beyond EV ARC or the legacy streetlight business in Europe, which of the newer product lines is closest to maturity in terms of gross margins versus those that are still further out because they're newer?
Anything based on the EV ARC platform is closest to maturity — that includes BeamPatrol, BeamBike and BeamScoot — because they leverage the existing EV ARC platform while addressing different use cases and value propositions. That was a deliberate strategy: a broad product set with narrow manufacturing and supply chain requirements. Beamflight remains nascent and often requires bespoke integration for specific drone platforms, so its margins are harder to forecast in the early days, though the potential value is high. BeamSpot, our streetlight replacement product, is still young but successive generations have been deployed at lower cost and with improved performance, so that has room to mature. I believe EV ARC unit economics are among the strongest; across our portfolio unit economics are above 30%, and EV ARC in particular is closer to the 40% range, especially when produced in Serbia.
This will conclude our question-and-answer session. I would like to turn the conference back over to Mr. Desmond Wheatley for any closing remarks. Please go ahead.
Yes. Thanks again, everybody, for your time and for your continued interest. I would again point out that this has been a disappointing quarter from a revenue and gross margin point of view, but it is in no way an indication of what's happening at the company. As I said earlier, we're dramatically larger and more capable than we were a few years ago. Please consider the noncash impacts on EPS and other metrics, because impairment charges and reserve activity can distort results and don't reflect the underlying operational progress. We're grateful for your attention, appreciate the great questions, and look forward to reporting more successes in future calls. Thank you.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.