Transcript: Wrap Applied sciences Q1 2026 Earnings Convention Name – Wrap Applied sciences (NASDAQ:WRAP)

Good day and thanks for standing by. Welcome to the Wrap Applied sciences, Inc. First Quarter 2026 Earnings Convention Name. At the moment, all individuals are in a pay attention solely mode. After the speaker’s presentation, there will probably be a query and reply session. Webcast viewers can sort questions in at any time by way of the webcast Q&A perform. Please be suggested that at present’s convention is being recorded. I might now like at hand the convention over to your speaker at present, Lou Springer. Please go forward.

Thanks. Good afternoon and welcome to Wrap Applied sciences first quarter 2026 earnings convention name. I am Lou Springer, Vice President of Finance. Becoming a member of me at present is Scott Cohen, Chief Govt Officer and Jared Novick, President and Chief Working Officer. We admire your time and continued curiosity in Wrap. Earlier than we start, I need to remind you that sure statements and assumptions on this convention name include or are based mostly upon ahead trying info which might be being made pursuant to the secure harbor provisions of the Personal Securities Litigation Reform act of 1995 and the Federal Securities Rules. Please overview the ahead trying and Cautionary Statements part on the finish of our first quarter 2026 earnings launch for numerous elements that would trigger precise outcomes to vary materially from ahead trying statements made throughout our name at present. Such ahead trying statements are topic to quite a few assumptions, uncertainties and identified or unknown dangers which may trigger precise outcomes to vary materially from these anticipated. These elements are extra absolutely mentioned within the Firm’s filings with the securities and Change Fee. The ahead trying statements included on this convention name are solely made as of the date of this name and the Firm shouldn’t be obligated to publicly replace or revise statements made throughout this name don’t represent a proposal to promote or a solicitation of any provide to purchase any securities. Securities will probably be supplied solely by way of a registration assertion and prospectus which could be discovered at www.sec.gov. additionally, throughout at present’s name we’ll talk about sure non GAAP monetary measures which we imagine could be helpful in evaluating the Firm’s monetary efficiency. Descriptions of these non GAAP monetary measures that we use and reconciliations of these measures to our outcomes as reported in accordance with GAAP are detailed in our earnings launch. Except in any other case acknowledged, all reported outcomes mentioned on this name examine the primary quarter ended March 31, 2026 with the primary quarter ended March 31, 2025. The earnings launch will probably be out there on the Monetary Data part of our [email protected] as well as, a replay of this earnings name will probably be posted on our web site after the decision. I’ll now hand it over to Scott

thanks Lou. Good afternoon everyone and thanks for becoming a member of us at present. After we spoke in March we advised you that for the primary time we had visibility into our pipeline and that we’re concentrating on 100% income progress progress for 26 1/4 in I can inform you that based mostly on the knowledge now we have at present, our conviction in that concentrate on has strengthened the momentum we described popping out of the fourth quarter carried instantly into the primary quarter and has continued to construct as we transfer into the second quarter. First quarter income grew 45% yr over yr. Extra importantly, product gross sales, the core measure of company adoption with our expertise grew 186%. That progress was pushed by elevated home and worldwide demand for the bowler app 150 line, together with continuous reorders from and really energetic put in base. We imagine these numbers point out two issues. First, the pipeline we talked about in March is starting to transform and second, the businesses which have adopted Bull Ramp are utilizing it and increasing internationally. We’re increasing our footprint. We have expanded our footprint in India, Panama, Brazil, Malta and the united kingdom. Throughout the BolaWrap, Wrap Actuality, our drone and counter drone options, we’re seeing the reoccurring facet of this enterprise begin to take form. Cassettes represented a rising quantity, a rising part of product income within the quarter in step with the increasing base of BO wrap gadgets and in energetic subject use subscription exercise and Wrap Actuality Wrap Ways and rap imaginative and prescient is starting to construct. Behind that reoccurring income is a slower compounding story than our single giant than a single giant product order. However it’s me. It is a significant contributor to the standard of our income base over time and it’s rising steadily on the innovation entrance. The early business traction we’re seeing from the drone encounter Drone reinforces our view that non deadly response built-in with autonomous platforms is an actual and rising market and one by which we imagine we’re nicely positioned for. Jared’s going to cowl that intimately shortly. I am now going to show it again over to Lou who’s going to stroll you thru the monetary outcomes. And Jared will cowl our operational progress and R and D progress initiatives. I will come again to debate our outlook and priorities for the steadiness of 26. Thanks.

Thanks Scott. The monetary ends in Q1 counsel that our technique is starting to translate into business traction. Whole income for the primary quarter was 1.1 million, a rise of 45% in comparison with the 0.8 million within the prior yr interval. We noticed our bookings develop to three.2 million over the identical interval. Product gross sales elevated 186% to 0.9 million in comparison with 0.3 million within the prior yr quarter pushed by elevated home and worldwide Demand for the Bolerap 150 product line. Cassettes and consumables represented a rising part of product income in step with the increasing base of Bolarap gadgets in energetic subject use. Know-how enabled providers income was 0.2 million in comparison with 0.5 million within the prior yr interval. The yr over yr change displays the expansion in RAP Imaginative and prescient and associated software program income offset by the wind down of sure advisory and investigative providers. We’re focusing expertise enabled providers income line on greater margin subscription and software program based mostly choices together with RAP Ways, RAP Actuality and RAP Imaginative and prescient Proof Administration. Subscriptions Gross revenue elevated 16% to 0.7 million in comparison with 0.6 million within the prior yr interval. Gross margin was 62% in comparison with 78% within the prior yr interval. The decline in gross margin proportion displays the expansion in {hardware} product gross sales in Q1 which carry decrease margin than software program subscriptions and managed providers. We presently anticipate gross margins to enhance as expertise enabled providers income grows as a proportion of whole income all through 2026, though there could be no assurances that this combine or shift will happen on the tempo or magnitude we anticipate. Inside promoting Normal and administrative Expense Share based mostly compensation was 2.4 million for the primary quarter in comparison with 1.7 million within the prior yr interval. Money based mostly SGA was 3 million in comparison with 2.5 million within the prior yr interval reflecting funding in gross sales and go to market growth. Whole working bills had been $5.5 million in comparison with $4.5 million within the prior yr interval. Please be aware, as all the time, a reconciliation of GAAP to non GAAP measures could be present in our earnings launch which is posted on our web site. Money utilized in working actions improved 59% to $1.2 million in comparison with $3.1 million within the prior yr interval reflecting greater income self-discipline, disciplined value administration and diminished money burn. At the same time as we proceed to spend money on gross sales and go to market actions. We imagine the primary quarter outcomes replicate a leaner, extra targeted enterprise that’s starting to develop with the non deadly response framework we laid out final quarter. I will now hand it over to Jared to cowl our operational highlights and strategic initiatives. Thanks Lou.

As we glance past the headline monetary outcomes, the primary quarter additionally supplied early proof that our go to market technique is starting to realize traction in areas now we have prioritized for progress. Let me describe this within the following key areas. Non Deadly Response at Scale we see businesses are more and more concerned with transferring away from single gadget buy to company large adoption. Within the first quarter we noticed this validated as businesses started to make that transition. The built-in program strategy of {hardware} expertise coaching and coverage is what’s resonating with regards to federal protection market entry. Our technique is supported by federal consultants and advisors that proceed to place our portfolio for DoD, DHS and different federal prospects. We proceed to give attention to TAA compliant merchandise, made in America manufacturing efforts, procurement infrastructure by means of carahsoft as our grasp authorities aggregator give us basis to compete for that work. On the subject of counter UAS and our developments there, our R and D investments into drone to drone and drone to individual capabilities are displaying traction. We have now pre orders for each drone and counter drone techniques with current orders throughout the UK and Europe and observe on dfrx. Orders from our accomplice in Panama and our R and D growth into web based mostly drone interdiction replicate {that a} market is transferring from idea to procurement. Worldwide reorders and engagements throughout the united kingdom, Europe, India, Panama and Malta throughout and after quarter assist overview that demand for built-in non deadly response options is broad based mostly and international. I will now hand it again to Scott to debate our outlook for the steadiness of 2026.

Thanks Jarrett. Placing all this collectively, we proceed to focus on 100% progress for this yr. What has modified in our visibility, our pipeline and our conviction? The contracts that we’re presently pursuing for 26 and 27, if awarded, have the potential for a significant improve within the scale of this enterprise. Nonetheless, these alternatives do stay topic to aggressive processes and authorities funding choices and different elements outdoors of our management. However in abstract for Q1 confirmed early proof that our go to market technique is starting to transform into measurable business traction. With income progress, stronger product gross sales and increasing bookings and decrease working money use, we’re seeing prospects transfer in direction of broader non deadly response adoption. Whereas early drone and counter drone pre orders counsel that our current R and D investments could open extra markets past the core handheld BoarApp platform, our focus for the steadiness of 26 is simple. Proceed changing pipeline, deepen company large adoption, advance federal and worldwide alternatives and execute towards our 100% income goal for this yr. To all you shareholders, thanks, thanks on your continued assist and confidence. All proper, Lou, I’ll flip it over to you. I feel we have got what number of questions will we get at present? We had 4 questions are available in. All proper, let’s hear them. All proper, I’ll take that one. Since I have been main and driving plenty of the capital, plenty of the financing. So look, it is actually simple. The extra liquidity in our inventory, the extra choices you’ve gotten. And to get institutional high quality traders, they’re searching for fundamentals on this enterprise. We lastly have them. We lastly have pipeline that we are able to present. We lastly have a gross sales rep. We lastly have fiscal self-discipline, self-discipline that is displaying up in our numbers. And if we are able to proceed to drive the highest line like what’s unfolding right here, there’s going to be plenty of totally different monetary choices for us. It has been a tricky street. You guys understand how a lot cash I put into this firm. I participated in all these rounds. It wasn’t one thing I used to be anticipating doing, however I’m standing up for this firm. I am standing up for what we’re constructing and I am not stopping as a result of we have got actually necessary work in entrance of us. It is not simple taking in cash for a corporation that hasn’t been forming as a result of we’ve not. It has been actually robust. But when issues proceed, and I’ve by no means, the corporate’s by no means given out steering, but when we are able to execute on this, we can have lastly, for the primary time, some actual financing choices. I hope that answered your first query. The very first thing you have to do is put the basics in place and put up numbers, which fortunately we’re doing now with visibility, which we’ll be speaking about. This will probably be unfolding all year long. In order you are on that path, we get to interact with several types of funds, several types of brokers that truly have basic traders which might be concerned with a monetary story with some large upside related to it. In order that’s exercise that we’re preparing for as a result of lastly the corporate may stand. I was on the purchase facet, I used to be on the promote facet. So I do know this enviornment extraordinarily nicely and I understand how a lot time can get wasted on the street and I do know what funds wish to spend money on and we’re undoubtedly investable. However once you put the numbers along with the story that is unfolding right here, I feel we’ll have plenty of monetary, quite a bit higher monetary choices going ahead. So you could possibly finish the primary signal is after we truly do it, after we truly put up a deal that with some credit score, with some Establishments that everyone can see and people are larger transactions. And you may see these funds will hopefully be energetic filers in small cap corporations with long run positions. However I’ll say this being actual about our cap desk, I am very happy with that cap desk. There are nonetheless now we have some extraordinarily sticky shareholders. We pulled the shareholder base three and a half years in the past, possibly 4 years in the past and located that over a 3rd of our cap desk had been folks related to legislation enforcement. That’s, that made me very proud and that is a very good indicator the trade has is shopping for in on what this expertise is about. So and in the event you take a look at our high holders, you possibly can take a look at a number of the small however our high holders have been in place for from the start. It is had little or no change in that holy ship. So I’m grateful and grateful that individuals have been supporting us for years and have not stopped these financings which have taken place, these smaller financings, let’s name them 3 to five. We may have taken in larger cash presumably however arduous to get actual basic folks concerned. And you may’t exit to the road and speaking about this as a result of it places stress on the inventory. Should be very, very cautious. So once more the factor that makes me proud not solely do now we have a giant great amount of our cap desk is coming from folks which might be related to legislation enforcement however our high holders and most of our holders have not moved their positions. A few of them improve however they have not moved. So and notably the folks that have invested in these, the pipes, the three or 4 final offers that we have achieved, they’re nonetheless in there facet barely any of them have offered their positions. So that’s not simple to do. You could have belief with that investor and I feel we have established that. However it’s time. I feel all of us need a totally different class traders and we are able to entry them if we preserve doing precisely what we’re on a path to begin to entry that type of capital. If we are able to get by means of the second quarter and execute by means of this yr, we can have a lot extra financing choices out there to us.

Oh yeah, there actually is. Look, we have had loads of C suite turnover I may inform you with and you may see evidenced by at present’s name. We had been forward of time. For the primary time in a very long time our techniques are in place and our controls are one of the best they’ve ever been. So large thanks out To Yulu and Brian and the remainder of the crew. They’ve achieved an incredible job to get us right here and get us lastly in a great place financially. However we’re good. I’m going to be searching for a CFO that may assist discuss to capital markets, assist assist inform our story and get in entrance of traders. However with a purpose to try this, you higher have the numbers to since you will not even get the assembly. It’s going to be losing time. So I feel we’re coming as much as that time. We’re on the lockout lookout. We have achieved interviews and we’ll discover the proper candidate. However the excellent news is our monetary infrastructure is one of the best it is ever been. Jared, do you’ve gotten something so as to add to that?

Nice query. I nonetheless scratch in my head how that occurred. I’ll depart it to algorithms. I feel an algo will need to have gotten a maintain of us and traded forwards and backwards as a result of as quickly as I noticed no large adjustments within the cap desk subsequent to that occasion. So if I noticed a big motion in any of the massive shareholders, I may inform you that I used to be from. However it wasn’t. I noticed no motion within the cap desk. So sadly it was a little bit of a head pretend. It was thrilling day. I did not know the place it was coming from, however my finest guess is the web price.

Disclaimer: This transcript is supplied for informational functions solely. Whereas we try for accuracy, there could also be errors or omissions on this automated transcription. For official firm statements and monetary info, please check with the corporate’s SEC filings and official press releases. Company individuals’ and analysts’ statements replicate their views as of the date of this name and are topic to vary with out discover.