Today's fireside chat with Cloudastructure. I'm your host, James Kisner, and I'm a senior analyst at Water Tower Research. Today, I'm joined by James McCormick, Chief Executive Officer, Greg Smitherman, Chief Financial Officer, and Lauren O'Brien, Chief Revenue Officer at Cloudastructure. Welcome, everyone. Thank you. Hey, James. Hey, James. Hey, so for listeners who may be new to the story, Cloudastructure is a Palo Alto-based, NASDAQ-listed company providing an AI-powered cloud video surveillance and remote guarding platform. The company's technology enables trained remote guards to monitor significantly more camera feeds than traditional setups, intervene in real time through integrated speakers, and deliver what the company reports as a 98% crime deterrence rate. Cloudastructure went public in early 2025. They've since posted accelerating revenue growth across multifamily housing, construction, logistics, and commercial real estate. Before we get started, I would like to point out that the company's safe harbor statements can be found on its website at cloudastructure.com. Also, this fireside chat may not be reproduced or a written transcript distributed without the express written consent of Water Tower Research. Let's get started. I'll start with James. For those listeners who aren't familiar with the story, can you give a short refresher on what Cloudastructure does? Along those lines, you know, Cloudastructure positions itself as a cloud-first, AI-first security platform. So practically speaking, what do customers get that a typical-- that they typically can't get from a traditional camera plus NVR setup? Sure. Let me start with the second part of your question first. Excuse me. What we are seeing now in our industry is a fundamental shift in the security industry. Customers are no longer satisfied with legacy systems that simply record events. They want technology that helps prevent incidents and protect people and property proactively, and that's what we provide. Our AI security platform provides a scalable, cloud-based architecture for video surveillance. Our solution is used by enterprise customers, think apartment complexes, construction sites, commercial properties, those sorts of entities. Our platform includes artificial intelligence and machine learning analytics, cloud storage, and seamless remote guarding, which we'll talk about a little bit more. Our enterprise customers get surveillance that's 100% continuously monitored in real time, and they receive alerts to threats. One of the key differentiators is that in the event of an emergency or a threatening event, our remote guards can talk down over a loudspeaker to perpetrators and/or contact law enforcement or emergency services, which reduces theft, vandalism, and increases resident and employee and visitor safety. We have a documented 98% deterrence rate in stopping crimes before they happen when our remote guards get involved. I'm very impressed with the deterrence rate. Thanks, thanks for that recap. Let's turn to kind of recent result, results. You recently released a 2025 year-end review highlighting approximately 270% year-over-year revenue growth. You know, more than $5 million in recognized revenue and approximately, 306% growth in Q4 alone year-over-year. So as you look back on, on the year as a whole, 2025, what were the two or three factors or accomplishments that, that really drove that growth? Yeah, good question. Well, let's start with this. It took a while for us, like approximately 2.5-3 years, to get traction in our largest current vertical, which is multifamily housing, i.e., apartment complexes. And what we found is that once you're in with a property management firm, you, it's easier to land and expand, if you will, to get additional properties inside that property management group, and that's exactly what we saw in 2025. We've proven what our systems can do, right? We talked about the 98% deterrence rate. Our customers really, really are fans of our solution, and we find that that allows us to get into additional opportunities above and beyond where we started with them. So there's one. The other, I would say, is introduction into new verticals, right? There's just a number of logical applications for our solution, and two in particular that we made some headway in, from a new customer and revenue generation standpoint, were transportation and logistics and the construction market. So all of those things together helped drive the revenue numbers, and the revenue growth that you quoted earlier. Yeah, sounds like you have a lot of momentum there. So, yeah, the AI-powered-- the AI-powered video surveillance and remote guarding market is kind of attracting more and more attention investment, I think, generally. How do you differentiate Cloudastructure from competitors who may also claim, you know, AI-driven capabilities, and what do you view as your most durable competitive advantages? Yeah. Perhaps a little cheeky, but how I would start answering that would be our solution actually works. And we anecdotally, what we hear is that a number of competitors, their solutions just frankly don't work as well as ours, and that allows us opportunities to go in and take over sites where those competitors are located. But a couple things. Our models, we train our models that identify potential threatening events or threatening activities using real video footage from our customer sites, right? Like, you know, a parking garage is not well-lit, right? And that's a target area for potential thieves. So we actually use actual footage of people, you know, going around, breaking into cars, trying to break into cars. And that grainy, low-lit video footage is what our models are trained on. So it gives us a leg up because we're not using clip art, right? Or, you know, images just downloaded from the web. We're using actual events to help train the models and improve the efficacy of identifying future events. That's one. Secondly, Remote Guarding. I mentioned it in the introduction. This is the human-in-the-loop piece, and this is really one of the large secret weapons that we have. A lot of our competitors really lean in on the AI side of things to help identify threatening activities, and frankly, it just doesn't work very well. What we've done, right, between the models and the remote guards, our guards get an alert when something is identified as a threatening activity. They can look at the feed, the live feed, in real time, and if they do determine that it's something that warrants additional action, they can take it. And that human-in-the-loop is important because, you know, you think about video images, right? Are those two people dancing, or are they fighting? Well, if they're dancing, you probably don't need to call law enforcement, but if there's fighting, you probably do need to do something. So, those two aspects really give us a competitive advantage, James. Well, that makes a ton of sense. One more for, James before we go to go-to-market. In the last year, you've announced a number of technology innovations, including the mobile surveillance trailer, you know, powered enclosure technology, proprietary video compression that reduces bandwidth by up to 50%, even I think integration with autonomous drones. Which of these innovations do you view as potentially the most impactful to the company's growth, competitive positioning, and kind of unit economics going forward? Yeah, I would say, all of the above and other things that we haven't announced yet and that we're working on. But of the list that you just brought up, I would say two things. One, if you think about some of our additional verticals we're getting into or increasing our footprint in, specifically, construction and commercial properties, those are huge opportunities for us, right? Just huge. And I think there's... Both of those verticals, mobile security solutions, as well as powered enclosures, which is the same technology, just, you know, mounted to a pole, I guess you would say, we see as being huge advantages for us as we look to 2026 and beyond, and we'll get into that a little bit. Great. All right, well, let's turn to Lauren and go-to-market. Lauren, welcome. Thank you. As a Chief Revenue Officer, you've been at the center of the commercial execution. You know, Cloudastructure has contracts with six of the top 10 multifamily property management firms in the U.S. I think you just announced another one in the top 15 recently. You disclosed approximately 74% customer growth in 2025. Just kind of talk about how you're prioritizing, you know, new customer acquisition versus, I mean, driving more business with the customers you already have. You know, maybe talk qualitatively about the size of the opportunity to drive business with those existing customers. Yeah. So, starting in 2026, we have divided our sales organization into two separate groups or divisions, and one is to focus on our existing markets for land and expand, as we would say. And so essentially multifamily, some commercial, et cetera, and they're really honing in on developing master service agreements so they can expand faster. And then our other division is, is looking at trucking and logistics and new markets, construction, and expanding into those and, and very, very large enterprise accounts. So that way, we can keep the focus on expanding with new logos and also working on our current logos. And you, you talked a little bit about the qualitative quantitative of the, the logos that we do have. We have seven of the top 11 right now. And in total, they have about 2.5 million units across their entire portfolio. And many of them are asking us, they're basically saying: "We want to standardize on a common security platform, and we're looking at you to help us with that standardization." So it's a huge market. If we take the 2.5 million units and divide it into locations, we get a current market valuation, total available market, essentially, of about $1 billion, just in our current logos alone. So it's a very big market. If we only focused exclusively on them, we'd be very happy, but we're not stopping there. We're going into new markets because we see equally very, very large opportunities, as James mentioned. Oh, wow, $1 billion's a lot, so, lot of opportunity with your current customers. It is a lot. Maybe just double-click on the new customer piece again. So can you talk about kind of a typical sales cycle for a new customer, just from lead generation to bake-off to deployment and expansion? You know, how long does that usually take, and has that length changed over time? Yeah, so it really does depend on the market that you're in. In the multifamily market, where we are predominantly in, the average sales cycle has been from, you know, cold lead to close, about nine months. I will say that as the trust has been built in that market, we are becoming sort of the gold standard, if you will. We have seen that that timeline has shortened. But in other markets, like construction and even trucking, it's much faster. People are making decisions a lot quicker, because they... Especially in construction, if they want a bunch of enclosures on a new construction project, they typically want it very quickly. So it's kind of nice because then we can work on the long-haul property management companies, but also on some of the shorter, faster-turning projects. Very helpful. So, you know, James kind of alluded to this a little bit, in a prior question, but, you know, maybe you could talk about a typical competitive sales situation. You know, what are the most common alternatives that a prospect is typically evaluating, and, you know, what tends to tip the decision in, in Cloudastructure's favor? Yeah, I would say there's two, two things that large customers are looking for. One is a cloud-based architecture, so they can manage all their sites across hundreds of locations and, and have it be easy. With the traditional NVR, that type of architecture makes it very difficult to manage hundreds of locations, so that's really the first. But increasingly, we are seeing the need for remote monitoring. A lot of these places have physical guards, and they're realizing that the physical guard is becoming, I would even say, it's archaic. We could have eyes all across a property in a video monitoring situation that's a lot more effective than a guard who might not be at the right place at the right time. We have a 98% deterrence rate, as James mentioned, and it is because we have eyes everywhere, and we can talk down and identify people and let them know they're being watched. Okay. All right, let's... One more for you, Lauren. Logistics and construction were identified as two key expansion verticals, and you previously mentioned a master service agreement with a commercial truck parking operator. You know, without naming names, can you give us an update on how that relationship is progressing and what the pipeline of potential looks like for those verticals more broadly as we head into 2026? And is the sales—I think you already talked about this just now here. The sales cycle perhaps is shorter. You know, is it different for those verticals? Yeah, I would say with that particular customer, it's great. We really view them as a partner. In fact, we like to think of all of our customers as partners in really understanding what they need and making sure that we can deliver. The feedback that we have gotten from them is, you know, and I'll give you some quotes. "You are exceeding my expectations." "Your customer service and onboarding process was over the top." Our remote guarding, they used to have, with one of our competitors, a remote monitoring situation, and ours is much more sophisticated. They're saying the AI is much stronger, as well as just the humans in the loop that James spoke about. The remote guards providing the incident reports in a timely fashion and really letting them know what's happening on property. They are extremely wowed with the experience. And then in terms of what we expect from them, it's a very large trucking company that is expanding very quickly. So, you know, easily it's going to be $1 million in the very near future of total contract value for us, but we're actually hoping for more, of course, so. Very exciting. Yeah. Congrats on that win, and congrats on having it go so well. Yeah. Speaks to the strength of your offering. You know, let's turn to some financial questions, Greg. You know, thanks, Lauren, for all that. All right, Greg, so Cloudastructure revenue includes recurring services and subscriptions, namely cloud video surveillance, remote guarding, but also has hardware sales and installation services mixed in there. So, you know, as the business scales and recurring revenue becomes a larger portion of the mix, you know, how should investors think about the trajectory of recurring revenue versus one-time revenue, and what does that mean for revenue visibility and perhaps gross margin as well? Sure. Well, there are a lot of components to that, but- Yeah but, Make it work for us. Let me start with a couple of them. So, while we did do a little bit of a high-level release of 2025 numbers with $5 million in revenue, I'll really refer to specifically the full released financials from Q3, and it, 'cause it really addresses some of these points. So, let's start with margin, right? A year ago in 2024, really just starting out, starting to get our legs, and 2025 was really kind of our breakout year. Significant revenue growth consistently across every quarter, and it took us from a very small company to, you know, we're still early stage, but a more substantial company. You saw margins go, if you look at sort of 2024, comparing Q3 margins to Q3 margins from, for the nine months from 17% to 45% in 2025, to if you just look at the, the last, three-month period, Q3 to Q3, it went from 16% to 52%. So like any SaaS company, once you start to cross over certain thresholds, margins get pretty can get pretty significant pretty quickly, and we've already seen that over the last two years. So that's on the, the margin component. I would expect to see maybe not quite that similar growth, 'cause you're topped out at 100%, but the trend to continue. If you look at the mix, I think the important thing that Lauren had said, when you think about the total addressable market, right, just from 7 of our logos, right, over $1 billion in revenue possible, and we've got certainly a lot more than 7 logos. We did $5 million last year. There's a huge amount of opportunity for growth in all phases of the business, both hardware installation as well as our continuing services. Now, that being said, our recurring services continue to build. Our churn is exceptionally low. We're kind of at the, you know, 99% retention level, so that recurring is going to continue to build. If you look at Q3 run rate of recurring revenue, it's about $1.7 million annually, just if you take the Q3 numbers and multiply it by four. Given our growth, the number is now higher, but you know, that's more than our entire revenue from 2024. So yeah, the recurring revenue is providing a strong base that continues to grow. So obviously, the mixture will continue to build from a recurring revenue standpoint, but you know, we're expanding our sales force. As Lauren had mentioned earlier, there's a huge pie to go after, so I think everything is gonna be growing, has the potential to grow at a pretty good rate. And we're not focused on what's the mix so much as growing the pie, 'cause there's a lot of room for the pie to grow. Helpful perspective. Maybe let's get a little bit philosophical perhaps, and or zoom out and talk about ROI, return on investment. So, you know, as CFO, you know, how do you think about it in general? And, you know, perhaps, you know, how do you think about ROI in terms of sales and marketing specifically? Sure. Well, for us, you know, when we talk about ROI, actually, the first things that comes to mind is not our ROI, it's our customer's ROI, because that is what ultimately drives our business. So we've got a great example from one of our customers using their numbers. You know, they had a live guard that they were spending about $100,000 a year on, and that was just to have one person there at night for, you know, 8 hours a night. You actually have to have more than one person, 'cause someone's not working every day of the year, obviously. When they signed the contract to put in quite a few cameras, so covering more than what this one guard could see, and you included the installation, the upfront purchase, plus a year of service, it was about $67,000. So just in that first year, including all this upfront cost, it's a 43% ROI for our customer. And then on an ongoing basis, they're obviously not installing and buying new hardware. That's a one-time upfront cost. The ROI for them was 133%, and that's just on hard dollars. It's not talking about the improved quality of life that the residents get because we're lowering the crime rate, right? We're preventing a lot of things from happening. We're keeping people out of the pool at night that are, you know, making a ruckus, and right. There are a lot of things that go to quality of living, and we address quite a few of those. So that means lower vacancy rates for our properties. There are a lot of things that generate ROI for our customer, and that's our first thought, right? 'Cause if we can deliver that, we will get that business, grow our business, and that will turn into ROI for us. Now, for us, it's not that we only think about our customers' ROI, we also worry about our own, and we really look about how can we continue to offer products at good margins that drive nice returns. You know, we want... We wanna make sure that any investment we're making, we're getting payback in under a year. That's how you drive this business. Almost all of our business is very scalable, so we don't have to put a huge amount of dollars upfront. As our business scales, we scale our data centers, we scale our employees, we scale our guard center, and we move with the business so that our ROI is not too far, you know, our investment is not too forward-thinking. It drives and it moves forward with revenue, and that improves our own ROI. Very helpful perspective. So, you know, as you look at the balance between growth and investment and just the path to profitability, are there specific expense categories where you expect to see meaningful operating leverage, you know, as your revenue scales? Sure. Again, right, SaaS company, there's some corporate overhead that you just gotta have, right? Some insurance and just a core team of people. That really doesn't change that much as the business grows. It goes up a little bit, but it's... There are some big chunks upfront, so that's very scalable. As we grow, that's not gonna grow significantly, or at least not proportionally. And then as I said, the rest of our business scales pretty well, right? We can expand in our data centers, we add a little bit of capacity, we add hardware, and as we do that, right, we are able to take advantage of the huge jumps in performance in compute power, right? 'Cause that's what we're doing, right? More computes per dollar, more storage per dollar. Four years ago, one of our CVRs could handle about 10 cameras. Now they can handle about 40 cameras, right? Same hardware cost, huge leverage. As we scale, and as you see Moore's Law continue to drive the cost down, our profitability is just gonna continue to increase. Makes sense, right, the technology curve. One more for you, Greg, before I give one more to James to wrap it up. You know, looking toward 2026, can you kind of just walk us through the company's liquidity position and runway based on what's publicly disclosed, and what levers are available to you, if additional capital is needed before the company reaches cash flow breakeven? Yep. Excellent question. So, we did end Q3 with $6.4 million. We haven't disclosed where we ended up the year, so I will stay off of that. But what I will say is our cash position remains strong. We've got quite a few levers you know, if we need additional cash to get to cash flow breakeven. We have, that's disclosed, a $50 million ELOC, which we have not drawn down on at all. We've got another $40 million facility, which we've drawn down on a little bit, but the majority of that remains available. And we just filed a S-3 for a shelf registration, $150 million, which also included an ATM. The ATM, which again, we don't need, our cash position right now is strong, but it's there in case we need to raise cash in a you know shorter period of time. But we also have the ability to raise significant amounts of capital as strategic opportunities you know come upon the horizon. So we've got multiple ways to get access to capital very efficiently, very cost-effectively. But the most important thing is where we are today, we have a good cash balance in the bank. That's very reassuring. So, thanks, Greg, for those answers. Just one more for James as we wrap up. You know, for investors evaluating Cloudastructure today, what are the two or three things that you would want them to take away from this conversation, and, you know, what milestones or catalysts should they watch over the next twelve months? Sure. A few things. I mean, you heard it from Greg, you heard it from Lauren, a little bit from myself. First thing I would say is we are attacking a large addressable market or markets, right, with the verticals that we're going in. So we are very aggressively pursuing additional revenue growth. You know, again, we have to be careful since we're a public entity, but I think you could assume that from 2025 to 2026, we should see significant revenue growth. As Greg just mentioned, right, we're very comfortable with where we're at from a cash position right now and our ability to tap into additional funds in the future as we need them. Sort of the leverage, the operating leverage that we talked about, the gross margin improvements, I mean, that all puts us on a path or a march to profitability, and I think that's what we would like people to take away. Now, milestones or catalysts. I think if you just go back and look at 2025, and you look at the press releases that we issued during 2025, that gives you a good framework for the types of things you can expect from us in 2026. Meaning new customer wins, expansion in existing customer accounts, new product introductions, increasing amounts of customer contracts, and positive financial results. That's what we think people should look for and expect over the next year, over 2026. All right, very exciting. We'll be watching. So, I wanna thank James, Greg, and Lauren for joining us today. Thank you as well, James. Thanks, James. More information on the company can be found on the company's website at cloudastructure.com, or in our research at www.watertowerresearch.com. Just a final disclaimer: The views expressed in this fireside chat may not necessarily reflect the views of Water Tower Research LLC, and are provided for informational purposes only. This fireside chat may not be distributed or reproduced without the written consent of Water Tower Research and should not be considered research nor recommendation. WTR is an investor engagement firm and not a licensed broker, broker-