Q2 FY2027
Filed Oct 21, 2026Revenue Excluding Largest Customer Up 61% Year-Over-Year; Revenue Up 8% Sequentially Customer Base More Diversified than at Any Point in Company History; Expanded Cost Program Targets Monthly Operating Cash Breakeven in January 2027
Revenue resumed year-over-year and sequential growth and customer concentration declined materially, but the Company reported a quarterly loss from operations of $2,680,396 and is targeting, rather than reporting, future cash breakeven.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Revenue, three months ended August 31, 2026other | $1,985,604 | up 8% | up 5% |
| Revenue excluding the Company's largest customer, three months ended August 31, 2026other | $1,627,444 | up 11% | up 61% |
| Revenue from the largest customer, three months ended August 31, 2026other | $358,160 | down 3% sequentially | – |
| Recurring revenue from device rental activities, three months ended August 31, 2026other | $1,765,293 | – | – |
| Annualized run-rate of recurring revenueother | approximately $7.1 million | – | – |
| Gross profit, three months ended August 31, 2026other | $1,063,301, or 54% of revenue | – | – |
| Non-cash inventory write-down, three months ended August 31, 2026other | $270,987 | – | – |
| Gross profit excluding inventory write-down, three months ended August 31, 2026other | $1,334,288, or 67% of revenue | – | – |
| Operating expenses, six months ended August 31, 2026other | $7,636,884 | – | declined 5% |
| General and administrative expense reduction, six months ended August 31, 2026other | $380,193 | – | down 6% |
| Loss from operations, three months ended August 31, 2026other | $2,680,396 | – | – |
| Loss from operations, six months ended August 31, 2026other | $5,389,759 | – | – |
| Loss from operations excluding inventory write-down, three months ended August 31, 2026other | $2,409,409 | narrowed 11% sequentially | – |
| Largest customer share of total revenue, three months ended August 31, 2026other | 18% of total revenue | – | – |
| Recurring revenue share of total revenue, three months ended August 31, 2026other | 89% of total revenue | – | – |
| Five largest customers' share of revenue, three months ended August 31, 2026other | approximately 50% of second-quarter revenue | – | – |
| Revenue from customers outside the top five, three months ended August 31, 2026other | nearly doubled | – | growing 91% year-over-year |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Device rental revenue, three months ended August 31, 2026Device rental activities represented recurring revenue. | $1,765,293 | – | increased 4% |
| Direct sales, three months ended August 31, 2026No further driver was provided. | $220,311 | – | increased 14% |
Second half of fiscal 2027 and second calendar quarter of 2027 outlook
- NoteCost and cash savings are expected to exceed $350,000 per month from February 2027.
- NoteMonthly operating cash breakeven is expected in January 2027, defined as monthly revenue exceeding operating cash expenses excluding debt service and device builds.
- NoteAll-in cash breakeven is expected in the second calendar quarter of 2027, including debt service and device builds.
- NoteThe launch of RAIA™ remains on track for the fiscal third quarter and is expected in the coming weeks.
What drove it
- Revenue excluding the Company's largest customer reached a record $1,627,444, driven by new and expanded deployments across logistics, healthcare, construction and critical infrastructure.
- The largest customer represented 18% of total revenue, versus 46% in the prior-year quarter.
- The Company's next four customers combined exceeded its largest customer, and the five largest customers accounted for approximately 50% of second-quarter revenue.
- Gross profit included a $270,987 non-cash inventory write-down related to the discontinued residential camera product line.
- Operating expenses for the six months ended August 31, 2026 declined 5%, with general and administrative expenses down 6%, or $380,193, primarily from lower salary and wage expense.
Concerns
- Loss from operations was $2,680,396 for the quarter and $5,389,759 for the six-month period.
- The largest customer began reducing its spend in December 2025 as part of its own cost-cutting initiatives.
- The reported gross-profit figure included a $270,987 non-cash inventory write-down.
- The release states that achievement of either cash-breakeven objective would not by itself establish positive net cash provided by operating activities, overall profitability, sufficient liquidity, or eliminate the need for external financing.
- The Company identifies its ability to continue as a going concern as a risk.
What to watch
- Whether decisions made in September begin producing savings in third-quarter results.
- Execution of the expanded cost and cash savings program, which is expected to exceed $350,000 per month from February 2027.
- Whether revenue growth from other customers offsets any additional decline from the largest customer.
- Timing and commercialization of the RAIA™ launch expected in the fiscal third quarter.
- Progress toward monthly operating cash breakeven in January 2027 and all-in cash breakeven in the second calendar quarter of 2027.
Analysis
Revenue was $1,985,604 in Q2 FY2027, up 5% from the prior-year quarter and up 8% from Q1 FY2027. Growth was led by revenue excluding the largest customer, which reached a record $1,627,444, up 61% year over year and up 11% sequentially. Device rental revenue was $1,765,293, while direct sales were $220,311.
The customer mix became substantially less concentrated. The largest customer contributed $358,160 and represented 18% of total revenue, compared with 46% in the prior-year quarter. The five largest customers accounted for approximately 50% of second-quarter revenue, compared with approximately 73% in the prior-year quarter, while revenue from customers outside the top five grew 91% year over year.
Reported gross profit was $1,063,301, or 54% of revenue, including a $270,987 non-cash inventory write-down associated with the discontinued residential camera product line. Gross profit excluding the write-down was $1,334,288, or 67% of revenue, compared with $1,344,865 (71%) in the prior-year quarter and $1,183,824 (65%) in Q1 FY2027. The Company nevertheless reported a loss from operations of $2,680,396 for the quarter.
Cost action is the central operational focus. Six-month operating expenses declined 5% to $7,636,884, with general and administrative expenses down 6%, or $380,193, but the release says these results captured only one month of the program announced in August. The expanded program is expected to generate cost and cash savings exceeding $350,000 per month from February 2027. Management targets monthly operating cash breakeven in January 2027 and all-in cash breakeven in the second calendar quarter of 2027, while maintaining that RAIA™ is on track for launch during the fiscal third quarter.
Management, verbatim
Q2 is the quarter the base business showed up. Revenue from customers other than our largest, now 82% of our total revenue, grew 61% year-over-year and set a record. Our top accounts are now spread across multiple customers rather than concentrated in one, and the margin profile of the core business was 67% once you set aside a one-time write-down on a product line we have already exited.
Steve Reinharz, CEO, CTO and founder of AITX
At the same time, I am extremely focused on cost. The program we announced in August is underway, and yesterday we expanded it. We are protecting the products and initiatives that are close to market and generating results, and reducing or eliminating spending on products, initiatives and activities that are not close to market or are not producing results.
Steve Reinharz, CEO, CTO and founder of AITX
Not in the filing
stated, not guessed- GAAP designation for the reported financial metrics
- Net income or net loss
- Basic and diluted EPS
- Operating cash flow
- Free cash flow
- Cash balance
- Debt balance
- Detailed balance-sheet data
- Capital returns, including dividends and share repurchases
- Actual general and administrative expense for either period
- Revenue guidance
- Gross-margin guidance
- Operating-expense guidance
- Tax-rate guidance
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.