Elauwit Connection NASDAQ: ELWT reported second-quarter results marked by lower revenue tied to the timing of construction projects, while management highlighted growth in contracted, activated and billed units as indicators of future recurring service revenue.
Second-quarter revenue fell 46% year over year, or $2.5 million, to $2.9 million. Chief Financial Officer James Di Bartolo said the decline reflected the periodic and variable nature of client construction and installation projects. For the first six months of 2026, revenue decreased 32.4%, or $3.5 million, to $7.3 million, also due to the timing of new construction work.
Management said construction activity is weighted toward the second half of 2026. Executive Chairman Dan McDonough said the company expects its quarterly revenue profile to become less uneven over time as construction work is distributed more evenly and recurring services account for a larger share of total revenue.
Unit Growth and Backlog
McDonough said Elauwit added nearly 5,900 contracted units across 21 properties during the second quarter, representing a 16% sequential increase and 33% year-over-year growth. The company signed more than 10,000 units during the first half of the year, he said.
As of June 30, Elauwit had 42,687 contracted units, up 33% from 32,094 a year earlier. Chief Executive Officer Barry Rubens said activated units increased 94% year over year to 27,134, while billed units rose 163% to 22,967.
- Contracted units: 42,687 as of June 30, up 33% year over year.
- Activated units: 27,134, up 94% year over year.
- Billed units: 22,967, up 163% year over year.
Rubens described contracted units as properties awaiting construction or installation, activated units as installed properties that may still be in an onboarding period, and billed units as those fully generating recurring revenue under managed services or Network as a Service, or NaaS, agreements.
He said activated properties generally move through a 12-month rollover period following installation, with costs onboarded in line with property lease renewals. Management views the progression from contracted to activated to billed units as a leading indicator for revenue growth over the next six to 24 months.
McDonough said the company had nearly 43,000 units under contract at June 30 and expects to exceed 50,000 contracted units by year-end. That outcome would represent an annualized increase of more than 46% for 2026, according to the company.
Elauwit also reported more than $38.9 million in contracted backlog for new installations and long-lived recurring service revenue, compared with $35.9 million a year earlier. Rubens said the company had 16,000 units committed either in writing or verbally through June 30, spanning 57 properties and 21 ownership groups, for installation during the rest of 2026 and 2027. Its tracked sales pipeline includes more than 500 properties and 98,000 units.
Margins, Expenses and Losses
Cost of revenue declined to $2.4 million in the second quarter from $4.5 million a year earlier. Gross profit fell to $0.4 million from $0.8 million, but gross margin improved slightly to 15.5% from 15.1%.
Di Bartolo said the company has implemented actions intended to improve network construction gross margin toward an expected range of approximately 20%. It expects recurring services margins to remain in a range of 10% to 15%, depending on the mix of managed service provider, NaaS and other business factors.
Operating expenses increased to $3.5 million from $1.5 million a year earlier. The company attributed the increase to its larger scale, expenses associated with its Nasdaq listing in November 2025, sales and marketing investments, and costs related to efficiency initiatives.
Elauwit reported an operating loss of $3.1 million, compared with an operating loss of $0.7 million in the prior-year quarter. Net loss widened to $3.1 million from $0.9 million, while adjusted EBITDA was a loss of $3 million, compared with a loss of $0.7 million a year earlier.
At quarter-end, the company held $1.2 million in cash and cash equivalents, along with $3.6 million in accounts receivable and $2.9 million in inventory. Deferred revenue totaled $5.3 million.
Efficiency Efforts and Sales Strategy
Management said it has invested in business intelligence tools, enterprise resource planning and inventory platforms, software integrations, network operations, account management and automation. Rubens said Elauwit has identified about $1.9 million in annualized operating-cost benefits, net of certain hires and other additions.
The first and second quarters included costs to implement those measures, Rubens said, while the company expects benefits to be more visible in the second half. Management said it expects operating results and net loss to improve during the remainder of 2026 and into 2027, supported by cost reductions, construction activity and growth in billed units.
During the question-and-answer session, McDonough said Elauwit has refined its sales strategy after expanding its team and testing multiple approaches during the first half. He said sales spending is expected to decline in the near term as the company focuses on the approaches it believes can generate results, with additional investment potentially returning as sales velocity increases.
McDonough also said the company is seeing more conversion opportunities at existing properties rather than new construction. He said conversions can shorten the period between contracting and revenue generation. Elauwit expects third- and fourth-quarter construction revenue to benefit from a greater share of conversion work, which management characterized as faster and more predictable than new construction projects.
Rubens said future opportunities from two large multifamily property real estate investment trusts are separate from the company’s 98,000-unit pipeline. He said those owners may allocate properties to Elauwit over the coming four to five years as existing carrier contracts expire or properties become eligible for conversion. Di Bartolo added that the company had not encountered significant supply-chain disruptions during the quarter as a result of tariffs.
About Elauwit Connection (NASDAQ:ELWT)
We are a provider of broadband Internet networks for the multifamily and student housing property sector. We provide Managed Services and Network-as-a-Service solutions designed to modernize and enhance the Internet connectivity experience for residents while driving significant financial benefits for property owners. We strive to be a leading player in a booming multifamily property conversion trend through service commitment, operational experience and flexibility. Key highlights of our business and market opportunity include: · There is an untapped market to fulfill major demand for network services in multifamily housing units: o According to market estimates from the National Multifamily Housing Council (NMHC), there are approximately 23 million apartment units in the U.S, and we estimate 55% of those units are well-suited for our network services.
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