Blackline Safety Q4 2025 Blackline Safety Corp Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Blackline Safety Corp Earnings Call
Speaker #1: Welcome to Blackline Safety. Fourth quarter results conference call. The conference is being recorded. I would now like to turn the conference over to Jason Zandberg, Director, Investor Relations.
Robin Koiman: Welcome to Blackline Safety Q4 results conference call. The conference is being recorded. I would now like to turn the conference over to Jason Zandberg, Director of Investor Relations. Please go ahead.
Operator: Welcome to Blackline Safety Q4 results conference call. The conference is being recorded. I would now like to turn the conference over to Jason Zandberg, Director of Investor Relations. Please go ahead.
Speaker #1: Please go ahead.
Speaker #2: Welcome, and thank you for joining us. On the call today, we'll be discussing our fiscal results for the fourth quarter ending October 31, 2025, which were released earlier this morning.
Jason Zandberg: Welcome, and thank you for joining us. On the call today, we'll be discussing our fiscal results for the Q4 ending 31 October 2025, which were released earlier this morning. With me today is Cody Slater, CEO and Chair of Blackline Safety Corp., Blackline CFO Robin Koiman, and Sean Stinson, President and Chief Growth Officer. I will turn the call over to Cody for an overview of our Q4 and year-end 2025 results. Robin will then discuss the financial highlights before turning the call back to Cody for closing remarks. I'd like to remind everyone that an archive of this webcast will be made available on the investor section of our website. I would like to note that some of the information discussed in this call is based on information as of today and contains forward-looking statements that involve risks and uncertainties.
Jason Zandberg: Welcome, and thank you for joining us. On the call today, we'll be discussing our fiscal results for the Q4 ending 31 October 2025, which were released earlier this morning. With me today is Cody Slater, CEO and Chair of Blackline Safety Corp., Blackline CFO Robin Koiman, and Sean Stinson, President and Chief Growth Officer. I will turn the call over to Cody for an overview of our Q4 and year-end 2025 results. Robin will then discuss the financial highlights before turning the call back to Cody for closing remarks. I'd like to remind everyone that an archive of this webcast will be made available on the investor section of our website. I would like to note that some of the information discussed in this call is based on information as of today and contains forward-looking statements that involve risks and uncertainties.
Speaker #2: With me today is Cody Slater, CEO and Chair of Blackline Safety Corp., Blackline CFO Robin Kooiman, and Sean Stinson, President and Chief Growth Officer.
Speaker #2: I will turn the call over to Cody for an overview of our fourth quarter and year-end 2025 results. Robin will then discuss the financial highlights before turning the call back to Cody for closing remarks.
Speaker #2: I'd like to remind everyone that an archive of this webcast will be made available on the investor section of our website. I would like to note that some of the information discussed in this call is based on information as of today and contains forward-looking statements that involve risks and uncertainties.
Speaker #2: Actual results may differ materially from those set forth in these statements. For discussion of these risks and uncertainties, please review the forward-looking statement disclosure in the earnings news release as well as the company's Cedar Plus filings.
Jason Zandberg: Actual results may differ materially from those set forth in these statements. For a discussion of these risks and uncertainties, please review the forward-looking statement disclosure in the earnings news release as well as the company's SEDAR+ filings. During this call, there will be a discussion of IFRS results, non-GAAP financial measures, non-GAAP ratios, and supplementary financial measures. A reconciliation between IFRS results and non-GAAP financial measures is available in the company's earnings news release and MD&A, both of which can be found on our website, Blackline Safety dot com, and on SEDAR+. All dollar amounts are reported in Canadian dollars unless otherwise noted. With that, I will now hand the call over to Mr. Slater.
Actual results may differ materially from those set forth in these statements. For a discussion of these risks and uncertainties, please review the forward-looking statement disclosure in the earnings news release as well as the company's SEDAR+ filings. During this call, there will be a discussion of IFRS results, non-GAAP financial measures, non-GAAP ratios, and supplementary financial measures. A reconciliation between IFRS results and non-GAAP financial measures is available in the company's earnings news release and MD&A, both of which can be found on our website, Blackline Safety dot com, and on SEDAR+. All dollar amounts are reported in Canadian dollars unless otherwise noted. With that, I will now hand the call over to Mr. Slater.
Speaker #2: During this call, there will be a discussion of IFRS results, non-GAAP financial measures, non-GAAP ratios, and supplementary financial measures. A reconciliation between IFRS results and non-GAAP financial measures is available in the company's earnings news release and MD&A.
Speaker #2: Both of which can be found on our website, BLACKLINESAFETY.com, and on Cedar Plus. All dollar amounts are reported in Canadian dollars unless otherwise noted.
Speaker #2: With that, I will now hand the call over to Mr.
Speaker #2: Slater. Thank you, Jason.
Cody Slater: Thank you, Jason. Good morning, everyone, and welcome to Blackline Safety's Q4 and fiscal 2025 conference call. I'm very pleased to report that Blackline delivered another strong quarter and capped off a record fiscal year, highlighted by record annual recurring revenue, strong net dollar retention, and our sixth consecutive quarter of positive adjusted EBITDA. For the Q4, revenue reached a record CAD 39.3 million, marking our 35th consecutive quarter of year-over-year top-line growth. For the full fiscal year, revenue reached CAD 150.5 million, an all-time high. Adjusted EBITDA for the Q4 was CAD 2.2 million. Adjusted EBITDA for the full year reached CAD 6.1 million, compared to a loss of CAD 2.4 million in fiscal 2024, clearly demonstrating our ability to generate full-year positive adjusted EBITDA. Annual recurring revenue reached a record CAD 84.5 million at year-end, up almost 30% from last year, providing strong visibility and a solid foundation for future growth.
Cody Slater: Thank you, Jason. Good morning, everyone, and welcome to Blackline Safety's Q4 and fiscal 2025 conference call. I'm very pleased to report that Blackline delivered another strong quarter and capped off a record fiscal year, highlighted by record annual recurring revenue, strong net dollar retention, and our sixth consecutive quarter of positive adjusted EBITDA. For the Q4, revenue reached a record CAD 39.3 million, marking our 35th consecutive quarter of year-over-year top-line growth. For the full fiscal year, revenue reached CAD 150.5 million, an all-time high. Adjusted EBITDA for the Q4 was CAD 2.2 million. Adjusted EBITDA for the full year reached CAD 6.1 million, compared to a loss of CAD 2.4 million in fiscal 2024, clearly demonstrating our ability to generate full-year positive adjusted EBITDA. Annual recurring revenue reached a record CAD 84.5 million at year-end, up almost 30% from last year, providing strong visibility and a solid foundation for future growth.
Speaker #3: Good morning, everyone, and welcome to BLACKLINE SAFETY's fourth quarter and fiscal 2025 conference call. I'm very pleased to report that BLACKLINE delivered another strong quarter, and capped off a record fiscal year.
Speaker #3: Highlighted by record annual recurring revenue, strong net dollar retention, and our sixth consecutive quarter of positive adjusted EBITDA. For the fourth quarter, revenue reached a record $39.3 million, marking our 35th consecutive quarter of year-over-year top-line growth.
Speaker #3: For the full fiscal year, revenue reached $150.5 million, an all-time high. Adjusted EBITDA for the fourth quarter was $2.2 million. Adjusted EBITDA for the full year reached $6.1 million, compared to a loss of $2.4 million in fiscal 2024.
Speaker #3: Clearly demonstrating our ability to generate full-year positive adjusted EBITDA. Annual recurring revenue reached a record $84.5 million at year-end. Up almost 30% from last year.
Speaker #3: Providing strong visibility and a solid foundation for future growth. This performance continues to validate the demand for our hardware-enabled SaaS business model. Net dollar retention remained extremely strong at $128% in the fourth quarter, reflecting ongoing expansion within our existing customer base as customers continue to see value in our hardware and services.
Cody Slater: This performance continues to validate the demand for our hardware-enabled SaaS business model. Net dollar retention remained extremely strong at 128% in the Q4, reflecting ongoing expansion within our existing customer base as customers continue to see value in our hardware and services, adding devices, services, and functionality to their deployments. Our NDR figure has been above 125% for 10 consecutive quarters now. Our connected safety product portfolio continues to resonate across a broad range of industries. Demand for our G7 EXO area monitor remains strong, as did demand for our G7 and G6 products, particularly in the Middle East, as our long-term purchase agreement with ADNOC starts to scale.
This performance continues to validate the demand for our hardware-enabled SaaS business model. Net dollar retention remained extremely strong at 128% in the Q4, reflecting ongoing expansion within our existing customer base as customers continue to see value in our hardware and services, adding devices, services, and functionality to their deployments. Our NDR figure has been above 125% for 10 consecutive quarters now. Our connected safety product portfolio continues to resonate across a broad range of industries. Demand for our G7 EXO area monitor remains strong, as did demand for our G7 and G6 products, particularly in the Middle East, as our long-term purchase agreement with ADNOC starts to scale.
Speaker #3: Adding devices, services, and functionality to their deployments. Our NDR figure has been above $125% for 10 consecutive quarters now. Our connected safety product portfolio continues to resonate across a broad range of industries.
Speaker #3: Demand for our EXO-8 area monitor remains strong, as did demand for our G7 and G6 products, particularly in the Middle East, as our long-term purchase agreement with ADNOC starts to scale.
Speaker #3: We not only delivered the initial 1,000 devices stated in our press release in August, but deployed almost 2,500 devices in the fourth quarter. An excellent start on our path to fulfill our multi-year purchase agreement with ADNOC.
Cody Slater: We not only delivered the initial 1,000 devices stated in our press release in August but deployed almost 2,500 devices in the Q4, an excellent start on our path to fulfill our multi-year purchase agreement with ADNOC, which could see up to 28,000 devices deployed with associated services. As a flagship customer in this region, we have already seen expanded interest from other leading companies in the Middle East. The growth in the Middle East region will be supported by the previously announced new international office in the UAE, providing localized training, rentals, and service. We did face some near-term headwinds in the Q4 in product revenue due to global trade uncertainty and overall economic conditions impacting our energy and industrial sector customers. The US government shutdown also impacted our business, with the funding disruption slowing purchase activity among fire and hazmat customers. As the US.
We not only delivered the initial 1,000 devices stated in our press release in August but deployed almost 2,500 devices in the Q4, an excellent start on our path to fulfill our multi-year purchase agreement with ADNOC, which could see up to 28,000 devices deployed with associated services. As a flagship customer in this region, we have already seen expanded interest from other leading companies in the Middle East. The growth in the Middle East region will be supported by the previously announced new international office in the UAE, providing localized training, rentals, and service. We did face some near-term headwinds in the Q4 in product revenue due to global trade uncertainty and overall economic conditions impacting our energy and industrial sector customers. The US government shutdown also impacted our business, with the funding disruption slowing purchase activity among fire and hazmat customers. As the US.
Speaker #3: Which could see up to 28,000 devices deployed with associated services. As a flagship customer of this region, we have already seen expanded interest from other leading companies in the Middle East.
Speaker #3: The growth in the Middle East region will be supported by the previously announced new international office in the UAE, providing localized training, rentals, and service.
Speaker #3: We did face some near-term headwinds in the fourth quarter in product revenue, due to global trade uncertainty and overall economic conditions impacting our energy and industrial sector customers.
Speaker #3: The U.S. government shutdown also impacted our business, with the funding disruption slowing purchase activity among fire and hazmat customers. As the U.S. government shutdown ended in November, we believe funding will begin flowing again in the near term.
Cody Slater: Government shutdown ended in November. We believe funding will begin flowing again in the near term, supporting our strong pipeline in that industry vertical. On Tuesday, we announced the G8, our next-generation connected safety wearable and the most advanced product we've built to date. G8 brings together gas detection, lone worker protection, and real-time communication in a single, rugged, intrinsically safe device, all connected to the cloud through Blackline Live. It builds on the strong foundation of our G7 but with meaningful enhancements, including a larger full-color display, expanded connectivity, and integrated communications so workers can stay connected without needing multiple devices. Importantly, we see the G8 as an inflection point for Blackline Safety. With over four years in development, the G8 represents a technological leap over the G7, which defined the category since 2017.
Government shutdown ended in November. We believe funding will begin flowing again in the near term, supporting our strong pipeline in that industry vertical. On Tuesday, we announced the G8, our next-generation connected safety wearable and the most advanced product we've built to date. G8 brings together gas detection, lone worker protection, and real-time communication in a single, rugged, intrinsically safe device, all connected to the cloud through Blackline Live. It builds on the strong foundation of our G7 but with meaningful enhancements, including a larger full-color display, expanded connectivity, and integrated communications so workers can stay connected without needing multiple devices. Importantly, we see the G8 as an inflection point for Blackline Safety. With over four years in development, the G8 represents a technological leap over the G7, which defined the category since 2017.
Speaker #3: Supporting our strong pipeline in that industry vertical. On Tuesday, we announced the G8, our next-generation connected safety wearable and the most advanced product we've built to date.
Speaker #3: G8 brings together gas detection, lone worker protection, and real-time communication in a single, rugged, intrinsically safe device. All connected to the cloud through BLACKLINE Live.
Speaker #3: It builds on the strong foundation of our G7, but with meaningful enhancements. This includes a larger, full-color display, expanded connectivity, and integrated communications, so workers can stay connected without needing multiple devices.
Speaker #3: Importantly, we see the G8 as an inflection point for BLACKLINE SAFETY. With over four years in development, the G8 represents a technological leap over the G7, which defined the category since 2017.
Speaker #3: The G8 is designed as a true platform that will become a hub for workforce productivity, hosting applications to enable teams to streamline workflows, reduce downtime, and maintain compliance in the field.
Cody Slater: The G8 is designed as a true platform that will become a hub for workforce productivity, hosting applications to enable teams to streamline workflows, reduce downtime, and maintain compliance in the field, all of which we believe will increase the service revenues associated with each device. We're currently taking orders, with our first commercial shipments expected to begin in February 2026. I'll now turn the call over to Robin to review our financials in more detail.
The G8 is designed as a true platform that will become a hub for workforce productivity, hosting applications to enable teams to streamline workflows, reduce downtime, and maintain compliance in the field, all of which we believe will increase the service revenues associated with each device. We're currently taking orders, with our first commercial shipments expected to begin in February 2026. I'll now turn the call over to Robin to review our financials in more detail.
Speaker #3: All of which we believe will increase the service revenues associated with each device. We're currently taking orders with our first commercial shipments expected to begin in February 2026.
Speaker #3: I'll now turn the call over to Robin to review our financials in more detail.
Speaker #4: Thank you, Cody, and good morning, everyone. I'll start with a review of our fourth quarter results and then provide a summary of full-year fiscal 2025 performance.
Robin Koiman: Thank you, Cody, and good morning, everyone. I'll start with a review of our Q4 results and then provide a summary of full-year fiscal 2025 performance. Total revenue in Q4 was CAD 39.3 million, up 10% year-over-year. This growth was driven by a 30% increase in service revenue, which reached CAD 25.5 million. Within services, software services revenue grew 26% to CAD 21.5 million, while rental revenue increased 55% to CAD 4 million, reflecting strong demand in industrial turnarounds, maintenance, and project-based environments. Product revenue in Q4 was CAD 13.8 million, down 14% year-over-year, as customers continued to exercise caution on capital purchases amid global trade and macroeconomic uncertainty, the US government shutdown, and a delay in certain customer hardware refreshment activity. Gross profit in Q4 increased 21% to CAD 26.3 million, and gross margin improved to 67% compared to 61% in the prior year quarter.
Robin Kooyman: Thank you, Cody, and good morning, everyone. I'll start with a review of our Q4 results and then provide a summary of full-year fiscal 2025 performance. Total revenue in Q4 was CAD 39.3 million, up 10% year-over-year. This growth was driven by a 30% increase in service revenue, which reached CAD 25.5 million. Within services, software services revenue grew 26% to CAD 21.5 million, while rental revenue increased 55% to CAD 4 million, reflecting strong demand in industrial turnarounds, maintenance, and project-based environments. Product revenue in Q4 was CAD 13.8 million, down 14% year-over-year, as customers continued to exercise caution on capital purchases amid global trade and macroeconomic uncertainty, the US government shutdown, and a delay in certain customer hardware refreshment activity. Gross profit in Q4 increased 21% to CAD 26.3 million, and gross margin improved to 67% compared to 61% in the prior year quarter.
Speaker #4: Total revenue in the fourth quarter was $39.3 million, up 10% year over year. This growth was driven by a 30% increase in service revenue, which reached $25.5 million.
Speaker #4: Within services, software services revenue grew 26% to $21.5 million, while rental revenue increased 55% to $4.0 million, reflecting strong demand in industrial turnarounds, maintenance, and project-based environments.
Speaker #4: Product revenue in the quarter was $13.8 million, down 14% year-over-year, as customers continued to exercise caution on capital purchases amid global trade and macroeconomic uncertainty.
Speaker #4: The US government shutdown and a delay in certain customer hardware refreshment activity. Gross profit in the fourth quarter increased 21% to $26.3 million, and gross margin improved to 67% compared to 61% in the prior year quarter.
Speaker #4: Service margins remained strong, reaching a record 82%, benefiting from scale efficiencies and costs. While product margins rebounded to 40%, from 35% in Q3. Total quarterly operating expenses represented 68% of revenue, excluding a one-time charge reported in general and administrative expenses and foreign exchange.
Robin Koiman: Service margins remained strong, reaching a record 82%, benefiting from scale efficiencies, optimized connectivity, and infrastructure costs, while product margins rebounded to 40% from 35% in Q3. Total quarterly operating expenses represented 68% of revenue, excluding a one-time charge reported in general and administrative expenses and foreign exchange. Within this, G&A expenses accounted for 20%, sales and marketing for 32%, and product research and development costs represented 16%. The one-time charge relates to a US sales tax assessment for prior periods. EBITDA for the Q4 was CAD 1.4 million, and adjusted EBITDA was CAD 2.2 million, reinforcing the scalability of our operating model. Turning to full year, total revenue for fiscal 2025 was CAD 150.5 million, up 18% year-over-year. Service revenue increased 30% to CAD 90.5 million, while product revenue increased 4% to CAD 60 million.
Service margins remained strong, reaching a record 82%, benefiting from scale efficiencies, optimized connectivity, and infrastructure costs, while product margins rebounded to 40% from 35% in Q3. Total quarterly operating expenses represented 68% of revenue, excluding a one-time charge reported in general and administrative expenses and foreign exchange. Within this, G&A expenses accounted for 20%, sales and marketing for 32%, and product research and development costs represented 16%. The one-time charge relates to a US sales tax assessment for prior periods. EBITDA for the Q4 was CAD 1.4 million, and adjusted EBITDA was CAD 2.2 million, reinforcing the scalability of our operating model. Turning to full year, total revenue for fiscal 2025 was CAD 150.5 million, up 18% year-over-year. Service revenue increased 30% to CAD 90.5 million, while product revenue increased 4% to CAD 60 million.
Speaker #4: Within this, G&A expenses accounted for 20%. Sales and marketing for 32%, and product research and development costs represented 16%. The one-time charge relates to a US sales tax assessment for prior periods.
Speaker #4: EBITDA for the quarter was $1.4 million, and adjusted EBITDA was $2.2 million, reinforcing the scalability of our operating model. Turning to the full year, total revenue for fiscal 2025 was $150.5 million, up 18% year-over-year.
Speaker #4: Service revenue increased 30% to $90.5 million, while product revenue increased 4% to $60.0 million. Gross margin improved to 63%, up from 58% in fiscal 2024, driven by favorable revenue mix.
Robin Koiman: Gross margin improved to 63%, up from 58% in fiscal 2024, driven by a favorable revenue mix, pricing discipline, and operating leverage. Total operating expense for the year represented 67% of revenue, consistent with the prior period, and reflected continued cost discipline as the business scales. Adjusted EBITDA improved significantly to positive CAD 6.1 million compared to a loss of CAD 2.4 million in fiscal 2024. We ended the year with CAD 46.6 million in cash and short-term investments. We have available capacity on our senior-secured operating facility, including its accordion feature, of CAD 29.8 million as of 31 October 2025, for total available liquidity of CAD 76.4 million. This compares to CAD 60.4 million at the end of fiscal 2024. Our fiscal 2025 evolved at the strength of our recurring service revenue base, expanding margins, and disciplined execution in a dynamic global environment.
Gross margin improved to 63%, up from 58% in fiscal 2024, driven by a favorable revenue mix, pricing discipline, and operating leverage. Total operating expense for the year represented 67% of revenue, consistent with the prior period, and reflected continued cost discipline as the business scales. Adjusted EBITDA improved significantly to positive CAD 6.1 million compared to a loss of CAD 2.4 million in fiscal 2024. We ended the year with CAD 46.6 million in cash and short-term investments. We have available capacity on our senior-secured operating facility, including its accordion feature, of CAD 29.8 million as of 31 October 2025, for total available liquidity of CAD 76.4 million. This compares to CAD 60.4 million at the end of fiscal 2024. Our fiscal 2025 evolved at the strength of our recurring service revenue base, expanding margins, and disciplined execution in a dynamic global environment.
Speaker #4: Pricing discipline and operating leverage. Total operating expense for the year represented 67% of revenue, consistent with the prior period and reflected continued cost discipline as the business scales.
Speaker #4: Adjusted EBITDA improved significantly to a positive $6.1 million, compared to a loss of $2.4 million in fiscal 2024. We ended the year with $46.6 million in cash and short-term investments.
Speaker #4: We have available capacity on our senior secured operating facility, including its accordion feature, of $29.8 million as of October 31, 2025, for total available liquidity of $76.4 million.
Speaker #4: This compares to $60.4 million at the end of fiscal 2024. Our fiscal 2025 reflects the strength of our recurring service revenue base, expanding margins, and disciplined execution in a dynamic global environment.
Speaker #4: On a personal note, I'll be temporarily stepping away from Blackline Safety for maternity leave, effective February 2. I'm proud to do so at a time when the company has achieved record revenue, ARR, and has a very strong balance sheet.
Robin Koiman: On a personal note, I'll be temporarily stepping away from Blackline Safety for maternity leave effective 2 February. I'm proud to do so at a time when the company has achieved record revenue, ARR, and has a very strong balance sheet. I have full confidence in Chris Curry, our VP Finance and Accounting, to work as interim CFO with the strong team at Blackline Safety to continue delivering ever greater results while I spend time with my growing family. With that, I'll turn the call back to Cody for closing remarks.
On a personal note, I'll be temporarily stepping away from Blackline Safety for maternity leave effective 2 February. I'm proud to do so at a time when the company has achieved record revenue, ARR, and has a very strong balance sheet. I have full confidence in Chris Curry, our VP Finance and Accounting, to work as interim CFO with the strong team at Blackline Safety to continue delivering ever greater results while I spend time with my growing family. With that, I'll turn the call back to Cody for closing remarks.
Speaker #4: I have full confidence in Chris Curry, our VP, Finance and Accounting, to work as interim CFO with the strong team at Blackline to continue delivering ever greater results while I spend time with my growing family.
Speaker #4: With that, I'll turn the call back to Cody for closing.
Speaker #4: remarks. Thank you, Robin.
Cody Slater: Thank you, Robin. We wish you and your family all the best. As we close out fiscal 2025, I'm extremely proud of what the Blackline team has accomplished. We've delivered record total revenue, record annual recurring revenue, and sustained positive adjusted EBITDA, all while continuing our track record of innovation and global expansion, redefining the connected worker category. Today, Blackline protects workers across more than 75 countries, supporting customers in energy, utilities, industrials, infrastructure, and emergency response. Our growing recurring revenue base, strong customer retention, and expanding global footprint position us well as we enter fiscal 2026. To close, we're particularly excited about the opportunities ahead as we launch the G8. We believe G8 represents a meaningful step forward for connected workers, both in terms of the value it delivers to customers and the long-term growth potential it creates for Blackline.
Cody Slater: Thank you, Robin. We wish you and your family all the best. As we close out fiscal 2025, I'm extremely proud of what the Blackline team has accomplished. We've delivered record total revenue, record annual recurring revenue, and sustained positive adjusted EBITDA, all while continuing our track record of innovation and global expansion, redefining the connected worker category. Today, Blackline protects workers across more than 75 countries, supporting customers in energy, utilities, industrials, infrastructure, and emergency response. Our growing recurring revenue base, strong customer retention, and expanding global footprint position us well as we enter fiscal 2026. To close, we're particularly excited about the opportunities ahead as we launch the G8. We believe G8 represents a meaningful step forward for connected workers, both in terms of the value it delivers to customers and the long-term growth potential it creates for Blackline.
Speaker #1: We wish you and your family all the best. As we close out fiscal 2025, I'm extremely proud of what the Blackline team has accomplished.
Speaker #1: We've delivered record total revenue, record annual recurring revenue, and sustained positive adjusted EBITDA. All while continuing our track record of innovation and global expansion.
Speaker #1: Redefining the connected worker category. Today, Blackline protects workers across more than 75 countries, supporting customers in energy, utilities, industrials, infrastructure, and emergency response. A growing recurring revenue base, strong customer retention, and expanding global footprint position us well as we enter fiscal 2026.
Speaker #1: To close, we're particularly excited about the opportunities ahead as we launch the G8. We believe G8 represents a meaningful step forward for connected workers, both in terms of the value it delivers to customers and the long-term growth potential it creates for Blackline.
Speaker #1: The G7 created the connected industrial safety market and has taken Blackline from a company of $12 million in revenue to over $150 million today.
Cody Slater: The G7 created the connected industrial safety market and has taken Blackline from a company of 12 billion in revenue to over 150 million today. The G8 will redefine the connected industrial worker market and be the key driver to accelerate our trajectory as we continue on our path to connect the global industrial workforce, creating a modern, more efficient workplace while ensuring more workers have the tools to get their job done and return home safe at the end of the day. I'm deeply grateful to our customers for their trust, to our employees for their dedication, and to our shareholders for their continued confidence. Thank you all for your ongoing support. I'll now turn the call back to the operator for questions.
The G7 created the connected industrial safety market and has taken Blackline from a company of 12 billion in revenue to over 150 million today. The G8 will redefine the connected industrial worker market and be the key driver to accelerate our trajectory as we continue on our path to connect the global industrial workforce, creating a modern, more efficient workplace while ensuring more workers have the tools to get their job done and return home safe at the end of the day. I'm deeply grateful to our customers for their trust, to our employees for their dedication, and to our shareholders for their continued confidence. Thank you all for your ongoing support. I'll now turn the call back to the operator for questions.
Speaker #1: The G8 will redefine the connected industrial worker market and be the key driver to accelerate our trajectory as we continue on our path to connect the global industrial workforce.
Speaker #1: Creating a modern, more efficient workplace while ensuring more workers have the tools to get their job done and return home safe at the end of the day.
Speaker #1: I'm deeply grateful to our customers for their trust, to our employees for their dedication, and to our shareholders for their continued confidence. Thank you all for your ongoing support.
Speaker #1: I'll now turn the call back to the operator.
Speaker #1: questions. Thank
Operator: Thank you. We will now begin the analyst question and answer session. To join the question queue, you may press star then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then 2. The first question comes from Martin Toner with ATB Capital Markets. Please go ahead.
Operator: Thank you. We will now begin the analyst question and answer session. To join the question queue, you may press star then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then 2. The first question comes from Martin Toner with ATB Capital Markets. Please go ahead.
Speaker #2: you. We will now begin the analyst question and answer session. To join the question queue, you may press star then one on your telephone keypad.
Speaker #2: You will hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star, then two.
Speaker #2: The first question comes from Martin Toner with ATB Capital Markets. Please go ahead.
Speaker #3: Thank you very much for taking my question. Congrats on a great start to the year, and congrats to Robin.
Martin Toner: Thank you very much for taking my question. Congrats on a great start to the year, and congrats to Robin, too.
Martin Toner: Thank you very much for taking my question. Congrats on a great start to the year, and congrats to Robin, too.
Martin Toner: My first question, maybe you can help us get our head around the timing of G8 revenues. How long does it take to ramp sales efforts? How easily are you able to move customers in the pipeline for the G7 over to the G8? And then what kind of near and long-term impact do you think the G8 can have on service revenue and service revenue growth? Thanks.
Martin Toner: My first question, maybe you can help us get our head around the timing of G8 revenues. How long does it take to ramp sales efforts? How easily are you able to move customers in the pipeline for the G7 over to the G8? And then what kind of near and long-term impact do you think the G8 can have on service revenue and service revenue growth? Thanks.
Speaker #3: So my first question—maybe you can help us get our head around the timing of G8 revenues. How long does it take to ramp sales efforts?
Speaker #3: How easily are you able to move customers in the pipeline for the G7 over to the G8? And then, what kind of near- and long-term impact do you think the G8 can have on service revenue and service revenue growth?
Speaker #3: Thanks.
Speaker #4: Hey, Martin. This is Sean here. I will address those in sequence. So, first off, how quickly can we start to realize G8 revenue? We anticipate the G8 shipping in late February.
Sean Stinson: Hey, Martin. This is Sean here. I will address those in sequence. So first off, how quickly can we start to realize G8 revenue? We anticipate the G8 shipping in late February. What we've modeled is a roughly two-quarter, two- to three-quarter transition between G7 to G8. So what I expect is that if customers have very tightly budgeted and inspected G7 in, they may be more likely to stay with the G7. We'll start to introduce G8 to everybody, but I don't believe that the entire pipeline will flip over to G8 right away. And part of that will be because of budgetary requirements. The price of the G8 will be a little bit higher on hardware, but we do anticipate a full switch over within about two quarters. So I think that's kind of related to your second question about how do we move people over.
Sean Stinson: Hey, Martin. This is Sean here. I will address those in sequence. So first off, how quickly can we start to realize G8 revenue? We anticipate the G8 shipping in late February. What we've modeled is a roughly two-quarter, two- to three-quarter transition between G7 to G8. So what I expect is that if customers have very tightly budgeted and inspected G7 in, they may be more likely to stay with the G7. We'll start to introduce G8 to everybody, but I don't believe that the entire pipeline will flip over to G8 right away. And part of that will be because of budgetary requirements. The price of the G8 will be a little bit higher on hardware, but we do anticipate a full switch over within about two quarters. So I think that's kind of related to your second question about how do we move people over.
Speaker #4: What we've modeled is a roughly two-quarter, two- to three-quarter transition between G7 to G8. So what I expect is that if customers have very tightly budgeted and inspected G7 in, they may be more likely to stay with the G7.
Speaker #4: We'll start to introduce G8 to everybody, but I don't believe that the entire pipeline will flip over to G8 right away. Part of that will be because of budgetary requirements.
Speaker #4: We are the price of the G8 will be a little bit higher on hardware. But we do anticipate a full switch over within about two quarters.
Speaker #4: So, I think that's kind of related to your second question about how do we move people over. The G8 is a significant improvement from the G7.
Sean Stinson: The G8 is a significant improvement from the G7. It's clearly the same concept. It's one of the only instruments in the world that can actually save a life. It's a voice-powered, extremely sophisticated device that helps people save lives in the case of an accident and helps them deliver proactive safety. Behind that, it's a platform that will deliver years of continued expansion. We will see initially, I think the biggest impact on services will come from the PTT growth. The G8 has a very significantly improved push-to-talk experience, and that's a crucial tool for people who work in the industries that we serve, both in terms of collaboration to get a job done, which is, I would say, more productivity than safety, but also safety and productivity are very much linked.
The G8 is a significant improvement from the G7. It's clearly the same concept. It's one of the only instruments in the world that can actually save a life. It's a voice-powered, extremely sophisticated device that helps people save lives in the case of an accident and helps them deliver proactive safety. Behind that, it's a platform that will deliver years of continued expansion. We will see initially, I think the biggest impact on services will come from the PTT growth. The G8 has a very significantly improved push-to-talk experience, and that's a crucial tool for people who work in the industries that we serve, both in terms of collaboration to get a job done, which is, I would say, more productivity than safety, but also safety and productivity are very much linked.
Speaker #4: It's clearly the same concept. It's one of the only instruments in the world that can actually save a life. It's a voice-powered, extremely sophisticated device that helps people save lives in the case of an accident and helps them deliver proactive safety.
Speaker #4: Behind that, it's a platform that will deliver years of continued expansion. We will see initially I think the biggest impact on services will come from the PTT growth.
Speaker #4: The G8 has a very significantly improved push-to-talk experience. And that's a crucial tool for people who work in the industries that we serve, both in terms of collaboration to get a job done, which is, I would say, more productivity than safety, but also safety and productivity are very much linked.
Speaker #4: So if there is any communication that needs to happen in order to properly assess a situation for safety, that can happen much more easily.
Sean Stinson: So if there is any communication that needs to happen in order to properly assess a situation for safety, that can happen much more easily. So we expect that to be a significant pickup. And if you followed Blackline for a while, you know that the G7 has roughly an 11% attach rate on PTT. We see that going significantly higher. I think I got them all, Martin. Did I miss one there? You dropped three questions.
So if there is any communication that needs to happen in order to properly assess a situation for safety, that can happen much more easily. So we expect that to be a significant pickup. And if you followed Blackline for a while, you know that the G7 has roughly an 11% attach rate on PTT. We see that going significantly higher. I think I got them all, Martin. Did I miss one there? You dropped three questions.
Speaker #4: So we expect that to be a significant pickup. And if you follow Blackline for a while, you know that the G7 has roughly an 11% attach rate on PTT.
Speaker #4: We see that going significantly higher. I think I got them all, Martin. Did I miss one there? But you dropped three questions.
Speaker #1: No, we got maybe, Martin. I'll just throw in an add that's coded here, that we have a difference with the G8—as with the 7, what we've seen is that customers acquire a certain stack of service on refresh.
Cody Slater: No, I got maybe Martin, I'll just throw in an add. It's Cody here. The other difference with the G8 is with the G7, what we've seen is that customers acquire a certain stack of service. On refresh, we might move them up a service tier or so, but usually they're pretty good at picking those safety elements. The G8 is a platform for more productivity, more workforce efficiency, more other elements of different, think about them like apps that we'll be starting to add through 2026 and beyond, and that will give us a base of, if the unit grows in the field, that gives us really a base of customers to service new opportunities, new value to, and drive that service revenue growth through the lifecycle of the product rather than at the refresh points. So a really significant difference in the business model for the company.
Cody Slater: No, I got maybe Martin, I'll just throw in an add. It's Cody here. The other difference with the G8 is with the G7, what we've seen is that customers acquire a certain stack of service. On refresh, we might move them up a service tier or so, but usually they're pretty good at picking those safety elements. The G8 is a platform for more productivity, more workforce efficiency, more other elements of different, think about them like apps that we'll be starting to add through 2026 and beyond, and that will give us a base of, if the unit grows in the field, that gives us really a base of customers to service new opportunities, new value to, and drive that service revenue growth through the lifecycle of the product rather than at the refresh points. So a really significant difference in the business model for the company.
Speaker #1: We might move them up a service tier or so, but usually they're pretty good at picking those safety elements. It's a platform for more productivity, more workforce efficiency, more of their elements of different—think about them like apps that we'll be starting to add.
Speaker #1: Through 2026 and beyond, and that will give us a base of— as the unit goes in the field, that gives us really a base of customers to service new opportunities, new value to, and drive that service revenue growth through the life cycle of the product rather than at the refresh points.
Speaker #1: So, a really significant difference in the business model for the company. And a significant difference for our customers too, because everything we're talking about here is something that will make their jobs easier and safer.
Cody Slater: A significant difference for our customers, too, because everything we're talking about here is something that will make their jobs easier and safer.
A significant difference for our customers, too, because everything we're talking about here is something that will make their jobs easier and safer.
Speaker #3: That's great. Thank you very much. So you have two interesting forces colliding here. Macro-driven caution and an exciting new product. How do you see that playing out in numbers in
Speaker #3: That's great. Thank you very much. So you have two interesting forces colliding here. Macro-driven caution and an exciting new product. How do you see that playing out in numbers in
Martin Toner: That's great. Thank you very much. So you have two interesting forces colliding here: macro-driven caution and an exciting new product. How do you see that playing out in numbers in 2026?
Martin Toner: That's great. Thank you very much. So you have two interesting forces colliding here: macro-driven caution and an exciting new product. How do you see that playing out in numbers in 2026?
Speaker #3: 2026? Yeah. I know it
Sean Stinson: Yeah.
Sean Stinson: Yeah.
Martin Toner: I think it does. We've surfaced the G8 to a number of core customers over the last period of time, and we'll say the response has been excellent across the board. So that's going to push some near-term work into renewals or refresh units into the second quarter as we start shipping G8s in the second quarter. So maybe a bit of a headwind in Q1, but starting to really see that flow through from Q2 forward. The nice thing is, as Sean mentioned, the G8's a phenomenal technological leap above the G7, but the idea of connected safety is no longer new. When we launched the G7, it was entirely new. No one had done anything like this before. A lot of caution in customers adopting the tech.
Martin Toner: I think it does. We've surfaced the G8 to a number of core customers over the last period of time, and we'll say the response has been excellent across the board. So that's going to push some near-term work into renewals or refresh units into the second quarter as we start shipping G8s in the second quarter. So maybe a bit of a headwind in Q1, but starting to really see that flow through from Q2 forward. The nice thing is, as Sean mentioned, the G8's a phenomenal technological leap above the G7, but the idea of connected safety is no longer new. When we launched the G7, it was entirely new. No one had done anything like this before. A lot of caution in customers adopting the tech.
Speaker #1: Does, on the surface, the G8 to a number of core customers. So, over the last period of time, and we'll say the response has been excellent across the board.
Speaker #1: So that's going to push some near-term work into or renewals or refresh units into the second quarter as we start shipping G8s in the second quarter.
Speaker #1: So maybe a bit of a headwind in Q1, but starting to really see that flow through from Q2 forward. The nice thing is Sean mentioned this is the G8's a phenomenal technological leap above the G7, but it's not the idea of connected safety is no longer new.
Speaker #1: When we launched the G7, it was entirely new. No one had done anything like this before. A lot of caution and customers adopting the tech.
Speaker #1: This is just something that they're going to see as a significant improvement, and can see that visibility of what they could do with it in the future.
Martin Toner: This is just something that they're going to see as a significant improvement and can see that visibility of what they could do with it in the future. So we're not going to see that kind of a challenge. We will see some customers wanting to do trials or tests or get it in their hands before they deploy. It's always a bit of noise on the launch of a new product of this scale, but the trajectory will be exceptionally strong. We feel throughout the year, particularly throughout the second half of the year. Super. That's great. Thank you. Why don't I pass the line?
This is just something that they're going to see as a significant improvement and can see that visibility of what they could do with it in the future. So we're not going to see that kind of a challenge. We will see some customers wanting to do trials or tests or get it in their hands before they deploy. It's always a bit of noise on the launch of a new product of this scale, but the trajectory will be exceptionally strong. We feel throughout the year, particularly throughout the second half of the year.
Speaker #1: So we're not going to see that kind of a challenge. We will see some customers wanting to do trials or tests or get it in their hands before they deploy.
Speaker #1: It's always a bit of a there's always a bit of noise on launch of a new product of this scale. But the trajectory will be exceptionally strong.
Speaker #1: We feel the year particularly throughout the second half of the year.
Cody Slater: Super. That's great. Thank you. Why don't I pass the line?
Speaker #3: Super. That's great. Thank you. Why don't I pass the line?
Cody Slater: Thanks.
Martin Toner: Thanks.
Speaker #5: The next Thanks. question comes from Doug Taylor with Canaccord Generity. Please go
Operator: The next question comes from Doug Taylor with Canaccord Genuity. Please go ahead.
Operator: The next question comes from Doug Taylor with Canaccord Genuity. Please go ahead.
Speaker #5: ahead. Yeah.
Doug Taylor: Yeah. Thank you. Good morning. I'll ask a couple more questions on the G8, and it's an exciting milestone. Now that it's official, can you speak a little bit more on how we should think about the manufacturing cutover from the G7 as the current plan stands? What we should think about in terms of the overlap? I mean, is the G7 going to continue to be produced for some of those more cost-conscious customers for a period of time? Can you talk about the mechanics of that a little bit, and inventory and working capital mechanics as it relates to that?
Doug Taylor: Yeah. Thank you. Good morning. I'll ask a couple more questions on the G8, and it's an exciting milestone. Now that it's official, can you speak a little bit more on how we should think about the manufacturing cutover from the G7 as the current plan stands? What we should think about in terms of the overlap? I mean, is the G7 going to continue to be produced for some of those more cost-conscious customers for a period of time? Can you talk about the mechanics of that a little bit, and inventory and working capital mechanics as it relates to that?
Speaker #3: Thank you. Good morning. I'll ask a couple more questions on the G8, and it's an exciting milestone. Now that it's official, can you speak a little bit more on how we should think about the manufacturing cutover from the G7 as the current plan stands?
Speaker #3: What should we think about in terms of the overlap? I mean, is the G7 going to continue to be produced for some of those more cost-conscious customers for a period of time?
Speaker #3: Can you talk about the mechanics of that a little bit, and inventory and working capital mechanics as it relates to—
Speaker #3: that? Sure,
Cody Slater: Sure, Doug. It's Cody here. I mean, we anticipate a full shift over, as Sean had mentioned, from the G7 to the G8 by the end of the fiscal year here. So scaling down the G7 manufacturing while we're scaling up the G8 manufacturing. We've already seen from some of our inventory numbers, etc., an investment in the G8 inventories. You'll continue to support the G7 customers, so there'll be nominal manufacturing G7 for a number of years as we go forward. But what you're going to see is a shift over over the next three quarters to be fully G8. During that time, I will say there's usually the introduction of a new product that puts some downward pressure on hardware margins for those first introductory periods. Your outputs, your throughputs are going to just scale up as we've seen that over the time with the G7.
Cody Slater: Sure, Doug. It's Cody here. I mean, we anticipate a full shift over, as Sean had mentioned, from the G7 to the G8 by the end of the fiscal year here. So scaling down the G7 manufacturing while we're scaling up the G8 manufacturing. We've already seen from some of our inventory numbers, etc., an investment in the G8 inventories. You'll continue to support the G7 customers, so there'll be nominal manufacturing G7 for a number of years as we go forward. But what you're going to see is a shift over over the next three quarters to be fully G8. During that time, I will say there's usually the introduction of a new product that puts some downward pressure on hardware margins for those first introductory periods. Your outputs, your throughputs are going to just scale up as we've seen that over the time with the G7.
Speaker #1: Doug. It's coded here. I mean, we anticipate a full shift over, as Sean had mentioned, from the G7 to the 8 by the end of the fiscal year here.
Speaker #1: So, scaling down the G7 manufacturing while we're scaling up the G8 manufacturing. We've already seen from some of our inventory numbers, etc., that an investment in the G8 inventories will continue to support the G7 customers.
Speaker #1: So there'll be nominal manufacturing G7 for a number of years. As we go forward, but what you're going to see is a shift over over the next three quarters to be fully G8.
Speaker #1: During that time, I will say there's usually introduction of a new product, could put some downward pressure on hardware margins for a short for those first introductory periods.
Speaker #1: Your outputs, your throughputs are going to just scale up as we've seen that over time with the G7. The 8 is designed to be exceptionally manufacturable, but again, we'll have some caution as we're entering into the new manufacturing of the new line.
Cody Slater: The G8's designed to be exceptionally manufacturable, but again, we'll have some caution as we're entering into the new manufacturing of the new line. We will be, as we expand down the line, expanding our manufacturing capacity as well, too. We'll be adding a second surface mount line to the production. Timing on that's probably late this fiscal year. There is some capital investment there, but not significant in the overall, particularly given the strength of the balance sheets here. So yeah, ramp up over the next three quarters, shift over a bit of time. The other thing I think you'll see with the G8 is when you talk about from the hardware standpoint, is we're going to see more accessory sales with the G8. Sean's mentioned the pickup. We anticipate in PTT.
The G8's designed to be exceptionally manufacturable, but again, we'll have some caution as we're entering into the new manufacturing of the new line. We will be, as we expand down the line, expanding our manufacturing capacity as well, too. We'll be adding a second surface mount line to the production. Timing on that's probably late this fiscal year. There is some capital investment there, but not significant in the overall, particularly given the strength of the balance sheets here. So yeah, ramp up over the next three quarters, shift over a bit of time. The other thing I think you'll see with the G8 is when you talk about from the hardware standpoint, is we're going to see more accessory sales with the G8. Sean's mentioned the pickup. We anticipate in PTT.
Speaker #1: And we will be, as we expand down the line, expanding our manufacturing capacity as well, too. We'll be adding a second surface mount line.
Speaker #1: To the production timing on that, it's probably late this fiscal year. There is some capital investment there, but not significant overall, particularly given the strength of the balance sheets here.
Speaker #1: So yeah, ramp up over the next three quarters. Shift over a bit of time. The other thing I think you'll see with the G8 is, when you talk about it from the hardware standpoint, we're going to see more accessory sales with the G8.
Speaker #1: Sean's mentioned the pickup we anticipate in PTT. One of the really cool features with the 8 is it's it has a custom, what's called remote speaker mic or RSM, the kind of thing you'd see a fireman or police officer having on their lapel.
Cody Slater: One of the really cool features with the 8 is it has a custom what's called remote speaker mic or RSM, the kind of thing you'd see a fireman or police officer having on their lapel. That really makes the PTT experience even greater. And so things like that will actually probably accelerate a little bit of the accessory revenues as well, too.
One of the really cool features with the 8 is it has a custom what's called remote speaker mic or RSM, the kind of thing you'd see a fireman or police officer having on their lapel. That really makes the PTT experience even greater. And so things like that will actually probably accelerate a little bit of the accessory revenues as well, too.
Speaker #1: That really makes the PTT experience even greater. And so things like that will actually probably accelerate a little bit of the accessory revenues as well too.
Speaker #2: Yeah. And hey, Doug, I'll just jump in with one more point on that investment in our manufacturing facility. You can think about that as single-digit millions.
Robin Koiman: Yeah. Hey, Doug, I'll just jump in with one more point on that investment in our manufacturing facility. You can think about that as single-digit millions later this year.
Robin Kooyman: Yeah. Hey, Doug, I'll just jump in with one more point on that investment in our manufacturing facility. You can think about that as single-digit millions later this year.
Speaker #2: Later this year.
Speaker #3: That's fantastic color. And so when you're launching the product here, the G8 next month, I mean, are all variants all the different gas configurations and the PTT and the related service speaker mic, all that, are they all going to be available, or is that kind of staggered over the course of the year?
Doug Taylor: That's fantastic color. And so when you're launching the product here, the G8 next month, I mean, are all variants, all the different gas configurations, the PTT, and the related service, the speaker mic, all that, are they all going to be available, or is that kind of staggered over the course of the year?
Doug Taylor: That's fantastic color. And so when you're launching the product here, the G8 next month, I mean, are all variants, all the different gas configurations, the PTT, and the related service, the speaker mic, all that, are they all going to be available, or is that kind of staggered over the course of the year?
Speaker #1: Nope. 100% of everything there is available day one. That's one of the real advantages of our product system is, and our design is that cartridge-based that you're familiar with, I think, with the G7.
Cody Slater: Nope. 100% of everything there is available day one. One of the real advantages of our product system and our design is that cartridge base that you're familiar with, I think, with the G7. So the gas cartridges are really where a lot of the flexibility in the device comes from, whether it be five gas, four gas, pumped instruments, unpumped instruments. Works with the G8. Everything's approved in all the regions that we're functioning and working in around the globe. The speaker mics in production, the multiple charger docks, the rest of the stuff, everything's ready to go. What you are going to see with the 8, though, is those new service apps that I'm talking about. Those will start to roll out later this year. Those will be something that we'll be able to talk a bit more about later in the year.
Cody Slater: Nope. 100% of everything there is available day one. One of the real advantages of our product system and our design is that cartridge base that you're familiar with, I think, with the G7. So the gas cartridges are really where a lot of the flexibility in the device comes from, whether it be five gas, four gas, pumped instruments, unpumped instruments. Works with the G8. Everything's approved in all the regions that we're functioning and working in around the globe. The speaker mics in production, the multiple charger docks, the rest of the stuff, everything's ready to go. What you are going to see with the 8, though, is those new service apps that I'm talking about. Those will start to roll out later this year. Those will be something that we'll be able to talk a bit more about later in the year.
Speaker #1: So the gas cartridges are really where a lot of the flexibility in the device comes from, whether it be five-gas, four-gas, pumped instruments, unpumped instruments—everyone’s works with the G8. Everyone’s approved in all the regions that we’re functioning and working in around the globe.
Speaker #1: The speaker mics in production, the multiple charger docks, the rest of the stuff, everything's ready to go. What you are going to see with the 8, though, is those new service apps that I'm talking about.
Speaker #1: Those will start to roll out later this year. And those will be something that will be able to talk a bit about more about later in the year.
Speaker #1: But that's the real one of the real keys with the G8 is this new platform with this big, full-color screen and the additional interface access to it through the different side buttons that will allow customers to do a lot more on the device. And those are things that we're going to be able to just keep adding and adding as customer demand and as we focus in different areas from the software side.
Cody Slater: But that's one of the real keys with the G8, is this new platform with this big full-color screen and the additional interface access to it through the different side buttons that will allow customers to do a lot more on the device. And those are things that we're going to be able to just keep adding and adding, as customer demand and as we focus in different areas from the software side. But to your point, from the hardware end, everything's available day one on the G8.
But that's one of the real keys with the G8, is this new platform with this big full-color screen and the additional interface access to it through the different side buttons that will allow customers to do a lot more on the device. And those are things that we're going to be able to just keep adding and adding, as customer demand and as we focus in different areas from the software side. But to your point, from the hardware end, everything's available day one on the G8.
Speaker #1: So but to your point, from the hardware end, everything's available day one on the G8.
Speaker #3: Okay, thank you for that. One further question from me, and maybe just to go back into the quarter that you just reported and talk about that a little bit, because the services revenue certainly stood out—and how resilient that growth has been in all market conditions, but also the margins.
Doug Taylor: Okay. Thank you for that. One further question for me, and maybe just to back into the quarter that you just reported and talk about that a little bit, because the services revenue certainly stood out, and how resilient the growth and that’s been in all market conditions, but also the margins. So I just wanted to touch on that a little bit. Is that the margin expansion there, I mean, a function of the rental growth, currency? I mean, can you just help us as we think about modeling that into the start of this year and as the G8 rolls out and becomes a bigger part of the mix?
Doug Taylor: Okay. Thank you for that. One further question for me, and maybe just to back into the quarter that you just reported and talk about that a little bit, because the services revenue certainly stood out, and how resilient the growth and that’s been in all market conditions, but also the margins. So I just wanted to touch on that a little bit. Is that the margin expansion there, I mean, a function of the rental growth, currency? I mean, can you just help us as we think about modeling that into the start of this year and as the G8 rolls out and becomes a bigger part of the mix?
Speaker #3: So I just wanted to touch on that a little bit. Is that the margin expansion there? I mean, a function of the rental growth currency?
Speaker #3: I mean, can you just help us as we think about modeling that into the start of this year, and as the G8 rolls out and becomes a bigger part of the mix?
Speaker #2: Thanks, Doug. It's a great question. So, one of the biggest drivers of the service growth margin this quarter is really the scale of our scalability initiatives.
Robin Koiman: Thanks, Doug. It's a great question. So one of the biggest drivers of the service growth margin this quarter is really the scalability initiatives that we've been focused on achieving in the business. And we're really pleased with the result this year. At over 80%, as you think forward from here, I just keep in mind that gains will still very much available are probably generally smaller. So we're going to continue to focus on optimizing things like connectivity services and data expenses. But as always, when you launch a new product, I think it's important just to keep in mind that there can be a little bit of variability.
Robin Kooyman: Thanks, Doug. It's a great question. So one of the biggest drivers of the service growth margin this quarter is really the scalability initiatives that we've been focused on achieving in the business. And we're really pleased with the result this year. At over 80%, as you think forward from here, I just keep in mind that gains will still very much available are probably generally smaller. So we're going to continue to focus on optimizing things like connectivity services and data expenses. But as always, when you launch a new product, I think it's important just to keep in mind that there can be a little bit of variability.
Speaker #2: That we've been focused on achieving in the business, and we're really pleased with the result this year. And over 80%, I think, forward from here.
Speaker #2: I just keep in mind that gains will still very much available or probably generally smaller so we're going to continue to focus on optimizing things like connectivity services and data expenses.
Speaker #2: But as always, when you launch a new product, I think it's important just to keep in mind that there can be a little bit of
Speaker #2: variability. The other thing I'd just add on
Cody Slater: The other thing I'd just add on the services growth is one of the core drivers of the lower hardware numbers: a slower refresh rate. A lot of our customers are just taking longer to replace their fleets. The devices are working. Capital's a bit constrained. Why would I replace them at this point in time? So even though that hardware number has been lighter, what you're seeing is still a lot of new customer adoption, and that's what's driving that growth there as well. And from our standpoint, frankly, there's some real positive in that because those customers who've delayed their refresh will be refreshing on a platform that we can, over the next five years, continually add new services to. So that's been part of the driver of the growth of the services, that new customer adoption, really.
Cody Slater: The other thing I'd just add on the services growth is one of the core drivers of the lower hardware numbers: a slower refresh rate. A lot of our customers are just taking longer to replace their fleets. The devices are working. Capital's a bit constrained. Why would I replace them at this point in time? So even though that hardware number has been lighter, what you're seeing is still a lot of new customer adoption, and that's what's driving that growth there as well. And from our standpoint, frankly, there's some real positive in that because those customers who've delayed their refresh will be refreshing on a platform that we can, over the next five years, continually add new services to. So that's been part of the driver of the growth of the services, that new customer adoption, really.
Speaker #1: The Services growth is one of the core drivers of the lower hardware numbers. A lot of our customers are just taking longer to replace their fleets, with a slower refresh rate.
Speaker #1: The devices are working, capital's a bit constrained. Why would I replace them at this point in time? So even though that hardware number has been lighter, what you're seeing is still a lot of new customer adoption, and that's what's driving that growth there.
Speaker #1: As well. And from our standpoint, frankly, there's some real positive in that, because as those customers who've delayed their refresh will be refreshing on a platform that we can, over the next five years, continually add new services to.
Speaker #1: So that's been part of the driver of the growth of the service, is that new customer adoption.
Speaker #3: Okay, thanks. Before I pass the line, I'll echo the congratulations, Robin, on the upcoming addition to your own family product line, so to speak.
Doug Taylor: Okay. Thanks. Before I pass the line, I'll echo the congratulations, Robin, on the upcoming addition to your own family product line, so to speak.
Doug Taylor: Okay. Thanks. Before I pass the line, I'll echo the congratulations, Robin, on the upcoming addition to your own family product line, so to speak.
Speaker #2: Thanks, Doug.
Robin Koiman: Thanks, Doug.
Robin Kooyman: Thanks, Doug.
Speaker #4: The next question comes from Sean, Jack, with Raymond Jane. Please go ahead.
Operator: The next question comes from Sean Jack with Raymond James. Please go ahead.
Operator: The next question comes from Sean Jack with Raymond James. Please go ahead.
Speaker #5: Hey, good morning, guys. Just wanted to hop on and ask again about the G8. Wondering if you guys could give a bit of color on how we should expect service growth margins to change now with the G8, just keeping in mind some of the more kind of technical and data analytics-based things that are probably going to be enabled by this device?
Sean Jack: Hey, good morning, guys. Just wanted to hop on and ask again about the G8. Wondering if you guys can give a bit of color on how we should expect service growth margins to change now with the G8, just keeping in mind some of the more kind of technical and data analytics-based things that are probably going to be enabled by this device. Should we expect to see prices move meaningfully upwards? Any sort of color would be great.
Sean Jack: Hey, good morning, guys. Just wanted to hop on and ask again about the G8. Wondering if you guys can give a bit of color on how we should expect service growth margins to change now with the G8, just keeping in mind some of the more kind of technical and data analytics-based things that are probably going to be enabled by this device. Should we expect to see prices move meaningfully upwards? Any sort of color would be great.
Speaker #5: Are we should we expect to see prices move meaningfully upwards? Any sort of color would be great.
Speaker #1: Sure. First, I’d say for 2026, I think you’re going to see a pretty similar model as we start adding, but it isn’t a good point.
Cody Slater: Sure. First, I'd say for 2026, I think you're going to see a pretty similar model as we start adding some of these new services that think about them again like apps on the devices. In fact, those will carry a good, strong margin because we already have the data channel. We already have the connectivity. We already have a lot of the backend. So it's not adding as much load as additional features might as the base does, if that makes sense in that context. So long term, I think there'll be some upward pressure on the margins, upward movement on the margins. But again, to Robin's point, in the shorter term, I think I'd be looking at something pretty similar to where we're at.
Cody Slater: Sure. First, I'd say for 2026, I think you're going to see a pretty similar model as we start adding some of these new services that think about them again like apps on the devices. In fact, those will carry a good, strong margin because we already have the data channel. We already have the connectivity. We already have a lot of the backend. So it's not adding as much load as additional features might as the base does, if that makes sense in that context. So long term, I think there'll be some upward pressure on the margins, upward movement on the margins. But again, to Robin's point, in the shorter term, I think I'd be looking at something pretty similar to where we're at.
Speaker #1: As we start adding some of these new services that think about them again like apps on the devices, in fact, those will carry a good, strong margin because we already have the data channel.
Speaker #1: We already have the connectivity. We already have a lot of the backend, so it's not adding as much load as additional features might as the base does, if that makes sense in that context.
Speaker #1: So long-term, I think there'll be some upward pressure on the margin, upward movement on the margins. But again, to Robin's point, in a shorter term, I think I'd be looking at something pretty similar to where we're at.
Speaker #1: The other point is that, when you talk about costs, the base costs are all staying the same. The different service features we have now are all the same price.
Cody Slater: The other point is that when you talk about costs, the base costs are all staying the same. The different service features we have now are all the same price. What we're really going to be able to do is add new features like, say, permitting on site or different apps that we can add. And those will be individually priced and priced based on the value proposition to the customer. But again, they're not ones that are going to really add a lot of additional cost from our standpoint. It should be high-margin elements.
The other point is that when you talk about costs, the base costs are all staying the same. The different service features we have now are all the same price. What we're really going to be able to do is add new features like, say, permitting on site or different apps that we can add. And those will be individually priced and priced based on the value proposition to the customer. But again, they're not ones that are going to really add a lot of additional cost from our standpoint. It should be high-margin elements.
Speaker #1: What we're really going to be able to do is add new features, like, say, permitting on-site or different apps that we can add. And those will be individually priced.
Speaker #1: And price based on the value proposition to the customer. But again, they're not ones that are going to really add a lot of additional cost from our standpoint.
Speaker #1: So it should be high-margin elements.
Speaker #2: Yeah. And then, Sean, just to jump in—it's Robin here. The other thing I'd keep in mind is, I wouldn't be necessarily just analyzing the service gross margin in a vacuum, right?
Robin Koiman: Yeah. And then Sean, just to jump in, it's Robin here. The other thing I'd keep in mind is I wouldn't be necessarily just analyzing the service gross margin in a vacuum, right? One of the key messages today is that we see the G8 as a product that's going to unlock more service revenue over time. And so that overall gross margin is an important one to think about there, too.
Robin Kooyman: Yeah. And then Sean, just to jump in, it's Robin here. The other thing I'd keep in mind is I wouldn't be necessarily just analyzing the service gross margin in a vacuum, right? One of the key messages today is that we see the G8 as a product that's going to unlock more service revenue over time. And so that overall gross margin is an important one to think about there, too.
Speaker #2: One of the key messages today is that we see the G8 as a product that's going to unlock more service revenue over time. And so that overall gross margin is an important one to think about there too.
Speaker #5: Okay. Perfect. And I know that we never really talked about specific guidance with you guys or anything, but just kind of headed back to Martin.
Sean Jack: Okay. Perfect. I know that we never really talked about specific guidance with you guys or anything, but just kind of headed back to margin questions. There are these kind of two conflicting forces here. Can you give us kind of any sort of sense of how we should expect product sales headed into the first half of the year here? Are you guys very confident with the pipeline that you set up in front of the G8? Any sort of extra detail would be great.
Sean Jack: Okay. Perfect. I know that we never really talked about specific guidance with you guys or anything, but just kind of headed back to margin questions. There are these kind of two conflicting forces here. Can you give us kind of any sort of sense of how we should expect product sales headed into the first half of the year here? Are you guys very confident with the pipeline that you set up in front of the G8? Any sort of extra detail would be great.
Speaker #5: There are these kind of two conflicting forces here. Can you give us any sort of sense of how we should expect product sales headed into the first half of the year here?
Speaker #5: Are you guys very confident with the pipeline that you set up in front of the G8? Any sort of extra detail would be great.
Speaker #1: I think we're very confident in where we see the year, particularly. Again, as I mentioned, we're customers. We announced the G8 two days ago.
Cody Slater: I think we're very confident in where we see the year, particularly. Again, as I mentioned, we announced the G8 two days ago. Customers have been seeing it now for a few weeks. That's definitely going to shift some of the business we'd expect in Q1 into Q2, I would say. And then strength going from Q2 throughout the rest of the year.
Cody Slater: I think we're very confident in where we see the year, particularly. Again, as I mentioned, we announced the G8 two days ago. Customers have been seeing it now for a few weeks. That's definitely going to shift some of the business we'd expect in Q1 into Q2, I would say. And then strength going from Q2 throughout the rest of the year.
Speaker #1: Customers have been seeing it now for a few weeks. That's definitely going to shift some of the business we'd expect in Q1 into Q2, I would say.
Speaker #1: And then strength going from Q2 throughout the rest of the year.
Speaker #1: year. Okay.
Sean Jack: Okay. Perfect. Well, I appreciate all the color, guys. Thanks.
Sean Jack: Okay. Perfect. Well, I appreciate all the color, guys. Thanks.
Speaker #5: Perfect. Well, I appreciate all the color, guys.
Speaker #5: Thank you. My next question comes from Amir.
Operator: The next question comes from Amir Azad with Research Capital. Please go ahead.
Operator: The next question comes from Amir Azad with Research Capital. Please go ahead.
Speaker #4: Azad with Ventum Capital. Please go
Speaker #4: ahead. Thank you.
Amir Azad: Thank you. And good morning, Robin, first and foremost. Congrats and all the very best to you and your family. If we could zoom in on product revenues, I think last quarter you guys had flagged that Q4 would be sort of weakish, but I still expected a small increase, nonetheless, Q on Q. And I think you spoke to a couple of factors. First, on the US government shutdown impacting fire and hazmats, are these orders simply delayed? Is that the way to think about it? Then can you size it for us? Are we talking about one, two, and three million, maybe more, maybe less?
Amir Azad: Thank you. And good morning, Robin, first and foremost. Congrats and all the very best to you and your family. If we could zoom in on product revenues, I think last quarter you guys had flagged that Q4 would be sort of weakish, but I still expected a small increase, nonetheless, Q on Q. And I think you spoke to a couple of factors. First, on the US government shutdown impacting fire and hazmats, are these orders simply delayed? Is that the way to think about it? Then can you size it for us? Are we talking about one, two, and three million, maybe more, maybe less?
Speaker #6: And good morning, Robin. First and foremost, congrats on all the very best to you and your family. If we could zoom in on product revenues, I think last quarter you guys had flagged that Q4 would be sort of weakish, but I still expected a small increase nonetheless Q on Q.
Speaker #6: And I think you spoke to a couple of factors. First, on the US government shutdown impacting fire and hazmats, are these orders simply delayed?
Speaker #6: Is that the way to think about it? So then can you size it for us? Are we talking about one, two, three million, maybe more, maybe
Speaker #6: Is that the way to think about it? So then can you size it for us? Are we talking about one, two, three million, maybe more, maybe less?
Speaker #1: Sure. I would guess these orders are just delayed. When you're looking at that marketplace, that's a market that three years ago, for us, didn't really exist.
Cody Slater: Sure. Yes, these orders are just delayed. When you're looking at that marketplace, that's a market that three years ago for us didn't really exist. Today, it's one of our fastest-growing markets. And you are talking single-digit millions here in the low end as far as the fire and hazmat pipeline for what we would have expected to be in Q4. And I'd expect to see that sort of coming through Q2, Q3. I think the bigger for us, we've talked a little bit about some of the different headwinds. But as I mentioned before, the other thing really is we have some of the lowest refresh rates that we've ever seen in the last really two quarters, where customers would normally refresh their hardware every four years, and they're just extending that out. And is some of that because they know the G8's coming? Probably.
Cody Slater: Sure. Yes, these orders are just delayed. When you're looking at that marketplace, that's a market that three years ago for us didn't really exist. Today, it's one of our fastest-growing markets. And you are talking single-digit millions here in the low end as far as the fire and hazmat pipeline for what we would have expected to be in Q4. And I'd expect to see that sort of coming through Q2, Q3. I think the bigger for us, we've talked a little bit about some of the different headwinds. But as I mentioned before, the other thing really is we have some of the lowest refresh rates that we've ever seen in the last really two quarters, where customers would normally refresh their hardware every four years, and they're just extending that out. And is some of that because they know the G8's coming? Probably.
Speaker #1: Today, it's one of our fastest-growing markets. And you are talking single-digit millions here in the low end as far as the fire and hazmat pipeline for what we would have expected to be in Q4.
Speaker #1: And I'd expect to see that sort of coming through Q2, Q3. I think the bigger thing for us—we've talked a little bit about some of the different headwinds—but as I mentioned before, the other thing really is we have some of the lowest refresh rates that we've ever seen in the last, really, two quarters.
Speaker #1: Where customers would normally refresh their hardware every four years, they're just extending that out. And some of that's because they know the G8's coming, probably.
Speaker #1: But some of it's also because the units functioning, working, and it's the services that give that real value. And you can see by the net dollar retention, it's not that we're losing customers.
Cody Slater: But some of it's also because the unit's functioning, working, and it's the services that give that real value. And you can see by the net dollar retention, it's not that we're losing customers. It's that they're just taking longer to refresh their hardware. And that's probably been the biggest headwind for us. The teams are still acquiring new customers. And again, as I mentioned earlier, that's what's driving that ARR growth and the services growth.
But some of it's also because the unit's functioning, working, and it's the services that give that real value. And you can see by the net dollar retention, it's not that we're losing customers. It's that they're just taking longer to refresh their hardware. And that's probably been the biggest headwind for us. The teams are still acquiring new customers. And again, as I mentioned earlier, that's what's driving that ARR growth and the services growth.
Speaker #1: It's that they're just taking longer to refresh their hardware, and that's probably been the biggest headwind for us. The teams are still acquiring new customers.
Speaker #1: And again, as I mentioned earlier, that's what's driving that ARR growth and the services growth.
Speaker #6: And I suspect as you launch the G8 as a sort of platform technology, where you could add apps and so on into it, you'll have that refresh headwinds more and more going forward.
Amir Azad: I suspect as you launch the G8 as a sort of platform technology where you could add apps and so on into it, you'll have that refresh headwinds more and more going forward. Do you feel the same way?
Amir Azad: I suspect as you launch the G8 as a sort of platform technology where you could add apps and so on into it, you'll have that refresh headwinds more and more going forward. Do you feel the same way?
Speaker #6: Do you feel the same
Speaker #6: way? Well, actually, look at
Cody Slater: Well, actually, I actually look at the midterm number. I'd actually say I think the G8 will be a tailwind to the refresh. I always use the analogy of the iPhone. Right now, for our customers, we're selling with the G7; we're selling an iPhone 11. They bought it four years ago. We're still selling an iPhone 11. Why would I refresh the device? Now we're moving from an 11 to a 17. So the G8 is going to give our current installed base reason to look to accelerate that refresh rate. So for the next couple of years, I think it's actually a tailwind for us on the G8.
Cody Slater: Well, actually, I actually look at the midterm number. I'd actually say I think the G8 will be a tailwind to the refresh. I always use the analogy of the iPhone. Right now, for our customers, we're selling with the G7; we're selling an iPhone 11. They bought it four years ago. We're still selling an iPhone 11. Why would I refresh the device? Now we're moving from an 11 to a 17. So the G8 is going to give our current installed base reason to look to accelerate that refresh rate. So for the next couple of years, I think it's actually a tailwind for us on the G8.
Speaker #1: the for the midterm number, I'd actually say I think the G8 will be a tailwind to the refresh. I always use the analogy of the iPhone.
Speaker #1: Right now, for our customers, we're selling with the G7, we're selling an iPhone 11. They bought it four years ago. We're still selling an iPhone 11.
Speaker #1: Why would I refresh the device? Now we're moving from an 11 to a 17. So, the G8 is going to give our current install base reason to look to accelerate that refresh rate.
Speaker #1: So, for the next couple of years, I think it's actually a tailwind for us on the G8.
Amir Azad: Oh, yeah. Moving. I was talking about moving out of the G8 eventually.
Amir Azad: Oh, yeah. Moving. I was talking about moving out of the G8 eventually.
Speaker #6: And let's moving I thought I was talking about moving out of the G8 eventually.
Speaker #1: So, into the G9, we'll leave that discussion for a little while. Our tech teams have spent four years on what is the biggest technological leap in this industry, I'd say.
Cody Slater: Into the G9? We'll leave that discussion for a little while. Our tech teams have spent four years on what is the biggest technological leap in this industry, I'd say. I'm going to leave them a couple of months before we start talking about the G9.
Cody Slater: Into the G9? We'll leave that discussion for a little while. Our tech teams have spent four years on what is the biggest technological leap in this industry, I'd say. I'm going to leave them a couple of months before we start talking about the G9.
Speaker #1: I'm not going to—I'm going to leave them a couple of months before we start talking about the—
Speaker #1: G9. I'm sure 12
Amir Azad: I'm sure a 12 deserves. Now, did I hear you correctly, Cody? So are we currently at 3,500 devices in total sold to ADNOC in the fiscal year?
Amir Azad: I'm sure a 12 deserves. Now, did I hear you correctly, Cody? So are we currently at 3,500 devices in total sold to ADNOC in the fiscal year?
Speaker #6: Deserve. Now, did I hear you correctly, Cody? So are we currently at 3,500 devices in total sold to ADNOC in the fiscal year?
Speaker #1: That would be 2,500. The first order was shipped in Q4 as well, too. So there was a total of
Speaker #1: That would be 2,500. The first order was shipped in Q4 as well, too. So there was a total of 2,500. Shipped as of Okay.
Cody Slater: That would be 2,500. The first order was shipped in Q4 as well, too. So there was a total of 2,500 shipped as of Q4. We continue to see orders coming from ADNOC, so that number just keeps growing and growing. We'll keep some visibility on that, partially just because of the scale. But I do think ADNOC really exemplifies the kind of customer we see becoming more and more a part of our standard business, where it's a company who's just simply said, "We're converting entirely to this platform." And they're doing it not only for safety, but for efficiency and operations. And that's what's really exciting about ADNOC. And as we start adding more logos in that same context, that would be a big driver for us going forward.
Cody Slater: That would be 2,500. The first order was shipped in Q4 as well, too. So there was a total of 2,500 shipped as of Q4. We continue to see orders coming from ADNOC, so that number just keeps growing and growing. We'll keep some visibility on that, partially just because of the scale. But I do think ADNOC really exemplifies the kind of customer we see becoming more and more a part of our standard business, where it's a company who's just simply said, "We're converting entirely to this platform." And they're doing it not only for safety, but for efficiency and operations. And that's what's really exciting about ADNOC. And as we start adding more logos in that same context, that would be a big driver for us going forward.
Speaker #1: Q4. We continue to see orders coming from Adnoc, so that number just keeps growing and growing. And we'll keep some visibility on that. Partially just because of the scale, but I do think it really Adnoc really exemplifies the kind of customer we see coming becoming more and more a part of our standard business, where it's a company who's just simply said, "We're converting entirely to this platform." And they're doing it not only for safety, but for efficiency and operations.
Speaker #1: And that's what's really exciting about ADNOC. And as we start adding more logos in that same context, that'll be a big driver for us going forward.
Speaker #1: forward.
Speaker #6: And then can you give
Amir Azad: And then can you give us the splits of these 2,500 between G6 and location beacons? Then I know you spoke.
Amir Azad: And then can you give us the splits of these 2,500 between G6 and location beacons? Then I know you spoke.
Speaker #6: us the splits of these 2,500 between G6 and location beacons? Then I know you spoke. Sorry,
Speaker #1: So is this all G6?
Cody Slater: So all G6? Sorry. The numbers there, the 2,500 are all body-worn devices. So it's a mix of G7s and G6s. It's not including the beacons. Those are only service revenue-generating devices.
Cody Slater: So all G6? Sorry. The numbers there, the 2,500 are all body-worn devices. So it's a mix of G7s and G6s. It's not including the beacons. Those are only service revenue-generating devices.
Speaker #6: Amir. The numbers there, the 2,500 are all body-worn devices. So it's a mix of G7s and G6s. It's not including the beacons. Those are only revenue-generating.
Speaker #6: Those are only service revenue-generating devices. Okay. Then one last one on the Adnoc. The number that's of devices you potentially spoke to was 28,000, correct?
Speaker #6: Those are only service revenue-generating devices. Okay. Then one last one on the Adnoc. The number of devices you potentially spoke to was 28,000,
Amir Azad: Okay. Then one last one on the ADNOC. The number of devices you potentially spoke to is 28,000, correct?
Amir Azad: Okay. Then one last one on the ADNOC. The number of devices you potentially spoke to is 28,000, correct?
Cody Slater: That's correct. Yeah.
Cody Slater: That's correct. Yeah.
Speaker #1: That's
Speaker #1: correct, yeah. And is that
Amir Azad: Is that number, that's an internal estimate, or is it validated with Elmess Holds Group or ADNOC?
Amir Azad: Is that number, that's an internal estimate, or is it validated with Elmess Holds Group or ADNOC?
Speaker #6: number that's an internal estimate, or is it validated with LMS Hodes Group or Adnoc?
Speaker #1: That's validated directly with ADNOC, Amir.
Sean Jack: That's validated directly with ADNOC, Amir.
Sean Stinson: That's validated directly with ADNOC, Amir.
Speaker #6: Fantastic. Any sort of color you could give us on the pace of follow-on orders? Is that over four years, five years, two years? Best guess?
Amir Azad: Fantastic. Any sort of color you could give us on the pace of follow-on orders? Is that over four years, five years, two years? Best guess?
Amir Azad: Fantastic. Any sort of color you could give us on the pace of follow-on orders? Is that over four years, five years, two years? Best guess?
Speaker #1: Yeah, my best guess is that it'll roll out over about the next two years. We're seeing continued velocity. ADNOC is such a large organization.
Sean Jack: Yeah. My best guess is that it'll roll out over about the next two years. We're seeing continued velocity. ADNOC is such a large organization. And so we're looking at it operating unit by operating unit, by plant by plant, and working very closely with them to make sure that the units are properly deployed and that everybody's happy as we move along. And there's some integrations behind the scenes there as well. We're integrating with the software package that they have. So it'll be a really best-in-class solution when it's all fully deployed.
Sean Stinson: Yeah. My best guess is that it'll roll out over about the next two years. We're seeing continued velocity. ADNOC is such a large organization. And so we're looking at it operating unit by operating unit, by plant by plant, and working very closely with them to make sure that the units are properly deployed and that everybody's happy as we move along. And there's some integrations behind the scenes there as well. We're integrating with the software package that they have. So it'll be a really best-in-class solution when it's all fully deployed.
Speaker #1: And so we're looking at it operating unit by operating unit, by plant by plant, and working very closely with them to make sure that the units are properly deployed and that everybody's happy as we move along.
Speaker #1: And there's some integrations behind the scenes there as well. We're integrating with the software package that they have, so it'll be a really best-in-class solution when it's all fully deployed.
Speaker #6: Fantastic. Then maybe one last one on the product gross margin. I was very surprised to see it's north of 40% despite lower hardware volumes this quarter.
Amir Azad: Fantastic. Then maybe one last one on the product gross margin. I was very surprised to see it north of 40% despite lower hardware volumes this quarter. Anything in particular happening there that's a one-off?
Amir Azad: Fantastic. Then maybe one last one on the product gross margin. I was very surprised to see it north of 40% despite lower hardware volumes this quarter. Anything in particular happening there that's a one-off?
Speaker #6: Anything in particular happening there that's a one-off?
Speaker #3: I wouldn't say anything particular that's a one-off. Product gross margin is the number of factors in it, including how busy the factory is. And obviously, you would have seen inventories growing a little bit this quarter as well as we prepare for the launch of the G8.
Robin Koiman: I wouldn't say anything particular that's a one-off. Product gross margin has a number of factors in it, including how busy the factory is. And obviously, you would have seen inventories growing a little bit this quarter as well as we prepare for the launch of the G8. So a few different factors just contributing to the strength.
Robin Kooyman: I wouldn't say anything particular that's a one-off. Product gross margin has a number of factors in it, including how busy the factory is. And obviously, you would have seen inventories growing a little bit this quarter as well as we prepare for the launch of the G8. So a few different factors just contributing to the strength.
Speaker #3: So, a few different factors just contributing to the strength.
Speaker #6: Fantastic. Congrats again on all past one.
Amir Azad: Fantastic. Congrats again on all past tomorrow.
Amir Azad: Fantastic. Congrats again on all past tomorrow.
Speaker #3: Thanks.
Robin Koiman: Thanks.
Robin Kooyman: Thanks.
Cody Slater: Thanks.
Cody Slater: Thanks.
Speaker #1: Thanks. Once again, if you have a question,
Operator: Once again, if you have a question, please press star then one. The next question comes from David Kwan with TD Cowen. Please go ahead.
Operator: Once again, if you have a question, please press star then one. The next question comes from David Kwan with TD Cowen. Please go ahead.
Speaker #7: Please press star, then one. The next question comes from David Kwan with TD Cowen. Please go ahead.
Speaker #7: ahead. Hey, good
Sean Jack: Hey, good morning. Maybe just on that last question as it relates to the product gross margins. You talked about it sounds like there might be some weakness here just as you kind of wrap up the G8 similar to kind of a weakness in gross product gross margins when you've launched other products. So I guess where do you think the product gross margins could go to in the coming quarters as you wrap up the G8?
David Kwan: Hey, good morning. Maybe just on that last question as it relates to the product gross margins. You talked about it sounds like there might be some weakness here just as you kind of wrap up the G8 similar to kind of a weakness in gross product gross margins when you've launched other products. So I guess where do you think the product gross margins could go to in the coming quarters as you wrap up the G8?
Speaker #8: morning. Maybe just on that last question as it relates to the product gross margins. You talked about it sounds like there might be some weakness here.
Speaker #8: Just as you kind of wrap up the G8 similar to kind of a weakness in gross product gross margins when you've launched other products.
Speaker #8: So I guess where do you think the product gross margins could go to in the coming quarters as you wrap up the G8?
Speaker #1: I mean, we're not talking massive differences, but a few points drop is a good potential to look at. Again, so many things is Robin mentioned impact that product mix, all kinds of other aspects.
Cody Slater: I mean, we're not talking massive differences, but a few points drop is a good potential to look at. Again, so many things, as Robin mentioned, impact that. Product mix, all kinds of other aspects. But yeah, I would expect to see that if you're modeling it, David. I'd say model a little bit of a drop for a couple of quarters and then getting back to the 40%. And then long term, we still believe there's opportunity to see the hardware margins move north of that. But I think that's more going to be a late 2026, maybe more like a 2027 story.
Cody Slater: I mean, we're not talking massive differences, but a few points drop is a good potential to look at. Again, so many things, as Robin mentioned, impact that. Product mix, all kinds of other aspects. But yeah, I would expect to see that if you're modeling it, David. I'd say model a little bit of a drop for a couple of quarters and then getting back to the 40%. And then long term, we still believe there's opportunity to see the hardware margins move north of that. But I think that's more going to be a late 2026, maybe more like a 2027 story.
Speaker #1: But yeah, I would expect to see that if you're modeling it, David. I'd say model a little bit of a drop for a couple of quarters, and then getting back to the 40%.
Speaker #1: And then long-term, we still believe there's opportunity to see the hardware margins move north of that. But I think that's more going to be late '26, maybe more like a '27.
Speaker #1: story. No, that's helpful.
Sean Jack: No, that's helpful. Thanks, Cody. And then on the services gross margins, it sounds like you've done almost as much as you can do in terms of kind of cost optimization. So maybe a lot more measured or steady, hopefully, increases. But I was wondering on the PTT side, I guess my understanding was, I think as the G8 launched, and hopefully you see some significant pickup in that uptake and adoption rate of PTT, that there could be some notable incremental upside on the services gross margin. So I was wondering if you could talk about that.
David Kwan: No, that's helpful. Thanks, Cody. And then on the services gross margins, it sounds like you've done almost as much as you can do in terms of kind of cost optimization. So maybe a lot more measured or steady, hopefully, increases. But I was wondering on the PTT side, I guess my understanding was, I think as the G8 launched, and hopefully you see some significant pickup in that uptake and adoption rate of PTT, that there could be some notable incremental upside on the services gross margin. So I was wondering if you could talk about that.
Speaker #8: Thanks, Cody. And then on the services gross margins, it sounds like you've done almost as much as you can do in terms of kind of cost optimization.
Speaker #8: So maybe a lot more measured or steady, hopefully, increases? But I was wondering, on the PTT side, I guess my understanding was, I think as G8 launched, and hopefully you see some significant pickup in that uptake and adoption rate of PTT.
Speaker #8: That there could be some notable incremental upside on the services gross margin. So I was wondering if you could talk about that.
Speaker #1: No, I wouldn't look at PTT as carrying a higher gross margin than the other core services, really. There's so many factors that impact that, whether it be data, whether the backend storage, because we store all the data for the customers in the PTT base.
Cody Slater: No, I wouldn't look at PTT as carrying a higher gross margin than the other core services, really. There's so many factors that impact that, whether it be data, whether it's the backend storage, because we store all the data for the customers in the PTT base. So the cost based on the PTT, I think, isn't anyway; I don't believe the expansion of the PTT is going to be a real upward pressure on the margins. What will be long term, I would say, is more of the kinds of app-like services we're talking about adding, because a lot of those are ones where we don't really do. Some of them are even realistically SDKs tying into another company's systems. So those will be ones that I think we can talk more about towards the end of the year about their higher gross margins themselves.
Cody Slater: No, I wouldn't look at PTT as carrying a higher gross margin than the other core services, really. There's so many factors that impact that, whether it be data, whether it's the backend storage, because we store all the data for the customers in the PTT base. So the cost based on the PTT, I think, isn't anyway; I don't believe the expansion of the PTT is going to be a real upward pressure on the margins. What will be long term, I would say, is more of the kinds of app-like services we're talking about adding, because a lot of those are ones where we don't really do. Some of them are even realistically SDKs tying into another company's systems. So those will be ones that I think we can talk more about towards the end of the year about their higher gross margins themselves.
Speaker #1: So there's the cost base on the PTT, I think it's going to isn't better way to phrase it. I don't believe the expansion of the PTT is going to be a real upward pressure on the margins.
Speaker #1: What will be long-term, I would say, is more of the kinds of app-like services we're talking about adding, because a lot of those are ones where we don't really do—some of them are even, realistically, SDKs tying into another company's systems.
Speaker #1: So those will be ones that I think we can talk more about towards the end of the year, about upward—about their higher gross margins themselves.
Speaker #1: But the PTT, I think, will be in our is in a similar context to where we're at with our other margins. I think the other thing to think about the PTT, though, is how much stickier you become with this customer.
Cody Slater: But the PTT, I think, will be in a similar context to where we're at with our other margins. I think the other thing to think about the PTT, though, is how much stickier you become with this customer. This is now their core safety device, but it's now also their core communication device. What Sean mentioned on that, how they work on their sites, how they communicate their operations, we just become an even stickier product at the end of the day.
But the PTT, I think, will be in a similar context to where we're at with our other margins. I think the other thing to think about the PTT, though, is how much stickier you become with this customer. This is now their core safety device, but it's now also their core communication device. What Sean mentioned on that, how they work on their sites, how they communicate their operations, we just become an even stickier product at the end of the day.
Speaker #1: If this is now their core safety device, but it's now also their core communication device, what Sean mentioned on that—how they work on their sites, how they communicate their operations.
Speaker #1: We just become an even stickier product at the end of the
Speaker #1: day. Yeah.
Robin Koiman: Yeah. David, just to jump in, the other thing I want to reiterate is while maybe push to talk doesn't necessarily come at a higher gross margin, the more services we can sell for every dollar of product that we sell is really impactful to the overall gross margin of the business. And that's part of the reason we're so excited about the G8.
Robin Kooyman: Yeah. David, just to jump in, the other thing I want to reiterate is while maybe push to talk doesn't necessarily come at a higher gross margin, the more services we can sell for every dollar of product that we sell is really impactful to the overall gross margin of the business. And that's part of the reason we're so excited about the G8.
Speaker #3: David, just to jump in, the other thing I want to reiterate is while maybe push to talk doesn't necessarily come at a higher gross margin, the more services we can sell for every dollar of product that we sell is really impactful to the overall gross margin of the business.
Speaker #3: And that's part of the reason we're so excited about the—
Speaker #8: Yeah. So just more of a revenue mix benefit. Sounds
Sean Jack: Yeah. So just more of a revenue mix benefit, sounds like.
David Kwan: Yeah. So just more of a revenue mix benefit, sounds like.
Speaker #1: Like . Exactly . I guess . Yeah . And I guess last question . The MDA reference some weakness in the US due to the lower energy prices .
Robin Koiman: Exactly.
Robin Kooyman: Exactly.
Sean Jack: I guess, yeah. And I guess last question, the MD&A referenced some weakness in the US due to the lower energy prices. I assume that was just customers extending the life of their devices that Cody mentioned earlier and/or renewing, but for fewer devices, similar to what I think we saw in the last downturn. So just wanted to confirm that, number one. And then number two, are you seeing any signs of similar behavior among your Canadian customers?
David Kwan: I guess, yeah. And I guess last question, the MD&A referenced some weakness in the US due to the lower energy prices. I assume that was just customers extending the life of their devices that Cody mentioned earlier and/or renewing, but for fewer devices, similar to what I think we saw in the last downturn. So just wanted to confirm that, number one. And then number two, are you seeing any signs of similar behavior among your Canadian customers?
Speaker #1: I assume that was just in a reference . Some weakness in the US due to lower energy prices . I assume that was just customers extending the life of their devices that that Cody mentioned earlier and or renewing .
Speaker #1: But for fewer devices similar to what I think we saw in the last downturn . So I just wanted to confirm that , number one , and then number two , are you seeing any signs of similar behavior amongst your Canadian customers ?
Cody Slater: Yeah. We were seeing similar patterns in both Canada and the US. And really, it was the upstream clients that were heavily affected. That's a lot of our core energy customer profile in Canada. Years ago, the satellite product that we came out with, which was the first really industrial-grade satellite lone worker device on the market, that established a lot of our early Canadian energy companies in the upstream market. So what we're seeing is it's a bit of a double whammy in that case, David. It's like renewals are sliding out a little bit, and then it's harder to acquire clients in the upstream market right now. So good conversations in the pipeline, just it stretches it out a little bit more. In a lot of cases, we've got companies saying they're going to buy, but they're just stretching out their buy timeline.
Cody Slater: Yeah. We were seeing similar patterns in both Canada and the US. And really, it was the upstream clients that were heavily affected. That's a lot of our core energy customer profile in Canada. Years ago, the satellite product that we came out with, which was the first really industrial-grade satellite lone worker device on the market, that established a lot of our early Canadian energy companies in the upstream market. So what we're seeing is it's a bit of a double whammy in that case, David. It's like renewals are sliding out a little bit, and then it's harder to acquire clients in the upstream market right now. So good conversations in the pipeline, just it stretches it out a little bit more. In a lot of cases, we've got companies saying they're going to buy, but they're just stretching out their buy timeline.
Speaker #2: Yeah , we were seeing similar patterns in both Canada and the US . So , and you know , really it was the upstream clients that were that were heavily affected .
Speaker #2: That's a lot of our core energy customer profile in Canada . The , you know , years ago , the satellite product that we came out with , which was the first really industrial grade lone worker device on the satellite market , you know , that that established a lot of our early Canadian energy companies in the upstream market .
Speaker #2: So what we're seeing is, it's a bit of a double whammy. In that case, David, it's like renewals are sliding out a little bit.
Speaker #2: And then it's harder to acquire clients in the upstream market right now. So, good conversations in the pipeline—just, it stretches it out a little bit more.
Cody Slater: So you might see the pipeline extending from a six-month sales cycle up to an eight- or a nine-month sales cycle. Ultimately, close them in the end. But that stretch out is something that ultimately you have to backfill that by more leads in the pipeline. So that's something that we focus on a lot going forward is just really working on the pipeline strength. That's kind of the only way you can counteract a slower market. So that's what we're really focused on for 2026. Obviously, G8 and so on and so forth.
Cody Slater: So you might see the pipeline extending from a six-month sales cycle up to an eight- or a nine-month sales cycle. Ultimately, close them in the end. But that stretch out is something that ultimately you have to backfill that by more leads in the pipeline. So that's something that we focus on a lot going forward is just really working on the pipeline strength. That's kind of the only way you can counteract a slower market. So that's what we're really focused on for 2026. Obviously, G8 and so on and so forth.
Speaker #2: Like in a lot of cases we've got companies saying they're going to buy , but they're just stretching out their their by timeline .
Speaker #2: So you might see the pipeline extending from , you know , a six month sales cycle up to an eight or a nine month sales cycle .
Speaker #2: Ultimately close them in the end . But that stretch out is something that you , know , ultimately you have to backfill that buy more leads in the pipeline .
Speaker #2: So that's, you know, that's something that we focus on a lot going forward, is just really working on the pipeline strength.
Speaker #2: That's kind of the only way you can counteract , you know , a slower market . So that's what that's what we're really focused on for 26 .
Sean Jack: No, that's helpful, Sean. And are you seeing a similar dynamic in the Middle East? Obviously, you've got the ADNOC win. It seems like it's going quite well, and it looks like there's some good future potential there. But just curious to see the dynamic in the Middle East if that's also maybe pushing out sales cycles?
David Kwan: No, that's helpful, Sean. And are you seeing a similar dynamic in the Middle East? Obviously, you've got the ADNOC win. It seems like it's going quite well, and it looks like there's some good future potential there. But just curious to see the dynamic in the Middle East if that's also maybe pushing out sales cycles?
Speaker #2: You know, obviously GA and so on and so forth.
Speaker #1: No , that's helpful Shawn . And are you seeing a dynamic similar in the Middle East ? Obviously you've got the Adnoc win that's seems like it's going quite well , and it looks like there's some some good future potential there .
Cody Slater: No, it's very strong in the Middle East. I do believe that a lot of that has to do with the lower incremental cost of production in the Middle East. I believe Aramco has published numbers like, this is a few years ago. So look this up before you quote me on it. But at some point, I think they quoted that their cost of production for barrel of oil is $19, and that's significantly higher in North America. I view the Middle Eastern energy market as a hedge to the North American market, just as I view the downstream refining market as a hedge to upstream. We're making significant inroads in refining. Typically, when the price of energy is low, refining will still buy. Upstream might suffer a little bit. We look at ways to naturally hedge the business by getting into different vertical markets.
Cody Slater: No, it's very strong in the Middle East. I do believe that a lot of that has to do with the lower incremental cost of production in the Middle East. I believe Aramco has published numbers like, this is a few years ago. So look this up before you quote me on it. But at some point, I think they quoted that their cost of production for barrel of oil is $19, and that's significantly higher in North America. I view the Middle Eastern energy market as a hedge to the North American market, just as I view the downstream refining market as a hedge to upstream. We're making significant inroads in refining. Typically, when the price of energy is low, refining will still buy. Upstream might suffer a little bit. We look at ways to naturally hedge the business by getting into different vertical markets.
Speaker #1: But just curious to see the dynamic in the Middle East, if that's also maybe pushing out sales cycles.
Speaker #2: No, it's very strong in the Middle East. And I do believe that a lot of that has to do with the lower incremental cost of production in the Middle East.
Speaker #2: I believe Aramco has published numbers like this is a few years ago . So , you know , look this up before you quote me on it .
Speaker #2: But I, you know, at some point I think they quoted that their cost of production for a barrel of oil is $19, and that's significantly higher north in America.
Speaker #2: So like I view the I view the Middle Eastern energy market as a hedge to the North American market . Just as I view the downstream refining market as a hedge to upstream , we're making significant inroads in refining .
Speaker #2: So , you know , typically when the price of energy is low , refining , you know , we'll still buy upstream , might suffer a little bit , but know , we look so , you at ways to naturally hedge the business by by getting into different vertical markets .
Cody Slater: Just like I said, even a geographical split can help us, even when you're in the same vertical.
Just like I said, even a geographical split can help us, even when you're in the same vertical.
Sean Jack: No, that's great, Keller. Thanks, Sean. And that's it for me.
David Kwan: No, that's great, Keller. Thanks, Sean. And that's it for me.
Speaker #2: And just like I said , even a geographical split can help us , even when you're in the same vertical .
Operator: We have a follow-up question from Martin Toner at ATB Capital Markets. Please go ahead.
Operator: We have a follow-up question from Martin Toner at ATB Capital Markets. Please go ahead.
Speaker #1: that's No , great color . Thanks , John . And that's it for me .
Amir Azad: Thanks, folks. At what point would G8 shipments run into capacity issues, if at all?
Martin Toner: Thanks, folks. At what point would G8 shipments run into capacity issues, if at all?
Speaker #3: We have a follow-up question from Martin Toner with ATB Capital Markets. Please go ahead.
Speaker #4: Thanks, folks. At what point would G shipments run into capacity issues, if at all?
Cody Slater: Our ops teams are so strong that we just don't see that as a challenge. We're planning for growth, and we're planning for capabilities there. We have the capabilities. We're planning for growth, and we have the capabilities there to meet whatever demand we see.
Cody Slater: Our ops teams are so strong that we just don't see that as a challenge. We're planning for growth, and we're planning for capabilities there. We have the capabilities. We're planning for growth, and we have the capabilities there to meet whatever demand we see.
Speaker #5: You know, our ops teams are so strong, we just don't see that as a challenge. We're planning for growth, and we're planning for capabilities there.
Amir Azad: Perfect. Thank you very much. That's it for me.
Martin Toner: Perfect. Thank you very much. That's it for me.
Speaker #5: We have to keep it. We're planning for growth, and we have the capabilities there to meet whatever demand we see.
Speaker #4: Perfect. Thank you very much. That's it for me.
Operator: This concludes the question and answer session. I would like to turn the conference back over to Cody Slater for any closing remarks. Please go ahead.
Operator: This concludes the question and answer session. I would like to turn the conference back over to Cody Slater for any closing remarks. Please go ahead.
Speaker #3: This concludes the question-and-answer session. I would like to turn the conference back over to Cody Slater for any closing remarks.
Amir Azad: Thank you, Alfredo. Thank you, everyone, for your attention and your time today. I look forward to talking again throughout 2026 as we launch the G8 and take the next steps on connecting the industrial workforce. Thanks again, everyone.
Cody Slater: Thank you, Alfredo. Thank you, everyone, for your attention and your time today. I look forward to talking again throughout 2026 as we launch the G8 and take the next steps on connecting the industrial workforce. Thanks again, everyone.
Speaker #3: Please go ahead .
Speaker #5: Thank you . Operator . And thank you , everyone , for your attention and your time today . I look forward to talking again throughout 2026 as we launch the G8 and take the next steps on connecting the industrial workforce .
Operator: This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.
Operator: This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.
