Q1 2026 Nauticus Robotics Inc Earnings Call

May 19, 2026

Speaker #2: Hello everyone. Thank you for joining us and welcome to Nauticus Robotics, Inc.'s first quarter 2026 earnings call. After today's prepared remarks, we will host a question-and-answer session.

Operator: Hello, everyone. Thank you for joining us, and welcome to Nauticus Robotics, Inc. Q1 2026 Earnings Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Kristin Moorman, corporate development lead. Kristin, please go ahead.

Operator: Hello, everyone. Thank you for joining us, and welcome to Nauticus Robotics, Incorporated Q1 2026 Earnings Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Kristin Moorman, corporate development lead. Kristin, please go ahead.

Speaker #2: If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Kristin Moorman, Corporate Development Lead.

Speaker #2: Kristin, please go ahead.

Speaker #3: Thank you and good morning, everyone. Joining me today and participating in the call are John Gibson, CEO and President; Jimena Begares, Interim CFO; and other members of our leadership team.

Kristin Moorman: Thank you, good morning, everyone. Joining me today and participating in the call are John Gibson, CEO and President, Jimena Begaries, interim CFO, and other members of our leadership team. On today's call, we will first provide prepared remarks concerning our financial and operations results. Following that, we will answer questions. We have now released our results for Q1 ending 31 March 2026, which are available on our website. Today's call is being webcast, and a replay will be available on our website shortly following the conclusion of the call. Please note that comments we make on today's call regarding projections or our expectations for future events are forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control. These risks and uncertainties can cause actual results to differ materially from our current expectations.

Kristin Moorman: Thank you, good morning, everyone. Joining me today and participating in the call are John Gibson, CEO and President, Jimena Begaries, interim CFO, and other members of our leadership team. On today's call, we will first provide prepared remarks concerning our financial and operations results. Following that, we will answer questions. We have now released our results for quarter ending 31st March 2026, which are available on our website. Today's call is being webcast, and a replay will be available on our website shortly following the conclusion of the call. Please note that comments we make on today's call regarding projections or our expectations for future events are forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control. These risks and uncertainties can cause actual results to differ materially from our current expectations.

Speaker #3: On today's call, we will first provide prepared remarks concerning our financial and operations results. Following that, we will answer questions. We have now released our results for the quarter ending March 31, 2026, which are available on our website.

Speaker #3: In addition, today's call is being webcast and a replay will be available on our website shortly following the conclusion of the call. Please note that comments we make on today's call regarding projections or our expectations for future events are forward-looking statements.

Speaker #3: Forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control. These risks and uncertainties can cause actual results to differ materially from our current expectations.

Speaker #3: We advise listeners to review our earnings release and the risk factors discussed in our filings with the SEC. Also, please refer to the reconciliations provided in our earnings press release as we may discuss non-GAAP metrics on this call.

Kristin Moorman: We advise listeners to review our earnings release and the risk factors discussed in our filings with the SEC. Please refer to the reconciliations provided in our earnings press release as we may discuss non-GAAP metrics on this call. I will now turn it over to John.

Speaker #3: I will now turn it over to John.

Speaker #4: Well, good morning. Thank you, Kristin, and thank you to everyone for joining us on the call today. The first quarter of 2026 was a seasonally softer quarter for offshore activity, and that's consistent with what the broader subsea and offshore services market experienced during the winter operating season.

John Gibson: Well, good morning. Thank you, Kristin, thank you to everyone for joining us on the call today. The Q1 of 2026 was a seasonally softer quarter for offshore activity, that's consistent with what the broader subsea and offshore services market experienced during the winter operating season. We saw similar commentary from larger industry participants, including Helix and Oceaneering International, both of which pointed to winter seasonality, lower Q1 utilization, and expectations for stronger activity in the Q2 and Q3 of 2026. For Nauticus, the important point is this: We used the quarter productively. While revenue was not where we wanted it to be, our team focused on the work that positions us for improved execution in the H2 of the year as the operating season strengthens.

Speaker #4: We saw similar commentary from larger industry participants, including Helix and Ocean Area; both of which pointed to winter seasonality, lower first-quarter utilization, and expectations for stronger activity in the second and third quarters of 2026.

Speaker #4: For Nauticus, the important point is this: we use the quarter productively while revenue was not where we wanted it to be. Our team focused on the work that positions us for improved execution in the second half of the year as the operating system strength season strengthens.

Speaker #4: We advanced fleet readiness, completed significant annual maintenance and refurbishment activities across several of the ROV systems, and continued preparing our systems for higher utilization opportunities during the remainder of the year.

John Gibson: We advanced fleet readiness, completed significant annual maintenance and refurbishment activities across several of the ROV systems, and continued preparing our systems for higher utilization opportunities during the remainder of the year. We also continued advancing Nauticus ToolKITT, our proprietary autonomy software platform. Nauticus ToolKITT is central to our strategy because it allows us to create value not only through services, but also through software licensing, technology-enabled services, and deployment on customer-owned vehicles. During the quarter, we continued integrating Nauticus ToolKITT across our subsea systems, along with new high-definition camera systems and other advanced sensors designed to improve navigation efficiency, data quality, and customer value. We also made progress with Aquanaut and our autonomous manipulation capabilities. Aquanaut Vehicle One has now completed more than 500 hours of in-water testing on client-driven workflows and more than 200 successful vertical inspection behaviors on mooring lines.

Speaker #4: We also continued advancing Nauticus toolkit, our proprietary autonomy software platform. Nauticus toolkit is central to our strategy because it allows us to create value, not only through services, but also through software licensing, technology-enabled services, and deployment on customer-owned vehicles.

Speaker #4: During the quarter, we continued integrating Nauticus toolkit across our subsea systems along with new high-definition camera systems and other advanced sensors designed to improve navigation efficiency, data quality, and customer value.

Speaker #4: We also made progress with Aquanaut and our autonomous manipulation capabilities. Aquanaut Vehicle 1 is now completed more than 500 hours of in-water testing on client-driven workflows and more than 200 successful vertical inspection behaviors on mooring lines.

Speaker #4: These are important steps towards offshore deployment, and the data from that testing continues to guide our software and engineering improvements. International expansion also remains another important part of our growth strategy.

John Gibson: These are important steps towards offshore deployment, and the data from that testing continues to guide our software and engineering improvements. International expansion also remains another important part of our growth strategy. During the quarter, we continued advancing our UAE and broader GCC initiative, including work toward a long-term operational and commercial presence in Ras Al Khaimah. That region represents a meaningful opportunity for Nauticus across offshore energy, technology licensing, manufacturing support, and strategic partnerships. Finally, we're pleased to welcome Brian Allen as Chief Revenue Officer. Brian brings nearly two decades of subsea robotics, autonomy, and commercial leadership experience. His focus is clear: convert customer interest into revenue opportunities across offshore services, software licensing, hardware sales, defense, and international markets.

Speaker #4: During the quarter, we continued advancing our UAE and broader GCC initiative, including work toward a long-term operational and commercial presence in Ras Al Khaimah.

Speaker #4: That region represents a meaningful opportunity for Nauticus across offshore energy, technology licensing, manufacturing support, and strategic partnerships. Finally, we're pleased to welcome Brian Allen as Chief Revenue Officer.

Speaker #4: Brian brings nearly two decades of subsea robotics, autonomy, and commercial leadership experience. His focus is clear, convert customer interest into revenue opportunities across offshore services, software licensing, hardware sales, defense, and international markets.

Speaker #4: So, while Q1 reflected normal offshore seasonality, we believe Nauticus exited the quarter better prepared, more focused on commerciality, and positioned to pursue a strong opportunity set through the balance of the year.

John Gibson: While Q1 reflected normal offshore seasonality, we believe Nauticus exited the quarter better prepared, more focused on commerciality, and positioned to pursue a strong opportunity set through the balance of the year. With that, I'm gonna turn it over to Jimena to walk you through the financials. Jimena.

Speaker #4: With that, I'm going to turn it over to Jimena to walk you through the financials. Jimena.

Speaker #5: Thank you, John. And good morning, everyone. I will now discuss our financial results for the quarter of for first quarter of 2026. During our first quarter, we remained focused on preserving liquidity, maintaining stockholder equity, and securing financial resources necessary to support the company.

Jimena Begaries: Thank you, John, and good morning, everyone. I will now discuss our financial results for Q1 2026. During our Q1, we remained focused on preserving liquidity, maintaining stockholder equity, and securing financial resources necessary to support the company. Revenue for Q1 was $0.2 million, which is down $0.9 million sequentially and essentially flat from the same quarter last year. This performance is consistent with the seasonal trends we typically experience in Q1 and reflects the overall market John just discussed. Operating expenses for the quarter were $5.8 million, which is down $0.2 million from Q1 2024 and down $0.8 million sequentially.

Speaker #5: Revenue for the first quarter was $0.2 million, which is down $0.9 million sequentially and essentially flat from the same quarter last year. This performance is consistent with the seasonal trends we typically experience in the first quarter and reflects the overall market downturn just discussed.

Speaker #5: Operating expenses for the quarter were 5.8 million dollars, which is down 0.2 million from Q1 2024 and down 0.8 million sequentially. TNA costs for the quarter were 3.2 million dollars, which is an improvement of 1.2 million compared to Q1 2025.

Jimena Begaries: G&A costs for the quarter were $3.2 million, which is an improvement of $1.2 million compared to Q1 2025. Sequentially, G&A has increased $0.6 million due to the non-recurring legal fee credit received in Q4 2025. Net loss for the quarter was $9.3 million. This is a $9.9 million decrease in net loss sequentially and a $1.7 million increase in net loss from Q1 2025. These variations, both positive and negative, are largely related to the changes in fair value of our debt instruments.

Speaker #5: Sequentially, TNA has increased 0.6 million dollars due to the non-recurring legal fee credit received in Q4 2025. Net loss for the quarter was 9.3 million dollars.

Speaker #5: This is a 9.9 million decrease in net loss sequentially and a 1.7 million increase in net loss from Q1 2025. This variations both positive and negative are largely related to the changes in fair value of our debt instruments.

Speaker #5: Adjusted net loss for the quarter was $6.4 million, compared to $10.4 million for the fourth quarter of 2025 and $6.6 million in Q1 2025.

Jimena Begaries: Adjusted net loss for the quarter was $6.4 million compared to $10.4 million for Q4 2025 and $6.6 million in Q1 2025. Cash at the end of Q1 2026 was $5.9 million compared to $7.6 million at the end of 2025. This decrease is related to cash used in operating activities. As we move into Q2, we remain disciplined in our approach to managing the business and preserving financial flexibility. I will now pass the call back to John.

Speaker #5: Cash at the end of Q1 2026 was $5.9 million compared to $7.6 million at the end of 2025. This decrease is related to cash used in operating activities.

Speaker #5: As we move into the second quarter, we remain disciplined in our approach to managing the business and preserving financial flexibility. I will now pass the call back to John.

Speaker #4: Thank you, Jimena. Now I'm going to turn it over to our leads that are working on international expansion, revenue opportunities. Jason, close will be first with updates on our UAE expansion.

John Gibson: Thank you, Jimena Begaries. Now I'm going to turn it over to our leads that are working on international expansion revenue opportunities. Jason Close will be first with updates on our UAE expansion. Jason?

Speaker #4: Jason.

Speaker #6: Thank you, John. Since our last call, we've been focused on moving from strategy into execution around our UAE and broader GCC expansion efforts. While the current regional security environment has limited our ability to travel in person, it is not slowed our progress.

Jason Close: Thank you, John. Since our last call, we've been focused on moving from strategy into execution around our UAE and broader GCC expansion efforts. While the current regional security environment has limited our ability to travel in person, it has not slowed our progress. In fact, we've continued to advance the foundational work needed to establish a presence in Ras Al Khaimah and support long-term growth in the region. Over the past several weeks, we've been actively engaged in identifying a location in Ras Al Khaimah that can support our long-term operations and commercial goals. We've also engaged a UAE-based marketing agency to support the next phase of our market activation efforts. That work includes improvements to our website, branding, and go-to-market materials, both for the regional market and more broadly as we continue refining how we position the Nauticus portfolio globally.

Speaker #6: In fact, we've continued to advance the foundational work needed to establish a presence in Ras Al Khaimah and support long-term growth in the region.

Speaker #6: Over the past several weeks, we've been actively engaged in identifying a location in Ras Al Khaimah that can support our long-term operations and commercial goals.

Speaker #6: We've also engaged a UAE-based marketing agency to support the next phase of our market activation efforts. That work includes improvements to our website, branding, and go-to-market materials, both for the regional market and more broadly as we continue refining how we position the Nauticus portfolio globally.

Speaker #6: At the same time, we are seeing that business opportunities in the regions continue to move forward and mature, even with the broader uncertainty. The current environment has also reinforced the relevance of our solution for government and defense-related applications, particularly where unmanned systems, remote operations, and increased operational safety are a priority.

Jason Close: At the same time, we are seeing that business opportunities in the regions continue to move forward and mature, even with the broader uncertainty. The current environment has also reinforced the relevance of our solution for government and defense-related applications, particularly where unmanned systems, remote operations, and increased operational safety are a priority. We're being careful and disciplined in how we approach those opportunities, but we believe our portfolio is well-aligned with several of the region's long-term needs. In parallel, we're seeing increased interest outside the GCC region as we continue expanding our international commercial engagement efforts. In addition, we continue to make progress in our collaboration with Forum Energy Technologies around the Olympic Arm platform. During Q1, the team completed a review of the existing design documents, and in Q2, we expect to begin collaborative testing activities around the current prototype.

Speaker #6: We are being careful and disciplined in how we approach those opportunities, but we believe our portfolio is well aligned with several of the region's long-term needs.

Speaker #6: In parallel, we're seeing increased interest outside the GCC region as we continue expanding our international commercial engagement efforts. In addition, we continue to make progress in our collaboration with Form Energy Technologies around the Olympic Arm platform.

Speaker #6: During the first quarter, the team completed a review of the existing design documents and in the second quarter, we expect to begin collaborative testing activities around the current prototype.

Speaker #6: This remains an important opportunity to further validate our technology and expand its application through established industry channels. Overall, we continue to see long-term potential in these international markets where we're focused on executing our growth strategy in a disciplined and structured way through 2026.

Jason Close: This remains an important opportunity to further validate our technology and expand its application through established industry channels. Overall, we continue to see long-term potential in these international markets. We're focused on executing our growth strategy in a disciplined and structured way through 2026. With that, I will now hand the call over to Steve Walsh, our sales lead, for an update.

Speaker #6: With that, I will now hand the call over to Steve Walsh, our sales lead, for an update.

Speaker #4: Thank you, Jason, and good morning. As expected, Q1 sales reflected the seasonal softness that has traditionally impacted operations across the Gulf of America during the winter months.

Steve Walsh: Thank you, Jason. Good morning. As expected, Q1 sales reflected the seasonal softness that has traditionally impacted operations across the Gulf of America during the winter months. Weather conditions limited offshore activity throughout much of the quarter, and lower oil prices contributed to a more cautious operating environment early in the year. More recently, however, we've seen energy markets begin to strengthen, driven in part by geopolitical instability and the ongoing conflict involving Iran. Despite the slower start to the year, we remain very encouraged by the outlook of the remainder of 2026. We are seeing strong momentum in upcoming offshore activity, with several new contracts recently commencing across both offshore oil and gas sector and the offshore wind industry. This diversification continues to position us well as demand for subsea services expands across multiple energy markets.

Speaker #4: Weather conditions limited offshore activity throughout much of the quarter and lower oil prices contributed to a more cautious operating environment early in the year.

Speaker #4: More recently, however, we've seen energy markets begin to strengthen, driven in part by geopolitical instability and the ongoing conflict involving Iran. Despite the slower start to the year, we remain very encouraged by the outlook for the remainder of 2026.

Speaker #4: We are seeing strong momentum in upcoming offshore activity with several new contracts recently commencing across both offshore oil and gas sector and the offshore wind industry.

Speaker #4: This diversification continues to position us well as demand for subsea services expands across multiple energy markets. In addition, we are continuing to actively pursue project opportunities along both US coasts throughout the Gulf of America and in select international markets.

Steve Walsh: In addition, we are continuing to actively pursue project opportunities along both US coasts throughout the Gulf of America and in select international markets. We are also expanding our focus within the defense sector, where we believe our subsea capabilities, operational experience, and technology platforms position us well for future opportunities. To that end, we're excited to be deploying resources in early June in support of a large defense contractor, the first work of this variety in over a year. Importantly, our team used the slower offshore period productively. During the quarter, we completed major annual maintenance and refurbishment activities across several of our ROV systems. These efforts ensure that our fleet is operating at peak efficiency and reliability as we move into what we expect will be a significantly more active 2026 operating season. We also continue to make meaningful progress on the technology front.

Speaker #4: We are also expanding our focus within the defense sector, where we believe our subsea capabilities, operational experience, and technology platforms position us well for future opportunities.

Speaker #4: To that end, we're excited to be deploying resources in early June in support of a large defense contractor, the first work of this variety in over a year.

Speaker #4: Importantly, our team used the slower offshore period productively, during the quarter, we completed major annual maintenance and refurbishment activities across several of our ROV systems.

Speaker #4: These efforts ensure that our fleet is operating at peak efficiency and reliability as we move into what we expect will be a significantly more active 2026 operating season.

Speaker #4: We also continue to make meaningful progress on the technology front. Nauticus Toolkit, our proprietary software platform, along with new perception capabilities and other advanced sensor technologies, are being successfully integrated across our subsea systems.

Steve Walsh: Nauticus ToolKITT, our proprietary software platform, along with new perception capabilities and other advanced sensor technologies, are being successfully integrated across our subsea systems. These enhancements improve operational capability, data quality, and overall client value while further differentiating us in an increasingly competitive subsea vehicle market. As the year progresses, we believe these operational improvements, combined with strengthening offshore demand, geographic expansion, continued technology integration, and growing exposure to the defense-related opportunities, position the company well for growth and long-term success. Thank you again for your continued support and confidence in our team. With that, I'll turn it over to Brian Allen, our revenue lead, for his thoughts on 2026.

Speaker #4: These enhancements improve operational capability, data quality, and overall client value while further differentiating us in an increasingly competitive subsea vehicle market. As the year progresses, we believe these operational improvements combined with strengthening offshore demand and geographic expansion continue technology integration and growing exposure to the defense-related opportunities position the company well for growth and long-term success.

Speaker #4: Thank you again for your continued support and confidence in our team. With that, I'll turn it over to Brian Allen, our revenue lead for his thoughts on 2026.

Speaker #5: Thank you, Steve, and good morning, everyone. I'm Brian Allen, the new Chief Revenue Officer at Nauticus, and this is my first earnings call with the company, so I want to be straightforward with you about how I see things and what I intend to do.

Brian Allen: Thank you, Steve. Good morning, everyone. I'm Brian Allen, the new Chief Revenue Officer at Nauticus, and this is my first earnings call with the company, so I want to be straightforward with you about how I see things and what I intend to do.

Speaker #5: You've heard about the weather conditions that brought about our Q1 results, and it's going to be my job to broaden our revenue streams across technology, robotic hardware, and services in other global locations that help smooth this and move us to more of a rapid growth profile.

Brian Allen: You've heard about the weather conditions that brought about our Q1 results. It's going to be my job to broaden our revenue streams across technology, robotic hardware, and services in other global locations that help smooth this and move us to more of a rapid growth profile. Briefly on my background. I spent the last decade building a subsea robotics and AI company called Beam from scratch to around 230 people, growing revenue at 60% to 100% year-on-year and creating an $840 million sales pipeline that brought in $90 million of sales and order book in my final 12 months. We sold autonomous inspection tech and tech-enabled services into the exact same markets Nauticus Robotics operates in.

Speaker #5: Briefly on my background, I spent the last decade building a subsea robotics and AI company called Beam from scratch to around 230 people. Growing revenue at 60 to 100 percent year on year and creating an $840 million sales pipeline that brought in $90 million in sales and order book in my final 12 months.

Speaker #5: We sold autonomous inspection tech and tech-enabled services into the exact same markets Nauticus operates in. Before that, I spent 10 years at sea, starting off piloting ROVs, then supervising and managing them to build oil fields and wind farms.

Brian Allen: Before that, I spent 10 years at sea, starting off piloting ROVs, then supervising and managing them to build oil fields and wind farms. I know these customers, I know this market, and I know what it takes to sell advanced autonomy into exactly this industry. People have asked me why I chose Nauticus, and the honest answer is two things I found during my technical diligence that I have not seen elsewhere in any other marine business. First, Nauticus ToolKITT is the most advanced autonomy software available to purchase today for subsea vehicles. It is the leader in the category that matters commercially, a deployable, supported product that customers can run on their existing vehicles today, and I see several near-term opportunities in the market for this software. Software sales are our clearest route to smoothing seasonality, as they are not tied to weather.

Speaker #5: So I know these customers; I know this market; and I know what it takes to sell advanced autonomy into exactly this industry. People have asked me why I chose Nauticus, and the honest answer is two things.

Speaker #5: I found during my technical diligence that I have not seen elsewhere in any other marine business. First, Nauticus Toolkit is the most advanced autonomy software available to purchase today for subsea vehicles.

Speaker #5: It is the leader in the category that matters commercially, a deployable, supported product that customers can run on their existing vehicles today and I see several near-term opportunities in the market for this software.

Speaker #5: Software sales are our clearest route to smoothing seasonality as they are not tied to weather. Second, and this is what really changed my mind, the company's work on autonomous manipulator control.

Brian Allen: Second, this is what really changed my mind, the company's work on autonomous manipulator control. The IP here is potentially 5 years ahead of the closest competition. When you consider how much of the offshore inspection, intervention, and repair market is constrained by pilot ability and vessel costs, reliable autonomous manipulation represents a very significant commercial opportunity. Bringing that to market alongside the core Nauticus ToolKITT platform and offering it with Aquanaut is where I see the real step change for this business. On what I intend to do. My first priority is generating early commercial wins that rebuild market confidence, and I've already identified a small number of near-term Nauticus ToolKITT opportunities and potential high $7, low 8-figure Aquanaut services tender from my own network that I intend to move on quickly.

Speaker #5: The IP here is potentially five years ahead of the closest competition. When you consider how much of the offshore inspection, intervention, and repair market is constrained by pilot ability and vessel costs, reliable autonomous manipulation represents a very significant commercial opportunity.

Speaker #5: Bringing that to market alongside the core Nauticus Toolkit platform and offering it with Aquanaut is where I see the real step change for this business.

Speaker #5: On what I intend to do, my first priority is generating early commercial wins that rebuild market confidence, and I've already identified a small number of near-term Nauticus Toolkit opportunities and potential high seven, low eight figure Aquanaut services tender from my own network that I intend to move on quickly.

Speaker #5: Beyond that, I'm building the marketing function and sales infrastructure to drive tech sales, technology-driven services, and Aquanaut hardware sales globally. A key part of my role is generating clear commercial signals from the market that a mean and the engineering team can use to direct development efforts.

Brian Allen: Beyond that, I'm building the marketing function and sales infrastructure to drive tech sales, technology-driven services, and Aquanaut hardware sales globally. A key part of my role is generating clear commercial signals from the market that Ameen and the engineering team can use to direct development efforts. The closer we tie what we build to what our customers are telling us they need, the faster the technology converts into revenue. I operate capital efficiently. That is a necessity in this market, and it's how I've always built businesses. I'm already designing systems that use AI to automate parts of our sales and marketing function, which allows us to strengthen commercial capability rapidly at a fraction of what a traditional approach would cost with fewer headcount. In a company at our stage, every dollar of commercial spend needs to work hard. I want to close with this.

Speaker #5: The closer we tie what we build to what our customers are telling us they need, the faster the technology converts into revenue. I operate Capsule efficiently.

Speaker #5: That is a necessity in this market, and it's how I've always built businesses. I'm already designing systems that use AI to automate parts of our sales and marketing function.

Speaker #5: Which allows us to strengthen commercial capability rapidly at a fraction of what a traditional approach would cost, with fewer headcount. In a company at our stage, every dollar of commercial spend needs to work hard.

Speaker #5: I want to close with this. I did have other opportunities on the table, and I chose Nauticus because the technology here is genuinely differentiated, which is very rare in this industry.

Brian Allen: I did have other opportunities on the table, and I chose Nauticus because the technology here is genuinely differentiated, which is very rare in this industry. The team here is strong, and I see an asymmetric opportunity that is worth committing to. I've taken a shareholding as part of my compensation because I want my interests aligned with all of yours. This isn't spin. I would not have joined if I did not see a bright future for this business. I'm looking forward to updating you all on our commercial progress over the coming quarters. I'll hand back to you, John.

Speaker #5: The team here is strong, and I see an asymmetric opportunity that is worth committing to. I've taken a shareholding as part of my compensation because I want my interests aligned with all of yours, and this isn't spin.

Speaker #5: I would not have joined if I did not see a bright future for this business. I'm looking forward to updating you all on our commercial progress over the coming quarters.

Speaker #5: And I'll hand back to you, John.

Speaker #6: Thank you, Brian. We're excited to have you here. We recognize that Q1 revenue reflects a slower seasonal period, but we're encouraged by the direction of the business.

John Gibson: Thank you, Brian. We're excited to have you here. We recognize that Q1 revenue reflects a slower seasonal period, but we're encouraged by the direction of the business. Our fleet readiness has improved. Our technology continues to advance. Nauticus ToolKITT is becoming a clearer commercial opportunity and gives the ability to offset some of the seasonality. Our UAE and GCC expansion efforts are moving from strategy into execution. Most importantly, we're sharpening our focus on revenue. With Brian joining the team, a stronger commercial structure, and continued opportunities across software, offshore energy, defense, international markets, software licensing, and the hardware sales that we believe Nauticus is positioned to build momentum through the remainder of 2026. We appreciate the continued support of our shareholders, our customers, our partners, and particularly our employees. We look forward to updating you on our progress in the quarters ahead.

Speaker #6: Our fleet readiness is improved. Our technology continues to advance. Nauticus Toolkit is becoming a clearer commercial opportunity and gives us the ability to offset some of the seasonality and our UAE and GCC expansion efforts for moving from strategy into execution.

Speaker #6: Most importantly, we're sharpening our focus on revenue. With Brian joining the team, a stronger commercial structure, and continued opportunities across software, offshore energy, defense, international markets, software licensing, and the hardware sales, that we believe Nauticus is positioned to build momentum through the remainder of 2026.

Speaker #6: We appreciate the continued support of our shareholders, our customers, our partners, and particularly our employees. We look forward to updating you on our progress in the quarters ahead.

Speaker #6: With that operator, I'd like to open up the line for questions.

John Gibson: With that, operator, I’d like to open up the line for questions.

Speaker #7: We will now begin the question and answer session. If you would like to ask a question, please press star one to raise your hand.

Speaker #7: To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality.

Speaker #7: If you are muted locally, please remember to unmute your device. Your first question comes from the line of Peter Gastreich with Water Tower Research.

Operator: Your first question comes from the line of Peter Gastreich with Water Tower Research. Peter, your line is open. Please go ahead.

Speaker #7: Peter, your line is open. Please go ahead.

Speaker #8: Thank you very much. So good morning and thanks for taking my questions. It's great to see the new senior hire with Brian and other talent that's been coming into Nauticus recently and really looking forward to tracking the team's progress throughout the rest of this year.

Peter Gastreich: Thank you very much. Good morning, and thanks for taking my questions. It's great to see the new senior hire with Brian and other talent that's been coming into Nauticus recently. I'm really looking forward to tracking the team's progress, you know, throughout the rest of this year. My first question, just kicking off with the revenue trajectory. Yeah, Q1, clearly seasonal softness, which should be expected, but it does look a little bit softer than expected. Could you talk about your strategy to reduce those seasonal swings in your business going forward? For example, how software would play a role in that?

Speaker #8: But my first question, just kicking off with the revenue trajectory, Q1 clearly seasonal softness, which should be expected, but it does look a little bit softer than expected.

Speaker #8: Could you talk about your strategy to reduce those seasonal swings in your business going forward? For example, how software would play a role in that.

Speaker #8: And also in terms of cadence in the Q2 and second half of the year, anything you can share about key revenue drivers there would be helpful.

Peter Gastreich: Also in terms of, you know, cadence into Q2 and H2 of the year, anything you can share about, you know, key revenue drivers there would be helpful. Thank you.

Speaker #8: Thank you.

Speaker #6: Oh, I appreciate the question, Peter. It really straightforward as to how we get balance on revenue, and that is we have to begin to do two things.

John Gibson: Appreciate the question, Peter. It really straightforward as to how we get balance on revenue, and that is we have to begin to do two things. Number one is we have to sell Toolkit, and I'll let Brian comment on that in just a moment. That eliminates sort of the seasonality and the weather-related risk that you have on revenues. The second thing we need to do is to have some international exposure so that we're not locked into the seasonality of the Gulf of Mexico or North America. I think those two strategies executed well will cause us to even out and the revenue profile for the company.

Speaker #6: Number one is, we have to sell Toolkit and Outlet. Brian commented on that just a moment ago. That eliminates sort of the seasonality and the weather-related risk that you have on revenues.

Speaker #6: The second thing we need to do is to have some international exposure so that we're not locked into the seasonality of the Gulf of Mexico or North America.

Speaker #6: So I think those two strategies executed well will cause us to even out the revenue profile for the company. And so it's on the software side. Brian, is there any comments you'd want to make on software and how you think that'll eliminate the seasonality and the softness in North America?

John Gibson: It's on the software side, Brian, is there any comments you'd wanna make on software and how you think, that'll eliminate the seasonality and the softness in?

Brian Allen: Yeah, of course.

John Gibson: North America?

Speaker #8: Yeah, of course. So I mean, I guess the fastest lever that we've got on toolkit sales is basically one of the fastest levers that we have in software licensing toolkit sales.

Brian Allen: I mean, I guess the fastest lever that we've got on Toolkit sales is basically, well, the fastest lever that we have is software licensing Toolkit sales. The product's mature. It's already deployed on third-party platforms, including the Comanche and VideoRay Defender, and it's outperformed incumbent solutions. One of the great things with software sales is they're year-round. Like, these devices, they're essentially, they're used year-round. Licenses are charged year-round. In terms of smoothing profiles, it's the clearest route to generating a year-round revenue source that's smoother than the lumpiness that you see in offshore services type contracts.

Speaker #8: The product's mature. It's already deployed on third-party platforms, including the Comanche NVIDIA Ray Defender, and it's outperformed incumbent solutions. One of the great things with software sales is they're year-round.

Speaker #8: These devices, they're essentially that they're used year-round. Licenses are charged year-round. And so in terms of smoothing profiles, it's the clearest route to generating a year-round revenue source that's smoother than the lumpiness that you see in offshore services type contracts.

Speaker #6: Yeah, I would have also thought we'd have been a little further ahead on activities in the GCC. But the conflict has prevented us ramping as rapidly as we want.

John Gibson: Yeah. I would, I would've also thought we'd have been a little further ahead on activities in the GCC, but the conflict has prevented us ramping as rapidly as we want. It's still going well, and we've got an excellent opportunity there, and we're excited about it. I'm looking forward to going back over to UAE here probably mid-late June and continuing to develop that opportunity. The conflict there slowed that down a bit, but it has not, we've lost no momentum there, so we're excited about working with them.

Speaker #6: It's still going well. And we've got an excellent opportunity there and we're excited about it. I'm looking forward to going back over to UAE here probably mid to late June.

Speaker #6: And continuing to develop that opportunity. But the conflict there slowed that down a bit, but we have lost no momentum there. So we're excited about working with them.

Speaker #8: Now, it's still early stages at this particular point. I mean, I've been with the company for less than a week now. But I've got a considerable number of contacts already in the industry, who I've already reached out to.

Brian Allen: Now, it's still early stages at this particular point. I mean, I've been with the company for less than a week now, but I've got a considerable number of contacts already in the industry who I've already reached out to, and there is interest in ToolKITT. There's calls there for me to make, there's meetings for me to have, and there's a market which we can sell into, which is interested. I think ToolKITT's gonna be pretty good for our future. It's just a case of how quickly we can convert that pipeline.

Speaker #8: And there is interest in toolkit. So there's calls there for me to make. There's meetings for me to have. And there's a market which we can sell into.

Speaker #8: Which is interested. So I think toolkit is going to be pretty good for our future. It's just a case of how quickly we can convert that pipeline.

John Gibson: Yeah. Next question, Peter.

Speaker #6: Next question, Peter. Okay, thank you. So with the you have a Northeast ROV fleet, which would be a good proof point for a toolkit.

Peter Gastreich: Okay. Thank you. With the, you know, you have a Northeast ROV, you know, fleet, which would be a good, you know, proof point for Toolkit. Has that been helpful for you in terms of your licensing discussions, and where do those stand?

Speaker #6: Has that been helpful for you in terms of your licensing discussions and where do those stand?

John Gibson: It, you know, this, it's another really good question. You can hardly sell Toolkit running on ROVs unless you eat your own dog food and put it on your own ROVs. We're excited to have it deployed there. That's also the best testing platform so that we know the quality of the product that we're sending to customers. We're very optimistic about the proof, showing them the work that we're doing so that they can see the productivity enhancements that you would get from deploying this type of autonomy onto the current and existing ROV fleet. It gives them the opportunity to either get greater utilization out of the assets they have, but it also keeps them from having to buy additional ROVs potentially.

Speaker #3: It's another really good question. You can hardly sell toolkit running on ROVs unless you eat your own dog food and put it on your own ROVs.

Speaker #3: And so we're excited to have it deployed there. That's also the best testing platform so that we know that the quality of the product that we're sending to customers.

Speaker #3: We're very optimistic about the proof. Showing them the work that we're doing, so that they can see the productivity enhancements that you would get from deploying this type of autonomy onto the current and existing ROV fleet.

Speaker #3: It gives them the opportunity to either get greater utilization out of the assets they have. But it also keeps them from having to buy additional ROVs, potentially.

Speaker #3: This is a great way to increase the capacity of your fleet if you have 10. And you can get 20-plus percent. That's 2 you don't need to buy.

John Gibson: This is a great way to increase the capacity of your fleet. If you have 10 and you can get 20%+, that's 2 you don't need to buy. I think it's a great financial opportunity for the ROV commercial operators to improve the utilization of their fleets without having to increase the number of assets. Putting it on our own ROV is going to demonstrate and quantify that for ROV operators, and I think improves our chances of selling the software. Yes, it's up in the Northeast, and I think we should be posting some things about the success with it there as we go through this quarter, and we do this work.

Speaker #3: And so I think it's a great financial opportunity for the ROV commercial operators. To improve the utilization of their fleets without having to increase the number of assets.

Speaker #3: So putting it on our own ROV is going to demonstrate and quantify that for ROV operators. And I think improves our chances of selling the software.

Speaker #3: And so, yes, it's up in the Northeast. And I think we should be posting some things about the success with it there as we go through this quarter and we do this work.

Speaker #8: Okay, thanks. And Brian mentioned high 7, low 8 opportunity. Sorry, could you please just repeat that just to make sure I understand what you've mentioned there?

Peter Gastreich: Okay. Thanks. Brian mentioned the high 7, low 8 opportunity. Sorry, could you please just re-repeat that just to make sure I understand what you've mentioned there?

Speaker #6: Yeah, of course. So part of my remit is in expanding types of revenue across EMEA. And I'm looking at both technology-enabled services and also toolkit licensing.

Brian Allen: Yeah, of course. Part of my remit is in expanding types of revenue across EMEA, and I'm looking at both technology-enabled services and also ToolKITT licensing and the longer sales cycle Aquanaut hardware sales, which we need to build the infrastructure for to convert that. The two short-term opportunities are essentially, as I said before, software licensing and technology-enabled services. To do that, we have to start building a pipeline of potential services contracts in EMEA. Now these are similar to the work that's already taking place in North America. The company already has this capability. It's using similar assets. It's just geographically different.

Speaker #6: And the longer sales cycle Aquanet hardware sales, which we need to build the infrastructure for to convert that. So the two short-term opportunities are essentially I've said before, software licensing and technology-enabled services.

Speaker #6: And so, to do that, we have to start building a pipeline of potential services contracts in EMEA. Now, these are similar to the work that's already taking place in North America.

Speaker #6: The company already has this capability. It's using similar assets. It's just geographically different. So I'm starting to reach out to my network and bring in tendering opportunities of a similar nature to what the business can already complete in the US, albeit geographically closer to where I work from.

Brian Allen: I'm starting to reach out to my network and bring in tendering opportunities of a similar nature to what the business can already complete in the US, albeit geographically closer to where I work from.

Speaker #8: Okay, great. Thank you. This is kind of a bigger picture question here. I just want to ask to what extent the budget cycles are important for your emerging customer base.

Peter Gastreich: Okay, great. Thank you. This is kind of a bigger picture question here. Just wanna ask to what extent the, you know, budget cycles are important for your emerging customer base. You know, you have, for example, oil and gas, you know, certainly with government type work, you know, I would imagine we might be, you know, past the cycle for the new work in 2026. Is that the way to look at it, that we should be focused more on sort of the opportunities for 2027 now? Or do, you know, are there still kind of budgets for 2026 that your customers can work with?

Speaker #8: So you have, for example, oil and gas, certainly with government-type work. I would imagine we might be past the cycle for the new work in 2026.

Speaker #8: Is that the way to look at it? That we should be focused more on sort of the opportunities for 2027 now? Or do are there still kind of budgets for 2026 that your customers can work with?

Speaker #8: And then also in terms of those 2027 budgets, is there signaling or confirmation for that? Time with your customers, annual budget announcements? Just curious, broadly, how that works against your customer cycles.

Peter Gastreich: Then also, you know, in terms of those 2027 budgets. You know, is there, you know, signaling or confirmation for that, you know, time with your customers, annual budget announcements? Just curious, you know, broadly, how that works against your customer cycles.

John Gibson: Okay. A lot of questions in that question, Peter.

Speaker #3: So a lot of questions in that question, Peter. Let's see how we do here. The first one is I just got back from Washington.

Peter Gastreich: Sure.

Peter Gastreich: Let's see how we do here. The first one is, I just got back from Washington and was up marketing and doing business development on the government side. We're there, and we're doing a really good job, I think, of positioning what we can do and how we can influence a lot of government work. Not all I can talk about, but I would tell you that what we have to do is be there right now and marketing in order for us to be successfully included in the 2027 and 2028 budgets. It looks as though they're planning out 2 years ahead, you want to be there and be on the ticket for 2027, 2028. I think that we are very successful in positioning ourselves for that 2027, 2028 budget.

Speaker #3: And was up marketing and doing business development on the government side. We're re there. And we're doing a really good job, I think, of positioning what we can do and how we can influence a lot of government work, not all I can talk about.

Speaker #3: But I would tell you that what we have to do is be there right now and marketing, in order for us to be successfully included in the '27 and '28 budgets. It looks as though they're planning out two years ahead.

Speaker #3: And so you want to be there and be on the ticket for '27, '28. And I think that we are very successful in positioning ourselves for that '27, '28 budget.

Speaker #3: The 26 budget will require them having probably a vendor default or a vendor issue or an emergency that we can fill in for. And we're positioned to go in and work with them in the event that they have an immediate need.

John Gibson: The 2026 budget will require them having probably a vendor default or a vendor issue or an emergency that we can fill in for. We're positioned to go in and work with them in the event that they have an immediate need. I think the real opportunity for us is to be contracted for the 2027, 2028 work. We need to be doing that now. That's what we are doing. We've finally gotten all of the products ready to go in and just bid commercial work at that level and to be considered a vendor for the 2027, 2028 season. A very positive outcome for us. In terms of even our existing customers, we continue in terms of oil and gas. There's still a lot of opportunity.

Speaker #3: But I think the real opportunity for us is to be contracted for the 27, 28 work. And we need to be doing that now.

Speaker #3: And that's what we are doing with. We finally gotten all of the products ready to go in and just bid commercial work at that level.

Speaker #3: And to be considered a vendor for the 27, 28 season. So very positive outcome for us. In terms of even our existing customers, we continue in terms of oil and gas.

Speaker #3: There's still a lot of opportunity. There's going to be a lot of transactional and call-out work through the rest of '26. I think oil and gas prices are going to be stable at where they are to higher.

John Gibson: There's gonna be a lot of transactional and call-out work through the rest of 2026. I think oil and gas prices are gonna be stable at where they are to higher. I would not anticipate opening up the Straits of Hormuz to drop the prices, but only for a short period of time until we understand the damage to the infrastructure that has occurred during the conflict. Look for longer-term, higher oil prices. As a consequence, I think you're gonna see the activity continue to ramp in the oil and gas sector, particularly in the Gulf of America and around the world offshore, as those are the least expensive barrels to produce. It's a tremendous opportunity for us.

Speaker #3: I would not anticipate opening up the Straits of Hormuz to drop the prices. But only for a short period of time until we understand the damage to the infrastructure that has occurred during the conflict.

Speaker #3: And so, look for longer-term, higher oil prices. And as a consequence, I think you're going to see the activity continue to ramp in the oil and gas sector, particularly in the Gulf of America and around the world offshore.

Speaker #3: As those are the least expensive barrels to produce. And so it's tremendous opportunity for us.

Speaker #8: Now, to that, I have less history with Nauticus. But I can talk about the industry generally from my previous work, doing similar work with similar vehicles in a similar environment.

Brian Allen: May I add to that?

John Gibson: Yeah.

Brian Allen: I have less history with Nauticus, but I can talk about the industry generally from my previous work doing similar work with similar vehicles in a similar environment. Compared to contracted position from this particular point in the year, you have a certain ability to forecast revenue for the rest of the year, but that never includes spot work and emergency work. In my previous company, from where we are today, we typically see a 30% to 40% uplift based on forecast revenue. Now, that doesn't directly translate to Nauticus because we're in North America, not EMEA, but you generally see a significant increase in revenue in the latter quarters based on spot work and the spot work market.

Speaker #8: And compared to contracted position from this particular point in the year, you have a certain ability to forecast revenue for the rest of the year.

Speaker #8: But that never includes spot work and emergency work. And in my previous company, from where we are today, we typically see a 30% to 40% uplift based on forecast revenue.

Speaker #8: Now, that doesn’t directly translate to Nauticus because we’re in North America, not EMEA. But you generally see a significant increase in revenue in the latter quarters based on spot work.

Speaker #8: And the spot work market.

John Gibson: Yeah. Another unintended consequence of this conflict is I think you're gonna see a strengthening emphasis on wind energy and the maintenance of the wind farms offshore as people try to offset higher oil and gas prices. Our position in doing the wind work in the Northeast is gonna be very advantageous to us. Steve's got tremendous connections there, as does Brian. I think we can pursue quite a bit of the offshore wind farm activity, which people will focus on with the price that oil and gas is gonna hold for the longer period. These alternative offshore energy producers are gonna, I think, see quite a lot of activity.

Speaker #6: Another unintended consequence of this conflict is I think you're going to see a strengthening emphasis on wind energy and the maintenance of the wind farms offshore as people try to offset higher oil and gas prices.

Speaker #6: So our position in doing the wind work in the Northeast is going to be very advantageous to us. And Steve's got tremendous connections there as does Brian.

Speaker #6: And so I think we can pursue quite a bit of the offshore wind farm activity, which people will focus on with the price that oil and gas is going to hold for the longer period these alternative offshore energy producers are going to, I think, see quite a lot of activity.

Speaker #8: Okay, great. Thank you. I'll just have one more question here before getting back in the queue. You have Cass sitting at close to 6 million.

Peter Gastreich: Okay. Great. Thank you. I'll just have one more question here before getting back in the queue. You have cash sitting at close to $6 million and continued to burn. How should investors think about your funding runway over the next 2 to 3 quarters?

Speaker #8: And continue to burn. How should investors think about your funding runway over the next two to three quarters?

Speaker #3: How many? You're going to answer? I mean, right now, Q1 was light on cash flow as a result. We've looked towards Q2, Q3 as to when the revenue picks up and the collections.

John Gibson: Hamed, you wanna answer? Right now, Q1 was light on cash flow. As a result, we've, you know, we'd look towards Q2, Q3 as to when the revenue picks up and the collections. Cash flow is always an issue for a company like this because collections occur after the work is done. We probably continue to look at using the ATM, likely. We'll also use the ELOC, and we have tremendous support from our current lenders. We're not concerned about the availability of the cash. We take as little as we can. As we go forward, our goal here is to get the cash flow break even and not have to use any other method that might dilute shareholders or would give us long-term obligations.

John Gibson: Hamed, you wanna answer?

Jimena Begaries: Right now, Q1 was light on cash flow. As a result, we've, you know, we'd look towards Q2, Q3 as to when the revenue picks up and the collections. Cash flow is always an issue for a company like this because collections occur after the work is done. We probably continue to look at using the ATM, likely. We'll also use the ELOC, and we have tremendous support from our current lenders. We're not concerned about the availability of the cash. We take as little as we can. As we go forward, our goal here is to get the cash flow break even and not have to use any other method that might dilute shareholders or would give us long-term obligations.

Speaker #3: Cash flow is always an issue for a company like this because collections occur after the work is done. So we probably continue to look at using the ATM lightly.

Speaker #3: We'll also use the e-lock. And we have tremendous support from our current lenders. And so we're not concerned about the availability of the cash.

Speaker #3: We take as little as we can. As we go forward, our goal here is to get to cash flow breakeven and not have to use any other method that might dilute shareholders or would give us long-term obligations.

Speaker #3: But the ability to withstand this long-term and to get this company where it needs to be as we go into 27, 28 is there.

John Gibson: The ability to withstand this long term and to get this company where it needs to be as we go into 2027, 2028 is there. We're focused on creating great products, great results for customers, customer satisfaction, because this is a long-term company, not a short-term company. I think the funding that we need to get through 2026 is available to us, and we need to be self-funding as we go to the end of the year going into 2027.

Jimena Begaries: The ability to withstand this long term and to get this company where it needs to be as we go into 2027, 2028 is there. We're focused on creating great products, great results for customers, customer satisfaction, because this is a long-term company, not a short-term company. I think the funding that we need to get through 2026 is available to us, and we need to be self-funding as we go to the end of the year going into 2027.

Speaker #3: And so we're focused on creating great products, great results for customers, customer satisfaction, because this is a long-term company, not a short-term company. And I think the '26 is available to us.

Speaker #3: And we need to be self-funding as we go to the end of the year and going into 27.

Speaker #8: Great. Thanks very much for the taking my questions and the presentation from your team. I'll get back in the queue.

Peter Gastreich: Great. Thanks very much for taking my questions and the presentation from your team. I will get back in the queue.

Speaker #1: Your next question comes from the line of Alex Lattimore with Northwind. Alex, your line is open. Please go ahead. Alex, your line.

Operator: Your next question comes from the line of Alex LaMore with Northland. Alex, your line is open. Please go ahead.

Alex LaMore: The first one is.

Alex Latimore: The first one is.

Speaker #3: The first one is open.

Operator: Alex, your line is open. Oh, there you go.

Operator: Alex, your line is open.

Speaker #8: Can you hear me?

Alex LaMore: Can you hear me?

Alex Latimore: Can you hear me?

Speaker #3: Yeah, we can hear you, Alex.

John Gibson: Yeah, we can hear you, Alex.

Speaker #8: Oh, you can hear me? Okay. I'm not sure how much of that came through there, but I'm going to wrap two questions into my first one here.

Alex LaMore: Oh, you can hear me? Okay. I'm not sure how much came through there. I'm gonna wrap two questions into my first one here. The first one comes, I was wondering if you could describe the advancements that ToolKITT provides for subsea vehicles. If you have, this is still part of the first, if you have any metrics that show the autonomy benefits before and after the system is upgraded. The second part is, do you need to upfit customers' ROVs, or do they already have the necessary hardware to run ToolKITT?

Alex Latimore: Oh, you can hear me? Okay. I'm not sure how much came through there. I'm gonna wrap two questions into my first one here. The first one comes, I was wondering if you could describe the advancements that ToolKITT provides for subsea vehicles. If you have, this is still part of the first, if you have any metrics that show the autonomy benefits before and after the system is upgraded. The second part is, do you need to upfit customers' ROVs, or do they already have the necessary hardware to run ToolKITT?

Speaker #8: The first one comes I was wondering if you could describe the advancements that Toolkit provides for subsea vehicles. And then if you have this is still part of the first.

Speaker #8: If you have any metrics that show the autonomy benefits before and after the system is upgraded. And then the second part is, do you need to upfit customers' ROVs?

Speaker #8: Or do they already have the necessary hardware to run Toolkit?

Speaker #3: Well, to your knowledgeable questioner, this morning, first off, let's start with the last part. And then we'll go to the first part. In order for you to be able to control and navigate the vehicle, we have to install additional equipment on the ROV.

John Gibson: Well, you're a knowledgeable questioner this morning. First off, let's start from the last part, and then we'll go to the first part. In order for you to be able to control and navigate the vehicle, we have to install additional equipment on the ROV, typically an INS, so that we know exactly where the vehicle is, and we have the ability to control it. Yes, there's additional equipment that needs to be installed on the ROV. After the equipment's installed, what we have the ability to do then is to actually control the dynamic positioning of the vehicle so that we can get bottom locks and hold the vehicle at a specified height above the sea floor, and we're able to control it in terms of its navigation from point to point.

Speaker #3: Typically, an INS. So that we know exactly where the vehicle is. And we have the ability to control it. So yes, there's additional equipment that needs to be installed on the ROV.

Speaker #3: After the equipment's installed, what we have the ability to do then is to actually control the dynamic positioning of the vehicle so that we can get bottom locks and hold the vehicle at a specified height above the seafloor.

Speaker #3: And we're able to control it in terms of its navigation from point to point. Now, what we have done which, to the first part of your question, is the very first time that we use this, we actually did a quantitative test that I think we posted some short videos up on X.

John Gibson: Now, what we have done, which to the first part of your question is, the very first time that we used this, we actually did a quantitative test that I think we posted some short videos up on X. What we discovered was this. When you're doing autonomy on an ROV, and the way that we do it with ToolKITT, you don't know anything about current, but what you do is you optimize the path. The thrusters are continuing to operate at different levels in order to maintain a specified line. What it moves from one point to the other very efficiently in a straight line as it's continually adjusting all 8 thrusters in order to maintain connection and fit to that line.

Speaker #3: And what we discovered was this. When you're doing autonomy on an ROV and the way that we do it with Toolkit, you don't know anything about current.

Speaker #3: But what you do is you optimize the path. And so the thrusters are continuing to operate at different levels in order to maintain a specified line.

Speaker #3: And so it moves from one point to the other very efficiently in a straight line as it's continually adjusting all eight thrusters in order to maintain connection and fit to that line.

Speaker #3: When you're an ROV operator and you're steering it manually, you're trying to overcome the current. You're trying to pull the umbilical behind you, and the tether—everything is working in the current.

John Gibson: When you're an ROV operator and you're steering it manually, you're trying to overcome the current. You're trying to pull the umbilical behind you and the tether. Everything is working, and the currents, and you actually have different currents at different depths. It's a pretty complicated operation. They're using just the thrusters in order to try to move the vehicle from point to point. What we discovered was that there's at least a 20% reduction in efficiency and the inability to stay on that line when you're steering it manually. That has a lot of consequences. One, 20% increase in time as a result of doing it manually. Just convert that into 20% of a daily vessel rate, which is running anywhere from say, $25,000 to 150,000.

Speaker #3: And you actually have different currents at different depths. And so it's a pretty complicated operation. And they're using just the thrusters in order to try to move the vehicle from point to point.

Speaker #3: What we discovered was that there's at least a 20% reduction in efficiency and the inability to stay on that line when you're steering it manually.

Speaker #3: Now, that has a lot of consequences. One, 20% increase in time as a result of doing it manually. Just convert that into 20% of a daily vessel rate, which is running anywhere from, say, $25,000 to $150,000.

Speaker #3: So we'll say in the 40 to 50 thousand dollar a day range, you're saving $8,000 a day just on vessel time if you're at the 40,000 dollar range.

John Gibson: Let's say in the $40,000 to $50,000 a day range, you're saving $8,000 a day just on vessel time. If you're at the $40,000 range, that leaves you a lot of room for a software license on a day rate basis to improve the quality of those ROVs. The second thing that happens is when you're moving laterally, back and forth, and you're moving up and down, your data quality is not as consistent, and you're having to do a lot of post-processing on the data in order to get the data that's wanted and desired and the quality that you want. When you hold a fixed position above the bottom and you stay in a straight line, you get much higher data quality and a lot lower effort in terms of data processing after that.

Speaker #3: That leaves you a lot of room for a software license on a day-rate basis to improve the quality of those ROVs. The second thing that happens is, when you're moving laterally, back and forth, and you're moving up and down, your data quality is not as consistent.

Speaker #3: And you're having to do a lot of post-processing on the data in order to get the data that's wanted and desired, and the quality that you want.

Speaker #3: When you hold a fixed position above the bottom and you stay in a straight line, you get much higher data quality. And a lot lower effort in terms of data processing after that.

Speaker #3: So I think it brings advantages to data. It brings tremendous advantages to cost. It actually is improving the ROV operators themselves or some of our biggest advocates because it reduces what they spend a lot of time doing.

John Gibson: I think it brings advantages to data. It brings tremendous advantages to cost. It actually is improving, the ROV operators themselves are some of our biggest advocates because it reduces what they spend a lot of time doing. They want to concentrate on the task that they're trying to do in terms of inspection, looking at data, and observing the infrastructure as opposed to steering the vehicle. You're bringing concentration back to the ROV on the task at hand. There's a lot of benefits to it, and I think the adoption of this for the ROV world, I think, is gonna pick up dramatically. They have some of these capabilities on the heavy-duty ROVs, but as we're finding, nobody turns those on. They've never really concentrated on a commercial quality autonomy system for the ROV world.

Speaker #3: They want the concentrate on the task that they're trying to do in terms of inspection and looking at data and observing the infrastructure as opposed to steering the vehicle.

Speaker #3: So you're bringing concentration back to the ROV on the task at hand. So there's a lot of benefits to it. And I think the adoption of this for the ROV world, I think, is going to pick up dramatically.

Speaker #3: They have some of these capabilities on the heavy-duty ROVs. But as we're finding, nobody turns those on. They've never really concentrated on a commercial quality autonomy system for the ROV world.

Speaker #3: I think we're going to lead in that.

John Gibson: I think we're gonna lead in that.

Speaker #8: Okay. That's a great response. That's an amazing color there. Let's see. I guess while we're talking about the data, here, what is the most I guess if you could rank maybe the top two or three most valuable data points that you collect?

Alex LaMore: Okay. That's a great response. That's a amazing color there. Let's see. I guess while we're talking about the data here, I guess if you could rank maybe the top two or three most valuable data points that you collect. Is there any customer interest in buying that data?

Alex Latimore: Okay. That's a great response. That's a amazing color there. Let's see. I guess while we're talking about the data here, I guess if you could rank maybe the top two or three most valuable data points that you collect. Is there any customer interest in buying that data?

Speaker #8: And then is there any customer interest in buying that data?

Speaker #3: Okay, so yeah, if I can let some of the other guys here comment too. Typically, we're contracted to collect the data for them, and it's proprietary data.

John Gibson: Okay. Yeah, I can let some of the other guys here comment too. Typically, we're contracted to collect the data for them, and it's proprietary data. We don't have a data library. It's something I've pondered as to whether or not we could lower the cost of the data and then have a data library. Most of this is proprietary infrastructure. They pay for it, they own it, they use it to manage their infrastructure. You return it to them, and we don't provide that as a data library, like you would with, say, spec seismic, where you collect data and sell it to multiple people.

Speaker #3: And so we don't have a data library. It's something I've pondered as to whether or not we could lower the cost of the data and then have a data library.

Speaker #3: But most of this is proprietary infrastructure. They pay for it. They own it. They use it to manage their infrastructure. And so you return it to them.

Speaker #3: And we don't provide that as a data library. Like you would with, say, spec seismic where you collect data and sell it to multiple people.

Speaker #3: We don't do that in the industry for most of the work that's done with ROVs. And I'll make sure I'm looking at the folks here to make sure I'm not misleading you on this.

John Gibson: We don't do that in the industry for most of the work that's done with ROVs. And I'll make sure I'm looking at the folks here to make sure I'm not misleading you on this. The opportunity to do that exists, particularly when you get to the environmental work where you're doing, you know, looking at coral reefs, et cetera. Where it's for the general good having that data library, but you still need to have somebody collect that data and pay for the collection of it. Brian, you got any comments you wanna make?

Speaker #3: But the opportunity to do that exists, particularly when you get to the environmental work where you're doing looking at coral reefs, etc. But where it's for the general good, having that data library but you still need to have somebody collect that data and pay for the collection of it.

Speaker #3: Brian, you got any comments you want to make?

Speaker #2: Just on in the main part, retaining rights on data analysis of customer data is difficult. But there are strategies that can be followed there.

Brian Allen: Just on, in the main part, retaining rights on, like, data analysis of customer data is difficult. There are strategies that can be followed there, and we should talk after the call.

Speaker #2: And we should talk after the call.

Speaker #3: Yeah. It belongs to them, to the customer. And all of the customers want to maintain confidentiality of it. To them, it's a competitive advantage.

John Gibson: Yeah. It's it mainly, it belongs to them, to the customer, and all of the customers have a their wanna maintain confidentiality of it. To them, it's a competitive advantage, so it's difficult to use it for any other purpose other than basically fee for service. We just deliver the data.

Speaker #3: So it's difficult to use it for any other purpose other than basically fee-for-service. We just deliver the data.

Speaker #8: Okay. Understood. Got you there. I got one more question. I was just curious what maybe some of the biggest technology advancements you expect to release this year and next year are.

Alex LaMore: Okay, understood. Gotcha there. I got one more question. I was just curious what maybe some of the biggest technology advancements you expect to release this year and next year are, what are the benefits surrounding those? Would it be adding the new manipulator, adding autonomy to the manipulators, something else?

Alex Latimore: Okay, understood. Gotcha there. I got one more question. I was just curious what maybe some of the biggest technology advancements you expect to release this year and next year are, what are the benefits surrounding those? Would it be adding the new manipulator, adding autonomy to the manipulators, something else?

Speaker #8: And then what are the benefits surrounding those? Would it be adding the new manipulator, adding autonomy to the manipulators, something else?

Speaker #2: Well, that's another really good question. I think one of the things that's a strategic decision that the company made, unlike some of our competitors, is we're not in the sensor business.

John Gibson: Well, that's another really good question. I think one of the things is a strategic decision that the company made, unlike some of our competitors, is we're not in the sensor business. So we have 22 sensors on board, and we can choose advances in sensors. Whenever we see one that's got a tremendous advancement, we can plug that in and pull another one out. So we're not locked in on a sensor that might be 2, 3, 4 years old. We're seeing some really strong advances in some of the imaging capabilities, so we're putting state-of-the-art. In fact, I'd say we're testing some of the new sensors for some of these companies right now.

Speaker #2: So we have 22 sensors on board. And we can choose advances in sensors and so whenever we see one that's got tremendous advancement, we can plug that in and pull another one out.

Speaker #2: And so we're not locked in on a sensor that might be two, three, four years old. And so we're seeing some really strong advances in some of the imaging capabilities.

Speaker #2: And so we're putting state-of-the-art in fact, I'd say we're testing some of the new sensors for some of these companies right now. And that's an opportunity for us is to use our platform to test other companies' sensors and have them pay for us to actually put these sensors in play and compare it to other sensors as well.

John Gibson: That's an opportunity for us, is to use our platform to test other companies' sensors and have them pay for us to actually put these sensors in play and compare it to other sensors as well. We're constantly looking at what's gonna give us the greatest differentiation and what's the right way to do the imaging and data collection, whether it be for pipelines, for cables. It doesn't matter. We're gonna be a platform for deploying the best technology, not for trying to develop those sensors. That's a very competitive, high R&D cost model that we're not gonna enter into. On the autonomy side, we've got the new generation manipulator. The parts are coming in for assembly, and we're very excited about putting that manipulator on the Aquanaut.

Speaker #2: And so we're constantly looking at what's going to give us the greatest differentiation and what's the right way to do the imaging and data collection, whether it be for pipelines, for cables, it doesn't matter.

Speaker #2: So we're going to be a platform for deploying the best technology, not for trying to develop those sensors. That's a very competitive, high R&D cost model that we're not going to enter into.

Speaker #2: And so exciting. On the autonomy side, we've got the new generation manipulator, the parts are coming in for assembly. And we're very excited about putting that manipulator on the Aquanaut.

Speaker #2: I've been talking to competitors and customers, potential customers. This is an absolutely perfectly targeted manipulator for this market. I congratulate our team here. It's a mid-range manipulator.

John Gibson: Been talking to competitors and customers, potential customers. This is an absolutely perfectly targeted manipulator for this market. I congratulate our team here. It's a mid-range manipulator. It's not really a small light range manipulator like you would see, which are just small arms that can lift, you know, maybe 10, 15 kg. It's also not one for a heavy-duty, work class ROV where it can lift hundreds of kg. It's gonna be in that 50 to 70 kg range for operation. It's also really well-designed with regard to maintenance. What we learned about using other manipulators and building manipulators is that you have to have spare parts. You have to have them on board.

Speaker #2: It's not really a small light-range manipulator like you would see, which are just small arms that can lift maybe 10, 15 kilograms. It's also not one for a heavy-duty, work-class ROV where it can lift hundreds of kilograms.

Speaker #2: It's going to be in that 50 to 70 kilogram range. For operation, it's also really well designed with regard to maintenance. What we learned about using other manipulators and building manipulators is that you have to have spare parts, you have to have them on board.

Speaker #2: You want the simplest possible ability to repair and maintain. Because you're going to be in the parts business as soon as you start selling manipulators.

John Gibson: You want the simplest possible ability to repair and maintain 'cause you're gonna be in the parts business as soon as you start selling manipulators. These guys are hard on them, you need to have the ability to produce replacement parts and have a really good ability to source parts to them as they purchase the manipulators. This manipulator is a 3 to 7 degree of freedom. If we don't need all those degrees of freedom to do something, we can drop it back to 3. If you just wanna touch something with a cathodic probe or gather a simple sample, or cut something, we don't need 7 degrees of freedom. It doesn't require a human arm to do that.

Speaker #2: These guys are hard on them. So you need to have the ability to produce replacement parts and have a really good ability to source parts to them.

Speaker #2: As they purchase the manipulators. And this manipulator is three to seven degree of freedom. If we don't need all those degrees of freedom to do something, we can drop it back to three.

Speaker #2: If you just want to touch something with the cathodic probe, or gather a simple sample, or cut something, we don't need seven degrees of freedom.

Speaker #2: It doesn't require a human arm to do that. What you want is the least amount of equipment doing the task the simplest way, so that you can keep the cost out of the system and also reduce the nonproductive time, which is the maintenance that occurs when you've got more joints than you need on the arm.

John Gibson: What you want is the least amount of equipment doing the task the simplest way so that you can keep the cost out of the system and also reduce the non-productive time, which is the maintenance that occurs when you've got more joints than you need on the arm. I think it's a fantastic design. The last thing is all of this is underpinned by autonomy for arms, which I think is incredibly unique here, in the whole of our industry. Even in the terrestrial industry, the ability to use an arm, not automated, where it does the same thing over and over, because that's not really possible in the subsea environment because of the position of the Aquanaut, the ROV, et cetera. You have to have some perception in order to address the object that you're working with.

Speaker #2: So I think it's a fantastic design. Last thing, is all of this is underpinned by autonomy for arms, which I think is incredibly unique here.

Speaker #2: In the whole of our industry, and even in the terrestrial industry, the ability to use an arm not automated where it does the same thing over and over.

Speaker #2: Because that's not really possible in the subsea environment. Because of the position of the Aquanaut, the ROV, etc., you have to have some perception in order to address the object that you're working with.

Speaker #2: Whereas if you're manufacturing an automobile, you can do automated welding with an arm. You can go to a fixed position, move to a fixed position, pull back and do that repetitively.

John Gibson: Whereas if you're manufacturing an automobile, you could do automated welding with an arm. You can go to a fixed position, move to a fixed position, pull back, and do that repetitively. That's not the world that we live in in maritime. You need to have the ability to observe the environment and interact with the environment. I think we'll have a toolkit that comes in several flavors. One's gonna be for the navigation of ROVs. We can strip down some of what's necessary there that we use on the Aquanaut. ROV related toolkit, Nauticus ToolKITT. We'll have the manipulator-related software, and then, we'll also have it for the Aquanaut or full AUV. It's the whole market for autonomous manipulators looks very, very exciting.

Speaker #2: That's not the world that we live in in maritime. You need to have the ability to observe the environment and interact with the environment.

Speaker #2: And so I think we'll have a toolkit that comes in several flavors. One's going to be for the navigation of ROVs. We can strip down some of what's necessary there that we use on the Aquanaut.

Speaker #2: So ROV-related toolkit, Nauticus toolkit. We'll have the manipulator-related software. And then we'll also have it for the Aquanaut or full AUVs. So it's the whole market for autonomous manipulators looks very, very exciting.

Speaker #8: Wow, awesome. That's great. It seems the tailwinds are blowing in Nauticus's favor here. I'm excited to watch you guys progress. Thank you.

Alex LaMore: Wow. Awesome. That's great. It seems, it seems the tailwinds are blowing in Nauticus's favor here. I'm excited to watch you guys progress. Thank you.

Alex Latimore: Wow. Awesome. That's great. It seems, it seems the tailwinds are blowing in Nauticus's favor here. I'm excited to watch you guys progress. Thank you.

Speaker #2: I appreciate it. I mean, we put two and a half years in getting these products ready. And now we're going to put the next year in getting them to market and really showing the revenue that can come from the investments that have been made.

John Gibson: I appreciate it. I mean, we've put two and a half years in getting these products ready, now we're gonna put the next year in getting them to market and really showing the revenue that can come from the investments that have been made. Appreciate all the shareholders that put money in this because it's put us in a great place.

Speaker #2: And appreciate all the shareholders that put money in this because it's put us in a great place.

Speaker #1: Your next question comes from the line of Robert Mandrala, a personal investor. Robert, your line is open. Please go ahead.

Operator: Your next question comes from the line of Robert Mandrola, a personal investor. Robert, your line is open. Please go ahead.

Speaker #9: Thank you. And thank you for the investor update. Brian, welcome to Nauticus. I have a two-part question for you. So given your background scaling subsea robotics and autonomy businesses and to clarify what might have been mentioned in this call, where do you believe you can have the earliest impact on revenue?

Robert Mandrola: Thank you. And thank you for the investor update. Brian, welcome to Nauticus. I have a two-part question for you. Given your background scaling subsea robotics and autonomy businesses, and to clarify what might have been mentioned in this call, where do you believe you can have the earliest impact on revenue, you know, whether it be services, software licensing, hardware sales, or international partnerships? As you look at the opportunity pipeline, how should investors think about the potential size and timing of commercial opportunities? I guess, without getting into too much formal guidance.

Speaker #9: Whether it be services, software licensing, hardware sales, or international partnerships. And as you look at the opportunity pipeline, how should investors think about the potential size and timing of commercial opportunities?

Speaker #9: I guess without getting into too much formal guidance.

Speaker #2: Well, great question. And yes, thank you for the welcome. So let me split that into two parts. Where I see the earliest impact, I think about it as three time horizons running in parallel rather than different buckets.

Brian Allen: Well, great question. Yes, thank you for the welcome. Let me split that into two parts. On where I see the earliest impact, I think about it as three time horizons running in parallel rather than different buckets. This isn't really a services versus software versus hardware play. They're all interdependent on each other and rely on and bounce off each other. Of all of those, the fastest lever for us to move is the Nauticus ToolKITT software licensing offer. I mean, that can be moved on in a period of months. We already have contacts in the market that are interested. We already have stats on how it's outperformed incumbent solutions in head-to-head trials. We already have it integrated with the Forum Comanche and VideoRay Defender and other vehicles as well.

Speaker #2: So this isn't really a services versus software versus hardware play. They're all interdependent on each other. And rely on and bounce off each other.

Speaker #2: Of all of those, the fastest lever for us to move is the Nauticus toolkit software licensing offer. I mean, that can be moved on in a period of months.

Speaker #2: We already have contacts. In the market, they're interested. We already have stats on how it's outperformed incumbent solutions in head-to-head trials. We already have it integrated with the foreign command sheet and Video Defender and other vehicles as well.

Speaker #2: Currently working on a few different flavors of vehicles. So that's a product that I can actually sell now. And the team as a whole have identified quite a number of opportunities that we can work on.

Brian Allen: Currently working on a few different flavors of vehicles. That's a product that I can actually sell now, and the team as a whole have identified quite a number of opportunities that we can work on. That's probably where you'll see the earliest commercial signal. The second lever running alongside it is technology-enabled services, and our services business is the operational engine that proves that technology in the field. It's there that we expect to see margin expansion happen as we substitute autonomy for vessel time and pilot time as Nauticus ToolKITT comes into our own systems and used in much greater detail now that it's a functional, strong product and commercially hardened. As Steve covered, Q2 and Q3 are the natural seasons for that to start showing improvement as well.

Speaker #2: So that's probably where you'll see the earliest commercial signal. So the second lever running alongside it is technology-enabled services. And our services business is the operational engine that proves that technology in the field.

Speaker #2: And it's there that we expect to see margin expansion happen as we substitute autonomy for vessel time and pilot time, as Toolkit comes into our own systems and use in much, much greater detail now that it's a functional, strong product and commercially hardened.

Speaker #2: So as Steve covered, Q2 and Q3 are the natural seasons for that to start showing improvement as well. And now, the third lever that we mentioned is hardware and international partnerships.

Brian Allen: Our third lever that we mentioned is hardware and international partnerships. For conversion at scale, those require a sales infrastructure that doesn't really exist strongly in the company today. We've got early success there and early meetings and interest, we really need a bit more sales infrastructure, which is what I'm gonna be putting in place over the next 3 to 4 months. EMEA for the international partnerships is a market that I know really well from my previous years, and the operators there are actively looking for this kind of autonomy capability that we've got. Rather than make promises or basically, yeah, I'd rather underpromise and overdeliver on international than the reverse. I'd caution against framing this as software versus hardware. The thesis is the services revenue is the development and testing area.

Speaker #2: But for conversion at scale, those require a sales infrastructure that doesn't really exist strongly in the company today. Now, we've got early success there and early meetings and interest.

Speaker #2: But we really need a bit more sales infrastructure, which is what I'm going to be putting in place over the next three to four months.

Speaker #2: Now EMEA, for the international partnerships, it's a market that I know really well from my previous years. And the operators there are actively looking for this kind of autonomy capability that we've got.

Speaker #2: But rather than make promises or basically yeah, I'd rather under-promise and over-deliver on international than the reverse. So I'd caution against framing this as software versus hardware.

Speaker #2: The thesis is the services revenue is the development and testing area. Nauticus Toolkit software demonstrates real market interest in the software, and then that naturally pulls the hardware through behind it as people see the capability.

Brian Allen: Nauticus ToolKITT software demonstrates real market interest in the software, then that naturally pulls the hardware through behind it as people see the capability. Now, Aquanaut hardware sales are a longer sales cycle but will generate high tens of millions once that engine's running well in 2 to 4 years' time. Right now, the mix shift and my main responsibility is in moving us towards higher margin software and recurring revenue. That's like kind of the direction of travel that I intend to sort of push on at the moment. No, can't give formal guidance. Really wouldn't want to in my first week. The way I'd frame it is the opportunity set's really large and the serviceable market for autonomy-enabled subsea services software runs into the billions.

Speaker #2: Now Aquanaut hardware sales are a longer sales cycle, but will generate high tens of millions once that engine is running well in sort of two to four years' time.

Speaker #2: But right now, the mix shift—and my main responsibility—is in moving us towards higher-margin software and recurring revenue. That's kind of the direction of travel that I intend to sort of push on at the moment.

Speaker #2: So no, can't give formal guidance. Really wouldn't want to in my first week. But the way I'd frame it is the opportunity sets really large and the serviceable market for autonomy-enabled subsea services software runs into the billions.

Speaker #2: And the consolidation pressure right now in traditional ROV contractors, with a lot of those who have created some of their own hybrid solutions, creates a window for commercially available autonomy players to take share.

Brian Allen: The consolidation pressure right now in traditional ROV contractors with a lot of those who have created some of their own hybrid solutions creates a window for commercially available autonomy players to take share. That window's open now. It won't stay open forever, but we're the first mover in that space when there's already commercial pressure as people are trying to compete with others. The honest framing is that you should expect to see a commercial signal and pipeline growth before you see revenue scale because software licensing recognizes differently than from project services, and the bigger international hardware deals have a longer sales cycle. What I'd ask for you to track is the leading indicators, mainly quality and breadth of pipeline.

Speaker #2: And that window is open now. It won't stay open forever, but we're the first mover in that space when there's already commercial pressure, as people are trying to compete with others.

Speaker #2: So the honest framing is that you should expect to see a commercial signal and pipeline growth before you see revenue scale because software licensing recognizes differently than from project services.

Speaker #2: And the bigger international hardware deals have a longer sales cycle. So what I'd ask you to track is the leading indicators, mainly quality and breadth of pipeline.

Speaker #2: After that, look for news about third-party deployments and sort of third-party platforms, partner announcements, and then we'll also be talking about repeat business and framework agreements as those come in.

Brian Allen: After that, look for news about third-party deployments, and sort of third-party platforms, partner announcements, and then we'll also be talking about repeat business and framework agreements as those come in. Those are the things that will tell you the commercial engine is working, and they'll show up in the numbers 6 to 12 months after those sorts of announcements. I'll be able to update you on commercial progress each quarter, but I'd rather you measure me on what we actually book than on what I can project from this seat on my first call.

Speaker #2: So those are the things that will tell you the commercial engine is working. And they'll show up in the numbers six to twelve months after those sorts of announcements.

Speaker #2: So I'll be able to update you on commercial progress each quarter, but I'd rather you measured me on what we actually book than on what I can project from this see on my first call.

Speaker #9: Okay, great. Thank you. And here's another revenue question. Referencing growing opportunities in defense-related applications, can you provide additional color on where Nauticus is seeing interest? For example, inspection, surveillance, autonomy, intervention, or subsea support?

Robert Mandrola: Okay, great. Thank you. Here's another revenue question. Referencing growing opportunities in defense-related applications, can you provide an additional color on where Nauticus is seeing interest? For example, inspection, surveillance, autonomy, intervention, or subsea support, and whether you expect defense to become a more meaningful part of the company's revenue mix over time, and also with respect to the Leidos partnership.

Speaker #9: And whether you expect defense to become a more meaningful part of the company's revenue mix over time and also with respect to the LIDOS partnership.

Speaker #3: Another good area to talk about, Robert, appreciate the question. We are actively engaged in a project that's going to commence shortly, and it is principally related to service-related work on an AUV.

John Gibson: Another good area to talk about, Robert, appreciate the question. We are actively engaged in a project that's going to commence shortly, and it is principally related to service-related work on working on an AUV. Our knowledge of hardware is what really is our strength in this particular one. As soon as we complete that, it'll be the software on that piece. Those two things will be in this project. I think this is a you know, smaller project, but it's one that can lead to quite a lot of growth with this particular large defense contractor. We spent three days at the Sea-Air-Space conference in Washington, meeting with basically all of the large defense contractors.

Speaker #3: And so our knowledge of hardware is what really is our strength in this particular one. As soon as we complete that, it'll be the software on that piece.

Speaker #3: And so those two things will be in this project I think this is a smaller project, but it's one that can lead to quite a lot of growth with this particular large defense contractor.

Speaker #3: We have a really—we spent three days at the Sea, Air, and Space conference in Washington, meeting with basically all of the large defense contractors.

Speaker #3: I think our encouraging to walk around the floor there and see how differentiated we are. You have a lot of people doing US base.

John Gibson: I think our product line fits really well. In fact, it was encouraging to walk around the floor there and see how differentiated we are. You have a lot of people doing USVs. I'd say 70% of the people at the conference were showing unmanned surface vehicles. You have a lot of, well, I'll call it's an AUV, but it often not really isn't an AUV. It's more of an underwater drone than it is a missile, which an AUV tends to be prop on the back, go straight. We saw almost nothing in that space. We saw quite a number of people doing different sizes, different depth ratings for AUVs, which are just the bullets. Everything was hugely differentiated.

Speaker #3: I'd say 70% of the people at the conference were showing unmanned surface vehicles. You have a lot of—well, I'll call it an AUV, but often it really isn't an AUV.

Speaker #3: It's more of an underwater drone than it is a missile, which an AUV tends to be propped on the back, goes straight. We saw almost nothing in that space.

Speaker #3: We saw quite a number of people doing different sizes, different depth ratings, for AUVs, which are just the bullets. So everything was hugely differentiated.

Speaker #3: Every body we wanted to speak to, we got senior-level meetings. And all the meetings were really productive. We have some follow-ups to do with them.

John Gibson: Every body we wanted to speak to, we got senior-level meetings, and all the meetings were really productive. We have some follow-ups to do with them, and I think the defense sector is really has a lot of demand for the capabilities and the competencies that we bring. I think we're also ahead of the market in this area. The manipulators themselves, particularly autonomous manipulators, the understanding of how to use those and the demand for those is just now emerging. We are particularly in emerging markets, and I appreciate the patience that shareholders have had because when you're in an emerging market, it's a little harder to get traction and put it out there. Everything we're doing is an underserved market. We're not in the, you know, improving productivity in an existing market.

Speaker #3: And I think the defense sector is really it has a lot of demand for the capabilities and the competencies that we bring. And I think we're also ahead of the market in this area.

Speaker #3: The manipulators themselves, particularly autonomous manipulators, they understanding of how to use those and the demand for those is just now emerging. We are particularly in emerging markets.

Speaker #3: And I appreciate the patience that shareholders have had, because when you're in an emerging market, it's a little harder to get traction and put it out there.

Speaker #3: But everything we're doing is an underserved market. We're not in the improving productivity in an existing market. We really are an underserved market, and with new solutions. And the defense side's a great area for us right now.

John Gibson: We really are in underserved markets and with new solutions, and the defense side is a great area for us right now.

Speaker #9: Okay, thank you, John. That's very helpful. And I have one last question. Given the company's technology assets, market opportunity, and current capital needs, how is the board thinking about the full range of options to maximize shareholder value?

Robert Mandrola: Okay. Thank you, John. That's very helpful. I have one last question. Given the company's technology assets, market opportunity, and current capital needs, how is the board thinking about the full range of options to maximize shareholder value, including strategic partnerships, licensing arrangements, commercial alliances, financing alternatives, or other strategic opportunities?

Speaker #9: Including strategic partnerships, licensing, arrangements, commercial alliances, financing alternatives, or other strategic opportunities.

Speaker #3: Another good broad question, Robert. So, how is the board thinking about this? We have a great board. Okay, that's first. Absolutely focused on creating shareholder value.

John Gibson: Another good broad question, Robert. How, how is the board thinking about this? We have a great board, okay? That's first. Absolutely focused on creating shareholder value. Any proposal that came in on the strategic opportunity side, you'd see that they would give it a fair viewing because what they wanna do is increase the shareholder value. Proposals come in, they're gonna get reviewed by the board. There's no filter here on taking things out. It truly is a board review of what should we do that's in the best interest of shareholders. In terms of the licensing, we started down that lane with Forum Energy Technologies. We're really excited as to how that's developing.

Speaker #3: And so, any proposal that came in on the strategic opportunity side, you would see that they would give it a fair viewing, because what they want to do is increase the shareholder value.

Speaker #3: So proposals come in, they're going to get reviewed by the board. There's no filter here on taking things out. It truly is a board review of what should we do, this and the best interest of shareholders.

Speaker #3: On the in terms of the licensing, we started down that lane. With Forum Energy Technology, we're really excited as to how that's developing. We're learning how to be a good partner there.

John Gibson: We're learning how to be a good partner there, and working with them. Licensing is a phenomenal way for us to work without having to actually put all the capital in to manufacture those to get the benefit of the intellectual property that we've created. In this particular case, it's one of our first manipulator generations that will be used on ROVs. I'm really excited about that. It's a low capital, high margin approach to the manufacturing industry. The same would be true for Aquanauts. While we will build them in Ras Al Khaimah under the agreement that we're working on now, that we would be quite amenable to licensing that technology too, where that is built and the cost of manufacturing is covered by someone else.

Speaker #3: And working with them and licensing is a phenomenal way for us to work without having to actually put all the capital in to manufacture those to get the benefit of the intellectual property that we've created in this particular case.

Speaker #3: It's one of our first manipulator generations that will be used on ROVs. I'm really excited about that. It's a low-capital high-margin approach to the manufacturing industry.

Speaker #3: The same would be true for Aquanauts. While we will build them in Russell Kima, under the agreement that we're working on now, we would be quite amenable to licensing that technology too, where that is built and the cost of manufacturing is covered by someone else.

Speaker #3: We would get a licensing fee on the Aquanauts. Toolkits, clear licensing. And so what we have to do overall as a company to get the kind of margins that we would like to have, which is on a blended margin basis, we need to be above 50%.

John Gibson: We would get a licensing fee on the Aquanauts. ToolKITT's clear licensing, and so what we have to do, overall as a company to get the kind of margins that we would like to have, which is on a blended margin basis, we need to be above 50%. Now you're looking in the 80 percentile range for the software side of the business. You're looking in the, you know, 25% to 35% range for the services side of the business. You're looking in that 25%, 30% range for hardware. I'd like to be in that, you know, 15%, 20%, 25% range without having the cost of capital for the manufacturing. That's how we're looking at the licensing capability on the hardware side. Software side's gonna be 80 plus.

Speaker #3: Now, you're looking in the 80 percentile range for the software side of the business. You're looking in the 25 to 35 percent range for the services side of the business.

Speaker #3: You're looking in that 25–30% range for hardware. And I'd like to be in that 15, 20, 25% range without having the cost of capital for the manufacturing.

Speaker #3: So that's how we're looking at the licensing capability on the hardware side, the software side's going to be 80 plus. And so goals to have blended margins above 50 in our model.

John Gibson: Goal is to have blended margins above 50 in our model. With regard to strategic partnerships, you know, we have a good relationship with Leidos at this point and are enjoying communicating with them about potential projects going forward, and we'll continue to do that. That's not an exclusive arrangement, we're talking to many other defense contractors, and we'd be excited to be working in a partnership with them on any project that fit what our competencies and capabilities are. We're very open on that, Robert.

Speaker #3: The with regard to strategic partnerships, we have a good relationship with the Leidos at this point and are enjoying communicating with them about potential projects going forward.

Speaker #3: And we'll continue to do that. But that's not an exclusive arrangement. And so we're talking to many other defense contractors and we'd be excited to be working in partnership with them on any project that fit what our competencies and capabilities are.

Speaker #3: So we're very open on that, Robert.

Speaker #1: We have reached the end of the Q&A session. I will now hand the call back to John Gibson, CEO for Closing Remarks.

Operator: We have reached the end of the Q&A session. I will now hand the call back to John Gibson, CEO, for closing remarks.

Speaker #3: I appreciate everybody being on the call. You have an investment in an emerging company. We've got great products. We've got a great strategy. And I think the testament to that is the quality of people that we have on the management team today.

John Gibson: Appreciate everybody being on the call. You know, you have an investment in an emerging company. We've got great products. We've got a great strategy. I think the testament to that is the quality of people that we have on the management team today. It's incredibly strong, with incredible commitment to what's possible for this company and wanting it to achieve its full potential. I appreciate your patience with us, and I appreciate the investment that you've made. We're gonna continue to work hard to create shareholder value here. I'd just like to thank our lenders, our board, our shareholders, our employees, our vendors. I mean, there's so many people that play a part in the success of a new company like this that with emerging technology. We're blessed to have all of you.

Speaker #3: It's incredibly strong, with incredible commitment to what's possible for this company and wanting it to achieve its full potential. And so I appreciate your patience with us.

Speaker #3: And I appreciate the investment that you've made. And we're going to continue to work hard to create shareholder value here. And I'd just like to thank our lenders, our board, our shareholders, our employees, and our vendors.

Speaker #3: I mean, there's so many people that play a part in the success of a new company, like this, that with emerging technology, we're blessed to have all of you.

Speaker #3: Appreciate it. And we'll look forward to updating you when we get through with the quarter. Take care.

John Gibson: Appreciate it. We'll look forward to updating you when we get through with the quarter. Take care.

Operator: This concludes today's call. Thank you for attending. You may now disconnect. This event has now concluded. Thank you for joining Nauticus Robotics 2026 Q1 earnings call. The line will disconnect automatically.

Speaker #1: This concludes today's call. Thank you for attending. You may now disconnect.