NXXT - NASDAQ

Greetings. Welcome to the NextNRG Third Quarter 2025 Earnings Results Conference Call. [Operator Instructions]. Please note, this conference is being recorded. I would now like to turn the conference over to Sharon Cohen, Investor Relations. Thank you. You may begin.

Thank you, and good morning, everyone. Joining us today are Michael Farkas, our Chief Executive Officer and Executive Chairman; Joel Kleiner, our Chief Financial Officer. Before we begin, I would like to remind you that certain statements on this call are forward-looking in nature and subject to risks and uncertainties. These statements are based on current expectations and assumptions and involve risks that could cause actual results to differ materially. Please refer to our filings with the SEC, including our most recent Form 10-K and our Form 10-Q for the quarter ended September 30, 2025, for a discussion of these risks. With that, I'll now turn the call over to Michael.

Thank you, Sharon, and welcome, everyone, to our third quarter earnings call. This quarter represents a significant step in NextNRG's journey as we continue advancing towards our vision. Our results clearly demonstrate that our strategy is working. Revenue is growing, margins are expanding, and our mobile fueling and energy infrastructure initiatives are driving strong measurable results across the business, making this our strongest financial performance to date. The results speak for themselves, and they set the stage for continued growth in operational excellence. I'd like to thank all of you for your confidence and take this opportunity to provide an overview of NextNRG. We're more than an energy company, we're a full-spectrum energy partner from generation and storage optimization and fueling, we give businesses the tools to be efficient, independent and the future ready. Our ecosystem combines power generation,, advanced batteries, wireless EV charging and on-demand mobile fueling to deliver energy wherever it's needed, smarter and faster than ever. We're not just following the energy transition, we're leading it. The momentum we've built continues. And as you'll hear today, the investments in our past initiatives are now delivering tangible results. Last quarter, I discussed our investments in expanding the fleet by 99 trucks and entering 10 new markets. You'll recall it was anchored in the strategic thesis than building operational density around our strongest customers will allow us to: one, optimize routes; two, enhance driving efficiency; three expand margins; and four, extend market presence of the sales of our largest customers. I'm proud to share that we are delivering on that vision, achieving our highest revenues and showing as margins days, marking the best performance in the company's history. In addition to the above, we have added 11 new markets for Miles, Florida. As we've grown and are increasing gallons delivered, we've been able to unlock volume-based supplier discounts, increasing profit margins from 8% to 11% and driving a 232% year-over-year revenue increase. Moving on to our emerging technologies, particularly our smart microgrid and battery storage solutions. We previously reported that we were working on various projects, including the California health care facilities, and I'm happy to report that we have just signed 2 power purchase agreements also known as PPAs, whereby we effectively replaced the traditional utility provider, supplying these locations with their full energy needs. Our systems are addressing a vital need, ensuring facilities remain efficient, compliant and operational around the clock. Most notably, these PPAs provide for 28 years of contractional profitable revenue to the company via energy sales, creating long-term revenue visibility. We continue to advance our Energy Division's pipeline driving meaningful progress across multiple fronts. As NextNRG evolves, our strategy is to be increasingly focused on high-demand sectors where reliability and resilience are nonnegotiable, particularly health care, assisted living and large-scale commercial facilities that require continuous mission-critical power. This approach has unified the company around a more focused sales approach within a massive TAM. Our active pipeline currently stands at over a dozen projects with several more qualified leads progressing through the pipeline. As time progresses and the market learns about NextNRG, we're watching our integrated energy ecosystem coming to life. As an example, we've been approached by solar installers who have deployed solar power generation solutions whose clients now require battery storage and/or charging solutions and the technology to optimize their energy generation, storage and usage. NextNRG is being asked to complete the energy ecosystem into a single intelligent platform. This growing interest validates our approach and reinforces the competitive advantage of our integrated energy model. As interest in our platform grows, we're strengthening relationships across the value team, expanding partnerships in solar hardware and battery storage to deliver cutting-edge technology at highly competitive pricing. These collaborations enhance our offering and position, NextNRG as a trusted full-service energy partner. Next, our much anticipated bidirectional wireless on charging initiative continues to advance. This quarter, we continued to make meaningful progress in the development framework and are moving closer to the launch of our first demonstration of this game-changing technology. While still in the planning and design phase, the groundwork that's being laid now positions us to move efficiently the execution as we refine partnerships and tech integration. We hope to provide a material update in the coming weeks. Looking ahead into 2026 and beyond, we find ourselves excited for the future a time when global and domestic energy demands are reaching unprecedented levels. I recently attended a conference where business and political is going to be, including President Trump and Eric Schmidt, the former Google CEO. They underscored the urgent need to expand our nation's capacity and energy generation and storage and distribution. We specifically mentioned the growing trend for developers of data centers and other energy-intensive sites to develop on-site fully integrated smart groups to ensure power reliability. The message was clear. Our current infrastructure cannot keep pace with the accelerating demand. In fact, following this conference, I was invited to an intimate dinner Eric Schmidt's home with a group of leading business executives in America. And as I discussed what NextNRG was building, the focus quickly came on nation's need for power generation, storage and distribution. To quote Eric, "We will run out of power before we run out of capital to invest in AI infrastructure," underscoring the urgency to generate power. NextNRG is uniquely positioned to help address that challenge. Our integrated approach spending generation, storage, distribution and fueling places us at the forefront of providing the critical energy solutions needed to power the next era of growth. Our strategy remains focused on expanding, scaling and optimizing. We are deepening our presence in key markets with mobile fuel delivery, advancing opportunities in renewable distributed infrastructure and strengthening partnerships that accelerate technology deployment while improving operating efficiency and margin performance. While our near-term focus is on disciplined execution, our long-term vision remains steadfast to create a fully connected energy ecosystem that produce today's fueling needs with tomorrow's clean intelligent infrastructure. As CEO, my goal is consistently to transparently articulate our current performance while also paving a clear picture of our commitment to disciplined growth and to deliver on our commitments. I am proud that all the things we laid out in last quarter's call, we have delivered I hope to do the same next quarter, consistent and reliable leadership. With that, I'll turn it over to our CFO, Joel Kleiner, for the financial review.

Thank you, Michael. Turning to the financials. Q3 was another quarter of outstanding growth with revenue of $22.9 million, up 232% year-over-year from $6.9 million in Q3 of 2024 and up $19.7 million in Q2 2025. To put that in perspective, our total revenue for the full year of 2024 was $27.8 million. So we're approaching nearly a full year's worth of revenue in just 1 quarter. Gross profit margins also continued to expand, increasing from 8% in Q2 to 11% in Q3. Not only did we grow revenue, but we also successfully lowered our cost of goods sold demonstrating that while growing top line revenue, we are also simultaneously improving our operational efficiencies. On the expense side, our loss from operation came in at $9 million, which includes a $5.6 million noncash stock-based compensation charge. As you recall, we introduced this program last quarter as a strategy to attract and retain top talent. And as expected, this quarter's charge is significantly lower in Q2 -- and then Q2. Excluding this item, our operating loss was $3.4 million, down from $5.2 million in Q2, reflecting our continued focus on disciplined cost management and operational efficiency as we move closer to profitability and positive cash flows. Cash used in operations for the first 9 months of 2025 was $14.1 million. Because of this figure reflects quarter end working capital timing, including inventory and prepaid expenses continuing just before quarter flows as well as Q2 invoices being paid in Q3, the reported number overstates our underlying burn rate. On a normalized basis, our year-to-date operating burn is closer to $11 million. We ended the quarter with roughly $650,000 in cash which similarly reflects those working capital timing dynamics. Since quarter end, we have taken deliberate steps to strengthening liquidity. We completed the refinancing of our truck fleet and continue to streamline our debt profile, converting portions of our debt to equity and reducing the overall complexity in the capital structure. These actions provide greater financial flexibility as we manage the business. Operationally, Q3 delivered solid progress. Revenue increased our energy pipeline continue to expand, and we began advancing several opportunities towards deployment as we scale revenue, expand margins and enhance operational efficiency, the underlying trend in our cash usage is moving in the right direction. While we still have work to do ahead of us, the trajectory of our business combined with the strength of our platform and the early validation we are seeing across both fueling and energy infrastructure position us well for continued momentum in the quarters to come. Thank you. Back to you, Michael.

Thank you, Joel. It's been a fantastic quarter for NextNRG. On our last call, we outlined a series of goals that we sought to achieve and I'm proud to say that we've executed on every single one of them. Our operational performance, project pipeline and financial results all reflect the disciplined growth and momentum we've been building for us. Looking ahead, we're excited to be in a unique position, both in time and in capability to help drive the future of energy across the nation and ultimately on a global scale. On our -- our savings for structure continues to spend, our pipeline is growing and profit potential continues to strengthen each passing quarter. And on a personal note, as many of you may know, I spent much of my career pioning advancements in EV charging. I'm pleased to share that I'm no longer under any noncompete restrictions, which opens the door for NextNRG to participate fully in all forms of EV charging, both wired and wireless, and to pursue high-value, high-margin energy assets that align with our long-term vision. We're just getting started, and the opportunity ahead has never been greater. Thank you all for your continued confidence and support. Operator, we can now move on to the questions.

Thank you so much. I understand there are some e-mail questions, Sharon. So I'd like to hand the call back over to you for the Q&A portion.

Thank you. Yes. I've gathered some submitted questions, and then we'll now direct them to you, Michael. The first question relates to our energy division. Can you give us more detail on the kinds of projects currently in your energy infrastructure pipeline? What types of facilities are engaging with you? And what solutions are they looking for?

Absolutely. Our pipeline today includes projects for municipalities as well as a large range of commercial facilities. These opportunities span everything from literally layering new components over existing infrastructure to full green build-out, greenfield build-outs. It could really depending upon the need of the facility. These customers are typically asking for 3 core components. One is on-site power generation, basically to reduce dependence on the grid and improve overall reliability. Number 2 is advanced battery storage. This is to ensure continuity of power, especially during peak demand or outages. And then we're looking at the -- our smart microgrid control system. It's really -- it's optimizing how energy is produced, stored and consumed in the all time. Many of these facilities are operating with aging equipment and insufficient backup systems. So they're looking us to design modern methodologies and integrated solutions that meet both operational requirements and regulatory standards. We're also seeing a growing wave of commercial operators who have solar installed but now needs storage and intelligent controls. And they want a unified platform that ties everything together in one simple place to be able to follow everything. They also want a single partner to complete that ecosystem. You can't have different components, different people all over the place. It's not a sound system. And that's exactly what our energy platform does. It allows the integration of all the stuff. So these are not exploratory or one-off engagements. They're well-defined high-value infrastructure deployments that directly address the reliability gaps that are out there today. Next question.

Sharon, can you check if you self-muted, please?

Yes. Sorry about that. Our next question relates to the margins reported. Michael, the company delivered the strongest margins in company history this quarter. How sustainable is this improvement? What are the main drivers of further margin expansion?

Joel, you want to grab that?

Sure. As we -- thank you, Sharon. Can you repeat the question?

Yes, absolutely. How sustainable is this improvement in the margins? And what are the main drivers of further margin expansion?

Our margin expansion this quarter is absolutely sustainable because it's tied directly to structural changes in the business. As we build density around our anchor customers, we're optimizing our routes, improving driver efficiency. So reducing one of the greatest components of cost of goods sold, which is the actual driver expense. And the other side is increasing our gallons delivered which we have a great contract with where we're finally unlocking volume-based discounting. Both of those lower our per unit cost. These improvements are not a onetime thing as we're continuously working towards better utilization, improve scheduling and continued vendor site advantages. We expect these to continue to grow as we continue expanding our business.

Well said, Joel. Thank you. Our next question asks to discuss the conference that you attended Michael where leaders emphasize their urgent need for more power generation and infrastructure. How does this environment impact NextNRG?

The message from the event and then the follow-on dinner was very, very clear. Energy demand, especially type AI, data centers, electrification is growing faster than the grid can support. When Eric Schmidt said that we will run out of town before we run out of capital, it underscores the scale of the opportunity. NextNRG is positioned exactly where the market is heading on-site power generation, storage and smart distribution, all integrated into a single platform. As developers, operators and corporations increasingly look for reliable, scalable, off-grade or grid-enhancing solutions, the demand for smart microgrids and infrastructure only intensifies. We're aligned with that, and we're already seeing the benefits in the pipeline for customers who need these kind of services.

And our final question is about operating losses. You've made progress reducing your operating loss this quarter, where you're still running at a multimillion dollar loss. Can you lay out a clear time line or framework for when investors can expect sustainable positive cash flow?

Absolutely. The improvement this quarter was driven by both scale and tighter cost discipline. Revenue grew materially massively margins expanded and our underlying operating loss improved from Q2 to Q3. The path to positive cash flow is tied to 3 things: continued revenue growth, which we're seeing, further margin expansion as operational eventually increases and maintaining disciplined SG&A spend as we scale. The remaining hurdle is simply timing. As more new markets mature and as supply discounts continue to strengthen, the economics improved quarter-by-quarter. We're not guiding to a specific date today, but the trend is clear. Our losses are narrowing. Our margins are expanding, and each quarter brings us closer to sustained positive cash flow. The fundamentals are moving in the right direction and the model scales efficiently as we continue growing. Thank you.