Senstar Technologies Corporation

Welcome to Censar Technologies first quarter 2026 results conference call. All participants are at present in the listen-only mode. Following management's formal presentation, instructions will be given at that time for a question and answer session. As a reminder, this conference is being recorded. I would now like to turn the call over to Corbin Woodhull of Hayden IR. Corbin, would you like to begin?

Thank you, Sherry. I would like to welcome everyone to the conference call, and thank Senstar Technologies Management for hosting today's call. With us on the call today are Mr. Fabian Haubert, CEO of Senstar Technologies, and Ms. Alicia Kelley, the CFO. Fabian will summarize key financial and business highlights, followed by Alicia, who will review Senstar's financial results for the first quarter of 2026. We will then open the call for a question and answer session. I would like to remind participants that all financial figures discussed in today's call are in U.S. dollars, and all comparisons are on a year-over-year basis unless otherwise indicated. Before we start, I'd like to point out this conference call may contain projections or other forward-looking statements regarding future events or the company's future performance. These statements are only predictions, and Senstar cannot guarantee that they will, in fact, occur. Senstar does not assume any obligation to update that information. Actual events or results may differ materially from those projected, including as a result of changing market trends, reduced demand, the competitive nature of the security systems industry, as well as other risks identified in the documents filed by the company with the Securities and Exchange Commission. In addition, during the course of the conference call, we will describe certain non-GAAP financial measures which should be considered in addition to and not in lieu of comparable GAAP financial measures. Please note that in our press release, we have reconciled our non-GAAP financial measures to the most directly comparable GAAP measures in accordance with Reg G requirements. And with that, I will now turn the call over to Fabian. Fabian, please go ahead.

Thank you, Corbin. And thank you to those joining us today. to review Sunstar technologies for quarter 2026 financial results. Our first quarter results reflected continuous projects, timing delays, and elongated customer procurement cycles in portions of our business, particularly in the US government markets, and mainly in corrections. Despite this near-term pressure, we continue to see healthy customer engagement and pipeline activity across several of our strategy growth areas. We're seeing strong underlying momentum across our business and encouraging traction in a number of important growth areas. At the headline level, we reported consolidated revenue of 8.1 million, a 4% decline versus the first quarter of 2025. As we anticipated, the first quarter of 2026 was transitional and shaped by a few transitory dynamics. Because of this, I will provide more granular details behind our performance as the story is more nuanced than a single percentage. Now, on to review of quarterly highlights and business drivers. Our first quarter performance can be explained by the following factors. Continued pressure in the US correction markets following the federal government shutdown and delayed funding deployment. While projects in this vertical have been delayed, we did not record any major loss, and we expect most of them to convert over the remainder of 2026. The absence of a large non-recurring energy project in APAC that benefited the year-ago quarter, which by its nature did not repeat, and with Blickfield revenue coming online six weeks after the quarter starts, we have saw that operating costs with less than a half a quarter of revenue affecting profitability in Q1 We have retained previously planned projects in our pipeline, though timing has shifted into the second half of 2026. This gives us confidence in the strength of our pipeline and the overall demand environment. Performance across our core vertical markets was mixed in the quarter, declining approximately 25% year-over-year. The decline was primarily driven by the U.S. correction market weakness, as well as tougher comparison in energy, due to non-recurring projects in the first quarter of 2025. As a positive offset, utility posted plus 40% growth versus the prior year quarter, continuing strength in telecom and data centers. More broadly, traction across these verticals remains on course worldwide, and we're focused on opening new logos while deepening our cross-selling opportunities. On the technology front, I want to spend a moment on LiDAR. because it is increasingly central to our story. In the first quarter, consolidated LIDAR revenue reached 11% of total revenue and order intake has been strong with the majority of recent bookings scheduled for delivery in Q2 and beyond. It's important to understand that LIDAR is complementary to Senstar solutions and significantly broadens our addressable markets. We're pleased to report that combined LIDAR sales across Blixell and Senstar grew by approximately four times during the first quarter, the first full quarter, validating the strategic rationale and demonstrating strong early commercial traction. These figures are provided to offer context on the scale of the LiDAR business prior to the acquisition and may not be disclosed quarterly in the future. Our closest peers in the LiDAR security market are growing at close to 50% per year, and we're confident we can achieve high growth rate in LiDAR as we scale with security applications, volume, and traffic monitoring representing the vectors where we're deploying the most resources. LiDAR is becoming a technological cornerstone of stand-start technology and plays an increasingly important role in our long-term strategic plan. The integration of the Blickfield and Senstar commercial teams is progressing well. We're aligning our go-to-market strategies across multiple regions, and the response from customers has been outstanding. Proof of concepts, evaluations, and formal quotation are being run across all our traditional vertical worldwide, and we continue to expect accelerated growth globally without requiring significant investments. Together, we're well positioned to scale our LiDAR capabilities globally, leveraging SANSTAR customer relationships and Blackfield's technology and market presence. Product innovation has always been the key differentiator for SANSTAR, and the first quarter of the year was no exception. At ISC West East Springs, we introduced two major innovations that received exceptionally positive market reception. Our next-generation embedded fiber platform features a compact, ruggedized, AI-enhanced architecture that significantly improves detection performance, ease of deployment, and operational robustness. All with a fully redesigned graphical user interface, this represents the next chapter of our market-leading fiber perimeter detection franchise. Through the SensorFlow engine, which is the next major enhancement to our Symfony software management platform, It brings intelligent workflow engine functionality and the new graphical interface that enables sophisticated scenario understanding across sensors and over time transforming our security management software and video management software platforms into an operational intelligent system. Both innovations are on track for market release in the second half of 2026 and we believe they will reinforce our competitive positioning and support expansion within existing accounts. Turning to our geographic performance, the FWADA reflected a mix of near-term timing pressure alongside continuous strength in several strategic growth areas. The primary drivers of this large year-over-year decline were the temporary U.S. federal government shutdown, which impacted portions of our U.S. correction business, as well as difficult cooperation against several large non-regulatory projects recognized in the prior year, particularly in APAC. At the same time, we continue to see encouraging traction across a number of important markets and geographies. Europe, Middle East, and Africa deliver strong growth in the quarter, reflecting the benefits of a long-term investment in the region, expanding customer relationships, and growing demand across utilities, telecom, energy, military, and security applications. We're also seeing increasing LiDAR engagement in the media, including activity in traffic and volume monitoring alongside our traditional period matter security business. In North America, while the U.S. correction market remained pressured by the federal shutdown and delayed procurement activity, customer engagement and project activity levels remained healthy. We'll also continue to see encouraging order activity in LIDAR and ongoing commercial engagements across data centers, utilities, energy, airport, and industrial applications. In APAC, results were impacted primarily by difficult cooperation against unusually strong prior year project activity. Excluding this non-rhetoric project, customer activity levels remain constructive, and we continue to invest in expanding our presence across key verticals including data centers, energy transport utilities, and corrections. Overall, while project timing continues to impact need-term revenue conversion during the quarter, we remain encouraged by customer engagement, order activity, geographic diversification, and the expanding contribution from LIDAR-related opportunities. To summarize, we recognize the need to improve consistency in quarterly performance. At the same time as our bookings, Customer engagements, order activity, and the diversification of our pipeline continue to support our confidence in the long-term opportunity and we remain focused on improving revenue conversion over the coming quarter. The confidence is supported by the following. One, EMEA continues to deliver strong growth supported by our long-term investment in the region and increasing demand across vertical. Two, we continue to see healthy customer engagement and project activity in the U.S. correction markets, despite delayed procurement activity associated with the federal shutdown, as well as in the utilities, data centers, and energy sectors. LIDAR, number three, is becoming an increasingly important growth driver for Sandstar, and the Blackfield combination strengthens our position in these high-growth markets. Four, we're launching two new innovative products in the second half of 2026 that we believe will reinforce our competitive positioning and support expansion within existing accounts. And five, our pipeline remains diversified across multiple geographies, technologies, and in markets, supporting future growth opportunities as project timing normalizes. Before turning the call over to Alicia, I would like to thank our employees for their continued dedication, our customers for their trust, and our shareholders for their ongoing support. I will now turn the call over to Alicia for review of the financial results in more detail.