10-Q: Knightscope Q3 2025: Revenue Up, Losses Persist Amid R&D Push

Sentiment:

Quarterly Report 12 November 2025 5:17 PM

Knightscope, Inc. reported increased revenue for Q3 2025 and the nine months ended September 30, 2025, driven by product sales and service growth, but continued to incur significant net losses and negative cash flows from operations.

Delay expectedProduct revenue increase in Q3 2025 was largely attributable to the timing of deliveries, as the company was able to fulfill orders delayed from Q2 2025 following the resolution of certain material shortages.The timing and magnitude of future supply constraints remain uncertain and could continue to impact operating results in the near term.

Capital raiseThe company is dependent on additional fundraising to sustain its ongoing operations and will need to raise additional funds in the next twelve months by selling additional equity or incurring debt.For the nine months ended September 30, 2025, the company sold 4,746,850 shares of Class A Common Stock under its At-the-Market (ATM) facility for net proceeds of approximately $31.2 million.From October 1, 2025, to November 7, 2025, an additional 1,108,623 shares of Class A Common Stock were sold under the ATM facility, generating approximately $7.1 million in net proceeds.As of November 7, 2025, approximately $35.6 million remained to be sold under the ATM facility.On March 27, 2025, the company entered into a securities purchase agreement for a registered direct offering of 625,000 shares of Class A Common Stock at $2.75 per share, generating gross proceeds of approximately $1.7 million.The company has a new shelf registration statement on Form S-3, declared effective April 11, 2025, allowing it to offer and sell up to $100.0 million in various securities.

Worse than expectedGross loss increased significantly both for the quarter (50% of revenue vs 20%) and year-to-date (36% of revenue vs 30%), primarily due to a $0.6 million write-off of obsolete ASR raw materials and lower ASR revenue.Net cash used in operating activities increased by $2.4 million for the nine months ended September 30, 2025, indicating a higher cash burn from core operations.The company continues to incur substantial net losses and has an accumulated deficit of $216.0 million, with its independent auditor expressing substantial doubt about its ability to continue as a going concern.

Summary

Total revenue for Q3 2025 increased by $0.6 million to $3.131 million, up from $2.535 million in Q3 2024.
Product revenue in Q3 2025 significantly increased by $0.551 million to $1.225 million (from $0.674 million in Q3 2024), primarily due to fulfilling delayed orders after resolving material shortages.
Service revenue in Q3 2025 was relatively flat at $1.906 million compared to $1.861 million in Q3 2024.
Total revenue for the nine months ended September 30, 2025, increased by $0.8 million to $8.797 million, up from $7.992 million in the same period of 2024.
Net loss for Q3 2025 was $9.539 million, an improvement from $10.904 million in Q3 2024, largely due to the non-recurrence of warrant and derivative liability revaluation expense.
Net loss for the nine months ended September 30, 2025, was $22.765 million, an improvement from $24.767 million in the same period of 2024.
Gross loss for Q3 2025 increased to $1.570 million (50% of revenue) from $0.506 million (20% of revenue) in Q3 2024, primarily due to a $0.6 million write-off of obsolete ASR raw materials and lower ASR revenue.
Gross loss for the nine months ended September 30, 2025, increased to $3.156 million (36% of revenue) from $2.433 million (30% of revenue) in the same period of 2024.
Research and development (R&D) expenses increased significantly by 113% to $3.773 million in Q3 2025 (from $1.770 million in Q3 2024) and by 61% to $7.997 million for the nine months ended September 30, 2025 (from $4.976 million in 2024), driven by investment in the K7 platform.
General and administrative (G&A) expenses decreased by 31% to $3.076 million in Q3 2025 (from $4.432 million in Q3 2024) and by 26% to $8.008 million for the nine months ended September 30, 2025 (from $10.883 million in 2024), due to lower investor relations fees, stock-based compensation, and professional fees.
Cash and cash equivalents increased to $20.389 million as of September 30, 2025, from $11.124 million as of December 31, 2024.
Net cash used in operating activities increased to $19.735 million for the nine months ended September 30, 2025, from $17.377 million in the same period of 2024.
Net cash provided by financing activities was $30.790 million for the nine months ended September 30, 2025, primarily from ATM facility sales ($31.2 million net proceeds) and a direct registration offering ($1.4 million).
The company moved to a new, larger corporate headquarters in Sunnyvale, California, securing approximately 33,355 square feet.
Backlog as of November 10, 2025, was approximately $2.8 million, with $2.3 million for ECDs and $0.5 million for ASRs.

Sentiment

Score: 3

Explanation: While revenue increased and G&A expenses decreased, the company continues to incur significant gross and net losses, with increasing cash burn from operations. The "going concern" warning remains, and the company is heavily reliant on further capital raises, which dilute existing shareholders. The R&D investment in K7 is positive for future potential, but current financial health is weak.

Positives

Total revenue increased by $0.6 million (23.5%) in Q3 2025 compared to Q3 2024, and by $0.8 million (10.1%) for the nine months ended September 30, 2025, compared to the same period in 2024.
Product revenue saw a significant increase of $0.551 million (81.7%) in Q3 2025, driven by improved supply chain conditions allowing fulfillment of delayed orders.
Net loss decreased by $1.365 million (12.5%) in Q3 2025 and by $2.002 million (8.1%) for the nine months ended September 30, 2025, primarily due to the non-recurrence of warrant and derivative liability revaluation expense.
Cash and cash equivalents increased significantly to $20.389 million as of September 30, 2025, from $11.124 million at December 31, 2024, indicating strengthened liquidity.
General and administrative expenses decreased by $1.356 million (30.6%) in Q3 2025 and by $2.875 million (26.4%) for the nine months ended September 30, 2025, reflecting disciplined cost management.
Successful capital raising through the At-the-Market (ATM) facility, generating $31.2 million net proceeds for the nine months ended September 30, 2025, and an additional $7.1 million from October 1 to November 7, 2025.
Relocation to a new, larger corporate headquarters (33,355 sq ft) in Sunnyvale, California, to enhance engineering, manufacturing, and client support.
Improved availability of key electronic components for ECD product assemblies due to supply chain mitigation measures.
Investment in continuous production process improvements leading to overtime labor cost reduction, improved capacity utilization, and shorter delivery timelines.

Negatives

Continued significant net losses: $9.539 million in Q3 2025 and $22.765 million for the nine months ended September 30, 2025.
Gross loss increased to $1.570 million (50% of revenue) in Q3 2025 from $0.506 million (20% of revenue) in Q3 2024, primarily due to a $0.6 million write-off of obsolete ASR raw materials and lower ASR revenue.
Gross loss for the nine months ended September 30, 2025, increased to $3.156 million (36% of revenue) from $2.433 million (30% of revenue) in the same period of 2024.
Net cash used in operating activities increased to $19.735 million for the nine months ended September 30, 2025, from $17.377 million in the same period of 2024, indicating a higher cash burn from core operations.
Accumulated deficit reached approximately $216.0 million as of September 30, 2025.
The independent registered public accounting firm expressed substantial doubt about the company's ability to continue as a going concern.
Dependence on additional fundraising to sustain ongoing operations, with no assurance of availability on commercially acceptable terms.
Research and development expenses increased significantly by 113% in Q3 2025 and 61% for the nine months ended September 30, 2025, contributing to higher operating costs.
Backlog of $2.8 million as of November 10, 2025, is relatively small compared to the company's operational scale and cash burn.

Risks

Going Concern Uncertainty: Substantial doubt about the ability to continue as a going concern due to historical losses, negative cash flows, and dependence on additional funding.
Inability to Achieve Profitability: The company has not yet generated profits or significant revenues and anticipates continued losses for the foreseeable future.
Capital Raising Challenges: Inability to raise additional capital on commercially acceptable terms could force delays, reductions, or elimination of operations.
Nasdaq Delisting Risk: Failure to comply with Nasdaq listing requirements or standards could lead to delisting of Class A Common Stock.
Fluctuations in Operating Results: Operating results are difficult to predict and may fluctuate due to sales cycles, customer acquisition/retention, contract losses, and global economic conditions (inflation, interest rates, tariffs).
Limited Market Acceptance: Limited deployments and market acceptance of products could harm the business.
Growth Management: Inability to effectively manage growth could negatively impact operations.
Operating Costs vs. Revenue: Operating costs may grow faster than revenues, harming profitability.
Debt Restrictions: Future debt arrangements may impose significant operating and financial restrictions.
Competitive Environment: Operating in a very competitive and rapidly changing environment.
Supply Chain Volatility: Potential volatility in global electronics and logistics markets could affect lead times, component pricing, and production schedules, despite recent improvements.
Sales Tax Contingencies: Potential tax liabilities if taxing authorities successfully assert that the company has not properly collected sales or other transaction taxes on its MaaS product offering.

Future Outlook

The company anticipates continued losses for the foreseeable future and expects to make significant capital investments over the next several years to ramp up production and support anticipated growth, including new product development across ASRs and ECDs, and other technology and software. Future operating losses and capital needs are subject to various factors including revenue growth, R&D spending, manufacturing scale-up, cost-reduction efforts, product launch timing, customer adoption, and broader economic conditions. The company is evaluating the impact of new accounting standards on income tax disclosures and credit losses, and does not believe a new standard on expense disaggregation will have a material impact.

Management Comments

"Knightscope is dedicated to transforming public safety through AI-driven robotics, emergency communication solutions, and real-time monitoring."
"Our comprehensive suite of solutions includes Autonomous Security Robots (ASR), advanced AI-powered detection, emergency communication devices (ECD), and the cloud-based Knightscope Security Operations Center (KSOC), providing organizations with scalable, 24/7 autonomous monitoring."
"Knightscope strongly supports efforts to revitalize domestic manufacturing and is committed to scaling U.S.-based engineering and production operations."
"We are actively investing in our new, larger production facility in Sunnyvale, California, and taking targeted actions to enhance throughput, strengthen yield, and improve overall delivery performance."
"We are optimizing our procurement and production strategies, leveraging existing supplier relationships, and evaluating alternative sourcing options where appropriate."
"Knightscope continues to maintain disciplined cost controls and may implement selective pricing adjustments as needed to offset residual tariff-related pressures while preserving value for our clients."
"Consistent with our long-term growth strategy, research and development (R&D) investments remain strategically directed toward development of the K7 platform and ECD products, advancements in autonomous navigation, and integration of AI-powered analytics."
"These efforts are designed to drive sustainable, high-margin growth as we enhance our product roadmap and competitive differentiation."
"The Company is focused on scaling its business and on implementing strategies to decrease net loss over time."
"Our attention remains focused on converting backlog into billings and cash receipts in the coming periods."
"The Company believes that its current procurement and inventory management processes have positioned it to better respond to potential disruptions; however, the timing and magnitude of future supply constraints remain uncertain and could continue to impact operating results in the near term."
"While the K7 has not been commercially deployed yet, the Company believes this investment positions it for future growth opportunities in larger environments."

Industry Context

Knightscope operates in a highly fragmented U.S. public safety market experiencing strong demand for automation and AI-driven solutions, driven by rising labor costs, staffing shortages, inconsistent service quality, and challenging crime rates. The company's integrated approach combines proactive physical deterrence with emergency response tools and remote monitoring, catering to both private and government clients. The industry is dynamic and evolving, with global material availability, supplier performance, and tariff environments influencing costs. The company's focus on domestic manufacturing and investment in AI-powered robotics aligns with broader trends towards advanced security and automation.

Comparison to Industry Standards

The filing does not provide specific comparisons to comparable companies, projects, or industry benchmarks.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Amendment to Certificate of Incorporation	Stockholders approved amendments to authorize 40,000,000 shares of blank check preferred stock, and to remove provisions related to former Super Voting Preferred Stock and Ordinary Preferred Stock.	August 16, 2024	Provides the Board of Directors flexibility to issue preferred stock with terms determined by the Board without further stockholder vote, potentially impacting existing shareholder rights.
Reverse Stock Split	A 1-for-50 reverse stock split for both Class A and Class B Common Stock was approved by stockholders and implemented by the Board of Directors.	September 13, 2024	Reduced the number of outstanding shares, typically done to increase share price and maintain Nasdaq listing compliance, but also resulted in cash payments for fractional shares.

Legal Proceedings

The company is not presently a party to any litigation that it believes to be material and is not aware of any pending or threatened litigation that could have a material adverse effect on its business, operating results, financial condition, or cash flows.
The company enters into contracts that contingently require indemnification against third-party claims, primarily related to intellectual property infringement, Regulation A Issuer Agreement, and indemnification of officers and directors. No material costs have been incurred or accrued related to these obligations.

Stakeholder Impact

Shareholders: Significant dilution from ongoing At-the-Market (ATM) offerings and other equity sales to fund operations. The "going concern" warning and continued losses pose a substantial risk to investment value. The reverse stock split in 2024 aimed to maintain Nasdaq listing, but the stock price remains volatile.
Employees: Continued investment in R&D and expansion into a new facility could indicate job stability or growth in specific areas (engineering, manufacturing). However, the overall financial instability and need for cost discipline could lead to future workforce adjustments.
Customers: Improved supply chain for ECDs and investment in the K7 platform suggest continued product development and potentially better service delivery. However, the company's financial health could impact long-term service reliability or product availability.
Creditors: The company has debt obligations, including Public Safety Infrastructure Bonds and insurance notes. The "going concern" warning indicates elevated risk for creditors, though recent capital raises have strengthened liquidity in the short term.
Suppliers: Improved supply chain management and diversification efforts could lead to more stable relationships, but the company's financial condition could pose payment risks.

Next Steps

Continue investment in the development of the K7 platform and ECD products, advancements in autonomous navigation, and integration of AI-powered analytics.
Focus on converting the existing backlog of $2.8 million into billings and cash receipts.
Utilize the remaining $35.6 million capacity under the At-the-Market (ATM) facility for capital raising.
Continue to implement strategies to decrease net loss over time and manage operating expense growth.
Undertake leasehold improvements to build out and furnish the new Sunnyvale headquarters during the last three months of 2025.
Monitor potential volatility in global electronics and logistics markets to mitigate supply chain disruptions.
Evaluate the impact of new accounting standards (ASU 2023-09 and ASU 2025-05) on financial statements and disclosures.

Key Dates

Date	Description
October 10, 2022	Company entered into a Securities Purchase Agreement with Alto Opportunity Master Fund, SPC Segregated Master Portfolio B, issuing senior secured convertible notes and warrants.
September 29, 2023	Company filed an Offering Circular on Form 1-A/A for the issuance of up to $10.0 million in Public Safety Infrastructure Bonds.
October 2, 2023	Offering Circular for Public Safety Infrastructure Bonds was qualified with the SEC.
December 14, 2023	FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, effective for fiscal years beginning after December 15, 2024.
May 15, 2024	Preferred Stock Conversion Date; all Preferred Stock automatically converted into Class A or Class B Common Stock, and preferred stock warrants reclassified to equity.
August 1, 2024	Company and Alto Opportunity Master Fund entered into an Agreement and Waiver, canceling 2022 warrants in exchange for a $3.0 million Senior Secured Promissory Note (August 2024 Note).
August 16, 2024	Stockholders approved amendments to the Certificate of Incorporation to authorize 40,000,000 shares of blank check preferred stock.
September 4, 2024	Board of Directors set the final ratio for a 1-for-50 reverse stock split.
September 13, 2024	Reverse stock split became effective; Company executed a purchase agreement for raw materials essential to ASR production, stipulating $0.8 million expenditure before December 31, 2026.
October 26, 2024	Company financed $0.3 million in business insurance premiums.
November 14, 2024	Prospectus supplement filed for ATM Facility.
November 21, 2024	Company priced a public offering of Class A Common Stock and pre-funded warrants, generating gross proceeds of approximately $12.1 million.
November 25, 2024	Public offering of Class A Common Stock and pre-funded warrants closed.
December 31, 2024	First annual interest payment due on Public Safety Infrastructure Bonds.
January 6, 2025	Company issued unregistered warrants to a consultant for advisory services.
February 4, 2025	Company financed additional business insurance premiums of $0.4 million.
March 27, 2025	Company entered into a securities purchase agreement for a registered direct offering of 625,000 shares of Class A Common Stock at $2.75 per share.
April 4, 2025	Company filed a new shelf registration statement on Form S-3 for up to $100.0 million in securities.
April 11, 2025	New shelf registration statement on Form S-3 was declared effective.
April 2025	Company entered into a new operating lease for its current headquarters in Sunnyvale, California.
June 30, 2025	Senior secured promissory note (August 2024 Note) was paid in full.
July 1, 2025	Maturity date of the Senior Secured Promissory Note (August 2024 Note).
July 4, 2025	President Trump signed the tax law referred to as One-Big-Beautiful-Bill-Act (OBBBA).
July 18, 2025	Company filed a new prospectus supplement for additional sales under the ATM Facility up to $50.0 million of Class A Common Stock.
September 30, 2025	End of the quarterly reporting period.
October 1, 2025	Start of period for additional ATM sales, generating $7.1 million net proceeds by November 7, 2025.
November 7, 2025	As of this date, 11,172,438 shares of Class A Common Stock and 336,424 shares of Class B Common Stock were outstanding; approximately $35.6 million remained to be sold under the ATM facility; cash on hand was $22.3 million; total backlog was $2.8 million.
November 10, 2025	Total backlog was approximately $2.8 million.
November 12, 2025	Date of filing of the 10-Q report.
December 15, 2025	Effective date for ASU 2025-05 (Credit Losses) for annual periods beginning after this date.
December 15, 2026	Effective date for ASU No. 2024-03 (Income Statement Expenses) for annual periods beginning after this date.
June 30, 2030	Lease term end date for the new Sunnyvale headquarters.

Recommendation

strong sell

Despite some revenue growth and cost control, Knightscope continues to operate at a significant gross and net loss, with increasing cash burn from operations. The explicit "going concern" warning from auditors, coupled with heavy reliance on dilutive equity financing (ATM offerings), indicates severe financial distress and high risk. The backlog is small relative to the cash burn, and while R&D investment is ongoing, commercial deployment of new products like K7 is not yet realized. The company's ability to secure future funding on acceptable terms is uncertain, making it a highly speculative investment with substantial downside risk for existing shareholders.

Keywords

Autonomous Security Robots (ASR), Emergency Communication Devices (ECD), Public Safety Technology, Robotics, Artificial Intelligence (AI), Security Solutions, Knightscope, SEC Filing, 10-Q, Financial Results, Q3 2025, Going Concern, Capital Raise, Nasdaq

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