Duos Technologies Group (NASDAQ:DUOT) said it has repositioned itself as a pure-play colocation data-center provider after selling its rail inspection portal business in July, with management outlining a strategy focused on smaller, rapidly deployable facilities supported by existing power infrastructure.
Chief Executive Officer Doug Recker said the company is targeting data-center deployments in the 1-megawatt to 20-megawatt range, rather than competing for large hyperscale projects requiring 100 MW or more. The strategy centers on identifying “stranded power” at sites such as former industrial facilities or underused cryptocurrency mining locations, where electrical infrastructure is already in place.
“We actually have the power,” Recker said, contrasting Duos’ approach with projects that depend on future utility upgrades. He said the company can deploy facilities in under six months by using modular infrastructure and sourcing equipment that is closer to off-the-shelf availability than equipment used in larger data-center developments.
Focus on modular colocation deployments
Recker said Duos operates as a landlord and colocation provider, rather than owning the graphics processing units installed by customers. The company charges roughly $180 per kilowatt for its colocation services, while passing through power costs without markup, according to management.
The company’s customer contracts generally run for five to 10 years, Recker said. He added that Duos recently deployed a 4.7-MW cluster with Axe Compute for a Tier 1 hyperscaler customer in fewer than 75 days. Supermicro delivered equipment for that installation, he said.
Duos previously purchased $144 million in GPUs to demonstrate that its modular facilities could be deployed quickly, Recker said. Those GPUs have since been sold to Axe Compute and its Tier 1 hyperscaler customer, leaving Duos focused solely on colocation services.
Management said its Columbus site is currently billing at 7 MW and is being expanded to 10 MW. Duos also has a 55-MW agreement with Axe Compute spanning two sites, including 35-MW and 20-MW locations, with projects planned in Ohio, the Carolinas and Oregon.
New 20-MW customer agreement
Recker announced that Duos had signed a new 20-MW agreement in the Carolinas with what he described as a mature, publicly traded cloud provider. He said the project is expected to enter service by the end of April 2027.
Chief Financial Officer Chris DeAlmeida said the agreement is a 10-year committed contract and characterized it as worth approximately $460 million over its full term. Recker said the company sees potential for additional deployments ranging from 5 MW to 20 MW with the same customer.
The company has secured more than 100 MW of land and power capacity across the country, management said, largely in 5-MW to 20-MW increments that it believes can be delivered within 60 to 90 days.
Economics and financing plans
DeAlmeida said Duos estimates build costs of slightly less than $6 million per MW, or about $6.5 million per MW including land. The company expects annual revenue of about $2.2 million per MW and annual EBITDA of approximately $1 million per MW.
During a question-and-answer session, however, management clarified that payback periods vary by project size. Recker said smaller 4-MW projects can have payback periods of less than three years, while larger projects may take less than five years.
DeAlmeida said Duos expects revenue of more than $50 million and positive EBITDA for 2026. For 2027, management expects revenue of more than $160 million as signed projects become operational.
The company ended the prior quarter with $112 million of cash, according to DeAlmeida, though some of that capital was deployed into projects during the third quarter. He said Duos expects to require additional capital and is primarily pursuing debt financing, potentially through project-level and corporate financing arrangements.
Management said the company currently has no debt on its balance sheet. DeAlmeida said asset-backed financing could support roughly 50% to 60% of project value, while the credit quality of the end customer and the terms of the underlying contract will also be important factors for lenders.
About Duos Technologies Group (NASDAQ:DUOT)
Duos Technologies Group, Inc develops technology that combines artificial intelligence, machine learning, computer vision and data analytics to automate the inspection and monitoring of rail and other transportation infrastructure. The company serves commercial and government customers seeking to improve safety, security and operational efficiency through automated systems.
Its core offerings include the Railcar Inspection Portal, an automated, wayside inspection system designed to capture high-resolution images and other data as trains pass through a portal.
