Rank One Computing (NASDAQ:ROC) reported record third-quarter revenue and its first profitable quarter since its February initial public offering, as federal contract activity and software licensing helped lift sales.
Revenue rose 50% from a year earlier to $8 million in the quarter ended Sept. 30, 2026, and increased 57% from the second quarter. Net income was $0.6 million, or 3 cents per diluted share, compared with a net loss of $0.8 million, or 5 cents per share, a year earlier.
CEO Scott Swann said the results reflected increased government contracting activity and product adoption. The company also secured two federal awards during the quarter, although it had recognized little revenue from the larger of the two by quarter-end.
Federal awards drive growth
In September, ROC won a Department of Justice digital evidence contract with a potential value of up to $64.3 million over eight years, including option periods. The contract has a one-year base period valued at approximately $7.4 million.
That award followed an August announcement of a five-year federal contract for ROC’s ABIS biometric identification product. Swann initially described the award as having a potential value of up to $51 million, including approximately $2.5 million in committed contract value. He later referred to it as a $5.1 million award, without explaining the difference.
The ABIS award contributed approximately $2 million in third-quarter product revenue. ROC Evidence, the company’s digital evidence platform, generated about $63,000 in the quarter, primarily from initial services under the DOJ contract.
CFO Cody Barnes said the $7.4 million DOJ base contract is approximately 45% software licensing and 55% services. He said ROC expects to recognize about 83% of the software licensing portion in the fourth quarter, while services revenue will be spread from the fourth quarter through the third quarter of 2027. Barnes estimated a blended gross margin of about 56% for the contract and said there is potential for additional software consumption revenue.
ROC acquired digital forensics company ZTC on Aug. 31. Swann said the acquisition added expertise to ROC Evidence and contributed incremental services revenue.
Software and research revenue rise
Product revenue increased 24% year over year to $5.7 million, representing about 71% of total revenue. ABIS revenue rose 654% to approximately $2.2 million, while revenue from ROC’s software development kit, or SDK, increased 52% to $2.6 million.
Research and development contract revenue rose 175% to $2.2 million, primarily because of increased activity under a U.S. government research contract. ROC also reported approximately $0.2 million in service contract revenue, mainly attributable to the ZTC acquisition.
ROC Watch, the company’s real-time video analytics platform, generated approximately $792,000 in revenue, more than triple the second-quarter figure. Revenue nevertheless fell about 69% from a year earlier, when it benefited from a significant government deployment that has since ended.
Swann said ROC is pursuing government and commercial opportunities for Watch and aims to secure a strategic anchor customer in the first half of 2027. He cautioned that government procurement timelines are difficult to predict.
Margins and cash position
Gross margin improved to 90% from 79% a year earlier, supported by a revenue mix weighted toward software licenses. Operating expenses rose to $6.6 million from $4.3 million.
Swann cautioned investors not to expect the 90% companywide gross margin to persist, particularly as the DOJ Evidence deployment brings a larger share of services revenue. “You probably should not expect the 90% margin to sustain,” he said.
ROC ended the quarter with $7.5 million in cash and $14.8 million in working capital. Accounts receivable rose to $11.1 million from $5.6 million at the end of June. Barnes said the company’s $2.5 million revolving credit line was undrawn and that management expected cash and working capital levels to stabilize during the fourth quarter.
Swann said management was comfortable with current cash levels and would prioritize executing the new federal programs while pursuing additional contracts. He also said the company may need to add engineers deployed with customers as it grows.
About Rank One Computing (NASDAQ:ROC)
Rank One Computing is a technology company that develops artificial intelligence and computer-vision software. Its platform is designed to help organizations analyze images and video, identify visual patterns, and support identity-related applications. The company’s offerings include computer-vision software development kits, application programming interfaces, and tools for facial recognition, image matching, object detection, and related biometric workflows. These products are intended to help government, defense, law-enforcement, security, and commercial organizations incorporate visual intelligence into their applications and operational systems.
