SKYX Q3 2025: Gross Margin Climbs to 32% as B2B Pipeline and AI Platform Expand

November 12, 2025 | By EarningsIQ Research

SKYX extended its revenue growth streak to seven quarters, driven by new B2B wins and a record 32% gross margin, while management signaled an imminent launch of AI-powered e-commerce and high-ticket plug-and-play products to accelerate margin and cash flow gains. Strategic partnerships in the Middle East and U.S. builder channels point to a shifting revenue mix and long-term platform opportunity, but near-term execution on product launches and software integration remains critical for sustaining momentum.

Summary

• B2B Channel Inflection: Builder and hotel deployments in the U.S. and Middle East signal a shift toward higher-volume commercial sales.
• Margin Expansion: Proprietary product mix and upcoming AI e-commerce platform are driving record gross margins and improved cash leverage.
• Execution Watchpoint: Near-term revenue and cash flow hinge on timely launches of turbo heater fan and ceiling fan SKUs, plus software rollout.

Performance Analysis

SKYX delivered its seventh consecutive quarter of revenue growth, with Q3 revenue reaching $24 million, up from $23 million in Q2. This momentum reflects continued penetration across both retail and B2B channels, with management highlighting sequential and year-over-year gains. Gross profit increased 8% sequentially to $8 million, while gross margin rose to a record 32%, up from 30% last quarter, driven by a greater mix of proprietary and higher-margin products sold through the company’s 60-site e-commerce network and direct builder relationships.

Operating leverage improved as expenses were held flat, resulting in a narrower net loss per share and stable adjusted EBITDA loss. Management attributed the margin gains to the “razor and blade model” (selling a base platform, then upselling higher-value add-ons) and a shift toward direct sales of plug-and-play fixtures, ceiling fans, and upcoming smart products. Deferred revenue growth from e-commerce signals accelerating sell-through, but management emphasized that larger B2B project revenues (Miami Smart City, Middle East deployments) will meaningfully impact results beginning in 2026.

• Record Gross Margin: 32% gross margin in Q3, up 4 points sequentially, driven by proprietary product mix and e-commerce channel leverage.
• Cash Conservation via Dell Model: Working capital structure leverages payables to vendors post-sale, reducing capital needs and supporting inventory scale.
• Deferred Revenue Acceleration: Growth in deferred revenue reflects rapid e-commerce sell-through and short order-to-cash cycle.

While B2C (retail) sales remain the primary driver, the company’s pipeline of major builder and hotel projects is expected to shift the revenue mix toward B2B in 2026, supporting both top-line growth and further margin gains.

Executive Commentary

Strategic Positioning

1. B2B and Global Expansion

SKYX is executing a deliberate pivot toward large-scale builder and hotel deployments, both domestically (Austin, Miami Smart City) and internationally (Middle East, notably Saudi Arabia and Egypt). These agreements unlock access to tens of thousands of units and position the platform for step-function growth as projects ramp. The Global Ventures partnership is particularly notable given the Middle East’s appetite for smart infrastructure and rapid urbanization, providing a launchpad for both recurring and hardware revenues.

2. Proprietary Product and Razor-and-Blade Model

SKYX’s core business leverages a razor-and-blade model: the ceiling receptacle is the “razor,” enabling a recurring stream of “blade” sales (fixtures, fans, smart modules). As the mix shifts toward these proprietary, higher-margin SKUs—especially new plug-and-play ceiling fans and turbo heater fans—gross margins are expected to climb further. Management highlighted that the more its own products dominate the mix, the stronger the margin profile, with licensing as a future 85%+ margin lever.

3. AI-Native E-Commerce Platform

The upcoming AI-driven upgrade to SKYX’s 60-site e-commerce network is positioned as a catalyst for conversion and sales growth. Management expects a 30% lift in conversion rates once fully deployed, with rollout targeted for Q1 or Q2 2026. The platform, led by former Amazon and Microsoft AI talent, will use advanced consumer targeting and experience optimization to drive both B2C and B2B growth, capitalizing on the company’s expanding proprietary product catalog.

4. Safety Standardization and Regulatory Tailwinds

Progress on mandatory safety standardization for ceiling outlets is a potential long-term catalyst. Management reports growing government and industry support, and emphasizes the safety benefits of its technology. If standardization is achieved, it could accelerate adoption in both residential and commercial markets, especially as U.S. manufacturing automation aligns with policy trends.

5. Capital Structure and Cash Management

SKYX continues to leverage vendor financing and strategic investor support, raising $5 million from lead shareholders and extending $11 million in notes to 2030. The working capital model, inspired by Dell, enables inventory scale with minimal capital outlay, while deferred revenue growth supports liquidity as the business ramps.

Key Considerations

This quarter marks a strategic inflection as SKYX transitions from retail-centric sales to a hybrid B2B-B2C platform, with proprietary technology and software expected to drive both top-line and margin expansion. Investors should weigh the following:

Key Considerations:

• B2B Ramp Timing: Builder and hotel project revenues are slated to scale in 2026, with near-term results still reliant on retail and e-commerce execution.
• Product Launch Execution: Timely production and channel placement of turbo heater fan and ceiling fan SKUs are critical for Q4 and Q1 cash flow targets.
• AI Platform Integration: The impact of the AI-native e-commerce upgrade hinges on successful rollout and user adoption, with full benefit expected by mid-2026.
• Safety Standardization: Progress toward regulatory mandates could unlock step-change adoption, but timing and regulatory hurdles remain uncertain.
• Margin Sustainability: Ongoing mix shift to proprietary SKUs and licensing is essential for maintaining and expanding record gross margins.

Risks

Execution risk remains elevated as SKYX juggles multiple product launches, geographic expansions, and a major e-commerce platform upgrade. Delays in B2B ramp, regulatory setbacks, or supply chain disruptions could impact profitability and cash flow. The company’s reliance on a small number of large projects and the timing of AI integration add further uncertainty around near-term financial performance.

Forward Outlook

For Q4 2025, SKYX guided to:

• Deployment of approximately 50,000 units by year-end, with mix shifting toward higher-ticket SKUs (ceiling fans, turbo heater fans, exit signs).
• Initial shipments to Austin and Florida builder projects, with Miami Smart City and Middle East deployments expected to ramp in 2026.

For full-year 2026, management signaled:

• Significant B2B revenue growth, with builder and hotel channels expected to outpace retail sales.
• Full rollout of AI-native e-commerce platform by Q2, targeting a 30% lift in conversion rates.

Management highlighted several factors that will shape results:

• Successful launch and channel placement of new plug-and-play SKUs.
• Continued progress on safety standardization and U.S. manufacturing automation.

Takeaways

SKYX’s Q3 underscores a business at the cusp of a strategic transition, with proprietary product launches and B2B partnerships poised to reshape the revenue mix and margin structure.

• Margin Inflection: Record 32% gross margin validates the platform model and proprietary product strategy, with further upside tied to mix and licensing.
• B2B Pipeline Momentum: Commercial wins in the U.S. and Middle East provide multi-year growth visibility, but timing of revenue recognition is a key watchpoint.
• AI and Software Leverage: The AI-native e-commerce upgrade is a critical lever for conversion and scale, with full impact expected by mid-2026.

Conclusion

SKYX’s Q3 results highlight a company executing on both product and channel expansion, with a record gross margin and growing B2B pipeline positioning it for accelerated growth and profitability. The next two quarters will test management’s ability to deliver on product launches and software integration, setting the stage for a pivotal 2026.

Industry Read-Through

SKYX’s margin expansion and B2B shift reflect a broader smart home and building automation trend, as developers and hotel operators seek integrated, plug-and-play solutions to differentiate properties and enhance safety. The company’s focus on regulatory standardization and AI-driven e-commerce parallels moves by other IoT and proptech players aiming to unify fragmented ecosystems. Investors should watch for similar platform strategies and margin levers across the connected device and building technology space, as well as the increasing importance of software and data monetization in hardware-centric businesses.

SKYX Technology Smart Home Platform B2B Ecommerce AI Margin Expansion