How might the shift in revenue mix between ASR services and ECD products affect the company's long‑term growth trajectory?

Fundamental outlook

Knightscope’s Q2 2025 results show a revenue mix pivot toward Autonomous Security‑Robot (ASR) services while Emergency Communication Device (ECD) product sales have slipped because of component shortages. Services generate recurring, higher‑margin cash‑flows, so the shift can improve the company’s gross‑margin trajectory over the medium term—especially if the ASR subscription base scales and the “gross‑loss” narrows. However, the decline in ECD product revenue erodes the top‑line growth rate and signals a supply‑chain bottleneck that could suppress total revenue until the component constraints are resolved. If the shortage persists, the firm may become over‑reliant on services, limiting upside from new hardware launches that historically drive headline‑growth spikes.

Market & technical implications

From a market‑sentiment perspective, the mixed‑signal (higher services, lower products) has already pushed the stock into a negative‑sentiment zone (‑60 sentiment score) and the price is likely testing the down‑trend channel formed since the 2023 rally (downward‑sloping 20‑day EMA and a broken 50‑day moving average). Traders should watch for price stabilization above the 20‑day EMA (~$1.12) as a sign that the market is pricing in a service‑driven recovery. A break below the 20‑day EMA with volume spikes could trigger a short‑bias, while a bounce toward the 50‑day EMA (~$1.25) with firm‑wide guidance on service‑growth and supply‑chain remediation would be a long‑entry point.

Actionable take‑away

- Short‑term: Stay defensive; the stock is under pressure from the revenue shortfall and widening gross loss. Consider tight‑stop short positions if the price breaches the 20‑day EMA on high volume.

- Medium‑term: If Knightscope issues a clear roadmap to expand ASR subscriptions and resolves the ECD component bottleneck, the mix shift could translate into improved recurring revenue and margin expansion, justifying a re‑entry on a breakout above the 50‑day EMA with a 3‑6 month horizon.

- Risk management: Monitor supply‑chain updates (e.g., component lead‑time reductions) and any guidance on service‑margin improvement; these will be the key catalysts that determine whether the revenue‑mix shift fuels sustainable long‑term growth or leaves the company trapped in a low‑growth, service‑only model.