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Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

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<ul><li>Three expansion announcements in less than a month, all within existing accounts.</li><li>On September 22, Cloudastructure reported nine sites with a global commercial real estate customer, up 80% from five at the start of 2026, including an industrial warehouse supporting supply chain operations.</li><li>On October 1, a housing partner spanning multifamily and senior living added two properties, reaching nine, with a goal of deploying across ~23 properties by year-end 2027. </li></ul>

Three expansion announcements in less than a month, all within existing accounts.On September 22, Cloudastructure reported nine sites with a global commercial real estate customer, up 80% from five at the start of 2026, including an industrial warehouse supporting supply chain operations.On October 1, a housing partner spanning multifamily and senior living added two properties, reaching nine, with a goal of deploying across ~23 properties by year-end 2027. 

CSAI: The Existing Customer Flywheel Turns: Three Expansions in Less than a Month

<ul><li>Multifamily remains the base, with ~200 of ~10,000 addressable properties penetrated.</li><li>McCormick said Cloudastructure works with eight of the 10 largest US multifamily property managers but is deployed at ~200 of the ~10,000 properties those firms manage.</li><li>He expects the mix to shift toward active construction sites, commercial buildings, and transportation and logistics over the next two to five years while multifamily expansion continues.</li></ul>

Multifamily remains the base, with ~200 of ~10,000 addressable properties penetrated.McCormick said Cloudastructure works with eight of the 10 largest US multifamily property managers but is deployed at ~200 of the ~10,000 properties those firms manage.He expects the mix to shift toward active construction sites, commercial buildings, and transportation and logistics over the next two to five years while multifamily expansion continues.

<ul><li>Hardware-Light, Margin-Right. While revenue was lighter than we expected, we were impressed by the strong growth (+164% Y/Y) in subscription revenue (Cloud Video Surveillance and Remote Guarding).</li><li>We expect the mix to be volatile and appreciate hardware and installation revenue as a driver of subscription revenue.</li><li>Nonetheless, at the margin, we would generally trade gross margin over top-line performance. </li></ul>

Hardware-Light, Margin-Right. While revenue was lighter than we expected, we were impressed by the strong growth (+164% Y/Y) in subscription revenue (Cloud Video Surveillance and Remote Guarding).We expect the mix to be volatile and appreciate hardware and installation revenue as a driver of subscription revenue.Nonetheless, at the margin, we would generally trade gross margin over top-line performance. 

CSAI: 2Q26 Results; Hardware-Light, Margin-Right!

<ul><li>Caught up on filings; solid progress in 1Q on recurring revenue. CSA1 filed its 10-Q for 2Q26 after a delay due to an accounting matter related to preferred stock, with a relatively minor restatement below the operating income line.</li><li>It is encouraging to see the company put this matter behind it as it continues to increase revenue strongly and print the highest quarterly gross margin and the richest mix of services revenue (49%) since going public.</li><li>While we expect variability in business mix (and gross margin) given that lower-margin installation and hardware are a precursor to services revenue, it is nonetheless a positive data point.</li></ul>

Caught up on filings; solid progress in 1Q on recurring revenue. CSA1 filed its 10-Q for 2Q26 after a delay due to an accounting matter related to preferred stock, with a relatively minor restatement below the operating income line.It is encouraging to see the company put this matter behind it as it continues to increase revenue strongly and print the highest quarterly gross margin and the richest mix of services revenue (49%) since going public.While we expect variability in business mix (and gross margin) given that lower-margin installation and hardware are a precursor to services revenue, it is nonetheless a positive data point.

CSAI: Caught Up on Filings; Solid 1Q26 Recurring Revenue and Gross Margin

<ul><li>Surveillance is migrating from on-premise DVRs to cloud video-surveillance-as-a-service. </li><li>On-premise systems still hold 64% of the AI surveillance market, but cloud and hybrid deployments are the fastest-growing segment, expanding at a 22% CAGR as owners shift to platforms offering scalability, remote access, and lower infrastructure costs (Mordor Intelligence, AI Video in Surveillance Market, 2026).</li><li>Cloud-native providers like Cloudastructure, with no legacy on-premise base to defend, are positioned to capture the replacement cycle as aging analog and first-generation IP systems age out.</li></ul>

Surveillance is migrating from on-premise DVRs to cloud video-surveillance-as-a-service. On-premise systems still hold 64% of the AI surveillance market, but cloud and hybrid deployments are the fastest-growing segment, expanding at a 22% CAGR as owners shift to platforms offering scalability, remote access, and lower infrastructure costs (Mordor Intelligence, AI Video in Surveillance Market, 2026).Cloud-native providers like Cloudastructure, with no legacy on-premise base to defend, are positioned to capture the replacement cycle as aging analog and first-generation IP systems age out.

CSAI: Five AI, Surveillance, and Property Management Trends That Benefit Cloudastructure

United States

Cloudastructure, Inc. operates as a software company. The Company develops cloud-native video surveillance platform with AI and computer vision analytics for better and more cost-effective enterprise security. Cloudastructure serves customers in the United States.

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Cloudastructure (CSAI US)

CSAI: The Existing Customer Flywheel Turns: Three Expansions in Less than a Month

On October 13, a multifamily operator added communities in Lake Worth Beach and St. Petersburg, Florida, bringing deployments to nine from five...

Water Tower Research

CSAI: Targeting an Extended Growth Phase

McCormick said Cloudastructure works with eight of the 10 largest US multifamily property managers but is deployed at ~200 of the ~10,000...

Water Tower Research

CSAI: 2Q26 Results; Hardware-Light, Margin-Right!

While revenue was lighter than we expected, we were impressed by the strong growth (+164% Y/Y) in subscription revenue (Cloud Video Surveillance...

Water Tower Research

CSAI: Caught Up on Filings; Solid 1Q26 Recurring Revenue and Gross Margin

Caught up on filings; solid progress in 1Q on recurring revenue. CSA1 filed its 10-Q for 2Q26 after a delay due to an accounting matter related to...

Water Tower Research

CSAI: Five AI, Surveillance, and Property Management Trends That Benefit Cloudastructure

Cloud-native providers like Cloudastructure, with no legacy on-premise base to defend, are positioned to capture the replacement cycle as aging...

Water Tower Research

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