We're Profitable (Sort Of): Managing Cash Flow

Erika here. We’ve closed our books on 2025 (see the annual review shared in last week’s memo. Our January numbers are in and they tell an interesting story about where we are as a business right now.

The Big Picture: Profitable on Paper, Managing Cash Flow in Reality

As you know, this year kicked off with two new agreements: NYCA and HPD. With the income from these agreements, we expect to reach profitability at some point this year- meaning we’ll no longer operate at a net burn and instead generate positive income.

Here’s what January revealed: We’re already profitable on an accrual basis, but our cash flow is still negative Let me explain what that means.

Understanding the Gap: Accrual vs. Cash

We have explained this before, and it’s worth a refresher.

Accrual basis counts money when we earn it- when when we’ve sent invoices, even if customers haven’t paid yet.

Cash basis only counts money when it actually hits our bank account.

January by the Numbers

• Revenue recognized (accrual): $271K
• Cash actually collected: $220K
• Accounts receivable (outstanding invoices): $205K

We’re “profitable” on paper because we’ve earned more than we’ve spent. But we’re cash flow negative because customers owe us $205K that we haven’t collected yet. Until those receivables convert to cash, we’re still drawing down our cash reserves to cover operations.

What this Means for Us

We’re in a good position. The outstanding invoices are all current (except for one), and we expect them to be paid in a timely manner.

In the meantime: We’re maintaining a lean budget through Q1. We continue to spend conservatively, and expenses that were contingent upon receiving NYCA and HPD income-such as salary increases- have been put on hold until that cash is in the bank.

Bottom line: Our business fundamentals are strong and we’re on track to profitability. We’re simply managing the timing gap between earning revenue and collecting it—a normal part of growing a business with larger contracts.

Metrics

Traction

• Unique Buildings: [X] (Real time, via Admin panel!)
• Annual Run Rate: $2.91MM

Financials

January look back. Descriptions of each metric live in the handbook

Metric	Value	Takeaway
Revenue (YTD)	$271,269	-10% from projection, expected
Transaction fees	$9,709 (3.6% of YTD revenue)	Share of revenue constant
Annual run rate	$2.91MM (+105% MoM)	Increase expected
Cash	$408,061	Cash position declining MoM but stable
Accounts receivable	$204,774 (+28% MoM)	Increase expected from new NYCA invoices
Runway	7 months	Declined MoM but will stabilize, see note below
Net burn (monthly, accrual)	$93,926 (% -MoM)	See note below
Net burn (YTD-to-last-month, cash)	-$92,770 (% -MoM)	See note below

Details

• Revenue: Our 2026 budget reflected being able to invoice HPD and NYCA in January. This was slow to happen as agreements worked their way through the appropriate channels.
• Annual run rate: Increase takes into account revenue accrued for NYCA.
• Cash and AR: Our cash position declined as we used our reserves to cover expenses until we receive payment from NYCA, who was invoiced end of January.
• Runway: The runway calculation is runway to cash flow break even where we looked at our current assets versus the cash (not accrual) burn rate due to net burn considerations.
• Net burn: As mentioned in the intro note, we are accrual profitable (no net burn) but cash flow negative. Until we receive our outstanding AR, we will be cash flow negative.

Current expenses by department

Department	Spend	Explanation of MoM Change
COGS	$31,325 (+20% MoM)	Consultant fees increased 293% MoM, driven by SWA invoice
G&A	$48,328 (-14% MoM)	Legal fees decllined 65% MoM to $1K
R&D	$110,263 (-%21 MoM)	Consultant fees declined 77% MoM to $9K
Sales	$19,907 (+6% MoM)	Employer tax contributions increased 99% but overall costs stable

Development

• Bug Count (P-0 and P-1): 4

Last Week’s Highs and Lows

• We have the Covered Building List connected to calc service, and the Boiler remaining useful life (RUL) is impacting rebate calculations. (FH)
• Lots more irons in the platform fire (not yet connected): address formatting updates, new EPA PM code that can pull all accounts and properties into normalized tables, BERDO and other incentive programs modeling, new weather data ELT brings daily NYC weather data and is extensible nationwide, and a prototype library of source references to speed up development, Phoenix instrumentation of a subset of our agents. (FH)
• Bomee’s award speech at the BE-Ex/WISE event–kick ass! (JMB)
• The NYCA folks from Willdan really what we showed them in Friday’s demo! It was great to be able to show them some of the very new (still in development) program management features–go team! (JMB)
• Mike Sweeney accepted out offer to join as a new Principal/Building Science Engineer! He’ll start in March. (JMB)

Any missing highlights? Please share in Slack comments.

Crow’s Nest

Looking out for icebergs: What are the risks on the horizon that we’re watching for and navigating around?

François’ List

Repeats with tweaks:

• Hat-shedding in progress (risky but necessary baton passing): EPA PM momentum -> back-end ; BKB access from momentum -> calc service ; fly / db ops François -> Chuck and Maksym ; new measure implementation human -> Claude
• Balancing short-term / vision Agents are fundamentally a combo of a/ a LLM (largely commoditized, but needs selection and possibly tuning), b/ a prompt (context + generic instruction), c/ tools (access to information and APIs relevant to perform a task), and d/ an architecture (orchestration of the above, evaluations, analytics). Even if we don’t put agents in Momentum right away, we have to make sure that what we build today prepares us for c/ and d/.

Jason’s List

Repeats:

• Improving clarity around our roadmap and prioritization process–I’ve started to meet with a PM coach to help me.
• We may have won some minds, and we’re winning some wallets, but will we win their fingers? Which users will actually use our software instead of just looking for the outputs and expecting consultant-style service?
• What is our moat in a world and industry where data wants to be free, especially when some of our largest customers are city and state agencies?
• Getting a clearer sense of our delivery velocity. I anticipate we’ll need to be more responsive to ad hoc customer feedback this year, and this will help me better plan and prioritize our product needs.

Erika’s List

• Money and making sure we get our money in the bank so we can move forward with other 2026 goals.
• Onboarding and Integration all employees and not just new hires should be able to integrate our practices, understand where information can be found, and be clear on what is expected of them. This will strengthen the onboarding and 360 feedback processes. We have been improving and I would like us to continue to progress on these two points.

On Deck for This Week

• Bhargav will lead an advice process meeting for the choice of technology stack we’ll use for the building data completion ML project for NYSERDA. (FH)
• Jason’s 360 (JMB)
• Sharing company goals with the team (EP)

Upcoming Releases

Release 114

• System admin can create new programs
• Program manager and program admin features
• Fixes for teams registering to join program
• New energy data and property names
• More accessibility improvements
• Moving advanced search to the back end

Release 115

• Program management dashboard
• Search with collections for building triage and more to come…

Please Leave Feedback

Please note your reaction to this update in the Slack channel. It helps us to know what is resonating, what is unclear, etc. Thanks!

• What are your highlights / low-lights?
• Did we miss a highlight? Something else you want to react to?