DATA Communications Management Corp.

Management said Q2 revenue was slightly below the prior year and gross profit was in line with expectations; adjusted EBITDA was just under 13% of total revenue. Tech-enabled services and software revenue increased 10.4% in the quarter and was about 7.3% of total revenue. Free cash flow was up $15.7 million in the first half of 2026, a $16.3 million swing versus a year ago, and net debt was down 26% year to date to the lowest leverage in 3 years. Shareholders received about $3.4 million in capital returns in the quarter. Looking ahead, management expects positive year-over-year revenue growth in the third quarter and second half, improved gross profit from a more favorable mix, and added contribution from Octacom beginning in Q3. They also said they expect debt to decline over the next year to 1.5 years and reiterated commitment to the quarterly dividend.

Richard Kellam framed the quarter as a steady setup for a stronger back half rather than a surprise quarter, saying results were in line and the business is stabilizing. He emphasized that the core business is seeing better new-business momentum, improved mix, and stronger utilization, while Octacom should let DCM accelerate its IDP strategy faster than building internally. His tone was upbeat and acquisition-focused, with repeated comments that the company is 'just getting started' and that Octacom makes DCM a stronger competitor from day one.

James Lorimer highlighted strong liquidity and capital discipline, pointing to the $15.7 million of free cash flow in the first half, the 26% year-to-date reduction in net debt, and the roughly $3.4 million returned to shareholders in the quarter. He said the new credit facility leaves DCM within its debt-to-EBITDA and fixed charge coverage ratios, and that debt repayment remains a top priority alongside maintaining the dividend. On costs, he said restructuring charges should come down in the second half and that any remaining acquisition and integration costs are mainly tied to Octacom's closing and legal/advisory expenses, not ongoing restructuring.

Analysts focused on Octacom momentum, sales-funnel development, integration plans, sales-cycle timing, margin impact, restructuring costs, and capital allocation. Management said Octacom entered the deal with a strong pipeline, most historical business was inbound or referral-driven, and DCM is now adding outbound marketing and commercial reach through Andrew Varga and the broader sales team. On integration, they stressed that Octacom will operate as a division rather than being fully absorbed, with shared services mainly in IT/security and finance, and that they expect no restructuring charges from the Octacom acquisition itself. They also said the typical sales cycle can be 6 to 18 months in government and 2 to 15 months, sometimes 9 to 12 months, in enterprise, so some cross-sell opportunities may not convert to revenue until 2027.