ONDS is charging ahead with explosive momentum. Follow the breaking news here.
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Operator
Good day and welcome to the Ondas Holdings Inc. Third quarter 2025 conference call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today’s presentation there will be an opportunity to ask questions. To ask a question you may press star then one on your telephone keypad. To withdraw your question please press Star then two. Before we begin, the Company would like to remind you that this call may contain forward looking statements. While these forward looking statements reflect Ondas’ best current judgment, they are subject to risks and uncertainties that could cause actual results to differ materially from those implied by these forward looking statements. These risk factors are discussed in Ondas’ periodic SEC filings and in the earnings press release issued today which are both available on the Company’s website. Ondas undertakes no obligation to revise or update any forward looking statements to reflect future events or circumstances except as required by law. During this call, Ondas will refer to certain non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with Generally Accepted Accounting Principles. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is shown in our press release issued earlier today which is available at the Investor Relations section of our website. This non-GAAP information is provided as a supplement to and not as a substitute for or as superior to measures of financial performance prepared in accordance with GAAP. However, management believes these non-GAAP measures provide investors with valuable information on the underlying trends of our business. Please note this event is being recorded. I would now like to turn the presentation over to Eric Brock, Chairman and CEO. Please go ahead.
Eric Brock (Chief Executive Officer)
Well, thank you operator and good morning. I want to get started by welcoming everyone to our quarterly conference call. We appreciate you joining us today and for your continued interest in Ondas. I’m happy to be joined this morning by key members of our leadership team including Neil Laird, our CFO Oshri Lagasse, the co CEO of OAS, Meir Kleiner, President of OAS and the founder of Aerobotics and Marcus Nodelman, the CEO of Ondas Networks. So let’s turn to the agenda. We’ll begin the call with a review of our key highlights from the third quarter of 2025. Then I’ll hand the call to Neil for a financial review of our Q3 2025 results. After that we’ll provide business updates for our OAS and Ondas Networks business units where I’ll ask Oshri Meir and Marcus to share commentary on current business activity and progress against our plans. During our OAS business review, we will also share some context on the progress of our strategic acquisition program. And we will also hear from Tal Cohen, the founder and General Manager of Centrix, who is joining the call to share some insight into the Centrix technology platform and business, as well as a strategic fit with Ondas. After the operational updates, I will share an outlook for the remainder of 2025 and beyond as we continue to see strong execution on our growth strategy and further momentum into 2026. Then we will wrap the call and open the floor for investor questions. Let’s start by setting the stage for today’s discussion. Simply put, Ondas is positioned for success. That positioning wasn’t luck. It’s a result of years of hard work, discipline and planning. We’ve earned it, as have our investors. We built a strong foundation through talent and perseverance and again through the support of our investors. And now we find ourselves at the heart of an industry wide transition. The autonomous and unmanned systems, defense and security markets have reached an inflection point, moving from technology development to platform adoption. As we said many times, the market from here will be defined by scaled operating companies, not by those simply introducing new technology platforms. Innovation and technological advancement remain critical, but they’re not sufficient on their own to create high returns on capital and equity value. The winners from this point forward will be those who can leverage the extraordinary advancements in autonomy, unmanned systems and physical AI to build durable, efficient and scaled businesses. And that’s exactly what we’re doing. At ondas. We’re demonstrating platform adoption and validation across both our Optimus and Iron Drone systems. And with the new technology platforms we are layering in at oas, we’re benefiting from strong market demand while seeing firsthand the beginning what we believe is a major counter UAS boom where Ondus is extremely well positioned to win. In July we laid out our Core plus strategic growth plan and the response has been tremendous. Truly a mandate from our investors to execute. We’ve immediately demonstrated execution on that plan. We are doing what we said we would do because we’ve been planning for this transition for years. This plan creates value across the board for our customers, partners and the incredible talent driving Ondos growth. And of course it creates opportunity and long term value for our investors. A key enabler of that success will be our balance sheet strength. We raised approximately $855 million since June to support our growth plan. We believe Ondesk now has one of the strongest balance sheets in the industry, giving us access to a deep capital pool and a meaningful cost to capital advantage. Access to low cost capital is the foundation of a true competitive advantage, one that allows us to move decisively, scale efficiently and lead confidently in the fast growing markets we are attacking. To support the coming boom in autonomous unmanned technologies, the industry needs scaled leaders, companies capable of operationalizing the technologies that have been validated in the field. ONDAS is focused on that exactly, and again deliberately executing the growth plan that we laid out in July. Now let’s turn to the overview. Momentum continues to build at ondas and I’m very pleased to report that we delivered another record quarter, not just financially but also operationally. In the third quarter we generated $10.1 million in revenue, a more than six fold increase year over year and up nearly 60% sequentially from Q2. Our consolidated backlog grew to 23.3 million, more than double where we started the year, and that Number reaches over 40 million when including another 18 million related to acquisitions that have closed or pending closure in the fourth quarter. We expect our backlog to grow through the end of 2025 as our pipeline matures. Given the strengthened visibility on customer order plans, given the strength of our execution and our expectations for strong market demand, we are raising our full year 2025 revenue target to at least $36 million, which means we expect to generate more than $15 million in revenue for Q4. We are also establishing a goal for at least $110 million in revenue for 2026. The outlook for Q4 and 2026 is being driven primarily by OAS, where we continue to expand with existing customers and add new ones. Our customer pipeline is expanding and maturing and we expect a strong end to 2025 from an order standpoint, which supports our outlook for significant ongoing growth in 2026. The OAS team is building the operating infrastructure to support a multi year growth outlook. We’re scaling production field services and sustainment capabilities to meet accelerating global demand for our autonomous and unmanned systems. OSRE and MEHR will share more details on the investments we are making in scaling operations. At the same time, our strategic growth program is accelerating. This is the evolution we’ve been planning, moving from standalone technology platforms towards a system of systems model that unites air, ground sensing and communications and into an integrated autonomy ecosystem. The evolution enables a faster path to operational maturity and we believe unlocks significant upside to both revenue and profitability. To further maximize the opportunity ahead of us, we established Ondas Capital, which we launched in the third quarter. Ondas Capital is building a technology bridge from Ukraine to the United States and allied European nations focused on scaling, combat, proven unmanned and dual use technologies into production and commercialization. This initiative broadens our reach, strengthens our industrial base and supports the growing alignment between innovation, security and economic resilience. Meanwhile, ondesk Networks continues the hard work to drive adoption of its dot16 wireless connectivity platform. As Marcus will share, the AAR’s Wireless Communications Committee formally selected dot16 as a wireless roadmap standard for all AAR owned frequencies, including the 900, 450 and now 160 MHz networks. While the hard work will continue, this formal designation validates our long term strategy and continues to position Ondas Networks at the center of a generational upgrade cycle for railroad communications across North America. Finally, from a financial standpoint, the company remains exceptionally well capitalized. We raised approximately $855 million in equity in 2025, providing the capital strength to support our business plan, including both our core operations and our strategic initiatives. We are investing this capital to accelerate growth and shareholder value creation as we said we would. To summarize, ONDAZ is positioned for continued record growth through the balance of 2025 and into 2026 and we continue to build what we believe is an important and valuable defense and security technology company. I want to now provide some context for the critical objectives defined within our long term business planning. What you see here is a continuation of the strategic roadmap we’ve been building over the past year. A roadmap that’s now delivering real tangible results. ONDAS today is no longer just a developer of market leading technologies. We are building a scaled operating platform that connects world class talent technology along with partners and customers into a unified growth engine. At the center of this effort is AVAS Autonomous Systems where we continue to build the core OAS operational platform under OSRI leadership. That platform is scaling rapidly, supported by seasoned executives, an impactful Cross Functional Advisory Board and a growing ecosystem of partners across technology sales and production. Osher and Mehr will share more details on the operational infrastructure we are building later in the call. Over the last several months we’ve expanded the scope of our capabilities through strategic acquisitions and investments that strengthen our operating foundation and extend our reach across multiple domains. We entered into a definitive agreement with Sentrix which will bring advanced cyber over RF drone detection and mitigation to complement our Iron Drone Radar. We added a pair of Motion which expands us into Unmanned Ground Systems, robotics and fiber optic communications. And we acquired Forum Defense, a leader in Subsurface intelligence and de mining robotics. That brings a new dimension to OAS’s autonomy portfolio. Other smaller yet strategic acquisitions that contribute engineering, AI and optics expertise were added and that includes spo, Zickle Engineering and Insight Intelligence sensors. At the same time, we formed a strategic partnership and made a minority investment in Rift Dynamics, whose attritable drone platform and leadership in European defense markets position us perfectly to capture new opportunities in allied regions. Taken together, these additions create a growing portfolio of capabilities that make Ondas a more complete and competitive company spanning air, ground, sensing and communications technologies. And as we expand this platform, we’re also expanding our talent base, customer reach and partner ecosystem, each one reinforcing the other. This creates true operating leverage which we believe will drive faster growth, stronger margins and higher profitability as we scale and the speed at which we do this is very important. The key message here is that this is not just a compilation of technologies and corporate entities. We are building a scalable unified service delivery platform designed to service, cloud demanding customers and use cases and importantly accelerate revenue growth in our path to profitability. We’re building a stronger, more diversified ondask1 capable of sustained performance, multi domain leadership and meaningful long term value creation. Now let’s turn to Onddust Capital. We are very excited to have formally launched Ondask Capital which represents a powerful new strategic growth platform for the company. ONDASK Capital is a multi year initiative designed to deploy up to $150 million to accelerate the transition of battle tested unmanned and dual use technologies from Ukraine and other allied nations into trusted US and European production. The mission is straightforward to scale proven technologies in unmanned systems, AI and dual use innovation that are already validated in the field and ready for production whereby ONDAS and our partner ecosystem can drive faster, more cost effective deployment across the major defense and security markets in the US and Europe. This effort is not just about capital, it’s about building an industrial bridge between innovation and deployment. By integrating investment, production and market access, Ondas Capital will help drive commercialization of critical defense and security technologies, strengthen the allied industrial ecosystem and and create meaningful long term value for our shareholders. A major strategic benefit of honest Capital is its global footprint. We are anchored here in the United States, but we now have forward offices and key allied innovation in financial corridors including Boston, New York, Kiev, Tallinn, London and Frankfurt. Being on the ground in Eastern Europe and Ukraine is a critical advantage. It allows us to directly access cutting edge combat proven technologies while working side by side with our partners and allies at the front line of innovation. This complements our deep operating experience in Israel, where we demonstrated how to take advanced defense technologies and scale them successfully through production, global partnerships and commercialization. We believe Ondas Capital will become a cornerstone for strategic growth, international collaboration and industrial resilience while creating new pathways for financial and operational expansion across the ONDAS Group. And finally, in the interest of time today, I’m keeping my comments brief, but I’m pleased to share that we plan to host a dedicated ONDAZ Capital investor call in December. James Acuna, who is leading this initiative, will join me along with our leadership team to provide a deep dive into the opportunity, business model and financial plan for Andas Capital. We’re incredibly proud of the progress to date and I look forward to sharing much more very soon. I will now hand the call to Neil to provide a detailed financial update. Neil.
Neil Laird (Chief Financial Officer)
Thank you Eric. As I get started, I wanted to remind our investors that our financial statements reflect the early stage of platform adoption for our products and the initial success of our acquisition program. We expect to demonstrate a significant revenue increase over the next few quarters, both from organic growth and from our acquisition pipeline. Revenues increased over 580% to $10.1 million in the third quarter, up from $1.5 million in the third quarter of last year. This increase was driven by OAS revenues, which were $10 million compared to $1.0 million a year ago. It reflects the ongoing deliveries of iron drone and optimus systems and contributions from apparel, ground robots, related services under contracts from military and public safety customers. Gross profit was $2.6 million, representing a 26% gross margin in the third quarter as compared to a gross profit of $0.05 million in Q3 of 2024. The increase in gross profit year over year results from increased higher margin product revenue at OAS compared to lower margin service and subscription revenue in Q3 of 2024. Gross margins can be volatile on a quarter to quarter basis due to revenue levels that reflect the early stages of platform adoption, certain fixed service costs reflected in our cost of goods sold and shifts in revenue mix between product development, product development and services. Revenue Operating expenses increased to $18.1 million for Q3 of 2025 as compared to $8.7 million in Q3 of 2024, an increase of $9.4 million. Our operating expenses increased primarily due to an increase in personnel costs as we are investing in leadership to support our business growth and strategic initiatives. Those operating expenses include an increase of $5 million of non cash items cash operating expenses which exclude non cash Items such as stock based compensation, depreciation and amortization were $11.6 million in the third quarter of 2025 compared to $7.2 million in Q3 of 2024, an increase of $4.4 million. The increase in cash operating expenses is due primarily to higher personnel costs, particularly with the OAS operating infrastructure build out and similar Ondas Holdings. Similarly, at ENBAS holdings, to support expected business expansion in the coming quarters and the company’s strategic growth plan, adjusted EBITDA loss increased $1.7 million to a loss of $8.8 million. For the current quarter, the operating loss was $15.5 million compared to $8.7 million in the third quarter of last year. Now let’s turn to the cash flow statement. We had cash of $433 million as of September 30, 2025 compared to $30 million as of September 31, 2024. Cash used in operations for the first nine months remained relatively flat at $26 million compared to $25.4 million for the first nine months of 2024. Cash used in investing activities for the first nine months of 2025 included a handful of strategic investments as indicated on the slide. We find these investments as a good use of cash and expect much higher returns and than money market investments. We have discussed in detail the strategic relationship with RIFT previously as it relates to investments in companies such as Light path, Copin and SafePro. We believe we have unique expertise to evaluate the opportunity for financial returns and these companies also offer strategic business relationships within our partner ecosystem. We generated cash from financing activities of $448.2 million during the first nine months of 2025. The majority of this came from the equity offerings in June, August and September, in addition to $24.7 million from the exercise of warrants and stock options. We expect operating cash utilization to continue to improve in the coming quarters. Improved cash efficiency comes from operating expense leverage at our OAS business unit, given our expectation of increased revenue and and. Gross profit growth over the course of. 2025 and into 2026. Further, our partnership with Clear, which we expanded in July, will support our revenue growth, including for revenue streams we add through our strategic acquisition program. This working capital is non dilutive credit facilities to fund certain inventory and accounts receivable balances. Again, we held cash of $433.4 million as of September 30, 2025 compared to $30 million as of September 31, 2024. We are pleased with the results of our program to improve the structure of the balance sheet by raising cash and converting debt. Shareholders Equity as of September 30, 2025 was $487.2 million, compared to $16.6 million as of September 31, 2024. Furthermore, ONDAs pro forma cash balances were $840.4 million and stockholders equity was $894 million, adjusted for the $407 million in net proceeds raised in an equity offering on October 7, 2025 and before cash used for operations and to finance acquisitions and investments in the fourth quarter. I’ll hand it back to you now, Eric.
Eric Brock (Chief Executive Officer)
Now we transition to a review of our business units and ask Marcus, Oshri and Mehr to share updates on business development activity and operations at ondus Networks and OAS. Let’s start first with Marcus, who is moving Ondas ...
