Q2 2025 Ondas Holdings Inc Earnings Call
Speaker #1: Welcome to the Ondas Holdings Inc., second 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.
Operator: Welcome to the Ondas Holdings Inc. second 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's 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's periodic SEC filings and in the earnings press release issued today, which are both available on the company's website.
Speaker #1: 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.
Speaker #1: 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.
Speaker #1: 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.
Speaker #1: These risk factors are discussed in Ondas' periodic SEC filings and in the earnings press release issued today, both of which are available on the company's website.
Speaker #1: 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.
Operator: 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, not as a substitute for, or as superior to measures of financial performance prepared in accordance with GAAP. However, management believes that 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.
Speaker #1: 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.
Speaker #1: Which is available at the company in the investor relations section of our website. This non-GAAP information is provided as a supplement to, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP.
Speaker #1: However, management believes that these non-GAAP measures provide investors with valuable information on the underlying trends of our business. Please note this event is being recorded.
Speaker #1: I would now like to turn the presentation over to Eric Brock, chairman and CEO. Please go ahead.
Operator: Please go ahead.
Speaker #3: Well, thank you, operator. And good morning. I want to get started by welcoming you to our quarterly conference call. We appreciate you joining us today and for your continued interest in Ondas.
Eric Brock: Thank you, operator, and good morning. I want to get started by welcoming you to our quarterly conference call. We appreciate you joining us today and for your continued interest in Ondas Holdings Inc. I am happy to be joined today by key members of our leadership team, including Neil Laird, our CFO; Oshri Lugassy, the Co-CEO of Ondas Autonomous Systems; Meir Kliner, the President of OAS and founder of American Robotics; and Markus Nottelmann, the CEO of Ondas Networks. Let us now turn to the agenda. I will begin with a review of our key highlights from the second quarter of 2025. I will then hand the call to Neil for a financial review of our Q2 2025 results.
Speaker #3: I am happy to be joined today by key members of our leadership team, including Neil Laird, our CFO, Oshri Lugassy, the co-CEO of Ondas Autonomous Systems, Meir Kliner, the president of OAS and founder of Air Robotics, and Markus Nottelmann, the CEO of Ondas Networks.
Speaker #3: Let's now turn to the agenda. I will begin with a review of our key highlights from the second quarter of 2025. I will then hand the call to Neil for a financial review of our Q2 2025 results.
Speaker #3: We will then provide a business update for our OAS and Ondas Networks businesses, where I will ask our business unit leaders, Oshri Lugassy and Markus Nottelmann, to provide commentary around current business activity and the progress we are making on our business plans.
Eric Brock: We will then provide a business update for our OAS and Ondas Networks businesses, where I will ask our business unit leaders, Oshri, Meir, and Markus, to provide commentary around current business activity and the progress we are making on our business plans. I will then provide an outlook for the remainder of 2025, where we continue to anticipate a record year of revenue growth, primarily driven by OAS. We will wrap the call and open the floor for investor questions. We met for an OAS-specific investor day about a month ago and shared a lot of detail on our plan, progress, and outlook. We will try to be succinct today, but at the same time, we do have quite a bit to discuss, so we are going to jump right into it now. I will start by saying that Q2 was another step forward for Ondas Holdings Inc.
Speaker #3: I will then provide an outlook for the remainder of 2025, where we continue to anticipate a record year of revenue growth, primarily driven by OAS.
Speaker #3: We will wrap the call and open the floor for investor questions. Now, we met for an OAS-specific investor date about a month ago, and shared a lot of detail on our plan, progress, and outlook.
Speaker #3: So we will try to be succinct today, but at the same time, we do have quite a bit to discuss, so we're going to jump right into it now.
Speaker #3: I'll start by saying that Q2 was another step forward for Ondas. We executed well, sustained momentum, and delivered a quarter that reflects both growth and operational progress.
Eric Brock: We executed well, sustained momentum, and delivered a quarter that reflects both growth and operational progress. We are demonstrating that our multi-year growth plan is firmly on track, supported by the growing global tailwinds and demand for our autonomous drone platforms. We generated record quarterly revenue of $6.3 million, a more than six-fold increase over the same period last year, and up 50% sequentially. This performance was driven by disciplined execution at OAS, where we are delivering against existing programs, expanding with current customers, and capturing new programs, new customers across the world. With this momentum and a growing order pipeline, we are reaffirming our full-year revenue target of at least $25 million in 2025, with more than $20 million to be generated by OAS.
Speaker #3: We are demonstrating that our multi-year growth plan is firmly on track, supported by the growing global tailwinds and demand for our autonomous drone platforms.
Speaker #3: We generated record quarterly revenue of $6.3 million, a more than six-fold increase over the same period last year, and up 50% sequentially. This performance was driven by disciplined execution at OAS, where we are delivering against existing programs, expanding with existing current customers, and capturing new programs new customers across the world.
Speaker #3: With this momentum and a growing order pipeline, we are reaffirming our full-year revenue target of at least $25 million in 2025. With more than $20 million to be generated by OAS.
Speaker #3: Our customer pipeline is both growing and maturing, and we expect to secure significant strategically important orders from new customers in the second half of 2025.
Eric Brock: Our customer pipeline is both growing and maturing, and we expect to secure significant, strategically important orders from new customers in the second half of 2025. This will enable us to meet our revenue goals for the year while building backlog to support continued rapid growth into 2026. From an execution standpoint, OAS continues to expand its footprint in defense and homeland security markets in Europe, the Middle East, and the United States. Our Iron Drone radar system is combat-proven with a leading military customer and now new customers. That real-world validation is fueling a global marketing push. Since February, our dedicated Iron Drone demonstration team has been engaging customers worldwide, driving strong interest in generating new demand. Similarly, we are executing and expanding major programs for our Optimus system, where we see a growing and maturing pipeline as well.
Speaker #3: This will enable us to meet our revenue goals for the year while building backlog to support continued rapid growth into 2026. From an execution standpoint, OAS continues to expand its footprint in defense and homeland security markets in Europe, the Middle East, and the United States.
Speaker #3: Our Iron Drone Radar System is combat-proven with a leading military customer and now new customers. And that real-world validation is fueling a global marketing push.
Speaker #3: Since February, our dedicated Iron Drone Demonstration Team has been engaging customers worldwide, driving strong interest in generating new demand. Similarly, we are executing and expanding major programs for our Optimus System, where we see a growing and maturing pipeline as well.
Speaker #3: Collectively this quarter, we deployed Iron Drone under a NATO governmental order at an international airport in Europe. We believe this may have been the first mitigation or inceptor CEOAS layer at a location like this in the world, and we expect these sorts of critical locations to be a large market for Ondas.
Eric Brock: Collectively, this quarter, we deployed Iron Drone under a NATO governmental order at an international airport in Europe. We believe this may have been the first mitigation or inceptor counter-UAS layer at a location like this in the world, and we expect these sorts of critical locations to be a large market for Ondas. We also completed a successful homeland security pilot in Asia that we expect will convert into a multi-year program. On the Optimus side, our UAE drone box fleet continues to expand for public safety missions and urban environments, and we expect additional growth this year from both existing and new customers, including important opportunities here in the United States. We have generated additional defense and homeland security opportunities, at least several, that we anticipate will close before year-end. At Ondas Networks, we advanced our long-term strategy with meaningful milestones.
Speaker #3: We also completed a successful homeland security pilot in Asia that we expect will convert into a multi-year program. On the Optimus side, our UAE drone box fleet continues to expand for public safety missions and urban environments, and we expect additional growth this year from both existing and new customers.
Speaker #3: Including important opportunities here in the United States. We have generated additional defense and homeland security opportunities—at least several that we anticipate will close before year-end.
Speaker #3: At Ondas Networks, we advanced our long-term strategy with meaningful milestones. The Association of American Railroads formally selected our DOT 16 protocol for the next generation head of train, end of train system, validating years of strategic development work.
Eric Brock: The Association of American Railroads formally selected our DOT 16 protocol for the next-generation head-of-train and end-of-train system, validating years of strategic development work. We delivered our new 220 megahertz ASIS radios to Amtrak, marking the start of a commercial rollout. We continued migration activity in Chicago's 900 megahertz A block and saw increased field activity for broader DOT 16 applications. Overall, we are executing our plan, scaling production and service capabilities, deepening customer relationships, and positioning Ondas for sustained growth into 2026. Let's take a closer look at the business metrics behind that momentum. In the last 12 months, OAS has secured over $39 million in orders, and our backlog has grown to $22 million at the end of Q2, up from $10 million at the year-end 2024. This backlog growth is translating into revenue, and our operational footprint in the U.S.
Speaker #3: We delivered our new 220 megahertz ASUS radios to Amtrak, marking the start of a commercial rollout. We continued migration activity in Chicago's 900 megahertz AVLOC and saw increased field activity for broader DOT 16 applications.
Speaker #3: Overall, we are executing our plan, scaling production and service capabilities, deepening customer relationships, and positioning Ondas for sustained growth into 2026. Let's take a closer look at the business metrics behind that momentum.
Speaker #3: In the last 12 months, OAS has secured over $39 million in orders, and our backlog has grown to $22 million at the end of Q2.
Speaker #3: Up from $10 million at the year-end 2024. This backlog growth is translating into revenue, and our operational footprint in the U.S. and Europe is expanding to support scaled adoption of our platforms.
Eric Brock: and Europe is expanding to support scaled adoption of our platforms. Our balance sheet is in the strongest position ever. We ended Q2 with $68.6 million in cash, and in July, we fully retired the remaining balance of Ondas Holdings Inc. convertible notes through equity conversion. With no holding company debt outstanding, we have the financial flexibility to execute our growth plan. Strategically, we continue to expand our ecosystem, as we will explain in more detail during this call. The Mistral partnership is poised to accelerate U.S. government adoption of Iron Drone and Optimus. Our production partnership with Detroit Manufacturing Systems strengthens U.S. supply chain resiliency and cost efficiency. We launched our strategic M&A program, and our strategic pipeline is both growing and maturing. In short, we are currently on track to build a scalable, well-capitalized operating platform, converting backlog into revenue and creating visibility for continued growth into 2026.
Speaker #3: Our balance sheet is the strongest in the strongest position ever. We entered Q2 with 68.6 million dollars in cash, and in July, we fully retired the remaining balance of Ondas Holdings Convertible Notes through equity conversion.
Speaker #3: With no holding company debt outstanding, we have the financial flexibility to execute our growth plan. Strategically, we continue to expand our ecosystem as we will explain in more detail during this call.
Speaker #3: The Mistral partnership is poised to accelerate US government adoption of Iron Drone and Optimus. Our production partnership with Detroit Manufacturing Systems strengthens US supply chain resiliency and cost efficiency.
Speaker #3: We launched our strategic M&A program and our strategic pipeline is both growing and maturing. In short, we are currently on track to build a scalable, well-capitalized operating platform converting backlog into revenue, and creating visibility for continued growth into 2026.
Speaker #3: I want to highlight a powerful moment for Ondas last week. As we shared in some detail at our OAS Investor Day in July, the drone sector is benefiting from significant policy tailwinds.
Eric Brock: I want to highlight a powerful moment for Ondas Holdings Inc. last week. As we shared in some detail at our OAS Investor Day in July, the drone sector is benefiting from significant policy tailwinds. We highlight some of them here on this slide. Ondas Holdings Inc. was thrilled to see the FAA, in response to President Trump's executive order, which is awesomely entitled "Unleashing American Drone Dominance," announce the launch of a new FAA rulemaking process to enable BB loss drone operations nationwide. This was a huge moment for the drone sector, and Ondas Holdings Inc., along with other industry leaders, have been working hard to get to this point.
Speaker #3: We highlight some of them here on this slide. Ondas was thrilled to see the FAA in response to President Trump's executive order, which is awesomely entitled, "Unleashing American Drone Dominance," announced the launch of new FAA rulemaking process to enable BBLOS drone operations nationwide.
Speaker #3: This was a huge moment for the drone sector, and Ondas, along with other industry leaders, has been working hard to get to this point.
Speaker #3: At the FAA's press conference in Washington, where transportation secretary Sean Duffy announced the rulemaking, two of the three drone systems on display front and center were ours.
Eric Brock: At the FAA's press conference in Washington, where Transportation Secretary Sean Duffy announced the rulemaking, two of the three drone systems on display, front and center, were ours: the Optimus system on the left-hand side and the Iron Drone radar in the middle, right under the podium. This visibility, as such a pivotal policy announcement, underscores our leadership in autonomous aerial systems, the dual-use markets we address, and the role we at Ondas Holdings Inc. are playing in shaping the future of drone operations here in the United States. Let me be very clear. We do believe our business will be a significant beneficiary of these regulatory advances in the strengthening demand and policy tailwinds outlined here. Let's take a moment now to talk about our big news from Friday, where we announced our partnership and investment with RIFT Dynamics.
Speaker #3: The Optimus system on the left-hand side and the Iron Drone Radar in the middle, right under the podium. This visibility at such a pivotal policy announcement underscores our leadership in autonomous aerial systems, the dual-use markets we address, and the role we at Ondas are playing in shaping the future of drone operations here in the United States.
Speaker #3: Let me be very clear, we do believe our business will be a significant beneficiary of these regulatory advances, and the strengthening demand and policy tailwinds outlined here.
Speaker #3: Let's take a moment now to talk about our big news from Friday, where we announced our partnership and investment with Rift Dynamics. Rift is led by drone and defense industry pioneer Knut Rulwig.
Eric Brock: RIFT is led by drone and defense industry pioneer Knut Rohwig. Knut is a longtime friend to me and our team at Ondas. He and his team bring tremendous pedigrees in the defense and aerospace sectors, with deep operational experience and trusted relationships across Europe's drone and defense ecosystem. As we discussed at our recent investor day, building a successful defense and security technology company will require localization in all major theaters. Together, Ondas and RIFT can help with those localization efforts, and the formalization of our relationship with RIFT is synergistic with the relationships we are building with other defense partners in Europe and our broader on-the-ground efforts on the continent. RIFT's WASP platform is a highly capable, low-cost, attritable drone designed for scale. It's ideally suited for reconnaissance, strike, and other critical missions where affordability, reliability, and mass production are paramount.
Speaker #3: Knut is a long-time friend to me and our team at Ondas. He and his team bring tremendous pedigrees in the defense and aerospace sectors, with deep operational experience and trusted relationships across Europe's drone and defense ecosystem.
Speaker #3: As we discussed at our recent investor date, building a successful defense and security technology company will require localization in all major theaters. Together, Ondas and Rift can help with those localization efforts, and the formalization of our relationship with Rift is synergistic with the relationships we are building with other defense partners in Europe and our broader on-the-ground efforts on the continent.
Speaker #3: Rift's WASP platform is a highly capable, low-cost, attributable drone designed for scale. Its ideally suited for reconnaissance, strike, and other critical missions where affordability, reliability, and mass production are paramount.
Speaker #3: As Rift has outlined, the WASP is cheap to use and cheap to lose, and this aligns squarely with the US DoD's priorities and Secretary Pete Hegseth's call for mass lethality to equip our warfighters at scale.
Eric Brock: As RIFT has outlined, the WASP is cheap to use and cheap to lose, and this aligns squarely with the U.S. DOD's priorities and Secretary Pete Hegseth's call for mass lethality to equip our warfighters at scale. RIFT is doing the right things out of the gates. They have used a clean sheet in the design of the WASP. This means they can start with high-quality, NDA-compliant components on day one, meeting the very specific DOD requirements for a low-cost, mass-producible, attritable drone platform. Further, the system has extreme modularity, and this flexibility will allow for segmentation based upon DOD requirements today and as they evolve in the future. One of RIFT's greatest strengths is the meticulous supply chain preparation they've put in place, positioning them to deliver in volume at a critical go-to-market advantage in this space.
Speaker #3: Rift is doing the right things out of the gates. They have used a clean sheet in the design of the WASP. This means they can start with high-quality NDA-compliant components on day one, meeting the very specific DoD requirements for a low-cost, mass-producible, attributable drone platform.
Speaker #3: Further, the system has extreme modularity, and this flexibility will allow for segmentation based upon DoD requirements today and as they evolve in the future.
Speaker #3: One of Rift's greatest strengths is the meticulous supply chain preparation they've put in place, positioning them to deliver in volume at a critical go-to-market advantage in the space.
Speaker #3: That supply chain relies on contract manufacturers, and we, along with Rift, have identified very capable global contract manufacturers with facilities in Europe and the US to produce significant volumes with very reasonable timelines.
Eric Brock: That supply chain relies on contract manufacturers, and we, along with RIFT, have identified very capable global contract manufacturers with facilities in Europe and the U.S. to produce significant volumes with very reasonable timelines. Of course, we believe there is a significant revenue opportunity in the United States here. The spending on one-way attritable drone platforms, as laid out in the One Big Beautiful Bill, was north of a billion dollars, and that is in addition to the DOD-budgeted spending on ISR-type drones, which is a segment that WASP addresses as well. As part of this partnership and our investment, I plan to join RIFT Dynamics' board to help support their growth, and Ondas Holdings Inc. will benefit from their success. We intend to strongly support their efforts, and I believe this relationship has some exciting avenues to grow from here.
Speaker #3: Of course, we believe there is a significant revenue opportunity in the United States here. The spending on one-way attributable drones as laid out in the one big, beautiful bill was north of a billion dollars, and that is in addition to the DoD budgeted spending on ISR-type drones, which is a segment that WASP addresses as well.
Speaker #3: As part of this partnership and our investment, I plan to join Rift's board to help support their growth, and Ondas will benefit from their success.
Speaker #3: We intend to strongly support their efforts, and I believe this relationship has some exciting avenues to grow from here. I will now hand the call to Neil to provide a detailed financial update.
Eric Brock: I will now hand the call to Neil Laird to provide a detailed financial update. Neil?
Speaker #3: Neil?
Speaker #4: Thank you, Eric. As I get started, I want to remind our investors that our financial statements reflect the early stage of platform adoption for both Ondas Networks and OAS.
Neil Laird: Thank you, Eric. As I get started, I want to remind our investors that our financial statements reflect the early stage of platform adoption for both Ondas Networks and OAS. We expect to demonstrate significant operating leverage in the next 12 months as revenues grow, though today's revenue levels do not yet cover our operating expenses. For Ondas Networks, revenues will fluctuate from quarter to quarter, given the uncertainty around the timing of customer activity in front of the targeted commercial rollouts in the 900 megahertz network, the development programs underway with Siemens and MXC Rail, Amtrak, and Northeast Corridor deliveries, as well as the ongoing work on additional rail networks beyond 900 megahertz and new applications being developed with customers.
Speaker #4: We expect to demonstrate significant operating leverage in the next 12 months as revenues grow, though today's revenue levels do not yet cover our operating expenses.
Speaker #4: For Ondas Networks, revenues will fluctuate from quarter to quarter, given the uncertainty around the timing of customer activity, in front of the targeted commercial rollouts in the 900 megahertz network, the development programs underway with Siemens and MXC Rail, Amtrak and Northeast Corridor deliveries, as well as the ongoing work on additional rail networks, the ON900 megahertz, and new applications being developed with customers.
Speaker #4: Similarly, revenues at OAS are expected to vary from quarter to quarter, and to normalize into a more predictable pattern as we grow our customer base and more of these customers enter fleet programs and recurring service agreements.
Neil Laird: Similarly, revenues at OAS are expected to vary from quarter to quarter and to normalize into a more predictable pattern as we grow our customer base and more of these customers enter fleet programs and recurring service agreements. Revenues increased over 500% to $6.3 million in the second quarter, from $1 million in the second quarter of last year. This increase was driven by OAS revenues, which were $6.1 million compared to $0.3 million a year ago. This reflects the shipment of products and services from the orders received over the past 12 months, and specifically to defense and homeland security customers in Israel, the United Arab Emirates, and Europe. The gross profit was $3.3 million, representing a 53% gross margin in the second quarter, as compared to a gross loss of $0.2 million in Q2 2024.
Speaker #4: Revenues increased over 500% to $6.3 million, in the second quarter, from $1 million in the second quarter of last year. This increase was driven by OAS revenues, which were $6.1 million, compared to $0.3 million a year ago.
Speaker #4: This reflects the shipment of products and services from the orders received over the past 12 months, and specifically to defense and homeless security customers in Israel, the United Arab Emirates, and Europe.
Speaker #4: Gross profit was $3.3 million, representing a 53% gross margin in the second quarter. This is a significant improvement compared to a gross loss of $0.2 million in Q2 2024.
Speaker #4: The increase in gross margins year over year results from increased higher margin products, revenue at OAS. Compared to the lower margin service and subscription revenue in the second quarter of 2024.
Neil Laird: The increase in gross margins year over year results from increased higher margin products revenue at OAS compared to the lower margin service and subscription revenue in the second quarter of 2024. Our gross margins can be volatile on a quarter-to-quarter basis due to the revenue levels that reflect the early stages of platform adoption, certain fixed service costs reflected in our cost of goods sold, and shifts in the revenue mix between product, development, and services revenue. Operating expenses increased to $12.6 million for the second quarter of 2025, as opposed to $8.1 million in Q2 2024, an increase of $4.5 million. Our operating expenses increased primarily due to an increase in human resource costs to support our business growth and strategic initiatives. These operating expenses include non-cash items, and our non-cash items were higher year over year.
Speaker #4: Gross margins can be volatile on a quarter-to-quarter basis due to the revenue levels that reflect the early stages of platform adoption, certain fixed service costs reflected in our cost of goods sold, and shifts in the revenue mix between product, development, and services revenue.
Speaker #4: Operating expenses increased to $12.6 million for the second quarter of 2025, as opposed to $8.1 million in Q2 2024, an increase of 4.5 million.
Speaker #4: Our operating expenses increased primarily due to an increase in human resource costs to support our business growth and strategic initiatives. These operating expenses include non-cash items, and our non-cash items were higher year over year.
Speaker #4: Cash operating expenses which exclude non-cash items such as stock-based compensation, depreciation, and amortization were 9.4 million in Q2 2025, compared to 6.6 million in Q2 2024, an increase of 2.8 million.
Neil Laird: Cash operating expenses, which exclude non-cash items such as stock-based compensation, depreciation, and amortization, were $9.4 million in Q2 2025, compared to $6.6 million in Q2 2024, an increase of $2.8 million. The increase in cash operating expenses includes approximately $1 million in holding company and other strategic costs to implement our M&A program, restructure the balance sheet, and establish internal processes to facilitate further growth. Employee costs were approximately $2 million higher because of salaries and for additional headcount and bonuses at OAS in line with the increased revenue. Additionally, stock-based compensation included in operating expenses increased by $1.6 million because of stock options and RSUs issued to hire and retain employees and advisors. Adjusted EBITDA improved from a $6.7 million to a loss of $5.8 million. This reflects the increase in gross margin of $3.5 million, exceeding the increase in cash operating expenses of $2.8 million.
Speaker #4: The increase in cash operating expenses, including approximately $1 million in holding company and other strategic costs, to implement our M&A program, restructure the balance sheet, and establish internal processes to facilitate further growth.
Speaker #4: Employee costs were approximately $2 million higher, because of salaries and for additional headcount and bonuses at OAS, in line with the increased revenue. Additionally, stock-based compensation, included in operating expenses, increased by 1.6 million dollars, because of stock options and RSUs, issued to hire and retain employees and advisors.
Speaker #4: Adjusted EBITDA improved from 6.7 million lost to a loss of 5.8 million dollars. This reflects the increase in gross margin of 3.5 million exceeding the increase in cash operating expenses of 2.8 million.
Speaker #4: The operating loss was 9.2 million in Q2 2025, compared to 8.3 million in Q2 2024. Other expense was 1.5 million dollars higher, primarily because of additional interest expense, which included the faster amortization of debt issuance costs, because of the accelerated conversion of debt.
Neil Laird: The operating loss was $9.2 million in Q2 2025, compared to $8.3 million in Q2 2024. Other expense was $1.5 million higher, primarily because of additional interest expense, which included the faster amortization of debt issuance costs because of the accelerated conversion of debt. Now let's turn our attention to the cash flow statement. We held cash of $68.6 million as of June 30, 2025, compared to $30 million as of December 31, 2024. Cash used in operations for the first six months decreased slightly to $15.1 million, compared to $16.3 million for the first six months of 2024, very much in line with the improvement in EBITDA. We also had cash from financing activities of $53.9 million in the first half of 2025. This includes $42.7 million net of expenses from the equity offering in June and $10 million from the exercise of warrants.
Speaker #4: So now let's turn our attention to the cash flow statement. We held cash of $68.6 million as of June the 30th, 2025. Compared to $30 million as of December the 31st, 2024.
Speaker #4: Cash used in operations for the first six months decreased slightly to 15.1 million dollars, compared to 16.3 million dollars for the first six months of 2024.
Speaker #4: Very much in line with the improvement in EBITDA. We also had cash from financing activities of 53.9 million dollars, in the first half of 2025.
Speaker #4: This includes 42.7 million dollars net of expenses, from the equity offering in June, and 10 million dollars from the exercise of warrants. We expect cash utilization to continue to improve, throughout 2025.
Neil Laird: We expect cash utilization to continue to improve throughout 2025. Improved efficiency comes from operating expense leverage at our OAS business unit, given our expectation of increased revenue and gross profit growth over the course of 2025. Further, our expanding 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 support is non-dilutive credit facilities to fund certain inventory and accounts receivable balances. On the balance sheet, again, we held $68.6 million of cash as of June 30, 2025, compared to $30.0 million as of December 31, 2024. Ondas Holdings Inc. had $5.2 million in convertible debt outstanding, down from $44.6 million at the end of 2024, reflecting a significant version of our outstanding convertible notes into equity.
Speaker #4: Improved efficiency comes from operating expense leverage at our OAS business unit, given our expectation of increased revenue and gross profit growth over the course of 2025.
Speaker #4: Further, our expanded partnership with Clear, which we expanded in July, will support our revenue growth, including for revenue streams we add through our strategic acquisition program.
Speaker #4: This working capital support is non-dilutive credit facilities to fund certain inventory and accounts receivable balances. On the balance sheet, again we held $68.6 million of cash as of June 30, 2025, compared to $30.0 million as of December 31, 2024.
Speaker #4: Ondas as Holdings had 5.2 million dollars in convertible debt, outstanding. Down from 44.6 million dollars at the end of 2024, reflecting a significant version of our outstanding convertible notes into equity.
Speaker #4: The remaining balance was converted in July and the holding company's convertible debt is now zero. We are pleased with the results of our program to improve the structure of the balance sheet, by raising cash and converting debt.
Neil Laird: The remaining balance was converted in July, and the holding company's convertible debt is now zero. We are pleased with the results of our program to improve the structure of the balance sheet by raising cash and converting debt. Shareholder equity as of June 30, 2025, was $90.8 million, compared to $16.6 million as of December 31, 2024. Perhaps now a little bit more on our capitalization. We have approximately 219.2 million shares outstanding as of today, which is an increase from the 137.4 million shares outstanding on our Q1 investment call in May. As outlined here, this increase is primarily related to the complete elimination of the convertible debt at Ondas Holdings Inc. and the June equity offering, as well as the exercise of warrants by investors with a de minimis amount of employee stock options and RSUs. Of course, Ondas Holdings Inc.
Speaker #4: Shareholders' equity as of June the 30th, 2025, was 90.8 million dollars, compared to 16.6 million dollars as of December the 31st, 2024. And perhaps now a little bit more on our capitalization.
Speaker #4: We have approximately $219.2 million shares outstanding as of today, which is an increase from the $137.4 million shares outstanding on our quarterly first quarter investment to call in May.
Speaker #4: As outlined here, this increase is primarily related to the complete elimination of the convertible debt at Ondas Holdings and the June equity offering, as well as the exercise of warrants by investors, with a de minimis amount of employee stock options and RSUs.
Speaker #4: Of course, Ondas has benefited from a dramatic improvement in balance sheet health, by the elimination of the convertible debt and the more than 54.4 million cash infusion, both of which positions us well to execute our growth plan.
Neil Laird: has benefited from a dramatic improvement in balance sheet health by the elimination of the convertible debt and the more than $54.4 million cash infusion, both of which positions us well to execute our growth plan. With that, I will now hand the call back to Eric.
Speaker #4: With that, I will now hand the call back to Eric.
Speaker #3: Thank you, Neil. I want to take a moment to emphasize two things that Neil has communicated in his financial review. Firstly, we believe our strong balance sheet is a massive competitive advantage for Ondas, as we execute our core and strategic growth plan from a position of strength.
Eric Brock: Thank you, Neil. I want to take a moment to emphasize two things that Neil has communicated in his financial review. Firstly, we believe our strong balance sheet is a massive competitive advantage for Ondas Holdings Inc. as we execute our core and strategic growth plan from a position of strength. Further, we intend to sustain Ondas Holdings Inc.'s strong capitalization profile and use it to the maximum benefit for our investors. Secondly, our share count has risen through the support of our investors, including new institutional holders who believe in our technology and end markets, but are also backing our vision and support our core plus strategic growth plan. We have a mandate to win in the AI-driven features and autonomy-driven global defense and security markets we are targeting.
Speaker #3: Further, we intend to sustain Ondas' strong capitalization profile and use it to the maximum benefit for our investors. Secondly, our share count has risen through the support of our investors, including new institutional holders who believe in our technology and end markets, but are also backing our vision and support our core plus strategic growth plan.
Speaker #3: We have a mandate to win in the AI-enabled and autonomy-driven global defense and security markets we are targeting. From here, I believe a combination of the core platform expansion and our M&A program will allow us to reward our investors for the significant contributions they have made to help position the company for the success we see in the coming quarters and years ahead.
Eric Brock: From here, I believe a combination of the core operating platform expansion and our M&A pipeline will allow us to reward our investors for the significant contributions they have made to help us position the company for the success we see in the coming quarters and years ahead. Now we will transition to a review of our business units and ask Markus, Oshri, and Meir to share updates on the business development activity and operations at Ondas Networks and OAS. Markus Nottelmann will start with Ondas Networks. Markus?
Speaker #3: Now we will transition to a review of our business units and ask Markus, Oshri, and Meir to share updates on the business development activity and operations at Ondas Networks and OAS.
Speaker #3: Markus will start with Ondas Networks. Markus?
Speaker #1: Thank you, Eric. We have been very busy at Ondas Networks, and it's great to be here and update you on our progress. I will start by highlighting that during the second quarter, the IEEE formally ratified the 80216T wireless standard.
Markus Nottelmann: Thank you, Eric. We have been very busy at Ondas Networks, and it's great to be here and update you on our progress. I will start by highlighting that during the second quarter, the IEEE formally ratified the 802.16t wireless standard. As you are well aware, this DOT 16 protocol was pioneered by Ondas, and over the last four years, we have worked tirelessly with the industry to prepare for formal adoption. Advancements like this are contributing to a broadening acceptance of our DOT 16 protocol platform across the North American rail industry. Indeed, the selection of DOT 16 protocol as the wireless backbone for the 450 megahertz NGHE network by the Association of American Railroads on April 11th was another important validation of Ondas' technology.
Speaker #1: As you are well aware, this DOT 16T standard was pioneered by Ondas and over the last four years, we have worked tirelessly with the industry to prepare for formal adoption.
Speaker #1: Advancements like this are contributing to a broadening acceptance of our DOT 16 platform across the North American rail industry. Indeed, the selection of DOT 16 as the wireless backbone for the 450 megahertz NGHE network by the AAR on April 11th was another important validation of Ondas' technology.
Speaker #1: This is not only an important milestone in the development of the NGHE 4.0's specification, but also a significant endorsement of 80216 technology, and the railroad operating environment, and has helped accelerate discussions across all the rail frequencies.
Markus Nottelmann: This is not only an important milestone in the development of the NGHE 4.0 specification, but also a significant endorsement of 802.16t wireless standard technology in the railroad operating environment and has helped accelerate discussions across all the rail frequencies. While we are establishing live networks supporting centralized train control via the ATCS product lines with Siemens, we are also progressing additional 900 megahertz field trials with multiple class ones and regional railroads alongside these full-scale deployments. These activities and class one pilots are testing new use cases that showcase the value of DOT 16 protocol as a true multipurpose network. Importantly, we are now seeing broadening awareness within the industry on how DOT 16 protocol can be applied across the critical wireless railroad networks where the massive capacity increases in data capacity and flexibility for the new IP-based use cases are extremely valuable.
Speaker #1: While we are establishing live networks supporting centralized train control via the ATCS product lines with Siemens, we are also progressing additional 900 megahertz field trials with multiple Class Ones and regional railroads alongside these full-scale deployments.
Speaker #1: These activities and class one pilots are testing new use cases that showcase the value of DOT 16 as a true multi-purpose network. Importantly, we are now seeing broadening awareness within the industry on how DOT 16 can be applied across the critical wireless railroad networks where the massive capacity increases in data capacity and flexibility for the new IP-based use cases are extremely valuable.
Speaker #1: As we show here, the capacity increases across all railroad private networks are material. For example, in the 220 megahertz spectrum, where the critical positive train control safety application resides, DOT 16 can increase network capacity by five times.
Markus Nottelmann: As we show here, the capacity increases across all railroad private networks are material. For example, in the 220 megahertz spectrum where the critical positive train control safety application resides, DOT 16 protocol can increase network capacity by five times. This would help the railroads avoid costly spectrum purchases. The 160 megahertz network, the largest single spectrum block owned by the railroads, represents a significant new opportunity, transforming legacy voice networks into high-capacity VoIP-enabled data systems. I will discuss this in more detail on the next slide, and note that the 160 network is the largest rail network as measured by channel capacity and is ubiquitous, covering every mile of track across North America. Meanwhile, legacy voice or land-mobile radio technology is utilizing less than 10% of this capacity.
Speaker #1: This would help the railroads avoid costly spectrum purchases. The 160 megahertz network, the largest single spectrum block owned by the railroads, represents a significant new opportunity, transforming legacy voice networks into high-capacity, VoIP-enabled data systems.
Speaker #1: I will discuss this in more detail on the next slide, and note that the 160 network is the largest rail network as measured by a channel capacity and is ubiquitous, covering every mile of track across North America.
Speaker #1: Meanwhile, legacy voice or LAN mobile radio technology is utilizing less than 10% of this capacity. As we will discuss next, the prospect of converting 160 megahertz from a legacy LMR network to a hybrid data and voice over IP network is a significant opportunity for railroad customers in Ondas.
Markus Nottelmann: As we will discuss next, the prospect of converting 160 megahertz from a legacy LMR network to a hybrid data and voice over IP network is a significant opportunity for railroad customers and Ondas. As noted, there is strong interest in deploying DOT 16 over 160 megahertz networks, and we are demonstrating how this can connect multiple applications, including mission-critical voice over a single IP network. Our field trials are showing wayside systems tied directly into the back office, new operational applications, and high-quality voice over IP communications that can meaningfully improve railroad safety and efficiency. Given the 160 megahertz system-wide coverage and channel capacity, the potential to convert these networks to DOT 16 is driving the creation of a growing ecosystem of rail applications. We plan to expand these demonstrations to a class one railroad in the first half of next year.
Speaker #1: As noted, there is strong interest in deploying DOT 16 over 160 megahertz networks, and we're demonstrating how this can connect multiple applications, including mission-critical voice, over a single IP network.
Speaker #1: Our field trials are showing wayside systems tied directly into the back office, new operational applications, and high-quality voice over IP communications that can meaningfully improve railroad safety and efficiency.
Speaker #1: Given the 160 megahertz system-wide coverage and channel capacity, the potential to convert these networks to DOT 16 is driving the creation of a growing ecosystem of rail applications.
Speaker #1: We plan to expand these demonstrations to a class one railroad in the first half of next year. Despite the lack of wide-scale commercial network buildouts to date, momentum in rail around Ondas and our DOT 16 capabilities continued to build.
Markus Nottelmann: Despite the lack of wide-scale commercial network buildouts to date, momentum in rail around Ondas and our DOT 16 capabilities continue to build. We are supporting ongoing 900 megahertz deployments, progressing A block migrations to primary network use, and positioning 900 megahertz as an alternative path for certain 220 megahertz applications. As we have discussed in recent investor calls, the new 900 megahertz A block is being positioned as both a primary network for CTC as well as a secondary network for both CTC and PTC. We are also working on integrating multiple new applications on the new 900 megahertz network. We are demonstrating how the railroads can upgrade from outdated legacy single-purpose networks to modern and secure IP-based systems that enable new data-intensive applications to support efficient train operations and safety tools.
Speaker #1: We're supporting ongoing 900 megahertz deployments, progressing Ablock migrations to primary network use, and positioning 900 megahertz as an alternative path for certain 220 megahertz applications.
Speaker #1: As we have discussed in recent investor calls, the new 900 megahertz Ablock is being positioned as both a primary network for CTC, as well as a secondary network for both CTC and PTC.
Speaker #1: We are also working on integrating multiple new applications on the new 900 megahertz network. We are demonstrating how the railroads can upgrade from outdated legacy single-purpose networks to modern and secure IP-based systems that enable new data-intensive applications to support efficient train operations and safety tools.
Speaker #1: We are field testing the 900 megahertz in dark territory for a class one operator, while our 220 megahertz PTC data radio program with Amtrak remains on track.
Markus Nottelmann: We are field testing the 900 megahertz in dark territory for a class one operator, while our 220 megahertz PTC data radio program with Amtrak remains on track, with deliveries starting this quarter. We are also in discussions with other Northeast Corridor operators for additional deployments. On the NGHE front, MXV Rail is finalizing the 4.0 standard by year-end, and we are engaging with HOT and EOT vendors to commercialize the next generation of products. As data-intensive IoT solutions are becoming more prominent on class one railroads, the need for timely data transmission increases significantly. Ondas Networks is engaging with several class ones on solving long-standing data transmission needs. We continue to engage with the railroad community on the significant value of DOT 16 protocol-enabled networks and the many applications they enable.
Speaker #1: With deliveries starting this quarter, we're also in discussions with other Northeast Corridor operators for additional deployments. On the NGHE front, MXV Rail is finalizing the 4.0 standard by year end, and we're engaging with HOT and EOT vendors to commercialize the next generation of products.
Speaker #1: As data-intensive IoT solutions are becoming more prominent on class one railroads, the need for timely data transmission increases significantly. Ondas Networks is engaging with several class ones on solving long-standing data transmission needs.
Speaker #1: We continue to engage with the railroad community on the significant value of DOT 16-enabled networks, and the many applications they enable. By building out an ecosystem of DOT 16 applications, we will continue to drive the commercialization of the Ondas technology platform.
Markus Nottelmann: By building out an ecosystem of DOT 16 protocol applications, we will continue to drive the commercialization of the Ondas Holdings Inc. technology platform. I will now hand the call back to Eric.
Speaker #1: I will now hand the call back to Eric.
Speaker #3: Thank you, Markus. I will now ask Oshri Lugassy to take the floor and provide a business update for our OAS business unit. Meir Kliner and I will also weigh in on the progress of the OAS business expansion.
Eric Brock: Thank you, Markus. I will now ask Oshri Lugassy to take the floor and provide a business update for our OAS business unit. Meir Kliner and I will also weigh in on the progress of the OAS business expansion. Oshri, please proceed.
Speaker #3: Oshri, please proceed.
Speaker #4: Thank you, Eric. Ondas Autonomous Systems maintains strong momentum during Q2 2025, particularly in the defense and homeland security sector, generating approximately $6.1 million in revenue—more than a six-fold increase from the same period in 2024.
Oshri Lugassy: Thank you, Eric. Ondas Autonomous Systems maintained strong momentum during Q2 2025, particularly in the defense and homeland security sector, generating approximately $6.1 million in revenue and more than a six-fold increase from the same period in 2024. OAS has captured $23.3 million in orders year to date, driving backlog growth, which reflected continued strong global demand for the Optimus and Iron Drone platforms. At the start of Q2, we are now at $3.2 million, followed on order from a governmental entity in the UAE to extend the Optimus drone network, supporting public safety operations. This order expanded by $600,000 to $3.8 million when fleet support services were later added. Later in the quarter, American Robotics secured a $14.3 million order from a major defense customer, primarily for our Optimus drone system, the largest single Optimus order in the company's history, significantly expanding our presence in the global defense sector.
Speaker #4: OAS has captured 23.3 million dollars in orders, yield-to-date. Driving backlog growth, which reflected continued strong global demand for the Optimus and Iron Drone platforms.
Speaker #4: At the start of Q2, we announced a 3.2 million dollars follow-on order from a governmental entity in the UAE to extend the Optimus drone network, supporting public safety operations.
Speaker #4: This order expanded by 600,000 dollars to 3.8 million dollars, when fleet support services were later added. Later in the quarter, Aerobotics secured a 14.3 million dollar order from a major defense customer.
Speaker #4: Primarily for our Optimus drone system, the largest single Optimus order in the company's history. Significantly expanding our presence in the global defense sector. Growing Q2, we secured an executed strategically important orders for new defense and homeless security customers for Iron Drone.
Oshri Lugassy: During Q2, we secured and executed strategically important orders for new defense and homeland security customers for Iron Drone. The first was a $3.4 million order from a European governmental defense agency in a NATO member country, successfully executing the system's first operational development in Europe. The second was a $1.7 million order from a governmental agency in Asia for homeland security operations, with potential for future expansion. The order was delivered, and we look forward to receiving a follow-up order. In the U.S. market, American Robotics secured a purchase order from a major U.S. urban public safety agency for the CASTA rail system, an advanced drone detection and counter-UAS platform. Our work, two of the Iron Drone radar systems, continued through Q2, showcasing the radar's unmatched autonomous counter-UAS capabilities and building trust through live high-impact demonstrations. During these demos, we engaged directly with top-tier defense and public safety stakeholders.
Speaker #4: The first was a 3.4 million dollar order from a European governmental defense agency in a NATO member country. Successfully executed the system's first operational development in Europe.
Speaker #4: The second was a 1.7 million dollar order from a governmental agency in Asia, for homeless security operations. With potential for future expansion, the order was delivered and we look forward to receiving a follow-up order.
Speaker #4: In the US market, American Robotics secured a purchase order from a major US Pullman public safety agency, for the custom rail system. An advanced drone detection and counter-US platform.
Speaker #4: Our work towards the Iron Drone Radar Systems continued through Q2 showcasing the radar's unmatched autonomous counter-US capabilities and building trust through life. High-impact demonstrations.
Speaker #4: During these demos, we engaged directly with top-tier defense and public safety stakeholders. This has already resulted in two new Iron Drone customers in Europe and Asia, in Q2 2025.
Oshri Lugassy: This has already resulted in two new Iron Drone customers in Europe and Asia in Q2 2025, with additional customers and orders in progress. More stops are planned in the U.S. and Europe over the coming months. Each event is designed to turn pipeline opportunities into active programs and programs into long-term expansion. Recently, and over a period of months, we participated in Project Vanline, a joint U.S. and UK initiative created to shape the future of counter-UAS capabilities. The Iron Drone's high level of autonomy, localizable design, and usability offer a unique value proposition for sustained high-frequency operations in next-generation military and homeland security missions. We will continue to promote it through participation in upcoming projects. Another key outcome of our global tour is integration with new local detection systems and C2 platforms. In Q2, we successfully completed integrations with multiple third-party detection and C2 systems.
Speaker #4: With additional customers and orders in progress. Master ops are planned in the US and Europe over the coming months. Each event is designed to turn pipeline opportunities into active programs, and programs into long-term expansion.
Speaker #4: Recently and over a period of months, we participated in projects online. A joint US and UK initiative created to shape the future of counter-US capabilities.
Speaker #4: The Iron Drone's high level of autonomy, localizer design, and usability offer a unique value proposition for sustained high-frequency operations in next-generation military and homeland security missions.
Speaker #4: We will continue to promote it through participation in upcoming projects. Another key outcome of our global tour is integration with new local detection systems and C2 platforms, in Q2 we successfully completed integrations with multiple third-party detection and C2 systems.
Speaker #4: Each completed integration proves the robustness of the Iron Drone Radar System and creates more opportunities for expansion as the system becomes a true plug-and-play component for key defense and homeless security contractual and end users.
Oshri Lugassy: Each completed integration proves the robustness of the Iron Drone radar system and creates more opportunities for expansion as the system becomes a true plug-and-play component for key defense and homeland security contractors and end users. We plan to continue our world tour with demos, POCs, and pilot programs in Europe and Asia to accelerate expansion. Recall our strategy is to engage with larger customers for initial pilot programs, which we then work to transition to multi-tier infrastructure program buildouts. In the U.S., we plan to demonstrate our counter-UAS capabilities to the NYPD and with distribution and partners to multiple U.S. DOD services branches during Q3. The New York Post highlighted that NYPD was seeking expanded authority to utilize counter-UAS tools and specifically highlighted their interest in deploying American Robotics Iron Drone platform.
Speaker #4: We plan to continue our world tour with demos, POCs, and pilot programs in Europe and Asia, to accelerate expansion. Recall our strategy is to engage with larger customers for initial pilot programs which we then work to transition to multi-tier infrastructure program buildouts.
Speaker #4: In the U.S., we plan to demonstrate our counter-U.S. capabilities to the NYPD, and with distribution and partners to multiple U.S. DoD service branches during Q3.
Speaker #4: The New York Post highlighted that NYPD was seeking expanded authority to utilize counter-US tools and specifically highlighted their interest in deploying American robotics, Iron Drone platform.
Speaker #4: We have other demonstrations with important partners and customers in the United States. We should include our participation in the Interpulse San Diego border counter-US expo in September.
Oshri Lugassy: We have other demonstrations with important partners and customers in the United States, which includes our participation in the Interpol-San Diego border counter-UAS expo in September. I will hand the call now to Meir, where we will discuss our operating platform expansion. Meir.
Speaker #4: I will hand the call now to Meir, where we will discuss our operating platform expansion. Meir.
Speaker #1: Thank you, Oshri. As part of our rapid expansion plan, we are building OAS as a fully operating platform—not just great products, but the service delivery infrastructure to deploy them at scale.
Operator: Thank you, Oshri. As part of our rapid expansion plan, we are building OAS as a full operating platform, not just great products, but a service delivery infrastructure to deploy them at scale. This includes sales and marketing, supply chain and production, field services and sustainment, finance and administration, legal, regulatory, and government affairs. Our customers, ranging from defense ministries to homeland security and first responders, need more than innovation; they need trusted, responsive partners who can deliver consistent results. During Q2, we established a new advisory board for OAS to support our global expansion and leadership focusing on autonomous drone and AI-powered intelligence, surveillance, and reconnaissance, or ISR, platforms for the defense and homeland security markets. We also announced that Brigadier General Red Yaniv Rotem was our first appointee to a newly formed advisory board. Mr.
Speaker #1: This includes sales and marketing, supply chain and production, field services and sustainment, finance and administration, legal, regulatory, and government affairs. Our customers, ranging from defense ministries to homeless security and first responders, need more than innovation; they need trusted, responsive partners who can deliver consistent results.
Speaker #1: During Q2, we established a new advisory board for OAS to support our global expansion and leadership-focusing on autonomous drone and AI-powered intelligence surveillance and reconnaissance, or ISR, platforms for the defense and homeless security markets.
Speaker #1: We also announced that Brigadier General Red Yaniv Rotem was our first appointee to a newly formed advisory board. Mr. Rotem brings decades of leadership experience in Israel defense R&D, weapon system innovation, and business development.
Operator: Rotem brings decades of leadership experience in Israel defense R&D, weapon system innovation, and business development, leveraging his deep leadership experience as a formal head of R&D at the Israeli Ministry of Defense. His guidelines will help shape OAS's strategies and direction in emerging technology and global defense partnerships. We will announce new high-impact advisory board members in coming weeks. We're investing in our internal leadership while simultaneously expanding through partnerships, especially for integration, distribution, and field services, and you will learn more about the talent we are adding in the coming months. Of course, this activity is also supporting the M&A program we laid out at the OAS Investor Day in July. Our M&A program is progressing nicely. Recently, we acquired Zikel Engineering, an Israeli firm specializing in defense industry engineering projects.
Speaker #1: Leveraging his deep leadership experience as formal Head of R&D at the Israeli Ministry of Defense, his guidelines will help shape OAS's strategies' direction in emerging technology and global defense partnerships.
Speaker #1: We will announce new high-impact advisory board members in coming weeks. We're investing in our internal leadership while simultaneously expanding through partnerships, especially for integration, distribution, and field services, and you will learn more about the talent we are adding in the coming months.
Speaker #1: Of course, this activity is also supporting the M&A program we lay out at the OAS investor day in July. Our M&A program is progressing nicely.
Speaker #1: Recently, we acquired Siegel Engineering, an Israeli firm specializing in defense industry engineering projects. This small, multi-disciplinary team delivers rapid high-quality solutions in enhancing our capabilities in advanced drone and defense system development and strengthening our strategic relationships with military customers and vendors.
Operator: This small, multidisciplinary team delivers rapid, high-quality solutions, enhancing our capabilities in advanced drone and defense system development and strengthening our strategic relationships with military customers and vendors. We close on this strategic acquisition in July and believe Zikel's business can grow significantly under Ondas' umbrella. We are building our platform, and we are confident our transition to a scaled operating company will create lasting strategic advantages. During Q2 and into 2025, we are expanding our technical and field operation infrastructure to support higher production capacity, more field deployments, and long-term scaling of programs for defense and homeland security markets. We continue developing and integrating advanced physical AI features for mission autonomy, including AI-driven mission planning, target detection and identification, and other real-time engagement capabilities across both the Optimus and Iron Drone platforms.
Speaker #1: We close on this strategic acquisition in July and believe Siegel's business can grow significantly under Ondas Umbrella. We are building our platform, and we are confident our transition to scaled operating company will create lasting strategic advantages.
Speaker #1: During Q2 and into 2025, we are expanding our technical and field operation infrastructure to support higher production capacity. More field deployments and long-term scaling of programs for defense and homeless security markets.
Speaker #1: We continue developing and integrating advanced physical AI features for mission autonomy, including AI-driven mission planning, target detection and identification, and other real-time engagement capabilities across both the Optimus and Iron Drone platforms.
Speaker #1: In the first half of the year, our R&D and integration teams successfully integrated the Iron Drone with leading cutting-edge drone detection systems and widely deployed C2 systems used by NATO-allied end users.
Operator: In the first half of the year, our R&D and integration teams successfully integrated the Iron Drone with leading cutting-edge drone detection systems and widely deployed C2 systems used by NATO allied end users. We see our integration capabilities as a key driver of our product, distribution, strategy, and go-to-market plans. We expect to announce more partnerships and integrations during the second half of the year. I will now end the call to Eric to discuss U.S. activity at OAS. Eric?
Speaker #1: We see our integration capabilities as a key driver of our product distribution, strategy, and go-to-market plans. We expect to announce more partnerships and integrations during the second half of the year.
Speaker #1: I will now end the call to Eric to discuss US activity at OAS. Eric?
Speaker #3: Thank you, Meir. And also to you, Oshri and Markus. Let's turn our focus to American Robotics and the US markets. On the regulatory front, Optimus is making substantial progress towards inclusion on the Green UAS list, and Iron Drone is slated for submission in Q3.
Eric Brock: Thank you, Meir, and also to you, Oshri and Markus. Let's turn our focus to American Robotics and the U.S. markets. On the regulatory front, Optimus is making substantial progress towards inclusion on the Green UAS list, and Iron Drone is slated for submission in Q3. Effective July 2025, I want to note, all Green UAS platforms are automatically added to the Blue UAS.
Speaker #3: Effective July 2025, I want to note, all Green UAS platforms are automatically added to the Blue UAS cleared list. Of course, Blue UAS certifications are critical for DoD adoption at scale, for systems such as Optimus and Iron Drone.
Operator: cleared list. Of course, Blue UAS certifications are critical for DOD adoption at scale for systems such as Optimus and Iron Drone. I believe we can and will share more details on this progress soon. Operationally, we are accelerating our U.S. expansion and announced key partnerships with immediate engagement during Q2, supporting a much larger go-to-market strategy with American Robotics in the United States. Our partnership with Mistral gives us strategic access to federal procurement channels backed by over 30 years of DOD and DHS contracting experience. Mistral is actively driving business developments for both Optimus and Iron Drone Raider, with a goal of securing at least one DOD order by year-end. We believe this is a modest goal based on the demand environment, our platform maturity, and our customer pipeline development activity.
Speaker #3: I believe we can and will share more details on this progress soon. Operationally, we're accelerating our US expansion and announced key partnerships with immediate engagement during Q2, supporting a much larger go-to-market strategy with American Robotics in the United States.
Speaker #3: Our partnership with Mistral gives us strategic access to federal procurement channels backed by over 30 years of DoD and DHS contract tracking experience. Mistral is actively driving business development for both Optimus and Iron Drone Radar, with the goal of at least securing at least one DoD order by year end.
Operator: On the production side, Detroit Manufacturing Systems will support NDA-compliant, made-in-USA manufacturing at its Connecticut facility in Michigan. This partnership strengthens our supply chain resilience, reduces costs, shortens delivery timelines, and improves gross margin profiles through design for manufacture at scale. This work was started immediately when we announced the partnership. Lastly, I want to highlight that we are actively pursuing opportunities under the Replicator II DOD initiatives while building a U.S. pipeline that includes major urban critical infrastructure programs, fleet expansions with existing utility customers, initial Optimus deployments at a U.S. military base in the second half of 2025, and campus security programs with a Fortune 100 customer. Of course, our partnership with RIFT Dynamics is going to be part of the American Robotics story in the coming quarters as well.
Operator: Let's now transition to our outlook for the second half of 2025, starting with a status update on our strategic growth program. At our OAS Investor Day earlier this year, we laid out a clear opportunity to build a scaled, AI-enabled, and autonomous systems defense and security platform that can deliver advanced technology, integrated solutions, and high-value services to customers globally. We have been methodical in advancing that plan. Our strategy is to layer in and finance the advancement of mature, field-proven technology platforms while making targeted investments in talent and ecosystem partnerships to strengthen both our global and localized go-to-market capabilities. This approach allows us to address an increasingly broad technology, solutions, and services offering for the emerging AI-enabled and autonomous systems markets and build our capabilities in defense, security, and critical infrastructure markets, which are poised for strong growth in the years ahead.
At our OAS investor date earlier this year. We laid out a clear opportunity to build a scale, AI enabled, an autonomous systems defense and security platform that can deliver advanced technology, Integrated Solutions and high-value services to customers globally. We've been methodical and advancing that plan. Our strategy is to layer in in finance, the advancement of mature field proven technology platforms, while making targeting invest, targeted investments in talent and ecosystem Partnerships to strengthen. Both our Global and localized, go to market capabilities.
Operator: We are deliberately building an operating platform that goes beyond individual products, integrating capabilities across autonomous ISR, counter-UAS, mission planning, and real-time engagement to deliver comprehensive solutions aligned with the operational priorities of defense, homeland security, and critical infrastructure customers worldwide. Our M&A pipeline is robust, diverse, and maturing. We have identified multiple targets that can accelerate our roadmap for mature, mission-ready technology platforms that expand our solutions offering to service and integration partners that strengthen customer adoption. We have highlighted today the RIFT transaction and Zikel Engineering, which are both highly strategic. While most strategic investments will be for control positions, RIFT is a situation where we are cementing the partnership with a small investment. RIFT's business is capital light, a necessity for developing low-cost, attritable drone platforms, and the company, frankly, did not need our capital.
This approach allows us to address an increasingly broad Technology Solutions and Services offering to the emerging AI enabled and autonomous systems markets and build our capabilities and defense security and critical infrastructure markets, which employs for strong growth in the years ahead.
We are deliberately building and operating platform that goes beyond individual products, integrating capabilities. Across autonomous ISR counter uas, Mission planning and real-time engagement to deliver comprehensive Solutions. Aligned with the operational priorities of Defense, homeless security and critical infrastructure customers worldwide.
Our m&a pipeline is robust diverse and maturing, we've identified multiple targets that it can accelerate our road maps for mature. Mission ready, technology platforms that expand our Solutions offering to service and integration partners that strengthen customer adoption
We have highlighted today, the rift transaction and vehicle engineering, which are both highly strategic.
While most strategic investments will be for control positions.
Rift is a situation where we, we are, are cementing the partnership with a small investment.
Operator: Rather, RIFT was attracted to Ondas, the global operating platform we are scaling. We will provide more detail on the revenue potential at RIFT as our marketing efforts mature in the coming months. Meir also discussed the Zikel Engineering acquisition. This was an opportunity for us to bring in an elite engineering team into our OAS business. Zikel expands our capabilities and helps support an even deeper relationship with defense customers and partners in Israel. We expect Zikel to generate revenue and positively contribute to cash flow at OAS and to help Ondas generate new program and partnering opportunities in Israel. We are actively pursuing new contracts with the Zikel team. We are on track to execute a number of what we believe will be strategically important and financially valuable strategic acquisitions in the second half of 2025.
Rich business is capital light, a necessity for developing low-cost attributable attributable, drones and the company, frankly didn't need our Capital rather Rift was attracted to and us the global operating platform. We are scaling
We will provide more detail in the revenue potential at Rift as our marketing efforts mature in the coming months.
Mayor. Also discussed the ziko engineering acquisition. This was an opportunity for us to bring in Elite engineering team into our OAS business. Zico expands our capabilities and helps support and even deeper relationship with defense customers and partners in Israel.
We expect Vickle to generate revenue and positively contribute to cash flow at OAS and to help us generate new program and partnering opportunities in Israel. We are actively pursuing new contracts with the Zico team.
Operator: These acquisitions will not only expand our capabilities and market reach, but also enhance our revenue mix, margin profile, and recurring revenue streams, creating durable shareholder value as we scale into 2026 and beyond. Let us now turn to our outlook. As I said at the outset, this is an exciting and pivotal time for Ondas. We are executing against a clearly defined multi-year growth plan, and our record first half confirms that the foundational work we've done across OAS and Ondas Networks is converting into measurable and accelerating business momentum. We continue to believe 2025 will deliver accelerated growth, leveraging the order activity, operational readiness, and market traction we've created over the last several quarters. At OAS, our key objectives remain driving growth through the expansion of our ongoing Optimus and Iron Drone programs with current military and public safety customers, ensuring successful deployments, operational impact, and further adoption.
expand our capabilities and Market reach but also enhance our Revenue, mix margin profile and recurring revenue streams, creating durable, shareholder value, as we scale into 2026 and Beyond
Let's now turn to our outlook. As we said at the outset, this is an exciting and pivotal time for Ondas. We are executing against a clearly defined multi-year growth plan, and our record first half confirms that the foundational work we've done across OAS and Ondas Networks is converting into measurable and accelerating business momentum.
Operator: We are also focused on adding new customer programs, particularly in the defense and homeland security sectors, targeting wins through both government channels and direct engagements. On our last call, we increased our goal to capture at least four new defense or homeland security customers this year, and we believe that remains very achievable. Growing our partner ecosystem remains a critical enabler, not only for global sales and marketing, but also for field support, sustainment, supply chain, and production. Localizing our business with the right partners is integral to scaling globally. We are seeing growing engagement from major defense and homeland security vendors that want to work collaboratively with Ondas and OAS to help support customers with integrated solutions and field support.
We continue to believe 2025 will deliver accelerated growth, leveraging the order activity, operational readiness, and market traction we've created over the last several quarters at OAS. Our key objectives remain driving growth through the expansion of our ongoing Optimist and Iron Drone programs with current military and public safety customers, ensuring successful deployments, operational impact, and further adoption.
We are also focused on adding new customer programs, particularly in the defense and homeland security sectors, targeting wins through both government and government channels, as well as direct engagements.
Operator: We are meeting our goal of establishing new impactful industry partnerships to complement those already announced and look forward to sharing more details over the course of the second half of 2025. Financially, the maturing of our platforms and operational plans is producing results. The growth we're sharing here reflects both business units with the bulk of the near-term acceleration coming from OAS. We are reaffirming our revenue target again of at least $25 million, with OAS expected to contribute more than $20 million this year. This visibility is supported by a backlog that now stands at $22 million in a robust, maturing pipeline across both units. We expect backlog to grow further in the second half alongside strong revenue conversion.
Our last call, we increased our goal to capture, at least, at least 2, at least 4, new defense, or homeless security customers this year. We believe that remains very achievable growing. Our partner, ecosystem remains a critical enabler, not only for Global sales and marketing but also for field support sustainment supply chain and production, localizing our business. With the right Partners is integral to scaling globally. We are seeing growing engagement for major defense and Homeland Security vendors that want to work collaboratively with andaz and OAS to help support customers with Integrated Solutions and field support.
We are meeting our goal of establishing new, impactful industry Partnerships to complement. Those already announced and look forward to sharing more details over the course of the second half of 2025.
But financially the maturing of our platforms and operational plans is producing results, the growth, we're sharing here, reflects both phys, both business units. With the bulk of the near-term acceleration coming from OAS.
We are reaffirming our Revenue Target again of at least 2025 mil. Uh, excuse me, at least 25 million with OS expected to contribute more than 20 million this year.
Operator: We believe our bookings in the second half of 2025 should exceed the $23 million we achieved in the first half, again setting us up for a strong start to 2026. Lastly, we believe we can execute at least two strategic acquisitions in the second half of 2025, and our visibility on the strategic pipeline is very strong. To sum it up, we are delivering on our vision to scale Ondas Holdings Inc. We have the leadership team, the platforms, and the strategy in place, and I continue to believe 2025 is being defined as the breakout year for our company. Operator, we will now move to take investor questions.
This visibility is supported by a backlog that now stands at $22 million in a robust, maturing pipeline across both units. We expect backlog to grow further in the second half alongside strong revenue conversion. We believe our bookings in the second half of 2025 should exceed the $23 million we achieved in the first half, again setting us up for a strong start to 2026.
Lastly, we believe we can execute at least 2 strategic Acquisitions in the second half of 2025 and our visit visibility on the Strategic pipeline is very strong.
To sum it up. We are delivering on our vision to scale on us. We have the leadership team, the platforms and the strategy in place and I continue to believe 2025 is being defined as the breakout year for our company.
Eric Brock: We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Mike Latimore with Northland Capital Markets. Please go ahead.
Operator. We will now move to take investor questions.
We will now begin the question and answer session to ask a question. You may press star then 1 on your telephone keypad. If you are using a speaker-phone please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question please press star. Then to at this time we will pause momentarily to assemble our roster.
The first question comes from Mike Latimore with Northland Capital markets, please go ahead.
Neil Laird: All right, good morning. Yeah, great results, and the list of accomplishments is impressive here this year.
All right, good morning. Yeah, great results. And, uh,
Eric Brock: I'll pass to you, Mike.
You know, the the list of uh, of accomplishments is is impressive here this year.
Oh, thank you. Mike
Neil Laird: Eric, just on that last slide, I guess you talked about $23 million plus of bookings. You know, it seems like demand is very diverse and you could kind of hit that or see that in several ways. But are there one to two big deals that you are expecting here or maybe just clarify kind of the source of those bookings confidence and a little bit more international versus the U.S., Optimus versus Iron Drone. A little clarity on that because that is a strong number.
Eric. Just on that last slide, I guess you talked about.
23 million plus.
Of bookings. Um, you know it seems like demand is very diverse and you could kind of hit that or see that and you know, several ways but are there uh, you know, 1 to 2, big deals that you're expecting here or maybe just clarify kind of the source of those bookings confidence and, you know, a little bit more International versus us, Optimus versus Zion drone, uh, little 30 on that because that's what that's a strong number.
Eric Brock: Yeah, sure. So, I will refer back to our OAS Investor Day when I outlined our marketing program and how we are generating programs with customers. Typically, you will see us capture a new customer with a POC type of a small order. Of course, we deliver on that. Then we aim to expand those to infrastructure buildouts. That is when the orders get larger. We have a few of these programs now in motion. We do believe that we will continue to capture new pilots, but also convert the pilots. What you will see is just increasingly large orders as we are moving through the next 6, 12, 18 months. At that point, there are quite a few things in our pipeline where we can be capturing orders in the tens of millions of dollars.
Eric Brock: Of course, we want to put them into the outlook here in a formal way when they are more visible. I can tell you that is the sort of scale that we see in front of us. I think the guidance could be quite conservative, and I think that is a good place to be for the moment.
Neil Laird: Yep, yep, for sure. Sounds good. You mentioned two control acquisitions. Is that in addition to the small one you just referenced today? I assume would those be upside to revenue?
Get uh, larger, uh, we have, um, you know, a few of these programs. Now in motion, and we do believe that the, uh, will continue to capture new pilots but also convert uh, the pilots. So, what you'll see is, uh just increasingly large orders as we're moving through the next 6 to 12, 18 months. Uh, and at that point, um, you know, there's quite a few things in our pipeline where we can be capturing orders in the tens of millions of dollars. Uh, but of course, you know, we want to put them into, uh, uh, the outlook here in a formal way, uh, when they are more visible, uh, but I can tell you, that's the sort of, uh, scale, uh, that we, we do see, uh, in front of us. Uh, so, you know, I I think the, the guidance, um, you know, you know, could be quite conservative and I think that's a good place to be for, for the moment.
Yeah. Yeah, for sure. Sounds good. Um, and then you mentioned two control acquisitions. Is that in addition to the small one you just referenced today? And then, I assume would those be upside to revenue?
Eric Brock: Absolutely. So it is in addition to the transaction with Zikel Engineering and RIFT Dynamics. Yes, absolutely, these will be revenue-generating companies that we are acquiring. The pipeline is quite robust.
Uh, absolutely. Yeah, so it is in, uh, that's an addition to, uh, the transaction with zico, uh, and Rift. Uh, and yeah, absolutely. These will be Revenue, uh, generating, uh, uh, companies that were, um,
We're acquiring.
And the pipeline is, is quite robust.
Neil Laird: Excellent. Just the last one for me. The gross margin is really good in the quarter. Is that a good sort of reflection of what your OAS business looks like kind of at scale?
Excellent. Just last 1 for me, the um, the gross margin was really good in the quarter, um, is that a good sort of reflection of what your um, OAS business looks like kind of at scale?
Eric Brock: Yeah, for sure. I do think that over time we can do better. That comes from both volume and design for manufacturing that we are going to do on both platforms. I think we have opportunities to do better. At the same time, I will caution, we are still not at scale. So it will likely be volatile from quarter to quarter. But the 50 target, I think, is a good one for now.
Uh, yeah for sure. And I do think that over time we can do better, right? So and that comes from
Neil Laird: Okay. All right. Thanks a lot. Best of luck.
Um you know both volume right and designed for manufacturing that uh we're going to do on both uh, platforms. So um, so I think we have opportunities to to do better at the same time, I will caution. Uh, we're still let that that at scale. Um, uh, so it'll likely be volatile from quarter to quarter. Um, but the 50 Target, um, I think is, is is a good 1 for now.
Okay.
Eric Brock: Excellent. Thanks, Mike.
All right, thanks a lot. Best of luck.
Excellent. Thanks. Mike.
Operator: The next question comes from Maxwell Michaelis with Lake Street Capital Markets. Please go ahead.
Markus Nottelmann: Hey guys, thanks for taking my question. I just kind of want to go back to the two acquisitions and maybe how that ties in with 2026. If I look back at the Investor Day, I think you guys talked of $40 million for 2026 of OAS revenue. Was that always thought to be organic or did this $40 million target always kind of include these two potential acquisitions in the second half of 2025?
The next question comes from Maxwell Michaelis with Lake Street Capital Markets. Please go ahead.
Eric Brock: Right. So that outlook for 2026 is entirely organic. So these acquisitions will be accretive to the 2026 outlook as well, as well as the second half of 2025.
Hey guys, thanks for taking my question. Just kind of want to go back to the 2 acres and maybe how that ties in with 2026. So if I look back at the investor day, I think you guys talked to 40 million for 2026 of os Revenue. I mean was that always thought to be organic or did this all week? This 40 million dollar Target always kind of include uh potent these 2 potential Acquisitions in the second half of 2025.
Right? So that, uh, outlook for 2026 is entirely organic. Uh, so these acquisitions, uh, will be uh,
Accretive to the 2026 Outlook as well as well as a second half of 2025.
Markus Nottelmann: Okay. Then maybe if we go stateside here and we look at the Kestrel win with the, I believe it was the Urban Public Safety Agency, maybe can you offer up a little bit more detail around that win and maybe what you are doing, the use case around that?
Okay.
And then maybe if we go kind of, say Stateside here, and we look at the Kestrel win with the, um,
I believe it was the urban Public Safety agency. Maybe, can you offer up a little bit more detail around that when maybe what you're doing the use case are on that.
Eric Brock: Yeah, sure. That was the first order we captured for the Kestrel system, which is an airspace awareness tool. The bulk of our activity with Kestrel is really to bundle that at a system level with the Optimus as we deploy the Optimus infrastructure. At the same time, we are seeing quite a bit of demand for all things counter-UAS. When we think about that layered security, the Kestrel is part of that initial layer of detection. We will see. I think with this customer, we have delivered the system, the Kestrel, and I think that is an area that we could see engagement on Optimus, for example. That is some context around the Kestrel order.
Yeah, sure. So that was uh, the first order we've captured for that the Kestrel system, uh, which is a airspace awareness Tool. Uh, the bulk of our activity with Kestrel is, is really to bundle that, uh, in a, in a s at a system level with The Optimist as we deploy The Optimist infrastructure. Uh, but at the same time we're seeing quite a bit of demand for all things counter uas. Uh, and you know, when we think about that layered security, the Kestrel is part of that initial layer of of detection. Uh, so you know, we'll see, I think, um, with this customer, uh, we have, uh, we have um, uh, delivered, uh, the system the testable. And I think that's an area that we, we could see, uh, engagement on Optimus, uh, for example. Um, so that's some context around, uh, around the cash flow order.
Markus Nottelmann: All right. Then just the last one for me. I know you guys highlighted the New York Post and how the NYPD had mentioned you guys. Are you guys working with additional police departments around the U.S.? You cannot obviously probably say their name.
All right, and then just the last 1 for me. I know you guys highlighted, the New York Post and how they the NYPD had mentioned you guys. I mean, is there any other police departments around the United States? You can't obviously probably say their name. But are you guys working with additional police departments around the US?
Eric Brock: Firstly, the interest globally and in the United States in counter-drone technologies is just up and to the right, and it is really, really intense. At the same time, there is a lot of activity where the ministries of defense, homeland security officials, and major urban public safety groups are doing the work to explore capabilities, how these layers are integrated, and et cetera. In parallel, there are activities on the regulatory side to allow more permissions for folks like NYPD to deploy these technologies. I do not want to talk about any other public safety organizations. There is just a very significant amount of customers who are interested, and they are big. At the same time, I want to point to those regulations that are evolving and will be allowing more permissions for deploying our drone across, say, DOD, homeland security, and major public safety organizations like NYPD.
Explore capabilities, uh, you know how these layers are integrated and Etc. Uh, in parallel, where there's there's activities on the regulatory side, uh, to allow more permissions for folks, like NYPD, uh, to deploy these Technologies. So, um, so I want want to talk about any other Public Safety organizations. It was just a very, uh,
Significant amount of customers who are interested and they're big. Um, but I think, I think time I want to, uh, you know,
Markus Nottelmann: Awesome. Thanks for taking my questions.
Point to those regulations that were are evolving, uh, and will be, uh, along more permissions for deploying our drone, uh, across. Um, so DOD home security and major public, uh, safety organizations. Like I want to be
Eric Brock: Yeah, yeah, great.
Awesome. Thanks for taking my questions. Yeah.
Great.
Operator: The next question comes from Timothy Horan with Oppenheimer. Please go ahead.
Oshri Lugassy: Thanks, guys. Eric, on Ondas Networks, qualitatively, it seems like we have broken the ice here, and it feels like we are seeing more momentum, I think, than we have seen in a few years. What are your thoughts on what is going on there?
The next question comes from. Timothy haran with Oppenheimer. Please go ahead.
Thanks, guys. Um, Eric on Ondas Networks. I mean, qualitatively, it seems like we've broken the ice here, and it feels like we're seeing more momentum, I think, than we've seen in a few years. But, um, you know, what are your thoughts on what's going on there?
Eric Brock: Firstly, I agree with you. The engagement with the railroads is both broadening and deepening. As you know, Tim, you've been following us for a long time. A lot of the early work with the railroads was really centered on validating the technology, and that was principally led by the Wireless Comms Committee, the Wireless Communications Committee, which is a centralized group that the Association of American Railroads oversees, right? All the railroads participate in that. At the same time, that WCC is really kind of focused on the network experts. What we've seen over the last, I'd say, 12 months, and that's particularly accelerating with Markus Nottelmann joining as a CEO, we're getting deeper and deeper into each of the rail organizations and really in the field, validating capabilities, validating performance, and also working on new applications.
Eric Brock: As you know, we're moving from these siloed networks, the legacy networks that are built for a single purpose to a general IP network where we can do multiple applications. As we prove that, the conversations are getting more and more productive. At this point, where we started with the railroads is 900 megahertz, and that's still in play. We have seen the Association of American Railroads announce that the 450 megahertz network, which is a head of train end of train network, has been selected. The 802.16t wireless standard technology has been selected there. As Markus outlined, we're seeing interest in 160. Markus, I don't know if you can add a bit more context to this, but I think it's clear that we are in the roadmap. We're still trying to get that inflection to when the first network gets built.
Uh, so firstly, I agree with you. Uh, the engagement, uh, with the railroads is um, is both broadening and deepening. Uh, and as you know, Tim you've been following us for a long time. A lot of the early work, um, with the railroads, was really centered on, uh, validating, uh, the technology, uh, and that was principally led by the wireless comms committee, the Wireless Communications committee, which is the centralized, uh, group, uh, that the a are overseas, right? So, all the railroads participate on that, uh, at the same time that W, that WCC is really kind of focused on the network experts. And what we, we've seen over the last, I'd say 12 months, and that's particularly accelerating, uh, with Marcus. Uh, not only joining as a CEO where you're getting deeper and deeper into each of the rail organizations and really um, in the field. Uh, the validating, uh uh, capabilities validating performance, uh and also um, working on new
Applications as as you know, we're moving from these siloed networks. The Legacy networks are built for a single purpose to a general. It Network where we can do multiple applications and as we proved that, the conversations are getting more and more productive. Uh, so this point where, you know, we started with the railroads is 900 megahertz and that's still in play. Uh, we have seen the AAR announced uh, that the 450 megahertz Network which is a head of train, end of train Network, um, has been select. Uh, did did that 16?
Eric Brock: As I'm looking into 2026, I feel very strongly that both 900 megahertz and 400 megahertz or 450 megahertz with that end of train application will be revenue generating. Markus, would you add anything?
Meir Kliner: Yeah, so it is quite similar to what you described with OAS. You start with the proof of concept, you build confidence, and then you build out from there. That is really what we have been focusing on in the first half of 2025. We continue that, continue with those efforts. We start with small-scale efforts that ultimately lead to bigger deployments. So building momentum there with all the class ones, that is right on track.
GT. Uh, technology has been selected there. And as Marcus outlined, we're seeing uh, interest in 160. So, um, so Marcus, I I don't know if you, if you can add a bit more context to this, but I think it's, it's, it's clear that, um, you know, we are in the roadmap and we're trying to get, obviously this we we're still trying to get that inflection to when, uh, the, the first Network gets built. Uh, but as I'm looking into 2026, um, um, um, feel very strongly that both 900 MHz and 400 megahertz or, or 450 megahertz with that end of train. Uh application will be re Revenue generating but Marcus, would you add anything?
Yeah, so it's quite similar to what you described with OAS. You start with the proof of concept, you build confidence, and then you build out from there, right? So, that's really what we've been focusing on in the first half of Q2.
2025, uh, we continue that continue to continue with those efforts.
Oshri Lugassy: Switching over to OAS, I guess it has only been two months or a little bit more since Ukraine attacked the planes on Russian soil, and it seems like that was a catalyst to wake up the world that you need some defense measures here. I know your analyst day was only a month ago, but can you give us a sense of what is going on with the pipeline at this point?
Uh, we start with small, small-scale efforts that ultimately lead to bigger deployments. So, building momentum there with all the Class Ones. Uh, that's right on track.
And then, uh, switching over to OAS, um, I, I guess it's only been 2 months or a little bit more since Ukraine attacked the planes on Russian soil. And it, it seems like that was a catalyst to wake up the world.
Eric Brock: Yeah, sure. The pipeline is growing, and it is also advancing. We have been doing a lot of work. It started in Europe back in February. We have seen that we did secure the customer firstly at the airport. We think that program will expand. We have been doing other work on the ground with various, I will say, homeland security organizations and militaries in Europe. I will also highlight, Tim, that there was a high-profile event connected to Project Vanaheim. This was actually sponsored by the U.S. Army. The U.S. Army called it Project Flytrap. There were some demonstrations in Poland just a couple of weeks ago, and we participated in that. As Oshri Lugassy had said in his earlier remarks, that Vanaheim, which is a joint project with the U.K. and the U.S. DODs, that has been a multi-month project.
So, you need some defense measures here, um, and I know your analyst there was only a month ago, but, uh, can you give us, um, maybe just a sense of what's going on with the pipeline at this point?
Yeah.
Yeah, sure. So the pipeline is is growing and it's also advancing. We've been doing a lot of work, uh, and started, um, uh, in in Europe, uh, back in February and
Eric Brock: The customers and the industry, the partners are learning a lot. I think that is going to be transitioning towards infrastructure deployments, and it will be multi-layered. We have had the great benefit as we are doing that work to integrate the Iron Drone platform with various detection technologies, principally radar and C2 capabilities. Those are generally going to be capabilities that are brought by major defense vendors. Of course, those are our partners. I think collectively, when you look at the customer activity, the partner activity, we have set up a lot of really robust pipeline. We are going to look to convert that over the next 3, 6, 12 months. Specifically on the U.S., a lot of engagement, as I just described in Europe, actually coming from the U.S. We did engage Mistral back in May to start to jumpstart our penetration here.
Also highlight Tim that, um, you know, there was a high profile event connected to project vanaheim, this was actually sponsored, uh, by the US Army, uh, the US Army, called it project, fly trap. Uh, and there was some demonstrations in Poland, just a couple weeks ago, uh, and we participated in that. Um, and as Oshie had said in his, uh, his earlier remarks, that was a, that that vanaheim and which is a joint project with, um, with UK and, and, uh, and, and the US Dodds, um, you know, that's been a multi-month project. So, you know, the, the customers and the industry, the partners are learning a lot. And I think that is, um, going to be transitioning towards uh, uh infrastructure deployments and it will be multi-layered. Uh, we've had the great benefit uh as we're doing that work with to integrate the iron drone uh platform with various uh detection Technologies, principally radar uh and C2 capabilities and those are generally going to be
Capabilities that are brought by Major defense, uh, vendors. Uh, and of course, those are our partners. Uh, so I think collectively we look at the customer activity the partner activity. I think we set up a lot about uh um, you know, a really robust uh, Pipeline and we're going to look at the convert that over the next uh 36 12 months uh, specifically on the US. Um, you know, a lot of Engagement as we just described in Europe. Uh, actually coming from the US. Uh, we did uh, engage in withdrawal. Uh, back in May to start to
Eric Brock: We are very happy with the traction we are getting. It is a big focus. If you look inside the one big beautiful bill and the DOD budgets and the programs, you know that there is a big focus on spending on counter-drone technologies, and we do believe we are going to be part of that.
Oshri Lugassy: Do you know of anyone else that is trying to pursue an operating platform strategy for Ondas Autonomous Systems like you are? Maybe you can elaborate a little bit more on what the strategy is for that operating platform. I know you just talked about integrating drone with radar. That would seem to be a unique kind of a neutral operating platform that multiple sales channels, multiple manufacturers, multiple technologies. For example, can RIFT Dynamics tie into that type of operating platform?
Jumpstart our penetration here, uh, and we're very happy with the traction we're getting. So it's a big Focus. If you're looking inside the the the 1, big, beautiful bill, and the dod budgets, uh, in the programs. You know that the, the, um, you know, there is a big focus on on spending on counter drone Technologies and we do believe we're going to be part of that.
And and lastly I I um do you know of anyone else that's trying to pursue a platform strategy for OAS like like you are and maybe you can elaborate a little bit more on on what the strategy is for that platform. Um, I know you just elaborate talked about integrating drone with radar, um, that would seem to be. You need kind of a neutral platform that multiple sales channels, multiple manufacturers multiple Technologies. Um,
Eric Brock: It does. Yeah, absolutely. So if I think of it in two levels, Tim, there is technology platforms, which Iron Drone or Optimus are. So, and we are integrating, you know, the autonomous systems and the capabilities that enable that. And very often, we are going to engage partners, as I described. The systems are modular, right? And that enables us to work in all sorts of environments. So when you come to the United States, there is going to be preferred radar vendors, for example, for detection. And there are multiple. And we know a bunch of them. And if we do not know all of them, yeah, we will. But I am really happy with the traction we are getting. So that is an example of technology platforms.
And I I I guess for example can Rift tie into that type of platform and can others also it it does. Uh, yeah, absolutely. So if I think of it in a 2 levels, 10, there's technology platforms. Which iron drone are optimists. Are so, uh, and we're integrating, you know, the autonomous systems and and the capabilities and enable that and very often, uh, we're going to engage Partners as as they're described, uh, the systems are modular right and that, that enables us to work and, and all sorts of environments. So, when you come to the United States, there's going to be preferred uh, radar vendors for example, for detection, uh, and there's multiple. And we know a bunch of them and if we don't know all of them yet we will. Uh but I'm really happy with the traction. We're getting
Eric Brock: At the same time, what we are really transitioning and focusing our business model and strategy is on becoming an operating platform, right? And that is a much different. That lends itself to the second half of your observation where you have to address customers, right? You need that whole suite of scaled operations. And if you have a single platform, it is very difficult to do that. A single revenue stream. It is very difficult to build that sophisticated sales and marketing capability. The field support and sustainment is really, really hard and costly on a single revenue stream. And it is also hard to do it globally. And if you are making these investments, you have leading technology, you want to be able to deploy these defense and security platforms across all allied nations. And the way you do that is localization.
Eric Brock: So if I think of RIFT, it does add our capability, right? So we are getting more scale from our sales and marketing. If we can add that third, that fourth, that fifth platform to market, it also gives us more scale on supply chain, right? Because we are more relevant to the folks like Detroit Manufacturing Systems and the component providers thereof. And then if I also go say you think about RIFT and it is a partnership, it is not just about the distribution here, which I do believe is going to be a major contributor, but it is also giving us relationships, strengthening relationships that we can build around in Europe because they have done that heavy work. So I really think of us as we are delivering technology platforms that are required for success. If you do not have that, you have nothing.
Um, so that's an example of of, of, of Technology platforms. Uh, at the same time, what we're really, uh, transitioning and focusing, our business model and strategy, uh, is becoming an operating platform, right? Uh, and that's a much different that lends itself to the second half of your observation where, um, you know, you have to, to address customers, right? You need that, that, that whole Suite of of scaled operations, um, and if you have a single platform is very difficult to do that single Revenue stream. It's very difficult to build that sophisticated sales and marketing. Capability to feel support is a statement really, really hard and costly our single Revenue stream and it's also hard to do it um, uh, globally. And if you are making these Investments, you have leading technology, you want to be able to deploy, uh, these defense and security to platforms, uh, across all Allied Nations and the way you do that is localization. So if I think a rift, it does add a key, our capability, right? So we're getting more scale from our sales and marketing. If we can add that third
That force that fifth platform uh, to Market. It also gives us more scale and supply chain, right? Because our we're more relevant to to, to the folks like Detroit Manufacturing Systems uh and the component for providers, uh uh thereof. Um and then if they also go say, you think about risks and and it's a partnership, it's not just about the distribution here, which I do believe is going to be a major contributor. Um, but it's also giving us relationships strengthening relationships, uh, that we can build around in Europe, uh, because they've done,
Eric Brock: But to be able to deliver those at scale, that is where it gets really interesting for investors, where you can do that using your operating capital and your financial capital really, really efficiently.
Oshri Lugassy: Thank you.
Have you worked? So so I I really think of this as we're delivering technology platforms that is required for Success. If you don't have that, you have nothing but to be able to deliver those at scale, that's where it gets really interesting for investors where you can do that at, you know, using your operating capital and your financial Capital really, really efficiency efficiently.
Eric Brock: Awesome.
Operator: The next question comes from Glenn Mattson with Latenberg. Please go ahead.
Awesome.
Markus Nottelmann: Yeah, hi Eric, thanks for taking the questions. Congrats on the results. I am curious, it is quite clear from everything you laid out today that the company is set to ramp significantly in terms of the scale in OAS. I am curious about the operational infrastructure that is in place, either capacity-wise. I do not know. I know you have got this relationship now with the Detroit Manufacturing Systems and other things in place, but can you maybe just broadly give us a sense of if you need to make any more big investments or new partnerships to have the kind of capacity you need to deliver these systems? Secondly, operationally, do you have the infrastructure within the OpEx? Obviously OpEx is going to grow with revenues, but is there anything you need to put in place, like systems or that kind of thing, to really support this ramp?
With ladenburg, please. Go ahead.
Uh, yeah. Hi Eric. Thanks for taking the questions, Congressman results. Um, curious the um,
Obviously, it's quite clear from everything you laid out today that the companies, uh, set to ramp, uh, significantly in terms of the scale and OAS.
Um, curious about the operational infrastructure that's in place either capacity wise, I don't know. I know you've got this relationship now with the Detroit, Manufacturing Systems and, and other things in place. But can you maybe just broadly, give us a sense of
if you need to make any more big Investments, or new Partnerships to meet to have the kind of capacity you need
Eric Brock: Yes, it is a terrific question. It is really important, Glenn. Oshri Lugassy joined us formally in March as the Co-CEO of Ondas Autonomous Systems. That has been a major focus of his to be able to build the leadership team and the partnerships and the ecosystem to help support the scaling that we are talking about here today, and we have been, and what we have been demonstrating. What we have done is we are layering in a leadership team at Ondas Autonomous Systems, who is just another layer that is going to help us scale all of these important aspects of the business, again, sales and marketing, the field support, supply chain, and really critical things like that. We are also going to continue to build our advisory board, and that is going to be very impactful.
To deliver these systems but then secondly operationally just do you have the the infrastructure within the within the Opex? You know, obviously Opex is going to grow with revenues but but is there anything you need to put in place like systems or or that kind of thing to to Really to support this ramp?
Yes, a terrific question is really important, Glen. So, uh, oshri joined us, uh, a formerly in March, um, as the Coco of OAS. And that is, this has been a major focus of this to, uh, to be able to, to build the leadership team and the, uh, and the Partnerships and the ecosystem uh to help support the scaling uh, that we're talking about. Um, you know, here, today we have been uh, and that what we've been demonstrating. Uh, so what we've done is we've um well, we are uh layering in a leadership team at OAS um, who is um, you know it's just another
Eric Brock: We are not just putting people that look good in the deck. These are folks who are going to make a real impact on the business and be very creative. Then I also point to leveraging the partnerships in the ecosystem. We are going to build our internal capabilities and our OpEx spend, and we are going to try to do that with our revenue growth in a way that we get positive operating leverage and get that path of profitability. One of the ways that we do that is by engaging these vendors around when we are integrating with them, for example, on the C2 or radar. That is also an opportunity for us to jointly market the systems to their customers. That is the context around how I am looking at that.
Eric Brock: We are going to be building this company for many years. I will also add this, Glenn, when we see, when you look at our pipeline and the folks that we are strategically aligning with in and around acquisitions and partnerships, we are not just acquiring technologies. We are acquiring people and experts. We need that expertise. We need that scale. That is part of the transaction. We provide for that in our financial analysis, valuation work, etc.
Layer that's going to help us scale all of these important uh uh the aspects of the business against sales and marketing um to feel support supply chain uh and and and really critical things like that. We're also going to continue to build our Advisory Board, uh, and that's going to be very impactful. We're not just putting people that look good in the deck, these are folks who are going to make a real impact on the business and be very creative. Uh, and then I also point to leveraging the Partnerships and the ecosystem. So um, you know, we're going to build uh, our internal capabilities and our Opex spend. And we're going to try to do that, uh, with, with our Revenue growth, and a way that we get positive operating leverage and get that path of profitability, um, you know, so, so 1 of the ways we do that is by, you know, engaging these these vendors around when we're integrating with them, for example, on the, on the C2 or radar. Um, you know, that's also an opportunity for us to jointly Market, uh, the systems to their customers. Um, so that's in context around how I'm looking at that. So, we're going to
Be we're going to be building this company for for many years. I'll also at this point is when we, we see when you look at our pipeline in, in, in the folks that, um, you know, we we we, you know, for strategically aligning with in and around Acquisitions and Partnerships. Um, you know, we're not just supporting Technologies, we're acquiring people and experts. Uh, and we need we need that expertise. We need that. We need that scale. So, um, so that's part of uh, of the transaction and we provide for that in our financial analysis,
Valuation work, etc.
Markus Nottelmann: Very helpful. I read this late in the call, but one more quick one. You mentioned winning a DOD contract before the end of the year. You seem to have high confidence in that. You may have said you could win multiple. I am not sure, but do you have multiple DOD potential, you know, large contracts in the pipeline? Could you win more than one? Are there programs of record? Just do a little bit more, flesh that out a little bit, if you could, it would be great.
Eric Brock: Yeah, so I just kind of want to leave it at that. I think we are very happy with how the pipeline is developing and advancing. We are in a strong demand environment. Our partners at Mistral are very, very experienced. I think, you know, I am optimistic. I will say it that. You know, a lot of these things get the timing. So if we do one or two or three, do we do it by year-end? I am not sure. So what I would just like to do is set that expectation for at least one, and then we will try to beat it.
Uh, very helpful. I was waiting to call, but one more quick one. You mentioned winning the DOD contract before the end of the year; you seem to have high confidence in that. You may have said you could win multiple ... I'm not sure. But if you have multiple DOD potential, you know, large contracts with the pipeline, could you win more than one? Is it the programs of record? Just do a little bit more to flesh that out a little bit, if you could. It would be great.
Yeah, so um, yeah, I I just kind of want to leave it at that. I think we're very happy with, um, how the pipelines developing and advancing we are in a strong demand environment Partners at the straw or, um, you know, very, uh, very experienced. And I think, um, uh, you know, I'm, I'm, I'm optimistic. I'll say that. Um, you know, and, and then, of course, A lot of these things, get the timing. So if we do 1 or 2 or 3, um, you know, do we do it by year end? I'm not sure. So, what I would just like to do is set that expectation for at least 1 and then we'll try to beat it.
Markus Nottelmann: Great. Congrats again. Thanks for taking the questions.
Eric Brock: Awesome. Thank you, Glenn.
Great. Congrats. Again, thanks for taking the questions.
Operator: This concludes our question and answer session. I would like to turn the conference back over to Eric Brock for any closing remarks.
Awesome. Thank you. Thank you. Bye.
This concludes our question-and-answer session. I would like to turn the conference back over to Eric Brock for any closing remarks.
Operator: Okay, thank you, Operator. As we wrap the call, I want to thank you again for spending time with us today. As we outlined, 2025 is off to a great start. We are going to be focused on sustaining the momentum through the end of 2025 and into 2026. Of course, we look forward to providing you more updates along the way. The team will go back to the important work of building the company, and we hope you have a great day. Thanks again.
Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Okay, thank you, operator. Uh, so as we wrap the call, I want to thank you again for spending time with us today. Uh, as we outline 2025 is, is off to a great start. Uh, we're going to be focused on, uh, sustaining the momentum through the end of 2025 and into 2026. Uh, and of course, we look forward to providing you more updates along the way. Uh, so the team will go back to the important work of building the company and we hope you have a great day. So thanks again.