Q3 2025 Ondas Holdings Inc Earnings Call
Speaker #1: Good day and welcome to the Ondas Holdings Inc. third quarter 2025 conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.
Speaker #1: After today's presentation, there will be an a question, you may press opportunity to ask questions. star then one on your telephone To ask 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 different materially from those implied by these forward-looking statements.
Speaker #1: These risks factors are discussed in Ondas' periodic SEC filings and in the earnings press release issued today. Which are both available on the company's website.
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.
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 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 these non-GAAP measures provide investors with valuable information on their 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
Speaker #1: I would now like to turn the presentation over to Eric Brock, Chairman and CEO. Please go ahead. Well, thank you, Operator.
Speaker #2: and good morning. I want to get started by welcoming everyone to our quarterly conference call. We appreciate you joining us today and for your continued interest in Ondas.
Speaker #2: this morning by key members of our leadership I'm happy to be joined team, including Neil Laird, our CFO; Oshri Lugassy, the co-CEO of Ondas Autonomous Systems; Merrick Kliner, President of OAS and the founder of Networks.
Speaker #2: agenda. We'll begin the call with a review So let's turn to the of our key highlights from the third quarter of 2025. Then I'll hand the call to Neil for a financial review of our Q3 2025 results.
Speaker #2: After that, we'll provide business updates for Aerobotics; and Marcus Nottelman, the CEO our OAS and Ondas Networks business units, while I'll ask Oshri, Merrick, and Marcus to share commentary on current business activity and plans.
Speaker #2: During our OAS business progress against our on the progress of our strategic acquisition program. And we will also hear review, we will also share some context from Tal Cohen, the founder and general manager of Centrix, who's joined the call to share some insight into the Centrix technology platform and business, as well as a strategic fit with Ondas.
Speaker #2: After the operational updates, I will share an outlook for the remainder of 2025 and beyond, and we'll, as we continue to see strong execution on our growth strategy and further momentum into the floor for investor 2026.
Speaker #2: questions. Let's start by setting the stage for today's discussion. Simply Then we will wrap the call and open put, Ondas is positioned for success.
Speaker #2: That results of years of hard work, discipline, and planning. We've earned it as have our investors. We've built a strong foundation through talent and perseverance, and again, through the support of our investors.
Speaker #2: And now we find ourselves at the heart of an industry-wide transition. The autonomous and unmanned systems defense and security markets have reached an inflection point, moving from technology development to platform adoption.
Speaker #2: As you said many times, the market from here will be defined by scaled operating companies. Not by those simply introducing new technology platforms. Innovation and technological advancement remain critical, but they're not sufficient on their own to create high returns on capital and equity value.
Speaker #2: point forward will be those who can leverage the The winners from this unmanned systems, and physical AI to build durable, efficient, and scaled businesses.
Speaker #2: And that's exactly what we're doing at validation across both our Optimus and Iron Ondas. We're demonstrating platform adoption and Drone systems and with the new technology platforms we are layering in at OAS. strong market demand.
Speaker #2: And that's exactly what we're doing at validation across both our Optimus and Iron Ondas. We're demonstrating platform adoption and Drone systems and with the new technology platforms we are layering in at OAS.
Speaker #2: While seeing firsthand the beginning of what we extraordinary advancements in autonomy, believe is a major counter-UAS boom, where Ondas is extremely well-positioned to We're benefiting from win.
Speaker #2: In July, we laid out our core plus strategic growth plan, and the response has been tremendous. Truly a mandate from our investors to execute.
Speaker #2: We've immediately demonstrated execution on that plan. We are doing what we said we would do because we've been planning for this transition for years.
Speaker #2: This plan creates value across the board for our customers, partners, and the incredible talent driving Ondas' growth. And of course, it creates opportunity and long-term value for our investors.
Speaker #2: A key enabler of that success will be our balance sheet strength. We've raised approximately $855 million since June to support our growth plan. We believe Ondas now has one of the strongest balance sheets in the industry, giving us access to a deep capital pool and a meaningful cost of capital advantage.
Speaker #2: Access to low-cost capital is the foundation of a allows us to move decisively, scale efficiently, and lead confidently in true competitive advantage, one that the fast-growing markets we are attacking.
Speaker #2: To support the coming boom in autonomous unmanned technologies, the industry needs scaled leaders, companies capable of operationalizing the technologies that have been validated in the field, Ondas is focused on that exactly.
Speaker #2: executing the growth plan that we laid out in And again, deliberately July. Now let's turn to the overview. Momentum continues to build at Ondas, and I'm very pleased to report that we've delivered another record quarter, not just financially, but also operationally.
Speaker #2: revenue, a more than sixfold increase year over year, and up nearly In the third quarter, 60% sequentially from Q2. Our consolidated backlog grew to $23.3 million, more than double where we started the year, and that number reaches over $40 million when including another $18 million related to acquisitions that have closed or are pending closure in the fourth quarter.
Speaker #2: We expect our backlog pipeline to grow through the end of 2025, given the strengthened visibility on customer order plans. Based on the strength of our execution and our expectations for strong market demand, we are raising our full-year 2025 revenue target to at least $36 million. This means we expect to generate more than $15 million in revenue for Q4.
Speaker #2: We are also establishing a goal for at least $110 million in revenue for 2026. The outlook for Q4 in 2026 is being driven primarily by OAS, where we continue to expand with existing customers and add new ones.
Speaker #2: Expanding and maturing, we expect a significant ongoing growth in our customer pipeline, which supports our outlook for a strong end to 2025 from an order standpoint. The team is building the operating infrastructure to support a multi-year growth outlook, scaling production, field services, and sustainment capabilities to meet accelerating global demand for our autonomous and unmanned systems through 2026.
Speaker #2: expanding and maturing, and we expect a Our customer pipeline is standpoint, which supports our outlook for strong end to 2025 from an order significant ongoing growth in team is building the operating infrastructure to support a multi-year growth outlook, where scaling production, field services, and sustainment capabilities to meet accelerating global demand for our autonomous and unmanned 2026.
Speaker #2: Scaling operations. At the same time, our strategic growth program is accelerating. This is the evolution we've been planning: moving from standalone technology platforms toward a system of systems model that unites air, ground, the OAS sensing, and communications into an integrated autonomy ecosystem.
Speaker #2: The evolution enables a faster path to operational maturity, and we believe it unlocks significant upside to both revenue and profitability. To further maximize the opportunity ahead of us, we established Ondas Capital, which we launched in the third quarter.
Speaker #2: Ondas Capital is building a technology bridge from Ukraine to the United States and allied European nations, focused on scaling combat-proven unmanned and dual-use technologies into production and commercialization.
Speaker #2: This initiative broadens our reach, strengthens our industrial base, and supports the growing alignment between innovation, security, and economic resilience. Meanwhile, Ondas Networks continues the hard work to drive adoption of its DOT16 wireless connectivity platform.
Speaker #2: As Marcus will share, the AAR's wireless communications committee formally selected DOT16 as a wireless roadmap standard for all AAR-owned frequencies. Including the 900, 450, and now 160 megahertz networks.
Speaker #2: While the hard work will continue, this formal designation validates our long-term strategy and continues to position a generational upgrade cycle for railroad communications across North America.
Speaker #2: Finally, from a financial standpoint, the company remains exceptionally well-capitalized. We've raised approximately $855 million in equity in 2025, providing the capital strength to support our business plan, including both our core operations and our strategic initiatives.
Speaker #2: We are investing this capital to accelerate growth and shareholder value creation as we said we would. To summarize, Ondas is positioned for continued record growth through the balance of 2025 and into 2026, and we continue to build what we believe is an important and valuable defense and security technology company.
Speaker #2: I want to now provide some context for the critical objectives defined within our long-term business planning. What you see here is a continuation of the strategic roadmap we've been building over the past year, a roadmap that's now delivering real, tangible results.
Speaker #2: Ondas today is no longer just a developer of market-leading technologies. We are building a scaled operating platform that connects world-class talent, technology, along with partners, and customers into a unified growth engine.
Speaker #2: At the center of this effort is Ondas Autonomous Systems, where we continue to build the core OAS operational platform. Under Oshri's leadership, that platform is scaling rapidly, supported by seasoned executives and impactful cross-functional advisory board, and a growing ecosystem of partners across technology, sales, and production.
Speaker #2: Oshri and Merrick will share more details on the operational infrastructure we are building later in the call. Over the last several months, we've expanded the scope of our capabilities through strategic acquisitions and investments.
Speaker #2: That strengthened our operating foundation and extended our reach across multiple domains. We entered into a definitive agreement with Centrix, which will bring mitigation to complement our iron drone radar.
Speaker #2: We added a pair advanced cyber over RF drone detection of motion, which expands us into unmanned ground systems, robotics, and fiber optic communications. And we acquired foreign defense, a leader in subsurface intelligence and demining robotics that brings a new dimension to OAS's autonomy portfolio.
Speaker #2: Other smaller yet strategic acquisitions that contribute engineering, AI, and optics expertise were added, and that includes SPO, Zickel Engineering, and Insight Intelligence Sensors. At the same time, we formed a strategic partnership and made a minority investment in RIF Dynamics, whose attributable drone platform and leadership in the European defense markets position us perfectly to capture new opportunities in allied regions.
Speaker #2: Taken together, these additions create a growing portfolio of capabilities that make Ondas a more complete and competitive company, spanning air, ground, sensing, and communications technologies.
Speaker #2: And as we expand this platform, we're also expanding our talent base, customer reach, and partner ecosystem, each one reinforcing the other. This creates true operating leverage, which we believe will drive faster growth, stronger margins, and higher profitability as we scale.
Speaker #2: In the speed at which we do this is very important. The key message here is that this is not just a entities. We are building a scalable, compilation of technologies and corporate unified service delivery platform designed to service demanding customers and use cases and, importantly, accelerate revenue growth in our path to profitability.
Speaker #2: We're building a stronger, more diversified Ondas. One capable of sustained performance, multi-domain leadership, and meaningful long-term value creation. Now let's turn to Ondas Capital.
Speaker #2: excited to have formerly launched Ondas Capital, which represents a powerful We are very new strategic growth platform for the company. Ondas Capital is a multi-year initiative designed to deploy up to 150 million dollars to accelerate the transition of battle-tested unmanned and dual-use technologies from Ukraine and other allied nations into trusted, US and European production.
Speaker #2: The mission is straightforward: to scale proven technologies in unmanned systems, AI, and dual-use innovation that are already validated in the field and ready for production whereby Ondas and our partner ecosystem can drive faster, more cost-effective deployment across the major defense and security markets in the US and Europe. just about capital.
Speaker #2: The mission is straightforward: to scale proven technologies in unmanned systems, AI, and dual-use innovation that are already validated in the field and ready for production whereby Ondas and our partner ecosystem can drive faster, more cost-effective deployment across the major defense and security markets in the US and Europe.
Speaker #2: It's about This effort is not building an industrial bridge between innovation and deployment. By access, Ondas Capital will help drive commercialization of critical defense and security technologies, strengthen the integrating investment, production, and market allied industrial ecosystem, and create meaningful long-term value for our shareholders.
Speaker #2: A major strategic benefit of Ondas Capital is its global footprint. We are anchored here in the United States, but we now have forward offices in key allied innovation and financial corridors, including Boston, New York, Kiev, Tallinn, London, and Frankfurt.
Speaker #2: Being on the ground in Eastern Europe and Ukraine is a critical advantage. It allows us to directly access cutting-edge combat-proven partners and allies at the front technologies, while working side by side with our line of innovation.
Speaker #2: This them successfully through production, advanced defense technologies, and scale complements our deep operating experience in Israel, where we've demonstrated how to take global partnerships, and commercialization.
Speaker #2: We believe Ondas Capital will become a cornerstone for strategic growth, international collaboration, and industrial resilience, while creating new pathways for financial and operational expansion across the Ondas group.
Speaker #2: And finally, in the interest of time today, I'm keeping my comments brief, but I'm pleased to share that we plan to host a dedicated Ondas Capital Investor Call in December.
Speaker #2: James Acuña, who is leading this initiative, will join me, along with our leadership team, to provide a deep dive into the opportunity, business model, and financial plan for Ondas Capital.
Speaker #2: We're incredibly proud of the progress to date, and I look forward to sharing much more very soon. I will now hand the call to Neil to provide a detailed financial update.
Speaker #2: Neil? Hi. Thank you, Eric. As I get started, I wanted to remind our investors that our financial statements reflect the early stage of platform adoption for our products, and the initial success of our acquisition program.
Speaker #2: We expect to demonstrate a significant revenue increase over the next few quarters, both from organic growth and from our acquisition pipeline. Revenues increased over 580% to 10.1 million dollars in the third quarter, up from 1.5 million dollars in the third quarter of last year.
Speaker #2: This increase was driven by OAS revenues, which were 10 million dollars, compared to 1.0 million dollars a year ago. It reflects the ongoing deliveries of iron drone and Optimus systems, and contributions from a pair of ground robots related services.
Speaker #2: And the contracts from military and public safety customers. Gross profit was 2.6 million dollars. Representing a 26% gross margin in the third quarter. As compared to a gross profit of 0.05 million dollars in Q3 of 2024.
Speaker #2: The increase in gross profit year over year results from increased higher margin product revenue at OAS, compared to lower margin service and subscription revenue in Q3 of 2024.
Speaker #2: Gross margins can be volatile on a quarter-to-quarter basis due to revenue levels that reflect the early stages of platform adoption, certain fixed service costs reflected in our cost of goods sold, and shifts in revenue mix between product development and services revenue.
Speaker #2: Operating expenses increased to 18.1 million dollars. For Q3 of 2025. As compared to 8.7 million dollars in Q3 of 2024. An increase of 9.4 million dollars.
Speaker #2: Our operating expenses increased primarily due to an increase in personnel costs, as we are investing in leadership to support our business growth and strategic initiatives.
Speaker #2: expenses include an increase of 5 million Those operating dollars of non-cash items. Cash operating expenses which exclude non-cash items such as stock-based compensation, depreciation, and amortization, were 11.6 million dollars in the third quarter of 2025, compared to 7.2 million dollars in Q3 of 2024.
Speaker #2: An increase of 4.4 million dollars. The increase in cash operating expenses is due primarily to higher personnel costs, particularly with the OAS operating infrastructure build-out and similar Ondas Holdings.
Speaker #2: Similarly, at Ondas Holdings, to support expected business expansion in the coming quarters and the company's strategic growth plan. Adjusted EBITDA loss increased 1.7 million dollars to a loss of 8.8 million dollars for the current quarter.
Speaker #2: The operating loss was 15.5 million dollars, compared to 8.7 million dollars in the third quarter of last year. Now let's turn to the cash flow statement.
Speaker #2: We had cash of 433 million dollars as of September the 30th, 2025, compared to 30 million dollars as of September the 31st, 2024. Cash used in operations for the first nine months remained relatively flat at 26 million dollars, compared to 25.4 million dollars for the first nine months of 2024.
Speaker #2: Cash used in investing activities for the first nine months of 2025 included a handful of strategic investments, as indicated on the slide. We find these investments to be a good use of cash and expect much higher returns than money market investments.
Speaker #2: We have discussed in detail the strategic relationship with Rift previously. As it relates to investments in companies such as Lightpath, Copin, and Safepro, we believe we have unique expertise to evaluate the opportunity for financial returns.
Speaker #2: And these companies also offer strategic business relationships within our partner ecosystem. We generated cash from financing activities of 448.2 million dollars during the first nine months of 2025.
Speaker #2: The majority of this came from the equity offerings in June and August and September. In addition to 24.7 million dollars from the exercise of warrants and stock options.
Speaker #2: We expect operating cash utilization to continue to improve in the coming quarters, improved cash efficiency comes from operating expense leverage at our OAS business unit, given our expectation of increased revenue and gross profit growth over the course of 2025 and into 2026.
Speaker #2: Further, our partnership with Clear, which we expanded in July, will support our revenue growth, including for revenue streams we had through our strategic acquisition program.
Speaker #2: This working capital consists of non-dilutive credit facilities to fund certain inventory and accounts receivable balances. Again, we held cash of $433.4 million as of September 30, 2025, compared to $30 million as of September 31, 2024.
Speaker #2: We are pleased with the results of our program to improve the structure of the balance sheet, by raising
Speaker #2: cash and converting debt. Shareholders'
Speaker #1: equity as of September the 30th, 2025, was 487.2 million dollars, compared to 16.6 million dollars as of September the 31st, 2024. Furthermore, Ondas Pro Forma cash balances were 840.4 million dollars, and stockholders' equity was 894 million dollars, adjusted for the 407 million dollars in net proceeds raised in an equity offering on October the 7th, 2025.
Speaker #1: And before cash used for operations and to finance acquisitions and investments in the fourth quarter. Now I'll hand it back to you now,
Speaker #1: Eric. Now we'll transition to
Speaker #2: a review of our business units and ask Marcus Oshri and Meir to provide updates to share updates on business development activity and operations at Ondas Networks and OAS.
Speaker #2: Let's start first with Marcus, who is moving Ondas Networks and our .16 platform deeper into the railroad operating groups which will eventually have its rewards.
Speaker #2: Marcus? Thank you,
Speaker #3: Eric. It's great to be here and to update you on some of our key initiatives and developments in Q3. To pick up from our last earnings call, support throughout the rail sector continues to build around .16p, the IEEE standard that Ondas has pioneered and continues to support and advance.
Speaker #3: In September, the wireless communications committee specialized working group within the Association of American Railroads announced that it has selected .16 for all new developments in the AARO and frequencies.
Speaker #3: This represents the AAR's commitment to .16, not only on the 900 and 450, but also on the 160 megahertz network. Again, this means that all of the AARO and frequencies are destined to adopt .16, the .16 wireless platform.
Speaker #3: As outlined in the Q2 earnings call, the 160 megahertz network has characteristics that make it a compelling case for railroad investment. Specifically, the 160 megahertz network is ubiquitous.
Speaker #3: Where there is rail, there is 160 megahertz coverage. This is the frequency where the railroads, through the AAR, own and operate 1.3 megahertz of spectrum, making it ideal for larger data-intensive IoT applications.
Speaker #3: Of the railroad-owned spectrum, the 160 megahertz frequency also has the best propagation characteristics, making it ideal for difficult terrain and dark territory. Addressing dark territory applications by providing connectivity for railroad applications and staff represents a substantial to highlight how quickly momentum is Networks.
Speaker #3: opportunity for Ondas building around .16 on the I would like 160 megahertz network. In Q4, an early next year, we are running several separate field trials on Class 1 and other railroads.
Speaker #3: Three railroads that, in aggregate, address long-term industry needs and significant markets. Specifically, these POCs address communications, signaling, and connected wayside topics, as well as general connectivity topics for connected railroad workforce.
Speaker #3: This is significant as it moves Ondas Networks from engaging with railroads on individual use cases to implement true .16 general-purpose networks in which adding safety and operation-enhancing applications becomes plug-and-play.
Speaker #3: On the revenue front, we will be shipping the first Northeast Corridor access production units at the end of Q4 with further deliveries in 2026.
Speaker #3: We take pride in the fact that our products will be used for a safety-critical positive train control application in the Northeast Corridor on Amtrak.
Speaker #3: Our joint development program with Siemens Mobility India for head of train radios has also progressed to deliveries and revenue within the next several months.
Speaker #3: As many of you may be aware, in July, the cybersecurity and infrastructure security agency also known as CISA issued a notification related to the security issues with the current generation head of train and end of train communications protocol.
Speaker #3: This has given railroads a significant reason to accelerate the finalization of the HOT/EOT generation 4.0 specifications. Given that the .16 protocol that Ondas Networks developed for NGHE addresses those relevant security issues.
Speaker #3: In September, the wireless communications committee announced that the NGHE specifications will be completed in 2026. We continue to engage with the HOT and EOT manufacturers on design and product development tasks to take advantage of the updated WCC timeline.
Speaker #3: We also continue to engage with the railroads on specific 900 megahertz applications. Though timelines of large network deployments remain uncertain. The 900 megahertz timelines are frustrating, though we are creating even more compelling opportunities in addition to the 900 megahertz network with the railroads.
Speaker #3: We believe the market and financial opportunity for our .16 technology remains significant. Overall, we are pleased with the commitment the industry is making to the adoption of .16.
Speaker #3: Our direct engagement with railroads and vendors of wayside and telematics devices is accelerating the build-out of the .16 ecosystem. Which we expect will lead to accelerated commercialization and believe we will be able to demonstrate the beginning of the adoption curve in 2026.
Speaker #3: I will now hand the call back to
Speaker #3: Eric. Thank you, Marcus.
Speaker #2: I will now ask Oshri Legassi to take the floor and provide a business update for our OAS business unit. Meir Kliner will also share some context on the progress of the build-out of the OAS operating platform.
Speaker #2: We will also be joined by Tal Cohen, the founder and general manager of Centrix, who will introduce the company, its technology platform, and the strategic fit with Ondas and our Iron Drone platform.
Speaker #2: Oshri, please proceed.
Speaker #4: Thank
Speaker #4: you, Eric. During Q3, we made a huge leap forward in building Ondas Autonomous System into a true defense tech and security field. We are working relentlessly toward our vision of delivering next-generation autonomous and connected solutions for defense, homeland security, and critical missions.
Speaker #4: OAS is shifting rapidly. We are dramatically expanding our talent base, our partnerships, our customer reach, and our technological capabilities. In the upcoming slides, we will elaborate on how these elements are driving our growth.
Speaker #4: Our vision is to integrate advanced technology resilience and scale to create the autonomous infrastructure that nations and industries will rely on. Our goal is bold global.
Speaker #4: To build a powerful global leader that delivers a complete portfolio of defense and security capabilities to the most important customers tasked with keeping the world safe.
Speaker #4: We are particularly focused on protecting from the surge in threats posed by drones; we are prioritizing combining sensor that can detect and track threats from small UAVs to large ones with effective capabilities of neutralizing them safely.
Speaker #4: Protecting the world's most critical assets. We aim to reinforce national borders and forces with cutting-edge technology, enhancing surveillance and intelligence capabilities, protecting civilians in cities and securing essential infrastructure that sustain modern life.
Speaker #4: Across all our systems, we integrate advanced AI at multiple levels of autonomy. From assisted to fully autonomous, powered by some of the most sophisticated robotic technologies in the world.
Speaker #4: As we promised in our last meeting, we've built real momentum and equipped OAS with much stronger commercial, operational, and technological muscles. During the quarter, we delivered record high revenues of approximately 10 million dollars, marking the strongest performance in our history.
Speaker #2: Our backlog grew to 22.2 million dollars, at OAS at of September 30. And was more than 40 million when including the announced acquisitions. Further, our customer pipeline remains robust, and we expect to close the year strongly with further backlog expansion.
Speaker #2: Indeed, we are tracking significant pipeline activity that we hope to share in the near term. This will support accelerating growth momentum into
Speaker #2: 2026.
Speaker #4: We advanced our
Speaker #4: M&A and strategic growth program and completed multiple strategic acquisitions which are adding immediate operational and financial value to Ondas. We established new partnerships and onboard top talent to strengthen and expand OAS's operational infrastructure.
Speaker #4: We achieved several important milestones across our portfolio. Optimus was officially listed on the Green UAS Framework, with inclusion on the Blue UAS list pending with the U.S. Department of Defense.
Speaker #2: At the same time, we continued to expand our global pipeline for the Iron Drone radar, strengthening our position in the fast-growing counter-UAS market.
Speaker #4: We successfully
Speaker #4: Executed multiple counter-UAS pilots market in the U.S., Europe, and Asia, demonstrating interoperability across our.
Speaker #4: systems. Iron Drone radar
Speaker #2: was showcased at the Interpol Counter-UAS ID ICE 2025 exercise in San Diego. During strong interest, from both US and international agencies, we have performed several similar demonstrations for US customers which have been well received.
Speaker #2: Our Iron Drone radar was also selected by security in Germany. A leading integration partner to the German armed forces and other critical security operators.
Speaker #2: Following successful system integration and demonstrations conducted in Germany by robotics. We expect this hard work to turn into demand in the coming months given the urgent need to protect critical infrastructure and borders in Europe.
Speaker #2: And we believe Ondas is positioned to lead here. Of course, our market position in even stronger with the addition to Centrix, which opens a tremendous opportunity to market a layered counter-UAS solution suite.
Speaker #2: Similarly, our US pipeline continues to mature aligned with a growing demand for advanced defense and security solutions. Our marketing partner Mistral is helping support a growing and maturing set of pipeline opportunities with defense and homeland security customers.
Speaker #4: We found a partnership and made a strategic investment with Drift Dynamics. Including an initial order for the WASP FVP drone, Drift is making impressive progress in Europe with the WASP, and we are excited to support the global success.
Speaker #4: Of course, including in the US.
Speaker #2: launched NDIA On the production side, we compliant made in US fiber optics pools at American Robotics. Strengthening our domestic production base we have also advanced the required work to prepare the US supply chain for Optimus and Iron Drone and expect to have US built systems available in Q1 2026.
Speaker #2: Finally, we continued scaling our operating platform through key leadership additions most notably the appointment earlier this week of Major General retired Joava Reven. Former CEO of Rafael Advanced Defense Systems to our advisory board.
Speaker #2: experience and insights His will significantly enhance our strategic depth as we continue expanding OAS
Speaker #2: globally. I will now
Speaker #4: pass the call to Mayor Kliner who will share an update on the M&A program and the operational scaling activities at OAS.
Speaker #4: Mayor?
Speaker #5: Thank you, Oshri. During the
Speaker #5: quarter, we accelerated the execution of our strategic growth program. We drive value creation through accelerated growth and a clear path to profitability. The first start after outlining the plan for investor in July leveraging the work and the preparation we began earlier in the year.
Speaker #5: Our acquisition program is off to a fast start after outlining the plan for investor just last July, which is leveraging the work and the preparation we began earlier in the year.
Speaker #5: Our M&A strategy remains highly focused and disciplined targeting companies and technologies. commercial reach and strengthen That expand OAS's our product ecosystem. Each acquisition we made contributes a unique capability within our multi-domain architecture allowing us to integrate aerial, ground, and other critical elements and systems into a unified system of systems.
Speaker #5: This integration merges ISR, counter-UAS, robotics, communications, and sensing technologies under one interoperable platform. Synergies accelerate customer solution delivery, enhance revenue growth, and increase operation leverage through OAS's scaled infrastructure and position OAS as a next-generation multi-domain defense and security leader.
Speaker #5: We are building a scaled and interoperable platform by bringing together a group of highly complementary companies, each representing a critical pillar of defense autonomy.
Speaker #5: In the last several months, we made significant progress in expanding the OAS platform through strategic acquisitions, adding five new companies that bring critical capabilities, technologies, and customer relationships to our group.
Speaker #5: These acquisitions strengthen OAS across critical operational domains, including air, ground, and cyber, while expanding our global footprint with Tier 1 defense and security customers.
Speaker #5: With SPO, we are now engaged in critical components for missiles and advanced drone systems. Reinforcing our access to the defense supply chain. APIRO Motion marks our entry into ground robotics and payload systems, a key capability for border defense and maneuvering forces operating in complex terrain.
Speaker #5: Foreign defense expands our sub-ground and engineering platforms, enabling OAS to participate in land clearance and demining operations. Which are essential to modern defense missions.
Speaker #5: In the counter-UAS domain, our primary focus area we added inside intelligence sensors, which delivers electro-optical and AI-driven identification of hostile drones. And Centrix, which we are entered into a definitive agreement with.
Speaker #5: With cyber over RF technology provides one of the most effective and precise counter-UAS solutions available. Capable of neutralizing threats with minimal collateral impact. And with Tickle, which required in July, we have further strengthened our elite engineering team adding important capabilities valued by our defense customers.
Speaker #5: Together, these companies significantly enhance OAS's technological depth. Operational diversity and customer reach. Solidifying our position as a next-generation multi-domain defense technology leader. We don't have time on a quarterly call to do a deep dive into the recently acquired companies.
Speaker #5: But we'll expand on the Centrix and ask Talco and Centrix founder and general manager to share some thoughts in a few moments. As we continue to scale on this autonomous systems, we are building a strong operational infrastructure that connects all elements of our business from our cooperations and acquired companies to new talent and an expanding partner ecosystem.
Speaker #5: Our goal is to create a fully integrated operating platform that supports growth, accelerates execution, and enhances efficiency, across the group. This integration is being supported by the establishment of a senior leadership layer at OAS, which will manage the integration and growth of the acquired businesses.
Speaker #5: The expanding OAS leadership runs across the critical disciplines, including sales and marketing, supply chain, and field support, HR, legal, and finance and accounting. We are expanding our go-to-market capabilities, aligning our global sales teams, partners, and customer networks under one commercial framework.
Speaker #5: At the same time, we are strengthening our operational backbone, unifying manufacturing, distribution, and technology resources to support higher production capacity and faster deployment cycles.
Speaker #5: We are also brought in new leadership and advisory talent to help guide execution and drive collaboration across all subsidiaries. Finally, by connecting our technology platforms, talent, and ecosystem partners, we are establishing the foundation for sustainable scale and long-term value creation as a multi-domain defense and security leader.
Speaker #5: The integrated structure is transforming OAS into a true multi-domain defense network where each company strengthens and amplifies the others. Merging aerial, ground, sensing, and cyber capabilities into one interoperable scalable and autonomous system of systems.
Speaker #5: Our counter-UAS segment, a key area of focus and growth, will be anchored by the integration of Iron Dawn and Centrix. Together, we will deliver complete hard and soft kill capabilities under a unified command and control architecture.
Speaker #5: This system of system framework is now coming together. With each company contributing a critical capability, to the border OAS defense technology ecosystem. And as we move forward, we will continue adding companies and technologies to complete our portfolio and further strengthen OAS's position as a next-generation defense and security leader.
Speaker #5: I would like to take a moment to focus on Centrix. Centrix will expand OAS's global reach to Tier 1 defense public safety and security agencies.
Speaker #5: Organizations actively protecting critical infrastructure across more than 25 countries. Centrix cyber over RF technology represents one of the most advanced counter-UAS solutions in the market today, enabling safe, precise, and regulation-compliant drone neutralizing without jamming or collateral interference.
Speaker #5: Centrix technology is already field-proven, deployed globally across airports, defense facilities, and public safety operations. It demonstrates extended range, multi-target engagement, and adaptability to evolving radio technologies.
Speaker #5: This acquisition will position OAS with a unique soft kill capability. Perfectly complementing Iron Dawn's hard kill system. And together, they create comprehensive counter-UAS architecture unmatched in the market.
Speaker #5: I will now end the call over to Talco and general manager of Centrix to review the company and this market of counter-UAS.
Speaker #5: Tal? Thank you, Mayor.
Speaker #2: And thank you for having me today. At Centrix, we are truly excited to join Ondas. We believe this partnership will create a significant opportunity to deliver together with Ondas the ideal solution to the evolving drone threat that is rapidly emerging over the past few years.
Speaker #2: I am pleased to highlight how Centrix is driving a major advancement in our CUS or counter unmanned aerial systems, capability, through our proprietary cyber over RF technology or CORF in short.
Speaker #2: CORF works differently from a traditional jamming or kinetic solutions. Rather than broadly disrupting signals or deploying interceptors, Centrix system interacts directly with a drone communication protocol, the language between the drone and its controller, enabling us to detect, identify, track, and then assume control of a hosted drone in seconds.
Speaker #2: Some of the operational advantages stand out: rapid deployment and simplicity. Centrix system can be deployed in minutes, in a single Pelican case or mobile kit.
Speaker #2: Precision and safety. CORF ensures zero interference with authorized drones, GNSS, or nearby communication systems, enabling safe mitigation in civilian critical infrastructure and defense environments alike.
Speaker #2: Proven global performance. Centrix is already trusted by defense, public safety, and infrastructure agencies in more than 25 countries. By integrating Centrix into the OAS architecture, alongside our aerial platforms, ground systems, and sensor networks, we will be delivering a complete detect-to-defeat, CUS ecosystem.
Speaker #2: Centrix brings the soft kill layer of precise, cyber protocol takeover which pairs organically with our kinetic platforms for hard kill response. As drone threats become more agile, more numerous, and more diverse across borders, critical infrastructure, and contested environments, the CORF capability gives us the scalability, agility, and compliance required for today's multi-domain defense posture.
Speaker #2: In short, with Centrix on board, we are not just reacting to drone threats. We will be proactively controlling them, safely, reliably, and at scale.
Speaker #2: Centrix's global footprint is growing rapidly. We have now successfully deployed our solution in more than 25 countries, demonstrating the strong demand and the proven value of our technology for customer across the defense, security, and public safety sectors.
Speaker #2: Centrix has reached more than 200 global deployments, reflecting strong and accelerating international adaptation among Tier 1 defense and security agencies worldwide. In Europe, we are active in 13 countries with 74 deployments, achieving 24% year-to-date growth.
Speaker #2: In Asia, we have expanded across six countries with 82 deployments, growing 32% year-to-date. In North America, we have seen the fastest growth at 21% year-to-date, with 34 deployments across three countries.
Speaker #2: We have also extended our presence in Africa, South America, and Australia through new multi-agency programs that highlight the scalability and versatility of our CORF counter-UAS technology.
Speaker #2: Altogether, this demonstrates not only the global scalability and operational readiness of Centrix, but also how this capability will reinforce OAS's position as a trusted provider of field-proven multi-layer CUS solution for defense and critical infrastructure protection.
Speaker #2: A combined solution will allow detection, mitigation, and situational awareness under one coordinated architecture. We start with Centrix, which provides the first line of defense through its cyber over RF technology.
Speaker #2: It delivers long-range detection, tracking, and identification of drones and enables safe, cyber-based mitigation, taking control of the hosted drone, and landing it without jamming or collateral interference.
Speaker #2: This also gives us critical intelligence, real-time insights, into the drone's identity, behavior, and even its operator's location. Next, we add the Iron Drone Rider.
Speaker #2: Ondas's autonomous kinetic interception system. It's designed to automatically intercept and defeat any drone threat, including those that operate without radio control or GPS, completing the full spectrum protection layer.
Speaker #2: Finally, both systems feed into a unified situational awareness interface, where data from Centrix and Iron Drone are fused into a single automated operational picture.
Speaker #2: This integration allows operators to detect, track, and utilize threats in real time, while reducing the workload and improving decision-making accuracy. Together, this capability will deliver comprehensive counter-UAS architecture, one that covers every threat type, across every environment, with precision, safety, and automation.
Speaker #2: When we look at the broader counter-UAS market, the opportunity ahead of us is extremely significant. Global demand for counter-drone technologies is projected to grow from roughly 2.4 billion dollars in 2024 to over 10.5 billion dollars by 2030, representing a 27% compound annual growth rate.
Speaker #2: This growth is driven by the rapid escalation of drone threats across defense, homeland security, and critical infrastructure sectors, and by increasing government funding and regulation worldwide, as we are seeing strong momentum across all regions.
Speaker #2: Centrix is already well-positioned in each of these markets, with active deployments and a proven track record supporting Tier 1 defense and security agencies. If we move to the revenue outlook, Centrix continues to demonstrate exceptional growth, maintaining a triple-digit compound annual growth rate, with bookings expected to more than triple over the next few years.
Speaker #2: The company also sustains a strong gross margin in the upper 70% range, underscoring the scalability and efficiency of its technology platform. Demand continues to increase across Europe, the United States, and Southeast Asia.
Speaker #2: Fueled by both the rising number of drone incidents and the urgent need for compliant, effective, and automated defense solutions, our cyber over RF approach provides exactly that: a simple, safe, and proven method to detect, identify, and neutralize drones without causing collateral interference, positioning Centrix and OAS to capture a meaningful share of this rapidly expanding 10 billion dollars market.
Speaker #2: That will conclude my remarks. Thank you for having me here today. We are excited about what's ahead of us and look forward to sharing more great news with you soon.
Speaker #2: call back over to Eric. With that, I'll end the Eric, Thank you, Tom. As you know, we are thrilled to have Centrix join the Ondas team.
Speaker #2: We see exceptional talent at Centrix, combined with market-leading technology, which we believe is extremely well-positioned for the massive addressable market opportunity we have outlined.
Speaker #2: We believe Ondas is building a very strong position in front of a coming boom in CUS infrastructure deployments globally. We'll now turn to the outlook for Q4 and take a quick look into 2026 as well.
Speaker #2: As we highlighted throughout the year, our programmatic M&A effort remains very productive, and we believe it will continue to be highly accretive for our investors.
Speaker #2: We're continuing to build our corporate development team, and as we expand our capabilities, we're seeing the pipeline mature rapidly. Just as importantly, we're seeing significant inbound interest from potential partners, investors, and acquisition candidates who view Ondas as a strategic home for their technologies and businesses.
Speaker #2: The pipeline isn't just maturing; it's broadening. We're now seeing more established and operationally mature companies emerge as relevant targets and that's exciting. It speaks to the strength of our reputation and the scale of opportunity we're creating for 2026 and beyond.
Speaker #2: At present, we have over 20 companies in the active M&A pipeline, with advanced activity with seven potential targets. Collectively, these opportunities represent more than $500 million in potential additional revenue, highlighting the material impact our strategic growth program can have as we continue to execute.
Speaker #2: We believe this momentum positions us for a very strong 2026, one where our acquisitions and partnerships will not only add scale and capability, but also drive higher operating leverage, faster growth, and sustained profitability.
Speaker #2: Ondas is building a platform designed for expansion, and we are confident that the next phase of our M&A program will continue to strengthen both our business and long-term shareholder value.
Speaker #2: Let's turn to the financial and operational outlook. As we have highlighted, Ondas continues to build momentum, and we expect to see strong growth across all areas of the business led by OAS as we move through the balance of 2025 and into 2026.
Speaker #2: We believe we can comfortably meet the financial and operational objectives we outlined earlier this year, and today we're updating those targets to reflect our progress and visibility.
Speaker #2: With a full year 2025, we're now raising our revenue target to at least 36 million dollars, which puts our Q4 revenue target north of 15 million dollars.
Speaker #2: Looking ahead, we've also—we're also providing our first formal view into 2026. Based on the visibility we have today, we are targeting at least 110 million dollars in revenue for 2026, and I would note that this number may, in fact, prove conservative given our expanding customer base, backlog, and maturing customer pipeline, as well as our expanded M&A opportunity set.
Speaker #2: We also expect to announce additional acquisitions during Q4, continuing to execute our strategic growth program. As we stated previously, we continue to target the addition of a U.S.
Speaker #2: DOD or DHS customer in 2025, which will represent another major milestone for the company. Of course, new acquisitions would be accretive to our 2026 outlook.
Speaker #2: As it relates to Ondas Networks, we are heartened by the AAR's expanding commitment to DOT 16, where three major private wireless networks have now been formally designated for upgrade with DOT 16 technology.
Speaker #2: We do believe we will see meaningful adoption by the railroads in 2026, and this will help reward our investors for the strategic value we are creating with Ondas Networks.
Speaker #2: However, until we see the orders, our outlook today reflects only modest revenue expectations from Ondas Networks relative to the OAS business. We will also continue to be as communicative as possible with our investors.
Speaker #2: To that front, we plan to host two dedicated events. In Ondas Capital Investor Day in December, we will dive into that business unit strategy and investment roadmap.
Speaker #2: In an OAS Investor Day in January, which will update our business plan from last July, and focus on our plans to scale our operating platform, capture new customers, as well as share our technology roadmap and a detailed financial plan for 2026.
Speaker #2: In summary, Ondas is executing on all fronts. We're growing, scaling, and expanding strategically. We've built an exceptionally strong foundation, and we're positioned to deliver a record-bearing 2025 while setting the stage for even greater performance in 2026.
Speaker #2: Before we wrap the call and take investor questions, I want to briefly revisit how our financial and operating models are designed to accelerate shareholder value creation.
Speaker #2: Of course, that's the bottom line for me and our leadership team, and also the bottom line for you. The formula here is straightforward, and it's working.
Speaker #2: Our core growth plan is delivering momentum and massive end markets that are still in the early stages of a 10-plus year adoption cycle. We're driving revenue acceleration and, as we continue to scale, we're generating operating leverage across the platform.
Speaker #2: That combination of sustained growth and capital efficiency gives us visibility into increasingly profitable growth over time, which we believe will support a premium valuation for Ondas.
Speaker #2: Layered on top of that is our strategic growth plan, which amplifies those returns leveraging our access to low-cost capital. With a premium-valued operating platform, we're able to acquire premium capabilities and do so in a way that's highly accretive to both earnings and long-term value.
Speaker #2: Together, these models—our core operations and strategic expansion—create a powerful cycle. We deploy growth capital, drive operating scale, and expand platform solutions that open new customer and market opportunities.
Speaker #2: This is how we intend to continue building shareholder value. Through execution, scalability, and disciplined capital deployment that compounds over time. I'm really excited to wrap up 2025 strongly, and I'm further excited to continue to leverage our momentum into 2026.
Speaker #2: With that said, operator, we will now move to take investor
Speaker #2: With that said, operator, we will now move to take investor questions. Thank you.
Speaker #1: We will now begin the question and answer session. To ask a question, you may press star then one on your touch tone phone. To withdraw your question, please press star then two.
Speaker #1: And at this time, we will pause momentarily to assemble our roster. And the first question will come from Ahmed Dayal from HC Wainwright. Please go
Speaker #2: Good Good morning, everyone. Thank you for taking my questions. Eric, very impressive, you know, the speed at which you are executing. Just along those lines, you know, you highlighted that you are pursuing seven deals that you are at advanced stages from an M&A perspective.
Speaker #2: Just to clarify, you know, if you do close all those seven deals, are you saying annual revenues or at least the run rate could exceed 500 million dollars per
Speaker #2: year? No, I'm not saying
Speaker #3: that. Specifically to the seven targets, we're talking more broadly about the pipeline we
Speaker #3: outlined. Okay.
Speaker #2: Understood. Thank you for that. And then let me just add that that's incremental to—it is incremental to the revenue targets we gave for 2026.
Speaker #2: Okay. So that's where potential upside could come from outside of any other organic developments for
Speaker #2: you. Right.
Speaker #3: And we think it's going to be bold paths.
Speaker #2: Understood. And then, you know, as we think about future OAS revenues, how should we think about one-time product or system sales versus any recurring revenue components, you know, from those sales?
Speaker #3: see the bulk of what we're doing in the next 12 to 18 months be the platform sales. So system sales and infrastructure buildouts. As we outlined in that July investor day, that's going to look and feel like recurring revenue because we've got this 10-year cycle.
Speaker #3: And as we build that install base, we'll be increasingly putting services behind that. Additionally, we are seeing significant demand from defense markets early on.
Speaker #3: Those tend to be purchases. As you see us build the pipeline and start to pull that through on a commercial side, that lends itself to a, you know, drone and data as a service model.
Speaker #3: So you'll see that mixed start to shift as well when commercial starts to
Speaker #3: grow. Got
Speaker #2: Got it. Thank you. Just one more for me, and then I'll get back in queue. You know, with all of this M&A activity, how quickly can you eliminate sort of overlapping, overheads, you know, from these recent
Speaker #2: acquisitions? Well, we really
Speaker #3: took some great pains today to outline that leadership team and that OAS operating platform layer that we're establishing. And that's going to be a significant leverage point for us.
Speaker #3: At the same time, the companies we're acquiring are growing quite a bit themselves. So what we're hoping to do and believe we can do with this operating platform layer I described is accelerate the revenue growth, but also the capital efficiency, and I don't think that means that we're going to have to be reducing costs with acquired companies.
Speaker #3: We're bringing on talent, and I think we're going to be growing that talent as
Speaker #3: We're bringing on talent, and I think we're going to be growing that talent as well. Got
Speaker #2: Got it. That's all I have there. Thank you so much.
Speaker #1: And the next question will be from Mike Lattimore from Northland Capital Markets. Please go ahead.
Speaker #4: Hi, great. Yeah, congrats. Many, many exciting developments here. I guess as you look at the guidance for '26, does that get you to EBITDA A positive?
Speaker #3: We still believe that the operating businesses will be EBITDA positive by the second half of next year. I think that case is even stronger as we're building the scale through the revenue additions.
Speaker #3: And, you know, let's stay tuned. We did say we're going to have a conference call in the first half of January to lay out the business plan and the financial model for 2026.
Speaker #3: And there we'll give you a sense as to when we can cover the holding company costs.
Speaker #4: Got it. And then the center of acquisition sounds very positive. I guess as you think about the counter-US or counter-drone market, do you expect most of your prospects to buy both Centrix and Iron Drone?
Speaker #4: Is that going to be a logical sale, or would you have a, you know, big tranche in one category versus the other?
Speaker #3: I think it depends on where these systems are going to be deployed. As you know, these are layered technologies. In many places, having the soft and hard kill will be appropriate.
Speaker #3: In certain locations, having one may be more appropriate. So we'll have to see how that plays out. So we do feel like we're in a very strong position as subject matter experts in the technology we can bring that are operational best in class, you know, that we can have a great deal of efficiency and guiding and value in guiding our customers to what that those layers look at, look like at specific locations.
Speaker #4: Got it. And just last for me, in terms of the US market, which sort of product categories seem most promising for the US, and maybe which, you know, type of government or government agency seem most promising?
Speaker #3: I'd say they're all promising for sure. We do see quite a demand signal here from the Department of Defense, as well as DHS, a critical infrastructure market, even for public safety, for the counter-drone.
Speaker #3: So as I'm looking into 2026, we expect the counter-drone to likely lead the charge. However, we're going to see growth really across the
Speaker #3: board. Okay, great.
Speaker #4: Thanks
Speaker #4: a lot.
Speaker #3: All right,
Speaker #3: great. Thanks, Mike. And the
Speaker #1: next question is from Tim Horan from Oppenheimer. Please go ahead.
Speaker #5: Thanks. I got about 20 questions, but I'll keep it to three. It doesn't seem like Europe has much in the way of near-air defenses at this point, but it sounds like six has been deployed in a few locations.
Speaker #5: But, you know, is that pretty accurate? And I guess, do you have the platform now to kind of go protect, well, sense and protect the sorts of nuclear facilities and other facilities coming?
Speaker #5: Can that be up and running, you know, relatively
Speaker #3: So quickly? So yeah, you're right. I think Europe and it's really true globally that the counter-drone infrastructure buildout really is just in its you know, that's the batteries just coming for the first pitch.
Speaker #3: So we see a lot of greenfield here. At the same time, Europe is likely uniquely pressured here because the war in Ukraine is on their doorstep, and you're seeing many reports consistently of drone threats emerging in Europe.
Speaker #3: So we think these urgency across Europe to protect critical infrastructure, you mentioned power plants for sure, airports, other critical assets, bases, borders, we see a significant demand there.
Speaker #3: So I do think this is going to be a place that's going to be very fruitful for us.
Speaker #5: And it sounds like Centrix is deployed in a bunch of locations. You know, as is there any evidence that their technology works to protect these locations?
Speaker #3: Yeah. Oh, yeah, there's tons
Speaker #5: of evidence, and you can see it in the customer expansion. So this is a very robust, proven technology and capability we think that growth curve is going to be sustained.
Speaker #5: So on Mike's question of Centrix, integrating Iron Drone with when will that actually be accomplished? When can you start deploying the platform?
Speaker #3: Yeah. Let's I'm going to defer that to our call in January. I don't want to put the timelines on that. I will add that, you know, the detection piece of what Centrix does is critical for the hard kill.
Speaker #3: You have to identify the threat to go mitigate. And Iron Drone we have been integrating many different detection technology platforms, and we think that's going to be pretty straightforward for us to do with Centrix as well.
Speaker #3: We'll give more specifics on that in
Speaker #5: Great. So I guess lastly, how much does it cost to protect an airport or a site? Do you think both, you know, the upfront cost for the customer and the ongoing annual cost?
Speaker #3: Yeah. You know, like always, it depends. Tim, it depends on how many you know, are they deploying a detection technology? Are they doing the soft kill?
Speaker #3: Are they adding hard kill? So it depends. But it can run into the millions of dollars per airport for
Speaker #3: sure. And is that an
Speaker #3: sure. And is that an
Speaker #5: is you know, how does it compare like the upfront versus the annual recurring? annual recurring fee, do you think, or
Speaker #3: that, but yeah, There are recurring fees on again, it depends on what's being deployed. And I think we'll be able to lay that out in January, the financial models around
Speaker #3: this. Thank Thank
Speaker #5: you.
Speaker #3: you.
Speaker #1: And the next question is
Speaker #1: from Austin Delhague from Needham. Please go ahead.
Speaker #6: results. First question, guys, is Hey, guys. Thanks for taking my kind of on the new 2025 guide. The 11 million in uptick, it sounds like some of this organic success that's higher than your expectations, or is the majority of this uptick coming from the recent acquisitions?
Speaker #3: It's both. I mean, we're going to be just to be clear, we run the businesses at OAS as one unit, and we have two business units on this network in OAS, and that's what we're going to be presenting to you on a go-forward basis.
Speaker #3: But the from the acquisitions and in terms of contribution Q3, we did highlight that Apero was added in. But we're seeing strength in the core business as well.
Speaker #6: Okay. And then looking at kind of your guys' 2026 guide, how much additional M&A is baked into that 110 number?
Speaker #3: There's no additional M&A; it's only the acquisitions we have announced. It does include the Centrix acquisition, which we expect to close soon.
Speaker #6: Okay. Okay. And then last question, like understanding gross margins can kind of bounce quarter to quarter, but maybe like on an annual basis, how are you guys thinking about those trending next year?
Speaker #6: Obviously, with the Centrix 70%, that's going to be very accretive. But just trying to get a sense from a modeling perspective.
Speaker #3: Yeah. So you'll see gross margins improve certainly in the 2026. We've talked about 50% as our target. I still want to keep it there.
Speaker #3: However, you know, let's see when we meet in January, we'll have a more precise outlook on that. But I do think 50% is a very comfortable number.
Speaker #3: And from there, I think
Speaker #3: we can see upside. All
Speaker #6: All righty. Well, thank you guys again. Keep up all the good work.
Speaker #6: great work. Great.
Speaker #1: And the next question will come.
Speaker #1: Lattenberg. Please go
Speaker #1: ahead. Thanks, Yeah, hi.
Speaker #7: Thanks for taking my call. Another one on Centrix for me, if you don't mind. The can you just talk about the obviously, there's unique capabilities because you can integrate it with all the other counter UAS technology that you have.
Speaker #7: But can you help us understand how unique it is versus what other people have out there in terms of other soft kill solutions or drone capture takeover, just kind of help us understand that a little better?
Speaker #3: Sure. Maybe I'll ask Mayor or Tal to tell you probably what to take this.
Speaker #7: Hi. Glad to assist. So just to make sure I understood the question correctly, was what is the difference between general, additional, or other effects of soft kill capabilities to Centrix capability?
Speaker #4: Yeah,
Speaker #4: the correct answer. What was the question?
Speaker #4: Yes.
Speaker #7: based is excellent during the presentation on the cost, cyber overall capability, y, meaning we can first detect and track and identify the drone in a passive manner.
Speaker #7: So we are not emitting or any creating any interference whatsoever. And I think the most important part is for the mitigation, we assume control over the drone with starting to communicate while trying while communicating with the drone and not by doing any jamming or inflicting any other communication collateral damage.
Speaker #7: So it's a very short, very safe, very limited, and precise surgical soft kill
Speaker #4: Appreciate
Speaker #4: that. And to your knowledge, there's no one else doing something similar in terms of technology. being able to do drone capture such as like that without interfering with other communication technologies.
Speaker #7: There are other capabilities that are doing and that are trying to do the same or to use the same technology. But currently, the technology is quite rare, and they're very effective.
Speaker #4: Great. Very
Speaker #4: Great. Very helpful. I'll add, Glenn, if I could
Speaker #3: In our assessment of the market, the Centrix solution was hands down the most robust. I’d also like to contrast this just to make sure it’s clear.
Speaker #3: We're not talking about jamming or spoofing radio links or GPS. We're talking about the cyber over RF, which has significant benefits in performance. This is the taking control of the drone and then landing it.
Speaker #3: So it's the threat to mitigate it.
Speaker #4: Very helpful. The last question I have is just on the guidance for '26. You talked about margins a little bit. That must give you some sense of the mix that you anticipate from all these different products that you now have.
Speaker #4: Can you just give a sense of the confidence level in that mix and in that guidance, just kind of I think you talked about tracking the pipeline activity, just is it a portfolio of various?
Speaker #3: Yeah. On the margin side, yeah, I get the question. On the margin side, we're quite confident that margins will trend higher from these levels in '26 as we get scale in the mix certainly is going to improve as
Speaker #3: well.
Speaker #4: Great. Okay.
Speaker #4: Thanks,
Speaker #4: guys.
Speaker #3: Thanks, Glenn. And the next
Speaker #1: Question is from Matthew Galinko from Maxim Group. Please go ahead.
Speaker #1: Ahead. Hey, thanks for taking my question.
Speaker #8: And congratulations on the corner. I wanted to ask about, I guess, working capital, particularly inventory, as we kind of see revenue scale pretty quickly.
Speaker #8: Is there should we expect pretty significant buildup in inventory and critical components and maybe as a follow-up to that, just how you feel on production capacity and any bottlenecks there that could limit the ramp?
Speaker #3: All right. So I'll take
Speaker #3: the latter first. Thanks. We believe we have ample capacity to meet this plan in our planning. So I'm not too concerned about that. Of course, it's going to be hard work.
Speaker #3: OSHU did highlight that we've made we're making a lot of progress in the US in terms of production on the drone platforms, Iron Drone and Optimus.
Speaker #3: So we do believe that in Q1, we'll start to have systems here, and that's going to be able to meet the demand we see here.
Speaker #3: So I feel pretty good about it. In terms of working capital, we'll probably be building a bit of inventory, but I don't find that too challenging.
Speaker #3: Obviously, we're well-capitalized. We will focus at the same time on our cash conversion cycle. So we'll probably be able to give you more details on at that meeting in January.
Speaker #4: Great. Thank you.
Speaker #3: Sure.
Speaker #3: Thanks, Matt. And the next
Speaker #1: question is from Jonathan Sigman from Stifel. Please go
Speaker #1: ahead. Good
Speaker #6: Good morning. Ondas team, thank you for taking my question. I mean, congratulations on all the progress. Just the operating platform that you're putting together is really pretty unique and I don't recall anyone having so much rapid success with acquiring businesses in a new industry like you are.
Speaker #6: I would love to hear how you're thinking about putting in incentive systems for your teams understand you'll give us more metrics in January. I just would like to hear a little bit about how you're thinking about the philosophy and how you measure performance and balancing the individual units and driving towards success for the integrated whole.
Speaker #6: Thank you.
Speaker #3: Yeah. Thanks, John. So you firstly mentioned the speed of the M&A and that is I think that observation is spot on. We've articulated this really as an opportunity.
Speaker #3: Probably a once-in-a-generation opportunity to provide a scaled platform for these important technologies and it won't belabor that. But yeah, we're moving fast and putting together the leadership team and incentivizing that team is really critical.
Speaker #3: And I think what we're doing is building a situation where we'll participate in the upside. So as we grow the business, it's certainly going to be able to increase cash compensation, but at the same time, we're also using equity incentives, and we find those to be very, very successful.
Speaker #3: The team that we're putting together believes in the mission. There's a lot of excitement about the success we're having, so that certainly helps reinforce the performance, even in our productivity.
Speaker #3: So I like that flywheel. And I guess that's really the answer. It's we're not doing anything unique on that front, I would say. But I think our team and I think the perspective management teams that we're talking to on the M&A side are excited about building a big company because, of course, they're looking at as an opportunity to build substantial equity value.
Speaker #3: So I think that's going to work out well for us.
Speaker #4: Thank
Speaker #4: you.
Speaker #3: Thanks,
Speaker #3: John.
Speaker #1: concludes today's question and answer session. I would like to turn the call back to Eric Brock for any closing
Speaker #1: remarks. Okay.
Speaker #3: Well, thank you, operator. As we wrap the call, I want to thank you again for spending time with us today. As we outlined, we're expecting a strong finish to 2025 and we're focused on sustaining that momentum into 2026.
Speaker #3: We, as always, look forward to providing more updates along the way, and I think that's probably going to be sooner rather than later. We do have a lot going on.
Speaker #3: And from here, enjoy the rest of the day. We're going to get back to the important work of building the company. So thank you for attending.