Yoav Amitai: As you all see, we did a small brand uplift to Elsight with a new logo and new look, mainly to stress the development that the company is doing from being a communication provider to being enablement technology provider for uncrewed systems, not only for communication, while ensuring bad entities and unauthorized entities are kept at bay. In Elsight, we are not building drones, we are not building robots. What we do is we are creating this thin layer of enablement technologies that enable all those platforms to perform their mission. It does not matter if the mission is commercial mission or inspection, drone delivery or agriculture, or it is an homeland security or defense mission like ISR mission, logistics mission, drone as a first responder, and so on and so forth.
Yoav Amitai: Elsight today, looking from top-down on what we achieved, we have a pretty big customer base that we are supporting with our systems today. This number is growing on a quarterly basis, having new customers. Some of them are pretty big one. We will talk about it, about those onboarding that we did this quarter as part of it. But when we are talking from experience and when we are talking about what we have done and where we are in the market, I think that while the market is growing fast, and we will talk about the trends in the market, we are sitting in a very, very interesting spot in the middle of the market, having the right capability from boots on the ground perspective and access to new customers and end users and OEMs. Also having the infrastructure to support logistically from manufacturing in both Israel, United States, and Germany.
Yoav Amitai: From having business development people in different parts of the world being close to the customers and generating more pipeline opportunities, as well as converting those pipeline opportunities into actual deliveries or actual sales. Looking on our overall numbers or starting from the technology, one of the beauties about Elsight is currently all the growth that we are seeing is pure organic growth. Maybe we will touch a little bit upon inorganic opportunity that we are seeing as well. But within this organic growth, it is all based on a proprietary technology that we have developed and still developing in-house. Part of what I will talk today is not only about what we already have on the track, but also about what we are developing for future capability and future feature for our customers that will create more upsell and cross-sell opportunities for us.
Yoav Amitai: While we are seeing a big surge in the defense market in general, but more interestingly in our case, the uncrewed systems, I think, like I said, Elsight is positioned in a very, very interesting spot within this space. We have all the tools we need to benefit or to take over this opportunity that, again, like I said in the beginning, I think that my biggest challenge as a CEO talking to investors that are looking from outside in, is to try to share the level of excitement and the level of confidence we have inside the company to execute and to deliver those opportunities that we have on the table today. Looking at our number, we put it as a 9-month numbers of revenue, which looks exceptionally good if you compare it to previous year.
Yoav Amitai: What we did during this quarter that was ended in September is spreading the infrastructure, spreading the exposure to many of these customers and potential customers, having all the legal tick boxes from Blue List that we have done before the last quarter, getting into the BOA with the DOD in the US, being listed in the US Army UAS Marketplace. I believe that between now and the end of the year, we will be able to show how we convert those pipeline opportunities into actual revenues based on those progress that we started a year and a half ago, to be honest, with the Project G.I. that you all remember. From there was a lot of different work streams that brought us to where we are today in terms of the opportunity that we have in front of us, the pipeline, and the backlog that we have.
Yoav Amitai: Looking on our resources, we have all the resources we need to execute on our strategy and to even be more aggressive on our strategy to make sure that not only that we are achieving our goals, but we are overachieving our goals and setting those goals, or thinking big when we are thinking about the results and thinking about next year as a result of the opportunity that we see in front of us. We genuinely believe that there is point in time in a company lifetime that you have these kind of opportunities that we need to think big, and that is where we are today in Elsight. Based on all the feedback that we are getting from the industry, based on the progress that we are doing much faster than what we thought in some areas.
Yoav Amitai: Taking those USD 195 million of pipeline or actual tangible opportunities, we will break down this pipeline into actual numbers. Like I said, I think that shows the opportunity and that shows that we know what needs to be done to convert that into actual revenues in not only in the short term, but also in the medium term, speaking about 2027 and how calendar year 2027 is going to look like. We are getting ourselves ready from production capacity, like I said. As we said to the market that we are going to expand our production capacity into new territories. During the quarter, we already started to do manufacturing in both Germany and the US in addition to the current manufacturing capacity that we have. Remind you all that we are using contract manufacturers, so we are not having our own manufacturers, basically.
Yoav Amitai: We do not have our own manufacturing line. We are not investing a lot of CapEx, as you can see in our numbers in the quarterly report. But expanding this number and being able to deliver on the opportunity we have, it is something that we are doing in a very planned way. I think what is equally interesting to all of the above is that the margins that we are still able to support showing the market the need for the product, basically, by having super high gross margin relative to the rest of the industry of 77% gross margin on every sale that we are doing on average. The software is higher than that and the hardware is around those levels. I think it shows the quality or the value proposition that we provide to our customers.
Yoav Amitai: When I am looking 2 years out or 3 years out, based on the macro political environment in the world today, I still think that the vast majority of our revenue will come from defense. Having said that, we are seeing expansion also in commercial markets. We are investing resources there to make sure that we are not only looking at the defense side, but also looking on the commercial side, different application within the commercial side. We are seeing those that are moving faster and some that are moving a little slower. But we do see the progress that is currently happening in the industry. As a company, as I said, not only that we are looking on different sectors within our industry, we are also looking on different domains.
Yoav Amitai: Starting from the sectors, and I think that is one of the advantages of us with our go-to market strategy is that we have the same go-to market to each one of the sectors. Elsight product, the Halo, and other products that we will talk about are kind of a one-size-fits-all. It does not matter if we are talking to a defense customer, to a public safety customer, or to a commercial customer. All of them are having the same needs base in the basic level. Obviously, they do their own configuration. The actual product is exactly the same, not only between different sectors, but also between different domains. When we are talking about when today most of our sales are in aerial vehicle, we do have a lot of exposure in ground, and since the last quarter, we are starting to have a growing exposure also to maritime.
Yoav Amitai: I think that being able to serve all those domain with pretty much the same product or exactly the same product, but just different configuration, provide us or expanding our addressable market in a very interesting way. On that, we are working with our customers, with the end users. We are looking on, in general, on industry trends of what are the next trends in terms of the main domain that will be there, and this is how we are expanding our addressable market. Looking on the problem that we are solving or what is the gap that Elsight is solving. From one hand, we have the platform, which is the basic level. That is the actual drone, robot, vessel, what have you. On the other side, there is what we call enablement or enabling infrastructure.
Yoav Amitai: Enabling infrastructure is exactly what I said, is the actual technical capabilities that enable those platforms to complete their mission, whatever the mission is. Again, that is true both for commercial and defense. What we are seeing in the market is that there is this big gap between the platform capability and the technology or enablement technologies capability. What we have seen there, we see more than anything, a great opportunity for Elsight to expand from being only a communication company to becoming an enablement technology, basically, company, which include different portion of the mission enablement that I will walk you through in a second. Before that, again, getting deeper into the challenge or the different challenges that are out there is anything from signal loss on the communication level, losing the positioning of the platform, knowing where the platform is in a non-GPS environment.
Yoav Amitai: Think about it that you are working with your iPhone or with your cell phone, and you do not know where you are using Google Maps or Waze or your favorite navigation app. That is the basic assumption in today's front lines or in today's modern warfare. That is a huge problem, probably as big as the communication problem, and I will talk about what Elsight is doing there. In addition to that, when we are talking about different failures that can happen, it can be how do you manage the spectrum? How do you get the intelligence in the right time backwards so decision-maker will get the right decision? How the data that all the sensor in the field are being collected, and how you enrich your database that you have on the back using AI tools and others to have a more situational awareness in the field.
Yoav Amitai: All of these are huge problems in today's modern warfare that we are seeing, both in active front lines, as well as looking on government and how they are getting ready to basically find a solution to the challenges that they see moving into the future. Going back to us and what we are solving, like I said, with the Halo, is exactly that. We are looking on all these different building blocks of a mission, regardless of the platform, regardless of the domain, and thinking where we can expand or where we can provide more solution that will create a better experience for our customers or OEMs in general on one hand, and on the other hand, will create up-sell and cross-sell opportunities for us.
Yoav Amitai: Today, we are looking on different parts of the solution, and the beauty of that is that they are all dependent on the same Halo as a platform, basically. Speaking about this platform on the baseline, what we are being able to do is to help our customers and end users to utilize the entire spectrum of frequencies and technologies to make sure that, again, they not only can complete their mission, but they can monitor their mission, they can make sure that the mission was successful, and so on. Summarizing the technical part, Elsight is sitting on what we call the Platform OS, the platform operating systems. While below that, we have the actual hardware, the actual vessel, the actual robot, the actual drone, or whatever the platform is.
Yoav Amitai: Then on top on above it, there is the Mission OS, the mission operating system, and the human machine interface, basically. Elsight, we look on these layers, call it the T1 layer, basically, of enabling technologies, like I said, or providing communication, positioning video and sensor processing, and some autonomy features to be able to complete it. By the way, on that, some of it is being developed in-house in Elsight, some of it we are looking to do joint venture with different companies, and some of it we are looking in terms of inorganic opportunities that we are looking to expand our product portfolio and our reach in the market as fast as possible because of the opportunity we have in front of us.
Yoav Amitai: Now, speaking about this opportunity, it is a slide that we showed for the last couple of quarters just to show the trends that we are seeing in defense budget in general, and more interestingly, how much of those budgets are specifically relevant for uncrewed systems or what we are doing. That is an interesting trend that we are seeing throughout the world, basically, not only in the US or North American market. We see the same in Europe, we see the same in different parts of Asia and Asia Pacific. All these, for us, are signaling or signs for the opportunity that I was referring to before, and to the shift that we are seeing happening in the industry of how big is the place of where today those technologies are taking part or what is the portion of those systems within the defense budget in general.
Yoav Amitai: Now, looking at the development that we are doing, regardless of the revenue and pipeline numbers are also different. Setting the right stage or setting the right infrastructure to take over the opportunity once those budgets will start to kick in, and I will talk about this budget in the next slide. Starting with AeroVironment, AV, that is one of the biggest or the biggest company in uncrewed systems in the US defense. We just announced the market, basically, a partnership that we have done with them as part of AUSA, one of the biggest defense conferences in the US, the R&D conference in the US. I refer you all, if you haven't watched the video of how they speak about the opportunity they see in Elsight and how we speak about the opportunity we see with them. I think that is a very, very interesting development.
Yoav Amitai: Being prepared for all those budgets that will be allocated and all those programs that will be started to be deployed, and how it will translate into actual revenue for us. Being next to this thing create a lot of benefit for us. Even during the AUSA show, we already started to see the result there of having a lot of feedback. Our name was out there, was very known when we walked the floor and people heard about this partnership. It was a PR that was made by AV saying that they now implement, or they now integrate Elsight capabilities into their Mayhem 10 platform, which I think is very interesting development that is happening there. Like I said, on the manufacturing scale, we started to do manufacturing with two new electronic manufacturer service providers, one in the US, the other one in Germany.
Yoav Amitai: More than it is supporting our production capacity, it is supporting the need to have a manufacturing close to our customers to be able to provide them local manufacturing so they have a better control of supply chain, better solvency on what they are buying for us, and that is another trend that we are seeing. We just, like I said, creating the infrastructure so we will not have any friction in the sales cycle when we move forward. Another interesting development that happened during this quarter, or actually after the quarter end, that was also part of the AUSA, we launched our new positioning product, which is basically to mitigate a problem that I mentioned before about how do you navigate or how do you know what is the position of the platform without using GPS. GPS is kind of GNSS network, basically.
Yoav Amitai: So what we have launched there is basically a product to go after this market. While the communication market is huge in TAM number, total addressable market, we are seeing the same in the positioning market of a lot of different solutions. None of them are the ultimate solution, and we see our disruptive technology, which is still patent pending, but is a new approach of how to utilize existing infrastructure around the world, the infrastructure that is the most deployed around the world, and how we leverage that to let the platform or let the operator know where the platform sits with integrating different kind of sensors and our unique technology that we have developed there internally in-house. Like I said, it is still patent pending and hopefully will mature into a patent in the medium term.
Yoav Amitai: Last but not least, during the quarter, the access to the US, which included BOA contracts as well as being listed in the marketplace. One of the first, or maybe the first component to be listed in the UAS Marketplace for the US Army, which is not only for the Army. Now there are different services that are using the same infrastructure to buy from. There is no dollar amount attached to that, but like I said, that is part of the rev of the pipeline expansion based on those development that help us to go to more customers.
Yoav Amitai: As I said in my opening, I do believe that between now and the end of the year, we will be able to show to investors or to ourselves as well how we translate those infrastructure development into actual revenues and millions of dollars of revenues that we are expecting to come from there, which I think is, again, an interesting development. Now, deep dive into the US market a little bit in talking about budget, and there is a lot of discussion in the industry in general and in the market as well about where the budget is going to land and how it is going to affect companies in the market. So I will focus on the US market, but for Elsight, it is true for almost any other market that we are going after.
Yoav Amitai: While the big primes or the big companies, the very big companies are very sensitive to the size of the budget, in our case, because we are sitting on so many different programs, it is more of the passing the budget rather than the size of the budget. It means that right now the budget request in the US is $1.5 trillion. Of it, $54 billion is allocated specifically for uncrewed systems, which, as you know, based on my previous presentation, it is 200 times higher than FY26. So that is a huge jump that is happening there. I think more than anything, even before the budget was approved, it shows where, like I said in the beginning, where the opportunity sits and how big is the opportunity.
Yoav Amitai: But what I wanted to comment about that is that while the sector or the industry is still discussing where those budgets will start to be deployed, I think that for a company like us, once it will be approved and we will start to see, even if it is a small program, that is already acceleration for us or open a lot of bottlenecks for us just of the approval. Regardless of if the size will be $54 billion or half of that, just the fact that the approval will happen and the budget can be deployed, that will open for us a lot of, or that will open up for us a lot of bottlenecks that we have today and will help us to translate it into revenue.
Yoav Amitai: What I wanted to put on this point today in this presentation is that in Elsight's case, again, unlike the big primes or near primes, we are not as much exposed to the approval of the budget and start to be deployed. Again, that is based on the next week election, midterm election in the US and what the process will be there and how it will look like. But when we are working with our customers and end users, this is what we are getting from them, that once those programs will start to happen, we will see a flow of new opportunities and new orders coming in. The way all of it translate into actual pipeline opportunities.
Yoav Amitai: As you can see, first of all, we try to put more detail into our pipelines and to give you a better understanding of how many opportunities we have in each one of those stages, how the numbers look like, and maybe one of the most important stuff here is that those pipeline cover Halo solutions and also covers opportunities that we already have on the table. Like we put on the quarterly, when we are talking about commercial discussion, those in a very, very high probability to translate into actual revenue in the short, medium term. That is the meaning of the commercial discussion. This is why we are feeling so comfortable and so excited about how the future look like.
Yoav Amitai: But all of these are opportunities for Halo, and those does not include, obviously, new customers and new opportunities that are coming our way, as well as expanding our product portfolio with both existing customers and net new customers, will create a lot of upsell and cross-sell opportunities for us. The meaning of this growth in the pipeline, and for those of you who remember the number, we have around $30 million increase in the pipeline, in different stages of the pipeline since last quarter. Now we started to see the result of our business development team that is working with the boots on the ground, like I said, being closer to the customer.
Yoav Amitai: When we are looking 12 months out of how the next 12 months or until 2027 will look like, we are feeling very comfortable that big portion of this pipeline will be converted into actual revenue as we are seeing the different opportunities mature inside the pipeline and getting into actual revenues or becoming a backlog, which is a contracted deal and translated into revenue. Speaking about the contract or the backlog and basically the number, if you look on the number of the quarter and look on this pipeline, how it looked like on the previous quarter, you can understand that many opportunities are matured during the quarter and already delivered. That is because if you look on the backlog, for example, this number went up since the last quarter, and we still did all the revenue we have done during this quarter.
Yoav Amitai: Just to make sure we all understand that those are the tangible, foreseeable opportunities that we have in front of us and that does not include other product or new product offering like I spoke about, the positioning, which we believe can be maybe even the same size of this pipeline, which we are seeing in front of us on the communication. We will have the same on positioning as well as other product that we are expecting to launch to the market in the short, medium, and long terms. What helps us to get into all those developments that are happening are the boots on the ground, like I said, that we have on each one of those areas of working specifically on North America or being more specific in the US market and on the priority market for us in Europe, Middle East, and the rest of the world.
Yoav Amitai: This is where we put our resources today. This is where we are expanding the capacity and the resources that we have. Like I said before, because we understand that the opportunity in front of us is huge, because we understand that we need to be more aggressive and to press the pedal to the metal and to accelerate even faster than what we are doing this year versus last year, and what we have done in the last 2 years. Like I said, in terms of the opportunity that we see in front of us, the opportunity is endless, basically, if you are looking on the face of Elsight today. This is why we have this level of excitement and hunger to go get it and to be more aggressive in places where we feel that we need to be more aggressive.
Yoav Amitai: We are doing that, like I said, while we are setting the infrastructure to be able to support these opportunities, whether it is from making a simple product to manufacture that can be manufactured anywhere in the world, whether we are talking about redundancy or making sure that we have different providers, and we are not depending on a single source for anything and being able to deliver orders while we get them. Supporting expanded production capacity, not only with the existing manufacturers that we had in the beginning of the year, but also expanding it to other territories and onboarding these manufacturers, like I said, in the US and Germany to support those needs and to support this surge that is happening currently in the market. Speaking of this infrastructure, to protect our IP and to make sure that we are in front of the technology.
Yoav Amitai: First of all, we are constantly utilizing all the data that we are collecting from the field. We are submitting patents. Those are patents that we already have granted. I mentioned during this call at least two patent pending that we are having on new development that we have done or still doing as part of it. How we protect or what is the moat that we are creating around the technology, not only from patent perspective, but also other measures like data protection that I was talking about, or making sure that we are constantly developing and being in the forefront of the technology, basically.
Yoav Amitai: Before I am opening it to questions, I think that if we look on the recent achievement that we have received, whether it is from actual revenue perspective, the margin that we are working on, looking on the different infrastructure that we are creating, whether it is the Blue List or the UAS Marketplace, and having the resources we need to execute on the strategy. I think that looking on the $196 million of pipeline and understanding that we know what it takes to convert those, that is very promising, and we are feeling super comfortable and excited to get into or to finish this year with the best foot forward. Getting into next year with even bigger hope than what we had for the year. Even though this current quarter was soft because of mainly movement of actual opportunities and not because they disappeared.
Yoav Amitai: I think, like I constantly saying to investors, it is a matter of time, and we see that those orders will come, and once they will come, I think that we all be satisfied with the result and the growth of Elsight. With that, I want to hand it over back to Mel to open the questions, and I will be happy to answer any questions.
Mel Singh: Thanks, Yoav. Just following on from that ending, can you answer how do you explain the lack of order wins in Q3 when the uncrewed market is growing so fast? Is it because of competition from large US tech companies, or is it purely a slowdown in orders due to inventory timing?
Yoav Amitai: So we are definitely not seeing a slowdown from this perspective. As I said in the last slide, what we are seeing is movement of those opportunities time-wise. So we are in a very close relationship and very close connection with all of our existing customers and a very good relationship with our prospects. And what we are seeing in this movement is definitely not because of new competition that is coming from the market or to the market. It is more so because of time shifts of programs and inventory and schedules of customers. And that is why I am able to still speak on the same level of confidence that I did throughout the last year, and even being more confident around how the short and medium and long-term future will look like. So, that is how we explain what happened to us during the quarter.
Yoav Amitai: And again, as I said, part of the orders have received during the quarter and was already delivered. This is the revenue number that we are seeing on the quarter. Part of them went into the backlog, and others have shifted. And we believe that, like I said, we will be able to show the market, between now and the end of the year and definitely throughout 2027, how those pipeline numbers are converted into actual revenues.
Mel Singh: Well, and that takes us to the next question. Someone has asked, can we expect a return to previous quarter revenue in Q4, December quarter?
Yoav Amitai: Generally speaking, like I said in previous webinars and presentations, we do expect those trends of quarters and growth in quarter-over-quarter to remain, and we are expecting it to grow, like I said, when I spoke about the pipeline and seeing how those pipelines are being translated into actual revenues. So yeah, we do expect those numbers to be in same levels or even higher levels, moving forward and looking into 2027.
Mel Singh: Thank you. In terms of the pipeline, can you please provide some estimated time frames of each segment of the pipeline? Just to add to Andre's question on pipeline, can you also clarify what backlog of USD 3.5 million means? Is it work secured and revenue to be delivered? In how long?
Yoav Amitai: Sure. Starting from the last part of the question because that is the easiest for us. What we put on contracted or backlog, that is actual deals that we already signed, got the purchase order, got the down payment for them, and then it is based on customer schedule of when and where they want the delivery to be in. So that is the meaning of the contracted. That is the definitive revenue or number that will translate into revenue, but it is not part of the revenue that we had in the quarter. Okay? Let us imagine that we have an order of $1 million that we received. The customer has paid about the down payment. We put it into the backlog until it is been actually recognized as revenue. So that is the meaning of this part.
Yoav Amitai: As for the first part of the question about timeline and when we expect those opportunities to be translated, obviously there are different maturity level inside a pipeline as we put it here. We can see that also the number of opportunities in each one of those buckets in the pipeline are different. As I said on previous presentations and previous webinars, on these pipeline numbers, we do put opportunities that are tangible in the next 12 to 24 months. So we are not putting here wishful thinking for something that we think is going to happen in 5 years' time. Those are tangible opportunities. Now, speaking about what we also included in the quarterly, if we look on the commercial discussion as an example of, let us call it a rounded number, USD 35 million, this is contracted. We are already negotiating.
Yoav Amitai: These are customers that we already have business relationship with. So it is not just that we need to mature a new customer. Those are much more tangible. It is also the same, sorry, for the evaluation in progress, which is in a different state. I would say, generally speaking, since we started to put out these pipeline numbers and looking on our customers, we do not have a lot of examples of opportunities that just vanished from the pipeline. It is a timing thing, like I said before. Now that we have the team set up and we have people closer to the customer, and we have much more clarity and understanding how it will look like, in the short, medium, long-term, that is what provide us the confidence or the excitement, as I said in the end of the slide, about how the future is going to look like.
Mel Singh: Thanks, Gil. Just in terms of Q4 revenue, we have been asked to clarify, do you expect revenue to be higher than Q3? What would be the uncertainties or risks? Further to that, while we are on that question, would you see material revenue contribution from your anchor customer in Q4? Potentially, could there be a repeat order from this customer in the disclosed pipeline?
Yoav Amitai: Yes. The pipeline is built of both existing customers and net new customers. Obviously, those that already submitted repeat orders in general, or I assume there was specific question about what the market called OEM one and when the next order will come from there. It is definitely part of the pipeline, and as I said in previous presentation and in all the communication we are doing with the market, we are feeling very comfortable there with the customer. We have a very close relationships there. We are looking on what are their plans or in general looking on different customers, not only on them. What are the plans for not only the next quarter, but for the next 12, 18 months, and based on that, we are building our plans and our expectation of how it will grow moving forward. That is on this part of the question.
Yoav Amitai: With regard to the numbers, we do expect Q4 definitely to be higher than Q3. As I said in the previous question, in general and looking forward, we are expecting the revenue number or the quarter numbers to be on the same level or higher of what we had in previous quarters. We still have the same level of confidence of us being able to deliver it. Again, it goes down to the same point that I made before about timing. Also, if I may add about that, it is not a direct relative part of the question, but just to give more color, when I am talking, as I spoke during the slides on the budget approval in the US as an example, the point is that there are a lot of programs that are sitting on the shelf basically and waiting to be budgeted.
Yoav Amitai: It does not matter, like I said, if the budget will be $1.5 trillion or $980 billion, those programs are in priority and once the budget is approved, those programs are kicked in and we are starting to see the actual orders or the actual discussion, let us call it, translate into actual revenue. So, while we have high confidence or definitive confidence that the fourth quarter will be higher than this quarter for sure, I think that if we look further away into next year as well, I think that we will see this uptick based on this approval. Then the question of is how fast based on the political environment, let us call it, how fast those budget approval will happen. Again, not necessarily the size of them, but more so the timing of the approval or the fact of the approval itself.
Mel Singh: Yeah. How long will it take to integrate Halo into AeroVironment's Mayhem and how many units a quarter will they be manufacturing?
Yoav Amitai: So as for the integration, we already started to do the integration work. We are expecting, or AeroVironment and us together are expecting to have revenue from this platform in FY27. AeroVironment's FY27 already started, so when they are talking about that started in September. So it is between now and next September basically that you see actual orders there. So it is starting with integration, then we have a demo unit basically, and then with those demo units, they are going to customers that they already have. For those of you who are not familiar with AeroVironment is probably one of the largest or the largest revenue-wise of uncrewed systems, mainly aerial vehicles that they are doing. The Mayhem specifically is a loitering munition platform that they are integrating the Halo. It is the new loitering ammunition who in the future should replace or be in addition to the Switchblade.
Yoav Amitai: If you want to read on that, AeroVironment is a public company, so you can look on their numbers and how they are growing. Obviously, for obvious reasons, I cannot comment on specific number of quantities that we are expecting to have there, but I can say that they share with us their expectation or their pipeline and opportunities that they are going after with the platform. It looks very interesting. Between now, they are looking not only in the 12-month period, but also how it will look like in 3 years' time. Those numbers look super interesting and that is why we are excited, not only because it is a big company and being attached to such name create a lot of help on the marketing side or with the industry, but also because of the revenue opportunity that we are seeing there.
Mel Singh: Thank you. Robin has asked, why cannot contracted manufacturers copy your technology and build white box models? Will the patents be too late?
Yoav Amitai: First of all, the patents are until 2030. Most of them are till 2032. My comment on that is always that it just doesn't work that way. If you look on the automotive industry, which is super mature industry, you can ask yourself why would Toyota buy from Bosch or from any other of their T1 layer providers, why they are not doing everything themselves. The answer for that is that companies are focused on what they are good at and if there is a good off-the-shelf product they can source, they will do it in many cases. Same as we see in the automotive industry, in the commercial aviation industry, in many places in the defense industries where the prime are more of an integrator which have their core IP, but they are sourcing the entire stack of the solution that they are providing.
Yoav Amitai: I think that's the reason why they are doing that. If you look on the commercial market, there are little less than a handful of examples of companies that are doing A to Z vertical integration. It's very, very rare on our industry. Again, the industry is the uncrewed systems industry, both in the commercial space and the defense space. We are seeing very little number of companies that are doing a fully vertical integrated solution. They are doing everything A to Z. That includes payload. It includes communication. It includes all the enablement technologies, actually. Everything that have to do with positioning, navigation, sensors, and so on. Just the dynamics of these industries doesn't work that way.
Yoav Amitai: Thankfully, when today software maybe become commodity in deep tech, like the Elsight environment, AI tools are great, but they are not enough to develop the deep tech that we are doing because of all the data and because of all those moat that we have around it. That's the best answer I can give for that.
Mel Singh: Thank you. Then in terms of the pipeline, has the Blue List potential been factored into that?
Yoav Amitai: Yeah. As I said when I spoke about the progress that we are doing on the infrastructure level, let's call it. For those of you who were with us a year and a bit ago, we started with Project G.I. That was our breakthrough into the US DOD or now DOW. Then from there we had the Blue List, then we have the BOA, then we have the UAS Marketplace. As I said during the presentation, now we are expecting all this infrastructure to translate into actual revenues based on the pipeline. The answer is partially yes, because part of the opportunities on the pipeline is as a result of the Blue List and the other milestone that I just mentioned. Some of them were still maturing, and they are not yet part of the pipeline.
Yoav Amitai: This is how it helps us and reduces a lot of friction on the sales cycle, by having all these checkboxes ticked from compliance standpoint, let's call it, or certification standpoint.
Mel Singh: Just sticking with the pipeline, Yoav, what are the new businesses not in the pipeline? Second to that, maybe can you provide some more details on the stealth program?
Yoav Amitai: Yeah, sure. On the first part, like I said, the pipeline opportunities or the pipeline figures that we put out is based on existing product that we have on the track. That is mainly the Halo or the vast majority, or only the Halo. As I said, 10 days ago or about 10 days ago, we launched a new product for the positioning, to call it. It is not a navigation product, but it is a positioning product. Seeing that the addressable market of the positioning market versus the communication market, I do believe that the pipeline that we will create on those opportunities of both upsell, cross-sell and net new, will make the pipeline thicker in terms of adding new products. In addition to that, we are working. So we have the Halo, we have the Aura, and we are working on another lower tier product.
Yoav Amitai: We now call it Mini Halo. It doesn't have a marketing name yet, but we are expecting to go out to the market with it around February, March of 2027. That will target the low end of the market of what is called in the industry FPVs or PBAS or small robots. Again, that is placed in the same way that a big part of it does not include in the pipeline figures that we put out at the moment. This is how it is split between the different products. It does include different regions, but not different products, but also only the Halo. On the new business unit that we discussed, we are expecting to have a launch around it between now and the end of the year.
Yoav Amitai: Like we advised to the market during the last quarter, we signed a first customer, and we are working to integrate that. It is a product to remind you all that goes to government directly, and it goes top-down to government. It means that the sales cycles are a little longer, and the integration time is also a little longer. But the moat and the stickiness of this product and the fact that it is a pure software without any hardware component, that is what is interesting about it. This is what we shared so far, and this is the situation over there. The team there is working very hard to complete the current existing integration as well as bring in net new opportunities.
Mel Singh: In terms of your partnership with Anduril, they are now listed on the website. Is there any information you can provide there? Does Elsight have any intention down the track of going after the eVTOL market?
Yoav Amitai: After which market? Sorry.
Mel Singh: E-V-T-O-L.
Yoav Amitai: eVTOL. All right. As for Anduril or any other logo that we have on the website, like probably many of you have seen, we launched a new website with a refresh of the names and refresh of the quotes that we have from customers that are giving us some good feedback, and we are able to share with the market. There are various logos there, including Anduril and other logos as well. Those are customers that we already have business relationship with in different levels. Obviously, working with big companies like the Anduril's or any other primes or near primes, there are multiple or many work streams that we are doing with them on different business units that they have on their side. Those companies are usually work in silos, so they have land domain, they have maritime domain, they have air domain, sometimes they have communication domain.
Yoav Amitai: While we are working with sometimes all of the work streams or all of the business units, sometimes we work with only one and then expand from there. That is what you are seeing on our website in terms of logos and what we have there and what is the work we have there. The obvious statement that each one of those is a tip of an iceberg because those companies have a lot of different projects and program they are doing. We are obviously constantly looking of how we can expand there. A good example for that, by the way, is AeroVironment.
Yoav Amitai: Again, for those of you who watched or did not watch the video that we shared together, like a shared video we shared with them, they are talking about the fact that once we are in the Mayhem doing the integration, that will make it easier to expand into other AeroVironment platforms, which I think that speak to itself. So, this is how we see that. About the eVTOL market in general, I am not sure what the person who asked the question was referring to, but if the reference was for the air taxi market or the big market, we do have some projects there. But I would say that Elsight, as a company in general, we are looking on high quantities. While we do have exposure to this market, it will take long time until this market will have high quantities.
Yoav Amitai: Again, I hope I understood the question correctly, and that was the reference around eVTOL for air taxi. So it is a market that we have a small footprint in, but the whole market is still small, and it is only. Trying to be cautious with what I am saying here, but it is mostly wishful thinking because currently we are not seeing scale in this specific niche of the market. Again, I hope I addressed the right reference there, but that is my take.
Mel Singh: And then in terms of Starlink being disabled in the Ukraine, has this impacted the reordering from your European OEM? How does Starlink interface, if at all, with Elsight?
Yoav Amitai: Many of our customers integrate, again, starting from the technical part, Elsight in general, our solution is how to aggregate the entire spectrum of technologies and frequencies. Starlink is one of the technologies and one of the spectrum bandwidth that we can utilize, and many of our customers are integrating Starlink into Elsight, so we can manage not only the Starlink but also all the other communication infrastructure that are out there. That's on that, and that happens a lot, and actually it's growing in terms of the number of companies or the number of customers that will integrate us with Starlink specifically or other LEO players like Amazon that is becoming one, and ASTS, and other players that are in the LEO space, in the low orbit satellite space.
Yoav Amitai: Specifically about the point of everything that happens with Starlink in Ukraine, again, without commenting specifically on the reason and what happens there, I would say that that's exactly what Elsight is providing. Our statement is that none of the infrastructure, as good as it can be, there is no single infrastructure that can support these operations for long term, regardless if the reason is because of sovereignty or because of accessibility or because of price or because of jamming and spoofing in EW environments. The bottom line is that trying to rely on only one stream, whether it's Starlink or any other, does not provide the necessary solution. Just commenting directly on the question, the answer is 100% yes. Not only in the Ukraine, by the way.
Yoav Amitai: When companies are or when governments are seeing those kinds of events, they're looking for a solution that will be multipath and will release their dependency on a single link.
Mel Singh: So, if we move to the competitive landscape, we have a few questions here. So one, do you have significant competitors in your market space? Would Codan be one? Are they bigger than you or more powerful? Again, can someone copy your developments readily, or are they a long way behind in terms of data acquisition? Essentially, if we look at the lesson of Ukraine innovating at pace.
Yoav Amitai: Yeah. So it is a highly competitive market, generally speaking, because the pile of dollars in this market is big, and obviously there are a lot of people that want to put their hands, or a lot of companies that want to put their hands on that. Having said that, I will split the answer into two, into anything between direct competition and non-direct competition. When I am speaking about non-direct competition, I am talking about alternatives and not necessarily a competition. For example, what I just pull up here on the slide is that you can see that there are different alternatives from single cellular solution to RF solution to satellite solution, and each one of these are listed specific names.
Yoav Amitai: Now, I can comment directly on Codan, the relevant company within Codan portfolio is a company called DTC, Domo Tactical, which also the same way that I said on Starlink, many of our customers integrate Codan products into our solution, so they can enjoy these capabilities as well as other capabilities. What we are basically creating is that we are connecting all of these together into one solution, basically, that the customer does not need to handle anything, but everything happen automatically. So that is the core of what Elsight is doing on the communication space.
Yoav Amitai: While there are a competitor in a way, because this, an alternative to choose only use an RF solution like Codan or like Silvus or like any other of Codan competitors, it is very rare in our case that the customers or even those companies are looking at us or we look at them as a competitor because of that. What we are essentially doing is that we are doing their performance and their product better, but by enabling more infrastructure to be used and not only their infrastructure. With regard to how easy it is to copy our solution, the fact of the matter is that we are seeing competition mainly from small companies, small startups that are trying to develop stuff. We have seen some in the past. We are constantly seeing them on different competition and so on.
Yoav Amitai: We just recently had one in the US, which seems like we were much better in the performance. As a result of it, we are expecting to receive the entire order, which was originally the plan was to split that. We now know that they are working to, that we will get the entire quantity because of the performance and because of the difference and the technological readiness level that we have. The industry call it TRL level, which I'm not aware of any other TRL 9 product that is currently being offered in the market and doing what we're doing. With regard to how easy it will be to develop something like that and try to copy it is exactly the point that is being made on the question.
Yoav Amitai: I think that all the hundreds of thousands of flight hours and drive hours and sail hours that we have on the system, the fact that we feedback it back into making the algorithm more efficient and more productive, and by, as a result of it, adding more abstract layers, let's call it, around the core of this IP, that's what enable us to create kind of a gap between us and any competitor that will step into the market. The fact that we are constantly continuing to invest in R&D and learning from the field, it just to keep this gap as big as we can and make sure that we will be ahead of the game once we started to see competition. That's where it is today.
Mel Singh: In terms of your team structure, how many employees does Elsight have, and how are they split between engineering and sales?
Yoav Amitai: Today we have 53 employees around the world. Displayed between engineering and sales is pretty much 50/50, while we have our, let's call it's 40%/40%, and the remaining 20% is G&A and support. In the sales, we have the marketing, the business development team, and the sales support team, which include professional services, integration, and onboarding. Like I said in the very beginning of this presentation, today we have teams in US, UK, Germany, and Israel. We are looking to expand based on the actual traction that we have from specific markets. We are expanding the team as part of our plan. That's the current headcount that we have.
Mel Singh: For inorganic growth, in terms of potential acquisitions, would the focus be on the Platform OS or the hardware layer?
Yoav Amitai: Definitely the Platform OS. We see that that's where we have the best access to actual revenue and translate the acquisition into revenue. That's where it makes sense for us to expand our portfolio of product and do upsell and cross-sell. That's where we can offer value if the company that we would acquire have their industry access or their customer access, we can do again, upsell and cross-sell in both ways. We definitely look on the Platform OS layer. We don't see that we have a competitive or any unfair advantage on the hardware side. That's why we're focusing on where we see that we have this unfair advantage to bring new capabilities to the market and new features and new product offering. This is where we're focusing our activities there.
Mel Singh: When are you expecting the product launch for the positioning capability?
Yoav Amitai: That was launched 10 days ago. It's in the AUSA, the same conference where we had the PR about the collaboration with AeroVironment. We launched there the positioning product, and we are expecting to start and build pipeline and then actual revenues as part of this product. I expect this product, during 2027, to already generate a meaningful amount of revenue. The product is already out there. We already have customers that are doing trials and testing it and using it. We are expecting to expand it. As I said, this market of positioning, in general, is as big as the communication market. I think that if we will execute in the right way, and again, we have no excuses in this front, we have everything we need to do that, this will become another interesting growth engine for us.
Yoav Amitai: In general, by the way, not only positioning, just the positioning is already out there and already been discussed with customers and prospects.
Mel Singh: I think we have a couple of questions here on guidance. Will you give any guidance in the future? Second to that, in the absence of guidance, broker consensus for 2026, do you feel like the full year is aligned to broker consensus? Could you potentially beat that?
Yoav Amitai: Yeah. One of the reasons of guidance, from our perspective, is we want to do it when we have the visibility. The point in our industry at the moment is because there is such a massive disruption in the industry and the numbers, and I will bake in the comment about the analyst forecast. I think that these numbers that are currently out there, whether it is for this year or for 2027, the number can be much bigger than that because of the opportunity that I tried to convey during this presentation today. We want to put the guidance out once we see it actually or have the confidence of the numbers, and we do not want to put a number there and then to be 50% higher than that or 20% higher than that or vice versa. That is our view about guidance.
Yoav Amitai: We do try to provide as much information as possible to the market in terms of modeling how it will look like into the future. Again, commenting on the analyst expectation or analyst numbers on what they are putting out there, we do feel that the next 12 months that we have in front of us will be able to be very exciting. I will put it that way, again, without getting into definitive numbers, to be very excited in terms of the actual results and revenue.
Mel Singh: Okay, we are down to the last couple of questions. Have you considered the value of your software system for personal emergency beacons in remote environments?
Yoav Amitai: We did in the past. I would say that it is an overkill for personal emergency. We do have it. When we are looking on the defense market, we do look on the opportunities that are out there, mainly because defense forces are investing more than personal emergency in those market, and our device cost and price is just not relevant for the personal use by they sense. Yes, we looked at that.
Mel Singh: To finish off, Yoav, are you more positive today on Elsight's growth and share price than you were last quarter, despite a softer quarter in Q3?
Yoav Amitai: 100%. The message I tried to convey during this presentation, is that while we admit that this quarter was a soft quarter, and obviously looking forward and also looking backwards, we do believe that we are sitting in a much different place. I think that all this infrastructure work that we have done during this quarter and all the boxes that we ticked, whether it is partnership or whether it is actual infrastructure to support growth in manufacturing, in sales and marketing, in operation or all of the above, I would say that on a personal level, I am much more excited than what I were before. I will say that as the comment on the share price, that was a question there.
Yoav Amitai: I would say that while I think pricing companies is investor's job and we are focusing 100% on actual deliveries, if it provide any comfort to anyone of our audience today, I would say that, for us as people who are actually executing on the management, me personally and the rest of the management and the entire team, big portion, if not, I will talk about me personally, without getting in any other one, anyone else from the management, but 99.999% of my paper worth is in Elsight. When the share price goes down, obviously, I am highly affected on a personal level. We are here to win, both for ourselves and for our shareholders. That is the best, I think, way for me to end it in terms of the excitement and the confidence that we have moving forward. That is where we stand today.
Mel Singh: Thanks, Yoav. That brings us to the end of our Q&A.
Yoav Amitai: Thank you very much, everyone. I would say that you have the IR email here on the screen. If we did not answer any of your question or if you have any follow-on question, feel free to shoot them in IR at Elsight. We are always happy to try to answer as many question, or not as many, as detailed as possible based on what we disclose to the market and based on all the ASX Listing Rules, obviously. Feel free to shoot emails or questions through us. Thank you very much for joining us today. Thank you, Mel, for hosting. We will see you in the next quarter.
