Drone Technology Advancements - Rapid advancements in drone technology, including AI, ML, and improved sensor technology, are enhancing drone capabilities for complex tasks with greater precision and efficiency [1] - Integration of AI and ML enables real-time data analysis, optimized flight paths, and autonomous decision-making [1] - Advancements in battery technology and propulsion systems have improved drone endurance and range, allowing longer operation and greater coverage [1] Agricultural Applications - Drones are increasingly used in precision farming for crop health monitoring, water and fertilizer optimization, and real-time data provision, driving market demand in agriculture [1] - The US agricultural drone market is valued at USD $2.74 billion in 2024, projected to grow at a CAGR of 25% to reach $10.45 billion by 2030 [7] - ZenaDrone 1000 is being developed for agricultural applications, including spraying fertilizers, herbicides, and pesticides, with potential dual-use for wildfire management [2][6] Urban Air Mobility (UAM) and Transportation - Urban air mobility and passenger drones represent a transformative opportunity for the transportation sector, with potential to redefine urban mobility [2] - Companies are developing drone-based urban transport solutions, creating new market segments [2] Regulatory and Certification Developments - ZenaDrone has applied for FAA Part 137 certification for agricultural aircraft operations, enabling commercial use in crop spraying and wildfire management [2][3] - FAA Part 137 certification requires meeting safety, operational, and knowledge standards, with a process that can take several months [3] Wildfire Management - Wildfire devastation in the US is estimated to cost between $394 billion and $893 billion annually, driven by climate change and increasing severity of wildfires [4] - Drones are being developed for wildfire management, offering potential to mitigate environmental and economic impacts [4][6] Company-Specific Developments - ZenaTech's ZenaDrone 1000 offers autonomous multifunction capabilities, including stable flight, heavy lift, and industrial-grade hardware [8] - AgEagle Aerial Systems received an order for 60 RedEdge-P Multispectral Sensors, marking a significant milestone in 2024 [8][18] - Palladyne AI successfully demonstrated its Pilot AI platform's ability to autonomously control drone navigation and target tracking [5][18] - ParaZero Technologies launched the SafeAir Raptor, a safety system compatible with Anzu Robotics' drone models, meeting FAA regulations [9][10] - Ondas Holdings' Airobotics subsidiary received a purchase order for its Iron Drone Raider, featuring AI-driven navigation for defense applications [11][12] Market Growth and Opportunities - The global drones market is expected to achieve remarkable growth by 2032, driven by technological advancements and expanding applications across industries [2] - Increased adoption of drones for mapping, crop monitoring, spraying, and livestock management is supported by government incentives and technological advancements [17]

Core Points - Ondas Holdings Inc. held its Q3 2024 earnings conference call on November 12, 2024, featuring key executives including the Chairman and CEO, Interim CFO, and Presidents of Ondas Networks and Autonomous Systems [1][2]. Group 1: Company Overview - The conference call was structured to provide insights into the company's performance and future outlook, with a focus on financial results and strategic initiatives [2][3]. - Management emphasized the importance of non-GAAP financial measures, which are intended to offer investors a clearer view of underlying trends, despite not being in accordance with generally accepted accounting principles [4][5]. Group 2: Financial Performance - The company plans to discuss its financial results in detail, including reconciliations of non-GAAP measures to GAAP measures, which are available in the press release [4]. - The call included a reminder that forward-looking statements made during the call are subject to risks and uncertainties that could lead to actual results differing from those projected [3].

Financial Data and Key Metrics Changes - In Q3 2024, revenues were approximately $1.5 million, down from approximately $2.7 million in Q3 2023, primarily due to extended timelines at Ondas Networks related to 900 MHz activities [23][24] - Gross margin for Q3 2024 was $48,000, or 3%, compared to $555,000, or 21%, in Q3 2023, reflecting a change in revenue mix [24] - Operating expenses increased to $8.7 million in Q3 2024 from $6.5 million in Q3 2023, leading to an operating loss of $8.7 million compared to $5.9 million in the prior year [25][26] Business Line Data and Key Metrics Changes - Ondas Autonomous Systems (OAS) secured $14.4 million in orders for Iron Drone Raider and Optimist platforms, marking the largest bookings quarter in the company's history [9][10] - Ondas Networks is experiencing fluctuations in revenue due to the uncertainty around customer activity and the timing of commercial rollouts in the 900 MHz network [21][22] Market Data and Key Metrics Changes - The expansion into global military markets has significantly increased the Total Addressable Market (TAM) for OAS, with tangible engagement from additional military customers [12][56] - The railroad sector is showing increased interest in the 900 MHz network, with orders from Metra and a Class I railroad in Chicago indicating a positive trend for future deployments [16][18] Company Strategy and Development Direction - The company is focusing on military, homeland security, and public safety markets, with plans to expand distribution capabilities for Iron Drone and Optimus systems [46][56] - There is a strong emphasis on enhancing operational capabilities and customer engagement, particularly in the defense sector, to capitalize on the growing demand for autonomous systems [70][72] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about significant revenue growth in Q4 2024 and 2025, driven by fulfilling backlog orders and expanding customer bases [8][68] - The company is preparing for increased production capacity and marketing efforts to support growth in both Iron Drone and Optimus systems [70][71] Other Important Information - The company held cash and cash equivalents of $2.9 million as of September 30, 2024, down from $15 million at the end of 2023, with plans to improve cash utilization in Q4 [26][30] - Ondas has requested an additional 180-day compliance period from NASDAQ to regain compliance with minimum bid price requirements [74] Q&A Session Summary Question: Can you explain the combat success related to Iron Drone and the timeline for future orders? - Management indicated that while specific details on combat success in Israel cannot be disclosed, they expect orders in 2025 as they deliver on current orders and integrate systems [77][80] Question: Do you need additional certifications for autonomous drones in the U.S.? - No additional certifications are needed beyond the regulatory processes already in place, as the company has received FAA type certification [81][82] Question: What is the expected gross margin on the $14 million of orders? - The gross margin for the $14 million in orders is expected to be north of 50% [83] Question: Will the $14 million of orders be recognized in Q4 and Q1? - Yes, most of the $14 million in orders will be recognized in Q4 and Q1 [85] Question: How much do the rails need to spend to clear the spectrum, and what is the liquidity outlook? - Management noted that railroads intend to meet FCC deadlines for retiring legacy networks, and they are working on a multistage capital plan to ensure liquidity [99][103]

Core Viewpoint - Ondas Holdings Inc. reported a quarterly loss of $0.15 per share, slightly worse than the Zacks Consensus Estimate of a loss of $0.14, indicating a -7.14% earnings surprise [1] Financial Performance - The company posted revenues of $1.48 million for the quarter ended September 2024, exceeding the Zacks Consensus Estimate by 12.20%, but down from $2.67 million in the same quarter last year [2] - Over the last four quarters, Ondas has surpassed consensus revenue estimates three times [2] - The current consensus EPS estimate for the upcoming quarter is -$0.09 on revenues of $5.75 million, and for the current fiscal year, it is -$0.51 on revenues of $8.65 million [7] Stock Performance - Ondas shares have declined approximately 47.7% since the beginning of the year, contrasting with the S&P 500's gain of 25.8% [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating expectations of underperformance in the near future [6] Industry Outlook - The Communication - Network Software industry, to which Ondas belongs, is currently ranked in the top 35% of over 250 Zacks industries, suggesting a favorable industry outlook [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Ondas's stock performance [5]

| --- | --- | --- | --- | |---------------|------------------------------------|-------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Nasdaq : ONDS | Third Quarter 202 Earnings Release | | | Nasdaq: ONDS Disclaimer This presentation may contain "forward-looking statements" as that term is defined under the Private Securities Litigation Reform Act of 1995 (PSLRA), which statements may be identified by words such as "expects," "projects," "will," "may," "anticipates," "believes," "sho ...

Revenue Performance - Revenue for the three months ended September 30, 2024, decreased by $1,184,398 to $1,480,792 compared to $2,665,190 for the same period in 2023, primarily due to a $2,178,000 decrease in product sales to Siemens[267]. - Ondas Networks generated $445,288 in revenue for the three months ended September 30, 2024, down from $2,430,954 in the same period in 2023, reflecting a significant decline in product sales[268]. - OAS revenue increased by $801,268 to $1,035,504 for the three months ended September 30, 2024, compared to $234,236 for the same period in 2023, indicating strong growth in drone-based solutions[268]. - Revenue decreased by $7,666,493 to $3,063,652 for the nine months ended September 30, 2024, compared to $10,730,145 for the same period in 2023[283]. - Revenue from maintenance, service, support, and subscriptions increased by approximately $651,000 during the three months ended September 30, 2024[269]. Operating Loss and Expenses - Operating loss for the three months ended September 30, 2024, was $8,660,715, an increase of $2,726,694 compared to the operating loss of $5,934,021 for the same period in 2023[267]. - Operating expenses increased by $2,219,376, or 34%, to $8,708,275 for the three months ended September 30, 2024, compared to $6,488,899 for the same period in 2023[273]. - Operating loss increased by $2,726,694, or 46%, to $8,660,715 for the three months ended September 30, 2024, compared to $5,934,021 for the same period in 2023[278]. - Operating expenses decreased by $6,183,732, or 19%, with total operating expenses amounting to $25,553,183 for the nine months ended September 30, 2024[286]. Net Loss - Net loss for the three months ended September 30, 2024, was $9,526,268, compared to a net loss of $7,292,461 for the same period in 2023, reflecting increased operational expenses[267]. - Net loss increased by $2,233,807, or 31%, to $9,526,268 for the three months ended September 30, 2024, compared to $7,292,461 for the same period in 2023[280]. - Net loss decreased by $3,034,010, or 10%, to $27,672,088 for the nine months ended September 30, 2024, with a net loss per share of $(0.46) compared to $(0.62) in 2023[294]. Gross Profit and Margin - Gross profit for the nine months ended September 30, 2024, was $(538,317), a decrease of $5,191,867 compared to $4,653,550 for the same period in 2023[281]. - Gross margin decreased from 21% in 2023 to 3% in 2024, reflecting a change in revenue mix and increased fixed costs[272]. - Gross profit decreased by $5,191,867 for the nine months ended September 30, 2024, with a gross margin of (18%) compared to 43% in the same period of 2023, reflecting a 61% decrease due to a shift in revenue mix[285]. Cash Flow and Financial Position - Net cash flows used in operating activities were $(25,360,649) for the nine months ended September 30, 2024, a decrease of $2,748,095 compared to the previous year[295]. - Cash, cash equivalents, and restricted cash decreased to $2,873,286 as of September 30, 2024, down from $21,011,891 at the end of the previous year[295]. - As of September 30, 2024, the company had an accumulated deficit of approximately $226,032,000 and a working capital deficit of approximately $22,341,000[300]. - The company raised approximately $4,375,000 from the sale of additional redeemable preferred shares and $7,327,000 from issuing common stock in the first nine months of 2024[301]. Future Outlook and Concerns - There is substantial doubt about the company's ability to continue as a going concern for one year from November 12, 2024, due to uncertainties in funding plans[302]. - Future capital requirements will depend on various factors, including technology development, manufacturing, marketing, and overall economic conditions in target markets[303]. Operational Challenges - Approximately 17% of the workforce in Israel was called to active duty due to the ongoing military operation, temporarily reducing operational capacity[265]. Management and Compliance - Management's financial condition analysis is based on unaudited Condensed Consolidated Financial Statements prepared in accordance with U.S. GAAP[305]. - No material changes to significant accounting policies were noted since the filing of the 2023 Form 10-K[306]. - Forward-looking statements are based on current expectations and assumptions, subject to risks and uncertainties that could materially affect actual results[307]. - The Company is classified as a smaller reporting company and is not required to provide market risk disclosures[308]. - Disclosure controls and procedures were evaluated as effective as of September 30, 2024[308]. - No changes in internal control over financial reporting were identified that materially affected the reporting during the quarter ended September 30, 2024[309]. - Management acknowledges that controls can only provide reasonable assurance of achieving desired objectives due to resource constraints[310]. - Legal proceedings information can be found in Note 11 of the Quarterly Report on Form 10-Q[312].

Financial Performance - The revenue for Q3 2024 was approximately $1.5 million, a decrease from $2.7 million in Q3 2023, primarily due to delays in order activity at Ondas Networks[32] - Gross profit for Q3 2024 was approximately $0.05 million, representing a gross margin of about 3%, down from 21% in Q3 2023[33] - Operating expenses increased to approximately $8.7 million in Q3 2024, compared to $6.5 million in Q3 2023[34] - Net loss for Q3 2024 was approximately $9.5 million, compared to a net loss of $7.3 million in Q3 2023[37] - Revenues for September 2024 were $1,480,792, a decrease of 44.7% compared to $2,665,190 in September 2023[61] - Gross profit for September 2024 was $47,560, down from $554,878 in the same period last year, indicating a significant decline[61] - Total operating expenses increased to $8,708,275 in September 2024, up 34.0% from $6,488,899 in September 2023[61] - Net loss attributable to common stockholders for September 2024 was $(10,671,912), compared to $(7,914,991) in September 2023, reflecting a 34.9% increase in losses[61] - Adjusted EBITDA for the three months ended September 2024 was $(7,103,109), compared to $(6,900,099) in the same period last year, indicating a worsening operational performance[66] - Cash operating expenses for September 2024 were $7,150,669, a decrease of 4.1% from $7,454,977 in September 2023[67] - The total stockholders' equity decreased to $14,918,792 as of September 2024, down from $33,135,127 in September 2023[61] Orders and Bookings - Ondas Holdings reported $14.4 million in purchase orders during Q3 2024, marking the largest bookings in the company's history[1] - Ondas Networks secured a $3.0 million order from Metra for a system-wide upgrade of the 900 MHz wireless network[6] - Airobotics received $9 million in purchase orders for the Iron Drone Raider system from a major military customer during Q3 2024[21] - Airobotics also secured a $5.4 million purchase order for the Optimus System to protect military bases and borders[23] Capital and Cash Flow - The company raised $10.5 million in capital during Q3 and Q4-to-date, indicating continued investor support[5] - As of September 30, 2024, the Company held cash and restricted cash of approximately $2.9 million, a decrease from approximately $15.0 million as of December 31, 2023[38] - The Company raised an additional $3.55 million in capital after September 30, 2024, including $3.5 million via a convertible note[40] - Cash flows used in operating activities for the nine months ended September 2024 were $(25,360,649), a slight improvement from $(28,108,744) in the same period last year[63] - Net cash flows provided by financing activities were $14,871,301 for the nine months ended September 2024, compared to $18,700,603 in the previous year[63] Future Outlook - Ondas expects a strong end to 2024 and significant growth in 2025, driven by a strengthening order book and customer pipeline[5] - The Company expects a recovery in revenue growth in Q4 2024, primarily driven by the OAS business unit fulfilling backlog, including military orders secured in Q3[41] - Revenue expectations for Ondas Networks in Q4 2024 are modest, limited to funded development programs, with growth anticipated in 2025[41] - Bookings and revenue growth are expected to fluctuate due to uncertainties around customer activity and the timing of deliveries of the Optimus and Iron Drone systems[42] Assets and Liabilities - Total current assets decreased from approximately $23.6 million as of December 31, 2023, to approximately $17.2 million as of September 30, 2024[58] - Total liabilities remained relatively stable at approximately $47.1 million as of December 31, 2023, compared to approximately $47.1 million as of September 30, 2024[59] Compliance and Operations - The Company has requested an additional 180-day compliance period from Nasdaq to regain compliance with the minimum bid price requirement of $1.00 per share[43] - The Company operates through subsidiaries that provide private wireless data solutions and commercial drone solutions, targeting various critical markets[45] - The Company’s Adjusted EBITDA and cash operating expenses are used to facilitate analysis of ongoing business operations, excluding non-core items[52]

Financial Data and Key Metrics Changes - In Q2 2024, revenues were approximately $1 million, down from approximately $5.5 million in Q2 2023, primarily due to extended timelines in the 900 megahertz activities and supply chain disruptions related to the Gaza war [18] - Gross profit was negative $190,000 for Q2 2024 compared to $3.1 million for Q2 2023, with a gross margin of negative 20% versus 56% in the prior year [18] - Operating expenses decreased to $8.1 million in Q2 2024 from $11.6 million in Q2 2023, reflecting strict cash expenditure controls and reduced R&D activity [19] - The operating loss narrowed to $8.3 million in Q2 2024 from $8.5 million in Q2 2023, while adjusted EBITDA loss was $6.7 million compared to $5.6 million in Q2 2023 [19] Business Line Data and Key Metrics Changes - Ondas Networks achieved important milestones, including live operations of Airlink wireless networks at 900 megahertz for two customers and a successful field trial with a third customer [7][8] - Ondas Autonomous Systems (OAS) saw significant demand for unmanned systems, particularly in defense and security markets, with the Iron Drone Raider securing initial orders from military customers [10][30] Market Data and Key Metrics Changes - The demand environment for aerial security platforms is strengthening, with expectations of a durable upcycle supporting long-term business plans [14] - American Robotics secured a fixed-price contract with the U.S. Coast Guard for emissions monitoring at the Port of Long Beach, marking a significant operational milestone [15][37] Company Strategy and Development Direction - The company is focused on expanding its presence in the defense sector, with the Iron Drone Raider positioned as a leading solution in the counter-drone market [12][13] - The strategy includes increasing production capacity and expanding marketing efforts to other defense and security customers globally [11] - The company aims to capitalize on the growing demand for drone technology in both commercial and government markets, particularly in the U.S. [41][42] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a disappointing start to 2024 from a revenue perspective but emphasized the importance of technical and operational milestones achieved [6] - The company expects a material recovery in revenue in the second half of 2024, driven by demand for the Optimus and Iron Drone platforms [41] - Management highlighted the supportive role of government initiatives in building the industrial drone manufacturing base, which is expected to amplify private sector investment [54] Other Important Information - The company ended Q2 2024 with $5 million in cash, down from $15 million at the end of 2023, and plans to improve cash utilization significantly in the second half of 2024 [20][21] - A planned Investor Day in September will focus on Ondas' Autonomous Systems, providing system demonstrations and an overview of the business plan [44] Q&A Session Summary Question: Can you provide insight into the scope of the Networks business and the migration plans? - The company is working on area-wide networks with three customers, focusing on smaller deployments while planning broader deployment strategies [46][47] Question: What is the potential for further deployments in the UAE? - The UAE government customer plans to deploy 22 systems by the end of 2025, with expectations for significant orders in the second half of 2024 [51] Question: How is the U.S. government supporting the drone manufacturing base? - There is major support from federal and state levels, recognizing the value of drones for security and inspection, which is encouraging private sector investment [54] Question: What is the status of bandwidth allocation in the EU for rail? - The opportunity in the EU is similar to the U.S., with private networks needed for mission-critical activities, though deployment is handled on an individual country basis [55][56] Question: Will more Iron Drone sales go directly to defense customers? - Direct sales to defense customers are expected to increase, allowing for better integration of technology and setting favorable economics for the system [61][62]

Company Performance - Ondas Holdings Inc. reported a quarterly loss of $0.14 per share, better than the Zacks Consensus Estimate of a loss of $0.17, and an improvement from a loss of $0.18 per share a year ago, resulting in an earnings surprise of 17.65% [1] - The company posted revenues of $0.96 million for the quarter ended June 2024, surpassing the Zacks Consensus Estimate by 13.37%, but down from $5.47 million in the same quarter last year [2] - Over the last four quarters, Ondas has exceeded consensus EPS estimates two times and topped consensus revenue estimates two times [2] Stock Performance - Ondas shares have declined approximately 54.8% since the beginning of the year, contrasting with the S&P 500's gain of 13.9% [3] - The current consensus EPS estimate for the upcoming quarter is -$0.14 on revenues of $4.44 million, and for the current fiscal year, it is -$0.50 on revenues of $19.64 million [7] Industry Outlook - The Communication - Network Software industry, to which Ondas belongs, is currently ranked in the bottom 16% of over 250 Zacks industries, indicating potential challenges ahead [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Ondas' stock performance [5]

Financial Performance - Ondas generated approximately $1.0 million in revenue for Q2 2024, a decrease from $5.5 million in Q2 2023, primarily due to delays in order activity and slow commercial activity related to the Gaza conflict[19]. - Gross profit for Q2 2024 was approximately ($0.2) million, with a gross margin of approximately (20%), compared to a gross profit of $3.1 million and a margin of 56% in Q2 2023[20]. - Revenues for the three months ended June 30, 2024, were $957,851, a decrease of 83.9% compared to $5,468,964 for the same period in 2023[39]. - Gross profit for the three months ended June 30, 2024, was $(190,895), compared to a gross profit of $3,071,776 for the same period in 2023[39]. - Net loss narrowed to approximately $8.3 million for Q2 2024, compared to a net loss of $9.0 million for Q2 2023[21]. - Net loss attributable to common stockholders for the three months ended June 30, 2024, was $(9,378,230), compared to $(8,958,086) for the same period in 2023[39]. - Adjusted EBITDA for the three months ended June 30, 2024, was $(6,730,982), compared to $(5,636,760) for the same period in 2023[44]. Operational Highlights - Ondas secured initial purchase orders for the Iron Drone Raider from a major military customer, indicating an expansion of their engagement in counter-drone technology[2]. - The distribution partner of Ondas Networks received an initial commercial order for Airlink systems for deployment in the 900 MHz network, marking a significant milestone[3]. - Ondas Autonomous Systems generated approximately $300,000 in revenue during Q2 2024, with a key purchase order for the Iron Drone Raider from a global defense company[13]. - The company is establishing supply chain and production capabilities to meet expected demand for the Iron Drone Raider, which is emerging as a leading counter-drone solution[4]. - A $2.8 million agreement for the development of a 220 MHz Positive Train Control data radio program is expected to be completed by Q1 2025, with commercial deliveries slated for Q2 2025[8]. - The successful integration of Airlink systems into legacy 900 MHz networks has led to operational networks for both a Class I freight rail operator and a transit customer[7]. Future Outlook - Ondas anticipates significant revenue recovery in the second half of 2024, driven by a growing customer pipeline for both the Optimus and Iron Drone Raider systems[6]. - The company expects revenue growth recovery in the second half of 2024, primarily driven by the OAS business unit, with modest revenue expectations for Ondas Networks[23]. - Bookings and revenue growth are anticipated to fluctuate quarter-to-quarter due to uncertainties around customer activity and deployment plans for the 900 MHz rail network[23]. - Ondas is experiencing high engagement from potential customers and partners, indicating optimism for future revenue growth despite current low revenues[18]. - Ondas plans to host an "Investor Day" in September 2024 to provide system demonstrations and a detailed overview of the OAS business plan[25]. Financial Position - Cash and restricted cash decreased to approximately $5.0 million as of June 30, 2024, down from approximately $15.0 million as of December 31, 2023, due to $16.3 million used for operations[22]. - The total current assets decreased to approximately $15.1 million as of June 30, 2024, from $23.6 million as of December 31, 2023[34]. - Total assets decreased to approximately $82.5 million as of June 30, 2024, down from $92.2 million as of December 31, 2023[37]. - Total stockholders' equity decreased to approximately $19.4 million as of June 30, 2024, compared to $33.1 million as of December 31, 2023[38]. - Operating expenses decreased to approximately $8.1 million for Q2 2024, down from approximately $11.6 million in Q2 2023, reflecting cost savings from operational consolidation[21]. - The company reported an operating loss of approximately $8.3 million for Q2 2024, slightly improved from an operating loss of $8.5 million in Q2 2023, primarily due to lower operating expenses[21]. - Net cash flows used in operating activities for the six months ended June 30, 2024, were $(16,274,722), an improvement from $(21,864,777) in the same period of 2023[41]. - Cash, cash equivalents, and restricted cash at the end of the period on June 30, 2024, were $4,975,374, compared to $3,104,716 at the end of the same period in 2023[41]. - The company reported a decrease in cash flows from investing activities of $(2,314,873) for the six months ended June 30, 2024, compared to a positive cash flow of $695,484 in the same period of 2023[41]. - The company raised $4,375,035 from the sale of noncontrolling interest in Ondas Networks during the six months ended June 30, 2024[41]. - The weighted average number of common shares outstanding for the three months ended June 30, 2024, was 66,377,505, an increase from 51,112,218 in the same period of 2023[39].