Odysight.ai Inc(ODYS) - 2025 Q2 - Quarterly Results

Company Overview About Odysight.ai Odysight.ai is a leading provider of Predictive Maintenance (PdM) and Condition Based Monitoring (CBM) solutions, leveraging a visualization and AI platform with video sensor-based technologies for critical systems in aviation, transportation, and energy industries - Odysight.ai specializes in Predictive Maintenance (PdM) and Condition Based Monitoring (CBM) using a visualization and AI platform[13] - The company provides video sensor-based solutions for critical systems across aviation, transportation, and energy industries, leveraging proven medical industry technologies[13] Overall Key Highlights Odysight.ai reported $2.4 million in revenue and a net cash position of approximately $33.2 million as of June 30, 2025. The company successfully uplisted to the Nasdaq Capital Markets, was added to the Russell Microcap® Index, and achieved significant commercial milestones globally | Metric | Value (as of June 30, 2025) | | :----- | :-------------------------- | | Revenue (H1 2025) | $2.4 million | | Net Cash Position | $33.2 million | - Odysight.ai uplisted to the Nasdaq Capital Markets and was added to the Russell Microcap® Index[8] Business Update & Strategic Developments CFO Commentary The CFO highlighted deepened partnerships with tier-one customers and advanced the development and integration of their predictive maintenance system. This supports an ongoing strategic transition towards the aerospace and defense sectors, with key deployments including the Heron TP UAV and an agreement with a multinational technology group - Deepened partnerships with tier-one customers and advanced development/integration of predictive maintenance systems[3] - Ongoing strategic transition towards the aerospace and defense sectors, which may cause short-term revenue fluctuations[3] - System selected for deployment on the Heron TP - a Medium Altitude Long Endurance (MALE) unmanned aerial vehicle (UAV) - for the Israeli Ministry of Defense and Air Force[3] Commercial Achievements Odysight.ai strengthened its global presence by delivering a system for the Heron TP UAV, signing a strategic partnership with a multinational technology group for PHM system integration, receiving a purchase order from a European partner for industrial solutions, and partnering with Israel Railways to deploy PHM for enhanced railway safety - Delivered system for the Heron TP UAV platform with Israeli Ministry of Defense (MOD) and Israeli Air Force (IAF)[8] - Signed a strategic partnership with a multinational technology group to integrate Odysight's predictive health monitoring (PHM) system on several platforms[8] - Partnered with Israel Railways to deploy Odysight's PHM system to prevent derailments and enhance railway safety[8] Financial Performance Analysis Six Months Ended June 30, 2025 For the first half of 2025, Odysight.ai's revenues significantly increased to $2.4 million from $1.4 million year-over-year, primarily driven by a Fortune 500 medical company contract. Gross profit more than doubled, and gross margin improved to 28%. However, operating expenses rose to $9.7 million due to operational expansion and Nasdaq uplisting costs, leading to an increased net loss of $8.3 million. The cash balance notably increased to $33.2 million, bolstered by a public offering Income Statement Highlights Revenues for the six months ended June 30, 2025, increased by 76.5% year-over-year, primarily due to the full recognition of a Fortune 500 medical company contract. Gross profit more than doubled, and gross margin improved from 21% to 28%. Despite this, operating expenses rose significantly by 61.1%, leading to a 56.0% increase in net loss | Metric | H1 2025 (USD in thousands) | H1 2024 (USD in thousands) | YoY Change | | :---------------- | :------------------------- | :------------------------- | :--------- | | Revenues | 2,427 | 1,368 | +76.5% | | Cost of Revenues | 1,756 | 1,077 | +63.0% | | Gross Profit | 671 | 291 | +130.6% | | Gross Margin | 28% | 21% | +7 ppts | | Operating Expenses | 9,700 | 6,019 | +61.1% | | Net Loss | (8,340) | (5,344) | -56.0% | - Revenue increase primarily attributed to full recognition of approximately $1.7 million from a contract with a Fortune 500 medical company and increased revenues from vision-based platform solutions[4] - Operating expenses increased due to the expansion of the Company's operations, including new Industry 4.0 product development, market penetration efforts, and one-time Nasdaq uplisting expenses[9] Cash Position The company's cash balance significantly increased to $33.2 million as of June 30, 2025, up from approximately $13.6 million a year prior. This substantial increase was primarily driven by a U.S. underwritten public offering in February 2025, which generated approximately $23.7 million in gross proceeds | Metric | As of June 30, 2025 (USD in thousands) | As of June 30, 2024 (USD in thousands) | YoY Change | | :----------- | :----------------------------------- | :----------------------------------- | :--------- | | Cash Balance | 33,238 | 13,600 (approx) | +144.4% | - The significant increase in cash balance was driven by a U.S. underwritten public offering in February 2025, which generated approximately $23.7 million in gross proceeds[10] Three Months Ended June 30, 2025 For the second quarter of 2025, revenues decreased significantly to $0.4 million from $1.2 million year-over-year, primarily due to reduced deliveries to a Fortune 500 medical company. Gross profit also declined, and gross margin slightly decreased to 37%. Operating expenses increased to $4.6 million, resulting in a higher net loss of $4.1 million compared to the prior year's quarter Income Statement Highlights Revenues for the three months ended June 30, 2025, decreased by 69.4% year-over-year, primarily due to reduced deliveries to a key medical customer. Gross profit and margin also declined, while operating expenses increased by 58.6%, leading to an 86.7% larger net loss compared to the same period last year | Metric | Q2 2025 (USD in thousands) | Q2 2024 (USD in thousands) | YoY Change | | :---------------- | :------------------------- | :------------------------- | :--------- | | Revenues | 362 | 1,181 | -69.4% | | Cost of Revenues | 229 | 667 | -65.7% | | Gross Profit | 133 | 514 | -74.1% | | Gross Margin | 37% | 44% | -7 ppts | | Operating Expenses | 4,600 (approx) | 2,900 (approx) | +58.6% | | Net Loss | (4,075) | (2,182) | -86.7% | - The decrease in revenues was primarily attributable to a decrease in deliveries to the Fortune 500 medical company customer[11] - Operating expenses increased due to the expansion of the Company's operations, including the development of new Industry 4.0 products and efforts to penetrate new markets and enhance product visibility[12] Financial Statements Interim Condensed Consolidated Statements of Operations and Comprehensive Loss This section presents the unaudited interim condensed consolidated statements of operations for the six and three months ended June 30, 2025, and 2024, providing detailed figures for revenues, cost of revenues, gross profit, operating expenses (R&D, S&M, G&A), operating loss, financing income, and net loss | Metric (USD in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | | :------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | REVENUES | 2,427 | 1,368 | 362 | 1,181 | | COST OF REVENUES | 1,756 | 1,077 | 229 | 667 | | GROSS PROFIT | 671 | 291 | 133 | 514 | | RESEARCH AND DEVELOPMENT EXPENSES | 4,843 | 2,975 | 2,356 | 1,408 | | SALES AND MARKETING EXPENSES | 1,024 | 459 | 628 | 225 | | GENERAL AND ADMINISTRATIVE EXPENSES | 3,802 | 2,585 | 1,587 | 1,245 | | OPERATING LOSS | (8,998) | (5,728) | (4,438) | (2,364) | | FINANCING INCOME, NET | 658 | 384 | 363 | 182 | | NET LOSS | (8,340) | (5,344) | (4,075) | (2,182) | Interim Condensed Consolidated Balance Sheets This section provides the unaudited interim condensed consolidated balance sheets as of June 30, 2025, and the audited balance sheets as of December 31, 2024, detailing the company's financial position including current and non-current assets, liabilities, and shareholders' equity | Metric (USD in thousands) | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :------------------------ | :------------------------ | :-------------------------- | | Assets | | | | Cash and cash equivalents | 32,910 | 18,164 | | Total current assets | 34,885 | 20,787 | | Total non-current assets | 1,674 | 2,892 | | TOTAL ASSETS | 36,559 | 23,679 | | Liabilities | | | | Total current liabilities | 3,294 | 3,295 | | Total non-current liabilities | 661 | 2,140 | | TOTAL LIABILITIES | 3,955 | 5,435 | | Shareholders' Equity | | | | Additional paid-in capital | 86,901 | 64,205 | | Accumulated deficit | (54,314) | (45,974) | | TOTAL SHAREHOLDERS' EQUITY | 32,604 | 18,244 | | TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 36,559 | 23,679 | Additional Information & Disclosures Backlog Definition and Disclaimer Backlog is defined as booked orders based on purchase orders or hard commitments not yet recognized as revenue, amounting to approximately $14.4 million as of June 30, 2025. It is presented for supplemental informational purposes only and is not a comprehensive indicator of future revenue or profitability, as orders may be cancelled or rescheduled - Backlog refers to booked orders based on purchase orders or hard commitments that have not yet been recognized as revenue[7][15] - Backlog is not a comprehensive indicator of future revenue or profitability and should not be considered a substitute for GAAP financial measures, as orders can be cancelled or rescheduled by customers[7][15] | Metric | Value (as of June 30, 2025) | | :----- | :-------------------------- | | Backlog | $14.4 million | Forward-Looking Statements This section contains forward-looking statements subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Key risk factors include market acceptance, product delays, regulatory approvals, intense competition, product liability, manufacturing limitations, inability to attract personnel, intellectual property protection, reliance on single customers/suppliers, need for additional capital, cybersecurity, foreign jurisdiction risks, and political/economic instability in Israel - Statements in the news release are forward-looking and subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed or suggested[17] - Key risk factors include market acceptance of products, lengthy product delays, inability to secure regulatory approvals, intense competition, product liability claims, limited manufacturing capabilities, reliance on single customers/suppliers, need for additional capital, cybersecurity, foreign jurisdiction risks, and political/economic instability in Israel[17] Company and Investor Contacts This section provides contact information for Odysight.ai's Chief Financial Officer, Einav Brenner, and for Investor Relations, Miri Segal of MS-IR LLC, for any inquiries - Company Contact: Einav Brenner, CFO, info@odysight.ai[18] - Investor Relations Contact: Miri Segal, MS-IR LLC, msegal@ms-ir.com, Tel: +1-917-607-8654[18]