Actelis(ASNS) - 2025 Q2 - Quarterly Results

Executive Summary & Business Update CEO's Strategic Outlook Actelis' CEO, Tuvia Barlev, highlighted the company's 31% sequential revenue growth in Q2 2025 and outlined a strategic restructuring plan focused on profitable growth in key markets like Federal/Military and MDU, aiming for an AI-enabled, efficient organization - Actelis grew 31% in revenues sequentially vs. Q1 2025, driven by multiple comprehensive growth initiatives[2] - Secured first major US telecommunications carrier customer for MDU solutions, validating long-term strategy[2] - Adopting a restructuring plan with increased focus on valuable, fast-growing markets and geographies, aiming for profitable growth and a more efficient, AI-enabled, automated organization[3] Key Financial Highlights (Q2 & H1 2025) Actelis reported a 31% sequential revenue increase in Q2 2025, reaching $0.94 million, but experienced significant year-over-year declines in both Q2 and H1 revenues and gross margins. Despite this, the company strengthened its liquidity by raising $1.35 million and reduced its net loss per share for the first half of 2025 | Metric | Q2 2025 ($) | Q1 2025 ($) | H1 2025 ($) | H1 2024 ($) | | :----- | :---------- | :---------- | :---------- | :---------- | | Revenues | $0.94 million | $0.72 million (implied) | $1.70 million | $4.16 million | | Sequential Change | +31% | - | - | - | | YoY Change (H1) | - | - | -59% | - | | Metric | Q2 2025 (%) | Q2 2024 (%) | H1 2025 (%) | H1 2024 (%) | | :----- | :---------- | :---------- | :---------- | :---------- | | Gross Margin | 32% | 57% | 33% | 52% | | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :----- | :------ | :------ | :------ | :------ | | Net Loss Per Share | $(0.21) | $(0.01) | $(0.43) | $(0.51) | | H1 YoY Change | - | - | -16% | - | - Successfully raised approximately $1.35 million during Q2 2025, including $1 million closed on July 2, strengthening the balance sheet while keeping debt extremely low[6] Recent Business and Operational Highlights Actelis achieved notable commercial successes, including a major US telecommunications carrier win and international expansion. The company also bolstered its leadership team with key sales appointments and initiated a comprehensive operational restructuring plan, incorporating AI and a new cryptocurrency treasury strategy, while maintaining cost discipline Commercial Wins & Expansion - Secured breakthrough order from a significant US telecommunications carrier for GigaLine MDU solutions, marking the first deployment with a carrier of this scale[6] - Secured follow-on transportation orders from major Mid-Atlantic county, Orange County California, and City of Eugene Oregon for intelligent transportation infrastructure upgrades[6] - Continued international expansion with orders from a Nordic municipality and Japanese infrastructure projects, demonstrating global validation of hybrid-fiber technology[6] Leadership Appointments - Hired Mark DeVol as Chief Revenue Officer for the Americas, focusing on Federal/Military, ITS/IoT, and MDU verticals[6] - Appointed Jason Chasse as Director of Federal Sales in June 2025, bringing 30+ years of specialized experience to accelerate federal growth[6] Strategic Initiatives - Adopting a strategic restructuring plan targeting 15-20% cost reduction compared to Q2 2025 levels, focused on growth enablement, automation, AI integration, offshoring, and outsourcing over 6-9 months[6] - Board approved a cryptocurrency treasury management strategy in August 2025, authorizing strategic allocation to established digital assets for long-term shareholder value creation[6] - Operating expenses of $2.08 million in Q2 2025 represent a 2% decrease when adjusted for $70,000 in foreign exchange headwinds compared to Q2 2024 ($2.04 million), demonstrating continued expense discipline[6] CFO's Financial Commentary CFO Yoav Efron reiterated the company's commitment to strengthening its financial foundation through disciplined capital management and low debt. He emphasized that the ongoing restructuring plan, targeting 15-20% cost reduction, is expected to drive faster growth and achieve sustainable operational leverage towards breaking even, despite temporary margin pressures - The restructuring plan is expected to enable faster growth and achieve a 15-20% cost reduction, creating sustainable operational leverage towards breaking even[7] - Maintained disciplined expense management, resulting in operating costs essentially flat year-over-year when adjusted for currency impacts[7] - Significant reduction in interest expenses reflects an improved debt situation, and the new cryptocurrency treasury strategy may open additional financial flexibility[7] Financial Performance Condensed Consolidated Statements of Comprehensive Loss Actelis experienced substantial year-over-year declines in revenues and gross profit for both the second quarter and first half of 2025, leading to increased operating and net losses. While R&D and S&M expenses rose, G&A costs decreased due to cost reduction measures, and interest expenses were significantly reduced Revenue and Gross Profit | Metric | Q2 2025 ($) | Q2 2024 ($) | H1 2025 ($) | H1 2024 ($) | | :----- | :---------- | :---------- | :---------- | :---------- | | Revenues | $941 thousand | $3.43 million | $1.66 million | $4.16 million | | YoY Change | -72.5% | - | -60.1% | - | | Cost of Revenues | $636 thousand | $1.49 million | $1.11 million | $1.99 million | | YoY Change | -57.3% | - | -44.2% | - | | Gross Profit | $305 thousand | $1.94 million | $556 thousand | $2.16 million | | YoY Change | -84.3% | - | -74.3% | - | - The decrease in revenues was primarily due to a decline in revenue from North America and the Europe, Middle East, and Africa (EMEA) region[8] - The decrease in gross profit was primarily due to increased indirect costs[10] Operating Expenses | Expense Category | Q2 2025 ($) | Q2 2024 ($) | H1 2025 ($) | H1 2024 ($) | | :--------------- | :---------- | :---------- | :---------- | :---------- | | R&D Expenses | $675 thousand | $603 thousand | $1.36 million | $1.25 million | | S&M Expenses | $700 thousand | $647 thousand | $1.37 million | $1.28 million | | G&A Expenses | $703 thousand | $790 thousand | $1.42 million | $1.61 million | - Research and development expenses increased primarily due to a rise in the utilization of professional services for the GL900 product line and exchange rate differences[11] - Sales and marketing expenses increased due to payroll expenses and engaging consultants to expand market reach in Europe and Asia[12] - General and administrative expenses decreased mainly due to cost reduction measures taken[13] Net Loss and EPS | Metric | Q2 2025 ($) | Q2 2024 ($) | H1 2025 ($) | H1 2024 ($) | | :----- | :---------- | :---------- | :---------- | :---------- | | Operating Income (Loss) | $(1.77 million) | $66 thousand | $(3.58 million) | $(1.80 million) | | Net Comprehensive Loss | $(1.90 million) | $(78 thousand) | $(3.76 million) | $(2.06 million) | | Net Loss Per Share (Basic & Diluted) | $(0.21) | $(0.01) | $(0.43) | $(0.51) | - Operating loss increased due to the decline in sales, consistent operating expenditures, effects of exchange rate fluctuations, and increased vacation expenses[14] - Net loss increased due to lower sales and exchange rate effects[16] - Financial expenses and interest expenses decreased mainly due to repayment of loans, reducing interest expenses and other bank-related charges[15] Non-GAAP Financial Measures Actelis reported a non-GAAP Adjusted EBITDA loss of $1.7 million for Q2 2025 and $3.5 million for H1 2025, a significant deterioration compared to a slight profit in Q2 2024 and a smaller loss in H1 2024, reflecting the overall decline in operational profitability | Metric | Q2 2025 ($) | Q2 2024 ($) | H1 2025 ($) | H1 2024 ($) | | :----- | :---------- | :---------- | :---------- | :---------- | | Non-GAAP Adjusted EBITDA | $(1.71 million) | $11 thousand | $(3.47 million) | $(1.78 million) | | Adjusted EBITDA Margin | (182.17)% | 0.03% | (208.98)% | (42.70)% | Financial Position Condensed Consolidated Balance Sheets As of June 30, 2025, Actelis' total assets decreased by 27.3% from December 31, 2024, primarily due to significant reductions in cash and trade receivables. Total liabilities also saw a decrease, while shareholders' equity declined by 62.9%, largely influenced by an increased accumulated deficit | Metric | June 30, 2025 ($) | December 31, 2024 ($) | Change | | :----- | :---------------- | :-------------------- | :----- | | Total Assets | $5,982 thousand | $8,225 thousand | -27.3% | | Current Asset | June 30, 2025 ($) | December 31, 2024 ($) | Change | | :------------ | :---------------- | :-------------------- | :----- | | Cash and cash equivalents | $393 thousand | $1,967 thousand | -80.0% | | Trade receivables, net | $943 thousand | $1,616 thousand | -41.6% | | Total Current Assets | $4,828 thousand | $6,903 thousand | -30.0% | | Metric | June 30, 2025 ($) | December 31, 2024 ($) | Change | | :----- | :---------------- | :-------------------- | :----- | | Total Liabilities | $4,730 thousand | $5,240 thousand | -9.7% | | Total Shareholders' Equity | $1,024 thousand | $2,757 thousand | -62.9% | - Accumulated deficit increased from $(44,062 thousand) as of December 31, 2024, to $(47,823 thousand) as of June 30, 2025[26] Cash Flow Analysis Condensed Consolidated Statements of Cash Flows For the first half of 2025, Actelis utilized $3.2 million in cash from operating activities, a 37.3% increase in cash burn compared to the prior year. This was partially offset by $1.6 million in cash provided by financing activities, including proceeds from common stock issuance, resulting in an overall decrease in cash and cash equivalents | Metric | H1 2025 ($) | H1 2024 ($) | Change | | :----- | :---------- | :---------- | :----- | | Net cash used in operating activities | $(3,218 thousand) | $(2,343 thousand) | +37.3% | | Metric | H1 2025 ($) | H1 2024 ($) | | :----- | :---------- | :---------- | | Net cash provided by financing activities | $1,643 thousand | $3 thousand | - Proceeds from issuance of common stock amounted to $2,100 thousand in H1 2025[31] | Metric | H1 2025 ($) | H1 2024 ($) | | :----- | :---------- | :---------- | | Decrease in cash, cash equivalents and restricted cash | $(1,572 thousand) | $(2,153 thousand) | | Metric | June 30, 2025 ($) | June 30, 2024 ($) | | :----- | :---------------- | :---------------- | | Balance of cash, cash equivalents and restricted cash at end of period | $695 thousand | $3,362 thousand | Company Information & Disclosures About Actelis Networks, Inc. Actelis Networks, Inc. is a leading provider of cyber-hardened, hybrid fiber-copper networking solutions for rapid deployment in wide-area IoT applications across various sectors, including government and military, and integrates AI-based cyber monitoring for enhanced network security - Actelis Networks is a market leader in hybrid fiber-copper, cyber-hardened networking solutions for rapid deployment in wide-area IoT applications[18] - Serves government, ITS, military, utility, rail, telecom, and campus networks[18] - Provides AI-based cyber monitoring and protection for all edge devices through its 'Cyber Aware Networking' initiative[18] Use of Non-GAAP Financial Information Actelis utilizes non-GAAP financial measures, specifically Adjusted EBITDA, to offer a clearer view of its core operating performance by excluding certain non-recurring or non-cash items such as interest, stock-based compensation, and depreciation, which are reconciled to GAAP net loss - Non-GAAP Adjusted EBITDA is used to report financial results adjusted for items including financial expenses, stock-based compensation expenses, depreciation and amortization expense, tax expense, and impact of development expenses[19] Cautionary Statement Concerning Forward-Looking Statements This section advises that the press release contains forward-looking statements based on management's current beliefs, which are inherently uncertain and subject to risks detailed in SEC filings. Actelis explicitly states it has no obligation to update these statements unless legally required - Forward-looking statements are based on management's current expectations, beliefs, and projections, which are inherently uncertain and subject to risks and uncertainties that could cause actual performance or results to differ materially[20] - Investors and security holders are urged to read the Company's filings with the SEC, including the Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, for more detailed information about risk factors[20] - The Company assumes no obligation to update forward-looking statements to reflect actual results, subsequent events or circumstances, changes in assumptions or changes in other factors affecting forward-looking information except to the extent required by applicable securities laws[21] Contact Information This section provides the contact details for investor relations, directing inquiries to Arx | Capital Markets & IR via their North American Equities Desk email address - Contact for investor relations is Arx | Capital Markets & IR, North American Equities Desk, via email at actelis@arxadvisory.com[22]