Fourth Quarter & Full Year 2024 Earnings Release NASDAQ: ONDS | March 12, 2025 Copyright 2025. All rights reserved. Nasdaq : ONDS 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," "should," "intends," "estimates," and other words of similar meaning. Ondas Holdings Inc. ...

Market Overview - The global virtual power plant (VPP) market is projected to grow from $5.01 billion in 2024 to $16.65 billion by 2030, at a CAGR of 22.3% driven by grid modernization, renewable energy integration, and demand response solutions [1][3][8] - North America leads the market, supported by government incentives and increasing adoption of clean energy technologies [1][8] - The industrial sector is the primary adopter of VPPs, focusing on cost savings and carbon footprint reduction [1][8] Technology and Segmentation - The demand response segment dominated the VPP market in 2024, aligning with sustainability goals and driving growth [8] - VPPs can optimize energy production and consumption through advanced control algorithms and real-time monitoring, thus reducing energy waste and emissions [3][5] Benefits and Customer Engagement - VPPs provide customers with greater control over energy consumption and cost savings, allowing participation in programs that leverage time-of-use pricing and demand response opportunities [5] - Advanced energy management tools enable real-time monitoring and control of energy usage for customers [5] Regulatory Environment - Stringent government regulations aimed at reducing greenhouse gas emissions are driving the adoption of VPPs, which facilitate the integration of renewables and demand response [6] - Government investments in grid modernization are enhancing the efficiency and intelligence of the power grid [6] Competitive Landscape - Key players in the VPP market include Siemens, Tesla, ABB, and Hitachi, among others [1][8] - Recent developments include SolarEdge Technologies' launch of a battery virtual power plant in the U.K. that supports grid services and offers financial incentives to users [8]

Financial Data and Key Metrics Changes - For Q4 2024, total revenues reached $50.1 million, representing a 22% year-over-year growth, exceeding the long-term growth target [20] - Full-year 2024 total revenues were $179.5 million, an 8% increase from $165.8 million in 2023, with significant growth occurring in the second half of the year [20][21] - Gross margin for Q4 was 72%, while the full-year gross margin was 74%, moving closer to the target model of 75% [24] Business Line Data and Key Metrics Changes - Analytics revenue grew 22% in Q4 compared to the same period last year and accounted for 96% of total revenue for the quarter [20][22] - The DFI eProbe systems showed strong momentum, with successful conversions from evaluations to sales for leading-edge customers [21] - Exensio modules, including process control and ML ops, are expected to drive most bookings in 2025 [15] Market Data and Key Metrics Changes - Customers in advanced logic, high bandwidth memory, and advanced packaging are investing, while other sectors exhibit a more cautious outlook [12][13] - The semiconductor industry is projected to experience mixed growth, with total revenues expected to grow at a rate approaching 15% year-over-year [17] Company Strategy and Development Direction - The company aims to expand applications for the eProbe in advanced logic and DRAM, anticipating shipment of over four machines in 2025 [14][28] - The strategy includes a shift towards a model where customers can purchase machines and optionally subscribe to application services and software [66] - The company is committed to achieving a long-term target model of 20% year-over-year revenue growth, 75% gross margin, and 20% operating margin [27] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about growth returning in the second half of 2024 and highlighted customer interest in products and solutions [12] - The outlook for 2025 reflects both short-term weaknesses in the semiconductor industry and a strong pipeline driven by macro trends such as distributed manufacturing and AI [27][28] - Management noted that while some customers are cautious, others are accelerating investments, indicating a diverse customer base [73] Other Important Information - The company reported positive operating cash flow of approximately $10 million and spent about $18 million on CapEx related to the DFI ecosystem [26] - The accounts receivable balance was elevated due to timing and billing, but management is confident in collections [60][62] Q&A Session Summary Question: Can you provide more color on the eProbe pipeline? - The eProbe sales will include both repeat sales to existing customers and new sales to new customers, with a focus on advanced logic and DRAM applications [35] Question: What is the status of the backlog? - The backlog decreased from $239 million in Q3 to $221 million, attributed to the nature of the new machine sales model [34][39] Question: How has customer receptivity to model ops been? - Customer receptivity has been high, with ongoing pilots and increased sales and marketing efforts related to model ops and guided analytics [52][53] Question: What is the impact of elevated accounts receivable on cash flow? - The elevated accounts receivable is a matter of timing and billing, with no significant concerns regarding collections [60][62] Question: How will the new sales model for DFI work? - The new model allows customers to take title of the machine while subscribing to software and application services, impacting accounts receivable [66][67] Question: Are management changes at key customers affecting business? - There is no significant impact from management changes; the business remains diverse, reducing dependency on any single customer [73][79] Question: Is there increased activity in advanced packaging? - Yes, there has been increased activity in advanced packaging, driven by the complexity of new assembly technologies [80][82] Question: Are there opportunities in HBM DRAM with Exensio? - The company is starting to penetrate HBM DRAM accounts, particularly through the eProbe, which has opened new opportunities [87][89]