Ondas(US:ONDS)2024-08-14 20:02Financial 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]