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Ondas(ONDS) - 2024 Q3 - Earnings Call Transcript
ONDSOndas(ONDS)2024-11-12 18:02
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Financial Data and Key Metrics Changes - In Q3 2024, revenues were approximately 1.5million,downfromapproximately1.5 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,or348,000, or 3%, compared to 555,000, or 21%, in Q3 2023, reflecting a change in revenue mix [24] - Operating expenses increased to 8.7millioninQ32024from8.7 million in Q3 2024 from 6.5 million in Q3 2023, leading to an operating loss of 8.7millioncomparedto8.7 million compared to 5.9 million in the prior year [25][26] Business Line Data and Key Metrics Changes - Ondas Autonomous Systems (OAS) secured 14.4millioninordersforIronDroneRaiderandOptimistplatforms,markingthelargestbookingsquarterinthecompany′shistory[9][10]−OndasNetworksisexperiencingfluctuationsinrevenueduetotheuncertaintyaroundcustomeractivityandthetimingofcommercialrolloutsinthe900MHznetwork[21][22]MarketDataandKeyMetricsChanges−TheexpansionintoglobalmilitarymarketshassignificantlyincreasedtheTotalAddressableMarket(TAM)forOAS,withtangibleengagementfromadditionalmilitarycustomers[12][56]−Therailroadsectorisshowingincreasedinterestinthe900MHznetwork,withordersfromMetraandaClassIrailroadinChicagoindicatingapositivetrendforfuturedeployments[16][18]CompanyStrategyandDevelopmentDirection−Thecompanyisfocusingonmilitary,homelandsecurity,andpublicsafetymarkets,withplanstoexpanddistributioncapabilitiesforIronDroneandOptimussystems[46][56]−Thereisastrongemphasisonenhancingoperationalcapabilitiesandcustomerengagement,particularlyinthedefensesector,tocapitalizeonthegrowingdemandforautonomoussystems[70][72]Management′sCommentsonOperatingEnvironmentandFutureOutlook−ManagementexpressedoptimismaboutsignificantrevenuegrowthinQ42024and2025,drivenbyfulfillingbacklogordersandexpandingcustomerbases[8][68]−ThecompanyispreparingforincreasedproductioncapacityandmarketingeffortstosupportgrowthinbothIronDroneandOptimussystems[70][71]OtherImportantInformation−Thecompanyheldcashandcashequivalentsof14.4 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 14millioninordersisexpectedtobenorthof5014 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]