Ondas(ONDS)2024-11-12 18:02Financial Data and Key Metrics Changes - In Q3 2024, revenues were approximately $1.5 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, or 3%, compared to $555,000, or 21%, in Q3 2023, reflecting a change in revenue mix [24] - Operating expenses increased to $8.7 million in Q3 2024 from $6.5 million in Q3 2023, leading to an operating loss of $8.7 million compared to $5.9 million in the prior year [25][26] Business Line Data and Key Metrics Changes - Ondas Autonomous Systems (OAS) secured $14.4 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 $14 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]