Ondas(ONDS)2023-11-14 21:38Financial Data and Key Metrics - Revenue for Q3 2023 was 630,000 in Q3 2022, driven by higher product shipments from Ondas Networks [43] - Gross profit in Q3 2023 was 400,000 in Q3 2022, but gross margins declined to 20 8% from 63 2% due to higher costs related to customer service operations [193] - EBITDA loss narrowed to 11 million in Q3 2022, benefiting from cost controls [16] - Cash operating expenses in Q3 2023 were 21 million in cash and 2 4 million in product and development revenue in Q3 2023, a record quarter driven by shipments to Siemens [54] - Ondas Autonomous Systems (OAS) revenue was modest in Q3 2023 after a large unit sale in the UAE in Q2 2023, with expectations for revenue to normalize into a more predictable pattern [71] - The company expects to achieve its 4 2 to 2 6 million order for Optimus drone systems from a governmental entity in Dubai [114] - Partnerships and distribution agreements are being established in Saudi Arabia, India, and Morocco, with potential for manufacturing and joint centers in Morocco [115] - The FAA type certification for the Optimus drone is expected to accelerate demand in US commercial and governmental markets [17] Company Strategy and Industry Competition - The company is focusing on scaling adoption of its technology platforms, including Ondas Networks and OAS, with a strong emphasis on cost discipline and operational leverage [78][80] - The FAA type certification positions the company as a leader in autonomous drone systems, with unique capabilities in security and data collection applications [173] - The company is leveraging partnerships and expanding its customer pipeline in industrial and government markets, particularly in the US [124] Management Commentary on Operating Environment and Future Outlook - Management is optimistic about the company's growth trajectory, with significant expansion expected in 2024 across both business units [158] - The company is managing geopolitical challenges, particularly in Israel, while maintaining operations and customer commitments [34][35] - The improving regulatory environment, including FAA approvals for beyond visual line of sight (BVLOS) operations, is expected to support growth in the drone sector [27][28] Other Important Information - The company received a financial grant from the Israeli Innovation Authority (IIA) to advance the development of the Iron Drone Raider, a counter-UAS system [117] - The company is working on enhancing the Optimus system with features such as night vision and GPS-denied environment capabilities [63] - The company is preparing for large-scale commercial deployments in the rail sector, with significant engagement from Class I Rail customers [55][56] Q&A Session Summary Question: Breakdown of revenue between rail and drone segments and gross margin outlook for next year - The company did not provide a specific breakdown but expects significant growth in both segments, targeting gross margins of at least 50% as volumes increase [129][94] Question: Turnkey service opportunity with Class I Rail customers - The company is seeing increased demand for its expertise in deploying wireless networks, particularly as deadlines for 900 MHz network deployments approach [106][107] Question: Cash operating expenses and Opex outlook for 2024 - Cash Opex is expected to remain stable, with significant operating leverage anticipated as revenue grows [109][135] Question: Revenue growth expectations for 2024 - The company expects multiples of 2023 revenue, with a focus on scaling production and meeting customer demand [126][128] Question: Competition in the counter-UAS market - The company highlighted its unique autonomous capture technology, which differentiates it from jamming-based systems, and sees significant market potential [159][160][161] Question: Rail sector spending and timing of large orders - The company is optimistic about material orders and deployments scaling across the rail industry, with significant engagement from customers [167][168][169]