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Ondas(ONDS) - 2023 Q2 - Earnings Call Transcript
ONDSOndas(ONDS)2023-08-14 15:45
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Financial Data and Key Metrics - Revenue for Q2 2023 reached 5.5million,asignificantincreasefrom5.5 million, a significant increase from 600,000 in Q2 2022 and 2.6millioninQ12023[53]−GrossprofitforQ22023was2.6 million in Q1 2023 [53] - Gross profit for Q2 2023 was 3.1 million, a tenfold increase from 300,000inQ22022[54]−Operatingexpensesdeclinedslightlyto300,000 in Q2 2022 [54] - Operating expenses declined slightly to 11.6 million in Q2 2023 compared to 11.7millionintheprioryear[55]−Thecompanyrealizedanoperatinglossof11.7 million in the prior year [55] - The company realized an operating loss of 8.5 million in Q2 2023, down from 11.4millioninQ22022[56]−EBITDAlossimprovedto11.4 million in Q2 2022 [56] - EBITDA loss improved to 5.6 million in Q2 2023 from 8.8millioninQ22022[57]−Proformacashbalanceafterrecentfundingwas8.8 million in Q2 2022 [57] - Pro forma cash balance after recent funding was 27.1 million as of June 30, 2023 [58][63] Business Line Data and Key Metrics - Ondas Networks delivered 1.5millioninproductanddevelopmentrevenueinQ22023,arecordquarterdrivenbyshipmentstoSiemens[22]−OndasAutonomousSystems(OAS)revenuereached1.5 million in product and development revenue in Q2 2023, a record quarter driven by shipments to Siemens [22] - Ondas Autonomous Systems (OAS) revenue reached 4 million in Q2 2023, up from 1.5millioninQ12023[28]−OASexpectstocompletemanufacturinganddeliver10newOptimusSystemsbytheendof2023,with15systemsonorder[36]MarketDataandKeyMetrics−IntheUAE,OAScompletedaproof−of−conceptinAbuDhabiandsecuredadditionalserviceagreementsinDubai[28][8]−OASexpandedintoIndiathroughapartnershipwithArrowHZandintoSaudiArabiawithSaudiExcellenceCorp[8][9]−IntheUS,OASsecuredaproof−of−conceptprogramwithMassDOTandisadvancingpartnershipswithSkyfireandotherentities[29][67]CompanyStrategyandIndustryCompetition−Thecompanyisfocusingonscalingproductionandincreasinginventorytomeetexpecteddemandforthe900MHznetworkmigration[25][26]−OASisleveragingitstypecertificationtoacceleratemarketpenetrationintheUS,particularlyinpublicsafetyandsmartcityapplications[31][69]−ThecompanyisworkingwithSiemenstonegotiatepurchaseorderswithClassIrailroadsforthe900MHznetworkdeployment[50][51]ManagementCommentaryonOperatingEnvironmentandFutureOutlook−Managementremainsbullishonthecompany′soutlook,expectingsignificantgrowthin2024andbeyond[15][16]−Thecompanyanticipatesgeneratingatleast1.5 million in Q1 2023 [28] - OAS expects to complete manufacturing and deliver 10 new Optimus Systems by the end of 2023, with 15 systems on order [36] Market Data and Key Metrics - In the UAE, OAS completed a proof-of-concept in Abu Dhabi and secured additional service agreements in Dubai [28][8] - OAS expanded into India through a partnership with Arrow HZ and into Saudi Arabia with Saudi Excellence Corp [8][9] - In the US, OAS secured a proof-of-concept program with MassDOT and is advancing partnerships with Skyfire and other entities [29][67] Company Strategy and Industry Competition - The company is focusing on scaling production and increasing inventory to meet expected demand for the 900 MHz network migration [25][26] - OAS is leveraging its type certification to accelerate market penetration in the US, particularly in public safety and smart city applications [31][69] - The company is working with Siemens to negotiate purchase orders with Class I railroads for the 900 MHz network deployment [50][51] Management Commentary on Operating Environment and Future Outlook - Management remains bullish on the company's outlook, expecting significant growth in 2024 and beyond [15][16] - The company anticipates generating at least 7 million in revenue in the second half of 2023, bringing the full-year target to approximately 15million[19]−Managementexpectscashoperatingexpensestobearound15 million [19] - Management expects cash operating expenses to be around 9 million for Q3 2023, consistent with Q2 levels [20] Other Important Information - The company raised 25millioninfunding,including25 million in funding, including 15 million for Ondas Networks and $10 million for the holding company [11][12] - The financing was led by Charles and Potomac, who conducted extensive due diligence on the company's technology and market opportunity [12][49] - The company extended the maturity of its convertible notes from October 2024 to April 2025, reducing monthly amortization [17] Q&A Session Summary Question: Can you provide details on orders from the rails and gross margins? [40][41] - Gross margins for Ondas Networks are targeted at 50%-60%, with expectations of improvement as volumes ramp [64] - The company is working with Siemens to negotiate purchase orders and is building inventory in anticipation of large orders in 2024 and 2025 [64][73] Question: How do you plan to fund the working capital needs for large orders? [74] - The company expects to have payment arrangements with Siemens to support component inventory build and favorable payment terms to manage working capital [74] Question: Can you provide more details on the contract manufacturer? [83] - The contract manufacturer in the US is qualified with Siemens and is prepared to ramp production to meet expected demand [84] Question: How does type certification impact the US market? [85] - Type certification is expected to accelerate customer engagement and shorten the sales process, particularly in public safety and urban environments [86][87]