Ondas Inc. Q3 FY2024 earnings call

• Ondas Autonomous Systems had a record bookings quarter with $14.4 million in purchase orders, entering military markets with Iron Drone Raider and Optimist platforms. The Iron Drone Raider is positioned as a best-in-class autonomous solution, and the Optimist system will be deployed for military base and border checkpoint security.
• Ondas Networks saw progress with Siemens, including an order from Metra for a system-wide upgrade of the 900 MHz network and an expansion of a live dot16 network in the 900 MHz band with a Class I railroad in Chicago. The railroads are showing more clarity on network architecture plans.
• American Robotics' customer pipelines are maturing with opportunities in public safety, ports, and critical technology infrastructure. OAS is working on enhancing Optimus functionality for remote operations in GPS-denied environments and expanding market reach into Europe and the U.S. public safety market.

In the third quarter of 2024, Ondas Networks had revenues of approximately $1.5 million, down from approximately $2.7 million in Q3 2023. Ondas Autonomous Systems (OAS) had a record bookings quarter with $14.4 million in purchase orders. Ondas Networks' revenue was affected by extended timelines related to 900 MHz activity with Class I railroads, while OAS saw increases as it started fulfilling purchase orders received during the quarter. Ondas Networks' gross margin was 3% ($48,000) for Q3 2024 compared to 21% ($555,000) in Q3 2023, due to changes in revenue mix. OAS' significant bookings of $14.4 million contributed to its strong performance in the quarter.

• Expect significant revenue growth in Q4 and 2025, with OAS seeing a pickup in revenue as it fulfills backlog orders starting in Q4 2024.
• Ondas Networks expects railroad orders to emerge in 2025 with the 900 MHz network and other private networks for Class I rails.
• Anticipate progress on the DFR 3.0 opportunity in the coming months, both with existing and new customers, contributing to revenue in 2025.
• Plan to establish additional customer centers in the U.S. and Europe in 2025.

• Uncertainty in railroad deployment timelines for the 900 MHz network, which can affect Ondas Networks' revenue.
• Liquidity risks as the company needs to secure additional funds through equity or debt offerings, lines of credit, etc., to support growth.
• Compliance risks related to NASDAQ listing, as the company has requested an extension for minimum bid price requirements.

Q: Mike Latimore asked about the Iron Drone prospect, specifically combat success leading to more volume orders and certifications for DFR in the U.S.

A: Meir Kliner mentioned they sold four IDF-specific Iron Drones and worked with them for eight months. Eric Brock said they're in the process of delivering orders and integrating systems. Regarding DFR in the U.S., Eric Brock stated they go through regular regulatory processes and have the FAA type certificate for Optimus.

Q: Glenn Mattson inquired about the $14 million orders for OAS, shipment of systems in Dubai, and inventory at Siemens.

A: Neil Laird said the $14 million orders will have a bit of a lag but 2025 will see reorders. They've shipped eight systems to the Dubai customer with plans to have 22 by the end of 2025. There'll be a lag with initial orders from Siemens but reorders expected as railroads expand.

Q: Matthew Galinko asked about the impact of U.S. government control change on DFR opportunity and Optimus development, and scaling Optimus production.

A: Eric Brock said support for DFR is broadly shared across both aisles. Optimus in military markets is coming sooner than expected. They feel good about production capabilities for Optimus but need to prepare for expanded demand and ensure local production for the U.S. market.

Q: Timothy Horan asked about rail spectrum spending deadlines, liquidity, and NASDAQ listing.

A: Eric Brock said railroads intend to meet FCC deadlines and they see visibility on network architecture plans. On liquidity, they're working on multistage capital plans. They applied for an extension on NASDAQ listing and believe they meet the requirements.

Q: Carter Mansbach asked for more color on rail developments and if the first railroad move leads to others following.

A: Eric Brock and Guy Simpson said the activity in Chicago with Metra and the Class I railroad shows clarity and that once the first railroad moves, others follow as the diligence pays off and railroads see the long-term sustainable solution in 900 MHz.