Elsight Limited

Everybody, I'd like to welcome you all to all our investors in Australia and good morning to those joining from abroad. I'm Howard Digby, non-executive director at L-Site. I'll be your host for today's session as we review what has been a truly transformative fourth quarter and full year for the company. So before we dive into the results, I direct your attention to the disclaimers on slide two. Look, I won't read them in full, but I want to highlight the key pillars of this. Information purposes only. This presentation provides an overview and is not financial product advice. And as to forward-looking statements, we will discuss our expectations and targets today. These involve known and unknown risks that could cause actual results to differ. Look, on the financial context and some housekeeping here, a quick reminder on our reporting. All figures discussed today are in US dollars, unless stated otherwise, and we operate on a calendar year basis. So when we say Q1, it's the quarter that we're in at the moment, finishing in March. And today we are focusing on the record-breaking Q4, the Q4 that we've just had, the full unaudited 2025 annual performance and our future plans. And regarding the logistics for today, we will have a dedicated Q&A session at the end. However, you're welcome to submit your questions at any time through the presentation. Simply use the Q&A button. Can you see that at the bottom of your screen? And we will address as many as possible during the session. So it is now my pleasure to hand over to our CEO, Yoav Amitai, to walk through the perfect storm we are seeing in the market and how our site is positioning itself as the future backbone of uncrewed systems. Yoav, over to you.

Thank you, Howard. And thank you, everyone, for joining us today. I'm super excited as always to share with you our results, but today I'm even more excited to share with you L-Site's next phase of growth. 2025 was not just another year of growth for L-Site. It was the year we reached our inflection point. We're no longer a company talking about potential. We are a company delivering on performance. And today, I'll walk you through the perfect storm driving our market. The record-breaking numbers we've just reported are why the next chapter will be the time we cement our position as the future backbone of uncrued industry. As said, 2025 was a breakout year for L-Site, but I want to be very clear from the start. What we all have seen is the foundation, not the peak. I recently find myself saying and writing to many asking me that we're just getting started. Some people laugh hearing this from a company that just grew the revenue by 11 fold over the previous year. But I truly believe this is our reality. The business, the markets we're in, the programs we're part of, and the pipeline we are only now moving into scale. Let's start with the why. What we're seeing and what we're witnessing is a fundamental shift in global defense and commercial robotics. It's the iPhone moment for the uncrewed industry. Look at those maps on these slides. Ten years ago, drones were a niche luxury for a few advanced military, and today they are a primary requirement. We're seeing NATO countries move their defense target from 2% GDP to 5% GDP, and that's not only there, that's a global trend. Not only that governments today are investing more in the defense spending, a lot of these budgets are allocated specifically for uncrewed systems. There even more for that. The most important trend is the shift towards COTS, known as commercial off the shelf technology. Government no longer have 10 years to develop a radio. They need solution that works today at scale. Let it sink for a moment. The speed of war and the speed of commercial delivery have converged. This is the perfect storm that L-Site was built for. And this is why this moment in time is where L-Site should and need and will scale. Perfect storm like this don't create hundreds of winners. They usually create a small number of category leader. And we're in those moment in time when giant companies emerge. Elfsight is uniquely positioned to become one of these as we are in right in the spot and right in the center of this perfect storm that we're talking about. We're not selling a feature or capability. YellowSide is enabling mission completion. We're empowering uncrewed systems to safely and effectively complete their mission while ensuring unauthorized entities are kept at bay. We're taking our 500,000 drive and flight hours of experience and applying it to more product, into more domains, and this is what will position us as the core backbone of this new industry that is emerging. YellowSide is going to be the future backbone of the uncrewed industry. But before we talk about future and how we're going to do that, let's look at our performance first. the numbers for 2025 are quite frankly unprecedented. We hit approximately $23 million in revenue for the full year. And to put that into perspective, this is an 11-fold increase over 2024. Importantly, we start in 2026 with already $22 million in confirmed order, which is 96% of our total 25 revenue. We reached profitability this year, proving that our model has operational leverage and a great outcome. We ended the year with $59 million in cash, and this is a massive strategic asset. It means we can execute our 2026 plan and push harder and faster. LSAT is one of the very few companies in our space that isn't just selling a vision. We are actually selling hardware, software, and capabilities at scale with super high profit margin and a profitable business model that create this business so interesting. Speaking about hardware, we're not factory constrained business. Capacity scales ahead of the event and not behind it. We develop global manufacturing capabilities through contract manufacturers, which means it does not require additional capital investment. We're not doing it only to expand our production capacity. We're also doing it to be closer to our customers, to serve them where they need us, to make sure that we have all the local customers. existing presence to be able to serve our customers in the best way and that's why we're doing those developments. I want to pause here for a moment because I think this slide is super important and it has changed. For those of you who follow us will notice that the cumulative pipeline today stands at 137 million dollars compared to the 157 million we showed previously That reduction is not a deterioration. It's the opposite, actually. During Q4, we converted approximately $10 million of pipeline into recognized revenue. That exactly what this funnel is supposed to do. Our focus during the quarter was deliberately on execution, delivering contracts, building our global sales team, and pushing existing opportunities down the funnel, which we did with great success. We optimize for moving opportunities down the funnel rather than just increase the top line size. What the slides really show is conversion discipline. With our expanded sales force now hired across the US and Europe, we're entering the next phase, converting existing opportunities faster while adding net new opportunities at the top of the funnel. Just to remind you all, this pipeline isn't based on headlines or market commentary. It's built on actual active programs we're already engaged with and part of, and we are seeing how we accelerate those conversion from the top of the funnel down to the bottom line, which then makes it much better visibility and much higher probability to convert it into actual revenues. Speaking of team expansion, we are fortunate to recruit top talent recently. The reason we could bring them in is due to our product unique value proposition, our brand name in the industry, and the vision we all share together. We're not just expanding our global footprint, we're doing it also locally with discipline. We're making sure we are recruiting people where and when we need them and not just bringing in headcount that will make us less efficient. We also added a new strategy function that looks at the long-term growth, ensuring we succeed not only here and now, but also years to come while seeing big trends and big movements in the market, making sure that we're analyzing correctly and we're being prepared for them correctly. Speaking about expansion, this is how we do it. This marks a super special, important transition point in L-Side history. We started as a connectivity company and that remains our core. Everything we do still starts there. But over the last 18 months, we've become so deeply embedded into our customer's mission that they are stop asking only about links. They are asking about the whole mission and how we can enable them and help them complete their mission. This transition is driven by customer pool. I want to make it very clear. We're not moving away from connectivity. We're building on top of connectivity. That expansion is happening along three main dimensions. Capabilities, moving towards a broader mission-enabling product and not only connectivity. Geographies, like I said, expanding our local manufacturing to support partners where they operate and have the right business development folks and salespeople with boots on the ground closer to our customers and end users. And domain expansion, the air, land, and maritime environment to make sure we are getting more into these domains. The common denominator isn't the vehicle, it's the need for communication and resilient mission completion in contested environments. We're taking a proven core and extending it responsibly into more features, more capabilities, more geographies, more domains. I want to take you through how this expansion we've been discussing across geographies, domains, and products translate into actual larger serviceable available market for L-Site. This is not a total addressable market slide. This is our serviceable market, which means areas where we already have the right tools to compete. On the left, you see our current SAM, roughly $250 million. This reflects what we already do today, high reliable connectivity for BVLOS and CRUD system, primarily in defense and regulated commercial use cases. This is a market where we know well we're executing in and where we already converting into actual revenue. The first step in SAM expansion comes from adjacent capabilities and broader operational scope. not only chasing new customers, but by adding more capabilities like positioning and mission enabling software on top of Halo, and by supporting additional operational domain like land and maritime systems, we expand the value we deliver within the same programs. At the same time as program scale across territories, our footprint expand geographically. Following customer into new regions, that combines more customers, more domains, more territories, and more capabilities per system, expand our serviceable market into the multi-billion dollar range. Looking further out, as these capabilities mature into a unified platform, L-Side moved from being a connectivity component to a mission stack layer. At that point, the sum expand again, not because we assume market dominance, but because the scope of what we can reliably service increases. This include more system per customer, more mission types, and higher software and service content per deployment for every system we're selling. What's important here is that this expansion is layered and disciplined. each step built on existing deployments, proven technologies, and active customer's demand. We're not assuming new markets, suddenly open, we're extending our role in markets we're already part of. So when you look at the SAM expansion, it's really a reflection of execution, expanding where we are operate, what we enable, and how much value we deliver permission, all anchored into the SAM. To give you some examples of how it's looked like and how it came to those numbers, when you look at the defense budget in Sweden, Germany, in Japan, in the UK, in the US, you see exactly where those same figures come from. This expansion is really a reflection of execution and from global trends that I described before of how governments today are putting more budgets into defense and how they allocate those budgets into uncrued systems. Now let's talk about the product expansion in more depth. Everything on this slide follows one rule and one rule only. If it doesn't threaten our core position in enablement, we do not pursue it. We're expanding horizontally and not vertically. This means higher value per system for the same customers and procurement path And importantly, we're doing this from a position of profitability and cash strengths and not forced diversification. We're expanding from communication only to more comprehensive communication, to autonomy feature, to video and sensors and positioning. And by that, we will be able to provide our customers with more comprehensive solution. And it's all built on our long experience and brand name that we have in this industry. And that's how we're going to grow it. A key part of our growth is our relationship with the OEMs. We often get asked, don't the big defense prime build this themselves? The answer is they don't want to. They want to focus on the airframe and the sensors. They want to buy the backbone from a specialist. We are the Intel inside for uncrewed system. We are in their competitors. We are their most critical partners. We helping them excel in front of their end customers to perform their mission and to provide them with the best technology available up there. Our go-to market strategy is focus. In the US being local is requirement for defense work human. In Europe, the shift in defense posture is structural and not cyclical. We've invested in local teams and regional execution, not just distribution, and we're also building the necessary flexibility in the organization to react to other territories and opportunities and not be locked on those markets only. In this moment of time, like we have in front of us, we must be adaptive and react quickly And we need to make sure we have all the tools we need to be able to execute on opportunities that come across us. A good example for that localization and this adoption is the project GI that we announced during the last quarter. I want to spend a moment on it because I think that is often misunderstood by a lot of the audience we have here on the line today. The DIU is not a pilot program for innovation theater. It's a structured pathway into operational adoption and procurement. Advancing to phase three means Halo has demonstrated reliability in contested environment and is moving through final fielding and testing. This phase is funded and aligns with real procurement timelines. That's actually put us in a very strong position within the US DoD, which is obviously the biggest market of where we're playing. Now how we monetize all these great features that I was talking about. Every Halo deployment start with hardware. We used to think that the hardware is a bug of ours, but now we understand that it's a big feature of ours because that's provide us the food at the door to be able to do, to put more capabilities and more features and product into the same platform. But that's only the entry point. On top of the hardware sits mandatory software and cloud services that every single hardware that we're selling have built into it as a long tail of every sale that we're doing. As our portfolio expand, more value move into the software layer. That's basically where all of what I just described is sits. This is where software layers, where margin are higher and revenues are recurring. Most of the new development and capabilities I mentioned earlier are getting exactly to this line. The beauty of it is that we don't only sell it to net new systems. We can also upgrade upsell and cross-sell to already deployed units as it's only software features that sits on the same platform, on the same hardware platform. And that's a big leverage point that we're seeing. And that's how we started to deploy beta versions to first customers. Speaking a little bit about how we leverage all the experience and all the deployments that we have in the field. This slide is about how our platform supports AI, not how we brand ourselves. AI only works if the underlying data is reliable and structured. With 500,000 operational hours, we have a data set that reflects real missions, not simulation, which is growing on an hourly, daily, and monthly basis in different parts of the world with different partners and different use cases. We built AI feature weights at operational value, not where it's at buzzwords. Alongside our core business that I described so far, as we updated the market a couple of months ago, we've established a parallel business unit currently operating in stealth. It is built on our core competencies, connectivity and data fusion, but addresses a separate $20 billion adjacent market. This is structured so it does not distract from the core business. We will be able to share more as we pass milestone, as we feel that we have a good enough mode and protection around the IP, the technology and the customer base. And as we have all of those, we will start to share more information. This is optionality with discipline. Looking ahead, our focus is execution. continuing to convert the pipeline, expanding sales productivity, and releasing additional software capabilities like I mentioned. Each milestone is designed to build on what's already deployed. And we're doing it with a pragmatic approach, making sure that we put more efforts only in vectors that we're seeing actual success. We are expecting to expand our existing customer base, We're expecting to expand what we're doing with already existing customers. And we also expecting to have the first design partners for the new business unit that I just described. In summary, L-Site is uniquely positioned in this market. We combine a proven product in real life deployments, experience, capital discipline, very efficient business model and deep customer relationship and integration. That combination is difficult to replicate. And this is why we feel that L-Site is in such a great position. have demonstrated that we can execute and we know how to execute at scale, convert opportunities into actual revenues and performance, and do so in highly profitable margin, while expanding our role across missions, geographies, and domains. I will say it again, we believe we're only getting started. The energy level and excitement inside a company is something I can't even describe in words here. People are working seriously around the clock and around the globe to deliver those opportunities. We literally have, while I'm speaking today, people in three different continents working with different customers in different trade shows and conferences to bring net new opportunities. So to close, 2025 marked a clear inflection point for LSI, not just in growth, but also in maturity. The opportunity ahead is significant, but what gives us the confidence is not the size of the market, it's our position inside the market and our past performance of execution. With that, I'll hand it over back to Howard and we'll open the session for questions. Howard, back to you.

Thank you, Yoav. for sharing the update on Q4 and our prospects for Elside Ahead. We've received a number of questions already. Please type in your questions in the Q&A section. I've also received some questions from people by email as well. I hope to cover them as well. I hope to get through all your questions today. Can I start with, you have the first question, is when will you receive cash from the $22 million in additional contracts that have been delivered in first half of 2016?