Ondas Inc

and welcome to the ONDIS Holdings Inc third quarter 2025 conference call all participants will be in listen only mode should you need assistance please signal a conference specialist by pressing the star key followed by zero after today's presentation there will be an opportunity to ask questions to ask a question you may press star then one on your telephone keypad to withdraw your question please press star then two Before we begin, the company would like to remind you that this call may contain forward-looking statements. While these forward-looking statements reflect ONDIS's best current judgment, they are subject to risks and uncertainties that could cause actual results to differ materially from those implied by these forward-looking statements. These risk factors are discussed in ONDIS's periodic SEC filings and in the earnings press release issued today, which are both available on the company's website. ONDIS undertakes no obligation to revise or update any forward-looking statements to reflect future events or circumstances, except as required by law. During this call, ONDIS will refer to certain non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is shown in our press release issued earlier today, which is available at the investor relations section of our website. This non-GAAP information is provided as a supplement to, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. However, management believes these non-GAAP measures provide investors with valuable information on the underlying trends of our business. Please note, this event is being recorded. I would now like to turn the presentation over to Eric Brock, Chairman and CEO. Please go ahead.

Well, thank you, Operator, and good morning. I want to get started by welcoming everyone to our quarterly conference call. We appreciate you joining us today and for your continued interest in OnDust. I'm happy to be joined this morning by key members of our leadership team, including Neil Laird, our CFO, Oshu Legassi, the co-CEO of Andes Autonomous Systems, Mayor Kleiner, president of OAS and the founder of Aerobotics, and Marcus Nadelman, the CEO of Andes Networks. So let's turn to the agenda. We'll begin the call with a review of our key highlights from the third quarter of 2025. Then I'll hand the call to Neil for a financial review of our Q3 2025 results. After that, we'll provide business updates for our OAS and Andes Networks business units, where I'll ask Oshree, Mayer, and Marcus to share commentary on current business activity and progress against our plans. During our OAS business review, we will also share some context on the progress of our strategic acquisition program. And we will also hear from Tal Cohen, the founder and general manager of Centrix, who is joining the call to share some insight into the Centrix technology platform and business, as well as the strategic fit with ONDOS. After the operational updates, I will share an outlook for the remainder of 2025 and beyond as we continue to see strong execution on our growth strategy and further momentum into 2026. Then we will wrap the call and open the floor for investor questions. Let's start by setting the stage for today's discussion. Simply put, Andas is positioned for success. That position wasn't luck. It's the results of years of hard work, discipline, and planning. We've earned it, as have our investors. We've built a strong foundation through talent and perseverance, and again, through the support of our investors. And now we find ourselves at the heart of an industry-wide transition. The autonomous and unmanned systems defense and security markets have reached an inflection point, moving from technology development to platform adoption. As you said many times, the market from here will be defined by scaled operating companies, not by those simply introducing new technology platforms. Innovation and technological advancement remain critical, but they're not sufficient on their own to create high returns on capital and equity value. The winners from this point forward will be those who can leverage the extraordinary advancements in autonomy, unmanned systems, and physical AI to build durable, efficient, and scaled businesses. And that's exactly what we're doing at ONDOS. We're demonstrating platform adoption and validation across both our Optimus and Iron Drone systems and with the new technology platforms we are layering in at OAS. We're benefiting from strong market demand. While seeing firsthand the beginning of what we believe is a major counter-UAS boom, where ONDOS is extremely well positioned to win. In July, we laid out our core plus strategic growth plan, and the response has been tremendous. truly a mandate from our investors to execute. We've immediately demonstrated execution on that plan. We are doing what we said we would do because we've been planning for this transition for years. This plan creates value across the board for our customers, partners, and the incredible talent driving on this as growth. And of course it creates opportunity and long-term value for our investors. A key enabler of that success will be our balance sheet strength. We've raised approximately $855 million since June to support our growth plan. We believe OnDesk now has one of the strongest balance sheets in the industry, giving us access to a deep capital pool and a meaningful cost-to-capital advantage. Access to low-cost capital is the foundation of a true competitive advantage, one that allows us to move decisively, scale efficiently, and lead confidently in the fast-growing markets we are attacking. To support the coming boom in autonomous unmanned technologies, the industry needs scaled leaders, companies capable of operationalizing the technologies that have been validated in the field. ONDAS is focused on that exactly, and again, deliberately executing the growth plan that we laid out in July. Now let's turn to the overview. Momentum continues to build at ONDAS, and I'm very pleased to report that we've delivered another record quarter. not just financially, but also operationally. In the third quarter, we generated $10.1 million in revenue, a more than six-fold increase year over year, and up nearly 60% sequentially from Q2. Our consolidated backlog grew to $23.3 million, more than double what we started the year, and that number reaches over $40 million, including another $18 million related to acquisitions that are closed or pending closure in the fourth quarter. We expect our backlog to grow through the end of 2025 as our pipeline matures, giving a strengthening visibility on customer order plans. Given the strength of our execution in our expectations for strong market demand, we are raising our full year 2025 revenue target to at least $36 million, which means we expect to generate more than $15 million in revenue for Q4. We are also establishing a goal for at least $110 million in revenue for 2026. The outlook for Q4 in 2026 is being driven primarily by OAS, where we continue to expand with existing customers and add new ones. Our customer pipeline is expanding and maturing, and we expect a strong end to 2025 from an order standpoint, which supports our outlook for significant ongoing growth in 2026. The OAS team is building the operating infrastructure to support a multi-year growth outlook. We're scaling production, fuel services, and sustainment capabilities to meet accelerating global demand for our autonomous and unmanned systems. Oshrey and Mayer will share more details on the investments we are making in scaling operations. At the same time, our strategic growth program is accelerating. This is the evolution we've been planning. moving from standalone technology platforms towards a system of systems model that unites air, ground sensing, and communications into an integrated autonomy ecosystem. The evolution enables a faster path to operational maturity, and we believe unlocks significant upside to both revenue and profitability. To further maximize the opportunity ahead of us, we established OnDesk Capital, which we launched in the third quarter. On this capital is building a technology bridge from Ukraine to the United States and allied European nations focused on stealing combat proven unmanned and dual use technologies into production in commercialization. This initiative broadens our reach strengthens our industrial base is supports the growing alignment between innovation, security and economic resilience. Meanwhile, OnDisk Networks continues the hard work to drive adoption of its .16 wireless connectivity platform. As Marcus will share, the AAR's Wireless Communications Committee formally selected .16 as a wireless roadmap standard for all AAR-owned frequencies, including the 900, 450, and now 160 MHz networks. While the hard work will continue, this formal designation validates our long-term strategy and continues to position OnDesk Networks at the center of a generational upgrade cycle for railroad communications across North America. Finally, from a financial standpoint, the company remains exceptionally well capitalized. We raised approximately $855 million in equity in 2025, providing the capital strength to support our business plan, including both our core operations and our strategic initiatives. We are investing this capital to accelerate growth and shareholder value creation, as we said we would. To summarize, OnDesk is positioned for continued record growth through the balance of 2025 and into 2026, and we continue to build what we believe is an important and valuable defense and security technology company. I want to now provide some context for the critical objectives defined within our long-term business planning. What you see here is a continuation of the strategic roadmap we've been building over the past year, a roadmap that's now delivering real, tangible results. Andes today is no longer just a developer of market-leading technologies. We are building a scaled operating platform that connects world-class talent and technology, along with partners and customers, into a unified growth engine. At the center of this effort is Andes Autonomous Systems, where we continue to build the core OAS operational platform. Under OSHRI leadership, that platform is scaling rapidly, supported by seasoned executives, an impactful cross-functional advisory board, and a growing ecosystem of partners across technology, sales, and production. OSHRI and Merrill share more details on the operational infrastructure we are building later in the call. Over the last several months, we've expanded the scope of our capabilities through strategic acquisitions and investments that strengthen our operating foundation and extend our reach across multiple domains. We entered into a definitive agreement with Centrix, which will bring advanced cyber over RF drone detection and mitigation to complement our iron drone radar. We added apparel motion, which expands us into unmanned ground systems, robotics, and fiber optic communications. And we acquired Forum Defense, a leader in subsurface intelligence and demining robotics that brings a new dimension to OAS's autonomy portfolio. Other smaller yet strategic acquisitions that contribute engineering, AI, and optics expertise were added, and that includes SPO, Zikl Engineering, and Insight Intelligent Sensors. At the same time, we formed a strategic partnership and made a minority investment in Rift Dynamics, whose attributable drone platform and leadership in European defense markets position us perfectly to capture new opportunities in allied regions. Taken together, these additions create a growing portfolio of capabilities that make OnBus a more complete and competitive company, spending air, ground, sensing, and communications technologies. And as we expand this platform, we're also expanding our talent base, customer reach, and partner ecosystem, each one reinforcing the other. This creates true operating leverage, which we believe will drive faster growth, stronger margins, and higher profitability as we scale. and the speed at which we do this is very important. The key message here is that this is not just a compilation of technologies and corporate entities. We are building a scalable, unified service delivery platform designed to service demanding customers and use cases, and importantly, accelerate revenue growth in our path to profitability. We're building a stronger, more diversified OnDust, one capable of sustained performance, multi-domain leadership, and meaningful long-term value creation. Now let's turn to Andes Capital. We are very excited to have formally launched Andes Capital, which represents a powerful new strategic growth platform for the company. Andes Capital is a multi-year initiative designed to deploy up to $150 million to accelerate the transition of battle-tested, unmanned, and dual-use technologies from Ukraine and other allied nations into trusted U.S. and European production. The mission is straightforward, to scale proven technologies and unmanned systems, AI, and do-it-yourself innovation that are already validated in the field and ready for production, whereby ONDAF and our partner ecosystem can drive faster, more cost-effective deployment across the major defense and security markets in the U.S. and Europe. This effort is not just about capital. It's about building an industrial bridge between innovation and deployment. By integrating investment, production, and market access, honest capital will help drive commercialization of critical defense and security technologies, strengthen the allied industrial ecosystem, and create meaningful long-term value for our shareholders. A major strategic benefit of honest capital is its global footprint. We are anchored here in the United States, but we now have forward offices in key allied innovation in financial corridors, including Boston, New York, Kiev, Tallinn, London, and Frankfurt. Being on the ground in Eastern Europe and Ukraine is a critical advantage. It allows us to directly access cutting-edge combat-driven technologies while working side-by-side with our partners and allies at the front line of innovation. This complements our deep operating experience in Israel, where we've demonstrated how to take advanced defense technologies and scale them successfully through production, global partnerships, and commercialization. We believe OnDesk Capital will become a cornerstone for strategic growth, international collaboration, and industrial resilience while creating new pathways for financial and operational expansion across the OnDesk group. And finally, in the interest of time today, I'm keeping my comments brief, but I'm pleased to share that we plan to host a dedicated OnDesk Capital investor call in December. James Acuna, who is leading this initiative, will join me, along with our leadership team, to provide a deep dive into the opportunity, business model, and financial plan for Andes Capital. We're incredibly proud of the progress to date, and I look forward to sharing much more very soon. I will now hand the call to Neil to provide a detailed financial update. Neil?

Thank you, Eric. As I get started, I wanted to remind our investors that that our financial statements reflect the early stage of platform adoption for our products and the initial success of our acquisition program. We expect to demonstrate a significant revenue increase over the next few quarters, both from organic growth and from our acquisition pipeline. Revenues increased over 580% to $10.1 million in the third quarter, up from $1.5 million in the third quarter of last year. This increase was driven by OAS revenues, which were $10 million compared to $1.0 million a year ago. It reflects the ongoing deliveries of Iron Drone and Optimus systems and contributions from apparel ground robots related services under contracts from military and public safety customers. Gross profit was $2.6 million, representing a 26% gross margin in the third quarter. as compared to a gross profit of $0.05 million in Q3 of 2024. The increase in gross profit year-over-year results from increased higher margin product revenue at OAS compared to lower margin service and subscription revenue in Q3 of 2024. Gross margins can be volatile on a quarter-to-quarter basis due to revenue levels that reflect the early stages of platform adoption certain fixed service costs reflected in our cost of goods sold, and shifts in revenue mix between product development and services revenue. Operating expenses increased to $18.1 million for Q3 of 2025, as compared to $8.7 million in Q3 of 2024, an increase of $9.4 million. Our operating expenses increase primarily due to an increase in personnel costs as we are investing in leadership to support our business growth and strategic initiatives. Those operating expenses include an increase of $5 million of non-cash items. Cash operating expenses, which exclude non-cash items such as stock-based compensation, depreciation, and amortization, were $11.6 million in the third quarter of 2025. compared to $7.2 million in Q3 of 2024, an increase of $4.4 million. The increase in cash operating expenses is due primarily to higher personnel costs, particularly with the OAS operating infrastructure build-out and similar on-bus holdings, similarly at on-bus holdings, to support expected business expansion in the coming quarters and the company's strategic growth plan. Adjusted EBITDA loss increased $1.7 million to a loss of $8.8 million for the current quarter. The operating loss was $15.5 million compared to $8.7 million in the third quarter of last year. Now let's turn to the cash flow statement. We had cash of $433 million as of September the 30th, 2025. compared to $30 million as of September the 31st, 2024. Cash used in operations for the first nine months remained relatively flat at $26 million, compared to $25.4 million for the first nine months of 2024. Cash used in investing activities for the first nine months of 2025 included a handful of strategic investments, as indicated on the slide. We find these investments as a good use of cash and expect much higher returns than money market investments. We have discussed in detail the strategic relationship with RIF previously. As it relates to investments in companies such as Lightpath, Copin, and SafePro, we believe we have unique expertise to evaluate the opportunity for financial returns. And these companies also offer strategic business relationships within our partner ecosystem. We generated cash from financing activities of $448.2 million during the first nine months of 2025. The majority of this came from the equity offerings in June, August, and September, in addition to $24.7 million from the exercise of warrants and stock options. We expect operating cash utilization to continue to improve in the coming quarters. Improved cash efficiency comes from operating expense leverage at our OAS business unit given our expectation of increased revenue and gross profit growth over the course of 2025 and into 2026. Further, our partnership with Clear, which we expanded in July, will support our revenue growth, including for revenue streams we add through our strategic acquisition program. This working capital is non-dilutive credit facilities to fund certain inventory and accounts receivable balances. Again, we held cash at $433.4 million as of September the 30th, 2025, compared to $30 million as of September the 31st, 2024. We are pleased with the results of our program to improve the structure of the balance sheet by raising cash and converting debt. Shareholder equity as of September the 30th, 2025 was $487.2 million compared to $16.6 million as of September the 31st, 2024. Furthermore, on those pro forma cash balances were $840.4 million, and stockholders' equity was $894 million, adjusted for the $407 million in net proceeds raised in an equity offering on October the 7th, 2025, and before cash used for operations and to finance acquisitions and investments in the fourth quarter. I'll hand it back to you now, Eric.