Ondas Inc

Welcome to the ONDIS Inc Second Quarter 2026 Earnings and Business Update 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 1 on your telephone keypad. To withdraw your question, please press star and then 2. 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 judgments, They are subject to risks and uncertainties that can 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 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 direct comparable GAAP measures is shown in our press release issued 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.

Thank you, Operator, and good morning, everyone. We appreciate you joining us today and your continued interest in ONDIS. I'm pleased to be joined this morning by key members of our leadership team. Neil Laird, our Chief Financial Officer and Treasurer, Oshri Lugassy, Co-CEO of ONDIS Autonomous Systems, Meir Kliner, President of OAS, and Ryan Hartman, CEO of ONDIS Sentinel. We have a lot to cover today, so we will dive right in. Let's turn to today's agenda. I'll begin with a high level review of our second quarter performance, the continued execution of our core plus strategic growth plan, and the progress we are making toward building WANANDAS. Neil will then review our second quarter financial results, balance sheet, and the investments supporting the significant growth we expect in the second half of 2026 and beyond. We will then provide a growth and operational update, including commercial momentum, major customer programs, expansion across our four strategic market segments, and the continued scaling of our global operating platform. We will also discuss the integration of our expanding technology portfolio and our progress toward delivering AI-enabled multi-domain systems of system solutions. I'll close with our updated financial outlook and management priorities for the next phase of ONDIS's growth. We will then open the call for questions. Let me begin with the operating model behind our strategy. Ondas continues to execute its core plus strategic growth plan. And to be clear, Ondas is not simply a collection of acquired companies. We are building and operating one integrated global platform, one Ondas. That means assembling mission-ready technologies, world-class engineering talent, experienced leadership teams, customer relationships, and operational capabilities, and then integrating those assets into a unified growth platform. The value of this model becomes most visible when we combine technologies across domains. We are connecting persistent multi-domain ISR capabilities to the complete detect, identify, track, and defeat chain. In Counter UAS, for example, we are bringing customers a unique layered architecture that can include passive detection, cyber takeover, electronic warfare, interception, and fully autonomous kinetic defeat. These integrated capabilities are designed to protect critical locations from hostile drones ranging from small FPV drones to larger, more sophisticated threats. We are integrating these capabilities through software-defined command and control, enabling customers to operate a coordinated system of systems rather than a collection of disconnected products. But technology integration is only part of the equation. We are also integrating engineering resources, sales and marketing teams across more than 60 countries, production and supply chain capabilities, field support, training, sustainment, and customer service. As we have said before, exceptional technology that is useful, built to customer requirements, and operational in the field is essential. Developing that technology is extremely challenging, and we are proud to have operationalized the incredible portfolio we have at Ondas. With that said, Technology, by itself, is not sufficient to win. Customers in global defense, homeland security, public safety, and critical infrastructure markets need partners that can deploy, support, and sustain mission-critical systems at scale. That is what OneAndas is all about. It is how we create value for customers, employees, partners, and shareholders. It is how we win. And Andas is playing to win. The execution of our strategy is increasingly reflected in our financial performance with these KPIs demonstrating the strength and momentum of our business. We delivered another quarter of record revenue generating approximately $83.8 million in the second quarter. That represents more than 13-fold growth versus a year ago. We expect to sustain this momentum and deliver another significant revenue ramp in the second half of 2026. Based on our results, backlog, and current visibility, we are also increasing our full-year 2026 revenue target to a range of $525 to $550 million. The growth is broad based across the portfolio, supported by continued strength in our core businesses, the conversion of large orders already in backlog, and the transition of several emerging platforms from development and qualification into deployment. Our two-year strategic program pipeline has expanded to more than $11 billion. And our pro forma backlog now stands at approximately $757 million, including design and cyber hawk, growing more than 11x during 2026 and providing substantial revenue visibility. Meanwhile, order momentum remains strong. We have already captured approximately $105 million of new orders quarter to date, further adding to backlog during this Q3. At the same time, we continue investing in the operating platform required to support this growth. Cash operating expenses were elevated in the quarter, reflecting the full quarter impact of businesses added earlier in the year, principally Worldview and Mistral, as well as approximately $29 million of growth investment across corporate development, on-desk capital, partner initiatives and the broader operating platform. We made these investments ahead of the significant revenue and gross profit ramp we expect in the second half and beyond. We expect the growth in these OPEX investments to moderate from here, providing substantial operating leverage as revenue scales. We also remain very well capitalized. We ended June with approximately $1.4 billion in cash, cash equivalents, restricted cash, and short-term investments. Even after deploying $325 million for new acquisitions in Q3, we retained significant financial flexibility to support organic growth, scale our operating platform, and execute our strategic growth program. This chart is a simple visual of the transformation underway in our financial performance. Quarterly revenue has grown from approximately $4.2 million in the first quarter of 2025 to $83.8 million in the second quarter of 2026. We believe this is what the early part of an S-curve should look like. Technology adoption curves are generally not linear. They are exponential. Once platforms are validated, customer requirements are established, and programs move from testing into scale deployment, growth can accelerate rapidly. Our strategy is designed around that dynamic. As we execute our Core Plus strategic growth plan, we are not only expanding the technology portfolio, but also building the operating platform required to support an exponential growth curve across production, supply chain, customer deployment, field support, and sustainment. Importantly, the underlying core growth of our businesses remains a major driver of the financial model and the economic value we are creating. On a pro forma basis, assuming our current portfolio companies had been owned throughout both periods, ONDA has generated approximately 85% organic revenue growth in the second quarter compared with Q2 2025. That is an important distinction. The growth reflected here is not simply the result of adding acquired revenue. Our underlying businesses are also expanding rapidly within the ONDIS platform. Core organic growth is a theme we will return to throughout today's discussion. We have strong momentum and are positioned for growth to accelerate further during the second half of 2026 and into 2027. This slide provides additional detail showing our growth model is working. The model begins with strong, mission-ready technology platforms in markets with very significant customer demand. That technology and demand are supported by the operating platform Ondaz is building, providing working capital, global customer relationships, expanded sales capabilities, production resources, supply chain support, and field services. As mentioned, on a pro forma basis, Onda has delivered approximately 85% organic year-over-year revenue growth during the second quarter. Backlog also continued to grow, increasing approximately 33% sequentially from Q1 to Q2 on an organic basis. We continue to see a particularly strong organic ramp across the Onda's autonomous systems businesses. Centrix continues to see substantial demand for its cyber over RF counter UAS systems, with second quarter pro forma revenue up approximately 298% year over year. The Centrix team is performing extremely well, benefiting from the expanding global sales platform, customer access, and operating resources available through ONDAs. Our success at the FIFA World Cup and recent win with the Jacksonville Jaguars are early signs that Andes is winning, as the long-term investment cycle kicks into high gear. A-Robotics also delivered very strong growth, with revenue up approximately 112% year-over-year. That growth was supported by Iron Drone, continued customer demand for autonomous drone infrastructure, and new integrated systems of systems customer engagements. Similarly, 4M delivered approximately 258% year-over-year pro forma revenue growth. With the capital, customer access, operating support, and international reach of ONDAs behind it, 4M is expanding its intelligent demining and land intelligence business into substantially larger programs. Rotron is proving to be another excellent addition to our portfolio. Rotron captured approximately $34.2 million in orders during the second quarter alone, compared with approximately $25 million of expected 2026 revenue we underwrote in the acquisition. Rotron's international pipeline outside the UK is also expanding under Ondas, and we believe its capabilities in jet propulsion, precision strike, UAV development, and platform commercialization will be meaningful value creators over the coming years. This performance is not isolated to one company or market segment. We are seeing strong organic growth across multiple businesses, and the data increasingly validates both our operating platform thesis and our execution. I want to pause on this slide because it illustrates the One Ondas operating model. At the top is Ondas Inc, responsible for capital allocation, corporate strategy, the Ondas brand, investor engagement, governance, and overall enterprise direction. Beneath that is our shared operational platform. This layer provides capabilities across supply chain and production, field support and services, global sales and marketing, government affairs, finance, and corporate infrastructure. These shared resources accelerate commercialization, improve execution, and allow the specialized technology companies within ONDOZ to scale more efficiently. Those specialized companies bring deep domain expertise, differentiated intellectual property, exceptional engineering talent, established customer relationships, and mission-ready products. We are integrating those capabilities across four major high growth market segments, aerial security, ISR and persistent intelligence, precision strike, and autonomous ground systems with AI software serving as a common enabling layer across the portfolio. Exceptional technology is merely the starting point in these markets. Customers need complete solutions built to requirements, integrated, reliably delivered, and supported across the mission lifecycle. Partners need a platform to bring technologies to market and pursue larger global programs. Employees need the resources, infrastructure, and capital to scale innovation. And investors need this model too. Our shared operating layer deploys capital more efficiently, accelerates revenue, reduces duplication, and generates increasing P&L leverage as the platform scales leverage that is fundamental to sustained profitability and attractive long-term returns. Oshri and Ryan will discuss this model in greater depth later, including how we are integrating technologies, pursuing larger programs, and scaling execution across the portfolio. As we deploy capital and scale ONDAS, one of our most important responsibilities is ensuring we have the strongest, most capable leadership team possible. We have made tremendous progress. Across ONDAS, we are assembling a mission-driven leadership team deeply committed to delivering robust, operational, autonomous capabilities to customers in defense, homeland security, public safety, and critical infrastructure markets across the United States, Israel, and allied nations. I am pleased to welcome David Barnea as President and Chairman of Andaz Defense Limited. David joins Andaz following a distinguished career serving the State of Israel, most recently as Director of the Mossad. He brings nearly three decades of intelligence, national security, and operational leadership experience, and intimate knowledge of modern warfare and the current battlefield. David's mandate is to help lead our global expansion, strengthen our relationships with international defense and security customers, and advance the integration and adoption of our AI enabled multi-domain autonomous systems platform. He will work closely with me, Oshri, and the broader leadership team to maximize the impact of our technologies and services across our global customer base. To summarize, our plan is working and I am extremely proud of our team's performance. We have had a very strong first half and believe we can accelerate this momentum through the remainder of the year. The revenue ramp we expect in the second half is significant and increasingly visible through our backlog, order book, and deployment schedules. Demand remains broad-based, and we expect to benefit from major program deliveries and new product adoption cycles across each of our principal market segments. As we convert these orders into revenue, we are expanding production, supply chain, deployment, and field support capacity to meet customer requirements efficiently and reliably. In aerial security and counter UAS, we continue to see strong global demand across the portfolio. We expect Centrix's cyber over RF platform to remain a key growth driver as customers increasingly adopt layered, multi-site, counter-drone infrastructure. We also believe IronStrike, which came to Andes through our recent acquisition of design, is positioned to begin receiving commercial volume orders and initial deliveries during the second half of the year. We see urgent demand for cost-effective kinetic solutions like IonStrike, capable of defending against increasingly sophisticated Shahad-class drones and coordinated swarms. In PrecisionStrike, Mistral is positioned to begin deliveries against approximately $240 million of aggregated orders associated with the U.S. Army LUS-IDIQ. We also expect continued advancement on Project BreakStop while Rotron ramps production and deliveries against material orders and a growing international pipeline. Across ISR and persistent intelligence, our backlog and pipeline for both Ultra and Stratolite deployments continue to grow. We have been expanding production and operational capacity to support the launch of Ultra programs and the increased adoption of Stratolites for maritime domain awareness and other persistent ISR missions. In autonomous ground systems, IndoEarth is expected to begin deliveries during the fourth quarter on the Combat Machinery Program, which has total program potential of approximately $140 million. These programs represent important customer adoption curves. As initial deployments move into larger-scale production and follow-on requirements, we believe they can support meaningful, sustained growth across the platform. Our priorities remain clear. Continue driving organic growth, convert backlog efficiently, leverage the investments we have made in our scalable operating platform, and demonstrate the strength of the ONDA's financial model. That concludes my introductory comments. I will now hand the call over to Neil, who will review our second quarter financial performance.

Neil. Thank you, Eric. The second quarter showed record revenue and represented another important step forward in demonstrating the scalability of our financial model. Revenue increased to approximately $83.8 million, up 67% sequentially and more than 13 times the prior year period. Importantly, this wasn't simply acquisition driven. On a pro forma organic basis, assuming our current portfolio had been owned in both periods, revenue grew approximately 85% year over year, reflecting strong execution across our underlying businesses and proving out the power of our growth platform. With $175 million of new orders during the quarter and continued strength into Q3, we believe that customer demand remains exceptionally strong across our platform. Gross profit increased to approximately $36 million, while adjusted gross margin, a new metric which excludes the non-cash items of stock compensation, expense, and amortization of acquisition-related intangible assets, was 50.4%, relatively stable from 51.5% in the prior quarter despite normal product mix variability. As we've discussed previously, quarterly margins will fluctuate as deliveries shift between programs. We expect some gross margin pressure in the second half due to mixed and recently acquired excess capacity. However, our longer term target remains to achieve gross margins in excess of 50%. Operating expenses increased to approximately $199 million, but more than half of the total consisted of non-cash or acquisition related items such as stock compensation, contingent consideration, revaluation, amortization of intangible assets, as well as $4.4 million in acquisition related transaction costs. To better understand the business, we encourage investors to look at our underlying adjusted cash operating expenses, which amounted to approximately $93 million during the quarter. This includes normal operating expenses as well as investments to support the integration of recently acquired businesses, continued deployment of Palantir Foundry and Warp Speed, commercialization activities, and infrastructure required to support the significant revenue growth we expect over the coming quarters. Second quarter represented a large increase as we invested ahead of and in support of a transformational growth curve. The important distinction is that the growth of our operating expense will normalize in the third quarter and beyond, while revenue and gross profit are expected to rise significantly, resulting in significant leverage in our model. Given these investments, which are occurring ahead of a broader revenue ramp, adjusted EBITDA was a loss of approximately $51 million during the quarter. This result was consistent with our expectation that the second quarter would represent the peak in adjusted EBITDA losses. As revenue accelerates during the second half, we expect those investments to begin producing meaningful operating leverage. Turning to the balance sheet, which remains strong and provides us with significant advantages. We ended the quarter with approximately $1.4 billion in cash. Cash equivalents, restricted cash and short-term investments compared to $616 million at the end of 2025. Included in our total assets are investments in unaffiliated public and private companies totaling $70 million. These investments are aligned with our broader platform strategy. They support key partners, enhance access to critical technologies, improve supply chain efficiency, and we believe will generate attractive returns over time. During the third quarter, we've already deployed approximately $325 million of cash to complete the design and cyber hawk acquisitions, both important elements for our near-term and long-term growth outlook. Our balance sheet allows us to invest aggressively in our operating platform, support larger customer opportunities, and continue executing our disciplined acquisition strategy from a position of strength. If there's one message we'd like investors to take away from today's call, it's that our confidence in the trajectory of the business has never been stronger. We believe the first half of 2026 has validated the strategic investments we've made over the past year. We enter the second half with record backlog, accelerating production, strong demand signals across a rapidly expanding product set, an exceptionally strong balance sheet and increasing confidence in our outlook. We believe the foundation is now in place for substantial growth and meaningful operating leverage over the coming quarters. With that, I'll turn it back to Eric.