Release Date: May 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ondas Holdings Inc (ONDS, Financial) announced a significant order to provide an upgraded 220 megahertz PTC data radio for a key Northeast Corridor passenger railroad, expanding their serviceable addressable market.
- The company has completed systems integration and demonstrated backwards compatibility on the legacy 900 megahertz network with two railroads, signaling progress in their technology deployment.
- Ondas Holdings Inc (ONDS) has received its first commercial order for the Ion drone platform, indicating potential growth in the defense and security markets.
- The company has established strategic partnerships, such as with Hall of Sky, to drive fleet adoption of Optimus systems and expand into new markets like Europe's third-largest seaport.
- Despite a slow start in revenue for the first half of 2024, Ondas Holdings Inc (ONDS) is optimistic about future growth, driven by new orders and expanded market opportunities.
Negative Points
- Ondas Holdings Inc (ONDS) reported a disappointing start to 2024 from a revenue perspective, with revenue heavily weighted to the second half of the year due to early headwinds.
- The company experienced disruptions in its Ondas Autonomous Systems business unit due to the Gaza conflict, impacting production and marketing activities.
- Gross profit for Q1 2024 was negative, primarily due to subscale operations and product development cost overruns on low margin projects.
- Revenue for Q1 2024 decreased significantly compared to Q1 2023, primarily due to extended timelines with Class one railroads and supply chain disruptions.
- Ondas Holdings Inc (ONDS) is facing uncertainties around the timing of customer activity and commercial rollouts, particularly in the 900 megahertz network, which may affect future revenue stability.
Q & A Highlights
Q: Can you provide more details on the reaffirmation by the railroads to the FCC about meeting the deadline to clear the spectrum?
A: Eric Brock, CEO of Ondas Holdings Inc, mentioned that while he couldn't provide specific numbers, he referred to the numbers used in the railroads' comment letter to the FCC. He emphasized the importance of the railroads' commitment to meeting the deadlines for moving off the legacy network and building out the new 900 MHz network, with substantial coverage required by April 2026.
Q: What is the current liquidity situation, and is there a need to raise more capital?
A: Eric Brock acknowledged the need to raise capital, particularly pointing to potential activities with the Ondas Holdings Inc's drone business unit (OH). He mentioned that discussions with investors are active and varied scenarios could play out, including investment and potentially spinning off the drone business into a separate entity.
Q: Can you update us on the revenue mix expected between autonomous systems and networks for this year?
A: Eric Brock indicated that the Autonomous Systems business unit is likely to have higher revenue than the Ondas Networks unit this year, although he did not specify the exact revenue mix.
Q: What are the expectations for custom integration work as the Raider is sold to other military and defense applications?
A: Eric Brock explained that while the system itself might not require significant work, integration with different radar systems could be necessary depending on the market, which is a straightforward and not very costly process.
Q: How do you navigate potential limitations in scaling up the Raider business given recent supply chain issues?
A: Eric Brock mentioned plans to produce the Raider in Israel and potentially in other regions as they access global customers. He highlighted that the complexity and material requirements for the Raider are significantly less than for the Optimus system, which should ease scaling challenges.
Q: Looking ahead to 2025, how do you see the demand developing for both the Optimus and Raider platforms?
A: Eric Brock projected significant growth for both platforms in 2025, with Optimus likely generating larger revenue through existing customers and fleet adoption. He also anticipated expansion in the Raider's customer base, particularly among homeland security and defense groups.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
