Ondas Holdings Inc. Price & Performance (ONDS)

However, management believes these non GAAP measures provide investors with valuable information of the underlying trends of our business. Please note this event is being recorded. I would now like to turn the conference over to Eric Brock, Chairman and CEO. Please go ahead. Well, thank you, operator. Good morning.

I want to get started by welcoming you to our quarterly conference call. [indiscernible] We appreciate you joining us today and for your continued interest in Andas. I'm happy to be joined today by key members of our leadership team, including Neil Laird, our Interim CFO and Mary Kleiner, President of Ondas Autonomous Systems and the Founder and CEO of our aerobotic subsidiary. Both whom are very familiar to you. We're also joined by two new members of our leadership team, for their first investor call of Ondas, Of course, I am speaking about Ashvi Lugassi, our new Co CEO of Anders Autonomous Systems. [indiscernible] the new CEO of Andus Networks. I'm excited to have Marcus and Ashri here with us. They bring exceptional leadership Ondas industry experience that is sure to be invaluable. Further, both have been known to Ondas for a while now and are already making an impact in the field with customers. You'll hear more about these two leaders later in the call. So let's now turn to the agenda. I will begin with a review of our key highlights from 2024 and provide an outlook for 2025 where we anticipate a record year of revenue growth primarily driven by OAS.

I will also share some important details on the partnership we announced yesterday with Palantir. Neil will then walk through our financial results for the fourth quarter and full year 2024, And after that, we will provide a business update within our Ondas Networks and OAS business units. Then I will wrap the call and move to take investor questions. 2024 was a defining year for Anda. Marked by pivotal milestones that sets the stage for accelerated growth in 2025 and beyond. It was also marked by overcoming challenges and I am extremely proud of our teams across Ondas. Recall that early in 2024, faced the challenges of extended timelines at Andas networks and of course, the war activities in Israel, which placed pressure on our operating capabilities. Nonetheless, we persevered through these challenges. We firmly established our presence in the global defense market securing two major programs of record with a key [indiscernible] our Optimus and Iron Dome Raider platforms.

These programs validate our dual use autonomous drone technology have also dramatically increased both our TAM in the serviceable and obtainable market or SOM in their expected to increase the velocity of our business at OAS. OAS. The mitigation of drone threats. Meeting the critical need for drone interception in contested environments. This market is seeing massive demand growth and we believe our opportunity position Iron Drone as the category owner. We recently announced that we have launched an Iron Drone demo team has already begun to engage customers globally. And we are already seeing tangible activity with We're engaging with these new defense and homeland security customers through government to government channel as well as through our own direct marketing efforts. As Mary will share, we have similarly engaged with new customers around our Optima system which is now being deployed to secure military bases and border checkpoints demonstrating the exceptional capabilities of this market leading system and high value security markets in both defense and critical industrial markets. Beyond our commercial traction, we invested significant energy to enhance operational efficiencies to scale our growth ensuring we are positioned to meet demand. That includes furthering the development of our supply chain and field services capabilities.

Enhancing our operational platform is a perpetual focus for us and will be critical as we drive growth across technology platforms, geographies and end markets. Despite the lack of revenue traction on those networks, we further solidified our position in technology network roadmaps for for our customers which of course includes Amtrak. While also broadening our engagement with new industry and ecosystem partners. We closed the year with a $10,000,000 backlog primarily with OAS reinforcing the strength of our pipeline and the visibility we now have on future revenue. That backlog is buttressed by a growing invisible order book This gives us confidence in projecting at least $20,000,000 in revenues from OAS and supports the total revenue expectations of $25,000,000 for Ondas Holdings, in 2025. Recall that we originally set expectations for 2025 revenue at $15,000,000 to $18,000,000 for OAS at our Investor Day in September 2024, [indiscernible] And I stated that we want to set conservative expectations we will strive to beat at that time.

This remains the case with our updated outlook today which I will touch on in some more detail at the end of today's call. We also fortified our capital position raising $35,000,000 in Q4 alone which met the goals articulated back in our last investor update. This provided us with a strong liquidity position and financial runway to with confidence. Andas enters 2025 stronger than ever with a clear runway for growth in defense, homeland security, critical infrastructure security markets.

As we look ahead, 2025 is set to be an acceleration year for Ondas. With momentum building from our execution in 2024 we believe we are positioned to deliver record revenue as we scale our existing programs and expand into new customer opportunities. We have the following key objectives for 2025. Firstly, we intend to drive growth with existing programs and customers. We are intensely focused on executing and expanding on existing programs with Optumis and Iron Drone, ensuring successful deployments is sustained customer adoption.

As we build on what we have, we plan further expansion through new customer programs. Defense and homeland security engagements in Israel and The UAE provide a strong foundation for broader adoption. From here, we expect to secure multiple additional military customers in 2025 leveraging both G2G channel opportunities in addition to Adas' direct marketing efforts. We believe these efforts will be enhanced with Arshri's leadership based on his demonstrated success in securing over $20,000,000 $20,000,000,000 defense contract sales by leading the go to market strategy at one of Israel's most important global defense companies. Of course, we will also look to pull through on our existing pipeline with critical infrastructure and public safety customers in The U. S. And Europe which also present substantial growth opportunities. We intend to continue to invest to scale our our operating platform. We are building a scalable infrastructure with investments in supply chain, sustainment, and field services to support long term customer adoption. These activities will have the benefit of leveraging our new partnership with Palantir whereby they are providing their foundry AI systems for enterprise resource, efficiencies, which I will expand upon in a moment. Lastly, we intend to build further build despite timeline challenges We continue to believe in both the long term opportunity at ONS Networks and the strategic value of the business and we are intent on realizing that value.

Recall that private wireless platform to create value along the technology ecosystem at the edge of rail operations. The capacity and flexibility to drive new applications supporting advanced intelligent safety and operating systems is strategically valuable for both our rail customers and the large rail edge technology vendors.

Under Marcus' leadership, we expect to see broader customer and partner engagement ensuring continued progress in 900 megahertz rail network deployments, while exploring additional product and network opportunities. With a strengthened leadership team, validated market traction and a robust pipeline Ondas deploys for transformative growth in 2025 As the year progresses, I believe a deeper customer pool a growing order book and backlog and our continuous focus on operational scale will support a growth flywheel. With proper execution, this will be a year when our investments in technology, operations market expansion deliver tangible results for our customers and our investors. Yesterday, we announced a strategic partnership with Palantir Technologies, a leading provider of AI systems.

I'm very excited about engaging with Palantir and the breadth of capabilities and solutions they bring to the markets we care about. This is an incredibly important relationship we have established with significant long term benefits to Ondas. Initially, we will leverage Palateir's Foundry AI platform to scale OAS's operating platform in support of our revenue ramp. With Foundry, we aid to unified data, and streamline operations which will help enable scalable adoption of our Optima system [indiscernible] This entails connecting to our supply chain, production as well as our field services and sustainment activities with customers across the world. This will also ultimately extend to our product and solutions development where we are likely to create further AI enabled advancements in our platform capabilities in support of evolving customer requirements for economy, and data intelligence. I believe Palantir sees similar scope for product and market development as we advance our relationship. I expect this partnership to ultimately be a force multiplier across a number of important facets of our business and look forward to sharing more details as we begin to integrate Foundry, eventually other Palantir AI capabilities into our business. I will now hand the call to Neil to provide a detailed financial update.

Neil? Thank you, Eric. I As I get started, I want to remind our investors that our financial statements reflect the early stage of platform adoption for both Ondas networks and OAS. And the preparation for larger commercial rollouts. We expect significant operating leverage as revenues grow. For today's revenue levels do not yet cover our operating expenses. [indiscernible] For 900 megahertz network and the development programs underway with Siemens and MXV Rail. [indiscernible] Similarly, revenues at OAS are expected to vary from quarter to quarter. And normalize into a more predictable pattern as we grow our customer base and more of those customers enter fleet programs and recurring service agreements in The United States and internationally. Revenues increased 173% to $4,100,000 quarter over quarter for the three months ending 12/31/2024. Compared to $1,500,000 for the three months ending 09/30/2024. Hanover down 18% from $5,000,000 for the three months ending 12/31/2023. [indiscernible] Revenues for Ondas Networks were 500,000.0 relatively flat compared to the third quarter of twenty twenty four and down $1,100,000 from the fourth quarter of twenty twenty three. This was primarily a result of extended timelines related to the 900 megahertz activity with [indiscernible] OAS revenues were $3,600,000 an increase of $2,600,000 or 260% from the third quarter of twenty twenty four and an increase of 10% from the fourth quarter of twenty twenty three.

This increase reflects the shipment of products and services from the $14,400,000 in orders, primarily related to the two new programs secured with our military customer in the third quarter of twenty twenty four. Gross profit was $900,000 or 22% for Q4 twenty twenty four, as opposed to $100,000 or 3% for the third quarter of twenty twenty four and $1,700,000 or 35% for the fourth quarter of twenty twenty three. The increase in gross margins from the third quarter results from increased product revenue at OAS, compared to the fourth quarter of twenty twenty three. The decrease reflects the lack of higher margin product sales at Ondas Networks and slightly lower margins at OAS. Because of the inclusion of third party products in the current quarter revenue. Gross margins can be volatile on a quarter to quarter basis, due to revenue levels that reflect the early stage of platform adoption. And shifts in revenue mix between product, development and service revenues.

Operating expenses decreased to $9,400,000 for the fourth quarter of twenty twenty four as opposed to $8,700,000 in the third quarter of twenty twenty four and $14,400,000 in the fourth quarter of twenty twenty three. The decrease from the prior year was primarily due to a $40,000,004,000,000 dollars non cash impairment charge in the fourth quarter of twenty twenty three and various cost savings implemented in 2024 at Andas Networks. The increase from the third quarter was primarily the result of a credit loss charge in the current quarter. Cash operating expenses were $7,900,000 in the fourth quarter of twenty twenty four, compared to $8,700,000 in the third quarter of twenty twenty four. These exclude non cash operating expenses for depreciation and amortization of $1,200,000 in both quarters, stock based compensation of $300,000 in the fourth quarter of twenty twenty four compared to 400,000.0 in the fourth quarter of twenty twenty three, an impairment of long term assets charge of $4,000,000 in the fourth quarter of twenty twenty three. The operating loss was $8,500,000 for the fourth quarter of twenty twenty four, compared to $12,600,000 for the fourth quarter of twenty twenty three. Adjusted EBITDA loss was $7,000,000 for the fourth quarter about the same as the $7,000,000 for the fourth quarter of twenty twenty three.

For the full year of 2024, revenues were $7,200,000 as opposed to $15,700,000 for the full year 2023. This was largely due to extended timelines at Ondas Networks, and war related disruptions in Israel for OAS that impacted operations, particularly in the first half of twenty twenty four. Gross profit was $300,000 for the full year 2024, as compared to $6,400,000 for the full year of 2023. Reflecting lower revenue compared to fixed operations costs particularly at OAS. We expect margins to recover in 2025 with higher revenues and improved scale from larger production volumes at OAS. Operating expenses for the full year of 2024 were $35,000,000 as compared to $46,100,000 for the full year of 2023. The reduction was due to the absence of one time non cash charges of $4,000,000 in 2024 achieving the full savings from the integration of American Robotics and Aerobotics operations. To form OAS that was implemented during 2023 and additional cost savings achieved at AmBus Networks during 2024. [indiscernible] Cash operating expenses were $28,900,000 dollars for the full year of 2024, a decline of $7,200,000 from 2023. This was due to the OAS inter Adjusted EBITDA loss was $28,500,000 for 2024, as compared to $29,700,000 for 2023.

So now let's turn to the cash flow statement. We held cash of $30,000,000 as of 12/31/2024, compared to $15,000,000 as of December 2023. The full year cash provided by financing includes additional financing totaling $50,200,000 of which $35,300,000 occurred in the fourth quarter. And that's holdings received proceeds from convertible loans of $28,300,000 OAS received $5,100,000 and Ondas Networks received $1,900,000 Cash used in operations during the full year decreased slightly to $33,500,000 Investments in working capital accounted for $4,800,000 of this usage compared to $3,900,000 in 2023. We expect cash utilization to improve in 2025. Improved cash efficiency comes from operating expense leverage, at our Ondas business unit given our expectation of a and continued cost controls across the company. The company expects to fund its operations from cash on hand of $30,000,000 as of 12/31/2024 from gross profits achieved from revenue growth potential prepayments from customers for purchase orders and potential proceeds from warrants issued and outstanding and additional funds if needed that the company may seek through equity or debt offerings and borrowings under additional notes payable. Lines of credit or other sources. As of 12/31/2024, $52,000,000 in debt outstanding. Dollars 9,600,000.0 of this balance has been converted into dollars 6,200,000.0 of Ondas Holdings convertible debt matures in April of twenty twenty five, a further $12,000,000 in July of twenty twenty five, and the balance of $24,900,000 in December of twenty twenty six.

We have been focused on maintaining liquidity to fund our growth plan. And raised a further $900,000 in convertible notes at Ondas Networks in January. We have also established a relationship with Clear, a working capital provider to allow us to factor receivables as needed. We also anticipate that the maturing notes will either be converted into equity or will have their terms extended. And I will now hand the call back to Eric.

Thank you, Danil. Now we will transition to a review Marcus, Ostrid and Mayer to share updates on business development activity and operations at Ondas Networks and OAS. As I hand the call to Marcus to provide a business update for Ondas Networks, I want to reiterate how excited we are to add this level of talent to our management team. Marcus brings deep experience in railroad operations, industrial technology and strategic finance. In addition to financial and strategic roles within the private equity industry, his experience included senior leadership positions as Sperry Rail Service, and Acura Inspections, subsidiaries of Rockwood Holdings. There he focused on integrating new technologies into railroad markets and was instrumental in driving improved operational efficiency, and revenue velocity. These experiences are highly relevant and complementary to the enabling us to drive deeper conversations with customers and business partners. [indiscernible] I am very confident that Marcus is the right person to help us drive the adoption of our DOT60 technology across rail networks. [indiscernible] welcome to the call. The floor is yours. Thank you, Eric.

Can I start want to say simply that I'm happy to join on this network and I'm grateful for the opportunity to work with you and the Board? As well as with Guy Simpson, our COO and the extremely talented team we have at Ondas networks. I believe we have an exceptional technology platform with our point one six system and we also have extremely valuable expertise in industrial network switch or extends to the railroad communications. [indiscernible] Together with together, this has the promise of creating significant value for both our railroad customers and the broader rail technology ecosystem. We Of course, we have a lot of work ahead of us to drive adoption and leverage the significant efforts we have made to create business development opportunities. [indiscernible] With that introduction, it's great to join you today to provide you with a review of key developments at Anders Networks in 2024. And how we are positioning ourselves for 2025. While we continue to support the railroad industry with their specific 900 megahertz network needs, we are also positioning Ondas networks robust technology platform to address the railroad's broader communication needs. I will expand on this in a moment, but first I'll provide an update on our specific activities and outlook for the 900 megawatts network. [indiscernible] 2024, one of our distribution partners [indiscernible] the primary commuter rail system in Chicago for a system wide upgrade their 900 megahertz network.

This project includes the migration of the network to the new ABLOC channels, and the introduction of 802.16 to support IP applications. In addition to Metro, a Class one railroad has also deployed and is operating a live 900 megahertz system with the AirLink equipment in the Chicago area. [indiscernible] Both of these infrastructure upgrades highlight the seamless seamless upgrade process associated with our technology and the benefits to be gained from the dot 16 platform. [indiscernible] Rather than continue to operate their silo communication platforms as is. Multiple Class 1s are evaluating the possibility of having nine hundred and two twenty megahertz networks act as backups for the critical systems that run-in each of these networks. Specifically, there is an interest in extending the new 900 megahertz network from its primary use of transporting legacy centralized train control traffic to providing a backup for deposit chain control applications operating on the two twenty megahertz network. [indiscernible] This strategy adds resiliency, redundancy and diversity to critical railroad operations by eliminating single points of failure. We're supporting various Class 1s in their evaluations and based on results to date expect that this strategy will be adopted for network rollout by at least The Class I railroads through the AAR have communicated on several occasions at the end of last year and earlier this year that the Class 1s are firmly committed to meet the 900 megahertz transmission deadlines as well as the related build out timeline.

The railroad's communication needs extend beyond the 900 megahertz network. Just as our customers are beginning to examine their broader communication needs, [indiscernible] intend to bring our capabilities to bear in providing holistic communication solutions. In the two twenty megahertz band, we continue to execute on the new PTC data radio program for Amtrak in the Northeast Corridor. The first prototype radios were delivered to Amtrak in Q3 and the development activity is on track to be completed in Q1. We expect deliveries of the new two twenty megahertz radios to begin in the second quarter of twenty twenty five. [indiscernible] a subsequent rollout to other operators in the Northeast Corridor. [indiscernible] In the four fifty megahertz band, we are making steady progress with next generation head of train, end of train technology. [indiscernible] Testing of our communications technology is complete and we are working with several head of train equipment manufacturers on integrating our technology. We expect that this will lead to commercialization at the end of twenty twenty five. Next generation Head of Train, End of Train or NGHE critical to the railroad industry to ensure significant improvement in safe train operations well as to enable operations of longer trains.

Both NGHE and the Northeast Corridor work highlight Ondas network's breadth and depth and communication expertise. [indiscernible] Our goal for 2025 is to work directly with the I's and other industry stakeholders to address broad industry communication needs and provide solutions for long standing industry challenges. [indiscernible] Since the beginning of the year, have engaged with several Class 1s and other industry stakeholders on topics related to large volume data transmission and railroad operations. This is an industry wide topic with significant implications for safety, operational continuity and capital spend.

The railroad operating environment presents some significant challenges, rendering off the shelf technology irrelevant. [indiscernible] The Class 1s are looking to Ondas networks to provide comprehensive solutions that overcome these challenges.

We are applying our broad expertise to design, develop and commercialize solutions that address these real communication needs of the Class 1s. Look forward to updating you on this topic throughout 2025. I will now hand the call back to Eric.

Thank you, Marcus. I will now ask Ashri Ligassi to take the floor and share his thoughts on the opportunities ahead at OAS. As I do, want to say once again how thrilled we are to have him join Ondas. Ashri brings several decades of leadership experience in military operations, and autonomous systems having served with great acclaim with the Israeli Defense Forces where he commanded over 30,000 personnel. Prior to joining Andas, Asri served as Vice President of Marketing at Rafael Advanced Defense Systems, At Rafael, he had prolific success leading the marketing and execution of critical security capabilities totaling over $20,000,000,000 in government to government defense contract sales and help grow Rafael's defense technology footprint globally. [indiscernible] industry relationships with defense ministries military forces and intelligence agencies worldwide are sure to be hugely valuable as Ondas continues to expand into defense and homeland security markets. After Oshri's comments, he will hand the call to Mayor Kleiner, will provide a detailed update on the business development progress at OAS, Oshri. Please proceed.

Thank you, Erik. And I also want to thank you and the Board for the opportunity to join the team and advance the important work we are doing together. And I am also happy to join the call and engage with our investors in this forum. Let me begin by sharing that they joined us, Autonomous Systems, because I believe the future of defense is rooted in systems that are autonomous intelligent, and built for real world operations. Having spent years working on government to government defense programs, I've seen firsthand how critical advanced technology is protecting people, defense isn't just about equipment. It's about delivering reliable field proven solutions that support those on the front lines and strengthen national security. Global traits are evolving at an unprecedented pace and traditional defense systems cannot keep up. There is an urgent need for AI driven autonomous solutions that can operate 20 fourseven, integrate seamlessly with allied forces. [indiscernible] is uniquely positioned as a leader in autonomous defense technology bringing combat proven AI driven solutions to allied forces with our advanced platform and operational expertise, we are poised to shape the future of modern warfare and strengthen national security. At the core of our success, is the talent and expertise of our teams at Aerobotics in Israel and American These teams bring decades of experience in developing and deploying autonomous technologies, ensuring that we deliver not just innovation, but real world capabilities that defense forces can trust.

Looking ahead, my vision is clear. We will become one of the leading next generation defense technology providers. Delivering autonomous systems that enhance security operations and provide real tactical advantages Our ability to operate across both U. S. And allied defense ecosystems gives us strategic edge. As we work closely with government agencies security forces and defense partners to deploy mission critical solutions where they are needed most.

We are not just adapting to the future. We are shaping with practical results driven solutions that protect people and secure nations So I am thrilled to be here and working with a strong team we are fully committed to both our mission and to delivering great outcomes for our investors. I will now hand over the call to Meyer who will give you a detailed update on our activities. I look forward to the quarters and deals ahead with all of you.

Thank you. Thank you, Ashri. It is great to have you here with us today.

I look forward to seeing your leadership at OAS help us drive the expansion of our business the defense and homeland security sectors. 2024 was a remarkable year for Honda's autonomous systems, We established a new business around our cutting edge counter drone system, the IRON-one radar, secured our first deal with ST strategic defense customer for our legacy system Optimus, and have already begun deploying these orders in a real world operational environment. The U. S. Market, American Robotics made significant progress in expanding our footprint and strengthening relationships with strategic partners. We launched our training and demo center in Maryland successfully conducted demonstrations and obtained designated waivers and unique technological approvals to enable fully autonomous behind visual line of sight flights. Outside of America, we continued scaling our drone network in Dubai while expanding our business into Europe and Asia, developing key relationships with customers and strategic partners. In Europe, we secured multiple agreements with local distributors and integrators and conducted real world demonstrations of both the Iron Run and Optimum systems. These activities in significant business development progress, and we look forward to sharing more details on our business progress in this country soon. The nature of modern warfare as seen in recent global conflicts is rapidly involving creating new demands for both defensive and offensive technologies OAS is in a unique position [indiscernible] accelerated upgrades and rigorous testing in real world combat environments.

We closed 2024 with significant deals involving key customers, with strong expansion potential in 2025 and beyond through government to government agreements and multimillion dollars opportunities in the global defense market, driving by the next generation warfare and cutting edge defense technology. Robotics is currently focused on fulfilling major military and defense contracts enhancing our products with next generation capabilities meeting defense specific operational needs, deploying our systems according to plan. Our initial platform, Optimus, stands out in the market for its maturities scalability and advanced capabilities. Unlike first generation door in a box solutions, that struggled with automated landing battery and payload swapping and fully automated data handling, Optimus has already surpassed these challenges. It operates autonomously even in disconnected environments without reliance on Internet connectivity or external networks. Our defense customers recognize Optimum as a scalable platform as we are actively collaborating to integrate advanced AI driven autonomy to make it truly unstoppable in mission critical scenarios. Iron drone radar has been tested and refined with real world operational feedback making it the most versatile and mature conduit one interceptor on the market today. We are continuously integrating it with other advanced defense systems and enhancing its features through I am confident that we will soon witness additional breakthroughs and new capabilities that will further strengthen our position as a leader in next gen autonomous defense technology.

During 2024, we managed to fulfill most of our business development targets, creating our marketing infrastructure in targeting regions and sectors. In The U. S. Market, American Robotics completed the establishment of its customer demonstration and training center at its new Maryland headquarters, supporting the introduction of Optimus and Iron Run radar to the defense public safety and critical infrastructure sectors. In addition, the OPTIMUS system was showcased through multiple Bivillos New York, Texas and Massachusetts, providing its ability to execute fully autonomous missions without an on-site pilot or visual observer. Our marketing activity at American Robotics is gaining traction and our customer pipeline is maturing. I'm happy to report today that we have received a purchase order from allowed U. S. Water utility based on the East Coast where we will deploy an Optimum system along with our Castwell Aerospace Awareness System. The Optimum system will be used to secure important water resources in support of local community and we believe this program could expand from here. American Robotics integrated the Casper system an advanced airspace monitoring solution combining active and passive detection technologies with air traffic situational awareness software. This system meets regulatory detect and avoid requirements enabling behind visual line of sight operations and fully autonomous drones missions.

Ambiguous waiver was achieved allowing for flights over people and moving vehicles further expanding American Robotics operational capabilities. We also executed a contract with the U. S. Coast Guard Maritime Emission Monitoring, supporting EPA Clean Port initiative at the Port Of Los Angeles and Long Beach. These milestones Robotics as a prime vendor for U. S. Federal agencies. In The Middle East, we have expanded our business footprint and continued our project in Dubai and Israel. Our Optimus networks in this region performing hundreds of flights every week completely autonomously 20 fourseven over populated urban areas. We are very excited to see this level of operational maturity in the Optimum system and we will soon have more news on scaling up our dual network in Dubai and additional locations. In Europe, we have partnered with Hara Sky and Sea Hostral Aerospace expanding our reach into key markets such as Germany and Slovenia. We conducted multiple demonstration of Optimus and Ionron radar for key customers and partners reinforcing a robotic growing market presence in the region. We recently announced the launch of our IRON1 demo team in Europe, and we are already seeing strong engagement and positive result which we believe will lead to important commercial activity in 2025.

We have also announced that Ondas and Vollatas Aerospace formed a strategic partnership to enhance border civilians utilizing advanced N1 technologies reinforcing OAS's role in security and defense applications. I would like to thank all of our teams in the robotics and American Robotics. I believe we are making very significant progress in the last year, and as 2025 started, we have witnessed big changes in the world, in the market and within our company. Every day, we see our systems getting better and conversations with more top customers. I am looking forward to sharing some more news with you soon. I will now hand over the call to Erik, so he can provide the outlook for 2025.

Thank you, Meyer. Let's now turn to our outlook. I am excited for Ondas and believe 2025 will see accelerated growth leveraging the momentum from our successes in 2024. So let me set that stage for you. Our key objectives at OAS include driving growth through the expansion of our ongoing Optimus and Iron Drone programs with our current military and public safety customers ensuring successful deployments and further customer adoption. We also plan to expand new customer programs aim to secure additional military customers through both government to government channels and direct marketing. [indiscernible] Similarly, are focused on leveraging our dual use capabilities across critical sectors to capture new customers in The U. S. And in Europe. To support this growth, we will continue invest in scaling our operating platform with a focus on supply chain and physical services and leveraging our new partnership with Palantir to enhance efficiencies through AI. At Ondas Networks, we are committed to building strategic value by advancing private wireless networks for critical rail operating and safety systems. As Marcus highlighted, that entails driving the 900 megahertz build out as well as broadening the use cases at the edge which will include additional applications on 900 megahertz as well as the other including the new systems such as NGHE at four fifty megahertz.

Given the building momentum at Ondas, we expect to generate record revenues for 2025. This is supported by a significant backlog we bring into the year and visibility we have on the order intentions of customers. Indeed, our business development pipeline is expanding and we also expect a record year for bookings and backlog growth.

For the full year, we expect to generate $25,000,000 in revenue across Ondas Dust business units. We believe this is a conservative forecast. For OIS, we are raising our revenue outlook to at least $20,000,000 as compared to our initial $15,000,000 to $18,000,000 given at our OAS Investor Day in September 2024. We want to carefully manage expectations at Ondas Networks due to the lack of tangible orders in hand today. For now, we have a conservative outlook expecting just $5,000,000 in revenue for 2025 Of course, these numbers would change dramatically to the upside with the network build out which I believe is inevitable. For some more context on the outlook, when sharing targets, our objective is to provide as much transparency as we can when setting expectations on financial performance. There is always risk in providing revenue targets but it is important to help our investors evaluate both our potential and performance. Simply put, we believe these revenue targets are conservative. We are targeting huge markets with proprietary and valuable platform technologies. We're engaging with various customers at both OAS and Andes Networks who could enter into and expand programs around our platforms that could substantially increase this outlook.

Of course, that is our goal and I hope we will be able to do that in 2025. With a strengthened leadership team and validated market traction, I believe we are poised for significant growth supported by a robust pipeline and a focus on operational scale. We are focused on delivering for our customers and for you, our investors. To sum it up, we are executing our vision to scale Ondas I believe 2025 will be a breakout year. With that said, let's see if there are any questions. Operator?

We will now begin the question and answer session. To assemble our roster.

The first question comes from Glenn Mattson with Ladenburg Thalmann. Please go ahead.

Yes. Hey, guys. Thanks for taking the question and congrats on the progress at OAS. Nice to see the $10,000,000 of backlog coming into the year. Can you just give us some more color on your visibility into the number you provided at least $20,000,000 a couple of things like just the timing of how you see that kind of when you expect orders to come in in order to get them shipped and out this year? And then also generally the mix that you've envisioned between Optimus and Iron Drone?

Sure, Glenn. Thanks for the question.

So bringing the $10,000,000 into this year, we expect that to be realized and recognized in revenue. In the first in second quarter? And we are actively engaged with various customers both on the military side, new customers that is for new programs with Iron Drone as well as customers who on Iron Drone and Optimus who are looking to expand programs and that specifically is with our major military customer in The Middle East and of course our public safety customer in Dubai.

On the Dubai customer, can you give us an update on you shipped any units in Q4 and maybe just a general sense of how many you expect in 2025 or if yes, I'm not able to share specific details on that, but there's an active and advanced dialogue specifically on that. That. We didn't ship units in Q4. But I guess I won't forecast the Q1 specifically for that just yet.

Okay, great. I'll jump in the queue and let someone else go. All right.

The next question comes from Matthew Gillinko with Maxim Group. Please go ahead.

Hey, good morning. Thanks for taking my questions.

I wanted to maybe check-in on the first responder opportunity in The U. S. Market. How is that developing? And how are any I guess changes to access to drones how is that impacting first responder interest in the Optumus platform? Thank you, Matt. So there is quite a bit of interest in Optimus specifically, but of course, as we've shared on recent calls and I know you're observing in the market, demand for DFR programs generally across The U. S. Is growing very rapidly. And we do expect to participate. We highlighted at end of last year that we had a demonstration with a public safety customer, a major one, That was and then in the first quarter of this year, we have performed a pilot program for that. It was a major pilot program, which was successful. And I guess I need to leave it at that. We're going to see from here how things progress with that customer. And commercial orders and things like that.

Got it. All right. And just as my follow-up, I guess it wouldn't be a conference call if we didn't ask about U. S. Tariff posture and how that might influence your ability to deliver product and how it might affect costs. So just curious how how you are positioned against some of the tariff issues and how nimble you can be to kind of offset some of that?

Well, I don't see it having a major impact for us.

We are not sourcing much if anything really from China directly. And so I think that's a smart answer Matt. At the same time, I do say policy, if I blow it up a little bit more, I think policy particularly the Trump administration is going to be proved to be extremely supportive for Western and U. S. Producers like us. So I do think that's going to be a nice tailwind for us really in the near term. [indiscernible] The next question comes from Mike Lattimore with Northland Capital. Please go ahead.

Hi. This is Aditya on behalf of Michael Latimore. Could you give some color on the gross margins for this year?

Yes, sure. So we're expecting gross margins to recover this year, specifically driven by OAS. And improved volumes.

So if I'm looking at the first couple of quarters, you should probably look at them be in the 40% range. And I think they can get to 50% or better as we're moving through the second half. Got it.

And could you also give some color on how many drones you have in the inventory and how much do you expect to manufacture this year?

I don't want to share those details. Thank you.

The next question comes from Carter Mansbach with Forte Capital Group. Please go ahead.

Well, that was slow. Good morning, gentlemen. Congrats on all that you've achieved and look forward to '25.

I need some clarity on Palantir.

So it seems that you put out a press release yesterday with a partnership. You doubled and tripled down on that during this call. And it seems there's confusion as to the meaning of partnership. So clearly, Palantir gave you permission to put out that press release. It reads as if you're utilizing their product, not partnering with them. So please explain to me and I guess shareholders why it's considered a partnership and how are they actually a partner? Thank you.

Sure. So first of all, as you're well aware, Palantir has vast capabilities. And that range those capabilities range from enterprise resource planning systems And of course, Foundry AI is one of the key pieces or services they provide there. But also includes tools around making autonomy more robust And they have tools, data analytics, for example, that can be combined with the data we collect via our sensors that provide actionable intelligence. So in that sense, sense, Palantir also serves as an integrator of capabilities where they can take complete advanced AI enabled solutions directly to customers. So today for us the first step is really to integrate Foundry AI I do believe longer term that we will see this evolve with Palantir AI being embedded in the product and solutions we develop on behalf of customers in terms of technology roadmap. And this partnership does call for some elements to that that we're likely to be able to share.

In the future.

Okay, great. Thanks guys. Best of luck. Thank you.

And we have a follow-up from Glenn Matson with Ladenburg Thalmann. Please go ahead.

Yes. Just on the network side, can you just could someone just comment about the the level of significance that the new administration is putting on on whatever timelines that were previously in place Obviously, it seems like I believe it was April 2026, but there was a deadline to meet some sort of FCC requirements.

Just what the status of that is? What the general thought of it is of how the administration is going to enforce that or extend that or just thoughts around that would be great. Thanks.

Yes. Let me take a crack at it and I'll see if Marcus has anything to add. So firstly, we let the railroad speak to the deadlines. And as Mark has highlighted, the AAR has publicly said they expect to meet their meet the deadlines. And I'd highlight there's a couple of deadlines that matter. Firstly, there's September 2025 where they have to they've agreed to to retire the legacy network and that spectrum is being returned back to the FCC for to be reused elsewhere. And then there is also what is known as utilization requirements. So they're required to utilize a spectrum or in that instance if they don't, the rules typically would require the spectrum to be the new spectrum on talking about the greenfield also known as the A block to be returned to the FCC. So that's simply it. I do believe that well, let me leave it at that. I don't want to speculate on what the administration or the FCC thinks about this. But Marcus, would you add anything? I mean perhaps you can share a bit more the two twenty and the 900 megahertz, the redundant network strategies and things like that, as well as the other use cases in addition to CTC and PTC backup on 900.

Yes, certainly. Thanks, Eric. So really the administration is new still. Although probably seems like it's been a long time already for some people. But still I think you're still shaking out at the FRA at the FCC and I think as Eric said, speaking for them in terms of what actions they will take and when they will enforce decisions. I think that's that's probably premature and they'll have the agencies have to speak for themselves. Now I do think the railroads are becoming more sophisticated in terms of how they look at their overall communication strategy. The idea of creating redundancy between the two twenty and the four as sorry, the two twenty and the 900 megahertz networks, I think that's a very real consideration for many of the Class 1s. They do realize they have to upgrade their communications capabilities. They want to move away from single points of failure. And we're supporting them in those efforts. And stated earlier in the presentation, again, those efforts are very real We have a number of trials out on our pilot projects out on some of the Class 1s. And as those programs close out, we expect to see network wide rollouts of those capabilities.

Okay, great. Thanks the color. And I guess we'll see how the look forward to further updates as the year progresses. Thank you.

Yes. Thanks, Glenn.

And we have a follow-up from Matthew Galinko with Maxim Group. Please go ahead.

Hey, thanks. Can you maybe give us a refresh here on the competitive environment for drone in the box maybe domestically and international more on the Optimus side?

The question was on the competitive environment.

Yes.

Sure. So I'll start by just discussing the capabilities and I think we would highlight that Optumis has unique capabilities around persistent availability. And functionality. With the persistent availability being particularly important for DFR applications where critical security is obviously critical. And that's of course is enabled by the our ability to swap batteries So the drone will your mission comes back, it's available immediately for the next mission. It's also critically important that the dock itself is industrial grade. And I think that's where we are able to work in very difficult [indiscernible] differentiator. Otherwise, I think you'll see in The U. S. Skydio obviously has a very competitive door in the box capability. You'll see DJI as well with the design capabilities of the Skydio system in TGI are fairly comparable. And I think that's the two that we see the most.

Got it. Thank you. And just as a follow-up, getting on rail side, you brought up the scenario of I guess, the railroad looking to eliminate single points of failure in their communications. Does that open up any avenue for competitors to [indiscernible] to sort of work their way into the network now? Or do you still feel as confident as you were on our last update that you're sort of in a prime position?

No, I don't we don't see any new 16 for the private wireless networks.

Was there a follow-up, Matthew?

No, that was it. Thank you.

The next question comes from Craig Scott with CSR Consulting. Please go ahead. Hey, Eric. Good job. Nice call. I'm glad to see the progress being made.

Could you just take us through a little bit of the cash position and know you have about $30,000,000 on the books at the end of the year.

And what you foresee as a slowdown in cash burn or any possible need for more capital in 2025?

Sure. So thank you, Craig. And we feel very good about our cash position for 2025. And of course, as we're moving through the year and seeing the revenue ramp, we're going to realize some operating leverage that will bring the burden down progressively. So we would expect sequential growth in revenues for each quarter this year. And for gross profit as well. So cash burn will be declining.

Thank you.

This concludes our question and answer session. Would like to turn the conference back over to Eric Brock for any closing remarks.

Well, thank you. And as we wrap up, I do want to give you just a preview that we do expect to see an article run tomorrow in breaking defense.

This article is going to provide an update on our activity with Iron Drone and Optimus. It shares context on the progress we are making in military and homeland security markets. So please keep your eyes open for that. With that said, we appreciate you spending time with us today.

I will reiterate that we expect a great year in 2025 and I do look forward to keeping you informed of our progress. So hope you have a great day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.