Ondas Inc. Common Stock 2026 Q2 Earnings Call

Please go ahead. Thank you, operator, and good morning, everyone.

We appreciate you joining us today and your continued interest in Ondas. I am 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 Ondas Autonomous Systems, Meir Kliner, President of Ondas Autonomous Systems, and Ryan Hartman, CEO of Ondas Sentinel. We have a lot to cover today, so we will dive right in. Let us turn to today's agenda. I will 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 One Ondas. Neil will then review our second quarter financial results, balance sheet, and the investment 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 systems solutions. I will close with our updated financial outlook and management priorities for the next phase of Ondas' 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. 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. 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 One Ondas is all about. It is how we create value for customers, employees, partners, and shareholders. It is how we win, and Ondas 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 million-$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 DZYNE and Cyberhawk, 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 World View and Mistral, as well as approximately $29 million of growth investment across corporate development, Ondas 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 equivalents, restricted cash, and short-term investments.

Even after deploying $325 million for new acquisitions in Q3, we retain 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 scaled 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, Ondas 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 Ondas 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 Ondas 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, Ondas 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 Ondas Autonomous Systems businesses.

Sentrycs 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 Sentrycs 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 Ondas is winning as the long-term investment cycle kicks into high gear. Airobotics 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 de-mining 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 U.K. 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.