Ondas Holdings Inc. (ONDS) Earnings

Management highlights

- Strategic Positioning & Portfolio Expansion * ONDIS executes a "core plus strategic growth" strategy to build a scaled global multi-domain unmanned and autonomous systems platform serving defense, security, industrial, and critical infrastructure markets, spanning air, ground, and stratospheric operations. * Completed the April 2026 acquisitions of Worldview (stratospheric ISR) and Mistral (ISR and strike capabilities), filling strategic gaps and accelerating platform scaling. Launched Anberg, a Germany-based joint venture with Heidelberg, focused initially on Germany and Ukraine with plans for broader European expansion, to meet regional defense modernization and sovereign manufacturing requirements. * Announced a strategic partnership with Palantir to integrate Palantir's AIP software stack, advancing mission autonomy and multi-domain ISR capabilities while aligning on joint go-to-market and customer opportunities. * Expanded to 15 global offices, active deployments in over 45 countries, and more than 1,000 global employees, supporting engineering, manufacturing, customer delivery, and field support at scale. - Customer & Pipeline Momentum * Post-acquisition total backlog increased to more than $450 million, diversified across counter UAS, ISR, unmanned ground vehicles (UGV), and loitering munition and strike (LMS) segments, with geographic diversification across the U.S., Middle East, Europe, and Asia. ONDIS holds positions in key strategic programs with a combined total potential of more than $1.6 billion. * Active global pipeline totals $4.3 billion in opportunities across more than 45 submissions, with $1.8 billion in the U.S. and over $2 billion in Europe, reflecting growing demand for integrated autonomous defense and security technologies. - New Product Development * Launched IronWave, a combat-proven, multi-layered systems-of-systems robotic solution built on a mobile UGV platform that integrates counter drone detection/neutralization, offensive ground/aerial effectors, and AI-assisted command and control for frontline maneuver forces. Initial IronWave units were delivered and are operational in active combat environments in Q1 2026. * Developed Skyweaver, an adaptive agentic AI mission autonomy layer powered by Palantir technology that automates the full intelligence TCPED (tasking, collection, processing, exploitation, dissemination) cycle across all ONDIS platforms, enabling fused multi-domain intelligence delivery. Initial Skyweaver integrations across the ONDIS portfolio are targeted for Q4 2026. - Capital & M&A Strategy * Ended Q1 2026 with $1.48 billion in cash, cash equivalents, restricted cash, and short-term investments, with virtually no debt, providing significant financial flexibility as a competitive advantage. * Current M&A pipeline represents over $500 million in potential annualized revenue, with ONDIS having capacity to support up to $4.2 billion in additional M&A activity, which could add $1 billion to $1.8 billion in incremental annualized revenue assuming 2.5-4x 2027 revenue multiples and a 2:1 equity-to-cash structure. Management maintains that acquisitions are strategically and financially accretive, strengthening the broader platform through technology, talent, and customer access.

Guidance

- Full year 2026 revenue guidance was raised to at least $390 million, up from the prior outlook of $370 million, driven by stronger than expected Q1 performance and growing backlog visibility. - Product company level EBITDA profitability is expected to continue through 2026 and beyond, with potential quarterly fluctuations based on product mix and investment priorities. - OAS level EBITDA profitability is now expected to be achieved in Q1 2027, six months ahead of the prior target date. - Operating expenses are expected to continue increasing in H1 2026 to support investments in leadership, infrastructure, systems integration, and scaling for a larger enterprise. Adjusted EBITDA losses are expected to improve meaningfully in H2 2026 driven by operating leverage. - Long-term adjusted EBITDA margin targets are 25% to 30%, to be achieved as the business scales, with near-term priorities focused on market capture rather than immediate peak profitability.

Segment performance

ONDIS operates through the Ondas Autonomous Systems (OAS) segment, which delivered all $50.1 million in Q1 2026 revenue. This represents 100% of total company revenue, 1000% year-over-year growth, and 66% sequential growth over Q4 2025. Within OAS, key sub-segment performance includes: Aerobotics delivered 260% year-over-year revenue growth driven by expanded Iron Drone and Optimus deliveries and new border infrastructure programs; Centrix captured $36 million in new orders through April 1, 2026, exceeding the $30 million in full-year 2025 revenue; 4M Defense captured $80 million in tender awards with $25.8 million in initial orders, up from just $8 million in full-year 2025 revenue. Gross profit for the total OAS segment was $24.7 million in Q1 2026, with a 49% gross margin, up from 35% in the prior year and 42% in Q4 2025. Adjusted EBITDA for the overall company was a loss of $10.9 million, compared to a loss of $7.5 million in the prior year, while product company level EBITDA profitability was achieved in Q1 2026, two quarters ahead of internal plans.

Risks & headwinds

- Reported net income is subject to significant non-cash volatility from the required mark-to-market accounting treatment of classified warrant liabilities, which creates non-cash gains or losses that do not impact cash flow or core operations but will continue to drive variability in GAAP earnings. - Operating in active conflict regions such as the Middle East creates operational challenges, including employee deployments for military service that can disrupt execution, though the ONDIS team has experience operating in these environments and has adapted to maintain progress. - Large backlog program conversion to revenue is subject to uncertainty, and customer order timelines can vary, making near-term revenue cadence difficult to predict precisely. - The company is investing heavily ahead of growth to capture market share, which means near-term profitability will remain lower than peak potential levels as the business scales. - Win rates for the $4.3 billion active opportunity pipeline are uncertain, as each program has unique competitive dynamics and varying probabilities of award.

Analyst Q&A

• Q: How should investors interpret organic core growth for ONDIS, given the strong 260% year-over-year growth reported for Aerobotics?

  A: Management confirms core organic growth is very strong. Pro forma full-year 2025 revenue for all companies owned at the end of 2025 was $90 million, against an initial 2026 guidance of $175 million, implying 100% core growth at the start of the year, and the company is already outperforming that target. Sequential Q1 2026 growth over Q4 2025 was 32.8%, further supporting strong underlying core momentum.

• Q: How does the large backlog, particularly the sizable Mistral UVision contract, translate into 2026 and future revenue?

  A: The program is well-funded with clear customer demand for reorders, but conversion timing remains uncertain. Management builds its guidance conservatively for large backlog programs, and expects strong sequential quarterly revenue growth through Q2, Q3, and Q4 2026, but cannot provide precise near-term cadence at this stage.

• Q: What is driving recent gross margin strength, and what are long-term margin targets?

  A: Gross margin strength partially comes from customized integrated systems-of-solutions that command higher value, and the company expects margins to continue improving as it adds higher-margin software content to its portfolio. Gross margins are expected to remain volatile quarter-to-quarter in the near term as the business scales, but the company targets long-term gross margins above 50%, trending toward 60% as scale increases, with a long-term adjusted EBITDA margin target of 25-30%. Near-term priorities focus on market capture rather than immediate profitability to build a larger long-term enterprise.

• Q: How has recent conflict in the Middle East impacted ONDIS operations and demand, and what is the revenue capacity of Mistral's new 46,000 square foot U.S. facility?

  A: Operating in active conflict zones creates challenges, including employee call-ups for military service, but the team is experienced in this environment and has continued to execute while prioritizing urgent customer needs. Strong demand growth has been seen across the region, though most near-term impact is prioritization of urgent orders rather than immediate incremental revenue. For the Mistral facility, management did not provide an exact revenue capacity number, but confirms the space can be filled and expansion is planned, with initial localization focused on counter drone and ground robotic systems originally developed in Israel.

• Q: How does Skyweaver relate to existing DoD platforms like Project Maven, and how does the outcome-based pricing model change deal sizes?

  A: Skyweaver is an agentic AI layer that fuses intelligence across ONDIS's multi-domain platform portfolio, producing an integrated reasoned intelligence product that is then disseminated to end users via the existing Maven architecture; Skyweaver complements Maven rather than competing with it. The integrated multi-domain offering allows ONDIS to bid larger single contracts that cover multiple ISR domains instead of separate single-platform contracts, increasing overall deal size while lowering combined costs and expanding margins for the company.