Ondas Holdings Q3 2026 Earnings Call Transcript

Ondas Holdings (NASDAQ:ONDS) reported third-quarter financial results on Thursday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

Ondas Holdings reported a record third quarter revenue of $167.5 million, a 16x increase from the prior year and nearly double from Q2, with expectations of $250 million in Q4 and a full-year target of at least $550 million.

The company highlighted strategic initiatives, such as Regna AI for defense applications, and acquisitions like Design and Cyberhawk to enhance capabilities in U.S. defense and critical infrastructure.

Ondas Holdings’ backlog grew to approximately $835 million, up 36% sequentially, providing significant visibility across its market segments, and expects to achieve adjusted EBITDA profitability by Q3 2027.

Key product developments include the Ultra platform, offering a low-cost ISR solution, and Ion Strike, a counter-UAS system with significant demand, both poised to become major growth drivers.

Management emphasized strong cash reserves of $820 million to support growth investments and acquisitions, and they are focused on expanding production capacity and scaling operations to meet increasing demand.

Full Transcript

OPERATOR

Welcome to the Ondas Holdings third 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 one on your telephone keypad. To withdraw your question, please press star then two.

Before we begin, the company would like to remind you that this call may contain forward-looking statements. While these forward-looking statements reflect Ondas’ best current judgment, they are subject to risks and uncertainties that could cause actual results to differ materially from those implied by these forward-looking statements. These risk factors are discussed in Ondas’ periodic SEC filings and in the earnings press release issued today, which are both available on the company’s website.

Ondas 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, Ondas 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 directly 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 conference over to Eric Brock, Chairman and CEO. Please go ahead.

Eric A Brock (Chairman)

Thank you, operator, and good morning, everyone. We appreciate you joining us today and your continued interest in Ondas Holdings. I’m pleased to be joined this morning by key members of our leadership team. Neil Laird, our Chief Financial Officer, and I will take you through the formal presentation this morning. Robert Patrick Huston, Ondas Holdings COO, and General Counsel Oshri Lugasi; Co-CEO of Ondas Autonomous Systems, Mayor Kleiner; President of OAS; and Ryan Hartman, CEO of Andes Sentinel, also joined us today and will be available during the Q&A. 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 third quarter performance and the continued execution of our Core Plus strategic growth plan. We will also share important context on Regna AI, the new initiative designed to capitalize on our growing expertise in building valuable software tools, leveraging sovereign AI capabilities on behalf of U.S. and Allied defense ecosystems. Neil will then review our third quarter financial results, balance sheet, and the investments we are making to support the significant growth we expect for Q4 and throughout 2027.

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. I’ll close with our updated financial outlook and management priorities for the next phase of Ondas Holdings’ growth. We will then open the call for questions. If there are three key takeaways we want analysts and investors to leave this call with, they are: first, we are establishing a scaled global business with a strong foundation for sustained, long-term organic growth.

Second, we have multiple opportunities to drive outsized growth, including Ultra Ion Strike, Regna AI, and others with the potential to meaningfully accelerate our growth trajectory. And third, we are laser-focused on rapidly scaling production and deployment capabilities to capitalize on accelerating demand for our solutions. I am pleased to begin by highlighting the significant progress we made against our long-term business objectives during an exceptionally productive third quarter. Our performance and industry fundamentals continue to strengthen, creating what we believe is a compelling opportunity for Ondas Holdings investors. During the quarter, we expanded our capabilities across the value chain, from complete autonomous systems to mission-critical components and enabling technologies.

The acquisitions of Design and Cyberhawk strengthened our position in U.S. defense and critical infrastructure, adding important technologies, services, customer relationships, and growth opportunities. Insignito Autopia and Caribou Labs added advanced acoustic sensing with resilient communications, remote operations, and navigation capabilities for GPS-denied environments. The acquisition of Gate, together with the pending acquisitions of Steme and Iran, is accelerating the expansion of our supply chain and production capacity.

Steme adds airframe engineering and manufacturing, Gate adds mission-critical electronic fusing and safe-and-arm technologies, and Iran will add multidisciplinary engineering and high-volume manufacturing capabilities. By integrating these assets, we are addressing supply chain bottlenecks, reducing reliance on third parties, and improving product performance, cost, margins, and delivery. We are focused on building the industrial capacity required to deliver for customers at scale and capture this market opportunity for our investors.

Execution of our core and strategic growth plan is translating directly into results. Third quarter revenue reached a record $167.5 million, more than 16 times the prior-year period and nearly double Q2. We expect another significant sequential increase in Q4 with revenue above $250 million. We are raising our full-year 2026 target to at least $550 million and introducing a 2027 target of at least $1.1 billion. That outlook reflects broad-based growth across our core businesses, backlog conversion, and emerging platforms moving into scale deployment.

Order momentum remains strong. Backlog reached approximately $835 million at September 30, up 36% sequentially and more than 12 times the Q4 2025 level, providing meaningful visibility across aerial security, persistent intelligence, precision strike, and autonomous ground systems. We continue to invest in the infrastructure needed to convert that demand into revenue. Q3 included approximately $37 million of discretionary growth investment across corporate development, Ondas Holdings Capital, Regna AI, and the operating capabilities required to scale production, deployment, field support, and sustainment.

Importantly, growth OPEX is moderating as revenue and gross profits scale, supporting meaningful operating leverage. With approximately $820 million in cash, cash equivalents, restricted cash, and short-term investments at quarter end, we remain well-capitalized to execute. Taken together, these results show that our strategy is working and position Ondas Holdings for continued growth through Q4 and into 2027. This chart provides a simple visual of the transformation underway in our financial performance. As we have highlighted in the past, we believe this is what the early stages of an S-curve adoption cycle should look like. Technology adoption curves are generally not linear. Once platforms are validated, customer requirements are established, and programs move from development and testing into scale deployment, revenue can accelerate rapidly. Our strategy is designed around that dynamic.

We are not only expanding the technology portfolio; we are building the production, supply chain, deployment, field support, and sustainment capabilities required to support this growth at scale. Importantly, the growth shown here is not simply the result of acquisitions. Our underlying businesses are also expanding rapidly within the Ondas Holdings platform. As the next slide demonstrates, strong organic growth remains a major driver of our financial model and the economic value we are creating.

Organic growth at Ondas Holdings was 64% in Q3 on an apples-to-apples basis with the prior year. We believe very few companies in our sector are growing at this rate. Importantly, we expect organic growth to accelerate further in Q4, reaching at least 75% year over year on a pro forma basis based on our guidance. Simply put, our 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 Holdings is building, providing working capital, global customer relationships, expanded sales capabilities, production resources, supply chain support, and field services. On the right, we show some recent key acquisitions that are growing faster now that they have the benefits of being integrated into the broader Ondas Holdings platform. Sentrix continues to benefit from strong demand for its cyber-over-RF counter-UAS systems, with Q3 pro forma revenue up more than 3.5x year over year.

We now expect to achieve our original 2027 bookings target in 2026, supported by strong counter-drone demand and new distribution channels. 4M generated nearly 3x its prior-year Q3 revenue and is positioned to outperform our original 2026 model by 2.3x, reflecting improved customer access, operating support, and Ondas Holdings’ international reach. Meanwhile, Rotron converted strong Q2 order growth into 250% year-over-year revenue growth in Q3, and Mistral began producing and shipping against the LUS IDIQ, driving 136% organic growth in Q3.

We expect this momentum to continue into Q4 and 2027. This performance is not isolated to one company or market segment. As the data continues to show, Ondas Holdings is seeing strong organic growth across multiple businesses, increasingly validating both our operating platform thesis and our execution. We are excited to share some details around Regna AI, our new sovereign artificial intelligence company founded by Ondas Holdings in response to one of the most important opportunities in defense technology—that is, bringing advanced AI directly into mission-critical operations. Regna AI develops mission-specialized AI models that governments and defense partners can own, control, and securely deploy. These models transform sensitive operational data into actionable intelligence, supporting ISR, threat detection, counter-UAS, and autonomous mission orchestration.

Our approach combines NVIDIA’s open-weight model ecosystem, providing the AI foundation, along with Palantir software platforms, which enable secure integration, training, and deployment. To this, Ondas Holdings brings the operational advantage with deployed defense systems and mission expertise around multi-domain ISR, autonomy, sensor fusion, and command and control. Our target customers include the U.S. Department of Defense, allied governments, and defense companies seeking sovereign AI capabilities that operate securely across classified environments, sovereign clouds, and the tactical edge.

We believe Regna AI can be a significant value creator for Ondas Holdings investors. First, Regna AI creates an opportunity to turn a development cost center into a valuable business by leveraging investments Ondas Holdings is already making in sovereign AI. As Regna AI attracts customers and external support as a standalone company, we believe our ownership can become an important source of long-term value for Ondas Holdings shareholders. Second, Regna AI expands the commercial opportunity beyond Ondas Holdings’ own platforms.

These capabilities can serve governments, defense companies, and other technology providers, opening new software and services revenue opportunities. External customer revenue and dedicated growth capital could support a broader development program without relying exclusively on Ondas Holdings to fund it. Third, Regna AI strengthens the core Ondas Holdings portfolio. Our deployed systems and mission expertise provide a practical foundation for development, while Regna AI’s mission-specialized models can advance intelligence, autonomy, and command and control across our ISR, counter-UAS, and unmanned systems.

The objective is to create value in both directions—a growing AI business and more capable, differentiated Ondas Holdings solutions. Ultimately, we believe the future of defense belongs to companies that combine intelligent software with autonomous physical systems. Regna AI positions Ondas Holdings to lead in both and creates another powerful engine for long-term shareholder value. This concludes my introductory comments, and I will now hand the call over to Neil, who will review our third quarter financial performance and balance sheet.

Neil Laird (Chief Financial Officer)

Thank you, Eric. The third quarter showed record revenue and represented another important step forward in demonstrating the scalability of our financial model. Revenue increased to approximately $167.5 million, up 100% sequentially and more than 16 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 64% year-over-year, reflecting strong execution across our underlying businesses.

Combined with approximately $214 million of new orders during the quarter and $507 million in the first nine months of the year, we believe these results demonstrate that customer demand remains exceptionally strong. Across our platform, gross profit was $36.5 million while adjusted gross margin, which excludes the non-cash items of stock-based compensation expense, amortization of acquisition-related intangible assets, qualifying acquisition-related employee costs, and inventory step-up, was 34.8%. As we previously communicated, we expected gross margin to decline sequentially in Q3, reflecting a higher concentration of revenue from lower-margin precision strike programs, including the LUS program at Mistral.

Gross margin saw some modest further pressure from temporary factors including production inefficiencies associated with scaling the LUS program as well as further swings in mix. Operating expenses increased to approximately $226 million from $199 million in the prior quarter. To better understand the business, we encourage investors to look at our underlying adjusted cash operating expenses, which amounted to approximately $119 million, up from $88.8 million in the prior quarter. This includes normal operating expenses as well as discretionary growth investments and compensation to support the continued transformational growth curve we expect over the coming quarters and years.

The third quarter saw a moderation in the growth of OpEx despite the addition of large acquisitions such as Design. In the third quarter, we continued to invest for growth with R&D expense of $61.6 million, up $30 million sequentially, driving future product innovation and integration. Adjusted EBITDA showed a loss of $59.7 million, increasing $13.4 million sequentially. Our OpEx was roughly in line with our expectations, and this higher loss was the result of our temporary gross margin impacts. We expect gross margins to remain in the mid-30% range in the Q4 period due to continued mix of lower-margin revenue.

That said, we expect a rebound to historical trends in 2027, as Eric will outline later in more detail in our Outlook section. We believe the combination of higher revenue and improving gross margin and more modest OpEx growth will help us show meaningful operating leverage in future periods. Indeed, we expect a significant reduction in adjusted EBITDA losses in Q4 and a steady improvement going forward. We have pulled forward our expectation for adjusted EBITDA break-even on a company-wide basis to Q3 2027 from our prior assumption of Q4 2027 based on our expectations for revenue, gross profit, and expense growth.

To conclude, we believe we are executing well against our long-term business plan. Although adjusted EBITDA declined in the third quarter, we expect a significant improvement in the fourth quarter and believe we remain ahead of plan on our path to company-wide profitability in 2027. Turning to the balance sheet, which remains strong and provides us with significant advantages, we ended the quarter with approximately $820 million in cash, cash equivalents, restricted cash and short-term investments compared to $616 million at the end of 2025 and approximately $1.4 billion at the end of Q2.

Included in our total assets are investments in unaffiliated public and private companies totaling $65 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 deployed approximately $431 million of cash to complete key acquisitions which have added significant scale, technology capabilities, talent and growth opportunities and are important elements for our near-term and long-term growth outlook.

Our balance sheet allows us to invest aggressively in our operating platform and support larger customer opportunities. As an example, we saw inventory grow to $111 million from $59 million sequentially to support our growing business. Last quarter we highlighted our confidence that the trajectory of the business has never been stronger. Our performance in Q3 only enhanced that conviction. Our focus now turns to capitalizing on the tremendous growth opportunities ahead of us, made possible by the exceptional work our team has done throughout the year to build the foundation, capabilities, and market position needed to capture them. Looking ahead to Q4 and 2027, we expect substantial growth to continue with meaningful operating leverage emerging as we scale the business.

With that, I’ll turn it back to Eric.

Eric A Brock (Chairman)

Thank you, Neil. As Neil noted, adjusted cash operating expense increased to approximately $119 million in the third quarter, driven by two principal factors. First, our strategic M&A program added new businesses to the Ondas platform. These companies bring operating costs, but they also contribute meaningful revenue and gross profit, established customer relationships, contracted backlog and expanding pipelines. We believe these additions materially strengthen Ondas’ earnings power and long-term growth potential and should be viewed as investments in scale, not incremental overhead.

Second, we continued investing in the growth platform at both Ondas Inc. and across our operating businesses at Ondas Inc. In addition to our underlying finance, accounting and governance expenses, we invested $27.6 million in growth OpEx related to corporate development, Ondas Capital ecosystem and partner initiatives, and the broader operating platform, including our work with Palantir and initial investments in Regna AI. In aggregate, the investment in growth OpEx at the Ondas Inc. level was slightly lower than in the second quarter. At the operating platform level, growth OpEx for OAS leadership and infrastructure totaled $9.5 million, up from $6 million as we continued building the leadership and capabilities required to scale. In total, we classify approximately $37 million in Q3 OpEx related to growth initiatives. These are deliberate, front-loaded investments designed to integrate acquisitions efficiently, expand our global commercial reach, scale supply chain and production, and provide the field support, sustainment and services a much larger business requires.

We are building the operating platform not for the Ondas of today, but for the significantly larger company we expect Ondas to become. Apart from planned investment in Regna AI, we expect growth OpEx to continue to moderate in the fourth quarter and into 2027. Because much of this spending is discretionary, rising revenue and gross profit should create meaningful operating leverage as we scale. Let’s now turn to our growth and operational update. I will review the continued expansion of our multi-domain platform, recent contract awards and the strong demand developing across our four strategic market segments. We will also discuss the progress we are making to scale Ultra and Ion Strike, expand our supply chain and production capacity, and build the global operating infrastructure required to deliver for customers at scale. Ondas has built a deep, differentiated solutions portfolio across the four strategic market segments shown: Aerial Security, ISR and Persistent Intelligence, Precision Strike, and Autonomous Ground Systems.

In Aerial Security, we provide technologies to detect, identify, track and defeat threats across the full counter-drone kill chain. Our ISR and Persistent Intelligence portfolio provides multi-layer surveillance from the stratosphere through long-endurance airborne platforms and down to the tactical edge. In Precision Strike, we are delivering affordable, autonomous loitering effects aligned with the growing demand for scalable mission-ready mass, and in Autonomous Ground Systems, our portfolio includes robotic ground platforms supporting demining, engineering, logistics, border security and operations in contested environments.

Supporting all four segments is an expanding portfolio of AI-enabled software and command-and-control capabilities, the Unified Command Core connecting sensing, decision-making, autonomous operations and mission execution across domains. Across these four segments, we are increasingly focused on integrating our technologies and solutions while investing in internal development to expand our capabilities, enhance our offerings and create new opportunities for growth.

Each of these four segments addresses significant global markets, supporting a strong, sustainable organic growth trajectory with opportunities for outsized growth that could meaningfully accelerate our business. Beyond the core, we continue to show solid order activity, highlighted by some of the key awards we have received since June 30th shown on this slide. This order activity is diversified across all four target markets—Aerial Security, ISR and Persistent Intelligence, Precision Strike and Autonomous Ground Systems. It also reflects a growing, increasingly diverse set of customers, geographies and mission requirements. Our newly acquired businesses are contributing important contract wins as we expand their access to customer relationships, partners and sales channels across Ondas.

Examples include U.S. Department of Defense activity involving Ultra, Dronebuster and Ion Strike, together with significant orders for Gate and Braun. These wins demonstrate the breadth of demand across both complete systems and mission-critical components. We are demonstrating increasing leverage from our expanded sales organization, customer access, partner network and commercial infrastructure. We are pleased with our progress and remain focused on achieving even greater results.

Our focus is sustaining and accelerating this order capture through the remainder of 2026 and beyond. Here we highlight our backlog as well as the global nature of our current and future revenue outlook. Our backlog now stands at $835 million and is up 36% sequentially, reflecting both newly acquired businesses in the quarter and strong organic order capture across the Ondas portfolio. Our backlog is diversified across both market segments and geographies, providing meaningful revenue visibility and reducing dependence on any single product, customer, program or region.

That said, we have made it a point to grow the U.S. business given the large, long-term domestic opportunity, and that focus is paying off as we highlight here that the U.S. represented more than 50% of total revenue in Q3. We expect to see a growing contribution from the U.S.; however, it’s worth highlighting that our customer base is more diversified globally than many peers, which provides stability during uncertain budget periods in the U.S. It’s also important to highlight that Ondas’ backlog consists of customer orders and awarded programs rather than the broader unfunded opportunity pipeline.

Our immediate priority is execution—delivering against this backlog, supporting customers, and converting a meaningful portion of these orders into revenue during the fourth quarter of 2026. At the same time, we remain focused on replenishing and expanding the backlog organically through continued pipeline conversion. Despite a large revenue outlook for Q4, we continue to expect our backlog to grow as we exit 2026. Let me now highlight two particularly significant growth opportunities that have emerged from our design acquisition. Of course, I am talking about the Ultra and Ion Strike platforms, both of which are seeing advancements in customer activities. Ultra is a low-cost, long-endurance intelligence, surveillance and reconnaissance, or ISR, platform that we believe is exceptionally well-positioned to address a growing and urgent military requirement. Recent conflicts have exposed the vulnerability and high cost of traditional unmanned ISR platforms, with significant aircraft losses reinforcing the need for more affordable, attritable alternatives.

At the same time, the growing need to operate across greater distances is placing additional pressure on legacy ISR solutions. Ultra addresses these challenges with approximately three times the flight endurance at just one-fifth the cost of traditional platforms—again, three times the flight endurance at one-fifth the cost. This is compelling, particularly when higher-cost legacy systems are seeing survivability issues that are driving the requirement for mixed-fleet operations.

Increased endurance means fewer aircraft are needed to maintain the same level of persistent surveillance. Combined with significantly lower acquisition and operating costs, Ultra offers a fundamentally more attractive economic model. To put that into perspective, at the bottom here on slide 18, we illustrate the economics of maintaining a combat air patrol, or CAP, using legacy MQ-9 aircraft versus Ultra. A traditional MQ-9 CAP requires nearly $200 million in upfront investment, with annual operating costs exceeding $50 million.

Ultra can provide comparable ISR coverage for approximately $25 million upfront and $23 million in annual operating costs. These are extraordinary economic advantages, particularly as the Department of Defense looks to rapidly replenish and expand ISR capacity while addressing the operational vulnerabilities of legacy systems. For Ondas, this represents a potentially transformative opportunity. We are already seeing demand signals for dozens of Ultra aircraft, with the potential to scale into a substantial installed base, supporting what we believe could ultimately become a $1 billion annual recurring service revenue opportunity. Given the significant opportunity ahead of us, we are taking decisive steps to scale production to meet anticipated demand. Here we highlight our recently announced definitive agreement to acquire Stemme, the German manufacturer of Ultra’s airframe and a critical component of the platform.

Bringing Stemme in-house will give us greater control over our supply chain, production capacity and the pace of expansion, positioning us to execute against what we believe is a substantial long-term growth opportunity. Importantly, this vertical integration also provides an opportunity to further enhance Ultra’s already attractive margin profile by capturing more of the value within the manufacturing process. Stemme’s existing European manufacturing facility is currently operating at just 25% capacity utilization, providing room to increase production within our existing footprint.

In addition, Stemme’s type-certified aircraft and established manufacturing processes provide a strong foundation to accelerate production in the U.S., where we intend to establish up to 345,000 square feet of additional manufacturing capacity. We believe we are well-capitalized to support this expansion, though may consider opportunities to access non-dilutive sources of capital to help fund an accelerated production ramp. Together, these initiatives position us to scale Ultra production to as many as 10 aircraft per month by 2028, supporting what we believe could become one of the most significant growth opportunities in our portfolio.

Let’s turn to Ion Strike, our cost-effective kinetic counter-UAS interceptor designed to address one of the most urgent requirements in global defense. We continue to advance Ion Strike with U.S. government customers, building on the important development and validation work completed with the U.S. Air Force. The market requirement is adversaries are industrializing the production of increasingly capable Shahed-type drones, creating demand for defensive systems that can be deployed in very large quantities.

As we have discussed previously, we are pursuing initial commercial orders and can now share that we have submitted a response to a $45 million sole-source RFP, reflecting progress toward operational use and scale deployment. While we are limited in the details we can share, we believe the requirement is urgent. We are preparing our production base so that we can move quickly if awarded. In addition, Ion Strike was recently selected for a $10 million integration order with a new U.S. government customer.

This order is related to a new operational environment and we look forward to sharing more on this as we can. Of course, the growing threat from Shahed-class drones creates an economic challenge as well as an operational one. Customers need an interceptor that can defeat these threats without relying on weapons costing hundreds of thousands of dollars per engagement. Ion Strike is designed for that mission. It is a fire-and-forget system, requires no operator after launch, can be deployed across land, maritime and airborne applications, and has a targeted sales price below $50,000 per unit.

Cost parity is critical here, as is the ability to produce at scale. We are now preparing our production base for rapid scale. We expect to reach hundreds of units per month early in 2027 and to expand toward thousands of units per month beginning in late 2027. We are also developing Ion Strike as a family of interceptors and precision strike systems that can address multiple missions, launch configurations and operational environments, and we look forward to sharing more details on this roadmap over time.

As Ion Strike moves from integration into fielded deployment, we believe it can become a meaningful growth platform for Ondas and address a multibillion-dollar annual market opportunity. Our focus is execution—completing customer integration, converting proposals into production orders, and building the capacity required to meet global demand at scale. We have also continued to strengthen the Ondas platform through a series of targeted acquisitions that add important enabling technologies across our major market segments. This slide highlights four of those additions. I want to focus first on GATE and Braun Technologies, which establish a strong position for Ondas in the fast-growing electronic safe-and-arm devices, or ESADs, and advanced electronic fusing for precision weapons, missiles and interceptors.

These are highly specialized, safety-critical components and qualified production capacity is increasingly constrained across the global precision strike supply chain. GATE brings proven engineering, established customer relationships and a scalable international production footprint, including NATO-based, non-ITAR manufacturing through Braun in Poland. Strategically, this acquisition does more than just add an attractive standalone business. With GATE, Ondas is now a leading supplier of high-quality and, importantly, low-cost ESAD and kinetic systems.

This also ensures we have access to a critical component in a supply-constrained kinetic package and offers significant gross margin capture for Ondas’ precision strike and interceptor platforms. The other acquisitions shown here are also important building blocks. Caribou Labs adds resilient positioning, navigation and communications capabilities for GNSS-denied and contested environments. Insignito adds an AI-enabled acoustic sensing layer that can identify and track drones by their unique signatures, further strengthening our counter-UAS detection architecture.

And Autopia adds proven teleoperation and autonomy software that we believe can accelerate the autonomy path for Ondas’ unmanned ground vehicles and heavy combat machinery portfolio. We expect to share more about each of these capabilities in the coming quarters as we integrate them across the portfolio and convert their technology advantages into larger customer solutions and new revenue opportunities. Before turning to the outlook, I want to highlight that we have established the Ondas Land Systems Division within OAS to bring five companies together under one strategy with a clear focus on autonomous ground vehicles. The purpose is to put unmanned systems at the first point of contact, reducing personnel exposure while helping customers carry out demanding ground missions. This is our Bots Before Boots vision in practice. By combining our capabilities in robotics, autonomy, platforms, protection and smart demining, we can deliver more complete solutions tailored to the customer’s mission.

Shared engineering and coordinated operations will accelerate development, integration, manufacturing, deployment and support while capturing cost synergies through streamlined operations. This also positions us to compete for larger, multi-year defense programs. We can bring a broader portfolio to each opportunity with one coordinated team accountable for delivery. We are currently tracking approximately $3.25 billion of identified unweighted potential pipeline opportunities for Land Systems through 2031.

We are building this division to turn these opportunities into awarded programs and sustained growth. Let’s now turn to our outlook for the fourth quarter in 2027. As we highlighted earlier, we expect a strong finish to a transformational year. We are targeting full-year 2026 revenue of at least $550 million, including more than $250 million in the fourth quarter. We also expect order momentum to remain strong and to exit the year with backlog above the $835 million reported at September 30, providing substantial visibility into 2027. That growth is supported by major programs already underway, including Mistral’s Lethal Unmanned Strike Program, Indo Earth’s combat engineering vehicles, and continued global demand across our counter-UAS portfolio.

Indeed, we see organic growth continuing to be robust and expect at least 75% organic year-over-year growth on a same-store basis for Q4, higher than the 64% we saw in Q3. Looking to 2027, we expect Ultra and Ion Strike to become increasingly material contributors as customers advance and production scales. We are also focused on expanding recurring and repeat revenue across the platform through software, services, sustainment and longer-duration customer programs.

Against that backdrop, we are initiating a 2027 revenue target of at least $1.1 billion. That outlook does not include potential acquisitions and assumes organic growth of more than 40%. As revenue and gross profit scale, we expect meaningful operating leverage. As mentioned, we continue to expect the operating platform to achieve adjusted EBITDA profitability in the fourth quarter of 2026. We are also pulling forward the profitability timeline for Ondas Inc. and now expect company-wide adjusted EBITDA profitability in the third quarter of 2027, one quarter earlier than our previous target.

Let me wrap up our prepared remarks before we open the call for questions. We are seeing very strong demand across U.S. and allied defense and security markets. The capabilities represented across the Ondas portfolio are rapidly moving from development and evaluation into operational adoption. Indeed, they are increasingly essential to the modern mission. Our adversaries are innovating, deploying and industrializing autonomous aerial and ground systems, precision effects, sensing and mission software at scale.

The United States and its allies cannot cede that advantage, and we do not believe they will. Despite the political tensions we see in Washington, across Europe and in other allied capitals, we believe the need to invest in these capabilities has broad and durable support across aisles in Congress. This is a structural, multi-year demand cycle supported by operational urgency and increasingly resilient procurement priorities. Ondas has been built specifically for this adoption curve.

We have assembled a differentiated portfolio of software-enabled capabilities across Aerial Security, Persistent Intelligence, Precision Strike, Autonomous Ground Systems and AI-enabled command and control. We continue to deepen and integrate those capabilities while expanding the supply chain, manufacturing, field support and sustainment infrastructure required to deliver reliably at scale. These investments strengthen our position with customers and support the much larger company we are building.

We also believe the platform company model is required for our industry to scale. Customers need integrated, mission-ready systems that can be delivered and supported across the operational lifecycle. Investors need a financial model that deploys capital efficiently, generates operating leverage and supports sustained investment in innovation and growth. That is the model we are building at Ondas—a diversified global business with multiple drivers of organic growth, an expanding base of recurring revenue and the scale to efficiently deploy capital and sustain investment in innovation.

Importantly, we believe a growing portion of our business will be driven by recurring and repeat revenue streams. This includes software, services and sustainment as well as mission-critical components designed into customer platforms that generate repeat orders and are difficult to substitute. Together, these revenue streams provide greater visibility, durability and predictability as our business scales. Our focus continues to be on execution—converting backlog, delivering on major programs, scaling production, integrating our technologies and demonstrating the profitable growth our platform model can generate.

In closing, I want to restate the three main takeaways from today’s call, which we mentioned at the outset of our call. First, Ondas is establishing a scaled global business with a strong foundation for sustained, long-term organic growth. Second, we have multiple opportunities to drive outsized growth, including Ultra, Ion Strike, Regna AI and others, with the potential to meaningfully accelerate our growth trajectory. And third, we are laser-focused on rapidly scaling production and deployment capabilities to capitalize on accelerating demand for our solutions.

We believe Ondas is positioned to become a global leader in autonomous defense and security technologies and to create substantial long-term value for our customers and shareholders. Thank you again for joining us today. Operator, we will now open the call for questions.

OPERATOR

Pressing the keys to ensure the best sound quality. Once again, that is star and then one to join the question queue. Our first question today comes from Trevor Walsh from Citizens. Please go ahead with your question.

Trevor Walsh (Analyst)

Great. Good morning, all. Thanks for taking the questions. I wanted to talk a little bit about Ultra, if I could. Eric, can you maybe unpack that $1 billion recurring revenue stat that you had on the slide and you talked about in the prepared remarks and kind of what really does that consist of? And is that really a U.S.-dependent type of number or is that broadly for the platform? Just a little bit more color there would be helpful. Thanks.

Eric A Brock (Chairman)

Hey, Trevor, thank you for the question. And it’s an important, important one. I want to ask Ryan to unpack that for us.

Ryan Hartman (CEO of Andes Sentinel)

Yeah, thanks, Trevor. I appreciate the question. So if you look at just the global demand for combat air patrols or combat lines with the U.S. Air Force and our allied partners, there’s approximately 110 combat air patrols that are deployed globally. And so what we see and what we’re experiencing today is an increase in what we would call a mixed fleet of systems for combat air patrols. You saw Secretary Mink mention in a speech recently that they deployed both Reapers and Ultras to great effect.

And what he’s talking about is that mixed fleet for a combat air patrol. And so in seeing that mixed fleet, we’re seeing that there is operational utility of having both Reapers and Ultras in support of a combat air patrol. And so for Ondas Holdings, the ongoing annual cost of a combat air patrol, or the revenue for a combat air patrol, is $23 million. So if you just extend that to less than half of the global combat air patrols, that gets us to a billion in sustained revenue on an annualized basis, not inclusive of the acquisition cost of the platform.

Eric A Brock (Chairman)

Yeah. I’ll also add that that’s, you know, Trevor, that’s a U.S. number.

Trevor Walsh (Analyst)

Perfect. Yeah, that makes sense. I appreciate the explanation. If I can just do one quick follow up, I kind of understand that the gross margin kind of outlook is kind of the pressure there is extending into Q4 and potentially into Q7. And it sounds like that’s more like more a mixture type of outcome that, you know, somewhat out of your control because obviously you want to just sell what you can get out the door. But just trying to bridge or marry you pulling forward the EBITDA, adjusted EBITDA outlook a quarter forward next year, should we expect gross margins to significantly kind of get back or, you know, abate the pressures there and get back to that 40 plus percent range to kind of meet that adjusted EBITDA goal? Is that sort of the best way to think about it as far as the timing of both sort of coming together, or am I missing something there?

Neil Laird (Chief Financial Officer)

Yeah, good question. So you’re right, there’s a combination of mix for sure, but some inefficiencies as we were ramping programs and driving scale. We think both will improve to the upside moving through into and through 2027. And we do have that longer-term target, I’d say over the next 12 to 24 months, to get that into the 45 to 50% range. So as it relates to the expectations around profitability and being EBITDA positive on a consolidated level, we’re just getting increased visibility around our revenue ramp and the gross profit ramp vis-à-vis our operating expenses.

So we think we’re on track.

Trevor Walsh (Analyst)

Terrific. Thanks all for the questions. I’ll hop back in the queue.

OPERATOR

Our next question comes from Austin Bowlig from Needham and Company. Please go ahead with your question.

Austin Bowlig (Analyst)

Hey guys, thanks for taking the question and congrats on the solid quarter and strong outlook. Maybe just one on that $1.1 billion deal with backlog expecting to grow in Q4. Do you guys expect the majority of that to get filled in 27? And if that’s true, it leaves like roughly a few hundred million dollars to hit that target. Sold $1.1 billion feels conservative. So I’m curious if you could lay out potential upside scenarios and what that might look like.

Eric A Brock (Chairman)

Austin, great question. And of course we’re still in 2026 so I want to be a little bit, I want to defer getting into some more granular conversation around upside. You know, $1.1 billion is a substantial step forward for us and we do have quite a bit of visibility and I think that is going to improve this quarter because we do see a strong pipeline and are optimistic about the bookings cadence as we’re going through the quarter. So we do endeavor to give targets that are conservative, and we’re working to establish that and sustain that track record of delivering for our investors.

So I feel good about the $1.1 billion and of course we’re going to work really hard to outperform that.

Austin Bowlig (Analyst)

All right, perfect. And then maybe just one more on the M&A front. But uniquely enough, this morning a public satellite company announced their first acquisition in the unmanned ground space, and their whole rationale is they believe space is becoming an important layer within this modern warfare domain. I’m just kind of curious. It feels like a natural extension for Ondas Holdings to kind of expand into the space domain. How do you guys view that, and what would that maybe look like?

Eric A Brock (Chairman)

Yeah, so I think for sure. And you know, we describe our ISR business as multi-domain. And of course, that starts with the stratosphere for us, where we bring unique capabilities, and that goes all the way down through, of course, the Ultra platform — a Group 5, long-endurance drone — Group 3, 2, and 1, both ISR and strike. So we do have an interest in the space domain, but I don’t think it’s time for us to unpack that and give an outlook as to how we may approach it.

I don’t feel it’s essential to us or that it’s a gap, but it would be an opportunity.

Austin Bowlig (Analyst)

All right, thank you, guys. We’ll keep up the great work.

Eric A Brock (Chairman)

Thank you.

OPERATOR

Our next question comes from Jonathan Segman from Stifel. Please go ahead with your question.

Jonathan Segman (Analyst)

Hey, good morning. Thank you for taking my question. A lot of good news in the quarter. Maybe talk a little bit about the ground vehicle opportunity now that it’s entering production. Can you talk a little bit about what’s firmly ordered and the production rate supported in 27? And just, you know, just how do you reserve for any contingencies related to that steep ramp that you have? Thank you.

Eric A Brock (Chairman)

Okay. Yeah, John. So we’ve got quite a bit going on in our land systems business. And as we said today, we’ve combined that under a single leadership team, and that includes foram, it includes Roboteam, in Otopia Apparel as well as into Earth. As we’re moving into Q4 and the first half of 2027, you’re going to see the Indo Earth orders and program ship. We think that has a possibility of expanding with additional orders. We see 4M continue to deliver on its land clearance activities, and we actually see opportunities there to have more follow-on orders around major cleanup programs that we’ve announced in Israel.

And we think there’s generally a strong demand. I’ll add that the Iron Wave systems have been deployed and have been well received, and we’re expecting to grow that business into 2027 as well. So I don’t want to give a specific number on what that looks like for 2027, but I do think it’s going to be a big chunk of the mix. And we did share what that looks like in terms of targets in our outlook for the land business.

Jonathan Segman (Analyst)

Good, thank you. And then I’ll ask just one on budgets, just because we’re in such a dynamic environment and recognizing there’s not a clean answer on some of these things, but just how much of your growth could be dampened if we have an extended CR or are not able to pass reconciliation? And then over in Israel, can you give some context on what could change and not change if the U.S. stops supporting funds over there? Thank you.

Eric A Brock (Chairman)

Okay, so I’ll start with the latter on Israel and then I’ll ask Ryan to share more context on the U.S. market and some of those dynamics you’re highlighting. So, firstly, we have a very strong foundation in Israel and, in fact, none of the business we have today has been funded or is expected to be funded by the U.S. government. So we feel like we have a very good position there. And of course, Israel had an election and they’re forming a new government.

We think our business there is very strong. We’re going to continue to invest in Israel’s security. And Israel, like all the markets we’re seeing, is undergoing a shift towards unmanned systems, autonomy, robotics, and it’s quite clear that Ondas Holdings is an important part of that market there. So we’re going to continue to invest. And I don’t see a significant impact on any pullback in funding from the United States to Israel impacting us. I do think that is just opportunity.

Ryan, would you share some insight into the U.S. business and outlook? And I’ll highlight before you do that the United States is now about half our business, and I think that’s going to continue to be the biggest market for Ondas Holdings. So, Ryan.

Ryan Hartman (CEO of Andes Sentinel)

Yeah, thanks, Eric. And John, thank you for the question. For the work we’re doing currently in the U.S., all of that work is either currently in a 2026 budget, therefore transitioning into a CR at current levels. In addition to that, a lot of the growth that we’re seeing is supported by O&M budgets and not new starts. So we feel quite confident that we’re isolated from a continuing resolution and that an extended CR is not going to impact the growth that we see in front of us.

I’ll also highlight that in a CR, the offerings that we have — and I’ll speak specifically to Ultra — enable the U.S. Air Force to extend the combat air patrols and the combat lines on a global level at a lower cost to the U.S. government. And so we believe that the O&M budgets will actually go further than they would have otherwise gone in being able to provide that very important capability around the world. And all of our other programs, like I said, are supported with current budgets and O&M.

Jonathan Segman (Analyst)

Thank you very much.

OPERATOR

Our next question comes from Tim Horan from Oppenheimer. Please go ahead with your question.

Tim Horan (Analyst)

Thanks, guys. On Einstrike, going from hundreds to thousands in manufacturing, is that relatively linear, that scale?

Eric A Brock (Chairman)

Sure. So we’re today shipping against, or preparing to ship against, the orders that we described on the call, Tim, and those are low-rate production. As we’re moving into 2027, we have a plan to scale that production and of course we’ll do that in concert with our customer as we’re looking towards reorders. Ryan, would you add anything to that?

Ryan Hartman (CEO of Andes Sentinel)

The only thing I’d add is that we have all of the manufacturing footprint that we need to scale it to the levels we’re talking about in 2027. We’re adding the people resources to be able to support that growth and we’re well aligned with our supply chain to be able to scale at the rates that we’re talking about.

Eric A Brock (Chairman)

Yeah. So let me spend some more time, Tim, going through the details of the capacity expansion for Ion strike as we get more visibility into follow-on orders. So stay tuned.

Tim Horan (Analyst)

I mean, can you talk about the demand for that qualitatively, and I guess if the demand is there, you’re talking about this being at least a billion-dollar run-rate business in a year.

Eric A Brock (Chairman)

We sure do. Ryan, what would you add to this in terms of the international opportunity?

Ryan Hartman (CEO of Andes Sentinel)

Everything that we’ve talked about thus far is specific to the U.S. We see growing demand in the Indo-Pacific region and in the European market. And global demand, or international demand, is about 25 to 30% of the overall demand for combat air patrols. So, you know, that’s a significant portion of what we see. Our focus today is on responding to U.S. Air Force demand. And once that’s satisfied and we’re at a steady rate with the U.S. Air Force, we’ll see steady growth in the international market.

OPERATOR

Our next question comes from Michael Latimore from Northland Capital Markets. Please go ahead with your question.

Michael Latimore (Analyst)

Great, thanks Jeff. Congrats on the strong growth here. With regard to Regna AI, can you talk a little bit more about dynamics around that? What are the sales cycles like there, deployment timelines, and then, you know, how do you price it, gross margin, deal size? You know, a little more detail on Regna would be great.

Eric A Brock (Chairman)

All right, great. Great question. And Ryan, you’ve been busy on this call. I’m going to ask you to expand on this.

Ryan Hartman (CEO of Andes Sentinel)

Yeah, thank you. Great question. So I’ll start with the sales cycle. What does that look like? So whenever a customer is deploying sovereign AI, there’s really two elements that are important for them to be able to deploy. The first is the hardware layer. This is whether it be on-prem or air-gapped sovereign AI. We work with those customers to establish a sovereign hardware environment and then deploy the sovereign AI models, the open-weight models, on their hardware.

So the sales cycle is pretty straightforward. This is mostly software sales with a little bit of hardware infrastructure. We expect sales cycles to be measured in single-digit months, in most cases within a quarter. Then the overall deployment model is once hardware is identified or established for these customers, our job is to forward-deploy engineers to design the overall model architecture for them and the post-training environment, and then separately have the researchers that post-train and fine-tune the models based on their mission data. The revenue profile is the forward-deployed engineers plus the researchers and then the compute and storage sales specific to operating their models.

Michael Latimore (Analyst)

Awesome. Great. And then, Eric, you talked about one of the goals is growing the reoccurring revenue over time. Can you just bracket that a little bit more? In ’27 what percent of revenue could that be, or longer term?

Eric A Brock (Chairman)

Yeah, I can’t put any more precision on it today. The recurring and reoccurring revenue is a small piece of our revenue stream today. But as the installed base grows and we mature more system-to-systems and software-driven revenues, I think you can see it grow dramatically. So we’ll be sharing more updates on that as we see that dynamic play through. But I’m very optimistic about it.

Michael Latimore (Analyst)

Thank you.

Eric A Brock (Chairman)

Thank you.

OPERATOR

Our next question comes from Clark Jeffries, from Piper Sandler. Please go ahead with your question.

Clark Jeffries (Analyst)

Hello. Thank you for taking the question. I was just curious if you could remind us on any significant deliveries that were planned in the ISR segment for the second half of this year. I noticed it’s the only category that didn’t sequentially grow in the backlog and it was one of those. The target revenue expectation jumped 27% in that category. Just any color on timing of revenue recognition and backlog-to-revenue transition in ISR specifically.

Eric A Brock (Chairman)

I think the ISR business is on plan and I think the dynamic you’re talking about is more of other parts of the business growing faster, perhaps in terms of orders. As we’ve highlighted on the call, we’re expecting a significant ramp in our ISR specifically around Ultra. And we do think the Worldview business is looking— we’ve got significant pipeline opportunities into 2027.

Clark Jeffries (Analyst)

Perfect. Then just talking about these adjusted EBITDA timelines and the ability to pull it forward here another quarter. In terms of the overall corporate number, what’s making the most difference there? It seems to be a very bullish tone in terms of the bookings and the growth outlook, but curious, maybe under the hood, in terms of any kind of efficiency or operating expense management that