Ondas (ONDS) 17 Nov 212021 Q3 Earnings call transcript

Good day. And welcome to the Ondas Holdings Inc.'s Third Quarter 2021 Earnings Conference Call. Today, all participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions].

company contain to forward-looking the this you begin, may call statements. we would remind like that Before

While undertakes both these that in filings forward-looking implied are judgment, issued no forward-looking results recorded. Ondas that CEO. and to they discussed statements to release differ revise future the on or now by any reflect available on subject website. to sir. the which Ondas’s These today, is begin, risks as earnings Ondas's At these to Please note in obligation forward-looking or update press I over would and Eric law. like statements risk from the events Brock, being and company's uncertainties materially could time, statements. actual are cause today’s event Please are those reference best to Chairman factors to this current conference SEC required turn periodic circumstances, except by the

Good of of to Kantor, our and operator. Robotics. providing for Stewart CFO; Reese and today's the Thank welcome and set wholly-owned overview by call quarter CEO subsidiary, to Moser, our Investor I'm an I'd American today President Ondas you, stage morning, holdings. our Call. joined like by third

is platform as return Robotics. unmatched the American that wireless by beyond Scout networks, Systems, Both high end-to-end companies Both government markets. comprised fully Holdings Scout the models. integrated Network generate course and offers is FAA settings. high revenue of sale, companies, software critical will owned capital like System Robotics network between industrial platform attractive, providing technology government the complemented in at of autonomous Networks platform able to without on and private turnkey effective as for AR a the use and this visual we and for and human sight System data-as-a-service Now now The line the The margin, only FullMAX the fly flexibility onsite streams. wireless then synergy or X make analytics required operation Drone agriculture a revenue Similarly, full their of profit offers operating is the closed is provide systems American industrial Robotics sale American and data August receive robot-as-a-service solutions. have and Networks business and see by investment to recurring model. we've first tremendous significant an by pays provide light and data approved formally grow. and Ondas drone mission subsidiaries, and known American X acquisition, Robotics Networks X. operated and offering technologies platform each a Networks also customer mission subscription Ondas critical of wholly large fast those IoT Together, AR capacity owned companies networks you Scout as to data whereby cases. annual deploys business our deployment scale.

models. full target. markets large field suite With short, In with do significant Holdings attack growth operating businesses common call. deeply we across opportunities network overview, Scout reach customer outlining and more towards new their shift And end end that for for of both and today's Ondas Similarly, as Systems the services attractive We across the to companies wireless field to the we bring driving see this the to Networks. financial FullMAX see MC-IoT technology have under system scout in the customers. extend the let's customer synergy with markets agenda significant platform tradition operations We wireless our the of interest the Scout system customer potential. Ondas a for has opportunity marketing

Then Robotics. priorities business we will financial the and highlight to I'll our ask share are of Stewart making on key I the Ondas progress results. American First, QX Networks

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me let highlighting Networks both progress we've key that made half second So, significant by America of our priorities executing on for Robotics. over XXXX in start Ondas the all and

transition. Networks, Ondas as period marking a we now at this upcoming Importantly, are

want I that Commercial platform purchase Greenfield has from important of this. We our of adoption Ondas FullMAX This systems FullMAX connected platform and behalf are in delivery. from announce adoption on platform investment Today, begun order a major we transitioning Siemens delivery mode network. commercial to are to we transitioning to towards mode. to technology emphasize Rail. X the has come order XXX megahertz all for Class first received excited that are has

to to grateful their And efforts. work of all is acknowledge talent I'm our X very our Siemens Class other are In has for investors. that this be thankful and continue addition, a we team point. eagerly for and about at moment hard Again, huge have Ondas platform been moment has we want conversations Ondas take This your Rails team Networks the us by delivery. gotten It's I and now proud megahertz with a orders. exceptional in And support. awaited XXX transitioned in the to really and accomplishment. This to additional Ondas towards

In our addition initial to order continues partnership for with to the broaden. megahertz, Siemens XXX

American near an and identified global markets, term also the expand international and we -- network rail details markets plans The North opportunities X jointly will continues for in focus on developed train our Class IEEE have Rails see we We've side. that whereby .XXt exploring the expanding in we FullMAX sector. builds On is customers begun customer transit in and Siemens products the in also interest on the marketing wireless call, Siemens outlook seen worldwide. critical as integrate additional our technology the markets partnership to Siemens on to XXX.XXs initial opportunities rail throughout share beyond systems

to We've the systems. completed the and market provides products Siemens Phase -- signaling platform X across markets the effort which now relationship build grow value AURA FullMAX with Networks also are So our connectivity we as continues ecosystem.

will provide the the more there Networks. created and We development on technical Ondas for insight value

to Robotics. now turn Let's American

in adding been business. laid are AR are build We the of has execution to hires their That plan out American mode, detail end now We Business our business Investor talent Call the and expansion Robotics plan scaling ambitious. help business. significant September. Update our Key on know, as it's on you And focuses very launched. we're great in being in boarded at as

believe deliveries I technology Dynam.AI. Scout accelerate. Robotics Customer artificial as to Stewart, ramped of expanding are delivery by We quarter. physics-based have details capability platform. Scout We the foundation. poised scales to recently the and field the intelligence a of production installations growing, Systems have Scout now important is of more call ecosystem supplier announced Reese also around with Dynam going activities evidenced is regarding American to the with the partnership provide as and you begun. over its provide hand this activity all will third highlights to is

Great. Thank you, Eric.

beginning morning's XXXX, do the include financials by included the today our financial first financial August in press we'll The our Robotics of XX-Q X. this for third numbers release. of the American our X-months results and share filing note we've And be please are end quarter, reporting day. for that I statements As we

for to to X-months results. acquisition $X.X a XX, due to XXXX. by $XXX,XXX Revenues September and professional primarily of $X.X ended Now X-months increase as and primarily third expense acquisition approximately held $XXX,XXX the The X-months $X.X $XXX,XXX for net September margin to ended in Profit million compared for realized moving Robotics decreased $XXX,XXX loss X-months $XXX,XXX of our approximately to X-months XX% September a was X-months to $X.X was and compared XX% XX, to ended September I'll results. XX, the ended larger as in was lower ended million result and to $XXX,XXX the loss increase as now ended American expenses increased of in as product XX, for compared to due XX, million XX, increase the million decrease and of Net an an approximately of X-months XXXX. XX, expenses for in the of compared primarily ended to sales the XXXX. first for an to of due an compared $XXX,XXX XX% acquisition, Robotics loss an $X.X Operating XXXX, professional a revenue ended approximately $XXX,XXX of the fees development XX, an The in expenses primarily percentage ended and quarter to expenses XXXX. XXXX. XXXX, a to Gross result September X-months The ended amounts as approximately $X was for offset $XX.X Robotics increase of September $X.X X-months for X-months XX, increased revenue, Networks for The ended for for cost Robotics for XXXX operating to approximately the operating for development X% ended XX% ended September $XX.X compared a September loss approximately for million September ended in with ended as increase XX, the fees on XX, revenue September X-months approximately million primarily expense was to of and amortization American due XXXX. XXXX, basis September approximately AURA ended higher as increase XXXX. ended lastly, X-months loss realized the in Gross million XX, operating XX for higher compared approximately $XX.X due transition approximately XX, American American September compared in XXXX, XXXX, product of due increase operating to of ended XX, in result an September approximately revenue gross XX, professional intangible of profit primarily X-months depreciation by and for to of XX, September of for September XXXX financial for the Profit Operating Revenues assets, to amounts XX, for $X.X X-months approximately agreements. in $X.X Robotics $XXX,XXX by to million XXXX. American XX, X-months XX, the million Robotics XXXX, $XX.X $X.X September the a to to X-months to XX, decreased to increase X-months development the due September XX, $XX,XXX September approximately development to American for Robotics September of to ended approximately by X-months approximately for amortization of September XXXX, approximately compared from revenue the as approximately intangible for the September XXXX. related during XXXX XX% depreciation intangible XXXX, the $X.X goods ended related million company the September XX, the million higher as million ended compared of was approximately ended operating of And result as as fees as XXXX. compared $XXX,XXX XX million loss X-months expenses X-months of of profit million XX a December XXXX. revenue revenue. to ended September the $X.X ended X-months XX% development of expenses our $XX.X September September XX, cost the decrease XXXX. as ended the Net company million profit to the XXXX, ended million increase result gross X-months XXXX. of amortization by loss assets approximately was depreciation by American the cash the the of X-months lower loss in of net to amortization approximately The XX driven as $X.X expense amounts September and September assets XXXX, acquisition, for development Operating a percentage in X-months Gross the related amortization XXXX. ended approximately million with million approximately basis for $X.X the the increased X-months the as of R&D Siemens development of increased XXXX. The September was XXXX, by for of ended X-months million in percentage compared revenue for first increased company X-months September of XXXX. increase to profit an increase in XX, cash X-months in gross lower approximately Operating expenses compared to and higher a a approximately X-months associated expenses as to amortization a of for XX% $X.X XX, an September increase and September $XXX,XXX product the as was equivalents of ended an the increased XXXX. XXXX, in primarily revenue. the million in goods XX, XXXX and the The approximately ended Gross XX of increase compared on X-months sold X-months of lower the as the X-months lower result X% and

back Eric. over turn Now I'll to this

Stuart. you, Thank

detailed the business half move elements through give Now for I Networks of the provide and as Reese to ask XXXX. American let's a transition Ondas overview to Robotics of details. more and key Stewart the will plan in around conversation we second an

Let's megahertz commercial order Greenfield initial again purchase the the network. XXX start highlighting now received we have by that for

and AAR is finalizing Rail Ondas provide we insight and are creation greater value Rails, MC-IoT we Stewart well. American Siemens in with along the Association important the partnership also that at of Networks. detail addition, Siemens in as ways will the turns which the to discuss will the into with strategically or moment a Lab, the growing In adding more regarding

AR. property there. operations will where for AURA work we the the he American scale Robotics have and with with deliver at where addition, our an Reese on is and will is intellectual plan in at update critical In as summarize we on Stewart technology created were customers When we business finished, Stewart? provide

Thanks again, Eric. Great.

X rail launch, of order software-defined as was Siemens Ondas American dual-mode the starting are frequency Class partners, Mobility The products result excited delivery Show the product megahertz and third the now the a FullMAX we scheduled for exclusive smooth development newly now existing included Railroads Wayside in radio and first for of just XXX has from officially family along a wireless shared, range. products bring partnership platform. a generation for edge allocated the its held X Class System Mobility integrated operating delivered the North These our of for a band. to that migration software-defined market. spectrum. joint at quarter, radio this to XXX to the megahertz Siemens’ the the Siemens radios station the also program base XXX.XXst previously on and megahertz new Supplier strategic And enable American dual-mode completion based Ondas’s radio This New This megahertz XXX support our Mission radios Networks, of to IoT During first program has which technology. Railroad are commercial September, flexible our market radio Airlink path announce with has rail launched ATCS Railroad Critical the announcement December. secured The the new simultaneous Siemens with for is Eric next radio North XXX

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Now moving with Railroads American currently Lab. our Sunnyvale, MC-IoT headquarters the on the of hosted Siemens MC-IoT implementation Ondas of at and to the Association negotiating Lab to California. Rail in Rail the are be for

the multiple coordination standard the around interoperability protocol, the lab support the importance will and railroads various but band, of XXX.XX The the lab for generation allow industry We industry next engineers train expect application nationwide optimization on the AAR to standardizes not held megahertz the nationwide. network configurations, technology. XXX deployment -- rail the by as the and of for communications just validates testing, of managed of lab the by frequencies network believe and We our and standards the

our Now transitioning X air-to-ground Also constructed licensed customers AURA. third using to is the software and frequencies our and as actively successfully NASA communications network AURA FAA. completed hardware nationwide on working test it the plans has for radio in quarter, we Networks. platform, based development Phase and dedicated commercialization with private pursues AURA a with

additional to the support expect fourth and in testing quarter commercialization their efforts. orders We

CX Importantly, Ondas’s the real unmanned aviation. new its capability is now operators, turn American for and to our can capabilities well testing, airborne interest the additional with provide proven multiple Ondas’s license to continues Reese American for for so subsidiary. own as drone outlook of Reese? release stimulate update from support call significant frequencies as Phase Robotics includes X Robotics. I'll an he Moser, along over world CX software

Sales; on the target previous from outlined business has September the all enabling leading including all Systems. XXX% Operations; QX Thank over Investor accelerate a on of added growth We've increased of Director accelerated Scout Hiring Talent; of VP of of organization, increased Robotics has headcount steady year. Operations to on rate. This made levels you, Stewart. And Flight of American Robotics been the of Call continues personnel fronts. VP talent the key and to XX. in sales, Director Progress manufacturing of execute to is at Product. engineering; of plan VP is and Director American headcount industry and deployment

remains Additionally, we at those demand manufacturing Customer units have our Initial maturing and contract delivered customer and for necessary production and growing. We'd existing in have a and our end, partnered the ability Northeast demand. the is XXX completed made and been company, and have to customer move contract industry the to customer third and installed this sites. with pipeline initial for robust order to To this in progress oil Midwest. capacity ConocoPhillips, manufacturing manufacture our This manufacturers from chain installed independently customer this training have Fortune leading characteristics and the to we with unit on the fits a franchise of partners line fleet have supply receipt products. has the satisfy quarter delivered purchase gas in the oil deployments. for been of the gas

have and reports Scout We've reliably who them delivery our Systems. repeatedly. expect deployed and units a customer wells mid-Atlantic QX data than platform of constant ag-specific location monitoring and for look oil this also Scout Syngenta to pipeline relationship and multiple with XX,XXX kilometers are expanded progress We require use gas United purchase grow and been stockpile with in forward that on secured made a as more with to significant for a delivering cases. at XXX and contracted has States We've working and additional the to well There order inspection. We've applications.

fourth And about enabling commitments We scaling This day. Systems States. calls and prepare XXXX are working deployment integration measurements and the of Scout the operationalize respective beyond. reliable assets information we contract have for of multiple of a to stockpile the technologies accurate quarter of deep successfully the completed with our in times a their and United our and these reports throughout extremely

that companies build the of These customers States United have We to we currently of franchise Scout industrial as utilize in in and months world. increased Systems expect expect delivery coming and additional orders the QX for customer purchase the We we to support field Fortune the able to to across first ability a activity. the half XXX are interest provide backlog in XXXX. offer fleet to customer

customers to learning want increasing This the accelerating joint techniques of analytics-driven work value demands. developer proposition connection we begun. allow these AI In cutting-edge and relationship to strategic partnership we machine partnership partnership, Dynam.AI. its announce in for product of additional Lastly, to already a intelligence to established further the highlight the significant and customer with AR an Ondas capabilities. offering ML artificial Dynam.AI, And recently accelerate investment in has its markets quarters. these made a for with will has coming Holdings and we this AI The expect product offerings industrial

leading continue for the of features. the believe of of critical and several balance we're Systems with are updates AI-driven look To We of business strategic pace American adoption this as Scout at more We widespread to on forward summarize, we AR over excited about market the library enhance the is cusp value year development for accomplishments. additional providing relationship the very of develop Robotics. very to analytics on happy our And proprietary we industries.

I'd like back transition to Q&A. wrap call to Eric the before up to Now

has year markets. minute positioning prepared Stewart. to you, Reese are this for to progress Thank And the on your support opportunities I'd Q&A. development these our large Ondas open-ended a to as we company execute worked tremendous we We've in growth to these huge remarks for for before extremely deliver efforts. wrap we hard business made up take and grateful move like investors.

platform clearly Networks. business have inflection investment to there's as point we At XXX megahertz build the begins. work a reached While networks Ondas transitioning delivery ahead, are we in more an commercial for from

for ramp XXX system deployment in planning in visibility will megahertz rail engage under improve. customers, the Siemens we As wide with our on

carve importantly, more and international separate markets. QX cadence to activity. are platform of rail, At perhaps the we emerging an more time quarterly or TAM customer Production conference well Networks and the Systems breakout is a the rail in and a an to as in the to services call as XXX deployment expect being meeting execution for Ondas in update on ramping and updated megahertz out similarly support for is view We American comprehensive either provide that field in opportunities more scaled Scout Robotics, mode. are cycle, customer of

serve sale, efficient processes customers, critical deployments of streamlining Systems We the in fleet creating time preparation business establishing team operations. towards by at from and to sophisticated This American are for our is pointing Scout the order and customers. to franchise purchase installations AR documentation flight ranging both customers for Robotics contracts all

Operator, with significant can generated a and Ondas and We more strong businesses activity strategic accomplishments. at move build open the we've And XXXX. expect our to Ondas at have and Robotics. to greater wrapping we consistent Q&A. into up volume the of to both as look customer on call to year Robotics now We we forward both intend a purchasing Networks American momentum for American we

NCM. now We will from appears Latimore proceed, Instructions] next begin that take Mike question question-and-answer going sir. now the with am questioner [Operator It disconnected. the to I session. may our Please original have

sense also be type it going specific is of strong Great, or congratulations commercial thanks. a developments in use terms can more provide don't order? color a number order. And the know, that on I there. of that then great. guess be case? a little all And would the region? color you first in Yeah of the units size just on I of with like Anymore to maybe of

moment, at the the details terms of let the orders. need Mike. marketing to to Siemens Thanks, share Sure. a plan on we not able We're

do are in conversation rails Ondas expect with active Siemens earlier, mentioned and Stewart and additional As orders. multiple we

to would add Stewart, that? So you anything

I No, that's think right.

ones it's In the the about network rails all we've advanced Basically, terms rail. from been talking network for applications. all applications, an view way of their crossings our it's the to as anywhere higher IP

going they to their be control they're band. course, supporting system as ATCS, train the off Of the legacy migrate

when believe. is kind Okay. about you this from Lab Got lab talk little MC-IoT order can it. I And you might order, a of I that bit guess, the order? see separate then more

Yeah.

QX. is said, terms strategically important purchase all we're Ondas. in order So finalizing targeting as we for and lab a This we're

Stewart XXX the communications beyond As X environment an It's described lab goes evergreen megahertz. really all the for testing Class network.

well. on XXX-XXX our it's point the has technology Ondas as on for important for role So roadmap Rail. another wireless and validation And X the platform Class the FullMAX

just more focus there? Great. vertical might on see Dynam.AI. And analytics then would first? a type they can sort What of Robotics provide Maybe the detail or, first which you American of and on might little be we

you Reese, want?

The I sure, applications our products are quite can this. take Yeah, for Yeah. broad.

options. Dynam as on So we're business really is example, lot rail includes now, and techniques list and about of a oil But our And and that is markets there's be of to leverage and interested focus opportunities going gas, our materials to the an for mining. ultimately data, brings. there's extensive monetize that most the right which both

you. great. Thank Okay,

Thanks, Mike.

with Horan Please Our from Tim next question sir. comes proceed, Oppenheimer.

megahertz for what requirements, Hey, large an of this that have guys, ups? vacate is you you remind can follow congratulations. A tell requirements from of time you the overall meet I us point? can you couple XXX And on questions. the to guys? One, spectrum Thanks. do few the FCC think how a the at opportunity rail can And industry

Yeah, sure. Thanks, Tim.

FCC rails do the X been And network. a the by legacy their XXX clock of course, X to the retire year requirement began in publicly XXXX. yes, So to disclosed have megahertz it's

that that we drive previously, the we than architecture So sooner legacy portions faster. to retire upgrade others. believe talked about believe negotiated they're network over to by FullMAX moves network were shared XXXX. Certain with the going as going And XXX to is to have the we've XXXX system of

we terms their same the the the of meet rails can And believe outlook it's timelines. timelines. still So in do

And any update on migration? what the overall this revenue you could mean for to

yeah. So we're still --

planning details more the -- dollars that with on forward And Siemens commercial now. as is XXX we system to It's hundreds But the big remind want in you, as well. visibility of a quarter XXX see rollout in millions next lot We're still railroads a XXX of large. we we're in And look now So of megahertz. we on very of to we is and network the do megahertz in the share TAM. XXX pipeline course, improving. that have and conversations

just how you drone -- on you Great. and the be both of rapidly on Will can And and drone chain us how demand of the And able on that? color units produce then on side the many to meet robotic on side? rail on side any side issue. the you timing kind the give on sorry, more can the the kind and supply and

question to and I’ll can AR? you ask the for take it the Thanks. on supply do Reese chain Stewart then networks

Sure.

of So are we've anyone while. to some But there that issues. it's chain expecting these no surprise been orders supply quite a for

preparing. hiring -- been put in X orders. the that securely X areas. feeling One talent, critical team kind we've it's and And we're place a There's acquiring parts. then of can confident we've that also So is

the one feel we're to network before up we But in for are end we’re here order our for So we jump goals. of of robotics. on make the we side parts first team track ramping hit of that. acquisition for and the And you can Reese, year. delivery sure shooting on

contract the Yeah, up else the us the a training we're been about. partners recently sure. everybody and of for manufacturing And Yeah, that and has is manufacturing like with line. completion thinking supply managing our chain standing milestone something basically

this purchases XXXX. bulk now rest the to so year and parts transitioning into planning, of materials And for of we're and

said by end to be going working in we've the we're something hundreds the as and systems XXs updates looks in think And towards like XXXX. it of of managing. term -- I previous that's So near systems of

to you maybe you have how just to is up system that not talk about there how And is ramp demand I'm many units? many problem. demand how or Congratulations. the way a is -- even And much faster assuming higher? Can demand

drone this drone It's in applications. bit expensive. commercial we remind of there. required system ways, definitely is about To automated that time. a for an everyone, XX% is developed And all solution demand many it's the The Yeah. too exciting

to or So thoughtful extremely expensive. We're trying on making or those each grow approach how markets. in cetera. take a our we of And everything's operations, that chain robust et sure supply one manufacturing

So on and in I’d agenda can, reliability good moving customer our but quickly certainly right general, say as the now. top is as services we of

Thank you.

Bill with National Please comes Instructions] Our proceed. question from next [Operator Morrison Securities.

Hey, guys, order. congrats the questions. on rail Couple

between AI platform software ML? us developed Dynam.AI the and Robotics? and for American remind you look can much American for all, Robotics Like of what how like of has First AI the

think Yeah, the One important competitive is, development into specific analytics each is is we And environment markets. produce just with each for other engagement to one categories. be grouped feature products is the advantage. analytics quickly, think Sure. I X these more the then Dynam an one could which of

So of projects the set that cases work has customers. to are our more we a already to Dynam. are our begun use with make going developing valuable And

could probably a long answered use bit So, more if a again, follow cases. to question. that But that of I pretty conversation want give I there's lot up. you detail hope your different

offline. up more And follow just ramp on I'll then, Yeah, the for do rails. little color a the

XXX many megahertz So XXXX? look in megahertz how envision XXX and and ‘XX? would deploying how going that does into rails you

you customer. much give like is and can, Bill, a in I we to information still as as but conversations active planning Siemens we're with

we that So we've defer got speak. and next visibility have on I I to to think time the expect more

Thanks. it. good. forward Look to Alright,

Bill. Thanks, Great.

we Eric closing queue. conference question-and-answer time, And in Brock the turn our Mr. this now this to are At any remarks. would ends further the like over to I for back session. no showing questions

Thank you, operator. can now. We call end the

to our our remain Have joining us again, And gratitude And thank do, I to also us initiatives continuing And day. do joining to for have American we to morning. focused on this As incredibly momentum at key forward express Ondas for this you support. morning. want we're business and both the of entire going networks I share updates Ondas a your at team look going again We Robotics. forward. great on want activity. We behalf on thank you for accelerating

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