Ondas Holdings Inc. is a leading provider of private industrial wireless networks and commercial drone solutions, empowering organizations across critical infrastructure sectors to modernize their mission-critical operations. With a rich history spanning over a decade, Ondas has established itself as a trailblazer in the field of wireless communications, revolutionizing the way industries manage and optimize their mission-critical applications.
Company History and Development
Ondas was originally incorporated in Nevada in 2014 under the name Zev Ventures Incorporated. In 2018, the company acquired Ondas Networks Inc., a Delaware-based wireless technology firm, and changed its name to Ondas Holdings Inc. The acquisition of Ondas Networks marked a pivotal moment in the company's history, as it solidified its position as a frontrunner in the industrial internet of things (IIoT) market.
In 2021, Ondas further expanded its capabilities by acquiring American Robotics, Inc., a Delaware-based developer of autonomous drone systems. This strategic acquisition allowed Ondas to integrate drone and automated data solutions into its portfolio, positioning the company as a comprehensive provider of mission-critical wireless communications and autonomous data solutions. In January 2023, Ondas continued its expansion by acquiring Airobotics, Ltd., an Israeli-based developer of autonomous drone systems, further strengthening its position in the drone market.
Challenges and Achievements
Throughout its history, Ondas has faced various challenges and made significant strides. In 2020, the company incurred net losses of $13.5 million as it worked to develop its wireless networking and drone technologies. The COVID-19 pandemic also created supply chain disruptions and delays that impacted the company's ability to fulfill customer orders. To overcome these challenges and fund its operations, Ondas has raised capital through various means. In 2021, the company raised $47.5 million through the issuance of common stock. Additionally, Ondas entered into convertible note agreements in 2022 and 2023 to secure additional capital.
Despite these obstacles, Ondas has achieved several key milestones. In 2021, the company's American Robotics subsidiary received the first-ever Federal Aviation Administration (FAA) approval for automated drone flights without human operators, marking a significant regulatory breakthrough. Ondas has also formed strategic partnerships, such as its collaboration with Siemens Mobility to develop wireless communications products for the North American rail industry.
Financials
Ondas' financial performance has been challenging in recent years. The company's annual net income has remained elusive, with reported losses of $44.84 million in 2023 and $73.24 million in 2022. Annual revenue has been modest, coming in at $15.69 million in 2023 and $2.13 million in 2022. Ondas' annual operating cash flow and free cash flow have been negative, standing at -$34.02 million and -$34.30 million, respectively, in 2023.
In the most recent quarter, Ondas reported revenues of $1.48 million, a significant decrease from the $2.7 million reported in the same period the previous year, representing a year-over-year revenue decline of 72.8%. The company's net loss for the quarter was $10.67 million, with operating cash flow at -$9.09 million and free cash flow at -$6.77 million. The decrease in revenue was primarily due to a $2.98 million decrease in product sales and a $675,000 decrease in maintenance, service, support, and subscription revenue at Ondas Autonomous Systems (OAS), which had a multi-drone order in the prior year quarter. Additionally, there was a $1.35 million decrease in product sales to Siemens at Ondas Networks, as further orders have been delayed. These decreases were partially offset by a $485,000 increase in development revenue to Siemens during the quarter.
Gross margin for the third quarter of 2024 was just 3%, compared to 21% in the prior-year quarter. The company's operating loss for the quarter was $8.7 million, up from $5.9 million in the third quarter of 2023.
Liquidity
Ondas' liquidity position has been a concern, with cash and cash equivalents of $2.9 million as of September 30, 2024, down from $15 million at the end of 2023. As of the most recent report, the company's cash position stood at $4.93 million. The debt-to-equity ratio is 2.45, while the current ratio and quick ratio are 0.40 and 0.27, respectively, indicating potential liquidity challenges. The company has been actively seeking additional funding, including a $3.5 million convertible note investment from a private investor group led by Privet Ventures, an investment vehicle owned by Ondas' CEO, Eric Brock.
Business Segments
Ondas operates through two main business segments: Ondas Networks and Ondas Autonomous Systems (OAS).
Ondas Networks provides wireless connectivity solutions enabling mission-critical Industrial Internet applications and services, which the company refers to as the Mission-Critical Internet of Things (MC-IoT). The segment designs, develops, manufactures, sells, and supports FullMAX, its patented Software Defined Radio (SDR) platform for secure, licensed, private, wide-area broadband networks. Ondas Networks has targeted North American freight rail operators for the initial adoption of its FullMAX platform, as these rail operators currently utilize legacy communications systems with limited data capacity.
Ondas Networks' MC-IoT intellectual property has been adopted by the Institute of Electrical and Electronics Engineers (IEEE) and forms the core of the IEEE 802.16 standard. The company continues to take a leadership position in IEEE as it relates to wireless networking for industrial markets.
Ondas Autonomous Systems (OAS) develops and integrates drone-based solutions focusing on high-performance critical applications for government and commercial enterprises. OAS markets comprehensive drone-based solutions, including the Optimus System, a fully autonomous drone platform capable of continuous and multipurpose aerial data capturing and analytics, and the Iron Drone Raider, a fully autonomous interceptor drone designed to neutralize small hostile drones.
OAS has achieved significant regulatory successes, including securing the first-of-its-kind Type Certification (TC) from the FAA for the Optimus 1.0-EX UAV, becoming the first autonomous security data capture UAV to achieve this distinction. This TC streamlines operational approvals for broad flight operations over people and infrastructure, significantly broadening the range of operational scenarios and scaling up of operations for automated UAS.
Recent Developments and Future Outlook
Despite the financial challenges, Ondas remains focused on expanding its market presence and delivering innovative solutions to its customers. The company has secured several significant orders for its drone platforms, including a $14.4 million order in the third quarter of 2024 from a major military customer for its Iron Drone Raider and Optimus System autonomous drone platforms.
Ondas has also made progress in the rail industry, with its partner Siemens Mobility securing orders from Metra, the primary commuter rail system in Chicago, and a Class I railroad for the deployment of Ondas' 802.16-based wireless technology in the 900 MHz network. This development represents a critical milestone for Ondas, as it demonstrates the growing adoption of its technology in the rail sector.
Looking ahead, Ondas expects modest revenues for Ondas Networks in Q4 2024, primarily driven by development programs. However, the company remains optimistic about a major financial opportunity in the 900 MHz network and expects railroad orders to emerge in 2025. For OAS, significant revenue growth is anticipated beginning in Q4 2024 as the company begins to fulfill the $14.4 million in military orders announced in Q3 2024. The company expects to land additional orders at both Airobotics and American Robotics in Q4 2024 and build backlog for 2025.
Ondas believes the revenue recovery at OAS starting in Q4 2024 will be strong and durable for both the Optimus and Iron Drone platforms. The company also expects to demonstrate progress on the Drone as First Responder (DFR 3.0) opportunity in the coming months, which will contribute to revenue in 2025.
Conclusion
In conclusion, Ondas Holdings Inc. is a company on the cusp of transforming mission-critical industries through its innovative wireless communications and autonomous drone technologies. While its financial performance has been challenging in recent years, with significant net losses and negative cash flows, the company's strategic focus on expanding its market reach and delivering cutting-edge solutions positions it well for potential long-term growth. The success of Ondas will hinge on its ability to continue securing large-scale orders for its wireless communications and drone solutions, while also managing its liquidity and operational expenses. As the company moves forward, investors and industry observers will closely watch its ability to convert its technological advancements and strategic partnerships into sustainable financial performance.