ACTELIS NETWORKS INC (ASNS)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 was seasonally light on revenue ($0.72M, flat YoY) but delivered improved gross margins (35%) and tighter OpEx, narrowing operating loss and net loss; management emphasized pipeline build in Federal/Military, MDU, and ITS and maintained Nasdaq compliance via shareholder equity of $2.58M .
• Versus S&P Global consensus, revenue missed ($0.72M vs $1.20M*) on timing/mix, while EPS beat materially (−$0.22 vs −$2.50*), though coverage is thin (1 estimate each) .
• Sequential trend from late-2024 remains “lumpy”: after a very strong Q3 2024, Q4 2024 moderated (derived ~$1.06M), with Q1 2025 again light; management attributes variability to order timing and book-to-ship dynamics .
• Operational catalysts in the quarter included rail and transportation wins (Northern Ireland rail; Mid-Atlantic county ATMS), supporting the narrative of traction in mission-critical infrastructure verticals .

What Went Well and What Went Wrong

• What Went Well

  • Gross margin expanded to 35% (from 30% YoY), driven by higher-margin verticals and North America mix; OpEx declined 1.5% YoY and interest costs fell with balance sheet deleveraging .
  • Management highlighted growing global presence and partnerships across NA/Europe/Japan; CEO: “Our ability to provide immediate fiber-grade connectivity over existing infrastructure…continues to resonate strongly with customers” .
  • Strategic wins reinforced the thesis: new Northern Ireland rail order and follow-on Mid-Atlantic transportation order demonstrate momentum in rail/ITS deployments .

• What Went Wrong

  • Revenue missed S&P consensus (actual $0.72M vs $1.20M*), reflecting seasonal softness and pipeline-building focus; EMEA revenue declined 31% YoY, partially offset by +23% in North America .
  • Cash used in operations increased (−$2.17M) reflecting working capital movements (receivables +$0.38M) and other items; cash and restricted cash ended at $1.42M .
  • Continued net loss (−$1.86M) underscores scale challenges; management reiterated revenue lumpiness and timing risk for larger orders driving intra-quarter volatility .

Financial Results

Headline results vs prior year and vs consensus (Q1 fiscal quarters)

Sequential trend (last three reported quarters; revenue and margins)

Regional dynamics (Q1 2025 YoY)

Cash, liquidity, and opex KPIs

KPIs and non-GAAP

• Adjusted EBITDA loss improved to $(1.695)M; reconciliation includes add-backs for interest, other financial items, taxes, D&A, SBC; adjusted EBITDA margin −253.09% in Q1 2025 .
• Management emphasized non-GAAP use cases and cautioned on limitations, as detailed in the press release .

Segment breakdown

• ASNS does not report formal operating segments. Mix commentary from Q1 2025 indicates EMEA weakness, North America strength, and APAC growth contributions .

Guidance Changes

No formal quantitative guidance was provided for Q2/FY 2025 in the Q1 materials or on a Q1 call.

Earnings Call Themes & Trends

Note: No Q1 2025 earnings call transcript was available; the most recent call was the FY 2024/Q4 2024 call on Mar 24, 2025.

Management Commentary

• CEO (Q1 PR): “Our ability to provide immediate fiber-grade connectivity over existing infrastructure…continues to resonate strongly with customers seeking rapid, cost-effective solutions” .
• CFO (Q1 PR): “We significantly decreased interest expenses as a result of becoming nearly debt free…focus on growing recurring revenues and driving further margin expansion” .
• CEO (FY24 call): “We delivered 38% revenue growth…125% gross margin improvement…67% reduction in loss per share” and outlined priorities in Federal/Military, Smart City/ITS, and MDU, plus MetaShield SaaS .
• Q4 call Q&A: Management expects continued growth but cautioned on revenue lumpiness and would invest more in sales/marketing while keeping non-core costs lean; profitability timing not committed for 2025 .

Q&A Highlights

• Revenue volatility: “Opportunities are still lumpy…book and ship business,” advising investors to view performance on an average basis across time .
• Investment mix: More spend in Sales & Marketing to drive growth; pursue offshoring/outsourcing to keep non-core costs efficient on path toward breakeven .
• Capital structure: Nearly debt-free exiting 2024; may add selective debt to limit dilution; equity raises remain possible if needed .
• UK Highways (NRTS): Additional phases expected but timing depends on UK government; first phase ~$6–7M already deployed .

Estimates Context

• S&P Global consensus for Q1 2025: Revenue $1.20M* (1 estimate) vs actual $0.721M; Primary EPS −$2.50* (1 estimate) vs actual −$0.22; result: revenue miss but a significant EPS beat. Coverage quality is low given single estimates .
• Implications: Street revenue models may need to step down near-term given seasonality/order timing; margin and cost execution likely support EPS trajectory despite top-line variability.

Values marked with * are retrieved from S&P Global.

Key Takeaways for Investors

• Mix-led margin resilience: Despite a light revenue quarter, margin expansion (+500 bps YoY) and OpEx discipline improved losses; this de-risks downside in seasonally soft quarters .
• Pipeline depth in target verticals: New orders and follow-ons in rail and ITS underpin traction; Federal/Military remains a core growth engine with certifications and partner leverage .
• Expect lumpiness: Management reiterated order timing variability; focus on average trend lines and backlog conversion cadence as key drivers of quarterly prints .
• Balance sheet/Listing compliance: Shareholders’ equity improved to $2.58M, maintaining Nasdaq compliance; interest expense down sharply with deleveraging, improving flexibility .
• Software/SaaS optionality: MetaShield is a 2H25 revenue driver with recurring profile; if adoption accelerates, it can lift margin mix and smooth revenue over time .
• Near-term modeling: Lower Q2 risk on revenue if timing shifts persist; EPS can remain supported by cost control and mix. Watch for order announcements and regional mix inflections.
• Medium-term thesis: Execution in Federal/Military, broader ITS, and MDU, plus SaaS layering, presents a path to scale and profitability; monitor partner ramp and contract phasing.

Supporting detail: Additional Q1 2025 operational releases

• Northern Ireland rail digitization order underscores rail sector expansion and hybrid-fiber value proposition .
• Mid-Atlantic US county follow-on ATMS order supports persistent ITS demand for rapid, cyber-hardened deployments leveraging existing infrastructure .

Notes:

• No Q1 2025 earnings call transcript was available in the document set; commentary reflects the Q1 press release and most recent call (FY24/Q4 2024) .
• Q4 2024 revenue shown is derived from full-year 2024 revenue less nine-month 2024 revenue .