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ACTELIS NETWORKS INC (ASNS)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $1.06M, down sharply from Q3 ($2.54M) and materially below S&P Global consensus ($3.00M) — a significant miss due to deal lumpiness and timing; management emphasized viewing performance on multi-quarter averages given volatile bookings cycles . Revenue Consensus Mean: $3.00M*; Primary EPS Consensus Mean: -$0.20* (actual quarterly EPS not disclosed) [GetEstimates].
  • Full-year 2024 results showed strong improvement: revenue grew 38% to $7.76M, gross margin expanded to 55% (from 34%), and net loss shrank to $4.37M (from $6.29M), reflecting mix shift to North America and software/services and disciplined OpEx control .
  • Management reinforced the 2025 pipeline across Federal/Military, Smart City/Transportation, and MDU, plus SaaS MetaShield ramp to build recurring revenue; no formal quantitative guidance was issued .
  • Near-term investor narrative: sequential decline from Q3 to Q4 and the Q4 revenue miss may pressure sentiment, but margin trajectory, deleveraging (only $0.77M bank line outstanding), and catalysts in federal/MDU/SaaS provide medium-term upside if execution converts pipeline to shipments .

Note: Values with an asterisk (*) are retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • Gross margin expansion and cost discipline: FY gross margin rose to 55% (from 34%), and OpEx fell 13% YoY, driven by mix shift (North America, software/services) and expense reduction programs .
  • Strategic progress and certifications: Inclusion in DoD-approved lists and JITIC certification underpin Federal/Military momentum; CEO: “We’re seeing increasing adoption across military bases and federal agencies” .
  • SaaS launch to add recurring revenue: MetaShield officially launched in Dec-2024, positioned to drive recurring, high-margin SaaS revenue; “MetaShield…providing comprehensive solution…from within the network” .

Key quotes:

  • “We’ve more than doubled our new customer orders compared to 2023…with growing interest in our GigaLine 900 MDU solution and SaaS, AI-based MetaShield” .
  • “We are entering 2025 with a strong pipeline…strategic partnerships…to capitalize on our unique technological advantages” .

What Went Wrong

  • Q4 revenue miss and sequential decline: Q4 revenue of $1.06M was down from Q3’s $2.54M and below the $3.00M S&P Global consensus; management cited lumpy timing of larger orders and book-ship dynamics . Revenue Consensus Mean: $3.00M* [GetEstimates].
  • Profitability timeline uncertain: Asked if 2025 will be profitable, CEO declined to commit; path relies on winning large contracts and timing remains uncertain .
  • Geographic contraction outside NA: FY revenue growth relied on +134% North America; Europe/Middle East/Africa revenue decreased significantly YoY, highlighting reliance on NA mix .

Financial Results

Quarterly Performance and Trends

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD)$3.431M $2.541M $1.062M (FY $7.760M − 9M $6.698M)
Gross Profit ($USD)$1.940M $1.743M $0.364M (FY $4.270M − 9M $3.906M)
Gross Margin %57% 69% ~34% (calc: $0.364M / $1.062M)
Operating Expenses ($USD)$2.350M $2.060M $1.999M (FY $8.028M − 9M $6.029M)
Operating Income (Loss) ($USD)$0.066M $(0.317)M $(1.635)M (FY $(3.758)M − 9M $(2.123)M)
Net Loss ($USD)$(0.078)M $(0.511)M $(1.799)M (FY $(4.374)M − 9M $(2.575)M)
Net Loss per Share$(0.01) $(0.09) N/A (company did not disclose quarterly EPS)
Adjusted EBITDA ($USD, Non-GAAP)$0.011M $(0.233)M $(1.471)M (FY $(3.481)M − 9M $(2.010)M)

Notes:

  • Q4 figures are calculated as Full-Year minus Nine-Month results; all inputs cited.
  • Non-GAAP reconciliation provided by the company; see press releases and 8-K .

Estimate Comparison (S&P Global)

MetricQ4 2024 S&P Global ConsensusActual# of Estimates
Revenue ($USD)$3.000M*$1.062M 1*
Primary EPS ($USD)$(0.20)*N/A (not disclosed) 1*

Values with an asterisk (*) are retrieved from S&P Global.

Segment/Geographic Mix (FY 2024)

RegionFY 2024 YoY Change
North America+134%
Europe−42%
Middle East−61%

Commentary: Mix shifted strongly toward North America and higher-margin software/services, supporting gross margin expansion .

KPIs and Operational Highlights

  • Recognized $1.1M of software and support revenue from a two-year renewal with a large North American customer in Q3 (recurring/renewal profile) .
  • Gross margin reached 69% in Q3 (benefit from software/services and fixed cost leverage), then normalized lower in Q4 on reduced shipments .
  • Cash, cash equivalents and restricted cash at FY-end: $2.267M; nearly debt-free with only $0.774M bank credit line outstanding .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025NoneNone (pipeline commentary only) Maintained: no formal guidance
Gross MarginFY 2025NoneNone (aim to improve via mix and indirect cost minimization) Maintained: no formal guidance
OpExFY 2025NoneExpect controlled increase in Sales & Marketing to drive growth; prudence elsewhere Qualitative update
ProfitabilityFY 2025NoneNo commitment to FY25 profitability; pursuing growth and selective debt to minimize dilution Clarified
Capital Structure2025NoneEvaluating limited new debt facilities; nearly debt-free at FY-end New qualitative color

No quantitative guidance ranges were provided.

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
AI/SaaS (MetaShield)Early collaboration; plan to expand SaaS offerings “Cyber Aware Networking” initiative advancing MetaShield launched; targeting recurring revenue ramp in 2H25 Building momentum
Federal/MilitaryKey wins incl. Bakersfield deployment; early military orders Continued deployments at U.S. bases; strong traction 150% YoY growth in new orders; JITIC certification; expanded partner reach Strengthening
Smart City/TransportationLarge Washington D.C. $2.3M order; city modernization Ongoing ITS deployments; DOT follow-on orders Positioning for UK NRTS next phases ($6–7M phase 1 discussed; total ~$20M potential) Pipeline continuation
MDU (GigaLine 900)Product interest; trials underway Growing trials; sector engagement Dozens of trials/installations; strong value proposition on coax/copper retrofit Expanding trials
Regional MixNA-driven growth; fixed cost leverage NA strength; software/services mix NA +134% YoY; EMEA declines; margin uplift Mix shift sustained
Capital & ListingRaised ~$5M; equity above Nasdaq threshold ATM in place; liquidity secured Nearly debt-free; exploring selective debt; reverse split not planned at call time Cleaner balance sheet

Management Commentary

  • Strategic positioning: “We help customers modernize and secure their networks…same day implementation of fiber grade quality…without expensive upgrades” .
  • Federal/Military traction: “Following our…DoD-cyber-certified solutions…we’re seeing increasing adoption across military bases and federal agencies” .
  • MetaShield thesis: “MetaShield…providing a comprehensive solution…from within the network…expected to expand recurring revenue over time” .
  • 2025 priorities: “Introducing MetaShield into our installed base…strengthening go-to-market…focusing on operational efficiency while reducing equity dilution” .

Q&A Highlights

  • Sequential revenue decline: Management attributed Q4 weakness to deal lumpiness and book-ship timing; urged multi-quarter averaging for assessment .
  • Expense trajectory: Expect prudent increases in Sales & Marketing to drive growth, with continued efficiency in non-core areas (offshoring/outsourcing) .
  • Capital/dilution: Targeting selective debt (~“couple of million”) to minimize equity dilution; nearly debt-free post repayments .
  • Profitability outlook: No commitment to FY25 profitability; depends on timing of large contracts and continued margin/OpEx improvements .
  • NRTS UK highways: First phase ~$6–7M completed; total project potential cited at “$20-some million”; timing of next phases depends on UK government .

Estimates Context

  • Q4 2024 revenue missed S&P Global consensus ($1.06M vs $3.00M*) — driven by timing/lumpiness of larger deals and shipments; EPS actual not disclosed, preventing a direct EPS beat/miss assessment .
  • Near-term estimate risks: Street may lower near-term revenue/EPS to reflect shipment timing variability; medium-term margin assumptions may improve with SaaS mix and North America exposure .

Values with an asterisk (*) are retrieved from S&P Global.

Key Takeaways for Investors

  • Q4 was weak on shipments versus an exceptionally strong Q2/Q3, underscoring order timing volatility; focus on multi-quarter averages and backlog/pipeline conversion in 2025 .
  • Structural margin uplift (55% FY GM) and lower OpEx provide leverage if revenue scales; continued mix toward NA and software/services is a key driver .
  • MetaShield and SaaS strategy add an emerging recurring revenue leg; watch for 2H25 contribution and attach rates across the installed base .
  • Federal/Military, Smart City/Transportation, and MDU are tangible growth vectors; certifications and partner ecosystems de-risk adoption, but contract timing remains a swing factor .
  • Balance sheet simplified (nearly debt-free) with intent to use selective debt to minimize dilution; monitoring any future equity needs versus debt capacity is prudent .
  • Near-term trading: Q4 miss may pressure the stock; catalysts include contract wins (UK NRTS phases, U.S. federal modernization) and SaaS metrics disclosure; execution on Sales & Marketing investments will be pivotal .
  • Medium-term thesis: If pipeline converts and recurring revenue ramps, the margin profile and operating leverage support a path toward breakeven; lack of formal guidance requires close tracking of quarterly bookings-to-shipments and gross margin mix .