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Ondas Holdings Inc. (ONDS)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $4.25M, up ~7x YoY, with gross margin improving to 35%; however, the quarter missed S&P Global consensus revenue ($4.94M) and EPS (-$0.098) as actuals came in at $4.25M and -$0.1196 on Primary EPS, respectively, and GAAP EPS was -$0.15 .*
  • Management reaffirmed FY 2025 revenue target of at least $25M, with OAS expected to deliver at least $20M; backlog expanded to $16.8M and new OAS orders YTD reached $9.3M .
  • OAS momentum: new Iron Drone Raider and Optimus deployments across NATO Europe, UAE, and U.S. public safety; margins for systems expected “north of 50%,” though quarterly mix kept consolidated gross margin at 35% .
  • Strategic catalysts: AAR selected dot16 DPP for NGHE, IEEE ratified 802.16t; Networks preparing commercialization timelines (HOT early 2026) and continued 220 MHz ACSES radio deliveries starting Q3 2025 .
  • Balance sheet deleveraging: Holdings’ convertible debt fell from $44.6M at 2024 year-end to $25.4M at Q1-end, further reduced to $20.6M post-quarter; share count increased due to conversions (average conversion price ~$0.68) .

What Went Well and What Went Wrong

What Went Well

  • OAS revenue inflected: $4.0M in Q1 2025 vs $0.3M in Q1 2024; strong demand from defense/HLS customers and UAE deployments (Optimus and Iron Drone Raider) .
    “We secured more than $9 million of additional orders year-to-date, further growing our backlog to $16.8 million” .
  • Product validation and margins: management indicated Optimus and Iron Drone margins “north of 50%,” with Iron Drone higher; AAR selection and IEEE ratification validate dot16 platform for rail NGHE and broader rail modernization .
  • Backlog visibility and guidance: Reaffirmed at least $25M FY revenue, OAS at least $20M, supported by $10M 2024 backlog and new orders; bookings expected to fluctuate but trend positive .

What Went Wrong

  • Miss vs Street and losses widened: Revenue below S&P consensus ($4.25M vs $4.94M*) and Primary EPS below consensus (-$0.1196 vs -$0.098*); net loss increased to -$14.1M largely on higher non-cash interest expense ($3.87M) .*
  • Operating losses persist at sub-scale: Operating loss -$10.3M; cash operating expenses rose to $9.0M as OAS scaled operations (vs $7.3M prior year), keeping consolidated profit below breakeven .
  • Dilution and debt dynamics: Significant share issuance from convertible note conversions (average price ~$0.68); while deleveraging is positive, dilution is an investor concern .

Financial Results

Consolidated Performance vs prior quarters/year

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD)$1,480,792 $4,129,042 $4,248,182
Gross Profit ($USD)$47,560 $883,500 $1,488,550
Gross Margin %3% 22% 35%
Operating Expenses ($USD)$8,708,275 $9,401,304 $11,798,988
Operating Loss ($USD)$(8,660,715) $(8,517,804) $(10,310,438)
Net Loss ($USD)$(9,526,268) $(10,335,669) $(14,136,350)
Adjusted EBITDA ($USD)$(7,103,109) $(7,004,928) $(7,495,215)

EPS (GAAP) and vs S&P Global Estimates

MetricQ1 2024Q1 2025
Net loss per share - basic/diluted ($)$(0.17) $(0.15)
MetricQ1 2025 ConsensusQ1 2025 ActualSurprise
Revenue ($USD)$4,937,320*$4,248,182 -13.9%*
Primary EPS ($)-0.098*-0.1196*-22.0%*

Values with asterisk retrieved from S&P Global.

Segment Revenue Breakdown

SegmentQ3 2024Q4 2024Q1 2025
Ondas Autonomous Systems (OAS) Revenue ($USD)~$1.0M $3.6M $4.0M
Ondas Networks Revenue ($USD)~$0.445M $0.5M ~$0.2M

KPIs and Balance Sheet Indicators

KPIQ4 2024Q1 2025
Backlog ($USD)$10.0M $16.8M
New OAS Orders YTD ($USD)—$9.3M
Cash & Restricted Cash ($USD)$29,999,321 $25,409,974
Holdings Convertible Debt Outstanding ($USD)$44,617,229 $25,449,671
Post-Q1 Update – Holdings Convertible Debt ($USD)—$20,600,000 (net of $2.1M unamortized discount; excl. $1.1M accrued interest)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total RevenueFY 2025At least $25M (Mar 12) Maintains at least $25M Maintained
OAS RevenueFY 2025At least $20M (raised from $15–18M) Reaffirmed at least $20M Maintained
Ondas Networks RevenueFY 2025Low visibility; modest growth tied to development programs Primarily development programs; modest system sales Maintained tone
NGHE (dot16) commercializationHOT/EOT Timeline“Expect commercialization to begin end of 2025” Specs complete by end 2025; HOT commercialization early 2026; EOT after Clarified timing later

Earnings Call Themes & Trends

TopicQ3 2024 (Prev)Q4 2024 (Prev)Q1 2025 (Current)Trend
OAS Defense/HLS momentum$14.4M orders (Iron Drone/Optimus); UAE & demos; margin >50% expected Deliveries beginning; backlog $10M entering 2025 $9.3M YTD orders; backlog $16.8M; third Iron Drone customer (border security) Accelerating
Rail dot16 adoptionMetra system-wide 900 MHz upgrade; Class I field expansions Progress on 220 MHz (Amtrak ACSES); NGHE bake-off success AAR selects dot16 for NGHE; IEEE ratifies 802.16t; commercialization plans Validated; timeline clarified
Margins trajectory50%+ on $14.4M defense orders Gross margin recovery expected in 2025 Systems margins “north of 50%”; consolidated GM 35% this quarter Improving with scale/mix
Tariffs/supply chainNoted U.S. support for domestic drones Expect support; minimal China sourcing Tariff impacts manageable; building U.S. production plans Manageable risk
Capital & dilutionCapital raised; NASDAQ extension request $50.2M financing in 2024; plan for conversions Avg conversion ~$0.68; target deleveraging to drive flexibility Deleveraging, dilution risk persists
U.S. public safety (DFR 3.0)Pipeline maturing; demos with large PD BVLOS waivers, Optimus U.S. first customer Strategic alliances (Volatus), FAA BVLOS waiver; ongoing U.S. pilots Building pipeline

Management Commentary

  • “We are reaffirming our full year revenue goal of at least $25 million for 2025 with at least $20 million to be generated by our OAS business unit” – Eric Brock, CEO .
  • “You should think of our systems as having both Optimus and Iron Drone margins north of 50%. And I would say that Iron Drone margins are better than Optimus.” – Eric Brock .
  • “The Association of American Railroads’ selection of dot16 as the standard for the NGHE system is a significant validation... We remain focused on scaling commercial deployments through 2025 and beyond.” – Markus Nottelmann (CEO, Ondas Networks) .
  • “We secured new orders... reflecting the strength of our portfolio, and the growing demand for autonomous drone capabilities... we believe OAS is well-positioned for record performance in 2025.” – Oshri Lugassy (Co-CEO, OAS) .

Q&A Highlights

  • Follow-on order sizing: pilot-to-expansion pathway with significant upside as programs scale with defense/HLS customers .
  • Margins: Management reiterated product margins “north of 50%” with Iron Drone higher, while initial consolidated margins reflect mix/scale effects .
  • Tariffs and sourcing: Limited China sourcing; Israel tariff risk being monitored; U.S. production plans advancing to mitigate impacts .
  • Customer mix: Expect both expansion of existing programs and new logos across Europe, Middle East, and U.S. to drive growth in 2025–2026 .
  • Working capital/prepayments: Using receivables factoring and customer prepayments where available; noted Clear/KLEAR facilities for working capital flexibility .

Estimates Context

  • Q1 2025 results missed consensus: revenue $4.25M vs $4.94M* and Primary EPS -$0.1196 vs -$0.098*, as OAS scaling investments and revenue mix capped margin leverage in the quarter .*
  • Street likely to adjust near-term quarterly cadence and margin ramp assumptions while maintaining positive full-year trajectory given reaffirmed guidance, backlog growth, and pipeline conversion signals .

Values with asterisk retrieved from S&P Global.

Key Takeaways for Investors

  • OAS is the growth engine: defense/HLS adoption is broadening (UAE, NATO-Europe, U.S.), with systems-level margins and backlog supporting FY25 targets; watch for additional Iron Drone and Optimus orders in 2H25 .
  • Rail validation achieved: AAR’s dot16 selection and IEEE ratification de-risk technology; commercialization milestones (HOT early 2026) are a medium-term catalyst; near-term Networks revenue remains tied to development programs .
  • Profit trajectory: Consolidated gross margin improved to 35% but remains mix-dependent; expect further margin lift as product revenues scale and services/subscriptions normalize .
  • Balance sheet: Material deleveraging from convertible note conversions reduces interest burden but introduces dilution; monitor conversion pace and any additional financing vs. execution milestones .
  • Near-term trading implications: Miss vs consensus may weigh in the short term; catalysts include new defense orders, U.S. DFR pilots converting, and visibility on rail deployments or ACSES deliveries starting Q3 2025 .
  • Medium-term thesis: Dual platform optionality (OAS + Networks) with expanding TAM, validated standards, and improving operating leverage supports multi-year growth; execution on backlog and pipeline is key .
  • Risk monitoring: Quarterly booking variability, tariff/geopolitical impacts, and rail deployment timing; management signaled manageable tariff risk and continued progress toward U.S. manufacturing to mitigate supply chain exposure .
Note: Consolidated GAAP EPS for Q1 2025 was -$0.15; S&P Global Primary EPS actual was -$0.1196 for estimate comparison **[1646188_0001213900-25-043710_ea024217401ex99-1_ondas.htm:9]**.*

S&P Global disclaimer: Values marked with * were retrieved from S&P Global.