Ondas Holdings Inc. (ONDS)·Q4 2024 Earnings Summary

Executive Summary

• Q4 revenue was $4.13M, up 179% sequentially (vs. $1.48M in Q3) but down 17% y/y (vs. $4.96–5.00M in Q4’23); gross margin recovered to 22% from 3% in Q3 (35% in Q4’23), while operating loss improved y/y to $(8.52)M and Adjusted EBITDA was $(7.00)M, roughly flat y/y .
• OAS (drones) drove the quarter: $3.6M revenue (+260% q/q), while Networks contributed $0.5M (q/q +$0.1M; y/y lower on deferred rail timelines) .
• 2025 guidance: Total revenue $25M with OAS ≥$20M (raised from prior $15–18M); Networks guided conservatively with modest sales (mgmt specified ~$5M on the call). Management targets gross margins of ~40% in early 2025, improving to 50%+ in 2H as volumes scale .
• Strategic catalysts: $10M year-end backlog expected to convert across 1H 2025; new Palantir partnership to scale supply chain/field ops; expanding defense and DFR pipelines in Middle East, U.S. and Europe; Amtrak 220 MHz radio program slated for Q2 2025 deliveries .

What Went Well and What Went Wrong

• What Went Well

  • OAS execution: Q4 OAS revenue $3.6M (+260% q/q) on initial defense programs (Iron Drone Raider, Optimus), with $10M backlog exiting 2024 and $16.9M 2024 bookings, the largest in OAS history .
  • Guidance raised at OAS: 2025 OAS revenue outlook lifted to at least $20M (from $15–18M) within a $25M consolidated revenue target, reflecting visibility from backlog/orders .
  • Margin trajectory: Gross margin expanded to 22% (from 3% in Q3), with management guiding to ~40% in early 2025 and ~50%+ in 2H as volumes scale at OAS .

• What Went Wrong

  • Year-over-year contraction: Q4 revenue declined to $4.13M vs. $4.96–5.00M in Q4’23; gross margin fell to 22% vs. 35% y/y due to lower Networks product mix and third-party content at OAS .
  • Networks softness: Rail deployment timelines remained slower than expected; Networks revenue fell to $0.5M (vs. $1.6M in Q4’23) despite signs of progress (e.g., Metra, Class I Chicago) .
  • Continued losses and cash burn: Q4 net loss $(10.34)M; FY24 cash used in operations $(33.47)M. Debt maturities cluster in 2025/2026; management plans conversions/extensions and has factoring access .

Financial Results

Quarterly P&L (oldest → newest)

Year-over-Year Q4 Comparison

Segment Revenue Breakdown

KPIs and Balance Sheet Highlights

Non-GAAP note: Adjusted EBITDA reconciliations provided in the exhibits .

Guidance Changes

Management also reiterated variability by quarter due to order timing at OAS and rail build-out pacing at Networks .

Earnings Call Themes & Trends

Management Commentary

• “We believe 2025 will be a record year with OAS expected to contribute at least $20 million in revenues of the expected Ondas Holdings revenue of $25 million.” – Eric Brock, CEO .
• “The Iron Drone Raider features… intelligent navigation capabilities in GNSS complex environments… meeting global requirements for low kinetic mitigation of threats from hostile drones.” – Eric Brock .
• “We expect to begin commercialization of our NGHE capabilities in 2025… and continue to engage customers and industry partners on railway communication projects globally.” – Markus Nottelmann, CEO Ondas Networks .
• “2024 has been a transformative year for OAS, highlighted by record-breaking bookings… As we expand our footprint in defense and homeland security, we remain committed to delivering highly capable and reliable autonomous drone solutions.” – Meir Kliner, OAS President .

Q&A Highlights

• Backlog cadence/mix: ~$10M OAS backlog expected to be recognized in 1H 2025; growth from both Iron Drone and Optimus expansions (Middle East, UAE, and new military customers) .
• DFR/US first responder: Major pilot with a large public safety department completed; broad DFR demand growing; regulatory processes aided by FAA type certification .
• Gross margin outlook: Management sees ~40% gross margins in early 2025, improving to ~50%+ in 2H as OAS volumes scale .
• Palantir “partnership” clarification: Near-term focus is integrating Foundry to scale ops; longer-term potential to embed Palantir AI into product solutions .
• Rail timelines/regulatory: AAR publicly intends to meet 900 MHz deadlines; railroads targeting 900 MHz as primary and redundant paths (with 220 MHz) to avoid single points of failure .
• Tariffs: Limited exposure to China sourcing; policy backdrop supportive of U.S./Western producers .
• Liquidity/cash burn: Management expects sequential revenue/gross profit growth in 2025 to reduce cash burn; plans include conversions/extensions of maturities, factoring via CLA, and potential additional financing if needed .

Estimates Context

• Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue was unavailable at time of analysis (S&P Global request limit reached); therefore, comparisons vs. consensus cannot be provided. Management did not cite specific consensus benchmarks in the press release or call .
• Implications: With OAS revenue acceleration, raised OAS guidance (≥$20M) and total 2025 target ($25M), Street estimates may need to reflect higher OAS contribution and margin recovery trajectory as volumes scale .

Key Takeaways for Investors

• OAS-led inflection: Defense and DFR demand is driving revenue acceleration, with ≥$20M OAS revenue targeted in 2025 and a $10M backlog supporting 1H conversion .
• Margin expansion lever: Mix shift to higher-volume OAS product deployments supports gross margin recovery (~40% early 2025 to >50% in 2H) and operating leverage .
• Strategic AI/ops scale: Palantir Foundry integration targets faster scale-up of supply chain, production and field sustainment as deployments broaden .
• Rail optionality: While near-term revenue is modest, 900 MHz migration (Metra/Class I Chicago) and Amtrak 220 MHz deliveries slated for Q2 2025 provide medium-term upside if deployment schedules firm .
• Liquidity watch: YE cash $30M; 2025/2026 debt maturities require continued conversions/extensions/factoring; progress on OAS cash generation reduces funding risk .
• Execution risks/variability: Quarterly revenue to remain lumpy given defense order timing and rail deployment cadence; focus remains on backlog conversion, new customer adds, and field sustainment scale .
• Near-term catalysts: Additional defense/DFR wins, margin improvement, Amtrak 220 MHz commercialization, and evidence of Palantir-enabled ops efficiency could be stock drivers .

Additional Q4-Relevant Announcements

• Strategic partnership with Palantir to deploy Foundry across OAS operations, targeting scalable adoption of Optimus and Iron Drone globally .
• Strategic partnership with Volatus Aerospace to market/support Optimus for border surveillance and security use cases across North America and beyond (announced shortly after quarter-end) .