Ondas Holdings, Inc. [ONDS] This autumn 2023 Earnings Name Transcript

Ondas Holdings, Inc. ONDS] This autumn 2023 Earnings Convention Name April 1, 2024 8:30 AM ET

Firm Members

Eric Brock – Chairman & CEO
Yishay Curelaru – CFO
Man Simpson – President & COO, Ondas Networks
Meir Kliner – President, Autonomous Techniques
Tim Tenne – CEO, American Robotics

Convention Name Members

Glenn Mattson – Ladenburg Thalmann
Tim Horan – Oppenheimer
Carter Mansbach – Forte Capital Group
Aditya Iyer – Northland Capital
Matthew Galinko – Maxim Group

Operator

Welcome to the Ondas Holding Inc. fourth quarter and full 12 months 2023 convention name. [Operator Instructions].

Earlier than we start, the Firm wish to remind you that this name might comprise forward-looking statements. Whereas these forward-looking statements mirror Ondas’ greatest present judgment, they’re topic to dangers and uncertainties that would trigger precise outcomes to vary materially from these implied by these forward-looking statements. These threat components are mentioned in Ondas’ periodic SEC filings and within the earnings press launch issued immediately, that are each out there on the corporate’s web site. Ondas undertakes no obligation to revise or replace any forward-looking statements to mirror future occasions or circumstances, besides as required by regulation. Throughout this name, Ondas will confer with sure non-GAAP monetary measures. These non-GAAP measures aren’t ready in accordance with Typically Accepted Accounting Ideas. A reconciliation of the non-GAAP monetary measures to essentially the most straight comparable GAAP measures is proven in our press launch issued earlier immediately, which is out there on the Buyers Relations part of our web site. This non-GAAP info is supplied as a complement to, not an alternative to as superior to, measures of monetary efficiency ready in accordance with GAAP. Nevertheless, administration believes these non-GAAP measures present traders with invaluable info on the underlying developments of our enterprise. Please notice, this occasion is being recorded.

I’d now like to show the presentation over to Eric Brock, Chairman and CEO. Please go forward.

Eric Brock

Thanks, Operator, and good morning. I need to get began by welcoming everybody to our quarterly convention name. We admire the time you are spending with us and on your curiosity in our firm. I am completely happy to be joined immediately by key members of our management workforce, together with our CFO, Yishay Curelaru, who returned to Ondas in January after being referred to as to obligation to serve his nation. As well as, we’ll hear from each Meir Kliner, who’s President of Ondas Autonomous Techniques, and the founder and CEO of our Airobotics subsidiary, and Tim Tenne, who’s the CEO of American Robotics. Meir and Tim will present updates on the marketing strategy and outlook for our drone companies. As well as, we’re joined immediately by Man Simpson, President and Chief Working Officer of our Ondas Networks. That is the primary quarterly investor name Man is attending, and he’ll assist present the enterprise replace for Ondas Networks. He has been the CEO at Ondas Networks for the final 13 years, and is instrumental in managing our enterprise by main a lot of our direct-facing buyer growth and repair exercise.

Now, let’s flip to the agenda. We’ll begin the decision with some transient feedback, highlighting some current bulletins, and I’ll then present a high-level evaluate of 2023 and the way we’re positioned for fulfillment in 2024. I’ll then hand the decision to Yishay for a monetary evaluate of our fourth quarter and full 12 months 2023 outcomes. We are going to then present a enterprise replace for Ondas Networks and our OAS enterprise items, the place I’ll ask Man, Meir, and Tim, to supply commentary round present enterprise exercise. Then we’ll wrap the decision and open the ground for investor questions. Let’s start immediately’s replace by highlighting a number of current bulletins we’ve got shared with traders, starting with this morning’s information that Joe Popolo, CEO of Charles & Potomac Capital, has been appointed to the Ondas Holdings’ Board of Administrators. I’m very grateful for Joe’s willingness to serve on the Board and assist advise me and the administration workforce on our development plan. This, together with Joe’s vital monetary curiosity within the Firm, is a large endorsement within the alternative we’ve got created at Ondas that displays a perception in our potential to drive vital returns for our traders within the years forward. I’ll spotlight that Joe has a protracted and profitable observe file as a enterprise operator and investor. This consists of main the expansion of huge worthwhile companies, in addition to the exit from profitable ventures as an investor. As the one largest investor in Ondas, Joe’s incentives are straight aligned with our shareholders, which is precisely what we wish at Ondas. Briefly, that is nice information for Ondas. I welcome Joe to the Board, and we’re excited to work much more intently collectively within the quarters and years forward.

I additionally need to spotlight our announcement on February 26 that we secured $8.6 million of latest finance. As we introduced, the funding was led by Charles & Potomac, and supplies further development capital to assist our enterprise. That is the second funding that C&P’ has lead after initially main a $50 million funding in Ondas Networks in Q3 final 12 months. We additionally introduced the formation of Ondas Autonomous Holdings, often known as OAH. OAH is a brand new drone holding firm established to carry our drone operations, which we function underneath the Ondas Autonomous Techniques enterprise unit. Bringing American Robotics and Airobotics underneath the OAS company umbrella, is a continuation of the combination we launched into after closing the Airobotics acquisition in January 2023. We imagine this construction will present many operational and monetary advantages as we scale the OAH enterprise globally round our world-class know-how. We’ll talk about this in additional element later within the name.

2023 was a breakout 12 months for Ondas. For the total 12 months, we generated file revenues of $15.7 million, which was a sevenfold improve from the prior 12 months. This embrace $5 million of income in This autumn, which was above our prior expectations. At Ondas Networks, development was pushed by preliminary orders from Siemens to feed the market with stock forward of the anticipated 900-megahertz adoption curve. Whereas the order ramp on 900-megahertz was additional delayed versus our prior expectations, we’ve got nonetheless made substantial progress within the discipline with clients. Man will present extra element later concerning the advanced programs integration course of by which we’re engaged with clients. We imagine we’re within the last stage of the adoption of the brand new dot16 customary, which is able to enable the Class I railroads to launch the 900-Megahertz buildout, driving a industrial order cycle for Ondas. At Ondas Networks, we see FCC deadlines producing extra exercise and urgency to have interaction in end, proving out the scalable integration of ATCS within the migration to the brand new community. Regardless of the sluggish orders with the 900-Megahertz community, our confidence within the rail alternative is barely rising, and we foresee demand constructing in lots of areas, even past 900-megahertz. This stems from a rise within the rising consciousness of our 802.16 know-how throughout the worldwide rail sector and with different rail distributors. That is creating visibility round vital new alternatives for community upgrades past 900-megahertz into new rail sectors resembling passenger in transit.

Our Ondas Autonomous Techniques enterprise unit had an distinctive 12 months, with market adoption kicking in to drive revenues to $9 million for 2023. This was forward of the $8 million objective we shared on the time of the closing of the Airobotics acquisition. This additionally represented a large improve relative to the lower than $1 million income base we had in 2022. OAS income development is being pushed by fleet adoption, with a very spectacular drone infrastructure fleet buildout being supported by our operations in Dubai, the place public security and safety are driving the preliminary use case there for Optimus. We imagine our Optimus system is the one actually automated platform seeing scaled deployment in large-scale operations in city environments globally. In fact, we’re very pleased with this. As we transfer into 2024, we’re seeing broadening alternatives at OAS, with advertising and marketing efforts in america starting to realize constructive traction. We now have strengthened the management workforce by way of the addition of Tim Tenne as CEO of American Robotics, and Tim is rising his customer support workforce with confirmed expertise in protection, authorities, and industrial sectors. As Meir and Tim will talk about, the Optimus system stock availability is enhancing after the delays associated to the Gaza battle. We imagine stock availability will enhance in Q2 and past. It will allow further buyer exercise right here within the US and internationally. It’s going to enable us to have interaction a rising and maturing buyer pipeline. In america, American Robotics has wrapped up its proof of worth in demo work with the MassDOT Aeronautics division. We’re fairly excited in regards to the prospects there. We imagine this was a really profitable program, and we anticipate and are working with the Commonwealth on follow-on actions. We imagine that the important infrastructure, public security, authorities, and industrial sectors will proceed to drive the UAS market and be the central focus for our capabilities and options. Within the final quarter, we’ve got seen a big improve in RFPs and inbound leads from these similar sectors that align with our management and choices.

To wrap up the overview, I need to spotlight that we’re very excited in regards to the prospects for the Iron Drone Raider system. As we disclose in November 2023, we’re responding to an pressing want in Israel for the Iron Drone Raider capabilities. The Raider system meets counter UAS necessities in different protection use circumstances by quickly and autonomously launching a number of excessive velocity unmanned plane to carry out a number of missioning to guard from the specter of hostile drones. That is clearly an unimaginable alternative, and we’re very enthusiastic about our potential to ship a invaluable resolution to pleasant protection and safety forces all over the world. Meir and Tim will share extra on this chance this morning.

I’m now going handy the decision to Yishay for the monetary evaluate Yishay?

Yishay Curelaru

Thanks, Eric. As I get began, I need to remind our traders that the figures we’re about to debate embody the inclusion of Airobotics monetary efficient from January 23, 2023, following our profitable acquisition. This strategic transfer has considerably augmented our operational effectiveness and income stream, elevated our market presence and enhancing shareholder worth. Additional, regardless of the added scale from the addition of Airobotics, as you will notice, working bills are down year-over-year, reflecting an excessive give attention to OpEx effectivity. That may proceed.

Turning to the This autumn 2023 outcomes. We had a powerful end to the 12 months. Within the fourth quarter of 2023, revenues elevated to $5 million in comparison with $0.5 million in This autumn 2023. Our greater than tenfold improve in revenues was primarily a results of greater product gross sales and growth income in comparison with prior 12 months intervals. At Ondas Networks, revenues within the fourth quarter of 2023 have been pushed by product sale to Siemens and growth tasks. Revenues at OAS have been primarily pushed by a continued buildout out of the Optimus fleet by our governmental clients in Dubai. For Ondas Networks, revenues will fluctuate from quarter to quarter, given the uncertainty across the timing of buyer exercise in entrance of the focused industrial rollouts for the 900-Megahertz rollout networks and the event packages underway with Siemens and MxV. Equally, revenues at OAS are anticipated to differ from quarter to quarter and to normalize right into a extra predictable sample as we develop our buyer base and extra of these clients enter fleet packages and recurring companies agreements in america and internationally.

Gross revenue elevated to $1.7 million for This autumn 2023 in comparison with $0.3 million for This autumn 2022. Gross revenue as a proportion of revenues stays variable within the close to time period and decreased to roughly 35% for This autumn 2023, in comparison with 56% for This autumn 2022, on account of decrease margin product combine. Working bills decreased to $14.4 million for This autumn 2023 as in comparison with $34.8 million in This autumn 2022. The sharp drop in working bills was primarily as a result of recognition of $19.4 million non-cash cost of goodwill impairment in 2022 and decreased R&D exercise.

Recurring money working bills, which exclude market bills and non-recurring prices outlined within the supplemental part of this desk, have been $8.7 million in This autumn 2023, a 32% decline from $12.9 million in This autumn 2023. The sharp decline in recurring money working bills was as a result of robust price controls regardless of the addition of Airobotics in 2023, and the rising revenues. This exhibit the working leverage we’ve got throughout companies as we drive anticipated income development within the coming quarters and years. We are going to talk about the non-cash and non-recurring price once we evaluate the total 12 months P&L in a really second. The corporate narrowed working loss to $12.6 million for This autumn 2023, as in comparison with $34.5 million for This autumn 2022. Working loss enchancment was pushed by expense controls and decrease non-cash fees as talked about. Adjusted EBITDA loss narrowed to $7 million for This autumn 2023, as in comparison with $12.6 million for This autumn 2022.

Turning to the total 12 months outcomes. For the fiscal 12 months of 2023, revenues develop $15.7 million, which was a dramatic improve year-over-year versus solely $2.1 million acknowledged in 2022. Income development was robust at each Ondas Networks and Ondas Autonomous Techniques. Each enterprise items posted file ranges of revenues. Gross revenue elevated by sixfold for 2023 as in comparison with 2022. Gross margins have been 41% for 2023 as in comparison with 52% for 2022, primarily as a result of a bigger proportion of low margin product gross sales and companies within the income combine throughout 2023. Working bills narrowed sharply to roughly $46.1 million for 2023, as in comparison with $70.5 million for 2022. The biggest part of the lower in operation bills was as a result of a one-time non-cash goodwill impairment cost of $19.4 million which was acknowledged in 2022. Included in working bills are non-cash bills, together with depreciation, amortization, stock-based compensation, in addition to fees of sure impairment of belongings. As outlined right here, impairment of right-of-use of belongings and leasehold enchancment of $2.5 million, was acknowledged in 2023. This impairment was linked to the American Robotics and Airobotics integration and workplace house discount and subleases with a view to create extra money financial savings. An extra non-cash cost is an impairment of long-term fairness funding of $1.5 million associated to our funding in Dynam AI in 2023. As talked about earlier, a goodwill impairment cost of $19.5 million was acknowledged in 2022. In whole, non-cash bills and impairment fees totaled $10 million in 2023 and $29.3 million in 2022. Recurring money working bills, which exclude non-cash bills and non-recurring prices, totaled $36.1 million in 2023, a 13% discount versus $41.2 million in 2022. The majority of the decline in recurring money working bills was an R&D spending, which was offset by elevated gross sales and advertising and marketing prices. This shift in OpEx displays our focus in driving platform adoption and income development throughout the companies. The corporate realized an working lack of $39.7 million in 2023, as in comparison with a lack of $69.4 million in 2022. Working loss decreased primarily on account of the aforementioned lower in working bills, together with the $9.4 million goodwill impairment cost. Internet loss was roughly $44.8 million for 2023, as in comparison with a internet lack of $73.2 million for 2022. Excluding non-cash and non-recurring prices, the corporate’s adjusted EBITDA loss narrowed to roughly $29.7 million for 2023, as in comparison with $40.1 million for 2022.

Now, let’s flip to the money movement assertion. We held money of $50 million as of December 31, 2023, as in comparison with $29.8 million as of December 31, 2022. The decline in money is primarily a results of working bills incurred and $5.5 million money used to repay debt within the first half of 2023. This use of money was supported by $24 million in internet proceeds raised from the beforehand introduced financing at Ondas Networks and Ondas Holdings early within the third quarter of 2023. Money utilized in operation throughout 2023 displays ongoing funding within the enterprise as we drive platform adoption throughout Ondas Networks and OAS. We anticipate money utilization to enhance considerably as we transfer by way of 2024. Improved money effectivity comes from working bills leverage at each corporations as we focus spending on driving buyer adoption and development in revenues and gross margin and gross income. As famous, we ended the 12 months with $15 million in money. In February, we introduced an $8.6 million capital elevate by way of the sale of Ondas Holdings widespread inventory and Ondas Networks most popular inventory in a financing led by Charles & Potomac Capital. Professional forma of those financing and internet transaction bills, the corporate would’ve had $23.4 million of money as of December 31, 2023. As of December 31, 2023, we had $28.5 million in convertible notes excellent. I need to spotlight that the convertible notes have maturities in April 2025 and July 2025, which suggests we’ve got typically to handle their amortization and create situation to equitize the notes underneath extra favorable situations. It’s our goal to equitize these notes as quickly as we are able to through the use of shares to retire the notes both by way of month-to-month amortization or to see these notes convert completely to fairness previous to maturity. I’ll now hand over the decision again to Eric.

Eric Brock

Nicely, thanks, Yishay. Now, we’ll transition to a evaluate of our enterprise items, and ask Man Simpson, and Meir Kliner to share updates on current exercise within the discipline with clients and trade companions. We can even ask Tim Tenne to share feedback concerning American Robotics and drill down a bit into the outlook for OAS in america. Earlier than I hand the ground to Man, I need to present a few necessary updates on Ondas Networks. Firstly, we’ve got made a management change at Ondas Networks. Stewart Kantor is not with the corporate. As well as, Man Simpson has been appointed as the brand new President at Ondas Networks. As I discussed originally of the decision, Man has had a protracted tenure as COO of Ondas Networks. I relied on him to handle our rising workforce from an inner operations standpoint, and in parallel, his management has spanned from spearheading our manufacturing capability ramp to main our technical discipline and options engineering groups, whereas additionally being out in entrance on essentially the most important customer-related actions. We depend on Man extensively, and I’m completely happy to have him assume the added obligations as president as we transfer ahead to scale the corporate. The aim and good thing about the administration chain is to align the corporate to be tremendous centered on driving the order ramp and income development we’re concentrating on, whereas charting a path to profitability. We now have finished distinctive work at Ondas, growing revolutionary, world-class wi-fi know-how for mission-critical networks. Now, it is time to intensively focus our energies in the direction of delivering these options within the discipline to clients at scale. We imagine our enterprise is at an inflection level. We imagine industrial deployments in 900-megahertz will start quickly, and that the chance of 900-megahertz and the opposite non-public networks for the Class I rails, along with international rail markets, stays substantial.

Man, I’m now handing the decision over to you.

Man Simpson

Thanks, Eric. It’s a pleasure to be right here and to have the chance to work with our traders. At Ondas Networks, we generated $6.7 million in revenues throughout 2023, led by product shipments for patrons. This represented a 250% improve in revenues in contrast with 2022. 2023 was additionally marked by Ondas Networks making investments to considerably improve its manufacturing capability, which supported file manufacturing and cargo volumes for the 12 months. We proceed to be absolutely engaged with Siemens, the Class I rails, and now transit clients to additional put together for big scale industrial deployments at 900-megahertz. Moreover, we proceed our work with the AAR and our rail clients on a growth roadmap for dot16 networks, together with a lot of future merchandise and extra networks past 900-megahertz. Internationally, We now have ongoing exercise with Siemens for Indian railways, in addition to the event of a brand new locomotive radio for the European market, a program that will probably be accomplished in 2024. And lastly, we’ve got a number of ongoing enterprise growth actions with the passenger and transit rails in North America and worldwide markets. We anticipate sharing new exercise in these markets, significantly on the passenger rail facet quickly.

As our traders know, we’ve got engaged in long-term program with Siemens and the Class I railroads to pursue an improve of the 900-megahertz community. I need to take a while and supply a factual replace associated to our work on that 900-megahertz community, whereas sharing some context on the chance and the trail forward. First, the Class I railroads have agreed with the FCC to vacate the legacy 900-megahertz channels. In return, the FCC has supplied new greenfield spectrum often known as the A block for the railroads to buildout new fashionable community – to construct a brand new fashionable community for operational and security use circumstances. Ondas first engaged the AAR in growth work on 900-megahertz in 2019. In April 2020, the FCC issued a proper order for the rails to vacate the legacy 900-megahertz spectrum. Additionally, in April 2020, we signed a partnership with Siemens to handle this 900-megahertz migration alternative and to improve the ATCS utility from the legacy 900-megahertz community. So, Ondas and Siemens have been deeply engaged on this undertaking for greater than 4 years, and let’s be clear, we’ve got completed quite a bit. After in depth lab and discipline testing of our FullMAX-based platform and vital joint product growth efforts with Siemens, the AAR introduced the collection of dot16 because the know-how for the brand new 900-megahertz community. This choice was introduced by the AAR’s Wi-fi Communications Committee, WCC, in March 2023. Since then, we’ve got labored within the discipline on end-to-end programs integration with a number of railroads. This work is with the railroads prepare working teams, principally the communications and signaling, or C&S groups. Techniques integration, typically encompassing many disparate legacy parts, is advanced. The excellent news is that dealing with complexity is a large energy of Ondas, and a major purpose why clients worth our experience. However after all, it takes work, and within the railroad enterprise, growing scalable processes isn’t a straight line, as you’ve gotten seen.

So, let’s take a better look and describe exactly the place we’re and the outlook forward. We imagine we’re within the last phases of the advanced programs integration course of linked to upgrading the 900-megahertz community. If you happen to’ve been listening intently, you may have heard me repeat the time period programs integration many occasions. This is a vital idea to know. The work that Ondas and Siemens and the railroads prepare operations teams, is targeted on the combination of latest fashionable programs with legacy applied sciences. So, first, what will we imply by a system? The 900-megahertz community improve is not only a communications occasion. The primary utility on the brand new 900-megahertz community, Siemens Superior Prepare Management System, or ATCS, is identical utility that has been operating for at the very least 20 years. Which means that Ondas and Siemens are upgrading the ATCS utility and introducing a brand new communications know-how concurrently. The programs integration of ATCS and the dot16 community requires backwards compatibility with many different complementary applied sciences inside rail operations, beginning on the rail waysides and all the best way to the back-office functions. A few of this know-how is greater than 20 years outdated, and as we transfer ahead, we and the shoppers are studying that different tangential know-how must be upgraded as effectively. Understandably, this integration effort should be finished rigorously. Even minor points can influence timelines greater than we want. The excellent news is that each Siemens and Ondas, in addition to the shoppers, are dedicated to doing the onerous work, and we imagine we’re near validating the programs integration effort.

Upon last acceptance from our main Class I buyer, we imagine preliminary industrial orders will come from this railroad in addition to two smaller rail programs with whom we’re additionally presently engaged. Importantly, the opposite Class I railroads are monitoring this exercise intently, and we anticipate them to advance their very own discipline work with Ondas and Siemens, after which sign their 900-megahertz networked aims, planning, and timelines as soon as our programs integration course of has been validated. In fact, whereas we’re reluctant to publicly talk about FCC deadlines, in spite of everything, they’re the rails deadlines, not ours, we do imagine that these deadlines are motivating elevated engagement. We imagine the onerous work on programs integration is sort of behind us, and the order and deployment cycle we’ve got been ready for is changing into more and more seen. We glance to construct the order guide and backlog with extra railroads planning ATCS upgrades and wider 900-megahertz community buildout. 2024 will probably be 12 months. Success within the discipline, and we’ll construct on the elevated manufacturing functionality established in 2023, and additional increase our service supply mannequin with coaching and advertising and marketing packages designed to drive expanded use of the dot16 know-how.

So, let me attempt to succinctly summarize the outlook at Ondas Networks. We are going to drive orders, backlog, supply, and deployment of programs this 12 months to start out the 900-megahertz community improve cycle for the railroads. We really feel like we’re shut. The client suggestions on the onerous process of programs integration has been universally constructive. We’re very shut. As we’ve got said beforehand, we proceed to maneuver ahead aggressively on securing new orders, and now have the capabilities to fulfill our clients’ manufacturing wants. In parallel, Siemens and Ondas are advancing our companies functionality to assist wide-scale adoption and deployment of our dot16 wi-fi know-how. As we advance, we’re seeing a broadening and likewise a deepening of engagement throughout the trade. This consists of the Class I rail clients we’ve got been working with since 2019, and now transit and passenger rail operators. Extra usually, there may be an rising demand for brand new networks and new merchandise and in new geographic markets, and likewise to develop new rail ecosystem/vendor relationships. We now have outlined a few of this right here and anticipate extra bulletins quickly on this entrance. As we develop, we pays shut consideration to spending ranges on working prices as we drive in the direction of profitability. We’re more and more focusing our OpEx {dollars} on driving income and supporting a path to profitability. I am going to now hand the decision again to Eric. Eric?

Eric Brock

Thanks, Man. I am going to now ask Meir Kliner to take the ground and replace us on the progress with clients at Ondas Autonomous Techniques and supply perception into current developments at OAS and the outlook from right here. Meir?

Meir Kliner

Thanks, Eric. 2023 was a pivotal 12 months for Ondas Autonomous Techniques. We now have been capable of obtain our objectives outlined in our roadmap to allow our imaginative and prescient for increasing our absolutely autonomous drones and the transformative options they provide for important operations. Our workforce has labored out over the previous two years to carry Ondas thus far. We’re concluding 2023 with file excessive revenues, a powerful validated market feed for the Optimus system, and a really promising place out there with the Iron Drone radio system. We imagine that Ondas presently holds two of essentially the most promising drone applied sciences out there and a really robust and succesful workforce to implementing them as a important drone infrastructure in civil and navy operations. Throughout 2023, the Optimus system has confirmed its worth for ongoing surveillance and emergency response operations in Dubai, AUE, demonstrating the disruptive potential of our trusted know-how in present safety operations worldwide. Within the US, we’ve got made vital progress demonstrating the capabilities of the Optimus system to the Massachusetts Division of Transportation and its stakeholders. Our Optimus drone has acquired an Airworthiness Kind Certification by the FAA, making it within the first drone-in-a-box and data-capturing drone to attain such certification. This milestone not solely permits our workforce to proceed working with the FAA on superior utterly autonomous operation in advanced environments resembling cities and metropolitan areas, but in addition signifies that our know-how has reached a really mature stage.

Our international potential advertising and marketing safety, important infrastructure safety, and distant monitoring companies, is huge. We are going to proceed executing our plan, specializing in market penetration by way of public security and transportation departments, serving ports and terminal operations, emergency response, and huge development tasks, as our drone and data-as-a-service enterprise fashions have confirmed to be scalable. We’re receiving robust indications of the worth of shared drone infrastructure demonstrated with our clients. The influence of our full-scale world’s first city drone community is mirrored in our 2023 revenues and development as we’ve got delivered in further programs to our buyer in Dubai. It is a continuation of our governmental buyer setting its intention to deploy a citywide community. Throughout 2023 and just lately, main public security and safety teams from the US and worldwide markets acquired demonstration of the Optimus system community capabilities. Its dramatic impacts on response time is proudly highlighted, with our buyer lowering it from 4 minutes to 70 seconds within the Optimus community protection areas, making a community impact and synergy of Optimus drone fleets deployed as a sensible community of drones. We are going to preserve working and concentrating on our enlargement within the UAE to further civil and industrial infrastructure clients and use circumstances, specializing in shared infrastructure deployments fashions with a number of clients and leveraging our operational footprint for native and export alternatives from the UAE.

2023 was a major 12 months for our Iron Drone Raider counter-drone system. We now have acquired and enhanced the system to turn into one of the vital distinguished options for a few of the most difficult issues posed by hostile drones. We now have acquired a grant from the Israeli Innovation Authority to assist assist this enhancement. As battle in Ukraine and Israel escalate, we’re witnessing the rising influence of small autonomous drone, the injury they trigger, and the problem in detecting and successfully neutralizing them in a well timed method, with minimal collateral injury. We now have responded to the pressing necessities of protection and safety forces in Israel and worldwide. We’re quickly integrating and enhancing this promising know-how to handle all facets and turn into a major participant on this area. After initially getting into the market in Israel, we’re planning to develop a world advertising and marketing plan. We’re already in dialog with the US protection and safety entities as we discover partnerships for distribution and system integration worldwide to seize market place on this giant market that additionally consists of the safety of important industrial and civil infrastructure and delicate public places. Ondas has additionally made vital progress within the US market throughout 2023. Our reorganization program aiming to leverage the core benefit of integrating American Robotics and Airobotics has been fruitful.

I’ll now finish the decision to Tim Tenne, CEO of American Robotics, to supply an replace on the enterprise advances we’re making at American Robotics.

Tim Tenne

Thanks, Meir. 2023 was a major 12 months for American Robotics. Since quarter 4 and all through quarter one, we’ve got continued to consolidate, construct, and mature our buyer pipeline, specializing in fleet alternatives and shared infrastructure fashions for the protection, authorities, and industrial sectors inside america. Throughout this era, we’ve got efficiently performed a proof of idea with the Mass Division of Transportation division of aeronautics, which included demonstrations of the Optimus system’s big selection of capabilities at a number of places and in broad ranging environments. We’re planning to advance our advertising and marketing efforts with further governmental clients as a part of our go-to market penetration plan and to launch extra packages throughout 2024. Our pipeline consists of departments of transportations, ports and terminals, public security, rail utilities, and oil and gasoline, providing them our distinctive trusted options to a few of the most difficult issues of distant monitoring and infrastructure missions. We’re advancing our enterprise and operational capabilities with a lean and efficient workforce of confirmed consultants and anticipating Optimus stock arrivals throughout quarter two. With the brand new stock, we will assist elevated installations of Optimus programs for extra packages and new websites. With the arrival of those new programs, we’re constructing a world-class customer support and expertise heart at our new Maryland location that permits for unfettered demonstrations of merchandise and is in shut proximity to protection, authorities, and industrial clients. Along with the FAA Kind Certification of the Optimus drone, and our potential to function persistently past visible line of sight, these demonstrations will make a huge effect. Our workforce’s ingenuity and professionalism have been confirmed this quarter, working in coordination with the FAA to obtain an necessary past visible line of sight waiver primarily based upon an answer that can allow autonomy and adoption of our programs for patrons, which I am going to talk about shortly in additional element.

I wish to spotlight our achievements within the proof of idea program completed with the Mass Division of Transportation. Throughout this program, American Robotics demonstrated a large number of use circumstances, together with inspection of rail and different important belongings, surveillance, and emergency response functions, automated mapping and survey by our autonomous Optimus system. We now have continued to construct and combine an ecosystem of technological companions, and along with the distinctive options of the Optimus system, allow our entry to advanced airspace, which is important for delivering steady efficient drone missions with out limitations. As talked about earlier, the unequalled aviation security and regulatory expertise was confirmed in live performance of getting an FAA-certified UAS and the patented scene-avoid system that enabled the fast approval of a past visible line of sight waiver, from which permits for actually distant operations. This exceptional achievement was lauded by MassDOT, additional solidifying our management within the UAS trade. This program additional validates our assumptions with respect to the scale of alternatives with the departments of transportation in america and worldwide in establishing a scalable framework, an end-to-end automated knowledge resolution that helps buyer necessities. We’re persevering with to discover and validate further deployment places all through america supporting our enlargement efforts. As talked about beforehand, we’re excited to introduce the Raider system to protection and authorities purchasers, and imagine the Raider is a vital functionality and resolution for the US markets, particularly given the refocus of UAS into protection and safety budgets. Lastly, we proceed to judge and add partnerships that allow our autonomous community technique and framework. Each Senhive and Resilience, which have been introduced this quarter, are central to this framework.

I’ll now hand again the decision to Meir.

Meir Kliner

Thanks, Tim. We’re happy with the expansion in 2023 and looking out ahead to persevering with this momentum in 2024. We’ll proceed to develop our income and orders for our fleet deployments within the UAE, safe further buyer engagement within the US, and increase into different worldwide markets. We’re planning to start out preliminary operations in Europe the place our advertising and marketing groups have already begun some enterprise growth actions. We’re optimistic for our potential to speed up enterprise growth within the US, leveraging American Robotics’ footprint to penetrate DOTs, public security, and significant industrial markets. We are going to proceed with ecosystem growth, working with companions to supply full spectrum drone platforms, companies, and knowledge integration. We’re centered on scaling our manufacturing functionality in 2024. We’re constructing and delivering stock, increasing to fifteen new Optimus system on order, and making ready new manufacturing orders for H2 2024 to fulfill anticipated demand. We imagine Iron Drone will launch this 12 months, and we stay up for sharing extra information in regards to the Iron Drone Radar. We’re establishing manufacturing capabilities in parallel as we work with clients and companions to formalize orders. As I discussed earlier than, we imagine we’re effectively positioned to take care of momentum and generate vital objectives in 2024. As we’ve got introduced, we’ve got determined to create Ondas Autonomous Holdings to scale up our drone enterprise. Eric will discuss this nice initiative, and I stay up for sharing that outlook with you the following time we meet.

This completes my formal remarks. Eric, I will hand the decision again to you now.

Eric Brock

Thanks, Meir, and Tim. Earlier than we wrap up the decision, I need to take a second and talk about the just lately introduced institution of Ondas Autonomous Holdings, or OAH, as an intermediate drone holding firm. Bringing American Robotics and Airobotics underneath the OAH company umbrella, is actually a continuation of the combination we launched into after closing the Airobotics acquisition in January 2023. It will present many operational and monetary advantages as we scale the OAS enterprise globally round our world-class know-how platform. As we illustrate right here, OAH is a completely owned subsidiary and managed by the general public firm, Ondas Holdings. From a consolidated foundation, nothing has modified. The advantages of this new company construction are multifold. Firstly, we anticipate to understand vital operational flexibility with a company construction completely centered on the worldwide growth and supply of best-in-class autonomous aerial safety and knowledge resolution. The markets we service are giant, dynamic, and quickly rising. A pure play drone options firm is the suitable company construction. The monetary advantages are additionally vital. We measure our market valuation alternatives with OAH within the many billions of {dollars}. We now have an distinctive alternative to develop a big, worthwhile enterprise, and in doing so, stake out a dominant place in a large, fast-growing market. Having a clear, impartial stability sheet will decrease our price of capital dramatically. We’re in a tough monetary local weather for drone corporations. We now have many aggressive benefits that matter to our clients and companions. These benefits are mainly our best-in-class confirmed know-how platforms and roadmap, our regulatory capabilities, and naturally, our extremely proficient workforce. That benefit will probably be amplified by a powerful stability sheet. Simply watch. We plan to have an Investor Day centered on OAH throughout Q2. Then we’ll lay out an expanded marketing strategy, which we expect will probably be effectively acquired.

Let’s wrap the decision now and summarize the outlook. We aren’t giving formal steering immediately. We now have a whole lot of confidence within the full-year outlook. Nevertheless, proper now, we need to be conservative, given we nonetheless have to safe that preliminary 900-megahertz quantity order. At Ondas Networks, we’ll full the programs integration effort, as Man mentioned. It’s shut, and from there, visibility on pipeline and talent to safe orders, improves fairly a bit. The chance at Ondas Networks stays as massive as ever. We proceed to see the TAM on 900-megahertz at $400 million, and you will notice us improve our serviceable addressable market or SAM this 12 months with new clients and community alternatives past 900. Keep in mind, dot16 is poised to be the non-public wi-fi community know-how for all of the non-public rail networks. So, keep tuned. At OAS, we’ll see continued development with present clients. Importantly, we see the prospect of including a number of new clients this 12 months which have vital potential to drive fleet adoption and speed up our development curve. As well as, we imagine the Iron Drone Raider is hitting a candy spot in a drone market phase seeing explosive development, and will probably be a significant catalyst for our valuation. Briefly, we do anticipate 2024 to be an excellent 12 months when it is all mentioned and finished.

With that, let’s examine if there are any questions. Operator?

Query-and-Reply Session

Operator

[Operator Instructions]. The primary query immediately comes from Glenn Mattson with Ladenburg Thalmann. Please go forward.

Glenn Mattson

Sure. Hello. Thanks for taking the questions. So, a few occasions, you guys talked about stock as a, I do not know, maybe a gating issue within the drone house by way of development. Are you able to simply discuss that availability of stock now and maybe I suppose the timeline as to whenever you assume that stock drawback alleviates itself versus what backlog you’ve gotten now and the way you anticipate that backlog to form of ship all year long? That’d be useful. Thanks.

Eric Brock

Sure, Glenn, I am going to reply this, after which I am going to ask Meir to supply a number of extra particulars. So, we have been constructing programs, as we communicated to traders final 12 months, and naturally form of making an attempt to sequence that for deliveries within the second half. The occasions in Gaza, the battle, did throw the provision chain and the manufacturing functionality off and actually pushed out the timing of completion of builds and delivering of programs to us. So, we’re on the level the place we’re seeing that relieve itself. We have had some items delivered just lately and we anticipate that to select up. And Meir, perhaps you can provide just a little bit extra element on that.

Meir Kliner

Certain. Thanks, Eric. So, as you talked about, we’re within the manufacturing section, and proper now we’re within the timeline of each two weeks we’ve acquired new system from the provider. So, I feel we’re in fine condition about that.

Glenn Mattson

Okay, thanks. And if I may ask one other one simply on the networks facet. I suppose, with the ramp and deployments coming just a little slower than anticipated maybe, are you able to simply give a way of the – it doesn’t seem, I suppose maybe for the Class I railroad, in the event that they begin to ramp up just a little sooner as this 12 months goes by, they’re going to maybe have the ability to meet a few of the onerous deadlines that has been set by the federal government, nevertheless it doesn’t seem that perhaps a few of the different Class I railroads are as far alongside down the trail. Are you able to simply get a way of the urgency on their facet, the way you’re sensing what their urgency is by way of the rules and the deadlines and what the plan can be in the event that they have been to not meet these and that form of factor?

Eric Brock

Certain. Sure. So, as we mentioned on the – we gave some context on this, and I am going to circle again to that concerning deadlines, however I do need to emphasize that these are the rail deadlines. And as we discuss to the AAR, principally the Wi-fi Comms Committee, they proceed to specific confidence in with the ability to meet the deadlines. However once more, I am going to depart that to them. When it comes to the method, Glenn, we’re doing this, as Man shared with some nice element, the advanced programs integration work, and that is a course of that’s being finished with one rail specifically, and we’ve got a few different transit rails concerned as effectively. And that is form of typical, I’d say, of how the AAR and WCC work. It doesn’t make sense for Ondas and Siemens to be stretched throughout all of the six rail programs, concurrently doing the identical program to exhibit the scalability of the community and ATCS integration and migration to the brand new band. So, you are seeing as we do that work, very common interplay with the broader WCC on our progress and our perception is that as we validate this, we do imagine we’re shut, that the engagement with the opposite railroads goes to be – we’re not beginning at floor zero, primarily. They’re going to undergo a course of the place they begin to set up themselves, get snug with how that course of seems, however the truth that we’ve got gone by way of and I would say ironed out the kinks with all of the legacy applied sciences and the way they play with our new programs in a contemporary community, I feel the assumption is that these different railroads can have interaction pretty rapidly.

Glenn Mattson

Nice. That is good shade, Eric. Thanks for the assistance.

Operator

The following query comes from Tim Horan with Oppenheimer. Please go forward.

Tim Horan

Thanks, guys. Eric, do you assume you’ve gotten sufficient money now to make it to free cashflow constructive, or do you have to do some extra fundraising?

Eric Brock

I feel we’ll see – we’ll do some extra fundraising, Tim, and we’re making an attempt to place the corporate in order that our entry to the capital on higher phrases is feasible. We have been capable of get that …

Tim Horan

Obtained it. Any sense of the quantities?

Eric Brock

Sure, we’re not going to reveal that quantity now. I feel you’ll be able to have a look at the present OpEx ranges of about – on a money foundation, about $7.5 million per quarter as is form of what the OpEx is. After which after all, we have to – we will probably be driving income development, gross revenue, and that is going to extend on the enterprise.

Tim Horan

Obtained it. And so, simply again to the rails and the 900-megahertz, do you’ve gotten a greatest guess when initially they need to vacate the spectrum and the second section, at this level, absent the FCC timeline, and do you’ve gotten a greatest guess at this level what which means income for you guys in whole?

Eric Brock

Sure, I hesitate to place the numbers on it. We nonetheless have a look at the addressable market, and we made this level on the decision as the identical. We simply see issues pushed to the suitable a bit right here. However we do imagine the order cycle will start quickly as we clear these last hurdles. And with respect to the timing, the legacy 900 community retirement date stays September 2025. So, we’ve got not seen any change of that after which buildout out necessities within the first – that kick in within the first half of 2026. So, we do imagine that there is some urgency right here, and that as we’ve got success on demonstrating the combination, that we will get much more visibility on broad plans for the whole sector.

Tim Horan

Obtained it. So, do you assume this 12 months continues to be primarily a 12 months for taking orders, or will we really begin to – ought to we anticipate shipments extra in 2025 or ought to we anticipate shipments in 2024?

Eric Brock

I feel we will get shipments in 2024.

Tim Horan

Obtained it. After which, the one companion that you simply’re engaged on the programs integration, how lengthy has the method taken? And it feels like we’re – are we weeks away or months away from that being finalized? And the way lengthy do you assume it will for others to form of show out the system integration?

Eric Brock

So, I feel we’re very shut. What we’re doing within the discipline is form of actual time, I’d say. And I hesitate to place any extra finer level on that since you’re not there till you are there. However we’ve got been within the discipline now with this effort, with this one explicit Class I for the higher a part of six months. And as we mentioned on the decision, there’s issues that come up, proper? And even innocuous integration with small piece of the legacy system, typically will form of ship you again. It’s a must to anticipate an improve of a sure part of the system, and you then get again and also you end. So, we imagine we have finished the huge bulk. I’d say I feel we might have finished all of it, however I do not need to make that time till we’re capable of say it is completed. So, I feel it is shut. After which from there, clearly we’ll be speaking this with Siemens and their buyer, and the kinds I’ve instructed you about earlier than, the WCC and with the person railroads. And I feel from there, there’s going to be extra engagement with folks making an attempt to do the identical form of course of. However once more, it doesn’t begin at floor zero as a result of we have demonstrated the trail within the discipline and with how the programs get built-in.

Tim Horan

Obtained it. So, for the remaining rails, you assume it is extra form of a six to eight-month course of, you assume it is extra of a 3 to four-month course of for every of them?

Eric Brock

Sure, it is positively shorter, and I’d hope it is shorter than that. I feel the second railroad will go quite a bit sooner. The third railroad will go even sooner than that. What we’re actually doing right here is demonstrating the programs integration and likewise the scalable processes to combine and migrate to the brand new band.

Tim Horan

Obtained it. And so, it feels like we may be in a scenario the place we have to ship like $100 million value of kit inside like a – I imply, to fulfill the timeframe inside like a six to nine-month interval. Do you’ve gotten the manufacturing functionality to try this?

Eric Brock

So, we have to add capability to hit these numbers you talked about. And so, that is the quick reply. I do imagine as we’re transferring by way of the second half and in 2025, that we will – with elevated visibility, we are able to do this, together with clearly working intently with our manufacturing companions.

Tim Horan

Thanks.

Operator

The following query comes from Carter Mansbach with Forte Capital Group. Please go forward.

Carter Mansbach

Good morning, guys. To begin with, congratulations on all of the progress that you simply guys have made. So, a few questions. So, Eric, I feel I heard you say early within the name about different distributors. Are there different distributors that you simply’re speaking to or working with in addition to Siemens for the rails?

Eric Brock

So, the quick reply is sure, we’ve got – and I am going to remind you that once we deploy this community, there’s a number of applied sciences that should be built-in. So, that is one factor I’d spotlight. Secondly, it is a international rail market, and we’ve got an excellent relationship with Siemens that is solely getting stronger. However there’s simply extra alternative on the market once we take into consideration international rail. So, that’s what I can share with you immediately.

Carter Mansbach

Truthful sufficient. All proper. Second query, perhaps just a little extra difficult. So, you mentioned that you’ll have a name, investor name concerning the spinoff of the drone enterprise. So, are you able to give us any perception of what it seems like? Are we speaking about two separate shares? I imply, I simply have a whole lot of questions coming in from traders. We now have no readability. So, are we two separate entities, whether or not it’s going to be two separate inventory symbols? Are you able to give us something till we even have a name about it?

Eric Brock

Sure, I feel the quick reply to that’s it might – that may be what we do. So, the place we’ve got now – what we’ve got established is OAH as a intermediate holding firm, and that may be a funding car the place we elevate capital particular to the drone companies, and that might be as – just like the best way we have finished – we have raised capital on Ondas Networks. And/or it might be in reference to a public market transacted say a spin out or subsidiary IPO. There is a vary of choices that we’ll be evaluating, and we’ll most likely share extra of that when we’ve got our investor name.

Carter Mansbach

It sounds good. Sure, it sounds just like the drone facet will probably be quite a bit leaner and it will be nice to have them separate entities. All proper, effectively, thanks on your time. Congratulations on all of the accomplishments. I stay up for seeing what occurs in 2024.

Operator

The following query comes from Aditya Iyer with Northland Capital. Please go forward.

Aditya Iyer

Hello, that is Aditya on behalf of Mike Latimore. Might you give some shade on how a lot of the anticipated drone income ought to come from worldwide clients versus home?

Eric Brock

Sure, that is query. I feel you could possibly anticipate us to drive most likely greater than half of our income this 12 months from worldwide markets, however I do assume you may see us get traction with some essential clients right here within the US, and that over time, the US market could be very prone to be the most important one for us. Slightly extra context on that’s, as you consider constructing expectations and constructing monetary fashions is, once we’re working with our preliminary clients, wherever they’re on this planet, usually what you may see is one or a small handful of programs be deployed. And naturally, we’re centered on clients that may scale a number of programs fleets. So, as we demonstrated in Dubai within the public security market there, it began with a pair, and naturally now we’re into a large fleet deployment. So, we noticed extra of this final 12 months in larger quantities by way of variety of programs. And we do anticipate this 12 months, we’ll see much more. So, hopefully, that provides you adequate shade on how we see development regionally.

Aditya Iyer

Yep. Obtained it. Might we additionally give some shade on the gross margin vary you’d anticipate from drone income for this 12 months?

Eric Brock

I am not going to present that steering simply but. That is determined by a whole lot of components, together with what the combo is vis-à-vis outright gross sales of the system or the as-a-service mannequin. So, I feel we will maintain again and share extra particulars. I’ll say that we imagine the massive market is the data-as-a-service market and we’ll have the ability to share some – a whole lot of shade on the unit economics we see there on our OAH Investor Day.

Aditya Iyer

Thanks.

Operator

The following query comes from Matthew Galinko with Maxim Group. Please go forward.

Matthew Galinko

Hey, thanks for taking my questions. Perhaps firstly simply wished to focus just a little bit on perhaps your ideas of timing for us fleet deployments and drones. Is that one thing that following the MassDOT work, might be a 2025 occasion, or simply form of body for us what the trail is to beginning to get some kinds of fleet deployments within the US?

Eric Brock

I do not need to – I will communicate extra broadly once I reply that query, Matt, and never particular to MassDOT. So, 2025, we do imagine that we will have clients who’re in a fleet enlargement mode. And I feel you may see this 12 months, we will be participating a number of clients who can do exactly that. So, that is what – the work we’re doing with clients is de facto making an attempt to qualify them to make sure that they’ve the potential and the intent to scale these applied sciences.

Matthew Galinko

Okay, thanks. After which are you able to additionally perhaps body the place Iron Drone stands in opposition to form of the standard fleet deployments that you have checked out? Is that one thing that may form of trying into 2025, be an even bigger contributor for a time frame, simply given the place focus is presently and the place budgets are?

Eric Brock

Certain. I am going to ask Meir to increase, however I feel what you may see within the close to time period is, as we have communicated, we’re actually centered on the preliminary buyer in Israel, and we’re enthusiastic about that. We expect we’re seeing – we do imagine we’re seeing success. We hope to have the ability to share extra specifics on that quickly. And we additionally highlighted a few of the work we’re doing to carry this to the US market. However Meir, perhaps you’ll be able to present some context as to what the engagement seems like, manufacturing functionality and issues like that to the remainder of 2024 and 2025.

Meir Kliner

Sure. Proper now, we’re within the last stage of the deployment the system with what’s occurred right here in Israel. And as you talked about, Eric, we will increase it to United States, I feel quickly, a few months. And we actually imagine that we’ve got one of the best resolution for this sort of threats, and I hope that we are going to present the world very quickly about it.

Matthew Galinko

Okay. Thanks.

Operator

This concludes our question-and-answer session. I wish to flip the convention again over to Eric Brock for any closing remarks.

Eric Brock

Okay, thanks. Operator. I will shut the decision by merely simply thanking you once more for attending. As all the time, we’ve got a whole lot of work forward, and we’ll get proper again at it, and I stay up for preserving you knowledgeable on our progress. I hope you all have a terrific day.

Operator

The convention has now concluded. Thanks for attending immediately’s presentation. It’s possible you’ll now disconnect.