Elsight Limited (ELS) Earnings Call Transcript

Good afternoon, and welcome to Elsight's Q3 FY '26 Results Webinar. Presenting today is Elsight, CEO, Yoav Amitai; and CFO, Dan Hilerowitz. Before we dive in, I'll direct your attention to the disclaimers on Slide 2. I won't read them in full; however, I want to highlight the key points. This presentation is for information purposes only and does not constitute financial product advice. We will discuss forward-looking statements today involve known and unknown risks that could cause actual results to dip. A quick reminder on our reporting. All figures discussed today are in U.S. dollars unless stated otherwise and we operate on a calendar year basis. Regarding logistics, we will have a dedicated Q&A session at the end; however, you are welcome to submit your questions at any time using the Q&A function at the bottom of your screen. We will address as many questions as possible during the session. It's now my pleasure to hand over to our CEO, Yoav Amitai.

Thank you, Mel, for the introduction. And thank you, everyone, for joining us today for this quarterly webinar about the September quarter of Elsight. For those of you who joined us for the first time, I'll try to walk you through briefly who else that is, where we sit, what is the opportunity that we have in front of us and what is the level of confidence and excitement that we have in the company. I hope to do it in the best way that will give you an understanding of how the future looks like, what happened to us in the last quarter and how we see the last -- the next year as part of the growth that we're seeing to ourselves. As you all see, we did a small brand uplift to Elsight with a new logo and look, mainly to stress the development that the company is doing from being a communication provider to being enablement technology provider for an systems, not only for communication, while ensuring our unauthorized entities are kept at bay. So in Elsight, we're not building drones, we are not building robots. What we do is we are creating this thin layer of enablement technologies that enable those -- all those platforms to perform their mission. It doesn't matter if the mission is commercial mission or inspection, drone delivery or agriculture or it's a home security or defense mission like ISR mission, logistics mission, drone as the first responder and so on and so forth. Elsight today, looking from top down on what we achieve, we have a pretty big customer base that we are supporting with our systems today, that this number is growing on a quarterly basis, having new customers, some of them are pretty big one. We'll talk about it -- about those onboarding that we did this quarter as part of it. But when we are talking from experience and when we're talking about what we have done and where we are in the market, I think that while the market is growing fast, and we'll talk about the trends in the market, we are sitting in a very, very interesting spot in the middle of the market, having the right capability from boots on the ground perspective and access to new customers and end users and OEMs and also having the infrastructure to support logistically from manufacturing in both Israel, United States and Germany from having business development people in different parts of the world being close to the customer and generating more pipeline opportunities as well as converting those pipeline opportunities into actual deliveries or actual sales. So looking on our overall number or starting from the technology. One of the beauties about Elsight is currently, all the growth that we're seeing is pure organic growth. Maybe we'll tax a little bit upon inorganic opportunity that we're seeing as well. But within this organic growth, it's all based on the proprietary technology that we have developed and still developing in-house. Part about that will talk today is not about all about what we already have on the truck, but also about what we're developing for future capability and future feature for our customers that will create more up-sell and cross-sell opportunities for us. So while we're seeing a big surge in the defense market in general, but more interestingly, in our case, the uncrude systems, it seems like I said, Elsight is positioned in a very, very interesting spot within this space. And we have all the tools we need to benefit or to take over this opportunity that, again, like I said in the beginning, I think that my biggest challenge as a CEO talking to investors that are looking from outside-in is to try to share the level of excitement and the level of confidence we have inside the company to execute and to deliver those opportunities that we have on the table today. Looking at our number, we put it as a 9-month numbers of revenue which look exceptionally good if you compare it to previous year. What we did during this quarter that was ended in September is spreading the infrastructure and trading the exposure to many of these customers and potential customers, having older legal tick boxes from that we have done before the last quarter getting into the DOA with the DOE in the U.S. being listed in the Army UAS marketplace. And I leave that between now and the end of the year, we will be able to show how we convert those at opportunities into actual revenues based on those progress that we started 15 years ago, to be honest, with the Project GI that you all remember. And then from there, there was a lot of different work streams that brought us to where we are today in terms of the opportunity that we have in front of us, the pipeline and the backlog that we have. Looking on our resources, we have all the resources we need to execute on our strategy and to even be more aggressive on our strategy to make sure that not only that we're achieving our goals, but we're overachieving our goals and putting those goals or thinking big when we're thinking about the results and thinking about next year as a result of the opportunity that we see in front of us. And we genuinely believe that there is a point in time in a company lifetime that you have these kind of opportunities that we need to think big, and that's where we are today in health side based on all the feedback that we're getting from the industry based on the progress that we're doing much faster than what we thought in some areas. So taking those USD 195 million of pipeline or actual tangible opportunities and we'll break down this pipeline into actual numbers, like I said, I think that shows the opportunity and that shows but we know what needs to be done to convert that into actual revenues in -- not only in the short term but also in the medium term, speaking about 2027 and how calendar '27 is going to look like. We're getting ourselves ready from production capacity, like I said -- as we said in the market that we're going to our production capacity into new territories. So during the quarter, we already decided to do manufacturing in both Germany and the U.S. in the current manufacturing capacity that we have remind you all that we are using contract manufacturers. So we are not having our own manufacturers basically, we don't have our own manufacturing line. We're not investing a lot of CapEx. As you can see in our numbers in the quarterly report but expanding this number and being able to deliver on the opportunity we have, it's something that we are doing in a very planned way. And I think what's equally interesting to all of the above is that the margins that we're still able to support join the market, the need for the products basically by having super high gross margin relative to the rest of the industry of 77-ish percent gross margin on every that we're doing on average well, the software is higher than that, and the harder is around those levels, I think it shows the quality or the value proposition that we provide to our customers. When I'm looking 2 years out or 3 years out based on the macro political environment in the world today, I still think that a vast majority of our revenue will come from defense. Having said that, we are seeing expansion also in commercial markets. We are investing resources there to make sure that we're not only looking at the defense side but also looking on the commercial side, different application within the commercial side. We're seeing those that are moving faster and some that are moving a little slower, but we do see the progress that is currently happening in the industry. As a company, not only -- as I said, not only that we're looking on different sectors within our industry, we're also looking on different domains. So starting from the sector, and I think that one of the advantages of us with our go-to-market strategy is that we have the same go-to-market to each one of these sectors. Elsight product, the halo and other products that we'll talk about are kind of a one-size-fits-all. It doesn't matter if we're talking to a defense customer to a public safety customers or to a commercial customer, all of them are having the same needs based in the basic level, obviously, they do their own configuration. The actual product is exactly the same, not only between different sectors, but also between different domains. So we're talking about when today, most of our sales are in aerial vehicle. We do have a lot of exposure in ground. And since the last quarter, we are starting to have a growing exposure also to maritime, I think that being able to serve all those domains with pretty much the same product or exactly the same product but just different configuration, provide us or expanding our addressable market in a very interesting way. And on that, we are working with our customers, with the end users. We're looking on general industry trends of one are the next brands in terms of the main domain that will be there, and this is how we are expanding our addressable market. Looking on the problem that we're solving or what is the gap that Elsight is solving? So from 1 hand, we have the platform, which is the basic level, that's the actual drone, robot vessel, what have you. And on the other side, there is the -- what we call enablement or enabling infrastructure and enable infrastructure is exactly what I said is the actual technical capabilities that enable those platforms to complete their mission, whatever the mission is. Again, that's true both for commercial and defense. So what we're seeing in the market is that there is this big gap between the platform capability and the technology or enablement technologies capability. And what we have seen there is we see more than anything a great opportunity for Elsight to expand from being only a communication company to becoming an enablement technology basically company, which include different portion of the mission enablement that I'll walk you through in a second. But before that, again, getting deeper into the challenge or the different challenges that are out there, is everything from signal loss on the communication level, losing the positioning of the platform, knowing where the platform is in the non-GPS environment. Think about it that you are working with your iPhone or with your cell phone and you don't know where you are using Google Maps or Waze or your favorite aviation app, that's the basic assumption in today's front lines or in today's modern warfare. And that needs -- that's a huge problem probably as big as the communication problem, and I'll talk about what Elsight is doing there. In addition to that, when we're talking about different failures that can happen, it can be how do you manage the spectrum, how do you get the intelligence in the right time backwards, so decision-maker will get the right decision how the data that you -- that all the sensors in the field are being collected and how you enrich your database that you have on the back using AI tools and others who have a more situational arenas in the field. All of these are huge problems in today modern warfare that we're seeing both in active front lines as well as looking on government and how they are getting ready to basically find the solutions to the challenges that they see moving into the future. Going back to us and what we're solving, like I said with the halo is exactly that. We are looking on all these different building blocks of emission, regardless of the platform regardless of the domain and thinking where we can expand or the way we can provide more solution that will create a better experience for our customers or OEMs in general on one hand. And on the other hand, we'll create upsell and cross-sell opportunities for us. So today, we're looking on different parts of the solution. And the beauty of that is that they're all dependent on the same halo as a platform basically and looking -- speaking about this platform on the baseline, what we're being able to do is to help our customers and end users to utilize the entire spectrum of frequencies and technologies to make sure that, again, they not only can complete their mission, but they can monitor their mission, they can make sure that the mission was successful and so on. So summarizing the technical part, Elsight is sitting on what we call the platform OS, the platform operating systems. While below that, we have the actual hardware, the actual vessel, the actual robot, the actual drone or whatever the platform is, then on top on above it, there is the mission OS, the mission operating system and the human machine interface basically. But Elsight, we look on this layer, call it the Tier 1 layer basically of enabling technologies, like I said, providing communication, positioning video and sensor processing and some autonomy features to be able to complete it. And by the way, on that, some of it is being developed in-house in Elsight, some of it we're looking to do joint venture with different companies and some of it, we are looking in terms of inorganic opportunities that we are looking to expand our product portfolio and our reach to the market as fast as possible because of the opportunity we have in front of us. Now speaking about this opportunity, this is a slide that we showed over the last couple of quarters just to show the trends that we're seeing in budgeting, in defense budget in general. And more interestingly, how much of those budgets are specifically relevant for unproved systems or what we are doing. And that's an interesting trend that we're seeing throughout the world, basically, not only in the U.S. or North American market, we see the same in Europe, we see the same in different parts of Asia and Asia Pacific. And all these for us are signaling or signs for the opportunity that I was referring to before and to the shift that we're seeing happening in the industry of how big is the place of where today the -- those technologies are taking part or what is the portion of those systems within the defense budget in general. Now looking at the development that we're doing, regardless of the revenue and pipeline numbers are also different putting the right -- setting the right stage or setting the right infrastructure to take over the opportunity once those budgets will start to kick in, and I'll talk about this budget in the next slide. So starting with AeroVironment, AVAV, that's 1 of the biggest or the biggest company on systems for -- in the U.S. defense. We just launched -- we just announced the market basically a partnership that we have done with them is part of AUSA, one of the biggest defense conferences in the U.S., the conference in the U.S. I refer you all if you haven't watched the video of how they speak about the opportunity based in Elsight and how we speak about the opportunity we see with them. I think that's a very, very interesting development. And again, being prepared for all the budget that will be allocated and all those programs that will be started to be deployed and how it will translate into actual revenue for us and being next to this creates a lot of benefit for us. Even during the AUSA show, we already decided to see the result there of having a lot of feedback. Our name was out there, was very known when we walked the floor and people heard about this partnership. It was a PR that was made by AV saying that they now implement or they now integrate Elsight capabilities into their platform, which I think is very, very interesting development that is happening there. Like I said, on the refactoring scale, we started do manufacturing with 2 new electronic manufacturer service providers, one in the U.S., the other one in Germany, more than it's supporting our production capacity, it's supporting the need to have manufacturing close to our customers to be able to provide them local manufacturing, so they have a better control of supply chain, better solvency on what they're buying for us, and that's another trend that we're seeing, and we just, like I said, reading the infrastructure, so we won't have any friction in the cell cycle when we move forward. Another interesting development that happened during this quarter or actually after the quarter end, that was also part of the AUSA, we launched our new positioning product which is basically to mitigate the problem that I mentioned before about how do you navigate or how do you know what is the position of the platform without using GPS, GNSS or GPS is kind of GNNS network basically. So what we have launched there is basically a product to go after this market while the communication market is huge in TAM number, total addressable market, we're seeing the same in the positioning market of a lot of different solutions. None of them are the ultimate solution. And we see our disruptive technology, which is still patent pending, but it's a new approach of how to utilize existing infrastructure around the world, the infrastructure that is the most deployed around the world and how we leverage that to let the platform or let the operator know what the platform sits with integrating different kind of sensors and our unique technology that we have developed internally in-house. And like I said, it's still patent pending and hopefully, will mature into a patent in the medium term. And last but not least, during the quarter, the access to the U.S., which included BOA contract as well as being listed in the marketplace, one of the first or maybe the first component to be listed in the marketplace, the UAS marketplace for the U.S. Army, which is not only for the Army. Now there are different services. They are using the same infrastructure to buy from. There is no dollar amount attached to that. But like I said, that's part of the pipeline expansion based on those developments that help us to go to more customer. As I said in my opening, I do believe that between now and the out of the year, we will be able to show to investors or to ourselves as well how we translate those infrastructure development into actual revenues and the millions of dollars of revenues that we are expecting to come from there, which I think it's, again, an interesting development. Now deep dive into the U.S. market a little bit and talking about budget and there are a lot of discussion in the industry in general and in the market as well about what the budget is going to land and how it's going to affect companies in the market. So I'll focus on the U.S. market, but for Elsight, it's true for almost any other market that we're going after. Well, the big prime or the big companies, very big companies are very sensitive to the size of the budget. In our case, because we are sitting on so many different programs, it's more of the passing the budget rather than the size of the budget. It means that right now the budget request of the -- in the U.S. is $1.5 trillion, of that $54 billion is allocated specifically for systems, which, as you know, based on my previous presentation, it's 200x higher than FY '26. So that's a huge jump that is happening there. I think more than anything, even before the budget was approved, it shows where -- like I said in the beginning, where the opportunities sit and how big is the opportunity? But what I wanted to comment about that is that while the sector or the industry is still discussing where those budgets will start to be deployed, I think that for a company like us, once it will be approved and we'll start to see even if it's a small program, that's already acceleration for us or opened a lot of bottlenecks for us just of the approval regardless of if the size will be $54 billion or half of that just the fact that the approval will happen and the budget can be deployed, that will open for us a lot of -- or that will open up for us a lot of bottlenecks that we have today and will help us to translate it into revenue. So what I wanted to put on this point today in this presentation, is that in Elsight again, unlike the big primes or NeoPrime, we're not as much exposed to the approval of the budget and started to be deployed. And again, that's based on the next week election -- midterm election in the U.S. and what the process will be there and how it will look like, but when we are working with our customers and end users, this is what we're getting from them that once those programs will start to happen, we'll see a flow of new opportunities and new orders coming in. The way all of it translate into actual pipeline opportunities. So as you can see, first of all, we try to put more detail into our pipelines and to give you a better understanding of how many opportunities we have in each one of those stages, how the numbers look like. And maybe one of the most important stuff here is that those pipelines cover halo solutions and also covers opportunities that we already have on the table. So like we put on the quarterly -- when we were talking about commercial discussion, those in a very, very high probability to translate into actual revenue in the short, medium term, and that's the meaning of the commercial discussion. This is why we're feeling so comfortable and so excited about how the future look like. And -- but all of these are opportunities for halo, and that's that -- those do not include, obviously, new customers and new opportunities that are coming our way as well as expanding our product portfolio with both existing customers and net new customers, which create a lot of upsell and cross-sell opportunities for us. So the meaning of this growth in the pipeline and for those of you who remember the number, we have around $30 million increase in the pipeline in different stages of the pipeline since last quarter, we started to see the result of our business development team that is working with the boots on the ground, like I said, being closer to the customer. And when we are looking 12 months out of how the next 12 months or until 2027 will look like, we're feeling very comfortable that a big portion of this pipeline will be converted into actual revenue as we're seeing the different opportunities mature inside the pipeline and getting into actual revenues or becoming a backlog, which is a contracted deal and translated into revenue. Speaking about the contract or the backlog and basically the number, if you look on the number of the quarter and look on this pipeline, how it looked like on the previous quarter, you can understand that many opportunities are matured during the quarter and already delivered. And because if you look on the backlog, for example, this number went up since the last quarter, and we still did all the revenue we have done during this quarter. So just to make sure we all understand that those are the tangible foreseeable opportunities that we have in front of us and that's not include other products or new product offering like I spoke about the positioning, which we believe can be maybe even the same size of this bid pipeline which we're seeing in front of us on the communication, we'll have the same on positioning as well as other products that we're expecting to launch to the market in the short, medium and long term. What helps us to get into all those developments that are happening are the boots on the ground, like I said, that we have in each one of those areas of working specifically in North America or being more specific in the U.S. market, and on the priority market for us in Europe, Middle East and the rest of the world. This is where we put our resources today. This is why we're expanding the capacity and the resources that we have, like I said before, because we understand that the opportunity in front of us is huge because we understand that we need to be more aggressive and to press the pedal to the metal and to accelerate even faster than what we're doing this year versus last year and what we have done in the last 2 years. Like I said, in terms of the opportunity that we see in front of us, the opportunity is endless basically if you're looking from the phase of Elsight today. And this is why we have this level of excitement and under to go get it and to be more aggressive in places where we feel that we need more -- to be more aggressive. We're doing that, like I said, while we're setting the infrastructure to be able to support these opportunities, whether it's from making a simple product to manufacture that can be manufactured anywhere in the world, whether we're talking about redundancy or making sure that we have different providers and we're not depending on a single source for anything and being able to deliver orders while we get them, supporting production capacity -- expanded production capacity, not only with the existing manufacturers that we had at the beginning of the year, but also expanding it to other territories and onboarding these manufacturers, like I said, in the U.S. and Germany, to support those needs and to support this happening currently in the market. Speaking of this infrastructure to protect our IP and to make sure that we are in front of the technology. So first of all, we're constantly utilizing all the data that we're collecting from the field. We are submitting patents. Those are patents that we already have granted. I mentioned during this call, please patent pending that we're having a new development that we have done or still doing as part of it and how we protect or what is the that we're creating around the technology, not only from a patent perspective, but also other measures like data protection that I talked about or making sure that we are constantly developing and being at the forefront of the technology, basically. So before opening it to questions, I think that if we look on the recent achievement that we received, whether it's from actual revenue perspective, the margin that we are working on, looking on the different infrastructure that we're creating, whether it's the blue list or the UAS marketplace and having the resources we need to execute on the strategy, I think that looking on the USD 196 million of pipeline and understanding that we know what it takes to convert those that is very promising, and we are feeling super comfortable and excited to get into -- or to finish this year with the best food put forward and getting into next year with even bigger hope than what we had for the year. And even though this current quarter was soft because of mainly movement of actual -- movement of actual opportunities not because they disappeared. I think like I constantly saying to investors, it's a matter of time. And I think those -- and we see that those orders will come, and once they will come, I think that we all be satisfied with the result and the growth of Elsight. So with that, I want to hand it over back to Mel to open the question, then I'll be happy to answer any questions.

Thanks, Yoav. Just following on from that ending, can you add to how do you explain the lack of order wins in Q3 when the uncrewed market is growing so fast? Is it because of competition from large U.S. tech companies or is it purely a slowdown in orders due to inventory time?

So we are definitely not seeing a slowdown from this perspective. As I said in the last slide, what we're seeing is movement of those opportunities time-wise. So we're in a very close relationship and very close connection with all of our existing customers and a very good relationship with our prospects. And what we're seeing in this movement is definitely not because of new competition that is coming from the market or to the market, is more so because of time shift of programs and inventory and schedules of customers and that's why I'm able to still speak on the same level of confidence that I did throughout the last year and even being more confident around how the future, how the show the medium and long-term future look like. So that's how we explain what happened to us during the quarter. And again, as I said, part of the orders have received during the quarter and was already delivered. This is the revenue number that we're seeing on the quarter. Part of them went into the backlog. And others have shifted, and we believe that, like I said, we'll be able to show the market between now and the end of the year and definitely throughout 2027, how those pipeline numbers are converted into actual revenues.

And that takes us to the next question. Someone has asked, can we expect a return to previous quarter revenue in Q4 December quarter?

Generally speaking, like I said in previous webinars and presentations, we do expect those trends of quarters and growth in quarter-over-quarter to remain, and we are expecting it to grow, like I said during the -- when I spoke about the pipeline and seeing how those pipelines are being translated into actual revenues. So yes, we do expect those numbers to be in same levels or even higher levels moving forward and looking into 2027.

In terms of the pipeline, can you please provide some estimated time frames of each segment of the pipeline? And just to add to [ Andre's ] question on pipeline, can you also just clarify what backlog of USD 3.5 million means? Is it work secured and revenue to be delivered in

Sure. Starting from the last part of the question because that's the easiest for us, what we vote on contracted or backlog that's actual deals that we already signed, got the purchase order, got the down payment for them. And then it's based on customer schedule of where -- when and where they want the delivery to be in. So that's the meaning of the contractor, that's a definitive revenue or number that will translate into revenue, but it's not part of the revenue that we had in the quarter, okay? So let's say -- let's imagine that we have an order of $1 million that we received, the customer have paid about the down payment. We put it into the backlog until it's been actually recognized as revenue. So that's the meaning of this. As for the first part of the question about time line and when we expect those to be -- those opportunities to be translated? So obviously, there are different maturity levels with inside the pipeline as we put it here. And we can see that also the number of opportunities in each one of those buckets in the pipeline are different. We do -- and as I said on previous presentations and previous webinars, we do put -- on these pipeline numbers, we do put opportunities that are tangible in the next 12 to 24 months. So we're not putting here wishful thinking for something that we think is going to happen in 5 years' time. Those are tangible opportunities. Now speaking about what we also included in the quarterly, if we look on the commercial discussion as an example, of, let's call it, rounded number, USD 35 million. This is contracted we are already negotiating. These are customers that we already have a business relationship with. So it's not just that we need to mature a new customer. Those are much more tangible. And as it's also the same for the evaluation in progress, which is in a different state. I would say, generally speaking, since we started to put out these pipeline numbers and looking on our customers, we don't have a lot of examples of opportunities that just -- was just vanished from the pipeline. It's a timing thing, like I said before, and now that we have the team set up and we have people closer to the customer and we have much more clarity and understanding how it will look like in the short, medium, long term, that's what provides us the confidence or the excitement, as I said, in the end of the slides about how the future is going to look like.

Thanks, Yoav. Just in terms of Q4 revenue, we've been asked to clarify, do you expect revenue to be higher in Q3? And what would be the uncertainties or risk? And further to that, while we're that question, would you see material revenue contribution from your anchor customer in Q4? And potentially, could there be a repeat order from this customer in the disclosed pipeline?

Yes. So the pipeline is built of both existing customers and net new customers. Obviously, those that already submitted repeat orders in general or I assume there was a specific question about what the market -- what the industry -- or sorry, what the market called OEM won and when the next order will come from there. It's definitely part of the pipeline. And as I said in previous presentation and in all the communication we're doing with the market, we're feeling very comfortable there with the customer. We have a very, very close relationships there. We are looking on what are their plans or in general, looking on different customers, not only on them, what are the plans for not only the next quarter, but for the next 12, 18 months. And based on that, we're building our plans and our expectation of how it will grow moving forward. So that's on this part of the question. With regard to the numbers, we do expect Q4 definitely to be higher than Q3. As I said in the previous question, in general, and looking forward, we are expecting the revenue number or the quarter numbers to be on the same level or higher of what we had in previous quarters. We still have the same level of confidence of us being able to deliver it. And again, it goes down to the same point that I made before about timing. And also, if I may add about that, it's not a direct relative part of the question, but just to give more color, when I'm talking, as I spoke during the slides on the budget approval in the U.S., as an example, the point is that there are a lot of programs that are sitting on the shelves basically and waiting to be budgeted. So it doesn't matter, like I said, if the budget will be $1.5 trillion or $980 billion, those programs are in priority. And once they kick in, once the budget is approved, those programs are kicked in, and we're starting to see the actual orders or the actual discussion, let's call it, translate into actual revenue. So while I have high confidence or definitive confidence that the fourth quarter will be higher than this quarter for sure, I think that if we look further away into next year as well, I think that we will see this uptick based on this approval. And then the question is how fast -- based on the political environment, let's call it, how fast those budget approval will happen. And again, not necessarily the size of them, but more so the timing of the approval or the fact of the approval itself.

Yes. How long will it take to integrate Halo into AVs Mahim and how many units a quarter will they be manufactured?

So as for the integration, we've already started to do the integration work. We are expecting or AV and us together are expecting to have revenue from this platform in FY '27. AV's FY '27 already started. So when they are talking about that, that started in September. So it's between now and next September, basically, that you see actual orders there as -- so it's starting with integration, then we have a demo unit basically. And then with those demo units, they're going to customers that they already have. For those of you who are not familiar with AV, AV is probably one of the largest or the largest revenue-wise of system, mainly aerial vehicle that they're doing, the Mayhem specifically is a loiter munition platform that they're integrating the halo. It's the new loitering ammunition, who in the future should replace or be in addition to the switch plate. If you want to read on that, AV is a public company, so you can look on their numbers and how they're growing. Obviously, for obvious reason, I cannot comment on specific number of quantities that we are expecting to have there. But I can say that they share with us their expectation or their pipeline and opportunities that they're going after with the platform and it looks very, very interesting. Between now, they are looking not only in the 12-month period, but also how it will look like in 3 years' time. And those numbers look super interesting, and that's why we are excited not only because it's a big company and being attached to such name create a lot of help on the marketing side or with the industry but also because of the revenue opportunity that we're seeing there.

Great. So [ Robin ] has asked why can't contracted manufacturers copy or technology and build white box models? Will the patents being too late?

So first of all, the patents are until 2030 -- most of them are till 2032. And my comment on that is always that it just doesn't work that way. If you look on the automotive industry, which is super mature industry, and you can ask yourselves, why would Toyota buy from Bosch or from any other of their Tier 1 providers, why they are not doing everything themselves? And the answer for that is that companies are focused on what they good at. And if there is a good off-the-shelf product they can source, they will do it in many cases. So same as we see in the automotive industry, in the commercial aviation industry, in many places in the defense industries where the prime are more of an integrator which have their core IP, but they are sourcing the entire stack of the solution that they are providing. I think that's the reason why they're doing that. Now if you look on the commercial market, by the way, there are little less than a handful of examples of companies that are doing A to Z vertical integration. It's very, very rare on our industry. And again, the industry is the uncrew industry, both in the commercial space and the defense space. We're seeing very little number of companies that are doing a fully vertical-integrated solution. They are doing everything A to Z. That includes payload, it includes communication, it includes all the enablement technologies. Actually, everything have to do with positioning, navigation, sensors and so on. So just the dynamics of these industries doesn't work that way. And thankfully, when today software maybe become commodity, in deep tech like environment, AI tools are great, but they are not enough to develop the deep tech that we're doing because of all the data and because of all those moats that we have around it. So that's the best answer I can give for that.

And then in terms of the pipeline, has the Blue list potential being factored into that?

Yes. So as I said, when I spoke about the progress that we were doing on the infrastructure level, let's call it. So for those of you who are with us a year and a bit ago, we started with the project GI. That was our breakthrough into the U.S. DoD or now DOW. Then from there, we have the blue list, then we have the BOA, then we have the UAS marketplace. And as I said during the presentation, now we're expecting all this infrastructure to translate into actual revenues based on the pipeline. So the answer is partially yes, because part of the opportunities on the pipeline is as a result of the blue list and the other milestone that I just mentioned. And some of them were still maturing and they're not yet part of the pipeline. So this is where -- this is how it helps us and reduce a lot of friction on the cell cycle by having all these jack boxes ticked from compliance standpoint, let's call it, our certification standpoint.

And just sticking with the pipeline Yoav, what are the new businesses not in the pipeline? And second to that, maybe can you provide some more details on the Stealth program?

Yes, sure. So on the first part, like I said, the pipeline opportunities or the pipeline figures that we put out is based on existing product that we have on the truck. That's mainly the halo or the vast majority are only the halo. As I said, 10 days ago or about 10 days ago, we launched a new product for the positioning to, call it, it's not a navigation product, but it's a positioning product and seeing the addressable market of the positioning market versus the communication market, you do believe that the pipeline that we will create on those opportunities are both upsell, cross-sell and net new will make the pipeline thicker in terms of adding new products. In addition to that, we are working -- so we have the Halo, we have the and we're working on another lower-tier product. We now call it mini-Halo, doesn't have a marketing name yet, but we are expecting to go out to the market with it around February, March of '27. That will target the low end of the market of what's called in the industry, SPVs or PBS or small robots. And again, that's placed again in the same way that it does not -- a big part of it does not include in the pipeline figures that we put out at the moment. So this is how it plays between the different products. Does include different regions, but not different products but also only the Halo on that. On the new business unit that we discussed, we are expecting to have a launch around it between now and the end of the year, like we advised to the market during the quarter -- during the last quarter, sorry, we signed the first customer, and we're working to integrate that. It's a product, to remind you all, that goes to government directly, and it goes top down to government. It means that the sales cycle are little longer and the integration time is also a little longer, but the moat and the stickiness of this product and the fact that it's a pure software without any hardware component, that's what interesting about it. So this is what we showed so far, and the situation over there. The team there is working very hard to complete the current existing integration as well as bringing in net new opportunities.

And then in terms of your partnership with Anduril, they're now listed on the website. Is there any information you can provide there? And does Elsight have any intention down the track of going after the EVTOL market?

After which market, sorry?