Ondas Inc. (ONDS) Earnings Call Transcript

Welcome to the Ondas Inc. Second Quarter 2026 Earnings and Business Update Conference Call. [Operator Instructions] Before we begin, the company would like to remind you that this call may contain forward-looking statements. While these forward-looking statements reflect Ondas' best current judgment, they are subject to risks and uncertainties that can cause actual results to differ materially from those implied by these forward-looking statements. These risk factors are discussed in Ondas' periodic SEC filings and in earnings release issued today, which are both available on the company's website. Ondas undertakes no obligation to revise or update any forward-looking statements to reflect future events or circumstances, except as required by law. During this call, Ondas will refer to certain non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles. A reconciliation of the non-GAAP financial measures to the most direct comparable GAAP measures is shown in our press release issued today, which is available at the Investor Relations section of our website. This non-GAAP information is provided as a supplement to, not as a substitute for or as superior to measures of financial performance prepared in accordance with GAAP. However, management believes these non-GAAP measures provide investors with valuable information on the underlying trends of our business. Please note, this event is being recorded. I would now like to turn the presentation over to Eric Brock, Chairman and CEO. Please go ahead.

Thank you, operator, and good morning, everyone. We appreciate you joining us today and your continued interest in Ondas. I'm pleased to be joined this morning by key members of our leadership team. Neil Laird, our Chief Financial Officer and Treasurer; Oshri Lugassy, Co-CEO of Ondas Autonomous Systems, Meir Kliner, President of Ondas and Ryan Hartman, CEO of Ondas Sentinel. We have a lot to cover today, so we will dive right in. Let's turn to today's agenda. I'll begin with a high-level review of our second quarter performance the continued execution of our core plus strategic growth plan and the progress we are making toward building One Ondas. Neil will then review our second quarter financial results, balance sheet and the investments supporting the significant growth we expect in the second half of 2026 and beyond. We will then provide a growth and operational update, including commercial momentum, major customer programs, expansion across our 4 strategic market segments and the continued scaling of our global operating platform. We will also discuss the integration of our expanding technology portfolio and our progress toward delivering AI-enabled multi-domain systems of system solutions. I'll close with our updated financial outlook and management priorities for the next phase of Ondas' growth. We will then open the call for questions. Let me begin with the operating model behind our strategy. Ondas continues to execute its core plus strategic growth plan. And to be clear, Ondas is not simply a collection of acquired companies. We are building and operating one integrated global platform, One Ondas. That means assembling mission-ready technologies, world-class engineering talent, experienced leadership teams, customer relationships and operational capabilities and then integrating those assets into a unified growth platform. The value of this model becomes most visible when we combine technologies across domains. We are connecting persistent multi-domain ISR capabilities to the complete detect, identify, track and defeat chain. In Counter-UAS, for example, we are bringing customers a unique layered architecture that can include passive detection, cyber takeover, electronic warfare, interception and fully autonomous kinetic defeat. These integrated capabilities are designed to protect critical locations from hostile drones ranging from small FPV drones to larger, more sophisticated threats. We are integrating these capabilities through software-defined command and control, enabling customers to operate a coordinated system of systems rather than a collection of disconnected products. But technology integration is only part of the equation. We are also integrating engineering resources, sales and marketing teams across more than 60 countries, production and supply chain capabilities, field support, training, sustainment and customer service. As we have said before, exceptional technology that is useful, built to customer requirements and operational in the field is essential. Developing that technology is extremely challenging, and we are proud to have operationalized the incredible portfolio we have at Ondas. With that said, technology by itself is not sufficient to win. Customers in global defense, homeland security, public safety and critical infrastructure markets need partners that can deploy, support and sustain mission-critical systems at scale. That is what One Ondas is all about. It is how we create value for customers, employees, partners and shareholders. It is how we win. And Ondas is playing to win. The execution of our strategy is increasingly reflected in our financial performance with these KPIs demonstrating the strength and momentum of our business. We delivered another quarter of record revenue, generating approximately $83.8 million in the second quarter. That represents more than 13-fold growth versus a year ago. We expect to sustain this momentum and deliver another significant revenue ramp in the second half of 2026. Based on our results, backlog and current visibility, we are also increasing our full year 2026 revenue target to a range of $525 million to $550 million. The growth is broad-based across the portfolio, supported by continued strength in our core businesses, the conversion of large orders already in backlog and the transition of several emerging platforms from development and qualification into deployment. Our 2-year strategic program pipeline has expanded to more than $11 billion and our pro forma backlog now stands at approximately $757 million, including design and Cyber Hawk, growing more than 11x during 2026 and providing substantial revenue visibility. Meanwhile, order momentum remains strong. We have already captured approximately $105 million of new orders quarter-to-date, further adding to backlog during this Q3. At the same time, we continue investing in the operating platform required to support this growth. Cash operating expenses were elevated in the quarter, reflecting the full quarter impact of businesses added earlier in the year, principally WorldView and Mistral as well as approximately $29 million of growth investment across corporate development, on-desk Capital, partner initiatives and the broader operating platform. We made these investments ahead of the significant revenue and gross profit ramp we expect in the second half and beyond. We expect the growth in these OpEx investments to moderate from here, providing substantial operating leverage as revenue scales. We also remain very well capitalized. We ended June with approximately $1.4 billion in cash, cash equivalents, restricted cash and short-term investments. Even after deploying $325 million for new acquisitions in Q3, we retained significant financial flexibility to support organic growth, scale our operating platform and execute our strategic growth program. This chart is a simple visual of the transformation underway in our financial performance. Quarterly revenue has grown from approximately $4.2 million in the first quarter of 2025 to $83.8 million in the second quarter of 2026. We believe this is what the early part of the S curve should look like. Technology adoption curves are generally not linear. They are exponential. Once platforms are validated, customer requirements are established, and programs move from testing into scale deployment, growth can accelerate rapidly. Our strategy is designed around that dynamic. As we execute our core plus strategic growth plan, we are not only expanding the technology portfolio, but also building the operating platform required to support an exponential growth curve across production, supply chain, customer deployment, field support and sustainment. Importantly, the underlying core growth of our businesses remains a major driver of the financial model and the economic value we are creating. On a pro forma basis, assuming our current portfolio companies had been owned throughout both periods Ondas generated approximately 85% organic revenue growth in the second quarter compared with Q2 2025. That is an important distinction. The growth reflected here is not simply the result of adding acquired revenue our underlying businesses are also expanding rapidly within the Ondas platform. Core organic growth is a theme we will return to throughout today's discussion. We have strong momentum and are positioned for growth to accelerate further during the second half of 2026 and into 2027. This slide provides additional detail showing the growth model is working. The model begins with strong mission-ready technology platforms in markets with very significant customer demand. That technology and demand are supported by the operating platform Ondas is building, providing working capital, global customer relationships, expanded sales capabilities, production resources, supply chain support and field services. As mentioned, on a pro forma basis, Ondas delivered approximately 85% organic year-over-year revenue growth during the second quarter. Backlog also continued to grow increasing approximately 33% sequentially from Q1 to Q2 on an organic basis. We continue to see a particularly strong organic ramp across the Ondas Autonomous Systems businesses, Centrix continues to see substantial demand for its cyber over RF counter-UAS systems, with second quarter pro forma revenue up approximately 298% year-over-year. The Centrix team is performing extremely well, benefiting from the expanding global sales platform, customer access and operating resources available through Ondas. Our success at the FIFA World Cup and recent win with the Jacksonville Jaguars are early signs that Ondas is winning as the long-term investment cycle kicks into high gear. Airobotics also delivered very strong growth, with revenue up approximately 112% year-over-year. That growth was supported by Iron Drone continued customer demand for autonomous drone infrastructure and new integrated systems of systems customer engagements. Similarly, 4M delivered approximately 258% year-over-year pro forma revenue growth with the capital, customer access, operating support and international reach of Ondas behind it, 4M is expanding its intelligent de-mining and land intelligence business into substantially larger programs. Rotron is proving to be another excellent addition to our portfolio. Rotron captured approximately $34.2 million in orders during the second quarter alone compared with approximately $25 million of expected 2026 revenue we underwrote in the acquisition. Rotron's international pipeline outside the U.K. is also expanding under Ondas, and we believe its capabilities in Jet Propulsion, precision strike, UAV development and platform commercialization will be meaningful value creators over the coming years. This performance is not isolated to one company or market segment. We are seeing strong organic growth across multiple businesses and the data increasingly validates both our operating platform thesis and our execution. I want to pause on this slide because it illustrates the Ondas does operating model. At the top is Ondas Inc responsible for capital allocation, corporate strategy, beyond as brand, investor engagement, governance and overall enterprise direction. Beneath that is our share operational platform. This layer provides capabilities across supply chain and production, field support and services, global sales and marketing, government affairs, finance and corporate infrastructure. These shared resources accelerate commercialization, improve execution and allow the specialized technology companies within Ondas to scale more efficiently. Those specialized companies bring deep domain expertise differentiated intellectual property, exceptional engineering talent, established customer relationships and mission-ready products. We are integrating those capabilities across 4 major high-growth market segments, aerial security, ISR and persistent intelligence, precision strike and autonomous ground systems with AI software serving as a common enabling layer across the portfolio. Exceptional technology is merely the starting point in these markets. Customers need complete solutions built to requirements, integrated, reliably delivered and supported across the mission life cycle. Partners need a platform to bring technologies to market and pursue larger global programs. Employees need the resources, infrastructure and capital to scale innovation and investors need this model, too. Our shared operating layer deploys capital more efficiently, accelerates revenue, reduces duplication and generates increasing P&L leverage as the platform scales leverage that is fundamental to sustained profitability and attractive long-term returns. Oshri and Ryan will discuss this model in greater depth later including how we are integrating technologies, pursuing larger programs and scaling execution across the portfolio. As we deploy capital and scale Ondas. One of our most important responsibilities is ensuring we have the strongest, most capable leadership team possible. We have made tremendous progress. Across Ondas, we are assembling a mission-driven leadership team deeply committed to delivering robust operational autonomous capabilities to customers in defense, homeland security, public safety and critical infrastructure markets across the United States, Israel and Allied nations. I am pleased to welcome David Barnea as President and Chairman of Ondas Defense Limited. David joins Ondas following a distinguished career serving the state of Israel most recently as Director of the Mossad. He brings nearly 3 decades of intelligence, national security and operational leadership experience and intimate knowledge of modern warfare and the current battlefield. David's mandate is to help lead our global expansion, strengthen our relationships with international defense and security customers and advances the integration and adoption of our AI-enabled multi-domain autonomous systems platform. He will work closely with me, Oshri and the broader leadership team to maximize the impact of our technologies and services across our global customer base. To summarize, our plan is working, and I am extremely proud of our team's performance. We have had a very strong first half and believe we can accelerate this momentum through the remainder of the year. The revenue ramp we expect in the second half is significant and increasingly visible through our backlog, order book and deployment schedules. Demand remains broad-based and we expect to benefit from major program deliveries and new product adoption cycles across each of our principal market segments. As we convert these orders into revenue, we are expanding production, supply chain, deployment and field support capacity to meet customer requirements efficiently and reliably. In aerial security and counter-UAS we continue to see strong global demand across the portfolio. We expect Centrix' cyber over RF platform to remain a key growth driver as customers increasingly adopt layered multisite counter drone infrastructure. We also believe in Strike, which came to Ondas through our recent acquisition of Design, is positioned to begin receiving commercial volume orders and initial deliveries during the second half of the year. We see urgent demand for cost-effective kinetic solutions like Ion Strike, capable of defending against increasingly sophisticated Shahed-class drones and coordinated swarms. In precision strike, Mistral is positioned to begin deliveries against approximately $240 million of aggregated orders associated with the U.S. Army LUS IDIQ. We also expect continued advancement on project break stop, while Rotron ramps production and deliveries against material orders and a growing international pipeline. Across ISR and persistent intelligence, our backlog and pipeline for both Ultra and Stratollite deployments continue to grow. We have been expanding production and operational capacity to support the launch of Ultra programs and the increased adoption of Stratollites for maritime domain awareness and other persistent ISR missions. In autonomous ground systems, Indoor Earth is expected to begin deliveries during the fourth quarter on the combat machinery program, which has total program potential of approximately $140 million. These programs represent important customer adoption curves. As initial deployments move into larger-scale production and follow-on requirements, we believe they can support meaningful sustained growth across the platform. Our priorities remain clear. Continue driving organic growth, convert backlog efficiently, leverage the investments we have made in our scalable operating platform and demonstrate the strength of the Ondas' financial model. That concludes my introductory comments. I will now hand the call over to Neil, who will review our second quarter financial performance. Neil?

Thank you, Eric. The second quarter showed record revenue and represented another important step forward in demonstrating the scalability of our financial model. Revenue increased to approximately $83.8 million, up 67% sequentially and more than 13x the prior year period. Importantly, this wasn't simply acquisition-driven. On a pro forma organic basis, assuming our current portfolio had been owned in both periods, revenue grew approximately 85% year-over-year, reflecting strong execution across our underlying businesses and proving out the power of our growth platform. . With $175 million of new orders during the quarter and continued strength into Q3, we believe that customer demand remains exceptionally strong across our platform. Gross profit increased to approximately $36 million, while adjusted gross margin, a new metric, which excludes the noncash items of stock compensation expense and amortization of acquisition-related intangible assets was 50.4%, relatively stable from 51.5% in the prior quarter despite normal product mix variability. As we've discussed previously, quarterly margins will fluctuate as delivery shift between programs. We expect some gross margin pressure in the second half due to mix on recently acquired Excess Capacity. However, our longer-term target remains to achieve gross margins in excess of 50%. And Operating expenses increased to approximately $199 million, but more than half of the total consisted of noncash or acquisition-related items such as stock compensation, contingent consideration, revaluation, amortization of intangible assets as well as $4.4 million in acquisition-related transaction costs. To better understand the business, we encourage investors to look at our underlying adjusted cash operating expenses, which amounted to approximately $93 million during the quarter. This includes normal operating expenses as well as investments to support the integration of recently acquired businesses, continued deployment of Palantir Foundry and Warp Speed, commercialization activities and infrastructure required to support the significant revenue growth we expect over the coming quarters. Second quarter represented a large increase as we invested ahead of and in support of a transformational growth curve. The important distinction is that the growth of our operating expense will normalize in the third quarter and beyond, while revenue and gross profit are expected to rise significantly, resulting in significant leverage in our model. Given these investments, which are occurring ahead of a broader revenue ramp, adjusted EBITDA was a loss of approximately $51 million during the quarter. This result was consistent with our expectation that the second quarter would represent the peak in adjusted EBITDA losses. As revenue accelerates during the second half, we expect those investments to begin producing meaningful operating leverage. Turning to the balance sheet, which remains strong and provides us with significant advantages. We ended the quarter with approximately $1.4 billion in cash, cash equivalents, restricted cash and short-term investments compared to $616 million at the end of 2025. Included in our total assets are investments in unaffiliated public and private companies totaling $70 million. These investments are aligned with our broader platform strategy. They support key partners, enhance access to critical technologies, improve supply chain efficiency, and we believe will generate attractive returns over time. During the third quarter, we've already deployed approximately $325 million of cash to complete the design and Cyber Hawk acquisitions, both important elements for our near-term and long-term growth outlook. Our balance sheet allows us to invest aggressively in our operating platform, support larger customer opportunities and continue executing our disciplined acquisition strategy from a position of strength. If there's one message we'd like investors to take away from today's call, it's that our confidence in the trajectory of the business has never been stronger. We believe the first half of 2026 has validated the strategic investments we've made over the past year. We entered the second half with record backlog, accelerating production, strong demand signals across a rapidly expanding product set, and exceptionally strong balance sheet and increasing confidence in our outlook. We believe the foundation is now in place for substantial growth and meaningful operating leverage over the coming quarters. With that, I'll turn it back to Eric.

As Neil noted, Adjusted cash operating expense increased significantly in the second quarter to approximately $93 million. There were 2 principal drivers of that increase. First, our strategic M&A program added new businesses to the Ondas platform. These come with operating costs but also bring meaningful revenue and gross profit, established customer relationships, contracted backlog and expanding pipelines. We believe these additions materially strengthen Ondas' earnings power and long-term growth potential and should be viewed as investments in scale, not incremental overhead. Second, we continue to invest in the growth platform at both Ondas Inc. and across our operating platform. At the Ondas Inc. level, in addition to our underlying finance, accounting and governance expenses, we invested approximately $29 million in growth OpEx related to corporate development, Ondas Capital, ecosystem and partner initiatives and our operating platform, including our work with Palantir. At the operating platform level, growth OpEx in terms of OAS leadership and operating infrastructure totaled approximately $6 million. These are deliberate front-loaded investments to ensure Ondas can integrate acquisitions efficiently expand its global sales and marketing reach, scale, supply chain and production and provide the field support, sustainment and services a much larger business requires. We are not building the operating platform for the Ondas of today. but for the significantly larger company, we expect Ondas to become. We believe we are well on our way driving substantial growth, generating increasing operating leverage and building a large and profitable global company over the next 12-plus months. Much of our growth OpEx is discretionary, and we expect the rate of growth in these expenses to moderate from here as revenue and gross profit continue to scale. Let's now turn to our growth and operational update. Oshri and Ryan will cover our customer engagement, expanding pipeline and major programs, along with the continued integration of our businesses under the One Ondas' operating model. They'll also address the global scale we're building across sales, partnerships, supply chain and field support and the integrated multi-domain systems of systems platforms we're bringing to market where software-enabled integration is delivering broader, more valuable customer solutions. Before I hand over to Oshri, I want to highlight an important addition to our advisory board, and that is General, Charlie Flynn, who joined the Ondas Advisory Board earlier this month. General, Flynn recently retired from the U.S. Army after 39 years of distinguished service. A 4-star general, he most recently served as Commanding General of U.S. Army Pacific and previously as the Army's Deputy Chief of Staff for operations, plans and training. General Flynn is well suited to help Ondas navigate the U.S. Department of War and Allied Ministries of Defense. Refine our multi-domain ISR and autonomous systems road map and position our platforms for broader operational adoption. He brings exceptional experience, judgment and relationships to Ondas shares our mission and understands the urgency of delivering advanced autonomous capabilities to the United States and its allies. I'm grateful that Charlie has chosen to support Ondas, and we look forward to his contributions as we continue building and scaling the company. With that, I'll hand over to Oshri to discuss our growth and operational progress.

Thank you, Eric. Ondas has built a deep differentiated solutions portfolio across 4 strategic market segments: Aerial security, ISR and persistent intelligence precision strike and autonomous ground systems. In aerial security, we provide technologies to detect, identify, track and defeat threats across the full counter drone kill chain. Our ISR and persistent intelligence portfolio provides multilayer surveillance from the stratosphere through long endurance airborne platforms and down to the tactical edge. In precision strike, we are delivering affordable autonomous launched effects aligned with the growing demand for scalable, mission-ready mass and in unmanned ground systems, our portfolio includes robotic ground platforms supporting, de mining, engineering, logistics, border security, and operations in contested environments. Supporting all 4 segments is an expanding portfolio of AI-enabled software and command and control capabilities, the unified command core, connecting sensing decision-making, autonomous operations and mission execution across domains. This is central to our strategy. We are increasingly able to offer customers integrated systems of systems, solutions rather than stand-alone products. Our core technology platforms are mission-ready and operational and we are building increasingly mature customer relationships as we demonstrate both our technology road map and our ability to manufacture, deploy, sustain and support these systems in the field with excellence and its scale. That operational credibility is reflected in the representative customer base on this slide. Across the United States, Ondas supports customers, including the U.S. Air Force, Army, Navy, Special Operations Command, Department of Homeland Security and NASA. Internationally, our customers include the Israel Defense Forces in MAFAT, the Australian defense forces, the Japan self-defense forces, the Royal Thai Army and the Dubai police, among others. We also serve major critical infrastructure and industrial customers, including PG and E, Southern California, Edison Shell, Chevron, National Grid and Reliance. We have worked hard to earn this organization's trust, and we are extremely proud of these relationships. That trust is built through technology performance, operational reliability, successful delivery and support in demanding real-world environments. Our strategy is focused on increasing Ondas relevance and mind share within these customers expanding from individual technologies and initial deployments into broader, integrated long-duration programs. We believe that will support an exceptional market position for Ondas as a trusted global solutions provider and lay the foundation for the large durable business we intend to build. Our expanding technology portfolio, broader customer access and increasing operational maturity are translating into a rapidly growing pipeline. Our 2-year strategic program pipeline now exceeds $11 billion, up more than 2.5x since our last update in May. This pipeline includes many dozens of program submissions globally and is robust across the major geographic markets in which we operate. Recent acquisitions, particularly design contributed important new platforms, customer relationships and program opportunities to this pipeline. Equally important, the pipeline is also expanding organically on a same portfolio basis. That organic growth reflects the scaling of Ondas' direct sales and marketing organization deeper engagement with existing customers and the growing number of distribution and strategic partners, extending our reach. Ryan will discuss that commercial infrastructure shortly. The size, breadth and geographic diversity demonstrate the expanding relevance of our portfolio and the scale of opportunity now available to Ondas, more important than pipeline size is our ability to convert opportunities into programs, which we are increasingly demonstrating the programs highlighted on this slide, span border security and smart mining, military engineering vehicles, lethal unmanned systems, autonomous UAV swarms, long-range precision strike, stratospheric maritime surveillance and contested logistics. These are meaningful programs, some of which have potential values of upwards of $1 billion in size. Looking forward, we see a strong near-term capture pipeline and expect additional strategically important awards during the second half of 2026. Those opportunities include ISRT programs led by our ultra long endurance aircraft, kinetic counter UAS programs involving iron strike, persistent stratospheric ISR programs, and additional opportunities across our unmanned ground vehicle portfolio. Another important example was the digital back program we announced this week, whereby Ondas is providing the Israeli MOD with a next-generation one-way attack system. As we deliver against our existing backlog and pursue these new programs, we are deepening critical relationships across the U.S. combatant commands, NATO and allied militaries and the Israel Defense Forces. These relationships are increasingly focused on broader mission requirements and integrated solutions not simply an individual platform purchase. That shift positions on us to participate in larger longer-duration programs and deliver more value across the customer mission. To reinforce our ability to convert pipeline into orders, this slide highlights selected commercial activity since April 1. As demonstrated, we are seeing a strong order cadence with an increasing number of large deals, which have continued into Q3. This order activity is diversified across all 4 target market segments, real security, ISR and persistent intelligence, precision strike and autonomous ground systems. It also reflects a growing increasingly diverse set of customers, geographies and mission requirements. This demonstrates the leverage we are beginning to realize from our expanded sales organization, customer access, partner network and commercial infrastructure. We are pleased with our progress and remain focused on achieving even greater results. Our focus is sustaining and accelerating this order capture through the remainder of 2026 and beyond. Lastly, before I hand over to Ryan I want to provide more detail on our backlog. Our pro forma backlog at June 30 was $757 million. That represents an increase of approximately 66% sequentially from the $457 million of pro forma backlog at the end of the first quarter. The increase reflects both the newly acquired businesses and strong organic order capture across the existing Ondas portfolio. As Eric mentioned earlier, with over $100 million in orders Q3 to date, our backlog is continuing to grow as well. Our backlog is diversified across our 4 market segments and geographically providing meaningful revenue visibility and shows demand is not dependent on a single product, customer program or region. Our immediate priority is execution delivering against this backlog, supporting customers and converting a meaningful portion of these orders into revenue during the second half of 2026. At the same time, we remain focused on replenishing and expanding the backlog organically through continued pipeline conversion. With that, I will hand over to Ryan.

Thank you, Oshri. Ondas has made tremendous progress building the global operating platform required to support our rapidly expanding business. As we scale, it is critical that we do so under a One Ondas strategy. We are not a collection of independent companies. We are integrating our talent, technologies, customer relationships, infrastructure, and operating capabilities to leverage the considerable resources we have assembled across the organization. The benefits extend across every major aspect of our business, sales and marketing, supply chain and production field support, sustainment and services, engineering and product development, technology integration and finance and accounting. Today, Ondas operates in more than 60 countries through 25 physical locations with approximately 1,700 employees around the world. This footprint provides the local market knowledge and customer proximity to compete globally while letting our businesses draw on shared expertise and capabilities across the broader Ondas platform. This scale strengthens our ability to pursue and deliver larger programs, expand production, deploy systems more rapidly and provide customers the reliable field support and service they require. Our footprint continues to grow, but scale itself is not the objective. The goal is to make every Ondas business more capable, more efficient and more valuable as part of an integrated global platform. We believe this One Ondas operating model will support faster growth, stronger customer outcomes and increasing operating leverage as the business scales. Having significantly expanded our global footprint through both organic growth and strategic acquisitions, our focus is now on scaling the operating platform. We're building the infrastructure required to support a much larger enterprise across manufacturing, commercial operations, partner networks and global facilities we've substantially increased capacity and reach over the past year. We're deliberately building an organization that can support growth at scale. We are creating the operational foundation needed to serve more customers, execute more programs and deliver across a broader set of mission requirements than ever before. That's where our Palantir partnership becomes especially important. Foundry is helping us establish a common operating framework that connects data, workflows and decision-making across the enterprise. It gives leadership real-time visibility into operations and lets teams coordinate across manufacturing, supply chain, flight operations and finance. As we integrate acquired businesses and expand our capabilities, this infrastructure becomes a powerful force multiplier, helping us scale efficiently while improving execution across the enterprise. As we've been building the foundation, we're also accelerating integration and quickly realizing value. One of the biggest challenges in any acquisition strategy is integration. Historically bringing together systems, processes, operational data, supply chains and business functions can take years. Our integration strategy, coupled with our Palantir partnership, fundamentally changes that dynamic. Foundry dramatically accelerates integration, allowing us to bring newly acquired organizations into the Ondas ecosystem in a fraction of the traditional time line. The impact extends beyond software deployment. Faster integration means faster visibility into operations, faster standardization of processes, faster collaboration between teams and ultimately, faster realization of the value from our acquisitions. We believe this capability represents a meaningful competitive advantage, allowing us to rapidly transform acquired technologies, talent and operations into a unified enterprise platform capable of operating at significantly greater scale. Ultimately, Foundry is becoming the operating system that enables Ondas to move with speed while maintaining the agility to innovate and grow. We have made significant progress, translating capabilities and next-generation solutions as we operationalize our system of system strategy. First, our Iron Wave product line is not only operational but being fielded by a customer with very strong performance. Iron Wave provides forward-deployed aerial and ground-based ISR capabilities through an integrated platform architecture designed to support mission execution at the tactical edge. This is another important step in expanding our ability to deliver multi-domain solutions to customers. Second, we're beginning to see the real benefits of combining the technologies acquired across the Ondas portfolio. A strong example is the effort combining design Sawtooth counter-UAS technology with Centric cyber over RF capabilities. This unified solution will soon enable a more complete detect, identify and defeat capability, bringing multiple layers of sensing, electronic effects and command and control into one platform. We believe this integration can create a highly differentiated counter-UAS capability that addresses a rapidly growing market requirement and demonstrates the value of our systems of systems approach. Finally, I'd like to update you on SkyWeaver, our Edge AI platform being developed with Palantir. Last week, we successfully conducted both ground and aerial testing of the SkyWeaver platform validating key aspects of the architecture and providing a clear path toward final development and broader operational integration. SkyWeaver is designed to serve as a unifying intelligence layer across the Ondas portfolio, enabling operators to ingest, process and act on information for multiple domains in real time. As it matures, we believe it will become a foundational capability supporting true system of systems operations across air, ground and future mission environments. Taken together, these developments reflect our broader strategy, integrating advanced technologies, accelerating innovation through software and delivering multi-domain operational capabilities that help customers make better decisions when every second counts. With that, I'll turn the call back over to Eric.

Thank you, Ryan. The work Ryan just described, embedding AI-enabled command and control across our platforms is central to how we differentiate our systems of systems offerings as we scale. Let's now turn to our outlook for the second half of 2026 and the priorities guiding the next chapter of Ondas' growth. As highlighted throughout today's presentation, Ondas has transformed its business and build meaningful scale. At the same time, we're scaling the operating platform to commercialize and deliver these technologies, globally improving capital efficiency, strengthening unit economics, accelerating delivery and supporting the much larger programs we're now pursuing. The opportunity ahead requires us to keep scaling and management is focused on 4 priorities: First, commercial scale, converting our backlog and pipeline, expanding our global reach and turning initial deployments into recurring long-duration programs; second, operational scale. Strengthening shared capabilities across the platform, expanding global manufacturing capacity and driving consistent execution as volumes increase. Third, AI and innovation, embedding agentic AI, autonomy and advanced software more deeply across the portfolio to deliver integrated software-defined multi-domain solutions rather than stand-alone products. Fourth, corporate development, disciplined portfolio expansion through strategic acquisitions, technology partnerships, including our work with Palantir and further expansion into key global markets. These priorities reinforce one another converting the demand we're seeing into sustained revenue growth, stronger operating leverage and long-term value for our customers and shareholders. Against that backdrop, we are increasing our full year 2026 revenue target to between $525 million and $550 million. At the midpoint, this would represent more than 10x Ondas' 2025 revenue and greater than 30% organic growth on a year-over-year pro forma basis. For the third quarter, we expect revenue of between $140 million and $155 million. At the midpoint, that represents approximately 73% sequential growth and greater than 30% organic growth year-over-year on a pro forma basis. Clearly, our outlook implies another significant sequential ramp in both the third and fourth quarters. We believe we have meaningful visibility into that ramp through our backlog and rapidly expanding pipeline. Importantly, we expect growth to remain broad-based across market segments as depicted in this pie chart. Several major programs already in backlog are also expected to contribute meaningfully during the second half. We are beginning volume shipments against more than $240 million of orders captured under the U.S. Army's $982 million lethal unmanned strike IDIQ. We also expect growing contributions from Ultra and Iron Strike as those platforms begin their adoption curves and volume deliveries during the third and fourth quarters. Similarly, Indo Earth is expected to begin delivering against the $140 million combat engineering vehicles program announced earlier this year. As Neil discussed, our first half cost structure reflected substantial front-loaded investment in the operating platform required to support this growth. As revenue and gross profit scale, we expect adjusted EBITDA losses to narrow in the second half beginning in the third quarter, while we continue investing in the opportunities ahead. We see upside to our previously announced adjusted EBITDA profitability objectives and are pulling forward the time line by 1 quarter. We now expect our operating platform consisting of Ondas' Autonomous Systems and Ondas Sentinel to reach profitability in the fourth quarter of 2026. And for Ondas Inc., to reach company-wide adjusted EBITDA profitability in the fourth quarter of 2027. Finally, if we execute against the planned fourth quarter ramp, we expect to exit 2026 at $1 billion in annualized run rate revenue. Indeed, we are tracking well ahead of our 2030 target of $1.5 billion in revenue by perhaps a couple of years. We have significant work ahead, but the strength of our backlog, the breadth of our pipeline and the increasing scale of the operating platform give us confidence we can sustain momentum through the balance of 2026 and into 2027. Let me wrap up our prepared remarks before we open the call for questions. We believe Ondas is positioned to win in large and expanding defense and security markets. We have built a differentiated portfolio across 4 strategic market segments, supported by growing backlog and commercial momentum, a global customer base, strategic partnerships and an increasingly integrated technology and operating platform. Most importantly, we believe we have a clear path to profitable, scalable growth. and we plan to demonstrate that operating leverage as we move through 2026 into 2027. Our focus now is execution, converting backlog, delivering on major programs integrating our capabilities across the platform and realizing the operating leverage inherent in the model. We believe these assets, technologies and execution capabilities position Ondas to build the global leader in autonomous defense and security technologies and create substantial long-term value. Thank you again for joining us today. Operator, we will now open the call for questions.

[Operator Instructions] Our first question comes from Austin Bohlig with Needham.

Congrats on the great results and solid execution. I guess I just wanted to dig into the big uptick in kind of the pipeline opportunity you're going from about $4 billion to $11 billion. Was curious on if you could maybe elaborate on like what is included in the DZYNE acquisition, but then also what was new incremental organically? It looks like APAC saw a really big uptick in this pipeline.

Yes. Austin, thank you. So the uptick in our strategic pipeline is really broad-based across the 4 market segments we're active in. And as you can see, it is also a broad-based regionally design and certainly brought quite a bit on the ISR and counter drill systems in particular. In Europe, we're seeing strength across segments as well. I highlight what we're seeing with unprecision strike with Rotron and we think these are also very relevant. And we're seeing demand in Asia Pac as well. . I do want to highlight, I'll come back to General Flynn has joined us. He is -- part of his mandate is to help us penetrate and serve the Asia Pacific region. So we think that's going to be supportive and that's pulling through this pipeline.

Awesome. Well, and then maybe just one quick follow-up. So I appreciate the color on kind of the pro forma organic revenue in the quarter, 85%. And I believe for the full year, you said it will imply around 30% organic growth. I'm just kind of curious if you can maybe -- is that an apples-to-apples comparison between the 2? Or does that 30% number imply something else?

Well, clearly, as we're moving through the year into 2027, the base we're comparing to is growing. So what I'm seeing from here is a 30% to 40% growth level across the portfolio. Of course, some of the systems in markets we're in will grow faster than others. But I think it's fair to say that we're seeing underlying demand in adoption curves across the board. And that's the context I can share. So if you're thinking about the 2027, there was an other metrics that would be...

Okay. Yes. And I guess as my quick follow-up was. So as we think about 2027 like, is this kind of 30% revenue CAGR something that's sustainable? Or how should we be thinking about growth as we enter next year?

I think it is sustainable. And I'd also add that we have some very significant platforms that are really just beginning their adoption curves. One thing you've seen it on us over the course of 2026 is that the frequency and size of the orders we're capturing has been growing. And I think that's going to be the case as we're moving over the next 3, 6 to 12 months. So the growth rates we're talking about, I think we're trying to achieve higher growth rates, but 30% to 40% would be very attractive and strong performance, all the same.

Next question comes from John Siegmann with Stifel. .

Congratulations on the backlog in revenue. Just maybe one question on the corporate investments. I know, Eric, you mentioned these are onetime in nature. Just -- and you're confident you're pulling forward the EBITDA targets next year. But -- are these -- it was unclear to us if these costs will scale down on a dollar basis or a percentage basis? Just maybe you can expand a little bit more on what you're actually investing given it diverges from your confidence next year?

Yes, sure. Thanks, Jon. So I think the level of spending on the Corp Dev and Ondas Capital or partner programs is probably a steady state, at least for the next 6 to 12 months. we may see that moderate -- we're certainly going to see it moderate and we potentially could see a decline into 2027. At the same time, we do believe we're going to grow -- we're growing a substantial business. And those investments are really designed to make sure that we're capturing market position in a market we think has a very strong growth curve over the next 5 to 10 years. So I think you're going to see the operating leverage from Ondas on strong revenue growth and gross profit generation.

The next question comes from Scott Searle with Roth Capital.

Congrats on the momentum that you continue to build with the M&A opportunities. Eric, this was sort of answered in the opening remarks. But I want to dive in a little bit more in terms of continuing to build the systems of systems and multidomain approach. Now that's been unified with the SkyWeaver platform. How is it really changing the level of engagement with government agencies and potential customers out there. What's built into the pipeline when you look at that huge $11 billion ramping up from $4 billion, I think, prior quarter. And when do we start to see some of the conversion of these, I'll call them larger multi-diverse multi-domain sort of opportunities? When does that start to transition into the P&L? And then just a real quick one, follow-up on the financials and OpEx, given the time lines for the closure of design and Cyber Hawk, how should we be thinking about normalized OpEx as we're exiting the fourth quarter of this year?

Sure. So let me take the last one first. So clearly, adding design in the Q3 P&L will present a step-up in operating expenses. At the same time, that's coming with higher revenues and gross profit, and that's -- when we talk about our outlook for both the top line and the operating leverage that's reflected the expectations around design and the contribution to the P&L over the next 6-plus months is reflected in that outlook. So we do expect operating leverage and designed to provide operating leverage on top of that. In terms of customer engagement, importing pipeline, we certainly see a lot of receptivity to the system of systems, but of course, it's not just that. Ondas and companies like Ondas becoming platform companies, where we can deliver the technologies and the road maps and start to add more and more autonomy to the unmanned operations. So when we're seeing customers, they really like our technology road map and capabilities, they're also very excited about the financial strength, the ability to energize supply chains and ability to deliver in the field and support and stay systems in the field. So what I'm seeing is that we're bringing the talent together, we're able to bring the technologies together that the customers are very receptive to that because you're seeing a company like Ondas step up and be able to be a long-term partner in critical technologies that are really essential to securing our country. Ryan, can you add -- would you add anything to the systems system, SkyWeaver, in particular and how that's impacting conversations in terms of us growing.

Yes. Thanks, Eric, and thanks, Scott, for the question. I'd add 2 things. As it relates to the pipeline, how you view SkyWeaver in that pipeline. There's 2 things that I would add. First is through the addition of SkyWeaver into our platforms, we're increasing the probability of when for programs that need to be connected into the customer C2 systems and through the ability to do mission autonomy. And then the second thing I would add is that it enables an increase in cross-selling. So when you have a stratospheric balloon with SkyWeaver, that can be connected to an Ultra in the Group 5 UAS space and they can be collaborating on a mission. It just increases the ability to sell stratelites where there are ultra customers or vice versa and in our customer engagements, those are exactly the kinds of things that they're looking for is the ability to autonomously connect our platforms and provide a greater level of mission autonomy. Operator?

Timothy your line may be muted.

I'm sorry, I didn't hear the question. I apologize for that. Eric, you've put together incredible world-class set of physical AI assets and software Board and management, the pipeline is kind of scared to execute on. And I know you're very focused on it. Ryan, you did touch on this, but on Slide 9, you talked about the operational platform. Can you give us -- and I know you're saying you're integrating these companies quickly than basically most kind of roll-ups to work. Can you elaborate on how you've built out operational platform? I know you said Palantir partnering there. What cloud are you using? How much is AI involved? How quickly can you kind of integrate these companies together? Any more color there would be very helpful.

Yes, sure. So just first, Tim, we're very deliberate in building out a scalable operating platform, and I do bristle a bit at the term roll-up because what we're doing is combining exceptional technologies, adding value across domains. And then we're doing that, we're investing in the operating platform which is, first and foremost, a people process, right? So we've added incredible leadership. You've seen over the past 12 months with Oshri Lugassy coming on in his critical role partner with Meir and many, many leaders inside of Ondas. More recently, Ryan Hartman and Matt McCue have joined, and they both have experienced leading large organizations. And of course, we've also added David Barnea to help us globalize the business. So leadership is really, really essential. On the technology side, I will ask Ryan to expand upon what we're doing with Palantir. Maybe he can be more specific on some of the technical aspects of it as well. So Ryan.

Yes. Thanks for the question. So there's a couple of things we're doing. So a lot of the integration is built on Foundry and work speed. And so we have worked with Palantir to design AI agents, have rewrite capability into ERPs, into MRPs and material planning systems into inventory systems and financial systems. And ultimately, what that enables us to do is have a unified picture of the businesses and create efficiencies through supply chain and manufacturing processes and then even doing things like building AI agents to merge policies. So we can merge a policy in a couple of minutes versus days and weeks or teams to write new policies or adopt policies. All of this that is built on DevCloud in Microsoft Azure. So we're staying compliant with our security requirements and legislation related to having our facility clearance licenses and CMMC Level 2s, et cetera. So yes, it's largely based on and the ability to use AI to create a common operating picture. And over time, we'll start to degrade or sunset some of the legacy systems in the background, but we won't have to have more of them because we've created a common operating picture built on balance foundries.

I mean, Ryan, how mature is this and how much better can you get? Like when did it really become operational?

So you did some of the first tools became operational about a week after WorldView was acquired by Ondas. So we started there. We built the infrastructure, the first thing we built was an inventory management tool than a supply chain tool and then started to build out some of the other tools. So all of the tools that I've mentioned are operational today. We're actively using them to integrate design and WorldView to start with. And then we'll be adding additional tools. But everything I've mentioned is already operational and has been for months.

So Eric, lastly, do you have a sense of how much you've improved revenue growth or margins for portfolio companies?

We've got underlying growth rates that are extremely high adoption -- multiyear adoption curves that are really just launching now. So I don't necessarily see us improving them as much as unlocking them, right? We're putting the infrastructure that can drive the adoption, support the adoption of it is a multiyear cycle on everything we have in our portfolio. So that's the context I would share.