10-Q: Ondas Holdings Q3 Revenue Soars, Bolstered by Acquisitions

Ondas Holdings Inc. reported a significant increase in Q3 2025 revenue and gross profit, driven by strong performance in its autonomous systems segment and recent acquisitions, despite continued operating losses.

Summary

• Revenue for the three months ended September 30, 2025, increased by $8.618 million (582%) to $10.098 million, compared to $1.481 million in Q3 2024.
• Revenue for the nine months ended September 30, 2025, increased by $17.556 million (573%) to $20.620 million, compared to $3.064 million in the same period of 2024.
• Gross profit for Q3 2025 was $2.604 million (26% margin), up from $0.048 million (3% margin) in Q3 2024.
• Gross profit for the nine months ended September 30, 2025, was $7.425 million (36% margin), a significant improvement from a gross loss of $(0.538) million ((18%) margin) in the same period of 2024.
• Operating loss for Q3 2025 increased by $6.843 million (79%) to $(15.504) million, primarily due to a 108% increase in operating expenses.
• Net loss for Q3 2025 improved by $2.045 million (21%) to $(7.481) million, compared to $(9.526) million in Q3 2024.
• Net loss for the nine months ended September 30, 2025, increased by $4.695 million (17%) to $(32.367) million, compared to $(27.672) million in the same period of 2024.
• Cash and restricted cash significantly increased to $433.394 million as of September 30, 2025, from $29.999 million at the beginning of the period, primarily due to successful capital raises.
• The company completed the acquisition of Apeiro Motion Ltd. on August 31, 2025, and subsequently acquired Smart Precision Optics S.P.O LTD. (October 1, 2025) and 4M Defense Ltd. (October 29, 2025).
• Management believes that substantial doubt about the company's ability to continue as a going concern has been alleviated due to improved liquidity.

Sentiment

Score: 7

Explanation: The company demonstrated impressive revenue and gross profit growth, successfully raised substantial capital, and addressed going concern doubts. However, operating losses remain high, and future reliance on capital raises and customer concentration are notable concerns.

Positives

• Significant revenue growth: Q3 2025 revenue increased by $8.618 million (582%) to $10.098 million, and nine-month revenue increased by $17.556 million (573%) to $20.620 million, primarily driven by the OAS segment.
• Substantial gross profit improvement: Q3 2025 gross profit increased by $2.557 million to $2.604 million (26% margin), and nine-month gross profit improved by $7.963 million to $7.425 million (36% margin) from a prior-year gross loss.
• Improved net loss for the quarter: Q3 2025 net loss decreased by $2.045 million (21%) to $(7.481) million, indicating better cost management or higher-margin sales in the quarter.
• Strong liquidity position: Cash and restricted cash increased to $433.394 million as of September 30, 2025, from $29.999 million at the beginning of the period, providing significant capital for operations and growth.
• Successful capital raises: The company raised approximately $422.3 million in net proceeds from public offerings in June, August, and September 2025, and an additional $407.2 million in October 2025.
• Alleviation of going concern doubt: Management has concluded that substantial doubt about the company's ability to continue as a going concern no longer exists.
• Strategic acquisitions: Completed acquisitions of Apeiro Motion Ltd., Smart Precision Optics S.P.O LTD., and 4M Defense Ltd., expanding multi-domain autonomous solutions and market reach.
• Unrealized gain on investments: Recognized a $6.893 million unrealized gain on marketable equity securities for the nine months ended September 30, 2025.

Negatives

• Increased operating loss: Operating loss for Q3 2025 increased by $6.843 million (79%) to $(15.504) million, and for the nine months, it increased by $8.972 million (34%) to $(35.063) million.
• Higher operating expenses: Total operating expenses increased significantly by $9.400 million (108%) in Q3 and $16.935 million (66%) for the nine months, driven by human resource costs (including stock-based compensation), professional fees, and R&D.
• Increased net loss for the nine months: Despite quarterly improvement, the net loss for the nine months ended September 30, 2025, increased by $4.695 million (17%) to $(32.367) million.
• Customer concentration: One customer accounted for 90% of the company's revenue for the three-month period ended September 30, 2025, and three customers accounted for 59%, 18%, and 15% for the nine-month period, posing a significant risk.
• Ondas Networks segment continues to report gross losses and operating losses for both the three and nine months ended September 30, 2025.

Risks

• The ongoing war in Israel, where Airobotics' main offices are located, could adversely affect anticipated milestones, Israel-based activities, and the ability to import materials for the Optimus System and ship them outside of Israel.
• Future capital requirements will depend on progress with developing, manufacturing, and marketing technologies, the costs of patent enforcement, ability to establish collaborative arrangements, and competitive/regulatory developments.
• There is no assurance that additional financing will be available on commercially acceptable terms or at all, which could significantly delay or limit operations and business growth.
• A small number of customers account for a substantial amount of revenue, creating a concentration risk if these relationships are disrupted.
• The company has provided a full valuation allowance against its net deferred tax assets, as their future utilization remains uncertain.
• The usage of Federal Net Operating Losses (NOLs) could be limited in the event of a change in ownership, as per Section 382 of the Internal Revenue Code.

Future Outlook

The company expects to fund its operations for the next twelve months using current cash on hand, gross profits generated from revenue growth, potential prepayments from customers for purchase orders, potential proceeds from warrants issued and outstanding, and additional funds that may be sought through equity or debt offerings and/or borrowings under additional notes payable, lines of credit, or other sources. Future capital requirements will depend on progress in developing, manufacturing, and marketing technologies, the costs of protecting intellectual property, the ability to establish collaborative arrangements, marketing activities, and competing technological and market developments, including regulatory changes and overall economic conditions in target markets.

Management Comments

• Management believes the actions discussed above sufficiently alleviate the previously identified conditions that raised substantial doubt, and the Company will have sufficient capital resources to fund its operations for the next twelve months from the date these interim financial statements are issued.
• Management has concluded that substantial doubt about the Company's ability to continue as a going concern no longer exists as of the issuance date of these unaudited condensed consolidated financial statements.

Industry Context

Ondas Holdings operates in the dynamic and growing private wireless, drone, and automated data solutions markets, with a strategic focus on defense, homeland security, and critical infrastructure. The company's recent acquisitions of Apeiro, SPO, and 4M Defense, along with the planned Sentry acquisition, demonstrate a clear strategy to expand its multi-domain autonomous capabilities and strengthen its position in these high-growth sectors. The FAA Type Certification for its Optimus 1-EX UAV is a significant competitive differentiator, validating its systems for broad beyond-visual-line-of-sight (BVLOS) operations in the U.S. National Airspace System. The adoption of the IEEE 802.16 standard by major North American freight rail operators for future private wireless networks positions Ondas Networks' FullMAX platform as a key solution for modernizing legacy infrastructure.

Comparison to Industry Standards

• The FAA Type Certification of the Optimus 1-EX UAV on September 25, 2023, is noted as the 'first autonomous security data-capture UAV to receive this distinction,' enabling broad beyond-visual-line-of-sight (BVLOS) operations over people and infrastructure and validating the system's safety and reliability within the U.S. National Airspace System (NAS). This achievement sets a high benchmark for autonomous drone safety and operational capability in the industry.
• The IEEE 802.16 standard, which forms the core of Ondas Networks' FullMAX platform, has been adopted by the Association of American Railroads (AAR), MxV Rail, and the American Railway Engineering and Maintenance Association (AREMA) for future private wireless networks, including the new NGHE Gen4 protocol for train telemetry operations. This positions FullMAX as a leading, standards-based solution for critical infrastructure upgrades in the North American rail industry, offering enhanced data throughput and security compared to legacy narrowband systems.

Management Changes

Corporate Governance

Legal Proceedings

• On October 27, 2023, the company reached a settlement agreement for legal proceedings related to Ardenna, entitling it to receive $600,000 in reimbursements for legal fees, of which $550,000 has been received as of September 30, 2025.
• Airobotics filed a Notice of Non-Payment with the Abu Dhabi Civil Courts on June 6, 2024, regarding a customer's lack of payment. The Abu Dhabi Civil Court of Appeals ruled in favor of Airobotics for $2,138,945 on October 9, 2024. Subsequently, on June 17, 2025, Airobotics entered into a second settlement agreement, waiving the remaining balance owed by the customer in consideration for the return of approximately $1 million in related inventory.

Related Party Transactions

• As of September 30, 2025, the company owed $515,000 to independent directors for accrued compensation.
• Charles & Potomac Capital, LLC (C&P), an entity affiliated with Joseph Popolo (a former director), purchased Convertible Notes in Ondas Networks totaling $2,500,000 in principal amount (July 8, 2024, July 23, 2024, and November 13, 2024).
• C&P also purchased OAS Convertible Notes for an aggregate original principal amount of $2,000,000 in October and December 2024. C&P assigned $30,000 of these notes to a non-related party on May 26, 2025.
• Privet Ventures LLC, an entity affiliated with Eric Brock (Chairman and Chief Executive Officer), purchased OAS Convertible Notes for $1,000,000 on October 10, 2024.
• C&P provided a Secured Note to Ondas Networks for up to $1,500,000, with $1,500,000 drawn as of December 31, 2024.
• C&P participated in the 2024 Ondas Offering, paying $2,000,000 for shares of Common Stock and OAS Warrants.
• C&P is the proxy for the members of the 2023 Initial Purchaser in the Networks Series A-1 Preferred Stock offering.
• C&P participated in the Networks Series A-2 Preferred Stock offering, paying $250,000 for shares and 2024 Holdings Warrants.

Stakeholder Impact

• Shareholders: Experienced significant dilution from multiple public offerings and convertible debt conversions, but the substantial capital raises have significantly improved liquidity and alleviated going concern risk, potentially stabilizing the stock and supporting long-term growth initiatives.
• Employees: Increased headcount, bonus expenses, and significant stock-based compensation indicate growth and efforts to attract and retain talent. The ongoing conflict in Israel poses potential risks to Israel-based employees and operations.
• Customers: Benefit from expanded product offerings through recent acquisitions (Apeiro, SPO, 4M Defense) and continued development of advanced autonomous systems and wireless connectivity solutions, enhancing operational intelligence, safety, and resilience in critical sectors.
• Creditors: Convertible notes and secured notes are being repaid or converted into equity, reducing the company's overall debt liabilities and improving its financial risk profile.

Next Steps

• Continue to fund operations through cash on hand, gross profits from revenue growth, customer prepayments, warrant proceeds, and potential future equity/debt offerings.
• Integrate recent acquisitions of Apeiro Motion Ltd., Smart Precision Optics S.P.O LTD., and 4M Defense Ltd. into operations.
• Complete the planned acquisition of Sentry CS Ltd. for $125 million cash and $100 million in stock.
• Continue developing, manufacturing, and marketing technologies, including the FullMAX platform and OAS autonomous systems.
• Prepare, file, prosecute, maintain, and enforce patent claims and other proprietary rights.
• Establish collaborative arrangements and expand marketing activities.
• Monitor the situation in Israel for potential impacts on Airobotics' operations and supply chain.
• Seek stockholder approval to increase authorized shares of Common Stock to allow for the full exercise of the October Common Warrants.

Key Dates

Recommendation

Ondas Holdings has demonstrated impressive revenue growth and a significant improvement in gross profit, driven by its OAS segment and strategic acquisitions. The successful capital raises have substantially strengthened its balance sheet and addressed previous going concern concerns, providing a solid foundation for future operations. However, the company continues to incur substantial operating losses, and its long-term profitability remains unproven. The high customer concentration and ongoing need for additional capital, as indicated by the potential $1.5 billion from warrant exercises, suggest continued financial risk and potential for further dilution. While the strategic direction and market opportunities in autonomous systems and critical infrastructure are compelling, the company's ability to translate revenue growth into sustainable profitability and manage its high operating expenses needs to be closely monitored. For a seasoned investor, a 'hold' recommendation is appropriate, acknowledging the positive operational momentum and improved liquidity while remaining cautious about the path to sustained profitability and potential future dilution.

Keywords

Ondas Holdings, ONDS, Quarterly Report, Financial Results, Autonomous Systems, Drones, Robotics, Wireless Connectivity, MC-IoT, Industrial IoT, Defense Technology, Homeland Security, Critical Infrastructure, Capital Raise, Acquisitions, Apeiro Motion, Smart Precision Optics, 4M Defense, Sentry CS, Revenue Growth, Gross Profit, Net Loss, Liquidity, Going Concern, FAA Type Certification, Israel Innovation Authority, Convertible Notes, Stock Options, Restricted Stock Units