Eric, good morning. How you doing here today?
I'm great, Ryan. Thrilled to be here and first time on your show.
Yeah, first time. And I'll be honest with you, hopefully not the last time. We can't thank you enough for making some time for us here this morning. Really quickly, just right off the top here, just so we're full disclosure, I've been following your stock for a long time. I'm extremely interested in the drone theme that's currently going on right now. We've watched your stock, we've traded your stock, and we've read a lot of the different press releases. So, really great and honored to have you here and want to ask you about some of that stuff. We do have some new people joining us here. So, if you wouldn't mind, can you quickly just give a brief on what exactly it is and does?
Yeah, sure. So, Ondas through our OAS business unit, Ondas Autonomous Systems, provides autonomous unmanned systems. These are both aerial and ground platforms. So, drones, ground robotics, and these systems are used to provide security and intelligence to critical markets. So, it's a dual-use company. Many of our technology platforms will be dual use as well. That means we're serving the military, homeland security, public safety, and then of course critical infrastructure. And we're doing this globally. I'll say we are attacking massive end markets, and we believe we're really at the beginning of a 10-year boom. That's what we're participating in. So, deploying these aerial platforms. We've got several of them now in our portfolio as well as ground robots. Happy to go into that or take this any way you like.
Yeah. I mean, I think we should probably start by talking about the Iron Drone Raider. That's an autonomous counter UAS drone. And then you also have the Optimus, the system, the first FAA certified. Small UAS. So can you talk a little bit about those and kind of the demand for these?
Yeah, absolutely. So why don't I start with Iron Drone and we will talk Optimus. We might even talk about the Wasp which is this FPV.
That's one of the questions on my list. That's pretty good.
Very good. But yeah, it did really start with us with the Optimus and Iron Drone. I'll talk about Iron Drone firstly. So that is a counter drone platform. So that's designed to protect critical locations and populations from the threat of intruder drones. And of course we see this threat growing really exponentially not just in the battlefield but concerns around how we're protecting the homeland. The Iron Drone is part of a layered protection system. So layers go from the detection. You can't mitigate or protect what you can't see. So there's all sorts of different technologies including radar that can detect threats. You also see electronic mitigation. So that's things like jamming and spoofing of GPS, radio links, and then there's a so-called hard kill. And that's where Iron Drone plays and our system is fully autonomous. We've got incredible performance in navigation. It's an operational system that's been developed by our team in Israel and been deployed in battle. We're very proud of that. And what we do with Iron Drone is we use a net to mitigate the threat. Has a couple benefits. Firstly, lower collateral impact. So we're typically protecting population centers that ranges from military bases and borders to amusement parks and stadiums as well as critical infrastructure. So there's a massive amount of infrastructure and population centers that need to be protected and using a net provides lower collateral impact. So exploding over people is something you want to avoid if you can. And then secondly the economic case here is really important because when the drone is finished with our mission you can use it again. You just put a new net on it and it goes. So that's Iron Drone.
The Optimus system is used for what we call ISR. This is also drone infrastructure. It's installed. And what is ISR? It's intelligence, surveillance, reconnaissance. So perimeter security at a critical infrastructure location, emergency response for what we call drone first responder that's public safety, and intelligence inspection of critical infrastructure so you can maintain and keep that resilient. So that's a little bit on Iron Drone and Optimus.
Okay. Awesome. Let me keep rolling here. You just attended the Association of the United States Army annual meeting and exposition, the AUSA, to highlight the Iron Drone Raider system. How did that all go? Can you tell us anything about that?
Yeah, it was great. And you're right. The counter drone systems and platforms are really front and center. We have a massive boom here coming and it's really just starting to launch on the deployment of counter drone technologies. And of course, this is addressing a gap for defense and security providers globally that's existed for many years. Nobody, you know, if you're in this industry, you knew eventually you'd be concerned with the threat of intruder or hostile drones. And all of a sudden, in the last couple years, that threat has become real. So you're seeing militaries and homeland security officials and even the private sector and public safety officials trying to solve for this. So we have, you know, we were there, it's a massive show and I'm very happy with the traffic we had at the booth with really important customers particularly from the Department of War in the US. And of course that's typically going to be for stuff like this US Army and Marines and actually what you're seeing however is one of the big concerns is of course on the battlefields outside the US which we're involved in protecting, Europe for example, Israel and the Middle East, but the homeland. And the homeland is really a coalition of folks. They have this joint task force that's looking at technologies, determining layers and trying to figure out how they deploy that and when. And I'll just say that I do believe this is going to be an infrastructure buildout that is, you know, a decade long if not longer.
Okay, that's absolutely fantastic. All right, let's talk about the Rift Dynamics partnership a little bit and about that drone. Can you tell us first of all about the partnership itself and about the drone itself?
Yeah, great. So, Rift is a Norwegian-based company addressing primarily the European markets and it's focused on defense and security. Their initial product is what they call the Wasp. So this is an FPV, what we call an attritable drone or a strike drone. So this is a drone that's designed to not come back. So it's something that PGsath and the Department of War would refer to as mass affordable. And the partnership with Rift is multifold. Firstly, we've made an investment in the company. We're really excited to do that given all the momentum they're building in the business which we might touch on. That gives us really important relationships in Europe. One of those as we announced earlier in the week was a relationship with NAMO which is a large artillery provider in Europe and of course companies like NAMO are looking at these strike drones as new artillery. So we with Rift announced that NAMO had integrated into a system the Wasp strike drone and the warhead and of course we think that's a really great thing we're able to bring to the United States. Our relationship with Rift gives us exclusive marketing rights of that system in the US markets. So anyway, so that's Rift and it is also part of our strategy to localize in Europe. We want to bring our technologies into Europe and having partnerships and relationships with Rift and others is helping us do that. In Europe they're making Europe great again just like they're making America great again here and that's going to require localization as we're going to market.
Okay, that sounds really awesome. That sounds like a huge increase to the addressable market that you can serve. So, really exciting stuff there as well. All right. You talked a little bit about how things are going to look going forward here. I think, at least since I've been following, you just reported your best quarter. To me, this entire story right now, it's all going to be about revenues. Can you tell us a little bit about how you plan to ramp revenues going forward here? Is there anything specific that you can discuss about that?
For sure. So we've given our outlook repeatedly over the year and we are showing substantial growth off a very low base and that's really emblematic of the industry. There's been a massive cycle here of investment in what we call deep technology. That's the integration of software and hardware. It's physical AI. It's software defined. These are systems that we're bringing to market and our peers that you can't design in 12 months and make operational. They're complex. But we're at the same time seeing several dynamics. The technology stack is mature for Ondas and increasingly for other companies and the end markets are prepared. So customers have been working with these technology platforms for a long time now. They've been defining use cases and making them operational. And what does that mean? That means we're going to have significant market penetration on these autonomous systems. And we're going to try to lead that. So again off a small base we got to $25 million in revenue this year. The bulk of that is in our drone businesses. And then we said that we should be doubling that next year. And I think that's very doable. At the same time, we see in our strategy that the industry is transitioning. It's transitioning from technology development, which is typically venture-backed. There's been a massive amount of capital invested and time, energy, and talent invested to get us to this point. However, this is now the time to build companies. And what I mean by that is we have to raise operating capital, which is invest in scaling the technology platforms that have been developed. And that requires growth capital. And that's what we're providing for the market. We're building operating companies that are scalable. That means sales and marketing. That means supply chain and production. That is a huge area to tackle. And you need scale. Every drone is not a company. And what that means is in the supply chain, which is something that we as an industry are trying to attack. If you have hundreds of drone companies, the supply chain can't interface. They can't give everybody 10 drones, right? We have to build thousands of drones. An example of that is Rift. So what does that mean for revenue? We're doing that. We're building field support sustainment. We're doing it with partners. That means we're scalable and that means we can deploy growth capital through acquisition. And we have an M&A program. So I think what you're going to see is as we're executing that program, we've made a couple of acquisitions. We've articulated we have a strong acquisition pipeline. Acquiring exceptional technology that's proven with customers and has its own growth curve. And that's going to bode well. So, it's a core plus strategic growth initiative and I think what you'll see is as we're executing that the street models are going to go higher and higher and that's going to help support a valuation that we have today and even growth beyond that.
