Obscure Defense Tech Company Sees 1,550% Revenue Jump
A lot can change in a year, just usually not this much.
On Thursday, little-known defense tech company Ondas reported third-quarter revenue of $167 million, marking a stunning year-over-year increase of more than 1,550%, or a 16.5-fold jump for the less math inclined. That’s impressive, just not to Wall Street. Shares of the company sank 7% on Thursday, thanks to a quarterly $0.11 earnings per share loss that came in larger than expectations. Consider the report a sign of the major growth — and correlated major expectations — for the next generation of defense firms.
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The growth was not entirely organic. The company, primarily a maker of autonomous drones, has been on an aggressive M&A shopping spree, including six key acquisitions in the most recent quarter mostly across the drone and autonomous weapons space. A year ago, Ondas acquired counter-drone systems company Sentrycs, whose tech was employed at many World Cup host stadiums this summer. However, pro forma organic revenue, which includes portfolio companies’ preacquisition sales in the prior period, still grew 64% year over year in the third quarter.
Ondas expects the rapid growth will continue:
Full-year revenue is now expected to reach “at least” $550 million, which was the high end of its previous forecast range. For next year, Ondas said it is setting an initial revenue target of $1.1 billion. Its order book, meanwhile, surged 36% from the prior quarter to $835 million.
Still, gross margins dropped to 21% from 43% a quarter prior; total losses reached $64 million, way up from just $7 million a year ago. On the bright side, companywide adjusted EBITDA profitability is now expected to arrive in next year’s third quarter, Ondas said, one quarter earlier than it previously estimated.
Alex Karp Fishing: The most significant recent development for Ondas may just be a new partnership with Palantir. In October, the two firms announced Regna AI, a standalone company “initially wholly owned by Ondas” and “powered by Palantir” that aims to help customers “deploy mission-specialized fine-tuned AI models within their own sovereign environments,” the two firms said in a statement.
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