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Ondas Q3 Earnings Show Wider Loss, Revenues Beat Estimates
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Key Takeaways
Ondas' Q3 revenues surged to $167.5M, beating estimates by 13.9%, while net loss widened to $64.7M.
ONDS secured $214M in new orders, lifting backlog 36% sequentially to $835M amid strong defense demand.
Ondas raised its 2026 revenue target to at least $550M and introduced a 2027 target of at least $1.1B.
Ondas Inc. (ONDS - Free Report) reported a third-quarter 2026 net loss (which included certain non-cash items) of $64.7 million compared with a net loss of $7.5 million in the year-ago quarter. Loss per share widened to 10 cents from 3 cents. Revenues surged more than 16-fold year over year to $167.5 million, beating the Zacks Consensus Estimate by 13.9%.
Top-line growth reflected strategic acquisitions and strong execution across the company's autonomous systems portfolio. Pro forma organic revenues increased 64% year over year. Ondas secured $214 million in new orders during the quarter, while backlog reached approximately $835 million, up 36% sequentially.
Ondas Holdings Inc. Price, Consensus and EPS Surprise
Ondas' revenues doubled sequentially from $83.8 million in the second quarter. The increase reflected contributions from acquired businesses and growing demand for counter-unmanned aircraft systems (C-UAS), precision strike technologies and autonomous platforms.
Several businesses delivered strong organic growth. Sentrycs recorded 263% year-over-year pro forma revenue growth, supported by demand for its cyber over RF counter-UAS systems. Rotron generated 250% growth, while 4M and Mistral registered increases of 192% and 136%, respectively.
The United States accounted for more than half of total quarterly revenues, reflecting Ondas' growing presence in the domestic defense market.
Ondas Faces Margin Pressure Amid Rapid Expansion
Gross profit increased to $36.5 million from $2.6 million a year ago. Gross margin contracted to 21.8% from 43.1% in the preceding quarter and 25.8% in the year-ago period. The sequential decline reflected higher amortization of capitalized IP, acquired inventory step-ups related to purchase accounting and inefficiencies inn the early stages in ramping large programs.
Adjusted gross profit reached $58.3 million, while adjusted gross margin improved to 34.8% from 28.1% a year earlier. Sequentially, adjusted gross margin declined from 50.4%, primarily due to a higher contribution from lower-margin precision strike programs and inefficiencies associated with scaling production.
Operating expenses increased to $226 million from $18.1 million in the prior-year quarter. This increase included $57.8 million in stock-based compensation and $25.3 million in amortization expenses.
Adjusted cash operating expenses were $118.7 million compared with $10.9 million a year earlier. Research and development expenses climbed to $61.6 million, reflecting investments in product innovation and integration. Adjusted EBITDA loss widened to $59.7 million from $8.1 million.
ONDS Strengthens Backlog and Defense Capabilities
Ondas secured $507 million in new orders during the first nine months of 2026. Its expanding backlog includes contracts across aerial security, intelligence, surveillance and reconnaissance, precision strike and autonomous ground systems.
The company continued expanding its defense capabilities through acquisitions, including DZYNE Technologies, Cyberhawk, GATE, Bron Technologies, Ottopia, Insignito and Caribou Labs. These additions strengthen its technology portfolio, manufacturing capabilities and customer reach.
DZYNE's ULTRA intelligence and surveillance platform represents a major growth opportunity. Ondas plans to expand manufacturing capacity through its proposed Stemme acquisition, targeting production of up to 10 aircraft monthly by 2028.
The IonStrike counter-drone interceptor also gained momentum, securing a $10 million integration order from a U.S. government customer. Ondas submitted a response to a $45 million sole-source RFP and is preparing to increase production capacity.
Ondas Maintains Substantial Financial Flexibility
Cash, cash equivalents, restricted cash and short-term investments totaled approximately $820.3 million as of Sept. 30, compared with roughly $1.4 billion at the end of June.
Ondas deployed approximately $431 million in cash toward acquisitions during the quarter.
The company also invested approximately $37 million in discretionary growth initiatives, including corporate development, operating infrastructure and emerging technology platforms.
ONDS Raises 2026 Outlook, Unveils 2027 Target
Management raised its full-year 2026 revenue target to at least $550 million from the previous range of $525-$550 million. Fourth-quarter revenues are expected to exceed $250 million, supported by backlog conversion, expanding production and customer deliveries.
Ondas expects fourth-quarter pro forma organic revenue growth of at least 75% year over year. Management also anticipates adjusted gross margins remaining in the mid-30% range due to continued mix of lower-margin revenues before recovering toward historical levels in 2027.
For 2027, the company introduced a revenue target of at least $1.1 billion, excluding potential acquisitions and incorporating organic growth exceeding 40%.
Management reaffirmed its expectation of operating-platform adjusted EBITDA profitability in the fourth quarter of 2026. ONDS also accelerated its company-wide adjusted EBITDA profitability target to the third quarter of 2027, one quarter earlier than previously anticipated.
Draganfly Inc. (DPRO - Free Report) reported third-quarter 2026 revenues of approximately $2.05 million, down 5% year over year, primarily due to lower service revenues. Product sales remained nearly flat at $1.61 million. Gross margin declined to 6.3% from 19.5%, reflecting a one-time non-cash inventory write-down of $366,609. Excluding the write-down, adjusted gross margin would have been 24.2% from 21.5%.
Shares for DPRO are down 58.2% in the past year.
Kratos Defense & Security Solutions (KTOS - Free Report) generated third-quarter 2026 revenues of $471.8 million, up 35.7% year over year, driven by strength in its government solutions business. Organic revenues increased 23.2%, while bookings reached $1.04 billion, taking backlog to approximately $2.6 billion. KTOS tightened its 2026 revenue guidance to $1.78-$1.81 billion and introduced a 2027 revenue forecast of $2.1-$2.2 billion.
Shares for KTOS are down 52% in the past year.
Unusual Machines (UMAC - Free Report) reported third-quarter 2026 revenues of $13.9 million, up 551% year over year. Gross margin was 35.4%, while adjusted EBITDA loss totaled approximately $0.7 million. UMAC’s enterprise customers represented approximately 90% of quarterly revenue and 88% year to date.
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Ondas Q3 Earnings Show Wider Loss, Revenues Beat Estimates
Key Takeaways
Ondas Inc. (ONDS - Free Report) reported a third-quarter 2026 net loss (which included certain non-cash items) of $64.7 million compared with a net loss of $7.5 million in the year-ago quarter. Loss per share widened to 10 cents from 3 cents. Revenues surged more than 16-fold year over year to $167.5 million, beating the Zacks Consensus Estimate by 13.9%.
Top-line growth reflected strategic acquisitions and strong execution across the company's autonomous systems portfolio. Pro forma organic revenues increased 64% year over year. Ondas secured $214 million in new orders during the quarter, while backlog reached approximately $835 million, up 36% sequentially.
Ondas Holdings Inc. Price, Consensus and EPS Surprise
Ondas Holdings Inc. price-consensus-eps-surprise-chart | Ondas Holdings Inc. Quote
ONDS Sees Broad-Based Growth Across Its Portfolio
Ondas' revenues doubled sequentially from $83.8 million in the second quarter. The increase reflected contributions from acquired businesses and growing demand for counter-unmanned aircraft systems (C-UAS), precision strike technologies and autonomous platforms.
Several businesses delivered strong organic growth. Sentrycs recorded 263% year-over-year pro forma revenue growth, supported by demand for its cyber over RF counter-UAS systems. Rotron generated 250% growth, while 4M and Mistral registered increases of 192% and 136%, respectively.
The United States accounted for more than half of total quarterly revenues, reflecting Ondas' growing presence in the domestic defense market.
Ondas Faces Margin Pressure Amid Rapid Expansion
Gross profit increased to $36.5 million from $2.6 million a year ago. Gross margin contracted to 21.8% from 43.1% in the preceding quarter and 25.8% in the year-ago period. The sequential decline reflected higher amortization of capitalized IP, acquired inventory step-ups related to purchase accounting and inefficiencies inn the early stages in ramping large programs.
Adjusted gross profit reached $58.3 million, while adjusted gross margin improved to 34.8% from 28.1% a year earlier. Sequentially, adjusted gross margin declined from 50.4%, primarily due to a higher contribution from lower-margin precision strike programs and inefficiencies associated with scaling production.
Operating expenses increased to $226 million from $18.1 million in the prior-year quarter. This increase included $57.8 million in stock-based compensation and $25.3 million in amortization expenses.
Adjusted cash operating expenses were $118.7 million compared with $10.9 million a year earlier. Research and development expenses climbed to $61.6 million, reflecting investments in product innovation and integration. Adjusted EBITDA loss widened to $59.7 million from $8.1 million.
ONDS Strengthens Backlog and Defense Capabilities
Ondas secured $507 million in new orders during the first nine months of 2026. Its expanding backlog includes contracts across aerial security, intelligence, surveillance and reconnaissance, precision strike and autonomous ground systems.
The company continued expanding its defense capabilities through acquisitions, including DZYNE Technologies, Cyberhawk, GATE, Bron Technologies, Ottopia, Insignito and Caribou Labs. These additions strengthen its technology portfolio, manufacturing capabilities and customer reach.
DZYNE's ULTRA intelligence and surveillance platform represents a major growth opportunity. Ondas plans to expand manufacturing capacity through its proposed Stemme acquisition, targeting production of up to 10 aircraft monthly by 2028.
The IonStrike counter-drone interceptor also gained momentum, securing a $10 million integration order from a U.S. government customer. Ondas submitted a response to a $45 million sole-source RFP and is preparing to increase production capacity.
Ondas Maintains Substantial Financial Flexibility
Cash, cash equivalents, restricted cash and short-term investments totaled approximately $820.3 million as of Sept. 30, compared with roughly $1.4 billion at the end of June.
Ondas deployed approximately $431 million in cash toward acquisitions during the quarter.
The company also invested approximately $37 million in discretionary growth initiatives, including corporate development, operating infrastructure and emerging technology platforms.
ONDS Raises 2026 Outlook, Unveils 2027 Target
Management raised its full-year 2026 revenue target to at least $550 million from the previous range of $525-$550 million. Fourth-quarter revenues are expected to exceed $250 million, supported by backlog conversion, expanding production and customer deliveries.
Ondas expects fourth-quarter pro forma organic revenue growth of at least 75% year over year. Management also anticipates adjusted gross margins remaining in the mid-30% range due to continued mix of lower-margin revenues before recovering toward historical levels in 2027.
For 2027, the company introduced a revenue target of at least $1.1 billion, excluding potential acquisitions and incorporating organic growth exceeding 40%.
Management reaffirmed its expectation of operating-platform adjusted EBITDA profitability in the fourth quarter of 2026. ONDS also accelerated its company-wide adjusted EBITDA profitability target to the third quarter of 2027, one quarter earlier than previously anticipated.
Zacks Rank
At present, ONDS carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Companies in the Same Space
Draganfly Inc. (DPRO - Free Report) reported third-quarter 2026 revenues of approximately $2.05 million, down 5% year over year, primarily due to lower service revenues. Product sales remained nearly flat at $1.61 million. Gross margin declined to 6.3% from 19.5%, reflecting a one-time non-cash inventory write-down of $366,609. Excluding the write-down, adjusted gross margin would have been 24.2% from 21.5%.
Shares for DPRO are down 58.2% in the past year.
Kratos Defense & Security Solutions (KTOS - Free Report) generated third-quarter 2026 revenues of $471.8 million, up 35.7% year over year, driven by strength in its government solutions business. Organic revenues increased 23.2%, while bookings reached $1.04 billion, taking backlog to approximately $2.6 billion. KTOS tightened its 2026 revenue guidance to $1.78-$1.81 billion and introduced a 2027 revenue forecast of $2.1-$2.2 billion.
Shares for KTOS are down 52% in the past year.
Unusual Machines (UMAC - Free Report) reported third-quarter 2026 revenues of $13.9 million, up 551% year over year. Gross margin was 35.4%, while adjusted EBITDA loss totaled approximately $0.7 million. UMAC’s enterprise customers represented approximately 90% of quarterly revenue and 88% year to date.
Shares for UMAC are up 26.5% in the past year.