Ondas Inc. (ONDS Quick QuoteONDS - Free Report) outlined an ambitious expansion strategy during its third-quarter 2026 earnings call, raising its revenue outlook and accelerating its timeline for company-wide adjusted profitability. Management emphasized rising defense demand, expanding production capabilities and a substantial order backlog.

The company reported revenues of $167.5 million, exceeding the Zacks Consensus Estimate of $147.1 million, while its reported loss of 11 cents per share was wider than the expected loss of 9 cents.

Ondas Holdings Inc. Price, Consensus and EPS Surprise

Ondas Holdings Inc. price-consensus-eps-surprise-chart | Ondas Holdings Inc. Quote

Ondas Raises Revenue Targets Through 2027

Chairman and CEO Eric Brock raised the company's 2026 revenue target to at least $550 million from the previous range of $525 million to $550 million.

For the fourth quarter, management expects revenues exceeding $250 million, supported by increased deliveries across precision strike, counter-drone and autonomous ground systems.

Ondas also introduced a 2027 revenue target of at least $1.1 billion, excluding additional acquisitions. Brock expects organic growth exceeding 40% next year, reflecting expanding customer programs and production capacity.

ONDS Backlog Strengthens Revenue Visibility

Brock highlighted an $835 million backlog at September-end, representing 36% sequential growth. The company captured $214 million in new orders during the third quarter.

Management expects backlog to increase further during the fourth quarter despite anticipated delivery acceleration. Brock emphasized that the backlog comprises customer orders and awarded programs rather than unfunded pipeline opportunities.

The company reported 64% year-over-year pro forma organic revenue growth. Brock expects this rate to reach at least 75% in the fourth quarter, supported by demand across multiple operating businesses.

Ondas Faces Margin Pressure Amid Production Ramp

CFO Neil Laird acknowledged profitability challenges stemming from production inefficiencies and a greater contribution from lower-margin precision strike programs.

GAAP gross margin declined to 21.8% from 43.1% sequentially, while adjusted gross margin fell to 34.8% from 50.4%. Laird expects adjusted margins to remain around the mid-30% range during the fourth quarter.

During the analyst discussion, a Citizens JMP Securities analyst questioned the margin recovery needed to support profitability targets. Brock outlined a longer-term gross margin objective of 45% to 50% over the next 12 to 24 months.

ONDS Accelerates Its Path to Adjusted Profitability

Laird reported an adjusted EBITDA loss of $59.7 million, compared with $46.2 million in the preceding quarter, reflecting margin pressures and continued investments.

Management expects adjusted EBITDA profitability at the operating-platform level in the fourth quarter of 2026. Company-wide adjusted EBITDA profitability is now targeted for the third quarter of 2027, one quarter earlier than previously anticipated.

Brock identified approximately $37 million of third-quarter operating expenses associated with growth initiatives. He expects spending growth to moderate as revenue expands, supporting operating leverage.

Ondas Advances ULTRA, IonStrike and Sovereign AI

Brock identified ULTRA and IonStrike as major potential growth drivers following the DZYNE acquisition. Management targets ULTRA production capacity of up to 10 aircraft monthly by 2028.

IonStrike production is expected to reach hundreds of units monthly in early 2027 and progress toward thousands monthly beginning later that year. Management highlighted a targeted selling price below $50,000 per interceptor.

During the Q&A, a Northland Capital Markets analyst sought details on Regna AI's commercialization. Ryan Hartman, CEO of Ondas Sentinel, described predominantly software-based sales cycles measured in single-digit months. Brock subsequently clarified that Regna's financial outlook is excluded from current forecasts.

ONDS Maintains Focus on Execution and Capital Discipline

Brock emphasized converting awarded programs into deliveries while integrating acquired businesses and strengthening manufacturing infrastructure.

Responding to an H.C. Wainwright analyst, Brock indicated that acquisitions would become more selective as management prioritizes internal growth opportunities and disciplined capital deployment.

With approximately $820 million in liquidity at quarter-end, management remains focused on expanding production, improving working-capital efficiency and translating accelerating demand into sustainable profitability.

Zacks Rank and Style Scores Signal Caution

ONDS currently carries a Zacks Rank #3 (Hold), indicating a neutral near-term earnings-revision outlook. Its Value, Growth and Momentum Scores are all F, reflecting unfavorable characteristics across the three investment styles. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The stock also holds a VGM Score of F, indicating weak combined value, growth and momentum characteristics. The combination falls outside the preferred Zacks Rank #1 or 2 (Buy) stocks with A or B Style Scores. The Zacks Rank remains subject to changes as analysts revise earnings estimates following the latest quarterly results.