- 2 months ago
Ondas Holdings Founder, Chairman & CEO, Eric Brock kindly joined us on Benzinga's Premarket Playbook to discuss what is happen in the drone sector and where Ondas Holdings is headed in the future.
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00:00Eric, good morning. How are you doing here today? I'm great, Ryan. I'm thrilled to be here and
00:09first time on your show. Yeah, first time and I'll be honest with you, hopefully not the last
00:14time. We can't thank you enough for making some time for us here this morning. Really quickly,
00:18just right off the top here, just so we're a full disclosure here, I've been following your
00:22stock for a long time. I'm extremely interested in the drone theme that's currently going on right
00:28now. We've watched your stock, we've traded your stock, and we've read a lot of the different
00:32press releases. So really great and honored to have you here and want to ask you about some of
00:36that stuff. We do have some new people joining us here. So if you wouldn't mind, can you quickly
00:41just give a brief on what exactly it is Andas does? Yeah, sure. So Andas, through our OAS business
00:48unit, Andas Autonomous Systems provides autonomous unmanned systems. These are aerial, both aerial
00:54and ground platforms. So drones, ground robotics. And these systems are used to provide security
01:02and intelligence to critical markets. So it's a dual use company, many of our technology
01:06platforms will be dual uses as well. That means we're serving the military, home and security,
01:12public safety, and then of course, critical infrastructure. And we're doing this globally.
01:16I'll say we are attacking massive end markets. And we're, we believe we're really at the beginning
01:23of a 10 year boom. You know, that's what we're participating in. So deploying these aerial
01:29platforms. We've got several of them now in our portfolio, as well as ground robots happy
01:34to go into that or take this any way you'd like. Yeah, I mean, I think we should probably
01:38start by talking about the Iron Drone Raider. That's an autonomous counter UAS drone. And then
01:43you also have the Optimus, the system, the first, first FAA certified, that's what it is,
01:51small UAS. So can you talk a little bit about those and kind of the demand for these?
01:55Yeah, absolutely. So when I start with Iron Drone, and we will talk Optimus, we might even
01:59talk about the WASP, which is this FAA. That's one of the questions on my list. That's pretty good.
02:04Very good. So but yeah, it did really start with us with the Optimus and Iron Drone. I'll talk
02:09about Iron Drone firstly. So that is a counter drone platform. So that's designed to protect critical
02:15locations and populations from the threat of intruder drones. And of course, we see this threat
02:21growing really exponentially, you know, not just in the battlefield, but concerns around how we're
02:26protecting the homeland. The Iron Drone is part of a layered protection system. So layers go from
02:33the detection. You can't mitigate or protect what you can't see. So there's all sorts of
02:38different technologies, including radar that can detect threats. You also see electronic mitigation.
02:45So that's things like jamming and spoofing of GPS and radio links. And then there's a so-called hard
02:51kill, hard kill. And that's where Iron Drone plays. And our system is fully autonomous. We've got
02:57incredible performance in navigation. It's an operational system that's been developed by our
03:03team in Israel and been deployed in battle. We're very proud of that. And what we do is with Iron Drone
03:08is we use a net to mitigate the threat has a couple of benefits. Firstly, lower collateral impact. So
03:13you don't, you know, we're typically protecting population centers, military bases and borders
03:20to amusement parks and stadiums, as well as critical infrastructure. So there's a massive amount
03:24of infrastructure and population centers that need to be protected. And using a net provides lower
03:30collateral impact. So exploding over people is something we want to avoid if we can. And then secondly,
03:35the economic case here is really important because when the drone is finished with our mission,
03:39you can use it again. You just put a new net on, it goes. So that's, that's, that's Iron Drone. The
03:44Optimist system is used for what we call ISR. This is also drone infrastructure. It's installed.
03:50And what is ISR? It's intelligence, surveillance, reconnaissance, so perimeter security,
03:55you know, at a critical infrastructure location, emergency response, that's a forward,
04:00what we call drone is first responder and that's public safety and intelligence inspection of
04:05critical infrastructure so you can maintain and keep that resilient. So that's, you know,
04:10a little bit on Iron Drone and Optimist. Okay. Awesome. Let me, let me keep rolling here. You
04:15just attended the Association of the United States Army Annual Meeting and Exposition, the AUSA,
04:21to highlight the Iron Drone Raider system. How did that all go? Can you tell us anything about that?
04:25Yeah, it was great. And you're right. It was the counter drone systems and platforms are really
04:31front and center. We have a massive boom here coming and it's really just, just starting to launch
04:37on deployment of counter drone technologies. And of course this is addressing a gap for defense and
04:44security providers globally that's existed for many years. Nobody, you know, there's, if you're in this
04:51industry, you knew eventually be concerned with the threat of, of intruder or hostile drones. And all
04:57of a sudden, you know, in the last couple of years, that threat has become real. So you're seeing
05:02militaries in homeless security officials, even the private sector try and public safety officials
05:08trying to solve for this. So we have, you know, we were there, it's a massive show and I'm very happy
05:14with the traffic we had in the booth with really important customers, particularly from the department or
05:19in the US. And of course that's typically going to be for stuff like this, US Army and Marines.
05:26And what actually you're seeing, however, is, you know, one of the big concerns is of course on the
05:30battlefields, you know, outside the US, which we're, we're involved in protecting, you know, Europe,
05:38for example, Israel and Middle East, but the homeland and the homeland is really a, is a, is a coalition of
05:45folks. They have this joint task force that's, you know, looking at technologies, determining the layers
05:51and trying to figure out how they deploy that and when. And I'll just say that I do believe this is
05:55going to be an infrastructure build out that is, you know, a decade long, if not longer.
06:00Okay, that's absolutely fantastic. All right, let's talk about the Rift Dynamics partnership a little
06:05bit and about that drone. Can you tell us, first of all, about the partnership itself and about the drone itself?
06:10Yeah, great. So Rift is a Norwegian based company addressing primarily the European markets.
06:19And I'm just focused on defense and security. Their initial product is what they call the WASP. So this
06:24is an FPV, what we call a tritable drone or a strike drone. So this is a drone that's designed
06:30to not come back. So it's something that Pete Hegseth in the Department of War would refer to as mass
06:36affordable. And the partnership with Rift is multiple. Firstly, we've made an investment in
06:41the company. We're really excited to do that, given all the all the things they're in momentum,
06:47they're building the business, which we might touch on. That gives us, you know, really important
06:51relationships in Europe. One of those, as we announced earlier in the week, was a relationship
06:58with NAMO, which is a large artillery provider in Europe. And of course, companies like NAMO are
07:05looking at these strike drones as new artillery. So we, with Rift announced that NAMO had integrated
07:14into a system, the WASP strike drone and the warhead. And of course, we think that's a really
07:21great thing we're able to bring to the United States. Our relationship with Rift gives us exclusive
07:26marketing rights of that system in the U.S. markets. You know, I think, so anyway, so that's
07:33Rift. And it is also part of our strategy of localize in Europe, right? We want to bring our
07:39technologies into Europe and having partnerships and relationships with Rift and others is helping
07:44us do that. In Europe, they're making Europe great again, just like they're making America great again
07:49here. And that's going to require localization as we're going to market.
07:53Okay. That sounds really awesome. That sounds like a huge increase to the addressable market
07:58that you can serve. So really exciting stuff there as well. All right. You talked a little
08:03bit about, you know, how things are going to look going forward here. I think, at least since I've been
08:08following, you just reported your best quarter. To me, this entire story right now, it's all going to be
08:14about revenues. Can you tell us a little bit about how you plan to ramp revenues going forward here?
08:19Is there anything specific that you can discuss about that?
08:23For sure. So we've given our outlook repeatedly over the year, and we are showing a substantial
08:29growth off a very low base. And that's really emblematic of the industry. There's been a massive
08:36cycle here of investment in what we call deep technology, right? That's the integration of
08:40software and hardware. It's physical AI. It's software-defined. These are systems that we're
08:45bringing to market in our peers that you can't design in 12 months, make operational. They're
08:49complex. But we're at the same time seeing several dynamics. The technology stack is mature for
08:56Ondas and increasingly for other companies. And the end markets are prepared. So customers have been
09:00working with these technology platforms for a long time now. They've been defining use cases and
09:06making them operational. And what does that mean? That means we're going to have significant
09:11market penetration on these autonomous systems. And we're going to try to lead that. So again,
09:17off a small base, we've got into 25 million in revenue this year. The bulk of that is in our drone
09:23businesses. And then we said that we should be doubling that next year. And I think that's very
09:30doable. At the same time, we see it in our strategy that the industry is transitioning. It's transitioning
09:36from technology development, which is typically venture-backed. There's been a massive amount of
09:41capital invested and time, energy, and talent invested to get us to this point. However, this is
09:46now a time to build companies. And what I mean by that is we have to raise operating capital, which is
09:51investments in scaling the technology platforms that have been developed. And that requires growth
09:56capital. And that's what we're providing for the market. We're building operating companies that are
10:00scalable. That means sales and marketing. That means supply chain and production. That is a huge
10:06area to tackle. And you need scale. Every drone is not a company. What that means is in the supply
10:11chain, which is something that we as an industry are trying to attack, if you have hundreds of drone
10:16companies, the supply chain can't interface. They can't give everybody 10 drones, right? We have to build
10:21thousands of drones. An example of that is Rift. So what does that mean for revenue? We're doing that.
10:26We're building field support sustainment. We're doing it with partners. That means we're scalable. And that
10:31means we can deploy growth capital through acquisition. And we have an M&A program. So
10:36I think what you're going to see is, you know, as we're executing that program, we've made a couple
10:41of acquisitions. We've articulated we have a strong acquisition pipeline, you know, acquiring exceptional
10:46technology that's proven with customers and has its own growth curve. And that's going to bode well. So
10:52it's a core plus strategic growth initiative. And I think what you'll see is, as we're executing
10:58that, the street models are going to go higher and higher, and that's going to help support a
11:03valuation that we have today and even growth beyond that. Okay, fantastic. You know, you talked a little
11:09bit about adding technology there. It looks like you're also adding intellectual capacity as well with
11:15some of the recent appointees to the board. Can you talk a little bit about that? I like General Patrick
11:21Houston or Carl Ease. I hope I'm pronouncing their names correctly. I'm sorry if I'm missing it.
11:26Can you talk about some of these other people you're adding to the board? Yeah, of course. And
11:30we have been blessed by adding additional talent, both internally to the management and leadership
11:35team. This is going to be perpetual. There's, you know, if you can step back and see where we are as
11:41an industry, you know, there's no large drone companies today, right? No large unmanned companies today.
11:48But of course, these markets are massive. And you're seeing this cycle start. So we're going to
11:52build some big companies over the next three to five years. And if you take a 10 year view, we're
11:56going to build massive companies. And of course, you need talent to do that. So we've been blessed by
12:01kind of staking a leadership role here. And of course, articulating this strategy to,
12:07you know, build and scale exceptional technology, but doing it with that operating capital. And you
12:14build the operating capital is being deployed, you have to have leaders and these advisors are
12:18very active with us. They're helping us open markets are hoping to identify investment opportunities.
12:24And they're helping advise us as to how you take these opportunities global. And that's really
12:29getting back to the localization strategies. We need experts in various places to help us do that.
12:36And one of these initiatives is on us capital. And a couple of the advisors you just mentioned are
12:41related to that and our initiative to invest and scale, globalize, really, technologies have been
12:47developed in Eastern Europe, specifically for the theater of Ukraine, where you're seeing combat
12:54proven capabilities that have global relevance all day long. So, you know, that's the context around
13:00why we're strengthening the leadership team. And these advisors are joining us because they know we're
13:04doing important work. Okay, that sounds awesome. Now, I ask everybody that I bring on here,
13:09I ask them the same question. You kind of already hinted at some of it, which is fantastic.
13:14Do you have any plans to raise further capital? And if so, what method are you looking at?
13:19We have no plans to raise capital anytime soon. We've been very fortunate to get what I would
13:25suggest is very significant support from institutional investors. And again, I've articulated that we are
13:30as an industry, this is essential. We're going to build big companies and you can't do that in the
13:34private venture markets. This is growth capital and it's capital that's going to be driving scale.
13:40So Ryan, we've raised close to $900 million over the last four months. We have north of $840 million
13:47on the balance sheet today. That is more than enough capital to execute our plan. And we're going to
13:51deploy it, like we said. And that's why we've been given this privilege and a responsibility to do this.
13:56This is the mission's important. The stakeholders need that. The stakeholders are customers,
14:01their governments, their supply chain partners. It's the talent that's building this industry.
14:07And of course, it's also investors. So we're going to do that. And I feel really strong,
14:11or I feel very comfortable in actually being extremely well capitalized right now is a huge
14:18competitive advantage. It's very smart to build a balance sheet this way.
14:22Yeah. Awesome. And thank you for answering that. Really appreciate that. Okay. We had just got a
14:28press release that affected multiple drone companies here talking about the drone market
14:32expecting to reach $95 billion by 2034. $95 billion by 2034. You also kind of touched on this, but
14:40maybe free, free, free wheel with this one if you want. Where do you see on this five years from now
14:45and 10 years from now? And how do you plan on getting there?
14:48So the markets are massive, right? The TAMs are in the many tens of billions. It may be even
14:54worth of that. And I think the studies you're referencing, I want to emphasize, these are
15:00these are dual use markets. Not every technology is, but many of them are. It was also particularly
15:06important when you're building a company. And again, the operating platform using that capital
15:10efficiently. The reality is that if you're building a drone that you might specialize it for security
15:17markets or inspection or long endurance markets, or you might use a strike drone like you have with
15:23Rift. Even if you're addressing these different markets, from an operating perspective, you're
15:27building scale in many places. It's field support. It's supply chain, right? You're becoming more
15:33relevant to your suppliers and manufacturing partners. So that's a big focus of ours. We want to
15:40have that aperture as wide as possible to give us the flexibility to monetize our investments in
15:46product development and people over the biggest TAM we can. So that's really important. I think if
15:52you see the vision, what you're going to see us is have a very significant technology portfolio.
16:00We all day long, you have to have exceptional technology, but that's not sufficient, right? You
16:04have to build the operations below it. But I think those are reflexive, right? They go together. So as we
16:11keep building through development, but also really this acquisition program is going to be
16:17quite accretive to our investors, that's giving us scale and relevance. That's going to provide more
16:21resources, including internally generated funds and profits, right? So being profitable is really
16:27important. I think we're still on track to meet our goals there. We're going to reinvest that. We're
16:31going to reinvest that in growth. So Ryan, to be more specific about how we see the world, I think,
16:37again, we have hundreds and hundreds and even more hundreds of drone technology. This includes
16:43ground robots, it's physical AI sensors at the edge, it's people doing really exceptional things,
16:48but we need to drive that scale. So those many, many hundreds of companies, we're going to come down
16:52over the next three to five years to maybe 20, maybe fewer that have real balance sheets. They've built
16:58the scalable flywheels around profitable business models that investors can support. And then if you go
17:04further, even further down the road, 10 years from now, I think you're going to see fewer than 10
17:09companies in this unmanned space that have global scale. And those, and think about what the outcomes
17:15are. You're going to have in these TAMs, right, which again, tens of billions of dollars, maybe more,
17:20these are technology enabled. That means these markets are being driven by technology, we're going
17:25to have high returns on capital, high margins, nice unit economics. And if you have that, that means you're
17:31going to create a lot of market capitalization over the next decade. And if that's spread over
17:36a few number of companies that scale in this business, the companies we build are going to
17:40be exceptionally important and exceptionally large and valuable. And that's what we're trying to do.
17:45So we're trying to lead, if somebody can do it better, and as we're building our portfolio
17:50capabilities, they can do it better, they can do it with a lower cost of capital, maybe we're part of
17:55a big company at the end. But for me and driving this with our investors, I just want to make sure we're
17:59leading and doing everything we can to drive this market faster and bigger, and we all win.
18:05Okay, that's awesome. That's exactly, I'm sure what investors want to hear. I know,
18:10as mentioned here in the chat, investors do have high expectations for this. So
18:14really, really great answer there. One more thing, and this might not be applicable,
18:19but just with the ongoing government shutdown, you guys have a lot of military contracts looking to
18:24work with the government, work with the military. Does the government shutdown impact this at all,
18:28or is this just much ado about nothing for you? I think, listen, these are inconveniences,
18:34for sure. But if you're an investor, you know, you got to have the context. I highly recommend you're
18:40not focused on what Q4 of 2025 is. Like I said, there is a massive boom, I think it's undebatable,
18:48that it has not launched this investment cycle, and we're going to build some really big companies. So,
18:53you know, as a leader of Andos, and I think my peers will agree, this is certainly inconvenient,
18:59but you know, don't miss the big story here. You know, the government is going to open,
19:04and the military is going to transform, it's going to, you know, it's going to be software
19:07defined, it's going to be autonomous, and that's what we have to focus on. So I'm not going to get
19:12too worried about the next couple months. Yeah, I absolutely love that, right? Keep your eyes on
19:17the prize, keep looking forward, don't worry about some of the noise around here, makes complete sense to me.
19:21Okay, Eric, was there anything else that you wanted to talk about here that maybe I didn't
19:25hit in some of these questions about either upcoming products or anything like that?
19:30No, I think, I think we've, this was, this was a good first step for us. Yeah, I look forward to
19:36coming back, you know, your program's great. And, you know, I just think, I will say this,
19:43you know, we're broadening what we do. And, you know, there's going to be, you know, we,
19:47and we are transparent, right? We're always going to be transparent, we want to tell the investors,
19:51what we're doing. And, you know, we're going to continue to do that. And I think we have a lot of
19:55good business development activity today. And you're going to learn more about that
20:00pretty consistently in the coming months. Okay, amazing. And I'll tell you, this is
20:04definitely, like I said at the top here, this is something that we follow on a regular basis.
20:08Would love to have you back and talk about that anytime. Again, thank you for taking the time here
20:13today. One last question, not as important here, but a personal question for me. That vest is sweet.
20:19Where can I get one of those? All right, I got to make this happen, because I'm getting a lot of
20:24pressure to have merch. I'm going to get one for you. And we got to, we got to make this scalable
20:29as well, right? So our team has been sort of investigating, I want to make sure it's good stuff.
20:33So, so we'll make it happen. Okay, I appreciate that. Eric Brock, CEO, founder and chairman of
20:41Ondas. Thank you very much for joining us here today. Really look forward to having you back.
20:45It's a pleasure. Thanks, Ryan. All right, take care. Be well. That is Eric Brock, folks. I know we
20:49talk about Ondas quite a bit here. Awesome to get information directly from the CEO. Thank you,
20:55everybody, for joining. And a special thanks to Eric for taking time out of his Friday morning to join us here.
21:00So,
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