Elsight Limited (ELS) Earnings Call Transcript & Summary

Okay. Hello, everybody, to the Elsight Investor Webinar. Give it another minute and we're going to start at the top of the hour. Okay. Hello, everybody. My name is Susan Becker. I run the marketing at Elsight, and welcome today to today's investor webinar. Before we begin, I'd like to take a moment to remind you that during today's presentation, we may discuss forward-looking statements. These statements are based on our current expectations, assumptions, projections and involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied. As always, we encourage you to review our full financial disclosure, and the risk outlined in our latest reports for more information. Please keep in mind that any forward-looking statements made today are not guarantees of future performance, and we undertake no obligation to update these statements unless required by law. As usual, at the end of the session, we will take all questions following the presentation. Please register all your questions by clicking on the QA button that you will see at the top of your screen. I'd like to welcome a few members of our Board of Directors at today's session. We have Director, Howard Digby and Jim Landau. And now without any further ado, I'd like to turn it over to our CEO, Yoav Amitai, to start today's presentation. Yoav?

Thank you very much, Susan. Hello, everyone. Good afternoon. I'm glad to have this investor presentation webinar that we're trying to do every 3 to 6 months to update you besides what we're putting out to the market. This quarter or this -- in 2024, I think we have a lot of progress and good news to provide to the market and showing our progress and how we do that. And I want to start from the end and then take it backwards for everything we have done. So starting with the numbers and like we put it out on the quarterly. So sales and revenue, looking on '23 over '24 continued the growth that we're showing in the last 4 years, year-over-year growth. Recurrent revenue, which is a big element of our business model today is growing pretty nicely, getting into USD 750,000 ARR, annual recurrent revenue, and that's growing every time we're selling unit. I'll remind you that when we get to the business model. Looking at the burn rate, again, on the yearly burn rate, we're seeing a decrease there. And based on current pipeline and opportunities, we are looking how to do it even more dramatically. And revenue in defense, which we'll talk about in extending with -- during this webinar, we're seeing a rapid growth there. And looking forward in the next, call it, 18 to 24 months, this is where we are seeing our growth in terms of where the market is at the moment and what is the pipeline look like in the moment. In terms of new customers, so those are both in the commercial market and defense market. We see there also a good progress that we're doing. Sorry for the side noise here. I hope you hear me okay. That includes some very promising logos like Lockheed Martin, which you all probably know the largest defense contractor in the world, ACSL, the largest drone manufacturer in Japan, Flock Safety, that's a new one, one of the largest first responder service provider in the U.S. that started to use our system recently. We have different ST Engineering, one of the largest defense contractor in the Asia Pacific. And the list goes on and on. This is just an example. To add to what is missing here in this slide, just to talk about some other significant milestones that we hit during this quarter or during 2024 in general. So we're talking about the largest defense contract that we've signed, Elsight ever had that we signed last September. We announced it to the market. I will share that we are doing a good progress within this project today, almost done with the development phase of it and then turning into basically delivery of units once it's approved and starting high-scale production, which like we put in the announcement, should be big in the coming 1, 2, 3 years ahead of us of millions of dollars of potential revenue that will come from this project, which is currently moving as expected. We have the DCX, the DroneCommX, which is our new aftermarket kit for DJI that we released to the market, started to have orders and have some interesting pipeline around it, both in Europe and in the U.S. for customers that wants to serve drone as a first responders for police forces, fire departments, for any kind of first responders. We're seeing it a lot in what happened recently in California with the fires and everything that how drones change the whole way of how first responders provide their services and having an aftermarket kit for the largest drone manufacturer in the world, which is a Chinese manufacturer that have -- was blacklisted during 2024 in the U.S. and some places in Europe and even in Australia, having an aftermarket kit that basically do a walkaround behind the communication link of those drones, that provide a very promising new product or new offering that we have to the market and started to have new -- starting to have new orders there, a new pipeline that is segregated. It's based on the Halo, but it's another way -- another type, sorry, of revenue stream that we're having, which include both the hardware and the software. We're talking about it in the business model, that just remain the same on every product we're putting out. In terms of the corporate, so we clean all the co notes we had or all the potential debt that we have. So we now clean the balance sheet in terms of that. Like you all saw in the 4C in terms of cash, we still have cash to operate with what we're doing, while, again, making our pipeline thicker and showing how we are growing there. And I will end this part of the opening with mentioning something that was written in a very short line in the activity report in the last 4C that we put out. But I would say that what we're currently seeing is a massive pipeline. I don't remember Elsight since I'm with the company in the last 7, 8 years, almost 8 years, having such a promising pipeline, which related to what happened around us in the geopolitical environment, which play good for the business in maybe unfortunate circumstances, but seeing what's happening in this side of the business is pretty promising, and we'll talk about that. Also, just adding another note, something -- another update that we put out with DroneUp, one of our close partner that had their contract with Walmart. They had their issues with Walmart without getting into details, not breaching our NDA that we have together, I would say that it was about business contract that Walmart had with DroneUp, not related to the technology or anything like that. And as a fact, DroneUp are still working with our systems in all their drones. They are developing their business in different areas. And in general, I would say, looking on commercial market versus defense market, the picture changed much more during 2024, and we're seeing that moving forward, like I said, how most of the weight moving from commercial application to defense application for various reasons, which we can get into later in the presentation. So that's in a high level, but I want to start with our lesson learned, maybe our biggest lesson learned during 2024 and what we've learned in the defense market or in the defense and homeland security market together. While we were looking backwards about our competitive edge in the commercial market, which was clear how you provide highly reliable communication link for different type of applications for uncrewed systems, in the defense market, during '23, it started in the end of '23 and then moved into 2024. We learned hardly what is our value proposition and how unique is our value proposition in the defense market, again, defense and homeland security market. And that's not only for aerial vehicle, but also for ground vehicle, only even for soldiers or policemen that walking down the field that require highly reliable communication. Today, communication is even more material than it was in the past because everything is about data, what they call C4 or C2, Command and Control and how they move data from point A to point B, doesn't matter what is point A and what is point B. And what is being talked about throughout the industry is about interoperability, how you combine multiple type or multiple technologies into one big pipeline of data, which include private cellular, public cellular even, include SATCOM communication, include point-to-point type of communication. And that's exactly what is our value proposition. How you combine all those together into an abstract layer basically to provide this what we call connection confidence, making sure that those platforms or whomever needs to be connected will be connected. And then I just came back 3 months ago, 2.5 months ago, I was in Austin for the Army Application Lab, which is the U.S. Army kind of innovation hub in Austin, Texas. And one of the interesting point they mentioned is how they can utilize, again, public infrastructure to be able to deploy much faster, how they can do it more reliably, how they can leverage infrastructure that are available but doing it in a safe way, in a secure way that they can use it for their own needs and how they can open the limit of working only within line of sight, whatever the mission is. So those are the different factors that had -- we had our lesson there, and this is how we are now -- currently, it's translate into pipeline, which will translate into revenue, like I said, with big programs and big projects that we never saw before, like the one we announced in the market in September -- in last -- in September '24. That's just one example of many different examples we currently have in the pipeline in different parts of the world, like I said, everything from the U.S. through Europe, Middle East and Asia, Asia Pacific markets, which we have -- we're seeing good traction from those markets. A little bit about what is the challenge. So when we're talking about uncrewed systems, we want to have a communication that will always work. Now always work is a very wide definition, and we are always saying to our customers, we're not a magician. But if there is any possibility to create some level of link, we will be able to do it for you by the way we're doing it on the technical level of providing, like I said, or utilizing all the different spectrum that is available in the field. So looking on different factors of what create interruptions in network, we can talk about spectrum interference, meaning that there are either the spectrum is congested, or the spectrum is limited or is jammed or spoofed or whatever. We can talk about line-of-sight communication, which doesn't necessarily mean how far you go. It can also mean that you literally don't have line of sight because there are buildings, there are trees, there are bush, there are whatever you have there that just block the line of sight and many of those communication links are starting to struggle in this environment. We're talking about jamming in general, EW, electronic warfare and what is happening there of how both sides is creating a lot of electronic warfare today and how you can hop between different type of technologies, different frequencies, different applications and how you create this spectrum superiority of utilizing, like I said, all the available spectrum. And last but not least is coverage limitation, when we're relying only on one single type of infrastructure, it makes it much harder to say, okay, this LTE or the SATCOM, whatever doesn't have coverage, which create a problem. Our lesson which the market adopt, or the market take it pretty hardly is that there is no single infrastructure that can be good enough to provide like we call it, connection confidence. Let's think about Starlink as an example, which starting to have a very good coverage globally, but still have a lot of places that it doesn't have coverage. And not only that, it also something can happen and is happening to the coverage to the -- sorry, to the link and then you are relying only on a single link, and we're seeing our customers combining, like I said, cellular together with SATCOM, whether it's Starlink, Iridium, Inmarsat, you name it, or when they are working with different type of point-to-point communication like Silvus, Persistent Systems. Our approach is we're agnostic to the link. You can bring your own link, added to the Halo is another interface and the Halo automatically will know how to manage all those networks together and how to create, like I said, this connection confidence. So this is basically how we solve the problem here by combining, like I said, all those different networks together, whether it's as an aggregation mechanism or working it in parallel to leverage the bandwidth that we can get from each one of those, to leverage the security we can get from each one of those links and so on. So this is a holistic approach we're having saying to the customer, why would you choose a single type of infrastructure when you can enjoy the entire spectrum, the entire spectrum of -- or the entire portfolio of technologies that are deployed in the field, whether you deploy it, your customer, Mr. customer or it's there because it's public like the Telstra of the world. And believe it or not, even the U.S. DoD is talking about how they leverage public infrastructure, again, like Telstra or Vodafone or Dotcom or T-Mobile or AT&T, how they leverage those to create these quick deployments and everything. So this is how our approach. And during 2024, to summarize this point, we saw what is our opportunity there. And like I said, not only in uncrewed systems, but in many different sectors. Now looking forward about our addressable market or addressable ecosystem like we put it in this slide, basically, what we are seeing is that it's not only for uncrewed platforms, like I said before, and for sure, not only for defense or homeland security application. Like I said before, we're seeing -- the trends we're seeing currently in the industry, in the unmanned industry in general before moving to other markets is that there is a big shift both on the OEM side, on the service providers, from commercial applications, more towards homeland security and defense application, like I said before. And the reason being is because people are following the money, and that's where currently the big programs are. I mean we're talking today about big programs that manufacturing sometimes even hundreds of drones a month. And those are numbers that we never heard before in the commercial market. It wasn't there, and we're still not seeing those order of magnitude in terms of programs. It will come. I mean we still believe that in the long-term, taking 2, 3, 5 years out, the commercial market will become much larger just because of the different use cases and applications that are done with drones, but it will take time because not only there are regulation and framework and legislation that need to be happened or is happening in the current pace, but also on the other hand, there is a big needs on the defense market. And this is why a lot of OEMs, for example, that used to do there, I don't know, deliveries or used to do their inspection are now looking into ISR missions or different type of defense or homeland security kind of deliveries and so on. So that's the trend. And that's only the level of the unmanned systems, like I said, which is only one part of it. The project that we announced in September, again, going back for that as a good test case, it's not only for uncrewed, that can go for any type of communication. Basically, this is part of the program with the customer's customer, how they develop their whole ecosystem, which includes crewed systems and uncrewed systems and soldiers and so on to use the same network to be on the same infrastructure and by doing that to be able to communicate between them from point-to-point. And that's this market, again, going downwards and expanding our product portfolio and make it more and more compelling for different type of application within those markets will make our addressable market much larger and can take us or can extend our current pipeline and as a result, revenue, obviously, even further. So in terms of that, looking on, again, combining all those points that I mentioned together into this point of how 2025 should look like, taking into consideration all these opportunities or this perfect storm that we have in front of us, that should be extremely interesting year for us based on the progress and based on what we're seeing today. Talking a little bit about Elsight going to the basics for those of you that are joining for those webinars for the first time. So starting from the technology, it's important to mention that all the technology is proprietary for Elsight. We own our patents. Everything was developed in-house. And the reason I mentioned it is because that's what allows us to develop the product in the direction we're seeing from the market. And by that, making sure that we're answering what the market require, and this is how we move fast and to get solutions to the market. And I can give multiple examples for that from the DroneCommX that I mentioned before with the DJI aftermarket kit to the HeatSight that I haven't mentioned, but we saw requirements from the market to understand what is the network coverage in the sky. So we came up with a solution that today, you can have a map, and you can see exactly on different altitudes, what is the coverage map and how it looks like from there. And that's the reason I mentioned it why it's so important to have everything in-house. And by the way, if this question will come later in the presentation, this is why we will also always invest in technology and development because in today's technology world, which we're all part of with all the new innovation that is coming in, you cannot just stand still. You constantly need to develop the product, making sure that we are in the forefront of the technology and making sure that no competitors is getting better than what we are. Again, looking on the market that we are looking at, which grew dramatically during 2024, which was mainly in commercial end of '23 and '24. And today, we're looking on a much larger numbers, like I said before, in terms of programs we are a part. In terms of product market fit, which we had strong product position in the commercial market. Today, I can comfortably say that we have the same in the defense market, understanding what is our value proposition, how we're going to deliver it to the market and what is the requirements or what are the questions that customers are asking or how they like to get it. And again, from here is about putting more efforts and more resources and sales and marketing efforts to make the pipeline even thicker and to execute this pipeline and turn it into revenue and recurrent revenue as a long tail of the sale. Looking on the growth engines, last but not least, so Elsight had multiple growth engines. Since we're in the middle of those systems, it means that we are seeing a lot of the customers' challenges, and this is what makes us to come with solutions that goes back to the technology that we're developing in-house. So this is kind of a feedback loop to understand, okay, now what is the requirements from the customers and how we translate those challenges or requirements into additional revenue, whether it's onetime or recurrent. That's exactly how we're doing it and reiterate all the time understanding what is the requirement from the market, how we develop it into product and how we sell those products, features, additional services, whatever it will be. And over the years or in the last 3 years, we're seeing a lot of examples of how we reiterate on this cycle and doing it again and again. And that's only one growth engine. Obviously, we have the obvious one, which is just growing our customer base. Another one based on the design win concept. As long as our partners are growing their businesses, we are growing with them because every drone they're putting out that use the Halo, we're getting another order for more Halos basically, and that include the recurrent revenue that I mentioned before. The last growth engine is like I mentioned in the last slide is about looking into either adjacent or completely parallel market and how we can work with those markets and grow based on, again, on the same value proposition of providing highly reliable communication. So that's the slide -- that's the same slide we used in the previous presentation. We just extended even further about what was another milestones we hit since the last time. So I'll start from after we split our 2 efforts into defense and commercial market. Starting in the commercial. So during 2024, we have ACSL as the -- the largest drone manufacturer in Japan, which is very interesting because that was our first sale through a channel that was extremely successful, and they are working the way towards different type of programs. ACSL is doing with commercial market and also, by the way, also government programs in Japan specifically. That's based on that. We'll launch our DroneCommX, what I said before, the DCX, the aftermarket kit for DJI starting to have first nice sales still in the tens of thousands of dollars and seeing how the pipeline there is growing based on existing customers as well as new customers that are getting into there. And in terms of new products that I mentioned before, launching the HeatSight just recently about a couple of weeks ago that we launched the HeatSight and have multiple type of business models of how we sell it not only to our existing customers, but also for new type of customers that require this type of information of understanding what is the, let's call it, the sky coverage in different altitudes. On the defense side, so obviously, Lockheed Martin that we mentioned or that we announced the market back in May of 2024, still having their progress there, working on their drones on different programs, haven't scaled yet into big numbers, but being in touch with them and understanding how their pipelines look like, obviously, they have a very interesting one there. Sorry, the announcement in September that I already mentioned a couple of times, I won't get back to that, but that was a shift in our understanding of what we can do there and how we can scale our operation in defense market, not only with this order, which is very interesting opportunity, but also how we take that and copy paste it or cookie cut it into other markets in different regions or in the same region with other type of customers. And the last one is starting to work with ST Engineering that I mentioned before. Sorry, having -- signing another major sales channel in Europe, a company called Tukom that are selling Silvus, which is the largest point-to-point link for defense currently exists. That's an American-based company. Tukom is their channel, now signed with us as well, starting to have the first sales and marketing collaborative work together with them. We have -- in 2 weeks' time, we have the first show with them in Germany, starting to penetrate even deeper into the European market. And again, like I mentioned before, expanding our pipeline from there and seeing how we are making this pipeline even thicker. The good point about the technology is the requirement in the development or the level of customization that we need to do for different customer, whether they are doing something in defense or they are doing on the other hand, some commercial mission, all of them are using the same baseline of hardware and software from our side. Each one of those customers can have their own configuration that are either done by the customer or with our professional services team. But basically, that's what makes it so easy, so to speak, for us to move between different use cases because it's kind of one size fits all, and it makes it much more interesting for us or much, much easier for us, sorry, to go after new market and so on. In terms of our business model, that haven't changed, by the way, whether we are talking about defense market or homeland security market, there are different niche market within defense that I'll mention that are not having the same business model because of the nature of those markets. But basically, we have 3 major revenue stream in every project and every program we're doing. The first one is the hardware sale, the onetime hardware sale, which is basically the Halo themselves or the DCX, the DroneCommX or any type of hardware product that we're selling, the [ Aura ] that we are now developing for this project I mentioned in September -- that we announced in September and so on. We have -- we still have a very extremely healthy gross margins thereof, call it, 67%, 70% depending on the flavor of the product, which show you how much value we provide to those customers and how much room we have once those programs are starting to scale and not having too much effect on our bottom line or on our profits as a corporate in general. In addition to that, every unit that we're putting out because of the technology and because of the way our product works, every unit that we're putting out there have their subscription to our cloud. Cloud, just to have it as a -- as a side note, I will mention that cloud is not necessarily on our infrastructure. You can imagine that government accounts or government -- sorry, government customers want to have everything on their premise. So basically, we are -- they host our services there, but still have this recurrent revenue coming in of using our license or our software as a subscription fee for any product we're doing. That today actually grew pretty dramatically because we increased the prices that we used to have in the cloud, mainly because we felt that we are today providing much more value to our customers, which allows us to increase the pricing there and still not having too much friction when we're working with new customers. And the last part of their recurrent revenue is the actual airtime, whether it's for satellite communication or cellular communication. It's part of what we're providing the actual SIM cards or the airtime, which translate into interesting revenue -- recurrent revenue for us. You can imagine that in the defense market, this piece of the revenue, it works a little different because they have their own network and their own agreement, but we're seeing it -- we were surprised to see that even in those markets, some customers require to have those, whether it's SIM cards or airtime from us, which this is how we're seeing it and still having it, like I said, the same business model doesn't matter if we're talking about the Halo, the DroneCommX and every hardware basically product that we're putting out to the market. The last slide before we are moving into the questions part is about how we're seeing the future. Like I said, just summarizing everything I said, the opportunity we're currently seeing in the homeland security and defense market is a very, very interesting opportunity based on the current geopolitical state in the world in general. We're seeing kind of an arm race all over the globe and drones or uncrewed systems in general are taking a major part within this process, let's call it. And being where we are at in terms of the experience, we have of providing solutions for those markets, in terms of our position in the market, in terms of our product value proposition that we are providing, like I said, it's put us in a very interesting spot in the center of this perfect storm. And that's about seeing how [ your ] execute 2025 translated into revenue, material revenue and started to grow the numbers much more dramatically than we grew it in the last year just because of what we're seeing in front of us. While we're doing that, I would say that we are constantly continuing to invest in the commercial market with the understanding that looking long-term, the commercial market will become larger than defense market, and we want to hold our market position or market share within this market and making sure that we're not only focusing there and expanding both market, whether it's from technological aspect or business development aspect, making sure that we have both markets together and going into other use cases like I mentioned before. I want to leave enough time for questions, making sure we answer all the questions. So from here, I will give it back to Susan for the Q&A. Susan?

Yes. I want to remind everybody that the Q&A you can see at the top of your screen. So just click on that and please enter your question. For now I'd like to thank Yoav for a very interesting presentation.

Maybe -- yes, some questions that we got before the -- while you are typing your question, the Q&A in the top, some question we had before we started this session. So I had a couple of question about different fiber optic-based drones that people are sending out, just to explain what fiber optics is. Basically it's like you have in your wall getting your Internet to your house. That's literally a fiber optic. That's creative communication. It's wired robots or drones that literally have wire hanging after them. So think about flying a drone when you have -- which is tethered drone basically, even though it's flying further and not above your head, it's still limited to where you can fly with something that is tethered. I want to highlight that if it work or the places where it works, it works really good because there is nothing like wired communication. But like I mentioned before, when those customers or when those ground forces wants to go beyond visual line of sight or want to go to long distances, making sure they overcome the -- all the EW, electronic warfare challenges, this become less relevant. So it's still a niche, but it's there, and it's something that we're seeing happening in some parts of the world, which is an interesting development. Like I said during the presentation, we need to constantly make sure that we are continuing developing our products and our portfolio to make sure that we are not staying behind and make sure that we are -- have what we need to continue the growth moving forward.

Okay. Thank you, Yoav. I want to remind everybody that you'll be receiving copies of this recording with the slides, which are -- will also soon be available on our Investor Relations page on our website. So if there aren't any further questions, I think we could -- we can wrap it up for today. So thank you very much for your participation. And of course, any questions are welcome following this presentation by e-mail.

One second, Susan, before -- there is one question that just flew in before you are ending the session.

Okay.

So the question is, could we have an update on Ondas? I see recently, they have made a few announcements in regards to military and first responders order. Is that flew through to us in terms of orders? So Ondas, for those of you who don't know, Ondas is the basically holding company that acquired Airobotics. Today, Airobotics is their main holding. They have American Robotics, which is also based on a robotics platforms and different solutions. Airobotics today have 2 main offering. One is the Optimus drones that we've got the FAA type certificate with. And the other one is a solution they call Iron Drone, which is a counter-drone solution. It's a small -- it's a kinetic small drones that just hit the other drone that is coming across. Airobotics are still a big customers of ours. Obviously, every deployment they have, whether in the U.S., in the Middle East, in Europe, they have -- they're starting to have an interesting orders. We are getting our orders. So definitely, when you are seeing progress there, it's pretty immediately translate into our bottom line in terms of providing them with solutions. They are very close customers or partners, I will call them, working together on understanding what is their needs and challenges and how we can provide them with solutions. I would say that some of those programs that you're seeing are long-term programs. So you need to read sometimes the small letters understanding how long the program is going to be, whether it's for a year or sometimes even 5 years. So just make sure you understand what you're reading because sometimes the details are more vague. But 100%, yes, we are very close to Airobotics, which is, like I said, today or from what I am seeing all the news coming from Ondas are based on Airobotics platform. So we're definitely there.

Okay. And we have another question. Based on the recent quarterly report, your R&D spend is over 60% of the year-to-date revenue. Can you please tell us about key R&D achievements for the last 12 months? And do you plan to reduce the R&D spend?

Sure. So I would say -- I tried to mention it during the presentation, but I would say when you're looking on percentage of revenue, I think it's -- the better way since we're still in low revenues in terms of R&D spend in general, if you're looking, I would say that it's -- I think it's more appropriate to look at that percentage of overall spending. Having said that, I would say that some of the achievements we have in R&D, like I mentioned, the DroneCommX, the HeatSight, continuing in developing the performance or enhancing the performance of the product and answering some customer needs, it's becoming very technical, and I can get very deeply technical if the audience will wish to, but we're doing a lot of progress in terms of answering a lot of challenges that we're seeing coming from the field, overcoming them and make the product more resilient and a better fit for different type of applications. I would say that looking on our R&D road map or backlog that we have in terms of development, it's always like that in tech company, even if we will have 40 people, we will still have work for all of them, but we are trying to be very pragmatic in our approach, making sure that we're developing only stuff that will translate into revenue or will enhance our stickiness of our product with our customers. And that's why we're keeping our R&D relatively very low in terms of the cost that it cost us. It's still a high percentage of our revenue like the question said. But I'm feeling very comfortable in the position we're currently in, in the R&D and both from a progress perspective and resources that we're investing there. Looking into the future, I think that we will -- as we are growing our revenue, I think that this percentage will shrink pretty dramatically looking forward and seeing how, let's call it, companies that are already grew in tens of -- to the tens of millions of dollars, what is the percentage of the revenue that they spend on R&D. But I think that in -- I will summarize it that in today's world, I don't think that we have the privilege not investing in R&D because we will just become not relevant to the market.

Thank you, Yoav. There's another question. The announcement in September stated expected USD 5 million revenue over 12 to 18 months. When do you think the orders will reflect that run rate on a monthly basis?

So like I mentioned, in terms of the status of this project, we are currently on time in terms of our progress. We are already shipped the prototypes to the customers to have the first test and everything, making sure that we're good to move to the production phase. And from there, it will start to translate into more orders as we look forward. I do expect us to finish this phase within the first quarter, so in 1.5 months, call it. And after that, starting to seeing the orders starting to have more sizable orders as the customer customers progress with their program. So this is how I see it falls out. It's still one of our most promising opportunities that we currently have, and we're working closely with our partners to make sure it happens as soon as possible.

Thank you. And one more question. What type of companies is the HeatSight useful for?

Great question. So that's basically open us for a new type of customers. If the obvious customer is the service providers who wants to know where they can fly, they need -- they have different safety measures that they need to take, whether it's for commercial, they must have it based on the regulatory approvals or in the defense and homeland security, they want to know that they can complete the mission. So that's one type of customer, which is our obvious one. The little less obvious one that we're still doing our business development activities there are either municipalities or even MNO service providers like the Telstra and the Optus of the world that wants to know what is the coverage in different altitudes as this infrastructure or as those systems, drones and so on starting to be more and more popular and you started to see more and more of those, they want to know, they looking on this as an opportunity for them to grow their business with new subscribers. But for that, they need to know what is the level of coverage or what is the level of service they can provide there. Today, they have very good understanding on the terrestrial level. This is how those networks are optimized for. We're all holding our phones on average of 1.5 meters off ground, above ground level and now try to extrapolate from that what's happening in 50 meters, 100 meters or 300 meters. And they have very little understanding what's happening there. And it's part of -- as we're collecting more and more metadata, understanding how the sky map look like, that will become more meaningful for them as another type of revenue stream that we can have selling them these coverage maps, let's call it. So those are the different -- the 2 different type of customers that we're seeing having interest in this HeatSight -- in this data, sorry. And again, while we still don't have an example for customer from the latter one from the MNO side, we do see a lot of interest from the customers that are just want to know how probable they will have coverage within their flight path.

Thank you, Yoav. Okay, at this time, I don't see any more questions. Again, everybody is invited to send questions by e-mail following this discussion. So I believe we can wrap up for today. Thank you very much, Yoav, and thank you, everybody, for joining us.

Thank you, Susan.

Bye now.