Elsight Limited (ELS) Earnings Call Transcript & Summary

Good evening, good afternoon, everyone, and welcome to Elsight's Presentation of our Financial Results for the First Quarter of 2025 in our business year. My name is Howard Digby, a Non-Executive Director here at Elsight, and I'll be your host for today's session. I'd also like to extend a warm welcome to a number of my fellow Board members who will be joining us today: Ami Shafran, our Chairman; Jim Landau, Non-Executive Director; and members of our management team. Following the presentation by our CEO, Yoav Amitai, we'll open the floor for a Q&A session where Yoav and the leadership team will address your questions. Before we begin, I'd like to remind you that today's presentation may include forward-looking statements. These statements are based on our current expectations, assumptions and projections and involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied. For a detailed discussion of the risks and uncertainties associated with our business, please refer to your most recent financial reports and disclosures available on our website. Please also notice that we undertake no obligation to publicly update any forward-looking statements unless required by law. We encourage you to submit your questions at any time during the presentation by clicking on the Q&A button at the bottom of your screen. We'll then address as many as time permits at the end of the session. And now without further ado, I'll hand over to our CEO, Yoav, to bring in today's presentation. Yoav, over to you.

Thank you very much, Howard, and thank you, everyone, for joining today's presentation and talking about the first quarter results and how the future look like in Elsight. I think we are in very exciting times in the company as you all probably saw in our quarterly report and the following announcement that we had after the quarter, which I'm glad to share with you today. Starting with the results in the first quarter. Having a revenue of more than USD 1 million, which equals to about AUD 1.6 million. That's the strongest quarterly revenue we had to date. That's alone equal to about 50% of last year total revenue, which shows the massive growth that we're currently feeling. And all of that is not including the big announcement that we have following the quarter end of $4.2 million revenue contract that we have signed that I will talk about later in the presentation. Another important note to say about this quarter, which was very strong is about the diversity of the revenue. So working in both commercial and defense market, seeing the revenue coming from different sources, from 70 different customers out of the more than 100 customers design wins that we have and I think that shows a very stable, very steady and very healthy revenue diversity. So we can show that there is no single customer today that is more than 30% of our revenue and that's a very healthy place to be in terms of our future expectations and future growth trajectory. In general looking on what happens to us. I think we can show and I'll try to stretch during this presentation where we're at in terms of the inflection point, how it looks like and how the future, both short term and long term, should look like in Elsight while we're continuing to execute all our strategy and seeing how the strategy is playing very well with what we're seeing in today global markets. Like I mentioned, those results are not including a single $0.10 from the $4.2 million that we have signed a contract with the European defense OEM and that's in addition to that when we're looking into the revenue and how it will continue through the year. So just to put it on a chart, that's how it looked like. So last year first quarter was USD 620,000. This first quarter is more than USD 1 million, which shows a massive growth and that's again before everything I mentioned before. The way we structure this chart is to show an actual revenue that's already booked. So the additional on top of what you see in 2025, this is the order that we already booked and basically started to deliver. As you all know, we put it on the announcement, this order should be delivered until end of July 2025 and obviously have the potential to grow. So that's a very interesting 1 opportunity out of many opportunities that I'll discuss during this presentation today. Another point that I want to put even stronger what I mentioned before is about the split between defense and commercial market and the diversity there. So while today we're seeing a massive growth in the defense market, and I'll talk about it, we're still seeing a growing market in the commercial market. And for us in Elsight, looking into the future and some of our growth engines is how we grow with the commercial market, which in the long way will definitely be bigger than the defense market we're seeing today whether it's for drone deliveries, inspection, security, private security, public security and agriculture and the list goes on and on. This is 1 market that we have a very strong footprint there and now we are getting more and more traction in the defense market as well. But I just want to put the point that we are working hard to make sure that both of those markets are continuing to grow. And once the commercial market will get into its inflection point, which I don't think it's there yet, that will be in addition to everything we're doing in the defense market. So that's a very interesting point. Another point that I want to stretch that we got a lot of question about and I just want to be clear about it. This order that we announced on April 9 had nothing to do with the announcement we have in September of last year, which another big contract that we announced that we have signed there with another prime contractor in the defense sector, which should start to play revenue into 2025 which is not included in this chart. So again all those numbers adds up together for a very interesting picture of how 2025 will look like and not only 2025, but also how it will play for the long term for Elsight and how it will translate over there. Going little backwards for those of you who are here for the first time in our webinar just to say a little bit about who is Elsight and what we're doing. So we're in the highly reliable wireless communication systems market. I'll talk little later in the presentation just as a brief about the technology and what we're developing and what we're offering to the market. Our flagship product called the Halo. And today, most of our revenue coming from again diverse market both in the U.S., Asia and the European market. We have a footprint in every continent. Those are the largest markets that we're seeing that are steadily growing and what we can do there in terms of sales and marketing efforts. In terms of our accumulated experience, today we deploy to the field thousands of units already. We have over 340,000 flight and drive hours with our partners, which is unprecedented number. If you compare it to men's year, that's a lot of years to be flying 24/7 and I don't think it's parallel to anyone else in the industry of having so many hours. Most of them in beyond visual line of sight or non-line of sight operation both in the air, on the ground or over the seas; operation with different platforms having more than 100 design win customers, which means customers that design their product or their solutions around our Halo product, which again that set the stage one of our growth engines or set the stage of how we will grow together with the industry while all those industries are growing whether it will be on the defense or the commercial side of the business. Talking a little bit about what happened to us and what happened in the global market, let's call it, and how it impacts our industry in general. So I don't need to -- I assume I don't need to speak a lot about the geopolitical environment today and all the trade issues that are currently happening globally whether it's between the U.S. and Europe and U.S. and China and Europe threat that they have there coming from what you're seeing the Russia-Ukraine conflict. All of those together are creating a massive surge in demand. And more importantly, when we're looking on where DoD, Department of Defense or Ministries of Defense globally are looking to spend their budget, we're seeing a big shift going towards unmanned systems and again that include ground vehicle, that include aerial vehicle, include maritime vehicle and we're seeing it all over the globe. Here we just put some titles from Australia, from the U.S., how they see that the drone become very meaningful in the modern military strategy. How Germany did historic boost in their defense and infrastructure spend by an order of magnitude, same in South Korea and in Sweden. And again those are just examples of what we're seeing and how we are seeing this market growing and that's in parallel to the growth of the commercial market. But for us looking at the current opportunity we have in front of us while we're making sure that we are enhancing our footprint in the commercial market, it's clear that in the short, medium term most of our revenue will come from defense market just because of everything going on around us and create kind of the perfect storm that we came or we are there with the right product in the right time and then all the stars starting to align towards the direction that we wanted to go. And again continuing to execute our strategy and making sure that we are there and making our product better and our customers more satisfied and broaden our customers' base. A little bit about the challenge we're solving and what is our product about. So when we're talking about uncrewed systems, those systems require highly reliable communication and it doesn't matter if those are in for drone delivery or for inspection for grid lines or railroads or this is for ISR mission in defense or other type of missions that are happening in defense and homeland security for public safety and police or you name it. All of those systems are either remote controlled or fully autonomous. But all of those types require highly reliable communication and wireless communication is a big challenge when we're talking about spectrum issues, jamming issues, loss of line of sight and so on. The communication is something that it's not yet solved in the best way and again that's only in the uncrewed sector. I will talk later in the presentation how it can be also affecting other type of markets and sector once we are starting to broaden our view and looking into additional sectors once we feel that that's the right time to do that. So the challenge is how do we create the most reliable link for communication between operators, control centers and platforms that are deployed in the field. Platforms mean drones, fixed wing, quads, ground vehicles, robots, maritime vehicles and again the list goes on and on for different kind of applications. The way we are solving it so the way the Halo solve it is kind of a disruptive approach to all the approaches that we're seeing in the market today. So there are a lot of different communication element or component that are today offered in the field. Some of them are for line of sight application, some of them are satellite communications, some of them are cellular communication. But our approach says that there is no single infrastructure or spectrum piece that is good enough to provide the reliability necessary for those platforms to be connected to their operators. So our approach is what the Halo does is essentially taking all those different infrastructures together and create a 1 big pipeline of data that rely on all of those different technologies. So that includes, like I said: solar, private and public LTE and 5G; that include different type of satellite link from Starlink through Iridium, Viasat and so on; that include kind of point-to-point communication like the Silvus of the world or the Doodle Labs or the Domo Tacticals of the world. All of those are names for companies that are offering their great solutions. Those solutions are only part of the spectrum that is utilized. And our approach is if you want to have reliability to do the more sophisticated missions, you want to rely on all of them and not on single one of them to create again the reliability that is required for those systems to operate and to perform their missions. So the bottom line or the impact like we call it here in this presentation of all of the challenge in our solution and taking into consideration again what we're currently seeing, the tailwinds that we're seeing coming from the global geopolitical environment and what's happened in defense today and what's happening in commercial market today. With our solution that is kind of platform agnostic, we're doing everything seamlessly. So the experience the customer have once it's on board, start using our product is pretty amazing. Having a lot of aha moments that are still providing nice experiences for us and for our team in Elsight. Understanding how big is the value that we are providing to our customers that are doing different type of missions in the field. And all of that together, like I said, set the perfect storm for us to have an even faster growth. And I'll talk about it in the following slides about what we're seeing looking forward and what our strategy and what we're about to do forward looking. Before I'm going to there, I want to talk a little bit about the growth opportunities. We have the obvious growth engines of adding more customers basically into our customer base, expanding with our customers as they expand their business based on the design win concept that I mentioned before, providing more features to those type of customers as an add-on or as an upsell, providing them with more technology or more technological solution to some of their challenges and by that, increasing what we call in the SaaS world the average revenue per unit or per user. And again that plays in both markets, both in the commercial and the defense market, which is the same. The fourth growth engine, which is maybe the less obvious for Elsight is looking into other sectors. While we are currently focused on uncrewed systems even though I must say that the announcement we put out last September is not only related to uncrewed systems, it's also related for standard communication devices. Speaking about highly reliable communication device that prove itself in different environment in some of the most challenging environments in the world both from EW electronic warfare's perspective and also real-world example in commercial challenges. That can provide us with a lot of interesting growth trajectories in other market, which are either adjacent market or completely parallel market to where we are today. I deeply believe in focus and I think what makes us provide our customers today with the best solution they are looking for to have this aha moment that I mentioned before, the only way to get there is if we are laser focused. We are the most professional people that today a person that wants to build a drone for whatever reason or a robot for whatever reason, we are the perfect go-to for them for communication because of our experience, because of our focus. But once we will feel that this part of the business is getting into a steady state of understanding how we're growing that dramatically and continue to grow there and once we will feel that this market is too small for us, which today we're not anything close to that, then we will start to broaden our umbrella and start to look into different market and to see how we do the same cookie cutting, same strategy that we run in the uncrewed systems, unmanned systems and taking it into other type of market. And here in the slide, we have just few examples of adjacent markets that are relevant and we can talk about many more. In the today connected world, you can think about endless numbers of features or applications or use cases that require highly reliable communication systems. A little bit about our current financial strength and position. So in terms of cash, we have everything we need to execute our strategy. Some of the contracts we have signed have very good and healthy payment terms. So in terms of working capital, it put us in a very good place to take us to where we need and even allow us to invest in the business growth in sales and marketing effort and so on. We implemented an expense strategy, I will call it, to make sure that we are not starting to spread, but being very focused on where we are putting our dollars and how those dollars are translated into more dollars on the other side of it. So that's something that we are working all along to make sure that we're taking ourselves to profitability and start generating cash. In terms of our operational scale, that's also an important part. I don't think that it's something that investors or customers should take for granted that we were able to deliver in full on time all the different demands that we had. Even when we had a massive surge there in the demand, we were still able to provide all our deliveries in full on time thanks to our great operation teams and technical teams. We have Shlomi, our VP of Operations, who is not here on the call, but I must give a big shout out. It's not something we should take for granted in today's challenging lead times and supply chain market. I think part of it is because we built super robust systems that can provide any type of scale. And today, I would just mention that we're not anything close to our production capacity. So we can bring in many more sales and being able to deliver them in full on time and making sure that our customers are satisfied not only with the product and the technology, but also with the, call it, customer experience that having everything as they should. I will end up and open the floor for question with how we see the future or what is our strategy looking into the future. Obviously seeing the perfect storm that we have around us, what we need to make sure that is that we are enhancing the Halo position in the market as the standard for uncrewed. Again doesn't matter what's the use case; if it's for drone delivery in commercial, if it's for inspection, if it's for ISR mission, for drone as a first responders for police forces and fire departments; the Halo needs to be positioned. We are working hard to position it as the standard go-to for those type of needs in communication for uncrewed systems. Seeing the current success that we have and seeing the current lot of change that is happening in today governments and defense entities, we're seeing a lot of RFIs, request for information. A lot of tenders that are going out. And what it translates to us is that we need to be more aggressive mainly in the U.S. and European market just because that's where the budgets are increasing and that's where we are going to put our focus. Again that doesn't mean that we're not continuing to press the pedal to the metal in the commercial market globally, but seeing the big opportunities and where we can be even more aggressive. Those are the places where we are positioning ourselves, making sure both on the technical level and on the sales and marketing level -- technology level and sales and marketing level that we're not staying behind and we are in the front continuing to enhance our product, to enhance our go-to-market strategy and make sure we expand all market. Again just to set the stage that the commercial market will get to its inflection point, which I don't think it's very far away, we will be one of the biggest beneficiaries because we will grow with our customers. So all of it happening concurrently and I think you will see the results coming in once we are continuing our operation and once we are continuing where we are today and enlarging or increasing or growing the business in a steady and healthy way. With that, I will give the stage back to Howard for the Q&A session. Howard?

Well done, Yoav. Thank you. I've already got questions here. Please type your questions in and I'll read them out for Yoav to answer. I've already got a number of questions. Yoav, do people compare Elsight to DroneShield, that's ASX DRO?

Yes. That's a great question. Obviously we're getting this comparison all the time. I would say we are quite different businesses, but both of us have something to do with drones. By the way, we are from different side of the aisle, let's call it. While DroneShield is protecting against drones, we're enabling drones to fly. So that's an interesting comparison there. But I would say we do have some similarities. If you're looking on DroneShield DRO history when they just started to grow the revenue, pretty much where we are today when it was unknown for most of the ASX investor community for different reasons and that's where Elsight is today. We're putting a lot of effort to seeing how we can increase this exposure and get into a larger audience. I think part of the challenge is that Elsight is a result of the clean IPO. We don't have many shares on issues and we didn't need another large capital raising. But again that's a lot of the work we're doing today of going to the more larger audience, whether it's retail or institutions, making sure that they know the story. I think that this quarter that we presented the first quarter and the results that we are about to have in the next quarter, that will bring it in. We do have the patience and we are focused. While we are completely focused on growing the business and making sure we have a stable growing business in a very healthy way, I think that result drive the share price in the right direction and making the investors also happy. So while we're focusing on the business, we're now starting also to invest on exposure and make sure that the story is getting to all the places that it should get, having more coverage from different entities in Australia and outside of Australia. And I think that's the right time to be part of the story because, like I said, we are only scratching the surface and it's just the beginning.

Yoav, you have a number of questions. You kind of answered that in advance about the disconnect between the very good operational achievements, about the muted response in the market. I guess there was a number of questions already coming in about what we're doing to promote more proactively. If you have anything else to add, I think you've already covered it, but take it.

Sure. So the way we're doing that is obviously or what we do to make sure that the story is getting to everything it needs to get to. So we are today doing a lot of meetings and making sure that we'll start to have analyst covers, which we don't have at the moment. I was talking about exposure to new entities that we haven't done and investing a lot of our time, effort and thinking about how to get it and how to promote it into different areas. And there is several steps to stretching it and that's what we are doing from refining our core messaging basically, making sure that it's clear and investors get it, increasing the direct engagement like I said before with both institutional and retail investors and also expect as we're continuing the growth and have more exciting news to have more and more media coverage and starting to talk with bigger megaphones, let's call it, or louder megaphones. Obviously the goal is to ensure that the markets fully understand our story and the potential. And as I said, as the business grow, I do believe that the share price will react accordingly.

I've got some questions here, a number of questions about the same topic. Your thoughts on fiber optic cable drones and does Halo actually make fiber optic drones redundant?

Fiber optic is one of the methods that today is in use. Obviously it have its own drawdowns of think about it, the drone actually need to be wired to the operator. So how far it can go or how maneuvering it can get if it get into a building or need to do, I don't know what. So it is a method. I won't say that Elsight is doing these methods redundant, but definitely a lot of the use cases that we're doing that might was in one -- I mean might was solved with fiber optic drones, today are solved with Halo. I won't look at it as a competition because it's a complete different solution for a completely different use case where we are currently not playing. So it's not something that we're seeing as a threat or even a competition. It's more of another offering in the market that is just there.

Okay. I've got a question about the September contract that we got last year. When do you expect further orders from this contract as previously mentioned and what dollar value is expected?

So as we put in the announcement there, we do expect this contract to grow dramatically over the course of '25 and '26. By the way, only small part of this revenue was already recognized in first quarter. So we still have a lot to do there from the order we have got and also for the future orders that we are discussing with the customers that they discuss with their customers. Again remind you all, our customer there is a prime contractor in the defense space. So that's where we are today. It's going based on the schedule. We're still finalizing all the design and deliveries there, making sure we have the first order shipped to them. And we do expect during this year to start to talk about the higher numbers, which should translate into multimillion dollars in revenue.

Okay. I've got a question about the total addressable market provided in the material. What is the TAM you estimate you address? What does the sales cycle looks like and how long does it typically take? With the focus of the markets on trade wars globally, can you provide an overview of your supply chain? There's a lot of questions here. Are you facing any other solutions or competitors? What is important to customers? And then the last question in that package there is in defense, is there a jamming solution to your Halo connectivity solution? There's a number there. I think you can see the question in the list.

I'll try to start to answer them one by one. So in terms of the TAM, the way we calculate the TAM what you see on the slides there is the addressable market on the drone space that include commercial application, defense application and drones by the way also include ground vehicles and so on. The way we are looking at that and how it translates into the communication element because those markets are huge obviously and the communication part of it is a subset of the overall market. I would say that today on average -- it's really a wide range. But on average, the communication piece of the entire drone cost is between 10% to 20% of the overall cost. So looking on the overall TAM, the total addressable market of the all uncrewed system market and looking something between 10% to 20%, that's the right number to look at in terms of Elsight total addressable market and total serviceable market. Not only TAM, but also SAM, service addressable market. So that's just to answer the TAM question. By the way, in previous presentations, we have the actual sources. Just it's split out -- slipped out from this presentation, but have all the sources. Those are all accredited researches that was done. Speaking about the sales cycle. So a typical sales cycle look like customers buying the first unit for evaluation. Those cycles are ranging between 1 day and 2 months depends on where it sits on the customer's priority. Once they have the evaluation kit, like I said before, we kind of productize the onboarding experience for our customers. So from the time they get the unit on their table until we're completing what we call POV, proof of value, that's relatively fast. But again it really depends on where is it in the priority on the customer side, which -- some elements there, it's not stuff that we can control if it's low in the priority. But I would say that this can take between a month and 6 months. We saw it also in big organizations, but sometimes it happens super quick. I will give the example of the contract that we just signed recently that we announced the $4.2 million. It started with the customers buying units for evaluation that was in October of '24. Then in December they placed the first material order, which was a hundred of thousands of dollars. Another one we announced in March and then in April we have the contract signed. So that's how usually a sales cycle look like and what are the different milestones that we have there within this process. The next one is about the supply chain and how we make sure with all the global trade wars that our supply chains are steady. First of all, I would say that Elsight is not exposed at all to Chinese manufacturing. Our product is FAA compliant for obvious reasons. So we are not exposed to that. Having said that, because of all the tariff issues that are going on, we do see, let's call it, interesting moves in supply chain and lead times and so on. The way we are protecting ourselves, what we started to do in the COVID and still doing, is making sure that we have a good forecast for the inventory required and also have access with our vendors to make sure that if we have peak points, we'll be able to deliver those as well. As I said during the presentation, we're not anything close to our production capacity. By the way, for those of you who don't know, we're not doing -- we're using contract manufacturing for the production part so we have a lot of room to scale there. And we feel pretty good with our vendors and their capability of providing us with units to fulfill our best wishes type of revenue levels in terms of deliveries and inventory. So that's not something that -- it is always a risk, but I won't consider it as high in our overall risk metrics. So we covered that. Like I said again during the presentation, we are not seeing any competition that is providing or offering exactly the same approach we're doing. Obviously for the system integrator who now need to choose what communication system they are using, they have many different alternatives and all of them we consider as competition because in the end of the day, the system integrator or the system engineer will have to choose what they're using. Again seeing the solution we are providing today, we're not aware of anyone that actually provide a working solution like the one we do in an optimal swap, swap stand for size weight power consumption, that can sit on every drone. So while we do have competition, just to give you an example, each one of our customers can buy a solar module off the shelf and integrate it into their drone and that will cost them, I don't know, $40 pretty much or something like that. For our product, they are paying in 2 order of magnitude higher than that just to give you high level numbers. So I think that shows the level of value we are providing and the product market fit that we have in this market and it also play, by the way, into our profit margins, if you will. The gross profit, it's part of the presentation; I didn't present it, but you can see it on the presentation we put out to the market. We have super healthy gross margins. Part of the reason is because of we are not in the race to the bottom in terms of pricing with our competitors. And last question about jamming solution. Obviously it's a chicken and egg game. While the jamming solution are constantly improving themselves, our system and system like ours need to provide solutions for those, I'll call it, threats or challenges. Today, I don't think the customers were continually buying from us if they saw that the product is just not working. And as I said without getting into details over the line here, the Halo is currently working in the most sophisticated hard electronic warfare environment. So it required us to continue and invest in R&D. But at the current time, we are very satisfied with the result and the performance of the product and our customers are the same.

Another question is partly answered about the competition. What are the origins of the technology and what are the approximate unit economics of the product?

The origin and what was the second part, sorry?

What are the origins of the technology? Are there any competitors? What are the approximate unit economics of the product?

So speaking about the origin everything. For those of you who didn't participate in previous webinars, I would say that Elsight owns the entire IP chain of our product including the hardware, the software and everything in between, including all the patents that protected it and everything is and was developed in-house. The company has started a long time ago founded by Nir Gabay, the former CEO; and Roee Kashi, our current CTO. That's where we started from various needs coming from the field based out of Israel so from the Israeli needs, let's call it. Again with trying not to get into sensitive details, but that's how it started, where the idea came from and how we looking into the future, how we can make it better, faster and more efficient and productive basically. So that's about that. And there was another part of it. Maybe you know what, I will share another slide that again it's in the part of the presentation. It just wasn't part of the presenting today, but it's part of the presentation we released just because there was many question about it. So the business model or the unit economics slide look like the following. First, we have the hardware sale which, as you can see, have a super healthy gross margin for hardware between 74% and 82% gross margin depending on the flavor. I won't get into specific numbers for I assume understandable reasons, but I would say that that's in the low thousands of dollars per unit for the hardware. Then we have our cloud service and SLA, which are altogether in a bundle, which have also a good gross margin there. I would say that that's a question of scale. As we scale the business, the gross margin for those services will grow accordingly because many of those expenses there are fixed expenses. But that's basically for every unit we're shipping out, we have the long tail of the sale of the recurrent revenue coming from every unit and that's in the hundreds of dollars per annum per unit. And in addition to that, another part of our business model or the unit economics is the actual data use. Like I said during the presentation, we're working with many different type of infrastructure and working with those infrastructure require SIM cards, whether it's the Optus and Telstra of the world or require the airtime from the satellite, whether it's Starlink or different type of satellites. So today, we are offering it as a full package of how we provide all of these in one-stop shop in 1 invoice to the customer and those are the 3 main elements of our revenue stream. Obviously in addition to that, we have professional service as an add-on feature, but those are the main elements in the unit economics of a single unit.

Okay. We've got a number of questions about the revenue figure or what sort of revenue you would be happy with or what do you expect for the financial year or calendar year 2025 bearing in mind that Elsight does not give formal guidance apart from projections from our announcements and what we update in the quarterly. What would you be estimating as the commercial revenue for a calendar year?

Yes. So since we are not providing forecast like you mentioned, Howard, I would say I think I provide enough details during this presentation for people who wants to do the math to understand where our revenue figures will be at. Obviously we're already much higher than double the revenue of last year, even closer to triple the revenue. That's what we already announced and what you have on the numbers in this presentation. And I think that during this presentation, I gave some -- it's part of the presentation and I gave it verbally part of the contract and program and pipelines that we have and ones that we announced that wasn't recognized yet as revenue and people can do the math again without getting into specifics.

Sometimes you deal with minimums. So you're saying that even the minimum revenue that we'll do is sort of based on contracts that you see and revenue booked is over $5 million and then people can extrapolate based on some assumptions of what we expect for the year. I'm right in paraphrasing that. There's about 4 questions about the same thing about how is your expectation? How is your satisfaction with the DJI retrofitting product and how is the sales momentum and what do you expect from that?

Yes. So the product named DCX, DroneCommX, that's an aftermarket kit for DJI. For those who don't know, DJI is the largest company in the world today for drone manufacturing based out of China. I would say that looking on all the trade wars that was mentioned before, we are seeing a lot of changes in terms of how people are using those drones if they use them at all. So the overall market is where it is I will say. Having said all that, we do have deliveries for customers like I mentioned in our previous quarter. We do see an interesting growth there. I'll say, again without getting into the specific numbers, that we hit our numbers in terms of targets of what we wanted to sell in the first quarter of this year and all of those sales are mainly for POCs evaluation. So from there, it should grow whether it's through sales channels or direct customers. So we definitely see it as an interesting growth engine as part of what we're doing.

Yoav, we've got a tandem question to the simple question about the revenue expectation, but more about like the path to scaling revenues. Can you provide more color on the path to scaling revenues and achieving profitability? And what key milestones should investors be watching over the next 12 months?

Yes, sure. I'll be happy to do so. So looking into -- like I mentioned, without getting into specific numbers because of how we present the numbers today. I think when we're looking on achieving profitability, it's built around 3 main pillars that we are looking at. First of all, expanding the business by expanding our customer base like I said, our product portfolio and making sure that we can expand on the top line. Second, making sure that we are growing the adoption with existing product or existing accounts that they're growing their business and as a result, we are growing ours. And like I said also as part of this presentation, make sure that we are maintaining a disciplined cost management just to make sure that our cost structure is right. So as I can expand on each one of those pillars, I would say that with all of them together, that should show us a very interesting growth trajectory and a path to profitability. Again if you look at our numbers and seeing our burn rate in the previous quarters and where we are today, I think that we are showing the way to profitability and start generating cash basically. So ultimately, like I said, currently, we're focusing on building the sustainable profitable growth engines. And we believe that in the coming 12 months and, as I said, we have what we need to get there, we will demonstrate a clear progress to getting to profitability and start to generate cash.

Okay. I don't have any more questions. I'll say at this point, start to thank you all for attending. But can I please encourage you to invite other people to these webinars. So we get a lot of questions from -- there's some more questions coming up. We get a lot of questions that are on our materials or misunderstandings. We're always available. We make ourselves very available. But these opportunities are always there to engage with the company. And there's a couple of more questions here. What range would you personally be happy with revenue for 2025?

I'm not going to get into specific numbers though. As I said, since we don't give structured guidance about forecast revenue, I'm not going to do it in this call. If we will start doing it, it will be through our quarterly and half year and yearly reports. Obviously it's not something we will do only verbally over a presentation. So forgive me for not getting there, but yes.

And yes, so we could consider things like other companies do sort of ranges and minimums and we can discuss that as a Board and present that to the market. Obviously we can't do selective disclosure.

Absolutely.

Okay. So I hope everybody got their questions answered. But please encourage -- thank you for attending and encourage others to attend. And you've all seen I hope that we're making strong progress in building a leading position in the rapidly growing uncrewed connectivity market and we're very excited about the opportunities ahead. We remain focused on executing our strategy, expanding our customer base and delivering sustainable profitable growth. If you have additional questions or would like to follow-up, please don't hesitate to reach out through our Investor Relations contact listed on our website and make sure you're receiving our e-mails and updates. On behalf of the Board, Yoav and the entire Elsight team; thank you again for your support and we look forward to updating you on our continued progress in the months ahead. Have a great evening.

Thank you, everyone. Bye-bye.