Mobilicom Limited (MOB) Earnings Call Transcript & Summary

Good day, and welcome to the iAccess Alpha Virtual Best Ideas Winter Investment Conference 2025. The next presenting company is Mobilicom Limited. [Operator Instructions] I would now like to turn the conference over to your -- to today's host, Oren Elkayam, CEO and Co-Founder at Mobilicom. Sir, the floor is yours.

Thank you very much, and hello to everybody. Thank you for joining us here in the United States. As he mentioned, my name is Oren Elkayam. I'm the CEO and Founder of Mobilicom, based here in beautiful California. I would like to start the presentation and after the forward-looking statements and different risk analysis, we will move to the presentation. So let's discuss Mobilicom. First, Mobilicom, at a glance, is what we do. We are the provider of the critical software, cyber and hardware solution that are the essential elements within drones, robotics and autonomous platform. Those are the elements that enable the drone to operate, to communicate, to safeguard themselves against different threats. So we are the sole and core solutions within drones and robotics. Our uniqueness in the market is coming from 2 key factors: One is the cybersecurity. We are heavily invested around the cybersecurity as we believe and see that in this market like other markets, cybersecurity will be a critical factor going forward and we have it across the board in our different products and as a key differentiation; and second, we are the sole player as an end-to-end provider of critical different elements within the drones and robotics and that set us apart from other companies. We are selling a variety of solutions to all drones and robotics manufacturers and so forth. The company is founded in 2017, multinational with U.S. Australia and Israeli sites, traded on the NASDAQ under the ticker MOB, and we have the warrants traded under MOBBW. We do have quite a lot of customers, mainly Tier 1s across the United States, Europe and Israel, which are the leading markets for drones and robotics. And in this segment, we are proud of being embedded, integrated and already within programs that are scaling as we speak. And we have patent for our technology. So the entire solution is proprietary technology owned by Mobilicom down to the bit. And that's important advantage over competitors in different sections. With regard to the position of Mobilicom, I think that this slide gives us a good insight on our unique position. As I mentioned, one of the key differentiations of Mobilicom, is the fact that we are a one-stop shop, end-to-end provider of a portfolio of solutions. If you are looking on drones and robotics in general, you will see that they are made from hundreds of elements inside, but only 8 to 10 systems within the drones and robotics being cyber, software and hardware are the crucial elements that cater for 80% of the price, okay? And this is where we are concentrating. You can see those elements in the diagram in front of you. The red segments are the elements that Mobilicom already have and own and those are the solutions marked in red, which means that we have technology, we have the products, we have customers, and we are embedded in it, okay? And then on -- and the black ones are elements that we are not yet inside. We do intend to extend to those elements in the future and be more holistic with more solutions as a one-stop shop. Why it's unique? Because offering a comprehensive suite of solution to a market that is ramping up, enable us to give an enhanced performance to the overall system, those that make the drones and robotics buying from 1 source multiple elements that were designed to work best with each other and sold them the performance issues, give them much higher security clearance and capability and cyber protection, bundling price is lower for us, lower for them, and time to market is a great advantage. And as the market is accelerating to large volumes and large cycles of innovation and replacement that will be crucial solutions. In fact, we are very similar to what we see in the automotive industry, where you have car manufacturers that like Audi, Mercedes, BMW, that's much like the drone or robotics manufacturer in our market, but inside who -- you will find 60% of the solution coming from Bosch or Continental selling to all car manufacturers. So Mobilicom is equivalent to Bosch or Continental selling to all drones and robotics, the cyber, the software and the hardware pieces. Where we are focused and what are the challenges that we are solving to the market? So on the right side you can see some of the customers we are serving. Definitely, we can see top-tier players in this industry. The United States DoD or Department of War, the Israeli Ministry of Defense and there is different brand name customers that we are integrated with across Airbus, the biggest aviation company worldwide, Teledyne FLIR, a giant American player in the small drones and robotic space, ST Engineering in Asia Pacific and the 3 biggest Israeli players worldwide in drones, robotics, and defense. And we are proud of that. We also have new customers, the Tier 1s, that are joining us right now and we'll explain more about it later on. On this slide, we can see some of the challenges we are solving. So cybersecurity being the threat and electronic warfare being the biggest threat right now is in the core competitive and innovation of Mobilicom, handling and capability to work in harsh environments and competitive environment is important, and ability to scale to volume production in relevant pricing model is critical for the evolution of this industry, and we are well positioned to capture significant market share and lead that revolution because of our performance to size to price offering. We do have all the American regulations summarization and being chosen by the Blue UAS certification of the Department of War, NDAA proving and evaluated by the DoD for being certified and secured for the USUs, trusted cyber and so forth. If we are looking on the growth of Mobilicom, we can definitely see that the growth of Mobilicom will come from -- so the growth of Mobilicom will come from 3 segments going forward, 3 pillars: One is the current Tier 1 customers that are moving to mass production. Those are design wins that we enter few years ago, worked with them as the market was in early stages, developed solution, integrated, tested, validated and so on, which are now getting to the scalability and moving in 2026 to mass production. And that's the customers that will allow us to scale forward and will show a few examples of that from the brand names and logos that you've seen earlier. Second, growth will come from the fact that new customers on the back of the success in those programs in the United States and Israel. New customers, new Tier 1s, are -- and the fact that we are certified for UAS and NDAA and so forth and are recommended on the U.S. government on the shortlist are coming to Mobilicom and bundling our solution and designing in. And so we are increasing market share. And the third growth will come from our biggest innovation and grade-3 technology in the cybersecurity for AI robots and drones. And that's all around our OS3 and cyber software solution that we are leading the market with the -- first to the market solution with the most advanced solution in the market and based on American standards and regulations. Let's review each one of those and discuss the potential of growth in the coming quarters. So one example of currently Tier 1 players that are working with us is one of the biggest in United States in small-sized drones or robotic market. It's a customer based in United States, giants serving and delivering drones, robotics and loitering kamikaze drones solutions. They work with us over the years and chose us over 4 competitors because of our price, performance and size. We've done a lot of integration and R&D phases. We've done a lot of certification and being approved as a platform before it can fly and operate and be sold or integrated into projects. And then they move to commercialization. We've seen a sequence of purchase orders, let's say, from us that they made in order to enable initial production rates and seeding the market over the last 1.5 years. And now we are shifting to Phase 5. This is the big jump for Mobilicom. This is the home run as they are scaling to mass production. And a few things happened recently that enter to this fifth phase, which is the big jump. First, they are shifting -- the U.S. decided to shift to mass production of drones, especially small sized drones, and 2026 will be the starting point for that and accelerate later every year. On the back of that decision from the U.S. government, they received an order this Tier 1 player. So we received an order from them, which is $1.6 million for the first yield that's scaling. So if the previous orders in -- over the last 1.5 years were in the hundreds of thousands of dollars, like $200,000, $300,000, the next one was $1.6 million, showing the jump 5x or 8x of the average procurement in order to enable scalability plan in the United States. They were chosen for the Department of War SOCOM program of record, that was chosen. And finally, for the OPF-L program of records by the -- the Department of War, which signaled that they are going to take significant market share in guaranteed budgets with guaranteed programs over the next 5 to 10 years, and that promised the scalability that we discussed, and they build production site that enable them to start producing from January higher volumes and accelerate from them in order to meet the demand of United States. All of that signals that right now we are in the inflection point of our business based on these customers and others that we show. Phase 6 will enable us to cross-sell the cybersecurity software, the electronic warfare software and others and by that, duplicate or double or triple the revenue per customer per year. One example is volume based. Just assuming that they are moving to 5,000 or 10,000 units a year and given the fact that United States wants to move to hundreds of thousands, if not millions, later on per year of drones and they will take a portion of that. So let's assume that are taking only 5,000 to 10,000 units a year, 5,000 will generate $20 million in roughly to Mobilicom and 10,000 is $40 million for Mobilicom in revenue on an early days. So we can see how 1 significant Tier 1 player like that, working with us and already accelerating to mass production, completely transform our company going forward. Let's see another example is an Israeli-based Tier 1 player selling worldwide that did the same journey with us. Over here, we are embedded with multiple products from our one-stop shop offering. And that means that we are having a bigger portion of the drone value and more revenue and more gross margin. And over here they've done the same journey. Now they have made first orders for initial production and they are shifting, we believe, in 2026, to mass production on the back of European Union, investing more in defense and more in drones and loitering munition kamikaze drones. They are having large customers across Europe. They are selling to 30 NATO countries, and the new offering that they chose us for in the platform are promoted over there. And as Europe is moving from 1% GDP in the defense to 4% and 5% GDP into defense, which means that the budget for the next 7 years are there, and they're expecting large growth from there. And as they are growing, we are growing with them. So working with the biggest peer players worldwide, and definitely in the biggest markets, U.S., Europe and Israel is enabling us the best opportunity to scale to large quantities, large deliveries and then gross margin. The next growth for the company, as we mentioned, will come from additional players that chose Mobilicom. We've seen here that the fact that we've been U.S. Department of War, or DIU, under that chosen solution, one of the few companies chosen in our field, give us the credibility and signal to the market that they can trust and use Mobilicom as the recommended company. That led to the fact that we are now seeing more integration and more approach by additional Tier 1s and that facilitate and accelerate more adoption and bigger market share. And that's part of additional players joining us as we speak in integrating. We believe that they will complete their integration and be ready with our solution for the market in the first half of 2026, which will allow them to accelerate and produce based on Mobilicom in the second part of 2026. And the last growth potential is coming from the cybersecurity, the OS3 and secured autonomy innovative solution that we release to the market. I would like to emphasize that United States have recently a new regulation by the Department of War that announced that they are shifting from single time testing for cyber, which is off-line testing to a dynamic online active cybersecurity across the board on all systems in the field, including robotic drones and loitering munition, just according to their timeline and tied to additional programs, is expected to finalize that by September 2027, which leaves companies less than 2 years to deploy that. And therefore, most of them will go for buy versus make, which puts Mobilicom, with the secured autonomy and OS3 solutions, which are based on these standards and meeting the requirements, the solution of choice. And we believe that, that will accelerate Mobilicom solution and adoption of cybersecurity, being leaders in the market with the technology and product based on our own IP. Bear in mind that, that will also introduce higher gross margin if the hardware elements are 60% gross margin roughly, the cyber and software are closer to 90%, which will accelerate even further the growth of the company and profitability. And that's a big regulation that was issued a few weeks ago, and that's a pivotal stage for the company because our innovation of the cybersecurity over here and being -- leading the autonomous -- Secured Autonomy solutions for the company is -- sorry, critical for the growth of the company. And that's another catalyst for additional growth in 2027. Summarizing the verticals of the pillars of growth. We have existing customers moving into mass production, followed by additional new design wins and new customers from the Tier 1 that are joining us, and then the innovation of Secured Autonomy and cybersecurity based on the new U.S. regulation that enforce do it by timetable, which is very aggressive and short to choose partners now and Mobilicom being first to the market is a great opportunity to capture this market. A few additional delivers that we've made recently: One, shifting to ordinary share, which was important for Mobilicom, that began and commence on Monday this week. If the delivery that we worked on for the last 3 -- in the last 6 months. And now that we are ordinary shares traded on the NASDAQ, it enables more volume, it enables more investors to buy the share. It enable ETFs and indexes to include Mobilicom as we are scaling forward. And all of that is very positive for our shareholders and the company itself, and it will help us increase the volumes and increase the market cap. So that's an important milestone that we achieved recently. The capital structure, there are updates from September 2025 were released in October -- or beginning of November, sorry. We had outstanding shares of 12 million right now shares, if not ADS anymore. We have additional 2.8 million warrants with a strike price, which is in the money under $5, and that can bring us additional funds once exercised, about $14 million. Fully diluted, we had 14.8 million shares on the NASDAQ. We are solely traded on the NASDAQ. And we have close to $18 million cash in hand. Remember that we have a very low burn rate, which is around $300,000 a month, which is less than $4 million a year, which brings us to a very long path to execute and reach to cash flow positive and enjoy the growth that is expected in the coming quarters based on the items that we reviewed earlier. And thanks to the fact that we have no bank debt, no loans, no preventables, we are in a very great position to move to cash authorities faster and then exploit the high rise of the drones and robotics market. To summarize the opportunity, Mobilicom is a company that owns a significant IP and know-how in the cybersecurity, drones and robotics and defense tech in the crossroad of those markets. We have known products that are in the market, proven and certified and recommended by the Department of War in U.S. We have customers that are already using that, including large Tier 1s around the world. They are already scaling in production. We have new innovations around the cybersecurity and Secured Autonomy where we lead the market. Regulation is pushing the customers forward for that. And that's the fact that we are working with blue-chip companies that are scaling with a very strong position or financial position to allow the growth and reach the cash flow positive and grow even faster on the back of cybersecurity software licensing model with high gross margin is a lucrative opportunity unseen in the market right now. This is Mobilicom, and now we can move to the Q&A.

So the first question that was asked is what visibility do we have to 2026 order flow from the Tier 1s of the U.S. Defense customers? I think that if you ask me that question a few months ago, when we have been in the shutdown, it was harder to answer. Right now, after the shutdown and additional milestone that will be announced soon. We can say that we have much larger visibility, and we are very optimistic from the scalability of our Tier 1 American customers that are winning more programs and based on that [ NPLs ] that they received, they expect them to scale. And we believe that, that will be a ripple effect because not only that they won significant programs and purchase order from the government that will then flow to us, but also they have -- most likely U.S. would like to move faster and U.S. is speaking about doing 100x or 50x at least more than what they've done. So if the market is going to ramp up and we have the solution and integrate it into programs that are already accelerating is great for what we expect and we see their manufacturing starting from January 2026. Another question is what we see as signals of demand from the Department of Defense or Department of War regarding cybersecurity regulation. So all the new bids that are coming have different cyber security requirements, it's clear that electronic warfare and cyber security against the communication and against the AI platforms based on NVIDIA and Qualcomm are making it a very important subject. We've seen the same evolution in other places. The new bids are coming with cyber requirements. There is a document they're referring to that our solutions are helping to address that. And the new regulation that we just -- was just recently released is a pivotal change because that will enhance the requirements around active online cybersecurity with a deadline, which is now placed around September 2027, which doesn't give them much time to move and develop them by themselves, and they will most probably go for buy versus make. And the only alternative that finally exists for small-sized drone that can meet the requirements of active online dynamic cybersecurity is currently Mobilicom, and that's amazing. There is a pandemic that is going to happen, which is pushed by the regulation. And the only vaccine on the market is the analogy is currently Mobilicom. How many additional Tier 1 partners do you expect to add in 2026? So that's a great question. In Q3, we've discussed that opportunity. And in the Q3 company discussion with investors and webinar, we said that in 2025, we had 6 total Tier 1 customers, 2 were in the R&D designing phase and 4 in the initial production and seeding the market. 2026, we believe that we can get to anywhere between 8 to 10 Tier 1 customers with 2 in mass production and scaling, and 3 to 4 in initial production and additional 3 to 4 in designing. So we are increasing, as we speak, additional designs with new platforms of Tier 1s, and that's according to our expectation. To grow significantly on the number of Tier 1s, the big player that most likely will mean the biggest programs of their governments around the world with focus on United States, Europe and Israel. In addition, we believe that in 2026, 2 of our partners will win program of records, which guarantee 10 -- 5, 10 years of constant buys, and that's part of the prospects we see through 2026. On the cybersecurity and software, we believe that we can scale to 4 to 6 strategic partners, NVIDIA and Qualcomm AI-based partners, and 2 additional software strategic partners, and that will also build the growth vector for 2027 to be a company with solid cyber and software revenue and leadership in this market. Another question that was raised is, what is the level of recurring revenue is request -- expected by cybersecurity and software? So as we mentioned, the ICE, electronic warfare software, that we have today, the OS3 cybersecurity for the NVIDIA and Qualcomm AI machines and the cloud solution will be the 3 figures of our licensing model, and that will be a recurring revenue, especially in the commercial market. We have the defense market, we believe that also the commercial will scale. In addition to that, we have to remember that the small-sized drones and robotics and loitering munitions are elements and systems that will not last more than 3 years in average, which means that in the business itself there is procurement, just replace those platforms that were damaged or bruise very fast or destroy it immediately if it's a loitering kamikaze drone, it's a one-way ticket drone. So the recurrence is coming from the fact that small-sized robots and drones are inherently limited in their time line. And in addition to the software that we have in cyber, which even take it further. Another question was on Mobilicom biggest competitive advantage. So as we mentioned, cybersecurity across the board for the electronic warfare of the communication for secured autonomy of the future of any autonomy of those drones or robots is the critical differentiation factor of Mobilicom and market leadership. And second is the fact that we are a one-stop shop for different hardware, software and cyber, which there is no other equivalent company with that strategy on the market, which has the technology IP, product in market and customers already in place, which are scaling. The other question was how U.S. tariffs and geographic range policies affect your cost structure or pricing? Mobilicom is able -- I mean there is 2 items. One is the software and cyber, which tariffs do not apply as we understand, for the software and cyber. And therefore, it's best because those are applicable for the hardware. And second, for the hardware elements which are -- we are having, which are actually hardware elements with a lot of software inside, we have few opportunities we are able to produce in the United States, Israel and the Philippines. And for the U.S. market, we intend to produce more, and as needed in U.S. soil to avoid the tariffs for that market. And enable the customer the flexibility that they need and have a U.S.-made solution from a U.S. company operating here and certified by the government. The reverse split. So there was a question about the reverse split. I would like to emphasize that. The reverse split do not affect the U.S. market and the NASDAQ listing. The trading on NASDAQ will say is instead of ADS, it's already shifted in this Monday to share trading. The Australian shares that the company is based on, those were reverse split in Australia, no effect on U.S., none forever. It just represent 1:1 ratio between the Australian company shares through the NASDAQ traded shares of here of the Israeli company. So the reverse split already happened in Australia to clean and make it much more transparent and easy. Nothing is affecting the NASDAQ and the NASDAQ is on from Monday, traded on shares and not ADS, which is another delivery on our promises to make it more transparent, easy to trade and accessible to all investors, including passive ETFs and indexes. Any more questions? So we don't have more questions. So I would like to thank you all for joining this session today, and you're welcome to our approach Liad and myself. Liad is the Head of Finance and myself on any questions you have. And come and meet with us tomorrow. I'm not sure if there are slots open, but we'll be glad to meet with investors. Thank you very much.

Thank you. That concludes Mobilicom Limited's presentation. You may now disconnect. Please consult the conference agenda for the next presenting company.