Ondas Inc. (ONDS) Earnings Call Transcript & Summary

Welcome to the Ondas Inc. Investor Event Conference Call. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Eric Brock, Chairman and CEO. Please go ahead.

Good morning, everyone, and thank you for joining us. Today marks an important milestone for Ondas. We are extremely pleased to announce the acquisition of DZYNE Technologies, a company we believe is one of the most innovative autonomous defense businesses built over the past decade. Today's events are about much more than a transaction. It's a significant advancement in Ondas, creating a company with greater scale, greater technology depth and a dramatically expanded customer footprint, and now Ondas is positioned with one of the broadest autonomous defense portfolios in the industry. Today, we'll introduce DZYNE, explain why this combination is so compelling, discuss the market opportunity and show why we believe this positions Ondas to become a category leader during what we believe will be one of the largest defense modernization cycles in decades. Before we begin, please take a moment to review the forward-looking statements and other disclosures contained in today's presentation. We'll be discussing future expectations, financial outlooks and market opportunities that involve risks and uncertainties. Additional information regarding those risks can be found in our SEC filings. With that, let's begin. So again, welcome, everyone, to today's very important call. This is a tremendously exciting day for everyone associated with Ondas. We're incredibly proud to introduce DZYNE Technologies to our shareholders, our customers, our partners and the broader Ondas ecosystem. Over the past several years, we've worked to build Ondas into a leader in autonomous systems through disciplined technology and market development, along with ecosystem development and, of course, via a well-developed and executed acquisition program. DZYNE represents the next major step in that strategy. This is an exceptional company. Its products are operational today. Its technology has been proven in demanding defense environments. Its engineering organization is world-class. Its customer relationships span the U.S. Department of War, allied militaries and leading defense and security organizations around the world. Most importantly, DZYNE shares our vision. Both companies believe that the future of defense belongs to autonomous systems, software-defined warfare, affordable mass and persistent intelligence. Together, we are creating a platform capable of delivering those capabilities on a meaningful scale. This transaction expands Ondas from a collection of outstanding technology businesses into a far more complete autonomous defense enterprise with leadership positions across persistent ISR, aerial security, counter-drone systems, autonomous effects and AI-enabled mission intelligence. We believe this combination fundamentally changes the trajectory of our company. Before we begin, I'd like to introduce today's speakers. I'm joined by Ryan Hartman, Founder and CEO of WorldView and now Chief Executive Officer of our newly formed Ondas Sentinel division. Ryan brings decades of aerospace and defense leadership across persistent ISR, autonomous aviation and mission systems. Also joining us is Matt McCue, Founder and CEO of DZYNE Technologies, who will become Chief Technology Officer of Ondas Sentinel. It is a real pleasure to welcome Matt to Ondas. Matt has spent more than 2 decades designing and delivering advanced autonomous systems for some of the most demanding customers in the world. He is not only an exceptional engineer, but an outstanding entrepreneur and business leader who has built DZYNE into one of the premier autonomous defense companies in the United States. Matt, we're honored to have you and your entire team joining Ondas. The combination of our organizations, creates something much larger than either company could have built independently, and we're all incredibly excited about what lies ahead. Let me begin with a brief overview of the transaction. Today, Onda announced the acquisition of DZYNE Technologies in a transaction valued at approximately $875 million. The consideration consists of $200 million in cash and approximately $675 million in Ondas' equity. Importantly, the transaction aligns both organizations for long-term value creation. The DZYNE shareholders, led by majority owner Highlander Partners are now one of our largest stockholders, a fact that underscores their confidence in the combined company and our shared vision for the future. In fact, Highlander has locked up more than half the shares received in the transaction for a 6-month period. This is not a financial acquisition. It is a strategic combination designed to create a larger, stronger and more competitive autonomous defense company. It's also important to highlight that DZYNE significantly enhances the financial model for Ondas, creating a larger and faster-growing revenue and gross profit pool to help support the OpEx and infrastructure investments Ondas is making to capture value and market capitalization in the rapidly growing unmanned and autonomous systems market. DZYNE is expected to generate more than $300 million of revenue in 2027 with expanding EBITDA margins and exceptional growth characteristics. We believe this transaction is highly accretive to Onda's investors today. And given DZYNE product portfolio, customers, operating scale, talent, U.S. footprint and strong growth profile, that accretion will compound over time. The acquisition closed concurrently with signing on July 2, allowing us to begin integration immediately and accelerate execution from day 1. This acquisition is transformational. It establishes what we believe is the leading independent autonomous defense and security platform focused on delivering for the next generation of warfare. Why? Because DZYNE dramatically strengthens every major component of our business. First, it immediately expands our U.S. operating platform. Combined with WorldView, we are creating Ondas Sentinel, a scaled U.S. defense organization with engineering, manufacturing, deployment and sustaining capabilities that very few emerging defense companies possess. Second, we gained extraordinary talent with nearly 120 engineers, deep manufacturing expertise and outstanding operational leadership and an organization that knows how to move products from development into production and into the field for customers. Third, DZYNE brings exceptional customer relationships. The company has earned trust across the Department of War, Air Force Research Labs, every Combatant Command and numerous allied defense organizations. Those relationships are difficult to build. They represent years of successful execution and become an invaluable asset for the combined company. Fourth, design significantly expands our technology portfolio, persistent ISR, long endurance autonomous aircraft, counter-drone systems. autonomous interceptors launched effects. Together with the existing Ondas portfolio, we now address many of the fastest-growing areas of defense modernization across the world with a deep portfolio of solutions and an extreme level of talent. Finally, this dramatically strengthens our financial model. We had substantial revenue, positive EBITDA, expanding operating leverage and a clear path towards scaled profitability. This will enhance our investment flywheel and propel Ondas market capture opportunities on day 1. Before we continue, we'd like to show a short video introducing the outstanding technology portfolio DZYNE is bringing into Ondas. Let's take a look. [Presentation]

The acquisition of DZYNE isn't simply about adding products. It's about responding to a fundamental change occurring across modern warfare. The battlefield has changed. Victory increasingly belongs to the side capable of deploying autonomous systems rapidly, affordably and at scale. For decades, military advantage centered around exquisite platforms purchased in relatively small quantities over long procurement cycles. That model is changing. Ukraine, Israel and increasingly, the Indo-Pacific all demonstrate that autonomy, software-defined systems and affordable mass are redefining military capability. A similar transition is occurring inside our industry. Autonomous technology has matured beyond experimentation. The challenge today is industrialization. Governments no longer need isolated demonstrations. They need companies capable of designing, manufacturing, deploying and sustaining autonomous systems at scale. That requires engineering, manufacturing, supply chains. It requires software, robust and scalable operations. And above all, it requires financial strength. These strengths form the core of durable, long-term trusted customer relationships. This is exactly why Ondas and DZYNE belong together. Our mission is straightforward. To help our customers achieve decisive operational advantage through multi-domain autonomy, persistent intelligence, software-defined warfare and affordable autonomous effects. We believe this combination positions us exceptionally well to meet that mission. So why now? Because we believe the timing could not be better. For years, both Ondas and DZYNE have invested in developing mission-ready autonomous technologies while building trusted relationships with defense and security customers. Today, those investments are converging with an extraordinary shift in demand. The conflicts in Ukraine and Israel have fundamentally reshaped military thinking. Autonomous systems are no longer experimental. They are becoming central to modern force structure. Defense budgets are shifting accordingly. Governments are accelerating procurement, affordable mass, autonomous effects, persistent ISR and counter-drone systems are moving from emerging technologies to strategic priorities. At exactly the same time, Ondas and DZYNE have reached the scale where combining creates immediate competitive advantages. Our technologies fit together naturally. Our customer relationships are complementary. Our engineering organizations strengthen one another and our manufacturing platforms scale together, and our financial model becomes substantially more powerful. Most importantly, we believe there is a first-mover opportunity. The category of scaled autonomous defense companies is only beginning to emerge. And of course, our objective is not simply to participate in that transition. Our objective is to lead it. We believe DZYNE has earned a reputation as one of America's next-generation autonomous defense companies. The company has developed a portfolio of highly differentiated autonomous platforms that are operational today and aligned with the fastest-growing defense priorities. Its business spans 3 core franchises with a suite of systems that are mission-ready and operational today. And I want to highlight that over $500 million has been invested in R&D to support this broad portfolio. The first segment DZYNE plays in is long Endurance ISR. Here, Design offers ULTRA and LEAP, highly capable autonomous aircraft designed to deliver persistent intelligence at dramatically lower acquisition and operating costs. ULTRA, in particular, is emerging as an extremely compelling complement to the MQ-9 reaper, providing persistent ISR at substantially lower cost while supporting a broad range of mission payloads. Second is aerial security and counter-UAS. In counter UAS, IonStrike is a remarkable product, a fully autonomous kinetic interceptor purpose-built to defeat next-generation threats such as [indiscernible] attack drones. Alongside IonStrike sits Dronebuster, which we believe is one of the world's most widely deployed handheld counter drone systems and the only U.S. manufactured solution utilizing GNSS spoofing technology. The third franchise is autonomous effects. Products such as Blitz and GRASSHOPPER address the rapidly growing affordable mass and launched effects markets, supporting distributed operations and swarm concepts that are becoming central to modern military doctrine. Financially, DZYNE is equally impressive. We expect approximately $191 million of revenue during 2026 and greater than $300 million in 2027, driving a 3-year CAGR of over 80%. The business growth is supported by a significant backlog and a large and visible pipeline. Clearly, DZYNE is at a pivotal inflection point in its growth, and Ondas provides the scale, infrastructure and operating platform to help accelerate its next phase. It's a playbook we have executed successfully time and again through our strategic growth initiatives. What gives us tremendous confidence in DZYNE is that this isn't a company built around future concepts. It is a company delivering product and services today. Its systems have been deployed globally across every U.S. combatant command and numerous allied defense organizations. Its customers include the U.S. Air Force, Army, SOCOM, Homeland Security, AFRL, NASA, NGA and multiple allied militaries. And given DZYNE's pipeline aligned with Ondas relationships is likely to see this customer list deepen and broaden from here. Those relationships were earned through performance. Operationally, the company is equally impressive. DZYNE operates a mature U.S.-based manufacturing and supply chain, supported by more than 145,000 square feet of production capacity. Its products are supported by established customer training, field service and sustainment organizations. One area I want to emphasize is ULTRA. We believe ULTRA is approaching a significant inflection point as it transitions toward a major program of record. Again, this is a high-performing system built for purpose, for extremely long endurance with payload diversity, which is much lower cost relative to legacy UAV platforms. Much like WorldView, DZYNE's revenue model will leverage delivering ISR capability through Go-Co and increasingly Co-Co or government-owned company-operated and contractor-owned, contractor-operated service models. That recurring services approach improves customer flexibility while creating attractive long-term revenue visibility for the company. This slide illustrates another important advantage created by the transaction, scale. Moving the unmanned sector across the adoption S-curve will require companies like Ondas to position for exponential growth. Production capacity is a critical enabler for us to do just that. DZYNE operates 6 facilities across the United States, anchored by its headquarters in Irvine, California, with additional operations supporting engineering, manufacturing and customer engagement. Importantly, DZYNE contributes approximately 145,000 square feet of U.S.-based manufacturing capacity. Combined with our existing operations, Ondas now has more than 330,000 square feet of manufacturing space across the United States. This puts Ondas in a very strong position competitively and with customers. As demand accelerates, our customers need partners capable not only of innovating, but of delivering. This footprint provides the production capacity, engineering resources and operational infrastructure necessary to support that growth. With this introduction and overview, I will now hand the call to Ryan Hartman, who will add additional context around DZYNE's capabilities and the strategic and operational fit for the combined DZYNE and Ondas.

Thank you, Eric. We are genuinely excited to welcome Design to Ondas. This is a company I've followed since its inception. I have tremendous respect for Matt McCue, who I've worked with for more than 20 years, and I recognize the depth of talent inside design and their ability to help us realize the full vision for Ondas. As we've previously shared, Ondas' strategy is to build a multi-domain business that delivers our customers' capabilities ranging from the surface to the stratosphere unified by a common tasking, collection, processing, exploitation and dissemination architecture. We've been very active executing against that strategy. In 2026 alone, we completed acquisitions and partnerships, including Bird Aerosystems, Rotron Aerospace and the Palantir partnership in March, Mistral and WorldView in April and Omnisys in May. As you'll note from the portfolio map on the screen, a clear gap remained between our low altitude unmanned systems and our stratospheric assets, specifically in the Group 4 and Group 5 long Endurance UAS category. DZYNE fits nicely in between the stratosphere and the assets we already have in the portfolio for multi-rotor UAVs and Group 1 and Group 2 UAS. It is a precise purpose-built complement to what Ondas has already built, and it gives us coverage from surface to stratosphere with no gaps. With Sky River as our mission layer and Palantir's Warp Speed and Foundry as our operations layer, the addition of design completes a cohesive architecture across land, air and stratospheric domains. With the systems already in our portfolio, Ondas had the ability to address a meaningful portion of the global TAM. With DZYNE's addition bringing launched defects, additional counter UAS technologies and Group 4 and Group 5 UAS, we significantly expand the addressable market available to Ondas. What you're looking at here are 3 of the fastest-growing segments in defense, persistent long endurance, ISRT and contested airspace, a counter-UAS market where spend is migrating from detection to low-cost autonomous defeat and a $15 billion-plus Department of War push into low-cost launched defects. Each segment carries attractive compounded annual growth rates. We look forward to maturing and evolving these platforms, so we have a right to win in each and to capturing an outsized portion of these markets over the next 4 years. Ondas has been focused on 4 specific verticals where defense modernization spend is accelerating, aerial security, ISR and persistent intelligence, precision strike and autonomous ground systems. DZYNE represents a transformational step forward in three of these four areas. It strengthens our aerial security posture with Sawtooth and Dronebuster. It deepens ISR with Ultra and LEAP, and it expands Precision Strike with IonStrike. These are complementary, not redundant additions to capabilities we already operate. With that foundation in place, I'd like to turn it over to Matt, who will walk through the core design franchises joining the Ondas portfolio and how they strengthen our position across long Endurance ISR, counter-UAS and Precision Effects. Matt, over to you.

Thank you, Ryan. It's an honor to join forces with you and Eric and the entire Ondas team, and we're excited about what DZYNE and Ondas can build together. I'd like to start with our marquee long Endurance ISR platforms, ULTRA and LEAP. ULTRA delivers over 3 days of endurance at over 25,000 feet altitude with modular payload support for EO, IR, targeting, radar, SIGINT and communications relay. It fits squarely into the Group 4 and Group 5 mission set for the Department of War and Allied Nations. LEAP complements ULTRA with over a day of Endurance at 17,000 feet at an even more cost-effective price point. Why this matters is that persistent ISR is seeing surging demand across every modern conflict. What we've learned in recent operations Epic Fury and Operation Absolute Resolve in Venezuela is that sorting count, cost and risk to cruise matter more today than they ever have. We designed both platforms to support modular payloads truly multi-mission directly aligned with combatant command surveillance gaps. And we designed them from day 1 to reduce acquisition and operational cost to a threshold where they are considered [indiscernible] assets, meaning they can fly one-way missions when the mission requires it at an operational cost lower than similarly capable systems. Both ULTRA and LEAP are in operational use today with U.S. and allied partners around the world. Their capabilities complement Ondas' stratospheric assets, and SkyWeaver will make them even more capable by enabling mission autonomy. The second design franchise we are emphasizing here is Counter-UAS, centered on kinetic kill with IonStrike. In a 6-month period, our team went from concept to a demonstrated capability specifically designed to address the Shahed-136 threat. We're seeing significant demand because the drone threat is at an all-time high. What we learned in both Ukraine and Epic Fury is that the ability to engage targets like the Shahed-136 is an absolute requirement and an urgent one for the U.S. Department of War and Allied Nations. Beyond IonStrike, DZYNE brings the handheld Dronebuster and the Sawtooth system, both designed as disruptive soft kill solutions against a broad set of UAS threats. True to design's history of innovation, we're always advancing to address new threats. In the near term, we'll be releasing a long-range electronic attack solution and the LiDAR detection capability to augment the already significant counter-UAS portfolio we have in the market today. To round out the overview of DZYNE's portfolio, we want to highlight the Precision Strike and Autonomous Effects capabilities brings to the market. This portfolio includes our low-cost, fully autonomous, swarm-capable Group 1 UAS Blitz. Blitz delivers a 150-kilometer range and a true multi-mission capability. The system is modular by design, configurable in the field for a range of missions and built to be assembled by soldiers, operating in an expeditionary environment. In addition, we bring GRASSHOPPER an autonomous, expendable glider capable of delivering substantial payload into contested or denied environments. We're excited about the unique mission profiles this enables, including pairing Grasshopper with a stratospheric balloon for battlefield delivery, and we look forward to bringing these capabilities forward under Ondas. Ryan, back to you.

Thank you, Matt. I want to congratulate you and the design team on the success you've achieved and reiterate how excited we are to bring those capabilities into Ondas. One of the most important things Ondas does is create platforms for unique companies to build a business around. Over the years, significant investment has been put into specific technologies. What's necessary to scale those businesses is a structure that lets us continue to innovate and manufacture at a scale that meets customer demand. With that, we are pleased to announce the creation of Ondas Sentinel, a dedicated operating platform that reflects Ondas' mission to help customers see more, perceive faster and act with confidence, turning persistent and intelligent sensing into decisive advantage. I am honored and excited to partner with Matt to bring Ondas Sentinel to life unifying DZYNE and WorldView under one dedicated operating platform to accelerate momentum. Together, this combined organization includes 8 U.S. facilities, more than 330,000 square feet of manufacturing capacity, 500 employees and more than 140 engineers. As I opened, we've been on a mission to build a multi-domain ISR architecture. DZYNE clearly fills the gap that existed within that architecture and gives us a set of solutions that delivers a uniquely complete capability to customers globally. At the same time, the stratospheric layer is moving from an emerging capability to a required element in modern ISR planning, particularly as customers design integrated multi-domain operating concepts. To make all of this work together, we previously announced our partnership with Palantir. There are two elements investors should understand. First, the operations layer built on Warp Speed and Foundry. With Palantir, we can rapidly integrate supply chain, inventory management, manufacturing, engineering and financial reporting. So integration of our companies happens much sooner than would otherwise be possible. Second, the mission layer SkyWeaver, which provides adaptive, agentic AI and inferencing at the edge to deliver mission autonomy. SkyWeaver is what converts the portfolio from a collection of capable platforms into an integrated intelligent system. It fuses data from stratospheric, aerial and ground-based assets, reasons across those domains and delivers correlated decision-ready intelligence to the customer. For example, a [indiscernible] can provide wide area surveillance and task fixed wing UAVs like ULTRA and LEAP to track and target items of interest in a customer's area of responsibility without an operator engaging until an effect needs to be delivered. The result is faster decisions, more engagements and fewer assets required to execute the mission. We believe we are the only provider offering persistent ISR across all 3 layers, stratosphere, air and surface in one portfolio. We do. I'd like to double down on what Matt shared about ULTRA and LEAP. What we've learned in recent conflicts is that combat air patrols require a new generation of affordable and attritable multi-mission ISR and targeting solutions. Long Endurance ISR represents a multibillion-dollar annual Department of War spend. In Epic Fury alone, the U.S. and partners lost more than $1 billion of ISR drones, making the legacy approach economically unsustainable. What's needed is for combat air patrols to be augmented with attritable systems that can operate in contested environments without giving the adversary a meaningful economic advantage. If we lose an ULTRA in a contested environment, we can rapidly replace it without creating a disproportionate cost burden on the Department of War. ULTRA and LEAP deliver not just persistent ISR, but also targeting at dramatically lower cost. That enables the Department of War to put more aircraft in more locations, conducting more missions than would otherwise have been possible. Ondas already had a very impressive counter-UAS portfolio. When you put counter UAS on a spectrum, capabilities range from detection of a UAS threat all the way through engaging and eliminating it. With the addition of DZYNE, Sawtooth and IonStrike, we now have the full spectrum of counter-UAS technologies under one roof. Coupled with our AI-enabled software and the mobilization layer for deploying these systems in theater, we believe no other company can offer the full suite of counter-UAS technologies that Ondas can. I want to spend a moment specifically on IonStrike. The fundamental problem we face today is that the cost exchange ratio is broken. It costs the U.S. and allied forces 2x to 3x more to eliminate a threat than the threat itself cost to produce. IonStrike changes the math. It delivers a capability that is on cost parity with the threat, meaning the cost to intercept and eliminate is now equivalent rather than asymmetric in the adversary's favor. What DZYNE has built is the lowest cost, most capable effector in the market today, purpose-built to address Shahed-136 class threats with approximately 360 miles per hour closing speed and approximately 40 kilometers engagement envelope and 2x to 5x lower cost per kill than alternatives. It is now our responsibility to rapidly scale this capability and evolve it into a family of low-cost interceptors that addresses not just the Shahed-136 threat, but every Group 3+ threat category where the cost exchange ratio is broken. We are excited to bring this into the portfolio, excited to expand it from a single effector into a family of low-cost intercept solutions and excited about the substantial addressable market this opens for Ondas. With that, I'll turn it back over to Eric.

Thank you, Ryan. Now let's talk about what this means to Ondas from a financial standpoint. This acquisition isn't simply adding another revenue stream. It fundamentally changes the scale and earnings profile of Ondas. DZYNE is expected to generate approximately $190 million of revenue during 2026 and more than $300 million in 2027, providing a significant impact to Onda's growth while providing meaningful operating margin leverage to the consolidated financial model. Looking beyond this year, we expect DZYNE to deliver more than 80% compounded annual revenue growth from 2025 through 2028, making it one of the fastest-growing businesses in our industry. There is significant visibility in these revenue targets provided by the robust $111 million in backlog and an active and growing pipeline currently measured at north of $1.5 billion. We believe this substantial growth will be driven primarily by 2 major product franchises. First is ULTRA. ULTRA is emerging as one of the most compelling long-endurance ISR platforms in the market. It offers customers persistent intelligence at dramatically lower acquisition and operating costs than legacy systems, and we believe it is exceptionally well positioned as a complement to the MQ9 reaper, which has a massive installed base and future combat air patrol architectures. The second hero system for design is the IonStrike, a next-generation interceptor. We continue to believe IonStrike represents one of the most important new counter drone products entering the market. Modern warfare has made clear that defending against mass drone attacks requires autonomous interceptors capable of defeating threats at cost parity. IonStrike was purpose-built to solve exactly that problem. Beyond these flagship programs, DZYNE's broader counter-UAS portfolio provides recurring and highly visible revenue opportunities across handheld systems, including the Dronebuster, which is the only U.S.-made GNSS spoofing system, vehicle-mounted systems, fixed site protection and open mission software. Importantly, this growth is supported by a substantial backlog and the $1.5 billion customer pipeline, which provides us excellent visibility into what we believe will be a multiyear expansion cycle. Operationally, we have clear milestones ahead. ULTRA deployments continue to expand. Co-Co ISR service offerings begin contributing meaningful recurring revenue. IronStrike production scales significantly as customer demand accelerates, manufacturing capacity expands. And finally, we will implement Palantir, Warp Speed and Foundry across the organization to improve production planning, supply chain management and operational efficiency as we scale. Taken together, these milestones position the combined company for a very meaningful period of growth and a more robust outlook for long-term profitability. Of course, the acquisition of DZYNE also changes the outlook for Ondas. Based on our current operating plans, we are raising our 2026 revenue target to more than $525 million versus the $390 million target we announced in May. This includes contributions from both DZYNE and Omnisys, the acquisition of which closed in May. I am very happy with the revenue and financial performance at Ondas. Our Core Plus strategic growth model is being executed by our operating teams extremely well, and those teams are getting stronger. As we've said repeatedly, our strategy has never been to assemble technologies for the sake of acquisition. Our objective has been to build a larger autonomous systems company operating across operational domains and capable of winning larger programs, serving larger customers and competing against much larger defense contractors. Scale matters. Scale enables investment and scale improves manufacturing efficiency. Scale strengthens customer confidence and scale creates better financial outcomes. Importantly, our backlog continues to expand and support the strong growth curve we are targeting. We entered the second quarter with approximately $457 million in pro forma backlog. During the quarter, we announced more than $150 million of additional orders. DZYNE will add an additional $111 million in backlog, and our recent acquisitions continue to strengthen long-term revenue visibility with high-growth technology platforms. We also expect our backlog to expand by $95 million upon closing the Cyberhawk acquisition, which we expect in Q3. Just as important, we continue to focus on expanding across 5 dimensions simultaneously. We're focused on capturing more and larger programs and serving more customers. We will continue to expand our strategic partner ecosystem and increasing our operational scale. And we're going to continue to drive post-merger integrations to leverage the substantial global footprint we have built across Ondas. To that point, our strategic acquisition program has been very successful and has clearly advanced our operational and financial models. I am particularly pleased to now have the strong U.S. footprint in place, which is essential to our success. We are well positioned to win with our customers. I expect us to moderate the acquisition pace in the second half and focus on driving growth and operating leverage across the company. We will provide more context on this during our Q2 conference call in August. To wrap the outlook, we believe Ondas has become one of the very few scaled independent autonomous defense companies in the industry. This is an incredibly valuable position, and we will continue to leverage that for the benefits of our customers, partners, employees and of course, especially on behalf of our investors. I'll close today's presentation where we began. This transaction is about much more than acquiring another company. It represents another major step toward building what we believe will become one of the defining autonomous defense companies in the marketplace. Together, Ondas now possesses leadership positions across 4 of the fastest-growing mission areas in defense, persistent ISR, aerial security and counter UAS, autonomous effects and precision strike and unmanned ground vehicles. Across those mission areas, we now deliver an integrated architecture capable of helping our customers detect, understand and defeat threats across multiple operational domains. We combine persistent sensing with intelligent software. We combine autonomous aircraft with autonomous effects. We combine electronic warfare with kinetic defeat, and we increasingly combine all of those capabilities into software-defined mission systems enabled by AI. We believe that architecture closely reflects where military doctrine is heading. Looking forward, our priorities are straightforward: execute, integrate DZYNE successfully, continue delivering for our customers, scale manufacturing, expand recurring revenue and continue investing in technologies that strengthen our competitive advantage. We believe the autonomous defense industry is entering one of the most significant growth cycles in decades. Ondas intends to be one of the companies that defines that future. I'd like to thank everyone who made this transaction possible, especially the outstanding teams at DZYNE and Ondas, whose dedication made today's announcement a reality. With that, we'd be happy to open the call for questions.

[Operator Instructions] The first question comes from [ Sidney Friedberg ] with Breaking Defense.

It sounds like you've been on a bit of an acquisition spree that's now wrapping up, if I understand correctly. And you talk about not just acquiring more stuff, but actually putting it together in a coherent integrated architecture. So let me ask, A, am I understanding correctly that this is sort of the time you're winding down the merger and acquisition? And B, how technically you're able to make everything work together and exchange data passing seamlessly from one company's product to another to, for example, a Palantir, your partner that's in widespread use across the Co-Co?

Okay. Sidney, thank you for your question. So firstly, we are in the early stages of a massive adoption cycle around unmanned and autonomous systems. And we -- our thesis is that the market needs platforms, operating platforms to deliver battle-proven and mission-ready technologies. And those platforms need to be well capitalized. And the operating leverage I talked about, of course, is across the supply chain, it's the field services and support and sustainment and it is across the integration of the technologies, as you've described. So there's still quite a bit to do. The point we're making around the moderation of our MA plan is specifically towards demonstrating that these systems can be integrated in the field and are being integrated with customers and that we are supporting them with a very robust operating platform, specifically around supply chain, production and field support. Ryan, I'll ask you to expand a bit more on what we're doing on the software to integrate the systems and make them even more valuable in terms of solutions for customers.

Yes. Thanks, Eric. And Sidney, thank you for your question. As you mentioned, Palantir is in wide use within the Department of War. I think what we learned in Epic Fury and other conflicts around the world that most wars are run on Palantir Maven. Our approach is to design a new solution that we call SkyWeaver. And what SkyWeaver is designed to do is create mission autonomy. What that means is creating platform autonomy and the command and control architecture that connects platforms so that we can be doing collections and tasking of those platforms through a software-defined architecture. Ultimately, what that means is the ability to detect something and then task another platform in the Ondas portfolio to either refine that surveillance of that target or ultimately deliver an effect. And that's where mission autonomy becomes key to the Ondas overall strategy. SkyWeaver will be very different than any other AI-enabled agentic AI-enabled autonomy solution that exists today. And we're hard at work in bringing SkyWeaver to life. And with DZYNE, we're going to accelerate that work. We've got demonstrations that are upcoming, and then we're going to be doing an Ondas-wide rollout of SkyWeaver before the end of the year.

Understood. And will that work with partner companies and with other people's products? Because the Defense Department is very big on avoiding vendor lock, avoiding proprietary systems that talk within a company's products portfolio, but don't talk with other companies. Big problems those have been in the past. Are you going to try to avoid that?

Yes, that's a great point, Sidney. And the intent with SkyWeaver is for it to not be a proprietary solution within Ondas, but rather be a solution that can both ingest data from other platforms and provide tasking to other platforms. The last thing we want to do is to create a proprietary closed architecture that doesn't enable the Department of Water to leverage all of the assets within their portfolio.

The next question comes from Austin Bohlig with Needham.

So first, guys, I just wanted to dive into this $1.5 billion pipeline related to DZYNE. Could you maybe just like walk through, one, is this more just like U.S. driven? Or is this including like international opportunity? And then second, like when you guys have a sense of like how quickly this pipeline could be converted into backlog/revenues? Is this a year, 2-year type of horizon?

Thank you, Austin. And clearly, we're seeing an adoption curve beginning with both ULTRA and IonStrike and that pipeline also reflects the other platforms we discussed during the presentation. Ryan, I'll ask you and/or Matt to expand on the pipeline and what the cadence is in terms of capture.

Yes, Austin, thanks for the question. So the pipeline that exists today is certainly largely driven by U.S. Department of War. And as Eric mentioned, we expect significant growth in IonStrike and ULTRA. And to answer your question specifically on time to convert, we expect to see a significant growth in the backlog for both IonStrike and ULTRA through the remainder of this year that fuels the greater than $300 million in revenue that we expect in 2027. Beyond IonStrike and ULTRA, we do see demand across the entire DZYNE portfolio and bringing that in with the WorldView pipeline and backlog, we expect to see not just growth in the U.S. but globally. Allied Nations, they see the same problem that we see within the Department of War. Attritable mass, affordable mass and the ability to deliver multi-domain ISR is an absolute requirement, and so although it's largely anchored in U.S. Department of War, we see growth in the Indo-Pacific market, the European market, especially on the Eastern flank, and then we expect to see additional growth in the Middle East.

Awesome. And then maybe like one follow-up here. If I remember correctly, I think on your guys' Q1 earnings call, you guys talked about getting to the OAS business profitability in Q1 of next year. With obviously, Cyberhawk being adjusted EBITDA positive, this acquisition, obviously adjusted EBITDA positive. How should we be thinking about time line? Could that be pulled in Q4 of this year? Or should we still be kind of expecting kind of Q1 of '27 as when we hit that adjusted EBITDA milestone?

Yes. So clearly, this does improve our financial profile and is going to provide quite a bit of operating leverage to the financial model. I think I'll defer being more specific until our Q2 call, which we'll have in the first half of August, where we will lay out our objectives around the path to profitability of OAS and of course, for the whole company.

The next question comes from Timothy Horan with Oppenheimer.

Eric, congratulations and best of luck for all of you. I got about a dozen questions, and I'm not even really sure where to start. But just maybe at a really, really high level, can you talk about your autonomous or your AI capabilities? How much are you developing in-house, and how much are you relying on like Palantir? And just out of curiosity, the Palantir relationship, is that like an equity joint venture? Are you just paying them for services? Or how is that structured?

Very good. So we'll talk about SkyWeaver and [ Lattos ] first, but then SkyWaver, and I'll defer to -- I'll ask Ryan to dig in a bit more on SkyWeaver and Palantir and the development process. So you think about our command and control capabilities at both the platform level and the integrated systems level at Ondas vis-a-vis the Mission Autonomy where autonomous platforms of Ondas and third-party vendors are integrated in the field around mission autonomy again. As it relates to platform autonomy, all of our autonomous systems have a command and control capability. We describe that as Lados, L-A-D-O-S. And so for example, there, we'll deploy an Optimus or deploy Iron Drone or we'll deploy Sentrycs, and those systems can be remotely operated and control with this software architecture infrastructure. Then as we're bringing, say, Iron Drone and Sentrycs on to, say, a ground vehicle from Roboteam, we begin to drive scale and those systems can work in tandem, again, with this LADOS command and control software. And then, of course, Palantir, the work we're doing with Palantir on top of that with SkyWeaver just expands that more broadly. And Ryan, do you want to describe the development work there?

Yes, happy to, Timothy, thanks for the question. So SkyWeaver is a joint development program between Ondas and Palantir. The way to think about it is we have all of the command and control architecture on the Ondas side, and we're focusing on evolving that command and control architecture to enable both platform autonomy and mission autonomy. And what Palantir brings to the table is the ability to connect this to Palantir ontologies and to their agentic-AI capabilities to better deploy platform autonomy to create mission autonomy. On the Ondas side, we're responsible for both the hardware development and the command and control architecture, whereas Palantir is bringing the ontology and the connections to Warp Speed Foundry and ultimately, the ability to integrate with MAVIN. As I mentioned earlier, we're in the process of pulling the hardware and software together to start demonstrations here in the coming months. And then later in the year, we'll start rolling out SkyWeaver across the Ondas portfolio. SkyWeaver is more than just software. It includes hardware. So think of it as an agentic-AI appliance to be deployed and integrated on Ondas platforms that runs both the platform autonomy and the mission autonomy for our overall strategy of connecting all of our systems to Department of War and Allied Nations command and control architectures and ultimately bringing to life what I mentioned, mission autonomy.

Yes, I want to talk about Palantir, but also I want to ask a question or have Ryan address what I think you're going to ask next, Tim, around the revenue model. which is specific to SkyWeaver, but of course, it's integrated with the platforms we're delivering at scale. So -- but coming back to Palantir, this -- the relationship we have with them is substantial, and it's really across three dimensions. So we have access to that full suite of Palantir's what they call AIP, the artificial intelligence platform, and that ranges from the Warped speed-type applications, the other software development work we're doing on top of Foundry. And in that work, Palantir is sending us 4 deployed engineers because there's a really deep dive and substantial collaboration with both our engineering teams and the experts at Palantir. So again, we have, firstly, full access to the entire suite of Palantir's AIP. Palantir is also supporting with Ondas in many instances, the revenue capture, program capture, so engaging customers, which, of course, is really important. And then there's a strategic road map. And Palantir is very bullish and the reason -- we first met WorldView and Ryan via Palantir because Palantir shared our view that we need to build to bring scale to these across domains to these subscale companies. We're doing incredible work in developing the unmanned systems, developing the autonomy. But when you're going to deliver these technology platforms at scale, you need this integration, you need a scaled operating platform and a financial platform as well. And of course, Ondas is building that. So that's the Palantir across technologies, across revenue and business capture and strategic road map where we're mapping the acquisition programs to fill domains and integrate solutions. Ryan, talk a bit about, if you would, on the revenue models and business models that we're engaging with SkyWeaver.