Disclosure: the writer holds shares of Ondas (ONDS) as of the date of publication, and those holdings may change at any time without notice. Nothing here is a recommendation to take any action in the security. See the full disclosure and disclaimer at the foot of the page.
Ondas published its second quarter results on 13 August 2026.
What the Company Does
Ondas develops and sells autonomous systems: drones, ground robotics, counter-drone defence systems and intelligence and surveillance platforms. The activity is concentrated in Ondas Autonomous Systems, of which the Israeli company Airobotics is a part, alongside Sentrycs and Iron Drone in counter-drone defence. During 2026 the company acquired a series of businesses - World View, Mistral, Omnisys, DZYNE and Cyberhawk - and established Ondas Sentinel, a US-focused defence arm. Ondas Networks, which supplied private wireless networks to industry, was deconsolidated on 16 January 2026 and is no longer included in the results.
The Quarter
| The quarter | A year ago | |
|---|---|---|
| Revenue | $83.8 million | $6.3 million |
| Gross profit | $36.1 million | $3.3 million |
| Gross margin | 43.1% | 53.1% |
| Operating expenses | $199.1 million | $12.6 million |
| Operating loss | $162.9 million | $9.3 million |
| Other income, net | $44.2 million | expense of $1.5 million |
| Tax benefit | $29.1 million | none |
| Net loss | $89.7 million | $10.8 million |
| Loss attributable to shareholders | $88.6 million | $12.0 million |
| Loss per share, basic | $0.18 | $0.08 |
| Loss per share, diluted | $0.19 | $0.08 |
| Weighted average shares, basic | 500.7 million | 150.7 million |
| Adjusted EBITDA | loss of $50.6 million | loss of $5.8 million |
| Adjusted cash operating expenses | $93.2 million | $9.4 million |
The Quarter Up Close
Where the Loss per Share Came From
The loss per share widened from $0.08 to $0.18, and that is the line drawing the attention. Almost all of the explanation sits in one place: operating expenses.
Operating expenses reached $199.1 million, against $67.3 million in the first quarter and $12.6 million a year ago. The company itself strips $105.8 million out of that figure, and so arrives at the measure it presents as its cash expense:
| Operating expenses, $ millions | The quarter |
|---|---|
| Total operating expenses | 199.1 |
| Less stock-based compensation | 67.7 |
| Less change in fair value of contingent consideration | 19.2 |
| Less amortization of intangible assets | 14.0 |
| Less acquisition-related expenses | 4.4 |
| Less depreciation | 0.6 |
| Adjusted cash operating expenses | 93.2 |
The largest item is $67.7 million of stock-based compensation - 81% of the quarter's entire revenue. The company attributes the unusual level to the vesting of equity awards granted to key executives. Note that one of the five items, the $4.4 million of acquisition-related expenses, is a cash cost in every sense; the company strips it out because it is one-off, not because it is non-cash.
And what cushioned the loss: the operating loss stood at $162.9 million, but two lines below it cut that almost in half. Other income, net of $44.2 million, which includes about $29 million of interest and investment income on a $1.4 billion cash balance along with non-cash fair-value gains on warrants, and a tax benefit of $29.1 million. The pre-tax loss was $118.7 million and the net loss $89.7 million.
And the denominator grew too: the weighted average share count for the quarter was 500.7 million, against 150.7 million a year earlier - 3.3 times as many. The loss attributable to shareholders grew 7.4-fold, so the loss per share grew only 2.25-fold. Anyone looking at the loss per share alone is seeing a small part of the movement underneath it.
And one point that deserves attention: the diluted loss per share, $0.19, is larger than the basic loss per share, $0.18. That is the opposite of the expected direction, since a larger share count should spread a given loss over more shares and reduce it. The release does not explain the gap, and the 10-Q had not been filed at the time of writing. Both figures are recorded as reported, without a cause being asserted.
The Moves of the Quarter
The quarter's expenses cannot be read apart from what they bought. This is the list of moves as the company reports them.
Acquisitions closed since 31 March: World View, a stratospheric balloon platform for persistent intelligence and communications; Mistral, a prime contractor and systems integrator to the US Department of War; Omnisys, AI-powered battle management and optimisation software; DZYNE, which closed on 2 July, in long-range intelligence, counter-drone defence and precision strike; and Cyberhawk, which closed on 10 August, in autonomous infrastructure inspection.
Reorganisation: Ondas Sentinel was established, a US-focused defence platform uniting the autonomous systems, counter-drone and intelligence technologies under one body. It is led by Ryan Hartman, CEO of World View, with Matt McCue, founder and CEO of DZYNE, as Chief Technology Officer. And in August, David Barnea was appointed President and Chairman of Ondas Defense.
Infrastructure: six US facilities totalling 230,000 square feet, which the company describes as underutilised; 560 US employees added, including 155 engineers; and planned expansion of a further 50,000 square feet. Palantir Foundry is deployed at 4 of the company's 5 US sites, across 8 enterprise workstreams and 24 operational use cases.
Partnerships: a joint venture named ONBERG with Heidelberg in Germany, establishing a European hub for the development and industrial-scale manufacture of autonomous air defence systems, initially targeting Germany and Ukraine. And a collaboration with Lockheed Martin to integrate Ondas' Cyber-over-RF capabilities into the Sanctum platform.
And the large orders: the $982 million IDIQ award with the US Army for loitering munitions, under which more than $240 million of orders have already been captured, including $52.9 million in July. NASA raised the ceiling on its IDIQ for Stratollite-based intelligence solutions from $45 million to $395 million. An $18.8 million ULTRA order in July, a $9 million order to integrate IonStrike with a fire control system, and a $4.8 million contract with US Navy SOUTHCOM for stratospheric balloon services.
And on the civil side: Sentrycs provided counter-drone protection at a majority of the stadiums hosting the 2026 FIFA World Cup in North America, and in August was selected to supply a system for Jacksonville Jaguars games - according to the company, the first NFL franchise to move beyond detection to controlled mitigation of drones.
Three Times the Target Was Pulled Forward
Ondas' profitability targets have moved forward in each of the last two reports. This is the sequence, in the wording of the releases themselves:
| When it was said | Adjusted EBITDA profitability, OAS or operating platform level | Company-wide |
|---|---|---|
| Until May 2026 | Q3 2027 | not stated |
| First quarter report, 14 May 2026 | Q1 2027 | Q1 2028 |
| Second quarter report, 13 August 2026 | Q4 2026 | Q4 2027 |
Two qualifications worth recording. First, the scope of the definition changed: the first quarter spoke about OAS, and the second quarter speaks of the "operating platform level", which also includes Ondas Sentinel - so these are not exactly the same boundaries. Second, the target is adjusted EBITDA and not net profit. The company has given no date for net profit, and the gap between the two in this quarter was $39.1 million.
The guidance is the other side of the report. The 2026 revenue target was raised to $525-550 million, and third quarter guidance is $140-155 million - 76% growth over the second quarter at the midpoint.
The backlog supports it: $613 million as of 30 June, and $757 million pro forma including DZYNE and Cyberhawk, against just $68 million at the end of 2025. About $175 million of orders were captured during the quarter, and a further $105 million was added between the start of the third quarter and 10 August.
And the company pulled its profitability targets forward: adjusted EBITDA profitability at the operating platform level, which includes OAS and Ondas Sentinel, in the fourth quarter of 2026; and company-wide in the fourth quarter of 2027.
The gross margin has fallen for three consecutive quarters: 53.1% a year ago, 49.2% in the first quarter and 43.1% in the second. The company explains that gross profit was reduced by the amortization of capitalised intellectual property, and presents an adjusted gross margin of 50.4%. That adjusted measure fell too, from 51.5% in the first quarter.
And the cash expense is larger than the gross profit: adjusted cash operating expenses stood at $93.2 million, against adjusted gross profit of $42.3 million. That gap is what produces an adjusted EBITDA loss of $50.6 million, itself 4.6 times the first quarter's.
And the cash is starting to move: of the $1.4 billion balance, about $325 million has already been used during the third quarter to close the DZYNE and Cyberhawk acquisitions.
Eric Brock, Chairman and CEO of Ondas, in the company's release:
We expect to sustain this momentum and deliver another significant revenue ramp during the second half of 2026.
Guidance
The 2026 revenue target was raised to $525-550 million, more than a 10-fold increase on 2025 results. On a pro forma organic basis, the midpoint of the range represents, according to the company, growth of more than 30% year over year.
Third quarter guidance: $140-155 million - 76% growth over the second quarter at the midpoint.
The company notes that the second-half increase will also be driven by orders and programs already in the backlog: the start of volume shipments under the $982 million IDIQ award with the US Army for loitering munitions, under which more than $240 million of orders have already been captured; deliveries of the ULTRA and IonStrike platforms; and the start of fourth quarter deliveries for the $140 million combat engineering vehicles program.
The company also says it expects to execute further acquisitions in 2026.
This piece was written while Wall Street was still open, so it carries no price and no share price reaction to the report. That is a choice rather than an omission: a share price reaction to a report is the closing price of the trading day, and an intraday price says nothing about it.
הזווית שלי
דעה אישית של אילן אברמוב - לא ייעוץ ולא המלצה
Ondas is a system of systems, and that is how this report should be read too. I wrote that in the deep dive in July, and it has not changed: the company acquires businesses on the understanding that each is a piece of a puzzle, and the aim is for the whole to be greater than the sum of its parts. A quarter in which World View, Mistral, Omnisys and DZYNE all closed, the Sentinel division was established and David Barnea was appointed President of Ondas Defense is a quarter of assembling a puzzle. An income statement does not know how to describe that, nor is it meant to.
And what I want to draw attention to is the timetable. My thesis, and the company's own estimates through the year, spoke of adjusted EBITDA profitability at a far later stage: the OAS target was originally the third quarter of 2027, and in the first quarter report it was pulled forward to the first quarter of 2027, with company-wide profitability stated as the first quarter of 2028. Today the target at the operating platform level is the fourth quarter of 2026, and company-wide the fourth quarter of 2027. That is a third pull-forward across two reports. All of it was part of the plan from the outset - but they keep breaking their own forecasts, one after another, and that no longer looks like coincidence.
And as for the stock: this volatility is familiar, expected and well known. Anyone following the trading today saw the stock rise nicely ahead of the release, fall the moment the report landed, and turn higher again afterwards. This is not a story of a day or two, and it will not end next quarter. The headline shows a widening loss; the line beneath it shows stock-based compensation at 81% of revenue; and the market needs a few hours to decide which of the two it cares about. An investor in a company like this needs to understand what business they hold - a company building infrastructure before the revenue arrives, paying part of the price in dilution, and whose accounting figures will be unpleasant for several more quarters. Anyone for whom that does not fit is better off knowing it in advance, and not on a reporting day.
Even so, stock-based compensation is not a line you can erase. True, it does not go out in cash - but it goes out in ownership. The weighted average share count rose from 150.7 million to 500.7 million within a year. Anyone who held one percent of the company a year ago holds about a third of that today, even without selling a single share. $67.7 million of compensation in a single quarter, on revenue of $83.8 million, is a proportion I track rather than write off as accounting noise.
And what I am watching from here. The third quarter is the first test of conversion, and its guidance, $140-155 million, is not the problem. The problem is the fourth quarter: to close the full-year target it needs to deliver $236-276 million, after the third is already required to jump 76%. Two consecutive jumps of that size are a demanding requirement, even for a company that has met every one of them so far. The backlog supports it - $68 million at the end of 2025, $457 million pro forma at the end of the first quarter and $757 million today - but a backlog is an order, and revenue is a delivery. The third quarter is the one that will tell us what the conversion rate really is.
(An important note: this is my personal opinion only, I am in a position at the time of writing, I may be wrong and there is risk.)
Errors or inaccuracies are possible. Spotted something that looks wrong? Write to me and I will correct it.
