Ondas (ONDS) Q3 2026 earnings review
Drone maker Ondas doubled its revenue, but its losses widened
Ondas, a maker of military drones and anti-drone systems, sold twice as much as last quarter while its losses deepened. Sales from businesses it owns today rose 64% from a year ago. But gross margin dropped to 22%, because new production lines ran inefficiently. Chief executive Eric Brock still lifted the yearly target and set a $1.1 billion goal for next year.
| Growth if today's businesses were owned a year ago | +64% plan: more than 30% |
|---|---|
| Revenue | $167.5M plan: $140–155M |
| Loss before interest, tax and depreciation, excluding one-offs | −$59.7M −$46.2M last quarter |
| Full-year revenue outlook | Raised to at least $550M earlier: $525–550M |
⚖️ Verdict: 🟢 Bullish
The story got better, because next year's goal rests on fast growth from businesses Ondas already owns. The company also pulled forward its date for a company-wide profit excluding one-offs. One caution: that loss widened after Brock said it would narrow, and Ondas redefined the measure again.
The question now is whether the margin drop reflects a temporary production ramp or the products Ondas now sells. If the ramp, margins recover and the profit dates hold; if the mix, higher sales add little profit. Gross margin early next year will tell, since Ondas expects a similar fourth quarter.
🐂 Bull Case
Ondas Targets $1.1 Billion of 2027 Sales
Ondas builds military drones, anti-drone systems and robotic ground vehicles, and it has grown mostly through purchases. Because deals distort any comparison with last year, the company also reports growth as if it had owned today's businesses a year ago. On that basis, sales rose 64%, against a plan of more than 30%.
Revenue reached $167.5 million, about 14% above the middle of the August range, by our math. Chief executive Eric Brock lifted the full-year target to at least $550 million. He also set a first goal of $1.1 billion for next year, "excluding additional acquisitions", with more than 40% growth from businesses Ondas already owns.
But a beat against the plan mainly shows that the plan was cautious. Ondas has topped both quarterly sales ranges it has given, by 21% on average by our math. The new full-year floor sits only $12.5 million above the old middle of the range, so the fourth-quarter goal did not move.
What to watch: fourth-quarter revenue, reported early next year, against the goal of more than $250 million. It will show whether deliveries on the Army's unmanned strike contract began on schedule.
New Orders Again Exceeded Revenue
Backlog is the value of orders Ondas has signed but not yet delivered. In the third quarter, the drone maker took $214 million of new orders, more than it shipped. Ondas Sentinel, its new US defense unit, booked $100 million of that, including $21.7 million for IonStrike, a product of DZYNE.
Growth in the order book slowed, though. The company says backlog rose 36% to $835 million. That comparison uses a figure that left out DZYNE and Cyberhawk, two businesses Ondas bought in July and August. Against a like-for-like base, the increase was about 10%, by our math.
What to watch: fourth-quarter backlog, which Ondas expects to grow on "strong order visibility". An increase there, while revenue climbs toward its quarterly goal, would show orders still outpacing shipments.
Positives this quarter didn't test
Two strengths in the Ondas case got no new figures in the third-quarter release, so they stand where they stood after the second quarter. The quarterly filing and the call may fill the gaps.
- Software that lets drones, sensors and ground robots work as one system: Brock said Ondas now combines "autonomous systems, mission software, AI, and critical components", but the release gives no software revenue; a first such figure would move this.
- Growth by business: last quarter Ondas gave rates for units such as Sentrycs, its anti-drone business; this release gives only the company-wide rate, and a split would show how widely the growth spreads.
🐻 Bear Case
Gross Margin Halved and the Loss Measure Changed
"The next phase is about disciplined execution: delivering on customer commitments, integrating our capabilities, and converting demand to sustainable growth and improving profitability," Brock said. Yet gross margin, the share of revenue left after the cost of making products, fell to 21.8% from 43.1% in the second quarter.
The cost of goods sold climbed to 78% of revenue from 57%. Ondas blamed amortization of acquired technology and a markup on inventory that came with acquisitions. It also cited "inefficiencies in the early stages of ramping large programs", mostly in precision strike, its attack-drone unit.
Last quarter Brock said the loss excluding one-offs would start to narrow in the third quarter. Instead it widened to $59.7 million, even after a new definition removed $17.1 million of costs.
The release says the change "did not affect previously reported non-GAAP measures". Yet Ondas now shows a second-quarter loss of $46.2 million, against $50.6 million reported in August. So the measure behind its profit goals leaves out more costs each quarter, while the loss on any basis grew.
What to watch: gross margin early next year, after a fourth quarter Ondas expects to match this one. A return toward 43% would show the drop came from the production ramp, not from the product mix.
Shares Outstanding Rose 55% Since December
Ondas pays for much of its expansion with new shares, which cuts each owner's portion of future profit. It had 590 million shares at the end of September, against 381 million in December. Stock-based pay, a non-cash cost, equalled 36% of revenue.
Ondas has also promised 45 million shares to DZYNE's sellers in January. Warrants, rights that let investors buy shares at a set price, sit on the balance sheet as a $918.6 million liability. A $125.1 million drop in their value counted as a gain, and that gain shrank the net loss.
What to watch: the share count at the end of the first quarter of next year, once the DZYNE shares arrive. Each further deal paid in stock would add to it.
Cash Fell $573 Million as Ondas Kept Buying
Ondas has grown by buying companies, and it closed six more deals this quarter, including DZYNE, its largest so far. The company says the purchases widen what it can sell to the US military. It also plans to buy Stemme, maker of the ULTRA S12 airframe, to "strengthen Ondas' production capacity and supply chain".
Cash, restricted cash and short-term investments fell to $820.3 million from $1.39 billion at the end of June. Ondas also owes sellers $268.2 million in fixed and conditional payments. Deal costs came to $14.1 million, and the release ties part of higher research spending to "intensified integration efforts".
What to watch: year-end cash against fourth-quarter revenue. Another drop of this size before Ondas reaches its profit goals would mean it needs to raise more money from shareholders.
Risks this quarter didn't answer
Five standing risks got no new figures in the release. The quarterly filing and the call should answer most of them before the year ends.
- Fourth-quarter load: the plan still needs a steep step-up in revenue, resting on deliveries that start in the fourth quarter; the fourth-quarter report settles it.
- One large customer: a single buyer took 40% of revenue last quarter; the filing's customer table will show whether that share fell.
- Israel: much of Ondas' production sits in a conflict region, and the release gives no update.
- Acquired units losing money: World View and Bird lost money after their purchase; the release gives no results by unit.
- Backlog timing: Ondas gives no schedule for turning backlog into revenue, and no win rate for its pipeline.
👓 Other Themes
Ondas Created Sentinel and Regna AI Units
Ondas grouped DZYNE and World View into Ondas Sentinel, a US defense unit meant "to accelerate the development, production and deployment of advanced defense technologies". It also formed Regna AI to build "mission-critical sovereign AI applications", meaning AI that governments run under their own control. Regna "will leverage NVIDIA's Nemotron open-weight AI models and Palantir's integration and deployment platforms". The release gives revenue for neither unit.
Currency Moves Cut Equity by $14.6 Million
Most of Ondas' backlog sat outside the US at the end of June, so exchange rates now affect its accounts. Converting foreign units' results into dollars cost $14.6 million this quarter. Ondas booked that loss in equity rather than in the income statement, so it did not change the reported net loss. The release names no currency.
💲 Other KPIs
Inventory more than doubled from June, keeping pace with revenue. It equalled 66% of quarterly sales, after 62% in the second quarter. At the end of 2025 the ratio stood at 73%. Part of the jump came with acquired businesses, and the stock ties up cash while Ondas still loses money.
Receivables, money customers owe for goods already delivered, stood at 76% of quarterly sales. That sits below the 90% of the first quarter, so collections have kept up with faster sales. The balance has climbed with revenue and with the businesses Ondas bought.
Deferred revenue, cash customers paid before delivery, grew 41% from June, less than half the pace of sales. It has climbed every quarter this year, from $8.0 million in December. Because it lags sales, advance payments now fund a smaller share of the drone maker's production.
Research spending doubled from the second quarter, in step with revenue, so it held at about 37% of sales. The release ties the rise to faster product development and integration work across acquired firms. At this level, research alone costs more than the quarter's entire gross profit.
🔮 Guidance
Raised. The plan now calls for sales more than ten times those of 2025. By our math, the first nine months leave about $249 million for the fourth quarter, just under the separate quarterly goal. Fifth increase in five quarters: +$265M, +$15M, +$147.5M, then +$12.5M against the old middle of the range.
Unchanged. The forecast asks for about 49% more revenue than in the third quarter. That is more than eight times the year-ago quarter. Ondas expects volume deliveries on the Army's unmanned strike contract and its combat engineering vehicle programme to carry the step-up. Brock last quarter tied the same level to a $1 billion yearly sales pace.
New. Ondas expects sales from today's businesses to rise at least 75% from a year earlier, after 64% in the third quarter. By our math, that caps the comparable year-ago base at about $143 million. The company calls the expected growth "broad-based across Ondas' product portfolio".
New. The goal doubles the 2026 floor without further deals and assumes more than 40% growth from today's businesses. By our math, those businesses would then have earned about $786 million this year under full ownership. That rate sits well below the 75% Ondas expects for the fourth quarter.
New. Ondas expects backlog to rise again in the fourth quarter. With quarterly revenue planned above $250 million, new orders must at least match that, by our math. That would top every quarter of orders the company has reported.
New. The company expects "similar gross margin levels in Q4 2026 due to mix", then a return to historical levels. Over the three quarters before this one, reported gross margin ran between 42% and 49%. The plan gives no date for the recovery.
Pushed back. Brock had said the loss excluding one-offs would start to narrow in the third quarter, but it widened. The release now promises "significant declines" in losses over the coming quarters. It calls this year's spending "a front-loading of expenses ahead of the continued significant revenue ramp into 2027".
Unchanged. Ondas still expects its operating businesses, Ondas Autonomous Systems and Ondas Sentinel, to earn a profit excluding one-offs in the fourth quarter. The goal leaves out head-office and deal costs. The release gives no third-quarter figure for this level, so readers cannot yet measure the gap.
Pulled forward. Ondas moved the date "one quarter earlier than its prior expectations", citing revenue and gross profit growth against slower expense growth. The date has moved earlier in each of the last two quarters. The goal rests on a measure Ondas redefined again this quarter.
Unchanged. Ondas still plans volume deliveries this quarter on the $140 million combat engineering vehicle programme, run by Indo Earth, its earth-moving equipment unit. The fourth-quarter revenue goal leans on this start.
Unchanged. Ondas expects continued volume shipments by Mistral, its US unit, under the Army's $982 million Lethal Unmanned Strike contract. That contract is a multi-year framework that sets a ceiling on orders. The release gives no shipment figure for the third quarter.
❓ Key Questions
Why did last quarter's loss figure change?
The release says the new exclusions did not touch past figures, yet the second-quarter loss excluding one-offs moved from $50.6 million to $46.2 million. Readers need one consistent series to judge the profit dates.
Which products pulled gross margin down, and how far?
Ondas named precision strike but gave no margin by unit. A split would show whether the low margin expected for the fourth quarter comes from a few ramping programmes or from the product mix itself.
How much backlog becomes revenue within twelve months?
Ondas gives no conversion schedule for its backlog. The share due within a year, and how much of the fourth quarter rests on the Army strike contract, would show how secure the revenue goal is.
Does one customer still provide 40% of revenue?
Last quarter a single buyer took 40% of revenue and 43% of receivables. The release names neither the customer nor its programme; the filing will show whether acquisitions have diluted that share.
What did DZYNE and Cyberhawk add to revenue?
Both joined during the quarter. Their revenue, and the DZYNE figures the quarterly filing must report, would separate bought growth from the rate Ondas gives for the businesses it owns today.