Ondas (NASDAQ:ONDS) raised its 2026 revenue target and projected at least $1.1 billion in sales next year after reporting record third-quarter revenue, as the defense technology company prepares to expand production of its surveillance aircraft and drone interceptors.
Third-quarter revenue reached $167.5 million, more than 16 times the year-earlier level and roughly double the second quarter, management said. Acquisitions contributed to the increase, while revenue grew approximately 64% on a pro forma organic basis, assuming the current portfolio had been owned in both periods.
Ondas now targets at least $550 million in revenue for 2026, including more than $250 million in the fourth quarter. Its initial 2027 target assumes organic growth of more than 40% and excludes potential acquisitions. Chief Executive Eric Brock said the forecast also excludes the financial outlook for Regna AI, a new company focused on defense-related artificial intelligence.
Losses widen as company invests for growth
Gross profit was $36.5 million in the third quarter, and adjusted gross margin was 34.8%. Chief Financial Officer Neil Laird said margins declined sequentially as lower-margin precision strike programs accounted for a greater share of revenue. Production inefficiencies associated with scaling Mistral’s Lethal Unmanned Systems program also weighed on margins.
Ondas reported an adjusted EBITDA loss of $59.7 million, $13.4 million more than in the preceding quarter. Operating expenses rose to approximately $226 million from $199 million, while adjusted cash operating expenses increased to about $119 million from $88.8 million.
Laird said the company expects gross margins to remain in the mid-30% range in the fourth quarter before returning to historical trends in 2027. Brock said Ondas has a longer-term goal of reaching a gross margin of 45% to 50% over the next 12 to 24 months.
Management expects a significant reduction in adjusted EBITDA losses in the fourth quarter and moved its target for company-wide adjusted EBITDA break-even to the third quarter of 2027, from the fourth quarter. The operating platform is still expected to achieve adjusted EBITDA profitability in the fourth quarter of 2026.
Backlog grows as acquisitions add capacity
Backlog stood at approximately $835 million at September 30, up 36% from the prior quarter, reflecting both acquisitions and organic orders. Ondas recorded approximately $214 million in new orders during the quarter and $507 million in the first nine months of 2026. Brock said the company expects backlog to grow further by year-end despite its substantial fourth-quarter revenue target.
The company ended the quarter with approximately $820 million in cash equivalents, restricted cash and short-term investments, down from approximately $1.4 billion at the end of the second quarter. Laird said Ondas spent approximately $431 million in cash on acquisitions during the third quarter. Inventory rose to $111 million from $59 million sequentially, and Brock said he expects further inventory growth to support the 2027 ramp.
Ondas has acquired businesses including DZYNE, Cyberhawk and GATE, while its acquisitions of Stemme and Aran Defense remain pending. Brock said the company expects to be more moderate and deliberate in its acquisition program, citing the cost of capital and opportunities to invest within its existing businesses.
ULTRA and IonStrike expansion plans
Management highlighted two products from the DZYNE acquisition: ULTRA, a long-endurance surveillance aircraft, and IonStrike, a counter-drone interceptor. Brock said Ondas is seeing demand signals for dozens of ULTRA aircraft and plans to scale production to as many as 10 per month by 2028.
The pending Stemme acquisition would bring ULTRA’s airframe manufacturer in-house. Ondas also intends to establish up to 345,000 square feet of additional U.S. manufacturing capacity. Brock said the company may consider non-dilutive financing to help fund an accelerated production ramp.
Management described a potential $1 billion in annual recurring ULTRA service revenue as a longer-term opportunity, not a current contract. Ondas Sentinel CEO Ryan Hartman said the estimate was based on providing services for less than half of approximately 110 combat air patrols deployed globally; Brock said the estimate was a U.S. figure.
For IonStrike, Ondas said it had responded to a $45 million sole-source request for proposals and received a $10 million integration order from a new U.S. government customer. The company is preparing to produce hundreds of units per month early in 2027 and move toward thousands per month beginning in late 2027. Its targeted sales price is below $50,000 per unit.
Regna AI funding discussions advance
Ondas founded Regna AI to develop mission-specialized models that governments and defense partners can control and deploy securely. Brock said the initiative combines NVIDIA’s open-weight model ecosystem with Palantir software and Ondas’ operational expertise.
Regna is pursuing financial partners, and discussions with venture capital investors are advanced, Brock said. Hartman said expected sales cycles would generally be measured in single-digit months, often within a quarter, though management did not provide a revenue forecast for the new business.
About Ondas (NASDAQ:ONDS)
Ondas Holdings is a technology company that develops private wireless networks and autonomous systems for industrial, government and security applications. Its businesses include Ondas Networks and Ondas Autonomous Systems. Ondas Networks provides private broadband wireless solutions for mission-critical communications. Its FullMAX platform is designed to support applications such as rail communications and industrial data networks. Ondas Autonomous Systems develops autonomous drone and counter-drone technologies, including systems for infrastructure inspection, security and public safety.
