Ondas Posts $36.5 Million in Gross Profit as Margin Falls to 21.8%
Key Facts
Ondas posted gross profit of $36.5 million in the third quarter of 2026, close to $36.1 million in the previous quarter, while gross margin fell to 21.8% from 43.1%. In its earnings release, the company said gross margin was 25.8% in the year-earlier period, when gross profit was $2.6 million. The company attributed the quarterly margin decline to intellectual property amortization, acquisition inventory accounting and efficiency issues at the start of scaling production. The margin pressure coincided with an increase in adjusted earnings before interest, taxes, depreciation and amortization loss to $59.7 million. Ondas said the loss was $46.2 million in the second quarter of 2026 and $8.1 million in the third quarter of 2025. It attributed the quarterly widening of the loss to lower gross margin and investment in platform expansion and business development activities.
The comparison between gross profit and margin reflects two different trends during the quarter: gross profit remained close to its level in the previous quarter, but the share of revenue the company retained after the cost of sales fell. Ondas cited three reasons for the quarterly decline: intellectual property amortization, accounting for acquired companies' inventory and efficiency issues at the start of ramping up production. These pressures were also linked to the company's spending on platform expansion and business development activities, according to its explanation of the adjusted loss. The company thus presents execution of its operating expansion, alongside revenue growth, as a challenge for the profitability path it has set. The widening of the adjusted loss compared with the year-earlier period also shows that the burden of investment and margins has yet to ease in its quarterly figures.
Ondas ended the third quarter of 2026 with $820.3 million in cash, restricted cash and cash equivalents, and short-term investments, according to its release. The company also said its backlog stood at $835 million at the end of the quarter. These balances place available financial resources alongside recorded customer commitments as the company seeks to expand its platform and increase production. Converting orders into revenue depends on the company's ability to fulfill those commitments, while it said efficiency issues at the start of scaling production affected margin. This context remains relevant when reading the adjusted losses that the company attributed in part to expansion investments.
On its outlook, Ondas said it still targets adjusted earnings before interest, taxes, depreciation and amortization profitability at the operating platform level in the fourth quarter of 2026. The operating platform includes OAS and Ondas Sentinel, according to the company. The company moved up its target for adjusted profitability at the group level to the third quarter of 2027, from its previous expectation of the fourth quarter of 2027. The timing change comes alongside an initial target of at least $1.1 billion in revenue in fiscal 2027. Ondas said the target represents 100% year-over-year growth and more than 40% organic growth, excluding additional acquisitions from the calculation. Meeting these targets depends on executing expansion plans and improving production efficiency and margins.
Ondas scheduled a call to discuss its results for November 12, 2026, at 8:30 a.m. U.S. Eastern time. Before the call, the company's shares had closed at $5.73 in the November 11 session, according to EL7 data. The call gives the company's management an opportunity to discuss the quarterly results and operating outlook it announced. The points the company identified for the period ahead center on profitability at the operating platform level, the revised timing for group-level profitability and the initial 2027 revenue target. Margins and adjusted losses will also remain among the key figures markets use to compare rapid expansion with the company's ability to improve operating results.