Ondas Posts Wider-Than-Expected Q2 Loss, Delivers Solid Revenue Growth

Ondas captured $175 million in new orders during the second quarter and another $105 million through quarter to date. Its two-year strategic program pipeline exceeded $11 billion, spanning aerial security, intelligence, surveillance and reconnaissance, precision strike and autonomous ground systems

Reported backlog reached approximately $613 million as of June 30, with pro forma backlog of $757 million including DZYNE and Cyberhawk.

ONDS Revenue Mix Expands Across Offerings

Product revenues increased to $43.5 million from $3.61 million a year ago. Service revenues climbed to $23.6 million from $2.49 million, while development revenues contributed $16.7 million.

Companies acquired since June 30, 2025, contributed $70 million of the year-over-year revenue increase, including $21.8 million from Sentrycs and $13.2 million fromOmnisys. Airobotics added $6.8 million, driven by higher Optimus System and Iron Drone Raider product and service sales.

Ondas Margin Pressure Meets Higher Scale

Gross profit rose to $36.1 million from $3.3 million a year earlier, but gross margin contracted to 43.1% from 53.1%, due to amortization of capitalized intellectual property. Adjusted gross profit was $42.3 million while adjusted gross margin was 50.4%, compared with 51.5% in the first quarter.

Operating expenses jumped to $199.1 million from $12.6 million from the year-ago quarter. The quarter included $105.8 million of non-cash expenses. Adjusted EBITDA loss widened to $50.6 million from $5.8 million a year ago.

ONDS’ Liquidity Profile

Cash, cash equivalents, restricted cash, and short-term investments totaled about $1.4 billion as of June 30. During the third quarter, Ondas used approximately $325 million of cash to complete the DZYNE and Cyberhawk acquisitions.

Net cash used in operating activities was $137.4 million in the first half of 2026, compared with $15.1 million in the first half of 2025.

Ondas Raises 2026 Revenue Outlook

Management raised its full-year 2026 revenue target to $525-$550 million from the previous target of at least $525 million, representing more than 10 times the reported figure of 2025 revenues. At the midpoint, the outlook implies more than 30% year-over-year organic growth on a pro forma basis.

Third-quarter revenues are expected between $140 million and $155 million, a 73% sequential growth at the midpoint. Adjusted EBITDA losses are expected to decline sequentially in the third quarter, with operating-platform adjusted EBITDA profitability now targeted by the fourth quarter of 2026 and company-wide adjusted EBITDA profitability by the fourth quarter of 2027.

Zacks Rank

At present, ONDS carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Performance of Other Drone Companies

Red Cat Holdings RCAT reported second-quarter 2026 revenues of $20.2 million, up 527% year over year.  RCAT reaffirmed its 2026 revenue target of $150-$180 million. It recently introduced Hellcat, a dual-use small unmanned aircraft system based on the Black Widow platform. RCAT’s expansion into USVs via Blue Ops adds a significant new revenue stream. It also completed the acquisition of Quaze Technologies Inc., which develops wireless power transfer technology for unmanned and autonomous systems.

Shares for RCAT are up 21.7% in the past year.

Draganfly Inc. DPRO generated second-quarter 2026 revenues of $2.66 million, up 26% year over year, as product sales increased 34.6% to $2.56 million. Gross margin was 20% compared with 23.9%, partly reflecting a one-time non-cash inventory write-down. DPRO also completed the purchase of Skip Dynamix’s fixed-wing drone technology, intellectual property and infrastructure.

Shares for DPRO are up 8.5% in the past year.

Kratos Defense & Security Solutions’ KTOS second-quarter revenues came in at $458.8 million, up 30.5%, with unmanned segment revenues increasing 8.1% year over year on an organic basis, primarily driven by Valkyrie-related activity. Kratos raised its 2026 revenue guidance to $1.75-$1.81 billion. Beyond drones, it is also expanding into other high-growth areas, such as hypersonics, propulsion systems, space and satellite systems, and microwave electronics

Shares for KTOS are down 8.3% in the past year. 

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