Ondas (ONDS) Q2 2025: Backlog Doubles to $22.8M as Autonomous Defense Demand Accelerates
Ondas’ transformation from R&D to operational scale is now visible, with backlog more than doubling and field deployments validating its core autonomous drone platforms. Defense and security procurement cycles are accelerating, creating a multi-year demand tailwind for OAS’s dual-use systems. Investors now face a fundamentally de-risked, well-capitalized operator positioned to capitalize on global autonomy and counter-drone spending—execution on pipeline conversion and recurring software revenue will be the next key proof points.
Summary
- Backlog Expansion Signals Demand: OAS’s order book surged, reflecting broadening customer adoption and pipeline visibility.
- Field-Proven Platforms Shift Narrative: Iron Drone and Optimus are now operational, not just developmental, with active deployments driving recurring business.
- Defense Tailwinds Set Stage: Policy and budget shifts in NATO and the U.S. underpin a decade-long runway for autonomy and counter-drone solutions.
Performance Analysis
Ondas’ Q2 2025 performance marks a strategic inflection, as the company’s OAS segment delivered rapid revenue growth, driven by expanding deployments of its Iron Drone Raider and Optimus platforms. Revenue for the quarter is expected to reach $6 million, a more than sixfold increase year-over-year, with OAS contributing the majority. This surge is directly linked to operational momentum in defense, homeland security, and critical infrastructure verticals, where procurement cycles are visibly accelerating.
The backlog now stands at $22.8 million—more than double the level at the end of 2024—after accounting for Q2 revenue recognition. This backlog provides both short-term revenue clarity and medium-term visibility, as management maintains a “conservative” $25 million full-year revenue outlook, with at least $20 million from OAS alone. Liquidity has improved dramatically, with $67 million in cash and convertible notes reduced to $5.4 million, giving Ondas the runway to execute its growth plan without near-term capital constraints.
- Order Book Leverage: The backlog’s acceleration reflects not only current demand but also improved go-to-market execution and reference wins across geographies.
- Platform Validation: Both Iron Drone and Optimus are now field-tested, with deployments in “combat-ready” and civilian contexts, shifting the business from pilot to scale.
- Financial De-Risking: The reduction in convertible debt and strong cash position mark a significant de-risking, aligning capital structure with growth ambitions.
OAS’s operational and financial progress now supports a transition to institutional investor relevance, but the next leg will depend on the pace of backlog conversion and software-driven margin expansion.
Executive Commentary
"Our flagship platforms include the Iron Drone Raider, a counter-UAS system designed to secure critical locations and population centers from the growing threat of intruder drones, and the Optimus system, which delivers autonomous aerial security, inspection, and emergency response. These are proven scalable platforms with active deployments."
Eric Brock, Chairman and CEO
"We have reduced our outstanding convertible notes at the holding company from over $46 million at the end of 2024 to just $5.4 million as of June 30th. Most importantly, we now have a strong liquidity position with over $67 million in cash as of the end of Q2."
Neil Laird, CFO
Strategic Positioning
1. Dual-Use, Mission-Critical Platforms
OAS’s core value proposition lies in its dual-use Iron Drone Raider and Optimus systems, which serve both military and civilian security needs. Iron Drone Raider, a counter-UAS (unmanned aerial system) platform, is gaining traction as a category-defining solution, offering non-lethal, low-collateral, and reusable interception—key differentiators as drone threats proliferate. Optimus provides persistent autonomous aerial security and infrastructure inspection, expanding OAS’s addressable market well beyond defense.
2. Modular, Scalable Full-Stack Architecture
OAS’s vertically integrated “physical AI” stack combines edge compute, multi-sensor fusion, embedded AI, and mission automation—enabling 24-7 operations without human pilots. This modularity supports rapid adaptation to new mission requirements and geographies, as well as recurring SaaS (software as a service) revenue via its Insightful intelligence portal and Primus C4ISR command suite.
3. Accelerating Go-to-Market and M&A Strategy
OAS is building out regional GTM (go-to-market) infrastructure in the U.S., Europe, and Middle East, leveraging both internal resources and partnerships. A newly launched M&A program targets synergistic acquisitions to deepen the technology stack and expand market presence. The company is now positioned to scale deployments and support customers with localized delivery and field services.
4. Macro and Regulatory Tailwinds
Major policy developments—such as NATO’s commitment to raise defense spending to 5% of GDP by 2035 and new U.S. executive orders supporting drone autonomy—create a multi-year demand runway. Federal funding, regulatory clarity (FAA Part 108, Section 2209), and “Buy American” preferences all reinforce OAS’s competitive positioning and pipeline visibility.
Key Considerations
Ondas’ Q2 signals a structural transition from R&D to commercial scale, but the path to sustained profitability and market share will hinge on several execution levers:
Key Considerations:
- Pipeline Conversion Pace: The doubled backlog must translate into timely revenue recognition and contract expansion, especially in defense and public safety verticals.
- Recurring Revenue Ramp: Scaling SaaS and data analytics revenue from the Insightful platform will be critical for margin expansion and customer stickiness.
- Operational Scale-Up: Execution on localized field services, supply chain, and regulatory compliance will determine OAS’s ability to deliver at global scale and meet mission-critical SLAs (service level agreements).
- M&A Integration Risk: Success of the acquisition program will depend on disciplined target selection and seamless integration—missteps could dilute focus or erode margin structure.
Risks
Execution risk remains high as OAS scales from pilot deployments to full-scale production and support in demanding environments. Procurement cycles in defense and public safety can be unpredictable, and regulatory shifts or delays could impact the pace of commercial drone adoption. M&A introduces integration and cultural risks, while competitive intensity from both legacy defense primes and emerging autonomy startups remains a constant threat.
Forward Outlook
For Q3 2025, Ondas management indicated:
- Backlog conversion and new order activity remain robust, supporting sequential revenue growth.
- OAS segment is expected to deliver the majority of total revenue, with continued momentum in both military and civilian contracts.
For full-year 2025, management maintained guidance:
- $25 million in total revenue, with at least $20 million from OAS.
Management emphasized:
- Conservative guidance reflects backlog visibility and pipeline strength, but upside exists if procurement cycles accelerate further.
- Strategic capital deployment will prioritize scaling operations, M&A, and recurring software revenue streams.
Takeaways
Ondas’ Q2 2025 marks a decisive transition from a technology developer to a field-proven operator with clear demand signals and a de-risked balance sheet.
- Backlog Acceleration: The doubling of backlog, driven by global deployments, validates both product-market fit and go-to-market execution.
- Operational Validation: Iron Drone Raider and Optimus are now delivering real-world value, supporting recurring revenue and reference wins in critical sectors.
- Next Proof Points: Investors should watch for backlog-to-revenue conversion, software margin ramp, and disciplined M&A integration as key drivers of long-term value creation.
Conclusion
Ondas enters the second half of 2025 with momentum, a fortified balance sheet, and a validated platform for autonomous defense and security. The opportunity now shifts to scaling deployments, ramping software revenue, and executing on a disciplined, global growth strategy.
Industry Read-Through
Ondas’ results provide a clear signal of accelerating demand for autonomous, AI-enabled defense and security platforms as both government and commercial operators seek persistent, scalable solutions. The doubling of backlog and rapid field deployment highlight a broader market inflection, with NATO and U.S. policy shifts likely to drive sustained investment across the sector. Peers in defense tech, critical infrastructure protection, and industrial automation should expect intensifying competition around autonomy, regulatory compliance, and recurring data services. Execution on full-stack, modular platforms and recurring SaaS models will increasingly separate winners from laggards as the industry moves from pilot to operational scale.