Actelis Networks (ASNS) Q3 2024 Earnings Call Transcript

ASNS earnings call for the period ending November 17th, 2024

Actelis Networks (NASDAQ: ASNS) reported strong financial results for Q3 2024, driven by strategic wins and shifting global defense priorities. Here's a summary of the key updates:

Actelis Q3 Results: Revenue Surges with Critical Infrastructure Wins

Actelis Networks (NASDAQ: ASNS) has announced its financial and operational updates for Q3 2024, showcasing impressive growth and strategic wins across critical infrastructure, IOT, and military markets.

Actelis reported a significant increase in revenue, with Q3 revenue reaching $2.54 million, a 200% surge compared to $0.85 million in Q3 2023. This strong performance contributed to year-to-date revenue of $6.7 million, reflecting a 46% increase from the prior year, surpassing the company's total 2023 performance.

This growth was largely driven by the execution of large contracts, including a $1.4 million software and services renewal with a major North American client, of which $1.1 million was recognized in Q3. This key client operates in the critical infrastructure sector, highlighting Actelis' ability to generate recurring revenue while catering to the demanding needs of these markets.

Actelis also reported a substantial improvement in gross margins, which surged to 69% in Q3 compared to 27% in the same quarter last year. This improvement reflects Actelis' focus on high-margin software and hybrid fiber-copper solutions, which offer customers cost-effective alternatives to full fiber deployments.

Actelis' efforts to improve operational efficiency and profitability also showed results, with a 12% year-over-year reduction in Q3 operating expenses and a 41% decrease in net loss, which amounted to $0.51 million in Q3 2024.

Actelis secured significant new orders across Intelligent Transportation Systems (ITS), military applications, and European infrastructure projects during Q3. These include deployments for major U.S. cities, counties, and German municipalities, further reinforcing Actelis' role as a key provider of secure networking solutions for critical infrastructure.

Actelis' inclusion on the Department of Defense Information Network (DoDIN) Approved Products List (APL) and its NIST FIPS 140-2 certification have been instrumental in securing defense contracts. Earlier this year, these certifications facilitated Actelis' deployment of cyber-hardened networking technology on three U.S. military bases, working to establish the company as a trusted partner for the Department of Defense.

Actelis' opportunities in defense markets could expand further, especially as geopolitical shifts and Donald Trump’s upcoming inauguration in January 2025 shape global spending priorities. How Actelis Could Leverage These Shifts

Actelis' hybrid fiber-copper solutions offer unique advantages for defense and critical infrastructure applications, delivering fiber-grade performance without the time or expense of full fiber deployment, enabling rapid modernization of military bases and government facilities.

The company's solutions are further enhanced by advanced encryption and data protection features, ensuring secure connectivity at the network edge—a critical requirement in military and government IoT environments.

With its strong track record in U.S. defense markets and growing presence in Europe, Actelis is well-positioned to meet the potential rising demand for secure, scalable networking solutions as nations respond to evolving geopolitical pressures.

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