Mobilicom Ltd (MOB) Q2 2026 Earnings Call Transcript

Greetings and welcome to the MobileCom Limited First Half 2026 Financial and Operating Results. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Liyad Gessler, Director of Finance.

Good afternoon, everyone.

My name is Lead Geffer, Mobilicom Director of Finance. Welcome to Mobilicom First Half 2026 Financials and Operating Results Conference Call. Joining me today is Ornel Kayam, Mobilicom's Founder and Chief Executive Officer. Earlier today, Mobilicom issued a press release announcing its financial results and business highlights for the six months ended June 30, 2026. A copy is available on the Investor Relations section of the company's website. Before we begin, please note that today's call includes forward-looking statements under the Private Security Litigation Reform Act of 1995. Actual results may differ materiality, as described in our SEC filing, including our most recent Form 20S. This statement speaks only as of today, and we undertake no obligation to update them. We will also refer to non-IFRS measures reconciled to IFRS in today's press release. Today's agenda includes a summary of the first half and a brief introduction to Mbilicom, financial highlights and our equity and cash position, first half achievements and design wins, progress against the 2026 outlook, our U.S. defense market position, CAO closing statement, and we will close with Q&A session. This webinar is being recorded and will be available for replay in irmobilicum.com. With that, I would like to turn the call over to Oren El-Khayyam, Founder and Chief Executive Officer. Oren, please go ahead.

Thank you very much, Liyad, and good afternoon, everyone. It was a good quarter with continuous execution of our vision we can share that we had about 1.2 million dollars in revenue for the second quarter i would like to emphasize that 100 of our revenue this period were from off-the-shelf product sales to customers all from enterprise defense mainly customers and majority of that came from the u.s market we maintain a very high growth margin with our hardware solution in addition to the software licensing We maintain strong financial cash position with nearly $16 million cash in hand, which is adjusted numbers. We launched two products in the period, the Scarper Moodland and the Scarper Tactical, and won two new designings based on those products. One of which is with the Israeli tier one player in this market for a new short to mid-range low-trained munition platform. which we anticipate that will have large volumes in the future. Ongoing monthly delivery cadence continues with our U.S. Tier 1 customer for the U.S. Department of 4 program of record. And we also have seen the regulation by FCC and others. We receive FCC-trusted drone exemption status for all of our products, cyber, software, and the hardware solution. So I think that based on those achievements, I want to thank our leaders and employees worldwide for the execution behind these results. And a special thanks to Yossi Seigal, our co-founder, for his continuous innovation and technology leadership. For those joining for us for the first time, the next two slides will give you some a short overview of uh with mobilicom and company uh overview at the glass so in high level terms mobilicom offers the essential ip-based high value cyber security software and hardware solution or subsystem you can call it for drones robotics and autonomous systems and manufacturers Those are proprietary solutions that are powering, connecting, securing, safeguarding the autonomous systems. Mobilicom is not doing the drone. Mobilicom is doing the guts, the important IP-based subsystem to drones, robotics, and autonomous systems. We can say that investment in Mobilicom and Mobilicom itself is in the convergence of three major trends that we see in the market today. One is drone. second is cybersecurity, and third is robotics autonomy, which positioned the company extremely well for the growth that is expected from those markets. In this slide you can see Mobilicom has two essential two segments. One is hardened hardware. Hardened is in this case meaning secured, more challenging to hack. And then the cybersecurity and software business. Mobilicom Hardware Solutions were certified as U.S. approved products by the Department of War and the U.S. agencies. We have the blue UAS select, as you can see on the logo below. We have the trusted cyber certification. We obtained the NDAA validation following testing, not with self-declaration, uh which is much more progress we achieved the equipment frequency allocation for the department of war under the dd 1494 and the newly released fcc trusted drone that was a new regulation that was initiated this year to build and promise a u.s ecosystem for the future Our business model is very vivid, we get first put in the door with secured hardware which yielding 50 to 60% growth margin which is very steep for hardware and then we cross the cyber or software solution which can get to up to 90% growth margin and has minimal competition today. Since we are already a hardware supply to drones and autonomous platform the platform maker can incorporate cyber security or software from mobilicom without undergoing any new procurement cycle mobilicom in the cyber security for small size autonomous system is a leader in this market and well positioned to the success that is built on the fact that new standards are required and The change is coming in the coming quarters. The first half of this year shows that the model is working in both directions. And the clearest example is the AI-enabled autonomous weapon system design that we had recently, where we sold both hardware and software and were selected together from day one. And I will come back to it at a later stage. So I will now hand it over to Liad for the first half financial highlights.

The detailed figures are on the slides and in today's release. So rather than just read them, let me give you the four things details. First, the shape of the house. The majority of our revenues landed in the second quarter. That is what the program moving to a monthly delivery looks like. During the quarter, we enter the monthly delivery cadence under the program of record, and we expect the cadence to continue through the second half. Second, backlog. It is lower than the end of the first quarter precisely because it chipped under monthly delivery cadence. Backlog behave as throughput rather than a stock of waiting orders. Orders received since the first half year end are already rebooting it for the second half of them. Third, margins. Held with this band, our hurdle model is built on. Even as production volume steps up, we are scaling without giving away the value of the IT. And fourth, the cost side. Our EBITDA loss works up to roughly half a million dollars a month. in line with our adjusted cash burn. The most difference between the two is the working capital with deliberately built for second-half delivery. Both measures tell the same story, a controlled target investment in production readiness ahead of Tier 1 volume. The IFRS net loss is a much larger figure, but the substantial majority of it is non-cash, share-based compensation, currency movement, and the orange valuation. and the full reconciliation was in today's release.

Let's move to the equity and strong cash position slide.

On the equity side, the capital structure on this slide is deliberately simple and everything is visible. One class of ordinary shares, a non-warrant position, and no leverage of any kind, no debt, no facilities, no ATM program. Two points worth taking away. The cash that came in during the half arrived from holders' exercising instruments they already have, not from any new issuance. And the warrants, still outstanding, represent additional potential capital of $12.6 million, already built into the structure, sitting on the top of the cash we hold today, totaling $28.5 million. Put together, the balance sheet gave us a multi-year runway and the freedom to execute the second half from strength.

Back to you. Thank you.

I think that we can see here the focus on six achievements that we are presenting. I will not review them one by one, but I would like to give you my thoughts on where we should focus with those lights and achievements. We expanded, one is we expanded onto new platform through two different routes. The larger ammunition wing came through the tier one relationship we already hold, a new platform category for us with the potential to scale alongside when the program advanced to mass production which shows capability to have a strong relationship with the customer, especially tier one. And then the success of first platform is yielding the expansion to a second platform. In this case, longer range, different mission. And then Mobilicom is working across the board with multi-platforms at the same tier one manufacturer. And that's important execution for us. And on the same point of expanding to new platforms, we have the AI-enabled autonomous system, WIM, placed four of our products. Two software, which is the ICE, electronic offer resistance solution, and the OS-free cybersecurity for autonomy. And two hardware, the Scarper Datalink and the 10-inch mobile ground controller. All together, so one onto a single new program, spinning drone and ground robotics, with the first order already delivered. And that is a clear truth that we sell an integrated stack rather than components. and integrated stacks mean substantially more Mobilicom content, more value on every platform and retention rate of the customer is the highest you can achieve. And that's part of our unique position in the market, which is unmatched by any other player. Second point I would like to emphasize is the speed. We've seen the release of multiband and the tactical hardware products as part of the Scarper family. And we've done that in Q1. In this quarter, we showed that those design rings were converted to initial orders and were converted to design rings and initial orders in the same half of the year. Fastest conversion we achieved so far. And that shows that we can create a new innovation to maintain the gap or to progress with the market and be converted to design wins and delivery for first implementation within customers. Third point that's worth emphasizing is the U.S. engine kept compounding. monthly delivery cadence under the U.S. Marine Corps program through our partner advancing also on the Army lasso validation phase and our trusted drone positions secured with onshore plane execution. So all of those are strengthening our U.S. position for the future. Add the initial order across the Asia-Pacific and UAE and India, and the picture is convinced, more platform, more content per platform, and faster conversion from products and innovation to design wings, to initial production and delivery, to scalability in production that we have with Tier 1. So this slide is a brief reminder on the Outlook framework we presented at the beginning of this year and the two next slides will show where we stand right now. So in this slide we are just reviewing again what was promised and here is what how we executed on this promise and how we progress in the second quarter and the first half of 2026 so on the hardware tier 1 platform pipelines those are platforms of tier 1 manufacturers with harder solution offerings so design wings already above the top of the range including new large-chain ammunition platform wing for our multiband and tactical that we explained earlier. We can see that initial production current player continues to generate roll-on orders and in the ramp-up phase we see one against a goal of two that one has entered the monthly delivery cadence which is important for a company like Mobilicom. In total we have nine tier one customers platforms again a goal which was eight to ten and we are entering the second half of the year and we are already meeting the target on the cybersecurity and software side on the right side we can see that the engagement continues across the Nvidia and Qualcomm ecosystem progressing against the four to six OEM partner goals. And the AI-enabled autonomous weapon system belongs here too because a software-led selection with OS3 operating security, safety, and cyber compliance, which are autonomy cyber security solutions. And the ICE software were chosen with our hardware from day one. So we've seen new wins, delivery, and soon deployment to this customer as well. On our goals, on operational and finance, we have mentioned multiple targets for the year. Of course, the first half, roughly 3,000 units were in motion at different stages. The first 1,000 were already produced in the first quarter and ongoing deliveries that started back then and continue now. Production of another 1,000 commenced in the second quarter and the long lead items procurement for additional 1,000 accelerated in response to the world supply chain constraints. Those long lead log item stock will help us and will be used to support our first U.S. production run in 2026. And we maintain a backlog unit capacity that will expedite delivery on customer demand that we anticipate that will ramp up from quarter to quarter. On the U.S. manufacturing footprint, significant progress was made this quarter. We have mapped multiple manufacturers across the United States. We shorted this to five contenders against benefit, tax, and location criteria. We conducted on-site inspections and capacity and capabilities review with those players. We narrowed down the field to two last candidates. And right now we are in the final stages of entering, as we promised, the Pentagon, which is closely monitoring our progress in this field. And on the program of record, we moved to an ongoing monthly delivery cadence, driving the first half revenue ramp up that you see for Q2. So I think that in this slide that we presented in the beginning of the year, we presented this position in details on our first quarter call, but I will keep it brief and update as following. For our OEM customers, we are embedded across U.S. branches, and we hold five U.S. endorsements and validations shown on the slide, which, without those products, cannot be participating in U.S. Federal Department of War and other programs. Two updates are worth highlighting since the last call. First, our aggressive U.S. production built-out progress supports both our growth plans and keeping the FCC onshore plan effective and on track. Second, we were selected to showcase our secure autonomy solution at the very, I think that one of the biggest departments of war and federal drills in the United States, the Northern Strike 2026, which is a premier department of war exercise, putting our technology directly in front of military end users and decision makers which create build the brand and later on will build new programs and operations with those end customers so before we take questions i would like to summarize the presentation with key reasons why mobilicom is compelling opportunity today And the short list of the key items are, we have an ongoing monthly delivery cadence to our US-1 customers and Department of War, and that's seen in the Q2 delivery and revenue. The designing engine running ahead of plan. We are in the goal for the full year target, which were executed in the middle of the year with nine Tier 1 customer platforms. on the book. The integrated stack position is proven. We've seen software and hardware selected together being giving us bigger position in the design, larger dollars for every platform in percentage and value, and rising content on every platform of Mobilicon, which also leads to retention rates which is very high with these partners the regulatory mode trusted drone status maintained through an execution of on-shoring plan with the u.s manufacturing partner selection at the final stage of progress which is important per the insights we are getting from the pentagon on that is reviewing and working with us on that new products monetization immediately we launched new products we want to design wings with initial orders to support the integration and we deliver and that shows capability to convert faster and move along phases faster And we have a fortress balance sheet, debt-free, multi-year runway, warrant exercise, added an additional cash in hand to support our future growth. And I think that the market is moving forward. The new cybersecurity mandates that were released in the recent months are converging on exactly what we build, and that's important for our future. I would like, again, to close my closing statement with thanks to our team worldwide, Yossi, my co-founder and partner, and our technology, business, and operational teams in U.S., Israel, and Australia. And I think that, Yad, this is the time to get back to you for the Q&A session.

Thank you all for the question and answer session. Operator, we appreciate your help here.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing any keys.

One moment, please, while we poll for questions.

Our first question is from Mike McCormack with Water Tower Research. Please go ahead.

Hey, guys, thanks. First quarter revenue reflected your customer moving into a program of record ramp-up. How did that convert in the second quarter?

Thanks for the question, Mike.

So actually it converted exactly as the model they choose. Second quarter revenue was approximately $1.2 million because deliveries under the U.S. program of records move onto a monthly cadence. That also explains the backlog movement, okay, or the shift rather than just set. What the second quarter tells us is not a number to extrapolate, okay? It is what we entered is that actually we entered a monthly delivery cadence, and this is what we expect the cadence to continue.

That's the short answer to that.

Okay. If I can follow up, you have runway, no debt, and you terminated the ATM. Under what circumstances would you raise capital?

Raise capital to execute the plan we have described today. We hold a multi-runway at the current burn. We carry no debt of any kind. And the ROINs still outstanding represent roughly $20.6 million of additional potential funding on top of the cash that we already hold. So the bar for new capital is actually opportunity. not a necessity, something that, you know, materiality, accelerate the plane, M&A, and so on. Absent that, our focus is converting the balance sheet we have into production, delivery, and, of course, the pass, eventually, to positive questions.

I hope that I answered your question. Yes, it did. Thank you.

Our next question is from Barry Sein with Litchfield Hills Research. Please go ahead.

Hey, good afternoon, Oren and Eliad. Congratulations. Really very good momentum from 2Q versus 1Q. A couple of questions, if you don't mind. First of all, I want to talk about the design wins. You had a great slide where you talked about what you did last year, your goals for this year, and, you know, what you have now. What is the timeline typically when you get a design win in order to get to initial low-rate production and then to volume revenue, which it sounds like you're at on one program or record already?

Yeah, I think I will take that. So thank you, Barry, for the question. And I think that we manage that in a three-step or three-stage pipeline, and it is exactly how the slide that we are showing in our presentation showed earlier how it's built. So the first integration and qualification stage is following the design win that we are winning. We're actually actively supporting the regional equipment manufacturers, the OEMs, during their platform integration, validation, and qualification. Historically, this initial OEM platform design required lengthy timelines because it was the first time that they built first systems to the market. Today, the development cycles are significantly faster, typically spend over several months, several months, especially for those experienced OEMs with the existing platforms already in the market. So the actual timeline remains dependent on the customer program schedule, of course, but it's much faster than what we've seen in the past. The second phase is initial production orders from qualification. Initial production orders typically began at a low rate. These early units enabled the OEM or the manufacturer of the autonomous platform to successfully deploy the platform, promote the programs, and secure broader sales to the end customers, which are usually governments around the world, typically spanning few quarters. So the timeline here is multiple quarters to deploy and progress into to larger orders. And then volume scaling, which is the third phase, production volume scales according to the customer program milestones rather than our own activity, because usually we are already faster and earlier than our partners, the large conglomerate and OEMs, which is standard for embedded defense system platforms. So, we can see that the five new wins from this half are new fuel entering on top of the funnel that we built earlier, which some of them are, as you mentioned, already in volume scalability and ongoing monthly delivery, and some of them are already in initial production run rate.

Okay, that's helpful. And as you're selected by a drone manufacturer, what if you can talk about the factors that go into that? Is it price? Is it technology? Are there cybersecurity testing? And, you know, who are you competing with? What does the competitive environment look like? How do you stack up, you know, price-wise, technology-wise, et cetera?

I think that I can summarize it with multiple key decision-making items that we hear again and again from those OEMs and manufacturers of autonomous platforms. First is the ability to deliver the performance they need in contested environments, which is the most important capability. They want to be able to achieve range, resilience, electronic water resistance and so forth that is crucial for their success of the mission that their platform is designed for. The second criteria that we see is compliance. Especially in the U.S., we see that NDAA, Blue UAS, and now the new FCC-trusted drone status, a manufacturer that is choosing us, inherits a qualified company with solution and approves supply chain rather than building one by himself. And that reduces the risk on their end and reduces the headache from their side. The third criteria that we see is price and supply capacity that can support mass market and customer program scalability for the next phases of market programs. So price and supply capacity are becoming important because as you scale in volume, they expect low prices to maintain that, which you can achieve by producing higher quantity of care obviously and they would like to see your u.s approved supply chain capacity to maintain what the u.s government would like to achieve and by the way we also see the same decision making of local supply chain or supply capacity capability in other places we see that in israel we see that in the european market we've seen that for example in canadian market that anticipate and request the future program will be with local capacity to volume production as well. And the fourth thing which we see recently is the integrated stack. Very few suppliers can put the security, secure data link and electronic offer resistance into the platform together with cybersecurity on the table as one offering. So in embedded drone cybersecurity, where we are positioned as leaders, we are facing very limited direct competition today. So to summarize that, we see mainly key four items, which is performance in real combat environment, compliance and regulations that are needed, for example, by the U.S. government, a price and supply capacity to be able to scale later based on the new regulations, and integrated stack that can accelerate some of the customers and OEMs. And here it's important that we shared, we believe that the platform development cycles accelerate and we will see that any new platforms will be initiated every 12 to maybe 24 months between generations. which means that it's driven by frequent modifications and program-specific adjustments, and platform manufacturers will drive immense value from working with a one-stop shop partner. This consolidated strategy ensures a disadvantage in time-to-market, in operational performance, and obviously price, which is also expected. And here I think that this is one of the two critical differentiation factors from Willicom. The first one is the cybersecurity across the board. And second is building the position of one-stop shop with hardware, software, and cyber capabilities that can come as single stack that can spend generation and platform faster and be the ideal partner for the largest audience. So those are the critical aspects that we see when, you know, evaluated by different customers.

Okay, that's great. And then my last question, you've talked about the two programs of record, OPFL for the Marine Corps, and then the LASSO program where you have one of your customers moving through for qualification. The other program that I want to ask about is drone dominance. And I think that came out last year was the first phase. They're moving into the next phases, and there's new requirements, some of which look like they may really require some of your products. How are you positioned for the new requirements as that program, Drone Dominance, evolves with your product line?

Great question. Yes, the drone dominance program, in short, DDP, is a Department of War program, which is using alternative, let's say, procurement processes. And their goal is mainly to learn from the things that were done in Ukraine and how they build an extensive industry over a short time or period and scale to millions of units in production on a yearly basis. So they would like to use that program to build a U.S. ecosystem for the smallest, highest volume of drones, but yet the lower value of drones, which are called FPV, first-person view class of drones. Those are very small, cheaper drones, which are below the Group 1, Group 2 platforms we are serving today. The DDP phase one was, as you mentioned, started earlier this year, and it was purely price-driven and validation, simple missions with minimal requirements, just let's understand who is the ecosystem participants and can help America scale on that, and that was the initial phase. kind of see not where RIP plays. So it wasn't relevant for Mobilicom because of what they required. There was no pure play for Mobilicom over there. But what matters is what happens next. The second phase, phase two of the DDP drone dominance program, which is the selection is underway now, shifted the requirements from simple analog data link to secured, encrypted, digital communication, which is exactly where the Scarper family of solutions sit today, and signals that the mass production will also require compliance to some cybersecurity.

And on that, can you meet the price requirements? Obviously, phase one with low-priced drone, you have very sophisticated cybersecurity capabilities. Can you meet the military's expectations in terms of pricing for Phase 2 on drone dominance, do you believe?

Once going into the future. So every step of the program evaluation, secure digital data links, certified vendors, American manufacturing, cybersecurity, all of them move towards our existing position. So for the SPV market segment, which is yes, showing incredible numbers of volume under this program that intend to build this ecosystem in America, but very competitive, low value drone, which is very small one. So for this SPV market segment, it provides optionality that we can choose to pursue if we want to, especially as they are moving more and more to Mobilicom capabilities as mandate for the future. Where we are very closely monitoring this emerging US market trends and the BOW Department of War resolutions, while carefully identifying our unique selling points for this market, as it is very competitive area, demanding lower prices, but offering large opportunities and quantities. And that's, yes, creating a big bug around the market, but it's also important that you can generate from that a sustainable company with gross margin revenue and scalability and not entering into losing fundamentally, losing money over the ambitious plan. So we are glad with the new resolution that came and brought the requirements towards Mobilicom's offering in different elements. We believe that phase three and phase four in 2027 will be much more appealing to what we have to offer. And we are yet to decide if we are going to take and choose these lower-end, high-volume, low-cost platforms and target that with partners. But there are activities that we are doing under that market segment to fortify our unique selling point for that.

Okay, thank you very much.

And do we have more time for additional questions, maybe?

We have reached the end of the question and answer session.

I would like to turn the floor back over to Liyad Gelfer for closing comments.

Liyad, do you have any?

Thank you.

Yeah, I think we can have the last one, another one that we just received. Sorry for, you know, raising it after we close, but we close it after that, of course. Yeah, okay. So the question we just received, the final question right now. So, with the FCC trusted status and the tier one wins in hand, what are you most focused on over the coming quarters? Yes, Orin.

So, there are multiple things that keep us busy on the coming quarters. I think the first one is assisting and advancing our current recent designings with large OEM manufacturers who are often being very busy and have limited resources by guiding them through integration and validation process toward initial production and identifying first deployment customers that they can achieve because that will progress us as their partner to larger programs in the next phases faster than later. I think the second thing that keep us busy is delivering the second half by maintaining the monthly cadence and encouraging new orders from the existing OEMs that are in this production. Third is finalizing the U.S. manufacturing agreement and building this U.S. production capacity, which is a significant position as indicated by the Pentagon and to meet first the requirements in Salad, but be part of the very small number of ecosystem players that can meet the entire requirements of the DOW and the federal market in the United States, which we aim to accomplish and deliver first production run in 2026. And fourth, I think deepening our software layer, The OS3 cybersecurity for autonomy and the secured autonomy framework is the new cybersecurity requirements move into programs because that is where the higher margin recurring parts of licensing model of our solutions live. And that's unique position that we have versus others. And we are leading this market position. So I will say that those are the key four items. And all of it is funded from our current balance sheet we have with the same discipline and bend rate that we are continuing to enforce over the last year.

So that's our focus for the coming quarters.

I believe that concludes today's call. A replay will be available on ir.mobilicon.com. For any follow-up questions, please contact Chris Donovan, our Head of Investor Relations, at chris.donovan at mobilicom.com. Thank you for joining us, and thank you for your continued interest in Mobilicom.

Have a great day.

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