Elsight (ASX:ELS) Q3 2026 Earnings Call

0:00 Good afternoon and welcome to LSAT's Q3 FY26 results webinar, presenting today's LSAT CEO of Amitai and CFO Dan Hillerobis. Before we dive in, I'll direct your attention to the disclaimers on slide two. I won't read them in full. However, I want to highlight the key points. This presentation is for information purposes only and does not constitute financial product We will discuss forward-looking statements today. These involve known and unknown risks that could cause actual results to differ. A quick reminder on our reporting, all figures discussed today are in US dollars, unless stated otherwise, and we operate on a calendar year basis.

0:48 Regarding logistics, we will have a dedicated Q&A session at the end. However, you are welcome to submit your questions at any time using the Q&A function at the bottom of your screen. will address as many questions as possible during the session. It's now my pleasure to hand over to our CEO, Yoram Amato. Thank you, Mel, for the introduction. And thank you, everyone, for joining us today for this quarterly webinar about the September quarter of L-CITES. For those of you who joined us for the first time, I'll try to walk you through briefly who else it is, where we sit, what is the opportunity that we have in front of us, and what is the level of confidence and excitement that we have in the company. I hope to do it in the best way that will give you an understanding of how the future looks like, what happened to us in the last quarter, and how we see the next year as part of the growth that we're seeing to ourselves.

1:51 As you all see, we did a small brand uplift to our site with a new logo and new look, mainly to stress the development that the company is doing from being a communication provider to being enablement technology provider for uncrewed systems, not only for communication, while ensuring our entities and unauthorized entities are kept at bay. so in LSAT we're not building drones we're not building robots what we do is we are creating this thin layer of enablement technologies that enable those all those platforms to perform their mission doesn't matter if the mission is commercial mission or inspection drone delivery or agriculture or it's a home security or defense mission like ISR mission logistics mission product the first responder and so on and so forth And I'll say today, looking from top down on what we achieve, we have a pretty big customer base that we're supporting with our systems today. This number is growing on a quarterly basis, having new customers. Some of them are pretty big ones.

2:53 We'll talk about it. about those onboarding that we did this quarter as part of it but when we're talking from experience and when we're talking about what we have done and where we are in the market i think that while the market is growing fast and we'll talk about the trends in the market we're sitting in a very very interesting spot in the middle of the market having the right capability from boot and ground perspective and access to new customers and end users and OEMs and also having the infrastructure to support logistically from manufacturing in both Israel, United States and Germany from having business development people in different parts of the world being close to the customers and generating more pipeline opportunities and as well as converting those pipeline opportunities into actual deliveries or actual sales.

3:45 so looking on our overall numbers or starting from the technology One of the beauties about L-Side is currently all the growth that we're seeing is pure organic growth. Maybe we'll touch a little bit upon inorganic opportunities that we're seeing as well. But within this organic growth, it's all based on a proprietary technology that we have developed and still developing in-house. Part of what I will talk today is not only about what we already have on the track, but also about what we're developing for future capability and future feature for our customers. that will create more pass-sell and cross-sell opportunities for us. So while we're seeing a big surge in the defense market in general, but more interestingly, in our case, the uncrued systems, I think, like I said, LSAID is positioned in a very, very interesting spot within this space, and we have all the tools we need to benefit or to take over this opportunity that, again, like I said in the beginning, I think that my biggest challenge as a CEO talking to investors that are looking from outside in is to try to share the level of excitement and the level of confidence we have inside the company to execute and to deliver those opportunities that we have on the table today. Looking at our number, we put it as a nine month numbers of revenue, which look exceptionally good if you compare it to previous year.

5:07 What we did during this quarter that was ended in September is grading the infrastructure and grading the exposure to many of these customers and potential customers, having all the legal tick boxes from BlueList that we have done before the last quarter, getting into the DOA with the DOW in the U.S., being listed in the Army or UAS marketplace. And I believe that between now and the end of the year, we'll be able to show how we convert those opportunities into actual revenues based on those progress that we started to be honest with the project GI that you all remember. And then from there, there was a lot of different work streams that brought us to where we are today in terms of the opportunity that we have in front of us, the pipeline and the backlog that we have.

5:56 on on our resources we have all the resources we need to execute on our strategy and to even be more aggressive on our strategy to make sure that not only that we're achieving our goals but we over achieving our goals and getting those goals or thinking big when we're thinking of the results and thinking about next year as a result of the opportunity with that we see in front of us and we genuinely believe that that there is point in time in a company lifetime that you have these kind of opportunities that we need to think big and that's where we are today in health side based on all the feedback that we're getting from the industry based on the progress that we're doing much faster than what we thought in some areas so taking those 195 million us dollars of pipeline or actual tangible opportunities and we'll break down that this pipeline into actual numbers And like I said, I think that shows the opportunity and that shows that we know what needs to be done to convert that into actual revenues in not only the short term, but also in the medium term, speaking about 2027 and how calendar year 2027 is going to look like.

7:03 We're getting ourselves ready from production capacity, like I said. As we set the market, we're going to expand our production capacity into new territories. So during the quarter, we already start to do manufacturing in both Germany and the U.S. in addition to the current manufacturing capacity that we have. Remind you all that we're using contract manufacturers, so we are not having our own manufacturers, basically. We don't have our own manufacturing line. We're not investing a lot of COPEX, as you can see in our numbers in the quarterly report. but expanding this number and being able to deliver on the opportunity we have is something that we were doing in a very planned way and I think what equally interesting to all of the above is that the margins that we're still able to support showing the market that need for the products basically by having super high gross margin relative to the rest of the industry of 77-ish percent gross margin on every sale that we're doing on average.

8:02 Well, the software is higher than that and the hardware is around those levels. I think it shows the quality or the value proposition that we provide to our customers. When I'm looking two years out or three years out, based on the macro political environment in the world today, I still think that the vast majority of our revenue will come from defense. having said that we are seeing expansion also in commercial markets we are investing resources there to make sure that we're not only looking at the defense side but also looking on the commercial side different application within the commercial side we're seeing those that are moving faster and some that are moving a little slower but we do see the progress that is currently happening in the industry as a company not only as i said not only that we're looking on different sectors within our industry, we're also looking on different domains.

8:56 So starting from the sectors, and I think that's one of the advantages of us with our go-to-market strategy is that we have the same go-to-market to each one of the sectors. L-side product, the Halo and other products that we'll talk about are kind of a one-size-fits-all. It doesn't matter if we're talking to a defense customer, to a public safety customer, or to a commercial customer. all of them are having the same needs based in the basic level obviously they do their own configuration the actual product is exactly the same not only between different sectors but also between different domains so when we're talking about when today most of our sales are in aerial vehicle we do have a lot of exposure in ground and since the last quarter we are starting to have a growing growing exposure also to maritime I think that being able to serve all those domains with pretty much the same products or exactly the same product but just decent configuration provide us or expanding our addressable market in a very interesting way and on that we are working with our customers with the end users we're looking on general on industry trends of one of the next trends in terms of the main domain that will be there and this is how we are expanding our addressable market looking on the problem that we're solving or what is the gap that else are you solving.

10:16 So from one hand, we have the platform, which is the basic level. That's the actual drone, robot, vessel, what have you. And on the other side, there is what we call enablement or enabling infrastructure. And enabling infrastructure is exactly what I said is the actual technical capabilities that enable those platforms to complete their mission, whatever the mission is. Again, that's true both for commercial and defense. so what we're seeing in the market is that there is this big gap between the platform capability and the technology or enablement technologies capability and what we have seen there we see more than anything a great opportunity for else is to expand from being only a communication company to becoming an enablement technology basically company which include different different portion of the of the mission enablement that I'll walk you through in a second But before that, again, getting deeper into the challenge or the different challenges that are out there is editing from signal loss on the communication level, losing the positioning of the platform, knowing where the platform is in a non-GPS environment.

11:25 Think about it that you are working with your iPhone. or with your cell phone and you don't know where you are using Google Maps or Waze or your favorite navigation app, that's the basic assumption in today's front lines or in today's modern warfare. And that's a huge problem, probably as big as the communication problem, and I'll talk about what else he's doing there. in addition to that when we're talking about different failures that can happen it can be how do you manage the spectrum how do you get the intelligence in the right time backwards so decision maker will get the right decision how the data that you that all the sensors in the field are being collected and how you enrich your database that you have on the back using AI tools and others to have a more situational awareness in the field. All of these are huge problems in today modern warfare that we're seeing both in active frontlines as well as looking on government and how they are getting ready to basically find a solution to the challenges that they see moving into the future.

12:30 going back to us and what we're solving like i said with the halo is exactly that we are looking on all these different building blocks of a mission regardless of the platform regardless of the domain and thinking where we can expand or where we can provide more solution that will create a better experience for our customers or OEMs in general, on one hand, and on the other hand, will create upsells and cross-sell opportunities for us. So today we're looking on different parts of the solution. And the beauty of that is that they're all dependent on the same halo as a platform, basically. And speaking about this platform, on the baseline, What we're being able to do is to help our customers and end users to utilize the entire spectrum of frequencies and technologies to make sure that, again, they not only can complete their mission, but they can monitor their mission, they can make sure that the mission was successful, and so on. So summarizing the technical part, LSAT is sitting on what we call the platform OS. the platform operating systems.

13:37 While below that we have the actual hugger, the actual vessel, the actual robot, the actual drone, or whatever the platform is, then on top, above it, there is the mission OS, the mission operating system, and the human-machine interface, basically. But L-Site, we look on this layer, call it the T1 layer, basically, of enabling technologies, like I said, of providing communication, positioning, video and sensor processing, and some autonomy features to be able to complete it. And by the way, on that, some of it is being developed in-house in Elphi. Some of it we're looking to do joint venture with different companies. And some of it we are looking in terms of inorganic opportunities that we are looking to expand our product portfolio and reach the market as fast as possible because of the opportunity we have in front of us.

14:27 now speaking about this opportunity it is a slide that we showed for the last couple of quarters just to show the trends that we're seeing in budgeting in defense budget in general and more interestingly how much of those budgets are specifically relevant for antro systems or what we're doing and that's an interesting trend that we're seeing throughout the world basically not only in the us or north american market we see the same in europe we see the same in different parts of asia and asia pacific and all these for us are signaling or signs for the opportunity that I was referring to before and to the shift that we're seeing happening in the industry of how big is the place of where today those technologies are taking part or what is the portion of those systems within the defense budget in general.

15:17 now looking at the development that we're doing regardless of the revenue and pipeline numbers are also different putting the right putting the right setting the right stage or setting the right infrastructure to take over the opportunity once the budget will start to kick in and i'll talk about this budget in the next slide So, starting with Air Environment, AVAV, that's one of the biggest or the biggest company in crude systems for in the US defense. We just launched, we just announced the market basically, a partnership that we have done with them is part of AUSA, one of the biggest Defense Conferences in the U.S., the RD Conference in the U.S. I refer you all, if you haven't watched the video of how they speak about the opportunity they see on the outside and how we speak about the opportunity we see with them, I think that's a very, very interesting development.

16:05 And again, being prepared for all the budgets that will be allocated and all those programs that will be started to be deployed and how it will translate into actual revenue for us and being next to this thing creates a lot of benefits for us even during the AUSA show, we already started to see the result there of having a lot of feedback. Our name was out there, was very, very known when we walked the floor and people heard about this partnership. It was a PR that was made by AV, saying that they now implement or they now integrate LSI capabilities into their Mayhem 10 platform, which I think is very, very interesting development that is happening there. Like I said, on the manufacturing scale, we started doing manufacturing with two new electronic manufacturer service providers, one in the U.S., the other one in Germany.

16:54 More than it's supporting our production capacity, it's supporting the need to have a manufacturing close to our customers to be able to provide them local manufacturing so they have a better control of supply chain, better sovereignty on what they're buying for us, and that's another trend that we're seeing, and we just... like I said, creating the infrastructure so we won't have any friction in the sales cycle when we move forward. Another interesting development that happened during this quarter, or actually after the quarter end, that was also part of the AUSA, we launched our new positioning product, which is basically to mitigate the problem that I mentioned before about how do you navigate or how do you know what is the position of the platform without using GPS.

17:39 GNSS or GPS is kind of GNSS network, basically. So, what we have launched there is basically a product to go after this market, while the communication market is huge in that number, total addressable market, we're seeing the same in the positioning market of a lot of different solutions, none of them are the ultimate solution, and we see our disruptive technology which is still patent pending, but is a new approach of how to utilize existing infrastructure around the world, the infrastructure that is the most deployed around the world and how we leverage that to let the platform or let the operator know where the platform sits with integrating different kind of sensors and our unique technology that we have developed internally in-house. And like I said, it's still patent pending and hopefully will mature into a patent in the medium term. and last but not least during the quarter the access to the us which included boa contract as well as being listed in the marketplace one of the first or maybe the first component to be listed in the marketplace the uas marketplace for the u.s army which is not only for the army now there are different services they're using the same infrastructure to buy from there is no dollar amount attached to that but like i said That's part of the pipeline expansion based on those developments that help us to go to more customers.

19:04 As I said in my opening, I do believe that between now and the end of the year, we will be able to show to investors or to ourselves as well how we translate those infrastructure developments into actual revenues and millions of dollars of revenues that we are expecting to come from there, which I think is, again, an interesting development. Now, deep dive into the U.S. market a little bit and talking about budgets, and there is a lot of discussion in the industry in general and in the market as well about what the budget is going to lend and how it's going to affect companies in the market. So I'll focus on the U.S. market, but for LSI, it's true for almost any other market that we're going after. Well, the big prime of the big companies, the very big companies are very sensitive to the size of the budget.

19:53 In our case, because we are sitting on so many different programs, it's more of the passing the budget rather than the size of the budget it means that right now the budget request of the in the us is 1.5 trillion dollar over 54 billion dollar is allocated specifically for uncrewed systems which as you know based on my previous of my previous presentation it's 200 times higher than FY26 so that's a huge jump that is happening there I think more than anything even before the budget was approved it shows where like I said in the beginning where the opportunity sits and how big is the opportunity but what I wanted to comment about that is that while the sector or the industry is still discussing where those budgets will start to be deployed I think that for a company like us once it will be approved and we'll start to see even if it's a small program that's already accelerated for us or opened a lot of bottlenecks for us just of the approval regardless of if the size will be 54 billion or half of that just the fact that the approval was happened and the budget can be deployed that will open for us a lot of or that will open up for us a lot of bottlenecks that we have today and will help us to translate it into revenue so what I wanted to put on this point today in this presentation is that in LSA case again unlike the big primes or neo primes we're not as much exposed to the approval of the budget and started to be deployed

21:23 and again that's based on the next week election mid-term election in the US and what the process will be there and how it will look like but when we are working with our customers and end users this is what we're getting from them that once those programs will start to happen we'll see a flow of new opportunities and new orders coming in. The way all of it translates into actual pipeline opportunities, so as you can see, first of all, we tried to put more detail into our pipelines and to give you a better understanding of how many opportunities we have in each one of those stages, how the numbers look like, and maybe one of the most important stuff here is that those pipelines cover Halo solutions and also covers opportunities that we already have on the table.

22:15 So like we put on the quarterly, when we're talking about commercial discussion, those in a very, very high, very, very high probability to translate into actual revenue in the short, medium term, and that's the meaning of the commercial discussion. This is why we're feeling so comfortable and so excited about how the future looks like. But all of these are opportunities for Halo, and those do not include, obviously, new customers and new opportunities that are coming our way, as well as expanding our product portfolio with both existing customers and net new customers. which create a lot of upsell and cross-sell opportunities for us. So the meaning of this growth in the pipeline, and for those of you who remember the number, we have around 30 million increase in the pipeline in different stages of the pipeline since last quarter. Now, we started to see the result of our business development team that is working with the boots on the ground, like I said, being closer to the customer.

23:14 And when we're looking 12 months out of how the next 12 months or until 2027 will look like, we're feeling very comfortable that big portion of this pipeline will be converted into actual revenue as we're seeing the different opportunities mature inside a pipeline and getting into actual revenues or becoming a backlog, which is a contracted deal and translated into revenues. speaking about the contract or the backlog and basically the number if you look on the number of the quarter and look on this pipeline how it looked like on the previous quarter you can understand sorry that many opportunities are matured during the quarter and already delivered and that because if you look on the backlog for example this number went up since the last quarter and we still did all the revenue we have done during this quarter so just to make sure we all understand that those are the tangible, foreseeable opportunities that we have in front of us and that does not include other products or new product offering like I spoke about the positioning, which we believe can be maybe even the same size of this pipeline which we're seeing in front of us on the communication.

24:28 We'll have the same on positioning as well as other products that we're expecting to launch to the market in the short, medium, and long terms. what helps us to get into all those developments that are happening are the boots of the ground like I said that we have on each one of those areas of working specifically in North America or being more specific in the US market and on the priority market for us in Europe Middle East and the rest of the world this is where we put our resources today this is where we're expanding the capacity and the resources that we have Like I said before, because we understand that the opportunity in front of us is huge, because we understand that we need to be more aggressive and to press the pedal to the metal and to accelerate even faster than what we're doing this year versus last year and what we have done in the last two years.

25:22 Like I said, in terms of the opportunity that we see in front of us, the opportunity is endless basically if you're looking on the face of LSA today. And this is why we have this level of excitement and hunger to go get it and to be more aggressive in places where we feel that we need to be more aggressive. We're doing that, like I said, while we're setting the infrastructure to be able to support these opportunities. whether it's from making a simple product to manufacturer that can be manufactured anywhere in the world whether we're talking about redundancy or making sure that we have different providers and we're not depending on a single source for anything and being able to deliver orders while we get them supporting production capacity expanded production capacity not only with the existing manufacturers that we had at the beginning of the year but also expanding it to other territories and onboarding these manufacturers like I said in the US and Germany to support those needs and to support this surges is happening currently in the market speaking of this infrastructure to protect our IP and to make sure that we are in front of the technology so first of all we're constantly utilizing all the data that we're collecting from the field we are submitting patents those are patents that we already have granted I mentioned during this call place to patent pending that we're having a new development that we have done or still doing as part of us and how we protect or what is the mode that we're creating around the technology, not only from patent perspective, but also other measures like

26:55 data protection that I talked about, or making sure that we're constantly developing and being at the forefront of the technology, basically. So before I'm opening it to questions, I think if we look on the recent achievement that we have received, whether it's from actual revenue perspective, the margin that we are working on, looking on the different infrastructure that we're creating, whether it's the Blue List or the UAS Marketplace, and having the resources we need to execute on the strategy I think that looking on the 196 million dollars of US dollars of pipeline and understanding that we know what it takes to convert those that is very promising and and we are feeling super comfortable and excited to get into or to finish this year with the best foot forward and getting into next year with even bigger hope than what we had for the year and even though this current quarter was soft because of mainly movement of actual movement of actual opportunities and not because they are they disappeared I think like I constantly saying to investors it's a matter of time and I think those and we see that those orders will come and once they will come I think that we all be satisfied with the result and the growth of L-Site.

28:12 So with that I want to hand it over back to Mel to open the question and I'll be happy to answer any question. Thank you. Just following on from that ending, How do you explain the lack of order wins in Q3 when the uncrewed market is growing so fast? Is it because of competition from large US tech companies or is it purely a slowdown in orders due to inventory timing? We are definitely not seeing a slowdown from this perspective. As I said in the last slide, what we're seeing is movement of those opportunities time-wise. So we're in a very close relationship and very close connection with all of our existing customers and a very good relationship with our prospects.

29:04 And what we're seeing in this movement is definitely not because of new competition that is coming from the market or to the market, is more so because of time shifts of programs and inventory and schedule of customers. And that's why I'm able to still speak on the same level of confidence that I did throughout the last year and even being more confident around how the future, how the short and medium and long-term future will look like. So that's how we explain what happened to us during the quarter. And again, as I said, Part of the orders have received during the quarter and was already delivered. This is the revenue number that we're seeing on the quarter.

29:50 Part of them went into the backlog and others have shifted. And we believe that, like I said, we'll be able to show the market between now and the end of the year and definitely throughout 2027, how those pipeline numbers are converted into actual revenues. And that takes us to the next question. Someone has asked, can we expect a return to previous quarter revenue in Q4, December quarter? Generally speaking, like I said in previous webinars and presentations, we do expect those trends of quarters and growth in quarter over quarter to remain, and we are expecting it to grow. Like I said, when I spoke about a pipeline and seeing how those pipelines are being translated into actual revenues.

30:45 So, yeah, we do expect those numbers to be in same levels or even higher levels moving forward and looking into 2027. Thank you. In terms of the pipeline, can you please provide some estimated timeframes of each segment of the pipeline? And just to add to Andre's question on pipelines, Can you also just clarify what backlog of US 3.5 means? Is it work secured and revenue to be delivered in power? Sure. Starting from the last part of the question, because that's the easiest for us, what we put on contract set or backlog, that's actual deals that we already signed, got the purchase order, down payment for them, and then it's based on customer schedule of when and where they want the delivery to be in. So that's the meaning of the contractor.

31:43 That's the definitive revenue or number that we'll translate into revenue, but it's not part of the revenue that we had in the quarter, okay? So let's imagine that we have an order of $1 million. that we received. The customer has paid about the down payment. We put it into the backlog until it's been actually recognized as a revenue. So that's the meaning of this part. And for the first part of the question about timeline and when we expect those to be, those opportunities to be translated. So obviously there are different maturity level with inside a pipeline as we put it here. And we can see that also the number of opportunities in each one of those buckets in the pipeline are different, we do, and as I said on previous presentations and previous webinars, we do put on these pipeline numbers, we do put opportunities that are tangible in the next 12, 24 months. So we're not putting here wishful thinking for something that we think is going to happen in five years' time.

32:49 Those are tangible opportunities. Now speaking about what we also included in the quarterly, if we look on the commercial discussion as an example, of, let's call it a rounded number, 35 million U.S. dollars. This is contracted, we're already negotiating. These are customers that we already have business relationship with. So it's not just that we need to mature a new customer. Those are much more tangible. And it's also the same, sorry, for the evaluation in progress, which is in a different state. I would say Generally speaking, since we started to put out these pipeline numbers and looking on our customers, we don't have a lot of examples of opportunities that just vanished from the pipeline. It's a timing thing, like I said before, and now that we have the team set up and we have people closer to the customer and we have much more clarity in understanding how it will look like in the short, medium, long term, That's what provided the confidence or the excitement, as I said in the end of the slide, about how the future is going to look like.

34:06 Thanks, Giles. Just in terms of Q4 revenue, we've been asked to clarify, do you expect revenue to be higher than Q3? what would be the uncertainties or risks? And further to that, while we're on that question, would you see material revenue contributions from your anchor customer in Q4? And potentially, could there be a repeat order from this customer in the disclosed pipeline? Yes, so the pipeline is built of both existing customers and net new customers. Obviously, those that already submitted repeat orders in general, or I assume there was a specific question about what the market called OEM1 and when the next order will come from there.

35:02 It's definitely part of the pipeline. And as I said in previous presentation and in all the communication we're doing with the market, We're feeling very comfortable there with the customer. We have very, very close relationships there. We are looking on what are their plans, or in general, looking on different customers, not only on them. What are the plans for not only the next quarter, but for the next 12, 18 months? And based on that, we're building our plans and our expectation of how it will grow moving forward. So that's on this part of the question. With regard to the numbers, we do expect Q4 definitely to be higher than Q3. As I said in the previous question, in general and looking forward, we are expecting the revenue number of the quarter numbers to be on the same level or higher of what we had in previous quarters.

35:55 We still have the same level of confidence of us being able to deliver it. And again, it goes down to the same point that I made before about timing. And also, if I may add about that, it's not a direct relative part of the question, but just to give more color, when I'm talking, as I spoke during the slides on the budget approval in the U.S. as an example, The point is that there are a lot of programs that are sitting on the shelves, basically, and waiting to be budgeted. So, it doesn't matter, like I said, if the budget will be $1.5 trillion or $980 billion. Those programs are in priority, and once they kick in, once the budget is approved, those programs are kicked in, and we're starting to see the actual orders or the actual discussion, let's call it, translate into actual revenue.

36:50 So, while I have high confidence or definitive confidence that the fourth quarter will be higher than this quarter for sure, I think that if we look further away into next year as well, I think that we will see this uptick based on this approval and then the question of how fast, based on the political environment, let's call it, how fast those budget approval will happen. And again, not necessarily the size of them, but more so the signing of the approval or the fact of the approval itself. How long will it take to integrate Halo into AV's Mayhem and how many units a quarter will they be manufactured?

37:41 So as for the integration, we're already started to do the integration work. We are expecting, or AV and us together are expecting to have revenue from this platform in FY27. AV's FY27 already started. So when they are talking about that, that started in September. So it's between now and next September, basically, that you see actual orders there. So it's starting with integration. then we have a demo unit, basically, and then with those demo units, they're going to customers that they already have. For those of you who are not familiar with AV, AV is probably one of the largest or the largest revenue-wise of uncrewed systems, mainly aerial vehicles that they're doing. The Mayhem, specifically, is a loitering munition platform that they're integrating into Halo. It's the new loitering ammunition who, in the future should replace or be in addition to the switchblade.

38:38 If you want to read on that, AV is a public company, so you can look on their numbers and how they're growing. Obviously, for obvious reasons, I cannot comment on specific number of quantities that we are expecting to have there, but I can say that they share with us their expectation or their pipeline and opportunities that they're going after with the platform, and it looks very, very interesting. Between now, they are looking not only in the 12-month period, but also how it will look like in three years' time. And those numbers will look super, super interesting, and that's why we are excited, not only because it's a big company and being attached to such name create a lot of help on the marketing side with the industry, but also because of the revenue opportunity that you are seeing there.

39:35 So Robin has asked, why can't contracted manufacturers copy your technology and build white box models? Will the patience be too late? So, first of all, the patents are until 2030. Most of them are until 2032. And my comment on that is always that it just doesn't work that way. If you look on the automotive industry, which is super mature industry, and you can ask yourselves, why would Toyota buy from Bosch or from any other of their T1 providers? Why they're not doing everything themselves? And the answer for that is that companies are focused on what they're good at, and if there is a good off-the-shelf product they can source, they will do it in many cases.

40:24 So, same as we see in the automotive industry, in the commercial aviation industry, in many places in the defense industries where the primes are more of an integrator which have their core IP, but they are sourcing the entire stack of the solution that you are providing. I think that's the reason why they're doing that. Now, if you look on the commercial market, by the way, there are little less than a handful of examples of companies that are doing A to Z vertical integration. It's very, very rare on our industry. And again, the industry is the uncrude industry, both in the commercial space and the defense space. We're seeing very little number of companies that are doing a fully vertical integrated solution. They're doing everything A to Z.

41:15 That includes payload. Sorry, that includes payload. It includes communication. It includes all the enablement technologies. Actually, everything has to do with positioning and navigation. sensors and so on so it's just the dynamics of these industries doesn't work that way and thankfully you know when today software maybe become commodity in deep tech like the like the outside environment AI tools are great but they're not enough to develop the deep tech that we're doing because of all the data and because of all those modes that we have around it so that's that's the best answer I can give for that Thank you.

42:03 And then in terms of the pipeline, has the blue list potential been factored into that? Yeah, so as I said when I spoke about the progress that we were doing on the infrastructure level, let's call it, so For those of you who were with us a year and a bit ago, we started with the Project GI. That was our breakthrough into the U.S. DOD, or now DOW. Then from there, we have the Blue List. Then we have the BOA. Then we have the UAS Marketplace. And as I said during the presentation, now we're expecting all these infrastructures to translate into actual revenues based on the pipeline. So the answer is yes. Partially, yes, because part of the opportunities on the pipeline is as a result of the blue list and the other milestone that I just mentioned. And some of them were still maturing and they're not yet part of the pipeline.

43:01 So this is how it helped us and reduced a lot of friction on the sales cycle by having all these chat boxes ticked from compliance standpoint, let's call it, or certification standpoint. Speaking with the pipeline, what are the new businesses not in the pipeline? And second to that, maybe, can you provide some more details on the stealth program? Yeah, sure. So on the first part, like I said, the pipeline opportunities or the pipeline figures that we put out is based on existing product that we have on the track. That's mainly the Halo or the vast majority or only the Halo.

43:47 As I said, 10 days ago or about 10 days ago, we launched a new product for the positioning. It's not a navigation product, but it's a positioning product. And seeing the addressable market of the positioning market versus the communication market. I do believe that the pipeline that we will create on those opportunities of both upsell, cross-sell, and net new will make the pipeline thicker in terms of adding new products. In addition to that, we are working, so we have the Halo, we have the Aura, and we're working on another lower tier product. We now call it Mini Halo. Doesn't have a marketing name yet, which we are expecting to go out to the market with it around February, March of 27. That will target the low end of the market of what's called in the industry SPVs or PVAT or small robots.

44:44 And again, that plays again in the same way that it does not Big part of it does not include in the pipeline figures that we put out at the moment. So this is how it's split between the different products. It does include different regions, but not different products, but also only the Halo. On that, on the new business unit that we discussed, we are expecting to have a launch around it between now and the end of the year. Like we advised to the market during the last quarter, we signed the first customer and we're working to integrate that. it's a product to remind you all that goes to government directly and it goes top down to government it means that the sell cycles are little longer and the integration time is also little longer but the most and the stickiness of this product and the fact that it's a pure software without any hardware component that's what interesting about it so this is what we shared so far and the situation over there The team there is working very hard to complete the current existing integration as well as bringing in net new opportunities.

46:08 And then in terms of your partnership with Andrew, they're now listed on the website. Is there any information you can provide there? And does LSAT have any intention down the track of going after the eBPOL market? After which market, sorry? EBKOL. EBKOL. All right. So as for Unreal or any other logo that we have on the website, like probably many of you have seen, we launched a new website with a refresh of the names and refresh of the quotes that we have from customers that are giving us some information some good feedback and we're able to share with the market.

46:58 There are various logos there, including Unreal and other logos as well. Those are customers that we already have business relationship with in different levels. Obviously, working with big companies like the Unreal's or any other Prime, Grinnell Prime, there are multiple or many work streams that we're doing with them on different business units that they have on their side. Those companies are usually working siloed, so they have land domain, they have maritime domain, they have air domain, sometimes they have communication domains. So while we are working with sometimes all of the work streams or all of the business units, sometimes you work with only one and then expand from there. And that's what you're seeing on our website in terms of logos and what we have there and what is the work we have there.

47:47 And the obvious statement that each one of those is a tip of an iceberg because our companies have a lot of different projects and programs they are doing. And we're obviously constantly looking of how we can expand there. A good example for that, by the way, is AV, Air Environment. Again, for those of you who watched or didn't watch the video that we shared together, like a shared video we shared with them, they're talking about the fact that once we are in the Mayhem doing the integration, that will make it easier to expand into other AV platforms, which I think that speaks for itself. So this is how we see that. And about the eVTOL market, in general, I'm not sure what the person who asked the question was referring to, but if the reference was for the air taxi market or the big market.

48:43 We do have some projects there, but I would say that L-State as a company in general, we're looking on high quantities. And while we do have exposure to this market, it will take a long time until this market will have high quantities. Again, I hope I understood the question correctly. And that was the reference around around EV tolls for air section. So it is a market that we have a small footprint in, but the whole market is still small and it's only trying to be cautious with what I'm saying here, but it's mostly wishful thinking because currently we're not seeing scale in this specific niche of the market. So again, I hope I addressed the right reference there, but that's my take.

49:34 And then in terms of Starlink being disabled in the Ukraine, has this impacted the reordering from your European OEM? And how did Starlink interface, if at all, with LSAT? So many of our customers integrate, again, going, starting from the technical part, LSAT in general, our solution is how to aggregate the entire spectrum of technologies and frequencies. Starlink is one of the technologies and one of the spectrum bandwidth that we can utilize. And many of our customers are integrating Starlink into LSAT so we can manage not only the Starlink, but also all the other communication infrastructure that are out there.

50:22 So that's on that, and that's happened a lot, and actually it's growing in terms of the number of companies or the number of customers that integrate us with Starlink specifically or other LEO players like Amazon that is becoming one and ASDS and other players that are in the LEO space, in the low-orbit satellite space. specifically about the point of all everything that happens with selling in Ukraine without commenting specifically on the reason and what happens there, I would say that that's exactly what LSI is providing. We are, our statement is that none of the infrastructure as good as it can be, there is no single infrastructure that can support these operations for long term with regardless if the reason is because of servancy, or because of accessibility or because of price or because of jamming and poofing in EW environments.

51:22 The bottom line is that trying to rely on only one stream, whether it's Starlink or any other, does not provide the necessary solution. So just commenting directly on the question, the answer is 100% yes. And not only in the Ukraine, by the way, companies or governments are seeing those kinds of events, they're looking for a solution that will be multi-path and will release their dependency on a single link. If we move to the competitive landscape, we have a few questions here. So one, do you have significant competitors in your market space? Would Kodan be one? Are they bigger than you or more powerful?

52:12 And again, can someone copy your developments readily or are they a long way behind in terms of data acquisition? Essentially, if we look at the lesson of Ukraine innovating, it takes Yeah, so it's a highly competitive market, generally speaking, because there is a lot of the pile of dollars in this market is big. And obviously, there are a lot of people that want to put their hands on a lot of companies. I want to put their hands on that. Having said that, I'll split the answer into two, into anything between direct competition and non-direct competition. And when I'm speaking about non-direct competition, I'm talking about alternatives and not necessarily a competition. So, for example, what I just pull up here on the slide is that you can see that there are different alternatives from single-cellar solution to RF solution to satellite solution, and each one of these are listed specific names. Now, and I can comment directly on Kodan, the relevant company within Kodan's portfolio is a company called DTC, Domo Tactical, which also, the same way that I said on Starlink, many of our customers integrate Kodan products into our solution so they can enable They can enjoy these capabilities as well as other capabilities.

53:33 What we're basically creating is that we are connecting all of these together into one solution, basically, that the customer does not need to handle anything, but everything happens automatically. So that's the core of what ELSA is doing on the communication space. So while there are competitors in a way, because an alternative to choose only use and RF solution like Kodan or like SILVUS or like any other of Kodan competitors, it's very rare in our case that the customers or even those companies are looking at us or we look at them as the competitors because of that. What we're essentially doing is that we're doing their performance and their product better by enabling more infrastructure to be used and not only their infrastructure.

54:24 with regard to how easy it is to copy our solution. The fact of the matter is that we are seeing competition mainly from small companies, small startups that are trying to develop stuff that we have seen some in the past. We're constantly seeing them on different competitions and so on. We just recently had one in the US which seems like we were much better in the performance and as a result of that we are expecting to receive the entire order which was originally the plan was to split that we are now know that they are working to that we will get the entire quantity because of the performance and because of the different and the level, the technology readiness level that we have. The industry call it TRL level, which I don't think there is, I'm not aware of any other TRL9 product that is currently being offered in the market and doing what we're doing. With regard to how easy it will be to develop something like that and try to copy it, it's exactly the point that is being made in the question.

55:26 I think that all the hundreds of thousands of flight hours and drive hours and tell hours that we have on the system the fact that we feedback it back into making the algorithm more efficient and more productive and by as a result of it adding more abstract layers let's call it around the core of this IP that's what enable us to create kind of a gap between us and any competitor that will step into the market and the fact that We are constantly continuing to invest in R&D and learning from the field just to keep this gap as big as we can and make sure that we will be ahead of the game once we started to see competition. So that's where it is today.

56:15 In terms of your team structure, how many employees does LSAT have and how are they split between engineering and sales? So today we have 53 employees around the world. The split between engineering and sales is pretty much 50-50, while we have, let's call it 40%, 40%, and the remaining 20% is G&A and support. So in the sales we have the marketing, the business development team, and the sales support team, which include professional services, integration, and onboarding. Like I said in the beginning, the very beginning of this presentation, today we have teams in US, UK, Germany, and Israel. And we are looking to expand based on the actual traction that we have from specific markets. We are expanding the team as part of our plan. But that's the current headcount that we have.

57:17 In terms of for inorganic growth in terms of potential acquisitions. Would the focus be on the platform operating system or the hardware layer? Definitely the platform operating system. We see that that's where we have the best access to actual revenue and translate those acquisitions into revenue. That's where it makes sense for us to expand our portfolio of products and do upsell and cross-sell. And that's where we can offer value if the company that we would acquire have their industry access or their customer access, we can do, again, upsell and cross-sell in both ways. So we definitely look on the platform OS layer. We don't see that we have, competitive or any unfair advantage on the hardware side. And that's why we're focusing on where we see that we have this unfair advantage to bring new capabilities to the market and new features and new product offering. So this is where we're focusing our activities there.

58:25 And then when are you expecting the products launched for the positioning capabilities? That was launched 10 days ago in the AUSA, the same conference where we had the PR about the collaboration with AV. We launched there the positioning product, and we are expecting to start and build pipeline and then actual revenues as part of this product. I expect this product during 2027 to already generate meaningful amounts of revenue. So the product is already out there. We already have customers that are doing trials and testing it and using it. We are expecting to expand it. As I said, this market of positioning in general is as big as the communication market.

59:16 and I think that if we will execute in the right way, and again, we have no excuses in this front, we have everything we need to do that, this will become another interesting growth engine for us. In general, by the way, not only positioning, just the positioning is already out there and already being discussed with customers and prospects. And then, I think we have a couple of questions here on guidance. So will you give any guidance in the future? And then second to that, in the absence of guidance, broker consensus for 2026, do you feel like the full year is aligned to broker consensus?

1:00:04 Could you potentially beat that? Yeah, one of the reasons of guidance from our perspective is we want to do it when we have the visibility and the point in our industry at the moment is because there is such a massive disruption in the industry and the numbers, I'll now make the comment about the analyst forecast. I think that These numbers that are currently out there, whether it's for this year or for 2027, the number can be much bigger than that because of the opportunity that I tried to convoy during this presentation today. But we want to put the guidance out once we see it actually or have the confidence of the numbers, and we don't want to put a number there and then to be 50% higher than that or 20% higher than that or vice versa.

1:00:58 That's our view about guidance. We do try to provide as much information as possible to the market in terms of modeling how it looks like into the future. And again, commenting on the analysts expectation or analyst numbers for what they are putting out there, we do feel that the next 12 months that we have in front of us will be able to be very exciting, I'll put it that way again without getting into definitive numbers, to be very excited in terms of the actual results and revenue. Okay, we're down to the last couple of questions. Have you considered the value of your software system for personal emergency beacons in remote environments?

1:01:48 We did in the past. I would say that it's an overkill for personal emergency, but we do have it when we're looking on the defense market. We do look on the opportunities that are out there, mainly because defense forces are investing more than personal emergency in those markets, and our device costs And price is just not relevant for the personal use by they sense. But yes, we'll look to that. And then to finish off, Jov, are you more positive today on LSAT's growth in share price than you were last quarter despite a softer quarter in Q3? 100%. The message I tried to convey during this presentation is that while we admit that this quarter was a soft quarter and obviously looking forward and also looking backwards, we do believe that we are sitting in a much different place. I think that all this infrastructure work that we have done during this quarter and all the Boxes that we ticked, whether it's partnership or whether it's actual infrastructure to support growth in manufacturing, in sales and marketing, in operation, or all of the above.

1:03:01 I would say that on a personal level, I'm much more excited than what I were before. I'll say that as a comment on the share price, that was a question there. I would say that while I think pricing companies is investor's job and we are focusing 100% on actual deliveries, if it provides any comfort to anyone of our audience today, I would say that for us as people who are actually executing on the management, me personally, and the rest of the management and the entire team, big portion is not, I'll talk about me personally, okay, without getting in any other one, anyone else from the management, but 99.999% of my paper was is in L-Site. So when the share price goes down, obviously I'm highly affected on the personal level, and we are here to win, both for ourselves and for our shareholders.

1:03:57 So that's the best, I think, way for me to end it in terms of the excitement and the confidence that we have moving forward. That's where we spend today. Thank you. That brings us to the end about Q&A. Thank you very much, everyone. I would say that you have the IR email here on the screen. If we didn't answer any of your questions, if you have any follow-on questions, feel free to shoot them in IRFL site. We're always happy to try to answer as many questions or not as many, as detailed as possible based on what we disclose to the market and based on all the listing rules, obviously. So feel free to shoot them. emails or questions through us and thank you very much for joining us today.

1:04:43 Thank you Mel for hosting and we'll see you in the next quarter.