Are you introducing me?
Yoav Efron is the CFO of Actelis Networks, trades over-the-counter, ASNS.
Correct. Thank you.
Thank you.
Hello, I'm Yoav Efron. I'm Deputy CEO and CFO of Actelis Networks. Happy to be here, ThinkEquity. Thank you for having me, and thank you for coming. We're webcasted, correct. I'm here to tell you about Actelis. Actelis has been around for a while, and today we're doing this. We connect AI to the edge, and we focus on modernizing defense, federal, intelligent transportation, and hospitality. We have had, I'll start with that because there's no way around it. We've had not a good year in 2025. Not at all. Our revenues were slashed versus 2024. Finished the year with less than $4 million of revenue, and welcome to come in. Less than $4 million of revenue, but 2026 looks much better.
We're on the mend, and after a first half, we're at 2.1, up 26% in revenue, up 80% in booking, and Q3 is not yet released. One thing I can tell you is we delivered a significant order to the U.S. Marine Corps in Q3, which was a major progress in our federal play and our federal program. Gross margin went back to where it should be at 51%, and we have many years in business, most of them as serving the telecom world. In the IPO we did, or right after the IPO we did in 2022, we transitioned, pivoted into critical infrastructure. Critical infrastructure, intelligent transportation, and smart cities, and so on. Lots of patents.
Before I get to the story of the business and the technology, I want to talk a little bit about the momentum that we created since we had that terrible 2025 year. In federal, we've done federal business for a long time, but we did it sporadically and project-based. What we did in 2025, we hired new talent who knows how to get to head sales into programmatic sales. The federal government, especially the military, operates what's called programs of record. Programs of record, once you're in the program, designed in, then you're continuously tapped into in order to continue modernizing, and modernization is the name of the game in government. Everything needs to be modernized from many, many aspects, and that's the frenzy that's going on right now. I talked about the IP telephony. Where do I put the laser?
I don't think there's a laser.
Okay. In any case, in Q3, in September, we delivered a large deal as part of a U.S. Marine Corps IP telephony upgrade of 65 buildings, and we did that successfully. That is part of our Q3 results. We are in lots and lots of trials and discussions into the programs of record, and this will be shown as we get into 2027. In ITS, intelligent transportation systems, it could be in smart cities, it could be in road agencies. We provide communication solutions to anything that needs to be connected around the road or the city. It could be a camera, a sensor, a sign, you name it. Everything else, everything that manages the city, the smart, the digital city, is what we connect. The deeper work in the city is showing. We are tapping into the 100,000 - 1 million people cities.
There are over 300 of these in the U.S., and we are in a multitude of them, but there is so much way to go. Cyber hardening is a focus of ours and what makes us also differentiated. Cyber hardening is an element that is critical in networking in order to be encrypted, in order to not be able to be tapped. In intelligent transportation, in intelligent environments, it is critical, and we constantly release software versions that are embedded into our devices that have enhanced cyber hardening.
Hospitality is a new segment for us. Lots of antiquated analog technologies in hotels all around. You probably saw it and see it all the time as we get into streaming into new customer experiences. We have multi-gigabit solutions for hospitality that are unique, and believe it or not, it is not that easy to make that in-room experience digital and also appealing.
Recent developments, we had a big software and services renewal with a big tier one carrier in the U.S. We had been working with Alaska environments in rural areas to connect schools and healthcare facilities. We reported Q2, which we talked about. We are getting a deeper engagement with the federal market, as we talked about. In September, we finally delivered that U.S. Marine Corps project, which is one of, I hope and I believe, many in the future. From a corporate strategic priorities, we have two main priorities in the pursuing of an M&A, which we are in the process of.
I cannot talk about it, but we are focusing on a synergistic acquisition that would allow us to join hands with someone who has a cyber orientation that would fit us, would be synergistic technologically and market-wise, and will be able to help us grow inorganically and eventually join hands technologically. This is something that is doable, and right now we are working on a target that I hope I will be able to say more soon. The other thing is we want to return to Nasdaq, and that is what we need to do.
We can do that, and M&A will help. Will help tell the different story because we now have been reorganizing, cost-reducing, and on top of that, we have been doing this progress that I talked about in the federal government. What do we do? There are three huge markets that are enabled with what Actelis does.
The huge market is that big bubble on the right, that's probably outdated because the Federal Department of War, as it's being called now, is much higher than that. It's over $1 trillion and growing. Cyber safety, always big and always large and always growing. The third one is edge AI. Edge AI or edge computing, as the AI world is progressing, it doesn't just happen in the cloud where we enjoy Claude and ChatGPT, and we work on it on a soft basis. The more AI will become automating the environments we are in, robotics, autonomous cars, buses, you name it, autonomous everything. Then more computing has to happen, not in the cloud, but close to where the activity occurs, because latency can mean loss of life and very dangerous.
Latency is one of the reasons why AI automation is going to drive a lot of the processes to be at the edge, where the critical infrastructure lies, in the city, on the road, in the airport, on the rail tracks, and so on. This is where we play. This is one of the tailwinds that helps us be very relevant. The other one, of course, cyber safety could be the weakest link. I'm definitely sure that all of us do not want cyber safety to be a weakest link in anything we do. So it's increasingly critical. Compliance gets tougher and tougher. Europe introduced the Cyber Resilience Act, becoming mandated for organizations in 2027 to make sure that they are vulnerability-free. In the U.S., FIPS is the cybersecurity standard for the Joint Interoperability Test Command of the Department of War.
Call it a military thing, but more and more municipalities and educational facilities who are hacked all the time. I see endless stories of ransomware attacking those civilian facilities. The result is they say, "Well, we want everyone that serves us to be FIPS compliant." We are FIPS compliant. This is a process we had to go through with the Joint IT Command, and that wasn't easy, but it's behind us. Talking about the edge. At the edge, we have three wired infrastructures: fiber, copper, and coax. Coax is another fancy name for the cable TV infrastructure. Fiber is amazing. Fiber is the best form and conduct of networking, but it doesn't exist everywhere. Actually, it will never exist everywhere because there are 10%- 30% of locations where it is just impossible to put fiber in. What are the alternatives?
Other than wireless and mobile, let's put that aside because in critical infrastructure, it's not necessarily doable. Then we could use command and control telephony lines, all those infrastructure cabling that have been there since the 1960s, since the 1950s, and coax. What happens is that when a smart city needs all those services and copper is available everywhere but is difficult and unsecure, difficult to operate. Fiber is amazing, but not everywhere. Wireless is problematic just because of its characteristics. The result is, what we can do is we provide equipment that can work on either fiber or copper or coax, or a hybrid solution of all. In other words, the real world, we look at it again, the real world is a mishmash of many, many infrastructures, and it's different in every corner of the city or wherever.
The task that we know how to do well is to provide that networking infrastructure that is tailored to whatever the infrastructure exists. No recabling, rewiring, all this requires a lot of disruption, very expensive, very slow. Mind you, AI is so fast that we have to be fast. We cannot wait. Fast to implement because you just go plug and play and no need to wait for additional infrastructure to be deployed or set up. Resilience and cyber safety, and the result is fiber speed, fiber grade on any wire. This is an example. Think about it, these are many, many, many copper pairs, and they sit in this very big cluster, originally desynchronized, unsecure, and disrupted heavily by the elements.
The result of what our technology knows to do with that is to make it optimally synchronized, to make it encrypted, to make it spectrally compliant, to make it manageable. Also, if you can think about copper as a conduit for electricity, it also allows for Power over Ethernet. That is an important element for implementations looking for Power over Ethernet. These are the three main verticals that we are playing at. Federal, primarily military, smart cities and roads, and hospitality. You can see here in the small print, there are so many budgets going on for modernization. Modernization is the name of the game, as I said earlier, and that modernization is, of course, for speed and for reliability, but also for cyber safety. We enjoy the fact that this is a critical requirement for those verticals.
Just to give you a glimpse of these, think about it, these are kind of switches. These switches, this is how our products look, those small boxes. They are not very big. Inside those, this is our GigaLine product line. One superset serves many, many, all those verticals, and the embedded software provides the low latency, the ability to be hybrid, the ubiquity Power over Ethernet that we talked about, power over the network, the cyber hardening, low touch management, all the good things that are required in managing a critical infrastructure network that needs to be reliable all the time.
On top of everything, we also look at, you may not have heard of, maybe you have, in the physical world, there is the world of IT, which we all know, the information technology, and on the other side, there is the OT, the operating technology.
The operating technology means all those devices that are in the network. There is an IT element, the network itself, where the traffic flows, and there is the operating technology. It is these types of devices on the road or in the smart city, but it could be an MRI machine in a hospital, or it could be a manufacturing device or manufacturing machine in a factory. Those have their own operating technology vulnerabilities, and we are looking to use the network and provide MetaShield, which is a solution that we have right now of AI intelligence and threat management, anomaly detection, and auto-correction from a centralized machine that looks through and monitors 24/7 what is going on and identifies things that should not be there. Anomalies.
For example, this traffic light talks to the camera and it shouldn't, or the speed and the volume of traffic from this device should be 1 Gb /h and right now it's 500 Gb/h . These are the types of anomalies that, and there are so many other types, that can be captured and mitigated. A small glimpse to some of our customers, those transportation authorities all around the world, cities that we all know, all the Department of War and Homeland Security, U.S. agencies. If you remember last year, there was a big incident of a halt in Newark of traffic. Air traffic control was stuck, was frozen for more than over a minute. It caused a ripple effect of weeks of delays. This had to do with antiquated infrastructure in their network.
The FAA received a $12 billion critical, urgent budget to modernize, and we are competing to be there, and we're going after FAA projects within that. Energy campuses, we see Canadian Rail over there, New York City, Seattle, Fremont, San Jose, Washington, D.C., is a very large customer of ours. All those are smart cities that we have been talking about and announcing. Every once in a while, we release a story about some win that we had, some implementation. Washington, D.C., we talked about, the FAA, we talked about as well. Legacy T1 to fiber modernization for a major U.S. carrier, Alaska, Air Force, and so on. The numbers are endless, and the cases are endless. If I want to summarize, I remind you, we didn't have a good year in 2025, and we're in the mend right now, looking for an M&A that's synergistic.
We restructured, we have cost reduced. We are going to market differently, more systematically, and more efficiently. We're positioned in the intersection of two huge and critical markets today. We're unique, and we have lots of IP. Our brand reputations, I can tell you that we have a reputation of high quality and maybe slightly higher expensive pricing. Experienced teams, strong players in federal market that, as I said, Jason Chasse helps us get into the programs of record. Lots of integrators and contractors, partners that will help us do what we are here to do. I really appreciate everyone listening, and thank you. If there are any questions, I'll be happy to answer. This is it. Onwards and upwards.
Hotel brands resonates because it seems like their terminals are very antiquated, even though they may be shiny.
Yes.
Is it a sell, or are they dying for the solution?
Well, they have to. Sometimes they're not dying for the solution because in order to modernize a room, you have to keep it vacant for a period.
Right.
Of course, they don't like that. It's the same as the subway in New York. It doesn't get modernized because you can't stop the subway, ever. Yes, if you think about the analog equipment in hotels or also in venues, in sports venues, in order to transition into streaming, transition the customer experience or the guest experience in the TV to a streaming, something that is a 21st century era, you have to deploy this modernization and become multi-gigabit. Eventually, we get into the hotel, so we log into our Netflix account and we watch the shows that we like from home. Many times, if the hotel is new and well invested, it might be there to begin with, but if it's a hotel that has been around for a long time, it's not necessarily available.
Right.
That's an important one. Yes.
I'd like to hear a little bit more about what the competitor landscape looks like for you guys.
Yeah.
You guys play in a broad range of industries, but just want to know where you guys fit within there.
Yeah, that's a great question. First of all, I spoke about fiber only, which is a big component of not just telecom networking, but also critical infrastructure. Then the hybrid networking or the more people may consider it a less advanced when you talk about copper networking, which we actually can show that we make fiber to fiber-grade multi-gigabit. In fiber only, you have very big players like Juniper and Cisco and Extreme Networks and Ciena. These would not typically go for projects the size that we are going because it's too small for them, which is a good thing for us. The small to medium market is less competitive, but you do have Extreme Networks playing in the smaller market, but also names like Belden, Hirschmann, Adtran to an extent.
The quality of the ability to do hybrid networking well depends on many small factors, and we know how to do it well. I would say that we know how to do it the best, and that's why when it comes to hybrid, it's not always a hybrid network. Sometimes it's just copper only, fiber only. It could be something less hybrid, as I said. Then it might be, as I mentioned, those competitors, more competitive. We were able, for example, in Highways England, we are in phase three now of modernizing all their devices around the roads. We beat Adtran and Cisco at that time. It was in 2018, but now it has a positive ripple effect for us as we're already 10 years later, and we continue to be relevant for them. Price is important here, especially in those environments where it's critical.
John?
Sure.
You mentioned you are doing the infrastructure. Is the hardware your own, or are you sourcing hardware from other vendors, I guess?
The hardware is our own.
Okay.
Of course, we assemble and we develop the final product.
Yeah.
But the chip, the memory, all those things are coming from—
Are you writing—
—the vendors.
—are you writing firmware as well, or are you—
Yeah.
—writing firmware?
The firmware is definitely ours.
Okay.
That is where we developed all the cyber hardening, which is probably by now the biggest focus of that firmware.
If you are doing firmware development, do you guys try to make sure your code is provably secure?
Absolutely.
You are trying to do formal verification and stuff like that?
We have several tools of code scanning, which we do constantly, I think up to once a week for all code. When we identify vulnerabilities, and that happens, you get to a new week, and then you have a scan, and you see that there's a new vulnerability. We need to fix it and then ship it to customers. If it's major, it may be a reason to charge for it. It depends also when we come to customers who actually bought from us five years ago, eight years ago, even more, the equipment might be working fine, but the firmware is so outdated. A, it will be cyber vulnerable, and we will need to update it. Or the cyber hardened firmware will not be able to run on their outdated hardware.
But yeah, that's by now the most important element of firmware, and we scan it constantly and not just once or two.
Thank you.
Thank you.
We've got any last questions?