THE THINKEQUITY CONFERENCE 2026 - ACTELIS NETWORKS INC

Financial Performance:

• Reported a significant decline in 2025 with revenue slashed to under $4 million compared to 2024.
• FY2026 H1 revenue increased 26% year-over-year to $2.1 million.
• H1 bookings surged 80%, indicating strong pipeline growth ahead of the Q3 release.
• Gross margin recovered to 51%, aligning with historical targets after previous years of lower performance.
• Cost reduction initiatives and restructuring were implemented following the difficult 2025 period.

Guidance and Future Outlook:

• 2026 is projected to perform significantly better than 2025, driven by new programmatic wins.
• Strategic goals include returning to NASDAQ listing status and pursuing a synergistic M&A target focused on cyber orientation.
• Management expects Federal and Intelligent Transportation Systems (ITS) contracts to materialize in 2027 as part of long-term "Programs of Record."
• The company is pivoting from sporadic project-based sales to a systematic, programmatic sales approach within the military and federal sectors.

Business Segments and Product Lines:

• Federal/Military: Delivered a major IP telephony upgrade for the U.S. Marine Corps in Q3 (covering 65 buildings); active in FAA modernization and various smart city/road agencies.
• Intelligent Transportation & Smart Cities: Deploying hybrid connectivity solutions for road sensors, cameras, and signs; currently in Phase 3 of a modernization program for Highways England.
• Hospitality: A new vertical targeting multi-gigabit connectivity for legacy analog hotel networks to support streaming and digital guest experiences.
• Product Capabilities: Core "Giga Line" product offers fiber-grade performance over copper, coax, or hybrid infrastructures; includes Power over Ethernet (PoE) and embedded "Meta Shield" AI threat management software.
• Cyber Hardening: Firmware is a key differentiator, with constant code scanning and FIPS compliance achieved for DoD requirements.

Market and Competitive Landscape:

• Targeting three massive tailwinds: Federal/Defense spending (trillion-dollar+ market), Cybersecurity compliance (driven by EU Cyber Resilience Act and US FIPS), and Edge AI infrastructure.
• Competes with Cisco, Juniper, and Extreme Networks; distinguishes itself by winning in small-to-medium sized projects that large competitors often ignore and by superior hybrid network capabilities.
• Market trend: Critical infrastructure modernization is driven by the need for low latency (for Edge AI/robotics) and the impracticality of installing new fiber in 10-30% of locations, necessitating copper/coax upgrades.

Risks and Challenges:

• Revenue Volatility: Heavy reliance on large, sporadic government contracts leads to revenue unpredictability, as evidenced by the 2025 decline.
• Operational Friction: Modernization projects in venues like hotels or transit systems (e.g., New York subway) face delays due to the inability to shut down operations for installation.
• Legacy Hardware: Older customer equipment may not support new, secure firmware, potentially requiring hardware replacements or paid updates.
• Competition: While less competitive in the SME hybrid market, larger players still dominate pure fiber or enterprise networking segments.

Management Commentary and Tone:

• Tone was candid about the "terrible" 2025 year but expressed high confidence in the 2026 recovery and future growth.
• Emphasized a strategic pivot from "selling hardware" to providing "critical infrastructure" solutions with a focus on cybersecurity and Edge AI.
• Management highlighted a strong reputation for quality and technical expertise, particularly in complex hybrid environments.
• CEO/CTO Yoav Efron projected optimism regarding the "modernization frenzy" in government and the necessity of the company's technology for Edge AI latency requirements.

Analyst Questions and Answers:

• Q: Is the hospitality market ready for adoption?
  • A: Yes, but adoption is slow due to the operational cost of vacating rooms during upgrades; however, the shift to streaming creates a mandatory need for multi-gigabit digital infrastructure.
• Q: Where do you fit in the competitive landscape?
  • A: The company dominates the small-to-medium market with hybrid networking solutions, whereas giants like Cisco/Juniper focus on larger, pure fiber projects. Actelis previously beat Cisco/Adtran in the UK highways program.
• Q: Is hardware proprietary?
  • A: Hardware is assembled and developed in-house, with vendors supplying chips/memory, but firmware is proprietary and the primary source of value, particularly regarding cyber hardening and security updates.

Other Key Points:

• The company operates at the intersection of IT (Information Technology) and OT (Operational Technology), offering monitoring and anomaly detection for devices like traffic lights and medical equipment.
• A significant portion of the market opportunity lies in locations where fiber installation is impossible or too disruptive, making copper/coax modernization the only viable option.
• The firm is currently working with a specific M&A target to accelerate growth through synergistic technology integration.