Elsight (ASX:ELS) executives told investors the company delivered a “record-breaking” fourth quarter and an unaudited full-year 2025 performance that management characterized as an inflection point for the business, driven by accelerating demand for resilient connectivity in uncrewed systems across defense and regulated commercial markets.
2025 results: revenue surge, profitability, and cash position
CEO Yoav Amitai said Elsight generated approximately $23 million in revenue in 2025, which he described as an 11-fold increase over 2024. Amitai also said the company reached profitability during the year, citing operational leverage in the model.
Backlog and revenue recognition: $22 million confirmed orders and upfront cash
In the Q&A, management addressed investor questions about the company’s $22 million in confirmed orders heading into 2026, which Amitai said represents 96% of total 2025 revenue. He explained Elsight typically charges 40% upfront, and that this advance payment is a prerequisite for backlog inclusion. “40% of the cash is already in our account,” he said, adding that it was already reflected in the company’s latest report.
Amitai also clarified that the $22 million backlog figure represents net new sales and does not include recurring revenue from prior years, nor the recurring revenue expected to be generated from those new sales. He said Elsight recognizes revenue over time—for example, monthly across a year-long program.
Recurring services and margins: cloud contribution and expectations for 2026
Asked about annual recurring revenue tied to Elsight Cloud and services, Amitai said that in 2025 the company recorded $2.6 million from recurring services. He said management expects recurring revenue to be “much higher” in 2026 due to the pace of deployments in 2025 and the timing of revenue recognition.
Management also discussed profitability and gross margins. The host cited “very high gross margins of approximately 77%” alongside record revenue. Amitai said the company expects margins to move higher as additional software capabilities increase the proportion of higher-margin recurring revenue. He also noted that software margins increased “from 82%-90%” over time, attributing that change to software mix and related initiatives.
Pipeline conversion and customer base: 92 design wins in 2025
Amitai described a focus on execution and conversion discipline in Q4. He said Elsight’s cumulative pipeline stood at $137 million, down from $157 million previously, but characterized the decline as a positive outcome of conversion. During Q4, he said the company converted approximately $10 million of pipeline into recognized revenue.
He added that Elsight expanded its sales force across the U.S. and Europe and is entering a phase focused on converting opportunities faster while adding new opportunities to the top of the funnel. Amitai said the pipeline is based on “actual active programs” the company is already engaged in, rather than headlines.
On the breadth of Elsight’s customer footprint, Amitai said 2025 revenue came from 92 different design win customers, and that the company has more than 110 total. He said Elsight is increasingly focusing on the “Pareto” portion of the market—larger OEMs that represent a major share of platform output—while still investing in smaller startups to maintain broad exposure.
Product and market strategy: expanding beyond connectivity, DIU pathway, and manufacturing localization
Amitai said Elsight is expanding from a core connectivity focus toward broader mission enablement, driven by “customer pull.” He outlined expansion across capabilities (including positioning, autonomy features, video and sensors), geographies (including local manufacturing and local teams), and domains (air, land, and maritime). He said the company is expanding “horizontally and not vertically,” aiming for higher value per system without moving away from the core connectivity role.
Management also highlighted its approach to hardware and manufacturing:
- Contract manufacturing model: Amitai said scaling capacity is “literally sending an email” to contract manufacturers, with no steady cost of production lines.
- Localization: He said additional manufacturing lines in other regions are driven more by proximity to customers and localization requirements than by capacity constraints.
- Tariffs: Amitai said the company is “not exposed too much” to tariffs and expects the first U.S.-manufactured production batch in the first half of the year, which he said would reduce tariff exposure further.
On the U.S. defense market, Amitai discussed the company’s participation in the Defense Innovation Unit (DIU) pathway referenced as “Project GI.” He said Phase 3 is funded and involves deployments and onboarding with end users, including a SOCOM unit, with Phase 3 expected to conclude by the end of March. After that, he said procurement could follow, and he expected first revenue from the project roughly a quarter after completion—“towards the end of the second quarter or during the third quarter” of the year. Amitai said feedback to date has been “very, very positive.”
Executives also provided updates on Aura, a smaller form-factor product introduced to meet lower cost requirements while maintaining margins. Amitai said the company shipped an initial production batch late last year and has received strong early feedback, describing Aura as another “flavor” in the portfolio for different use cases.
Looking to commercial markets, Amitai said he sees regulatory progress (including U.S. Part 107) but expects defense-related demand to grow faster over the next 18–24 months amid geopolitical conditions. He referenced the company’s participation in a Drone as a First Responder (DFR) program, which he said began generating meaningful revenue of “a little less than $500,000,” while noting that much of near-term revenue is expected to come from homeland security and defense.
Finally, Amitai said Elsight has established a parallel business unit operating “in stealth,” built on connectivity and data fusion, targeting what he described as a $20 billion adjacent market. He said the effort is structured not to distract from the core business and that the company will share more after achieving milestones and strengthening protection around IP and customer positioning.
About Elsight (ASX:ELS)
Elsight Limited provides connectivity technology solutions in Israel, the United States, and internationally. It offers Halo, a communication platform. The company also provides beyond visual line of sight, a solution for operation of unmanned aerial vehicles without pilot observation. In addition, the company offers unmanned aerial vehicle for drone operations. Further, the company provides continuous wireless delivery of data services. It serves agriculture, construction, oil and gas, mining, and utility companies.
