Cyberhawk Secures Multi-Year SSE Agreement, Extending Offshore Inspection Scope

What happened

Ondas' Cyberhawk subsidiary signed a three-year agreement, extendable by two years, to provide drone inspection and surveying across SSE plc's UK transmission and distribution networks, with immediate expansion into offshore wind turbine inspection. This marks the third consecutive long-term award in a relationship spanning over a decade, alongside a renewed iHawk as a Service agreement. The deal adds visible recurring revenue and extends Cyberhawk into offshore renewable assets, complementing its existing 300+ customers and ~95% recurring revenue profile. However, Ondas as a whole still faces significant integration challenges, widening losses, and sharp share dilution, as detailed in the latest quarterly filings. While this contract strengthens one acquired asset's revenue base, it does not resolve the platform's broader need to convert backlog and cut cash burn.

Implication

Investors should view the SSE award as incremental validation of Cyberhawk's inspection franchise and its push into offshore energy, which supports the acquired asset's recurring revenue assumptions. That said, Ondas remains a debt-heavy, loss-making roll-up with Q2 adjusted EBITDA of -$50.6M and shares outstanding up to 569.8M, and this single contract does not address the backlog conversion risk in the defense segment or the upcoming DZYNE share delivery in January 2027. The agreement may provide a slight lift to near-term revenue, but the valuation is already generous at current levels. Only if Q3 revenue lands within the $140M-$155M guide and adjusted EBITDA improves sequentially would the risk/reward improve. Until then, staying on the sidelines with a WAIT rating and an attractive entry near $6.25 appears prudent.

Thesis delta

The agreement adds modestly to the Cyberhawk recurring revenue base and diversifies its customer mix toward UK offshore wind, but this was already partially embedded in the acquisition thesis. No change to the overall WAIT rating; the central issues of integration, dilution, and cash burn remain unresolved.