A Primer on Mobilecom

Our usual handy company overview..

Introduction

• Mobilicom (MOB) is an Israeli provider of hardware, software, and cybersecurity solutions for small-sized drones (SUAVs) and robotic systems.

• The company has some unique IP, an end-to-end production portfolio, obvious tailwinds from market growth, and an increasing number of design wins from Tier 1 customers.

• The company outsources its production and is shifting towards SaaS offerings which will produce much higher margins.

• The company has a very clean balance sheet and cash for at least two years with little cash burn.

Products

• Smart Solutions: Mobilicom focuses on key critical "smart" technology solutions for drones, including cybersecurity, cloud management, communication datalinks, mobile mesh networking, and handheld control terminals.

• Key Product Offerings: ICE Cybersecurity: Automated software suite designed for multi-layered real-time cyber protection. From the 20-F:

"The ICE Cybersecurity Suite is our automated software designed to provide a 'holistic' solution to prevent, detect, and respond in real-time to one or more cyber-attacks."

• CONTROLiT Cloud Management Software: Cloud-based network management platform for SUAV operators, offering real-time data consolidation. From the 20-F:

"We believe that our key competitive advantage over other management solutions is the ability to consolidate all relevant data into a single powerful software platform..."

• SkyHopper Datalinks: Bi-directional data links that support multiple transmission modes with high performance in harsh environments and urban areas. From the 20-F

"Because of its communication capabilities through line of sight, or LOS, non-line of sight, or N-LOS, and urban areas we believe that the SkyHopper is uniquely positioned to provide high-end performance..."

• Mobile Mesh Networking (MCU): Connects and relays communication within a network, providing redundancy and enabling fleet/swarm operations. From the 20-F:

"The MCU enables each unit to provide redundancy communication to all of the other units in its range such that a failure in one unit will not affect the operation of other units within the network."

• Mobile Controller Systems: Handheld ruggedized controllers for SUAV control with multiple functionalities.

• Professional Services: Integrated logistic support (ILS) for SUAVs, including operation, logistics, maintenance, and safety services.

• The products work together:

OS3 Platform

• The company introduced a software security platform called OS3 in April 2024. It consists of two parts:

  • OS3 Edge; an on device solution working on the NVIDIA AI computing platform) for drones and robotics, OS3 Edge fortifies each autonomous vehicle mission locally on the system itself

  • OS3 Cloud; remote monitoring and protecting the entire fleet’s operations. OS3 monitors, identifies, and remotely responds to deliver immediate and complete control across the entire fleet by addressing three main pillars of performance:

    • security risk mitigation by detecting hostile external threats;

    • safety of operations related to internal software, hardware, and maintenance issues including risk mitigation; and

    • standards compliance ensuring platform adherence to regulatory standards.

  • The kinds of threats that OS3 Cloud deals with are things like hijacked drones, unauthorized access, geofence violations, lost control incidents, swarm disruptions, sensor malfunctions, spoofing, network breaches, and onboard software failures.

• From the linked PR:

The industry is at an inflection point where a comprehensive edge and cloud-based operations system is needed and is likely to be required by certain regulators and insurers alike. We’ve recently seen a similar emergence in the automotive industry when a few innovative companies introduced SaaS safety and security platforms that quickly became the industry standard. As an early provider of cybersecurity drones and robotics, including our combat proven ICE Cybersecurity suite, we believe that Mobilicom is ideally positioned to launch this first-of-its-kind robust solution following years of intensive in-house development.

• Parts of it, like its cybersecurity solution are not new and have customers already.

• There are multiple advantages:

  • The market opportunity is large, management claims its the first platform of its kind specific to securing uncrewed fleets (drones, robots, etc.).

  • OS3 continuously monitors network activity to identify suspicious behavior, enabling immediate automated responses when threats are detected. This proactive monitoring helps maintain operational security throughout missions

  • It employs policy-based automated protocols that can isolate and neutralize threats in real time. This includes actions such as disconnecting compromised devices from the network to prevent further spread of potential threats across both onboard and offboard infrastructure.

  • Once a threat is neutralized, OS3 initiates automated recovery workflows to restore normal operations quickly. This process mitigates risks and ensures that mission-critical functions can resume with minimal downtime

  • It solves real problems for end-users and improves their economics, reducing downtime and incidents.

  • It also increases the economics for Mobilicom’s customes as it’s a simple add-on option that can be activated and they share in the revenue stream, producing incentives to include it in orders. There should be a considerable upsell opportunity with its existing customers.

  • It creates a high-margin recurring revenue stream for Mobilicom

Competitive advantage

• A near end-to-end solution, providing an insider's view of customer needs and the ability to bundle together solutions to provide better system performance, shorter time to market, and cost-effective pricing for their customers.

• A holistic cybersecurity approach offering multi-layered protection that secures the drone platform itself, communication channels, and data. The ICE Cybersecurity Suite is designed to prevent, detect, and respond in real-time to cyber-attacks. This cybersecurity focus is a major selling point, especially given the increasing threat of cyber-attacks in drone warfare and is able to perform well in harsh environments.

• Field Proven Solutions: Mobilicom's solutions have been chosen by well-known Israeli defense contractors, including Elbit Systems, Rafael Advanced Defense Systems, and Israeli Aerospace Industries, with their systems currently in use by the Israeli Ministry of Defense. Additionally, their systems have been embedded into SUAVs manufactured across the U.S., Europe, and Israel, and have performed well in harsh environmental conditions. These real-world deployments provide valuable validation of their technology.

• 34 Patent claims and two patents in the US related to mesh networking modem technology.

• It’s Mobilicom’s SkyHopper PRO datalink was chosen over four other competing products following intensive field testing.

Market

• Target Market: The company aims to be an end-to-end provider to SUAV and robotics OEMs across various sectors, like security, surveillance, process industry, infrastructure inspection, first responders, homeland security, government and defense, and courier markets.

• Market Opportunity: The SUAV market is projected to reach $41.3 billion by 2026 with Mobilicom's addressable market at $8.5 billion (20.7% of the total, split between hardware and software).

• Impact of Geopolitical Events: The company expects increased demand due to conflicts in Ukraine and the Middle East, especially for cybersecurity solutions. From the 20-F (our emphasis):

"In these conflicts, we are also seeing cyber-attacks which target drones and other platforms, rendering them ineffective. Therefore, we witness and expect increased interest from our customers and potential customers in the need for cybersecurity products to protect drone platforms..."

• Government programs: Like the US Replicator Program, aiming to ramp up US production and decrease the dependence on Chinese drone manufacturers.

Growth Strategies

• Market Penetration: Increase design wins and pilot projects to foster deeper relationships and cross-sell other products (20-F):

"This is a crucial element of our strategy because they help deepen our working relationship with a customer, understand their overall needs, and, in turn, allow us to better cross-sell other products and solutions."

• Market Exposure: Expand marketing and sales activities in the US, Europe, and Asia.

• Strategic Partnerships/Acquisitions: Aim to acquire or partner with other drone-related solution providers.

• R&D: Develop new solutions and explore SaaS models.

New products

There have been quite a few new products in 2024:

• The MCU-300 delivers cybersecure mesh networking long-range, high-speed, high-definition video and data (April 3).

• The MCU-70 & MCU-300, expanding its offering and total addressable market (TAM) beyond small-sized drones into the mid-sized uncrewed aerial vehicle (UAV) market with its newly released (April 18).

• The OS3 Platform, see above (April 23).

• The next-generation 8-inch Controller Pro (Sept. 4).

Customers

Recent design and contract wins with important customers like US and Israeli defense departments and Tier 1 suppliers include 8 tier-1 manufacturers with over 50 customers in 18 countries including Israel Aerospace Industries, Airbus, Elbit Systems, Teledyne-Flir, and more. Plenty of evidence for market acceptance:

• Mobilicom secured an initial order exceeding $100K from a large Asia-based Tier 1 small-sized drone manufacturer. This partnership involves integrating Mobilicom's product families, including MCU mesh networking and SkyHopper Datalinks, into the customer’s UAVs, marking Mobilicom's entry into a new geographic market and indicating potential for substantial future orders as the customer expands its drone product line. (Dec 13, 2022).

• A repeat purchase order for its Mobile Ground Control Systems from a cutting-edge manufacturer of remote-controlled weapons systems platforms. (April 27, 2023)

• A repeat purchase order for its robust end-to-end solutions from a leading UAE government organization. The customer purchased Mobilicom’s entire product offering, including hardware and software, demonstrating the effectiveness of the company’s end-to-end solutions strategy for uncrewed and autonomous systems. (May 9, 2023).

• A purchase order for its end-to-end product solution from a leading global provider of autonomous and remote-controlled armor technology. (May 22, 2023)

• A commercial scale purchase order from one of its Tier-1 customers, Teledyne-FLIR, one of the world’s largest manufacturers of small-sized drones and robotics, for 120 of Mobilicom’s SkyHopper PRO datalink systems. (Jul 10, 2023)

• A design win and initial $150,000 purchase order with a new customer, an innovative drone designer and manufacturer that serves commercial and defense customers in the U.S. and globally. (Sept 12, 2023)

• An initial purchase order for two of its products from a new customer, one of the largest defense contractors in Europe. (Sept 19, 2023)

• Two follow-on orders, including one order from a large Tier-1 customer. (Oct 16, 2023)

• Mobilicom recently secured a $900K initial production-scale order from another global Tier 1 Israel-based defense drone manufacturer. This marks their second Tier 1 customer transitioning from design win to commercial production, emphasizing Mobilicom's growing presence in the high-growth loitering munition market. (Nov 27, 2023).

• The US DOD has selected its SkyHopper cybersecure, bi-directional software-defined radio (SDR) for integration into the RAID System. (Dec 12, 2023)

• Another follow-on commercial scale order from a U.S.-based Tier-1 customer. (Dec 14, 2023)

• An initial production-scale order for its cybersecure SkyHopper Pro Lite datalinks from the Israel Aerospace Industries (IAI), a government-owned corporation and Israel’s major aerospace and aviation manufacturer. (Jan 9, 2024)

• Mibilicom’s ICE Cybersecurity, the world’s first AI-based 360° software cybersecurity system for drones, has been chosen by Israel’s Ministry of Defense for its small-sized drone program. (Jan 24, 2024)

• A third consecutive commercial scale order from a U.S.-based Tier-1 customer, one of the largest drone manufacturers in the world. (May 28, 2024)

• One of the largest loitering munitions providers in the world with approximately $4 billion in annual revenue, has placed a follow-on order for Mobilicom’s 10” Ground Control Station (GCS), a tactical mobile handheld controller for small-sized drones. (Jun 18, 2024)

• A follow-on order from one of the largest U.S. drone manufacturers of “small-sized” drones. This defense manufacturer, with over $5 billion in annual sales, is equipping its drones with Mobilicom’s SkyHopper PRO. (July 1, 2024)

• One of the world's largest loitering munitions providers has placed orders totaling $1.7M in less than a year. This customer is a prime Lockheed Martin vendor specializing in defense systems sold to over 40 countries. They have chosen Mobilicom's SkyHopper Pro Micro datalink for integration into their systems, with the latest order valued at $530K. (Oct 2, 2024).

• An initial production-scale order for its cybersecure SkyHopper Pro datalinks from an innovative U.S.-based drone designer and manufacturer that serves commercial and defense customers globally. (Dec 10, 2024)

• Mobilicom also has a major partnership with one of the largest U.S. drone manufacturers, which generates over $5 billion in annual sales. This customer has placed multiple follow-on orders totaling approximately $600K recently, indicating strong traction in U.S. Department of Defense programs where these drones are utilized. (Jan 7, 2025)

• Apart from orders, there is also a lot of industry recognition:

Business model

• The company aims to increase its number of design wins (large-scale adoption of their products by OEM customers) and pilot projects (initial small-scale sales and implementation).

• A key strategy is to leverage initial sales to cross-sell other solutions to the same customers, as they did with a Tier 1 US company:

• The company outsources hardware production so it can easily scale up the anticipated increase in demand.

See our upcoming Quick Take for an investment assessment on Mobilicom