limpeh

Good spaces yest on $VELO w Arun and @VASTCNC x.com/VASTCNC/status… I have some non sequential thoughts as a follow up to my very 'bullish' take in the linked post. TL;DR damn the capex for this company to fulfill the CEO's vision is going to be an issue. I'd say this call actually raised some concerns of varying degree, valid or not. There were plenty of bullish things on this talk as well. Not going to go into each of those as most of those were known knowns. The market opportunity could be huge - and the partnerships with vendors should be in theory sticky once earned. But some potential worms were seen, with one non negotiable worm unearthed. That's at the bottom of the piece. ➡️First the positive - I like this CEO a lot more on each listen. With his accent and 'seriousness' he might not be everyone's cup of tea. My 2 fav CEOs right now --- Allan over at $UMAC always has an array of jokes and Sam at $LPTH has some self deprecating humor while both being visionary and obviously working to something really big. Arun on the other hand is all business and pretty intense. It works for me but I can see how perhaps it would be more difficult for him to get his message across to some people. Also I love any immigrant story as often you have a different work ethic when you start from nothing .... "they are built different". Arun sounds built different. He came to the US at age 28 with $200 in his pocket, started a business in medical with $10K and flipped it within a few years (I forgot the quote if it was $5M or $50M) - whatever the exact # that is impressive. After that he moved into the manufacturing business and has a suite of companies and enough cash out of pocket that by 2024 he could essentially buy out a nearing bankrupt $VELO. He also has a very big vision for the company; eventually even scaling past the parts business. That is great - but going to be very costly. I didn't realize how costly until this call. More on that later. ➡️A few concerns of varying impact: while this suite of companies he owns seem somewhat (or quite) related, especially his main one Arrayed Additive..... I don't prefer my CEO running 4ish companies at once. Especially with the vision he has for $VELO. I am trying not to read too much into the personality type from this interview but I try to look for nuggets since we want to implicitly trust the CEO and how they work, realizing everyone has their flaws. Arun said he had to get rid of EVERY CEO of the companies he bought out and had to take over that role himself. That is concerning to me - not ONE CEO was worthy to stick around? Coach em up a bit? Further, there is only so much wick on anyone's candle. There is a power to delegation and trust; Allan said he learned from his early life as a manager he was a control freak (in so many words) and he needed to delegate. So there has to be SOMEONE in this country Arun could delegate some of this stewardship in his companies so he can focus on $VELO and then the most related company Arrayed Additive. That's like an opinion man and I am sure Arun could care less about it, but aside Elon I can't think of anyone who is running multiple companies like this. If there are others - it isn't common. And allegedly on a lot of ketamine to do so. Elon also has an army of the smartest people in these companies so when he goes on a sojourn to the White House for 6 months they can function just fine. Maybe Arun is the next Elon but I like to go with probabilities. And I doubt he as an army of talent pool like they have at SpaceX or Tesla. He said in another interview he puts about 3 days of the week towards $VELO. Again with the vision he is trying to implement this should be a full time job. Obviously he has a huge financial stake in the company so it is not about incentives here, but about reality of running a public company and the demands of trying to scale a relatively tiny company into something larger. This would be a concern if this continues in the out years (past 24 months). Monitoring. ******************************** ➡️Are there moat concerns? Are valuation discounts going to haunt $VELO due to software exposure? I will preface this section by saying some of it may be seen as a reach. That's ok. $VELO is WAY more of a software play than I anticipated. I was thinking the hardware was some sort of differentiator but that is not the case. A lot of the talk was about the secret sauce of the algorithm. That raised concern to me when according to @Citrini7 a company reliant on software algorithms like $DASH can be erased from this planet in half a decade via some random person "vibe coding" a replica in their spare time. Well in that 'thought experiment' sooner than 5 years. So while the $VELO algorithm is "years ahead" of anyone else's can AI in X years create a competitor on the software side at least? The machining side is its own story. I am clueless on that and it's perhaps a wildly naive take, and I don't think of it as an existential threat but more of a valuation threat. $VELO's stock has fallen WAY more then the typical growth stock ex software in the past month ..... so is it getting grouped as a software stock despite the hardware overlay? Arun seems to be relying on the data sets the software will generate by creating all these parts, as a moat. Maybe - but couldn't the AI of future just reverse engineer any part and blow up any moat? I am sure the Chinese will work on that every day of the week. Again I have zero insight on this (nor do most people not living in the AI world) but seeing how every software company is now presumed dead within half a decade it raises some concern on any company whose moat is mostly going to be software IP. Do I think SpaceX or the a Lockheed or someone like that is going to rely on a 'vibe coded' company in 4 years for their mission critical parts? Or a Chinese company who can reverse engineer any sophisticated part on earth in 5 years? No chance. But if everything software related is going to get a depressed valuation for the rest of eternity because of threat of displacement or competition, that puts a damper on multiples for any company with a heavy software facing moat. It's too early to tell how that plays out. And it's a "down the road" theoretical. But potential depression of multiple issue. ******************** Last is the biggest issue. The printers. This one is more tangible and doesn't take any extrapolation into a thought experiment piece circulating on Wall Street. Holy smoke this is going to be a costly build out to achieve Arun's vision. I WAY underestimated the cost of each printer - I was thinking maybe these are $1M a pop or similar. I thought the share count was going to be mostly stable here for a while but I didn't realize how expensive these printers are to make. Shareholders are going to be in for a world of dilution the next half decade for Arun to get to his grand vision. I am not a fan of that - I know the $ONDS boys are fine getting diluted til the cows come home, but I like low(er) share count companies when at all possible so your price to sales ratios (and eventually EPS) drive up PPS. Vs being spread out over 300-500-700M shares. Which depresses PPS. Went through dilutions non stop on my holdings in 2025. ➡️He wants to get to 400 machines in the future Midwest facility ---in time. In time sounds like 7 years. For perspective after a $250M raise via SPAC in 2021 (and running through it all via the older business model), and working at this since 2014, they will just be getting up to their 25th machine in CA by end of Q2 26. Hence they have been going at this for well over a decade, at a rate of about 2 machines a year. He dropped some numbers in the spaces, so I could reverse engineer some prices and costs - I got to $5M a machine as a selling price for a printer. With 30-35% gross margins let's say its $3.25-$3.5M cost to $VELO per machine to build it out. He said something along the line of "a few million" per machine. To simplify the math I am going to go with $3M cost per printer. That would be a 40% margin so I am being very kind; the real cost would be higher based on Arun's comments. 400 printers "in time" x $3M cost per = $1.2 BILLION cost That's insane CAPEX over 7 years. Straight line that would be $171M A YEAR. (for perspective the company will be at $50-$60M revenue this year) This spend is not going to be a straight line, it will be graduated - imagine something like: Year 1: 5 machines Year 2: 15 machines Year 3: 35 machines Year 4: 50 machines Year 5: 75 machines That's still only 180 printers. I only have 2 more years to get to the 400 in 7 years. You get the picture. Again the company in 12 years has been building ~2 printers a year. ➡️They have $12M cash on the books (and debt against that). Cash flow from operations AIN'T PAYING for that sort of CAPEX. This company is hopefully going to do $70-$80M revenue in 2026. (I have them at $68M in my model) Arun said in the interview linked below they become cash flow positive at $80M a year revenue. So they will be eating into the current $12M all through 2026 just to operate the company - forget building another 5 printers for $15M+. So where is the money coming to even build 3 printers forget 7? Then 15. Then 35. Then 50. You'll eventually get to a scale operations pays for X machines a year but everything over X is going to need to come from dilution. Maybe some debt borrowing in there - hopefully. Maybe a government grant or three can be found somewhere along the line to help. I cannot even fathom how much revenue is going to be needed to do a 100 printer a year buildout, 5 year hence. But I am more focused on the 2027-2029 plan at this point. Maybe the 400 printer target is just a dream goal on a whiteboard. But yeah even getting another 40 printers out thee by 2029 is going to be cost intensive. And yes each machine will feed on itself and generate revenue to partially offset the next machine's cost, but this is going to be a delicate dance of cash flow vs capex every year. A good question to ask Arun is - will the customer pre fund part of the expense? i.e. this thing is going to cost you $5M to buy from us, we need $2M up front to start work on it. If the answer is yes, this alleviates a lot of my concern. But based on them going thru $250M of cash it seems like that was not how it was done in the past. ➡️On top of that they will either be renting a HUGE 1M sq foot facility to house these machines, or building it outright - sounds like starting by end of this year. I am praying renting based on how much money $VELO is going to need for the innards of this facility. Anyhow if most of my above assumptions are even remotely correct, this lovely 24.5M shares outstanding is going to be blown out of the water in the ensuing years. So that affects the whole financial model dramatically. And drops PPS targets each ensuing year as the share count grows substantially. Meh. *********************** Anyhow it was a good educational space - each go around / interview - gets us more in tune with a company. I know this 'tweet' won't be popular as the one below as that one was all booolish. But it massively understated the cost of this printer explosion Arun is planning. Aside the other concerns, real or imagined. Go forward my ears will be glued to the floor for any discussion of goals for machine builds each year / capital raises / cash flows / CAPEX needs each conference call, presentation, and interview. And can the company get customer to pre-fund part of the cost go forward? That would help immensely. This slowly built army of printers is going to create a much more variable pathway go forward than anticipated.

Ondas reported preliminary Q4 and FY2025 results, with revenue higher than prior targets. The Company also reiterated its revenue outlook of $170–$180 million for FY2026. Fourth quarter and full year 2025 results will be reported and an investor call will be held on March 25, 2026. $ONDS ondas.com/post/ondas-rep…