Drone cameras netted NextVision founders $195 million profit

It seems that trouble will continue to haunt the local capital market in 2023. Inflation and rising interest rates were already present before October 7, the date of the horrific Hamas attack on Israel which ignited a war whose end is not in sight, and which may even escalate to another front. Accordingly, while the S&P 500 increased by 15% since the beginning of the year, the Tel Aviv-125 flagship index recorded a 7% decrease.

Contrary to the general trend, the investors who put their trust in a limited number of companies actually profited from them. Among them, NextVision, a manufacturer of photographic solutions for mini and micro drones and drones, stands out. The company's stock, which was issued in June 2021 at a value of NIS 407 million ($105M), has yielded to investors since the beginning of the year a dream return of 251%, the highest among the companies included in the Tel Aviv-125 index, which it entered at the beginning of the month, and is currently traded at a value of NIS 2.1 billion ($545M).

NextVision Chairman Chen Golan

At the end of 2022, NextVision, which was founded in 2009, set a target of a 70% increase in sales by the end of 2023, that is, to reach from sales of $26 million to $44 million. Now, with seven weeks left until the end of the year, the company has surpassed the goal it set. This is after it added sales of $11 million to the $33 million it registered in January-September from the beginning of the fourth quarter. Some of them, from providing immediate systems to its customers in Israel as part of their needs in the war.

In the summary of the third quarter, NextVision continued the trend of improving its results with revenues of $12.7 million - a 92% increase compared to the corresponding quarter. The net profit reached $6.3 million, with a 130% improvement compared to the corresponding period. In the first nine months of the year, its revenues jumped by 85% compared to the corresponding period, to $33.4 million as mentioned. The net profit during this period doubled 2.5 times, to $16.5 million.

NextVision provides lightweight photography systems with the ability to stabilize an image in real-time even in difficult flight conditions, and even perform zooming while moving and obtaining a stable image. It produces, among other things, day and night cameras, communication systems, geographic pointing capability, and image-based navigation capabilities, and even cameras based on a cooled detector that enables detection at large ranges.

Its customers are the tool suppliers (the UAVs and drones) who sell their products to the end customers, and most of its sales are abroad. Its backlog of orders, as of the end of the third quarter, reached $48.5 million compared to $10.3 million at the end of 2022. Of this, in October it registered three new orders with a total value of $21.9 million, one of which amounted to $17 million - the largest in its history. The company does not disclose the identity of the companies that order its products. In the 2022 summary, the company reported that Elbit and UVision Air, which develop unmanned aerial vehicles, were responsible for 20% of its annual revenues and for 43% of them in 2021, and in the company's presentation, the Defense Ministry, IAI, and Aeronautics also appear among its customers.

In its reports, NextVision referred to the current state of the war and wrote: "Since the beginning of the war, there has been an increase in the company's orders for cameras and other products from its Israeli customers", and that it "increased its inventory and production capacity to meet the increase in demand and deliver the orders on time.”

Along with the investors, those who benefited from the success of NextVision are the three founders of the company, Chairman Chen Golan, who is also an F15 pilot; Boris Kipnis, the VP of Technologies; Director Yosef Sandler, and CEO Michael Grosman. The four together own 32.5% of the company's shares, whose market value currently stands at NIS 679 million ($176M), while after the IPO the value of these shares was NIS 132 million ($34M). Since March 2022, the four have sold shares at NIS 174 million ($45M) and their share of the dividends received by the company amounted to NIS 12.8 million ($3.3M). Also, for their roles, Golan, Kipnis, and Grossman received a salary with an aggregate cost of NIS 12.7 million in 2021-2022. Thus, the founders' total profit since the IPO is approximately NIS 750 million NIS ($195M), on paper and in cash.

Along with the founders, the More Investment House purchased 10% of the company's shares near the IPO with an investment of NIS 40 million and later increased its holding to 16.3%, which is currently worth NIS 340 million. The Phoenix also purchased 12% of the shares in exchange for NIS 48 million close to the offering and today, after exercising part of its holdings, it owns 5.9% worth NIS 123 million. Meitav became an interested party in the company in March and its holding reaches 5.6% with a value of NIS 117 million, after enjoying a 141% increase in the value of the shares in March.