B.O.S. Better Online Solutions (NASDAQ:BOSC) said second-quarter 2026 revenue rose 29% from a year earlier, supported by a recovery in Israel’s commercial market and continued demand from defense-sector customers. The company said revenue growth in the quarter helped offset a softer first quarter, bringing trailing 12-month revenue to the same level as its record full-year 2025 revenue.
Management said it expects full-year 2026 revenue to exceed 2025 revenue of $51 million and net income to surpass the $3.6 million reported last year. The outlook is supported by a record $31 million backlog at the end of the second quarter, including approximately $20 million scheduled for delivery by year-end.
Backlog Supports Full-Year Outlook
“We know that our clients in the defense segment will buy our component, but we are not controlling on the rate of consumption,” Cohen said. He added that the company maintained its $31 million consolidated backlog despite revenue increasing about 30% sequentially from the first quarter to the second quarter.
The Supply Chain Division integrates franchised electromechanical components into customer products, including products developed by defense and high-tech companies. Cohen said a recently announced semiconductor-related order followed roughly a year of design work, and that orders should continue as long as the customer’s product remains in production.
The company also said its India team has expanded its reach to customers it had not previously contacted. Cohen said he expects the effort to support B.O.S.’s growth in India during 2027.
RFID Business Shows Commercial-Market Recovery
B.O.S. reported that RFID Division revenue increased 17% in the first half of 2026 from the comparable period a year earlier. Cohen attributed the growth to a rebound in Israel’s commercial market after what he described as roughly three years of constrained activity.
“There is a rebound in the market,” Cohen said. “The demand starts very strong. We see a recovery.” He said he is bullish on the RFID Division for 2026.
The RFID business provides inventory tracking and end-of-line automation systems, including integrations with enterprise resource planning, warehouse management and manufacturing execution systems. Management said the division is also working to expand into Israel’s defense and hospital markets in an effort to reduce its exposure to geopolitical disruptions affecting commercial activity.
Cohen said the company hired a consulting firm to support its entry into the defense market and is considering either acquisitions or building a hospital-focused team internally. He noted that B.O.S. has not identified acquisition opportunities in that particular field.
Management also discussed progress at a specific RFID unit that had weighed on profitability in 2025. Cohen said the unit’s performance has improved materially and is expected to be profitable in 2026, while noting that additional work remains.
Currency Pressure and Margin Initiatives
Despite revenue growth, B.O.S. faces higher operating expenses resulting from the weakening U.S. dollar. Cohen said the currency effect added about $600,000 of operating expenses during the first half, or an estimated $1.2 million on an annualized basis.
The company plans to offset that pressure through higher revenue, internal efficiency measures, price increases and improved gross margins. Cohen said sales teams have been raising prices since the beginning of the year and that management is monitoring those efforts monthly.
“In general, we are expecting higher gross profit margins,” Cohen said. He cautioned, however, that large Supply Chain Division transactions can affect quarterly gross margins because the division occasionally handles orders valued at $1.5 million to $2 million with varying margins.
Cohen said B.O.S. is using artificial intelligence internally to improve operational efficiency and in commercial software development. He said these initiatives are intended to support margin improvement and revenue growth.
Cash Position and M&A Plans
CFO Moshe Zeltzer said cash remained near $10 million despite total revenue growing approximately 30% from the first quarter to the second quarter. He said the company grew without consuming cash, aided by vendor financing of customer activity.
B.O.S. reported shareholders’ equity of $30.9 million and said it intends to use its financial resources to pursue external growth through acquisitions. Management said it is evaluating several opportunities, though Cohen noted that the company has not completed a transaction in the past two to three years because potential deals did not meet its criteria.
- Potential acquisitions are expected to have a maximum value of about $20 million.
- Targets must offer some degree of synergy with B.O.S.’s core business.
- Management is seeking companies with three to five years of consecutive profitability and a positive outlook.
- Transactions under review have EBITDA valuation multiples of roughly five to six times, according to Cohen.
Cohen said B.O.S. expects acquisitions to be financed with available cash and bank funding rather than shareholder dilution. He said that if the company acquires a profitable business, it expects banks could finance approximately 50% of a transaction.
About B.O.S. Better Online Solutions (NASDAQ:BOSC)
B.O.S. Better Online Solutions Ltd. provides intelligent robotics, radio frequency identification (RFID), and supply chain solutions for enterprises worldwide. The Intelligent Robotics Division provides custom-made machines for industrial automation and assembly of products and packing that offer technological solutions. The RFID Division provides hardware products, such as thermal and barcode printers; RFID and barcode scanners and readers; wireless, mobile, and forklift terminals; wireless infrastructure; active and passive RFID tags; ribbons, labels, and tags; and RFID systems for libraries.
