Record Backlog and RFID Rebound Bolster B.O.S.'s 2026 Outlook

Record Backlog and Revenue Momentum

The second quarter of 2026 marked a clear inflection point for B.O.S. Better Online Solutions Ltd. (NASDAQ: BOSC). Record backlog of $31 million, a 29% year-over-year revenue increase, and a reaffirmed outlook to exceed both $51 million in revenue and $3.6 million in net income signal that the company's multi-year investments in defense and automation are now paying off. As the operator noted in the prepared remarks, "The growth momentum continued. Second quarter 2026 revenue grew 29% year-over-year, helping offset a softer first quarter of 2026 and bringing trailing 12-month revenue to the same level as our record 2025 revenue." “Second quarter 2026 revenue grew 29% year-over-year…” — Unknown Attendee · 2026-08-20 This is a departure from the pandemic-era lumpiness and the war-driven volatility seen in prior quarters.

The backlog's composition is also noteworthy. Approximately $20 million of the $31 million is scheduled for delivery by year-end, providing 91% visibility into 2025 revenue. CEO Eyal Cohen attributed the strength to the Defense segment, stating, "Demand in the Defense segment continues to be strong as reflected in our record backlog, most of which relates to our Supply Chain division." “Demand in the Defense segment continues to be strong…” — Eyal Cohen, Chief Executive Officer · 2026-08-20 This recurring theme is reinforced by the company's own keyword trajectory, where "Defense segment" has been a top keyword for three straight quarters.

RFID Rebound and the Israeli Commercial Market

The RFID division, which had been a drag due to the war and restructuring, is showing signs of recovery. In the first half, RFID division revenue grew 17% year-over-year, and the CEO is "bullish on year '26" for the division. The recovery is tied to the normalization of the Israeli commercial market. "We see a positive change. Actually, we expected – and it's happened a little bit quiet here in Israel and it camps. There is a rebound in the market." “We see a positive change.” — Eyal Cohen, Chief Executive Officer · 2026-08-20 This is a marked contrast to prior quarters when management repeatedly highlighted geopolitical headwinds. In Q3 2025, they had said, "We are optimistic about returning to profit in the fourth quarter." “We are optimistic about returning to profit in the fourth quarter.” — Eyal Cohen, Chief Executive Officer · 2025-11-25 Now, the division appears to be executing on that promise.

However, the recovery is not without nuance. Management acknowledges that RFID is "100% affected by the Israeli commercial market," which exposes it to geopolitical volatility. That is why they are actively diversifying into defense and hospital segments, though those initiatives are still early.

Currency Headwinds and the Efficiency Push

The shekel's continued appreciation against the dollar remains a structural challenge. The devaluation increased operational expenses by roughly $600,000 in the first half, and the company is combating this through price increases and internal efficiency, notably with AI tools. In the prior quarter, the CEO had outlined the approach: "We are doing it based on 2 pillars. The first one is to increase the sales price, even though it's quoted in dollar, but to increase the gross profit margin to compensate our operational expenses, which are quoted in NIS." “We are doing it based on 2 pillars…” — Eyal Cohen, Chief Executive Officer · 2026-05-28 Now, CFO Moshe Zeltzer reinforced that execution is underway: "We grew without needing to burn cash, which is a strong indication of highly efficient cash management." “We grew without needing to burn cash…” — Moshe Zeltzer, Chief Financial Officer · 2026-08-20 The company has also been raising prices across its product lines, which should support gross margins. This is not a new theme – it was central to the prior Q&A – but the intensity is higher now.

M&A Ambitions and Valuation

M&A remains a stated priority, and management is actively evaluating opportunities, particularly in AI. The criteria are strict: profitable companies with a history of profits and synergy with core businesses. The acquisition ceiling is set at $20 million, funded by $10 million in cash and bank loans. In the current call, the CEO reiterated, "we are in negotiations with several companies. Hopefully, one of them will be closed." “we are in negotiations with several companies” — Eyal Cohen, Chief Executive Officer · 2026-08-20 This is consistent with prior calls, but the pipeline appears closer than before.

Meanwhile, the company is aggressively courting investors with new IR initiatives, including conferences and a possible name change to "BOSC," which would better reflect its defense and supply-chain identity. The current valuation – roughly 1x book and 9x earnings versus the Russell Microcap Index's 2x and 16x – is a recurring talking point. As the operator concluded,

For comparison, the Russell Microcap Index trades at approximately 2x book value versus B.O.S. trades 1x book value.

Conclusion

The quarter is a strong positive data point, but the story is not new. The company has been consistently messaging its defense backlog, RFID recovery, and M&A ambitions. What has changed is the execution: revenue is accelerating, the backlog is at a record, and the RFID division is turning profitable. The world's Golden Dome –like defense spending surge (and its emphasis on Iron Dome and missile defense) is a tailwind, though BOSC's exposure is indirect through its Israeli defense customers. The company's small-cap scale and geopolitical concentration in Israel introduce risk, but the improving fundamentals make it a name to watch.