Counterdrone Tech Ushers in Advanced AI and Enhanced Detection Capabilities

DroneShield Ltd. (DRO:ASX; DRSHF:OTC) has announced the release of Version 10.0 for its DroneSentry-C2 platform, which includes substantial updates to the user interface, AI capabilities, and detection functionalities within the C-UAS Command-and-Control software industry.

The update introduces a new design from the ground up, providing a more intuitive user experience with a streamlined interface for faster navigation and improved access to settings. Enhancements include better usability for desktop and tablet interfaces, particularly in mobile applications like vehicles and dismounted missions. The version also integrates ThreatAI, a new feature that analyzes threats dynamically to assist in decision-making across the platform.

Additional improvements in this release include full integration of OTM sensors with the DroneSentry-X Mk2, expanded data visualization features, and localization into Spanish and Polish. A new planning tool application has been created to aid clients in planning their Counter-UAS installations and assessing system suitability.

Why AI and Counterdrone Tech?

On February 27, 2024, McAlinden Research Partners covered data's increasing value, particularly for large language models, writing, "Reddit recently struck a deal with Google worth US$60 million per year that will allow the search engine giant to access a trove of data contained within Reddit's forum posts. After being sued by the New York Times late last year for copyright infringement, OpenAI reportedly began negotiating licensing agreements with several news outlets to avoid potential litigation in the future."

The balance for counterdrone technology is a hard one to find and is constantly evolving. As noted in an October 18, 2023 Forbes report, "Commercially empowered drone technology is evolving at a rapid pace, outpacing the progress in counter-drone technology, primarily driven by the military sector. With one country develops and deploys new counter-drone systems, their adversaries adapt by identifying weaknesses and devising strategies to circumvent them."

Jefferies equity analyst Mark Lipacis, in an August 24 report on Yahoo! Finance, highlighted that "Today, we think there are many examples of companies that are generating a return using generative AI through product enhancements, productivity gains, or outright cost reductions." 

Nvidia, a major player in the AI space, has seen demand for its AI data center platforms soar. In that same Yahoo report, Nvidia CEO Jensen Huang noted, "Demand for our data center platform for AI is tremendous and broad-based across industries and customers . . . Our demand visibility extends into next year."

Catalysts for Future Growth

The deployment of DroneSentry-C2 Version 10.0 introduces several technological advancements that could positively impact DroneShield's growth. The update enhances the system's AI capabilities, including SensorFusionAI and DroneOptID, which have been refined for greater accuracy and a broader detection range. These advancements are designed to meet the increasing demand for sophisticated drone detection systems in various security-sensitive sectors.

As noted by DroneShield, this version has been completely rewritten "from the ground up," leading to a "faster and smoother experience" and a framework that supports "significant upcoming features."

According to the company, ThreatAI provides a "responsive threat rating based on data from all sensors and user input," which is utilized across the platform to enhance command decision-making. This level of integrated intelligence is critical in evolving C-UAS operations where rapid and accurate responses are necessary.

Moreover, the full integration of OTM sensors with the DroneSentry-X Mk2 into DroneSentry-C2, as described by DroneShield, allows for "integrated control of disruption features, and smarter detections in the field," marking a substantial improvement in operational capabilities. This enhancement is likely to improve the efficiency and effectiveness of deployments in various environments, from static security settings to mobile operations.

DroneShield’s CTO, Angus Bean, emphasized the broader implications of this release, stating, “The release this quarter allows us to bring the DroneSentry-C2 platform to many more users. In a growing market, it allows us to better scale and maintain our Software-as-a-Service, and simplifying the front-end opens opportunities with clients who were previously beyond our reach.” 

Bell Potter analyst Daniel Laing reinstated his Buy rating for DroneShield in a March 4 research note following the company's standout 2023 performance. Potter wrote of the stock, "DroneShield (DRO) has had an outstanding last 12 months, which has been reflected in the share price performance YTD."

Ownership and Share Structure

Management and insiders own 11% of the company. CEO Oleg Vornik owns 2.23% of the company with 15 million options, on a fully diluted basis. Non-Executive Chairman Peter James owns 0.58% of the company with 920k shares and 3 million options, on a fully diluted basis, and Non-Executive Director Jethro Marks owns 0.22%, with 1.5 million options, on a fully diluted basis, according to DroneShield.

The company reports that the largest independent investor, Charles Goode, owns 4.41% of the company with 21.5 million shares, while strategic investors own a total of 13.99% of the company.

Eprius Inc. is the second largest shareholder, with 3.16% of the company having 18.5 million shares.

The company reports that there are about 704 million shares outstanding and about 526.8 million free-float traded shares. Its market cap is about AU$680 million, and it trades in a 52-week range of AU$0.99 and AU$1.145.