DroneShield Ltd. (DRO:ASX; DRSHF:OTC) received a AU$13.5 million order for a number of its dismounted, maritime counter unmanned systems, from a repeat U.S. government customer, which it expects to deliver and receive payment for, in full, this quarter, noted a news release.
"DroneShield's ability to rapidly deliver high-performance, lifesaving technology at this scale sets us apart in the counter unmanned aircraft systems (C-UAS) industry, empowering our clients with cutting-edge solutions precisely when they need it," DroneShield Director of Business Development Tom Branstetter said in the release.
The need and demand for DroneShield's products are growing, Chief Executive Officer Oleg Vornik told Proactive in a Sept. 25 interview.
"Today, there is this arms race," he said. "We are seeing an ongoing, rapid increase in drone threats. DroneShield is very much up in the leading pack to detect and take down those threats."
Meeting End Users' Needs
This Australian defense technology company develops and offers an array of end-to-end counterdrone solutions that combine its hardware products and its proprietary artificial intelligence (AI)-backed software.
Its counterdrone systems have three functions, which they can carry out in any environment, in the air, on the ground and at sea, as described in DroneShield's August 2024 Investor Presentation. The C-UAS monitor situations in real time using AI. They detect drones using their AI-powered optic and thermal sensing capabilities. They defeat threats, with intelligent, responsive soft or hard kills.
To meet the specific needs of end users, DroneShield's systems are available in various configurations, from standalone and plug-and-play to cohesive and fully integrated. The hardware can be used while affixed to a site or while handheld by someone who is stationary or on the move. The company ensures that its products are practically applicable in real-life scenarios.
"Providing solutions that deliver a decisive advantage to our end users is what we strive for," DroneShield U.S. CEO Matt McCrann said in the release.
The defense company also offers portable augmented and virtual reality training options so operators may become trained on and certified in its products.
To keep up with evolving and new threats happening quickly, DroneShield keeps investing in research and development, technology and specialists, Vornik said. For this purpose, it raised less than AU$285M in two raises this year. Also, the company expects to increase its team of hardware and software engineers to about 240 by year-end 2025 from 130 now.
DroneShield's customers include military and intelligence, government, law enforcement and entities protecting infrastructure and assets, including airports, stadiums, ports, correctional facilities, high-profile events, commercial enterprises, energy production sites and more. The U.S. government, which has been DroneShield's largest client, accounting for about two-thirds of its business last year, is expected to remain so in the near future, said Vornik.
The company continues to build its customer base, noted the CEO, through sales teams on the ground in the U.S., Europe, the Middle East and soon, South America too.
26% CAGR Projected for Sector
The emerging global counterdrone market is forecasted to expand at a compound annual growth rate of 26% between 2023 and 2032, according to Global Market Insights, reaching US$15.3 billion (US$15.3B) in value, up from US$1.9B during the period.
Increasing advancements in drone technology, including longer range, larger cargo capacity, autonomous flying, communication and control technologies, are expected to contribute to sector growth, the marketing firm indicated. Increasing geopolitical security concerns, the need for military forces to defend their bases, troops and critical operations and surging cases of unauthorized drone activities are other growth drivers.
Rising government expenditures on the defense and aerospace industry are also forecasted to impact the sector. A Sept. 12 Wealth Daily article reported the U.S.' fiscal year 2025 defense budget starts at about US$895B and in the next few years, is likely to be US$1 trillion. NATO already is set to spend more than that this year.
"In fact, a record 18 NATO members are on track to hit the alliance's oft-stated target of 2% of GDP — up from just three in 2014. And some of those countries — those most threatened by Russia’s aggression — are exceeding it," the reporter wrote.
The Catalyst: More Sales Growth
A confluence of factors is creating opportunity, specifically "meaningful and consistent order flow," for DroneShield, as highlighted in its Investor Presentation. These contributors include the rapid, ongoing proliferation of drones, increasing geopolitical tensions and conflicts, escalating drone use in hot zones and by terrorists, and rising government spending on counterdrone solutions.
"I expect DroneShield to continue to benefit from the wave of demand that we expect to continue coming our way," Vornik said.
Shaw & Partners Analyst Abraham Akra and Bell Potter Analyst Daniel Laing expect DroneShield to grow sales throughout the rest of 2024 and into 2025, each wrote in his most recent research report. Both have a Buy rating on the stock.
Ownership and Share Structure
Management and insiders own 6.88% of the company, according to DroneShield. CEO and Managing Director Oleg Vornik owns 1.63% with 15 million (15M) options, on a fully diluted basis. Nonexecutive Chairman Peter James holds 0.43% with 935,000 shares and 3M options, on a fully diluted basis. Nonexecutive Director Jethro Marks owns 0.16%, with 1.5M options, on a fully diluted basis.
According to Reuters, Epirus Inc. is the largest shareholder, with 2.12% or 18.5M shares.
Structurally, DroneShield has 872.12M outstanding shares and 782.40M free float traded shares.
Its market cap is AU$1.06B Its 52-week range is AU$0.26−2.72 per share.
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