DroneShield Uncovers Record Revenue Gains in Australia
Research Report

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Disclosures for Shaw and Parnters, DroneShield Ltd., August 28, 2025:

Shaw and Partners Limited ABN 24 003 221 583 (“Shaw”) is a Participant of ASX Limited, Cboe Australia Pty Limited and holder of Australian Financial Services Licence number 236048.

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DroneShield Ltd. (DRO:ASX; DRSHF:OTC) achieved a record-breaking first half of 2025, with revenue soaring 210% year-over-year to AU$72.3 million and a net profit after tax of AU$2.1 million, marking a significant turnaround from an AU$4.8 million loss in the first half of 2024, wrote Shaw and Partners Analyst Abraham Akra in an updated research note on August 28.

EBITDA increased to AU$5.2 million, compared to a negative AU$4.9 million in the previous corresponding period. Cash receipts rose 185% year-over-year to AU$60.7 million. With revenue visibility for fiscal year 2025 at AU$176.3 million, compared to AU$57.5 million in FY24.

"Most deliveries expected to completed in 2H25, the 2H outlook remains strong," Akra wrote.

Leidos Secures LAND 156 Systems Integration Role

Leidos Australia has been chosen by the Australia Department of Defense as the Systems Integration Partner for the LAND 156 project under an AU$45.9 million contract. This initiative aims to establish a modular, sovereign counter-small unmanned aerial systems (C-sUAS) capability for addressing Group 1–2 threats. The initial capability, featuring Acacia’s Cortex C2, EOS’s Slinger effector, and Department 13 sensors, will be showcased at Southern Arrow 25 in December 2025.

Although DroneShield was not selected for this role, there is optimism about its involvement in future phases and complementary layers, given the Australian government’s AU$1.3 billion allocation for counter-drone acquisitions within the Integrated Investment Program, Akra noted.

Strong Cash Position and No Debt

DroneShield concluded June with AU$204 million in cash and term deposits. Although fixed operating cash costs have risen to approximately AU$8.5 million per month from AU$6.5 million in the first quarter, this is supported by increasing revenue and strong gross profit margins of around 71%, according to Akra. With no debt and approximately AU$270 million in saleable inventory (book value: AU$81 million), the company is well-positioned to self-fund its growth, including manufacturing expansion.

DroneShield is implementing a strategy to increase manufacturing capacity from AU$0.5 billion to AU$2.4 billion annually by FY26 through contract manufacturing in the US and EU, and the commissioning of a new 3,000 square meter production line in Sydney, the report said.

Headcount reached 373 by August, up from 250 at the end of FY24, including 285 engineers supporting quarterly AI software upgrades. These systems support the delivery of next-generation hardware, increased SaaS attach rates, and repeat revenue throughout the product lifecycle.

"These systems underpin the delivery of next-gen hardware, increased SaaS attach rates, and repeat revenue across the product lifecycle," Akra wrote.

Expanding Market via Civilian SaaS and Regional Growth

While defense remains a core focus, DroneShield is expanding into civilian infrastructure with SentryCiv, a subscription-only, detect-only product targeting airports, utilities, and stadiums, the analyst said. SaaS revenue, although only 5% of group revenue in the first half of 2025, grew 177% year-over-year, driven by an expanding AI feature set. Regionally, revenue from Europe (16%) and Asia-Pacific (27%) is increasing, although the US (20%) remains a key market. This highlights the growing global demand for counter-drone solutions.

DroneShield’s qualified pipeline has expanded to AU$2.34 billion across 310 active projects, according to Akra's report. Notably, 13 opportunities exceed AU$30 million, and 52 are over AU$5 million. Europe now leads in opportunity volume, benefiting from the €800 billion ReArm Europe defense expenditure.

Key upcoming catalysts for DRO include converting the existing pipeline into further FY25/26 orders and expanding SaaS revenues linked to new hardware launches in 2026.

Minimal Changes to Earnings Forecasts

Revenue forecasts for FY25–27 remain largely unchanged, with EBITDA stable and net profit after tax adjusted by +2.6%, +7.9%, and -5.6% for FY25–27, primarily due to net interest on revised yield assumptions, Akra said.

"We rate DRO at Buy with a US$3.60 PT (unchanged)," Akra wrote. "Our valuation is a blend of DCF and SOTP. We see DRO reaching an inflection point in sales and profitability with the NATO agreement supplementing the U.S. Dept of Defense recommendation and solidifying DRO as a market leader in jamming C-UAS."