The case for sustained, long-term demand in the counter-drone technology sector is strengthening, with DroneShield Ltd. providing compelling evidence. A landmark financial performance, marked by its first net profit, has been swiftly followed by a significant new European contract. The central question for investors now shifts to the company’s operational execution as it scales to meet a rapidly growing order pipeline.
Financial Milestones: From Loss to Profit
For the 2025 fiscal year, DroneShield achieved a transformative financial turnaround. Revenue surged to AUD 216.55 million, representing a staggering 276% increase year-over-year. Crucially, this top-line growth translated to the bottom line, with the company posting a net profit after tax of AUD 3.52 million—a sharp reversal from the loss recorded in the prior period. Earnings per share correspondingly moved into positive territory.
A deeper analysis of the financials reveals a robust gross margin, which stood at 64.8% after adjusting for inventory writedowns. Operating expenses grew to AUD 125.3 million, driven by strategic hires and increased share-based compensation. Excluding these non-cash share-based payments of AUD 23.5 million, the adjusted EBITDA was a healthy AUD 36.5 million, a substantial improvement from the negative AUD 4.0 million in FY2024. The balance sheet remains solid, with a cash position of AUD 209.4 million and positive operating cash flow of AUD 15.9 million.
Operational Scaling and Governance
Concurrent with its financial growth, DroneShield is undertaking a massive operational expansion. Its annual production capacity is slated to jump from AUD 500 million in 2025 to AUD 2.4 billion by the end of 2026. This scaling is supported by new facilities in Australia, the United States, and Europe. In Sydney alone, the company added 3,000 square meters of production space and 2,500 square meters for research and development. Headcount has nearly doubled, growing from 250 to over 450 employees.
Internal systems are also being upgraded to support this growth. A new enterprise resource planning (ERP) system has been implemented to enhance control over inventory, orders, and production scheduling. Furthermore, following a governance review mandated by the ASX, the board has announced stricter trading rules for company insiders.
Should investors sell immediately? Or is it worth buying DroneShield?
A Substantial New Contract and Recurring Revenue
Shortly after releasing its annual results, DroneShield announced a major new contract win. The company secured six separate agreements worth a combined USD 21.7 million with a Western military customer, facilitated through a local distribution partner. The order includes mobile counter-drone systems, spare parts, and critically, software licenses.
The inclusion of Software-as-a-Service (SaaS) subscriptions within this deal is a significant development. This mix moves the company’s revenue model beyond one-off hardware sales, creating a more predictable and recurring income stream. Delivery for the order is scheduled for the first quarter of 2026, with payment expected in Q2, and products will be supplied from existing inventory.
A Burgeoning Pipeline and the Execution Challenge
The company’s sales pipeline continues to swell, reaching AUD 2.3 billion as of February 2026, up from AUD 2.1 billion just a month earlier. This opportunity set spans approximately 50 countries, with Europe and the United Kingdom representing the largest segment at AUD 1.2 billion across 78 projects. The pipeline contains 18 individual deals each valued over AUD 30 million, with a single large opportunity pegged at AUD 750 million. For the 2026 fiscal year, AUD 104 million in revenue is already firmly committed.
Market sentiment has been positive, with the share price recently quoted at €2.13, reflecting significant gains over the preceding 12-month period.
Looking ahead, investor focus will narrow on two critical execution metrics: the pace at which the new manufacturing capacity can be brought fully online, and the conversion rate of the substantial pipeline into booked revenue, transforming what is currently a list of opportunities into tangible sales.
Ad
DroneShield Stock: Buy or Sell?! New DroneShield Analysis from February 27 delivers the answer:
The latest DroneShield figures speak for themselves: Urgent action needed for DroneShield investors. Is it worth buying or should you sell? Find out what to do now in the current free analysis from February 27.
DroneShield: Buy or sell? Read more here...
