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Droneshield secures its biggest contract yet. Where to from here?

Wed 25 Jun 25, 11:46am (AEST)
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Key Points

  • Droneshield secured its largest ever contract worth $61.6 million, exceeding the company's entire 2024 revenue of $57.5 million and can deliver within the quarter without additional capital requirements.
  • Shares have surged 250% from February lows and are up 35% month-to-date, driven by heightened geopolitical tensions boosting defence stocks.
  • Year-to-date metrics show explosive growth with Q1 revenue up 102%, pipeline expanding 367% to $2.41 billion, and $161 million in secured revenues already booked.

Droneshield (ASX: DRO) shares surged more than 20% in early trade Wednesday after securing a $61.6 million contract package from its privately owned European reseller.

The deal represents Droneshield's largest single order and exceeds the company's entire 2024 revenue of $57.5 million. Management said recent production and inventory expansion will enable full delivery within the quarter, with cash payment expected in the second half of the calendar year.

Overall, it's a big deal given the sheer contract size and the company's ability to deliver on such an order without extended lead times or additional capital requirements.

The timing aligns with heightened global demand for drone defense systems amid ongoing conflicts in Ukraine and Middle East tensions. This geopolitical backdrop has driven strong performance for Droneshield, with shares already up 35% month-to-date before Wednesday's rally.

Droneshield contract history

Droneshield has built momentum through consistent contract announcements, typically ranging from $3-10 million with occasional larger deals exceeding $30 million.

Major contracts typically drive meaningful share price upside. Below, I've collated all of the company's contract wins valued at $10 million or more, and how the stock performed on the day.

Date

Contract Amount

Customer

% Chg

25/06/2025

$61.6m

European military customer

TBD

14/04/2025

$32.2m

Asia Pacific customer

16.2% to $1.03

08/10/2024

$13.5m

US government

1.1% to $1.34

17/07/2023

$33m

US government

18.8% to $0.31

09/01/2023

$11m

Government agency

16.0% to $0.29

21/12/2022

$11m

Government agency

20% to $0.21

Source: Author's own research

Another question that may arise is whether or not these contract wins can drive a sustained move for the share price as opposed to a potential pump (and dump).

Date

Close

% Chg

2 Days

1 Week

1 Month

21/12/2022

$0.21

20.00%

2.38%

11.90%

54.76%

9/01/2023

$0.29

16.00%

-12.07%

-5.17%

17.24%

17/07/2023

$0.32

18.87%

-3.17%

6.35%

0.00%

8/10/2024

$1.35

1.13%

-2.97%

-15.61%

-36.80%

Source: Author's own research

Sustaining these gains has proven mixed. Post-announcement performance varies significantly, with some contracts delivering continued gains while others fade within weeks.

Where to from here?

Today's geopolitical climate has been a major tailwind for defence stocks, with a peer like Electro Optic Systems also up around 40% so far in June.

Bell Potter is one of the few brokers that cover Droneshield. The latest coverage (24 April) retained a Buy rating with a $1.50 target price and the following forecasts for FY25:

  • Sales: $140 million

  • EBITDA: $39 million

  • Earnings per share: 3.5 cents

However, today's contract win alone suggests these estimates may be conservative. The company's latest metrics paint an impressive growth picture:

  • Q1 2025 revenue: $33.5m (+102% vs prior period)

  • Pipeline: $2.41bn (+367% vs prior period)

  • Year-to-date secured revenue: $161m

  • Cash balance: $198.1m (as of June 20)

The two most recent contracts ($32.2m plus $61.6m) total $93.8 million - already representing 67% of Bell Potter's full-year sales forecast. This should prompt analysts to upgrade their earnings assumptions for FY25.

Overall, Droneshield has been running hard and is up ~250% from its February 2025 lows. The stock remains highly volatile as investors weigh concerns over valuation and earnings volatility against the tailwinds from escalating geopolitical tensions and strong contract momentum.

 

Written By

Kerry Sun

Content Strategist

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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