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