DroneShield (ASX:DRO) executives highlighted sharp growth in revenue, cash receipts and software-as-a-service (SaaS) commitments during a recent investor call, while also pointing to a large but slightly reduced sales pipeline and a continued push to expand manufacturing capacity in multiple regions.
Top-line growth and a stronger start to calendar 2026
The company said it generated roughly four times the prior year’s top-line increase, citing results that included “about $202 million in cash receipts” and strong revenue performance. Management emphasized that the company reports on calendar year ends and said it had entered 2026 with substantially more “locked-in” revenue and cash receipts than the year before.
SaaS revenue was described as continuing to climb. Management said SaaS revenue increased from just under AUD 3 million in 2024 to just under AUD 12 million in 2025, and that the company had already “locked in over AUD 18 million for 2026.” The company said profit before or after tax would be released in about a month as part of annual results.
Pipeline remains large despite a more conservative U.S. civilian outlook
DroneShield reported a sales pipeline of about $2.1 billion, down from roughly $2.4 billion around three months earlier. Management attributed the reduction primarily to more conservative assumptions for U.S. civilian opportunities, describing the non-military sector as “very nascent” and noting that early-stage buyers do not always progress through procurement steps in a predictable way.
Management characterized the pipeline as diversified across roughly 300 deals spanning products, geographies and stages of maturity. Executives reiterated that they still see momentum in U.S. non-military opportunities, including potential demand from data centers, airports and energy infrastructure, but said near-term pipeline projections were trimmed to reflect the market’s early-stage nature.
On revenue guidance, management said the company does not provide formal forecasts, calling the sector “a nascent industry” and stating that issuing a specific number would be irresponsible. Executives said internal expectations call for “a very meaningful increase” versus 2025, and reiterated that the company had started 2026 with a much stronger base of locked-in revenue than in prior years.
Regional demand drivers: Europe momentum, U.S. catalysts, and other markets
Management said the U.S. has historically been the growth engine, contributing about 70% of revenues, but noted that Europe “has taken that title” more recently as countries increase defense spending. The company said it is positioned in Europe through distributors, training and an Amsterdam office led by the Global Chief Commercial Officer, along with plans to set up manufacturing in Europe.
In the U.S., management described 2025 as “relatively quiet” and said 2026 could strengthen as congressional budget discussions conclude. Executives pointed to several demand drivers discussed on the call, including:
- U.S. defense spending discussions, including reference to a proposed $1 trillion defense budget in 2026 and a proposed $1.5 trillion level in 2027, and the potential role of JIATF 401 as a centralized procurement office for counter-drone.
- The Department of Homeland Security’s Program Executive Office and a “$1.5 billion contract vehicle,” which management linked to security needs for the FIFA World Cup in June-July.
- The Safer Skies Act, which management said expands the ability of state and local law enforcement to jam, aligning with DroneShield products such as DroneGuns, RfPatrol and vehicle-mounted systems.
- Inclusion in the Golden Dome/“$151 billion SHIELD IDIQ,” which management said is early-stage and not yet reflected in the company’s pipeline, but could require counter-drone protection at missile defense sites.
In the UK, management cited an example of its RfPatrol being demonstrated during a visit by the UK Minister of Defence to the SAS headquarters in Hereford, characterizing this as evidence the company is “deeply embedded” with the Ministry of Defence. In Australia, DroneShield said it was included in the Line of Effort III panel for Land 156 and also part of Line of Effort II, which covers purchases of portable systems. The company noted it received “initial small couple orders totaling $6 million” last year and expects more.
Management said Asia efforts are driven by Japan and nearby markets, and highlighted South America as a key driver, citing activity in Colombia and Mexico and referencing Colombia’s announced “$1.7 billion US counter-drone budget,” where fixed-site systems such as DroneSentry are a focus.
Software strategy: targeting a higher SaaS mix and recurring revenue models
DroneShield said software currently represents about 5% of total revenue, with an internal goal to push software closer to 30% “over the next several years.” Management said this will be pursued by attaching one or more SaaS streams to every new product released going forward.
Executives used DroneSentry-X as an example, describing SaaS components including an AI engine (RFAI), command-and-control (C2), and enterprise-level SaaS for multi-site deployments. The company also referenced SaaS offerings tied to camera and radar integrations, including DroneOpt ID.
Management also discussed the potential evolution toward “counter-drone as a service,” where hardware refresh cycles are bundled into a larger recurring model. Executives said counter-drone hardware often needs to be replaced every three to four years and noted that some customers are already asking about service-based approaches that could smooth cash flows over time.
Manufacturing capacity, R&D investment, and next-generation AI
Management said the company’s technology differentiation is supported by roughly 350 hardware and software engineers in Sydney and more than AUD 70 million in R&D spend, which it expects to continue with only modest increases. Executives said headcount is expected to rise from about 500 to 600 by the end of 2026, assuming recruitment stays on track, with a focus on engineering as well as operations and sales. The company reiterated a 65% gross margin for its hardware and described maintaining healthy cash levels, including a reference to AUD 200 million in the bank.
Executives said the company is “on track to expand” manufacturing capacity to $2.4 billion by year-end and is completing a move to a facility described as eight times larger in Sydney. Management said manufacturing setups in Europe and the U.S. are expected to begin in the current half-year, with Europe starting “this quarter” and the U.S. the following quarter.
On delivery performance and supply chain, management said the company has “never missed a delivery.” Executives cited examples including a European order delivered the day after it was announced and a “$62 million” order delivered within two months. The company said it is not seeing material delays at this time.
On product development, the company said it plans to release next-generation products commencing in the second half of the year. Chief Technology Officer Angus described DroneShield’s “micro AI” approach—AI running on the edge rather than in the cloud—and said the company is working on RFAI 3 and RFAI-ATK 2 for rollout to existing products and new platforms. He emphasized that AI development becomes “a race for data” and said DroneShield’s global signal database is a foundational advantage.
Management also addressed competitive and technology topics raised during Q&A, including fiber optic drones and high-powered microwave systems. Executives characterized fiber optic drones as niche with practical limitations, while noting DroneShield can integrate radars, cameras and other technologies for broader detection and response. On high-powered microwave systems, management referenced a strategic relationship with Epirus and described those solutions as impressive but costly and complex relative to DroneShield’s broader, cost-effective market focus.
About DroneShield (ASX:DRO)
DroneShield Limited engages in the development, commercialization, and sale of hardware and software technology for drone detection and security in Australia and the United States. It offers DroneGun Tactical, a portable rifle shape drone disruptor, causing the drone to safely land, or fly back to the starting point; DroneGun Mk4, a rugged handheld counter-unmanned aircraft system (UAS) effector; DroneGun Mk3, a pistol shaped compact drone disruptor; RfPatrol Mk2, a wearable AI-enabled multi-mission detection tool; DroneSentry-X, a cross-vehicle compatible automated 360° detect and defeat device; and DroneSentry-X Mk2 is a software-defined detection and adaptive disruption system.
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