DroneShield (DRO) investor relations material

Executive summary

• Achieved record first-half revenue of $125.8 million for 1H 2026, up 74% year-over-year, driven by expansion in end-user base, global conflicts, and increased demand for counter-drone solutions.

• Recurring revenue rose 229% to $11.5 million, now 9.2% of total revenue, with 4,100 software-enabled devices deployed globally.

• Significant investments made in governance, ERP systems, production facilities, R&D, and leadership to support global scaling and next-generation product launches.

• Expanded customer base and partnerships beyond defense to include commercial, government, and critical infrastructure sectors, reflecting a dual-use strategy.

• Leadership changes included new CEO, Chairman, and board members, with major governance enhancements.

Financial highlights

• Revenue increased 74% to $125.8 million compared to $72.3 million in 1H 2025.

• Recurring revenue grew 229% to $11.5 million, now 9.2% of total revenue.

• Gross margin declined to 60% from 65.3% due to product mix and one-off inventory impairment.

• Underlying EBITDA loss of $12.4 million, compared to an $8.0 million profit in the prior year, reflecting planned investments and one-off costs.

• Cash and term deposits stood at $180 million as of 30 June 2026, with no debt.

Outlook and guidance

• FY2026 revenue outlook reaffirmed at $250–$270 million, representing 15–25% growth over FY2025, with $240 million in committed revenue covering 89–96% of the range.

• Priorities for 2H 2026 include delivering on revenue targets, recovering gross margin, shipping first RfRecon units, and expanding recurring revenue.

• Committed revenue for 2027 and beyond already at AUD 43 million, reflecting shift to programmatic procurement.

• Full product refresh with next-generation platforms expected by end of 2027.