Draganfly (DPRO) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue reached CAD 1.885 million (USD 1.89M), up 8.9% sequentially but down year-over-year, with product sales as the main contributor.

• Launched the APEX drone, targeting high-demand military and law enforcement markets, and announced a partnership with Nightingale Security for autonomous drone-in-a-box solutions.

• Secured significant military and industrial orders, including Commander 3XL drone purchase for U.S. Department of Defense logistics and a major installation with a Fortune 50 oil and gas company.

• Advisory board strengthened with the addition of former White House Chief of Staff Andy Card.

• 1-for-25 share consolidation effective September 5, 2024, to improve market standing and attract broader investor interest.

Financial highlights

• Q3 revenue down 11.8% year-over-year to CAD 1.9 million, but up 8.8% sequentially from Q2; gross profit was CAD 441,000, impacted by a one-time inventory write-down of CAD 176,000.

• Adjusted gross margin would have been 32.7% versus 42.2% year-over-year and 34.4% in Q2; reported gross margin was 23.4%.

• Comprehensive loss narrowed to CAD 365,000 from CAD 5.5 million last year, aided by a CAD 3.6 million gain on derivative liability and lower operating expenses.

• Cash on hand at quarter-end was just under CAD 4 million, up from CAD 3.1 million at year-end 2023, with minimal debt.

• Total assets stood at CAD 8.53 million and shareholders' equity at CAD 5.6 million at quarter-end.

Outlook and guidance

• Expecting best Q4 ever, with opportunities in Q4 orders of magnitude larger than annual revenue.

• Growing demand in military, law enforcement, and industrial sectors, especially in the Pacific Rim and Australia.

• Anticipates continued industry consolidation and increased North American supply chain localization.

• Management expects share consolidation to enhance share value and market positioning.

• Forward-looking statements highlight expectations for new product launches and partnerships to drive future growth, but caution is noted due to market uncertainties.