New Firmware Update Enhances Counter-Drone Capabilities

DroneShield Ltd. (DRO:ASX;  DRSHF:OTC) has released its latest firmware update for its full range of Radio Frequency (RF) sensors, including the RfPatrol Mk2, RfOne Mk2, and all DroneSentry-X models. This update marks a significant enhancement in the capabilities of DroneShield's products, expanding the pool of drones that its Radio Frequency Artificial Intelligence (RFAI) can identify. This expansion includes several additions requested by customers, who provided real-world recordings of previously unseen drone models to aid in development.

The new firmware introduces several advanced features. According to the news release, users can now customize each device's scanning pattern, integrating AI-powered RF scanning, Wi-Fi scanning, and other emission detection methods. Additionally, the existing Directional Antenna Units for the RfPatrol Mk2 have been upgraded to offer greater sensitivity and improved performance in locating drones. The RF filters on the DroneSentry-X Mk2 have also been enhanced, allowing for better adaptation to specific operational environments.

An expanded API now allows all major features of DroneShield systems to be controlled remotely, including signal filters and detection band activation. Client developers can download protocol buffer code packages from the Access Portal, facilitating easier integration of DroneShield hardware into third-party systems.

Counter Drone Technology

The anti-drone market has been experiencing significant growth and is projected to continue on this trajectory in the coming years. According to a report from Strait's Research, "The global anti-drone market is projected to reach US$9.78 billion by 2030, growing at a remarkable CAGR of 26.7% during the forecast period (2022–2030)."

This growth has been driven by rising drone sales and increasing privacy concerns, which have fueled the demand for advanced anti-drone systems that can detect and neutralize weaponized drones, thereby enhancing security at critical locations.

As reported by Yahoo! Finance on June 27, "The global anti-drone market was valued at US$1.2 billion in 2022 and was projected to reach US$5.2 billion by 2028, registering a CAGR of 26.6% between 2023 and 2028." The rise in demand for anti-drone systems was attributed to increasing government spending on counter-drone technologies, rising incidences of critical infrastructure security breaches by unauthorized drones, and the surging adoption of aerial remote sensing technologies to safeguard critical infrastructure.

In his July 25 report, Maund wrote, "The company is still on a stellar growth trajectory."

The kinetic system segment of the anti-drone market was expected to grow at the highest CAGR from 2023 to 2028. As The Aviationist wrote on July 15, this growth was due to the versatility and reliability of kinetic systems in countering drones across various threat levels. Homeland security was also expected to exhibit the highest CAGR during the forecast period, driven by the escalating threat posed by drones and the need for advanced technology to counter these threats.

The UAV-based segment was another area expected to see significant growth, driven by the need for robust countermeasures against unauthorized or potentially malicious drones. The report continued, "Asia Pacific was projected to account for the largest share of the anti-drone market by 2028, with growth driven by the development of a broad range of counter-drone technologies and extensive research and development initiatives."

The recent large-scale demonstration of counter-sUAS systems by the U.S. Army at the Yuma Proving Ground underscored the critical importance of developing and deploying advanced technologies to detect and defeat swarms of drones. As the report in The Aviationist pointed out, "The Army's Joint C-sUAS Office highlighted the effectiveness of various counter-drone systems, deploying a combination of soft and hard kill measures to take down swarms of UAVs." This demonstration showcased the versatility and adaptability of the latest counter-drone technologies and highlighted the necessity for layered defense systems to effectively counter diverse drone threats.

Catalysts Driving DroneShield

The latest firmware update represents a significant catalyst for DroneShield. The enhanced scanning and detection capabilities, combined with the expanded API, position DroneShield's products as more adaptable and effective in diverse operational environments. The company noted that these improvements are likely to strengthen the company's market position and appeal to a broader customer base.

Angus Bean, DroneShield's Chief Technology Officer, emphasized the importance of customer collaboration in developing these new features, stating in the news release, "Our focus on delivering world-class counterdrone technology is highlighted by collaboration with our valued customers. We provide the latest integration tools they need, and work closely with them to gain insights to the cutting-edge threats they experience."

This update not only enhances the functionality of DroneShield's existing products but also signals the company's ability to respond swiftly to customer feedback and emerging threats. Such responsiveness is crucial in the rapidly evolving counterdrone market, where technological advancements and new drone models continually emerge. By incorporating real-world data provided by customers, DroneShield ensures its solutions remain at the forefront of counterdrone technology, potentially leading to increased sales and market share.

Analysts Analyze DroneShield

In a May 31 report, Abraham Akra from Shaw and Partners gave DroneShield a Buy recommendation and a price target of AU$1.40. Akra stated, "DroneShield is a market leader and early mover in counter-drone (C-UAS) tech. DRO specializes in advanced AI-driven counter-drone and electronic warfare solutions for terrestrial, maritime, and airborne platforms." He highlighted that DroneShield was well-positioned to benefit from rising global defense spending and the increasing focus on counter-drone capabilities, expecting the company's sales growth to exceed market growth rates due to its robust product suite and established track record. 

Despite a recent pullback in DroneShield's stock price, Technical Analyst Clive Maund remained bullish on the company. In his July 25 report, Maund wrote, "The company is still on a stellar growth trajectory that has not been changed one iota by the plunge in the share price over the past week or two." He explained that the drop was a major step in clearing the "speculative froth," and once this finished, "the stock will be free to advance anew after a period of stabilization and base building to allow time for sentiment to recover." Maund warned that DRO could dip a little further beforehand but recommended that investors start buying it again.

Ownership and Share Structure

Management and insiders own 11% of the company. CEO Oleg Vornik owns 2.23% of the company with 15 million options on a fully diluted basis.

Non-Executive Chairman Peter James owns 0.58% of the company with 920k shares and 3 million options, on a fully diluted basis, and Non-Executive Director Jethro Marks owns 0.22%, with 1.5 million options, on a fully diluted basis, according to DroneShield.

The largest independent investor, Charles Goode, owns 4.41% of the company with 21.5 million shares, while strategic investors own a total of 13.99% of the company.

Eprius Inc. is the second largest shareholder, with 3.16% of the company having 18.5 million shares.

The company reports that there are about 763 million shares outstanding.

Its market cap is about AU$900m, and it trades in a 52-week range of AU$0.25 - AU$2.72 

Important Disclosures:

1. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of DroneShield Ltd.
2. James Guttman wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
3.  This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company. 

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