AUKUS Agreement Boosts Defense Tech Exports Beyond Expectations, Backed by US$18.1M Commitment

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DroneShield Ltd. (DRO:ASX; DRSHF:OTC), known for its role in counter-drone defense technology, has officially been registered under the AUKUS export framework with both the United States and Australian governments. This registration enables DroneShield to export most military and dual-use goods, technologies, and services to the U.S. and the U.K. without the need for an export license. The AUKUS trilateral export agreement, effective from September 1, 2024, facilitates streamlined defense trade among the three nations, reducing administrative barriers and accelerating the delivery of critical defense capabilities.

According to Oleg Vornik, Chief Executive Officer of DroneShield in the news release, "Being officially registered under AUKUS strengthens our ability to contribute to global defense initiatives by enabling a more rapid and efficient delivery of advanced capabilities. The simplified export process enhances collaboration, fosters innovation, and reinforces the shared security objectives of Australia, the United States, and the United Kingdom."

The agreement is expected to enhance industrial partnerships, support rapid deployment of defense technologies, and provide DroneShield with a competitive edge by simplifying regulatory processes and reducing lead times. The Australian government has committed AU$18.1 million (converted from AU$28 million at the current exchange rate) in the 2024-25 budget to support industry engagement under the new framework. DroneShield's advanced counterdrone technology positions it well to benefit from this agreement, as the company continues to innovate and supply critical defense solutions.

DroneShield's 2025 Growth Strategy: Expanding Capacity and Advancing AI-Driven Counterdrone Solutions

DroneShield's investor presentation from January 2025 highlights the company's significant growth trajectory and its strategic initiatives for 2025. With a record revenue of AU$57.5 million in 2024, DroneShield has already secured AU$36 million in revenue for 2025 through received payments and committed purchase orders.

Abraham Akra from Shaw and Partners maintained a Buy rating on DroneShield in a February 5 report.

The company's robust pipeline, valued at AU$1.2 billion as of January 2025, includes defined opportunities across the U.S., Europe, Australia, and other regions. DroneShield plans to expand its Sydney facility and supply chain network to increase manufacturing capacity to AU$500 million annually.

The company's focus on next-generation counterdrone systems, driven by proprietary AI technology, is expected to enhance its market position. Investments in AI-driven software and integrated hardware systems aim to accelerate the development of new products such as the RfPatrol Mk3 and DroneGun Mk5, which are anticipated to meet growing global demand for counterdrone solutions. With a substantial cash balance of AU$220.6 million as of December 31, 2024, DroneShield is well-positioned for long-term growth in the rapidly evolving counterdrone sector.

Aerospace and Defense Industry Sees Billions in Growth Fueled by AI Innovation

According to Business Facilities on January 29, the aerospace and defense industry experienced substantial growth, generating over US$955 billion in sales in 2023, a 7.1% increase from the previous year. The industry supported more than 2.2 million jobs, with nearly 60% tied directly to the supply chain, highlighting its critical role in driving economic activity.

Bain and Company wrote on February 4 that venture capital investment in defense surged from US$500 million in 2014 to US$8.7 billion in 2024, driven by increasing demand for innovation and cost-effective solutions. The report highlighted that venture-backed companies have delivered technological advancements that improve capability and reduce costs, positioning themselves to take market share from traditional defense firms.

Independent investor Chase Barlow highlighted DroneShield as an attractive investment on February 14.

US Global Investors noted on February 14 that the global AI market in aerospace and defense was projected to grow from US$28 billion to US$65 billion by 2034, with North America representing US$10.43 billion and growing at 10.02% annually. Frank Holmes emphasized the sector's shift towards AI-driven capabilities, describing it as the "new red Cold War," where AI technology has become the primary competitive arena for global powers.

Market Insights Report highlighted on February 17 that the aerospace and defense chemical distribution market was valued at US$5.06 billion in 2023 and was expected to reach US$6.75 billion by 2032, with a 4.2% CAGR. The report underscored the importance of advanced materials such as adhesives, coatings, and composites in aerospace manufacturing and defense applications, driven by increasing global investments.

Analysts Highlight DroneShield's Strong Financial Position and Growth Potential 

Daniel Laing from Bell Potter Securities offered a Buy rating for Droneshield on January 29, though he adjusted his target price to AU$1.10 from AU$1.20 due to increased operating expenses. Laing noted DroneShield's secured AU$47.8 million in contracted revenue for 2025 and its AU$220.6 million cash balance as of December 2024. He highlighted the company's AU$1.2 billion sales pipeline and its potential to benefit from increasing global defense budgets as factors supporting its long-term prospects.

Abraham Akra from Shaw and Partners maintained a Buy rating on DroneShield in a February 5 report, citing its AU$1.2 billion sales pipeline and AU$45 million in secured revenue for 1H 2025. Akra provided a target price of AU$0.90, emphasizing the company's strong medium-term growth profile despite slower-than-expected revenue in 2024. He pointed out DroneShield's strategic wins, including an AU$9.7 million Latin American deal and an AU$8.2 million NATO contract, as key indicators of its market strength.

Independent investor Chase Barlow highlighted DroneShield as an attractive investment on February 14, emphasizing its strong financial position and growing demand for counterdrone solutions.

According to Barlow, the company's AU$220 million cash balance at the end of FY24, combined with its expanded Sydney facility capable of supporting AU$317 million in annual manufacturing, positions it well for future growth. Barlow valued DroneShield at AU$1.60 per share, based on a 25x EV/EBITDA multiple on projected FY26 revenue, noting that its full-product suite and integration with directed energy technology could drive further adoption.

Ownership and Share Structure

Recent filings reveal that Vanguard Group has become a substantial shareholder in the company, holding a 5.466% stake. According to Form 603, submitted on December 26, 2024, Vanguard Group's relevant interest spans 47,669,725 ordinary shares. These holdings are distributed across various funds and accounts managed by Vanguard, with shares registered under custodians such as JP Morgan Chase Bank (34,997,482 shares), State Street Bank and Trust Company (8,329,351 shares), and others.

This development adds to the company's strategic investors, which currently hold 6.31% of the company's stock, according to Refinitiv.

3.98% is with management and insiders. 

Refinitiv reports that 9.55% of the company is with institutions. 

Structurally, DroneShield has 872.12M outstanding shares and 782.40M free float traded shares.

Its market cap is reported as AU$550 million. Its 52-week range is AU$0.26−2.72 per share.