On April 22, 2025, Shaw and Partners analyst Abraham Akra maintained a Buy rating and AU$1.20 price target on DroneShield Ltd. (DRO:ASX; DRSHF:OTC), highlighting the company's record quarterly revenue performance and strengthening market position in counter-unmanned aircraft systems (C-UAS), particularly in Europe.
DroneShield reported record first quarter 2025 revenue of AU$33.5 million, representing a 102% increase year-over-year, driven by strong hardware sales. Software-as-a-Service (SaaS) revenue grew significantly, surging 198% to AU$1.67 million, reflecting growing demand for AI-driven software subscriptions. While SaaS remains a smaller portion of total revenue, it is scaling rapidly and is expected to expand further with the rollout of next-generation products.
Europe has emerged as DroneShield's largest market, accounting for 24% of year-to-date revenue in 2025. This growth is being accelerated by the European Union's €800 billion "ReArm Europe" initiative. The company is expanding its regional presence with on-ground staff, plans for a European hub, and has secured recent contract wins including an AU$8.2 million deal. Ukraine-related opportunities also remain active for the company.
DroneShield's revenue visibility for 2025 has increased to approximately AU$94 million, up AU$40 million since February 2024. Year-to-date committed revenue has already surpassed the full-year 2024 total. The analyst sees further upside potential as the sales pipeline continues to build, particularly in Europe and Asia, supported by rising demand for C-UAS capability and structurally higher global defense budgets.
The company is actively exploring M&A opportunities to broaden its integrated C-UxS offering, with management indicating potential acquisitions of third-party sensor and effector technologies to enhance its full-system integration capabilities. These strategic acquisitions would reduce reliance on external hardware, deepen intellectual property ownership, and support vertical integration as DroneShield scales toward higher-margin system deployments.
Regarding the recently implemented 10% U.S. tariff on Australian imports, the company plans to pass these costs to end customers without expecting any margin impact. The analyst notes that price is not the primary driver in procurement decisions for DroneShield's customers, who prioritize technology, operational performance, and complete counter-UAS solutions across fixed and mobile platforms.
Key risks identified include counterparty risk with international customers, supply chain challenges, government contract uncertainties, product liability concerns, regulatory changes, and data security vulnerabilities.
With the share price at the time of the report at AU$1.15, the AU$1.20 price target represents a potential return of 4.3%.
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Shaw and Partners, Disclosures for DroneShield Ltd., April 22, 2025
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