DroneShield Ltd.'s (DRO:ASX; DRSHF:OTC) newly released financial results are notable for record revenue in Q1/25 and a significant year-over-year (YOY) increase in contracted revenue expected this year, reported Bell Potter Analyst Daniel Laing in an April 23 research note. Bell Potter raised its target price on the counterdrone defense solutions firm to account for the Q1/25 earnings changes and market movements.
"DroneShield remains our key pick in the defense sector, with macro tailwinds driving increasing customer demand and the company well-capitalized to fund further research and development to maintain its market leading position," Laing wrote.
Buy Rated, 24% Uplift
Bell Potter's new target price on DroneShield is AU$1.50 per share, previously AU$1.30, noted Laing. The company's share price at the time of the report was about AU$1.21. Thus, Bell Potter's target price reflects a potential return for investors of 24%.
DroneShield remains a Buy.
Its market cap is AU$1.2 billion (AU$1.2B). Its 52-week range is AU$0.59–2.72 per share.
Highlights of First Quarter
Laing presented the key takeaways from DroneShield's Q1/25 results. During the quarter, the Australian anti-drone company generated record revenue of AU$33.5 million (AU$33.5M), reflecting a 102% year-over-year (YOY) increase. Software as a service revenue was AU$1.7M, up 198% YOY. Cash receipts were AU$16.7M, also up YOY, by 135%.
DroneShield's contracted revenue for delivery in 2025 totals AU$94.4M compared to AU$57.5M in 2024.
Cash outflow during Q1/25 was AU$16.8M but, according to Laing, it mostly is because final customer payments are due 30 days after delivery.
"We expect this to smooth out throughout the year," the analyst added.
As of April 14, the company had AU$196.8M in cash.
More Geographical Expansion
Laing pointed out that DroneShield continues to gain new customers in additional countries, thereby expanding its base geographically. As for contracted revenue year to date, 24% of it is attributed to Europe, 23% to Asia excluding China, 22% to the United States (versus 70% in 2024), 10% to the United Kingdom, less than 1% to Australia and 20% to other locales (Latin America and the Middle East).
"Whilst we expect [the U.S.] to remain the largest market, the increasing level of demand from new markets demonstrates the growth of the business," Laing wrote.
Changes to Forecasts
Bell Potter revised its revenue forecasts for DroneShield to reflect its record Q1/25 revenue, its greater-than-expected amount of contracted revenue for delivery this year and its growing, more diversified sales pipeline of AU$1.6B. The financial advisory firm also raised its operating expense forecasts in light of the company having started scaling up operations.
"The net result of these changes is earnings per share upgrades of 9%, 14% and 19% in FY25, FY26 and FY27, respectively," wrote Laing.
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Important Disclosures:
- 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.
- Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
- 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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Disclosures for Bell Potter, DroneShield Ltd., April 23, 2025
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