DroneShield, an Australian industrial capability business specializing in counterdrone technology, has secured a follow-on 2-year research and development (R&D) contract worth $9.9 million from a Five Eyes Department of Defence (DoD). The Five Eyes alliance comprises the defense and intelligence communities of the United States, Canada, United Kingdom, Australia, and New Zealand.
The new contract comes after DroneShield successfully fulfilled a $3.8 million contract with the DoD, which was announced on June 4, 2021. The final milestone payment for the previous contract is expected to be received this month.
Oleg Vornik, CEO of DroneShield, expressed satisfaction with the award, stating,
"Follow-on contracts are the ultimate customer measure of our performance. As an Australian sovereign industrial capability business, DroneShield is proud and pleased to continue undertaking multi-year contracts of increasing size with this customer."
The latest contract represents DroneShield's largest long-term agreement to date, surpassing the previous $3.8 million contract. The 2-year duration ensures a consistent flow of cash receipts over an extended period. The company anticipates securing more significant contracts upon completion of this phase.
Given the current uncertain geopolitical environment, there is heightened emphasis among the Five Eyes governments on procuring from defense industrial capability champions within their network of countries. DroneShield's robust engineering and research capabilities, as well as its Technology Readiness Level 9 products and proven track record of working with defense entities, position the company favorably for future engagements.
DroneShield achieved a strong cash receipt of $7 million in the first quarter of 2023 and is on track to record its highest-ever cash receipts in the second quarter. The company anticipates another record year for cash receipts in 2023, with further details to be provided in the upcoming quarterly report.
The company has made significant progress in manufacturing, operations, and inventory scale-up to accommodate anticipated orders for the remainder of 2023. DroneShield is currently finalizing the selection of a larger industrial site to relocate its Sydney operations, enabling future growth.
After successfully delivering and receiving payment for the $11 million contract announced in December, DroneShield is now focusing on inventory buildup for the second $11 million order announced in January, expected to be fulfilled later this year.
DroneShield's current order book, consisting of committed and binding customer purchase orders, stands at approximately $29 million, marking an all-time high.
The company also boasts a qualified opportunities pipeline exceeding $200 million, encompassing approximately 80 projects, in addition to its existing order book. The strong demand for counterdrone and C-UAS (Counter-Unmanned Aircraft System) equipment persists, propelled by recent events in Ukraine and increasing defense and security budgets worldwide.
In addition to military and intelligence communities, DroneShield has engaged extensively with critical infrastructure facilities, airports, and other civilian customers, expanding its market presence beyond traditional defense applications.
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