DroneShield secures A$23.2 million European defence contracts as first-half revenue surges 74%

DroneShield Ltd (ASX:DRO, OTC:DRSHF) has secured A$23.2 million in European military contracts and reported preliminary first-half 2026 revenue of A$125.8 million, up 74% on the previous corresponding period, as demand for its counter-drone systems continues to accelerate.

The company has also unveiled RfAI-3, the third generation of its proprietary radio frequency intelligence engine, designed to detect emerging drone threats beyond those already catalogued in conventional RF signature libraries.

DroneShield now expects full-year 2026 revenue of between A$250 million and A$270 million, representing growth of 15% to 25% on the record revenue generated in 2025.

European contracts strengthen order book

The two European contracts cover the supply of vehicle-mounted counter-drone systems to long-standing Benelux reseller COBBS BELUX BV for deployment by an undisclosed European military customer.

The package includes DroneShield hardware, software subscriptions, warranties, services and third-party equipment, with deliveries scheduled progressively throughout 2026.

Around A$21 million of the contract value will be recognised as committed revenue in the 2026 financial year, with the balance comprising subscription revenue in future periods.

The hardware required for the contracts is available through DroneShield’s existing planned production capacity.

CEO and managing director Angus Bean said the awards reinforced Europe’s importance as a growth market for the company.

“We are pleased to continue our engagement with leading partners and end-customers in Europe, which is a key growth market for DroneShield,” Bean said.

“These awards demonstrate the strength of our regional partnerships and the relevance of DroneShield’s technology in complex military environments.

“It also validates our continued investment in personnel, manufacturing capability and partner relationships in the region.”

DroneShield C2 and DroneSentry X on-the-move deployment.

First-half revenue climbs to A$125.8 million

DroneShield expects to report revenue of A$125.8 million for the six months ended June 30, 2026, a 74% increase on the same period last year.

Recurring revenue from software, subscriptions and long-term services is estimated at A$14.2 million, accounting for 11.3% of first-half revenue.

As of July 28, DroneShield had secured A$206 million in committed revenue for 2026, equivalent to 95% of the company’s total revenue for the whole of 2025. Around 13% of this committed revenue is recurring.

A further A$26 million has been committed for 2027 and later periods across hardware, software, warranties and services.

First-half gross margin is expected to be approximately 60%, compared with 65% in the prior corresponding period.

DroneShield attributed the reduction to the sales mix between its proprietary systems and third-party hardware, currency movements and raw material impairments identified during the relocation to its new production facility and implementation of a new enterprise resource planning system.

The company is targeting a blended gross margin of around 65%, supported by the planned introduction of next-generation proprietary hardware and a growing contribution from higher-margin subscription revenue.

Bean said DroneShield had successfully converted strong international demand into revenue while continuing to expand its operational capacity.

“The first half of 2026 has been an important period for DroneShield,” he said.

“We have converted global customer demand into revenue, deepened engagement with defence and government customers, and continued to scale the business at pace while executing a structured leadership transition.”

RfAI-3 targets previously unknown drone threats

DroneShield’s newly released RfAI-3 platform represents a significant evolution of the company’s RF-based counter-drone detection technology.

Traditional RF detection systems typically depend on classified emitter libraries, meaning a drone or its communications signal must already be catalogued before it can be identified.

RfAI-3 instead applies wideband detection across the radio spectrum to identify emissions that may be associated with drones, compare them with previously observed signals and generate new signatures for unknown emissions.

The system then provides a confidence assessment for operators to review, potentially enabling the faster detection of newly developed or modified drone threats.

“The threat that matters most is the one we have not yet encountered, and by the time we encounter it a second time, it will have changed again,” Bean said.

“The world is moving to software-defined radio, where waveforms can be rewritten in software and the spectrum has become a genuinely dynamic battlespace.

“RfAI-3 is our answer to that. Its ultra-wideband nature means we are no longer limited to detecting only what we already know, which changes the calculus for our operators and for the adversaries trying to evade them.”

RfAI-3 has been developed specifically for DroneShield’s next-generation hardware platforms.

Initial hardware releases are expected to begin during the second half of 2026, with further product launches planned through 2027.

The company will continue supporting its existing product range through its software subscription model, including ongoing updates and expanded emitter coverage as DroneShield’s RF intelligence dataset grows.

Outlook and next steps

DroneShield expects full-year revenue of between A$250 million and A$270 million, supported by its existing committed order book and additional orders anticipated during the remainder of 2026.

Orders received later in the year, particularly during the final months of 2026, are more likely to contribute to committed revenue for 2027 and beyond.

DroneShield's forecasts do not include the potential impact of additional contracts outside its current qualified opportunity pipeline, noting that defence orders can arise and be delivered at short notice.

The company will release its full financial results for the six months ended June 30, 2026, on Wednesday, August 26.

An investor call is scheduled for 9am AEST on Thursday, August 27. The registration link is: https://zoom.us/webinar/register/WN_ivpUVK4qTAOz2y95oQgb5w#/registration