Highlights

• EOS signed a £370 million (about A$700 million) nationwide counter-drone contract with a Gulf government, the largest in its history.

• First-half 2026 revenue from continuing operations jumped 283% to A$168.8 million, with underlying EBITDA of A$21.6 million.

• The contracted order book reached about A$846 million at 30 June 2026, counting unconditional contracts only.

• Management guides full-year 2026 revenue of A$360 million to A$400 million, including the acquired MARSS business.

Electro Optic Systems Holdings Limited (ASX:EOS) has signed the biggest contract in its history: a £370 million (about A$700 million) deal to build a nationwide counter-drone network for the government of an unnamed Gulf state. Announced in October 2026, the agreement puts the company's NiDAR command-and-control system at the centre of the network. Shares were trading at A$8.46 on 23 October 2026, down 7.03%.

A Landmark Order With Strings Attached

EOS will act as prime contractor and systems integrator, drawing on engineering and products from MARSS, the European business it acquired in May 2026. The system combines third-party electro-optical, radar and sonar sensors with an initial supply of interceptors and jammers.

The contract is not yet unconditional. EOS must satisfy several conditions precedent. A performance bond guarantee of 10% of contract value, or £37 million, was provided on 12 August 2026 and is secured by a £40.3 million cash deposit. The customer must also provide an advance payment of £74 million against a matching bank guarantee, and export licences for system components are required within two months of the customer supplying the necessary documents. EOS also needs consents and further accommodation from Washington H. Soul Pattinson and its guarantee facility providers.

The company gave no timetable and cannot guarantee when, or whether, the conditions will be met.

Once the contract becomes unconditional, EOS expects more than 80% of revenue within the first 12 to 24 months, with roughly 20% tied to four years of ongoing support. It expects the work to be profitable and cash-flow positive over its term, with a significant early working capital need turning positive in mid-2027. Five-year warranties and customer termination rights are among the obligations.

The Half-Year Numbers Behind the Deal

The contract follows a sharp reset in the numbers. Revenue from continuing operations for the six months to 30 June 2026 rose to A$168.8 million from A$44.1 million a year earlier. Defence Systems contributed A$163.7 million of it.

Underlying EBITDA swung to a A$21.6 million profit from a A$14.9 million loss. The statutory result remained negative: the company reported a loss after tax of A$33.7 million, including a non-cash A$34.0 million remeasurement of contingent consideration linked to MARSS. No dividend was declared.

Cash stood at A$256.0 million at 30 June 2026. The contracted order book reached about A$846 million, comprising roughly A$605 million of unconditional defence orders and A$225 million at MARSS.

Funding the Expansion

EOS paid for growth with new capital. It raised A$150 million through an institutional placement, A$40 million through a share purchase plan and A$40 million through a strategic placement, all at A$8.00 per share. It also drew A$70 million of a A$100 million secured term loan from a subsidiary of Washington H. Soul Pattinson, which matures on 28 February 2028.

The MARSS earn-out adds commitments of up to €140 million, with the first tranche set at €24.06 million.

Guidance and Conditional Pipeline

For 2026, management expects revenue of A$360 million to A$400 million including MARSS, which would be a record if secured. That range assumes no significant deterioration in global supply chains.

Other opportunities remain conditional. EOS has a joint venture planned with Gen5 in the United Arab Emirates for laser weapons and remote weapon systems, and a conditional US$80 million laser contract in Korea that could be finalised in 2027. The company noted that new opportunities can take twelve months or more to convert into signed contracts.