Highlights

  • Elsight generated record Q2 2026 revenue of approximately US$11.83 million, nearly three times the prior corresponding period.
  • Unaudited H1 2026 revenue reached approximately US$23.4 million, up 387% and already above full-year CY2025 revenue.
  • H1 2026 unaudited non-GAAP net profit is expected to exceed US$10 million, reflecting continued profitability as operations scale.
  • Recurring revenue increased to approximately US$1.6 million in Q2 2026 and represented around 14% of quarterly revenue.
  • Elsight advanced its U.S. defence presence, secured a follow-on public safety order and gained the first paying customer for its Stealth Initiative.

Elsight Limited (ASX:ELS) has released its business update for the quarter ended 30 June 2026, reporting a sixth consecutive quarter of record revenue and continued profitability during the first half of the calendar year. The uncrewed systems technology provider also outlined progress across its U.S. defence programs, recurring revenue base, product portfolio and international sales activities, alongside the first commercial order for its Stealth Initiative business unit.

Elsight shares traded at AUD 6.82 during the session on 22 July 2026, down 4.88%, or AUD 0.35. Despite the latest decline, the stock remains 227.88% higher over the past year, representing an increase of AUD 4.74 across the twelve-month period.

Record Quarterly Revenue Extends Growth Sequence

Elsight recorded Q2 2026 revenue of approximately US$11.83 million, equivalent to around A$17.1 million. The result marked the company’s sixth consecutive quarter of record revenue and was approximately three times the revenue generated in Q2 2025.

The quarterly outcome lifted unaudited revenue for H1 2026 to approximately US$23.4 million, or about A$33.8 million. This represented an increase of 387% compared with the prior corresponding half-year period.

Revenue generated during the first six months of 2026 also exceeded the US$22.8 million reported for the entire CY2025 financial year. This indicates that the company surpassed its previous full-year revenue outcome within the opening half of the current calendar year.

Elsight expects unaudited non-GAAP net profit for H1 2026 to exceed US$10 million, equivalent to approximately A$14.45 million. The company said the expected result confirms that profitability has been maintained while it continues investing in sales, product development, marketing and geographic expansion.

The financial performance reflects operating leverage within the business model as revenue expands across defence, public safety and commercial applications.

Recurring Revenue Becomes a Larger Part of the Mix

Revenue from software licences, cloud services and connectivity subscriptions reached approximately US$1.6 million during Q2 2026.

Recurring revenue accounted for around 14% of total quarterly revenue, increasing from 11% during Q1 2026 and 12% for the full CY2025 year.

Across H1 2026, recurring revenue totalled approximately US$2.9 million. This amount has already exceeded the approximately US$2.6 million generated from recurring sources during the whole of CY2025.

Elsight attributed the increase to the compounding effect of a larger installed product base. As additional Halo units and related solutions are deployed, the company can generate further income through software, cloud and connectivity services attached to those installations.

Management expects recurring revenue to represent an increasingly meaningful component of future financial performance. These revenue streams also provide greater visibility because they arise from ongoing services rather than single hardware transactions.

Follow-On Order Signals Broader Commercial Deployment

During the period, Elsight received a follow-on purchase order worth approximately US$2 million, or around A$2.8 million, from a United States-based public safety customer.

The order, announced on 29 May 2026, was more than four times the value of the customer’s initial US$460,000 purchase made in January 2026.

Elsight views the larger follow-on order as operational validation of its Halo platform and an indication that the customer is progressing towards a broader deployment.

The company also continued receiving orders from defence and commercial customers across the United States, Europe and the Middle East.

According to Elsight, demand is being supported by expanding adoption of uncrewed systems, higher defence expenditure and the contribution of its direct sales team, which was established during the previous year.

The sales team is now contributing to both the development of the opportunity pipeline and the conversion of potential contracts into customer orders.

U.S. Defence Position Strengthens

Elsight continued executing multiple funded programs involving the United States Department of War during the quarter.

A key development was the approval of Halo for inclusion on the Defense Contract Management Agency’s Blue UAS Cleared List.

The Blue UAS list is the U.S. Department of War’s main directory of National Defense Authorization Act-compliant unmanned systems and components. Inclusion allows U.S. military units to procure approved products through a faster acquisition marketplace rather than relying on traditional procurement processes that may extend across several years.

The company believes this approval places Halo within a major U.S. defence procurement cycle. Elsight noted that the FY2027 budget allocates approximately US$75 billion to drone and counter-drone capabilities.

Halo was also determined to be non-International Traffic in Arms Regulations, or non-ITAR. This export classification simplifies the deployment of the product alongside allied partners by reducing the administrative restrictions associated with ITAR-controlled technology.

A U.S. combatant command has selected Halo for use in a major exercise involving partner forces. Elsight said its participation in this exercise will be easier because of the non-ITAR classification.

Special Forces Procurement Pathways Progress

Elsight is advancing through several procurement pathways involving U.S. Special Forces.

These engagements followed operational evaluations in which Halo was assessed against defined mission requirements and was determined to meet those requirements.

The company’s Special Operations Command Other Transaction Authority contracting vehicle also remains active. This arrangement provides an accelerated procurement route for programs involving the U.S. Special Operations Command.

Elsight expects to provide further information as the procurement processes develop.

Halo has additionally been integrated into the ABE 1.01, or Attritable Battlefield Enabler, developed by the U.S. Army’s 101st Airborne Division.

The ABE 1.01 is a small, soldier-built first-person-view drone designed for deployment in battlefield environments. Elsight views the integration as further validation of Halo’s suitability for modular and rapidly deployable unmanned systems.

Drone Dominance Program Offers Longer-Term Positioning

The company continued its participation in the U.S. Department of War’s Drone Dominance Program during Q2 2026.

The program progressed to its second capability assessment phase during the quarter.

Elsight regards this involvement as a longer-term positioning opportunity that increases the company’s visibility across fleet-level drone procurement programs.

Although the company does not expect a material revenue contribution from this initiative in the immediate term, it anticipates that the program could begin contributing meaningfully from CY2027 onwards.

The company’s ongoing participation allows Halo to be assessed as part of broader U.S. defence efforts focused on increasing the deployment of drone and counter-drone technologies.

European and Middle Eastern Demand Continues to Develop

Elsight reported increasing engagement across European and Middle Eastern markets, supported by defence modernisation and higher spending on unmanned systems.

The company referred to several regional programs, including the European Union’s ReArm Europe Readiness 2030 plan, which is intended to mobilise up to €800 billion, or approximately US$870 billion, in additional defence capacity.

It also highlighted Germany’s €100 billion Bundeswehr special fund and its drone-wall initiative, together with the United Kingdom’s 20-40-40 force structure doctrine, which gives greater priority to unmanned systems.

Elsight expanded its sales presence across these regions, with senior personnel now located in the United Kingdom, Germany and the Middle East.

These appointments are supporting deeper engagement with government customers and original equipment manufacturer partners.

The company considers these markets to represent a material longer-term revenue opportunity as defence procurement programs continue to expand.

New Positioning Capability Broadens Product Offering

Product development during the quarter included continued work on Elsight’s patent-allowed positioning technology for environments where Global Navigation Satellite System signals are unavailable, disrupted or contested.

The capability is being introduced through a controlled soft launch involving selected design partners.

Rather than requiring new hardware, the positioning product uses existing Halo equipment. It combines the device’s multi-link radio capability with proprietary machine-learning algorithms to provide positioning functionality in GNSS-denied environments.

A wider commercial release is planned for later in CY2026.

Because the solution operates through the existing Halo platform, Elsight believes it can create cross-selling and upselling opportunities among current customers and organisations already within the company’s sales pipeline.

The company also released additional product capabilities during the quarter as it continued expanding beyond connectivity.

Its broader platform now covers connectivity, positioning, video and autonomy. Elsight’s strategic objective is to establish itself as a Tier 1 technology backbone provider across the uncrewed systems sector.

Stealth Initiative Secures First Commercial Customer

Elsight’s Stealth Initiative business unit reached its first commercial milestone by securing a paying customer during the quarter.

The customer is a Western government, and the initial order has a value of approximately US$230,000.

Although the first order is relatively modest compared with the group’s overall revenue, Elsight considers it an important validation of the business unit’s product-market fit.

The Stealth Initiative was established in September 2025 and is targeting an addressable market estimated by the company at more than US$20 billion.

Near-term revenue from the business unit is expected to remain limited while Elsight expands its design partner network and demonstrates the technology’s operational capabilities.

The first order nevertheless establishes an initial commercial foundation from which the company can seek broader adoption within the targeted market segment.

Cash Generation Supports Continued Investment

Elsight recorded US$13.6 million in customer receipts during H1 2026.

Net cash generated from operating activities amounted to US$3.8 million, while research and development investment totalled US$2.3 million.

Combined spending on product manufacturing, marketing, administration and employees reached US$8.8 million during the half year.

Cash and cash equivalents stood at approximately US$63.3 million as at 30 June 2026, compared with around US$64.2 million at 31 March 2026.

The company reported no material cost overruns, operational disruptions or adverse variances during the quarter.

Its available cash position provides funding capacity for continued investment across sales, research and development, product expansion and international market activity.

About Elsight

Founded in 2009, Elsight provides technology designed to support drones and other uncrewed systems across defence, public safety and commercial markets.

Its principal product, Halo, uses multi-link bonding to combine cellular, satellite and radio frequency communications within a single connectivity platform.

The company states that Halo provides 99.99% connectivity reliability and includes cybersecurity features.

Halo is available as a lightweight card weighing less than 100 grams and as a boxed ground-based version, allowing it to support stationary, portable and mobile applications.

Elsight’s technology is used across defence, homeland security, public safety, delivery, medical services, oil and gas, utilities, inspection and surveillance applications.

What This Means for Investors?

Elsight’s Q2 2026 update shows that the company continued expanding revenue while maintaining profitability during H1 2026. The first-half revenue result surpassed the company’s entire CY2025 revenue, while recurring income increased as a proportion of quarterly sales.

Operationally, the company advanced several U.S. defence procurement pathways, expanded commercial activity and continued developing products beyond its original connectivity offering. The Blue UAS approval, non-ITAR status and engagement with the Drone Dominance Program provide potential procurement access, although future outcomes remain dependent on government purchasing decisions and program progression.

Investors are also likely to monitor the broader launch of the company’s GNSS-denied positioning capability, the conversion of international opportunities and the development of its Stealth Initiative following the first customer order.

Elsight will hold its Q2 2026 webinar on 3 August 2026 at 4:00 pm AEST, during which Chief Executive Officer Yoav Amitai and Chief Financial Officer Dan Hilerowitz will discuss the quarterly results and business developments.