Key Highlights

• For the six months to 30 June 2026, DroneShield reported record Revenue of $125.8 million.

• DroneShield reaffirmed its FY2026 revenue outlook of $250 million to $270 million, which it describes as growth of 15% to 25% on FY2025.

• Revenue comes from hardware sales, software, and increasingly recurring software subscriptions, with the company targeting a longer-term goal of Recurring Revenue reaching 30% of the total by 2030.

• Recurring revenue was $11.5 million, up 229%, and the installed base reached 4,100 software-enabled devices.

How can a defence technology company report record revenue and still make a loss? DroneShield (ASX:DRO) did exactly that in its 1H 2026 results on 26 August 2026: revenue of $125.8 million, up 74% on the prior corresponding period, but an underlying EBITDA loss of $12.4 million and a statutory loss after tax of $32.2 million. The explanation lies in the timing of deliveries, lower margins, higher operating Investment and one-off items, and it frames the key questions for the second half.

What the half-year result showed

For the six months to 30 June 2026, DroneShield reported record revenue of $125.8 million. Recurring revenue was $11.5 million, up 229%, and the installed base reached 4,100 software-enabled devices. Against that, underlying EBITDA was a loss of $12.4 million compared with a profit of $8.0 million a year earlier. The statutory loss after tax was $32.2 million, versus a profit of $2.1 million, after $15 million of what the company calls Individually Significant Items.

Cash and term deposits were $180.0 million at 30 June 2026, down from $210.6 million at 31 December 2025, with no debt.

Quarterly detail from earlier in the year shows how lumpy the Business is. In the March 2026 quarter, reported on 22 April 2026, revenue was $74.1 million, up 121%, with record customer cash receipts of $77.4 million and about $222 million of cash. Defence and security customers place orders in lumps, so quarters can differ sharply.

Guidance and committed revenue

DroneShield reaffirmed its FY2026 revenue outlook of $250 million to $270 million, which it describes as growth of 15% to 25% on FY2025. Committed revenue for FY2026 was $240 million as at 21 August 2026, compared with $176 million a year earlier, equal to 89% to 96% of the outlook range. Committed revenue for FY2027 and beyond was $43 million.

Committed revenue is the company's own measure of orders and contracts expected to convert into revenue in the period, not audited revenue. A high committed figure reduces the revenue risk for FY2026 but says nothing about margins or about the pipeline beyond the current year.

An earlier trading update on 28 July 2026 had estimated first-half gross Margin at 60%, down from 65% a year earlier, with the company citing sales mix. The results announcement lists strengthening gross margin as a second-half priority. Investors should watch whether margin recovers as product mix shifts toward higher-margin software and new hardware.

Business model and products

DroneShield makes radio-frequency detection, drone-defeat and command-and-control systems used by military, government and critical-infrastructure customers to detect and counter unauthorised drones. Revenue comes from hardware sales, software, and increasingly recurring software subscriptions, with the company targeting a longer-term goal of recurring revenue reaching 30% of the total by 2030.

The company unveiled its RfAI-3 radio-frequency intelligence software engine in July 2026 alongside the RfRecon hardware launch. Scaled RfRecon production is expected in the second half of 2026, with first deliveries targeted by the end of 2026. The first European-manufactured hardware was produced in June 2026, and the company moved into a new 3,000 square metre production Facility in early 2026. In July 2026 it announced $23.2 million of European military orders placed through its Subsidiary COBBS BELUX.

Non-military government and commercial customers made up 15% of first-half revenue. The announcement referred to deployments at FIFA World Cup 2026 venues in Kansas City, where it reported 184 detections and 48 unauthorised drones seized across seven multi-site deployments.

Sector and competitive position

Counter-drone Demand has risen with the use of drones in conflicts and concerns about airport and event security. DroneShield competes with larger defence primes and specialist counter-UAS firms, and has announced partnerships or memoranda of understanding with groups including Terma, Parsons, Overland AI and others.

Material risks

- Margin and cost control: the swing from a profit to a loss shows Operating Leverage works both ways.

- Lumpy order timing and government procurement delays.

- Possible dependence on a small number of large defence customers and export approvals.

- Regulatory scrutiny. The announcement says DroneShield is assisting the Australian Securities and Investments Commission with an investigation into November 2025 ASX announcements and trading activity, and that it is unclear what action, if any, may follow.

- Execution on new hardware production, including European manufacturing.

- Competition from better-capitalised defence groups.