DroneShield (ASX:DRO): Share Price Has Taken Off, But Is It Too Late to Jump In?

A New Kind of War, And the Defence Race No One Can Afford to Lose

A silent war is unfolding and the next billion-dollar defence boom might not come from missiles, but from jamming signals.

Across the globe, drones are changing the rules of engagement. They’re cheap, fast and deadly, and they’re flooding modern battlefields, airspace and borders at an unprecedented rate. The world’s superpowers have taken notice.

Drones are the New Battleground

In response, governments are ramping up spending like never before. The US military budget has surged past $900 billion. Caught in this whirlwind of demand is an unlikely ASX standout, DroneShield (ASX: DRO). DRO is an Australian business that specialises in counter drones (C-UAS) and electronic warfare solutions. Their core mission is to detect, track, identify and defeat hostile drones and unmanned threats across military, government, and commercial sectors.

Up 212% over the past year, DRO is no longer a niche player. Its cutting-edge tech, from AI-powered drone detectors to battlefield jamming rifles, is now protecting borders from Ukraine to Asia. With $176 million in revenue already locked in for 2025, the small-cap defence stock is proving it can win big.

But here’s the real question: Is DRO just getting started, or has it flown too close to the sun?

What are the Best ASX Technology Stocks to invest in right now?

Check our buy/sell tips

$176 Million and Counting, Inside Droneshield’s Breakout Year

As drone warfare evolves, so too does the demand for counter-drone technology, and the company is firmly in the spotlight.
Ongoing geopolitical tensions, particularly across regions like Eastern Europe and the Asia-Pacific, have led many governments to increase their investment in defence and surveillance capabilities. In this environment, companies offering counter-unmanned systems (C-UxS) solutions are seeing heightened interest, to put it mildly.

The company reported its strongest quarter on record in Q2 2025, generating $38.8 million in revenue, a 480% increase year-over-year. With $176 million in revenue already booked or contracted for the year, DRO is pacing well ahead of its 2024 full-year result.

Revenue this year has been driven by a mix of regional contracts, including a $32 million deal in Asia, $61 million from Europe, and consistent activity in the US and Australian markets. In addition, its software-related revenue, including SaaS subscriptions, grew 161% YoY, suggesting early traction in its recurring revenue strategy.

Expanding Very Rapidly

With $192 million in cash, increased investment in R&D and plans to expand manufacturing capacity from $500 million to $2.4 billion annually, DroneShield is scaling up its operations significantly. A new 3,000 sqm production facility in Sydney marks a key step in this expansion, alongside broader efforts in the US and Europe. While the company’s infrastructure buildout signals strong growth ambitions, the real test will be whether this translates into sustained demand and long-term value creation, making the next few quarters critical to watch.

Priced for Perfection: But Can It Deliver?

The share price is flying high, but how much are you willing to pay for future potential?

Amid rising global defence spending and drone threats becoming headline risks, investor attention has come with blistering growth. Trading volume has nearly doubled over the past year, reflecting growing market interest. But it’s important to step back and ask, where is DroneShield in its business lifecycle? The answer, early-stage growth. The company is aggressively reinvesting capital into R&D, global manufacturing and software development to fuel long-term expansion. That brings opportunity, but also risk, can these investments deliver returns that justify the premium you’re paying today?

With share price pullbacks of 10–20% common among high-growth stocks, volatility is part of the journey. While the long-term thesis remains compelling, the company’s ability to execute consistently will be key to justifying its current valuation.

At the time of writing, DRO was trading at more than 18x revenues for FY25, which is very high. Of course, the year isn’t over and more orders for delivery this year may come in. But we need to look at FY26 and even FY27 to justify the current valuation. Having said that, it’s not uncommon to look out several years when it comes to these high growth stocks.

But a more favourable entry point may still emerge, especially if short-term volatility creates a disconnect between price and long-term fundamentals. For investors with patience, waiting for market overreactions or pullbacks could offer a more compelling risk-reward opportunity.