DroneShield Surges 40% After Hitting 4,000 Units Sold and Securing AUD 7.9m in New Orders

Droneshield (ASX: DRO) has been one of the standout movers on the ASX in recent months, with the stock surging another 40 percent this week. For investors watching the defence technology space, this momentum reflects investor optimism on the back of the latest driver being a series of Department of Defence contracts that helped the company surpass 4,000 systems sold, worth AUD 7.9 million in new orders.

What makes the latest update stand out is that more than half of those sales were for the RFPatrol, Droneshield’s body-worn drone detection device. Compact and lightweight, the RFPatrol alerts operators to hostile drones by listening for their radio signals, offering a hands-free solution for frontline defence. Its credibility is backed by high-profile contracts, including a record AUD 61.6 million European deal, a AUD 5 million order from the Australian Defence Force, and a AUD 10.4 million supply to Ukraine through Australia’s counter-drone aid program.

With drone warfare and counter-drone solutions rapidly becoming central to global defence strategies, the question for investors is whether Droneshield is now positioned for its next major growth phase. 

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DroneShield Shifts Focus to AI and SaaS as Growth Driver

Droneshield is an Australian company specialising in counter-drone (C-UAS) and electronic warfare solutions. Its mission is to detect, track, identify, and defeat hostile drones and unmanned threats across military, government, and commercial markets. While many investors are familiar with the company’s hardware products, fewer are aware of the software infrastructure that has become a central focus of development over the past year.

The first major initiative is Droneshield’s AI technology strategy. At the core of this is the RFAI-32 detection model, an advanced radio frequency artificial intelligence system trained on extensive datasets of drone signals. This technology enables the accurate detection, classification, and geolocation of unmanned aerial systems, providing a critical layer of intelligence that strengthens the company’s product portfolio.

The second initiative is the expansion of Droneshield’s SaaS model, designed to create a recurring revenue stream alongside unit sales. Through the secure DroneShield Access Portal, software updates and new features are deployed across its global fleet of more than 1,600 AI-enabled devices. Notably, strong updates were rolled out in both the first and second quarters of 2025. Although SaaS revenue represented only AUD 3 million of the AUD 72 million reported for the half year ended 30 June, the company expects recurring revenue to become a more significant contributor to growth over the next five years.

The Investor’s Takeaway for DRO

DroneShield remains a strong stock, underpinned by a solid balance sheet with no debt and more than AUD 200 million in cash. This financial position provides the company with flexibility to fund growth initiatives and allocate capital strategically. If management deploys this capital effectively, it could support continued expansion in the years ahead.

That said, consensus estimates suggest revenue growth will begin to moderate into 2026, with forecasts of around AUD 245 million in FY26, representing a 20 percent increase. With the company currently trading on an EV-to-revenue multiple of 34.1x, the market is clearly pricing in very strong growth expectations. At today’s levels, the stock appears expensive when viewed against current sales.

However, the long-term investment case rests on execution. If DroneShield can successfully convert its growing pipeline of contracts into sustained revenue, expand margins through higher recurring SaaS and AI contributions, and maintain its momentum in securing major defence deals, today’s premium valuation could prove justified.