DroneShield (ASX:DRO) Revenue Up 276%, The Business Crosses the Profit Chasm

Hardware Wins, SaaS Ambition, The Earnings Quality Upgrade

DroneShield has now crossed the commercial profitability chasm, and FY25 was clearly a step up year for the business.

The company has moved from proving demand to proving it can scale profitably. That is an important shift. At the same time, it feels like much of that progress was already reflected in the share price, which helps explain why the market reaction was more muted. The result was strong, but there were no major surprises to force a re rating on the day.

What stands out most is that DroneShield is now operating as a profitable business and a meaningful cash generator. That is a big milestone. It also helps explain why the company is now able to reinvest more aggressively back into growth, particularly across its product division, where product development expense reached A$84m this year.

From an investor perspective, that changes the story. This is no longer just a business funding growth in the hope of future scale. It is now generating enough from operations to support reinvestment internally, which is a much stronger position to be in.

Here is the financial snapshot.

Revenue rose 276% to A$216.5m from A$57.5m in FY2024.

Statutory NPAT improved to A$3.5m from a A$1.3m loss in FY2024.

EBITDA turned positive at A$4.5m versus an A$8.6m loss last year.

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From Growth Story to Cash Generator

Revenue increased to A$216m, up 276%, driven by strong contract momentum across the year. That demand backdrop still looks supportive. As geopolitical tensions remain elevated, more nations are prioritising counter-drone capability, and that should continue to support procurement activity.

Customer cash receipts were another strong proof point, coming in at A$201m, which helped strengthen the balance sheet and reinforces that this growth was backed by real cash collection.

One of the clearest signals of execution was the company’s largest contract to date, worth A$61.6m, which was delivered in roughly two months. That matters because FY25 showed the market that DroneShield has moved beyond being a smaller emerging technology supplier and is now capable of handling meaningfully larger contracts.

Profitability Arrives, Now Prove It’s Repeatable

Profitability was also a standout. Profit after tax came in at A$3.5m, compared with a A$1.3m loss in the prior year, while underlying EBITDA reached A$36m. To me, that is the clearest sign the business is scaling operationally and starting to convert revenue growth into a more credible earnings base.

At the same time, the company is still very much in a reinvestment phase. DroneShield is continuing to spend more than A$70m on research and development, while also expanding its team from around 250 employees to roughly 460 to 500, with a heavy engineering focus. Management is also continuing to roll out AI-led product upgrades, including RFAI-3, updates to RFAI-ATK, and next-generation hardware releases across 2026 and 2027.

We also saw SaaS revenue rise to A$11m, up 312%, which is an important part of the long-term story.

Management’s goal is to lift SaaS to around 30% of group revenue over time, and that matters because software and recurring revenue should be structurally higher margin than hardware. In simple terms, DroneShield is not just investing to sell more products. It is investing to build a more scalable and more stable earnings base through software.

That shift is important for investors. Hardware can drive large contract wins, but SaaS can make revenue more predictable and margins more resilient over time. If management executes well here, the quality of earnings should improve meaningfully.

$2.4bn Capacity Target, A New Phase of Scale

Another key point to focus on is the manufacturing expansion. DroneShield is planning to increase its manufacturing footprint from around A$500m per annum in 2025 to approximately A$2.4bn by the end of the year. That is a substantial step up in capacity and shows management is preparing the business for much larger contract volumes.

A major part of this is the new 3,000sqm production facility in Sydney, which replaces the much smaller 400sqm prior production site. Annual lease costs are expected to be around A$2.3m, with a further A$3m in fitout costs. The scale of that upgrade highlights just how quickly the business is evolving.

Reinvesting Hard, But at a Premium Valuation

The bigger takeaway is that DroneShield has undergone a sharp shift in its business model and is now much closer to being a more profitable, more mature business. The next phase of growth is likely to come not just from larger hardware contracts, but increasingly from the commercial software and SaaS side of the business.

That said, DroneShield is not a cheap stock by any means. A lot of the growth story is already reflected in the share price. So while the operational momentum is clearly strong, investors will still need to see continued execution to justify that premium valuation.