DroneShield (ASX:DRO) 15 mega-deals, $750m top ticket, and a surprise CEO change

$2.2b pipeline grows as CEO Oleg Vornik exits unexpectedly

DroneShield’s  (ASX:DRO) April investor presentation gave us a few reasons to stay constructive. What stood out most was the scale of the opportunity in front of the business. Droneshield now has 15 ongoing deals above $30 million, with the largest deal under negotiation worth $750 million.

We think that reinforces the point that demand across the counter-drone market is still very real. DroneShield is now pointing to a potential sales pipeline of $2.2 billion, which suggests the company is still operating in a high-growth environment with a very large commercial runway ahead of it.

That is why Oleg’s resignation is very interesting. When a CEO steps down during a period like this, investors are naturally going to pay attention. We think that is very fair. At the same time, we also think investors should acknowledge that the decision could be for entirely valid reasons and not necessarily reflect a problem in the underlying business. But we acknowledge the company probably hasn’t gone about it the right way, given a big 70 million sell of in shares sold not too long ago.

What also matters is what comes next. We think the appointment of Angus Bean as CEO, along with Hamish McLennan joining the board, sends a clear message that the company is focused on strengthening governance and improving investor relations. That is particularly important at this stage of DroneShield’s growth, as execution and communication both matter more as the business scales.\

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$2.2 Billion Across 312 Projects in 60+ Countries

DroneShield’s sales pipeline now sits at about $2.2 billion across 312 projects, which gives us a good sense of how broad the opportunity has become.

The US accounts for $268 million across 126 projects. We think a meaningful portion of that pipeline is being driven by regulatory tailwinds, particularly following Trump’s $2.7 billion investment in counter-UAS systems.

In Europe and the UK, the pipeline stands at about $1.1 billion. This remains DroneShield’s strongest market, and that lines up with the fact Europe contributed 45% of revenue.

Asia is more concentrated in government-led opportunities, with a pipeline of $502 million across 28 projects. That reflects growing concern around Chinese drone capabilities, with many of these projects likely tied to DroneSentry installations for government perimeter protection. That appears to be the main driver of contracts in the region.

The Revenue Acceleration Is Not Slowing Down

With 15 deals now above $30 million and 36 above $10 million, we can see contract sizes are getting larger and the sales pipeline is starting to convert. That is already showing up in the FY25 data, and we think the latest quarterly result adds further support to that trend.

Q1 2026 came in as Drone Shield’s second-largest quarter on record, which is particularly notable because Q1 is traditionally the weakest quarter for defence companies. So printing A$62.6 million in Q1 2026 tells us the business is now operating at a materially higher structural revenue run rate than even FY2025 had implied.

On an annualised basis, Q1 alone points to a revenue run rate of more than A$250 million. That is a strong sign that DroneShield is moving into a new phase where larger contracts are no longer just sitting in the pipeline, but are increasingly starting to come through into reported numbers.

Why the SaaS Story Is Underappreciated

Where we think investors should be focusing now is the SaaS model, because we think this still looks underappreciated.

Right now, SaaS only accounts for 5% of revenue, but the model follows a classic razor-and-blade structure. The hardware comes first, with products like RfPatrol, DroneGun, and DroneSentry deployed into the field, and then the recurring software layer attaches on top through RfAI, DroneSentry-C2, and Enterprise C2.

The installed base is now large enough for this to become much more meaningful over time. DroneShield already has more than 3,600 RfPatrol units, 1,700 DroneGuns, and 200 DroneSentry systems deployed globally.

As the company keeps scaling, that software layer should become increasingly important because these systems need software to operate, manage, and coordinate effectively. By 2030, management is targeting 30% of total revenue from SaaS, which would shift the business mix toward a higher-margin, more profitable recurring revenue stream.

DroneShield has already turned profitable, and a bigger SaaS contribution should further improve the profitability profile. It should also help offset some of the lumpiness in cash flow that naturally comes with contract timing and procurement-driven hardware sales.

What Investors Should Watch with DRO

There is already A$140 million in committed revenue for FY26, and with A$221.1 million in cash and zero debt, DroneShield has a very strong balance sheet to fund R&D, manufacturing, and potentially opportunistic M&A.

From our perspective, investors should be focused on two things. The first is continued commercial conversion of the sales pipeline. The second is the development and rollout of the SaaS model, which we think remains one of the more important longer-term drivers in the story.

That said, it is important to stay realistic on the pipeline. The A$2.2 billion figure is probability-unweighted, so it does not mean A$2.2 billion of future revenue. A meaningful number of projects will not convert, and even for the ones that do, timing remains uncertain.

If we look at consensus, EBITDA growth for FY26 is expected to be about 86%. On a pure PEG-to-EBITDA basis, DroneShield screens as undervalued at roughly 0.51x, which means investors are paying around half the EBITDA multiple for the growth rate on offer.

The other thing that stands out is how quickly the forward multiple compresses, falling from 44x in FY26 to 29x in FY27 and 22x in FY28.

The risk, of course, is that the consensus growth does not materialise. If pipeline conversion slows, contract timing slips, or SaaS adoption takes longer than expected, that valuation support can weaken very quickly.