DroneShield edges closer to a true recurring revenue business

Three’s a trend: DroneShield up 10% after reporting recurring revenue.

If you read our previous article asking whether DroneShield (ASX: DRO) was a good investment after its 40% pullback, the main thesis centred on one thing: repeat customer growth. What stood out then, and continues to stand out now, is the steady increase in both the frequency and value of orders from existing clients. Today’s announcement reinforces that view, with repeat customers expanding their demand for counter-drone systems. It’s important to note that DroneShield was required to withdraw its announcement due to wording that may have led investors to believe the contracts were new, when in fact they were not. Aside from this news, we are going to look objectively at what this means for DRO business model and revenue outlook.

This latest announcement highlighted that DroneShield has had 3 consecutive orders from the US government within just 18 months, a milestone that highlights its strengthening position as a trusted defence partner. It is not just about one-off deals anymore, it is about relationship depth and recurring demand. Each repeat order is proof that the company’s technology is performing where it matters most: in the field. For investors, that kind of consistency speaks louder than headlines, showing DroneShield’s transition from a promising defence tech player to a reliable supplier in a rapidly scaling global market.

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DroneShield accelerates growth with contracts and doubling of average deal size

These smaller contracts, while modest in size compared to the A$62 million European order earlier this year, further strengthens the company’s credibility and validates the performance of its existing counter-drone systems. It shows that DroneShield’s products are not only being adopted but are proving effective and reliable in real-world defence settings. These repeat orders reinforce confidence in the technology and signal growing customer trust, both of which are essential for long-term scale.

The key takeaway for investors is that DroneShield continues to show strong momentum in both the size and frequency of its commercial contracts. So far in 2025, the company has secured 78 purchase orders with a median value of around A$400,000, compared to 66 orders in the previous year at a median of A$200,000. This doubling in average deal size, alongside an 18% increase in total orders, signals accelerating commercial traction and broader market penetration.

DroneShield targets fivefold production boost with new US and European facilities

DroneShield’s growth strategy is firmly focused on scaling production capacity and deepening its global footprint to meet surging demand from defence and security agencies. The company is in the midst of a major production expansion, targeting a fivefold increase in annual manufacturing capability from A$500 million to A$2.4 billion worth of systems by the end of 2026. This initiative includes the rollout of new assembly plants in the US and Europe, designed to localise production closer to key customers, reduce lead times, and better align with defence procurement cycles.

What the CEO Oleg Vornik had to say

CEO Oleg Vornik has highlighted that smaller, frequent contracts play a critical role in this growth phase. These orders help maintain steady operational momentum, smooth cash flow, and reinforce trust with major clients, laying the groundwork for larger, multi-year deals. Importantly, Vornik noted that DroneShield’s pipeline now includes multiple opportunities exceeding A$100 million, with one potential project valued at around A$800 million.

For investors, this combination of manufacturing expansion, geographic localisation, and a growing high-value pipeline reflects a company transitioning from a niche defence supplier into a globally scaled, recurring-revenue defence technology business.