Electro Optic Systems (ASX:EOS) Fires Up as A$152M Defence Contracts Ignite Rally.

EOS Powers Ahead with A$152M Defence Bonanza.

Electro Optic Systems (ASX: EOS) is seeing strong momentum over the past week, highlighted first by a South Korean contract valued at A$120 million for high energy laser weapons supporting counter unmanned surface vessel systems. This was followed today by a A$32 million contract for the R400 remote weapon system, which is mounted on armed vehicles.

The weapon system is configured for ground to ground operations and is designed to be deployed on light armoured vehicles. While the customer has not been named, it is described as a long standing defence manufacturer with an investment grade credit rating. Investors can expect delivery of these systems to occur across 2026 and 2027, providing further revenue visibility for the business.

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Why is the defence sector seeing a boom

The US administration has outlined an approximately US$850 billion defence budget, including around US$167 billion allocated to procurement and a substantial portion directed toward research and development initiatives aimed at accelerating innovation in defence technologies.

This matters because a growing number of ASX listed companies are benefiting from federal funding directed toward modernisation, next generation capabilities, and continuous technology iteration. As a result, some of the fastest-growing areas across both the US and Australia include uncrewed UAV systems, next-generation aircraft platforms, and advanced cyber and software solutions. 

These segments are attracting a growing share of capital inflows and strategic partnerships, positioning select companies like EOS as early beneficiaries of long duration government and commercial demand. These are the types of businesses investors should keep on their radar as this structural funding trend continues to unfold.

Backlog Military Deals

Looking at the backlog of orders also demonstrates that demand is not being driven solely by the United States. EOS has seen its backlog revenue increase threefold over the past year, reaching approximately A$400 million. This sharp increase highlights accelerating global investment in defence systems and provides EOS with materially improved revenue visibility over the medium term, supporting confidence in future delivery schedules and earnings conversion as contracts move into execution. Here are the backlog revenues:

• A$53m Slinger counter-drone RWS (Western Europe)
• A$125m High Energy Laser Weapon system (Western Europe)
• A$108m R400 RWS for LAND 400-3 (Australia)
• A$120m High Energy Laser Weapon conditional contract (South Korea)
• A$32m R400 RWS order (this announcement)

The Investors Takeaway for EOS

What we believe investors will be pleased to see is increasing diversification across both geographies and multiple product verticals. We have also observed that contract sizes are becoming meaningfully larger. Based on current timing, investors can reasonably expect a stronger FY26, with many of these contracts likely to begin materialising through mid 2026 and into early 2027. Importantly, improving backlog conversion enhances earnings predictability, which is a key requirement for any sustained institutional rerating of EOS