DroneShield Ltd (ASX: DRO), a company specializing in counter-drone technology, has experienced a notable drop in its share price recently. As of this morning, shares are down 13% to $1.70, following the release of its half-year update.
For the six months ending June 30, DroneShield, an ASX technology stock, reported record revenue of $24.1 million, with $16.7 million from the first quarter and $7.4 million from the second quarter. This represents a substantial 110% increase from the $11.5 million recorded in the same period last year. Additionally, the company achieved record cash receipts of $21.4 million during the first half of the year.
Despite the impressive revenue growth, the company's shares have fallen, which can be attributed to a slowdown in growth rates since the end of the first quarter. Management remains optimistic about the future, noting that the second half of the year is traditionally stronger for sales. They anticipate that October and November, which often mark the beginning of a new budget cycle for many U.S. government clients, will see increased activity. This period typically involves catching up on end-of-year underspending and the deployment of new budget allocations.
The company's sales pipeline has notably expanded, now estimated at $1.1 billion—twice the size of the pipeline at the end of the first quarter. This growth is largely driven by increased activity in the Asia region, where several governments are initiating substantial counter-unmanned aerial systems (C-UAS) programs to address threats from small drones.
Management's outlook remains positive, citing favorable operating conditions amid a deteriorating global geopolitical environment. The counter-drone market, still in its early stages, presents significant growth opportunities compared to more established, saturated markets like helmets and tactical radios. The increasing awareness among military and security planners about the need for counter-drone solutions is expected to drive substantial acquisitions in the near future.
At the end of the reporting period, DroneShield maintained a strong balance sheet with $146 million in cash and no debt or convertibles. This cash reserve is primarily allocated for inventory acquisition, crucial for the production of high-margin, sophisticated hardware with a build time of three to four months. This positions the company well to address its $28 million contracted backlog.
Despite the recent decline, DroneShield's share price remains up 400% over the past year, reflecting the company's significant growth and market potential.