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DroneShield shares surge then flatten on new government orders

man flying remote control drone
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Shares in DroneShield Ltd (ASX: DRO) surged more than 14% in early trade following an announcement from the company.  

What did DroneShield announce?

Earlier today DroneShield announced that the company has received multiple, new European government orders worth about $750,000.

The first order is from an existing European government customer and follows a smaller order earlier in the year. The new order includes DroneShield’s multi-sensor detection system and DroneGun Tactical which is a portable counter drone solution.

A second order from the defence ministry of a different European country is for several of DroneShield’s portable solutions.

The company said the new orders would generate approximately $750,000 in sales. The company plans to build upon these initial sales to achieve follow-on orders. DroneShield expects to receive the amount due for the first order at the end of September. Half of the amount from the second order is expected in September, with the remainder due on shipment.

DroneShield’s management noted that the new orders showcased the diverse capability of the company’s products in the rapidly growing C-UAS market.

What does DroneShield do?

DroneShield is an Australian-based company that specialises in drone security technology. The company’s security solutions are designed to protect people and critical infrastructure from intrusions by drones. DroneShield built its hardware and software from the ground up and has an extensive pipeline of solutions.

The new European orders follows DroneShield’s most recent contract with the US Air Force. In addition, the company recently released a positive activated report for the fourth quarter of FY20.

The report was highlighted by positive cash flow for the quarter with DroneShield reporting cash inflows of $2.1 million. As a result, the company recorded its first ever quarter in which operating cashflows were approximately breakeven.

At the time of writing, the DroneShield share price is flat for the day, trading around 14 cents per share. The company’s share price has been sold down after hitting an intra-day high of 16 cents earlier. The DroneShield share price has struggled in 2020 and is trading more than 45% lower for the year.

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Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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