The Droneshield Ltd (ASX: DRO) share price is flying high on Tuesday.
Shares in the ASX drone defence tech company closed yesterday trading for 22.5 cents. At the time of writing shares are swapping hands for 26.5 cents apiece, up 17.8%.
Investors are bidding up the Droneshield share price following news the company was awarded a new, record contract.
What did the drone defence company report?
The Droneshield share price is soaring after the company reported it was awarded a follow-on two-year research and development (R&D) contract by a Five Eyes Department of Defence (DoD).
Five Eyes, if you're not familiar, refers to the defence and intelligence-sharing alliance linking the United States, the United Kingdom Canada, Australia and New Zealand.
The follow-on contract has a total value of $9.9 million. Approximately $4.5 million is due in the September and December 2023 quarters.
The award comes after the company completed its existing $3.8 million contract with the DoD. Management said they expect the final milestone payment this month.
Commenting on the Five Eyes contract sending the Droneshield share price soaring today, CEO Oleg Vornik said:
Follow-on contracts are the ultimate customer measure of our performance. As an Australian sovereign industrial capability business, Droneshield is proud and pleased to continue undertaking multi-year contracts of increasing size with this customer.
Vornik noted that the new DoD contract is the largest long-term contract received by the company so far, adding that the two-year contract term "locks in cash receipts over a period of time".
Also potentially offering a boost to Droneshield shares today, Vornik said the company anticipates "further larger contracts" after this phase is completed.
Vornik added:
In the current uncertain geopolitical environment, there is a significant focus by the Five Eyes governments to procure from defence industrial capability champions within their network of countries.
He noted Droneshield's "deep engineering and research capability, TRL9 products and a track record of working with Defence," as placing the company in a strong position for ongoing contracts.
Droneshield share price snapshot
With today's big leap factored in, the Droneshield share price is up an impressive 33% over the past 12 months.
Shares in the drone defence stock are up 15% in 2023.
