Home / Earnings Results / DroneShield share price flying 13% on first profitable year

DroneShield share price flying 13% on first profitable year

It's a historic day for DroneShield and shareholders are celebrating.

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Mitchell Lawler
Mitchell stumbled upon the concept of investing when in high school, devotedly urging his parents to put some money into a handful of technology companies with increasingly popular products among his demographic – many of which have gone on to great success. It wouldn’t be until 2017, some five years later, that Mitchell became an investor of his own money. Having studied and worked as a mechanical engineer in the building services industry, Mitchell takes a methodical and analytical approach to evaluating businesses. Rather than relying purely on numbers, Mitchell drills beyond a company’s metaphorical mantle to unearth obscure patterns or competitive advantages that would go otherwise unnoticed. His expertise resides within areas such as software, consumer goods, and building services equipment. However, his quest to find quality companies that set the industry standard and flex some degree of an impenetrable position has no limits – small cap to mega cap, cosmetics to healthcare – if it’s an exceptional business it’s on his radar.
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The DroneShield Ltd (ASX: DRO) share price is going great guns on Wednesday after releasing its full-year results for FY23.

At the time of writing, shares in the counter-drone solutions company are up 13.2%, trading at 86 cents. Meanwhile, the S&P/ASX Small Ordinaries Index (ASX: XSO) is down 0.08%.

Woman jumping for joy at great news with wide open country around her.

Image source: Getty Images

DroneShield share price rallies on record results

  • Revenue up 226% on the prior year to a record $55.1 million
  • Cash receipts from sales and grants up fivefold to a record $73.5 million
  • Inaugural profit after tax of $9.3 million, up from a $900,000 loss
  • Cash balance of $57.9 million as of 31 December 2023
  • Pipeline of more than $510 million

What else happened in FY23?

It was a year of records, once again, for the counter-drone defence company. Amid continuing conflicts in Ukraine and elsewhere, the appetite for the use of drones in combat remained robust.

To meet this demand, the company moved into a new manufacturing facility during the year that is three times the size of its original site. Likewise, the DroneShield team doubled in size to more than 100 people in 2023.

DroneShield recorded $73.5 million in cash receipts in FY23, marking a significant step up from the previous $15.6 million. Part of this achievement stems from the company landing a record $33 million order from a United States Government agency in July 2023.

The DroneShield share price leapt nearly 19% amid news of the $33 million order on 17 July. The company's shares have soared 156% since then, as shown below.

Another important facet for DroneShield is the increasing portion of subscription revenue. A total of $1.39 million worth of revenue was generated by the software-as-a-service (SaaS) segment in FY23, increasing fourfold.

What's next for DroneShield?

Guidance for FY24 revenue or profits was absent in today's release. However, the company did note its 2024 pipeline stands at $388 million. The United States maintains the bulk of this pipeline, with $231 million allotted to 41 projects under discussion.

Now holding $57.9 million in cash and no debts, the team believe 2023 has laid the groundwork for a promising 2024.

DroneShield share price snapshot

The return from the S&P/ASX 200 Index (ASX: XJO) pales in comparison to that of the DroneShield share price over the last year. Amassing a 130% increase over the past 12 months, DroneShield is a staggering 125% ahead of the benchmark index.

And now profitable, we can determine a price-to-earnings (P/E) ratio. Based on the $9.3 million 2023 profit, DroneShield shares now trade at an earnings multiple of 54 times. For context, the global defence industry trades at roughly 36 times earnings.

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended DroneShield. The Motley Fool Australia has recommended DroneShield. 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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