DroneShield share price jumps 16% on 'significant' NATO deal

More big news has come out of this tech stock this morning.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The DroneShield Ltd (ASX: DRO) share price is roaring higher again on Wednesday.

In morning trade, the counterdrone technology company's shares are up 16% to $1.10.

A man has a surprised and relieved expression on his face.

Image source: Getty Images

Why is the DroneShield share price racing higher?

Investors have been hitting the buy button on Wednesday morning after the company made its second big announcement of the week.

As a reminder, on Monday DroneShield released its first-quarter update and reported record first-quarter revenues of $16.4 million. This was a massive 10x increase from $1.6 million in the prior corresponding period.

Management also spoke positively about the future. It advised that it has a $27 million contracted backlog and a sales pipeline of over $519 million.

The good news is that this sales pipeline may have just got even larger thanks to some big news this morning.

What was announced?

According to the release, the NATO Support and Procurement Agency (NSPA) has approved the first counter-small UAS (CUAS) procurement framework agreement in NATO history.

NSPA is NATO's lead organisation for multinational acquisition, support, and sustainment in all domains.

The NSPA procurement framework agreement has been awarded via COBBS BELUX BV, DroneShield's in-country Belgium and Luxembourg partner. The initial agreement is for three years but has extension options.

Management notes that the NSPA procurement framework agreement is considered "significant".

That's because the total order of magnitude of sales under the framework over the initial three years is expected to be material.

Also, as a result of being on the NSPA framework, it believes that additional end-users are likely to place orders with DroneShield.

European NATO awards are expected to initially account for the bulk of the contracts. However, the exact order amounts cannot be estimated at this time, and DroneShield intends to provide further updates to the market as appropriate.

'One of the most strategically noteworthy agreements'

DroneShield's CEO, Oleg Vornik, believes this is an incredibly important agreement. He said:

The importance of being awarded this first framework agreement, which is a distinctive feature of NSPA, is one of the most strategically noteworthy agreements since the company was founded. DroneShield is well positioned for the potential order volume with the new production facilities and production ramp-up announced earlier this year.

Additionally, this contract provides further validation to the distributor model, where DroneShield has undertaken a significant investment over last the 10 years to grow its network of highly competent in-country partners in over 70 countries globally.

This enables the company to leverage off local expertise and relationships in each of these individual country markets.

Motley Fool contributor James Mickleboro 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Technology Shares

A woman wearing yellow smiles and drinks coffee while on laptop.
Technology Shares

The ASX 200 shares I think smart investors are buying after the tech selloff

The recent pullback has changed the conversation around several ASX 200 growth shares.

Read more »

Smiling young parents with their daughter dream of success.
Technology Shares

Here's why Life360 shares could rise a massive 75%

Big returns could be coming for buyers of this tech stock according to Bell Potter.

Read more »

A woman presenting company news to investors looks back at the camera and smiles.
Technology Shares

3 reasons to buy Xero shares now

This beaten down tech stock could be worth considering. Let's see why.

Read more »

Man with a hand on his head looks at a red stock market chart showing a falling share price.
52-Week Lows

Down 43% this year, this ASX tech stock is now back at January 2025 levels

Megaport shares are down 43% this year as weak momentum continues.

Read more »

A judge bangs down the gavel.
Technology Shares

Why are shares in this ASX defence company tanking today?

They've received more than just a slap on the wrist.

Read more »

A boy holds on tight as his gaming console nearly blows him away.
Technology Shares

This ASX tech firm presents a "unique" opportunity, Shaw and Partners says

A major game launch is just days away.

Read more »

A businessman looking at his digital tablet or strategy planning in hotel conference lobby. He is happy at achieving financial goals.
Technology Shares

DroneShield shares rebound on investor update

The counter-drone technology company has released an update.

Read more »

A man sitting at a computer is blown away by what he's seeing on the screen, hair and tie whooshing back as he screams argh in panic.
Technology Shares

Should you buy the 20% dip in the DroneShield share price?

This high-flying stock is having its wings clipped on Wednesday.

Read more »