DroneShield Ltd (ASX: DRO) shares are charging higher on Tuesday morning.
At the time of writing, the counter drone technology company's shares are up 5% to $1.21.
This follows the release of a blockbuster first quarter update, headlined by record revenue and a growing backlog of committed orders that appears to be setting the stage for another bumper year.
DroneShield shares jump on record-breaking quarter
According to the release, for the three months ended 31 March, DroneShield reported first-quarter revenue of $33.5 million, up a whopping 102% on the prior corresponding period. This is now officially the company's strongest revenue quarter ever, overtaking its previous high of $27.7 million in the third quarter of FY 2023.
In addition, the company is already sitting on $94.4 million of revenue either received or locked in via purchase orders for the 2025 financial year. That's well ahead of the $57.5 million achieved in all of FY 2024 — and we're only in April. Any contracts won from this point will be on top of that figure.
Cash receipts hit $16.7 million, up 135% year-on-year. The gap between revenue and receipts is largely attributed to billing cycles.
Importantly, recurring software revenue is ramping up, with DroneShield's SaaS revenue jumping 198% to $1.67 million in the quarter. Management expects this to increase even further in 2026 as it releases next-generation AI-driven platforms and shifts more of its defence customers to subscription-based software models.
Another standout of this update is the company's cash position — a healthy $197 million and no debt. Management notes that this gives DroneShield the flexibility to invest in R&D, acquisitions, global expansion, and the growing cost base that comes with scaling a defence tech business.
Even with operating expenses of around $6.5 million per month, the company is comfortably positioned to weather volatility, fund product development, and meet surging demand.
Speaking of demand.
Global demand accelerating
DroneShield revealed that its sales pipeline now totals $1.6 billion in visible opportunities across 2025 and 2026.
That's a massive step up from prior years and reflects surging global demand for counter-drone (C-UxS) technology, particularly across Europe, Asia, and the US.
It notes that in Europe, which contributes 24% of year to date revenue, increased EU defence spending, a EUR800 billion "ReArm Europe" initiative, and ongoing demand from Ukraine are all fuelling orders. The company is eyeing a dedicated European manufacturing hub to support growth.
In Asia, which represents 23% of year to date revenue, tensions in the region, especially around China, have seen defence budgets spike and two large contracts (worth $43.8 million combined) have been secured already this year.
Finally, in the United States, which represents 22% of year to date revenue, its defence budget now tops US$1 trillion, with drones and anti-drone tech named as priority areas. And while tariffs may present headwinds, management believes that DroneShield's highly differentiated solutions will maintain demand.
