DroneShield fans throw $120 million at the defence tech company in fresh raise

Simon Thomsen- August 2, 2024



The DroneShield DroneGun Tactical in 2021

ASX-listed defence tech scaleup DroneShield has made hay while its shares shine, raising $120 million from institutional and sophisticated investors at $1.15 a share.Shares in the Sydney-headquartered US tech business (ASX: DRO) have been on tear over the last seven months, climbing from $0.31 cents in mid-December 2023, the $1 April and then a high last month of $2.72 before going over the cliff in mid-July to halve in value as short-sellers swarmed.The raise at $1.15 is nonetheless impressive for DroneShield, which listed on the ASX in 2016 at $0.20 cents a share, and saw its price bounce along around or below $0.40 cents a share for most of the past eight years.The new 104.3 million ordinary shares represent around 13.7% of the stock on issue.The company said the funds will be used on R&D programs ($90m) for new counterdrone (C-UxS) products, as well as strategic bolt-on acquisitions ($20m) to accelerate the development of DroneShield’s new Artificial Intelligence (AI) products & software capabilities, with $10 million left as for offer costs and working capital.

DroneShield was certainly bullish in its announcement following the placement on Thursday. The company said it had a “sales pipeline of $1.1 billion with 110 qualified projects at different stages with high quality government customers”;.Meanwhile, it has $28 million of contracted sales orders currently being fulfilled and its revenues for the first half of CY24 hit $24.1 million, a 110% increase on the same period in CY23. Half year cash receipts for 1H24 of $21.4 million, up 40%.DroneShield makes drone countermeasures, described as “electronic warfare solutions”. Some are made to look like guns you point at autonomous aircraft to bring them down. Their clients are governments, especially military, law enforcement and other critical infrastructure organisations.DroneShield CEO Oleg Vornik said the capital injection allows them to implement frapid R&D programs in response to end user requirements, over the next 12-24 months.“This favourably positions DroneShield to fuel its revenue growth and further increase its margins, due to anticipated increase in AI SaaS offerings and higher sales pricing for the underlying hardware, as the C-UxS market continues to rapidly grow, supported by the current tailwinds through drones being used extensively for nefarious purposes globally,” he said.Settlement of the placement is expected to take place on August 6. DroneShield shares closed at $1.185 on Thursday.