The DroneShield Ltd (ASX: DRO) share price is up by 4% after announcing another contract win.
DroneShield’s offering involves equipment and technology to help protect people, vehicles, and infrastructure from drones and other autonomous systems.
Asia Pacific contract win
The defence company announced that it has received a standalone contract for $6.2 million from an in-country reseller for delivery to a military end-customer in an Asia Pacific country.
This reseller is a wholly-owned subsidiary of a multi-billion dollar, global, publicly-listed customer that is contractually required to distribute solutions to a major Asia Pacific military government department.
DroneShield revealed that the solutions include third party hardware, which is interoperable with DroneShield’s command-and-control software platform called DroneSentry-C2.
The ASX defence share said it expects to complete the delivery and receive payment in 2026. No additional important conditions need to be satisfied.
Is this a regular customer?
DroneShield noted that it has previously received 14 standalone contracts from this reseller over the past two years. The total amount for those 14 contracts comes to more than $48 million.
The company said that there is no obligation for any additional contracts from this customer.
DroneShield does not believe the identity of the customer to be information that a reasonable person would expect to have a sizeable impact on the DroneShield share price or how investors would value the business.
The ASX defence share believes all of the details that investors need to know about the contract have been included.
Is the DroneShield share price a buy?
This isn’t the largest deal announced by the company – it’s only a fraction of the size of a recent European contract.
However, this is a positive announcement because it shows the geographic diversification of the customer base of the business. It can’t be wholly reliant on just getting contracts related to the Ukraine-Russia war which should end at some point, perhaps soon.
I don’t think it’s wonderful value today, but it’s positive to see the business continues winning contracts and that’s an important part of justifying today’s DroneShield share price valuation and any possible gains. Recent governance changes are also seemingly a good move by the business, as it’s closer to how a typical ASX 200 share may operate.
It’s not something I want to buy for my own portfolio, but it’s a fascinating rollercoaster to watch. Time will tell how successful it is – for now there are other ASX growth shares I’d rather invest in.
