The DroneShield Ltd (ASX: DRO) share price is down by close to 3% after it announced its fourth-quarter update for FY25.
DroneShield is an ASX tech company that provides counter-unmanned aircraft systems (counter-UAS) technology. Its anti-drone solutions include radio frequency sensing, artificial intelligence (AI), machine learning (ML), electronic warfare and more. The company has operations in Australia and the USA.
DroneShield December quarter update
DroneShield said that it “continued with another strong quarter, capping off the year with all-time record metrics across the board”.
Let’s take a look at its quarterly cash flow report for the December 2025 quarter:
- Revenue grew 94% year on year to $51.3 million
- Customer cash receipts soared 142% year on year to $63.5 million
- Software as a service (SaaS) revenue rocketed up 475% year on year to $4.6 million
- Operating cashflow increased 187% year on year to $7.7 million
The drone-focused business reported that this was the second-highest quarter of revenue generation to date. The highest quarter of revenue was the September 2025 quarter with $92.9 million of revenue. It has announced a number of new contracts over the quarter, including a large European contract worth almost $50 million.
The business reported that it has committed revenue for 2026 of $95.6 million (compared to “negligible” committed revenue at the start of 2025).
On the cash receipts side of things, the business also reported that this was the second-best quarter to date. Like revenue, the highest cash receipt quarter was the third quarter of 2025, which came to $77.4 million.
The business is now generating positive cashflow, which is an important milestone for the business because now it can fund its own growth without relying on outside money, whether that’s lenders or shareholders. It’s targeting to be consistently operating cashflow positive and profitable in the coming quarters and years.
The company reported that its cash balance finished at $212.8 million at the end of December 2025, up from $210.4 million at the end of the previous quarter.
Software as a service (SaaS) revenue
The business is making significant progress on its efforts to generate recuring revenue. The SaaS revenue is expected to continue rising, with all new products carrying one or multiple SaaS offerings.
DroneShield said that SaaS is critical due to the changes in drone technology. As the hardware becomes more ‘open-ended’, software is expected to play an increasing role. The ASX share’s management believes that the command-and-control SaaS software is expected to increase.
It’s also expecting the civilian sector to reach up to 50% of revenue over the next five years, with subscription products expected to be a central part.
Final thoughts on the DroneShield share price
The business continues growing at a fast pace and the fact it’s now positive operating cashflow status is a good step. Time will tell if it’s able to continue winning more revenue or if it reaches a ceiling soon. New offerings and civilian growth will be key to justify the excitement.
For me, there are other ASX growth shares that have a more appealing growth outlook.
