The DroneShield Ltd (ASX: DRO) share price is down 10% after the counter-drone business gave a trading update for HY26.
DroneShield describes itself as a global leader in AI-powered, counter-drone and uncrewed, autonomous systems defence. It aims to detect, track, identify and defeast drone threats in a variety of scenarios.
Trading update
The company has given investors an insight into the company’s performance for the six months to 30 June 2026.
Its revenue for HY26 is expected to be $125.8 million, which is up 74% higher year on year.
Recurring revenue, in the form of software, subscriptions and long-term service revenue is estimated to be $14.2 million, which is 11.3% of HY26 revenue.
FY26 committed revenue as of 28 July 2026 is $206 million, of which 13% is recurring revenue. That committed revenue is already 95% of FY25 total revenue.
Committed revenue for FY27 and beyond is $26 million, with a mix of committed hardware, software, warranty and other services revenue.
The HY26 gross profit margin is estimated at 60%, compared to 65% in the prior corresponding period. This decline is due to the sales mix between DroneShield solutions and third-party product hardware, currency movements and raw material impairment.
The business targets a blended gross profit margin of around 65%, which will be supported in the second half through a launch of its own next-generation hardware and increasing subscription revenue.
DroneShield said that it expects FY26 revenue to be between $250 million to $270 million, representing 15% to 25% growth year on year.
New contract twin
DroneShield also announced that it has received a package of contracts totalling $23.2 million from a reseller for delivery to a European military end-customer.
Plus, it said the unveiling of a “significant evolution in the counter-drone doctrine with the release of RfAI-3, the third generation” of proprietary RF detection engine.
Final thoughts on the DroneShield share price
The market was clearly hoping for more, but the company continues to deliver double-digit growth despite having grown so much in 2025.
It’s hard to say whether this is an opportunity or not – it’s now down more than 30% in 2026 to date. There is a lot of competition in the space. Seeing a lower profit margin is not ideal, either.
It could be undervalued, particularly as it’s near a 52-week low, but it’s not the type of business I’d want to buy for my own portfolio.
