Elsight Reports Record H1 2026 Revenue of US$23.4 Million Driven by Defence Contracts and Global Expansion

Sixth Straight Quarter of Record Revenue Highlights Rapid Market Adoption

Elsight delivered its strongest quarterly revenue in Q2 2026, generating approximately US$11.83 million (~A$17.1 million), marking the sixth consecutive quarter of record revenue and nearly a threefold increase compared to Q2 2025. This consistent growth underscores increasing demand for Elsight’s connectivity and enablement technologies across key geographic markets and customer segments.

Unaudited revenue for H1 2026 reached approximately US$23.4 million (~A$33.8 million), nearly five times the prior corresponding period and surpassing the full-year CY2025 revenue of US$22.8 million. This growth is driven by rising global defence spending, expanding uncrewed system adoption in military and commercial sectors, and contributions from Elsight’s direct sales team established last year. The company’s business model shows strong operating leverage, with expected non-GAAP net profit exceeding US$10 million (~A$14.45 million), confirming sustained profitability amid investments in sales, product development, and geographic expansion.

DCMA Blue UAS Cleared List Approval Positions Halo for US$75 Billion Defence Procurement Opportunity

In Q2 2026, Elsight’s Halo platform was approved for inclusion on the DCMA Blue UAS Cleared List, the U.S. Department of War’s primary directory of NDAA-compliant unmanned systems pre-approved for rapid military procurement. This milestone enables U.S. military units to procure Halo through accelerated acquisition channels, bypassing traditional multi-year procurement cycles. The approval coincides with the FY2027 budget allocating approximately US$75 billion toward drone and counter-drone capabilities.

Halo’s non-ITAR classification further enhances Elsight’s defence market positioning by simplifying international deployments and enabling U.S. forces to operate alongside allied partners without export restrictions. A key U.S. combatant command has selected Halo for a major exercise with partner forces, facilitated by this classification. This approval paves the way for accelerated procurement as U.S. military confidence in rapid acquisition grows and defence budgets prioritize drone technologies.

U.S. Special Forces Procurement and Drone Dominance Program Support Long-Term Growth

Elsight is progressing through multiple U.S. Special Forces procurement pathways, with Halo undergoing operational evaluations that have advanced beyond initial phases, demonstrating strong product performance. The company holds an active SOCOM OTA contracting vehicle, enabling accelerated procurement with shorter decision cycles.

Engagement with the U.S. Department of War’s Drone Dominance Program ("DDP") advanced to the second capability assessment phase, enhancing Elsight’s visibility in fleet-level drone procurement. While DDP revenue is expected to materialize from 2027 onwards, this multi-phase evaluation is typical for large defence programs. Combined with Blue UAS Cleared List approval and U.S. Special Forces pathways, Elsight has diversified procurement channels reducing reliance on any single customer or program.

Follow-On Order from U.S. Public Safety Customer Highlights Commercial Growth and FAA Regulatory Readiness

In May 2026, Elsight secured a follow-on purchase order valued at approximately US$2 million (~A$2.8 million) from a U.S. public safety customer, more than four times the initial US$460,000 order from January 2026. This validates operational success and customer satisfaction with the Halo platform, indicating progression from pilot phases to scaled procurement.

This commercial expansion precedes anticipated FAA Part 108 Beyond Visual Line of Sight (BVLOS) rulemaking, positioning Elsight to capitalize on regulatory developments enabling broader commercial drone operations. Public safety agencies are early adopters of autonomous uncrewed technologies and often signal wider commercial adoption trends. Elsight’s success with this customer demonstrates readiness for commercial-scale deployment ahead of regulatory changes.

Stealth Initiative Business Unit Secures First Western Government Customer

Elsight’s Stealth Initiative business unit achieved its first paying customer in H1 2026, a western government entity, with an initial order of approximately US$230,000. This strategic win validates product-market fit in a new segment with a total addressable market exceeding US$20 billion.

Government customer validation is critical for scaling within defence and security sectors, where reference cases and proof-of-concept are essential. This milestone positions Elsight to build case studies and expand sales pipelines across government and commercial customers within this large market.

Recurring Revenue Growth Reaches 14% of Quarterly Revenue, Enhancing Software and Services Model

Recurring revenue from software licenses, cloud services, and connectivity subscriptions reached approximately US$1.6 million in Q2 2026, representing 14% of total quarterly revenue, up from 11% in Q1 2026. H1 2026 recurring revenue totaled approximately US$2.9 million, surpassing full-year CY2025 recurring revenue of about US$2.6 million. This shift toward higher-margin, predictable revenue streams improves earnings visibility and customer lifetime value.

Increasing recurring revenue reduces reliance on large hardware orders, which can cause revenue volatility, and typically yields higher net margins due to lower acquisition and manufacturing costs. A diversified revenue mix spanning hardware, services, and subscriptions strengthens customer retention and supports a stable long-term earnings profile as Elsight commercializes its software and cloud offerings.

Advancement in GNSS-Denied Positioning Expands Market Beyond Connectivity

During H1 2026, Elsight progressed its patent-allowed GNSS-denied positioning capability, significantly broadening its technology beyond connectivity. Currently in soft launch with select design partners, a broader commercial release is planned for late 2026. This software-based capability leverages existing Halo hardware, enabling value extension without new hardware development.

GNSS-denied positioning addresses challenges in environments with degraded or jammed satellite signals, such as urban canyons, indoor areas, and electronic warfare zones. By integrating positioning with connectivity and video transmission, Elsight aims to become a Tier 1 technology provider offering comprehensive connectivity, positioning, video, and autonomy from a single platform. This strategy increases customer switching costs and expands the addressable market to those prioritizing positioning or autonomy.

Operating Cash Flow Reaches US$3.8 Million in H1 2026

Elsight generated strong operating cash flow of US$3.8 million in H1 2026, with customer receipts totaling US$13.6 million. Effective working capital and collection processes contributed to timely cash conversion. While the closing cash balance as of 30 June 2026 was not fully disclosed, the cash flow supports ongoing operations and strategic investments.

R&D spending totaled US$2.3 million, while manufacturing, marketing, administration, and staff costs combined reached US$8.8 million, reflecting a balance between innovation and cost discipline. No material cost overruns or operational disruptions were reported, indicating stable execution.

Expanding Demand Across U.S., Europe, and Middle East Driven by Defence Spending Trends

Elsight is experiencing growing demand in the United States, Europe, and the Middle East, attributed to rising defence budgets, increasing adoption of uncrewed systems as core operational tools, and the impact of its direct sales team established last year. Defence spending in allied nations is shifting toward autonomous systems, including drones and counter-drone platforms.

Elsight’s inclusion on the Blue UAS Cleared List, SOCOM procurement pathways, and participation in the U.S. Department of War’s Drone Dominance Program position it to benefit from these trends. The maturing sales team is now driving pipeline growth and order conversions, accelerating customer engagement and order flow across multiple regions.

Strategic Product Expansion Positions Elsight as Tier 1 Technology Provider

In H1 2026, Elsight outlined a strategic vision to become a Tier 1 backbone technology provider for the uncrewed systems industry, delivering integrated connectivity, positioning, video, and autonomy capabilities. This evolution builds on the Halo connectivity platform to offer a comprehensive enablement solution addressing multiple critical system requirements.

Although specific new capabilities were not detailed, the Tier 1 provider strategy enhances competitive advantages by increasing switching costs, expanding addressable markets through multiple technology vectors, and strengthening relationships with prime contractors and system integrators. Progress in GNSS-denied positioning alongside existing technologies supports this strategic shift, enabling Elsight to capture greater customer wallet share and solidify its market position.