Summary
- ASX-listed drone defence technology developer - DroneShield Limited (ASX:DRO) surged over 17% on an intraday basis.
- The surge was primarily led by positive quarterly performance.
- How is the manufacturer unfolding defence technology cards amidst growing international tensions?
ASX-listed drone detection technology leader- DroneShield Limited (ASX:DRO) is stealing the show on ASX with the stock zooming over 14% on an intraday basis after disclosing quarterly performance for the period ended 30 September 2020.
September 2020 Quarter Eye Catchers
Sales
During the period, the Company continued to expand its customers and sales pipelines while cashing in on the growing international tensions.
- DroneShield received an order of ~ $900,000 for its DroneGun Tactical™ from Five Eyes: a signals alliance between the United States, Australia, the United Kingdom, Canada, and New Zealand.
- Furthermore, the Company anticipates receiving additional orders in the near-term, and it expects the delivery of the current order before the end of the year, for which, the manufacturer will receive the payment across 4Q2020 and 1Q2021.
- Despite the COVID-19 scenario denting a lot of businesses on the global front, the Company seems to have weathered the storm with the Company’s order book reaching an all-time high of $5.2 million.
- Out of the total order book, DRO received ~ $2.3 million worth of orders during and after the third quarter.
DRO received two separate orders from a European Ministry of Defence. The first order was in July 2020 for RadarZero™, generating $100,000 in sales proceeds. Apart from that, the Company received a large order for a variant of the DroneSentry™ and DroneGun™ worth ~ $560,000 in August 2020.
Historic Capital Raising
During the period, DRO raised $17 million through a Placement and Share Purchase Plan (or SPP), marking a record capital raising in the Company’s history. The recently raised funds had further supported the business front on many lines.
- DRO scaled up the sales and marketing team in the U.S. to support the current market momentum while investing in long-lead items for inventory to enable rapid sales.
- DRO scaled up inventory to support customer trials; and,
- The Australian engineering team was expanded to support the rapid refinement of products in response to end-user feedback.
Furthermore, the Company expended manufacturing operations and repaid $600,000 R&D facility loan during the period. DRO is anticipating an R&D tax incentive in mid-2021.
Cash Generation
During the period, DRO generated a record operating cash receipts of ~ $410,219 with subsequent cash receipts of $813,092 in October alone.
High Conviction Pipeline
- DRO projects its high conviction pipeline to be over $100 million along with additional bids and other processes in the full project pipeline that the Company is participating in.
- One such example of the high conviction pipeline is the DroneSentry™ project win in South East Asia, which holds an estimated value of $1 million approx.
Business Strategy to Increase Footprints Across The United States
During the period, DRO appointed Cassidy & Associates Inc - a renowned Washington, DC government relations firm, to accelerate the work in the U.S. market.
- Moreover, the Company also bagged funding from the Pentagon for the targeted development of its DroneSentry-C2™.
- The section of the United States Department of Defense is a new customer for the Company.
On the domestic front, the Company recently received a Capability Improvement Grant from the Australian Department of Defence under the Centre for Defence Industry Capability (or CDIC).
The recent developments on the business front with strong cash generation, order book, and high conviction pipeline seem to be catching the eye of the investing community.
The stock of the Company last traded at $0.195, up by 14.70 per cent against its previous close on ASX.
