The DroneShield Ltd’s [ASX:DRO] share price is up 8.8% after receiving a $2.3 million payment from a Middle Eastern Ministry of Defence.
DRO share price is up as much as 14.7% in early trade.
Year-to-date, DroneShield’s share price is up 8% and 85% over the last 12 months.
DroneShield receives $2.3 million payment
The company today revealed that it received the remaining due payment on a previously completed order to a Middle Eastern Ministry of Defence.
That order was previously announced to the market all the way back in June 2018 and the remaining order items shipped on 30 March 2020.
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Back in March 2020, DroneShield CEO Oleg Vornik commented that ‘Middle Eastern customer order flow processes are often less structured than those involving their Western counterparts.’
Despite this, Mr Vornik noted that DroneShield has a ‘close relationship with this governmental customer…and has a high degree of confidence in the process.’
Today, that confidence was rewarded with the unnamed Middle Eastern Ministry of Defence paying DroneShield $2.3 million of the remaining due payment.
For reference, that June 2018 order was for 70 units of the company’s DroneGun Tactical jammer, worth AU$3.2 million.
At that time, it was the largest order in the history of DroneShield and, according to DRO, the largest known order if its kind in the industry.
It was also the company’s first multimillion-dollar order.
DRO share price outlook
When the DroneGun order was first announced in 2018, DroneShield CEO Oleg Vornik stated that the company viewed the order as ‘just the start of our relationship with the MOD.’
Mr Vornik further stated in that 2018 update that he expected DroneShield to ‘receive substantial (and substantially larger) additional orders for this product and other products of the Company for the MOD.’
Some investors may think that this relationship is progressing quite slowly, with Droneshield receiving payment today on an order placed in June 2018.
However, Mr Vornik noted in today’s release that the repayment marks the ‘completion of a repeat purchase order.’
He stated that the ‘next contract is expected to be a much larger amount, approximately $60-70 million.’
That said, this larger contract is still being discussed and will be announced to the market ‘once the contract has been mutually executed.’
Today’s announcement follows multiple contracts secured by DroneShield in recent weeks, as we’ve covered here.
Last week, DRO secured a $1.1 million repeat order from a Five Eyes agency as well as a US Law Enforcement Order contract.
And last month the company announced multiple DroneSentry-X orders.
These orders will no doubt go a long way in DroneShield’s pursuit of profitability.
In FY20 (for the year ending 31 December 2020), the company reported revenue of $5.6 million, a 58% increase.
However, DRO also posted a net loss attributable to members of $5.8 million, down 24% from $7.7 million in FY19.
DroneShield securing larger orders from repeat customers — like the $60–70 million contract with the MOD (Ministry of Defence) currently being discussed — may go a long way in putting DRO on the path to profitability.
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For Money Morning