DroneShield on 3Q25 Earnings, Biz Outlook

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00:00We can probably start with the technology of DroneShield.

00:02I think people are, of course, very familiar with how drones,

00:05the hardware drones, have been used extensively in the battlefields in Ukraine, for instance.

00:10But what is counter-drone technology and what is that use for it as well?

00:16Counter-drone technology utilizes multiple types of tech,

00:20such as radio frequency, radars, cameras and acoustics,

00:24all fused together for the first step being detection and tracking of drone

00:28or multiple drones, like a swarm, and then it's followed by the defeat.

00:33So defeat can be, again, through a number of ways like smart jamming,

00:38protocol manipulation or even high-powered microwave.

00:41So DroneShield develops a number of technologies as well as integrates

00:44a number of third-party technologies into comprehensive packages

00:48for our customers around the world.

00:51And that technology is, I mean, it's certainly benefiting

00:57from an increase in government spending, for instance.

01:00What were sort of the key takeaways from your numbers

01:03that you reported earlier today?

01:05We're continuing to rapidly accelerate with our customer adoption.

01:10When we started 10 years ago, there was really no demand

01:13for counter-drone to speak of.

01:14Now militaries, as well as increasingly civilian customers,

01:18are saying drones and nefarious activity are for real,

01:22but unfortunately we have really not much in counter-drone technology deployed.

01:27So for the last couple of years, since it's really came on radar

01:30of a lot of our customers since the start of the Ukraine war,

01:34customers started to evaluate the counter-drone technologies

01:37and now are moving into a rapid adoption cycle.

01:40But we are still in the very early days,

01:42but we're seeing those increased large purchases,

01:45which is showing through our quarterly results,

01:48which are continuing to get stronger every quarter.

01:50Yeah, and as we said, a surge in revenue of 1,000%

01:55from the same period a year earlier that you had this morning.

01:58Where's most of the demand coming from right now?

02:00Is it in Europe, for instance?

02:03Europe is by far the largest share of our sales.

02:08So today it's accounting for about 40% of our revenues.

02:12But we are present in about 50 countries around the world,

02:16so the U.S. continues to contribute.

02:18We have presence in Virginia

02:20and we serve a number of defence, homeland security,

02:24law enforcement and intelligence customers there.

02:26We're seeing quite strong demand from South America

02:30where we're supporting government customers fighting drug cartels.

02:34And we're seeing quite a lot of demand in Asia-Pacific

02:36where a number of our customers are concerned

02:38about the rise of drones, Chinese drones,

02:41essentially all of China neighbours.

02:43So all of that is combining together

02:45into a very significant wave of interest.

02:47How's commercial demand when it comes to other sectors

02:53other than defence, whether it's infrastructure or airports

02:56and just other areas that you're also working at?

03:00We're seeing increasing amount of demand.

03:02It's a bit slower compared to defence,

03:04but especially airports and data centres,

03:06we expect to be a significant demand driver.

03:10In fact, a little bit earlier this month,

03:12we have unveiled our updated total addressable market estimates

03:15where we believe that Counter-Drone is approximately

03:18U.S. $60 billion total addressable market

03:21and roughly half of that sits in the civilian space.

03:25And in addition to airports and data centres,

03:28you're looking at stadiums, energy infrastructure,

03:31public venues, corporates and others.

03:33So because of that, we have earlier this year unveiled Century Civ,

03:38which is our dedicated offering towards the civilian sector.

03:42And we expect for that to really start driving our revenues

03:45over the next several years.

03:46But as it stands today, defence and intelligence

03:49are the vast majority of our revenue streams.

03:53We've seen, of course, your investments into R&D,

03:56a new facility in Adelaide as well.

03:59When it comes to potential new breakthroughs,

04:01what are you hoping to achieve and what's your competitive edge against rivals?

04:06Counter-Drone is very much a game of cat and mouse

04:09against drone manufacturers themselves.

04:12If you looked at Chinese drone manufacturers,

04:15especially but also Russians and Iranians,

04:17maybe even five years ago,

04:18the game for drone manufacturers was about saying,

04:21how do we make drones that can fly the furthest,

04:23carry the most payload, see the furthest,

04:26do the best sense and avoid?

04:27And that is still the focus, but also increasingly we're seeing focus

04:31for drone manufacturers on how to avoid detection and defeat systems

04:36such as what DroneShield makes.

04:38Over the last 10 years, we have developed a number of technical

04:41and commercial differentiators, which set us apart from our competitors.

04:45And we are the only public-listed counter-drone company in the world.

04:50On the technical differentiators,

04:51we have a highly agile engineering team,

04:54which we believe is the largest in the world at what it does.

04:57And as a result, through the last 10 years of work,

05:00our sensors can detect furthest, defeat furthest,

05:03have most accuracy and so on.

05:05And also we integrate the best-of-breed third-party equipment

05:09for our customers as well.

05:11About five years ago,

05:12we have realized that counter-drone is very much a data game

05:15as increasing amount of drones means

05:18that you really need to move to artificial intelligence

05:21to be able to detect and defeat never-seen-before drones.

05:25But like with any AI,

05:26you really need to have very large, clean, well-tagged data sets.

05:30So we started collecting drone signal data from everywhere around the world.

05:33So we're talking Ukraine, States, South America, Australia, Europe, and so on.

05:38And so then we have data engineering teams

05:40to be able to clean and process the data.

05:43And now the 4,000-odd devices that we have deployed with customer's consent,

05:49a number of them can also send us the data back,

05:51which continues to make our products better

05:54with our quarterly AI-enabled SaaS updates to our customer set.

05:58So these are all of our technical differentiators.

06:00On the commercial front,

06:01we have developed a number of trusted relationships

06:03within customers around the world.

06:05When you're talking about dealing with defense customers,

06:09it's not quite the same as working in the consumer space,

06:11meaning you have customers that share a lot of vulnerable information with you

06:16and you become their trusted vendor.

06:18And once you have that early mover advantage

06:20and you're well-positioned with customers around the world,

06:23you're really well set

06:24and it's pretty hard for somebody to shake you off.

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