There is no doubt that DroneShield (DRO asx) has captured the imagination with its drone-busting capabilities amid increasing global conflict. The CEO Oleg Vornik spends a great deal of time talking about geopolitical issues.

What we’re interested in is money. DroneShield is getting its hands on a large amount of shareholders’ money in a very short time. The company has raised close to $250m in the past 18 months and is far from cashflow positive. 

DroneShield shares might have captured the investor zeitgeist, but is there value now that the stock has come off recent highs? Droneshield's share price has had a 52-week high of $2.72 and a low of $0.24. It's currently trading below $1.20.
How does DroneShield detect and destroy?

Drones have become ubiquitous, most notably on the battlefields of Ukraine and the Middle East, but also in smuggling, intelligence gathering and in recreational/nuisance applications.  With every advance in drone technology there needs to be a commensurate improvement in counterdrone technology and this is where DroneShield come in.

Overview: What does DroneShield Ltd do? 

DRO is a tech stock that has drone detection, tracking and defeat capabilities which are needed by military and other government agencies to defend people, equipment and infrastructure.

DRO Analysis

Sounds good? Maybe, but as an investor, it’s what you pay for a stock that determines your return.

What is the market and sales pipeline for DroneShield?

Drones or unmanned aerial vehicles (UAV) pose a number of threats that need to be countered. In a civilian setting they may be used for drug and weapon delivery, notably into prisons, or for invasions of privacy.

Drones flying around airfields pose obvious risks to commercial, passenger, emergency services and other aircraft. In a military setting they are used for spying/surveillance and payload delivery posing a threat to military hardware, personnel and critical civilian infrastructure.

The use of drones has boomed due to their low and falling cost to acquire or build and operate. The asymmetric nature of drone electronic warfare means that very expensive military equipment including tanks, air-defence systems and ships can be threatened with destruction by an enemy with much lower grades of technology and financial resources. Hence there is a booming demand for counter-drone technology.

Counter-drone - Detect and Defeat

There are two aspects to successful counter-drone operations, firstly finding and tracking the drone and then defeating the drone.  Finding it is a complicated business and there are a number of techniques which we outline below:

1.     Radio Frequency – picking up the radio frequency used between the drone and its controller.  Requires being able to filter out the noise from all the other RF transmitting/receiving devices in the environment.  Also requires constantly updating a library of known RF signatures used by drones. Doesn’t emit energy so can’t be detected, has a low false alarm rate.

2.     Radar – motion tracking which can pick up drones that don’t have RF emissions. Can give false alarms from things like birds and struggles with hovering drones. Can be detected as it emits energy.

3.     Cameras – electro-optical, infrared and thermal. Best used to verify, classify and track a target detected by another sensor. Has a short range so not well suited to detection on its own.

4.     Acoustic – compares noise of drone blade or motor to a database of known acoustic signatures. 

Droneshield uses its own Radio Frequency detection and incorporates Radar, Camera and Acoustic capabilities from other providers into its multi-sensor solutions.

 Defeat: Soft Kill and Hard Kill

When it comes to defeat, there are also a number of options which are split into soft kill (taking over control) and hard kill (destroying) categories:

1.     Smart Jamming – radio waves used to force the drone to fly back, hover or land. Is universally effective with 360-degree coverage and effective against swarms.

2.     Spoofing/manipulation – allowing re-routing of the drone. Isn’t effective against all drones, takes time to engage and can only deal with one at a time.

3.     Counterdrone drones – which can be ‘kamikaze or ‘catching’. Can be slow to deploy and won’t work against swarms.

4.     Projectile Fire – using remote weapons systems to shoot down drones.  Drawback is it can’t be used in a civilian environment due to risk of collateral damage.

5.     Direct Energy (laser or microwave) – still in early stages of development.

Droneshield uses the Smart Jamming technique.

The advantages of the system used by Droneshield is that there is no risk of drones or projectiles falling or hitting someone.  The drone when forced to land can be collected and examined. They have a number of systems, some are lightweight enough to be carried by a person, others are for mounting on light vehicles.

Droneshield (DSO.ASX) Listed on the ASX in 2016

Droneshield listed on the ASX in 2016 after the company was founded in 2014 to develop hardware and software for the detection of small UAVs. 

Meaningful revenues started to come through during 2023 and as various pieces of news have come through the stock has enjoyed considerable appreciation and more latterly retracement. 

Product Releases

Over the course of the past 20 months, the company have announced a number of product releases and some important milestones in terms of NATO Stock Number listing and access to procurement agreements.

 In terms of order flow, Droneshield have announced around 8 orders received in the $2-$11m range from various government customers both in Australia, the US and Europe, and one $33m order from a US Government agency.

 Droneshield Raising Capital

To fund the growth Droneshield completed and equity raise at 30c and raised $13.9m in February 2023. It completed anouther capital raising of $115m at 80c in April 2024 and then a further $120m at $1.15 in July 2024. The funds raised have largely been dedicated to inventory build to fulfil current and future orders, as well as to expand engineering and sales capabilities.

Droneshield Investment summary

Please login online or access a free trial now for a detailed investment report on DRO by our analyst team. All the information contained in our research contains the latest market data and a clear buy, sell, hold recommendation.