DroneShield Limited

Good morning everyone and welcome to DroneShield's first quarter 26 4C results. It's a pleasure to be speaking with you this morning. My name is Angus Bean. I'm the CEO and Managing Director for DroneShield. I've got with me Josh Balot who's our Head of Investor Relations and Strategy and we're pleased to present our results to you this morning. Firstly, many of you have seen the news. Droneshield completed a leadership transition in the last couple of weeks of both our CEO, Oleg Vornik, and our chair. We announced to the market that our chair, after 10 years, Peter James, would be not standing for re-election, and we have had the appointment for election. Our incoming chair, Hamish McLennan, The news of this leadership transition has been received very well and I'd like to thank the whole 500 staff of DroneShield for their support during the last two weeks as well as our investors, various stakeholders and our partners around the world in the support of this transition. We'd also like to invite you to attend or join online our AGM at the end of May and we look forward to having another update of the business at that time. I'd like to also touch on what I've been up to in the first two weeks as CEO of DroneShield. Many of you have seen me in the past over the last 10 years in previous roles as Chief Technology Officer and Chief Product Officer and it's a pleasure and an honour to step into the CEO role. In my first two weeks, it's been about listening. It's been about speaking with our team, understanding what they need, what their challenges are, and making sure that we're all working together. DroneShield is now a sizable global entity, and making sure that the team are moving together is a core part of my role. We've also been speaking to shareholders, understanding their views on the business, learning how we can improve, and really listening to where they believe the business can be taken in the future. And we thank you for all the input from all of your shareholders around the world. And lastly, we've been speaking with our partners who more and more we rely on to provide great commercial and technical opportunities for us around the world. So thank you for all of our partners. As many of you would have seen by now, we released our numbers yesterday and these are outstanding results. This is the second highest quarter in terms of revenue on record for the business and it demonstrates the continued momentum and leadership that DroneShield has in the counter drone market. Already by this early stage in 2026 we have $155 million of committed revenue which is an outstanding result for a business that only a few years ago was doing sub $50 million on an annualised basis. So to be here in April with $155 million revenue committed for the year is an outstanding result. We are seeing, in our opinion, a better ratio between the larger military contract that we at DroneShield have become known for but also an increase in repeat and recurring small orders which is lending itself to allow the business to be much more predictable and allow us to make better decisions in the future. We are just as comfortable executing on these large military contracts as we are with the more sustained revenue streams from both military and the emerging non-military market which by dollar value individually are less but certainly at a much significantly higher volume and that's really good to see. It allows us to make better decisions as a business. You'll also note an increase in our Software as a Service revenue stream for the quarter. One of our objectives, and we'll speak more about this later in the presentation, is to get to the point where we have above 30% recurring revenue as part of our business strategy. This is a great first step in moving in that right direction. In terms of financial discipline, you will also recognise this is our fourth consecutive quarter of positive net operating cash flow. Again, an important milestone for the business as we are proving operating leverage is increasing and our ability to operate the business is improving. In terms of the momentum, I'd like to give a bit more of a history analysis of the numbers. What you can see from the years of 2021 and 2022 is the early adopters, some small trial and test evaluations. of our technology. Through 2023 and 24, we had a significant increase in those revenues. That was primarily through first-time buyers and customers rolling out our products in a minor way. In 2025, We have an outstanding year and this really represented the first time that military is worth buying as part of defence programs of record and part of much larger military programs that take a number of years to come to fruition. 2025 really recognised that for us. As you can see in 2026, the results so far are very positive as both militaries are continuing to buy as part of much larger planned procurement activities and this is where Dry & Shield really sees a lot of our business coming through in the future. We've spoken to some of the company highlights and the financials but it's important to understand the future and also the company's position. Our sales pipeline remains strong at $2.2 billion. This is the same update we provided just over two weeks ago in March, so at the end of March. We have 312 deals in the pipeline, 15 of which have a value over $30 million. So the pipeline remains strong. We do have a number of deals that are outside of these 312 but these are yet to be fully qualified and so these are unweighted and at various stages of development in terms of the sales maturation cycle but 2.2 billion pipeline remains a strong pipeline for the next couple of years. Operationally, we're in a great place. We have over 500 staff now in seven different countries. with a large portion of our capital being invested into research and development which is becoming the norm in the defence and military industry where companies are being asked to self-fund programs and then the output of those programs is being procured at scale by militaries around the world. Our cash balance remains strong, again, above $200 million cash balance, which really gives us the ability to be flexible and jump on opportunities when we see them. We are increasingly seeing a very turbulent and perhaps chaotic environment where the world is moving to a multipolar order and that is causing large tensions around the world. Our two primary markets remain the United States and Europe. The US, for example, we're seeing the confluence of two really significant trends. One is the regulatory environment and the second is the unlocking of significant budgets for defence and non-defence spending. In terms of the regulatory environment, we recently saw the Safe As Skies Act, which unlocked 17,500 state and local law enforcement to actually start going through the process to procure counter drone equipment, which was previously unavailable to them. The programs of record, such as GIAA 401, now are really starting to take place. We have the Department of Homeland Security also allocating significant budgets to counter UAS. A headline for us for this update is the recent receipt of a FIFA World Cup associated order, which is critically important as Droneshield has done a number of headlines, both executive protection and sporting events around the world in the past. But the FIFA World Cup is an important one because it demonstrates again this idea that local law enforcement with the end customer are also starting to adopt counter drone technologies, specifically those that DroneShield offer. This is a very positive sign. Europe and the UK remain a core part of DroneShield's strategy. Many of you are aware we've moved our Chief Commercial Officer, Louis Kamara, and his family to Europe, and so our centre of sales gravity is now in Amsterdam, where we've recently opened our new headquarters. We've also opened up production in Europe as well, and we'll continue to expand that. And that allows us to be compliant with the Readiness 2030, or REARM, Europe plan where we need to be at 65% European industry content to be part of that program. So we are now compliant and we have already started receiving orders through that umbrella. Outside of those two major markets, we still see strong growth in Asia, Latin America and the Middle East. We are continuing to grow our sales and commercial operations in these areas. Australia remains our home and we are really proud as an Australian business. We are part of the flagship LAM156 program on both Line of Effort 2 and Line of Effort 3 and we anticipate to see additional orders from Australia in the months and years to come. In terms of our competitive differentiators, we have both technical and commercial differentiators Our technical team, which I'm incredibly proud of, we have over 350 world-class engineers, developers and designers. We are able to take this technology from the ground up, from the chip all the way through to the end product manufacturing, so we have full in-house capability to provide these world-leading technologies and we are in full control of that manufacturing cycle. Additionally, over the last 10 years, DroneShield has developed significant amounts of data on various types of drones, whether that be radio frequency recordings through to radar data through to acoustic recordings. And so DroneShield holds one of the largest counter-US appropriate datasets in the world, which is a core tool and a core differentiator for us. This is something that is incredibly hard to replicate in a short space of time. Commercially, we are a truly growable company now. You've seen that we've bolstered both our US and our European presence as well as our presence here in Australia. Fundamentally, our 70 distributors or 70 partners around the world remain a core part of the business and that the DroneShield hub and spoke model continues to prove to be effective. In terms of the vision for 2030, this is something that Josh and I will be speaking more and more about over the next few months. It's exciting. We're seeing continued growth of our military market but in addition we are seeing now the green shoots of this commercial or non-military market which we have anticipated for almost a decade. DroneShield is incredibly well positioned as our technologies can be utilised in both military and non-military markets, particularly with the regulatory change we discussed. Droneshield, we remain a flexible organisation in terms of how we approach the market and so we have a multi-channel market approach where we can either be the prime, the sub-prime, the partner or go through a regional distributor or go direct to end users. So Droneshield, we take a multi-channel approach there and it really depends on the environment and the requirements of that location. In terms of the revenue target, we have a Our big goal is to hit a billion dollars annualized revenue with 30% of that as recurring revenue in the next few years. This is a substantial uplift on numbers that were already a four times increase on previous years. But to fuel that, we are seeing strong diversification across our end users, our geographies and our products, both hardware and software. And so we feel that the drone fuel business is in a very strong position in terms of its diversification across all those metrics. You'll also see and you'll hear from us again in the next few months around DroneShield beginning to monetize our whole-of-life cycle solutions. Today, we do some of the harder part, which is new sales and new product development. DroneShield will be getting into additional services, both software and recurring services, to continue to strive towards that billion-dollar annualized revenue and that 30% recurring revenue number. Our global presence, as I mentioned, remains strong with headquarters now in Australia, the United States and Europe, but you'll also see us continue to expand on our regional hubs in Asia, Middle East and Latin America. And finally, regional manufacturing in core markets will be a core part of the strategy over the next few years. I think this slide does a lot of work in terms of explaining how we see the counter UAS ecosystem. DroneShield is very well positioned, providing layers 1 and 2 of the county UAS industry. In most cases, for most customers, the first technology they will look to employ is a radio frequency detection and, if they are able to, defeat solution. This, as many of you know, is DroneShield's bread and butter and has been a core technology that we continue to build on today. This is the most cost-effective and most reliable way to down the most amount of drones or deal with the most amount of drones that we see on the market today. So radio frequency continues to be a core technology being deployed by Tier 1 militaries and security operators around the world. Once the customer buys enough and they're starting to scale up their usage of those RF protection devices, often the next thing they need is a way to orchestrate them together and that's where our DroneSentry C2 comes in. DroneSentry C2 allows an operator to have multiple devices deployed on a Google Maps style interface and they can then operate those devices fully remotely. We also released Drone Century C2 Enterprise at the end of last year that allows customers to also manage multiple sites themselves, so another layer above that Drone Century C2 enterprise. From there, often our customers ask us for additional layers of protection, and that's where we rely on our partner network of radar, optical and various other technologies, where DroneShield provides Layer 3, 4 and 5 solutions as part of that C2 solution. This is a constantly evolving technology field where new technologies or various adaptations of existing technologies is constantly changing and Droneshoe can remain relevant in all of these areas by partnering and through our extremely good test and evaluation team we can find the best sensors and effective technologies around the world, integrate them into our C2 and offer them to our end users. You would have seen recently, this included the recent signing of an MOU with Origin Robotics, an interceptor drone company out of Latvia. Over the last 10 years, DroneShield has developed comprehensive suite of solutions across the three core operational scenarios that we see in CounterDrone. These are dismounted, on the move and fixed site. DriveShield now offers solutions for all of these categories and in addition, late last year, sorry in 2025, we offered our first Century Civ product, a product that was specifically designed for the non-military market. This is something that you'll continue to see from us in the future as we refine our approach to the emerging non-military market. We've talked a little bit about the software as a service, and we'd like to unpack exactly how that works. So we have three layers of software at DroneShield, at the device layer, the site layer, and at the enterprise layer. DroneShield now, again, over the last few years, has developed all these solutions from the ground up ourselves. And we can now successfully apply a software-as-a-service subscription to each of these layers, meaning that customers that are utilizing all three layers have a multi-software SaaS applied to their solution. And if you think this as a close to an antivirus analogy, This is something that our customers are really fond of in terms of they need ways to keep their software updated to the latest software as similar again to antivirus. The longer you go without updating the software, the more likely that the drone technology may have changed and you may miss some significant change. So DroneShield has a strong pull. through its software as service revenue streams, through the need to keep those software up to date on each level of those devices. I'd like to acknowledge our senior leadership team. Again, over the last few years, we've strengthened our leadership team and we now feel very well positioned to continue to refine that and continue to build out the organisation to achieve our significant revenue targets in the future. Lastly, as we mentioned at the top of this presentation, we have announced changes to our Board and our Chairman of 10 Years, Peter James, has decided to retire from the Board and not seek re-election at our next AGM. Hamish McLennan will be appointed as the Chairman following our AGM in May. And for the last point on the board, as we've previously announced, we are reviewing and we have an ongoing process to seek additional board members to continue to grow the experience and also the skill sets that our board can offer the business to support that growth. Thank you for listening to the presentation this morning. I think one of the most important parts of these presentations is to dive into some Q&A and I'll hand over to Josh to start that process and we'll also start taking some questions from the Q&A posted in the Zoom link. So Josh.

Thanks, Angus. And thank you to those investors and issues parties who have submitted questions in advance. That's been very useful. I'll also combine those with some that we've received online and please continue to submit those. One question which has come through has been regarding the global conflict and the escalation of global conflict and the widespread commitments and higher defence spending in the counter drone space and how that's feeding into our revenue pipeline, our potential revenue pipeline. So maybe you want to talk a little bit about that and also the commercial fields that we're now moving towards.

Thanks Josh. That's right. Well firstly the global situation as we mentioned does seem to continue to deteriorate and that puts drone shooters in a very important position as drone technology is one of the core disruptors and is essentially revolutionising the military and security environment. We find ourselves as an Australian business in a strong position to create these solutions and provide them to our end users, our Western allies around the world. Even in the last week, we've seen significant budget allocations from Australia, from the Philippines and from the United States, specifically calling out CannaUS as a core part of their expanded defence budget. Our view is that this is driving the exceptional result that we've announced this morning with $155 million of committed revenue for 2026 at this very early stage and so we'll continue We'll continue to execute well, keeping our heads down and focus on both our product development strategies as well as our commercial strategies to take full advantage of the additional budgets being allocated at a rapid clip.