DroneShield Stock

Good morning, everyone, and welcome to DroneShield's First Half 2026 Results Call. My name is Angus Bean, the CEO of DroneShield. This morning, I have with me Josh Bolot, which is -- who is our Director of Investor Relations and Strategy. It's an absolute pleasure to be speaking with you this morning. I'm really excited to present our first half results. There's plenty to talk about it. So let's just jump in. We're going to cover an overview of the first half, the highlights.

We're going to speak a lot about the growth platform that we are building and provide some sentiment outlook information for our investor community. We will also conduct a Q&A at the end of this presentation. So the first half has been an incredibly transformative time for the business. We have both simultaneously improved our governance systems, uplifted the organization, invested in ERP systems and provided a phenomenal new production facility for our expanded growth.

Meanwhile, we've also achieved record revenues. And so simultaneously, the continued growth of the business in all aspects has been very strong. A number of our core objectives, both the overall revenue growth, but also the recurring nature of that revenue growth has increased substantially. We are now sitting at 9.2% recurring revenue for the first half, and that's almost 3x where we were last year.

Again, it's important to understand that for every device that we sell, there is a hardware cost. But as that builds up, the software is of a recurring nature. And for that recurring revenue number we will continue to build as we have more devices in the field. We have over 4,000 devices now around the world.

What's really exciting and what I'm really proud of the team in the last -- particularly in the last couple of weeks, we have now achieved a committed revenue number of $240 million, and that is up substantially on the Trading Update we released to the market only a couple of weeks ago, which was only at $206 million. So it's been a great couple of weeks for DroneShield, and we'll look to continue that momentum well into the second half.

And I think what is also a great achievement for this organization, we had a record year last year of $216 million. We're now well surpassed that number for committed revenue for 2026. So overall, I'm very pleased with both the continued revenue growth, but also the growth of the organization and building our platform as we move forward into this really significant market opportunity.

One thing I would like to touch on is our gross margin. It was slightly down on where we would like it to be, which has been widely reported at 65%. We feel strongly that we can return to that 65% number through the remainder of the year and moving forward. What that depression in that margin was, was around the product sales mix. So as many of you know, we sell both our products as well as interoperable third-party solutions, which have a lower margin, which we sold a significant amount of in the first half.

Also, due to our ERP implementation and our significant warehouse move, we had a product impairment that we took in the first half, which lowered the overall number in the first half. Again, we feel confident that we can have that number rise in the second half, closer to where we wanted to be in the mid-60s.

The balance sheet remains strong, $180 million cash and term deposits, no debt, and we have invested heavily in long lead items, including things like CPU and chips that we need for our next-generation AI edge deployed sensors. The revenue outlook, I was very pleased to be able to provide a revenue guidance for the first time in the company's history only a couple of weeks ago at $250 million to $270 million.

This represents 15% to 25% increase on that record year last year, and we have now reaffirmed that number. We'll continue to provide updates to the market when we need to, should that change. But right now, we're comfortable with that range. A few comments from myself.

This was certainly an investment-heavy period for us, bringing online our next-generation platforms, improving the governance, controls and systems across the organization. We decided to spend these 6 months, 4.5 of which I was the CEO is required for the ongoing growth of the business. So we've done that now and we'll now look to continue to optimize the business and drive the growth platform forward.

The foundations are very much set not only the systems and processes we've spoken about, but the leadership team and everything that we're doing to make sure that globally, we are scaling the organization. So I feel strongly that we've laid a lot of the great foundations in this first half, and we'll continue to execute in the second half of '26 and well into '27. We're doing all of this because of the opportunity we see in front of us.

The doctrine has very much shifted. Counter-UAS or counter-UxS solutions are now front and center in the media every day. Drone technology is fundamentally reshaping defense and security as we know it. The doctrine has completely shifted. The world understands now that there's no silver bullet to this and only the most competitive solutions will win. Our intention is to make sure DroneShield will always have the most competitive solutions.

What's been really interesting is we have thought about and spoke about the idea that eventually, there will be a market outside of the military. And over the last 10 years, primarily the only major customer base for us has been defense. That changed in this half. We have now seen huge demand and lots of engagement well outside the defense industry from everything from government to security teams, data centers, critical infrastructure providers, correctional facilities and even some use cases that surprised us where drones are causing real issues in the day-to-day industry and people's lives.

And so the threat continues to evolve and continues to expand in the market need. And that's a really exciting thing, specifically for DroneShield, which is one of the only counter-UAS companies that has a true dual-use strategy. And what I mean by that is our technology is as applicable to the military domain as it is to this emerging nonmilitary market, which is really exciting.

One thing that we've struggled with over the last 10 years is the budgets that were assigned to solve the counter-UAS problem. It's been a very nascent industry for a long time. As many of you know, DroneShield was really early one of the original pioneers of this industry. What's exciting to see now is budgets are becoming structural.

We can now have line of sight to where world governments and world militaries as well as large organizations are budgeting for counter-UAS solutions in -- over the next 5 years. So that's giving us greater insight into the pipeline, greater insight into the size and shape of the market moving forward. And this has only again happened in the first half of this year. Let's move through some of the highlights.

So again, revenue up really significantly, 74% on the first half of 2025, which was that record outstanding year for us. We've again, we've beaten those numbers quite convincingly, really proud of the whole team working together to achieve that. Recurring revenue, which provides the sustainability for the business, up significantly, certainly coming from a low base.

But again, something we'll continue to drive forward with a number of devices, but also some product mix changes that we'll make throughout the second half of this year and well into '27. Gross margin, I believe we've touched on. Again, our strategy is set, and we believe that we can return to close to a 65% gross margin moving forward. Absolutely, this was a period of significant investment, and that's what has contributed to the underlying EBITDA stats you see there.

But we feel strongly in the future of this business, and it's up to us to be -- make sure that our solutions are world-leading and absolutely the most competitive they can be. The committed revenue number is really exciting. To be sitting here at the end of August with already $240 million, just slightly over that committed in the books is really, really encouraging.

And again, one thing I would comment here is the market and many of our investors are used to seeing lots of individual contract updates from us that previously were over $5 million. What we're seeing now is a change in the market. And I think this is really important to understand. You're going to probably hear from us less as our announcement threshold is now $20 million.

But as you can see with the committed revenue numbers later in this presentation, the consistency of the repeated nature of the orders that we are receiving from repeat customers as well as new customers just continues to roll in the door week after week. It's really great to see.

And for me, that's a much more sustainable long-term high-growth business. Cash, we absolutely utilized our cash position this half to invest in that working capital, R&D and our team. It's really important we do remain debt-free. We have no debt currently on the books.

I'm going to hand to Josh now, who's going to talk about some of the exciting numbers when it comes to our revenue contribution.

Thanks, Angus. The first half revenue segments really demonstrate that DroneShield is continuing to be more diversified across region, type and segments. Starting with the regions, the callout here are that Europe and the U.K. continues to be our strongest region with 52% of revenue. And this reflects that strong reorder activity and the scope expansions, which have come from existing and new end users.

In the half, we opened our regional headquarters in Amsterdam as well as in-region production, showing our commitment to that important core market. We're also very pleased with the growth coming out of the United States, where this time for 2025, that was 14%. It's now at 17%, and we confirmly see a track for that to be even stronger with the committed revenue we have.

Some of that growth out of the U.S. is coming from the multi-agency procurement mechanisms such as JITAF401, where they recently launched an online ordering portal, and we are one of the first providers in that portal. The diversification sees the balance of our business coming from LatAm, Middle East, North Africa and Asia-Pacific. And we've got really good engagement and promising opportunities across all of these markets and continue to build, particularly with the next-generation product discussions.

Importantly, demand is increasingly global, and we're now operating in well over 40 -- we've got products in well over 40 countries on the edge of 50 as well as representation in 70-plus countries. By revenue type, we are heavily still anchored towards the hardware.

But with subscriptions representing 9% of revenue, up from 5% across all of last year, that's a dramatic shift because it shows that hardware wins the deal, but software provides a long-term value to the end users as they rely on the software upgrades, the AI-enabled part of the product to keep them up to date with the latest in drone threats.

Counter-drone is not a [ static ] solution. We currently have 4,100 software-enabled units, and that will be an important metric to track over time as it has a direct impact on our broader aspirations for recurring revenue to be a major feature in our future revenue. Alongside our existing hardware lineup, the next-generation products will help compound the value as there are more devices in the field.

By segment, military is still the largest contributor. However, to be able to report the non-military segments, which includes commercial activities is already at 15%, and this is from a negligible amount about a year ago. It's a very positive outcome. We are the only scaled operator who can provide products from the battlefield through to the suburbs.

While the headlines and awareness is there in Ukraine and Middle East conflict zones, every day, we're hearing about drone-related issues at airports, critical infrastructure, prisons, public safety venues and other major events, such as our work at the Kansas City Police Department and the FIFA World Cup sites around Kansas City.

I would encourage everyone to look at the case study of this on Page 28 of the pack as this is just one situation where airspace awareness is critical in non-military settings. Turning now to our revenue outlook. As Angus noted, committed revenue is at $240 million, and this includes $126 million of which was delivered in the first half. This slide provides a clear evidence behind our outlook for the $250 million to $270 million of revenue for the year and our ability to reaffirm this guidance.

The growth in committed revenue through the year reflects a solid run rate through repeat reorder and expansion orders from existing end users and this is an important point. DroneShield is not only winning new opportunities, it is seeing customers expand scope as operational needs evolve. We're sometimes asked what proportion of our orders come from existing end users, and that can be a tricky question to answer.

For example, if we're working with a national defense force, is each area of that defense force considered either the same or a unique end user? In our case, we would say that it's an existing end user. While we also know that big headline material contracts get a lot of attention, there's a very clear pattern of healthy and regular reorders that flow through without fanfare, and this is plotted out in this chart here.

With more than 4 months of the year still to run, $240 million is 36% above the prior corresponding period and represents 111% of the total revenue of last year. As we have previously said in notes to the market, some of the orders that continue to build through the balance of this year, particularly some of the more complicated orders, which have interoperable systems with third parties, will take slightly longer to deliver and will more likely start building into committed revenue for 2027.

So what we've provided as a guidance is based on what we can see based on the conversations we're up to and where new conversations commence. It doesn't mean that we won't necessarily secure those in the next few months, but it is possible that those may fill into next year. On that basis, we are already at committed revenue for 2027 and beyond of $43 million. And again, this is consistent with the move from urgent purchases to more programmatic and budgeted counter-drone procurement.

On the revenue growth more generally, over the last 5 years, DroneShield's delivered a cumulative average growth rate of 113% between 2021 and 2025. Now this is clearly from a very low starting base and over a period where awareness and funding for counter-drone capability have accelerated profoundly. However, the observation we would make is that DroneShield has historically invested ahead of this demand.

And there are signs of that in the company's history when there have been more modest periods of growth. Periods of meaningful R&D investment precede revenue step changes. This is a pattern we see is continuing, especially as we bring on board our next-generation products to the market. And that's where we are today. Starting with RfAI-3 and RfRecon, there is a major rollout of our next-generation solutions from now until the end of 2027.

And I know Angus will delve into that more shortly. Finally, the recurring revenue line shows DroneShield's growth is not simply a function of one-off hardware demand. It is being driven by structural market adoption, product evolution, software-enabled AI intelligent devices and an expanding installed base that supports future recurring revenue opportunities. We now -- we also recognize that there's been an increase in the cost base.

H1 2026 was a deliberate investment period as we continue to build the operating platform required to run this business now and well into the future. For context, on this slide, we have shown 4 major expense categories from within our P&L. With each, the black bar represents the 6 months to June 2025. The orange is the growth to the current period with a slightly lighter orange, what we consider to be individually significant items as discussed in the Appendix.

This leads us to the gray bars, which show the 6 months to June 2026, the period we just reported. And within that, the dotted lighter gray section is the comparison to the 6 months to December 2025. The reason is that in some cases, those costs, which we have reported for this half are actually more in line with where they were for the December half that is not -- that has just been completed prior to this one.

In the case of employee benefits, this is a material increase, reflecting the growth in the headcount to 537 employees as at 30 June compared with 332 last June and 482 at the end of last year. This increase reflects sales, technology, operations and corporate support capability as well as recruitment costs and various senior hires. There is no doubt that we have to put more people in this business ahead of this next stage of growth and particularly at more experienced levels.

This organizational maturity is both necessary and deliberate. While we are likely to see selected headcount growth in some areas of the business, we're being far more considered in how and where we add people. For example, we know that additions in our sales functions will be a priority in the near-term.

At the end of last year, in the current period, we saw an increase in our sales and marketing costs ahead of our next-generation product releases. The emphasis in the second half shifts toward more targeted customer acquisition and the channel activation, so we should see a moderation in these costs.

Corporate and professional costs are also increased with added governance, legal and finance and specialist support functions needed for our scale. And again, this is by design and critical as we continue to grow. Finally, business systems costs reflect the implementation of the new ERP and sales systems. These are the lighter gray box -- sorry, the lighter orange box, the $3 million is the implementation cost of those.

And it's very clear that these systems are already providing operational benefits and process benefits across sales, procurement, productions and finance. So on balance, the company has increased operating expenses to support the scale. Much of this is needed, and it is better to have this in place now rather than later. However, equally, the focus has shifted on disciplined management of these costs.

With a healthy delivery of revenue, the operating leverage of that largely relatively fixed cost base will bring profitability back to the bottom line. To drive this point home, operating leverage means that, for example, another $50 million of revenue at a 65% gross margin will bring a faster delivery of that $32.5 million of gross profit to the bottom line quicker. Thanks Angus.

Thanks, Josh. I think that's a great summary of some of the critical investments we made in the first half of this year. Even with those, our cash and term deposits remain strong. We've increased our inventory as many of our investors would know, around the world, hardware chips, memory, software-defined radios are critical line items for many industries and many sectors now.

We've had to strategically invest in those with our supply chain partners. One thing I'm incredibly proud of at DroneShield is that over the last 10 years, we have never missed a delivery. And that's something we'll continue to strive towards and maintain even as the numbers grow in terms of size and complexity. And the way we do this is investing ahead of time, making sure that we have the chips, the memory, and the GPUs and the software-defined radios ready to go to put into production.

We've also slightly increased our research and development team ahead of our next-generation product releases. As has been widely reported, we've also looked at our governance and the maturity of the business. We only have to go back a couple of years. This business was not even inside the ASX 300 and was producing significantly less revenue than it is today.

We have now focused fully on this in the first half, bringing on our new Chair, Hamish McLennan, who we've been working with incredibly closely and Retired Rear Admiral, Lee Goddard has joined the Board recently. This represents a major governance uplift, and we'll continue to do this in the second half of '26. We continue to invest in our people and our systems.

As Josh mentioned, the ERP system as well as the CRM allow us to make better decisions when it comes to inventory planning and capital allocation. And these things, due to the start-up nature of the business for many years were not fully in place, and I'm really pleased to say they are now. We've also been looking at our governance policies and raising our standards across the board in terms of our policies and procedures.

While these are not as exciting as some of the revenue numbers we've spoken about earlier, I think it's just as critical that our investment community understand that this business is maturing at an incredibly rapid pace, again, ahead of this next stage of growth. So let's talk about that growth platform. We've mentioned before that there's no silver bullet for counter-drone, and that is something that we realized many years ago and started building our DroneSentry-C2 ecosystem.

What remains still very much the case is that radio frequency Detection and Defeat technologies remain at the forefront and are often the first products that our end users look to acquire and deploy to counter the drone threats that they have. Why is that? RF Detect & Defeat solutions are arguably the most capable solutions that provide coverage for the most amount of drones at a -- within a product format that is easily deployable, easily trained upon and is incredibly effective as well as cost-effective.

This is not changing. We look at the next generation of drones and swarm technology as well as man-to-machine teaming technologies that are being developed. All of these require radio links. We only have to look at some of our great peers in the ASX who like Elsight and Codan who create some of the radio links that are being used in the next generation of drones to see the significant increase in these radio links. The good news for DroneShield is that's exactly the type of things that we work on and we target.

So as those radio links proliferate, our technology is even more in demand to make sure we can detect and track these types of communications. Our C2 remains a core part of our strategy as we integrate additional Sensors & Effectors in Layers 3, 4 and 5. And this continues to be a really positive strategy, winning some significant contracts such as the JITAF401 contract we announced in the previous period.

We'll continue to work with partners, and you'll see some additional exciting partnership announcements from us in the next several months when it comes to our partnership ecosystem. As many of you know, I have been -- devoted the better part of my working life to the counter-drone mission. Starting very early in this business.

We have tracked this industry day-in, day-out, and it is really encouraging as the organization matures to see those structural -- that this industry becoming much more structural, less one-off and more reliable. The technology we deploy is now in high demand around the world. I'm looking forward to in the second half of this year, completing trips to both Europe and the U.S. as well as core markets such as Asia-Pacific, where we're seeing huge demand and to engage with our channel partners as well as our end customers around the world.

There's a lot to do and many conversations to have in the second half of this year. But it's really exciting to see that the counter-UAS issue is now very much a standard issue for militaries as well as security and law enforcement agencies around the world, and DroneShield is incredibly well-positioned with both our technology as well as our partner network around the world to provide that capability.

I'm incredibly excited about our next-generation platforms. Some of these technologies and solutions, we started talking about over 6 years ago. RfAI-V3 was something that we started working on over 3.5 years ago and has culminated in the launch of RfRecon, which is the first of our true next-generation detection platforms. I still don't think it's fully understood the level of technology and complexity that we've built into this platform.

Most software-defined detection systems are banded, meaning they can scan individual portions of the radio frequency spectrum. The RfRecon can scan from 100 megahertz all the way through to 7.125 gigahertz fully continuously. This is a huge achievement and a core part of our ultra-wideband technology that we've built over the last 3.5 years. Not only that, with the launch of RfAI-V3, which is our next-generation RfAI model, our solutions can detect drones they have never seen before.

And that's really easy to say and almost impossible to do. Only this week, we saw the latest of that model, which has not been released to the market yet, doing some of the other incredible technology aspects, including detecting new emitters and promoting those -- classifying those based on the behavior of the emitter, not just the underlying data that it was seen. This is incredible technology that I'm incredibly proud of DroneShield for pioneering.

So we continue to build on those platforms. The second half of '26 for us is about producing the production and scaling those solutions as well as generating revenue. And we will -- we do look forward to announcing our first sale of next-generation platforms shortly. Again, really excited and lots of great customer conversations happening around those platforms every day. As Josh mentioned earlier, by the end of '27, we expect to have our entire product suite fully refreshed with next-generation hardware built on our ultra-wideband technology underpinned by RfAI-V3 with some of the best hardware we've ever put together.

All of this is supported by our software and our recurring revenue streams. We get asked often about the competitive landscape and what are the moats around the business. I've never been more comfortable with our competitive moats around the business and our position in the competitive landscape. We have -- we would arguably have more hardware devices in the field than almost any other provider in our category with over 6,200 devices around the world.

That's a lot of experience building a lot of hardware at scale, and that really counts when it comes to reliability and performance over time. The hardware that we build is incredibly intricate and complex in nature. And there's a real competitive moat around just building the hardware part of our business. Secondly, the second moat around our business is our AI-driven software.

We have a unique environment of engineering here where we have engineers capable of understanding the radio frequency spectrum, deep software experience as well as some of the leading AI engineers from across Australia. And we also have 10 years of proprietary threat data that all of this is built on. Again, these are not -- this is not data that you can go online and scrape off the web.

This is data that is hard fought and hard earned that we have recorded from around the world over a decade. So that's the second moat around the business. And the last moat that we have is the trust in our brand, the trust in our solutions that are deployed every day in safety and life-critical operations. We now sell to just under 50 countries, and we look forward to hitting that 50 mark hopefully soon. But just under 50 countries, we're deploying our solutions every day around the world. Josh?

Thanks, Angus. We get a lot of questions around the broader thematics across funding and other aspects of the counter-drone industry. It's clear that governments and alliances around the world are increasingly acknowledging the drone threat by unlocking funding, procurement channels and the regulatory gates needed to implement counter-drone measures. In the U.S., which is the world's largest military spending nation, the budgets are getting bigger and bigger.

The call out here, as I mentioned earlier, is the JITAF401 counter-drone marketplace platform. And already there's $900 million committed for 2026 to that platform in terms of their spending allocation. DroneShield was one of the first companies to have the products on the platform, which is an important validation point of the work we've been doing with them over some time. We see procurement portals where end users can fill their cart with direct counter-drone solutions for quick delivery as more evidence of the reorder, up order and expansion order approaches that have been a feature of our committed revenue development over the year.

Again, we would call out the implications of the Safer Skies Act, which opens up the counter-drone access for 17,500 local and state law enforcement agencies with FIFA World Cup 2026 providing a useful operational case study of this. Europe and the U.K. remain highly significant with NATO commitment referencing at USD 40 billion for counter-drone over the next 5 years and the U.K. putting GBP 790 million towards integrated air and drone and missile defense systems.

This region, obviously, is DroneShield's fastest-growing revenue contributor at the moment and remains an area of opportunity. On that, we have previously made mention of a major European opportunity. Today, we are sharing a very disciplined message. It remains the largest program in DroneShield's sales opportunity pipeline. We will refer to this as the COBBS Anduril-Nokia consortium.

Down selection is expected in the second half of this year. But to protect sovereign commercial and competitive sensitivities, we will be making a deliberate decision to reduce the commentary on this terminology, and we will provide the market with appropriate updates when appropriate. In Asia-Pacific, counter-drone capability is increasingly discussed in the context of protecting crowded spaces, vulnerable targets and critical infrastructure.

And in Australia, we've seen approximately $1.5 billion earmarks for counter-drone as well as clearly reported needs based on recent coverage. On the commercial side of the market, I can see questions come through on how big is the commercial side of the market. Our total addressable market reports on that, which are available on our website. I think [ Mark ] put that number at $28 billion.

As we've previously noted, counter-drone is no longer defined to the battlefield -- confined to the battlefield. The numbers on this slide speak for themselves, and it's evident -- it's scarily evident that drone incidents are escalating across public safety and critical infrastructure and commercial settings. The strength is persistent, geographically widespread and relevant to both government and commercial operators.

This is -- this dynamic creates a broadening set of use cases for DroneShield's Detection and Awareness solutions. Importantly, DroneShield, I would say, is arguably possibly the only operator in counter-drone space that can service both military and commercial markets. As regulations funding and real-world case studies developed, our Fielded Systems and Software-enabled devices provide a -- part of a multilayered architecture as we participate in this market.

Thank you, Josh. So what are we doing in the second half? We will deliver on our FY '26 guidance, which we have reaffirmed this morning. We will look to recover that gross margin trajectory through a combination of our new products being sold as well as not needing that one-off stock impairment there. We also look to ship -- sell and ship our first RfRecon devices.

We're really excited about this as DroneShield's next-generation flagship product moving forward. We'll continue to build on the recurring revenue base. And as Josh mentioned before, we are looking to expand our commercial team and really drive that growth engine well into '26 and '27. Some notes again that underpin the thesis behind DroneShield and what we think about often.

This is -- and you've heard us from this morning, this problem is becoming structural. We now have visibility into the budgets. Budgets are now being allocated. Again, this has all happened in the first half of this year, giving us much more confidence that there are numbers behind the demand and where we need to focus our attention.

The committed revenue number, I think, is outstanding for this part of the year to be in August with $240 million committed revenue, and we'll look to continue to aggressively build on that in the second half. We also move to our platform transition.

So moving again to a full product refresh by the end of '27, underpinned by our next-generation technology, some of which the market has seen, some of which we look forward to announcing through that period. The balance sheet remains strong, and I'm excited about the experienced leadership team that we have driving every day to continue to build this company around the world.

With that, we'll end the formal part of this presentation, and we look forward to running through some of the Q&A that we have from our investment community.

Thanks, Angus. I'll moderate the Q&A. And in some cases, I'll answer those and then throw some others to you as well. Taking -- we also received questions in advance. I appreciate those which have been submitted in advance. Maybe starting at a more local level. Is the Australian defense establishment by DroneShield products? Do you think the Australian defense is paying enough attention to both defensive and offensive drone technology?

As an Australian business, we're incredibly proud, and I'm personally incredibly proud to be providing our capability into ADF. This is through the LAND 156 program, which we are part of Line of Effort 2 and Line of Effort 3. So we are continuing that and we've had a lot of engagement with the ADF again in the first half of this year.

We've seen as widely reported in the media, some of the challenges that exist to the ADF in terms of the RAAF Williamtown done incursions. I'm not going to speak too much about that as that is an ongoing operational situation. But certainly, DroneShield, I would say, obviously stands ready, and we will continue working with the ADF on this significant issue.

In terms of what Australia is doing in the drone and counter-drone space, there are significant investments upcoming in the Australian defense budget for both drone and counter-drone technology. And all I would say there is we look forward to working with our partners in the ADF to provide them with technology, but as well as our information and support in any way.

One thing that's not probably known to many of our investors, but we have a capability agreement with the DSTG, so the Scientific arm of Defense, where DroneShield and DSTG have a monthly meeting to discuss the latest intelligence and requirements that we're seeing from around the world from a DroneShield perspective, but also from an Australian perspective through DSTG. So we have deep partnerships into both the commercial, the military and as well as the Scientific arms of the ADF.

Thanks. Moving on to the technology for a second. There are a few questions around counter-drone more generally as well as our solutions. So the questions, I'll summarize as thoughts on drones controlled by cyber or AI-enabled drones or drones which don't see themselves controlled by radio frequency, the use of sound detection for drones. Maybe that's the first part of that, and I'll wait for the second part, but if you want to address those parts of it.

Look, certainly, there is a lot of technologies when it comes to drones and something that we talk about often is that you shouldn't think of the drone as the technology, right? The drone is a platform of many different technologies that can be configured and reconfigured. Many of these technologies are on their own. exponential development curves, creating additional challenges for drones.

Clearly, DroneShield, we have world-leading RF detection technology and RF jamming technology, particularly with the release of our RfAI-V3 engine, which, as I mentioned before, is able to detect drones that is never seen before and promote those into -- based on the behavior of those emitters into a threat profile for our operators is technology that I believe that we are pioneering around the world. So clearly, that's a core part of our technology and our strategy.

But similarly, we have developed and invested heavily in our DroneSentry-C2 platform, which is our Sensor Fusion system. The reality is you need multiple different technologies to detect and deter all the different types of drones that we see now and well into the future. DroneShield, we want to be that integration layer or interoperability layer that allows all those technologies to work together and get the best out of those technologies.

So having one sensor offset the weaknesses and with the strengths of another. This is what our Sensor Fusion technology is designed to do, and I think we're getting more and more traction with that platform over time. So look, there will be different technologies.

And certainly, we've discussed previously, the fiber optic drones we see primarily in the Ukrainian and Russian conflict as one area of technology innovation. And again, our Radar technology, our Sensor Fusion, our Interceptor Drone platforms and our -- and some of the interesting partnerships we'll announce shortly are designed to deal with those types of threats.

But realistically, what we're focused on is building solutions that are easily operated and deployable today around the world, and that's what we are focused on at scaling the business.

I'll give you a bit of reprieve, and I'll take a few questions. So one of the questions which has come in is the current status of the ASIC investigations and when will this investigation be closed? As we've identified the market, we're cooperating fully with the investigation being conducted by ASIC. And it's not clear what action, if any, may result from these investigations.

As it is an ongoing investigation, it will not be appropriate for us to comment further around their time lines, and we'll obviously update the market when there are developments that we can share. So that's as much as we can say on this today. There are questions also regarding a note in the accounts regarding a payment to -- as part of the settlement with a member of the key management personnel.

This matter is a confidential matter. It is a settlement which has been reached where it does not relate to termination, misconduct, proprietary or any other of those sort of nefarious matters. It is a private matter, which we are not able to explore further, but we have acknowledged that in the accounts. It is not a matter of remuneration or employee benefit, and we'll close that matter with that context.

The other questions which arose were a lot of commentary around or questions around the share price. Clearly, we do see the share price. We acknowledge that the share price moves on -- sometimes it can move on no information and sometimes it can move -- it can not move on a lot of information.

Really, what we're trying to do here and show is that we have had to make a number of important decisions over the last 6 months around how we invest in our business in order to support the business for the future of DroneShield. And the future requires us to have a more stabilized base to it across every aspect of it, whether that's in the production through our new production facility, whether it's in our sales functions despite having an Amsterdam office and building up our sales team around the world.

This business has run for over a decade on a very lean structure. And as we see the demand coming from our next-generation products, as we see the demand coming from the threat of drones, this is a business that has a very promising future, but sometimes we do need to reinvest in the base of it in order to support that growth. So we understand that the share price has caused frustration to people.

And as a shareholder myself, causes a frustration to me. We obviously are building a long-term story here, and this does sometimes require a little bit of investment in that period. One of the other conversations is around the impairments and around the -- we have previously talked about impairments around the inventory earlier in the year.

This was -- that was in relation to a specific -- large amount of that was in relation to a specific product, which we identified back in, I think it was February. This impairment that we've talked about for this half is more around as we open that new production facility, moved the ERP system, identified items that, frankly, when you move out sometimes, you sometimes realize that actually it's not worth moving some of the stuff. It's raw materials.

It's not -- in this case here, for the 6 months we just reported, it's raw materials. It's not finished product. And we really do hope that it's not a recurring feature, which is why we see the confidence in being able to rebuild the gross margin back towards that 65%.

So that covers that one. Angus, I'm going to bring something to your attention regarding Ukraine, and this has come up a lot. One is how do we -- do we sell to Ukraine? How do we get products sold to Ukraine? And what evidence are we seeing out of that market?

Sure. So Ukraine continues to be a core focus for us from an intelligence perspective on the nature of drone warfare. I would argue that the best drone operators in the world are the Ukrainians and secondly, only by the Russians. Interestingly enough, I would say the third best in the world, some of the drug cartels that exist in South America. They are utilizing drone technology and some of the tactics and operations that are being refined in the Ukrainian-Russian conflict.

So it definitely underpins that this is a global problem that is existing. Ukraine represents, I would say, less than 10% of our revenue, but we do engage with that market specifically for the reason that it is the most real world and probably the most advanced drone warfare that it exists. We do have an in-country partner. We do not have people in the ground ourselves.

We do have a very close in-country partner who is with us recently when we opened up our Amsterdam office. So we do have -- and they provide all the servicing of the thousands of devices over the years that we have across Ukraine. So still very much engaged in that market, probably less than 10% of our revenue at the moment, but a critical area of focus from us from an intelligence and as well as just supporting the people of Ukraine.

While we're in sort of that broader part of the world, there's some questions received regarding the European opportunity, which we talked about. One was what does down selection mean and sort of the timing beyond that. And yes, so yes, if we can talk a little bit more about that opportunity.

Sure. So I think I'll add the color to that at a macro level. Europe is going through a very significant rearmament phase. It's industrial base as well as the organizations that are there, I would say, have been underinvested in for many decades. And it's exciting to see the different -- various European nations rearming.

But for us as an Australian business, also outreaching to people like DroneShield to help them with that technological uplift and that rearmament of their protection and defensive technologies. So this is the macro environment for Europe for us. And as Josh highlighted with our revenue contribution continues to drive a lot of the growth that we see, and we're very grateful and thankful to the various European military as well as government agencies around the world who have chosen DroneShield to be their counter-drone partner.

That specific opportunity is at one of the programs under the ReArm 2030 program that is ongoing with significant funding attached to it, a very large portion of that funding for that individual European nation. The down selection process, as we've touched on, DroneShield has teamed up with Anduril, COBBS and Nokia in a consortium to go after and bid for that significant, significant opportunity.

We feel that those 2 partners, both particularly, obviously, our relationship with COBBS is incredibly strong. But to be partnered there with Anduril and Nokia, 2 great technology companies with similar like-minded mindsets when it comes to these issues is a great opportunity. And I was pleased to join Anduril and Nokia in the first half of this year to open up the COBBS Battle Lab facility in line with our tender process and our down selection opportunity for this opportunity.

Down selection for us would be essentially reaffirming that our consortium will be one of the smaller group that will pass through that gate and then have the opportunity to fully engage with the Department of Defense of that country and go on to tender for that opportunity. So it remains a very significant opportunity, a lot of funding attached to it.

But again, I would like to state that this business is very global, very diversified by product, region and opportunity and now by segment as well with the non-military market very quickly creeping up in terms of the revenue contribution. So it's not live or die on one opportunity, certainly not anymore.

But there's no question that we are putting everything we can behind to be successful in this down selection process. Again, we will -- we are expecting that down selection process to be published in the second half of this year, and we will update the market when we hear that.

A couple of questions about RfRecon. I'm going to merge them together. So one is talking about the actual technology, the hard-to-replicate aspects of it. So what actually makes it special in the IP or the moat around that. And I think more commercially moving to -- we've given illusions to strong interest from end users around RfRecon.

That's off the back of some of our prelaunch work with those end users over a number of periods. What needs to happen for those to convert into meaningful orders and the timing around that? So one is the technology and the next part is the commercialization of [indiscernible].

Thanks, Josh. So RfRecon is a platform that we're incredibly proud of. What makes it hard to build? Well, there's a number of factors. One of them is we decided about 3 years ago that we were going to build the next-generation platforms on a specific chipset that was not even released to the market yet.

So we essentially worked very closely with that chip designer, chip manufacturer to line up this next-generation product essentially as the product -- as that chip was going to be made available to the global market. So DroneShield was one of the first to receive that specific software-defined radio and we were able to launch our platform essentially in line with those chips being available to the market, which puts us at a real competitive edge and again, took a lot of planning to execute on.

The hardware itself is incredibly complex. I've spoken before about our ultra-wideband technology that we've developed. This, again, represents years of research and development, being able to scan the multitudes of frequencies that we now are able to and I believe will put us in a class of our own when it comes to these next-generation solutions.

In terms of converting those purchases, historically, we would often say we would release a product, and it would be somewhere between 12 and 18 months before we would see the first sales of that product due to things like the relatively slow nature of military procurement programs. What we are seeing is that those structural changes flow through.

And thankfully, for our investment community, we're not anticipating having to wait 12 to 18 months for the first sales. We do anticipate to make our first sales in the second half of '26 and build on those sales through '27 as our new flagship products. So I think we'll continue to update the market as we progress with that product.

And I would say that it has been in the hands of some of our core end users, as you can imagine, across Europe and the United States. Some of those core end users who we have a very close relationship have had early access to the product and have had -- it has already been deployed at a major international defense exercise.

Again, there's a lot of secrecy around that. But certainly, our campaign has been deployed by one of our customers who's been working with us actually on what their requirements were for that platform. So really excited about that, and we'll continue to update the market as we need to.

Thanks. A couple of other questions moving to financial matters. So the -- there's a question around further headcount increase in the second half of this year. So as I said, as at 30 June, we're around 530-odd, 537-odd people. And we would see that there may be a modest growth in that. I think it's less around targeting what our headcount growth number is, but the composition of that growth.

And I think what we've said as part of our broader commentary is that we will add people where we need to in certain aspects of the business, but we look very carefully about adding for the sake of it. And so there's always a natural attrition in the business, any business of the size, you can expect that there will be a flow of arrivals and departures. But I think our net headcount position, I can't see it going significantly more than where we are.

And certainly, that's not the plan. It's more where those bodies are and where those people are. And I think it's going to be sales and getting the commercial engine going, as Angus talked about, is a priority for this next period. Also around the cost base, we've previously discussed on calls around our steady state normalized cost base between gross profit and underlying EBITDA, it's sitting at around about $170 million. I think we're very comfortable based on what we have seen to date, notwithstanding the numbers that we've got in the half -- in the first half to say that, that number -- we're not changing our view around that number.

So a steady state $170 million of OpEx between gross margin and underlying EBITDA remains a number. I think the other question which we get, and this is asked a few different ways. So apologies if your specific question isn't answered directly, but it is around profitability and obviously, cash flow and then leading to dividends. So our near-term priority is to invest in growth production capacity, product development systems and people, so we can capture that rapidly growing global market opportunity.

We do understand the desire for people to get -- for us to return to operating profitability, and that's certainly a near-term goal for us as well. That being said, we do need to invest in product and tech R&D, and that means that profitability may not necessarily allow for cash flow to use for dividends.

So our future dividend policy is obviously a matter for the Board and will depend on the sustainable profitability, but the cash requirements and the best use of cash in the immediate term is around growing the business, particularly in the areas of inventory and research and development as we get these products to market. So at the moment, there is no foreseeable dividend plan based on the current results. The other part of it is around the working capital investment.

And as we talked about, the ERP implementation has been a game changer internally. And anecdotally, the calls and the conversations that are going on in this business provide a level of maturity that possibly it's never had the scale to warrant it, but it's actually never had the opportunity to need it.

And that means that when there are calls between sales and procurement and production and financing and logistics, it means that everybody is on the same page. And that ERP system is no longer just talking about what do we need to deliver next week or next month or next quarter. It's actually what are we thinking about in 12 months' time.

So we've now got a product road map, which shows us what products we're bringing to market over the next 12-plus months. Where the demand is coming from based on our sales pipeline, which, again, we've had questions, why are we talking sales pipeline? Where is the big multibillion dollar number? Big multibillion-dollar number still exists within the business, but it is an internal tool for us to manage that business with our team.

And the final piece of it is, well, what products do we need. And these are long lead time items we keep compete in the global world for some of these items. And so as Angus talked about, some of the memory and chip and the componentry that we need for the next generation of products, we're buying today, not based on what we need for next month, but really what we need well into the next year.

And we often hear other companies in our broader industry talk about these issues, and they're on exactly the same pages as what we're doing. So we're very comfortable with what we're doing there. I might just -- I know you get excited. There's a really broad question, but what do you see as the trends in counter-drone over the next 5 years?

I've got to be careful here. I keep it too long. Look, counter-drone and drone technology has, yes, very much become my life and my focus and the trends, one thing I'm incredibly proud of for DroneShield is we have accurately predicted, I would say, 2 or 3 of the major pivots in the technology. We've accurately predicted a lot of where this market would go, and we did that many years before essentially the industry existed.

So the predictions I would give to this audience for the next few years will be an increase in software-defined technologies. And again, this is being pioneered by some of our colleagues on the ASX like Codan with their BTC department. So software-defined radio technology, being able to change and manipulate those signals on -- essentially live on the fly.

And that's why we're building the RfAI-V3 technology to make sure that we can detect and capture those signals even as they are being manipulated and changed. Also an increase in autonomy. We are starting to see that across the board. But a lot of the time, you will still require a radio link or some backhaul for things like surveillance as well as intelligence capture and delivery.

So autonomy is certainly coming into the space, and you look -- you will see us continue to pivot our technologies towards being able to deal with those threats. Again, really challenging technological threat, but we feel very uniquely equipped to go after some of these new challenges in the future. And look, lastly, I would say, just increased proliferation.

Essentially, if we wanted to get some really macro, the drone technology, uncrewed systems is essentially eating away almost all parts of the traditional defense and security ecosystems. It is far more capable -- drones are far more capable, far cheap, more cost effective and as well as scalable than deploying many of the traditional military platforms we see around the world today.

One of the things I do feel that is concerning around this is it is becoming significantly cheaper to wage conflict due to the technological change. And not only wage conflict, but certainly disrupt major parts of a country's economic platform, disrupt critical infrastructure, disrupt the economic nature, and this is something we were talking about for those of you who have seen my seminar on the Weapons of Mass Disruption Technology.

So yes, this trend is going to increase as the world becomes unfortunately, most likely more geopolitically unstable and drones more than likely will be the core platform that instability will be proliferated through.

So again, while that's a fairly dark outlook on the nature of the world, that is exactly why we're coming in here every day, and we work as hard as we do to build the next-generation technologies to make sure that Australia as the U.S., Europe and its allies have the greatest technology to defend ourselves from this increasing threat.

Great. There was a question regarding Director Ownership. And obviously, the Directors, while they're not on this line, will be aware of the contents of it. It is a matter which is under discussion by the Directors. They are aware that they are subject to a minimum shareholding policy. And -- but they're also -- and that policy is on our website available for you all to see.

There is also a matter that they are from time to time, subject to blackout periods and also certain restrictions which may arise where they're not able to trade as readily. So it is a matter which we are on notice about and the Directors are on notice about and that they are aware of that. Question regarding -- sorry, just quickly run through a few more there.

There's a question regarding the efficacy and the feedback from FIFA World Cup and how that performed. We have provided good detail around that in the presentation. And I think more generally, the FIFA World Cup opportunity is a test case actually not just of the use of live events, but it's actually a broader test case.

We referred to Safer Skies Act. So the Kansas City opportunity and as other World Cup sites through the U.S. demonstrated, that was only available because of Safer Skies Act, which put the power more into the hands of the local and state law enforcement. That means that those 17,500 local -- state and local law enforcement agencies need to be trained by the FBI on counter-drone measures, and they need to go through an accreditation process around that.

There's a facility where our products are there for people to learn on, and that's a very important part of this. And so the headlines of FIFA obviously, are very exciting for multiple reasons. But it's not like the equipment gets tapped up and goes away into a cupboard and it doesn't get used again. That is an ongoing contract with Kansas City Police Department, where they will continue to have that -- those solutions available to them in the field.

And really, the case study is much for -- obviously, for this community, but it's also actually for our end users in that market to understand what can be done. Often, it's not actually necessarily about bringing the drone down. That may be a requirement, but it's actually a situational awareness that it brings.

So taking that situation aside, we're hearing the situations, for example, in bushfire zones where innocent drones are out there to see what's going on and for locals to see what's going on with the bushfire. Now unfortunately, those drones can actually get in the way of the first responders and the fire services who are trying to conduct operations in that field.

So I think what we're trying to explain is that there are a multitude of case studies, which is part of why that commercial part of the market is really going to be a very important part of that future revenue. There's a question regarding impediments to being an Australian HQ company. Well, I think we've managed to do pretty well growing to where we are today from our Sydney base.

But importantly, using our partner network and using our reseller network around the world to a very good effect. We've got a great team of tech and R&D and engineers in this office. And it's really useful to have them centralized in one place. I think from a customer perspective, this is a global business.

Like many businesses, which emanate from Australia, if they were to rely on the Australian market alone, they will be very strong businesses, but not necessarily reach the scale of the potential scale.

And so with the benefit of being Australian-based, we can sell our products to pretty much any Western allied or Western aligned country that provides us representation in over 70 countries, products in almost 50 countries very soon. And so at the moment, we're not seeing that as a drag in our business. I don't know, Angus, if you want to talk about that?

Yes. Look, I think there's also some real competitive advantages as well. As Josh mentioned, Australia is a very stable, well-regulated country that provides a great opportunity for engineering, development, production and has got enough high skilled labor to do what we need to do. But also on the export side, probably 96%, I would say, by the end of the year, export business, as Josh mentioned, very much global business.

We have some advantages. So in the U.S., for example, many people don't know this, but Australia is actually exempt from the Made in America Act because of our involvement in the Middle East during the 2000s. And so we -- as a business, an Australian business, we actually -- exempt from the Made in America Act. And therefore, DroneShield is a much easier pathway to provide those technology and those products into our U.S. allies.

When we move across to Europe, Australia is incredibly well liked and well respected on the global stage, and we're seeing that with close partnerships with Belgium, Dutch governments now really supporting the collaboration, particularly, and we continue to expand our European footprint across through to Poland as well as up into Scandinavia, where Australia is very well-respected.

So I think Australia is a phenomenal place to build a business. I think we've done -- we're really proud. And we had a conversation only yesterday, which made me reflect that there's a number of businesses, I would say, even potentially dozens of businesses who are now attempting to build defense technology or deep tech companies in this country because they saw that DroneShield did it over the last decade.

So that's something that I'm really proud of, and we'll look to continue to work with our different companies across Australia. Also on the manufacturing side, I think it's important to touch on, we're incredibly proud. One of our products, the RfPatrol for the production line we run here has an 85% Australian industry content rating. That's an incredibly high amount for a defense manufactured good.

Just while you mentioned manufacturing, there's a question regarding -- we've previously talked about we've now got European manufacturing capability, a question about the U.S. market. At the moment, I think we're working on the basis that we can certainly procure more items and more componentry towards that.

That's right. So we do have our European production line up and running now, and they've successfully produced their first several hundred units in this half. Additionally, if we look across in the U.S., we've expanded our facility in the U.S., allowing us to do additional quality as well as some of the kitting and support functions that is required in the U.S.

So we'll continue to grow that that part of the assembly and supply chain in the U.S. to make our operations more efficient in the future. So that's something we've talked about before, and we'll look to continue to build on as our U.S. team grow their revenues.

Okay. A couple of quick rapid fire ones to me. One is, is the ERP system live or are there more investments needed to realize the go live? It is live. There are some minor improvements that we're making, but the substantial cost of those has been reported in the first half. Is there a share buyback for management proposed anytime soon?

Again, as commented, the near-term is to use cash to help grow the business across the areas we've talked about. More a question around how is DroneShield actually averting the drone after detecting it and it's more on the defeat capability that might be for one of our shareholders who's newer to the register. Maybe if you just want to talk through the aspects of the 2 aspects of what we're doing with our product.

So the product strategy has been something that we've refined over many years. Where we are now in terms of Detection and Defeat, I believe the question is. So where we are now, we've -- maybe obvious to many of you, we've started with our next-generation product launches. We've started with our next-generation detection solution.

That solution has ultra-wideband technology, direction finding and underpinned by our RfAI-V3 platform. That is a very -- let's say, that's a very strategic product, and you will see additional products from us in the future on the defeat side towards the end of this year and going into 2027. That is designed again to be an ecosystem play for us to work with the other solutions that we're bringing to market.

So there's a lot of interoperability strategy behind our next-generation platforms, and there's a lot of -- what will become more obvious as we release those platforms, the sort of the digital puzzle that we're putting together over the next, let's say, 18 to 12-plus months will become more obvious. So yes, we do expect to release new Defeat platforms as well as I mentioned, a new technology platform in the next 12-plus months.

A question actually, I think I'll take the question as is, but I'll actually expand on it myself, which is can DroneShield's technology be applied against ballistic missiles as well as drones. Obviously, that's maybe a bit farfetched for what we can do. But I think maybe if you want to talk about how our products -- where we draw the line or where the line is at the moment.

Absolutely. So DroneShield, we've, again, been very strategic in focusing on what we're good at, which is everything from the really small FPV drones. These are the ultrafast 100 to 200 kilometers an hour first person small drones that has been widely reported are actually now the leading casualty causer across both the Russian and Ukrainian size. These are the things that are doing a lot of damage to inventory on the ground.

So we focus on those threats. We focus on some of the larger quadcopter and hexacopter platforms that exist out there that are increasing use across military and security operations. And lastly, we focus on some of the smaller fixed wing sort of 1.25-meter wingspan fixed wing drones that exist. At some point, and I think we've discussed this before, at some point, the drone is moving so quickly and at such a technology level, it is more like a missile than a drone.

And so we draw the line of the platforms that we detect. And I would give the analogy of there's a reason why you have a rifle and a pistol side arm, they are for 2 very different missions.

So the technology we are building for is less applicable for those larger jet-powered drones that we see emerging, but really focused on a lot of the use cases that we've talked about this morning, whereas the technologies that are being built up for those larger jet-powered drones have no effect and are completely ineffective on these more smaller, agile and very concerning drones as well.

So yes, we really focused on everything from the very small FPV drone through to about 1.25 meter wingspan fixed-wing drone, and that's our area of expertise. And often, we see our technology being deployed alongside the larger -- essentially what is [ anti-aer ] technology.

Question about IP protection and have we -- what IP protection do we have and more generally, our security protocols may be?

Certainly. So on the IP protection side, we don't patent fundamentally, in the defense and security industry, patenting how your technology works is not a good idea. So we don't -- we actively do not patent technology. If you do see patents from us, almost guarantee is not something that we value highly.

So there's -- that's how we think about that. So everything is essentially a trade secret within the organization. From that perspective, there are -- it's a very large organization now and only some individuals have access to certain amounts of IP, and we make sure that there's some walls between the organization when it comes to IP.

Additionally, I think the second half of the question was around security, yes. So we are a DISP-certified organization. In the first half of this year, we actually had our DISP Security Ratings raised and were accredited to a higher DISP security rating, which is phenomenally good.

And we do have secure facilities in-house now here at DroneShield. So we have a great [indiscernible] and a great security team. Again, we'll look to continue to invest in these types of security systems and people and processes as we've done in the first half in the future, but a lot of that now very much in place.

We are getting sort of the tail end of the questions. And if your question hasn't been addressed directly, I think in some cases, we've actually covered in other answers. I'm happy to receive some of those offline after the call as well. But a couple of questions regarding the Middle East and Latin America about sort of the budgets and the spending which are coming from those nations.

As we said, Latin America, Middle East represented and others represented 22% of revenue for the first half, and that's up from about 15% in FY '25. I think the other thing we'd say is that there are sometimes orders that the Middle East is obviously -- we deliver product to an end user. And under our sale requirements, we need to know who that end user is.

But we don't know where that products may end up. And what do we mean by that? In the case of the United States, it may be that product or other countries, they have bases in alternative locations. So we can't talk broadly, but in essence, we -- our product is used on a global basis.

I think that is probably the vast majority of the questions that we can address here. There are a few other questions where people are asking about specific comments around other companies or around share price movements or on various other forums and probably not the channel to talk about that here. Angus, are there any other sort of closing remarks you want to talk about?

Look, I'd like to thank everyone for joining this morning. I'm 4.5 months into my CEO tenure here at DroneShield. It's such an honor to represent the close to 550 people that we have in the organization.

It's a phenomenally great business, great team, and I'm probably more excited now than I was 4.5 months ago based on some of the pipeline and also the delivery of our next-generation platform, which is looking really good.

So really happy with where we are as a business. Plenty to do, plenty of hard work ahead of us, but we'll continue to execute as we have been. And I'd like to thank everyone for their continued support, and we appreciate it very much, and we'll talk to you soon.

Good morning, everyone. I'm Melanie DroneShield's Chief of Staff, here with Angus Bean, our CEO. Welcome to DroneShield's Investor Webinar for the launch of RfRecon. This is a flagship addition to our next generation of counter-drone solutions.

Thanks for joining us at short notice. We wanted our investors to be among the first to hear about this important milestone in our product and solutions road map. One housekeeping point before we get into the details. Today's webinar is a short form session focused specifically on the RfRecon launch.

DroneShield's interim results for the period ended 30 June 2026 are scheduled for release in a few weeks' time, and that will provide a broader opportunity to update investors in the company about operational and strategic progress. We will host a separate investor call at that time, which will include live Q&A, so we won't be taking any questions today.

Just before we begin, please take a moment to read the important notices and disclaimer on this slide. Today's presentation may contain forward-looking statements, which involve inherent risks and uncertainties and should be read alongside our continuous disclosure announcements lodged with the ASX. This presentation is for information purposes only and does not constitute investment advice.

With that, let's talk about why we built RfRecon. Over to Angus.

Thanks, Mel, and great to have you with me this morning. Thanks, everyone, for joining, and good to be speaking to you again. If we can just go to the next slide, please. So we're really excited about RfRecon. This is a product that we have been thinking about and architecting now for several years, and it is such a credit to the team and the whole organization that today, we are able to launch this product. And as Mel mentioned, we wanted our investment community to be one of the first to receive an update on the progress that we've made at the organization.

So what I would like to start off with is updating everyone on the threat environment and the threat environment is changing. It is very clear that drones and uncrewed systems are operating well outside traditional allocated frequency bands, things like the ISM bands. Increasingly, we're seeing software-defined radio technology develop at an exponential pace, leading to additional challenges in terms of radio frequency detection, tracking and mitigation. Not only this, we're seeing a significant increase in the number of complex signals that are existing in these environments and the complexity of those environments is increasing.

If we take our recent deployments into the FIFA World Cup, for example, some of the most complicated and complex radio frequency, but also operational environment that the company has experienced. It's really critical to understand that radio frequency detection is a core layer of counter-drone protection. And this is not changing. This is not going away, and the market as a whole is increasing substantially. Swarming, teaming, these types of technologies is where the future of drone technology is going. And all of those are fundamentally underpinned by the use of radio links.

So radio frequency remains a core part of what we would describe and what we have been describing over the last couple of years as a layered counter-drone defensive solution. It's also important to understand that radio frequency detection and mitigation in a lot of scenarios is the only practical solution to be deployed. So we see this, again, not only in the military context, but certainly in the emerging commercial context as well.

As I started off with, we have worked tirelessly over the last 4 years to develop this platform. I still remember the original whiteboard session that I had with the engineering team where we sat down, we looked at where the technologies were going and the result today -- sorry, today is the result of those original sessions we had almost 4 years ago. Those operational challenges, I'm very pleased to say this product was, with great foresight built to close the gap. And it should be noted, as we have spoken previously in our investment community, this is the first of our next-generation platforms. So you'll see -- you'll continue to see additional solutions from us throughout '26 and through '27.

We go to the next slide that we got. Before we deep dive into the product itself, I think it's really important to understand the technology layer, okay?

So we recently, in the last 2 weeks, announced the arrival of our third-generation RfAI model. RfAI is something that we have been developing since the early days of the company where we started off with a really simple correlation RF detection mechanism. We then translated that, started to use some really basic machine learning technology back in the 2016, 2017 and beyond.

And over the years, we've refined that into RfAI, Gen 2, where we were able to expose that model to massive amounts of data and get a really phenomenal RF detection and classification engine. In the last 2 weeks, we announced RfAI Gen 3 and this detection engine and classification and tracking solution underpins a lot of the next-generation platforms you'll see from us in the future.

So what is the big leap forward here? And RfAI V3 is really about building a model that is far more about RF intelligence than it is about purely RF detection. It's about building a machine learning model that understands the principles of RF and understand its environment and can learn over time. It's about being able to detect signals, record and then eventually classify those signals on the device over time. And we have a really significant R&D and technology road map built on RfAI V3, but also our next-generation hardware platforms.

This is really a new chapter for DroneShield technology, and we'll continue to refine that as we roll out our quarterly Software-as-a-Service updates. So not only do we have a technology road map, but we also have the commercial pathway to make sure that we are funding that research and development.

So let's talk about the solution. DroneShield, we are really well known for our hardware and mission-ready solutions. As many of you know, we have over 5,500 devices now deployed all around the world, and our hardware is one of the things we constantly get great reviews and compliments on from end customers. And this product, I would say to you, will be no different. As you can see, the product in front of us this morning, really, this product is about understanding the whole spectrum, and we'll deep dive into some of those specs in a second. What's really important for me, though, is that this is not a specialized electronic warfare officer only tool. This is a product that can be used from everyone from the local security guard all the way through to those special forces operators. This is a product that's really easy to use and provides great intelligence to the operator and does not require a 4-year degree in electronic warfare.

We have massively expanded the hardware solution that we've built before right down to the chip layer where we are using the latest of our partners' chip design and software-defined radio technology. We've done things like build direction finding into the hardware from the day one. We have an in-built GNSS positioner so that the product can be set up and deployed for long periods of time and know where it is and also support things like On-the-Move vehicle convoy protection. We have ultra-wideband technology built into this product like we've never seen before.

As well as a lot of situational awareness hardware, things like WiFi and Bluetooth, ADS-B, AIS, all built into the hardware of the design from day one. And I'd like to congratulate and thank the entire DroneShield R&D team with over 350 engineers, developers and designers. Many of those have touched this product over the last few years, and I would like to thank them for all their efforts bringing this product to market.

So what is so special about the RfRecon? And you'll see the numbers on the screen there. We are talking about ultra-wideband technology. We are talking about 100 megahertz all the way, fully continuous through to 7.125 gigahertz, that is a vast amount of the RF spectrum that this product is able to do. We are not talking about individual slivers of the RF spectrum between that. We're talking about the full frequency band coverage that this product will be able to be tuned towards and detect threats within.

This product is ready to deploy from day one. The product itself has been designed for military standards and will receive the certifications for military standards that are required by many of our end users and is fully interoperable, again, day one with a lot of the open standards that military and security organizations use around the world for things like data transfer and security.

Just touching on security. Again, something we've doubled down our efforts on. We have a great security team now who have been involved on the whole journey as we brought this product to market. So we have things like full Zeroisation of the hardware technology as well as the most advanced hardware encryption built into the device. This product specifically is designed to work in a layered solution, as we mentioned.

So it can work with things like RF jammers as well as the cyber solutions as well as potentially a hard kill solution as well. But also they -- this solution can be networked together. So you can have a number of these solutions in the field all providing direction finding and can do things like tracking in -- with multiple devices.

One thing that we are really focused on and you'll continue to hear from us at DroneShield about is our understanding of multi-mission. The reality is the products that we develop need to support more than one operational scenario in the future. And so we're seeing a blend of the three traditional scenarios we have built product for being dismounted, on the move and fixed site. And this product specifically and quite amazingly can translate all the way through those core mission scenarios in one product. So we really understand the multi-mission aspects of this product.

And as you will also see in the months to come, we will release a number of accessory kits that will make each of those missions even more capable, again, using this base hardware that we're developing and launching today. But not only are we multi-mission, the threat is multi-mission. So in this product design, we have also considered, and this is the first product we've really spent a lot of time considering how to counter not just uncrewed aerial vehicles, but uncrewed land and surface vehicles as well, but including things like AIS tracking directly into the device for the maritime environment was critical.

Again, this product will be able to be utilized from everything, from a critical infrastructure supplier all the way through to our mostly special forces operators around the world. In the dismounted format, it becomes fully integrated with things like ATAK, which is the Android tactical Awareness Kit so that the dismounted operator can see where they are on the map, see the lines of bearing to the potential threats and track themselves and the target in real time.

Vehicle, critical component for us and a number of our most recent sales, we've seen a really significant uptick in the Vehicle On-the-Move, convoy protection and Littoral interest from customers. And so this product, again, fits really nicely into that product category as well. Rapidly deployable. This product is ready in minutes. There are no complex fasteners or screws that need to be -- or could be lost. The whole product simply clicks together and is ready and operational in just a few minutes.

And fixed site. So we're seeing, again, an increase in base protection, long-term protection, data centers, a lot of interest there. And so this product is very applicable to those longer-term fixed site applications as well. So really excited to have a product that can translate either all the way through or to be sold into any of those channels.

We have started through a pretty -- pretty interesting process. We have started rolling this product out for some field trials with some of our key end users. So far, the feedback has been really encouraging, and it's great to see the engagement that we're having with some of our Tier 1 operators around the world.

In terms of the core messages for our investment community, we -- again, we have stayed with our product positioning. We want to position product at the low end of the high end, meaning the product is a very, very capable high-end solution that can be sold to Tier 1 operators, but it's not so exquisite or not so expensive that it can't be operated and rolled out at scale. And so that's where we've targeted the price point and the positioning for this product. We'll also be increasing the percentage of recurring revenue based on this product.

So traditionally, DroneShield has offered a SaaS product that supports the product over the next few years of around 10%. We'll be increasing that to 15% moving forward with this product. The first year, it should be noted, is included in the price of the hardware. As I mentioned, the feedback has been encouraging. We have a clear commercial pathway now for this product as well as several years of R&D technology road map well out ahead of us that we will continue to build on this hardware platform into the future.

It's early days with those end users, we have -- we will have a production batch available towards the end of the year, but there is potential for revenue to be -- to show up in the second half of '26. And we will continue to provide updates to the market as and when we need to. So that's it from my side. I thank everyone for joining this morning. It's been great, and we're really excited about RfRecon, again, the first of our next-generation platforms to hit the market.

Back to you, Mel.

Thank you, Angus. Thanks, everybody, for joining today's session. As you just heard, RfRecon represents the next chapter of DroneShield's RF sensing capability. It's built on over a decade of sustained investment for the company and is designed where the threat is going, not where it's been. As announced to the market, DroneShield's interim results are scheduled to be released on Wednesday, the 26th of August. We'll host an investor call at 9:00 a.m. Sydney time on Thursday, the 27th of August, which will include a live Q&A component.

If you would like to submit questions in advance, please send them to [email protected], and we will aim to address them during that call. Thanks for joining us, and enjoy the rest of your day.

Thank you.

Good morning, everyone. Welcome to DroneShield's First Quarter of '26 4C results. It's a pleasure to be speaking with you this morning. So my name is Angus Bean. I'm the CEO and Managing Director for DroneShield. And I've got with me Josh Bolot, who is 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 the market that our chair, after 10 years, Peter James, would not be standing for reelection, and we have had the appointment of -- sorry, for election our incoming Chair, Hamish McLennan. The news of this leadership transition has been received very well. And I'd like to thank, obviously, the whole 500 staff of DroneShield for their support during the last 2 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 2 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 honor to step into the CEO role.

In my first 2 weeks, it's a bit 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 our 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.

Let's move into the presentation. 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 that -- 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 annualized basis. So to be here in April with $155 million revenue committed for the year is an outstanding result.

Interestingly enough, we are seeing, in our opinion, a better ratio between the larger military contracts that we at DroneShield have become known for, but also an increase in repeat and recurring smaller 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 nonmilitary 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. And so this is a great first step in moving in that right direction.

In terms of financial discipline, you will also recognize 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 momentum, I'd like to give a -- 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, and that was primarily through first-time buyers and customers rolling out our products in a minor way. In 2025, we had an outstanding year. And this really represented the first time that militaries were buying as part of defense programs of record and part of much larger military programs that takes a number of years to come to fruition.

2025 really recognize that for us and 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 DroneShield 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 what 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 2 weeks ago in March -- sorry, 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 not -- 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 7 different countries with a large portion of our capital being invested into research and development, which is becoming the norm in the defense 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. Globally, we are increasingly seeing a very turbulent and perhaps a chaotic environment where the world is moving to a multipolar order, and that is causing large tensions around the world. Our 2 primary markets remain the United States and Europe. The U.S., for example, we are seeing the confluence of 2 really significant trends. One is the regulatory environment and the second is the unlocking of significant revenue -- significant -- of significant budgets for defense and non-defense spending.

In terms of the regulatory environment, we recently saw the Safer Skies Act, which unlocks 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 records such as JIATF401 now are really taking -- 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, who is 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 U.K. remain a core part of DroneShield's strategy. Many of you are aware, we moved our Chief Commercial Officer, Louis Gamarra, and his family to Europe. And so our center 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 2 major markets, we still see strong growth in Asia, Latin America and the Middle East. And these are -- 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 LAND 156 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 capabilities 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-UAS 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 global company now. You've seen that we've bolstered our -- both our U.S. and our European presence as well as our presence here in Australia. And fundamentally, our 70 distributors around -- 70 partners around the world remain a core part of the business and that the DroneShield's 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. In addition, we are seeing that now the green shoots of this commercial or nonmilitary market, which we have anticipated for almost a decade. DroneShield is incredibly well positioned as our technologies can be utilized in both military and nonmilitary markets, particularly with the regulatory change we discussed. DroneShield will remain a flexible organization in terms of how we approach the market. And so we have a multichannel market approach where we can either be the prime, the subprime, the partner or go through a regional distributor, or go direct to end users. So DroneShield, we take a multichannel 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 $1 billion annualized revenue with 30% of that is recurring revenue in the next few years. This is a substantial uplift on numbers that were already a 4x increase on previous years. But to fuel that, we are seeing strong diversification across our end users, geographies and our products, both hardware and software. And so we feel that the DroneShield business is in a very strong position in terms of its diversification across all those metrics.

We also -- you'll also see, and you'll hear from us again in the next few months around DroneShield beginning to monetize our whole of lifecycle solutions. Today, we do some of the harder parts, which is new sales and new product development. DroneShield will be getting into additional services, both software and recurring services to continue to -- continue to strive towards that $1 billion 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 counter-UAS industry. In most cases, for most customers, the first technology they will look to employ is a radio frequency detection, and if they're 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 in 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 map style interface and they can then operate those devices fully remotely. We also released DroneSentry-C2 Enterprise at the end of -- excuse me, of last year that allows customers to also manage multiple sites themselves, so another layer above that DroneSentry-C2.

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 DroneShield 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 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 a comprehensive suite of solutions across the 3 core operational scenarios that we see in counter-drone and these are dismounted, on the move and fixed site. DroneShield now offers solutions for all of these categories. And in addition, late last year -- sorry, in 2025, we offered our first SentryCiv product, a product that is specifically designed for the nonmilitary market. This is something that you'll continue to see from us in the future as we refine our approach to the emerging nonmilitary 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 3 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 developed all their 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 3 layers have a multi-software SaaS applied to their solution. And if you think of this as close to 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 to its Software-as-a-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 organization 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 he will not seek reelection at our next AGM. And Hamish McLennan has been -- will be appointed as the Chairman following our AGM in May. All right, and for last point on the Board. As we have previously announced, we will be -- 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 part 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 for those investors and interested parties who have submitted questions in advance. That's been very useful. I will 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 escalation of global conflict and the widespread commitments in higher defense spending in the counter-drone space and how that's feeding into our revenue pipeline -- 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 DroneShield in a very important position as drone technology is one of the core disruptors and is essentially revolutionizing the military and security environment.

DroneShield 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 counter-UAS as a core part of their expanded defense budgets. Our view is that this is driving the exceptional results that we've announced this morning with $155 million of committed revenue for 2026 at this very early stage. And so 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 these additional budgets being allocated at a rapid clip.

Thanks. The next question relates to revenue and profit guidance assessments. I'll address that one. DroneShield does not provide revenue or profit -- or earnings guidance. We share information about our progress, which includes, obviously, periodic financial reporting, the presentations to investor groups, including these and those which we lodge with the ASX and material contracts and that threshold for material contracts is over $20 million now and as well as other trading updates. And we feel this is the right approach given the nature of the industry we operate in. And as the company moves towards a more predictable style of revenue, for example, the recurring revenue, the SaaS lines over the next few years, that will help provide a greater granularity around that.

In regards to the material contracts of $20 million, and this may cover off a few other questions. There was a question about the frequency with which we announced those. I think what's important right now is that 3 weeks ago -- just under 3 weeks ago, we announced the revenue pipeline. So the committed revenue for the year was at $140 million. Today, it's sitting at $155 million and we have not announced any material contracts over that period. So that provides an indication of a number of smaller sub-$20 million orders that are constantly being received from existing end users as well as new end users. And that's a very important sign of just the general maturity of the business as it's growing. So that kind of addresses that one.

The other part, which we want to talk about is that the revenue and the trading update that was provided at the -- in the early days of April was prepared just as April was beginning. And there was a slight variation between the Q1 revenue change in -- on the 8th of April and what we've ultimately reported yesterday. That they should be taken in context that a comprehensive month end takes longer than a few days. An order delivery, which was made in the closing days of March was only notified to DroneShield during that month end process. And we recognize revenue when customers confirm the receipt of the day that they receive it. The suggestion that this might lead to bringing forward revenues is incorrect, and it still remains our second highest revenue quarter and the highest cash receipts quarter.

Angus, the next one, which I might put to you is we're on government panels both in Australia and other jurisdictions. What's the commentary around the Australian panels?

That's right. So Australia's flagship defense counter-UAS program is called LAND 156, it's run by the Australian Army. And we are on 2 of the 3, and we hope to be on the third when the time is right, but we are in 2 of the 3 of those lines of effort. We've already received orders under the second line of effort, and we are on the panel, as you mentioned, Josh, for Line of Effort 3 and things are starting to move quickly where we're involved in a lot of good discussions with the Australian Department of Defense around LAND 156.

Great. The other discussion has been -- it's come through a few times. I'll address it because it will take a few questions off the register. The question is regarding dividends and the intention to pay off the dividend reinvestment scheme. DroneShield is a high-growth focused company and it has not paid dividends today. There is no current intention to do so as it is maintaining cash balances for reinvestment in product, potential acquisitions and other such opportunities. The Board does assess the situation from time to time, and will advise the market when there are updates to the dividend policy.

A broader question here, Angus, is regarding the movement of technology towards other drone and robotic technologies seen in the market. There's been a question received online regarding non-aerial counter-drone defeat and maybe that expands the conversation towards our product development pipeline as well.

Thanks, Josh. So DroneShield, absolutely. We've updated our approach. And if you look at a lot of our documentation, we now refer to instead of just counter-UAS, which is counter uncrewed aerial vehicle. We often say UXS. And the X means multi-domain, okay? And so over the next few years, we are going to see an increase in ground UGVs, the surface of the water, USVs, and even underwater autonomous vehicles emerging. DroneShield and DroneShield's Technologies, we believe, are very applicable as these new types of threats emerge, and we have some of the core building blocks, whether it be the radio frequency, the radar and obviously, our C2 is the core orchestration layer to counter these emerging multi-domain assets.

And so DroneShield, yes, we are opening our aperture as the technologies change and as we see essentially the super cycle and the trend go towards replacing human inventory and humans on the battlespace with a more robotic and autonomous vehicle selection. So DroneShield, we are one of a handful of companies around the world that has the proven expertise to execute the technology stack that will be utilized against these types of technologies in the future as well as the vision to counter these types of technologies in the future.

Thanks. The next question we've received is in relation to the staff costs and administration and corporate costs and that we've received this offline as well as online. So first I'll address that. The comment in -- this refers to a comment in 1.2F of the 4C, where there were some additional wordings regarding the salaries of the engineering team. This is an inadvertent error from a version control in the preparation of the 4C only. It has never appeared in prior 4C's and it does not impact the underlying numbers or methodology. The engineering team has always been in the staff costs of Line 1.2E and as they are in this 4C. So the commentary there is an inadvertent comment.

On the matter of staff costs more generally, during the fourth quarter of 2025, there were some exceptional one-off items in the staff cost number. This led to it being higher in that quarter compared to those of the current Q1 2026. Without these one-off costs, Q4 staff costs, which were higher and would have set somewhere between those of this current quarter and those in Q3. So that addresses those matters.

The next question regarding -- we've received online is regarding the transition changes. And I think it's fair to say we've addressed those quite thoroughly in the communications in early April. But importantly, there has been a considered plan with Angus joining and with Oleg's decision to step back. He still remains an adviser to the company and has -- and provides regular support where required, including in discussions with staff, with end users and with partners around the world. So we obviously understand that, that news would have been a surprise to some, particularly after so many years and developing the company from it's really embryonic stage. But after nearly over a decade after nearly 12 years, a decision for someone to step back and have personal reasons why they'd like to do that, I think, should be respected.

The next question, which I'll bring to from the floor, let me just bring that up for a second. Perhaps you just want to talk a bit about the head count and where you see the main areas of our head count moving.

Sure. So as we've mentioned, we have about 500 staff across the world at the moment. We've -- over the last couple of years, many of you know, we've substantially increased our head count and we will continue to do so in a controlled way throughout '26 and '27, and you'll see a lot of that head count growth will be in our critical regional hubs of our new headquarters for Europe in Amsterdam and our headquarters for the U.S. outside of Washington, D.C. And so control growth will continue into the future in terms of the head count. And obviously, that is in response to the dramatically increasing demand that we're seeing for our products. Our demand on our commercial and sales teams, but also as we are rolling out larger and larger amounts of our multisite multi-center solutions, our field service engineering, training staff to provide those full programs into those end customers around the world.

There's been a question regarding the sales pipeline. I know we've addressed that. And a little bit about the frequency with which that's going to be reported. At the moment, it has been reported at the end of March and was there a decision to update it again now?

Thanks, Josh. So look, we felt that it wasn't appropriate to update the pipeline again so quickly after updating it only just 2 weeks ago. So the pipeline we've published for this update is the one that is relevant for this allocation of reporting and so we felt that was the appropriate way, and we'll continue to update the pipeline and obviously, our progress towards that pipeline throughout the year.

Great. A question regarding local and international competitors and how we differentiate ourselves in the global marketplace.

Thanks, Josh. DroneShield has a number of critical differentiators, both technical and commercial, as we mentioned. We are one of the most experienced, if not the most experienced counter-UAS company globally. And so although the DroneShield is a core part of this massive groundswell towards counter-UAS, there are competitors around the world. But very little have the scale of operations, the experience to roll out their solutions now at the quality level but also at the scale that many of our end users now demand. So DroneShield, we're in a very strong position.

Additionally, being an Australian business and as we mentioned, around defense we are only regulated in most cases by our Australian Defense Export Controls office, which is a really good thing because we have no U.S. defense export controls on our -- most of our core product line items. We are bound by EAR out of the U.S. government for some of the radar technology that we integrate and we import from the U.S. but our core product lines are only controlled by the Australian Defense Export office, which we have a great relationship with.

Thanks. There's been a few questions online and also in advance regarding governance and remuneration. So I'll take those ones on. In terms of remuneration, the question is about the remuneration structure and incentives that align with shareholder value. I think there's been a clear move in making sure that their alignment and structures that work with both the shareholder expectations of value creation and growth and retention of staff. This includes the setting of performance metrics, which involve strong revenue growth targets of $300 million, $400 million and $500 million in 12-month periods over the next 3 years, also includes staggered vesting periods, 50% on achievements of that target and 50% after 12 months of continued service as well as minimum shareholding policies for key management personnel.

The Remuneration Committee of the Board receives advice benchmarking and feedback from consultants as well as shareholder advisory groups. There will be further discussion of this in the Notice of Meeting for the Annual General Meeting, and we encourage everyone to read through that as well as attend and ask at the AGM.

In terms of the remuneration and incentive structure of Angus, of the newly appointed CEO and Managing Director, these were shared in the leadership transition announcement. In relation to that, more generally, there have been questions regarding the governance steps, which have been initiated as a result of entering the S&P ASX 200. As indicated, we did -- we did initiate a search for additional non-exec director. And in that process, Hamish McLennan was identified. In speaking and identifying Hamish and his engagement with the company, we found a global leader who had worked across many industries, both in Australia and international markets, bringing a range of skills, both of a business nature and of the governance nature, which are highly useful in our business.

So we look forward to welcoming him on the Board. The search for additional directors has not ended, and we will continue to do so and update the market along the way. We believe that the Board will evolve as the company matures, and that's consistent with any other company of this nature.

The next question, which I'll address to you, Angus, is regarding the interplay of third-party products, the interoperability and how the -- how those conversations are sold to end users in the context and trends of our product versus the interoperable third-party products.

Sure. That's a great question. So DroneShield has those really core technology building blocks of radio frequency RF detection and defeat. We have our C2 and our sensor fusion layer. And as we mentioned, in layers 3, 4 and 5, which we offer to end users. That is a conversation mostly that happens with the end user. We have deep relationships now as we are on some really important programs around the world with what are they seeing in terms of the needs of the operators in the field. What are they seeing in terms of the need to secure low-altitude airspace, to secure air bases. And so we understand we have a very strong funnel of information in terms of the future needs and requirements of those operators. And so we take that into account and then we essentially do global searches around the world for best-of-breed types of sensor and effector technologies.

And as we've announced of 3 almost consecutive partnerships over the last few months, Origin Robotics, OpenWorks and Robin Radar. We believe these are 3 absolutely exceptional organizations providing a great product and also opens up new markets and new regions for us. So you'll continue to see us do that. DroneShield, we are very focused on our C2 and our core technologies. But we acknowledge that we will need additional layers to be able to be that full turnkey counter-UAS provider but that doesn't mean that DroneShield needs to develop all of these technologies in-house ourselves, and specialization is really important. And so you'll see us continue to partner with the best of the best around the world.

There is a question regarding -- and we received this question outside of reporting periods as well regarding the large contract, which is a -- large possible contract, which is sitting in the pipeline. And I think we've previously talked about a number of $750 million, the status on that at the moment.

That's -- yes, that's right. That's a significant goal for us, and it's a contract that, as we've previously discussed, is a follow-on contract from some of the larger contracts that DroneShield received in previous financial years. So we are essentially the incumbent in terms of the technology provider for that contract. And so we feel in a strong position. And I myself have, recently in the last couple of months, met with the end user and decision-makers around that contract. We will continue to update the market on any -- with any confirmed information around that contract, but we won't be advising anything further at this stage outside of the contract remains in the pipeline, and we have great relationships with end user.

Thank you. There are a few questions regarding manufacturing. And I think those have largely been dealt with, but just to reiterate, at the moment, the majority -- the vast majority of our product is manufactured in Australia, and that's very important because that allows us to service the markets that we do and with relative ease. We have recently announced the manufacturing capability in Europe, and that is a very important facilitator for us to work towards the ReArm Defense Readiness Program in Europe, and we're very pleased to have that in effect now. The U.S. will come -- had a similar arrangement in place later in the year, and we'll update the market regarding that through a press release.

I think more generally, a discussion regarding our approach to manufacturing might be worthwhile sharing.

Sure. So DroneShield, we generally take a light CapEx approach to manufacturing, where we are not involved in the fabrication of most of the parts, and we outsource that to a great supply chain of partners, as Josh mentioned, most of which are here in Australia. And so we don't need to be -- we can be very light on CapEx in terms of manufacturing. We don't require to essentially buy and maintain large mechanical equipment to do that. We utilize our supply chain for that. But what we do are the really important high IP and high-value add components of that manufacturing process. And so that often is the electronics subassembly process, the quality assurance and checking process and the final field testing of the solution prior to it being deployed into the field.

So that's where -- that's how we do our manufacturing process. And as you've seen recently in Europe, we've successfully now transplanted our manufacturing setup to a completely external manufacturer -- contract manufacturing arrangement in Europe and that, again, shows that the way we design and develop our solutions. This model is very possible. While there is a lot of IP and know-how in terms of the manufacturing of these goods, the core really difficult part of what we do is actually the software and the encryption of that software that gets loaded onto the devices and so we successfully transplanted that production into Europe, which we're really happy with now. And as Josh mentioned, we are also looking at production options for the United States. But again, the core technology and the core software platform will be distributed from our team here in Australia.

One of the questions which has come through is regarding our views around profitability versus growth. I think the company has worked exceptionally hard to reach the pivot point that it has in the last 12 to 18 months, where particularly over the last 4 quarters, it is operational net cash flow positive. And in 2025, announced underlying EBITDA of close to $37 million, which is a 17% margin. I think what we've indicated to the market regarding our operating cost base provides an indication that we are looking at profitable growth within the business as we bring additional product lines and solutions online matched with the growth in the recurring revenue stream.

In essence, we do look at -- when we are at opportunities we look at the payback period of new product investment. We do look at that from a number of angles both in terms of the return on investment that it will generate from delivering it into the market.

The other thing that we've thought about is when we are looking at acquisitions, is the speed with which we may be able to do a similar thing or the same thing versus acquiring that. So to date, the company has not made any acquisitions, and it constantly is put different ideas and different opportunities. We balance that off with our internal investment and the payback period for those. I think that's quite a useful thing to think about because we do have a useful level of cash available for growth, be it organic or acquisition based.

There's been a few questions, particularly around the commercial market. So one question is regarding the progress on SentryCiv to date and the types of customer scenarios that has been used and the growth that we expect there. I think we both know have some really good interesting case studies around that. And also how that will play out over time with things like Safer Skies and the split between commercial and military. So that's a broad question, but I think they go together.

Thanks, Josh. That's right. So the commercial market, as we mentioned, we believe, is now after almost a decade of talking about and monitoring the situation is coming online. Let's say, the nonmilitary market. And DroneShield, as I mentioned, we are in a strong position with already our first product. It's really specifically designed for that nonmilitary market, our SentryCiv product. The SentryCiv product is a high SaaS, almost entirely SaaS-based product, again, feeding another strategy that we developed to feed into that 30% recurring revenue base over the next few years. And it is -- we've made now a number of sales around the world of the SentryCiv product. But these sales, obviously, we don't publish as they are below the $20 million revenue number. But I'm really encouraged and excited to see the quality of the customers who are procuring this.

We are talking about really major law enforcement and major, let's say, commercial operators around the world. And so our relationships are deepening with those commercial operators and those law enforcement markets that were previously unavailable to us, either through regulatory or through their lack of finances to actually go out and procure counter-drone equipment. So we are monitoring the commercial space very closely. We are starting to move the business more in that direction, bringing on our product teams specifically designed for that growing segment. But similarly to the way we have successfully penetrated the military market over the last decade, we will -- we don't want to go too early -- too hard too early. We want to mature that approach with the market and make sure every step along the way we take to capture that market is the correct one. And so we will -- you'll continue to see sort of a steady stream of movement in that direction as we continuing our core short-term revenue driver of the military market is self-sustained as well.

So yes, we're really excited about the potential emergence of this commercial sector and the green shoots we saw in the first quarter of this year.

Thank you. There's a lot of -- a few questions regarding how we interact with the primes of the industry, both as customers, competitors and partnership arrangements with them. I think that's a broader question, particularly some of the companies that people have talked about in the U.S. and Europe.

Sure. So I think one of the most common misconceptions about DroneShield, and we get the question a lot, which is are you concerned about these really significant defense primes who have traditionally been very dominant players in the defense space for many years? And do you see them as a threat to the business? Our honest answer is in almost all cases, these defense primes are our customers much more than they are our competitors. And so whether it be in the U.S. or even now across Europe, we are actively selling to defense primes who are taking our technologies and our products and integrating them into their existing defense programs or into their larger defense rollouts as they capture them.

So often, the defense primes are a partner of DroneShield. And as I mentioned previously, DroneShield, we remain very flexible with our approach to market where we can go direct, we can be the prime, subprime, contractor or even engage the market through an authorized distributor in country. So we're really flexible with that, and it will really depend on the region and on how we approach each of those markets.

There's a couple of short ones, which I'll just quickly rattle off. Do we deal with the Ukraine? I think we previously identified that we have less than 5% of our revenues currently based on sales to the Ukraine market. To market, obviously, that we've been very supportive of in the earlier stages of the conflict there. And the -- it is still a presence in our revenue, but it is not more than 5% at the moment.

A question regarding our security and processes to ensure that we, I guess, commercially and militarily cautious in our approach, both in terms of making sure that our intellectual property is protected and our employees are appropriately vetted. So I don't know if you want to talk about that.

Yes, sure. No, that's a great question. So DroneShield, we are a DISP-certified organization, DISP, defense industry security program. And that is the major defense and security program that's rolled out here in Australia. And we are then -- we essentially govern the business via the rules of DISP. And that sets out very clearly what we need to do from an employee vetting perspective through to a cybersecurity and physical security controls perspective as well as provides a lot of insight in terms of the governance, policies and procedures that we need to have as part of an organization.

So it's great actually to work with the DISP team as they provide for you the frameworks that you need to implement and then our significant security team then essentially rolls that out across the business. We are continuing to uplift that DISP certification, but also our general security posture across the organization and globally as DroneShield becomes a supplier of main stage, as we mentioned, larger programs of record. Our security needs to mature and continue to mature to make sure we meet the market where it is and make sure we protect the business.

Interesting question, actually. And it's inventory related. I think I'll start off with the answer and then we'll work towards the forward-looking part of the answer. So it's regarding inventory obsolescence. And what's happened in the past, I mean, we announced a one-off inventory impairment, the significant item of $8.5 million in the FY '25 results. That product is still in our warehouses and available for sale, it is still an effective product, and there are still sales of those, albeit at a slower rate.

I think more generally, though, the question which comes through, which is how we deal with inventory obsolescence with the release of new hardware as we move into that expanded product set.

That's a great question, Josh. So yes, certainly, that is something that we are considering deeply. And one of the things we're going to talk about, particularly in the second half of this year as we bring on our next-generation platforms which I am dying to speak about, but we will hold off for now, is obsolescence.

The good news here is the products that initially we'll bring on to the market do not directly replace any product lines that we see today. And so the product lines that you see on the website currently, we will continue to provide to end users for the next few years to come. And so this is not an immediate impact and much of the next-generation platforms will be slight variation in terms of product positioning or a completely different technology itself. And so we will -- there won't be any necessary disruption in terms of obsolescence but it's certainly something we need to manage. And as we grow our product lines, we are trying to be very strategic about the use of our core components. And for example, using the same chipset, if we can across multiple product lines, allowing us to then order at much higher volumes of an individual item, therefore, getting a better price per item. But then that product -- that chipset that is being used -- utilized in multiple different DroneShield product lines.

So we've already started to roll this out in a lot of the core technology platforms that you'll see from us over the next 2 years. Essentially, we'll use a lot of the same family of chips and same core componentry. So again, reducing the chance of either component obsolescence or product obsolescence.

There are actually a number of questions, which are very interesting in relation to different trends and different things which people see in social media and whether they're kamikaze drones, whether they're fiber optic, whether they're real, whether they're AI. Maybe you just want to talk about how we assess each one of those developments and where it leads into our product road map.

Thanks, Josh. It's a broad question, but I will do my best. Look, essentially, counter-drone, this is, as we've discussed, one of the most -- drone technology itself is one of the most disruptive elements to the defense and security apparatus around the world as we speak, and DroneShield is one of a handful of companies that are incredibly well positioned with the experience, but also the operations and funds to execute on that emerging trend. There is a lot of noise. There is a lot of diverging technologies being developed.

And there's no question, we need to make really good decisions around the technologies we invest in the future, whether that be technologies we choose to develop ourselves. The potential use of an M&A activity to acquire technology new to the business, or as you've seen from us recently, just choose to partner and create really good agreements that are beneficial to DroneShield with Tier 1 technology providers around the world. So we're going to take a balanced approach to that, and we'll assess each of those technologies based on its own merit as to which one of those 3 avenues we want to go down to attain that technology for our end users.

The great hedge, I guess, we have from a technology perspective is our DroneSentry-C2 platform that essentially allows us to roll with the technology and integrate various different types of technologies, sensor or effector and provide that as a fully consolidated solution, full turnkey for our operators or if technologies evolve and our customers more increasingly so already have our technology in country in operation, we can augment their existing solutions with this new technology over time.

So -- and it is one of the reasons I believe that when Oleg decided to step down as CEO and the Board ran their process that they did end up selecting the Chief -- previous Chief Technology Officer to essentially run the business as I believe that my personal -- personally one of the best positioned people in the organization to make some of those hard calls.

I think we'll use this as the last closing question, and it might tie nicely to some closing remarks as well. In relation, I think we've answered the vast majority of questions. And there are some questions, which, unfortunately, we're just not able to answer in a public forum or generally because of operational security reasons or for other reasons, it's just not appropriate for us to provide commentary on those matters.

But I think the one which might encourage towards a broader answer and a closing statement is regarding the things that you see happening in the next 2 to 5 years in the business, which will help to get us towards that 2030 vision.

Sure. Thanks, Josh. So look, in terms of what do we need to do? The position that the DroneShield company finds itself in is very strong. And that is, again, to highlighted and demonstrated by this first quarter of '26 update. And so both financially, operationally and technically, we are in a good position. Many of you have mentioned in the comments, these are lofty ambitions, the $1 billion annualized revenue and 30% of that being recurring revenue. These are significant uplifts on where we are today. But we do believe these are achievable. And certainly, we are redesigning and reshaping the organization, gearing up to really go after these ambitious goals.

And I certainly wouldn't have stepped into the role and wouldn't have the excitement that I do have if I didn't feel these were achievable. In terms of what we need to do, it's a continuation of our current existing R&D strategy. We currently hold a 2-year product and technology road map that we believe will set the business up really well for the growth that's required to hit those numbers from a product and technology perspective. You will see us, as I mentioned, continue to grow our regional hubs in both the U.S. and Europe. Both of these footprints now are generating good revenue for the business. You've seen a number of those larger deals, most recently out of Europe, but I think there were some comments before about not announcing any U.S. contracts, and I'd like to highlight what Josh was mentioning is that we have received a number of U.S. contracts, but many of them, if not all of them, have fallen under the $20 million, but the volume of those contracts has increased. And that's perfectly fine for us as a business as well. And if anything, it allows us more predictability and more certainty in the organization.

So outside of growing the regional hubs, we'll continue to grow our partner base both commercially and technical in the future. And this is something that DroneShield as an Australian business, one that is highly trusted and respected in the sector, we are in a great position to utilize that goodwill and utilize the trust that we do have to partner with some of these great organizations and either enter new markets or augment existing solutions around the world.

Thank you. Thank you very much, Angus. I think we're just on 10:00. So we appreciate the time that many hundreds of people -- hundreds of people have used to listen to this update. And as Angus mentioned, we have our Annual General Meeting with the Notice of Meeting coming out in the -- by the end of the month. The Annual General Meeting is on the 29th of May, and we encourage everybody to either attend in person or online. Thank you.

Thank you, everyone.

Welcome to those joining the DroneShield investor call covering our 2025 annual results. I'm Oleg Vornik, the CEO and Managing Director of DroneShield. And joining me today are Carla Balanco, our Chief Financial Officer, on my right; and Josh Bolot, our Head of Investor Relations, on my left. Angus Bean, our Chief Product Officer, is unfortunately unable to join us today due to customer travel commitments overseas. We will aim to speak for approximately 15, 20 minutes presenting the results, followed by questions. Please submit your questions well in advance so we can start immediately with the questions following completion of the presentation.

2025 has seen a record revenue of about $260 million, about a 4x increase on the previous year. Importantly, it has been a profitable year for us of about $3.5 million profit being also $33 million of underlying profit before tax. And importantly, having $15.9 million of net cash from operations. This reinforces our aim to have rapid growth as well as being profitable and operating cash flow positive moving forward.

The pipeline has slightly increased from $2.1 billion to $2.3 billion in the last month since we presented the 4Q results, and a lot of it was due to our increase in the Asia Pacific pipeline specifically. The pipeline corresponds to about 295 deals. Great diversity of deals is how we have certainty of ongoing business where there's diversification across the stages of maturity, geography, products, customers and other factors. Some of those deals are significant. There is about 18 deals over $30 million each and our largest deal being about $750 million. Previously, we advertised this deal is about $800 million, but with being European deal and the Australian dollar continuing to strengthen, the Australian dollar value of the deal has slightly reduced.

DroneShield continues to be significantly well positioned to win in the exploding counter-drone market. We have 460 employees in about 7 countries around the world, and that includes over 350 engineers. We continue to invest significantly in R&D in this rapidly evolving landscape, and it's about $70 million plus of R&D that we spend every year. And we continue to have significant cash balance of over $200 million to support our growth.

To recap on top of what I was saying earlier about the record revenues, the SaaS is continuing to grow, and our goal is to continue to ramp it up to the eventual aim of over 30% a year over the next 5 years. And the growth in SaaS will be reached through having multiple streams of SaaS over increasing amount of hardware in our space. We're familiar with some of the recent market commentary about some of the software companies that have been sold off. And the big difference in the DroneShield case is we have an integrated hardware and software solution, where a lot of our IP is really deeply inside the hardware as well as software. And the data we use for our software is not something you can easily just scrub off the Internet. So when you're looking at the drone signal data, you have to collect it in a number of countries, often very sensitive situations. So very high IP that cannot be easily disrupted by the likes of ChatGPT.

Along with the record revenue growth, we're seeing significant matching growth in customer cash receipts and big increase also in the committed and also recognized year-to-date revenues and cash receipts already going in, into 2026. So a very strong start of the year. We talked briefly about the profit where the underlying profit before tax for 2025 has been about $33 million and then showing the significant operating leverage going forward. What I mean by that is with the roughly 65% gross profit margin as the revenues grow, that is going to outpace the growth in costs, resulting in what we're aiming to be increasingly profitable position.

And the bottom right-hand chart is the NPAT to EBITDA bridge. I'll leave it as read, essentially $36 million in underlying EBITDA with $3.5 million statutory NPAT. If there are any questions on that, happy to answer that.

The sales pipeline, this has largely been covered when we presented about a month ago. So one change, as I mentioned, is the increase in our Asia Pacific position where a number of countries bordering China are significantly concerned about the Chinese drone threat, and we're continuing to see increase in demand there.

But overall, to recap on the key themes, U.S., we believe, will have a number of growth factors. So in addition to the military, where there is a $1 trillion record defense budget for '26 and $1.5 trillion defense budget proposed for '27, we're expecting to see significant public safety market, not just with the Safer Skies legislation enabling police to take down drones, but also significant funding applied ahead of the FIFA World Cup in June, July, and we expect to see meaningful sales between now and that time and also going forward. Importantly, we believe that police will be a bridge towards the counter-drone being seen less so strictly military type of solutions and more into the civilian solution. So then increasingly deployed by critical infrastructure operators, airports and corporates.

In Europe and U.K., we have opened our sales office in Amsterdam, managing our local distributors around Europe. And both Europe and U.K. are driving our momentum significantly at the moment, underpinned by everything you read in the news about Ukraine and the general instability there. Europeans realizing they cannot rely on U.S. for their security. And being Australian is a great neutral position in terms of appealing for sales for both the European and the U.S. markets.

In Australia, DroneShield has been selected on the panel for LAND 156, which is the rollout across defense spaces nationally and we anticipate for there to be a significant amount of business for us even starting from this year in this $1.3 billion program. We have approximately $79 million in inventory as of 31st of December. That combines $26 million in finished goods as well as $53 million in raw inventory, which is largely the long lead items to ensure that we can deliver to our customers in a short amount of time. We have moved to an enterprise ERP system, which enables us to really push out on our goal of moving production from $500 million a year to $2.4 billion by the end of the year, which is underpinned by the new 3,000 square meter facility in Sydney as well as our manufacturing hubs in the U.S. and Europe, which are being finalized as we speak.

2025 has seen inventory impairment of about $10.3 million, constituting 2 factors, the $8.5 million in finished goods, which substantively relates to DroneGun Mk4 out selling DroneGun Tactical. We believe it's a one-off situation because we essentially introduced 2 product lines with the Mk4 being the success to tactical within a couple of years of each other. And we do not intend to introduce successor versions to the DroneGun Mk4 and RF controllers, we believe that at the hardware level, those are essentially as best as the technology can get within those form factors and the future versions of those technologies will look entirely different. And therefore, we do not believe that similar sort of impairment is likely going forward. And the $1.8 million in raw materials, so a lot of it was linked to us moving to the new ERP, and it's in line with FY '24 impairment of $0.6 million.

On the manufacturing, as I mentioned earlier, we are expanding from $500 million a year to $2.4 billion, and that includes the European and the U.S. assemblies. For those relatively new to our story, we have essentially 2 streams of products. You have the dismounted being the RfPatrol, body-worn drone detector. It's a hardware that has AI on the edge. So SaaS software that lives inside of it that we do quarterly software updates on. And then there's DroneGun, which is what we've historically been most well known for.

In fact, those observing our news probably would have seen with electronic arts major game adopting DroneGun as one of its key weapons. But in fact, DroneGun has only been just under 20%, 19% of our revenues in FY '25. And in fact, the business is fundamentally moving towards being a diversified company with our on the move and fixed site DroneSentry system constituting just under 40% and RfPatrol being just over 40% of our revenues. And SentryCiv, the civilians specific subscription-based product that we launched last year, I think will start ramping up as the civilian sector grows as well.

Our SaaS strategy is separated into 3 streams. You have the device level SaaS. So today, when you buy RfPatrol, DroneSentry-X that comes with RFAI detection software. And then we're currently trialing the RFAI attack, which is AI-enabled defeat software that will be a paid product from about middle of the year. Then we do AI that sits inside the cameras and then also utilize third-party AI for radars and of course, SentryCiv, which is our own SaaS as well.

And then the site SaaS, so when you have a base or generally maybe critical infrastructure facility, you'll be having a number of sensors, DroneShield and third parties stitched together by our DroneSentry-C2, or perhaps commanders with tablets with our Sentry-C2 Tactical. And then our latest product that we introduced at the end of last year being our DroneSentry-C2 Enterprise when you have entire region or a country looking for patterns of drone incursions, drone attacks. So the idea when I was saying earlier about the SaaS getting to 30% of the revenues over the next 5 years being our goal.

For example, you might be buying DroneSentry-X and on that, you might have our RFAI detection software and then RFAI defeat, you'll probably be pairing DroneSentry-X with a camera that will come with our DroneOptID SaaS, probably a radar as well, which will have its own SaaS. It will probably sit on a base underpinned by DroneSentry-C2 and potentially even in the region overseen by DroneSentry-C2 Enterprise. So this is an example of how multiple SaaS packages can apply to a single piece of hardware.

Sometimes we get asked what's a small company at the end of the world in Sydney able to do to compete against large defense players. And historically, when you think about defense, you think about perhaps U.S., Europe, Israel, maybe South Korea, you don't think about Australia. And we have been lucky to an extent of being in this game right from the start and deploying significant engineering force on this. And also being in Australia, we knew that we cannot sustain ourselves just for the Australian market. So we became an export business from day 1. In fact, today, about 95% of our revenues are export, and I'm expecting the trend to be similar going forward. And so as a result of this truly global threat being the drone attacks, we developed distributors in about 70 countries around the world and now we have active customers in dozens of countries around the world.

And with that, over time, Australia also being very good base for engineering, we developed solutions which are smaller, lighter, more effective for both detection and defeat and also those relationships with end users around the world, Australia being a great country again in terms of the relationships with these Western and Western allied countries that feed us honestly, probably more information that we can do with in terms of rapidly changing our technology roadmap to adapt to the latest drone threat. So a number of commercial and technical differentiators.

In terms of specific competitors, what we generally say is that within the niches of counter-drone that we choose to compete in, we are the dominant player. So if you think about body-worn drone detection, our RfPatrol is, we believe, the leading product by number of units sold around the world. There are a couple of others. So MyDefence has a product and DZYNE has a product, but we believe that we significantly outsell them based on what we're seeing. And similarly, for handheld defeat, we believe DroneGun is the best-selling product of its nature around the world. In the on-the-move detection and defeat, the closest product to DroneSentry-X will be a product that AeroVironment has, but it's a pretty small part of their business. And if anything, in the long term, this potentially be a cooperative relationship.

In terms of the C2 solutions, there are a couple of competitors. So we're listing Dedrone and Anduril, but I think we have a number of unique differentiators on both of them, and we don't necessarily compete with Anduril being a much higher cost and strictly military solution compared to DroneSentry-C2.

Last thing to add here is that the traditional defense primes are not competitors and really more customers because they are not really moving at the speed and the cost base that is required to be successful in this cost asymmetric market. Cost asymmetric, meaning if you've got a $500 drone, you can't really be fielding a $10 million solution. So with that, we see the traditional primes as customers.

On the corporate governance, many of you will be familiar with a lot of the media scrutiny we had at the end of last year. We have engaged Freehills, a Tier 1 legal advisor, to give us essentially gold standard in corporate governance. And with that, we have yesterday revealed a number of updates of our policies, the trading policy, disclosure policy, the minimum shareholding policy, and others. And in my view, what has actually happened is the business has been growing incredibly quickly. So on the indices front, for example, we joined the All Ords in March '24, ASX 300 in September '24, ASX 200 in September '25, and now, depending on how fast we grow, we might be knocking on the door of ASX 100.

So as a result, when you grow so quickly, policies, procedures can sometimes fall behind, and this was an opportunity for us to establish gold standard for this particular area, much like we are running really quickly, recapping our -- changing our policies for a much larger business right across the company. We made a number of hires, so Head of People & Performance at the end of last year. Josh joined us in January this year, and also Chief Operating Officer, who joined us from a similar position from Thales, where he brings a wealth of that high-end operational experience.

The last slide, then we'll turn to questions, and I encourage everybody again to please be asking us questions. So as we stand today, we are excited to be starting to launch the next generation of hardware across our product family, so this will be towards the second half of the year and into '27. The counter-drone market continues to have very low saturation because you think about drones, they only really came into people's minds about 10 years ago, really started having negative that sort of nefarious impact from the start of the Ukraine war.

So thinking about only 5 years ago, and counter-drone is a derivative of the drone market, so military started to buy or looking to buy in any meaningful quantities only in the last 5 years, and when you're selling to the government market, the wheels can grind slowly, right? And so as a result, I would say militaries have probably sub 5% market saturation, civilian market has close to zero, and therefore, we have significant opportunity in front of us. The SaaS revenue we talked about are going from about 5% current to about 30% and continuing to expand our market share. So in addition to selling hardware and software, we'll be looking to expand into training solutions, support, counter-drone as a service, and other related initiatives to maximize, I guess, that ownership of the customer and providing the services to them.

We talked about establishing of the European manufacturing facility, and also in the U.S., and we believe that the next 12 to 18 months, we'll start seeing additional -- initial material sales in the civilian space, such as data centers, potentially airports, and other key customers. We're continuing to work on our processes and systems due to our rapid growth and in a very disciplined manner, looking at the opportunistic M&A. Now, there are no competitors that we would like to buy, but we're always interested to look at emerging counter-drone technologies, in addition to what we may be doing in-house, and we're really well-positioned to assess what makes sense due to our understanding of the sector.

And as we look over the next 5 years, we're looking to get to the target revenue of over $1 billion a year. This may sound like a lot, but then we quadrupled our revenues last year alone, so that will hopefully give you some sense of our ambition. And also, just the fact that the maturity of the market is still so early, and the customers are going to be putting increasing orders, hopefully. Most of our revenues are from repeat customers, right? So people placing increasing orders as they get more comfortable with the idea of having counter-drone solutions and more budgets to go with it. And continuing to have that global focus is probably the last point to say.

So with that, we'll conclude the presentation part of that session and turn to any questions.

The first question is: How likely do we think is it to sign a $750 million deal with Europe, and do we have production to deliver on the deal timely?

So it's not going to be trivial, we think that we're well-positioned, and it's the same customer who gave us a $62 million order in the middle of last year, and smaller orders in addition to that. So we have an existing, really good relationship with that customer. And the production capacity, so depending on how fast the customer wants to execute on the deal, if they say to us, "Go as fast as you can", I believe we should be able to deliver it in batches over perhaps under 9 months. If the customer wants to stagger it, which is entirely possible, in stages, it might be, say, over 2 years or so. So that's my best estimate at this stage.

I think the next question, I'm trying to rephrase it. What is our announcement level for deals?

So we continue our approach as of the past, where approximately 10% of last year's revenue has been our announcement threshold. For '26, it'll be $20 million, unless there is a strategic element to announce a smaller deal.

So there's a question about $18 million of the $30 million deals. When are we going to be announcing them?

Well, hopefully, once we win them, we will be announcing them.

The next question is about, does DroneShield have plans to expand its drone technology into different domains, such as naval drones, used in Ukraine conflict? And do we see it as an area we could pivot to?

Absolutely. So when you see us talking in our announcements about counter-drone, we actually refer to it often as C-UxS, not C-UAS, A being aerial. We consider drones being all domains, whether it's ground, naval, or flying machines. And the good news is that the technology that we use is equally valid for flying machines, swimming machines, and crawling machines, and we can be effective on all of those.

The only time when the technology stops working is for the underwater drones, so UUVs, where our command and control is still effective, but for the detection, for example, you'll be most likely looking to use a sonar. If we see more of that being where the market is heading, we would simply focus on integration of most sonars and lead with our C2. But the vast majority, we believe, for the foreseeable future, will be aerial, ground, and what we see in Ukraine, as you said, being the swimming drones.

So I think the next question I might pass to Carla, our CFO. The January update referenced gross margin of 65%. The statutory FY '25 number was 61% after the inventory impairment. Should we think of 65% as the normalized run rate?

Thanks, Oleg. Yes, our average normalized run rate for the gross profit margin should be seen as 65%. There's obviously items that will affect this margin. And those items will be the percentage of system sales versus dismounted sales. Our systems carry a lower gross profit margin. And the reason for that is because of the external third-party componentry that is incorporated in the system, such as the cameras and the radars. Those items carry gross profit margins between 15% and 30%. Therefore, we do think a 65% average moving forward for our gross profit margin is our aim.

Thanks, Oleg.

Thanks, Carla. The next question is about Bundeswehr, the German army. Are they a customer of our products, and do we have plans to supply the Bundeswehr?

Yes, Bundeswehr is a key focus for us, and in fact, if you follow the German defense market, there's a high-profile defense exhibition in Germany that is just concluding now that we were at. So yes, it's very much focus for us. Germany is a key European market.

The next question is, what is our current penetration of Ukraine and neighboring NATO markets?

So we have hundreds of detection and defeat systems deployed in Ukraine and continuing to add more. We have systems deployed in Poland and a number of other areas. So yes, absolutely, we are deployed, I want to say probably with about 10 or 12 European NATO countries, plus obviously U.S. and Canada, as far as NATO is concerned.

The next question is: Is there a goal for the stock price?

I mean, as high as possible, but unfortunately, I only get to influence it so much.

How much revenue do we estimate currently comes from civilian buyers? Do we estimate a shift?

So today, almost all of the revenue comes from military, border security and intelligence community with a bit of public safety being police. I think the question was referring more to customers like airports and data centers. So today, those are minimal, but we're starting to see green shoots of demand. And if you looked at our total addressable market, we're estimating about $30 billion TAM, total addressable market for the military and another roughly $30 billion for the civilian market. And we think over the next 5 years, our revenues will truly become more 50-50. And once the civilian market gets going, I think it can evolve potentially much faster than the military market has.

Next question, given the continuous innovation in the industry, what gives us confidence that the inventory is sound? And are we able to reduce the inventory risk in terms of moving to just-in-time manufacturing?

So as I briefly mentioned, the inventory write-down this year was a bit of a unique situation, where we introduced 2 DroneGuns within several years of each other and essentially, our newer DroneGun ended up cannibalizing some of the older DroneGun sales. And by the way, we continue to sell DroneGun Tacticals, we just decided together with our Board to take a prudent approach and do the inventory write-down.

Going forward, we don't expect to launch superseding versions of any of our product lines today, but rather really different product form factors. So I don't expect for there to be cannibalization, meaning if you want to have a jammer in a shape of a gun that you hold in your hand, I believe DroneGun Mk4 is kind of as good as it will get. So there will be better jammers, but there'll be backpacks, they'll need more space and so on.

I don't believe that just-in-time manufacturing really works for this industry because some of our longest lead circuitry has a 25-week lead time. And I don't believe it will change much because, again, of just complexity of the technologies that we're dealing with and our buyers want to be able to fulfill small orders quickly, right?

So our goal, which is largely in consultation with our sales force and customer expectations is to be able to deliver orders in single digits of millions instantly. So you probably would have seen, we did an announcement at the end of last year. We received an order about $5 million on the 30th of December, delivered it by the 31st of December, which was pretty incredible. Then the $62 million order we had in the middle of last year, we delivered within 2 months and then the $750 million order I talked about fulfillment in under 9 months. So for that, you need to hold inventory.

But we're pretty happy with the raw and finished inventory we're holding. And please remember that raw, as I was saying, is largely long lead time items as well. They're not finished goods. And also keep in mind that, for example, RfPatrol and DroneGun and some other products we have, have interchangeable parts that you can use in between the products. And we're trying to have as many interchangeable parts between product families as possible.

What are our plans for increasing effective range and distance of our products?

I guess it's the same thing, range and distance. So my first comment somewhat flippantly is that more is not always better. So for example, for the detection, more range you get often more false alarms you get. And our customers don't necessarily want to be able to see 20, 30 kilometers out. And at some point, physics kicks in as well, right? So a lot of our work with customers if they're very new to counter-drone is saying, okay, well, if you come with an expectation of detecting a proper missile 200 kilometers away, there's nothing that will detect a small drone 200 kilometers away. So explaining that there is natural physics limitation to range. But a lot of it is just pushing the envelope of physics, right?

So you're saying, okay, there's noise floor in radio frequency, how do you see through the noise floor, how do you reduce the false alarms. There are quite a lot of parameters that you want to optimize how you detect never seen before drones, how do you deal with the Chinese drones, which are hiding behind other bits of noise, which are running away from you when you're trying to disrupt it. So there are a number of challenges in addition to distance, but that is ultimately why you have 350-plus engineers working on that problem with a lot of drone signal data and just continue to get information from their customers.

The next question is about, can we provide some more detail about the types of drone deployments by China, which are behind the concerns that our Asia Pacific customers have?

So a well-publicized example, this is a bit dated about 2 years ago, has been of a Chinese drone landing on the deck of a Japanese naval ship. Now you imagine massive embarrassment, loss of faith -- loss of face. And so that's an example, right? So small drones are buzzing over military facilities and just generally harassing both the civilian and the military targets. So this is what our Asia Pacific customers are looking to protect against.

Has DroneShield considered underwater drones and drone capabilities -- anti-drone capabilities and detection?

Yes. So we actually first came upon the concept of underwater drones and what to do about them about 5 years ago. Those who have been following us for a while would have seen we introduced a partnership with a sonar company. And our job there is our command and control. So DroneSentry-C2. Again, remember, we're not a drone gun company. We are much more than that. So we make a command and control solution that various modalities of sensors plug into. And so we had a sonar compatible with our command and control system, started marketing it those 5 years ago, not a single person bought one.

Now the conclusion we reached is that the market just wasn't ready for it. And my view is that the market is still not ready for underwater drones, but the threat is there. And underwater is significantly different, as I was just saying 5 minutes ago, to every other types of drones. So drones that crawl on the ground or the surface of the water that fly in the air because traditional physics of radio frequency in the air doesn't propagate well under water. So you need sonar for the detection and something else, be it nets, torpedoes, it depends really on the customer in there, the ability to deploy countermeasures for the defeat. But our role in all of this will be providing a command/control solution, which also will protect against drones from the air and the ground and so on.

Can we quantify the current order backlog and how much of the revenue is expected to be awarded in this financial year?

So if you look at the chart, we are sitting at a bit over $100 million in committed revenue this year, and we recognize roughly about 20-ish or so. So that means the backlog of about 80 and virtually all orders for this year, plus obviously, the revenue that we will actually secure. Now my controversial view is that I don't like backlog, backlog means a customer has placed an order and is patiently waiting or sometimes impatiently waiting on delivery from us. My goal is to deliver goods under order as soon as possible to customers.

So you find that big defense primes often advertise their backlog. So they say, "Hey, I've got a 5-year contract, I'm going to deliver this and that over the next 5 years, and that is seen as a positive, great. But in our industry, it's actually negative in a sense that you want to be rapidly delivering to customers and not making them wait. So vast majority of the revenue I anticipate for '26 is not inside of that $80 or so million current backlog, but the new revenue that we will earn and deliver and recognize from now before the end of the year.

What likely drone threats exist or may exist that DroneShield does not have solutions for, for example, cable drones?

So I think the person is referring to the fiber optic drones. So there's a slide in our presentation, which talks specifically about why fiber optic drones are not a threat. So for example, we are effective against fiber optic drones because we offer a command and control solution that integrates with radars, which can detect anything that flies, including fiber optic drones and also depending on the customer solutions like HPM that can take down those drones. But my view is, I think I said to many of you before is that radio frequency is the backbone of drones. And fiber optics exists very much around the edges with significant limitations. You think about flying a drone with 10 kilometers of fishing line attached to it, wrapping around trees, buildings, you fly a bit too quickly, you snag the cable. It's really very much an edge case.

And RF to drones, I believe, will be a bit like wheels and cars, like whatever cars will look like in 50 years, they'll probably have wheels on them because we're flat in our world and built a lot of roads. So similarly, for how much was invested in the radio frequency. Now that's not to say there will be new types of RF, which is like I was saying, the Chinese are now putting what was 5 years ago, sensitive electronic warfare techniques into $5,000 drones designed to avoid detection and defeat. We're starting to see slow rise of cellular control drones. But tethered drones, I don't believe, have that much future and our existing on-to-move and fixed site solutions already have a way of dealing with them.

The next question is $28 million of our FY '26 committed revenue is the SaaS pipeline tracking 2x of '25. So about 7% of SaaS for FY '26, how are we going to get an uplift to get to 30% by 2030?

Great question. So I talked before about the 3 strands of SaaS, the device level SaaS, which has a bunch of elements to it, like the detection, defeat for the radio frequency to separate SaaS, our RFAI, RFAI attack, talked about DroneOptID SaaS, the radar SaaS, the SentryCiv SaaS and then the DroneSentry-C2 and the C2 Enterprise. So today, out of the roughly 4,500 pieces of hardware deployed around the world, maybe only half actually receive SaaS, the other half being DroneGuns, which don't require SaaS by design.

Going forward, as the technology continues to rapidly iterate, so hardware probably has a 3-, 4-year cycle, I would expect over the next 5 years for us to have tens of thousands of pieces of hardware, almost all of them receiving SaaS. And not just one piece of SaaS on every piece of hardware, but having like an example I was giving with DroneSentry-X, you have one piece of hardware, but then you might have RFAI, RFAI attack. It's part of the system. So it has a radar SaaS, camera SaaS and the C2 SaaS. So having multiple pieces of SaaS maximizing that SaaS element as part of the total revenue. But then also on top of that, I talked about the wallet share, right? So talking about the training and counter-drone as a service. So there's quite a lot of elements that we are actively exploring with customers at the moment.

The next question is about how do we see ourselves in terms of the World Cup this year in the U.S.?

So we talked about the Safer Skies Act, which enables police and public safety officers more generally to use jammers take drones down going forward. This, we believe, will really drive adoption of counter-drone technologies within public safety system that will protect those stadium venues. So we have a public safety team inside of our U.S. office run by Tom Adams, an ex-FBI guy. And we are actively engaging with a number of police agencies around the world -- sorry, around the U.S. at the moment and believe we'll have meaningful sales from that between now and the World Cup.

What countries or theaters of war are considered no go for DroneShield?

So pretty common sense, right? We would not work with Russia, China, North Korea, Iran. I mean, essentially, any country which is either prohibited or gray zone list by the Australian government because we do need export licenses to sell. And well clear what those are. We've been working with Department of Export Controls now since the beginning, and we have a very close relationship with them. We basically would never ship to those countries. And the processes are very strict, right? I mean, even though our products are entirely safe for humans, so none of our products can hurt human being or even the drone for that matter, the strictness of export controls is comparable to a proper weapon.

So for example, a guy who runs our shipping department is an Italian guy who used to be shipping torpedoes around the world on behalf of a Italian defense prime. And so it's the same strictness of the process in terms of end users entering into paperwork not to share our equipment with anybody else. And ultimately, this is not just between us and them, but also involving Australian government. So exceptionally strict control processes.

What are some of the drone-related verticals that look interesting to us from an M&A perspective?

So we'll always stick with counter-drone as we want to continue playing in what we know. There are technologies like high-power microwave, which I find really interesting, and it fits in our nonlethal but complementary to drones, for example. I think there will be new methods of detection potentially relating to shock and vibration coming from drones. So essentially, the way I see this is the equipment needs to be cost effective. It's hard to justify having a $10 million piece of equipment against $200 drones. It needs to ideally protect an area, not just 200 sort of meter range around it, unless it's super cheap, so you can have mass volume of these things.

And ideally non-ITAR because we want to have the market of all of the NATO and NATO allied countries. And the current AUKUS process in terms of Pillar 2 is streamlining a lot of that ITAR stuff between Australia, U.K. and the U.S. But ideally, we want to be continuing to focus on non-ITAR technologies.

The next question talks about how was our exhibition at Enforce Tac in Nuremberg.

So I wasn't there myself, Angus, our Chief Product Officer, was leading our delegation. We have a number of European team members who were in Enforce Tac and the download I had so far is that it's been an exceptionally positive meeting and helpful for our folks on Germany with Bundeswehr as well as the rest of the European market.

So the next question is, why has DroneShield not introduced Phantom shares to attract and retain talent and not put pressure on the share price?

So the Board regularly revisits what are the most appropriate structures. In my opinion, phantom shares are not an optimal structure. And so we haven't been introducing it, but the -- this is something the Board does review regularly what makes most sense.

There are increasing reports of hybrid attacks at airports throughout Europe, what are our plans in that space?

So we have had equipment deployed at the airports. For example, you might have seen news articles with the DroneSentry-X at Copenhagen Airport a few months ago. I think airports more generally struggle bureaucratically. So in some countries like in Germany, actually, Bundeswehr has technically a lot of influence over what gets deployed at the airport. So it just becomes of kind of too many cooks problem where you have airport, you have the military, you have government more generally kind of all coming up with what's the most appropriate solution. But I think you're right in that the pressure continues to escalate on airports to deploy counter-drone measures. As today, you imagine you stop all flights for 15 minutes, 30 minutes, an hour, and that's a significant disruption. And the alternative is even worse, plane taking off and a drone blowing out an engine, right? So we are talking to some of regulators. We're talking to airports directly. We're talking to military. So the idea is that you just keep pushing, chipping away of the stakeholders until eventually you kind of break through and start deploying gear.

The next question about viewers saying they watched a terrifying video on Chinese robot advancement moving to RF control.

So I mean, robots can be seen as UGVs and ground vehicles, and this is very much part of our market. So UGVs, ground vehicles, UAVs, aerial vehicles or fly drones and USVs, so unmanned surface vehicles, both essentially on the surface of the water. And the physics is exactly the same in terms of how radio frequency radars. Radars work a bit not so well close to the ground because you get a lot of ground clutter coming up, but radio frequency is generally pretty good.

Have any shipping companies expressed interest in DroneShield to protect ships through conflict areas in Red Sea and Iran?

Yes, we have some shipping companies using our kit already. This normally needs to be a bit of a layered arrangement of government forces being on those ships and them having our kit, which ultimately links to if you -- who can own -- possess jammers. So the law of the high seas essentially says, well, anybody can do anything. But then, of course, those ships need to come to harbor eventually. So usually, the arrangement that we're seeing at the moment is if the ship has government security on it, they'll be able to use our kit and some of them do.

I'll pass the next question to Carla as it deals with the net profit margin. So I'll read out the question. I understand we're investing heavily to scale, which is importing reported net profit, but net margin is low. When do we expect net profit margin to materially improve? And what level of margin do we believe -- what level of margin do we believe is achievable in FY '26 as we continue to scale?

Thank you, Oleg. So right now, our focus is, obviously, we want to grow the business and we want to increase our revenues. We know that profitability is important as well. And we are focusing on trying to improve our profitability position, taking into account that we were in an operating loss, a net loss a couple of years ago, and we've only now really started to focus on improving our net profit position.

However, as you mentioned, we are scaling really rapidly. So balancing that rapid scale in terms of implementing a new enterprise risk system that we'll be doing this year, also our ERP system, opening a European office, focusing on U.S. manufacturing, European manufacturing, all of these items add costs to the P&L. And so we are focusing on trying to control costs, but focusing on increasing those revenues. And by doing those 2 things, naturally, our net profit will increase.

I cannot provide any details at this stage in terms of what I forecast our net profit margin to be. But what I can say is our fixed cash costs for this year is looking at around $150 million. We have capitalized R&D and so we're looking to capitalize between $25 million and $30 million on R&D. Our gross profit margin, we spoke about already, which is 65% in terms of normalized average gross profit margin. And that is about as much as I can provide at this time. Thank you.

Thanks, Carla. Does DroneShield see Asia, excluding China and Central South America as big potential markets than European Union as they quickly adopt drones, as seen in the Thai-Cambodian conflict? And are there any difficulty selling into those regions, countries not seen as Australian allies?

So I'm not sure about these becoming bigger than EU. EU is a huge driver for us, but becoming big, yes. So the key countries in Asia we're focusing on is Japan, Singapore, Thailand, Vietnam, Taiwan, and there are a couple of others as well. None of those markets have an issue with export permits with the Australian government. So we've been working there. And in Central and South America, so Mexico and Colombia both have issues with drug cartels and past that, there's Brazil, Argentina and others. So again, growing markets, especially Mexico and Colombia. And we haven't had issues in terms of export permits working with Department of Export Controls.

The next question talks about competitive landscape across product lines. We're seeing new entrants and are we increasingly having to compete on price?

No, we don't compete on price. It's interesting. So when we started 10, 11 years ago, there was really maybe us and 1 or 2 other companies. And then roughly maybe 5 years ago, the amount of competition really blew out. You go to defense show and every single stand is suddenly a counter-drone company, all kinds of stuff. Now we're seeing the market consolidate significantly. So some get merged or acquired, for example, DZYNE, which is a compilation of 3 or 4 companies or BlueHalo that got absorbed into AeroVironment and some go out of business just because customers basically don't buy from them because the products don't make sense. So we don't really see new entrants just because the industry is so high barrier now.

We talk, for example, about drone signal data, right? Like you try to go around dozens of countries collecting drone signals in various environments. Some of these drones are very sophisticated restricted government drones, very, very difficult to build up and maintain that database, deal with relationships with military, government and customers, looking at radio frequency at the edge of physics, like, say, maybe 5, 7 years ago, the aim is to take an existing technology that has been successfully deployed in electronic warfare and cost effectively adapt it to counter-drone.

Today, you are truly at the edge of like stuff that we are using is often a lot more sophisticated than any electronic warfare solution just again because we've been at it for so long and you just keep getting better and better. So it's very hard for new entrants. If anything, I would say our products will become more expensive, but also with more capability. So some of our new product lines will be launching from end of the year will be triple the cost of the existing products, but roughly keeping the same gross margin. But then the capability will be significantly higher as well. So if anything, I see our pricing trending higher rather than lower.

How do we keep captured equipment from being used by the enemy?

So it depends on the equipment. Most of our equipment and increasingly more and more are software-enabled. So obviously, we have ability to deny any changes in software. And then if you don't do changes in software, then the software quickly becomes obsolete.

Can it be linked with laser beam technology?

Can be in terms of our command and control DroneSentry-C2. But I actually have a pretty dim view on the laser. It makes for cool news headlines. But remember, right? So lasers have their place, right? So you always see militaries deploying some laser solutions. But think about mass deployments. You have systems that often cost $10 million plus that have obviously kinetic impact. You don't want to be blinding people if you're using it for stadiums.

So I would consider laser in the same bucket as say, high-power microwave; an exquisite, very useful but very specific use case rather than what we are targeting most of our technologies being mass deployment to as much of the customer base around the world as possible, which has to be no collateral impact. But then if a customer comes to us and says, can you provide a laser solution? We have our great friends in AIM Defence based in Melbourne. They do amazing laser solutions. So that's what we'll be putting forward, assuming it works from an export compliance point of view.

Have we considered drone protection with the making of other drones?

I think anti-jamming, I'm trying to rephrase the question. So no, we don't really do things on the drones that stop other counter-drone systems being able to detect or defeat them. It's very different technology. I mean it's a bit like saying Boeing doesn't do anti-aircraft missiles, even though Boeing is great at planes, like you kind of have to stick to what you're good at. So drones and counter-drone are actually very different technologies, even though they are obviously on the opposite ends of the same battle.

Are we prepared for threats to the business such as cyber attacks, theft for facilities or threats to executives or employees?

So this is something we take very seriously. And also, there are government standards across physical cyber and other classes of security that we follow. So we have a team led by an experienced executive that deals specifically with cyber threats. And thankfully, knock wood, we haven't had a single successful cyber attempt, but we're continuing to see a ton, and this is something we take extremely seriously.

In terms of insider threat, there is a very thorough employee vetting and also employee vetting program. We use a dedicated defense software in terms of monitoring employee actions, for example, ensuring the person doesn't download a whole bunch of stuff they're not supposed to. There is natural segregation on a need-to-know basis. So for example, I don't actually write code, so I don't have access to the code database because why should I? And a number of other kind of standard defense industry things. We don't need to reinvent the wheel here. So similar things to what the likes of Lockheed Martin or Thales or Raytheon doing, I mean, we do largely all the same stuff, gold standard and continuing to revise that as the technology evolves.

In terms of threats to the executives, so yes, look, I mean, it's something that we looked at a lot. So for example, about a week or 2 ago, to give you a recent one, there was a case of somebody, I believe it was a Ukrainian guy, who got deported from Dubai, where he was based, forcefully to Russia as he was accused by Russia of killing a Russian general involved in Ukraine war. So for example, my directive internally was if you happen to be on the Russian sanctions list, which I personally am, for example, then you don't transit through Dubai. You don't stop in Dubai. And so this is something that we take very seriously.

Do we have a capability to detect and neutralize drones swarms?

Yes. So our detection and defeat is what you call volumetric, meaning you're scanning not just a little area at a time, but a whole wide area and you're basically staring at the sky and you can detect multiple drones at the same time, essentially, I don't want to say limited, but exceptionally large number of drones. And similar for the defeat, jamming and its advantage of jamming versus some other technologies like cyber can affect multiple drones at the same time.

Next one. What do we see as the main threats to our growth and profitability going forward? Is it emerging competitors, for example?

It's a great question. So I don't believe there are major blocks, right? But generally, you want to be on top of technology. So you always live in fear that our friends in China will invent something that's entirely immune to anything that we do, detection and defeat wise. But the reality is that physics are physics and as smart as engineers in China are, they still have to follow the laws of physics. So that nature limits to what parts of the bands you use and how you hide behind noise and so on. So we think we're pretty well positioned.

And again, we've been in this space for 11 years. We understand the industry, and we continue to be on the bleeding edge of it. But you need to keep at it, right? Like you can't rest on your laurels. That's why you have 350 engineers out of the 460 people because you just have to keep innovating on a weekly, monthly, quarterly basis. I'm super excited about the next gen of hardware that we're releasing, the next gen of software, our RFAI version 3 that will go on top of the new gen of hardware when we release it at the end of the year. So this is all part of -- all part of that.

And also, there is just general growth, right? So the organizational theory is that as you get past 30, 50, 100, 300, 500 employees, you almost have to break and remake organization. So how you follow your processes, how you communicate, all of that needs to be entirely changed so the organization doesn't sort of collapse onto itself. So that's what a lot of our focus is on at the moment.

Do we need to work with CASA to certify our solutions to use in the Australian airports?

So there is no such thing really I wish there was as a certification to be deployed at Australian airports. So first of all, it's not CASA. CASA used to be in charge of counter-drone security, and then it was transitioned to Airservices Australia several years ago. And Airservices ran a limited trial, we were involved in it. And since then, nothing really happened, unfortunately. And I mean, I get it. I don't want to blame Australian government. To be honest, U.S. government and all the other Western governments are doing exactly the same, meaning not doing much.

But I think as drones continue to pose a threat to airports, this will just continue to become more and more a pressing issue. And I think once a few airports start deploying it, you'll be seeing more and more continue to do it because today, it's kind of easy to say, well, nobody else is deploying, no other airports are deploying counter-drones. So I just won't do anything. But I think that excuse will start going away. And so we're really excited about that eventually starting to snowball, but we're continuing to push. So in Australia, this ultimately sits with the transport minister. So we're continuing to push at the government level to have counter-drone deployed at airports.

Next one. Are we seeing increasing pricing pressure with Anduril and other primes pushing into the space?

So I think if anything, anything to do with primes will probably mean we're increasing our margins, not reducing given the cost structure of the primes and Anduril would be in the same bucket. I wouldn't call them the cheapest by any measure. So no, as I was saying, Anduril is really only overlapping with us on Lattice, the C2. And I don't want to say it's a competitor to DroneSentry-C2 Enterprise. It's just a different product. So there will be customers like the U.S. military where Lattice will be competing with Northrop Grumman and their environment and other dedicated C2s.

And for example, the countries where we are deployed, they for various reasons, wouldn't be using Anduril C2. So I'd say -- and also, by the way, in the civilian space, Anduril doesn't really go into that space either. So I think -- or public safety, for that matter. So I think it's not really competitors, but if anything, our customers. Anduril is our customer, too, by the way, as they are the SIP, administrator essentially on the U.S. SOCOM program.

We -- next question is we just released the $21 million contract. Can we elaborate?

So we've been working with this Western customer for a number of years. If you read the announcement, the details are all there, had a number of contracts with them, and now they're just ramping up in terms of the deployment. And we're really excited in that particular country, we are the only counter-drone system of any significance. And it's actually a very large Western country in terms of defense budget. So now it's just a matter of continuing to sell more. We talked about low market situation to really kind of assist the customer into high situation with our equipment.

Okay. Last question I'm seeing here. If there are any more, please ask or otherwise, you can e-mail your questions to us later. Are there any plans to integrate counter-drone tools directly into drones or other mobile platforms? What are the challenges of this?

So not drones, but if you look at programs like AIR6500, which is Australia's mission -- sorry, missile protection system operated by Lockheed Martin. So those likes of programs where you have complete airspace awareness, so you are protecting against missile threats, but also you want to be able to protect your lower airspace against drone threats. So for example, attacks locally from drones taking out your jet fighters at Amberley or Williamtown airbases. So it's the likes of those, so call it like the larger air defense programs that we'll be looking to integrate with over time. And our DroneSentry-C2 has pretty standard APIs. So that makes the integration pretty streamlined. But ultimately, the government and customers will be driving a lot of this.

The next one I'll leave to Carla. Can we talk to income tax benefit in the second half versus tax expense in the first half, what to expect going forward?

Thanks, Oleg. So with regards to our taxes, you would have seen in the annual report that we have a complicated tax structure. We are tax residents in the U.S. as well as in Australia. What that means is that obviously, our tax profit and accounting profit are very different and there's items that were deductible in the second half of the year versus the first half, resulting in a tax benefit versus the tax expense for the first half of the year. Currently, we have about AUD 11 million in carryforward losses to be used against future tax profits.

Thanks, Carla.

How does selling through resales impact margins?

So our margins are already after the use of resellers. So essentially, the way you should think about the customer cash flow is our revenue is what we get from the reseller and the reseller would have their own margin on top. Now what we do is in the U.S. and Australia, we would influence the customer directly. But in the U.S., when you sell, you often sell through vehicles like DLA, TLS, it's just how you do defense procurement there. So there is a degree of clipping the ticket. And when you say, sell in many European countries or Asia Pacific, you have to go through distributors because these are people that have local relationships, obviously, understand the customers, the language and it saves us from trying to hire people in 70 countries around the world.

So even despite the resellers, we're able to achieve very attractive 65% gross margins, but then we don't have to employ people in every country. And to be honest, some of the best guys who are resellers in terms of their relationships with the end customers, you can't employ them. They'll have their own little shops where they would sell maybe a dozen different product lines, we would often be their only counter-drone brand, but then they will be, for example, selling radars, electronic warfare, maybe drones themselves to the customers, and we tap into those unique relationships.

A lot of the recent contracts are with existing customers, how we're going with converting prospects into customers, what's been experienced like bringing in new customers into DroneShield?

So this is the whole art of selling to governments, right? So we lean on our distributors, but also we try to own as much of the customer relationship as possible. So you're not entirely dependent on the distributor. There is this complex web of the government budgets, which are often competing with different priorities and counter-drone is a priority. But for example, sometimes the customer may choose to buy drones rather than counter-drone equipment as that happens to get the priority. I mean, usually, customer gets a bit of both. Then you often have -- is it us or is it going to be another competitor, you normally try and ensure that the tenders are written with advantage to DroneShield in mind.

Often if you see tender for the first time when it comes out, that means that it's been shaped by a competitor. So you want to be involved in the earlier stage. But generally speaking, you really want to ensure you're servicing the customer, right? You're providing that quarterly software updates is an important touch points. If there is an issue, you attend to that. And that's also expanding our fee wallet as well, as I was saying, in terms of having those support fees that we plan going forward.

In terms of the new customers, so we continue to gradually expand to new customers. And so every once in a while, we -- like, for example, there was a new customer in South Africa about a year ago that we got and there are smaller customers in Asia Pacific that we would get in the last couple of months. But the goal really is to say there are -- in terms of what moves the dial, right? So there are probably 20 government customers around the world like U.S. Army that move the needle. And so the best bet for us is to focus on programmatic levels, so large-scale deployments while opportunistically going at the tactical level, so unit level to get those purchases. So it's less about kind of scrubbing and ensuring you get all the little fish. I mean you do that kind of in your spare time as best as you can of going around the elephant opportunities. And also once you have product deployed with customer, often they'll come back to you anyways for the top-up. So it's a pretty sticky position.

I think that's all the questions we had, and we are over an hour. So we'll stop here. Thank you for your time. And if there are any questions, please e-mail them to us at [email protected]. Thanks for your time.

Good morning, and welcome to the DroneShield December Quarterly Investor Presentation. I'm Oleg Vornik, the Chief Executive Officer of DroneShield, and with me is Carla Balanco, our Chief Financial Officer; and Angus Bean, our Chief Product Officer.

I will aim to speak for about 20 to 30 minutes, and then we'll turn to Q&A, which will be the majority of this session. I encourage everybody on this call to submit your questions as you go as opposed to wait until the end of my presentation, so we can commence the responses to Q&A as soon as we're done.

I'm going to skip the basics of DroneShield as I assume most who have dialed into this call

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in revenues as well as about $202 million in cash receipts. This is a truly outstanding result and approximately just under 4x the increase from the top line of last year. But importantly also, we have started really strongly on the 2026. And a reminder that we are going in calendar year-end. So roughly this time last year, we would have begun the year with maybe $5 million or $10 million in locked in cash receipts and revenues while today, we're essentially $100 million that we have carried over from the end of last year, and that will be reflected in the next 1 or 2 quarters, plus any additional business that we're currently working on.

The SaaS revenue similarly has continued to climb. So we have gone from just under $3 million in '24 to just under $12 million in '25, and we have already locked in over $18 million for 2026. And again, this we anticipate to continue to climb as we secure more sales with SaaS attached to it, but more on that as we speak about our SaaS strategy.

In terms of the profit before or after tax, we're going to be releasing this in about a month from now as part of our annual results, and that is what our finance team are busily working on.

The next slide gives roughly a quarter-on-quarter and a year-on-year comparison. So across all top line metrics, the revenues, the customer cash receipts, the SaaS revenue and the operating cash flows, we are seeing significant increases.

The revenue from customers and the secured revenues is not the only metric. The pipeline remains strong at about $2.1 billion, and that is a small reduction from the $2.4 billion roughly that we had about 3 months ago. And a lot of it is driven by a -- us essentially being slightly more conservative when it comes to the civilian revenues in the U.S. We're seeing still a lot of momentum in those non-military opportunities in the U.S., and I'll talk more about it. But essentially as part of us being more strict in how we apply those metrics and also remembering that U.S. civilian sector is a very nascent industry and much like what military used to be several years ago when you had the early stages, you are not always seeing that progression.

And if you go -- just give me one second. I have received and know that I need to reshare the slide deck, so I will do so now. [Technical Difficulty] Okay. Now you should be able to start seeing the screen again. Apologies for the IT issue.

So $2.1 billion pipeline, which is an exceptionally strong pipeline that I will talk more to in the next couple of slides. But ballpark, we're talking 300 deals diversified across products, geographies, stages of maturity and so on.

Underpinning all this is about 350 world-class hardware and software engineers here in Sydney that has taken a decade for us to build. There is no team of this sophistication and quantum in the market that we're aware of. And this is what's leading to the highly differentiated nature of our products, both the current products, which I believe, are the best out there, but also the next generation of products that we'll be commencing release of in the second half of the year, which we think will completely transform how our customers think about counter-drone solutions.

The $70 million plus R&D spend and we expect that to continue, slightly increase, but not a lot. So we expect to go from about 500 to 600 people, assuming our recruitment program goes on track by end of '26. Most of those would be engineers as well as ops and salespeople. And this will continue building on our highly -- basically high gross margin products, so 65% gross margin as well as a healthy cash balance.

So let's talk about the individual geographies. U.S. has, for a long time, been the engine of growth of the business, so 70% revenues. Last year, Europe has taken that title and Europe will continue driving a lot of our momentum as we're seeing a number of countries really ramp up their defense, realizing they cannot just rely on the U.S., they need to be self-reliant, and increasing their defense expenditures significantly. And within that, we're really well positioned, including setting up manufacturing in Europe. We have a number of well-credentialed distributors that we trained and are deeply ingrained with our military but also critical infrastructure and customers through Europe and set up our office in Amsterdam led by Louis Gamarra, our Global Chief Commercial Officer, who is then managing those distributors around Europe.

In the U.S., after a relatively quiet '25, we expect to have a very strong '26 once the current U.S. congressional '26 budgetary discussions are concluding. And hopefully, that will be all in the next month or so. And that is across several verticals. The defense budget, which is already at the record of USD 1 trillion in '26 is proposed to be USD 1.5 trillion in '27 and we believe we're well positioned as JIATF 401, which is the centralized procurement office for counter drone in the U.S. will start kicking in.

Outside of the defense, the Department of Homeland Security has set up a dedicated team, the Program Executive Office with USD 1.5 billion contract vehicle. And that's also linked into the FIFA World Cup in June, July where you need significant security, including counter drone.

And Safer Skies Act in a nutshell enables police and majority of police in the U.S., state and local, not federal, enables states and local police to be able to jam on our product, if you think DroneGuns, RfPatrols, DroneSentry-X, on-car sensors and effectors are perfectly suited for police deployment.

And also, we have been included in the Golden Dome, the $151 billion SHIELD IDIQ. Now those are primarily missile protection sites, but all of them will need counter drone protection. So that's where we intend to play.

In the U.K., those of you following me on social media would have seen that I shared a picture in Hereford about a day ago where there was a U.K. Minister of Defense visiting the SAS HQ facility, and that was our RfPatrol basically being demonstrated as part of the visit, and that is not a stage marketing opportunity. This was a genuine visit unrelated to DroneShield and this shows how deeply embedded DroneShield is within the various arms of the Ministry of Defense. And we believe that the actual opportunity is much more than just $17 million or 5 projects. This is what we are actively tracking. But I think the U.K. will be spending significantly on counter drone, and I believe we are, by far, the best positioned business there.

In Australia, we've recently been included into a Line of Effort 3 panel for LAND 156, which is saying to be the managing contractor on specific sites. And we expect that work to commence as in the participants on those panel will start getting those roles sometime this year as well as us being part of Line of Effort 2, which is purchases of portables like DroneGun and RfPatrol and where we received initial small couple of orders totaling $6 million last year, and we expect to get more off the back of that.

In Asia, a lot of our efforts are driven off Japan and the rest of Chinese neighbors, and we expect that to continue ramping up significantly.

Outside of all these geographies, South America is probably the key driver where we're very active in both Colombia and Mexico, and Colombia has announced USD 1.7 billion counter drone budget. And the key focus for South America tend to be fixed site systems, our drone DroneSentrys, which provide protection for the whole facility.

I'll likely skip through the Safer Skies Act except to say that this is significantly increasing our U.S. law enforcement demand.

On the products, again, I will skim and maybe refer back to it during the Q&A session, but a reminder that we do a complete range of dismounted and on-the-move and fixed-site products. So we are a radio frequency AI-enabled drone detector and defeat maker, but we are also an integrator. So integrator of third-party detectors and third-party effectors. And this is quite important, especially when it comes to fixed sites.

I want to spend a little bit of time talking about the software strategy. So today, software is a small, about 5% part of the total revenue. We plan to have it as close to 30% over the next several years as possible. And this will be achieved by every new product that will be released going forward, having one or multiple SaaS streams on top of that product.

DroneSentry-X is a good example. So today, when you buy DroneSentry-X, you have RFAI, which is our AI-enabled engine that runs as a SaaS product on that. But then you're also probably going to have it deployed as part of your site. And within that, our C2 is also the other SaaS product that will be applicable to you.

If now you happen to run multiple sites, our enterprise SaaS, so DroneSentry-C2 Enterprise kicks in, which gives you a region or a country-wide awareness and that is an additional product again.

Now if you're having a multisensor solution, chances are, you have cameras, so our DroneOptID SaaS, you probably have radars where there's SaaS attached to it as well. And we'll continue releasing new SaaS families, optimizing for more and more of the SaaS offerings on top of the hardware that we sell.

I think selling as hardware and software positions us really well competitively. I would not want to be a pure software business in the world of ChatGPTs, et cetera, today, where you're worried that the big AI is going to eat your lunch. And I think hardware, which is highly customized, high IP sort of product, we have a lot of effort that we've been putting in, in terms of designing that circuitry, designing those antennas, how it all sits together.

And having AI that works on that hardware, not in the cloud, it's not large server farms, but on the device, AI on the device, is making us a truly unique proposition that is very difficult for somebody to replicate. And I don't believe we have any competitors that are doing anything quite like we are in terms of our deployment of AI to sense and take down drones. And so this is our strategy to then grow our SaaS to 30%.

But then importantly, selling to militaries and government agencies is recurring by nature. So in the world of counter drone where you really need new hardware every 3 or 4 years, whatever the customers are buying today in terms of hardware, they'll be fully replacing in about 3 or 4 years. In fact, some of our customers are already seeing the trend and they're asking us, and I think this is potentially where the industry is moving, towards Counter-Drone-as-a-Service.

So instead of paying us x dollars for hardware and then continuing to pay SaaS, it's basically becoming one giant SaaS and the hardware refreshes are baked into that. Now this is not going to be done by everybody. And this will enable us to continue receiving those bigger one-offs in the short term from the hardware purchases as well. But I think in the long term, so over the next 5 to 10 years, I think a lot of the industry will move towards Counter-Drone-as-a-Service, which will further smooth out our cash flows.

Number of differentiators, so technical and commercial, I've talked to many of you about this before. On the technical front, the AI. So our enormous database of drone signals, the largest proprietary database of its kind in the world, we believe, which is collecting drone signal data from 70-odd countries in which we operate. And this is one of our also key advantages compared to, say, North American or European competitors, a lot of whom focus on their regions because the markets are big enough.

Coming out of Australia, we always had to be a global export business because the market here doesn't support a business of our size, and that enabled us the global reach as well as building those enormous databases. And then we have data engineers in Australia, cleaning, tagging the data and enabling them the dedicated hardware with an AI engine to perform against drones.

Now we're super excited and we can talk more about it in the Q&A if people are interested on this call about the next generation of AI engine that we are planning to release later this year, which we really think will be the game changer in the performance of the drone detection as well as the defeat. So as a result, our gear can detect, further defeat, further be lighter, smaller and be in various form factors. So on-the-move, fixed-site or both.

On the commercial front, we are one of the most global counter drone businesses. Now we don't supply to the likes of Russia, China and North Korea, Iran and so on, but within the Western and Western allied countries, I don't believe there is a counter drone company with a wider deployment than DroneShield is.

And over the last 10-plus years, and we've truly been a pioneer in this business, and there are a lot of people in this company with very significant longevity. We've seen the whole cycle, both from the commercial and technology experience. We have this think tank capability of understanding where the threat is moving, what the drones are likely to do, how to direct our road map, what makes sense, and this is also our competitive advantage.

In the world where you have to have understanding, not just with military technology, drone technology, but also the acquisition cycles and how various customers like.

On the competitive positioning, we have 1 or 2 competitors usually across most of our product lines, but we are aiming and I believe we are today the leader in every product segment in which we operate. Traditional defense primes, we see more as our customers rather than competitors just due to the requirement to rapidly evolve like 3 to 4 years hardware cycles, quarterly software updates and also be cost competitive. Live defense primes are not positioned for that kind of performance. Theirs are more like, if you want to build a tank or a missile with very different sort of competitive moat.

And I believe that we remain the only publicly listed pure counter drone company in the world. There are other publicly listed companies that do lots of things as well as counter drone being a relatively small part of what they do. But we are the only pure-play counter drone listed company in the world.

And on the manufacturing capacity expansion and maybe in the interest of time, I'll stop on this slide, we are on track to expand to $2.4 billion by end of the year. We are -- we're just in the process of completing the move now to our 8x. Beside the facility expansion in Sydney, we are setting up manufacturing in Europe and in the U.S.

So the idea is for smallish orders up to maybe $5 million, we can usually deliver really rapidly. So for example, the order that we announced on the 30th of December last year, about a month ago, we delivered the following day, and this was in Europe. And for larger orders like the $62 million order we received in the middle of last year, we delivered that within 2 months. And the idea is that if we receive an order in hundreds of millions of dollars, we can still deliver that within, say, 2 quarters. So that's the goal of manufacturing capacity and how we look at the inventory.

I'll stop there and see if there are any questions in the function. Just give me one moment.

So the first question is why did the pipeline move from $2.5 billion to $2.1 billion?

So this was what I was alluding to earlier about in the U.S. when it comes to the civilian sector, we had more bullish assumptions that we have today in terms of follow-on projects. So some of those non-military, non-law enforcement, more nascent industry type situations, where I still think there's going to be an enormous business to be done in data centers and airports and energy infrastructure. But a bit like what we've been seeing with the military sector, say, 5 years ago, those customers are still struggling, given it's their very first time buying counter drone equipment. They need to figure out how much they want to spend, how they want to lay it out. So we have significantly trimmed and made more conservative our near-term forecast for the U.S. non-law enforcement, non-military sector in terms of what we presented in the pipeline.

So in the very near term, I still expect defense to be the majority driver of business in this company, except in the U.S. where I think law enforcement will be a very significant contributor. And I think over the next 3 years or so, the civilian sector would really start picking up to the point where if you think about the total addressable market, the USD 30 billion for the military and USD 30 billion for the civilian sector, I'd see in the long term, this business being 50-50 military and non-military.

Any guidance or TAM for SentryCiv?

So SentryCiv is our commercially focused more affordable product that we released several months ago. We already started having early sales to customers. And this is focused on civilian customers who are budget conscious and they want to be spending hundreds of thousands of dollars or in the low millions for their deployment, but rather they want to be spending tens of thousands of dollars a year. And it's a little bit too early to tell. And I think a lot of that adoption will drive as the civilian market starts to take on. So we're talking potentially farms concerned about activists, and we've already been seeing purchases on that front, some energy infrastructure, stadiums and so on.

The next question is when or how would we consider a U.S. listing to increase exposure to U.S. investors?

I think there will be a time when that makes sense. However, my view is that you need to be significantly larger. So today, we're about AUD 4 billion market cap or US, call it, USD 2.5 billion. But while that is significant. So we are probably halfway on the ASX200. That is truly a micro cap by the U.S. standards, and I believe that it's going to be a disservice for our shareholders if we list on the U.S. market now. But say if we are 2x or 3x the size, which given the growth we achieved, we more than tripled just last year alone in terms of the share price and the size, that could start making sense. So I think this is a regular thought that we're having. But right now, my personal opinion, a bit too early in terms of diluting from our primary listing in Australia.

The next question is, when are we expecting to start manufacturing products in European Union and in the U.S.?

This half year. So in Europe, this quarter, and in the U.S., the following quarter.

Are we finding any challenges to slow this down?

No, I mean, there's obviously the usual process, nothing simple in terms of the supply chains and whatnot, but we're not seeing an issue.

The next question is how do we counter fiber optic drones?

So there's actually a slide in the appendix of the investor presentation that I will draw those of you who are interested in this question, but I'll give you a short summary. So radio frequency and drones are very closely linked. I see this a bit like wheels and cars because there's been so much invested in road infrastructure, whatever cars will look like in 50 years, they'll probably have wheels on, whatever they'll look like. So similarly, radio frequency is so core to the drone technology that the reason why fiber optic and attempts at AI exist is to try to circumvent what we do, but we are still dealing with the vast ramp of what drones are. And fiber optics have very severe limitations like you think practically, right, flying a drone with 10 kilometers of a fishing line attached to it and snagging at other things or snagging the line itself, very, very difficult. You can't fly quickly. And a lot of the images by the way, coming from Ukraine, I wouldn't necessarily trust what you see.

Information warfare is prevalent. They say in war the first casualty is off on the truth. So -- but if you are really looking to make sure you can counter them, remember we're an integrator as well. So we build in radars and cameras that can track fiber optics, and we can integrate, and we already have, in fact, integrated things that can effectively count current electronic systems inside of our DroneSentry that can deal with that as well. But frankly, our customers are not seeing a lot of concern based on everything I'm observing on fiber optics, and it's more of a media thing.

The next question I may pass to Angus about RFAI and our next generation and what it means. I'm personally really excited by that. So Angus, over to you.

Thanks, Oleg. Good morning, everyone. Thank you again for attending this morning and your continued support and interest in DroneShield. Yes, very keen to talk about our next-generation AI technologies.

As many of you know, we have been a pioneer in the counter drone space. We're also a pioneer in utilizing what we call micro AIs. So these AIs are run on the edge. As Oleg mentioned, these are not cloud-based, big server farm, big GPU-based systems. These are very low power, very high throughput AI systems that run essentially on the edge. And that strategy that we developed over 8 years ago has proved to be incredibly accurate as our detection performance often, as you can see in the results of '25, has been really good, and there's been a large adoption of these systems. And the other thing that it allows us to do is attach a software and service license arrangement to the products as well to get those recurring revenues.

The AI, the next generation is coming through, and we're really excited about the developments. So we -- our current models, RFAI-ATK and RFAI V2 are doing really well in the market. We are working on both RFAI-3 and RFAI-ATK-2 that will be reduced -- sorry, will be released onto the existing products but also, as Oleg alluded to, our next-generation platforms later this year. And there will be a slow rollout through the different products that are appropriate over time.

One last point I'd make on here is the key thing you need to understand about building an AI business is the algorithms that you develop are important and they're difficult. But once you get through that, it really becomes a race for information or a race for data. DroneShield has more data available on drones than almost any company in the world and we're utilizing that as the core foundation to both sustain our current generation AI models. But more importantly, that's also the bedrock of our next-generation AI models, which will be much more open and much more applicable to the new varieties of drone technology that we're seeing in the future. So a bit of color on that one on to you. Oleg?

Thanks, Angus. The next question is, do our products -- I'm paraphrasing the question slightly. Do our products have any familiarity to systems developed by Palantir?

So Palantir develops more broader software only based battle space awareness systems. This is quite a bit different to us. We are focusing specifically on counter drone, we're doing a fusion of hardware and software. And in fact, I believe that going forward that fusion, that working together of software, the C2 and the hardware will become increasingly more important. So no, I don't quite see us competing with Palantir, which I think is a great company.

The next question is, do we think that any of our customers are delaying purchasing our current generation of products for the next generation?

Look, I doubt it. So the next generation of products will come in batches through to and probably from the end of the year onwards. I mean it's probably a bit of an analogy. Would you not buy an iPhone and wait for another year for another iPhone. Look, you probably would wait except if your life depended on it, you'll probably buy the current iPhone as it stands and then you'll buy the next one when that is released. So I don't believe there's any way. There's expectation, in fact, that military see working with DroneShield as a long-term partnership, which is also how the 65% gross margins are justified, in that we're doing significant ongoing investment in R&D, which means we will be releasing new hardware every several years, software every quarter. And they will be having to upgrade and also that's where counter-UAS, the service idea comes in.

Next question is, can we talk to the new product road map and any changes in the mix of potential uplift?

So there's not everything that I can speak about. But the general comment I would make is that the average sales price would be higher. So we're pricing our product to the gross margin, which we -- on the hardware front in -- are planning to keep at 65%. But the extra product cost is likely to be close to triple just due to the more advanced chips, circuitry and so on. But essentially, it would mean that the revenue should continue to rise, I believe, as low market situation and customers are looking to still have counter drone products where they often have very little by way of the civilian sector hasn't been started, for example. And so larger dollar numbers, but similar margins. And hopefully, as SaaS continues to increase as a percentage, that will, in time, increase the gross margins across the business.

The next question -- sorry, it's a bit of a long one. I'm trying to read it as I go. So maybe I'll turn this one to Angus as well. So the person is asking about the -- us previously talking about the ongoing cat and mouse dynamic in the technology. Can we give an update on how the landscape is evolving? So what are the drone makers doing to make our life difficult essentially? And how are we responding? And then a follow-up, what are the fundamental shifts in the underlying technology that we're seeing and how we're positioned with those changes?

So Angus, over to you.

Thanks, Oleg. Great question. So yes, we are definitely in counter drone 2.0, and we talk about that a lot on DroneShield where we really are in the second era of counter drone warfare, whereby the big shift here is that the drone manufacturers are actively building systems and technologies to mitigate previously deployed counter drone solutions. And so we are seeing a really large uptick in that. And we've spoken about this before. This is the reason why we invest so much of our time and energy and financial resources into R&D. We have, as Oleg mentioned, the largest R&D team specifically to meet the needs of this emerging market.

So to give you some examples of what we're seeing and drone manufacturers use, we are seeing really wideband RF communications. We're seeing mesh networking in drones. We're seeing obviously the fiber optic, which we still feel is a very niche use case, technology becoming into play, and we are responding accordingly. But we're responding with solutions that our customers can actually purchase and field. There's a lot of solutions out there, particularly once you get into kinetic and high energy and laser systems that either financially or operationally are not really something that a lot of our customers can deploy easily to the level that we basically expect from DroneShield. So we're responding with solutions that are going to work for our customers, most importantly.

The thing -- and going back to the point forward, we've been looking at this for 10 years now. But the thing that we really understand is the core principles of the drone technology. We've watched this technology evolve over time. We have some pretty good understanding of where the evolution is going and it really is going back to first principles. There are physical limitations on what you can do with the radio system, there are physical limitations on the airframes and once you understand those first principles, then you can build technology to meet those changing needs.

And as Oleg mentioned, what are we doing about it? We are looking at integrations of a number of different technologies that we don't plan to build ourselves. I think a good example of that is the interceptor drone category, but we are currently doing test evaluation, and we are in very close communication with a number of interceptor drone companies around the world that market itself very competitive, no clear owner and winner. So we plan to take a strategic view and just partner with best-in-breed. We are doing that work now to work out who those partners are and pushing those integrations.

Oleg, did you want to talk to anything on the M&A front on that side?

On the M&A front, our goal is to ensure that we continue being best of breed in anything that we buy. So you'd notice we have $200 million in the bank. Obviously, we have ability to use our stock as well, but we do not want to buy one of many. And I think there have been cases in the counter-drone industry where people went out and purchased companies that were not best of breed basically just for the sake of making transaction. We are very disciplined, which is why in our 10-plus year history, we haven't done an opportunity yet, but that's not to say that we're not actively looking.

And in fact, we have hired [ Josh Bollo ] to start with us this week and one of his explicit focus areas is assisting us to identify M&A targets for us. And so we -- this is something that we're actively thinking about, but it has to be a success for the company. I often find that, and as you guys may well know, I come from M&A background myself. In a transaction situation, the target benefits much more than an acquirer. And obviously, here as being an acquirer, I want to make sure that it is value add to the shareholders. So we're being very careful. But I believe the opportunity is there in terms of acquiring best-of-breed capability, otherwise, we'll just keep developing things organically.

The next question is around the Golden Dome. So the SHIELD IDIQ, the USD 151 billion program that we are now a part of. And the question is, has the U.S. given any context to the time lines and when we're going to see pipeline from SHIELD IQ (sic) [ SHIELD IDIQ ].

So there is no pipeline from SHIELD IDIQ in our sales pipeline right now because it's a little bit too early. On the timing, it's really difficult to tell. There have been, as you probably know, a large number of companies included in that IDIQ, but it's also a very large program. So I'm hoping to get some news over the next 6 to 12 months on this. And I'm glad we're included. And like I said, all of these missile protection sites will need to have a counter drone program attached to it. And so I believe we're well positioned.

So the next question is -- I'm trying to summarize it, is that basically, I think, the asker is wanting to get some more background around me selling the stock of the performance options in the business back in November last year.

So look, the background is as follows: myself as well as a number of senior executives in the business get rewarded when we hit revenue thresholds. Those are exceptionally ambitious thresholds. When we had no revenue to speak of, it was $10 million. When we hit $10 million, the next threshold was $50 million. When we had $50 million, the next threshold was $200 million, which is the one that was achieved in November last year.

And now the next threshold we communicated, which is more of an industry best standard, is a number of those thresholds rather than what you call cliff vesting, which is what we've been operating in a more elegant way up to now, where you have $300 million, $400 million and $500 million in revenue as your threshold and for each one of these numbers being reached, you have some vesting of the options immediately and some the other half 12 months later. So it's a very, very staggered fashion.

So once those performance options have vested and I've chosen to exercise them, that essentially crystallized immediately half of that as a tax bill, regardless whether I would have sold them or not and regardless where the share price would have gone. So essentially for me to immediately crystallize $25 million in tax liability regardless where the DroneShield share price is, which is a huge burden. So clearly, anybody looking at this now would have said, okay, well, Oleg is looking to sell at least $25 million worth of stock to pay the bill to the ATO.

And then the rest, look, I grew up in a fairly poor condition as some of you who followed me would know in social housing and so on. So this was an opportunity for me to secure my financial future. I had a mortgage, a fairly significant renovation bill, unfortunately, that went out of control, but more generally secured the financial future.

Look, unlike what some of the articles reported, I did not sell everything. I still have a multimillion dollar equity position through the stock options and obviously continue to care about the business. And I would also say that while the price has reduced a bit before, like from about $6 plus to about $4, it was completely unrelated to selling. It was before the selling. And this was in line with the general listed market slide down after a hard run up a couple of months before.

And in terms of impact from misselling, well, the price now is higher than what it was before I started selling. So those that would have held on. I'll be seeing the money. And I would say that we are #1 performing stock in terms of 3x plus growth out of the ASX200 in 2025. And I hope as we continue to keep goals, the share price will continue to perform.

And maybe the last thing I would say is that while obviously I was in the news as a director and my filings are public, there are a number of employees in the company that also benefited from this, and I'm really glad for them because life at DroneShield is not simple. In order to achieve those revenue targets, the amount of effort and the sacrifice on people's family life and so on is very, very significant. We're not just posting these results because we're lucky. So I'm glad that all of these employees, they've been around for many years and have prioritized the company over anything else in their lives, have been rewarded and continue to be rewarded as part of the stock structure and this is aligning with obviously investor interest. And then ultimately, as we'll continue to keep goals in terms of our financial performance, the stock price follows that as we've seen through '25.

I think the next question I might pass to Angus in terms of the other current supply shortages across semiconductor industry expected to impact 2026 revenue. And maybe more generally, Angus, if we talk about our supply chain and how we deal with that.

Sure. So one thing we're really proud of at DroneShield is we've never missed a delivery. So in all of our history, when we have been working with our customers, many of those had been urgent requests for equipment, we've been able to supply generally into the time line in which the customer needed that equipment. That's something we're really proud of, and that's the sort of thing that gives many of our end users and our customers the confidence to go with DroneShield and -- so that they can place significantly larger orders with DroneShield and know that we'll meet their demands. I mean the great example we had last year was the very large European order, over AUD 60 million, which we essentially was able to turn around in just over 2 months which is an incredible feat of our operations team, working very closely with our various supply chain partners.

In terms of the supply chain, we are investing a lot of capital into ensuring that we can meet those long lead time items, we can build confidence in our supply chain partners, and we can secure the stock that we need. And obviously, the much larger facilities that we already have in Sydney at the moment are supporting that as well, having additional warehousing and just logistics support to do much larger orders and turn them around very rapidly. So we're not experiencing any delays that are material to us in delivering on orders at this time. And so we're in a relatively good position there.

Thanks, Angus. The next question is around whether DroneShield is being affected by the Trump tariffs. So we have revised our pricing and fully passed on the tariffs when they were introduced last year. So no, we are not affected.

The next question is slightly long, so I'm trying to summarize it. It's around how do we continue to innovate in response to new drone technologies such as fiber optics.

So to kind of reiterate what me and Angus said before, DroneShield at the heart is an engineering organization. We have 350 engineers, but not just slabbed together over the last month, but a lot of these people have been in the organization, especially in the senior roles in the last 5, 7 years, right? I've been in this company now for more than 10 years. Angus has been here for a very similar amount of time. Even outside of the engineering functions, Carla, our CFO, has been here for about 8 years. So there's a lot of longevity in the business and understanding of the trends and where things might go, right? And the drone makers are a clever bunch, but physics is physics and there are natural limitations of what those guys can do. And I guess, further up the curve you go, the more difficult it gets and where they are waiting for them as they're making their technologies more sophisticated.

So to me, innovation in drones is a very positive thing. If the drone makers stopped innovating, the counter drone industry would commoditize and our gross margins would collapse. So that rapid engineering mindset and deep experience in anything to do with counter drone is our key competitive advantage, and we actually want the drone makers to keep innovating. Our customers do not want us to be -- what -- they're not expecting us to be 100%, nobody is, but they want us to be materially better than competition, which I believe we are, and to continue to innovate.

The next question is whether we can give an update on the Homeland Security World Cup. So this is the June, July event and how we're positioned.

So there was a grant from FEMA, a U.S. government agency for about $0.5 billion. And there are a number of U.S. law enforcement agencies that have been applying for these grants at various degrees of that process. There's only so much I can share. And obviously, under the Safer Skies Act, a lot of these guys once they go through their Huntsville, Alabama FBI range training school are able to use jammers as well. So we are well positioned. Obviously, the urgency is there. So I'm pretty optimistic, but I can't give solid update in terms of the dollar numbers that we're currently associating with the program in part because I think there's just going to be so much movement over the next several months.

There are next couple of questions, which are essentially asking us for revenue forecast for '26.

Look, I'd love to have a crystal ball. So we don't give guidance. The reason why we don't is because you're in a nascent industry and it will just be irresponsible for us to give a number. We're not a toll road, we're not an airport. I can tell you that my internal direction to the sales team is to have a very meaningful increase like we're talking multiple increase over '25 sales. And obviously, we'll update the market as we continue to push towards the target. And I would notice that we already started the year with essentially $100 million in the bank in terms of the revenues, which is by far the strongest where we had in any of the years in the past.

The next one, I'll pass to Angus. Does DroneShield have concerns with the emergence of microwave-based drone defense technology? How we differentiate ourselves from the company's focus on that technology, specifically combating drone swarm defense? Angus?

Thanks, Oleg. So yes, high-powered microwave solutions are emerging as a counter drone technology. We -- many of you would remember, we do have a strategic relationship with a company out of the U.S. called Epirus, who are, in our opinion, the leader globally in that space. The technology is incredibly impressive. However, it has very large limitations around cost. We are talking multiple tens of millions of dollars per panel, which is a price point significantly higher, many pages higher above where many of our solutions are priced. So it's a very different price point.

So often we don't compete directly with these types of companies, and we see them more as a strategic partner for those customers, and those customers have a very limited subset of the core defense customers that we have who are interested in that technology. We have ways to partner with various companies to provide that should we be requested. So a very different price point, very different technology and very complex to deploy, very complex to sustain. So incredible technology, and we think we've got some great partnerships there, but it's a very different strategy than the much more broader, larger piece of the pie that DroneShield is going after.

Thanks, Angus. And to reinforce what Angus just said, I firmly believe that for counter drone solution to work, it has to be cost effective. So drones are costing a few thousand dollars a piece. You can't have a $10 million, $20 million piece of equipment unless you're protecting only what will be effectively, a couple of sites in a nation where you basically throw anything at that in a counter drone solution. So if you want to be selling more than 5 or 10 of something, you can't be costing $10 million or $20 million in the counter drone land, which is also why we don't really see defense primes in this situation.

The next question is about dividends. Also a topic we get periodically. When will the dividends be payable given -- well, the question was also saying, given performance options are taking priority?

So firstly, I wouldn't see dividends and performance options as a trade-off. They're related to entirely different things. Performance options related to basically motivating the staff to achieve the results that shareholders are looking for. And the dividends are about capital allocation in saying, are we wanting to invest the capital for rapid growth? Or do we want to return the excess capital that we don't have deployment for to achieve the growth to shareholders. And right now, we're seeing an immense amount of opportunity as we continue to post these record results. And so dividends are not a priority at this time, but this is something that the Board regularly reconsiders. But I would see this, frankly, more of a consideration when we finish the growth rate at the incredible levels that we are doing now.

The next one is thoughts of being part of ASX100?

So we got into ASX300 in September '24, into ASX200 in September '25, if my memory serves me right, or I could be slightly off. And we are, today, I believe, sitting somewhere around a number, depending on how you count 120 or 130 but in order to get into the ASX100 , you can't be #99 and you need to be more like further up. So there's a significant jump from where we are to get to ASX100. But hey, if we tripled in the share price last year, depending on where we get to this year, this is all in the realm of possible and obviously, that opens additional angles in terms of further funds investing into the company.

The next question is, can we give some context into the $800 million opportunity that we're working on? What stage of the sales cycle are we in this deal?

So it's a European countrywide deployment where this is a part of a much bigger deployment, but our share of it is about $800 million. It's the same customer that we had the $62 million order with in the middle of last year. I hope to see the project awarded in the second half of the year. But as you'd expect of mega projects of this size, there's a lot of political angles to it, budgetary locations at the national level. So there are a lot of moving parts. But I'm hopeful to have the order in the second half of the year.

And then the question is, how soon do they want it fielded? So whether it's ASAP or whether it will be staged over a period, over a year or a couple of years, perhaps, and also what are the payment terms?

So obviously, we'll be seeking payment terms to ensure that we either have no or absolutely minimal cash drag. And remember, 65% gross margin means that you don't need to have enormously favorable payment terms not to have cash drag or on an order of that size.

So the next question, I think this is the last question that we currently see in the line. So if you have more, please feel free to ask now. Can we talk -- can we speak -- sorry, I'm just trying to summarize this. So -- can we talk to market-sensitive contracts, which are now under $20 million threshold. For example, would LAND 156 or other Australian government contracts always be market sensitive?

So I think the question is, for contracts, which are not quite $20 million. So $20 million is a dollar threshold over which we will always announce. If it's under $20 million, but it has some kind of a deep strategic element, would we announce it?

And the answer is, if there is a deep strategic element, meaning it has a clear pathway towards larger sales, the fact that we got a particular contract, then we would be looking to consider announcing, but there needs to be that strategic element for us to do so. So you wouldn't be expecting a lot less cadence in the amount of sales announcements we do, but obviously each one is going to be a lot more material than what people have seen in the past.

The next question is about the expense. So do we expect to increase our fixed expenditure line? So maybe I'll pass this one to Carla, our CFO.

Thank you, Oleg. So on the question, it asked specifically if the $800 million would increase our fixed expenses?

And the answer to that is no. So it would not significantly increase it because we are currently putting structures in place so that we can increase our manufacturing to way above that level. So therefore, everything that we are currently doing in terms of uplifting all the internal structures, focusing on our manufacturing capability, we will not need to significantly increase our fixed cash costs.

Thanks, Carla. And in terms of our base costs, so as we said in the investor presentation, there is about $150 million in run rate cash cost. This is not what the question was asking, but I'm just expanding on that. As of December, and this is based on about 500 people head count plus the on cost, like the spaces we lease and so on. So that will increase a bit as we get from 500 to 600, but at the revenue growth that we're expecting, our aim is to continue being operating cash flow positive as, in fact, we have been in the December quarter, as you can see from the 4C quarterly.

Then the next one is, do we have any update on Mission Syracuse?

No, we do not. And if there is an update, chances are you will hear it from the Commonwealth before you hear it from us. That's usually how the nature of the Australian defense announcement works, you have to let the customer make the announcement first.

The partnerships question. So maybe I'll pass it to Angus. So, is DroneShield considering partnerships with specialist connectivity providers such as Elsight to enhance resilience and stability of RF communications, avoid signal loss, tight integration, it sounds like an outside shareholder asking this question, and enabling tighter integration across different platforms, assets and operating environments. Angus, over to you.

Thanks, Oleg. Look, we have a number of partnerships, some of which we do talk about it, a lot of them we don't. And that is for supply chain resiliency, but also just for commercial reasons, we don't always announce our partners. Look, we are open to partner where it make sense. But also, I think one of the hard lessons we've learned over the last 10 years is your core capabilities, core technologies, if you don't have them in-house, you don't control the destiny of those technologies, it's very hard to keep pace with where the market is going. And so we do have a strong tenancy for core technologies, particularly those 2 right now -- or sorry, those 3 are the RF detection, and RF defeat and the C2 layer. These are our core technologies, we remain in-house. And then we look to partner with the integrators and different technology providers to layer on top of those 3 and equip the units. And the story behind that strategy is those are the 3 elements that most of our customers need first.

So DroneShield is generally the first partner that -- or first supplier that most of our customers come to. They're the first 3 layers that they look to put in place, then we can work with those end customers to layer additional partners and technology. So we want to control that relationship. We want to supply the intelligence and our understanding of the industry to those customers, and that's why we focus again on those 3 layers. And then we had those additional ways where it makes sense.

Thanks. A question that just came through, have any major European and North American institutional investors already discovered DroneShield? If so, which ones?

In terms of public information, you would see that Fidelity has been a substantial shareholder, so over 5%. I think they're currently sitting at about 7% according to their substantial shareholder notices. So that's obviously a sort of a pan, call it, Boston, London, huge investment giant, and now they've been with us for quite some time. I want to say probably over a year, if I remember correctly.

And then we can't really comment on the registered composition, but we see a $4 billion market cap and quite deep liquidity and inclusion in a bunch of indices. We're now getting to the press piece of being on the screen for a lot of the funds. And we are starting to do an active outreach using opportunities like quarterly release and annual report that we're releasing in a month to market to those institutions.

We still remain a majority retail-held stock, and I think it just reflects our heritage, having grown very quickly from a tiny company to a fairly big one. But I think in the long term, this would be a majority institutionally held company as you'd expect.

I believe that concludes all of the questions. So we'll stop there. Thank you for your time. And if you think of anything else, please feel free to email us with your question at [email protected]. Thanks for your time.

Hello, everyone, and warm welcome to today's drone conference in cooperation with Dr. Reuter Investor Relations. It's a pleasure to have you all today for this very special roundtable. And this session is dedicated to DroneShield. And we are very delighted to have the chance to talk to the CEO directly, Oleg Vornik. And the stage is yours, Oleg.

Thanks for having me, Franzi? And good morning, and good evening, everybody. I'm Oleg Vornik, the Chief Executive Officer and Managing Director of DroneShield. Today, we'll talk about the basics of the business as well as the current thematics that the business is facing and hopefully, a little bit about the future of the business.

For those less familiar with the company, DroneShield is an Australian-based global leader in counter-drone solutions. We make hardware and software that detects and takes down small drones, such as what you're seeing in the cover of our investor presentations of our DroneSentry-X. So you see that in the middle of that boat, that in gray-blue device on a mast called DroneSentry-X Mk2, deployed as part of the NATO exercise Bold Machina a couple of months ago in Netherlands. The device provides several kilometer bubble around the object, in this case, the boat, doing radio frequency-based detection as well as a smart jamming takedown when the user desires it to address one or multiple drones coming into its vicinity and safely coming down. Everything we make is completely safe for humans, and we do not do kinetic solutions at this stage.

The company has operated for about 10 years. We started from essentially just a couple of person garage business when nobody was thinking about small drones doing any nefarious activities and expanded today into about 70 countries around the world, including several dozen countries in Europe. Our manufacturing today is in Australia as well as all of our engineering. However, we are expanding into Europe, now having a sales hub on the ground in Netherlands as well as setting up a production facility in Europe as well, which will be fully functional within the next several months.

The order of this presentation is set up as our last quarterly. So it's a little bit out of order in terms of results first and then the products. So please bear with me if you're relatively new to the story.

In terms of the investment thesis, DroneShield is, as I was saying, a global leader in what is a surging industry that is very new across both military and civilian sectors. I think everybody on this call would be in agreement that things are probably going to get worse before they get better. And with it, both defense and general security spend is continuing to increase. And with it are the electronic warfare. And as part of electronic warfare, specifically counter-drone budgets.

Ukraine has shown how drones and counter-drone solutions can impact today's battlefield. Drones do not replace expensive kings of battlefield such as tanks, frigates, missiles. However, they are a disruptor and they are a force multiplier. For example, you can use a $200 drone to blow up a $5 million tank. So every tank and armored vehicle now needs a counter-drone solution. And also, you can have a $200 drone shutting down an airport or creating significant scare at a military base, which is what now we're seeing in a lot of facilities around Europe. So while it doesn't displace other things already used in security and warfare, you need counter-drone solutions.

And often, we get asked, well, what happens if tomorrow, there's peace in Ukraine. Now firstly, I think just like everybody on this call, we are hoping that there will be peace in Ukraine very soon. I think it's going to take a little while. And even with that, counter drone will be center of any future conflict and so will be drones. But because it's such a new market, nobody has anywhere near enough counter-drone solution. So the difference between counter drone and, let's say, rifles or helmets, all these other devices existed for a while. I mean helmets has been existing since Roman times. Everybody got plenty of those. And yes, wars increased sales of helmets, but ultimately, if tomorrow wars subside, there's already plenty to go around. But counter drone specifically, because it's so new, nobody has been even thinking about it until maybe 3 or 4 years ago, there is, I'd say, less than 5% market saturation into what is essentially a $60 billion total addressable market, we believe. Half of that in terms of the military and intelligence and half of that into civilian market.

So often people think of counter drone just as a military problem. But if you think about protection of airports, data centers, ports, energy infrastructure, prisons, there are a lot of contraband delivery to prison windows using drones and stadiums, corporates. So anywhere where drones can create danger through delivery of dangerous payload or cyber threats or espionage, counter-drone solutions have a role to play.

We sometimes get asked, well, what happens if Lockheed Martin tomorrow decides to get into the counter-drone space. And we really do not believe that traditional defense primes are well positioned for this. The reasons are multiple. Firstly, counter-drone solutions need to be cost effective. You cannot be firing $50,000 missiles at $200 drones. You're going to be running out of money and missiles very quickly. And similarly, you cannot be using $10 million, $15 million lasers against $200 drones because how many of those lasers they're going to have.

Secondly is the rapid evolution. When you're talking about new hardware for counter drone every 3 or 4 years, software every quarter, because the drone technology is evolving really quickly, you really need an agile company and traditional defense primes are not positioned like that. And so because of that, we see those large companies actually as our customers as opposed to competitors.

And lastly, in terms of exposure to this sector, while there are lots of public listed drone companies in terms of the pure-play counter drone, we are the only company in the world.

I just had a comment saying there's no voice. Can somebody confirm that you can hear me okay, please?

Yes, we can hear you perfectly.

Right. Thank you. So let's move to the next slide. On the September quarterly update, we have recorded about $93 million in revenue. This is more than our entire 2024 revenue the year before. So $93 million in the third quarter represents about 11x what we have secured in the comparable quarter of last year. Similarly, about 7.5x increase in cash receipts, 4x increase in SaaS revenues, and I'll talk about SaaS revenues a little bit later and twice increase in our operating cash flow.

Slide 4 gives you a bit of a graphic summary. So we started in 2015. We listed in 2016 as a means of raising money for developing our technology and the sales footprint around the world. The counter-drone industry as such really started in 2022, where Ukraine has demonstrated the potential of drones, their battlefield. And with that, we're now seeing the surge, which I believe is just the beginning of the growth for both the counter-drone sector and for DroneShield specifically.

In addition to the significant financial performance that we just talked about, so $165 million in revenue for the first 3 quarters. So now we're going through towards the end of our fourth quarter. We're running calendar year, $5 million profit before tax for the June '25 and about $193 million. These are all numbers as of October that we publicly announced, the financial update.

In terms of looking forward, we are looking at about a $2.5 billion pipeline. Now what is the pipeline? The pipeline is when a customer that is usually a well-credentialed government customer comes to one of our salespeople and says, "Okay, I now want to place maybe another order." Most of our customers today are repeat customers. Over 90% of the business comes from repeat customers. And I'm not exactly sure when or what products or if I can secure the budget and maybe there's going to be competition, but it's a lead. And as each of these parameters get individually confirmed, so the customer confirms is definitely DroneShield. And by the way, a majority of our projects, we do not compete in the sense that it's sole-source award to DroneShield. And obviously, the customers evaluate which company they want to go for before.

The specific opportunity matures from a credible lead all the way up to a purchase order when it gets a 100% weighting. So we've got about 300 projects in the pipeline across virtually all continents around the world. We've got some pretty meaty projects as part of that. So the largest opportunity we have, which is in Europe with the same customer who placed a $62 million order. By the way, when I say dollars, I mean Australian dollars. And the largest opportunity here is about $800 million.

And how are we different? So there's a separate slide I'll talk to. But at a high level, we're saying we've got, we believe, more engineers than just about anybody else out there, about 330 and growing world-class hardware and software engineers. We continue to significantly invest in R&D. We're a very high margin -- high gross margin business. So historically, we had about 65% gross margin on our sales, which is pretty remarkable for a majority hardware business, and it shows the high degree of differentiation and also a very healthy cash balance of just under $0.25 billion.

Speaking of sales pipeline, so Europe is by far the biggest driver for this company right now. It's both in terms of the revenue contributed year-to-date as well as the outlook where almost roughly half of our pipeline is across different places in Europe, and that includes -- we now have hundreds of systems deployed in Ukraine, but also Western Europe significantly as well. U.S. has historically been about 70% of our revenues, and we are significantly investing in U.S. as well as in Europe to rapidly develop that market. I think there are a number of exciting growth drivers there, like Department of Homeland Security really looking to ramp up their counter-drone spend, Department of War looking to increase the counter-drone budgets, legislation potentially changing to enable police departments to jam where public safety generally is limited to detection today in terms of the local and state-based level and other drivers.

So Europe, firstly, and then also U.S., I think, will be quite significant for us, but also everything else. Like, for example, in Latin America, we have significant business in both Mexico and Colombia who are fighting Narco Cartels, basically sending drones against our customers being government agencies in what is a fairly underreported, but pretty deadly war going on between government agencies and Narco Cartels.

In Australia, we expect the rollout of LAND 156, which is a $1.3 billion counter-drone deployment across various military bases. In Asia, we're seeing significantly increasing tensions between China and all of its neighbors, and we had substantial sales in Japan in recent times, and I expect those to continue in 2026. U.K. has been fairly slow up to now, but we expect for there to be meaningful purchases even into 2026 as it's finally getting the point that it really needs to start investing in counter drone as a sector. And we are the only, to my knowledge, widely deployed counter-drone product today with the U.K. Army through our partnership with British Telecom.

We believe the total addressable market for counter drone in the military space is about $35 billion. But very importantly, it's a super nascent market. So today, probably 5% of that market has counter-drone systems, meaning for every customer that has one system, they really need more like 20. A lot of customers have nothing to speak of. And that's across quite a variety of spaces there. As you can see, counter drone has a really diverse problem. So you need it on the soldiers, on the vehicles, on the bases, on flying objects, on the vessels, on border security, the list is quite significant. And that's even before you go into the civilian market.

Now civilian market has been somewhat slow. And the way I see it developing is 1 of 2 ways. One, if we see -- and this resonates with our American audiences really well, like a drone 9/11 type event where there is a potentially large-scale loss of life and incident involving a drone, I think then we're going to see a really rapid response in the sense of every critical infrastructure-type asset having to mandatorily have a counter-drone system, much like airport security has changed almost overnight after the original 9/11 event. But even without that, and I think we're all hoping something like that would not happen, although statistically, I think it's just increasing in chances.

I think there's continuously increasing number of flights over critical infrastructure facilities. For example, even with data centers, we're now seeing a lot of unidentified drones flying around data centers while they're being built, essentially snooping on the design of the data centers. And then once they're built, attempting to land on the roofs of data centers and using proximity to do cyber attacks and hacking into the data and so on. So a very significant kind of threat from drones to data centers. And that's one example.

Slide 9 talks about our solutions. So this slide is on the hardware, and then I'll talk about the software. So hardware today corresponds to about 95% of our revenues. And software, the other 5. Our aim is to get to as close to 30% to 40% of total revenues being a software over the next 5 years. So first, I'll start on the hardware, and then I'll talk about the software strategy. The hardware goes into families, the handheld products. So today, it is RfPatrol, body-worn drone solution, and we are launching the next generation of that product in 2026 as well as DroneGun. So that's a body-worn jammer, which is probably what we're most well known as a company, which is a little ironic because it's actually some of the more basic technology compared to other products that we offer, still fairly sophisticated in itself.

The DroneSentry product is actually a family of solutions. So next to the F/A-18 plane, you're seeing DroneSentry-X, which I talked to on that Dutch mode on the cover slide. But then in addition to the radio frequency-based approach, we also offer other modes of detection and defeat. So here in the picture, you're seeing third-party radars and cameras. We also offer acoustics. And then for the defeat, we offer other solutions such as protocol manipulation. We'll be integrating things like intercepted drones into our command and control. So it's a fully flexible modular on them and will be in fixed-site solution.

And then Sentry-C2, what you're seeing on the very right of that slide is our latest launched product. It's a cost-effective subscription-based solution, fully cash flow positive from day 1 for us in terms of how the pricing model works, where you would attach the box to a site of a prison, a stadium or other cost-conscious customers and that provides you with capabilities such as tracking a drone location on the map and a number of other functionalities such as analytics.

On the software, we have fundamentally 3 levels of software, device, site and enterprise. On the device level software, we have radio frequency AI, which is AI-enabled detection that today sits inside of RfPatrols and DroneSentry-X. So about 5 years ago, we realized that we cannot just do a library-based approach because there are unlimited number of drone protocols coming out. So we moved to AI, but the problem -- just like with any AI, the problem is you have to have enormous amount of drone data signals. So that's where our presence in 70 countries around the world really helped. So we started collecting and retaining with customers' consent data that our devices have been recording all around the world in different regions, and drone signals sound entirely different depending where in the world you are, the background environment and so on.

And even today, so we've got a bit over 4,000 devices deployed around the world. A number of them are able to transmit data back to us as well as data from our trials. Our database grows virtually weekly, and we have data engineering teams, which clean, tag and improve the data so that artificial intelligence engines can continue to improve. And that's one of our core competitive differentiators.

When it comes to RFAI-ATK, that's the same thing, but focused on the defeat of drones across different spectrum. And that's our device-based software. On the site, there is DroneSentry-C2. So it's a bit like Google Maps, there are dots floating around, the drones are flags where pilots are. And then you have rich suite of analytics.

And then we have DroneSentry-C2, which I need to update the slide for, which is essentially lots of DroneSentry-C2 instances. We had our first sale of that system to an Eastern European country on the Eastern flank of NATO, which gives you country-wide awareness of nefarious drone behavior.

I'm mindful of time, so I'll start skipping. I'll take Slides 11 and 12 as read. I'm happy to answer any specific questions, but we often get things like, what about fiber optic drones, what about AI drones and so on. So I'll take that as read. The presentation is available on our website. I'll talk a little bit about competitive differentiators. So technical and commercial.

On the technical front, we have more engineers working on the counter-drone problem longer than just about anybody else and continue to do so. And some problems, you just have to spend time thinking about and developing in-house skill. And so as a result, our products today can detect further, defeat further, be more accurate, less false alarms, lighter and so on. We talked about the AI database as well.

On the commercial differentiators, apart from our reputation and the branding and the commercial presence around the world, trusted relationships with end customers really matter because unlike selling in the consumer space, when you're dealing with the militaries, it's really hard to get in. But once you're in, it's a really close collaborative relationship with end customers who then feed you what they're seeing around the world. We often get asked, "Well, what do you guys in Australia at the end of the world know about the problems we're having here in Europe?" And the answer is, "Well, we get information from Ukraine and all the other European customers who tell us, here are the drones we're seeing, here are various technologies that we're observing inside of those drones, here is how you might be looking to solve it." And then we incorporate all of that in our technology road map.

I'm mindful of time again. So on the competitive positioning, at a high level, I'd say in every niche we play, there's usually a handful -- a small handful of competitors, which are different across the niche like handheld detection, defeat, again, handheld defeat on the move and so on. And we have a number of differentiators compared to these firms.

Manufacturing capacity expansion. So we're currently in the process of moving to $2.4 billion capacity expansion by end of '26. So this will be through a combination of our new European facility, new U.S. facility as well as expansion of our Australian facility.

And with that, I can see there are questions that start to come in. Maybe I'll stop presenting and see what questions come.

Thank you so much, Oleg, for the presentation. We'll now move forward to the Q&A session. And today, we kindly like to ask you to only pose the question in the chat. And I'd like to ask today because it's a drone conference. And if you could elaborate a little bit more on the plans for Europe 2026. I know you opened just recently in Amsterdam. Could you tell me a little bit more about that?

So several strengths to it. First, on the sales front, outside of Australia, which is our home market, we generally tend to embed distributors in the countries where we operate, and then we tend to refine them, change them if it's not working, train them, go in front of customers with them. And now that we are seeing very significant momentum in Europe, we have decided to invest to have on-the-ground representation with a very capable local sales team working hand in glove with our various European distributors, having our own warehouse with goods available on short notice when you need -- when you have urgent requirements by our customers.

And I think eventually, we'll end up, which is European Center of Excellence, and this will be very likely in 2026, partnering with one of key European governments to essentially create this, call it, like a counter-drone Center of Excellence Research Institute as we're seeing very significant demand for sovereign. And by sovereign, I don't mean just a particular country, but also potentially regional counter-drone points of excellence. So this is pretty exciting for us. And of course, manufacturing that we expect to start, which will be majority European componentry from first quarter of '26.

Thank you so much. And we have another question from [ Albert Iype ]. An hour ago, during this event with EOS, they told us that drone tech is not part of the latest consortium solution, which won the LAND 156. Therefore, EOS is up to now not compatible with DroneShield's products and software. What do you expect from LAND 156 in perspective of future revenue? Is there a foot in the door? Or are there iron in the fires regarding it? Is there a partnership with Leidos? Or is it only DroneGun RfPatrol effect, so [indiscernible] retailed with broad integration? Sorry about the last part of the question, but it is in the chat.

Great question. So LAND 156 consists of several parts. We have already received one of the largest orders awarded to any one company for the portables, which is still small experimental purchases for Phase 1.

Leidos Australia was appointed as part of the next phase to be government's adviser to provide basically advice on what the government should deploy to protect its bases domestically and overseas. Leidos has initially bid with a handful of companies, including EOS. That group of companies, in my opinion, is completely irrelevant going forward because the only company that matters here is Leidos because they have a multiyear contract with the Australian government. Everything else, so in terms of role of EOS, role of everybody else in the consortium is fully up for discussion. And I would not read anything into who was in the Leidos consortium at the time of selection of Leidos.

There's going to be a panel of suppliers that will be appointed shortly. Exactly how shortly, I don't know. I think the original plan was supposed to be several months ago, but I think it's going to be very soon. And then the plan would be for the government to draw on the suppliers from that panel, and that would include all of our solutions potentially, assuming we're in the panel to start deploying over the next decade or so as part of the $1.3 billion solution.

Now in terms of EOS compatible or noncompatible with our products and software, the most important thing is what will the customer meaning Australian government decide to use. If they decide to deploy our C2, our command and control system and EOS' remote weapon stations, then sure, we can integrate it. There's no problem. Please remember that one of key differences, there are many differences between us and EOS. But please remember that one key difference between us and them is that they're a business of making individual effectors, so remote weapon stations, lasers and now interceptor missiles. While we are a business of making individual products like DroneGuns or DroneSentry-X, but we are also importantly an integrator. So we provide complete systems with third-party kit like radars, cameras, et cetera, integrated in. So that's one big difference.

Thank you so much. And then we have another question from the chat. How many drones can be taken down in 1 minute with one of your products? Where is the planned production facility in Europe?

We can take unlimited amount of drones down. Remember that smart jamming is a volumetric solution. So it impacts in, say, in the case of DroneSentry-X, a complete dome around the -- around what you're trying to protect. So whether it's 1 drone or 100 drones, it doesn't matter. This is one key advantage of what we do versus kinetic solutions.

There are many advantages of what we do versus kinetic solutions. No one solution is perfect. But for example, anything that enters into an area gets equally affected at the same time. You don't need to go drone #1, then drone #2, then drone #3. And of course, the other advantage is that when you're protecting, say, an airport in a densely populated area, if you're protecting a military base, surrounded by settlements, you're not going to be firing bullets or lasers. It's simply unsafe. In an open war, you will, but not in a domestic setting. So it's because of that nonkinetic solutions and especially something that's not bullets or lasers like what we do, jammer's protocol manipulation solutions have a lot wider appeal. And I will repeat, there's no one fits all. It's all ultimately about layering. But in terms of universality, the nonkinetic solutions provide the best approach, I believe.

In terms of the country, I can't comment, sorry, due to confidentiality.

And then we have the last question. And I kindly also ask you to pose the questions and message us afterwards. So don't worry, your questions will be answered. And the last question is what kind of sales force size are you deploying for U.S. growth efforts?

For the U.S. growth efforts, so remember, we do both distributor and own sales force. So today, we have approximately 10 salesperson in the U.S. And what I find with salespeople is it's not about quantity because this is not a shop floor. So one well-positioned person selling to the U.S. Army can outdo 100 ordinary people. That's basically the magic of somebody who is great at selling and also concentrated customers like the U.S. Army, like where you're going to get big bucks is basically selling a programmatic level. And for that, you don't need a lot of people. You just need really good people with a really good plan. But that said, as we're going now starting to go after the public safety and the civilian space, those are more fragmented markets. So we'll aim to beef up a little bit. But all of these people then are supported by also distributors. So there's quite a complex structure. So you think in terms of people who work on tenders, people who help shape government acquisitions programs for us and so on. So we have also providing support from Australia. So you don't need a huge amount of sales force to go into that.

And also, the other thing that we've done is hiring people who are specifically going after defense primes in terms of embedding our products onto the defense prime platforms.

Thank you so much, Oleg, for the answers and also for you for your attention. If you have any questions in the future, please do not hesitate to contact Oleg directly or the Investor Relations team. And of course, the recording and the presentation will be also on the Airtime platform. So for the investors, this is an excellent opportunity to also look at the slides and get more information on DroneShield. And with this, I hand over to Oleg. Thank you so much for being here.

Thank you, Franzi. So if anybody got questions, [email protected] is how you can reach me and my team, and thanks for tuning in.

Welcome, everyone. I'm Oleg Vornik, the Chief Executive Officer of DroneShield. With me today is our Chief Financial Officer, Carla Balanco and our Chief Product Officer -- Greetings, everybody. My name is Oleg Vornik. I'm the Chief Executive Officer of DroneShield. With me today is Carla Balanco, our Chief Financial Officer; and [indiscernible] our Chief Product Officer; and today, will be presenting to you our September quarterly results. Please feel free to submit your questions upfront, and then we'll aim to take about 20, 30 minutes to go through the presentation itself and then answer your questions. We'll probably tend to go for about 60 to 90 minutes depending on the amount of questions. So let's begin.

DroneShield continues to be a well-positioned leader in the rapidly growing counterdraw industry. We are seeing continued deterioration in geopolitical situation and around every single conflict we're seeing, there are drugs. We're seeing that not only in Ukraine but in Asia Pacific with Chinese drones all around the region in Europe with all of you seeing the shutdown of European airports such as what we're seeing on the color of the presentation. I was showing just earlier with our drones in Denmark throughout the U.S. and rest of the world. Ukraine has reversibly brought the drones as the centerpiece of every future work there. And hopefully, we'll get up to question, well, what happens to those at the war in Ukraine, I think we are holding for it.

But bottom line is military planners around the world are looking to ensure they are ready for the next call, which means lots of drones and also [indiscernible] solutions drones have clearly shown to be both the multiplier and the disruptor on the battlefield. So you can have a $100 do well in if you like a tank, you can send the draw product lines to disrupt. If you disrupt the anime, you can do surveillance instead of standing your own sales. So it's clear that any future conflict would have lots of drones and with the need of lots of [indiscernible] and if you're a military planner, your #1 goal is [indiscernible]. So ensuring you have enough equipment of every kind, including the latest technologies, so you determine the end starting more.

And secondly, if the Board does begin we will be able to have a demand of equipment on hand as opposed to do the already supply during the war itself, which is the worst possible time. But importantly, this is not just the military market. We have recently done an updated total addressable market study showing that [ calodrone ] is roughly $60 billion opportunity. So around $30 billion for the civilian market and $30 billion for the military market. Civilian market has been a little slow to adopt to this new threat, but it is a very significant opportunity nonetheless. So we're looking at airports like drones disrupting flights. Cyber threats. So data centers, drones landing on the roofs of data centers and conducted cyber [indiscernible] to prisons, drugs, weapons, cigarettes, cell phones, escape kits, drones disrupting energy infrastructure, stadia conducted corporate [indiscernible].

And because of that, we recently launched our century to our dedicated subscription base civilian of [ counter drones ] counter solution for the civilian applications with lesser budget prints and then to be high-end civilian customers like airports and data centers, which will continue to use our main [indiscernible] solution. We delivered on Sugar's really we position with a number of unique different shares and traditional defense primes are not well positioned to play in this area, which required [indiscernible] and rapidly changing solutions. So today, we'll do a core software updates and hard refreshes every 3 to 4 years, and I'm excited about the lead of next-generation technologies that will be releasing dots the second half of next year.

Last but not least, we are the only publicly listed control company in the world. And we provide that exposure to investors looking to participate in the [indiscernible] sector. On the results themselves, results speak for what they are, by far, the record quarter, accelerating what was already a record set of results in the last quarter. Why? Because now we're seeing [indiscernible] saying, hey, I need a lot of card equipment. I only started looking at this recently. So most of our customers have not looked [indiscernible] problem until Ukraine war 3 years ago. And they have very little to speak of. So the market situation is timing. We say that in the military space, it's a 5% market situation. So a lot of our customers that may have 1 system really need 100. A lot of our customers have absolutely nothing. So over the last 3 years, our companies have conducted reviews certifications, compliance checks, smaller purchases and now they are moving to mass acquisitions and DroneShield is well positioned globally as the dramatic condition is not commenting.

And our revenues are picking for themselves and we into accelerate. So revenue, $3 million just for the third quarter. That is more than our entire last year combined, which was really a record year of itself. 11x uptick on the quarter-over-quarter of last year. Cash received, $77 million, again a tonne, 7x to 8x increase on quarter-on-quarter last year. Sets revenues, only 4x increase quarter-on-quarter last year. And once these where a strategy to move from the current roughly 5% of revenues to as closed 30% to 40% of the revenues over the next 5 years, and we'll talk about that later in the presentation. And operating cash flow, importantly, turning significantly positive at $20 million from a negative $19 million quarter-on-quarter last year, and our aims at companies to be consistently profitable and operating cash flow positive going forward while continuing to plan the growth.

Next, we seen some that I just mentioned in charge. So remarkable continued acceleration, and we believe that this continue going forward as our customers seek to procure counter drone systems to meet their requirements in an urgent fashion with everything that's going on around the world in Europe, but also U.S., South America, Asia Pacific cargoes a truly global problem, and we are well leader place. For the key highlights, to recap, we're seeing incredible record financial performance across every single metric you can think of, the revenue, the profit before tax. So we do update our profit every half year. But if you look at our last update in quarter to call, we had a profitable half year and our aim is to continue remaining profitable moving forward. 193 million secured revenues. Now a logical question to ask is how much can we improve it by end of this year. And it is difficult to say.

However, we are taking up to another $130 million of profitable revenues this quarter in a perfect scenario. What is perfect scenario been? So we have about $27 million of finished inventory that corresponds to about $80 million of inventory by sale value in additionally, number of matches in progress. Depending on the nature of customer orders. So what is the composition of the orders in terms of the products, the timing, there is not a potential upto in the perfect scenario, $130 million of further revenues that we could secure material pipeline. So we are increasing the size of the pipeline is $2.5 billion now. Historically, the conversion rate has been approximately 1% and 5%, improving from about 1 and 10, maybe 5 to 7 years ago.

And I'll talk about the pipeline separately when it comes to -- there's it's across about 300 projects, and there are several very large projects in the pipeline or by projects of $100 million each and the largest appreciated of about $800 million in Europe with the same customer previously put a $62 million order with us. And we believe we'll continue to be really well positioned. So approximately 330 engineers are real 100 vehicle. This is very much a [indiscernible] game, and we're well resourced and continue to receive incredible amount of intelligence from around the world. on the latest drone techniques. And our customers share intelligence and data from our sensors to continue assisting us to develop best technologies. We want draw manufacturers to because ultimately, that's what's providing challenge for our engineers and continues to make our products highly differentiated. And with it, we're spending $50 million plus in terms of the annual R&D spend, we continue to build our moat with a very hot cash balance of over 230 fiber.

On the pipeline, Europe continues to be in our large driver with about 66 projects. But this is a global business. We're active in about [ seven ] countries around the world, and there will be a number of additional drivers. For example, in Europe, we are doing Amsterdam office that we are starting shortly. We have manufacturing in Europe that's coming online in the first quarter of '26, we have acted the U.S. that's coming the line around mid-26 as well as continuing to build up tons around the world to take advantages of the rapidly growing [indiscernible] demand. We already talked about the top addressable market, but it's very large, it continuing to grow. So roughly $35 billion in the military space, about $28 billion in the sealing market. And importantly, very will but we have customer situation. So we are the very [indiscernible] of this opportunity [indiscernible].

On the product themselves, I believe most of [indiscernible] other call would be well aware of the products we offer is a combination of highway software, the small in both. And a lot of the technology when you think about AI on edge as opposed to most language models, it's about how do you build your hardware that can run your software AI engine right on the edge in the palm of your hand. So with it, we have all the 2 families of products being the dismounted or handheld solutions. So the RF patrol, the portion the sector and the drawdowns, the defeat so they listen for the ready frequency connection to the drone and the controller to sense detection and provide an [indiscernible] actually very difficult because drones today are continuously making themselves more and more difficult to be detected and also disruptive often against very complex environment, which is why approximately 5 years ago, move to artificial intelligence and a library less based approach to be able to detect [indiscernible] any artificial intelligence into our very large drag signal assets.

So we started going around the world, and this is, again, benefit of us being present in about 70 countries and collecting drone dates in places like Japan, Europe, Ukraine, U.S., South America, and so on. And we continue to have a large number of devices around about 4,000 devices in the quarter globally and all 1,500 of them are software enabled. That with customers consent, then relay the data back to us. And now the engineering teams are continuing to grow those data sets and making our drone detection [indiscernible].

The second family of products is on the Melbourne fixate solution, what we call DroneSentry. DroneSentry combines [indiscernible] modalities. So our DroneSentry-X, which you're seeing in the middle of the slide makes [indiscernible]. So that's a multi-kilometer of [indiscernible] protection you be around site combined with [indiscernible] systems like radars, camera, [indiscernible] to be able to compare drone [indiscernible] that's our civilian more budgetary credit the option for low bunch customers that present a stadium. So it's a [indiscernible], if you get a tablet and you can see a drug being tracked around the map of the tablet, which gives you an option to send security and rest the pilot or not wait the drones in real time and give you a bunch of statistics around it. So this is all about hardware.

Now on the software, this is an important part of our strategy to grow from 5% of revenues from software to up 3% to 4% [indiscernible]. So today, only our patrol and drones, we see the cession base broadly. In the future, if we divide the drone shot made. We have one or multiple families of tower updates that will charge that. So for example, this month, we released our FAI pack. This is AI-enabled at engine, which for the next 2 quarters, we are running in the bundle with caters to have our drug and care. But after that, there will be an additional subscription price. So if you buy a DroneSentry, you now have 2 SaaS growing funds into pure be SaaS-enable detection Saas-enable defeat.

Future generations of draw guns will have our FAI attack [indiscernible]. Now when you look at DroneSentry, the fixed and one box solution done is core. It's our sense fusion engine, our map engine. It gives you and map on the screen with [indiscernible] floating around [indiscernible], our flags where the pilot side, label to [indiscernible] and also [indiscernible], like, for example, you're getting 2 flights you've got 20 flights a week if you're present, and with other [indiscernible]. So dropoff ID, our SaaS-enabled care-based our software. The radio-based SaaS software. And we have a number of GP modules under consideration.

Again, the [indiscernible] DroneSentry is an ecosystem of SaaS when somebody buys a fix-it solution. Like for example, we have a number of these in Poland on the Eastern [indiscernible]. DroneSentry talked about with the electronic officials intelligence. So we're currently having our being fourth, an $11.2 million contract, and it's a 2-year contract very adjacent in the skill set to our capital solutions. So all about detection of never seen before signals, and we're learning from them to take back to our main control work. And by the way, without tonal of the IP is 100% or in overlying on any third-party IP, the government does evolve in the anymore. I would like to take the next couple of slides as read. I get a lot of these questions in terms of what's going to happen to drop ship with fibrotic drones and AI-enabled drones.

So I take it you guys have read through it. I'm happy to answer additional questions. In terms of our differentiators, we say that we have a number of technical and commercial differentiates. On the technical front, we have always been an incredibly engineering-focused company while some of our compares are really been marketing business with a bit of technology on the site. So when our competitors at 5-inch years, we have 15 when we have an incredibly highly agile organization, meaning as a result over the last 10 years, our products can detect for that you feed further have more accuracy these smaller, lighter, better performance customer expectations. So all of these various technical different ships.

On the moment differentiators, the relationships with customers, selling to governments to militaries to [indiscernible] infrastructure is very different to sell into the consumer market, where over time, you have more on turbos for your customers. For example, in the military space, U.S. to risk would just deal with locking [indiscernible] Boeing with a case plans and we talk to 20 other suppliers. Because there's a lot of sensitive days in as being exchanged, and especially a cost of vulnerabilities. Militaries are usually a lot more forward if I'm speaking by their strength. There's a [indiscernible], which tends to be very sensitive. The drone shield of the last 10 years the pioneer in this space, managing felt as the trusted supplier of that technology to not grow governments around the world, and we continue receiving their feedback and the result well positioned for those procurements. There's a common miss that all government work needs to be tendered. That is not true when it comes to defense, homeland security because often when you tempt you have to reveal your requirements, which is a problem.

So because of that, our customers often get an exemption and are able to do direct award as opposed to a tender for our products. So most of our business comes at from tenders, but from the direct purchases based evaluations by our customers. Speaking of [indiscernible] we state that across each product category, we normally have 1 or 2 competitors. And we usually all in the category in which we compete. For example, in handheld detection, there is a product by mine events or Wingman. We are at a higher price point but significantly high capability as well, a similar thing for design. Same thing for hand healthy fee. Again, we are a high price point than many of our competitors, but we're also in a high capability. And what we're finding with our customers, we need to be cost effective. But at the same time, you provide fast value might even most effective, especially if your customer lives depend on it.

So the names aren't listed there. But the point is that across the world, across the product segments, we are the most widely deployed company that we are aware of. I already talked about the traditional defense and security brands. They have more of our customers than competitors. They're not well positioned as the organization to deal with the rapidly changing technology product. They are also our complementary providers in a sense of that off, they run based even systems, which are against larger shiny objects like every sense, aircraft, helicopters, and we deal with smaller brands. And so 2 systems can work together and our [indiscernible] do APIs or common communication protocols that can communicate with GBA distance. We're not competing with Chinese or Russian systems. So they are not considered possible for the Western customer. There's been a lot of consolidation in the [indiscernible] space.

So if anything, we're seeing that drones are continuing to proliferate, and I would not want to be a drone manufacturer today competing against Ukrainian or Russian drone makers, that's definitely more commoditized in terms of becoming a legal like in terms of putting your like your bodies, comms modules, engines and so on together, and there's a lot of rapid innovation inside there in Ukraine. For [indiscernible] systems, it's really much going into electronic warfare, where you need almost like farm and development like large teams of engineers, March during the development over a period of years. It's much more complex game. And because of that, we've seen the number of [indiscernible] makers continuing to consolidate.

We will be seeing less and less of our competitors' drag. On the manufacturing front, we're expanding from about $500 million a year to about $2.4 billion by end of '26. This is a number of flights. So today, we are substantially relying firstly, on our supply chain of component makers. So we have approximately 50 of those parties, mostly Australian where we think we can buy in Australia, we get it here. The only time we go outside of Australia, things industries that don't exist in Australia chips, batteries, some other things for that is also the U.S. that we can. So we're moving from our current a 400 square meter facility that we used to assemble and do final quality testing from that supply chain to about 3,000. So about 8x increase in Sydney. And also we're relying on 2 contract manufacturers, one in Sydney, one [indiscernible] to do the final assembly as well. And this is reducing our requirements.

So what we have stated before is that all of the expansion in Australia was to do less than $15 million in [indiscernible] including 3 years to come in our quarter because, again, we have this supply chain underneath us. So we don't do things like buying expensive CNC machines on [indiscernible] equipment. That is all done by our supply chain and instead of focus on rapid R&D and then final [indiscernible] testing the products mentally not a manufacturing. Should not be seen as well. We're acknowledging how many. And then in the U.S. and in Europe, we are finalizing arrangements with contract manufacturers there. So the European contract refracture will be online in the first quarter of 2016, and the U.S. contract manufacturing will be by about mid I already briefly talked about inventory.

So we maintain about $82 million of inventory. So we can and that is by book value. So that's a bit under $300 million by sales value in terms of our finished inventory and in progress or inventory and for the current quarter, in a perfect scenario in terms of the customers placing orders just mentioned motor in the right way, the timing and so we get potential deliver up to another $130 million of orders before the end of the year. Our strategic priorities remain the same. So we're looking to grow our pipeline to about $5 billion. My personal goal is to have our revenues cracking over $1 billion over the next 5 years. This is not guidance. And this will be achieved through both our current products, the next generation of hardware that we're releasing over the next 12, 18 months. And importantly in the recent role of SaaS and software inside of our products as our customers are seeking to rapidly close the gap in terms of how little they have is how much they need to have.

So for our customers, both military and civilian, over the next 5 years, the priority will be how do you go from [indiscernible] solutions. And then from a 5 or a given market would be like saying unreplaced cycle because whenever you buy it 3 or 4 years ago is not with any more, given how quick it drone technology is developing itself. With that, I conclude the presentation, and we'll turn to questions.

So give me one second, I'll just read through what we have in the Q&A. So the first question is, have the U.S. Development of Defense or European military given us feedback that we have a competitive advantage that your competitors can provide.

Yes, and we'll get us all the time. And if we did not then we would not be seeing those sales. So generally, competitive advantage cost to the range, range of detection, range of effectiveness. So when our customers send a bunch of drugs against double equipment during the demos, Harmonica with Taramani can we do feed and other similar parameters. The next question is, what is our ability to meet the $800 million order with current manufacturing footprint? Do we need to further scale up?

So Assuming we get a $100 million order around middle of next year. I hope is that we can do a good chunk of it, maybe half or 2/3 even depending on exact composition of the order and timing within FY '26 and then the remain will fulfill over 27%. The customer will expect rapid fulfillment. And so this is part of our expansion from $500 million year to $2.4 billion by end of next year. The next part of the same question was background on the Land 15 opportunity in feedback from the government. So for those who are whole new to the story. So M16 is the Australian popular defense rollout across domestic and overseas basis. [indiscernible] means defense industry previously said that this is going to be roughly $1.3 billion opportunity over the next 10 years.

So [indiscernible] Australia subsidiary of the U.S. Defense [indiscernible] was appointed as, call it, the administrator of the program in the last month or 2. Our understanding of the recent [indiscernible] play a countertrend. They're not a [indiscernible]. They are more of a specialist of the Ministry contents government programs. They want somebody who is not biased and want to avoid the governor warranty voice situation we say [indiscernible] Australia, then it's difficult for drone [indiscernible] recommend drone [indiscernible] systems being deployed because there will be confines. So because of that, [indiscernible] was appointed, and we believe we'll be well positioned for the actual deployment of account systems as the rollout will commence from '26 awards.

So the next question is, what are the challenges in scaling up our operations to meet the demand that experience so far. And that's likely is in the demand that's likely to accelerate going forward. I would say is the general challenges of scaling, right? So I think of the business as sales operations and technology. And as you scale all 3 needs to scale up. So on the sales, how do you have an efficient structure of the best own sales guys and the key centers around the world, managing distributed network, having the right certifications, access points to governments. And also importantly, actually, integration with larger platforms. So if you're saying you want to be integrated with every iron platform that you want to be inside of every sensor government facility. The aim is to have very close integration with those platform providers, right? So tankmakers, people that make their access control systems. So the final decision managers will be the customers, so we need to influence them, but then you also need best involvement of actually talking to platform providers, including defense, security price for them to meet who the offering as part of the overall system, which also help for them the to sell their kids because they're now saying, hey, if we sell a tank and the tank also has a cantonal system from the best in the field.

When it comes to operations, the challenge is how do you sell a lot more pieces and with it maintain all software updates. So I mean, nothing that hasn't been done before in other sectors, but it's just growing pains. And when it comes to tech, it's about keeping up with essential Chinese government making jobs. Now the good thing is our customers don't expect us to be perfect. We don't say we are. So the analogy that Angus, our CPO often gives is it's a bit like offense. So people kind of holster fans, people climb all the [indiscernible].

So similarly, you not expect it to be perfect, but we expect to be the best and continue to rapidly improve. And we want the Chinese and the Russian draw makers to continue improve because that's how we keep our competitive differentiation because the do manufacturers will stop improving, stop seeking to avoid you. The whole downtown industry would just commoditize our margins from collapse. The next question is, what is the time line of orders being made by Europeans for their drone makers. So many of you have seen conversations about [indiscernible] and the news, we see drone wallets 2 parts. So there is actual water deployment systems, and we're already getting some of those and receive some of those orders in small wells, for example, more of our Q4 order in Poland. But also protection of facilities deep inside Europe. So when you look at Hanger were being disrupted, that's not us to fly from Russia, they don't have social range.

Instead, it's drones being launched domestically by Russian agents games and so on disrupting those assets. So you need a whole lot of facilities being protected by accountants. And the $800 million project that we believe will land roughly around middle of '26 at this stage is part of this issue, the drop issue. Impact of government shutdown in the U.S. on orders in quarter fourth quarter '25. So yes, there has been some delay on the U.S. actually issuing purchase orders while the government isn't a shutdown, but we don't expect it to have any impact on our fourth quarter results.

It just shifts the orders by a couple of weeks while the government was shut down, but then there's rapid catch-up. In the U.S., this has happened a number of times recently. So Gavin agents, unfortunately, well test in this situation. Gross margin profile across product range. So I might've should turn this one to Carla, our Chief Financial Officer.

Thank you, Oleg. The gross profit margins across our [indiscernible] products ranges from 65% to 75% at an average with the third-party products that we integrate. So that's cameras and radars, the gross profit margins at around 15% to 20%. So that will bring down our products on the systems that we sell, where our internal DSX or our fixed sites are generating that, on average, 70% margin, but when you include the cameras and radars that brings it down slacky.

Thanks, Carla. Next question is, I'll try to summarize it best I can. I think the person is seeking to understand where the robots are going to be involved in war in the future over the next 5 to 10 years and how are we thinking about it. So we are actively in the process of integrating our kit with other -- what I call the robots, we call them autonomous systems. But same thing. So whether it's on robotic dogs, where they on tracked vehicles, whether it's on unmet boats, all of that will have cauldron kids sitting on top, and that's part of the same thing as I was talking earlier, but, for example, [indiscernible].

So you have [indiscernible] enrollment when you first talked to on the same time, talk to their customer and say, hey, if you're buying these other man platforms, they really need to have counter on protection on top of them. And then we're talking to counter drone system providers saying, hey, you need. So you're talking to the role meters basically saying, hey, you need to control on top of that. The next person is asking, can we talk about the current legislation in the civilian markets across U.S., Europe, Australia and how is it likely to progress in next 5 years now on. And how do we envisage competitive intensity in tempering for civilian contracts. So U.S. is probably the best the best first indicators. So there is a lot of focus on the U.S. legislation now to enable stays first state of awful law enforcement to be able to take drones down today on the federal [indiscernible].

And there's a very significant buy you think of Boston police department and all the other [indiscernible] police department. So today, they can detail the they can now jam. When the legislation changes and do you think this could be as little as the next 12 months, legislation can work pretty quickly with the current U.S. administration [indiscernible] demand. But Also, I think this will start putting pressure on the next field down, which is [indiscernible]. So today, the U.S. approach is by planting federal agents more important against like the Super Bowl. So you're stating who normally have [indiscernible] security agents inside a stadium Super Bowl or minicars cost there on. And then they would operate systems like ours. But I think over time, there's going to be a lot of focus on ability for either remote operation by federal agents or facilities themselves being able to operate systems.

So here in Australia today, Australia Federal Police is able to use our games. So for example, today, there is a drone disruption around the Sydney Airport, while Sydney Airport themselves can do detection, police is the one who have been doing with can. So it's a little awkward as a solution, but I think over time, as we see more pressure to streamline this. And our approach has been to talk to regulators to then apply pressure ample to get all with it. this will all going to get streamlined. And this is all [indiscernible] I will call it like a drone 9/11. I can assure you that tomorrow, anywhere around the world, there is a civil incident with mass supply evolving a drone, which is a miracle that hasn't happened. I hope it doesn't, but statistically speaking on seminal time. There's got to be very, very rapid change in legislation. And just like a fire loss that will be motor in every such public facility, [indiscernible] system would be as well.

Now if you're supplying to the military space, you're already operating at a higher level than what the civilian sector would require. So you just have to adjust to the budgets. Airports and Data centers are generating similar bunches to the military by 4 others. [indiscernible], more affordable solution will be the right fit, which is why we introduced it. We think we're going to see same crew of teepees, in the defense space because the auto companies compete in the civilian sector some that will be outpriced, Like, for example, I don't really see their arm competing much in the civilian space. But I think there is a significant opportunity for us as that said, [indiscernible].

The next question is on the $2.5 billion pipeline, how do we think about timing? How long would we expect to work through the pipeline, assuming we close all deals in the pipeline. So we think of Pico and Pwin when we talk about the pipeline. So Polis the probability of a particular project going ahead or getting delayed change [indiscernible]. So that's the biggest trend. And [indiscernible] will continue to remarkably improve because as the sector matures, our customers are getting expired about hard not have failed acquisition process. So in the past, very often the Verified capital would buy [indiscernible] will now on deteriorate. They would know how to approach this. Now they are also on bonds. So we believe that [indiscernible] will continue to make [indiscernible] when it comes to [indiscernible] so this is our business coats look for most situations because 6 old doors per cell, and we don't really see much -- we don't only see much of a threat. Yes, there will be situations where customers want a bit of diversity in terms of buying from several suppliers and whatnot. But in our experience, in our pro categories will do dominate.

So the $2.5 billion pipeline, which by the waste projects to end of '26, which is as far as we can see. I say, our base case, this is not guidance that we'll get maybe a bit of that, which is consistent with the pipeline conversion of the next 12 months. The next question is competition for drone children was our roll up to develop ways and bay system. I think I might turn that one to Angus, our Chief Product Officer.

Thanks, Oleg. For EOS, [indiscernible] a laser-based solution for canoe. It's a very different price point, very different technologies so I can generally we wouldn't be competing against EOS. [indiscernible] the customer is looking for that, it's very different to our products. However, our products are very complements for that platform laser-based or even our microwave systems. Require technology to slow to and then they can engage. And that's really where our technology is. And so DroneShield, we've positioned our product and our technology stack to be at the front end of the engagement. Therefore, generally the first thing that the customer adopts.

The next one is, can we expand on the 5 opportunities of $100 million each, including sectors or regions that relate to it, they like the don't expected time frame for conversion? So they are all across the regions. So U.S., Europe, South America, Asia Pacific, are pretty the most. They're all defense or holing security type customers. They are all repeat [indiscernible], and timing is roughly some time next year. Timing is very different process, especially for larger projects by roughly all next year.

The next one is if a peace deal were to be implemented quickly between [indiscernible], how would it impact our pipeline of projects. we believe that we have very close to 0 impact. So this is because I was saying before, military planes preferred to bag in Patin is a goal to having a knee-jerk reaction to rocking drones flying around cup-hanging imports. We might get $1 million to $2 million using acquisition contract on the back of a crisis, but all of the larger opportunities we have are things that we've been working on over months and years in some cases. And this will continue regardless of the current geopolitics. Militaries want to be ready and have robust long-term planning processes regards of what share we use.

The next one I think I'll turn that one to Angus again. What do we think is our advantage over our competitors.

Thanks, Oleg. DroneShield has a number of solutions. And as Oleg mentioned, we've been doing this almost longer than anyone else in the game. So 10 years of research and development to lead up to this point. a substantial advantage technically in our product performance, the ruggedization. And then as you've seen by the results this year, and the ability for us to scale and support mass rollouts of these solutions. So that does take time. And I think we've had a good run up to this moment. So that's a real competitive advantage. The other thing and I would mention is that we are a true technology company. And if you walk inside dry child, you [indiscernible] here, it feels much more like Google than it does a traditional defense company. and that gives us a lot of advantage by the culture, but also the ability to remain agile and nimble and respond to these evolving drone threats. So really critical. We maintain that.

Thank you. I think the next one might turn back to you again. So the person is asking what is our position on future collaboration with specialized drone hard kill market participants.

Thanks, Oleg. Sure. So as I mentioned previously, we've repositioned our products at the very engagement end of the solution. So our C2 platform and based solutions in general, the first 2 layers that are customers looking to roll out as they develop their [indiscernible] solution. Then we strategically have partnered with absolutely Tier 1 best-in-breed radar and optical manufacturers around the world to provide that additional layer. And the question here is more around [indiscernible], which we see that as sort of fall or even fifth layer to the Can-UAS problem. We are looking at and partnering with high-field solution providers around the world. We're going through a number of evaluations at the moment, and we'll determine which ones are appropriate for our customers in our markets with her some exciting announcements leading start saying in the next year.

Thanks, Angus. Maybe just to keep rolling with you still. So the next person is asking people and their knowledge are an important part of our current and ongoing success. What is our human acquisition and development strategy? The reason posties so huge capacity as the TPO as well, which he just started sharing were relinquished to inserting the tariffs here via we built the majority of our -- or all of our technology majority of our overall still [indiscernible].

Thanks, Oleg. That's right. Look, early color and myself are really proud about a lot of the things we've built here, but I don't think we're more proud of anything other than the team that we've developed as Oleg mentioned, over 400 people in DroneShield now and a truly world-class engineering team and organization. The big advantage we've had is actually to build this organization in Australia. If you want to do high-tech defense security, RF engineering, complex system integration, tranche one of the best, if not the best option in all of Australia to come at work. We backed that up with a really positive culture. We have an extremely high retention rate over many years.

A lot of the people who have been part of the organization throughout the last decade. It's still here today, and there's a lot of retained knowledge and information. So we have very high retention human resource metrics are looking really positive. And it's all about building the culture, maintain the culture even as we scale, and I'm quite proud about how will we maintain our core values and mission through the large-scale effort we've done over the last 24 months.

The next question is, what kind of margin profile should onshore $1 billion of revenue. So we anticipate that our 65% margin that Carla mentioned before, will remain intact. Which will be about EUR 650 million worth of gross profit? The current cost base is about $100 million the year and the operational leverage would be that this will increase, but it will certainly not be a buyback increase in line with the increasing $1 billion of revenue. So the growth is speculated in our guidance. I would say on the EUR 650 million of gross profits, we might do maybe EUR 300 million of profit before tax. Next question is, last week, the White House [indiscernible] $0.5 billion anti-drone plan for '26 World Cup named LA, how positioned for those contracts?

We are actively engaging with molecular agencies, which are involved in this project. And obviously, there's also some elements in Canada as well as Mexico [indiscernible] as well. The next one is given we're the only public control company would we consider listing in the U.S. So in time, yes, but you need to be probably 3x of our current size. Otherwise, we just become another lost microcomp in the U.S. market. And we're finding that the large U.S. investors have no issue investing in a Brian, the next question is, are we certain that the civilian airports across Europe, we have an understanding of antidotal technology available to them we certain. No. So I think, look, there is a lot of -- there is a lot of general let's say ways when it comes to airports, which is also why we are approaching by regulators to ensure there's enough pressure for the airports to adopt control systems.

Today, Nordic single airport around the world to our knowledge of the fully deployed canton system. And we think this is enormous change for the action. So yes, if there's a drawn tomorrow. Therefore, we'll have a huge amount of pressure to deploy [indiscernible] system. Interestingly, in the U.S., unlike an Australian area is governance, which means once FAA issues guidance to deploy one of several other things diversity reasons. [indiscernible] systems is going to be masked war procurements.

Meanwhile, we are both engaged directly with the boards to promote [indiscernible] for example, no, you don't have a machine gone in perform this reasons. You probably don't want to have high-powered rate because you can feel [indiscernible]. Other things that are able to do so, an educational campaign. Our case of our sense is actually perfect for airport deployment in terms of the low range and not deteriorating else at the airport. So we think the airports will start an option over the next 12 to 18 months. I think the pressure just continues [indiscernible]. How we think about competitive positioning in the civilian space versus drone and the differences in system architecture. I will actually throw this one to Angus, one some [indiscernible] comment I make is early in 1 of my presentation, I mentioned that we've chosen to be a hearing company with marketing in addition to that, while digital largely really evolved as a marketing business with an after-fee comes to engineering, which is why they normally have any hard way to lead with it.

But we're pretty much course to go into common control system as the path as opposed to having both, which is what we offer. But our [indiscernible] comprehensive.

Thanks, Oleg. So [indiscernible], we have been competing against for a number of years over a number of different markets. Really, the key here is solutions that work and engineering solutions that are proven in the battlefield and in real-world environments. And if we evaluated correct those terms, we were really comfortable with the propositioning in [indiscernible]. Overall, we have a few more prolines than they do and generate the war price a little bit higher than [indiscernible], performance is generally [indiscernible].

Thanks.-- all right. I'll turn the next one to Carla. Regarding [indiscernible], is it safe to assume that these are active opportunities in lose a contract or customer decides to miss opportunity in the late stage. [indiscernible] get removed from the pipeline.

Thanks, Oleg. Yes. So that's correct. So all of these are active opportunities. So if there is a delay to a future period where we don't know when that is going to materialize, we move that from the pipeline if it's lost to remove from the pipeline. So all of those are current opportunities that we're working on.

The next one is the channel mix trend to as distributed business during sales, what's the driving the line. So in the Australia and in the U.S., which are, I guess, two of our long-established home markets, customer expectation is to deal directly with the manufacturer being us, and this is also our home. So we engage directly and then -- we sell directly in Australia, while in the U.S. for bureaucratic reasons, there is sometimes an intervener these companies are called DLA. I mean there are some others, which are basically when you're buying your era acquisition vehicle, so you would sell by one of those, but you're driving the requirement and holding the relationship we sell. When it comes to Europe, it's a bit of a hybrid model.

We seek to build relationships with customers directly being fined them as much as we can't create requirements, but we all to come be everywhere, and we don't speak the language in lots of places. We don't have the often required performance history of contracts, which is why we'll be looking to going distributors. Now [indiscernible] is not trivial. So we interned the right kind of a distributor, you need to train them. They would often have 10 or 20 different brands. You might often to be the only Caito brand, but they might have course sales of radars, tactical comps, systems, not vision roles, and you need to have your sales person top of the distributor to use a small company 10, 20 people, but highly experienced won and stay on top of them saying, hey, what if you go to sweep to position transfer products?

And if you haven't done much [indiscernible] find another treatment. Most of our distributors are very our long position relationships, a number of years that understand our products, and we work with them to align very large programs. or in certain countries, which are less the customers of control was bested by when a [indiscernible] does set now the event should come to acquisition content systems. [indiscernible] no plan to enter unmanned traffic management market. I think it's what is fans like [indiscernible] delivered in the past. the unmanned traffic management or UTM sector is growing at this point. It's very much a government sponsor, government as you're required, there's not a huge amount of commercial use cases for the platform. But it is evolving, and it is increasing in its viability alongside other markets such as the drone is a first responder, the idea where a drone can be deployed to a side of agreements before the police or ambulance arrive on site, and we are seeing this being rolled out across areas like North America and Europe at the moment.

[indiscernible] we're actually really well positioned to support these 2 industries. So we do not have plans today to lead the charge into the sort of unproven markets, but we are speaking with a number of partners where we can provide our Canada solution, which in this case, this brand is base awareness solutions to those UTM or DFR operators. And we have a huge part to play in these evolving markets. It's very, very early days, and we are well positioned. The next question is with the 20% or 5:1 pipeline conversion was the reason why 80% isn't closing now. So the biggest one is the Pago, meaning customers getting their projects delayed. Budgets just taking longer than the affected. This is expected to improve. So just like it used to be maybe 1 in 10, now 1 and 5 and a substantially reduced or improved over the last several years. We've got compensate kind of more competent in their approach to procurement.

We believe that this can well be down to maybe even 1 and 3 and in the next several years as the customers become better at getting their procurement in time and just becoming more confident. Then on the use amount of press, right, to do the oil calendar on system. A couple of 5 years ago, deploying Canada on system, this was kind of like an early stage in even and nice to have no big deal that you're running a couple of years later for Q1 No, it's not having. There's a huge amount of pressure given everything around the world.

So I think the next one will be for Angus without the question. Can we comment on the ideal transaction [indiscernible] drones how see frequency protecting the fee partner with Kinetic such as [indiscernible] microwave system based on the feedback and how can we provide the rails of IND for frequency at [indiscernible] quite a lot to unpack there.

[indiscernible]. So in terms of the -- what we call the connotes general sequence of use -- the first thing that happens when a drawing fly to any security area as we get a radio frequency detection. The second thing that happens is the radar will pick up the drug our C2 system will fuse that data together. So you'll no longer get a radar track and an RF loan of bearing. You'll get a nice drawing object that is displayed clearly to the operator with confidence and also a threat level in C2. The third step is that generally is an optical slow to the camera then slew onto the target, whether that be optical or feed or a thermal feed and then there were lot arms of the target and start tracking the drone across the sky. The question then moves to what can you do about that in terms of a response.

We have built out already obviously manufacture and build ourselves, and we're putting a lot of time energy into our RF attack solution. The second layer is a cyber approach that we have also integrated into the solution to attempt to actually take over the control of our AV platform. And the last, generally, the third step is potentially the hard kill solution. As I mentioned, we are currently evaluating a number of different hard call solutions for their performance, their precision and also their appropriate to our customers. we will provide the solutions that our customers require. And really, that will determine that these types of solutions that we that we move forward with more than anything else. In terms of the effectiveness and ranges, look, a lot of that is quite confidential in nature.

But generally, we would say that traditional boards and then that type of capability is not a great solution for counter drone. These trains are increasing to be very small. They can move at 12 meters an hour firing many boards into the night side to take down a drone is not a good idea. People are looking at laser systems, microwave solutions. But all of these solutions have positives and negatives. And what we are doing is evaluating those and we'll be layering in solutions that are complementary to our existing platform throughout the end of this year and moving into '26.

And just to emphasize with asymmetric nature of this welfare, you can have a $10 million or $100 million as against $200 drops. The cost of the [indiscernible] solution needs to be proportional to the cost of the drug. Otherwise, you just can't have wide deployment solution will keep costs from tens of hundreds of thousands of dollars and also in white deployed. Like for example, we'll work with a great [indiscernible] solution to the U.S. from a company called [indiscernible] I don't know how the VR technology will be and when it be allowed to be in the U.S. because it's so highly restricted level on cost. The main question is about entity. Do we [indiscernible] use of different customers? What's the market or at the moment. So yes, we have now deployed trials with different customers. And I think the market is significant. So when you think about all of the relatively lower end budgets, top customers, to presents, stadiums, corporates, like say Tasmania, you now have activists building some farms and local facilities. All of that has been the right market for Century. time line to dividends.

So today, we're focused on growth. The Board rail reviews its capitalization policy. So when I need the updates we advised how do we think about the R&D spend moving forward as a percentage of revenue or growing parent. So we not only think about it as a percentage of revenue. We think about it nor as what do we need to achieve the jet. So we have grown over the last year from about 250 to 400 staff out of that, about 330 inches. There is a mature limit meaning you completely restructure our engineering team once you get to a certain point in terms of significantly on manager answer because of that is operational leverage. And you really want to go to the quality, not the quantity. So as Angus often serves, there is your capability hires and capacity higher than the gross book, you're really reaching this up to certain demand.

So I would expect the R&D to probably increase by maybe up to 30% next year, even if say double or triple the revenue, but you in nature in both in terms of your hiring and just how much makes sense in terms of the return on your R&D absolute. So I'll leave the next question to Angus. Given our increasing reliance on artificial intelligence-driven detection and cloud connected systems, how is the company strengthening its cybersecurity posture to protect it's and sensor client day, especially for defense customers.

Thanks, Oleg. Great question. So at the middle part of last year, we actually brought on a new Chief Information Security Officer. It's the first time we appointed that role in the business. So Scaled our security team comes from a very team background working in Silicon Valley as well as [indiscernible] America from companies like Microsoft Javier. So he's leading the team now. We've more than 40% increase over the security team over the last 12 months, a very, very strong one believe one of the strongest security teams in Australia Additionally, we are a discertified organization. So that's the defense industry security program. And so we have a high level of security across the organization as part of that program.

And then we are audited by the Australian Commonwealth on security postering on a regular basis as being part of that program. So we -- as always, always ongoing battle similar to operations. You're constantly improving as you're extending the business with always more work to do, but we're actively addressing it.

Next up is for Angus as well [indiscernible] implementing 0 trust solutions to its cloud services such amounts?

I'm not going to talk in too much detail around our actual security execution. But certainly, there is a really strong mix of both on-premise security as well as cloud, and there's a lot of A lot of our customers do operate in a fully gapped environment, and that has different challenges as well. So the physical security of the service themselves. So that often the server is forward deployed in quite challenging conditions, and so we need to manage that as well. So there's a lot of security being built from all the way through hardware through our cloud in structure.

Thank you, Angus. There are no further open questions at this time. So we'll conclude the EBITDA. Thank you, everybody, for joining. If anybody has any further questions, please feel free to e-mail us investors have drugs showed all alternatively to me, all of the [indiscernible]. Thanks for your time.