Why the DroneShield (ASX:DRO) share price is jumping 6% today

The DroneShield Ltd (ASX: DRO) share price share price has rocketed higher today following a government agency order. Here's the lowdown.

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DroneShield Ltd (ASX: DRO) shares are rocketing higher today on news the defence contractor has signed an additional government agency order. At the time of writing, the DroneShield share price has lifted 5.9% to 18 cents.

What's driving the DroneShield share price?

The DroneShield share price is on the rise today after the company announced it has received a follow up order for its DroneGun Tactical hand-held, counter-unmanned aerial systems (UAS) products. The additional purchase is said to be from a Five Eyes country. The term 'Five Eyes' relates to a signals alliance between the United States, Canada, Australia, the United Kingdom, and New Zealand.

DroneGun Tactical is a portable, long range counter measure used against UAS threats. When attacking the target, the high-tech gun safely brings the enemy UAS down to ground with no peripheral damage, protecting the surrounding environment.

The deal, valued at around $400,000, represents ongoing commitments from government agencies, which have sought DroneShield products in the past. This includes a $900,000 purchase of DroneGun counter UAS products that was announced on 1 October. The latest transaction is due to be completed sometime in the first-quarter of the new year, pending usual export approvals.

Words from the CEO

Commenting on the contract award, DroneShield CEO Mr Oleg Vornik reinforced the company's importance to defence markets. He said:

This order demonstrates adoption of our products at a mature sales cycle level, where ongoing repeat orders of meaningful scale start to occur. There is necessarily a larger upfront effort in developing the technology and achieving the initial adoption by tier 1 customers.

This order shows DroneShield moving to a subsequent phase of ongoing sales without requirement of testing and evaluation prior to each sale, as our products become the standard for counter-UAS technology amongst leading Government agencies globally.

DroneShield share price snapshot

The DroneShield share price has fallen pretty hard over the past 12 months, losing nearly 40% for shareholders. While the company signed off a slew of contracts in 2020, its share price has failed to take off.

Based on the current DroneShield share price, the company has a market capitalisation of $66.3 million.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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