DroneShield share price jumps 16% on 'significant' NATO deal

More big news has come out of this tech stock this morning.

| More on:
A man has a surprised and relieved expression on his face. as he raises his hands up to his face in response to the high fluctuations in the Galileo share price today

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The DroneShield Ltd (ASX: DRO) share price is roaring higher again on Wednesday.

In morning trade, the counterdrone technology company's shares are up 16% to $1.10.

Why is the DroneShield share price racing higher?

Investors have been hitting the buy button on Wednesday morning after the company made its second big announcement of the week.

As a reminder, on Monday DroneShield released its first-quarter update and reported record first-quarter revenues of $16.4 million. This was a massive 10x increase from $1.6 million in the prior corresponding period.

Management also spoke positively about the future. It advised that it has a $27 million contracted backlog and a sales pipeline of over $519 million.

The good news is that this sales pipeline may have just got even larger thanks to some big news this morning.

What was announced?

According to the release, the NATO Support and Procurement Agency (NSPA) has approved the first counter-small UAS (CUAS) procurement framework agreement in NATO history.

NSPA is NATO's lead organisation for multinational acquisition, support, and sustainment in all domains.

The NSPA procurement framework agreement has been awarded via COBBS BELUX BV, DroneShield's in-country Belgium and Luxembourg partner. The initial agreement is for three years but has extension options.

Management notes that the NSPA procurement framework agreement is considered "significant".

That's because the total order of magnitude of sales under the framework over the initial three years is expected to be material.

Also, as a result of being on the NSPA framework, it believes that additional end-users are likely to place orders with DroneShield.

European NATO awards are expected to initially account for the bulk of the contracts. However, the exact order amounts cannot be estimated at this time, and DroneShield intends to provide further updates to the market as appropriate.

'One of the most strategically noteworthy agreements'

DroneShield's CEO, Oleg Vornik, believes this is an incredibly important agreement. He said:

The importance of being awarded this first framework agreement, which is a distinctive feature of NSPA, is one of the most strategically noteworthy agreements since the company was founded. DroneShield is well positioned for the potential order volume with the new production facilities and production ramp-up announced earlier this year.

Additionally, this contract provides further validation to the distributor model, where DroneShield has undertaken a significant investment over last the 10 years to grow its network of highly competent in-country partners in over 70 countries globally.

This enables the company to leverage off local expertise and relationships in each of these individual country markets.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended DroneShield. 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 Scott Phillips.

More on Technology Shares

A man sits in contemplation on his sofa looking at his phone as though he has just heard some serious or interesting news.
Technology Shares

Up 60% in two months, is it too late to buy Pro Medicus shares?

Pro Medicus has been delivering solid returns for years. Can the trend continue?

Read more »

Group of people in a gym high five each other surrounded by gym equipment.
Mergers & Acquisitions

This ASX tech stock is hitting a record high on acquisition news

The market is responding positively to this news. Let's dig deeper into it.

Read more »

A man in a suit face palms at the downturn happening with shares today.
Technology Shares

Guess which ASX 300 share is crashing 17% on shock news

Investors are rushing to the exits on Thursday. Let's find out why.

Read more »

Cheerful boyfriend showing mobile phone to girlfriend in dining room. They are spending leisure time together at home and planning their financial future.
Technology Shares

These were the best ASX 200 tech stocks to buy in May

Shareholders of these shares were smiling last month. But why?

Read more »

A woman smiles as she sits on the bus using her phone and listening to music through headphones.
Technology Shares

Here's why I think these ASX tech shares are buys in June

These stocks have loads of potential.

Read more »

A young man wearing a black and white striped t-shirt looks surprised.
Technology Shares

Why did the Life360 share price rocket 51% in May?

This ASX 200 stock smashed the market last month with an incredible gain.

Read more »

Man ponders a receipt as he looks at his laptop.
Technology Shares

Up 30% since April, are Xero shares still a buy?

Xero shares have surged 30% since April, but can this SaaS leader's share price keep rising?

Read more »

A man and a woman sitting in a technology-related work environment high five each other while the man wears headphones around his neck and the woman sits in front of a laptop.
Share Market News

Strong gains for Wisetech, TechnologyOne, and Catapult amid ASX 200 tech sector lead

ASX technology shares led the market with a 3.85% increase while the ASX 200 lifted 0.88% last week.

Read more »