DroneShield, Volatus Aerospace, Kratos Defense: Those Protecting the Airspace Are Reaping the Benefits of the New Budgets

DroneShield: Record Revenue, but in the Red

Drones are no longer just a military problem. Airports, data centres, stadiums, and correctional facilities are now seeking the same technology. Sydney-based DroneShield builds the sensors and jammers, as well as the software that analyzes the signals, specifically for this purpose. Non-military business accounted for 15% of revenue in the first half of the year. Europe, including the United Kingdom, contributed 52%, while the US accounted for 17%. By comparison, the US share was just 14% a year ago. The Australian company operates in over 40 countries.

On August 26, the company released its first-half results. Revenue climbed 74% to AUD 125.8 million, while recurring revenue rose 229% to AUD 11.5 million. However, this growth has driven up costs. Adjusted EBITDA showed a loss of AUD 12.4 million; by comparison, the company posted a profit of AUD 8.0 million in the same period last year. The bottom line was a net loss of AUD 32.2 million, including AUD 15 million in one-time items. A new production facility, an ERP system, and additional staff cost money.

There is no need to plug any financial holes for now. As of June 30, the company had AUD 180 million in cash and term deposits on hand. The company has no debt. As of August 21, AUD 240 million in revenue for 2026 had already been firmly committed; by comparison, the figure a year earlier was AUD 176 million—the annual forecast of AUD 250 to 270 million remains unchanged. If the mass production of the new RfRecon reconnaissance device gets off the ground by the end of the year, the software segment's share of the business is likely to grow further. However, the gross margin remained below the company's own target of 65%, and the Australian Securities and Investments Commission (ASIC) is still reviewing the disclosures from November 2025.

Volatus Aerospace: Drone Defence and Much More

With SKYDRA, Volatus Aerospace launched its first SaaS platform, enabling military forces, government agencies, and critical infrastructure operators to plan, simulate, and practice countering hostile drones. Industry reports estimate this market to be worth over USD 20 billion by 2030. But anyone who focuses solely on drone defence is missing the bigger picture. On September 3, Volatus was selected as a qualified provider on the Defence Drone Initiative's (DDI) Marketplace, followed on September 8 by qualification across all five work streams. This means the company can bid on significantly more than just counter-drone projects.

September 10 demonstrated just how quickly such a qualification can lead to a contract. The Canadian government awarded the company a 5-year contract for tactical ISR drones. The initial procurement includes 100 systems; Canada may call up to 4,900 additional systems at its discretion, paving the way for a total of 5,000 systems. The government's framework allows up to CAD 5,000 per system and up to CAD 25 million total. The package includes aircraft, payloads, ground control stations, training, and spare parts. Deliveries will begin in the fourth quarter of 2026, with manufacturing taking place in Mirabel.

In addition to defense, the company has long been active in the commercial sector. Through Singular Aircraft, they are bringing the FlyOx 1 autonomous heavy-lift aircraft to the country, which, with a takeoff weight of 4,000 kg, can carry 1,560 litres of water or fire retardant and can take off from unprepared runways. It also has amphibious capabilities. Kraus Hamdani Aerospace is contributing the K1000ULE electric long-range aircraft, which has logged more than 6,000 flight hours. In addition, Transport Canada issued a letter of acceptance for the Canary System in July. In the second quarter, revenue climbed to CAD 8,418,830, up 49.5% from the first quarter. The company is well-positioned with its platform concept and has once again significantly expanded its business segments in recent months.

Kratos Defense: Drone Defense and Full Order Books

Drones have become cheap, but defending against them has not. Kratos Defense & Security Solutions recently received a contract with an initial value of approximately USD 160 million for a directed-energy drone defense program. Such systems detect enemy drones and neutralize them with powerful lasers. Policymakers are further driving this trend. For fiscal year 2027, the US has budgeted USD 74 billion for drones, and funding for drones and drone defence is set to triple from 2026.

On August 4, the company reported its second-quarter results. Revenue rose to USD 458.8 million, up from USD 351.5 million in the prior year. Adjusted EBITDA came in at USD 38.2 million, up from USD 28.3 million. The jump in order intake was even more pronounced, rising from USD 257.0 million to USD 492.2 million. The order backlog stands at USD 2.08 billion, of which USD 1.57 billion is fully funded. Management raised its full-year forecast to USD 1.75 to 1.81 billion. The order book is full.

But the California-based company's business consists of more than just drones. On August 6, the company received an order from the US Army for a new seeker head for the Javelin anti-tank weapon, followed on August 17 by a development contract from the Air Force, in collaboration with GE Aerospace, for an alternative engine for the JASSM cruise missile. In the hypersonic business, revenue is expected to rise from approximately USD 200 million in 2025 to USD 400 million this year. Expansion costs money, and free cash flow was recently negative. If the ramp-up of the new plants is successful, margins could improve.

Airspace protection has become a billion-dollar business within just a few months. DroneShield reports record revenue and orders worth AUD 240 million that are firmly committed, but is in the red in terms of adjusted EBITDA. Volatus Aerospace has secured a path to up to 5,000 ISR drones with a 5-year contract from the Canadian government. Kratos Defense has a backlog of USD 2.08 billion, but is funding the expansion of its facilities with negative free cash flow. If all three companies succeed in ramping up operations, the new security landscape will work in their favour.