Get in now: How DroneShield, NEO Battery Materials, and Hensoldt are benefiting from exploding defense budgets

DroneShield – From niche to mass market

The market for drone defense is literally skyrocketing. The reasons are obvious. The global situation is more tense than it has been for a long time, and at the same time, drones are becoming increasingly commonplace. This explosive mixture is bringing breathtaking growth to the industry, with DroneShield already securing orders worth AUD 193 million in the first nine months of this year. As a result, the Company has already easily tripled its total sales for the previous year! The highlight was the third quarter, when revenue exploded to AUD 93 million, an increase of over 1,000% year-on-year. These figures signal that the market for protection technologies against drone threats has finally arrived in the mass market.

The Company's financial health has improved exorbitantly in parallel. Customer payments received skyrocketed to over AUD 77 million in the third quarter, an increase of 751%. Even more significant is the turnaround in operating cash flow. Instead of losses, the Company is now generating surpluses and recorded a positive operating cash flow of just under AUD 16 million in the first nine months. This solid financial base, coupled with cash reserves of over AUD 212 million, provides the necessary flexibility to invest in research, production, and expansion without becoming dependent on external investors.

DroneShield's strategic focus is gradually taking a new direction, with an increasing emphasis on software and civilian applications. The Software-as-a-Service (SaaS) business really took off in the last quarter. Revenues from this segment rose by a whopping 400%. Management aims for SaaS to contribute 30–40% of total revenue in the medium term. One focus of the new products is specifically on protecting critical infrastructure, such as airports and energy suppliers. This diversification away from the pure defense business opens up significantly larger markets in the long term. The stock is currently trading at AUD 4.60.

NEO Battery Materials – Energy transition with strategy

While many are focusing on the electric vehicle revolution, NEO Battery Materials is taking a broader approach. The Company is specifically driving forward the commercialization of its silicon anode technology and set an important course for this in October. One milestone is a long-term supply contract for 50 tons of silicon battery materials with a North American battery manufacturer specializing in high-performance batteries for drones and unmanned systems. At the same time, an already productive manufacturing facility in South Korea is being acquired by way of lease to significantly accelerate the scaling of materials and components. This dual strategy of secured demand and immediately available production capacity reduces the usual start-up risks and puts the Company on a significant growth path.

Expansion extends well beyond consumer applications. Also in October, NEO received a CAD 2.5 million order from a South Korean robotics manufacturer, which will jointly develop and procure high-performance battery packs for autonomous robots. Particularly noteworthy is the strategic appointment of high-ranking former military personnel to advisory positions. These appointments are intended to open the door to the demanding procurement processes in the defense sector. This is a clear signal that the technology is to be qualified for the extreme requirements of military drones and other platforms. The focus on these high-performance markets underlines the Company's technological lead.

NEO Battery's prospects are not dependent on a single industry. In addition to drones, robotics, and defense technology, its "Battery Innovation Platform" also addresses future fields such as energy storage for AI data centers and industrial electromobility. This diversification reduces dependence on the volatile automotive market. Vertical integration, from material development to cell production, is designed to support margins and ensure supply chain control. For investors, this broad foundation provides a compelling way to participate in the rising global demand for high-performance batteries, especially as China's export restrictions tighten supply. The share is currently trading at CAD 0.65.

Hensoldt – Focusing on drones and benefiting from new momentum

Hensoldt's strategic focus on the drone market is increasingly bearing fruit. The technology specialist is massively expanding its business with sensors for unmanned aerial vehicles and drone defense solutions. The partnership with Avilus, with which a powerful reconnaissance drone is being developed, plays a key role in this. Hensoldt is contributing high-performance sensor technology, including electro-optical systems and the PrecISR radar system, which enables the tracking of over 1,000 targets in real time. These flexible, AI-supported platforms strengthen European sovereignty in this critical technology sector and are used in both military and civilian scenarios.

The latest forecast upgrade underscores the momentum. Hensoldt expects significantly higher order intake for 2025. This is expected to be 1.6 to 1.9 times revenue, up from around 1.2 previously. This is the Company's response to exceptionally high demand, particularly from the German Armed Forces. Revenue is now forecast more precisely at around EUR 2.5 billion, with a stable or even slightly increasing EBITDA margin of at least 18%. This signals that growth will not come at the expense of profitability.

Another focus is on drone defense, a rapidly growing market. With systems such as the Elysion mission core software and advanced radar solutions such as ASUL, Hensoldt can not only reliably identify drones, but also defend against them in a targeted manner. Production capacities are being massively expanded to meet the high demand. By 2027, new production lines are expected to deliver up to 1,000 defense radars per year. These initiatives consolidate Hensoldt's position as a key European supplier in a long-term growth market. A share currently costs EUR 97.75.

Exploding defense budgets are opening up targeted investment opportunities in key drone technologies. DroneShield has evolved from a niche provider to a profitable growth company with specialized drone defense solutions and growing SaaS revenues. NEO Battery Materials is tapping into future markets such as drones, robotics, electromobility, and energy storage through its advanced silicon anode technology for high-performance batteries. Hensoldt, in turn, is a European technology specialist with sensors and defense systems for unmanned aerial vehicles that is benefiting directly from strongly rising demand, particularly from the German Armed Forces. Together, these companies embody the structural megatrend and offer shareholders long-term growth opportunities.