)
DroneShield (ASX: DRO) shares lost more than 20 per cent of their value today despite record first-half cash receipts of $21.4 million and a doubling of its sales pipeline to $1.1 billion in the space of three months, as investors were turned off by a quarter-on-quarter decline in revenue.
For a sense of perspective on the counterdrone defence technology company, the closing price of $1.55 for DRO shares today is still almost double where they were in April when DroneShield raised $105 million.
The company finished the June quarter with $145.5 million in cash after its operations saw a net cash burn of $18.9 million, mainly driven by $23.6 million for manufacturing that included advanced inventory purchases.
DroneShield also saw record half-yearly revenue of $24.1 million, and explained the discrepancy with cash receipts as coming from 30-day payment cycles after delivery with US customers.
But what likely scared investors was the drop in revenue from $16.4 million in the March quarter to $7.4 million in the June quarter.
Cash receipts more than doubled to $14.2 million over the same period, with the differential between revenue and cash receipts flipped versus the half-yearly result.
DroneShield's quarterly results from the equivalent periods last year did not include revenue, but what can be seen is that cash receipts only increased marginally in the September quarter of 2023 when excluding for government grants.
Business News Australia has sought clarification from DroneShield CEO Oleg Vornik about the reasons behind today's share drop, which also follows a significant fall in the share price that the company believes can be attributed to a report on short sellers published by Capital Brief.
DRO shares have declined 40 per cent in the past week.
The company highlighted several reasons for the large increase in its pipeline to $1.1 billion, although it clarified there was no assurance that any of its sales opportunities will result in sales. The group has a $28 million contracted backlog, compared to $27 million at the end of March.
The opportunities include a significant ramp up in the Asian region, particularly for countries neighbouring China, as multiple governments ramp up their counter-unmanned aerial system (C-UAS) programs "against the threat of small Chinese drones conducting surveillance of sensitive areas, harassment and potential attacks".
DroneShield also noted a steady rise in C-UAS demand across the US and Europe, while drones are continuing to play a major role in the Ukraine war.
The company is investing in ready-to-sell inventory to support this strong pipeline of high-quality customer opportunities, with an inventory book value of $42 million at 30 June 2024 compared to $24 million at 31 March 2024.
)
