Increased defence spending and other significant tailwinds in the defence sector is making defence stocks an attractive investment.
DroneShield Limited (ASX: DRO)
A Global Defence Innovator on the Rise
DroneShield Limited (ASX: DRO), a pioneer in counter-unmanned systems (C-UxS) technology, has kicked off 2025 with its strongest quarterly performance yet. For the first quarter ending March, the company posted revenue of $33.5 million more than double the figure from Q1 2024. Software-as-a-Service (SaaS) income rose sharply to $1.67 million, marking 198% growth, while operating cash receipts reached $16.8 million. By mid-May, DroneShield had secured $100.4 million in revenue year-to-date, exceeding its full-year 2024 total of $57.5 million. With a team of 306 employees, including 217 engineers, the company has nine hardware products on offer and a sales pipeline of 256 projects worth $2.34 billion. An expanded Sydney facility now boosts annual production capacity to $500 million.
With a presence in over 70 countries, DroneShield continues to scale its integrated solutions across defence, critical infrastructure, and civil sectors. Key offerings include DroneGun, RfPatrol, and DroneSentry systems, all supported by proprietary AI tools like DroneSentry-C2 and RFAI-ATK. So far this year, the company has won contracts worth $41.3 million, including a significant repeat order of $32.2 million from the APAC region. Backed by a cash reserve of $213.4 million and no debt, DroneShield is positioned for long-term growth. The company is also advancing its electronic warfare capabilities through a multi-year contract with the Australian Department of Defence. As global defence budgets expand and demand for autonomous security technology grows, DroneShield stands ready to deliver next-generation protection against evolving aerial threats.
Lockheed Martin (NYSE: LMT)
Strong Start to 2025 Backed by Financial Performance and Ethical Oversight
Following Israel’s recent military action against Iran, defense industry stocks saw a noticeable lift, with Lockheed Martin shares climbing 3.7% in response. Lockheed Martin is a key defense supplier to Israel, providing systems such as the F-35 stealth fighter jet, Sikorsky CH-53K helicopters, AGM-114 Hellfire missiles, and other advanced military technologies. The company’s global defense presence is anchored by its four primary business areas: Aeronautics, Missiles and Fire Control, Rotary and Mission Systems, and Space. For the first quarter of 2025, it reported $17.96 billion in revenue an increase from $17.19 billion in Q1 2024. Operating profit rose to $2.08 billion, while net earnings reached $1.71 billion, equating to $7.28 in diluted EPS, up from $6.39 a year prior. Cash flow from operations totalled $1.41 billion, even as total cash reserves declined by $680 million. Product revenue came in at $14.9 billion, bolstered by flagship programs like the F-35 and various classified contracts. The company returned value to shareholders with $3.30 per share in dividends and $750 million in buybacks. U.S. Government contracts made up $12.95 billion of Q1 revenue.
In its 2024 Conflict Minerals Report, Lockheed Martin confirmed the use of tin, tungsten, tantalum, and gold across various product lines. Engaging with 13,100 suppliers in 53 countries, the company prioritized those contributing to over 90% of direct manufacturing costs. While smelters were identified, the exact mine sources of these materials could not be verified. Lockheed remains focused on ethical sourcing, supporting audit programs and maintaining its role in the Responsible Minerals Initiative.
(Source: Company Announcements)
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