Drone Volt unveiled a mixed FY25 trading update with disappointing financials for FY25 but a promising outlook for FY26. Another year of growth is expected in its high-margin activities, which should help reach the missed positive EBITDA objective in 2025, albeit with a delay. Drone Volt is still considering a NASDAQ listing for 2026, which could help lift its valuation and raise its reputation in the important North American market, thus also supporting our positive recommendation on the name.
Sales for FY25 declined by 73% from €32.7m to €8.8m, falling short of our optimistic estimate of €10.7m.
The gross margin for FY25 declined by 14% from €4.0m to €3.6m, falling short of our expectations of €5.4m.
The company stated that it expects an increase in high-margin activities for 2026.
A frustrating end to the year
The miss on the top line seems to have come from a delay in the recognition of recent R&D contracts signed, which should thus be recognised in 2026. The number of internal drones sold also declined from 105 to 78 despite sales from North America increasing strongly (28 drones sold in the US and 9 in Canada), contributing to the miss as well. However, the distribution revenue came in higher than we expected at €3.1m (vs €2.5m expected), but no explanation was given for this strength at the end of the year.
The gross margin for FY25 declined by 14% from €4.0m to €3.6m, falling short of our expectations of €5.4m, as the company registered a more unfavourable revenue mix than we anticipated due to the seemingly delayed recognition of new R&D contracts revenue and thus a lower turnover as well that impacted expected gross profit. However, the gross margins in both divisions held well with Distribution beating our expectations by c. €90k while DV Factory, Services & Academy came in €1.9m lower.
A promising outlook for 2026
The company stated that it expects an increase in high-margin activities for 2026 with several contracts to be announced in the coming days but did not communicate a positive EBITDA objective, which was missed in H2 2025. We nonetheless think that an increase in high-margin activities should lead to a positive EBITDA at some point as distribution gross margin only represented 14% of the total, which should thus be easy to offset even if this activity were to be stopped abruptly.
Drone Volt also mentioned that it will continue to make bolt-on acquisitions thanks to its reinforced capital structure over the year and that a NASDAQ listing remains a possibility for 2026, which could unlock value for shareholders. Indeed, it could boost its reputation on the crucial North American market and innovative start-ups are also significantly better valued there, with a peer like Aerovironment valued more than two times higher on a P/B basis, for instance.
We will integrate these figures into our model, which should result in a decrease in our target price given the lower turnover and gross margin realised in 2025. This will also have an effect on our future assumptions.
