Elsight has secured an AUD $7.1 million (USD $4.28 million) follow-on supply agreement with a European drone manufacturer for its drone connectivity systems, due to be fulfilled in the coming four months.
The agreement follows an initial order of AUD $498,000 (USD $300,000) made earlier this year in March. The recent order is expected to more than double Elsight's revenue for the 2024 calendar year, which stands at AUD $3.36 million (USD $2.02 million).
The European original equipment manufacturer will deploy the systems in a government drone programme, marking a significant expansion in Elsight's dealings with its European partner. The new contract includes a substantial down payment at signing and outlines a specific delivery schedule, aligning production with the customer's deployment timetable.
The order highlights Elsight's operational capability and financial prudence, as the company confirms it is well-equipped to meet the demands of this agreement. During the initial phase, the customer will also determine the long-term quantities and rollout plans, laying the groundwork for future collaborations.
Commenting on the development, Yoav Amitai, Chief Executive Officer of Elsight, remarked, "After a long and extensive period of field testing with deployment success, the customer's fast move to production at a multi-million-dollar scale-up within just a few months, highlights the critical role that reliable communications play in today's defence operations." He further added, "We look forward to continuing to support this important programme and to deepen our engagement over the coming year."
This deal strengthens Elsight's focus on the defence sector, which accounted for over half of the company's revenue in 2024.
Amidst growing geopolitical tensions and increased defence budgets across Europe, Elsight is well-positioned to meet the expanding demand for unmanned systems and communication technologies.
Recently, the Chief of General Staff for the UK Army noted that a considerable portion of the Army's future budget would prioritise autonomous solutions, indicating the potential role of Elsight's connectivity systems in upcoming military operations.
On a related note, Swedish Defence Minister Pal Jonson highlighted the significance of swarm drones during recent conflicts, observing the strategic advantage of being able to control up to 100 drones autonomously, reinforcing the importance of secure and reliable communications systems like those offered by Elsight.
While Elsight has confirmed the relationship with this European customer remains distinct from other existing programmes, it has committed to providing updates as new phases of procurement are initiated.
Elsight also clarified that it does not consider the disclosure of the customer's identity to impact the market value of its securities and assures that all necessary information has been communicated transparently.
