A FY25 transition year burdened by non-cash impacts
A FY25 transition year burdened by non-cash impactsEARNINGS/SALES RELEASES
Drone Volt has just announced mixed audited FY25 figures due to non-cash impairments and regulatory burdens. This opens the way for a return to growth in 2026 with an expected focus on the US market, potentially through add-on acquisitions and a NASDAQ listing, as well as more defence-related orders. We thus reiterate our positive stance on the stock given the many catalysts in the coming year that could boost the re-rating of the stock.
FACT
Sales were already announced at €8.732m, a 73% decrease compared to last year.
Gross margin was revised slightly downwards to €3.220m, decreasing by 24% compared to last year and below the previous estimate of €3.6m.
However, EBIT decreased further from €-7.143m to €-11.886m due to a €-5m impairment charge related to the closure of Aerialtronics and Drone Volt Benelux, and thus came in lower than our estimate of €-9.787m as we forecasted lower depreciation levels notably.
Net result (group share) came in accordingly lower than our estimate to €-13.813m from €-11.901m (AlphaValue estimate €-10.691m).
The balance sheet has been strengthened by the €25m capital raised over the year (bringing the level of equity up from €10m to €21m), which should enable the company to take on external growth opportunities, with a transaction underway according to the press release.
The outlook for 2026 seems unchanged.
ANALYSIS
Another year impacted by non-cash impacts
The deterioration in EBIT was entirely explained by the €5m impairment charge related to the closure of two subsidiaries. This is visible in the current operating income, which only declined by c.€140k to €-6.856m, enabled by the strong improvement in gross margin over the year to 37% from 13% last year despite the decline in revenue. The picture could have been rosier if the company had not suffered from regulatory burdens to obtain export licenses, which has thus limited its revenue growth potential in 2025 and probably partly explains the lack of a positive EBITDA.
A good set of catalysts for 2026
The reinforced balance sheet offers opportunities for external growth, and the company is currently involved in a transaction that could finalise soon according to the press release. We speculate that this acquisition could be a company which has a footprint in the US, which is the most attractive market due to the effective ban of Chinese players, offering a good opportunity to grab share on this market.
The NASDAQ listing is clearly intended also to reinforce the notoriety of Drone Volt on this market; we would thus not be surprised by such an acquisition that would provide substance to the equity story. We still think that this listing could provide a boost to the share price given the difference in valuation between US listed drone companies and European ones, as US investors have more appetite for non-mature high-potential companies.
Operationally, the outlook for 2026 seems unchanged (increasing high margin activities), notably thanks to the strong demand the company has enjoyed since the beginning of the year for its internal drones, which have higher margins, owing to its reinforced presence in the US and defence orders that are starting to come. The current political realisation that not all defence spending must be routed towards legacy weapons should accelerate such orders in our opinion. The sale of its R&D capabilities to major companies such as Hydro Québec should also be key to turning engineering costs into a profit and help reach EBITDA profitability.
IMPACT
We will integrate these figures into our model, which should have a slight negative impact given that profitability figures came in slightly below our estimates.
Drone Volt SA. Drone Volt SA is a France-based company principally engaged in the aerospace industry. The Company provides civilian drone manufacturing. It specializes in the production, integration and sale of drones for professionals. Drone Volt is a provider of the audiovisual market in the field of aerial photography by drone. The Company is also present in many other markets such as security and topography, among others. The Company's main product is the Pack PRO FOR GH4 S900. It cooperates with Ministry of Internal Affaires, Ministry of Defense, CERN, Gendarmerie Transports Aeriens (aerial transport police), Dakar 2015, Spie, TF1, Bouygues, CNRS, Bonne Pioche, RAID and GEDEON Programmes, among others. It operates through Dandrone.
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