New annual sales record and new capital increase
New annual sales record and new capital increaseEARNINGS/SALES RELEASES
Drone Volt unveiled a promising FY23 trading update but announced a new capital increase to fund its high expected growth. Last year’s performance could have been better without the Chinese restrictions on the sale of drones.
FACT
Sales for FY23 grew by 74% from €13.7m to €23.9m, beating our estimate and guidance of €23m (revised downwards a month ago).
The gross margin for FY23 grew by by 17% from €2.9m to €3.4m, falling short of our expectations of €3.9m.
The company expects strong growth in revenue in Q1 24 and an improvement in the gross margin for the FY 24.
Drone Volt also announced the success of a new capital raising of €2.5m with a price of €0.01 per share, an 18% discount to the stock price of €0.0122 at yesterday’s close. The dilution is 14% for shareholders that did not subscribe to the offer.
ANALYSIS
Distribution still the main contributor
The group managed to deliver 80% of the big distribution contract (representing €16m) as expected due to supply chain tensions. The overperformance lies in the other distribution contracts that were less affected than we had expected with 53 drones sold. Drone Volt Factory, Services and Academy sales are ramping up thanks to the new Drone Volt Expert service, with growth of 20% from €1.7m to €2.0m.
The shortfall in the growth margins stems from a decline in margins for both divisions over the year, but the trend subsequently improved over the year as emphasized by the gross margin improvement to 14% in H2 23 compared to 11% in H1 23 to reach a gross result of €1.6m in H2.
*A promising outlook…
Strong revenue growth will come from delivery of the remaining 20% of the €20m contract before the end of H1 24. The company also expects double-digit growth in 2024 for its high-margin Drone Volt Expert offer. The potential game changer is the new Drone Volt Kobra, that could improve revenue started from H2 24 according to the management and could generate high margins if sold in high numbers due to the relatively fixed cost base.
… funded by another capital raising
The company also announced the success of a new capital increase of €2.5m with a price of €0.01 per share, an 18% discount to the stock price of €0.0122 at yesterday’s close. The dilution amounts to 14% for shareholders that did not subscribe to the offer. The amount raised will be used to recruit new telepilots for its drone as a service offer and to ramp up production capacity for the new Linedrones and Kobra drones.
IMPACT
We will integrate these elements into our model and this will drive the target price downwards, but we do not expect a change in recommendation.
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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