Q1 26 figures: A business model change validation
Q1 26 figures: A business model change validationEARNINGS/SALES RELEASES
Drone Volt unveiled excellent results that clearly validates the business model change that occurred over the past two years, by paying off on the gross result side notably which is now higher than in 2024, when the group was still focusing on distribution. The group also reiterated its guidance for 2026, prompting us renew our positive stance on the stock that should benefit from several re-rating catalysts, including a potential NASDAQ listing and acquisitions.
FACT
Sales increased by 20% to €2.2m (Q1 25: €1.9m) driven by a strong increase in high margin activities
The gross result grew by 112% to €1.5m from €702k, resulting in a gross margin of 67%, a huge 19pp improvement thanks to the improved mix towards higher margins services activities notably (76% gross margin for Drone Volt Factory, Services and Academy).
The company reiterates its objective of continued growth in high-margin activities while still evaluating acquisition opportunities to expand geographically and focus more on services
ANALYSIS
A take up in growth rate
The strong sales growth rate was driven by a 80% increase in high margin activities to €1.9m, more than offsetting the 58% decline in distribution activities, now representing only €332k and is now non-core. Even though we do not have the split between the different high-margin activities, Drone Volt gave a qualitative assessment of their performance. The Services business seemed to have experienced the higher growth rate driven by the Phoenix Tower International contract, which is only 10% completed as of date. The R&D services exhibited “satisfactory momentum” thanks to the contract signed with Hydro-Québec while (internal) drone sales remained strong, with 4 Hercules 20, 2 LineDrones and 2 HELIPLANEs invoiced, that should be worth around €550k in total according to our estimates.
A business model change validated by impressive profit figures
The highlight of this release for us is the gross result, which grew disproportionately compared to the revenue growth thanks to mix and probably operating leverage for internal drones. This strong improvement enables the company to largely beat the €1.023m registered in Q1 24, the last quarter with important distribution revenue and thus provide a clear validation of the business model change focusing on high margin activities that the company underwent over the last two years.
An unchanged outlook full of catalysts
The company reiterated its objective of continued growth in its services and R&D activities as well as for own drones’ sales, which should enable the company to reach positive EBITDA shortly in our opinion. This is especially true given the current political realisation that not all defence spending must be routed towards legacy weapons should accelerate drone orders such as the Kobra in our opinion.
The group is still evaluating acquisition opportunities to expand geographically and with a focus on the services sector, a new element that was previously unknown. As a reminder, 2026 should be a year with another important catalyst which is the NASDAQ listing, and we would not be surprised that the acquisition would reinforce DroneVolt’s footprint in the US, a very attractive market following the effective ban of Chinese drones, and would give more 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.
IMPACT
We will slightly adjust our forecasts downwards on the distribution segment, which is declining further, but this should not heavily affect our target price which is already including a healthy ramp-up of the high-margin activities.
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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