Thanks @Rapstar for making me think about this. Droneshield is the second largest holding in my portfolio with a solid moat and as a classic averaging down investor one of the few that i have averaged up.

I don’t particularly like the incentive scheme either and hope they don’t buy revenue. I’ll admit I’m unsure how the voting works, the total number of proxy votes are definitely not near the 600 or so million shares on issue. I can’t seem to find why this is? On researching a bit more does anyone use the Australian shareholders association or any other associations as proxies?

Just makes me think I should vote more and pay a bit more attention to these items. Appreciate any enlightenment for what seems simple but the numbers don’t add up for me.

Hey Metis,

Thanks for that.

Would love to hear your thoughts on what the 'moat' is for droneshield.

I'm finding it hard to see why one of the larger manufacturers in the states couldn't just emulate what Droneshield are doing in the blink of an eye.

I mean the tech in the newer radars used by us air force can jam, interfere, direct electromagnetic noise down a boresight, and in principle do anything droneshield could come up with...

They're finding crazier and crazier ways to use the technology every day.

I guess a lot of smaller tech companies feel the same about Apple and Google, just hoping the bigger company avoids the area.

Appreciate any thoughts.

Hi @topowl

have a look at the most recent straw man meeting.

The moat isn't so much in the tech (although this is also probably a moat) rather in the long lead time to getting approval to sell into the various militaries - several years. Oleg addresses this is in some detail

Hi @topowl thanks for asking. I’ll admit that I used the wrong language and moat should have been my own personal ‘psychological buffer’ from being up 90% IRL, which hopefully isn’t confirmation bias…

I choose to still own it despite the lumpy nature of its revenue due to:

• Starting to deliver on revenue stream resulting in bigger contracts with meaningful players.
• Stickiness of this industry and its contracts. Knowing full well the size of the contracts are probable still just testing the tech out for the bigger players. (Not sure how to work if this goes south)
• Believing Oleg in regards to the way he talks about competitors and where they are in the game.
• Unfortunately see drones as being used for multiple nefarious reasons in both war and terrorism. So feel this area, sadly has a huge growth runway with protection in the civilian arena.
• Solid cash balance, with no capital raises in sight (touch wood).

Thanks though as its made me think what would make me sell and when??

Ahhh.....cool.

Thanks for that.

Food for thought.

Appreciated.

Thanks for that Metis, appreciated !

My investment hypothesis for this one (could be wrong) has always been based on securing larger assets (eg. Military bases, airports, jails and other types of critical infrastructure). I think that could also probably be stretched to large mobile assets as well (eg. Warships) and potentially even smaller deployed assets such as tanks, APCs etc.

What I am hoping for is that these sorts of installations get a much higher percentage of recurring software revenue than those guns that every politician seems to want to tote. I don’t get excited by seeing DroneGun sales (which is really just defeat) without the percentage of SaaS revenue.

Just extrapolating out the fixed site revenues of 125K to 860K to the number of bases someone like the US has (about 500 domestic and 800 international) can deliver a significant amount of revenue. In terms of the Moat, it’s really a race to win these as I think once you get the infrastructure installed it’s all about ARR from the software for this sort of deployment. Using a rough assumption of 1000 fixed sites x 500K per site x 10 to 15% ARR gives 50 to 75m ARR from software. Using a 5 to 15x multiple of ARR (I think US SaaS company average in 2023 was 6.7x … big contractions over the last few years). That gives a 250 to 350m valuation just on software revenues alone. The the rest of this hardware is upside.

As such, I remain comfortable with current valuation (even though the revenues aren’t yet coming from where I think they should when this company grows up).

Holder IRL in Strawman (but someone who voted against the latest executive incentive as I don’t see success selling a bunch of those guns).