Elsight lands $8.2m follow-up contract with European drone manufacturer for Halo connectivity platform

Elsight (ASX: ELS) has been awarded an $8.2 million order to supply its Halo connectivity platform to an undisclosed European defence drone manufacturer.

The contract follows a previous Halo purchase order in April from the same customer and takes the customer’s total commitment to approximately $15m.

Elsight has already recognised more than $1.56m of the April contract as revenue, highlighting the company’s ability to scale production capacity to meet higher volume demand.

Contract terms

Under the terms of each Halo contract, Elsight will receive a substantial upfront payment to fund working capital requirements, with the remainder payable on delivery to the customer.

Elsight expects the contracts to move it into profitability and cash flow break-even by year end.

The company anticipates further expansion of its relationship with the European drone manufacturer as it finalises long-term quantity requirements and new defence programs emerge.

Scalable blueprint

Elsight chief executive officer Yoav Amitai said the new contracts validate Halo’s long-term potential.

“Strategic contracts like this provide a blueprint for how we can scale into a significantly larger organisation in a short period of time,” he said.

“As our solutions become embedded into a customer’s critical defence programs, we transition from niche innovation to indispensable infrastructure and we see this expansion as the beginning of a much broader market adoption.”

Defence industry shift

Mr Amitai said there had been a significant shift in global defence postures and budgets, driven by increased geopolitical instability and a growing emphasis on the deployment of unmanned systems.

“The growing demand for scalable, battle-proven technologies presents a meaningful opportunity for us to embed our solutions in foundational defence platforms,” he said.

“These new contract wins position our technology as a critical enabler of unmanned defence capabilities, driving accelerated adoption among additional defence customers.”

Elsight has hardware production capacity to support more than $100m in annual sales and additional orders from existing customers, plus further pipeline growth.