How can governments minimise casualties during the war? One solution is to send fewer people. That’s what tech, like drones, enables without compromising safety—which is probably why many countries are jumping on the bandwagon to secure some advanced drones.

Just one day after it delivered an over three-million-dollar US government order, defence industry company XTEK Limited (ASX: XTE) is back to work with a new deal for its tech division. This time, it’s with the Commonwealth of Australia’s Department of Defence. 

Australia has increased its APAC defence spending to $270 billion over the next decade. Like most countries, Aus is gearing itself up in light of the Russia-Ukraine war. The new order is valued at $26.9 million for new Small Unmanned Aerial Systems (SUAS), a.k.a. drones, from US-based company AeroVironment.

Scott Basham, XTEK’s Group CEO, said: “XTEK is very pleased to be able to continue to provide Defence with high-end SUAS technology, and this new order for a mixed fleet of advanced AeroVironment drones, will deliver significantly enhanced tactical reconnaissance and surveillance capabilities for Defence.”

AeroVironment is a US-based defence solutions company specialising in unmanned air and ground vehicles. In 2016, XTEK and AeroVironment teamed up, with the latter supplying the Company with Wasp AE drones: they are compact, lightweight (weighing just 1.3 kg) and can efficiently process video data. The Aussie army will use drones for tactical observation and surveillance but will not attack.

The XTEK Group comprises XTEK Limited and its wholly-owned subsidiary, US-based HighCom Armor Inc. It offers solutions in two divisions: ballistics (like helmets and other gear) and technology (including unmanned aerial and other vehicles). More and more countries seem to want to up their drone tech, seeing how companies like Delta Drone and DroneShield are also having a moment right now. 

The Aus defence order is expected to be completed in late H2 FY23. Besides this, XTEK’s tech division has many orders lined up for delivery in FY23, boasting a combined value of $35 million. Taking any unforeseen delays out of the picture, these orders, along with the expected revenue of over $47 million in the first half, should see the Group exceed $82 million for the full year, up from $58.2 million in FY22.

Basham added, “On top of that, should we win even just a portion of the many large-scale ballistic armour opportunities we are currently pursuing around the world, then that could see the second half of FY23 become very exciting indeed.”

Moreover, XTEK recently undertook a management change, wherein it appointed a new CFO and HighCom Armor CEO. Jacqui Myers took over as the new Group CFO, while Sally Nordeen became the CEO of its global armour business.

Though the excessive popularity of drones raises alarms for security, it also allows for increased protection requiring no human life as collateral. XTEK’s pipeline of opportunities exceeds $130 million, with a range of projects slated for FY23, FY24 and beyond. Exciting as it may seem, it also paints a scary picture of what the world is about to witness and whether these drones will shift gears from defence to attack at some point.

Since this announcement, XTEK’s share price has climbed 7.20% to 67 cents per share.