AI Gains Ground in Defence Sector

As governments increase investment in defence technology, AI-powered tools are carving out a central role in modern military infrastructure. Vection Technologies (ASX:VR1) has secured a $7.3 million extension to an existing defence contract, confirming its foothold in a multi-year digital transformation program for a European client.

“This follow-up award reflects both operational excellence and continued customer trust in our technologies,” said Vection Managing Director Gianmarco Biagi.

Contract Extension Builds on $10M in Past Deliveries

The latest order follows a $4.4 million defence contract announced on 30 June 2025 and takes Vection’s cumulative work with this client to over $10 million. The contract involves delivery of Vection’s AI products, which are part of its INTEGRATEDXR® platform, and will be delivered using existing resources—without any additional cost to the company.

“We look forward to continuing to work as a key defence partner,” said Biagi.

Client Commits with No Termination Rights

Notably, the contract has been issued with no termination rights for the client. It’s part of a broader annual delivery plan that includes another $19 million budgeted for this vertical between FY27 and FY29.

The structure of the deal is designed to support future extensions, with similar orders expected over the next four years subject to performance.

Vection expects to recognise $5.4 million of this award as revenue in FY26, and a further $1.9 million in Q1 FY27.

“This contract supports our expansion success in this key vertical for Vection,” Biagi added.

Incumbent Position Strengthened

The company’s role as the incumbent partner is reinforced by this repeat order, signalling trust from its defence client as it rolls out a long-term digital transformation strategy. The delivery of Vection’s AI solutions forms a core component of that initiative, highlighting the relevance of its technology in a defence context.

More to Come Under Approved $19M Budget

The defence client’s broader budget of $19 million for the same vertical between FY27 and FY29 positions Vection to potentially capture additional high-value orders. These would likely follow the same structure and delivery model, assuming performance metrics are met.

This announcement is deemed material by the company, as it exceeds Vection’s materiality threshold of $500,000 in revenue.

With this $7.3 million defence extension, Vection Technologies has reaffirmed its growing role in the defence sector’s shift toward AI and digital solutions. The company remains well positioned to capture future value from a locked-in $19 million budget and a long-term strategic relationship.