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Oleg Vornik: Welcome to those joining the DroneShield investor call covering our 2025 annual results. I'm Oleg Vornik, the CEO and Managing Director of DroneShield. And joining me today are Carla Balanco, our Chief Financial Officer, on my right; and Josh Bolot, our Head of Investor Relations, on my left. Angus Bean, our Chief Product Officer, is unfortunately unable to join us today due to customer travel commitments overseas. We will aim to speak for approximately 15, 20 minutes presenting the results, followed by questions. Please submit your questions well in advance so we can start immediately with the questions following completion of the presentation. 2025 has seen a record revenue of about $260 million, about a 4x increase on the previous year. Importantly, it has been a profitable year for us of about $3.5 million profit being also $33 million of underlying profit before tax. And importantly, having $15.9 million of net cash from operations. This reinforces our aim to have rapid growth as well as being profitable and operating cash flow positive moving forward. The pipeline has slightly increased from $2.1 billion to $2.3 billion in the last month since we presented the 4Q results, and a lot of it was due to our increase in the Asia Pacific pipeline specifically. The pipeline corresponds to about 295 deals. Great diversity of deals is how we have certainty of ongoing business where there's diversification across the stages of maturity, geography, products, customers and other factors. Some of those deals are significant. There is about 18 deals over $30 million each and our largest deal being about $750 million. Previously, we advertised this deal is about $800 million, but with being European deal and the Australian dollar continuing to strengthen, the Australian dollar value of the deal has slightly reduced. DroneShield continues to be significantly well positioned to win in the exploding counter-drone market. We have 460 employees in about 7 countries around the world, and that includes over 350 engineers. We continue to invest significantly in R&D in this rapidly evolving landscape, and it's about $70 million plus of R&D that we spend every year. And we continue to have significant cash balance of over $200 million to support our growth. To recap on top of what I was saying earlier about the record revenues, the SaaS is continuing to grow, and our goal is to continue to ramp it up to the eventual aim of over 30% a year over the next 5 years. And the growth in SaaS will be reached through having multiple streams of SaaS over increasing amount of hardware in our space. We're familiar with some of the recent market commentary about some of the software companies that have been sold off. And the big difference in the DroneShield case is we have an integrated hardware and software solution, where a lot of our IP is really deeply inside the hardware as well as software. And the data we use for our software is not something you can easily just scrub off the Internet. So when you're looking at the drone signal data, you have to collect it in a number of countries, often very sensitive situations. So very high IP that cannot be easily disrupted by the likes of ChatGPT. Along with the record revenue growth, we're seeing significant matching growth in customer cash receipts and big increase also in the committed and also recognized year-to-date revenues and cash receipts already going in, into 2026. So a very strong start of the year. We talked briefly about the profit where the underlying profit before tax for 2025 has been about $33 million and then showing the significant operating leverage going forward. What I mean by that is with the roughly 65% gross profit margin as the revenues grow, that is going to outpace the growth in costs, resulting in what we're aiming to be increasingly profitable position. And the bottom right-hand chart is the NPAT to EBITDA bridge. I'll leave it as read, essentially $36 million in underlying EBITDA with $3.5 million statutory NPAT. If there are any questions on that, happy to answer that. The sales pipeline, this has largely been covered when we presented about a month ago. So one change, as I mentioned, is the increase in our Asia Pacific position where a number of countries bordering China are significantly concerned about the Chinese drone threat, and we're continuing to see increase in demand there. But overall, to recap on the key themes, U.S., we believe, will have a number of growth factors. So in addition to the military, where there is a $1 trillion record defense budget for '26 and $1.5 trillion defense budget proposed for '27, we're expecting to see significant public safety market, not just with the Safer Skies legislation enabling police to take down drones, but also significant funding applied ahead of the FIFA World Cup in June, July, and we expect to see meaningful sales between now and that time and also going forward. Importantly, we believe that police will be a bridge towards the counter-drone being seen less so strictly military type of solutions and more into the civilian solution. So then increasingly deployed by critical infrastructure operators, airports and corporates. In Europe and U.K., we have opened our sales office in Amsterdam, managing our local distributors around Europe. And both Europe and U.K. are driving our momentum significantly at the moment, underpinned by everything you read in the news about Ukraine and the general instability there. Europeans realizing they cannot rely on U.S. for their security. And being Australian is a great neutral position in terms of appealing for sales for both the European and the U.S. markets. In Australia, DroneShield has been selected on the panel for LAND 156, which is the rollout across defense spaces nationally and we anticipate for there to be a significant amount of business for us even starting from this year in this $1.3 billion program. We have approximately $79 million in inventory as of 31st of December. That combines $26 million in finished goods as well as $53 million in raw inventory, which is largely the long lead items to ensure that we can deliver to our customers in a short amount of time. We have moved to an enterprise ERP system, which enables us to really push out on our goal of moving production from $500 million a year to $2.4 billion by the end of the year, which is underpinned by the new 3,000 square meter facility in Sydney as well as our manufacturing hubs in the U.S. and Europe, which are being finalized as we speak. 2025 has seen inventory impairment of about $10.3 million, constituting 2 factors, the $8.5 million in finished goods, which substantively relates to DroneGun Mk4 out selling DroneGun Tactical. We believe it's a one-off situation because we essentially introduced 2 product lines with the Mk4 being the success to tactical within a couple of years of each other. And we do not intend to introduce successor versions to the DroneGun Mk4 and RF controllers, we believe that at the hardware level, those are essentially as best as the technology can get within those form factors and the future versions of those technologies will look entirely different. And therefore, we do not believe that similar sort of impairment is likely going forward. And the $1.8 million in raw materials, so a lot of it was linked to us moving to the new ERP, and it's in line with FY '24 impairment of $0.6 million. On the manufacturing, as I mentioned earlier, we are expanding from $500 million a year to $2.4 billion, and that includes the European and the U.S. assemblies. For those relatively new to our story, we have essentially 2 streams of products. You have the dismounted being the RfPatrol, body-worn drone detector. It's a hardware that has AI on the edge. So SaaS software that lives inside of it that we do quarterly software updates on. And then there's DroneGun, which is what we've historically been most well known for. In fact, those observing our news probably would have seen with electronic arts major game adopting DroneGun as one of its key weapons. But in fact, DroneGun has only been just under 20%, 19% of our revenues in FY '25. And in fact, the business is fundamentally moving towards being a diversified company with our on the move and fixed site DroneSentry system constituting just under 40% and RfPatrol being just over 40% of our revenues. And SentryCiv, the civilians specific subscription-based product that we launched last year, I think will start ramping up as the civilian sector grows as well. Our SaaS strategy is separated into 3 streams. You have the device level SaaS. So today, when you buy RfPatrol, DroneSentry-X that comes with RFAI detection software. And then we're currently trialing the RFAI attack, which is AI-enabled defeat software that will be a paid product from about middle of the year. Then we do AI that sits inside the cameras and then also utilize third-party AI for radars and of course, SentryCiv, which is our own SaaS as well. And then the site SaaS, so when you have a base or generally maybe critical infrastructure facility, you'll be having a number of sensors, DroneShield and third parties stitched together by our DroneSentry-C2, or perhaps commanders with tablets with our Sentry-C2 Tactical. And then our latest product that we introduced at the end of last year being our DroneSentry-C2 Enterprise when you have entire region or a country looking for patterns of drone incursions, drone attacks. So the idea when I was saying earlier about the SaaS getting to 30% of the revenues over the next 5 years being our goal. For example, you might be buying DroneSentry-X and on that, you might have our RFAI detection software and then RFAI defeat, you'll probably be pairing DroneSentry-X with a camera that will come with our DroneOptID SaaS, probably a radar as well, which will have its own SaaS. It will probably sit on a base underpinned by DroneSentry-C2 and potentially even in the region overseen by DroneSentry-C2 Enterprise. So this is an example of how multiple SaaS packages can apply to a single piece of hardware. Sometimes we get asked what's a small company at the end of the world in Sydney able to do to compete against large defense players. And historically, when you think about defense, you think about perhaps U.S., Europe, Israel, maybe South Korea, you don't think about Australia. And we have been lucky to an extent of being in this game right from the start and deploying significant engineering force on this. And also being in Australia, we knew that we cannot sustain ourselves just for the Australian market. So we became an export business from day 1. In fact, today, about 95% of our revenues are export, and I'm expecting the trend to be similar going forward. And so as a result of this truly global threat being the drone attacks, we developed distributors in about 70 countries around the world and now we have active customers in dozens of countries around the world. And with that, over time, Australia also being very good base for engineering, we developed solutions which are smaller, lighter, more effective for both detection and defeat and also those relationships with end users around the world, Australia being a great country again in terms of the relationships with these Western and Western allied countries that feed us honestly, probably more information that we can do with in terms of rapidly changing our technology roadmap to adapt to the latest drone threat. So a number of commercial and technical differentiators. In terms of specific competitors, what we generally say is that within the niches of counter-drone that we choose to compete in, we are the dominant player. So if you think about body-worn drone detection, our RfPatrol is, we believe, the leading product by number of units sold around the world. There are a couple of others. So MyDefence has a product and DZYNE has a product, but we believe that we significantly outsell them based on what we're seeing. And similarly, for handheld defeat, we believe DroneGun is the best-selling product of its nature around the world. In the on-the-move detection and defeat, the closest product to DroneSentry-X will be a product that AeroVironment has, but it's a pretty small part of their business. And if anything, in the long term, this potentially be a cooperative relationship. In terms of the C2 solutions, there are a couple of competitors. So we're listing Dedrone and Anduril, but I think we have a number of unique differentiators on both of them, and we don't necessarily compete with Anduril being a much higher cost and strictly military solution compared to DroneSentry-C2. Last thing to add here is that the traditional defense primes are not competitors and really more customers because they are not really moving at the speed and the cost base that is required to be successful in this cost asymmetric market. Cost asymmetric, meaning if you've got a $500 drone, you can't really be fielding a $10 million solution. So with that, we see the traditional primes as customers. On the corporate governance, many of you will be familiar with a lot of the media scrutiny we had at the end of last year. We have engaged Freehills, a Tier 1 legal advisor, to give us essentially gold standard in corporate governance. And with that, we have yesterday revealed a number of updates of our policies, the trading policy, disclosure policy, the minimum shareholding policy, and others. And in my view, what has actually happened is the business has been growing incredibly quickly. So on the indices front, for example, we joined the All Ords in March '24, ASX 300 in September '24, ASX 200 in September '25, and now, depending on how fast we grow, we might be knocking on the door of ASX 100. So as a result, when you grow so quickly, policies, procedures can sometimes fall behind, and this was an opportunity for us to establish gold standard for this particular area, much like we are running really quickly, recapping our -- changing our policies for a much larger business right across the company. We made a number of hires, so Head of People & Performance at the end of last year. Josh joined us in January this year, and also Chief Operating Officer, who joined us from a similar position from Thales, where he brings a wealth of that high-end operational experience. The last slide, then we'll turn to questions, and I encourage everybody again to please be asking us questions. So as we stand today, we are excited to be starting to launch the next generation of hardware across our product family, so this will be towards the second half of the year and into '27. The counter-drone market continues to have very low saturation because you think about drones, they only really came into people's minds about 10 years ago, really started having negative that sort of nefarious impact from the start of the Ukraine war. So thinking about only 5 years ago, and counter-drone is a derivative of the drone market, so military started to buy or looking to buy in any meaningful quantities only in the last 5 years, and when you're selling to the government market, the wheels can grind slowly, right? And so as a result, I would say militaries have probably sub 5% market saturation, civilian market has close to zero, and therefore, we have significant opportunity in front of us. The SaaS revenue we talked about are going from about 5% current to about 30% and continuing to expand our market share. So in addition to selling hardware and software, we'll be looking to expand into training solutions, support, counter-drone as a service, and other related initiatives to maximize, I guess, that ownership of the customer and providing the services to them. We talked about establishing of the European manufacturing facility, and also in the U.S., and we believe that the next 12 to 18 months, we'll start seeing additional -- initial material sales in the civilian space, such as data centers, potentially airports, and other key customers. We're continuing to work on our processes and systems due to our rapid growth and in a very disciplined manner, looking at the opportunistic M&A. Now, there are no competitors that we would like to buy, but we're always interested to look at emerging counter-drone technologies, in addition to what we may be doing in-house, and we're really well-positioned to assess what makes sense due to our understanding of the sector. And as we look over the next 5 years, we're looking to get to the target revenue of over $1 billion a year. This may sound like a lot, but then we quadrupled our revenues last year alone, so that will hopefully give you some sense of our ambition. And also, just the fact that the maturity of the market is still so early, and the customers are going to be putting increasing orders, hopefully. Most of our revenues are from repeat customers, right? So people placing increasing orders as they get more comfortable with the idea of having counter-drone solutions and more budgets to go with it. And continuing to have that global focus is probably the last point to say. So with that, we'll conclude the presentation part of that session and turn to any questions.
Oleg Vornik: The first question is: How likely do we think is it to sign a $750 million deal with Europe, and do we have production to deliver on the deal timely? So it's not going to be trivial, we think that we're well-positioned, and it's the same customer who gave us a $62 million order in the middle of last year, and smaller orders in addition to that. So we have an existing, really good relationship with that customer. And the production capacity, so depending on how fast the customer wants to execute on the deal, if they say to us, "Go as fast as you can", I believe we should be able to deliver it in batches over perhaps under 9 months. If the customer wants to stagger it, which is entirely possible, in stages, it might be, say, over 2 years or so. So that's my best estimate at this stage. I think the next question, I'm trying to rephrase it. What is our announcement level for deals? So we continue our approach as of the past, where approximately 10% of last year's revenue has been our announcement threshold. For '26, it'll be $20 million, unless there is a strategic element to announce a smaller deal. So there's a question about $18 million of the $30 million deals. When are we going to be announcing them? Well, hopefully, once we win them, we will be announcing them. The next question is about, does DroneShield have plans to expand its drone technology into different domains, such as naval drones, used in Ukraine conflict? And do we see it as an area we could pivot to? Absolutely. So when you see us talking in our announcements about counter-drone, we actually refer to it often as C-UxS, not C-UAS, A being aerial. We consider drones being all domains, whether it's ground, naval, or flying machines. And the good news is that the technology that we use is equally valid for flying machines, swimming machines, and crawling machines, and we can be effective on all of those. The only time when the technology stops working is for the underwater drones, so UUVs, where our command and control is still effective, but for the detection, for example, you'll be most likely looking to use a sonar. If we see more of that being where the market is heading, we would simply focus on integration of most sonars and lead with our C2. But the vast majority, we believe, for the foreseeable future, will be aerial, ground, and what we see in Ukraine, as you said, being the swimming drones. So I think the next question I might pass to Carla, our CFO. The January update referenced gross margin of 65%. The statutory FY '25 number was 61% after the inventory impairment. Should we think of 65% as the normalized run rate?
Carla Balanco: Thanks, Oleg. Yes, our average normalized run rate for the gross profit margin should be seen as 65%. There's obviously items that will affect this margin. And those items will be the percentage of system sales versus dismounted sales. Our systems carry a lower gross profit margin. And the reason for that is because of the external third-party componentry that is incorporated in the system, such as the cameras and the radars. Those items carry gross profit margins between 15% and 30%. Therefore, we do think a 65% average moving forward for our gross profit margin is our aim. Thanks, Oleg.
Oleg Vornik: Thanks, Carla. The next question is about Bundeswehr, the German army. Are they a customer of our products, and do we have plans to supply the Bundeswehr? Yes, Bundeswehr is a key focus for us, and in fact, if you follow the German defense market, there's a high-profile defense exhibition in Germany that is just concluding now that we were at. So yes, it's very much focus for us. Germany is a key European market. The next question is, what is our current penetration of Ukraine and neighboring NATO markets? So we have hundreds of detection and defeat systems deployed in Ukraine and continuing to add more. We have systems deployed in Poland and a number of other areas. So yes, absolutely, we are deployed, I want to say probably with about 10 or 12 European NATO countries, plus obviously U.S. and Canada, as far as NATO is concerned. The next question is: Is there a goal for the stock price? I mean, as high as possible, but unfortunately, I only get to influence it so much. How much revenue do we estimate currently comes from civilian buyers? Do we estimate a shift? So today, almost all of the revenue comes from military, border security and intelligence community with a bit of public safety being police. I think the question was referring more to customers like airports and data centers. So today, those are minimal, but we're starting to see green shoots of demand. And if you looked at our total addressable market, we're estimating about $30 billion TAM, total addressable market for the military and another roughly $30 billion for the civilian market. And we think over the next 5 years, our revenues will truly become more 50-50. And once the civilian market gets going, I think it can evolve potentially much faster than the military market has. Next question, given the continuous innovation in the industry, what gives us confidence that the inventory is sound? And are we able to reduce the inventory risk in terms of moving to just-in-time manufacturing? So as I briefly mentioned, the inventory write-down this year was a bit of a unique situation, where we introduced 2 DroneGuns within several years of each other and essentially, our newer DroneGun ended up cannibalizing some of the older DroneGun sales. And by the way, we continue to sell DroneGun Tacticals, we just decided together with our Board to take a prudent approach and do the inventory write-down. Going forward, we don't expect to launch superseding versions of any of our product lines today, but rather really different product form factors. So I don't expect for there to be cannibalization, meaning if you want to have a jammer in a shape of a gun that you hold in your hand, I believe DroneGun Mk4 is kind of as good as it will get. So there will be better jammers, but there'll be backpacks, they'll need more space and so on. I don't believe that just-in-time manufacturing really works for this industry because some of our longest lead circuitry has a 25-week lead time. And I don't believe it will change much because, again, of just complexity of the technologies that we're dealing with and our buyers want to be able to fulfill small orders quickly, right? So our goal, which is largely in consultation with our sales force and customer expectations is to be able to deliver orders in single digits of millions instantly. So you probably would have seen, we did an announcement at the end of last year. We received an order about $5 million on the 30th of December, delivered it by the 31st of December, which was pretty incredible. Then the $62 million order we had in the middle of last year, we delivered within 2 months and then the $750 million order I talked about fulfillment in under 9 months. So for that, you need to hold inventory. But we're pretty happy with the raw and finished inventory we're holding. And please remember that raw, as I was saying, is largely long lead time items as well. They're not finished goods. And also keep in mind that, for example, RfPatrol and DroneGun and some other products we have, have interchangeable parts that you can use in between the products. And we're trying to have as many interchangeable parts between product families as possible. What are our plans for increasing effective range and distance of our products? I guess it's the same thing, range and distance. So my first comment somewhat flippantly is that more is not always better. So for example, for the detection, more range you get often more false alarms you get. And our customers don't necessarily want to be able to see 20, 30 kilometers out. And at some point, physics kicks in as well, right? So a lot of our work with customers if they're very new to counter-drone is saying, okay, well, if you come with an expectation of detecting a proper missile 200 kilometers away, there's nothing that will detect a small drone 200 kilometers away. So explaining that there is natural physics limitation to range. But a lot of it is just pushing the envelope of physics, right? So you're saying, okay, there's noise floor in radio frequency, how do you see through the noise floor, how do you reduce the false alarms. There are quite a lot of parameters that you want to optimize how you detect never seen before drones, how do you deal with the Chinese drones, which are hiding behind other bits of noise, which are running away from you when you're trying to disrupt it. So there are a number of challenges in addition to distance, but that is ultimately why you have 350-plus engineers working on that problem with a lot of drone signal data and just continue to get information from their customers. The next question is about, can we provide some more detail about the types of drone deployments by China, which are behind the concerns that our Asia Pacific customers have? So a well-publicized example, this is a bit dated about 2 years ago, has been of a Chinese drone landing on the deck of a Japanese naval ship. Now you imagine massive embarrassment, loss of faith -- loss of face. And so that's an example, right? So small drones are buzzing over military facilities and just generally harassing both the civilian and the military targets. So this is what our Asia Pacific customers are looking to protect against. Has DroneShield considered underwater drones and drone capabilities -- anti-drone capabilities and detection? Yes. So we actually first came upon the concept of underwater drones and what to do about them about 5 years ago. Those who have been following us for a while would have seen we introduced a partnership with a sonar company. And our job there is our command and control. So DroneSentry-C2. Again, remember, we're not a drone gun company. We are much more than that. So we make a command and control solution that various modalities of sensors plug into. And so we had a sonar compatible with our command and control system, started marketing it those 5 years ago, not a single person bought one. Now the conclusion we reached is that the market just wasn't ready for it. And my view is that the market is still not ready for underwater drones, but the threat is there. And underwater is significantly different, as I was just saying 5 minutes ago, to every other types of drones. So drones that crawl on the ground or the surface of the water that fly in the air because traditional physics of radio frequency in the air doesn't propagate well under water. So you need sonar for the detection and something else, be it nets, torpedoes, it depends really on the customer in there, the ability to deploy countermeasures for the defeat. But our role in all of this will be providing a command/control solution, which also will protect against drones from the air and the ground and so on. Can we quantify the current order backlog and how much of the revenue is expected to be awarded in this financial year? So if you look at the chart, we are sitting at a bit over $100 million in committed revenue this year, and we recognize roughly about 20-ish or so. So that means the backlog of about 80 and virtually all orders for this year, plus obviously, the revenue that we will actually secure. Now my controversial view is that I don't like backlog, backlog means a customer has placed an order and is patiently waiting or sometimes impatiently waiting on delivery from us. My goal is to deliver goods under order as soon as possible to customers. So you find that big defense primes often advertise their backlog. So they say, "Hey, I've got a 5-year contract, I'm going to deliver this and that over the next 5 years, and that is seen as a positive, great. But in our industry, it's actually negative in a sense that you want to be rapidly delivering to customers and not making them wait. So vast majority of the revenue I anticipate for '26 is not inside of that $80 or so million current backlog, but the new revenue that we will earn and deliver and recognize from now before the end of the year. What likely drone threats exist or may exist that DroneShield does not have solutions for, for example, cable drones? So I think the person is referring to the fiber optic drones. So there's a slide in our presentation, which talks specifically about why fiber optic drones are not a threat. So for example, we are effective against fiber optic drones because we offer a command and control solution that integrates with radars, which can detect anything that flies, including fiber optic drones and also depending on the customer solutions like HPM that can take down those drones. But my view is, I think I said to many of you before is that radio frequency is the backbone of drones. And fiber optics exists very much around the edges with significant limitations. You think about flying a drone with 10 kilometers of fishing line attached to it, wrapping around trees, buildings, you fly a bit too quickly, you snag the cable. It's really very much an edge case. And RF to drones, I believe, will be a bit like wheels and cars, like whatever cars will look like in 50 years, they'll probably have wheels on them because we're flat in our world and built a lot of roads. So similarly, for how much was invested in the radio frequency. Now that's not to say there will be new types of RF, which is like I was saying, the Chinese are now putting what was 5 years ago, sensitive electronic warfare techniques into $5,000 drones designed to avoid detection and defeat. We're starting to see slow rise of cellular control drones. But tethered drones, I don't believe, have that much future and our existing on-to-move and fixed site solutions already have a way of dealing with them. The next question is $28 million of our FY '26 committed revenue is the SaaS pipeline tracking 2x of '25. So about 7% of SaaS for FY '26, how are we going to get an uplift to get to 30% by 2030? Great question. So I talked before about the 3 strands of SaaS, the device level SaaS, which has a bunch of elements to it, like the detection, defeat for the radio frequency to separate SaaS, our RFAI, RFAI attack, talked about DroneOptID SaaS, the radar SaaS, the SentryCiv SaaS and then the DroneSentry-C2 and the C2 Enterprise. So today, out of the roughly 4,500 pieces of hardware deployed around the world, maybe only half actually receive SaaS, the other half being DroneGuns, which don't require SaaS by design. Going forward, as the technology continues to rapidly iterate, so hardware probably has a 3-, 4-year cycle, I would expect over the next 5 years for us to have tens of thousands of pieces of hardware, almost all of them receiving SaaS. And not just one piece of SaaS on every piece of hardware, but having like an example I was giving with DroneSentry-X, you have one piece of hardware, but then you might have RFAI, RFAI attack. It's part of the system. So it has a radar SaaS, camera SaaS and the C2 SaaS. So having multiple pieces of SaaS maximizing that SaaS element as part of the total revenue. But then also on top of that, I talked about the wallet share, right? So talking about the training and counter-drone as a service. So there's quite a lot of elements that we are actively exploring with customers at the moment. The next question is about how do we see ourselves in terms of the World Cup this year in the U.S.? So we talked about the Safer Skies Act, which enables police and public safety officers more generally to use jammers take drones down going forward. This, we believe, will really drive adoption of counter-drone technologies within public safety system that will protect those stadium venues. So we have a public safety team inside of our U.S. office run by Tom Adams, an ex-FBI guy. And we are actively engaging with a number of police agencies around the world -- sorry, around the U.S. at the moment and believe we'll have meaningful sales from that between now and the World Cup. What countries or theaters of war are considered no go for DroneShield? So pretty common sense, right? We would not work with Russia, China, North Korea, Iran. I mean, essentially, any country which is either prohibited or gray zone list by the Australian government because we do need export licenses to sell. And well clear what those are. We've been working with Department of Export Controls now since the beginning, and we have a very close relationship with them. We basically would never ship to those countries. And the processes are very strict, right? I mean, even though our products are entirely safe for humans, so none of our products can hurt human being or even the drone for that matter, the strictness of export controls is comparable to a proper weapon. So for example, a guy who runs our shipping department is an Italian guy who used to be shipping torpedoes around the world on behalf of a Italian defense prime. And so it's the same strictness of the process in terms of end users entering into paperwork not to share our equipment with anybody else. And ultimately, this is not just between us and them, but also involving Australian government. So exceptionally strict control processes. What are some of the drone-related verticals that look interesting to us from an M&A perspective? So we'll always stick with counter-drone as we want to continue playing in what we know. There are technologies like high-power microwave, which I find really interesting, and it fits in our nonlethal but complementary to drones, for example. I think there will be new methods of detection potentially relating to shock and vibration coming from drones. So essentially, the way I see this is the equipment needs to be cost effective. It's hard to justify having a $10 million piece of equipment against $200 drones. It needs to ideally protect an area, not just 200 sort of meter range around it, unless it's super cheap, so you can have mass volume of these things. And ideally non-ITAR because we want to have the market of all of the NATO and NATO allied countries. And the current AUKUS process in terms of Pillar 2 is streamlining a lot of that ITAR stuff between Australia, U.K. and the U.S. But ideally, we want to be continuing to focus on non-ITAR technologies. The next question talks about how was our exhibition at Enforce Tac in Nuremberg. So I wasn't there myself, Angus, our Chief Product Officer, was leading our delegation. We have a number of European team members who were in Enforce Tac and the download I had so far is that it's been an exceptionally positive meeting and helpful for our folks on Germany with Bundeswehr as well as the rest of the European market. So the next question is, why has DroneShield not introduced Phantom shares to attract and retain talent and not put pressure on the share price? So the Board regularly revisits what are the most appropriate structures. In my opinion, phantom shares are not an optimal structure. And so we haven't been introducing it, but the -- this is something the Board does review regularly what makes most sense. There are increasing reports of hybrid attacks at airports throughout Europe, what are our plans in that space? So we have had equipment deployed at the airports. For example, you might have seen news articles with the DroneSentry-X at Copenhagen Airport a few months ago. I think airports more generally struggle bureaucratically. So in some countries like in Germany, actually, Bundeswehr has technically a lot of influence over what gets deployed at the airport. So it just becomes of kind of too many cooks problem where you have airport, you have the military, you have government more generally kind of all coming up with what's the most appropriate solution. But I think you're right in that the pressure continues to escalate on airports to deploy counter-drone measures. As today, you imagine you stop all flights for 15 minutes, 30 minutes, an hour, and that's a significant disruption. And the alternative is even worse, plane taking off and a drone blowing out an engine, right? So we are talking to some of regulators. We're talking to airports directly. We're talking to military. So the idea is that you just keep pushing, chipping away of the stakeholders until eventually you kind of break through and start deploying gear. The next question about viewers saying they watched a terrifying video on Chinese robot advancement moving to RF control. So I mean, robots can be seen as UGVs and ground vehicles, and this is very much part of our market. So UGVs, ground vehicles, UAVs, aerial vehicles or fly drones and USVs, so unmanned surface vehicles, both essentially on the surface of the water. And the physics is exactly the same in terms of how radio frequency radars. Radars work a bit not so well close to the ground because you get a lot of ground clutter coming up, but radio frequency is generally pretty good. Have any shipping companies expressed interest in DroneShield to protect ships through conflict areas in Red Sea and Iran? Yes, we have some shipping companies using our kit already. This normally needs to be a bit of a layered arrangement of government forces being on those ships and them having our kit, which ultimately links to if you -- who can own -- possess jammers. So the law of the high seas essentially says, well, anybody can do anything. But then, of course, those ships need to come to harbor eventually. So usually, the arrangement that we're seeing at the moment is if the ship has government security on it, they'll be able to use our kit and some of them do. I'll pass the next question to Carla as it deals with the net profit margin. So I'll read out the question. I understand we're investing heavily to scale, which is importing reported net profit, but net margin is low. When do we expect net profit margin to materially improve? And what level of margin do we believe -- what level of margin do we believe is achievable in FY '26 as we continue to scale?
Carla Balanco: Thank you, Oleg. So right now, our focus is, obviously, we want to grow the business and we want to increase our revenues. We know that profitability is important as well. And we are focusing on trying to improve our profitability position, taking into account that we were in an operating loss, a net loss a couple of years ago, and we've only now really started to focus on improving our net profit position. However, as you mentioned, we are scaling really rapidly. So balancing that rapid scale in terms of implementing a new enterprise risk system that we'll be doing this year, also our ERP system, opening a European office, focusing on U.S. manufacturing, European manufacturing, all of these items add costs to the P&L. And so we are focusing on trying to control costs, but focusing on increasing those revenues. And by doing those 2 things, naturally, our net profit will increase. I cannot provide any details at this stage in terms of what I forecast our net profit margin to be. But what I can say is our fixed cash costs for this year is looking at around $150 million. We have capitalized R&D and so we're looking to capitalize between $25 million and $30 million on R&D. Our gross profit margin, we spoke about already, which is 65% in terms of normalized average gross profit margin. And that is about as much as I can provide at this time. Thank you.
Oleg Vornik: Thanks, Carla. Does DroneShield see Asia, excluding China and Central South America as big potential markets than European Union as they quickly adopt drones, as seen in the Thai-Cambodian conflict? And are there any difficulty selling into those regions, countries not seen as Australian allies? So I'm not sure about these becoming bigger than EU. EU is a huge driver for us, but becoming big, yes. So the key countries in Asia we're focusing on is Japan, Singapore, Thailand, Vietnam, Taiwan, and there are a couple of others as well. None of those markets have an issue with export permits with the Australian government. So we've been working there. And in Central and South America, so Mexico and Colombia both have issues with drug cartels and past that, there's Brazil, Argentina and others. So again, growing markets, especially Mexico and Colombia. And we haven't had issues in terms of export permits working with Department of Export Controls. The next question talks about competitive landscape across product lines. We're seeing new entrants and are we increasingly having to compete on price? No, we don't compete on price. It's interesting. So when we started 10, 11 years ago, there was really maybe us and 1 or 2 other companies. And then roughly maybe 5 years ago, the amount of competition really blew out. You go to defense show and every single stand is suddenly a counter-drone company, all kinds of stuff. Now we're seeing the market consolidate significantly. So some get merged or acquired, for example, DZYNE, which is a compilation of 3 or 4 companies or BlueHalo that got absorbed into AeroVironment and some go out of business just because customers basically don't buy from them because the products don't make sense. So we don't really see new entrants just because the industry is so high barrier now. We talk, for example, about drone signal data, right? Like you try to go around dozens of countries collecting drone signals in various environments. Some of these drones are very sophisticated restricted government drones, very, very difficult to build up and maintain that database, deal with relationships with military, government and customers, looking at radio frequency at the edge of physics, like, say, maybe 5, 7 years ago, the aim is to take an existing technology that has been successfully deployed in electronic warfare and cost effectively adapt it to counter-drone. Today, you are truly at the edge of like stuff that we are using is often a lot more sophisticated than any electronic warfare solution just again because we've been at it for so long and you just keep getting better and better. So it's very hard for new entrants. If anything, I would say our products will become more expensive, but also with more capability. So some of our new product lines will be launching from end of the year will be triple the cost of the existing products, but roughly keeping the same gross margin. But then the capability will be significantly higher as well. So if anything, I see our pricing trending higher rather than lower. How do we keep captured equipment from being used by the enemy? So it depends on the equipment. Most of our equipment and increasingly more and more are software-enabled. So obviously, we have ability to deny any changes in software. And then if you don't do changes in software, then the software quickly becomes obsolete. Can it be linked with laser beam technology? Can be in terms of our command and control DroneSentry-C2. But I actually have a pretty dim view on the laser. It makes for cool news headlines. But remember, right? So lasers have their place, right? So you always see militaries deploying some laser solutions. But think about mass deployments. You have systems that often cost $10 million plus that have obviously kinetic impact. You don't want to be blinding people if you're using it for stadiums. So I would consider laser in the same bucket as say, high-power microwave; an exquisite, very useful but very specific use case rather than what we are targeting most of our technologies being mass deployment to as much of the customer base around the world as possible, which has to be no collateral impact. But then if a customer comes to us and says, can you provide a laser solution? We have our great friends in AIM Defence based in Melbourne. They do amazing laser solutions. So that's what we'll be putting forward, assuming it works from an export compliance point of view. Have we considered drone protection with the making of other drones? I think anti-jamming, I'm trying to rephrase the question. So no, we don't really do things on the drones that stop other counter-drone systems being able to detect or defeat them. It's very different technology. I mean it's a bit like saying Boeing doesn't do anti-aircraft missiles, even though Boeing is great at planes, like you kind of have to stick to what you're good at. So drones and counter-drone are actually very different technologies, even though they are obviously on the opposite ends of the same battle. Are we prepared for threats to the business such as cyber attacks, theft for facilities or threats to executives or employees? So this is something we take very seriously. And also, there are government standards across physical cyber and other classes of security that we follow. So we have a team led by an experienced executive that deals specifically with cyber threats. And thankfully, knock wood, we haven't had a single successful cyber attempt, but we're continuing to see a ton, and this is something we take extremely seriously. In terms of insider threat, there is a very thorough employee vetting and also employee vetting program. We use a dedicated defense software in terms of monitoring employee actions, for example, ensuring the person doesn't download a whole bunch of stuff they're not supposed to. There is natural segregation on a need-to-know basis. So for example, I don't actually write code, so I don't have access to the code database because why should I? And a number of other kind of standard defense industry things. We don't need to reinvent the wheel here. So similar things to what the likes of Lockheed Martin or Thales or Raytheon doing, I mean, we do largely all the same stuff, gold standard and continuing to revise that as the technology evolves. In terms of threats to the executives, so yes, look, I mean, it's something that we looked at a lot. So for example, about a week or 2 ago, to give you a recent one, there was a case of somebody, I believe it was a Ukrainian guy, who got deported from Dubai, where he was based, forcefully to Russia as he was accused by Russia of killing a Russian general involved in Ukraine war. So for example, my directive internally was if you happen to be on the Russian sanctions list, which I personally am, for example, then you don't transit through Dubai. You don't stop in Dubai. And so this is something that we take very seriously. Do we have a capability to detect and neutralize drones swarms? Yes. So our detection and defeat is what you call volumetric, meaning you're scanning not just a little area at a time, but a whole wide area and you're basically staring at the sky and you can detect multiple drones at the same time, essentially, I don't want to say limited, but exceptionally large number of drones. And similar for the defeat, jamming and its advantage of jamming versus some other technologies like cyber can affect multiple drones at the same time. Next one. What do we see as the main threats to our growth and profitability going forward? Is it emerging competitors, for example? It's a great question. So I don't believe there are major blocks, right? But generally, you want to be on top of technology. So you always live in fear that our friends in China will invent something that's entirely immune to anything that we do, detection and defeat wise. But the reality is that physics are physics and as smart as engineers in China are, they still have to follow the laws of physics. So that nature limits to what parts of the bands you use and how you hide behind noise and so on. So we think we're pretty well positioned. And again, we've been in this space for 11 years. We understand the industry, and we continue to be on the bleeding edge of it. But you need to keep at it, right? Like you can't rest on your laurels. That's why you have 350 engineers out of the 460 people because you just have to keep innovating on a weekly, monthly, quarterly basis. I'm super excited about the next gen of hardware that we're releasing, the next gen of software, our RFAI version 3 that will go on top of the new gen of hardware when we release it at the end of the year. So this is all part of -- all part of that. And also, there is just general growth, right? So the organizational theory is that as you get past 30, 50, 100, 300, 500 employees, you almost have to break and remake organization. So how you follow your processes, how you communicate, all of that needs to be entirely changed so the organization doesn't sort of collapse onto itself. So that's what a lot of our focus is on at the moment. Do we need to work with CASA to certify our solutions to use in the Australian airports? So there is no such thing really I wish there was as a certification to be deployed at Australian airports. So first of all, it's not CASA. CASA used to be in charge of counter-drone security, and then it was transitioned to Airservices Australia several years ago. And Airservices ran a limited trial, we were involved in it. And since then, nothing really happened, unfortunately. And I mean, I get it. I don't want to blame Australian government. To be honest, U.S. government and all the other Western governments are doing exactly the same, meaning not doing much. But I think as drones continue to pose a threat to airports, this will just continue to become more and more a pressing issue. And I think once a few airports start deploying it, you'll be seeing more and more continue to do it because today, it's kind of easy to say, well, nobody else is deploying, no other airports are deploying counter-drones. So I just won't do anything. But I think that excuse will start going away. And so we're really excited about that eventually starting to snowball, but we're continuing to push. So in Australia, this ultimately sits with the transport minister. So we're continuing to push at the government level to have counter-drone deployed at airports. Next one. Are we seeing increasing pricing pressure with Anduril and other primes pushing into the space? So I think if anything, anything to do with primes will probably mean we're increasing our margins, not reducing given the cost structure of the primes and Anduril would be in the same bucket. I wouldn't call them the cheapest by any measure. So no, as I was saying, Anduril is really only overlapping with us on Lattice, the C2. And I don't want to say it's a competitor to DroneSentry-C2 Enterprise. It's just a different product. So there will be customers like the U.S. military where Lattice will be competing with Northrop Grumman and their environment and other dedicated C2s. And for example, the countries where we are deployed, they for various reasons, wouldn't be using Anduril C2. So I'd say -- and also, by the way, in the civilian space, Anduril doesn't really go into that space either. So I think -- or public safety, for that matter. So I think it's not really competitors, but if anything, our customers. Anduril is our customer, too, by the way, as they are the SIP, administrator essentially on the U.S. SOCOM program. We -- next question is we just released the $21 million contract. Can we elaborate? So we've been working with this Western customer for a number of years. If you read the announcement, the details are all there, had a number of contracts with them, and now they're just ramping up in terms of the deployment. And we're really excited in that particular country, we are the only counter-drone system of any significance. And it's actually a very large Western country in terms of defense budget. So now it's just a matter of continuing to sell more. We talked about low market situation to really kind of assist the customer into high situation with our equipment. Okay. Last question I'm seeing here. If there are any more, please ask or otherwise, you can e-mail your questions to us later. Are there any plans to integrate counter-drone tools directly into drones or other mobile platforms? What are the challenges of this? So not drones, but if you look at programs like AIR6500, which is Australia's mission -- sorry, missile protection system operated by Lockheed Martin. So those likes of programs where you have complete airspace awareness, so you are protecting against missile threats, but also you want to be able to protect your lower airspace against drone threats. So for example, attacks locally from drones taking out your jet fighters at Amberley or Williamtown airbases. So it's the likes of those, so call it like the larger air defense programs that we'll be looking to integrate with over time. And our DroneSentry-C2 has pretty standard APIs. So that makes the integration pretty streamlined. But ultimately, the government and customers will be driving a lot of this. The next one I'll leave to Carla. Can we talk to income tax benefit in the second half versus tax expense in the first half, what to expect going forward?
Carla Balanco: Thanks, Oleg. So with regards to our taxes, you would have seen in the annual report that we have a complicated tax structure. We are tax residents in the U.S. as well as in Australia. What that means is that obviously, our tax profit and accounting profit are very different and there's items that were deductible in the second half of the year versus the first half, resulting in a tax benefit versus the tax expense for the first half of the year. Currently, we have about AUD 11 million in carryforward losses to be used against future tax profits.
Oleg Vornik: Thanks, Carla. How does selling through resales impact margins? So our margins are already after the use of resellers. So essentially, the way you should think about the customer cash flow is our revenue is what we get from the reseller and the reseller would have their own margin on top. Now what we do is in the U.S. and Australia, we would influence the customer directly. But in the U.S., when you sell, you often sell through vehicles like DLA, TLS, it's just how you do defense procurement there. So there is a degree of clipping the ticket. And when you say, sell in many European countries or Asia Pacific, you have to go through distributors because these are people that have local relationships, obviously, understand the customers, the language and it saves us from trying to hire people in 70 countries around the world. So even despite the resellers, we're able to achieve very attractive 65% gross margins, but then we don't have to employ people in every country. And to be honest, some of the best guys who are resellers in terms of their relationships with the end customers, you can't employ them. They'll have their own little shops where they would sell maybe a dozen different product lines, we would often be their only counter-drone brand, but then they will be, for example, selling radars, electronic warfare, maybe drones themselves to the customers, and we tap into those unique relationships. A lot of the recent contracts are with existing customers, how we're going with converting prospects into customers, what's been experienced like bringing in new customers into DroneShield? So this is the whole art of selling to governments, right? So we lean on our distributors, but also we try to own as much of the customer relationship as possible. So you're not entirely dependent on the distributor. There is this complex web of the government budgets, which are often competing with different priorities and counter-drone is a priority. But for example, sometimes the customer may choose to buy drones rather than counter-drone equipment as that happens to get the priority. I mean, usually, customer gets a bit of both. Then you often have -- is it us or is it going to be another competitor, you normally try and ensure that the tenders are written with advantage to DroneShield in mind. Often if you see tender for the first time when it comes out, that means that it's been shaped by a competitor. So you want to be involved in the earlier stage. But generally speaking, you really want to ensure you're servicing the customer, right? You're providing that quarterly software updates is an important touch points. If there is an issue, you attend to that. And that's also expanding our fee wallet as well, as I was saying, in terms of having those support fees that we plan going forward. In terms of the new customers, so we continue to gradually expand to new customers. And so every once in a while, we -- like, for example, there was a new customer in South Africa about a year ago that we got and there are smaller customers in Asia Pacific that we would get in the last couple of months. But the goal really is to say there are -- in terms of what moves the dial, right? So there are probably 20 government customers around the world like U.S. Army that move the needle. And so the best bet for us is to focus on programmatic levels, so large-scale deployments while opportunistically going at the tactical level, so unit level to get those purchases. So it's less about kind of scrubbing and ensuring you get all the little fish. I mean you do that kind of in your spare time as best as you can of going around the elephant opportunities. And also once you have product deployed with customer, often they'll come back to you anyways for the top-up. So it's a pretty sticky position. I think that's all the questions we had, and we are over an hour. So we'll stop here. Thank you for your time. And if there are any questions, please e-mail them to us at investors@droneshield.com. Thanks for your time.