Drone Volt (EPA:ALDRV) Research Update – May 2024

Arrowhead is updating its coverage on Drone Volt SA with a fair value bracket of EUR 0.02 per share to EUR 0.06 per share (share price on May 15, 2024: EUR 0.0082) based on the Relative Valuation method.

• During FY 2023, Drone Volt generated revenue of EUR 24.0 mn compared to EUR 13.7 mn in FY 2022, a growth of 75% YoY. The revenue growth was driven by an increase in deliveries on the record order of more than EUR 20 mn, announced in the first quarter of FY 2023.
• During the period, the consolidated gross profit increased to EUR 3.7 mn compared with EUR 2.9 mn in the same period of last year. The gross margin rate stood at 14% in FY 2023 compared with 21% in FY 2022.
• Of the total revenue, the Distribution segment generated revenue of EUR 21.8 mn in FY 2023 compared with EUR 12.0 mn in FY 2022. The gross profit of the segment was EUR 2.3 mn in FY 2023 compared to EUR 1.8 mn in FY 2022. 
• Revenue from Drone Volt Factory, services and academy segment was EUR 2.0 mn in FY 2023 compared with EUR 1.7 mn in FY 2022. Gross profit from the segment stood at EUR 1.1 mn compared with EUR 1.0 mn in FY 2022.
• In February 2024, DRV signed a major distribution contract with a player in the Middle East region. Under this agreement, DRV will provide drones developed and assembled within the Drone Volt Factory, services from Drone Volt Expert and training from Drone Volt Academy. The agreement will also provide exclusivity rights to the distributor if significant sales volume is generated over the next 2 years.
• Drone Volt successfully completed a complex cable unwinding mission in Madagascar, showing its competence in executing large-scale projects.
• During FY 2024, the company’s growth strategy is to increase its gross margin with focus on three key pillars – ramp up of Drone Volt Expert service, production of its own solutions including spray version of HERCULES 20, brand new LINEDRONE and Drone Volt Kobra and expansion of its Distribution segment, owing to the contract signed in FY 2023 and expected new orders.
• In January 2024, DRV raised EUR 2.5 mn from institutional investors and individuals through a private placement. These funds will be utilized to recruit remote pilots for the Drone Volt Expert service and to ramp up the production capacities for the new LINEDRONE and Drone Volt Kobra.