Electro Optic Systems (ASX: EOS) Revenue Surges as Order Book Reaches $846 Million

Electro Optic Systems Holdings reported record first-half revenue and underlying earnings as defence contracts converted into deliveries.

Revenue reached $168.8 million for the six months through June, up 283% from $44.1 million a year earlier. Underlying EBITDA improved to a $21.6 million profit from a $14.9 million loss.

EOS said both measures were the highest first-half outcomes in its history. Defence Systems generated $163.7 million of revenue, up 322% from the prior corresponding period.

Orders Convert into Revenue

EOS has built its order pipeline around remote weapons, counter-drone technology and high-energy laser weapons. The latest result shows those contracts moving into production and revenue recognition.

Its unconditional order book reached about $846 million at June 30. That was 84% above the $459 million recorded at the end of December.

Remote weapon systems represented $507 million of the backlog. Acquired business MARSS contributed $225 million, while high-energy laser weapons accounted for $98 million.

The Middle East represented 55% of the order book. Australia accounted for 16%, Europe 14% and the Americas 11%.

The total excludes a conditional US$80 million Korean contract. Some legacy MARSS contracts also require novation through applicable processes and consents.

Statutory Loss Persists

EOS recorded a statutory net loss of $33.7 million, narrowing from $44.8 million a year earlier.

The result included a $34 million fair-value remeasurement of contingent consideration linked to MARSS. EOS also recorded $10.2 million of other MARSS acquisition costs.

Those items are excluded from underlying EBITDA. The measure is unaudited and not prepared under IFRS.

Gross margin fell to 58% from 76%. The previous period benefited from income associated with finalising a Middle Eastern contract.

MARSS Expands the Counter-Drone Business

EOS completed the MARSS acquisition in May for US$36 million in upfront cash, reported as about A$51 million.

MARSS has secured about A$200 million of orders during 2026. These include an £85 million contract with an existing Middle Eastern military customer.

The project expands a country-wide drone detection and mitigation installation using MARSS’s NiDAR command-and-control software. EOS expects about 70% of the contract’s revenue and cash during 2026 and 2027.

The acquisition also carries an earnout capped at €140 million. It is linked to qualifying order intake before May 20, 2027.

Cash Position and Guidance

Unrestricted cash increased to $256 million from $107 million at December. EOS received $200 million from an equity raising and drew $70 million from a term loan facility.

Operating cash outflow narrowed to $8.1 million from $9.2 million. Inventory declined by $11.9 million despite higher activity.

EOS maintained full-year revenue guidance of $360 million to $400 million, including MARSS. The guidance is based on contracted, unconditional work as of August 25.

The outlook assumes no significant unforeseen deterioration affecting supply chains, production, customer delivery or revenue recognition.

Meanwhile, the €71.4 million Netherlands laser-weapon contract remains on schedule. The project passed its critical design review during the second quarter of 2026.