Why Did Orbital Post a $4.3M Loss Despite $3M Capital Raise?

Financial Performance and Market Context

Orbital Corporation Limited, a specialist in propulsion systems for tactical unmanned aerial vehicles (UAVs), reported a net loss after tax of AUD 4.3 million for the year ended 30 June 2025. This marks a significant reversal from the modest profit of AUD 67,000 recorded in the previous year. The decline was driven primarily by a 34% drop in revenue to AUD 8.4 million, reflecting lower production volumes and a strategic shift towards pre-production activities for key customers.

The company’s revenue mix included AUD 6.9 million from exports of heavy fuel engine models to clients in the US, Singapore, and Vietnam, alongside AUD 1.3 million from engineering development services. Other income of AUD 4.3 million was bolstered by government grants and the final milestone payment related to the retirement of a WA Government loan.

Capital Structure and Liquidity

Orbital successfully repaid its WA Government loan of AUD 2.4 million in December 2024, leaving the company debt free at the end of FY25. To support ongoing operations and new product development, Orbital completed a fully underwritten renounceable rights issue in November 2024, raising AUD 2 million. Post-year-end, the company secured firm commitments for a $3 million capital raising through a placement of 14.3 million shares at $0.21 each, expected to be issued in late August 2025.

This capital injection is intended to fund the next phase of growth, including the development of new engine models and expansion into emerging UAV market segments. The company also entered into a financing arrangement with Radium Capital, receiving an advance of AUD 1.1 million secured against anticipated R&D tax incentives, further strengthening its working capital position.

Operational Highlights and Market Opportunities

During FY25, Orbital delivered key milestones for global clients, including production deliveries for the Veloce 60 program with DSO National Laboratories and flight trial engines for the Textron Systems Aerosonde 4.8 UAV program with the US Department of Defence. The company also supplied engines to Vietnam and developed prototype engines for an Indian customer, with flight trials underway.

Orbital is well positioned to capitalize on evolving UAV market demands, such as increased payload capacity, vertical take-off and landing (VTOL) configurations, and regulatory shifts favoring Beyond Visual Line of Sight (BVLOS) operations. Notably, recent US Department of Defence policies emphasize domestic UAV production and increased funding, presenting opportunities for Orbital’s US manufacturing capabilities and Tier 1 military OEM relationships.

Governance and Leadership Changes

The company underwent several executive changes during the year, including the appointment of Kyle Abbott as Chairman in December 2024, Mark Wege as CFO and Company Secretary, and Stephen Pearce as CEO at the end of June 2025. These leadership adjustments align with Orbital’s strategic focus on innovation and market expansion.

Orbital’s remuneration framework continues to emphasize alignment with shareholder interests through a Long-Term Incentive (LTI) plan, with options issued to key management personnel to incentivize performance linked to share price appreciation.

Auditor’s Going Concern Note and Outlook

The independent auditor highlighted a material uncertainty regarding Orbital’s ability to continue as a going concern, citing the net loss and operating cash outflows. However, the Board remains confident that ongoing product development, cost management, and recent capital raises will support the company’s viability over the next twelve months.

Looking ahead to FY26, Orbital aims to broaden its customer base, including entry into Tier 1 commercial UAV markets, and leverage its global footprint spanning the US, Southeast Asia, India, Europe, and emerging regions such as the Middle East.