Electro Optic Systems (EOS) reports a record $459 million contract backlog, major new defence contracts including a $120 million laser weapon deal, and a strategic acquisition to boost counter-drone capabilities.
- Contract backlog surges 238% to $459 million
- Secured $120 million High Energy Laser Weapon contract in South Korea
- Acquisition of MARSS Group to expand AI-enabled counter-drone systems
- Positive operating cash flow of $19.3 million and cash holdings rise to $106.9 million
- Entered $100 million secured term loan facility to support growth and acquisitions
Robust Manufacturing and Global Delivery
During the December quarter, Electro Optic Systems Holdings Limited (ASX, EOS) intensified production and delivery of its Remote Weapon Systems (RWS) across multiple continents including the United States, Europe, the Middle East, South East Asia, and Australia. This uptick in activity was driven by the timing of customer orders and delivery schedules, reflecting strong demand for EOS’s defence technologies.
Notably, EOS relocated its Singapore operations to a new facility that now houses a Remote Weapon System service and support centre alongside a High Energy Laser Weapon (HELW) manufacturing unit, signalling a strategic investment in advanced directed energy capabilities.
Significant Contract Wins and Backlog Growth
EOS secured several high-profile contracts during the quarter, including a $108 million deal with Hanwha Australia to supply enhanced R400 RWS integrated with the Australian Defence Force’s Redback Infantry Fighting Vehicle. Additionally, a €11.4 million contract was awarded to supply Slinger counter-drone systems to a Western European NATO country, addressing urgent operational needs.
Perhaps most striking is the conditional $120 million contract for a 100kW High Energy Laser Weapon with a South Korean customer, which includes plans for a joint venture to develop and supply the Korean market. While finalisation of this deal is pending certain conditions, it represents a major step into the Asia-Pacific directed energy market.
Further contracts include a $32 million order for R400 RWS for South American Light Armoured Vehicles and a $33 million contract with General Dynamics Land Systems to supply RWS for a U.S. Army ground combat vehicle, underscoring EOS’s expanding footprint in key defence markets.
These wins have propelled EOS’s contract backlog to a record $459 million, a 238% increase year-on-year, excluding the conditional South Korean contract which would raise the total backlog to $579 million.
Strategic Acquisition and Financial Position
In line with its strategic focus on counter-drone technology, EOS acquired an interceptor drone capability from MARSS Group for approximately $10 million in November 2025. Subsequently, EOS entered into a conditional agreement to acquire the remainder of MARSS, a European AI-enabled command and control systems provider, for an upfront $54 million plus a potential earnout of up to $174 million. Completion is subject to regulatory and customer approvals expected during 2026.
Financially, EOS reported a positive operating cash flow of $19.3 million for the quarter, reversing the prior quarter’s outflow, and increased cash holdings to $106.9 million. The company also secured a $100 million two-year secured term loan facility to support growth initiatives and the MARSS acquisition, reflecting strong liquidity and financial flexibility.
Market Development and Regulatory Update
EOS continues to engage with prospective customers globally for its High Energy Laser Weapon products, exploring potential joint ventures and strategic partnerships. The company also demonstrated a mission-ready counter-drone capability for the Australian Defence Force under the LAND 156 project, positioning itself well for future contracts in this $1.3 billion program.
On the regulatory front, EOS settled an ASIC investigation relating to 2022 disclosure matters, agreeing to a $4 million civil penalty expected to be paid in 2026. This resolution removes a significant overhang and allows management to focus on operational execution.
Outlook
EOS has restated its 2025 revenue guidance, now expecting full-year revenues to slightly exceed prior estimates of $115-125 million, driven by strong contract execution and backlog growth. The company’s expanding product portfolio, strategic acquisitions, and robust financial position set the stage for continued growth in the defence and space sectors.
Bottom Line?
With a record backlog and strategic moves into laser and AI-enabled counter-drone technologies, EOS is poised for a transformative 2026, but execution risks remain on key conditional contracts and acquisitions.
Questions in the middle?
- Will EOS finalise the conditional South Korean High Energy Laser Weapon contract and joint venture this quarter?
- How will the MARSS acquisition impact EOS’s financials and integration timeline?
- What portion of the $459 million backlog will convert to revenue and cash flow in 2026?