Electro Optic Systems reported a 27% revenue drop to $128.5 million in FY2025 but posted a net profit of $18.6 million, boosted by the sale of EM Solutions. The company strengthened its position with key contract wins and acquisitions, including the UK-based Interceptor business and a conditional deal for MARSS.
- 27% revenue decline to $128.5 million driven by lower Defence Systems activity
- Net profit of $18.6 million including $90.5 million gain from EM Solutions divestment
- Order backlog surged to $459.1 million, underpinning 2026-27 revenue outlook
- Acquisition of UK Interceptor business completed; MARSS acquisition agreed subject to conditions
- No dividends declared; Board updates remuneration framework amid strong share price gains
FY2025 Financial Performance
Electro Optic Systems Holdings Limited (ASX: EOS) reported a challenging 2025 financial year with revenue from continuing operations falling 27% to $128.5 million. This decline was primarily due to reduced activity in the Defence Systems segment following the completion of a major contract in the Middle East. Despite this, the Group posted a net profit of $18.6 million, buoyed by a $90.5 million gain on the divestment of its subsidiary EM Solutions (EMS) in January 2025.
Continuing operations recorded an after-tax loss of $73.5 million, reflecting ongoing investment in product development and operational scale-up. The Group ended the year debt-free with $106.9 million in cash, a significant improvement from $52.3 million the previous year, positioning EOS with a strengthened balance sheet to support growth initiatives.
Strategic Acquisitions and Contract Wins
In November 2025, EOS completed the acquisition of the UK-based Interceptor business, expanding its counter-drone effector portfolio and establishing a foothold in the important AUKUS partner market. This acquisition adds specialist engineering capabilities and intellectual property to EOS’ Defence Systems segment.
Further, in January 2026, EOS announced a conditional agreement to acquire MARSS, a European AI-enabled command and control software provider. This acquisition aims to integrate MARSS’ software with EOS’ existing hardware offerings, creating an end-to-end counter-drone solution and broadening EOS’ geographic and market reach. The transaction includes an upfront cash payment of US$36 million plus an earnout of up to €100 million, subject to regulatory and customer approvals.
EOS secured several significant contracts during 2025, including a $108 million Remote Weapon System (RWS) contract for the Australian Defence Force’s LAND 400-3 project, a €71.4 million High Energy Laser Weapon (HELW) contract with a NATO customer, and a conditional $120 million HELW contract with a Korean customer. These wins underpin a substantial order backlog of $459.1 million, up from $135.6 million in 2024, providing a solid revenue pipeline for 2026 and 2027.
Operational and Market Outlook
EOS continues to focus on commercialising its intellectual property in counter-drone and space domains, with the Defence Systems segment advancing production readiness and supply chain resilience. The Space Systems segment grew revenue modestly to $12.7 million, driven by space domain awareness services and new technology deployments.
Market conditions remain supportive, with ongoing geopolitical tensions driving demand for advanced defence technologies. EOS is actively pursuing a broad pipeline of opportunities across Europe, North America, the Middle East, and other regions, although the timing of contract awards remains uncertain given the complex nature of defence procurement.
Governance, Risks, and Remuneration
The Board maintained a stable composition throughout 2025, with no changes to directors. The company settled an ASIC investigation related to 2022 disclosure matters, recognising a $5 million legal provision for penalties and associated costs.
EOS updated its remuneration framework to better align executive incentives with shareholder value creation, including a shift towards performance-based long-term incentives. The company’s share price surged 626% during the year, reflecting market confidence in EOS’ strategic direction.
Key risks highlighted include customer concentration, cash flow dependency, regulatory compliance challenges, and geopolitical uncertainties. EOS is managing these through diversification efforts, robust cash management, and proactive engagement with regulators and customers.
Bottom Line?
With a strengthened balance sheet, a growing order book, and strategic acquisitions underway, EOS is poised for a pivotal 2026 as it seeks to convert opportunities into revenue and navigate evolving defence market dynamics.
Questions in the middle?
- Will the MARSS acquisition complete as planned, and how will it integrate operationally?
- How quickly can EOS convert its $459 million order backlog into recognised revenue?
- What impact will the ASIC settlement and associated legal provisions have on future compliance and governance?