Why Did HighCom’s Revenue Plunge 59% Amid US Market Turmoil?

A Challenging Half-Year for HighCom

HighCom Limited (ASX: HCL) has reported a significant deterioration in its financial performance for the half-year ended 31 December 2025. Revenue from continuing operations fell sharply by 59% to $10.9 million, compared to $26.6 million in the prior corresponding period. This steep decline was accompanied by an EBITDA loss of $5.4 million, reversing a $1.9 million profit a year earlier, and a net loss after tax of $6.8 million versus a $1.2 million profit previously.

The downturn was largely driven by the HighCom Armor business, which designs and supplies advanced ballistic protection products. This segment was severely impacted by the extended US government shutdown and ongoing tariff uncertainties, which disrupted sales and market confidence. In contrast, the HighCom Technology division, specialising in uncrewed aerial systems and related defence services, maintained steady revenue and delivered results in line with expectations.

Operational Highlights and Market Conditions

HighCom Armor generated $5.8 million in revenue during the half, down significantly from prior periods. Despite these challenges, the business has a robust opportunity pipeline exceeding US$55 million for the second half of FY26, signalling potential for a rebound as US market conditions normalise. The company also advanced development of its patented XTclave® lightweight armour technology, with the first plates successfully passing independent National Institute of Justice (NIJ) compliance testing. These products are slated for commercial release in the latter half of FY26, representing a key growth driver.

Meanwhile, HighCom Technology contributed $5.1 million in revenue, including $3.5 million from spare parts for small uncrewed aerial systems and $1.6 million from sustainment services for the Australian Department of Defence. The division continues to expand its product and service offerings across small, tethered, and counter unmanned aerial systems, positioning itself as a valued technology integrator in the defence sector.

Financial Position and Strategic Moves

At 31 December 2025, HighCom held $3.0 million in cash and reduced inventory levels by $1.8 million to $12.7 million, reflecting tighter working capital management amid revenue pressures. The company reported no dividends for the period, consistent with its loss position.

Post-reporting period, HighCom announced a $7 million capital raising through a placement and a share purchase plan, aimed at strengthening its balance sheet and funding growth initiatives, including the XTclave® product launch. Directors have also participated in the raising, signalling confidence in the company’s strategic direction.

Leadership and Outlook

New Executive Chairman Geoff Knox, appointed in January 2026, has overseen key organisational developments, including the appointment of a new President for HighCom Armor to bolster the US team ahead of the XTclave® rollout. The company remains cautiously optimistic about global market conditions and anticipates a recovery in US demand as government operations stabilise and tariff issues resolve.

While the first half results reflect significant headwinds, HighCom’s investment in innovative armour technology and expanding defence technology services could position it well for growth in the second half of FY26 and beyond.