Orbital Corporation has broadened its customer base and product lineup, positioning itself to capture growth in defence and commercial UAV markets with $3.2 million in expected sales for Q1 FY2027.
- Customer base grows to 14 across key international markets
- Launch of 350HFE engine and Gen 2 Power Management System
- Business efficiency program cuts headcount by over 20%
- FY2026 revenue at $6.2 million with $4.8 million net loss
- Focus on converting development programs into production orders
Broader Customer Footprint and Product Portfolio
Orbital Corporation Limited (ASX:OEC) has expanded its global footprint in the UAV propulsion sector, growing its customer base to 14 across critical international regions including the US, Middle East, India, and Southeast Asia. The company’s entry into the commercial UAV market with Commercial Off-The-Shelf (COTS) propulsion systems marks a strategic shift beyond traditional defence clients.
Alongside this, Orbital has broadened its product suite with the launch of the 350HFE propulsion system and the Generation 2 Power Management System (PMS). These technologies aim to meet the evolving demands for higher payload capacity and onboard electrical power generation, particularly as Vertical Take-Off and Landing (VTOL) UAVs gain traction. The company is also advancing an ICE-Electric hybrid propulsion solution designed to extend flight duration and range for battery-powered UAVs.
Operational Streamlining Amid Market Challenges
In FY2026, Orbital undertook a significant business efficiency program, reducing full-time headcount from 54 to 42, while targeting lower product costs and shortened lead times through engineering and supply chain improvements. Despite these measures, revenue declined to $6.2 million from $8.2 million the prior year, with a net loss widening slightly to $4.8 million. The cancellation of the US Government’s FTUAS program notably impacted sales during the period.
Cash and receivables stood at $2.5 million as of 30 June 2026, supported by a $3 million equity placement and $4.1 million received from the Australian R&D Tax Incentive program. These capital injections provide some buffer as Orbital transitions toward production scaling.
Path to Production and Market Expansion
Orbital’s CEO Stephen Pearce emphasised the company’s focus on converting its expanded customer relationships and development programs into production orders, noting that the lead time for such conversions typically ranges from six to eighteen months in defence sectors. Commercial UAV programs may see faster progress, offering earlier production opportunities.
The company expects to deliver $3.2 million in sales revenue during Q1 FY2027 across the US, Middle East, and India. Notably, Orbital has secured initial orders from a new Indian defence customer for its 350HFE propulsion system and Gen 2 PMS, earmarked for a high-altitude tactical UAV. Further orders are anticipated to support integration and flight testing phases.
Orbital’s strategy extends to emerging segments such as Attritable UAVs within the US defence sector, characterised by lower unit costs and higher production volumes, and the rapidly evolving commercial UAV sector, driven by regulatory changes allowing unmanned flights in commercial airspace.
Building Recurring Revenue Streams
The company’s growing portfolio now includes customers such as ST Engineering, AATI, MightyFly, Sky Front, Freespace Operations, IGG, and Callen-Lenz (BAE Systems), spanning North America, Europe, the Middle East, India, Singapore, and Australia. Orbital aims to generate recurring revenue through production orders, spare parts, in-service support agreements, and its Power by the Hour model, which ties service fees to engine operating hours.
This approach aligns with Orbital’s ambition to create a diversified and scalable propulsion business that can adapt to the fast-changing UAV landscape globally.
Bottom Line?
Orbital’s expanded customer base and new propulsion technologies set the stage for production growth, but the timing and scale of contract conversions remain key to watch.
Questions in the middle?
- How quickly will Orbital convert its development programs into steady production orders?
- What impact will the evolving regulatory environment have on commercial UAV market penetration?
- Can Orbital’s cost reduction initiatives sustain margins amid competitive pressures?