Electro Optic Systems (ASX:EOS) used its annual results presentation to outline a sharp increase in order intake during 2025, a continued push into counter-drone and space control markets, and a reshaped portfolio following the sale of EM Solutions and the planned acquisition of command-and-control provider MARSS.
Market backdrop and strategic priorities
Group CEO Dr. Andreas Schwer said market conditions were “superb,” pointing to growing defense budgets and geopolitical tension as supportive tailwinds. He framed EOS’ strategic focus around two areas: counter-drone systems and “space control or space warfare.”
EOS highlighted a broadened counter-drone portfolio that includes remote weapon systems, interceptor drones, high-energy laser weapons, and integrations for rockets and missiles. The company also emphasized the role of command-and-control software, describing MARSS’ NiDAR system as the “brain behind any counter-drone system,” particularly for defeating higher volumes of drones or swarms.
2025 financial performance
CFO and COO Clive Cuthell reported 2025 revenue of AUD 128.5 million, which was down compared to 2024. Management attributed the decline primarily to the divestment of EM Solutions and to major order intakes occurring later than expected, affecting the timing of revenue recognition.
Gross margin increased to 63%. Cuthell said the result included the benefit of a finalized Middle East contract (previously disclosed) and what he described as continued improvement in the underlying base gross margin. He cautioned that management does not expect 63% gross margin going forward, but said EOS is aiming for continued multi-year improvement, “perhaps over 50%” in 2026 versus historical levels.
Underlying EBITDA was a loss of AUD 24 million, which management linked mainly to lower revenue, with gross margin improvements offsetting some operating expense increases. Cuthell said EBIT included higher depreciation and amortization (including customer-funded CapEx) and AUD 9 million in non-recurring non-trading items, consisting of an ASIC-related penalty (about two-thirds) and acquisition costs related to MARSS (about one-third).
Finance costs improved after EOS repaid all debt in January 2025; the company reported it has no borrowings, though finance costs included a make-whole expense tied to the repayment. Cuthell also noted net profit after tax included a AUD 91 million gain on the sale of EM Solutions recorded in January 2025.
Order book surge and revenue rollout targets
Management repeatedly emphasized the expansion of the order book during 2025. EOS said it signed 18 contracts totaling AUD 420 million in order intake, compared with AUD 70 million and six orders in the prior year. This resulted in an unconditional order book of AUD 459 million at the end of December 2025.
Schwer and Cuthell both noted the order book figure excludes a highly conditional Korean high-energy laser contract (KRW 80 million), which management said is not included in internal planning. In Q&A, Cuthell confirmed the deposit and letter of credit conditions had not yet been met.
EOS did not issue revenue guidance, but provided a planning target for converting backlog into 2026 revenue. Cuthell said the company is aiming to realize 40% to 50% of the AUD 459 million order book in calendar 2026, equating to roughly AUD 180 million to AUD 230 million from the existing backlog, with additional revenue potential from new orders that can be delivered within the year. He said the outcome depends more on delivery timing than on new orders, and noted revenue is typically weighted toward the second half.
High-energy laser, space control, and expansion moves
Schwer described high-energy lasers as a major growth pillar beyond the remote weapon systems business. EOS said it achieved a commercialization milestone by becoming the first company to sign a 100 kW high-energy laser weapon export contract, citing a landmark deal with the Dutch government valued at EUR 71 million.
EOS said it opened a 20,000 sq ft serial high-energy laser production facility in Singapore on February 6, designed for 20 laser weapons per year with expansion potential to 40 per year. In Q&A, management said delivery timelines are driven by supply-chain lead times for key components, and that EOS is negotiating with the Dutch customer to accelerate delivery, potentially as early as the end of 2027.
On space control, Schwer said EOS’ ATLAS product range can be deployed in fixed installations or mobile configurations, with missions including dazzling sensors, disabling satellites by increasing laser power, and moving satellites or space debris. In response to an analyst question, Schwer said the fixed installation product is available now and could be sold without further development, estimating a system cost of “around about $100 million.” He said development is ongoing for a mobile solution, with a prototype expected by the end of 2027 or 2028.
EOS also highlighted geographic expansion and commercial partnerships, noting new offices and operations in Europe (including France, the UK, the Netherlands and Germany). Schwer described partnership agreements with Calidus in the Middle East, MSI in the UK (including licensed production), KNDS for European opportunities (including potential production in France), and Roketsan in Turkey for high-energy laser efforts.
MARSS acquisition and additional opportunities discussed
Management positioned the planned acquisition of MARSS as a core strategic move to strengthen EOS’ integrated counter-drone offering and embed AI-enabled command and control across EOS products. Schwer said MARSS has fielded more than 60 systems globally and provides a user-intuitive interface that EOS teams found easy to integrate in prior collaborations.
EOS said it announced the transaction on January 12, with an upfront cash payment of AUD 36 million plus an earn-out in shares and cash tied to order intake. Cuthell said EOS expects earn-outs to be funded from cash flow generated by those orders.
During Q&A, the company discussed several additional items:
- German UTF tender: Schwer said Germany is seeking more than 3,000 remote weapon systems over the next 10 years and that Diehl and EOS are among three shortlisted bidders for the first phase. He said a final decision is expected in 2027, and management described total market potential of more than EUR 1 billion.
- M1 Abrams tank opportunity: Schwer said EOS was selected by the US government and General Dynamics as the sole partner to integrate an autonomous version of the R400 Slinger weapon station on the Abrams platform. He said EOS expects further “slices” of orders in 2026, with large-quantity orders from 2027 onward, and described longer-term market potential of up to $3 billion over 15 years.
- Laser development pathway: Schwer said current technology scales from 50 kW to 150 kW and that EOS is negotiating with governments to potentially sign a contract this year to develop a scalable 300 kW laser family, which he said could expand applications to counter-rocket, artillery and mortar missions and extend space warfare capability to higher orbits.
- CapEx expectations: Cuthell said the company does not provide CapEx guidance, but noted historical CapEx has typically been under AUD 20 million and that significant portions have been customer-funded under contracts.
EOS closed the presentation by reiterating its focus on disciplined cost management, including sensitivity to overhead growth, while continuing to invest selectively to support delivery speed and product competitiveness.
About Electro Optic Systems (ASX:EOS)
Electro Optic Systems Holdings Limited engages in the development, manufacture, and sale of telescopes and dome enclosures, laser satellite tracking systems, electro-optic fire control systems, and microwave satellite dishes and receivers. The company operates in Defence Systems and Space Systems segments. It develops, manufactures, and markets fire control, surveillance, and weapon systems to military customers; designs, manufactures, and supplies remote weapon systems, as well as provides related installation, integration, and support services; and designs, manufactures, delivers, and operates sensors for space domain awareness and space control.
