Stonegate Capital Partners has updated its coverage on Electro Optics Systems Holdings Ltd (ASX: EOS), focusing on the company's strong order momentum and expected revenue ramp in the coming years. The announcement details EOS's financial results for fiscal year 2025, which included revenue of $126.3 million, gross margin of 63%, and EBITDA of negative $24.4 million. The revenue decline was attributed to the divestment of EM Solutions and shifts in order timing into the latter part of FY25, which are expected to convert into FY26.
Despite the near-term decline, EOS ended FY25 with $106.9 million in cash and a robust order book. The company signed 18 contracts valued at approximately $420 million, contributing to an unconditional order book of roughly $459 million, excluding Korea. This backlog supports a higher delivery cadence through FY26 to FY28 as the product mix shifts toward higher-value remote weapon stations (RWS), counter-drone systems, and high-energy laser weapons (HELW), and as manufacturing scales up.
Key takeaways from the update include a backlog inflection, with the $459 million order book targeting 40-50% conversion in FY26 and a ramp through FY28. Visibility is enhanced by the signed contracts and the order book, including a €71 million Dutch 100kW HELW deal. Additionally, the company's investment in MARSS, which adds NiDAR C2 and interceptor drones, represents hidden growth optionality not included in current metrics.
For more details, see the full announcement here.
