What Draganfly (DPRO) Said on Its Q3 Earnings Call

Key Points

• Q3 results weakened: Revenue fell 5% year over year to CAD 2.05 million, while comprehensive loss widened to CAD 13 million. A CAD 367,000 inventory write-down pushed gross margin to 6.3%, though adjusted gross margin improved to 24.2% excluding write-downs.
• Defense opportunities are expanding: Draganfly reserved production capacity for potential defense work and is participating in 19 Canadian military RFPs. A Canadian program could involve up to 5,000 surveillance drones worth CAD 25 million, but the company’s initial delivery is 100 drones and further orders depend on demand.
• Growth is expected later than previously forecast: CEO Cameron Chell pointed to a revenue-growth inflection around Q2 or Q3 2027, citing funding delays and the time needed for military programs to advance. Draganfly reported CAD 128 million in cash and is establishing a U.S. defense subsidiary in Tampa.

Draganfly NASDAQ: DPRO reported lower third-quarter revenue and a wider loss as reduced drone services sales and an inventory write-down weighed on results. Management said it had reserved production capacity for defense work and expects revenue growth to accelerate in 2027.

Revenue for the quarter ended in 2026 was CAD 2.05 million, down approximately 5% from CAD 2.1 million a year earlier, Chief Financial Officer Paul Sun said on the company’s November 10 earnings call. Product sales were approximately CAD 1.6 million, roughly flat year over year, while drone services contributed CAD 436,000.

Revenue also fell approximately 23% from CAD 2.6 million in the second quarter, which Sun described as the company’s best quarter. He attributed the sequential decline mainly to lower services sales.

Inventory Write-Down Squeezes Margin

Third-quarter gross profit fell to approximately CAD 129,000 from CAD 421,000 a year earlier. Gross margin was 6.3%, including a one-time, noncash inventory write-down of CAD 367,000.

Excluding inventory write-downs in both periods, gross profit rose to CAD 496,000 from CAD 464,000, while adjusted gross margin improved to 24.2% from 21.5%, Sun said. He attributed the improvement to the mix of products and services.

Total comprehensive loss widened to CAD 13 million from CAD 5.4 million a year earlier. Excluding the inventory write-down and a CAD 57,000 noncash fair-value change in derivative liability, the loss was CAD 12.6 million, compared with an adjusted loss of CAD 3.6 million in the prior-year quarter.

Sun attributed the increase primarily to higher office and miscellaneous costs, share-based compensation, professional fees, wages and travel as the company scaled its operations.

Draganfly ended the quarter with CAD 128 million in cash, compared with CAD 90.2 million at the end of 2025. Sun said the company completed financing in February and a strategic financing near the end of September. Working capital was CAD 144 million, up from CAD 95 million at year-end 2025.

Defense Orders and Production Capacity

CEO and President Cameron Chell said Draganfly held production capacity for work involving the Canadian Armed Forces and other opportunities that had not yet been announced. “We have never been busier,” Chell said, adding that the company had switched some production lines in response to sales and contracts.

Chell discussed Draganfly’s selection for a Canadian Department of National Defence program involving low-cost tactical surveillance and reconnaissance drones. He described the opportunity as an order of up to 5,000 drones with a total value of CAD 25 million, noting that other participants were included in the bid.

Draganfly will deliver an initial 100 drones for training and testing, Chell said, with subsequent orders dependent on demand. He also said the company was involved in 19 requests for proposals across the Canadian military and expected announcements on at least two more opportunities before year-end.

Chell said Draganfly had qualified under all five categories of Canada’s request for supply arrangement, which he described as a marketplace for participating in government defense work. He said the company hoped to win a significant share of Canadian drone spending, while acknowledging that it would have to continue earning that business.

Growth Outlook and U.S. Expansion

Asked when revenue growth could reach an inflection point, Chell pointed to around the second quarter of 2027, particularly the third quarter—roughly a year later than he had previously expected. He cited delays in U.S. funding flows and the time required for Canadian and other military programs to develop.

Chell said the company had established Draganfly Defense USA, to be headquartered in Tampa, and hired retired U.S. Marine Corps Brigadier General AJ Pasagian as its president. In Canada, Kevin Leblond is leading defense and security operations, sales and initiatives.

Draganfly also obtained U.S. Federal Aviation Administration approval for its Heavy Lift drone to fly beyond visual line of sight over highways and people, Chell said. He said customers can operate under the company-held clearance if they have the required licensing, and that the approval was needed to complete sales on several military projects.

On other opportunities, Chell said the company was examining potential acquisitions and continued to invest in counter-drone technology. He also said Draganfly was working with three campuses on a public safety program before a broader rollout, and that its military business was currently driving the company forward.

About Draganfly (NASDAQ:DPRO)

Draganfly Inc. is a Canadian drone technology company that develops and provides unmanned aerial systems, software and related services. Its solutions are designed for public safety, defense and security, agriculture, industrial inspection, mapping, surveying, environmental monitoring and delivery applications. The company's offerings include remotely piloted aircraft, autonomous drone systems, payloads, flight-control technology, data-collection tools and professional services. Draganfly also provides drone design, manufacturing, training, consulting and operational support, helping organizations collect aerial imagery and other data for analysis and decision-making.

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