Draganfly Inc. Q2 FY2025 earnings call

• Revenue for Q2 was $2.155255 million, with Q-over-Q 37% increase and 22% year-over-year increase. Product sales were $1.9 million, services $213,000. Gross profit $504,000, gross margin 24%. • Current cash balance as of end of Q2 was over $22 million, now approximately $68 million due to subsequent financing. • Commander 3XL plus DROPS achieved 100% success rate at U.S. Army SMEX25 event. • Closed $13.75 million public offering, selected for U.S. Southern border drone pilot program with Cochise County, showcased tactical drone in Latvia, delivered Flex FPV system to major U.S. prime defense contractor. • Established Public Safety Advisory Board, closed additional $3.6 million of capital, warrants exercised. • Teaming agreement with Autonome Labs for demining, active in demining missions in Ukraine. • Secured strategic military order for Commander 3XL UAV systems, closed $25 million registered direct offering, Commander 3XL selected by U.S. Department of Defense for specific missions.

For Q2 2025, revenue was $2.155255 million. Product sales were $1.9 million, and provision of services was $213,000. Gross profit was $504,000, which is a 9.3% year-over-year increase, and gross margin was about 24%. Revenue had a Q-over-Q 37% increase and a 22% year-over-year increase.

• Revenues continue to increase pragmatically while managing costs, with operating expense as a percentage dropping. • Positioned well to participate in drone future, with confidence in balance sheet to drive growth and execute on contracts.

Q: He noticed that Draganfly has been on the AUVSI Green List pending for a long time now. Can you comment on this? And what, if anything, does the new drone memo by Secretary Hegseth mean for these classifications, for example, the Green and Blue Lists?

A: We have various units in Blue List testing and submitted to Green List. There was clarity on Green and Blue List relation. Secretary Hegseth's memo validates capabilities, performance, and capacity as key factors in defense decisions, not stopping significant orders.

Q: What plans do you have for the healthy cash balance?

A: Focus on organic growth, scaling iteration capacity. Considering M&A activity but not prioritizing it. Confidence in balance sheet gives customers confidence in execution.

Q: How positioned in terms of production capacity to fill hopeful meaningful contracts?

A: Built up production capacity over years, continuing to pursue additional contract manufacturing capability. Process is detailed to ensure ability to answer detailed customer questions on nuts and bolts, personnel, etc.

Q: Given recent surge in police departments adopting drones as first responders, comment on inbound interest/engagement from agencies?

A: Everybody is interested. Inquiries still about regulation, training, budgets. Focus on small, rural, campus, tribal, private security spaces with multi-mission drones.

Q: Does end to Ukraine conflict negatively impact Draganfly or drone industry?

A: Drone use likely continues to increase. Ukraine conflict was a training ground, but external industry posture wouldn't change much other than learning from it.