Stonegate Capital Partners has updated its coverage on Electro Optics Systems Holdings Ltd (ASX: EOS), providing insights into the company's financial performance and future outlook. Electro Optics Systems reported FY25 revenue of $126.3 million, a gross margin of 63%, and EBITDA of $(24.4 million). The revenue decline was primarily attributed to the divestment of EM Solutions and the timing of orders, which shifted later into FY25 and are expected to convert into FY26.
The company concluded the fiscal year with a strong cash position of $106.9 million and demonstrated significant order momentum. During the period, Electro Optics Systems signed 18 contracts worth approximately $420 million. Its unconditional order book, excluding Korea, stands at approximately $459 million. This substantial backlog supports an anticipated higher delivery cadence through FY26 to FY28, as the company's product mix shifts toward higher-value systems including Remote Weapon Stations (RWS), counter-drone technology, and High-Energy Laser Weapons (HELW).
A key highlight from the update is the backlog inflection, with a $459 million order book and a targeted conversion rate of 40-50% in FY26, signaling a ramp-up in activity through FY28. The company's visibility is bolstered by the signed contracts and the order book. A significant contract includes a €71 million deal with the Netherlands for a 100kW High-Energy Laser Weapon system, detailed further in the full announcement available here.
Additionally, the update notes upside potential from MARSS, which adds NiDAR command and control systems and interceptor drones to the portfolio. This pipeline is currently excluded from the reported metrics, representing hidden growth optionality for the company. The shift in product mix toward advanced defense technologies like RWS, counter-drone systems, and HELW, coupled with scaling manufacturing, is central to the projected growth trajectory. The financial and operational data suggests Electro Optics Systems is positioning itself for a period of increased delivery and revenue realization, leveraging its strong order book and strategic focus on high-value defense sectors.
