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Butterwick, England
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$EOS.AX
The Netherlands and EOS signed a letter of intent this week, announced by the Dutch Ministry of Defence on 24 September. Both parties intend to develop the High Energy Laser into a full weapon system and to examine setting up a production site with a Dutch-led European supply chain. EOS intends in principle to carry out development and production in the Netherlands, which the ministry says makes the Netherlands EOS's European base. If the further development succeeds, the Netherlands intends to acquire a number of laser systems.
State Secretary Derk Boswijk gave more detail in a radio interview the same morning. He described the arrangement as the Netherlands placing a fairly substantial order in exchange for EOS coming to the Netherlands, producing there and doing the knowledge development locally. So this is explicitly industrial policy as much as procurement.
His reasoning is the cost asymmetry. He pointed to the opening days of the conflict between the US and Iran, where Patriot interceptors costing hundreds of thousands to a million each were fired at drones worth tens of thousands. On the technology he said it is no longer a thing of the future, the technology exists and it works. He was also clear it is not a silver bullet, and that Patriots, counter-drone systems and lasers will operate alongside each other.
Asked whether there is a risk that EOS fails to develop the weapon properly, he said they have confidence in its potential, because they have already seen the prototype. He noted the prototype has a much weaker capability than the planned system and is already achieving impressive results. That is what convinced them the technology belongs to the future of air defence.
On capability he said the system could defeat drone swarms and penetrate one and a half to two centimetres of plate steel. On cost, the system itself is roughly as expensive as a traditional air defence system, with the saving coming from ammunition rather than acquisition.
Underneath it all is strategic autonomy. Boswijk called air defence a sector where Europe is heavily dependent on suppliers from outside Europe, and said that if the Netherlands gets this right, it could make other countries dependent on it instead.
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$EOS.AX reported first half 2026 results tonight, alongside a conference call and investor presentation. There is a lot in there, so let me go through it segment by segment.
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Space remains the smallest segment and revenue actually fell 4% year on year. The numbers are irrelevant for now. The commentary on future prospects is far more interesting and shows why space control could eventually be larger than counter-drone.
Schwer stated that the German government has allocated more than €35bn for space defence by 2030, with a significant sub-line designated for ground-based protection of space assets, the exact niche in which EOS leads.
EOS can track any object in space down to the size of a coin, including in cislunar orbit, and correct for atmospheric distortion to a degree nobody outside the US can match. Combined with the laser technology, that allows engagement of satellites from the ground regardless of orbit, from temporary blinding through to permanent disabling.
Schwer also said space is coming sooner than expected and now anticipates meaningful revenue before 2030. Discussions are already underway with partners and customers across the globe, and the mobile Atlas variant should be revealed in early 2027.
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For me this was an almost flawless report. EOS delivered its first profitable half, lifted guidance well beyond what most had modelled, and gave far more disclosure than usual on production capacity, the Abrams sequencing and the Dutch programme. MARSS has clearly exceeded what anyone expected in January, and the bank guarantee in the subsequent events section points to a contract that would be the largest in company history.
The issues I raised are worth noting but none of them change my conviction. The R500 opportunity shrinking and slipping is a reminder that management timelines run optimistic, which is not new information. Operating cash flow remaining negative is what you would expect from a company scaling production and building inventory ahead of delivery. Space going backwards is irrelevant at this stage of that segment's development.
The one thing I am genuinely dissatisfied with is the handling of the supply chain question. Montega cut their price target in July specifically because of component availability, and that was the single biggest open question going into this report. Management was asked about it directly and still evaded it to a large extent, pointing to contract lumpiness and delivery timing before acknowledging that EOS continues to manage capacity and supply chain constraints. That is not an answer. Either the constraints are material to the second half or they are not, and management chose not to say which.
Given how much of the investment case now rests on converting a A$846m order book into revenue, I would have expected a clearer explanation. It is the question I would most like answered before the next update.
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Space remains the smallest segment and revenue actually fell 4% year on year. The numbers are irrelevant for now. The commentary on future prospects is far more interesting and shows why space control could eventually be larger than counter-drone.
Schwer stated that the German government has allocated more than €35bn for space defence by 2030, with a significant sub-line designated for ground-based protection of space assets, the exact niche in which EOS leads.
EOS can track any object in space down to the size of a coin, including in cislunar orbit, and correct for atmospheric distortion to a degree nobody outside the US can match. Combined with the laser technology, that allows engagement of satellites from the ground regardless of orbit, from temporary blinding through to permanent disabling.
Schwer also said space is coming sooner than expected and now anticipates meaningful revenue before 2030. Discussions are already underway with partners and customers across the globe, and the mobile Atlas variant should be revealed in early 2027.
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For me this was an almost flawless report. EOS delivered its first profitable half, lifted guidance well beyond what most had modelled, and gave far more disclosure than usual on production capacity, the Abrams sequencing and the Dutch programme. MARSS has clearly exceeded what anyone expected in January, and the bank guarantee in the subsequent events section points to a contract that would be the largest in company history.
The issues I raised are worth noting but none of them change my conviction. The R500 opportunity shrinking and slipping is a reminder that management timelines run optimistic, which is not new information. Operating cash flow remaining negative is what you would expect from a company scaling production and building inventory ahead of delivery. Space going backwards is irrelevant at this stage of that segment's development.
The one thing I am genuinely dissatisfied with is the handling of the supply chain question. Montega cut their price target in July specifically because of component availability, and that was the single biggest open question going into this report. Management was asked about it directly and still evaded it to a large extent, pointing to contract lumpiness and delivery timing before acknowledging that EOS continues to manage capacity and supply chain constraints. That is not an answer. Either the constraints are material to the second half or they are not, and management chose not to say which.
Given how much of the investment case now rests on converting a A$846m order book into revenue, I would have expected a clearer explanation. It is the question I would most like answered before the next update.
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Yesterday, $EOS.AX posted nine new directed energy job listings. Today one of the hiring managers wrote that EOS is building a high energy laser system in Canberra and is hiring nine people for it.
Let’s find out what it might be:
The job description specifically mentions design work, which is why I would rule out Apollo, as it has already finished development and is already in production. Schwer in December 2025: “There’s no development work to be done. The product has been fully developed.” The system is also being developed and built in Canberra and not in Singapore, where the Apollo production facility sits.
I would also rule out the 300 kW laser, as it is routed through the JV with Generation 5 in the UAE. Development and manufacturing of that laser is most likely also taking place in the UAE, compared to development of the new laser fully in Canberra. A nine person team is also most likely too small for an undertaking as big as the 300 kW laser.
What fits best in my view is a development contract with the ADF, either for a new laser weapon or for a modified version of an existing weapon tailored to the Australian military.
EOS management has repeatedly stated that major development programs are financed by a customer, while EOS retains the IP. EOS is also part of LAND 156, the ADF’s counter small uncrewed aerial systems program, with Leidos serving as the prime. Under this program, EOS has been awarded A$2m for initial deliveries. Management has already said that they want to make HELWs and interceptor drones part of their LAND 156 offering in the future, so this would be a natural route for a laser development program.
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RT @financialjuice: Aerovironment set to win $400 million anti-drone US army award. $AVAV
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FiberBridge Photonics opened serial production of high-energy counter-drone laser sources in Hannover this week. They do not build weapon systems, they supply the laser source that primes like $RHM and MBDA integrate. Worth noting $EOS.AX is different here, it builds its own laser source, which is the basis for its claim to own 100% of its laser IP.
The most important part came from the opening itself. Frank Dosquet, head of the Bundeswehr’s WTD 91 trials centre, stated that the Bundeswehr plans to field counter-UAS laser systems across the board from 2028.
Worth remembering after the HoWiSM direct award: the budget committee has since bound the ministry to run an international market survey for all future laser procurements. So the land-based programme, concept due Q1 2027, is meant to be open to international bidders, not handed to a domestic prime.
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It has been over a month since my last post. I think this is a good time to look back at what news came out of $EOS.AX since I was last active here.
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Last week EOS released an impressive quarterly report. First-half 2026 revenue is expected at A$169m, with underlying EBITDA profitability expected. The company also raised FY26 guidance a second time, to A$280-300m, once again excluding MARSS. This range would represent the best year for EOS ever in terms of revenue. The order book also reached another all-time high at A$846m. Full half-year financial results are expected later this month, with EOS likely also announcing its first revenue guidance including MARSS. I think A$30-50m is a realistic range for the MARSS revenue contribution.
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Earlier this year EOS management indicated that revenue would be second-half weighted. Looking at first-half revenue and guidance, it actually seems to be the opposite. Revenue is likely to be slightly first-half weighted, due to Middle East customers demanding faster delivery timelines because of the Iran war. While another guidance raise excluding MARSS would seem logical, it is unlikely because of an issue Montega mentioned in their latest report. The current bottleneck keeping EOS from achieving even higher revenue in 2026 is not demand, it is the supply chain. According to the report, critical components are supply-strained in the short term. I cannot tell which components are affected, and in turn which systems, but I am hoping the company can give us more information on the H1 2026 call.
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