Orbital Delivers 29 Engines, Forecasts 39 More, Clears Legacy Debt
Orbital Corporation Ltd reports a strong quarterly update with 29 engines delivered, a debt-free balance sheet, and significant R&D grant funding supporting new engine development.
- 29 engines delivered in first half of FY2025, with 39 more forecast
- New Indian customer engagement with initial engine deliveries
- Debt fully repaid following WA government loan clearance
- Received $1.9 million R&D grant funds in early 2025
- Advancing larger capacity engine prototypes for heavier payload UAVs
Production Momentum and Market Reach
Orbital Corporation Ltd (ASX: OEC), a specialist in propulsion systems for tactical uncrewed aerial vehicles (UAVs), has reported a robust operational quarter ending December 31, 2024. The company delivered 29 engines across four product lines servicing key international clients in the USA, Singapore, Vietnam, and India. This production pace sets a solid foundation for the forecasted delivery of an additional 39 engines in the second half of the 2025 financial year, signaling sustained demand and expanding market penetration.
Notably, Orbital UAV has begun supplying a new customer in India, delivering two engines in the first half of the year with four more scheduled for the upcoming period. This development underscores the company’s growing footprint in the strategically important Indian UAV market.
Financial Health and Cash Flow Dynamics
From a financial perspective, Orbital UAV has achieved a significant milestone by fully repaying its legacy Western Australian government loan, positioning the company as debt-free as of December 31, 2024. This deleveraging enhances financial flexibility and reduces risk, a positive signal for investors.
The company reported $1.9 million in revenue receipts during the second quarter, with an additional $1.6 million expected in the following quarter from engines already delivered. Despite operating cash outflows of $1.13 million this quarter, Orbital maintains a healthy cash balance of $2.6 million, providing an estimated 2.3 quarters of funding runway based on current cash burn rates.
Engineering Innovation and Future Prospects
Beyond current production, Orbital UAV is advancing its engineering pipeline with the development of a larger capacity internal combustion engine designed to support heavier payloads and improved power-to-weight ratios. The company has completed detailed design drawings, established a supply chain strategy, and commenced early prototype builds. Testing is slated for the fourth quarter, which could unlock new market opportunities and enhance competitive positioning.
Additionally, Orbital secured nearly $1.9 million in R&D grant funding in early January 2025, reinforcing its commitment to innovation and supporting ongoing development programs.
Outlook and Market Implications
Orbital UAV’s combination of production growth, debt elimination, and forward-looking engineering initiatives paints a promising picture. The company’s ability to service diverse international markets while investing in next-generation propulsion technology positions it well to capitalize on the expanding UAV sector. However, the relatively short cash runway and ongoing R&D expenses warrant close monitoring.
Bottom Line?
Orbital UAV’s debt-free status and production momentum set the stage for a pivotal year of growth and innovation.
Questions in the middle?
- How will the new larger capacity engine perform in upcoming tests and market acceptance?
- What are the company’s plans to extend its cash runway beyond the current 2.3 quarters?
- Can Orbital UAV expand its customer base further in emerging UAV markets such as India?
