Remy Blaire: Commercial and defense drone adoption is accelerating as enterprises pivot from purchasing CapEx hardware to flexible subscription models. ZenaTech, trading under ticker symbol ZENA on Nasdaq, has reported substantial Q2 growth, driven by its drone-as-a-service rollout, expanding AI autonomy capabilities, and advancements in counter-UAS interceptor tech. With defense budgets and industrial automation ramping up, can subscription drone services keep driving high-margin recurring expansion through 2027?
Well, joining us at Stocktoberfest to break down Q2 performance is Linda Montgomery, VP of Corporate Development and Investor Relations at ZenaTech. Linda, great to have you back on. Thank you so much for joining us.
Linda Montgomery: Thank you for having me.
Remy Blaire: Well, first and foremost, tell us about what drove Q2 performance and also what stood out most on the balance sheet.
Linda Montgomery: So I think the highlight is that we’re continuing to significantly scale the business. So revenue for the second quarter was 9.3 million Canadian, or 6.6 million US approximately. And this was a 316% increase over the same period last year. And then if you look at our first half of the year, our revenue was 17.7 million, or approximately 12.6 million US, and that was a 425% increase over the same period last year.
So one comparison I think is quite interesting is that if you look at last year, our revenue was almost 13 million for the entire year. So just in the first half of the year, we’ve done significantly well and increased the business by a third in just half a year. And another point that I think is significant is the fact that we’ve had seven consecutive quarters of revenue growth. So from 0.7 in the fourth quarter of 2024, up until almost 18 million for this quarter, we’ve increased our business by about 13 times over that period.
But it’s not simply about the top-line growth. It is the fact that we’re continuing to invest in the business. And we’re investing in acquisitions and in integrating our technology, our drone technology, and also in our product development and in our manufacturing facilities. So what we’re looking to demonstrate now is that this larger revenue platform that we’re creating can translate into greater operating leverage and improved economics as our integration progresses.
Remy Blaire: Yeah. And speaking of economics, Linda, I do want to ask you about drone as a service, or DaaS, as some may refer to it. So tell us a little bit about, for investors looking at this business model, why is DaaS, or drone as a service, so compelling? Not just for investors, but for your enterprise customers?
Linda Montgomery: So what’s different about drone as a service is that the customer buys the outcome and not the drone. And as an example, a builder, construction company, oil and gas company, or even a municipal or state government, they don’t want to be investing in drone technology and maintenance of drones and drone pilots and understanding regulation. So what we do is we do all that for them, at their site, as a subscription-based service for them. So what we’re doing is really providing a lot of convenience and productivity for them.
And our strategy has another dimension as well, in that we are acquiring under-digitized legacy businesses. We’ve actually acquired 29 of them so far, giving us about 40 locations internationally. And then we’re introducing our drones and AI into the workflow, into what historically have been labor-intensive and relatively low-tech kinds of jobs. So our opportunity, I guess, is that we want to do more jobs in less time. We want to increase capacity, and we want to cross-sell additional services and also high-margin analytics to these customers.
So really, again, it’s about productivity and lower complexity for customers, and also the latest drone technology that changes so quickly. And then for us, it’s all about repeatable services, recurring revenue, deeper customer relationships, expanding our margins, and capturing, I guess, a vertically integrated operating environment, including our ZenaDrone drones. So that’s why drone as a service has become an important part of our business.
Remy Blaire: And speaking of your business, I do want to get a perspective when it comes to product development as well as progress, especially when it comes to counter-UAS interceptor technology. So for viewers who may not be as familiar, walk us through this.
Linda Montgomery: Sure. Well, I’ll take you through some of our latest products, including counter-UAS. So first of all, our IQ Aqua, we recently announced. That’s our underwater drone, and we have that at the testing stage right now. And then another recently announced one is our IQ Octo. Now, that’s going to be for spraying and seeding for precision agriculture types of applications, and that is also at the testing stage.
And then looking at our counter-UAS solutions, we have our Interceptor P1, which is our low-cost, one-way interceptor drone that is designed to physically engage with hostile drones. And that’s at the flight testing stage at our Arizona facility. And we’re also advancing the other drones as part of our counter-UAS solutions: our gas-powered ZenaDrone 2000, and also our IQ Glider, and our launch and refueling station and marine-based launch and refueling station.
And we have a division called Zena AI, so we’ll be incorporating a lot of the work they’re doing with advanced AI types of applications. And also, we’re doing a lot of R&D work around drone swarms. And so we’ll be incorporating all of those capabilities into developing our drone and our counter-UAS platforms.
And then geographically, we’re looking to be selling these solutions to US defense agencies, but also to NATO and strategic US allies, including Gulf countries. And recently we’ve announced that we are setting up an operation for manufacturing and testing in Ukraine. So that will be an important part of our counter-UAS solution development as well.
Remy Blaire: Yes. And speaking of which, I do want to hear about what’s going on with the AI autonomy platform. So give us a preview.
Linda Montgomery: Right. So I think when we talk about our AI autonomy platform that we’re building, we really view that as much broader than just building a drone. So what we’re doing is we’re combining the autonomous hardware, the AI and the software, and the data and analytics, and then manufacturing, and also an operating service platform, including back-office data analysis capabilities also.
And these are all coming together along with drone as a service. We have real-world customers and businesses, so we can deploy this technology. And so with that, we are acquiring established businesses, surveying, inspection businesses, and other types of companies. And they have customers. They have revenue. They have licensed operators, in the case of land surveyors, professional land surveyors. And so what we’re doing is we’re introducing our drone-based workflows and our AI and data analysis. And basically, at the end of the day, we want to perform the work faster, increase capacity, and also improve the economics per location. So this is a really different business model than simply building a drone and hoping someone is going to buy it.
And at the same time, you know, we have our manufacturing facilities in three places in the world right now. We have our own drones, so we’re in charge of our supply chain. And so I guess the long-term vision is that we have this AI autonomy platform through drone as a service, where the hardware performs the work, the AI and the software manage and interpret the work, and then through drone as a service, we’re monetizing the outcome. And so that’s really what we’re building with drone as a service.
Remy Blaire: And finally, Linda, before I let you go, we are counting down to year-end as well as the new year, 2027. So what are some key milestones that investors out there on Wall Street should be looking out for?
Linda Montgomery: Sure. Well, first of all, drone as a service: can we continue to close on high-quality acquisitions and then continue to integrate our drones with the workflows in that business? I think that’s what investors should look for. Second, of course, is operating leverage. So as we introduce drones and automation into these businesses, I think that investors should watch revenue growth, cross-selling, and ultimately margin progression.
And then thirdly, I think defense commercialization. So Blue UAS certification, to enable us to be on the procurement list for the US military and government organizations, is important. And then also our progression in engaging with US defense customers and getting more demonstrations and pilot programs, ultimately leading to procurement. That is really important. These are important de-risking events around that business.
And then I think fourthly, product maturation. So bringing all of our products, like the ones I just mentioned, IQ Aqua and the IQ Octo, our ZenaDrone, really all of our drone platforms, and we’re working on those all simultaneously. We need to bring those through the process from prototype to testing, to pilot programs, and ultimately to customers and customer revenue. So they all have identifiable milestones, and I think those are really what we’re looking at moving forward.
And then I think that our next stage is really converting this scale into increasingly integrated operations, greater commercial adoption, and then ultimately stronger financial performance. That’s what we’re focused on.
Remy Blaire: Well, Linda, thank you so much for joining us here at Stocktoberfest here in New York City. Appreciate the latest updates from ZenaTech. Thank you.
Linda Montgomery: Thank you. Great to be here.
