Sky-Watch A/S

Ledelsesberetning

5. Knowledge Resources and Research & Development Innovation remains a core strategic capability and long-term value driver. In 2025, the company accelerated vertical supply-chain integration and horizontal expansion of its technology platforms to address evolving operational requirements. Lessons learned from active deployment environments were rapidly integrated into product architecture, autonomy features, resilience measures, and component sourcing strategies. The company’s continuous development cycles, supported by operational deployment experience from high- intensity warfare deployments, constitute a significant technological and organizational barrier to entry. The company employs highly specialized engineers across electronics, aerodynamics, mechanical systems, software engineering, AI-enabled systems, and secure data integration. 6. Cyber and Defense Security In 2025, Sky-Watch further strengthened its cybersecurity and compliance framework and achieved CMMC Level 1 certification. Key initiatives included network segregation, enhanced access controls, vulnerability assessments, and mandatory cyber-awareness training. CMMC Level 2 certification is targeted for completion in early 2027. These measures reinforce eligibility within regulated Western defense procurement environments and strengthen the company’s positioning as a secure and reliable industrial partner. 9. Organizational Development During 2025, Sky-Watch continued scaling operations and strengthening governance structures to support international expansion and readiness for industrial partnerships. ERP-integrated production planning, clarified executive accountability, and strengthened cross-functional coordination enhanced operational scalability. Establishment of U.S. operations progressed according to plan and supports deeper integration with North American defense stakeholders.

Beskrivelse af virksomhedens væsentligste aktiviteter

1. Principal Activities Sky-Watch A/S develops, manufactures, and commercializes advanced unmanned aerial systems (UAS), UAS components, software solutions, and integrated mission systems for military, defense, and security sectors globally. These systems enable defense organizations to collect, process, and act on operational intelligence, supporting faster and more informed decision-making in complex operational environments. Through close collaboration with defense customers and industry partners, the company develops systems that enhance situational awareness, operational decision-making, and mission effectiveness at the tactical and sub-tactical level. It is the ambition of Sky-Watch to maintain its market leadership position and shape the next generation of tactical unmanned (eco-)systems by integrating advanced autonomy, sensor technologies, and mission software into scalable and high-impact mini-UAS solutions. The company’s mission is to deliver reliable and innovative unmanned systems and integrated mission solutions that provide lasting operational value for allied defense and security organizations. Over recent years, the company has established a leading position within the segment of mini fixed-wing UAS for tactical military applications in Western-aligned markets. Following significant industry consolidation, rising compliance thresholds, cybersecurity requirements, and battlefield validation demands, the competitive landscape today consists of a limited number of Western suppliers capable of delivering production-scale, field-proven systems. Sky-Watch has, throughout 2025, intensified its transition from a single-platform manufacturer to a diversified unmanned systems provider with an expanding portfolio spanning air vehicles, sensor payloads, ground control software, mission planning systems, advanced AI-enabled autonomy and application layers, training, and lifecycle support services. This platform, integration and services-based approach will address a broader set of defense and security missions while creating multiple new recurring revenue streams across platform and system upgrades, expanded software capabilities, spare parts, and operational services in 2026 and beyond. Sky-Watch collaborates with globally leading defense and aerospace partners and is increasingly positioned as a preferred technology partner for larger industrial primes seeking integration with and exploitation of scalable, combat-validated mini UAS capabilities. The company’s growing international customer base and strengthening opportunity pipeline provides a growing resilience against regional procurement fluctuations and aligns the company with long-term defense modernization programs among NATO and allied nations. The company is part of AIRO Group Holdings, Inc., a US-based aerospace company listed on Nasdaq (New York), integrating businesses within avionics, advanced air mobility, uncrewed systems, and specialized training programs. The performance and technological position of Sky-Watch represent a key value driver within AIRO’s uncrewed systems portfolio.

Beskrivelse af udviklingen i virksomhedens aktiviteter og økonomiske forhold

2. Development in Activities and Financial Performance Throughout 2025, Sky-Watch maintained a solid operational platform supported by sustained international demand for tactical UAS solutions amid elevated geopolitical instability and increasing defense expenditures. Revenue increased from DKK 515 million in 2024 to DKK 523 million in 2025. While revenue remained stable year-over-year, growth momentum was temporarily impacted by rapidly changing technical and operational requirements driven by evolving battlefield conditions in Ukraine. These changes required accelerated product adaptations and targeted restructuring within parts of the supply chain to ensure performance robustness, component security, and long-term compliance alignment. The necessary supply chain restructuring and product modifications temporarily constrained delivery scaling in 2025 and limited year-over-year growth. These adjustments were strategic and operationally prudent, reinforcing long-term competitiveness rather than reflecting demand constraints. The restructuring has been successfully completed, and production scalability has been re-established entering 2026. In parallel with operational adjustments, the company accelerated strategic investments aimed at strengthening long-term competitiveness. These investments included expansion of production capacity, vertical integration of key components, development of next-generation autonomous capabilities, and strengthening of international sales infrastructure. Executive management considers these investments essential for scaling operations and capturing emerging defense procurement opportunities across allied and western-affiliated markets. The company’s offering remains among the most widely deployed Western mini fixed-wing UAS systems in active operational theaters, providing extensive field validation under high-intensity conditions. This operational track record continues to strengthen procurement positioning in allied markets. The company’s growing installed base across allied defense organizations generates operational data and mission feedback that continuously informs product improvements. This feedback loop strengthens system performance and contributes to technological and organizational learning advantages that are difficult for new entrants to replicate. In addition to supplying complete systems, the company increasingly acts as a technology partner within larger defense programs where mini-UAS capabilities are integrated into broader ISR architectures, command-and-control networks, and multi-domain operational frameworks. Gross profit amounted to DKK 302 million (2024: DKK 365 million), reflecting deliberate investments in production scaling, quality assurance expansion, R&D acceleration, and strengthening of the global commercial organization. Profit for the year was DKK 149 million (2024: DKK 223 million). Profit for the year exceeded the previously stated expectation of DKK 0-123 million expectation in last year's Annual Report, driven by stronger execution of contracts and delivery to customers. Equity at 31 December 2025 amounted to DKK 259 million (2024: DKK 110 million), corresponding to an equity ratio of 77.5%, reflecting a strengthened capital structure and enhanced strategic flexibility. 3. Market Position and Competitive Landscape The global market for mini fixed-wing UAS has undergone substantial consolidation over the past three years. Within Western-aligned markets, the supplier landscape is concentrated among a small number of companies with demonstrated production scale, compliance infrastructure, secure supply chains, and operational track record. Sky-Watch remains positioned among this limited group of established Western providers. The company’s accumulated operational data, installed base experience, and continuous development cycles create structural competitive advantages and strengthen its attractiveness as a globally capable solution partner for defense clients and large industrial primes seeking validated subsystem or platform integration partners. Competitive dynamics remain performance-driven. Market positioning is supported by scalable manufacturing capability, compliance infrastructure, cybersecurity certification, and sustained product evolution.

Beskrivelse af virksomhedens forventede udvikling

10. Outlook for 2026 Sky-Watch enters 2026 from a strengthened operational and financial platform. In 2025, the company completed a supply chain restructuring and implemented product adaptations to support future production scalability and operational resilience. Demand for advanced mini fixed-wing UAS and intelligence-driven capabilities remains strong across allied markets. However, the company operates in a sector characterized by procurement processes that can involve long decision cycles and significant timing uncertainty regarding contract awards and deliveries. Strategic priorities for the coming period include scaling production capacity, accelerating the development of next-generation autonomous platforms, expanding global sales reach, and strengthening partnerships with defense and aerospace industry partners. For 2026, revenue is expected to be in the range of DKK 0,5–0,7 billion, and profit for the year is expected to be in the range of DKK 0,1–0,2 billion, both subject to uncertainty related to the timing of customer procurement processes, contract awards, and geopolitical developments. Executive management considers the company well positioned to create long-term shareholder value within AIRO Group and to strengthen its role as a globally leading partner in the mini fixed-wing UAS segment. Despite moderated revenue growth in 2025 due to supply chain restructuring and product adaptations, the company maintained solid profitability and strengthened its capital structure. The increased equity base and positive cash generation provide financial flexibility to support continued investment in production capacity, technology development, and international market expansion.