Hensoldt’s Software Overhaul Gains Traction as Record Backlog and IBM Deal Propel Shares

German defence group Hensoldt shifts to software-centric strategy, signs IBM deal, posts record €9.8B backlog. Stock jumps 21%, forward P/E tightens as 2030 revenue target of €6B set.

Hensoldt is rewriting its playbook. The German defence company, long known for tank systems and radar hardware, used its annual general meeting on Thursday to unveil a fundamental strategic pivot. Chief executive Oliver Dörre is steering the MDax-listed group toward a software-centric model, betting that networked, digitally driven architectures will define modern defence capabilities. To speed that transition, Hensoldt has signed a cooperation agreement with IBM Deutschland to develop specific software functions for its MDOcore suite.

Investors have responded with enthusiasm. The stock surged more than 21% over the past seven trading days to reach €89.66, pulling well clear of its 50-day moving average of roughly €78. The rally also snapped Hensoldt above its 200-day line earlier in the week, a technical breakout that caught the attention of chart-watchers.

Orders Pile Up as Q1 Revenue Jumps

The financial firepower for this transformation comes from a booming order book. At the end of the first quarter, Hensoldt’s backlog hit a record €9.8 billion, while order intake in the period nearly doubled to about €1.48 billion. Major contracts for the Puma infantry fighting vehicle, the Schakal combat vehicle and Eurofighter radars drove the inflow.

First-quarter revenue rose 26% to €496 million, and the operating loss per share narrowed from €0.26 a year earlier to €0.16 — an improvement, though the group remains in the red at the earnings line. Management reiterated its full-year 2026 guidance: revenue of around €2.75 billion, an adjusted EBITDA margin of 18.5% to 19.0%, and a book-to-bill ratio between 1.5 and 2.0.

Shareholders approved a dividend of €0.55 per share for the 2025 financial year. Analysts expect that payout to rise to €0.69 for 2026.

Alliances and Acquisitions to Build a Software-Driven Arsenal

Beyond the IBM pact, Hensoldt is adding hardware capacity. The acquisition of Dutch optronics specialist Nedinsco, announced in the spring, is undergoing antitrust review and is expected to close around mid-year. The company also secured a €10 million service contract with the Canadian armed forces to repair Leopard 2 sight systems.

Another strategic push came from the “Spock 2” programme. Hensoldt is part of a consortium that includes OHB, Helsing and Norway’s Kongsberg Defence & Aerospace, competing for a contract to build an AI-powered, satellite-based surveillance and targeting system for the German armed forces. The German government, which has held a 25.1% stake in Hensoldt since 2021, underscored the group’s importance to the country’s defence architecture. Separately, Airbus Defence and Space noted that Hensoldt’s Mk1 radar could cut costs by more than 40% on new combat systems.

Valuation Tightens as Ambitions Grow

Hensoldt’s long-term target is to lift revenue to €6 billion by 2030. For now, analysts see earnings per share of €1.78 in 2026. But the stock’s rapid ascent has compressed the upside: the forward P/E sits at roughly 40, and the average analyst price target of €91.17 is only about six percent above the current level. Anyone buying here is effectively betting that Hensoldt will deliver on its ambitious medium-term goals.

The next major check on that thesis comes on 31 July 2026, when the company publishes its second-quarter results. Until then, the combination of a record order backlog, a fresh software strategy and an expanding alliance network provides a powerful narrative — one that investors so far are buying into.