Up next is Volatus Aerospace with Abhinav Singhvi. I hope I pronounced it correctly. We met at the Oktoberfest, I think, but I had one or two steins, so I hope I didn't mess it up too badly.
Hey, Matthias. Good to see you. Yeah, to make it easy, I go with Abi here.
Okay. You know the drill. Please share the screen with the presentation.
Absolutely. Absolutely. Yep. Let me know when you can see it.
So far nothing.
Fixing it.
Now it's loading. Perfect. Full screen, all yours.
Awesome. Thank you so much, Matthias.
Yes. So 25 minutes for you and about five minutes Q&A. All yours.
Sounds good. Perfect. Good morning all Eastern Time, and good afternoon in Europe, and thank you for being here. Volatus Aerospace operates at the intersection of aviation, autonomy, and defense technology. We are one of the very few companies that operates both manned and unmanned aircraft. Over 90 unmanned aircraft and approximately 28 manned aircraft today are being used in different intelligence and inspection activities. We believe the market is moving beyond standalone products, more towards integrated mission systems and autonomous aviation platforms. What differentiates Volatus is that technology is not being developed in isolation. It's being refined every day through a large commercial operation in real environment. These slides represent the leadership behind the platform. At Volatus, execution matters, and the team you see has built and operated complex aviation businesses, technology, and more importantly, in a regulated and complex environment.
Glen Lynch is our founder and CEO, brings experience of scaling aviation business and aerospace operations for the last 45 years, is originally pilot with 15,000+ hours of flying experience. I'm the Group CFO, come from more growth stage companies and venture backed companies. Greg, Rob, and Luke are members of the executive leadership team, all coming from aviation background and from different blue-chip companies. Our CTO, you'll see him blurred out, mostly because of the security reasons. We have kept his identity stealth, and Krish is his pseudo nym. He's an electronic warfare expert, has done wonders for defense organizations and different countries, in the U.S., in Middle East, and in Southeast Asian countries, and he's one of the, I would say, is the brains behind driving the technology of Volatus today. If you look at this slide, I'd like to spend some moments here.
We are entering a substantial defense modernization cycle, not just in Canada. This slide speaks about Canada, but also across all the NATO members and European Union members today. Canada has committed significant capital and commitment to scale and build its Defence Industrial Strategy. On your bottom left, you'll see a graph where Canada was one of the lowest spending member back in 2024, where they spent 1.3% of GDP in defense spending. But just last year in 2025, they matched 2% spending and have committed to spend and to meet 5% of the GDP into defense by 2035. That's an additional CAD 50 billion incremental spend just going in defense. ISR sits right at the center of that demand and Arctic awareness. It includes Arctic surveillance, maritime surveillance, border security, and critical infrastructure protection. All the elements where Volatus has been involved for few years.
These priorities require aircraft, sensors, and software. They also require trained people who can put capability to work. These are the long-term government requirements. They support demand for mission delivery and ongoing operational support. This is where the combined capabilities fit for us. Across all nations, governments are increasing investment towards more domestic aerospace production, technology ownership, and operational readiness. Volatus is aligned with all those priorities. Defence Industrial Strategy had seven different priorities identified, and Volatus addresses all those different priorities, right from setting up its manufacturing base in Canada, a 53,000 sq ft facility in Mirabel, to have a scale RPAS or drone production with a centralized engineering and NATO-aligned sourcing and integration model.
There is a total of CAD 81.6 billion of investment opportunity, along with not just 5% spend, but also Canada recently launched Defence Drone Initiative, and Volatus has been qualified on all those five streams as of now. When you look at this slide, there have been, in the last 15 months, two major policy shifts just in Canada. When you compare Volatus across those policy shifts, there have been eight different milestones that we have already achieved to align ourselves with those policies. Basically, put us in front of the policy so that we are rightly positioned to capture all those opportunities across the defense, right from acquisition to partnering with the right technology partners across North America and Europe, to not just establishing a manufacturing base, but also opening and starting the production of that facility, to getting awarded up to CAD 25 million contract by the Canadian government.
We have been a frontrunner at this point when it comes to NATO and Canada's alignment with defense. This slide highlights the core capability and breadth of capability Volatus has and can deploy its expertise across different segments, right from visual and thermal intelligence to radar imaging, precision mapping, pipeline inspection. We do 1.7 million kilometers of right of way inspection in Canada alone, we recently expanded in the U.S., and that makes Volatus one of the largest companies in this space alone. We are involved through our proprietary technology, both hardware and software, into cargo technologies and cargo delivery. These are not just, I would say, urban deliveries that we are involved in. These are basically heavy lift deliveries for inspection activities. We actively work on projects where we are delivering from moving vessel on a mobile wind turbine.
That is something that was historically done using cranes and vessels with people on the ground. This is being done through drones today. Utility inspection, one of the growing markets for us. We have projects and contracts in Canada and U.S. with major utility companies. Then comes the drone defense systems. We are actively bringing aircraft sensors and operating experiences together. This is how we are using our commercial expertise, at the same time, our defense expertise, and deploying assets and mission-critical systems in the defense segment. This slide highlights the core offering of Volatus. It basically sums up our business model. What we have done is created a flywheel today. What this flywheel does is, we started initially back in 2019 by selling drones.
Over the period of time, we have learned that as we sell drone, the need of the customer evolves, the requirement changes, and the complexity increases for the customer themselves. For us, the most important aspect has been the customer stickiness, and our entire business model has been built and structured around the solving customer problem. We like to fall in love with customer problem instead of our own solution, and that's the reason Volatus today, if you look at as a company, we don't define ourselves as an OEM, but more as a capability builder and a capability provider. We provide technologies, Volatus technologies, integrate with third-party technologies. We provide data services where some customers who don't want to operate drones, they want us to operate drones for them, and basically, instead of selling hardware or drone technologies, we sell them data.
That's something we are involved into. Cargo and logistics, something, it's an extended arm, which is where we are seeing increased demand and opportunities this year. We provide training and certification because whenever we have to supply drones, we have to supply training to the staff or to the armed forces. We provide maintenance solution, we provide software solution. That sits in the sustainment part of a defense contract. Of course, when you look at the defense, we provide ISR platform, ISR services, which basically builds an entire flywheel where we start with selling equipment and it comes back to maintenance, solutions, selling data, and then upgrading those equipments. That's how we have structured the company, that it creates a flywheel and repeat customer base for us. One of the biggest misconception in this sector is that opportunity is simply about aircraft. It's not.
There is no shortage of companies building drones today. What is scarce, as I said, is the integrated execution capability. The real challenge is bringing together those operations, autonomy, manufacturing, mission systems, training, and regulatory expertise inside one scalable operating platform. That's what differentiates Volatus from any other company. We provide entire life cycle that captures the customer through the life cycle and beyond. This is just one snapshot. We officially opened our manufacturing facility on September 29th. The facility has been operational since Q2 of this year. This was an official inauguration. As you can see, the entire offices have been completely built. The manufacturing and the assembly base has been activated, and we are actively building drones from this facility.
It also includes our acquisition of last year technology, which is a MALE technology, or MALE stands for Medium -Altitude Long -Endurance drone. That something is also being built today. As we see the war in Ukraine and Middle East continues, our focus has been to build technologies not just to help Ukraine fight the war against Russia, but also increase the capabilities and expand the technology breadth to other NATO allies. As you may be aware, that we have been supplying technologies and supporting Ukraine since 2022, and our technologies have been very effective that back in late end of 2022, the entire leadership of Volatus was sanctioned by Russia. I myself is on number 13 on that list. My CEO is in number 11 on that sanction list and ban list of Russia.
We wear it as a badge of honor today. That is our means and ways we can support Ukraine in any ways we can, and that is by supplying technologies and building drones. This is a quick snapshot of where Volatus operates today. We have operations across Canada, U.S., sales office in Peru. We have our base in Europe, in Norway, and also in U.K., London, we have our office operating and supporting the European region. What we have done is over the last several years, built a platform that combines piloted aviation, which is manned aircraft, drone operation mission system, and also remote operation manufacturing and autonomy infrastructure. When we talk about autonomy, I will take some time and explain that later here. On the gray side, when you see, that is the aircraft and deployment platforms we have today.
These are the hardware platforms that we are building actively or will be building in our manufacturing base. It goes from small UAS to large technologies, and also to Medium-Altitude Long-Endurance drones. The one layer that we have started working since late last year is the autonomy and control layer, and that is, we call it as V-Cortex AI. That is the brains behind the drones today, or as you may imagine, that kill switch of any technology that exists. The last thing we want to do is import those kill switch from hostile environment and in case of future conflict, lose the battle even before it starts. Today, we are living in a world that if a soldier or a member of the armed forces has to use guns and bullets to defend themselves, the reality is they have already lost the war.
It is already too late because drones have become the first layer of defense. One of the critical aspect of those drones hardware is the software layer. Most of the technology today and the future of warfare is autonomous. There will not be any manual intervention with operating those drones. That is where V-Cortex AI sits. It brings that autonomy within the entire drone ecosystem. We have already launched SKYDRA, one of our own platform today. SKYDRA basically is the mission planning, war -gaming exercise platform that is been actively commercialized. We have already made the press release that our technology works in GNSS -denied environment without any complex compute, and that is one of the critical milestone I would like to highlight in the drone industry. Also we are building technologies on the counter-UAS, side.
That basically will take out drones, in the coming, I would say, in the plan is by mid-2027, which is basically elimination of targets without hardware involved. The future of counter-UAS is not hardware to hardware, it is more hardware -to -software. This slide highlights the industry we serve, energy, utility, infrastructure, public safety, but that is the foundation, that is the commercial engine we have built. Almost approximately, I would say, CAD 18 million of Annual Recurring Revenue over the next five years. The upside comes from defense technology, where we already have up to CAD 30 million of back orders. Our total backlog today exceeds little over CAD 100 million over the next five years that will be executed. On the defense side, we have ISR missions technology, actively building Arctic surveillance capability, counter-drone technologies, and mission software. Our foundational revenue is commercial. That is how Volatus started.
That segment is growing with double-digit CAGR. Our upside is defense technology. That is growing with the multiple today. If you look at Volatus' historic ratio, back in 2024, 70% of the business was by selling data or services, and 30% was equipment. Less than overall 5% in 2024 came from defense. In 2025, 25% of the business came from defense. This year, we are expecting approximately 40% coming from defense. Next year, approximately, as a go forward basis, is 60%-65% of the business eventually coming from defense. That does not mean that commercial is slowing down. It just means the opportunities in defense are huge. We are living in a defense super -cycle.
Even if tomorrow the war with Ukraine and the war in Middle East stops, which we do hope that it stops, both the wars have exposed a big gap in capabilities of different nations and allies today. That one is a capability of drone, and second, no one has enough stockpile. We do expect that this spending will continue for at least the next decade because it is changing the face of warfare. We did CAD 34 million in annual revenue last year with 32% gross margin. As we move forward, our gross margin profile will shift because defense sustainment revenue kicks in. Our commercial business services training will keep scaling. That has higher gross margin. Also as software revenue kicks in starting late 2027 and beyond, which of course have 80%-85% gross margin profile, our blended gross margin will change as well.
Last year, we have already seen 106% growth in equipment, approximately 244% growth in European region and U.K. market. End of June, we were sitting on CAD 61 million cash on hand, so we are well capitalized to grow the company as of now on a go-forward basis. This slide highlights the cap structure of the company. The key point I would like to highlight here is approximately 20% of the company is still held by the insiders. Myself as CFO, my CEO, the executive leadership, the board of directors are all the shareholders of the company, and we have not sold a single share in the last six years. We believe in the story. There is a significant skin in the game. Our overall unfactored sales pipeline exceeds CAD 500 million. There are plenty of opportunities we see, and we have long-term commitment.
In addition to that, annually, we allot equity to all our employees. I would like to highlight that every single member of Volatus family is a shareholder. The performance has been aligned with the success of the company, and the compensation has been aligned with the growth of the company, and that is how we are scaling the organization today. I will take a few moments to conclude this slide on the growth side. Our intent to keep growing organically on both scaling services and equipment on the commercial side. Deepening our footprint today on what we do well today, we want to keep doing it, and at the same time, the focus has been on the defense at the same time. We are operating two different pillars. We have two different teams.
On the commercial side and on the defense side, we want to keep scaling those segments of the businesses and then keep expanding, one, on the global market expansion. We see opportunities outside of the regions we are operating in. We want to expand those regions. We want to tap into growth opportunities. The differentiating factor for Volatus is we are one of a few companies that operate both on the commercial side and on the defense side. A lot of our competition today are focused only on defense because of the increased spending, but we don't want to take our eyes off the commercial market. That's a market that brings stability and foundation and also gives us an experience to operate technologies in the most regulated and contested environment.
We are one of the few companies globally that operate drones without a single pilot on the ground out of a regulated international airport. We do up to 12 flights on a daily basis out of Edmonton International Airport, which is western part of Canada, from Toronto, almost 3,000 miles away, where the pilot sits in operation command center in Toronto and the drone operates in Edmonton. This expertise is very valuable in deploying and building solution in defense segment, and that's something a lot of our competition lacks. Lastly, we have done 20 M&A in the past. We intend to keep finding the right target, accretive opportunities for us that expand our capabilities both in commercial and defense segment. We want to keep building, and we want to make sure that the flywheel continues, and we keep scaling the organization.
That brings me towards the end of the organized presentation. I'm happy to take any questions.
Perfect. You highlighted the recent Canadian Armed Forces contract for tactical ISR systems. Beyond the initial award, what does winning a program like this mean strategically for the company?
Matthias, this is just a start. What the Canadian government has done is allocated the initial tranche of the contracts over the next five years. However, it is up -to -five years, which means it does not mean that they will be accepting the awards over the period of five years. If the companies are able to deliver it before, they will be accepting those, and there are more coming after that. That is one. This is not just one and done contract. This is the initial tranche of the contract. Second, the government has already dropped a few RFPs, which we have already participated in Precision Strike, in Counter-UAS, in more FPV drones categories. Since we have been qualified in all five streams of Defence Drone Initiative, we expect at least a dozen more RFQs to drop over the next several quarters and several months.
This is just a start where Canada has started investing and building its Defence Industrial Strategy, and we see tremendous opportunities and growth potential. This is just Canada. We are seeing the same trend happening in NATO allies and in European markets today where we are active. We have already Basically, we had confirmed a win of CAD 9 million contract last year, where we are already fulfilling the first tranche of CAD 4.5 million. This is basically, we are seeing we are in the inflection point of defense spending by NATO and the allied partners, and we do not see that this is going to. This is not the end, but just a beginning.
Okay. You introduced V-Cortex as your own autonomy and flight control technology. How important is owning more of the underlying technology stack for the long-term positioning of Volatus?
It is very key, Matthias, because at the end of the day, there are a lot of third-party OEM providers today that use third party flight controller, for example. We have also built our own flight controller, where it is 3.5 cm by 3.5 cm. It is one of the smallest as well in the industry. The plan is to scale that platform. It is not just the hardware play, it is also the software play, the autonomy play, and basically V-Cortex AI fits right in that solution base. The key feature is V-Cortex AI, the software, the autonomy platform, it does not only work on Volatus platform, it is drone agnostic. It will also be integrated with third party platform. Our end goal is that it does not matter what solution the commercial or defense market buys.
The intent is to keep pushing our own autonomy proprietary platform so that we always have a presence in the room. Our technology is used widely. It gets adopted widely, not by our own platform, but also our competing platforms. That is the goal we have.
Beyond defense, you also discussed cargo applications and runway independent operations. Where do you currently see the strongest use case for those cargo aircrafts?
One thing we are seeing is in cargo side, Volatus is not in the business of urban delivery. When I say it is like package delivery, we do not want to get into business of delivering like what Amazon or Walmart of the world or DoorDash of the worlds are doing today. The reason is, that is race to the bottom. Everyone has a mission to reduce their delivery cost. That only means that economics, the profitability is going to reduce from where it is today. Volatus operates large cargo drones, and these are basically heavy lift drones, as we say, for example, even we are actively testing Condor, which is 200 kg, or 180 kg payload, 200 km range. Those are the kind of aircraft we want to operate.
The opportunities we are seeing in cargo side is more heavy lift, where a drone can lift 5,000 kg of cargo. It can deliver for inspection activities, for infrastructure maintenance. That is where we are seeing a lot of opportunities coming in. We have already won few contracts, executing them as we speak, and we are seeing significant momentum. Why it is important for Volatus? Because it is not just our ability to own that platform and operate, but having those regulatory approval to operate those platform without a pilot on the ground is a significant competitive advantage the competition does not have. It is easy to operate a platform with a pilot on the ground, but the moment the pilot is not on the ground, but in a thousands of miles away in a remote operation center, everything is autonomous, everything is dealt through autonomy, and the pilot job is basically a fail-safe.
That's where Volatus fits in the entire, I would say, ecosystem today.
You showed significant growth in the service side of the business. Which service areas are currently generating the strongest customer interest?
On the service side, the strongest interest is coming from utility, and oil and gas. We have narrowed that segment as well. When we started the company five years ago, our objective was as hunter, if you don't catch, you don't eat. We always go to hunt elephants. If we have to bag squirrels in that process, we will bag squirrels because if we don't eat, we won't survive. That was the strategy when we started the company five, six years ago. Today, the size of squirrel has changed. We have more elephants in the room, and we are in a position to choose those elephants. That's the approach we have. We are going after larger contract base, more recurring revenue base that has more margin profile. Also it's easy, it's a scalable platform. Those are the criterias.
It's basically mostly oil and gas inspection space. It's critical infrastructure, utility transmission, power line, and then the cargo inspection and deliveries. Those are the four key areas we have today where we are operating on the services side.
Okay. We basically just ran out of time. In one sentence, why is now the time to invest in Volatus? Then we have to skip to the next presentation.
No, absolutely. I have been saying it since five years, it is the right time to invest in Volatus. It still is. The reason is we are living in a world we have the entire structural foundation of the industrial base has shifted. Five years ago, it was a commercial story. Today, it is not just commercial, it is also a defense story. We all are living in an environment where the foundational structure, the way war is fought, has shifted, has changed, and drones have become the future. It is just not when I say drones, they are smaller drones, but also from the missionized aircraft. Instead of sending a CAD 60 million asset to get eye in the sky, you can use one of our MALE technology, which is V100, which costs significantly less compared to a CAD 60 million MQ-9. That does similar single mission profile of surveillance activities.
It reduces the risk of bankrupting a country as they try to defend their own nation. That is where the war has shifted. We are developing technologies that changes the future of modern warfare. So it is not just the technologies that have a use case today. It is changing the future of warfare completely in the coming quarters and the coming years. That is what Volatus is all about. It is a commercial and.-
That is a very long sentence.
-All right. Okay.
We have to stop here.
I will stop there.
All right. Well, thank you very much for your presentation.