Good morning, everybody. Thank you for all of, thanks to all of you for being here. My name is Wahid Nawabi, as you all, as Jonah mentioned. I'm gonna try to keep this short. I wanna thank all of you for taking the time to be here, number one, and your time is very precious. And, so the question really is, what do we wanna get out of today? The first half of the day that you guys are, you know, investing in, some of you flying across the country, what do we wanna get out of it? In my view, there's basically 2-3 key messages we wanna get across. All of you know AV already for the, a good amount.
And actually, this is a really good chance for all of you to also meet our leadership team. We've kind of changed quite a bit over the last 3-5 years, and you'll get to see our general managers who are running our businesses. You'll get to meet our head of government relations, some of the folks that are behind the founding members of what I call computer vision in the defense industry, Dr. Faltemier. And that's one category, so the team. Second one is to give you a little more insight into our strategy. Where are we going? And the third thing is really about the capabilities. I think you hear things about our capabilities on earnings calls or trade shows.
We probably haven't got a chance to really in-depth see the breadth and depth of our technology and the capabilities that are relevant, not for today, but also for the long term. All those three objectives are for the ultimate outcome, which is, we invented the space that we're playing in 15, 20 years ago, and we are the leader, and we intend, and this market is growing really fast, rapidly in the next 5 years, to 5 to 10 years, and we intend to keep our leadership position. There's lots and lots of competitors, but we intend to keep it. So far, our track record is as such, and we wanna show you that there is no one else that's as well qualified as AeroVironment to get that done. So really, those are the four things.
The last one is the main objective, but in order to do that, we'd like to show you why and how we're gonna achieve that. So I've got only 4, 3 or 4 slides, and I'm gonna walk through this real quickly. One slide on who we are. You all know us pretty well, and I've joined the company about 14 years ago, and we've really grown significantly over the last. This is the seventh consecutive year, we just announced our earnings, as you know, of top-line growth. Most of those years have been double-digit, if not all, have been double-digit. Stock's done really well, but I think still, it's a value stock.
I believe that when I became the CEO and people laughed at me at that time, and I love it, because it's our job to demonstrate, improve, and deliver on that. And so far, knock on wood, here or there, we've done so. About $700 million this past year, 50,000 plus of our robots are deployed. That is really a massive, massive achievement, if you ask me. Not a single company that I know of, other than DJI, can claim those kinds of numbers, especially in the military space, to my knowledge, there isn't any, and even close. Fifty-five allied countries that we ship our products to, and the list continues to grow.
I still believe that we have probably penetrated half of that opportunity size in the international markets. Most of that growth internationally has been with our small UAS, but we've got enormous, equal amount of growth coming from our loitering munitions and new platforms that we're gonna show you some today as well. And we're organized in three segments, you know that, already, and that's about it for this slide. Okay. This slide is all about sharing with you what's happening to the market. What are the fundamental demand drivers? There is one fundamental shift that I've been waiting for my entire career at AV, and that's happening actually now, and it's really took a turn in the last two and a half years since Ukraine war, and maybe a little bit before that, in Azerbaijan and Armenia.
If you recall, I used to talk about that before Ukraine even. I fundamentally believe there is a shift in the military strategies of not only United States, but all of our allies, and all of our adversaries as well. The wars of the future and the conflicts of the future is going to include a significantly more number of robotic systems, primarily small, distributed robotic systems, mostly air domain. And not just air, but also surface, water, and underwater, as part of the force structure.
There is not a single military leader you can go talk to in any country around the world or United States that will not admit to the fact that they have learned something massively new in their history, in their career that they've been in military, which is small unmanned systems, distributed, connected, working as a team, and contested, and jammed environment without GPS and with some level of autonomy, and there's different degrees of autonomy, is going to do an enormous amount of pain. Cause a lot of pain for the adversary. And that's exactly what we've been actually driving for the last 2+ decades as a company. That has been our mission, we've believed in it, and we continue to believe in that in the long run, okay? And so that's the fundamental shift, number one.
Number two, the world is not a safer place than it was a year ago, two years ago, three years ago. We've got conflicts and threats brewing in almost every corner of the continents, from Eastern Europe to Central Asia, to Far East, to Southeast Asia, you name it. Even in the Southern Hemisphere of the Americas, there's issues that we're dealing with. And so I don't see militaries sitting back and saying, "You know what? It's time to take it easy." It's not the case. We all know that. So the demand for security and for capability is there. Most of the militaries, including the United States and our allies, are amping up investments.
They are really doubling down, and if there's one area that they all feel they're underinvested, is in our category, because they never thought about it in this such a huge way. I mean, think of it. Today, we're providing stuff to Ukraine that our own military doesn't really have as a program of record. And this has been stated in congressional hearings, it's been stated at the leadership of the Pentagon, and it's stated by the different services within every branch of the military. We have to do a lot more, and there's no other way, in my view, to be able to combat and face our adversaries, primarily in the Pacific, without this set of capabilities. That is inexpensive, far less expensive than much more expensive other larger assets. And it's also more resilient.
The resiliency makes a huge, huge difference, that you can't just take one item and then reduce 10% of somebody's capability in a theater. That's a huge problem in military. And so lastly, AV is incredibly well-positioned because we're the only pure play company, that's public, that is focused on this, and actually has made it our mission to, to deliver the most integrated, widest and deepest portfolio of solutions to our customers' problems. And that is going to continue. You're gonna see some new capabilities today, but we're just getting started. There's a lot more to come. The reason why we're investing in R&D is because we see an enormous amount of potential in the next 5+ years. That's really, that's a, a fundamental belief that we have as an organization. Okay, let's talk a little bit about the TAM.
I know that TAM for a lot of folks makes a lot of sense. And it's important. If I were to put this chart up 10 years ago, 7 years ago, 5 years ago, it was much smaller. Today, we're playing at about a $12 billion+ TAM, total addressable market. We don't serve all of that market, but we serve a decent chunk of that market. And the last one, the MacCready Works, is actually intentionally sort of faded out because it could be bigger than any of the other categories. You know, things such as HAPS and some other capabilities that Jeff's gonna talk about, are contested logistics capabilities with the solar platform, et cetera, is really disruptive and the dollars are way, way, way bigger. Way bigger than any of the other markets for us.
You know, we don't really talk a lot about that because it's not today, it's in the next few years, but they have enormous opportunities. And we are really disrupting those markets with incredibly innovative, clever solutions that you'll see some examples of it today. So, A, the market has changed, the TAMs are larger, and we're positioned really well, and the, this chart essentially says that. Okay, so what are the key growth drivers? You know, if you wanna buy a stock, you're gonna say: What is it gonna make this company more successful, and what are the demand drivers that are gonna drive it in the next one to two years, or three years, maybe or so?
I would say number one, the conflict areas, Ukraine and the Pacific, central, the Central Command in the Middle East, we still have conflicts. There's a lot going on in all those regions still today. And guess what? One of the top, top needs in those markets is the stuff that we, we provide. And you see, that's why you see drawdown authorizations by the president one after another, that has our solutions included in them, because the customers want more of them. I would call that the first layer of the cake. You know, we, we're trying to build layers of cake so we can have a diversity, diversity of opportunities and revenue streams in the long run and continue our growth.
The second one is, while these conflicts are happening, because the U.S. DoD never really had programs of record for these capabilities, there are several, not just one, several billion-dollar-plus programs of record, some of them more than a couple of $ billion, that were basically positioned in the catbird seat. We were the one who shaped the requirements because of our systems and solutions performance, and we're leading the first or second tranche of those acquisitions today. So the job for us is to make sure that we capitalize on the rest of those programs of record and win them in the long run. We have a tremendous opportunity and position, but we got to continue that. Those are gonna go on for 10+ years. As we get those, those are gonna give us long-term tails of acquisition, sustainment, and revenue.
Then it's the existing inventories of our own customers today that don't have the programs of record and probably won't have some programs of record for the short term, mid-term, 2-3 years from now. And then beyond that is all of the international sales. You know, we are doing really well on our small UAS category, but even that has tremendous potential for growth. Many of those countries are really gonna do exactly what the U.S. DoD is doing, probably times 2 or 3, because our systems are much more less expensive for them to acquire, easier for them to be able to get them due to export issues, and third, it's a lot more relevant to their problems. If you are some of the Asian countries or European countries, smaller ones, you're not worried a lot about-...
China or United States or Russia, you're worried about your neighbors and about your closer, you know, regions of your national security, and also domestically. We provide the best solutions for that, and it's a very cost-effective solution for them. Then, this next two are integration of our solutions with other platforms. This is just at its infancy right now. We're just doing some demonstrations and all the other program offices, such as the next generation Stryker and Abrams tank, and the Humvees and JLTVs, helicopters, airplanes, unmanned larger aircraft, all looking to integrate these capabilities into those platforms, and that's actually coming down the pipeline as we, we grow. Then lastly, organic and inorganically, we have new categories that you're gonna see some examples of today, not a lot, gotta keep something for the future.
And those are gonna increase our TAM significantly more, significantly more. And we've got these small bets that we're co-funding with our customers that could really transform those markets and disrupt them with our solutions. So fundamentally, these are the top six ways we're gonna continue to grow and we're gonna continue to deliver value to our shareholders. So the recipe is pretty simple. We've got the technology that no one else has in terms of the markets that we play in. And the second one is probably the most understated.
If the U.S. DoD said today, and then you hear this from almost every military leader and congressional leader that's in this space, that says, "If we were to ramp up, how fast can you get to thousands of systems, if not tens of thousands and even hundreds of thousands of systems?" Well, look, there's no debate. We've, we've done that in our history more than once, three times, at least so far in our history, we've done it in the last 15 years. The COIN conflict in Iraq and Afghanistan, we were called on. We were making single number of Ravens and Pointers a day, a week. We went to hundreds a week. Hundreds, okay? In a matter of months. Literally, 2 to 3 months. And we have people on our staff that will tell you that.
Scott actually sitting in the back there, he was part of that, those teams. We've done it during several Switchblade 300, same story. And then Ukraine started. You know, we have always been able to address demand very, very well as a company. And so we have a history of knowing how to take these capabilities and deliver them to our customers at scale, but that's not the only thing. It has to be also underlined with quality and military-grade reliability. Battle-tested systems. It's, as most of you know, making a prototype is 10% of the effort. 90% of the effort is actually getting it to a producible product that can win program of record, withstand the military rigor, and actually work in the theater.
You will hear story after story if you talk to our customers, including Ukraine, how satisfied and how thrilled they are with our systems and why they want more of them. So that's really the capacity problem. There's no one out there that can actually produce loitering munitions by the thousands today. We're doing it. We are doing it today in our factories, and we welcome all of you to come and visit us. Then lastly, we have the experience. You know, we're not just pounding our chest because we were doing it for the first time. This is not our first rodeo. We've done this many times in our past. We know what we're doing, and we're very close with our customers.
So the combination of those three differentiators and unique qualifications with our innovation engine, that is this fast cycle of developing things. You'll see a solution here, it's called the P550. We went from concept, customer requirements, sit with a customer, U.S. Army, and says, "What are your needs?" To the time we actually flew the airplane, about 9 months? 9 months. Okay? Now, we submitted our proposal to the LRR program this past week, and the decision is gonna be made sometime in the next month or two, hopefully 3, 4, something like that. So that is in our DNA. We don't take 5 years, 10 years to develop these things. We know how to do this very quickly, and we've done it over and over again.
So that's really our recipe, and we wanna keep this engine running, so we keep building more and more distance between us and our competitors. That's really has been fundamentally part of our recipe, and we're gonna continue that. That's all I got. So I'm gonna hand it over to the rest of our team, who's gonna tell you a lot more about the other two or three pieces of this, objectives that we talked about today. Thank you.
Thank you.
You're welcome.
So it's now my pleasure to introduce Church Hutton, who leads our government relations team in D.C. As Wahid mentioned, there's a lot of things we need to do to succeed, and one of them is being intimate with our customers and stakeholders in Washington. Church has a phenomenal background, and I look forward to what he's gonna present here shortly. But in terms of a brief introduction, he joined the company with a wealth of industry and government experience. He's held similar government relations leadership positions at Mercury Systems and Sierra Nevada Corporation. He also served in the Army as an officer and held several senior staff positions on Capitol Hill and in the offices of Senators Joe Manchin and John McCain. Church, come on up.
Thank you. Everybody hear me okay?
... I was also a sergeant, Jonah. Church Hutton. I discovered AeroVironment about a decade ago, maybe, when some of you all did. When a colonel representing SOCOM came into the Senate Appropriations Committee and briefed us on what was then an earlier variant of Switchblade 300, and I fell a little bit in love. I joined last year because we are so well-positioned with our capabilities relative to not just the department's pacing threat in the Indo-Pacific, but with capabilities that are applicable to every combatant command and every war fighting scenario. We deliver, and I'm thrilled to be here. We have grown significantly in our D.C. presence in the last six months. When I got here, there was a team of three.
Two years prior to that, it had been a team of one. We're now six. I had a question this morning about hiring and about the challenges of hiring. We've got, we've got well-funded and competitors, we've got primes who we're competing for talent with, with AV, and I have had no trouble whatsoever. We have a, a mission, mission-focused culture, and people are excited to come work for us. We have a phenomenal capability growing in Washington and providing value back into the business. I wanna talk briefly about both the geostrategic environment, in which we're operating and, of course, the budget environment, and then transition to to the rest of the, the rest of the team, who are gonna talk in depth about those capabilities. I won't belabor it too much.
Everybody understands what the department's pacing threat is and how important, distributed, autonomous lethality and mass are gonna be in helping the department address its primary challenge. We are beautifully positioned as a company to deliver those capabilities. We see the Department of Defense modernizing as quickly as it can to attempt to bring in new capabilities, the very same capability space, that we offer, to provide deterrence through mass. However, after a couple of years of significant budget growth, we are now looking at flat budgets and, in real terms, declining budgets across DOD, right, in terms of top line, and, and that may persist. However, within those budgets, we're seeing incredible growth in the small unmanned space.
Some of the examples down here that my colleagues will talk about, the Army's LASSO program, long range reconnaissance, medium range company UAS, all in the Army. Organic Precision Fires-Light in the Marine Corps, potentially medium in the future. Of course, the Replicator effort and all of that entails, and then continued foreign military sales and other SOCOM capabilities and classified capabilities. So there really is, it is an order of magnitude increase in the size of our market space within the overall flat DoD budget. So how are we positioned in Washington to address that? Well, we've got some key differentiators. Number one, we are leading in production now. We have capacity, we are delivering, and for a set of customers who are demanding things in the immediate term, we're able to provide that.
Number two, we're testing the next generation of capabilities now. Some of those are classified, but everything that is being delivered now will shortly be improved upon as we, as we move forward. That is well known to our customers and stakeholders. They are actively participating in that. And finally, in MacCready Works team, we have a group of high-end engineers who are providing the enabling capabilities for this entire space, which they'll talk about at, at some length in terms of computer vision and autonomy. And being able to be the provider to multiple customers and give us that insight into what are the big problems the department is attempting to solve, the services are attempting to solve, is a fantastic advantage for us. We know our heritage.
We are increasingly well-positioned in Washington with access to the White House, to the Pentagon, to think tanks and associations all over Congress. We have a team now that is very nearly at full strength. And why? How do we have that access? Because we are delivering on programs, because we are inventing the next set of capabilities, and because we're principally solving problems of the department. So very brief introduction. Happy to talk to you all afterward. Jonah?
Hi. Thank you, Church. We're now going to have a fireside chat. It's my pleasure to introduce Brett Hush and Trace Stevenson. If you guys could come up to the stage.
Yeah. I'll get the table here. Talking about our experience in the field. Trace and Brett are the respective leaders of our uncrewed systems and loitering munitions segment. By way of introductions, Brett, AKA the father of loitering munitions, has been with the company since 2010. During that time, he's led the build-out of the loitering munitions business from concept to the business that you now see today, with the Switchblade 300 and 600, and more to come. Before joining AeroVironment, he had an extensive career in the defense space and worked at a number of large companies, which you'll recognize, such as Teledyne, Lockheed Martin, and BAE Systems.
Trace, sitting there beside Brett, has been with AV since 2004, where he's had a number of leadership roles within the company before now leading the Uncrewed Systems segment, including the small UAS business, our international business, and oversaw acquisitions and integrations, among other things. As you may recall from our last Investor Day, these two have a bit of a competition to see who can grow the largest segment within the company. Trace got out to an early lead, but Brett's coming up quick. It is now my pleasure to hand it over to you guys. Oh, we'll do a video first, and then I'll hand it over to you guys. Great.
AeroVironment makes the Switchblade at a secure location. These crates are ready to be loaded with Switchblades for Ukraine.
All right. Trace, would you like to get us started with talking about how our products or why our products were selected to go to Ukraine, to begin with?
Yeah, thanks, Jonah, and welcome, everybody. Pleasure to be here. It's really an honor to be speaking to you today. It's an honor to be in this position. I truly believe that what we do makes a difference in the world every single day by delivering these capabilities to the front line and really, you know, protecting our militaries and our allies around the world. So, it's really an honor for me to be here and a pleasure to talk about the great things that we're doing out in the world.
On the onset of Ukraine, I think a lot of you remember a couple of years ago, some of you may have been in Petaluma, where I talked about really the new capabilities at the time that we were bringing forward for our small UAS systems at the time, VTOL, GPS-denied. We were just in the middle of developing our Puma Visual Navigation System, which enables it to fly without GPS, new payloads. So there were lots of things that we were working on at the time that we were gonna bring to market to really create -- to make these systems that we were currently delivering and fielding more capable than that they had in the past, and really be prepared for the next fight.
And, coincidentally, we were very lucky that we were investing heavily in those things. As Wahid mentioned, we continue to invest heavily and really to try to stay ahead of the competition, but most importantly, stay ahead of the adversary, so that our systems bring the best capability to the war fighter when they need it. And so basically, we were well-positioned when Ukraine happened. We had envisioned a peer versus peer or near peer fight and really brought these capabilities together and were able to deliver them to Ukraine rapidly. You know, from the first contract that we received for Pumas for Ukraine, we delivered within 26 days. So that was a proud moment to really get our systems into the fight within a month of the war, of the Russians invading.
And so, as the leader in the market space and having done this for 20 years, we've been delivering small UAS to our, our military and other allies for 20+ years now. We were well-positioned for the U.S. military and Ukraine to say: "We want their systems. We know they work, and they know that they'll work against the adversary." I feel sorry for our competition right now. No, actually, I don't. But we are operating on the front line every day and getting real-time feedback from our customers on what they would like to see in the product going forward to continue to keep its edge against the adversary as the adversary continues to evolve.
We've got an amazing, amazing engineering team that's working around the clock, and we continue to introduce new capabilities to the Ukrainians and our other customers very rapidly. You can see, you know, the first drone war is being fought right now, right? This has been a total pivot, as Wahid mentioned, and being the leader in this space has really just excelled our growth and positioned us for future growth going forward. We're really excited to support Ukraine and providing them the best-in-class systems that we've been providing the U.S. military to date.
... Correct. Wow, great. Thank you, Trace. And by the way, congratulations, that was a phenomenal Q4 and last year performance by you and your team.
I appreciate it. Brett's chomping at my heels, just like the competition is, but I'm still trying to keep that lead as the largest segment. But obviously, there's lots of huge excitement about Switchblade, and he's coming quickly behind, so.
Clearly. Clearly, yes. Thank you. How we got to this point with Ukraine is, Switchblade products have been fielded with U.S. military and allies going back to our first fieldings in combat engagements in 2011. We learned a lot over those years in the counterinsurgency fights that we were supporting U.S. military and allies for. So then when the opportunity to support the U.S. government and Ukraine through presidential drawdowns and additional orders came, we were ready, we were prepared, we had certain capabilities. We had faced the Russian jammers in other theaters, so we had developed special techniques to be successful in a very harsh RF environment. So we had a lot of great successes. Switchblade became, you know, a household name, believe it or not, in Ukraine.
You go talk to people, and people knew of Switchblade because of the effect it was having right off the bat, starting after the war in February of 2022. But we haven't stopped there. I think part of our DNA, our culture, is a hunger that I think both our teams have to get as quick, relevant information from the warfighters of what's going on, what's working, and every time something's not working as well as you want it to, or the adversary has innovated in a way to counter our solution, we hunger for that information as quickly as possible, and then bring it back to, I think, what we have the best engineering team in the world in the uncrewed and loitering munition space and some of these innovations.
So we're very quick in being able to iterate that and then get that deployed back into the theater and then see the results. Some of the things that we have learned is, you know, the Russians have taken RF jamming, either on the navigation solutions that come from the satellites or from the comms links, to another level, and they're continuing to innovate at a fast pace as well. So unless we're getting that real-time information and feeding it back to our engineers, who we think are better than their engineers, we won't be able to be successful long term. A couple other things that we've learned is, you know, Switchblades were designed, again, primarily for the counterinsurgency, kind of a single high-value target, operated by special users.
When Ukraine defense forces started using Switchblade, they were using them in very different ways. All of a sudden, they're going against, you know, a peer or near peer of the United States and NATO allies. And they were using them in what's called combined arms operations. So instead of just Switchblade by itself, taking out a particular target, they're using Switchblades as part of the overall force structure to change the maneuver that they're trying to do through a certain area, or the maneuver of their enemy to stop them at that place. What you'll see in one of these pictures, and I think it's just right behind me, it's kind of hard to see what that is, but that is a Russian high-end electronic warfare and surface-to-air missile system. And they have very few of these assets in total.
You've probably heard of S-300s, S-300s, S-400s. This is a Tor, and Switchblade 600s have been taking those out on a regular basis. Switchblade, I won't say the exact price of it, but it's fairly comparable to like a Javelin missile, in the unit cost, will take out a $25 million asset. And so that's quite a leverage that, Ukraine forces have of the cost, the expense, and what it takes to operate a Switchblade 600 versus what the asset you can take out. But it's even more important than the dollar difference between the cost of the missile and the cost of that integrated air defense system. It's that the Russians have very few of them. They're in the hundreds in total quantities.
And while they can pull out of storage T-50, you know, T-60 or whatever, tanks from decades back in the Soviet Union, they can't pull these out of storage. They're, they're the highest-end technology that they have, you know, filled with microprocessors, RF devices, and so on. And so, Switchblade 600 is making an incredible impact in the battle, and that's why you've seen in the news now the fourth request from the U.S. government in the USAI packages for it. The other thing that we've learned and we're innovated on is Switchblade 300 went in in the very early days and was very successful. And now we have a new generation of Switchblade 300, our small, man-packable, fits in a, in a backpack, loitering munition, is we've now tripled the range. Instead of 10 kilometers, it'll go 30 kilometers.
And instead of just a frag warhead, which was primarily anti-personnel, we now have an explosively formed penetrator, basically something to take out armor. It'll take out 90% of all the armor, maybe with the exception of a main battle tank, like a T-90, that the Russians have at 30 kilometers, and an individual soldier can be carrying three of them in a backpack. Game changer... This is really game-changing. We're continuing to innovate. I like to tease Trace that I steal from his group all the time. If we didn't have originally the small UAS business, we wouldn't have loitering munitions. We share technology back and forth, whether it's radios, cameras, light structures, motors, battery technology. So we get a lot of synergy from each other on these products, and we're continuing to innovate.
What he learns on the battlefield with Puma, what I learn on the battlefield with Switchblades, we share that information because a lot of the counters that we have to do are the same for our systems.
It's really neat also to see our products working together in Ukraine as well, right? The Puma going out, finding targets, identifying targets, and then Switchblades taking out those targets. So, you know, we collaborate in the workplace, but we also collaborate on the battlefield as well. So it's great.
Thank you.
Fantastic. And that's, I just wanna go back to a point you were making, Brett, around the success our products are having. How has that success reshaped the landscape for our opportunity set?
Hey, do you want me to start off with that?
[crosstalk]
So, you know, I've been doing this for 14 years, right? Started with Switchblade. And for a very long time, we were advocating that, "Hey, this capability, this merger of a missile and a small UAS, has a capability on the battlefield that's far beyond just what's being used by Special Forces and our allies in the Middle East and some other regions." And there weren't a lot of believers. And now what we've seen over the last probably 3 years or so is all of a sudden, U.S. Army, U.S. Marine Corps, have hit the, I believe, button on it, and they're developing long-term programs of record to establish Switchblades into their force structure. So there's been a lot of learning, not just by us, U.S. military forces, the leadership, and it's shaped where they're putting their money.
So programs like Replicator, which we'll talk a little bit more about, came about from this learning on the battlefield. So, Trace?
Yeah, and I mean, we've seen it on the uncrewed systems side as well. As Wahid mentioned, you know, this is tremendous growth right now, right? The way that wars are being fought has changed. We all see it on the news every day, and as Brett mentioned, you know, the U.S. Department of Defense has said, "Hey, we got to catch up here, and put in place long-term programs of record where we can get the products that we know are making a difference in winning the fight today." And, you know, again, we see huge growth internationally as well. Everybody's watching what's happening in Ukraine.
Everybody wants to see what works, because having a show in force, having their own indigenous drones, that most likely will not survive in this fight today, does not provide them any security that they need in this threat environment long term. So they're watching Ukraine. They're watching what works. I'm proud that our systems are working tremendously in Ukraine today, and that we are well positioned to capture programs of record, both within the U.S., long-range reconnaissance. You saw P550, that product over there built ground up, focused on that program of record. And as I mentioned, taking all the technologies that we've been working on within MacCready Works and across the company, and incorporating them in a brand-new platform, next-generation platform, to focus on that one program of record, and then obviously, international adoption beyond that.
We're also focused on the Army Medium-Range Reconnaissance program of record, a little bit further out, but they are doing what we call directed requirement tranches, where they will buy small amounts of systems to inform their requirements for that long-term program of record that's probably out FY 2028 timeframe. And then, of course, on our medium UAS, Group 3 space, lots of opportunities, both domestically with the Navy STUAS program and then internationally as well. And, it's just it's a, it's a really exciting time to see, you know, the defense militaries around the world recognize what's going on and put long-term programs in place that I believe AeroVironment is better positioned than anybody to go and capture.
Great.
I couldn't agree more, and it's interesting when Trace and I talk about our businesses, there's so much similarity with how the world is changing in their view of uncrewed systems as well as loitering munitions going forward. You know, I spent almost four decades. I think this is my thirty-ninth year in the defense industry. Jonah mentioned earlier some of the other companies that I worked for. And throughout that career, you know, I've got a lot of military service in my family, my father, brother, you know, son-in-law, many others. And through my career, I was focused, I think, as many in the U.S. industrial complex, to say: We got to have the most exquisite technology.
It's got to be the best capability, and we will protect freedom, we will win wars based on having the best technology to take out, you know, certain targets. One of the military leaders that I work closely with, I had a conversation with recently and said to me, said: "You know, there's a change in that whole mindset in, certainly within the U.S. military, that it's now not just about a small number of exquisite weapons. It's now, quantity has its own quality, is what he said to me. And you're kind of like, "Well, what the heck?" That sounds kind of like an odd phrase, right? What does that mean? Quantity has its own quality. And that is, in this fight today, whether it's deterring China or helping Ukraine defeat Russia, quantity matters.
So you have to have this exquisite capability, but it's irrelevant on the battlefield if it cannot be procured, delivered, trained, employed in mass quantity. And so that's very exciting for us. That's what we're focused on. You know, so this is a list. You'll see a number of programs that are on here. Replicator obviously got a lot of press, recently. The Army stated they're gonna procure about 1,000 Switchblade 600s for this first tranche of Replicator. Army has a program of record called LASSO, that, they're putting it in place, and they've been buying our system so far, leading up to that.
The Marine Corps has certainly pressed the, I believe, button in loiter munitions as they've gone to a lighter, faster, force, eliminating their tanks and their heavy mortars and introducing loiter munitions into their force structure. So we are, you know, some people say that, you know, luck is when opportunity meets preparation. We are definitely prepared and continue to focus on what's the mission, what do we have to do to continue to lead in this space. Now, some of our competitors are winning, some of them are coming out there. I look at that as, you know, it's a big pie, it's growing. We're not gonna win 100%. I'd like to win 100%, but we're not gonna win 100%.
It's a clear validation that the investment strategy that we made a number of years ago, and continue to make, is paying off. This market is clearly demonstrated to be growing, big, and we can win in it, continue to win.
Well, Brett, along those same lines-
Yeah.
You mentioned that, you know, we're now shipping high volumes. Wahid talked about it's not just hundreds or thousands, it's tens of thousands, potentially hundreds of thousands. Can you guys talk about the expansion you've been making and the preparations you've been making to deliver at these volumes, assuming you win some of these programs?
Yeah. Trace?
Yeah. Great. I mean, you know, again, we've, you know, we saw this conflict start. We were prepared. We've been delivering a high rate production in our uncrewed systems for years. So, but because of the conflict and what we saw with the changing market, we have ramped up considerably in the uncrewed space. You know, we shipped thousands of airplanes last year. You saw our results yesterday. It was a great year on the uncrewed system side, as we continued to ship uncrewed systems to our allies across the world and the U.S. Department of Defense. And at the same time, ramped up production in anticipation of this increasing market.
So, you know, last year, we had the capability of being able to deliver approximately $500 million of revenue, converted to, you know, uncrewed systems. And this year, based on our ramp up, we are set to be able to deliver over $1 billion of uncrewed systems, if the customers were to ask us to deliver in those type of quantities. And again, we'll be prepared to double that again, if we see the need to.
Yeah, very good. Again, here's an example where uncrewed systems has been leading in this area of high volume production, and loitering munitions is following suit the same way. Wahid mentioned one of my kind of one of my favorite quotes from Elon Musk, from Tesla, which is: "Prototypes are easy." If you look around in our space, oh, my goodness, there's so much flattery of Switchblades. You'll see so many different variants that look like a Switchblade. But does that lead to a compelling business success for those other companies? In most cases, no. Building the prototype is, you know, 10% of the effort.
Building the factory, the supply chain, the reliability, the consistency, is a main focus for us, because we know it's not really relevant unless we can build it at scale and with the quality that our customers demand. So, you know, you saw the results last year. We grew pretty substantially in loitering munitions, up to just under $200 million in revenue. We had a capacity. When you look at these numbers that are on here, this is really meant to say, it's not a forward-looking, "Here's our revenue for next year." It's, "Here's the capacity that we're developing, so it'll be in place." Okay, a lot of that has been AeroVironment leaning forward with our supply base, leaning forward with the hiring and setting up parallel lines. And this is all on still just single shift.
We still have the ability to surge greater for both our businesses, going to multiple shifts. But for this year, capacity-wise, and we're getting help from the U.S. government, too, because they recognize how important this is, which is kind of a first for our company, is they're helping us financially, they're helping us with prioritization of supply, suppliers. This year, we'll have a capacity, if we get the orders in a certain time, up to $500 million of delivery. We will be building thousands of Switchblade 300s and thousands of Switchblade 600s... this fiscal year. So pretty, pretty remarkable, and we look at that as just the start. The demand is accelerating for these programs.
All this is happening under, essentially, for Loitering Munitions, under some urgent needs, not even with long-established programs of record, which are in the pipeline right now and will start over the next couple of years. So from a capacity standpoint, we're gonna add another factory, which will then take us from the $500 million potential production capability up to $1 billion by 2027, and we'll have it in place a little bit sooner than that.
That's great, guys. Any final remarks?
No. Again, thank you everyone for coming, and it's been a pleasure, and look forward to having discussions with you throughout the day.
Yeah, thank you very much. And it's great to see some familiar faces.
Yeah. Thank you, guys.
Thanks, Jonah.
All right. Do we wanna take this?
Yeah. Oh, we gotta take our chairs.
Yeah. All right. So we were just talking about how we're getting real-time feedback from the field and leveraging that to make improvements in our products. I'd now like to introduce Jeff Rodrian, who heads our third, but by no means, our least important segment, MacCready Works. It's our center of excellence for autonomy and machine learning, and also our home for incubating new technologies and new product lines. Prior to his role, leading MacCready Works, Jeff led the development of multiple platforms for AeroVironment, including small UAS, all the way up to large hybrid UAS for both the commercial and defense markets. Also, before joining AV in 2010, he held several leadership positions at startup companies focused on the uncrewed systems market.
Jeff will cover how we're thinking even further into the future about where our adversaries might be and what technologies we need to be developing today in order to counter those and keep our customers ahead in the battle space. With that, Jeff, I'd like to welcome you to the stage.
Thank you, Jonah. Thanks, everyone, for your time. So as Jonah mentioned, I have the pleasure of leading the MacCready Works segment, which is where we're really focused on creating disruptive innovations, and that's where technology meets market opportunities, and that powers significant growth for our company. And while he set a great stage for the market shifts that we're seeing today with autonomous systems. And just to frame simply the technology shift that's been happening, and we all see this every day, the Puma behind you, the Puma 550 that you see over there, today, with some of the capabilities that the teams are adding, has more computing capabilities than a high-end gaming computer 5 years ago, right?
Our team of MacCready Works, majority of software engineers, along with some phenomenal, very creative aerospace engineers, are taking advantage of those two items coming together to create new and exciting disruptive innovations for AeroVironment. Today's talk, I'm gonna focus mostly on what we're doing in the software-defined arena. So autonomy, ML, how we bring that together, how we think about the four main pillars of challenges that UAS will focus on and have to face in the future. So we'll talk about those four main pillars. And then, we gave the challenge to the software teams, several weeks ago to be able to bring this all to you, to show you this live, to show how when we put that much computing capacity on small UAVs, can change how these systems get used.
So we're gonna do a live demonstration, with two Pumas and one VAPOR, operating across the country, connected to me here. It was very cool to see the team take on this challenge. I asked the team several weeks ago, I said, "What's the biggest risk of doing this?" They said, "It's you." So, hopefully, I can navigate all this, successfully, but I'm sure it's gonna be exciting for you all to see how these things come together. And as Brett and Trace mentioned, you know, the three of us operate very closely together, collaborate on how we take what's coming out of MacCready Works and the software-defined area, and get it on to new systems like P550, along with pushing it on to our legacy systems.
While all of this is going on in MacCready Works, we're developing HAPS, our scale model you see over here. We have about a half a dozen other new kind of platform-level system concepts in development with various customers that we can share in the coming year with you, as they mature and get... You know, we're very excited for those that really exploit the confluence of market changes and technology changes in the world of AI. So with that, first, let's set the stage with what are the four main pillars that we see going forward that UAS systems are gonna have to face. Brett and Trace talked about this and what's happening in Ukraine today. But when we fast-forward and think about, you know, even greater, greater peer kind of conflicts, this is gonna become an overwhelmingly larger challenge.
So the first one, data links are gonna be compromised, right? So, take away our cell phones, take away our internet connectivity, you know, things have to behave very differently. What we see in Ukraine today is intermittent availability of communication, and in the future, this is gonna become even less and less reliable as a capability, as a way to use autonomous systems. The foundational elements in Puma and Switchblade have enabled us to be successful and continue to allow us to be successful, but we have to always be anticipating the next 3-5 years where this is gonna be heading. So I'll share a little bit what we're doing there to overcome these challenges. Next, GPS is gonna become unreliable or almost to the point of unavailable.
So you take away GPS, we now need to figure out other means of navigation. The Puma VNS system is a start, and our group is continuing to evolve and take that capability to the next level through software-defined capabilities. The third pillar is air defense system. So about 20 years ago, Afghanistan, Iraq, those other areas we were operating in, we could pretty much operate however we wanted. We could fly Reapers, we could fly Pumas, we could fly Switchblades, and virtually be untouched. As you saw, when the Ukraine conflict started unfolding, the TB2 Bayraktar, very heavily focused in the news, very successful platform, at this point, non-existent, right? The airspace has collapsed. Those systems get eliminated the second they're put in the air. We're moving towards smaller, more distributed capabilities to overcome air defense systems.
What that means is we need to enable swarms of systems like Puma and Switchblade, P550, and future systems, to operate where there's tens, hundreds of systems with one operator planning and executing those missions. We'll talk about what we're doing to overcome air defense systems. And then lastly, the rapidly field-evolving battlefield. Products that went downrange the beginning of the Ukraine conflict, we had to quickly evolve things in the data links, behaviors of the aircraft, in a matter of months to keep them relevant, and this is going to just accelerate, unfortunately, in great power conflicts. During World War II, throughout the entire conflict, radar and other new technologies, they were becoming more and more susceptible to being degraded more quickly, requiring faster evolution.
And when we see autonomous systems being heavily software-defined, that means we can evolve at the speed of software, and we need to anticipate that in our future products. And I'll share with you what we're doing in MacCready Works to help enable that for the future. So one of the first items for data links. You know, we talked about the great computing power that we can put on a Puma. So if I can take that much computing power and that much intelligence and push it onto a Puma, push it onto P550, I now remove my reliance on data links. And so you saw several months ago, we made the press release on ARC, our autonomy retrofit kit, available on the entire Puma family. It can be expanded to other UASs.
It's basically our computing capability and our software capabilities put together to enable Pumas and other UAVs to use the perception engine of SPOTR-Edge, which Tim will talk about later, to drive decision you know, decisions onboard the Puma, removing its reliance on data links. To the extent that what we'll see today in this demonstration, I'll be commanding and interacting with Pumas in California and getting just simple information back to myself. I don't need to be reliant on the data link or high-quality connections. So very excited about this capability and where it's gonna take us in the future. To deal with the GPS being unreliable, we need to move away from this means for navigation, right?
So the VNS, Visual Navigation System, that's on Puma, there's a display in the back with this on it today, is something that AeroVironment anticipated five years ago and started investing in developing this capability as a collaboration with MacCready Works and SUAS, to mature the technology, show the realm of possible, and we're very excited that that's now a product that's gonna be going downrange and being used. Continuing to build on that, not remaining static, is critically important to us. We've taken this technique, which uses some very fascinating image processing techniques. We've abstracted it away to being a pure software-defined capability and that we can push across all of our products.
So that's a very exciting capability, and that's going to continue to evolve and create new use cases for our products, when we're not reliant on GPS to go after those higher-end assets like Brett had mentioned earlier today. To deal with air defense systems, you know, there's many areas we can focus on, but the primary area that we're concentrated on in MacCready Works is back to what Brett mentioned, this lower cost, quantity is quality concept, and we need to be able to deploy that efficiently. So we saw, you know, several months ago, you know, the unfortunate attack by Iran on Israel. You know, they sent 300 very low-cost systems towards Israel.
Luckily, we were able to defeat that capability, but if you read about it, it's probably a 7-to-1 cost of-- you know, cost, that was imposed by the Iranians on the friendly forces to defeat those 300 missiles, right? And so we wanna be able to impose that and greater types of economic disparity on our adversaries by using swarms of low-cost, attributable systems like Switchblade and AVACORE . Our software framework that's running on the ARC system is a key enabler for this, where we will drive based on the perception engine, behaviors that are made onboard the aircraft. As what you see on the image here, is our decision tree. You know, these are, relatively simple concepts in theory, but implementing it becomes very complicated.
To drive our perception engine, where we now are using onboard decision-making to prioritize targets, identify friend or foe, based on the foundational elements of SPOTR-Edge. So this is a very exciting capability in the AVACORE framework that is available through the ARC capability. And then bringing that all together to enable us to evolve quickly and to get a little bit deeper into what AVACORE is. It's a very new concept at AeroVironment. It parallels Kinesis on the ground side of it.
AVACORE is this vision, and it's a software framework that is in place today, where we are basically developing autonomy, SPOTR-Edge, computer vision, all wrapped together in a very robust operating system, if you will, that enables our suite of products across AeroVironment to build the yellow interface layer, and you build that interface layer once to connect to your platform. And now, as our blue circle of mission autonomy evolves over the coming years, that autonomy becomes available across the suite of AeroVironment's family of systems. So that means that today we'll see a VAPOR and a Puma.... Talking to Shane, he can deploy that exact same capability, and if I was operating and commanding these type of assets, and it was flying on a JUMP 20, it would really look no different to me.
The exact same autonomous mission behavior modes become immediately available on the JUMP 20, and we see that being very powerful in the future to enable all of our systems to evolve their capabilities on the battlefield at the speed of software. So that brings us all together, and it's a very exciting new future for us. So just to show you an example of how software can evolve capabilities, this is a business I helped stand up several years ago, it's the Quantix. Tim and his team took this capability. They looked at how to evolve it and make it more military applicable, and they, through software, created this swarming capability for Quantix, not touching any elements of the hardware, right?
And so this gets back to this ability to redefine new capabilities through software and autonomous systems, which AeroVironment's at the lead position to do, and it's all fueled by the learnings we're getting continuously in theaters across the world of how our systems are being used today. So to put it all into action, we're gonna jump over and do a demonstration. So what we have today is we're sitting here. We have a VAPOR team using a helicopter like you see here on my left in Kansas, and so they're flying. They're gonna be doing what we call a sentry mission. So they're basically just watching an area for targets, and we'll jump over, and we'll connect to them. They're connected to the internet via cellular.
Then in Simi Valley, California, we have 2 Puma AEs with the ARC payload and AVACORE running, and they're going to be doing several different missions, and we'll walk through that as we jump into this, this scenario, and they're connected via Starlink to the internet to us here. So it should be pretty fascinating. Fingers crossed, right, Kevin? So I think we need to switch to the ATAK. Do I need anything, Johnny, here? So unfortunately, I can see the Pumas are up flying here wonderfully, so that's great.
So what do you have in front of you?
So in front of me, I have a Samsung Android tablet. It's running what's called ATAK. It's an interface developed by the U.S. military for command and control of UAVs. It parallels into and flows into the roadmap for Tomahawk Robotics Kinesis, and it's basically able... You can pinch and zoom. We have a map display of several Pumas flying in California, and if I zoom out, let's go to Kansas. There, now it's all up. Great. So you can see Washington, D.C., that's us, over New York. We've got Kansas, and we've got the two Pumas here. So this is live. It's not recorded. So let's go zoom in on Kansas.
You on Wi-Fi?
And we're just connected via Wi-Fi here. Yeah. And I have here vibrating. If you hear that, that's basically every time it's detecting a new image via SPOTR-Edge, it's alerting the user, and so you don't have to have someone continuously watching the display. So we'll tap on our video feeds. We have two Pumas up right now. Doesn't look like the VAPOR's flying. I think there's maybe some weather issues, but let's go back to California. Yeah. So this is a flight test range just outside our offices in Simi Valley, California. The blue chevrons are the Pumas flying. This is live. The orange, reddish diamonds are targets that they're detecting. And then we've set the green as we call it, geofence.
So basically, we're constraining where the Pumas can operate, and then the red is an area where we defined previously as an area of interest that we want to search for a target. So let's see. Here we go. So right now, I'm defining search or region of interest. So polygon is gonna be the airfield, it's a multi-vehicle mission, and there's several options people can change from altitudes or different areas there. We're gonna leave those all set to the default. Let's get out of this... So there we have the video feed from that Puma tracking a pickup truck driving down the airfield that we just searched and found.
Autonomous?
So this is fully autonomous. We have, per the FAA regulations, we have operators sitting back just drinking coffee, watching the Pumas fly. But basically, pickup trucks driving through that desert area, and we can see if I move this around here.
SPOTR-Edge .
SPOTR-Edge is running, picking up that pickup truck. ARC is then making the decisions on board the Puma to autonomously track and follow that pickup truck.
We have GPS or no GPS?
In this scenario, we have GPS, but, you know, with the VNS system, we do not need GPS to be doing this autonomously.
You're only looking inside that box?
We're only looking inside that box. Yes, correct. Yeah. And now, since we told it to search that pickup truck, it will then follow it outside that box and continue to follow it wherever it may go. As it starts to give a flavor of how you start building these missions and how it can become very useful, where now I have two Pumas. You know, in the future, you could imagine six Switchblades, and I'm searching an area for a target, and when it finds a target, operate a little more savvy than me, we just click—simply click on it and say, "Engage target." And we start really reducing the load on operators, increasing mission effectiveness, all through these software-defined capabilities. So we back out of that. Looks like the VAPOR is up. No, the VAPOR is not up.
So now we switched over to the other Puma. You can see this is in the infrared spectrum, and so it's also doing a search of the area. So again, they're flying California, connected via Starlink to the Internet, and then we're connected via Wi-Fi back into a common server that enables this type of distributed operations. And so bringing this all together with the GPS deny capabilities enables, you know, single operators to command large swarms of UAVs with very low operator burden and really drive a new entire use case for our products, and it keeps us at the forefront of disrupting defense technology.
They found the car.
They found the car? Yeah, there it is. Yeah. And so if someone were to get out of that car, let's say it stops, we have preprogrammed it to stay following the car and not track the people. But we could easily change that. We could redefine the mission to say, "My mission is actually to find where the people from the car go." And now, when the truck stops and people get out, the UAV will follow those people.
All without-
All without autonomy, all without any data link or any operator in the loop. And you can see, yeah, here I am up here talking to you. These are performing the missions, very low operator cognitive load. I had about 30 minutes of training on this before I got up here. So, so a very exciting capability that's on the forefront and will keep us leading defense tech for the foreseeable future and well beyond. Other, other questions? Then we have a Q&A session, but since I have this up, does anyone want to see anything else right now on it? And you just—There you just saw we drove past some other vehicles, and again, because we gave this vehicle the priority, it did not jump and track those other vehicles. Great. Well, thank you, all. I think we have up next, Jonah, you want to...
If we're about on time for the break?
Yeah.
All right.
Thank you, Jeff.
Thanks.
Awesome.
We can leave this up if people want to come take a look at it.
Yeah.
Brad will probably know how to use this better than me.
Yeah, so we have another example of AeroVironment delivering ahead of schedule. We're a little early for the break. So I have 9:47. Let's plan to get back in the seats about 10:00 A.M., and we'll get restarted. For those on the webcast, we'll just pause right here. We'll leave it running, and we'll be back at 10:00 A.M. Thank you.
We're gonna get started again in another minute.
... Hello, hello. If everyone could take their seats, we're going to get started in one minute.
Ladies and gentlemen, may I have your attention please? Please take your seats. The program is about to begin.
Thank you. All right. Thank you, everybody. Welcome back. We'll have plenty of time for Q&A at the end of our prepared remarks, and also you'll get a chance to continue discussions with the team after we finish, today's event. It is now my pleasure to get started again. As you can see, we're right on track with the agenda. Up next is Brad Truesdell, who leads our small UAS business. He recently joined AeroVironment through the acquisition of Tomahawk Robotics last year, where he was the co-founder and CEO. Brad brings over 25 years of military and defense industry experience, where he has held numerous strategic roles in executive leadership. Before founding Tomahawk Robotics, Brad worked at Harris Corporation and proudly served as a naval special warfare officer.
It is now my pleasure to introduce Brad, where he's going to take you through how common control capabilities are enabling the future of autonomous AI-powered, uncrewed solutions. Brad?
All right, thank you. Good morning. My name is Brad Truesdell. As Jonas said, I'm the Vice President of SUAS, which is, P550 VAPOR products that you see over there. I'm very excited to be here in general, and I would say that, also from an investor perspective, the acquisition of Tomahawk Robotics has been, it's been great for me personally, it's been great for our team, and I'm really excited about how we're bringing those technologies together to the betterment of AeroVironment and frankly, our customer base, and getting after a really, challenging problem of common control. All right, so first off, what is Tomahawk Robotics? What's the technology, and all that?
I'll spend a few minutes on this, you know, talking through the technology, how it's differentiated, how it's driving, enhanced competitive position, growing the top line, for AeroVironment. Then I'll talk about some specific customer examples of that. Then lastly, I'll talk about how we're saving money for AeroVironment as well through the use of these technologies. So first off, you'll see, you know, and over there, we have, a model, depicting the technologies that I'm talking through right now. The primary technology here, is a software suite called Kinesis. And the simplest way to think of this, and this is, you know, my engineers will give me a little bit of a hard time about saying it this way, but think of it as Windows for robots.
So you have a common user experience regardless of the underlying hardware. So when I say that, think of, fixed-wing aircraft like the Puma, think of rotary-wing aircraft, you know, like you might see from a company like Teal Drones, unmanned surface vessels, EOD robots, manipulation systems, tracked or wheeled robots. So it's the same software that can control all those different platforms, okay? That is a profound technical achievement in and of itself, and it reduces cost, training, and it builds, you know, frankly, greater efficacy and safety of use of these systems because of greater familiarity. So I'll talk more about, you know, what's the condition of the marketplace otherwise, as I move forward. A couple other things here that I'll bring up.
You know, Jeff and Tim will talk in a bit about some of the things that AeroVironment is doing from an AI perspective. We provide the software and hardware infrastructure to deploy many of these AI algorithms at the edge, and we've been doing this for years. Under contract with whether it's the U.S. Army through PEO Soldier or through the U.S. Marine Corps or the U.K. Ministry of Defense, deploying AI algorithms at the edge to do video analytics against multiple video streams at once, right? So that is a significant, you know, again, a differentiated capability for the marketplace.
Then the last thing here, you know, when we talk about the network, you know, Jeff talked about this with regards to the challenging network environment of places like Ukraine and what we expect in future conflicts in general. One of the beauties of, you know, the Kinesis system and what we brought, brought forward with Tomahawk Robotics is the talk across all these different robotic networks, as, you know, so there's, you know, capacity for things like failover, real-time network shaping, things like that, that allow robots to collaborate with each other and to share information with maneuver echelons, platoon, squad, warfighters on the ground. So a very differentiated capability in that regard. All right, so I'll come back to the problem we're fixing here with the Tomahawk Robotics and the Kinesis ecosystem.
And this is just an example of the Army, okay? So the, you know, the reason why my co-founder and I started the company was we saw this problem of one-to-one control of disparate robotic systems. So literally, the state of the world was all these different robotic systems, this is an example of this in the Army here, have different hardware and software to control them, different training, different logistics, increased cost across them. And they didn't work together. They did not natively speak amongst each other, share information amongst each other, or work with, you know, existing tactical network systems like ATAK, et cetera, that were available, that squads or platoons use.
So really, again, what Tomahawk Robotics allows people to do is either one-to-one control of these in parallel through the same system, one-to-many control. I can use disparate systems in combination to do more complex tasks, or many-to-many control, meaning multiple people can share, view, control robotic systems of various types across this. And what's interesting, again, from your perspective, is this is just the Army, the Marine Corps, the Navy, the UK Ministry of Defense. Every single allied military that we deal with has this problem. They want to use unmanned systems, you know, at greater scale, and they have a mix of unmanned systems. So again, we get after that problem by offering our technologies. All right, so talking a little bit about, again, what Kinesis is and the problem it solves.
I use some analogies about, you know, Windows for robots, a common, you know, common software set or suite. On the right side here, you'll see, you know, the types of robots that we interact with today. So from over a dozen different manufacturers, and some of these are the largest manufacturers of robotic systems in the world, certainly AeroVironment, chief amongst those. But you have folks like GDLS, Lockheed Martin, L3Harris, Teal, Skydio, the list goes on and on. And what's interesting about the marketplace and why the need for our technology existed in the first place is when you talk rotary wing platforms like, you know, what you might have from Teal or Skydio, they use a protocol called MAVLink. And what that is a fancy word for, you know, messaging format for moving data to a robot.
Some of the, you know, larger fixed-wing platforms use something called STANAG 4586, another messaging format. Then some of the ground robots use RAS-G IOP or ROS- M. And this is, you know, fundamentally, this is like having a Italian speaker, a French speaker, and a German speaker all in the same squad. None of this stuff work together, okay? So what we're able to do is, you know, through these technologies, the software, and what you'll see here, the KXM, which is over on the model there, we're able to speak all those languages simultaneously, at the same time, communicate, so all these different disparate, you know, robotic systems can work together. And again, you know, this is, none of this is aspirational.
We've delivered thousands of these systems to multiple users, you know, you know, allies across the world, in NATO and obviously here in the U.S. Now, you know, back to this, you know, and I'll talk a little bit more about the product family. You know, this edge processor, and we've got, you know, various form factors of our hardware to allow us to deploy software. But on the left side of the chart here, you'll see the various AI algorithms again, that we're deploying on our edge processor to run against the multiple and various video streams created by these different robots. And again, we've been doing this for years under contract for folks like the U.S. Army, working with AI providers, you know, in addition to AeroVironment, folks like, MITRE Corporation, Booz Allen Hamilton, to name just a couple of those.
All right, again, I talked about our family of products, and what you'll see here is hardware, so you can scale up or scale down, predicated upon mission need. You'll see different, you know, display sizes here on my left. You'll see, you know, the KXM I talked about, one example of our edge processor, and then on the right, you'll see something called the RAID syste m. So this is a great example of the U.S. Marine Corps identifying the value of this, and they've been a great customer for our, for ourselves for years, and wanting a, you know, more tightly packaged, integrated solution. And that's a nice opportunity I'll talk about a little bit further as far as growing the top line for AeroVironment. All right, so talked about the technology, you know, some of the products here. So what's this enable?
You've heard, Brett talk about, you know, some of the more sophisticated, operating challenges in places like Ukraine. You've heard, Trace talk about that with regards to UxS or Jeff. And what this is, again, is a foundational technology that allows maneuver units to, you know, interact with robotic systems to execute much more sophisticated, operations than they did in the past, right? So I can combine, ISR and strike in the case of, you know, Puma and Switchblade, or I can combine ISR and EOD, in the, you know, in those two examples there. So those are the kind of things that we're getting after today. And again, this has been, these kind of missions are being executed by, U.K. Ministry of Defense, the Marine Corps, Army, et cetera.
So very proud about the market traction we've generated over the years. All right, here are examples of, you know, the customer base we have, and I've certainly alluded to it. I think what's interesting is not only the, you know, whether it's the Marine Corps, you know, the Navy or, or whatnot, but there's this whole, you know, obviously, the list is much longer than this, of OEMs that we've been working with, right? So the idea of providing best-in-class ground control solutions, meaning that when a robot buyer or builder says, you know, "Do I want to build this technology myself, or do I want to use what Tomahawk Robotics has, right? And what AeroVironment has?" They come to us, right? And you'll see folks that we run into from a competitive basis all the time using our technologies. We've got Shield on the list.
We have Anduril, where there's, you know, competitive overlap, L3Harris, you know, the list goes on. I mentioned Lockheed before. Bell has used our technologies. Last year alone, there was over 100 purchase orders from different OEMs. So you see, you know, what we're doing is we're planting seeds with each of these OEMs. Some of them won't scale up, but some of them will, right? So it's a nice opportunity for us to grab a share of the market and frankly, monetize parts of the market that we would not otherwise monetize, right? So maybe on the smaller drone side, where it's not as lucrative, or other parts of the market, again, where we're not operating. All right, now talking about some of the, you know, getting to more specifics about driving top line or increasing, our competitive position.
So, Brett made mention of a program called LASSO. So that is a combination of loitering munitions, and it's primarily loitering munitions, ISR platforms, but also the GCS. So that is a program being managed and run by PEO Soldier. PEO Soldier is a company that's obviously worked with AeroVironment for many years, but also Tomahawk Robotics, and they specifically requested common control between those elements that I just talked about. So the benefit there of increasing our competitive position and increasing our share of wallet, you know, in that, for instance, right? So, you know, again, significant benefit to the company as a result. Two other examples, and Wahid talked about these programs earlier, both MRR and LRR, where that's Medium Range Reconnaissance for the Army and Long Range Reconnaissance for the Army.
They specifically had requirements in there for ATAK interoperability. Again, a technology that we bring to the table, you know, right out of the box, again, to allow those kind of data exchanges to take place. I mentioned RAID a few minutes ago. This is a large program where the Marine Corps intends to deploy that system with every marine infantry squad and enablers. So a significant market opportunity for us, you know, to again grow additive top line to the business. And there's some other examples, you know, across here. You know, FLEXOR is a program we're executing right now for the Navy, where they want some of these improved networking and communication capabilities, where they're augmenting. And actually, that was the largest program of from PMS 408 last year, which is the Navy EOD command.
I made mention of the, you know, the international, pardon me, the UK Ministry of Defense on a couple times. We are a major sub for a program called HMT, Human-Machine Teaming, where they're using the same technologies we're delivering to the, you know, the Navy, the Marine Corps, the Army, et cetera, to get after common control, for the British military. So a great opportunity for us. Those are some examples. Certainly, there are more, but as you can see, again, driving additional competitive, you know, differentiation and top line for the company as well. All right, the demonstration, I will move over to that, after we break here, and I'll run through the equipment that's over there. So I'll move forward. And really here is where I'll conclude.
You know, the benefit I you know talked about of you know increased competitive differentiation, improved top line, but also comes with cost savings. So we, as AeroVironment, you know, we're optimizing ground control stations for individual robotic platforms in the past. Now, we have a common ground control station across UxS and LMS, and you're starting to see the benefits of that today through the you know the combination of use of those platforms together. But number two, that or you know enhances our ability to rationalize our supply chain, have a single software baseline for these technologies, which reduces a lot of costs from a labor perspective, reduces time to market for new capabilities as well.
So a lot of benefits there that accrue to the company as well, you know, through these technologies from a cost savings perspective. All right, and that is it for me. Appreciate the opportunity to be here and, thank you, Jonah.
We're gonna bring the man connect through.
Okay.
Yeah.
All right.
Stay up there.
All right. Yeah.
Do it later.
Ok ay, fine. All right.
We'll have Brad do the demo for those of you who are interested. Now, keeping with the theme of software enabling autonomy in the future of our systems, we're—I wanna have Shane and Tim come up here to have a fireside chat. Shane Hastings is the head of our medium UAS business with the JUMP 20, and Dr. Tim Faltemier is the head of our Learning and Active Perception, or LEAP, business, which is within the MacCready Works segment. So come on up. All right. By way of introductions, Tim realized long ago that AI would play a key role in defense and has spent his entire 15-year-plus-year career developing innovative defense technologies in the areas of computer vision, image and video analytics, and perception.
During this time, he has become one of the nation's leading experts in the defense application of this technology. Most notably, he led the development of the Surveillance Persistent Observation and Target Recognition, or SPOTR, technology that you've already heard about today. Shane has more than 20 years of experience in defense and commercial markets. Shane has held key leadership roles within our small UAS and tactical UAS businesses before taking on the medium UAS business. Before joining AeroVironment in 2015, he led, he was the head of engineering at Insitu for the ScanEagle program.... Starting with Tim, would you like to give us a quick overview of your role and what you work on within the company, and what are your key priorities right now?
Sure. Thank you, Jonah. Thank you, everyone. As mentioned, I've been kind of blessed to come to AeroVironment and work on a lot of really interesting cool problems. My, my background is in Ph.D. in computer vision, and how do we really take perception and change the, the thoughts of how do you take these, these aircraft that we're building here and enabling them to go massively multiple? How do we start flying thousands or tens of thousands of them and use the perception capabilities as if you had someone on board that's able to make those decisions? And so all of the research that my group does and, and the development and productionize of that is, how do we make that a reality? And that's what we'll talk about here today.
Shane?
Yeah. Good afternoon, good morning. My responsibility is really as the profit and loss leader for the MUAS division at AeroVironment, so that really includes the JUMP 20 Group 3 platform and the T-20 Group 3 platform. The difference between the two is the vertical takeoff kit that we use on our JUMP 20. The Group 3 platforms are generally 15-24-hour persistent endurance, and we are constantly looking at new concept of operations on how to deploy a Group 3 platform, and that's part of my key responsibilities as the overall P&L leader of the MUAS business.
Shane, building off your last thoughts, can you talk us through the JUMP 20 and what differentiates that platform today, especially when it comes to the field experience we've been getting?
Yeah, very good. So I think the key differentiator is the JUMP 20 is actually a battle-proven platform. It's got over 300,000 operational flight hours, and generally under a commercial-owned, commercial-operated, service-based contract or even government-owned, government-operated. What I found very interesting about the JUMP 20, given my background with other businesses and actually developing Group 2 platforms and Group 3 platforms, is the JUMP 20 is legitimately a truck. And when I say it's a truck, think of an F-150, where you can put different sort of payloads into your truck, fly it operationally, and actually become a multi-mission platform. Multi-mission is more than just ISR, intelligence, surveillance, reconnaissance. We can put different payloads in there and become more than just a one-trick pony.
With that, we've been able to fly over 60 different payloads on the JUMP 20, and I truly believe that with its payload carrying capability and its small logistic footprint, that is a key differentiator among the other assets that we're seeing in the Group 3 battlespace right now.
Tim, what about your access to the JUMP 20 platform for testing the technologies you're developing has given AeroVironment an advantage?
Great question. So, you know, as Shane mentioned, one of the things that we need as part of our machine learning and computer vision work is experience in the real world. We need to understand how these systems work and what's gonna happen. And one of the differentiators is that by taking one of Shane's platforms and running on it, we can start working on tomorrow's ConOps today. One of the things that we'll be talking about a little bit today is our new platform called Wildcat. They mentioned it as an offshoot of the DARPA ANCILLARY program. And one of the things that we needed to be able to do is start working years ahead of the actual platform being finished, where we could start working on the ConOps, start working on the different kinds of technology that we'll be releasing to it.
We're using JUMP 20 as that surrogate platform to be running all of the crazy things we're doing, from ship ID to automatic landing, and, and others that we'll talk about in a few minutes. Using that platform so that when that new platform comes around, we are ready to have the software build ready to go and, and develop and deploy.
I think Tim brings up an excellent point, and this is what's really excited me about partnering with Tim and getting that technology on JUMP 20. If you're at all familiar with how a Group 3... I just mentioned the endurance persistence of 14-24 hours. Having a soldier sit at a screen and looking at full motion video for 24 hours is really just a non-value add, and I think it probably increases the probability of missing something, 'cause you're staring at mind-numbing video. So being able to introduce software technologies and hardware technologies that reduce the cognitive load on the soldier and or the user is a strong value proposition in my mind. I'm excited that JUMP 20 provides that avenue to put this technology on there. I think you start unlocking different possibilities.
No longer is it a one-to-one relationship where you're staring at 14 hours of video. Now, you're introducing software that does the hard work, and it engages the battlefield when it needs to be engaged, the soldier, the commander. I think that when you start looking at that, you start looking at one-to-many solutions. Brad talked about having disparate vehicles, cross-domain vehicles. I think JUMP 20 fits in that ecosystem. So I think having this partnership of taking JUMP 20, taking with the LEAP SPOTR-Edge and other software onto that platform, really starts to get tomorrow's ConOps today. As Tim mentioned, as you start looking at the future programs, ANCILLARY is one of them, we can actually start stretching the legs on those concepts long before that program really transitions into a full program of record.
I think that's what's exciting about JUMP 20 being able to do that.
Yep, and to kind of pile on to Shane's thoughts, one of the first opportunities that we're looking to do that is imagining how maritime ISR should work. So if you think of, you know, in an ocean big sense, ocean's a big place, and if you're trying to cover that with normal terrestrial imagers, the one plane to a very large space is very challenging. Imagine if you had a 400-kilometer play box, where you're trying to tell the commander at every point in time how many actual ships are out there, whether or not they're running any kind of AIS or any kind of radio frequency type of operations.
What we're talking about here is changing the dynamic of having one plane go off and leave and try to cover 400 square kilometers, where you're effectively mowing very small swaths in the grass, to having 10-20 of them covering all simultaneously. And so Jeff did a fantastic introduction with the Puma work, and that was showing the power of just two Pumas in one section. If you start taking the power and the lift and the duration of Group 3 UAS, you can have persistent coverage without the use of satellites, at a fraction of the cost of satellites, in a completely autonomous fashion. They autonomously take off, they autonomously search, and every time something sees it, because it's processing on board, it's able to make a decision on: Is that a high priority?
Should I follow it, or should I let it go and add it to my list? All of this is the next generation of, of ISR, let alone to how it can relate to the work that Brett and others are doing with, with strike and targeting.
Absolutely, and I think it's real time. So we're talking about low Earth orbit satellites doing a pass every 8, 12, 24 hours. Having the capability of actually running multiple vehicles to get that swath of square miles is extremely valuable. I think as we start looking at where conflicts could be going, and you're looking at the tyranny of distance and looking at a lot of blue water as you go to Asia Pacific, you're going to need something like that. You're one platform per one vessel is just not going to be good enough. So getting this technology on JUMP 20 and looking at that maritime mission is paramount in my mind as the business owner for MUAS, because I believe that's where it's going to go in the very near future.
I, I think with the lessons that we're learning through our other businesses from Ukraine, that's only strengthening and make our systems, and positioning it better for the next fight.
Transitioning to the future, Shane, what does this mean for the future of MUAS to be able to have the capability that Tim and his team is developing and future platforms like the Wildcat?
It's a good question, Jonah. I think that we have the beauty of doing a lot of those things now, and I mentioned that we've got technologies across AV's diverse portfolio. You've heard a lot of different things today, and we're able to bring that into our JUMP 20 platform and really start fleshing out what the concept of operations are going to be, what the procedures are going to be. So you have to realize that we're trying to extract the human from the loop. We're trying to put them on the loop, and that's going to redefine how systems are going to be deployed in the future. And we don't want an operator staring at a screen, but we want an operator engaged when the operator needs to be engaged.
I think that with what we have now and the JUMP 20 and the T-20, we can start putting in play and going to market with a solution long before these future programs become a program of record. I think that gives, in my view, AeroVironment a strong position of credibility that we can actually do this. So we're not doing it by PowerPoint, we're actually doing it. We can fly it, we can integrate it, and we can do it today. I really start believing, and Wahid mentioned we're shaping requirements for future program of record. Why can't we do that now on this next Group 3 program of record? So we talk about ANCILLARY .
They're doing transformative innovation to think about the DARPA hard problems, and I think that's great, and we'll take that, and - but you have to figure out how to go to market with it. I think with us in MUAS, that's what we do, we go to market. We take that new technology, and we put it in there. We talk about the quality of it. We talk about building the programs of record. You have to have foundational excellence to actually launch that to market so that when it gets out to the end user, it works each time and every time. That's everything in the hardware and the software.
Fantastic.
To kind of piggyback on that, one of my jobs, which you never really understood when you're kind of accepting the job of what my job would be, is education. So most of the time, I'm talking to government customers who started out with a set of requirements of saying, "Based on my experience in the previous conflict, this is what I think the requirements for this new platform or new capability should be." And most of what I end up doing is helping them understand that they're shooting way too low. Here's actually what's possible today. Here's what our group is doing in, you know, collaboration with Office of Naval Research and DARPA and others. If you start thinking about how it really could work, then you're writing the requirements that'll eventually be there versus letting them kind of organically happen from requirements writers.
So the real way that happens is exactly as Shane said: Let's go out and fly it. Let's put 20 of these things out in CENTCOM and see what actually happens, and show the effect of this completely different modality that no one's ever really been able to do.
That's great, guys. Any final remarks?
No, I think for... As you said, yes, I think that, I'm, I'm really passionate about this space. I'm really passionate about the products that I manage. I've got a solid team and partnering with really all the different divisions within AV, you know, for me is exciting. I've worked on platforms in the past that, you know, you kind of pigeonhole into only being one thing, and with what we have in the MUAS business and then having the ability to tap into other technologies, it just. I just get passionate about it and excited by it, and I think we really start tapping into the art of the possible. One of the things that you may have seen on YouTube or whatnot, we've got demonstrations of having Switchblades integrated on a JUMP 20.
So now you start thinking system and system solutions and using the LEAP software to do more than just track, and now it's starting to do targeting. We can do all sorts of stuff, and so really excited about where this is going. I can't wait to get this out there, and yeah, thank you.
I guess for mine, one of the biggest thoughts that we have going forward is the currency of data. So, you know, at a very fundamental level, what drives a lot of my research and development is the access to data that we in AeroVironment have that almost no one else does. You know, as Wahid started out, you know, we have more deployed UAS systems than anyone else that's out there. And what that allows us to do is collect data that no one else has, get that data annotated, and start to build out libraries and ConOps and missions that are really just next level, and building that into the core framework of all of our products. So that was the first thing that I really took on when I came to AV: "Hey, we have all these platforms.
Let's build infrastructure to start gathering that data, to start using that data in ways that no one else has access to. That allows us to make a differentiating kind of solution that is going to be that next-generation capability.
Fantastic. Thank you, guys.
Cool.
Appreciate it.
Thank you.
Bring my chair.
Cool.
And finally, it is my pleasure to introduce our closer, Kevin McDonnell, our CFO. Many of you have had a chance to meet Kevin over the past few years, but for those who haven't, Kevin has more than 35 years of financial leadership experience at companies such as JAMS and Digital Insight, where he helped them grow significantly, and especially at Teradata Corporation, where he had a number of senior financial roles and grew revenue more than 100-fold. No pressure. It is my pleasure now to introduce Kevin. Come on up.
Everybody, thank you, Jonah. Thank you, everybody else. My colleagues made great presentations. I'm gonna take you through a few things here. I'm gonna start with this chart. I've been showing this in investor presentations pretty much all of this year, and it kinda talks to kind of the phases of growth, of what is driving the growth of AV. The first section there, the 1- to 2-year section, we're in that right now. The key point is, we're about to cross that line that says in the 3- to 5-year period. It really isn't 3- to 5-year out. We're really at that point where we're about to cross that line to a world where we're in multiple programs of record in a replacement cycle for the Group 1, 2, and 3 UAVs.
So you're gonna see an acceleration of growth through that phase. And then as we move through that, we have, as you saw from Jeff and what we do in MacCready Works and other areas of the company, there's a whole other set of products that should follow that to fill gaps necessary for the U.S. military and our allies. And as you know, a lot of the things mentioned here might be U.S. programs, but you can kinda multiply that in when you look at the global picture. We talked a little bit about the programs of record on the horizon. It's, you know, we talk a lot about the LMS programs. The medium UAS side is not as, you know...
But there is 1 large U.S. Army program, but there's also Navy programs in the U.S., and most importantly, there's an upgrade cycle happening throughout the world. I think there's a number of opportunities for us in foreign, foreign countries where we're already operating, they already know who AeroVironment is, where we can compete for their their equivalent programs of record. And the same thing is happening on small UAS in the U.S. and globally. So there's a lot of action happening in this marketplace. I mean, think about, the technology has changed quite a bit. The needs of the war fighter have changed over the last 5 or 10 years, and now those militaries around the world are adopting those new technologies that are, are necessary in a peer-to-peer conflict and things like that. So you're gonna see a lot of, of change.
We talked yesterday on the earnings call about our guidance for next year, where we came in at about a 12% revenue growth on average, $790 million-$820 million. Our EBITDA at $143 million-$153 million. What's implied in these numbers is continued investment in R&D. We're, we've normally talked about 10%-12%. Next year, we're talking about 12%-13%, a little bit higher than average. I think, you know, when you think about, we say, the leading defense tech company, what is a defense tech company?
It's really a company who's investing in the military market to deliver products around the globe, and usually, that will mean higher growth and higher earnings or EBITDA percentages over time than a traditional defense company. So here's that. So this just shows our historical performance. We've been able to grow 15% every year, keep that R&D investment in the low teens, EBITDA in the high teens. We've showing some improvement there in the EBITDA percentage this year, even with an increasing R&D percentage. The growth is 10%-15%, and you know, we really wanna be at the 15%, but as you- as we talked about yesterday on the call, there's a number of awards. So the hard part is getting the customer to say yes.
The next hard part is getting them to get the contract, particularly with the U.S. DoD. So we're in that phase, and really, the high and the low are dependent upon how quickly that happens. If that happens faster than we anticipate, then we'll be at the high end of the range. If it's a little slower, we'll probably be at the lower end of the range. But longer term, we really think this is a 15% plus organic revenue growth business, and we can be well above 20% with some strategic acquisitions like we've done in the last few years. We wanna continue to do those and continue to drive the top line growth. Again, R&D investment is high right now.
As we move into that next phase, where we cross that line into the larger programs, there'll be much more leverage on our R&D investment to date. Right now, we're in a very much a fast turn business where it's IDIQs and things like that, and responding to those, those needs, we're not on a lot of programs of record. Moving into the program of record phase will allow us to get some more leverage on the R&D and start to drive that down over time. Not lower dollars, but lower percentage. And then that should allow us to achieve, in the next three to five years, a 20%+ EBITDA number, and then longer term, this should be a 22%-24% EBITDA business.
Again, that's kind of, I think, what the mark of a defense tech business is, is those higher EBITDA percentages over time. You're gonna get the higher gross margins, which are gonna drive the higher EBITDA percentages. So our strategy is pretty much unchanged. I mean, for a long time, and Wahid says this all the time, you know, just a portfolio of distributed, intelligent, multi-domain robotic systems, softwares, and components for the defense and public safety industry. That's, that's been, since I've come to the company, what our future state and goal has been. We're gonna add to that some additional capabilities through acquisitions, through an acquisition strategy, looking at that market, not moving too far afield from where we're at.
But a lot of the areas we're in are high growth with other companies that are developing interesting technologies that we can bolt on to our current platform and build what we call our goal now, is a multibillion-dollar defense tech business. I think that's very much in reach here in the next three to five years, is to get to that multibillion-dollar defense tech business. Wahid talked a little bit about our TAM, you know, kind of estimating that at $12 billion. We have different levels of kind of, you know, penetration into these different markets. But as those who've followed us for several years know, we started out four years ago, mostly as a small UAS business. That was really the market we're going after.
Through acquisitions, along the way, investments in R&D, we've been able to expand those capabilities and expand that TAM into what is a $12 billion market, a little bit driven by the loitering munitions market exploding over the last couple of years. But as we look forward, there's a whole playing field of things that fit nicely into that footprint and our capabilities today. This shows you multiple areas that we can invest in or buy or acquire the companies in, but they're not outside our lane. I can make a case that everything on this page, we're really already doing in some form or another. We have either organic initiatives moving forward that may produce products, or we have, and there's inorganic opportunities, but they leverage our capabilities.
I mean, really, at the end of the day, when you look at all of this, the secret sauce are the things that Tim and Shane talked about, that machine vision, that autonomy. These are all capabilities that kind of cross all of these segments of the market, and we can leverage that and build a that multibillion-dollar defense tech platform. So this is Wahid's chart, but I added on a little box. You know, as you can see today, we have a strong technology engine, innovation engine, 50 years of doing this stuff, and technology and innovation is in our DNA.
You know, there's no challenge too high when a customer comes to us and says, "Here's what I'm trying to do." And even as Tim said, it's not—their challenge might not even be high enough. We're telling them, "Go higher," because there are capabilities to do these things. We have the capacity. We've been doing this a long time. We've been fortunate to build out our factories on the Switchblade product line, on the small UAS product line, and the medium UAS product line. So we have the capacity for growth and the manufacturing capability to go along with the demand. We have the experience, as I think Brett or somebody was saying earlier, you know, it's that ability to innovate with the warfighter as things are going on.
I mean, Ukraine has been a great example of our ability to work with the environment, get the feedback, come back, have our engineers innovate a new solution for the war fighter. That's what's gonna be needed as warfare goes forward in many of these different theaters. And then I'm gonna add to that growth. It's a growth platform. It's ready for inorganic capabilities also. Like I said, not moving far afield from where we've been or our current capabilities, but moving farther into what is really possible for us in those markets. And that's it. So now the long way to Q... I'm not the closer. Wahid's the closer, with the Q&A capabilities. So we need to, we need to bring chairs up or we-
Yes. Well, I'll, I'll hold that. Yes, we can have Trace, Brett.
Okay.
Shane, Wahid will be up here.
Okay.
If you have a question, please raise your hand. I'll come to you with the microphone.
Get out of here.
We're doing great for time.
Yeah, right on schedule.
You want to come sit down?
Okay.
I want to make sure we're not short.
All right, let's jump right into it. If you don't mind introducing yourself.
Sure. Yeah, Peter Arment from Baird. Thanks again for doing this and for all the great presentations. I guess maybe to Brett, on thinking about the Switchblade 600 and some of the technologies like that, they talked about with ARC and VNS and some of those things that are really, I think, at the forefront, and maybe you want to comment as well, is just that, given the environment that you're seeing in Ukraine, the jamming, all the different technologies, when the Switchblade 600 will be in a position to kind of, you know, you're already doing things to get around some jamming, but in a more, you know, critical manner, you know, when will that happen? And how do you just see that, you know, impacting the Switchblade 600? Thanks.
Fantastic question. Can you hear me okay?
If you get talking, I think it's going to come on.
Okay, I'll keep talking.
Oh, okay. Well, actually-
So great-
There you go.
Yeah. So, great question.
... And you clearly articulated there's things that we're doing right now to be able to get around the jamming environment, right? What we have not incorporated is some of the latest technology that Jeff's MacCready Works group has done, and some of that has already been fielded on Pumas over in Trace's uncrewed systems. Fitting it into the very constrained SWaP of the Switchblade 300 and 600 is a little bit more challenging and is taking us some time. We're in the middle of that development. We have a SOCOM customer sponsor for integrating Jeff's SPOTR-Edge automatic target recognition software into Switchblade 600. So that's coming, and we're also working on a solution for alternate nav when the GPS signals are jammed, as well. So our strategic intent is we're working together as partners on this.
It's just taken a little bit longer to get that into a production configuration for Switchblade 600. Timing-wise, we'll be flying later this calendar year. We'll be flying those technologies in Switchblade 600. And then depending on what customer interests are, let's say, before the end of our fiscal year, we should have orders, that include those capabilities.
Terrific. Thanks.
Oh, sorry.
Maybe I should have the microphone.
Yeah, hey, just Ken Herbert with RBC. As you look at the your capacity additions to support the the Uncrewed and LMS segments, how fungible are those? Can you go back and forth? Like, is all the incremental capacity you're putting in for Switchblade, could you use it for the the Uncrewed product line, if obviously, you have any gaps there? And then how do we think about sort of the the CapEx framework over the next three to four years to support that capacity and where you think the revenues could ultimately get to?
Okay, I'll take maybe the first part, then Trace, if there's anything you want to add. So our primary product production facilities are, you know, in Southern California, close proximity between the small UAS and the loitering munitions. So we do share resources as capacity kind of goes up and down, and so our teams are working close together. While we are in separate P&Ls, we still have a mechanism for sharing those resources, and we get a lot of synergy. Because when you look at building a Switchblade 300 or 600 versus a Puma or a Raven, a lot of the techniques, capabilities, procedures are similar. You know, we're integrating small, lightweight, composite structures with battery packs, avionics, cameras, radios, all very common things.
So we do get benefit out of that so far. The second question, I think, is probably maybe more on the CapEx for-
Yeah. So generally speaking, in terms of the, so just to add to Brett's point on the first one, not only there are similarities in the techniques, we used to make Switchblade years ago before we had a dedicated factory, at the same factory. In fact, the same operators were making the Switchblade as they were making the Pumas and Ravens. So if we have to flex capacity in one facility versus the other, it's a very doable, easy task for us, 'cause we've done it before. We've done it before multiple times. In fact, we've even taken people and taken them back and forth between facilities as well, 'cause it's not that far away from each other.
In terms of the CapEx, as we bring on a new factory, which is our plan, beyond this fiscal year, we have to make some investment this year. It's within our current CapEx expenditures of between 3%-5%. Our facility investments, unlike many other manufacturing facilities, is not very high CapEx or expenditure-heavy investments. We just need the building and the automation in building the test fixtures, and that is actually quite inexpensive rather than being very expensive robots and all that. So within 3%-5% of our spend, we would be able to manage that as we grow into new facilities over the next...
If we have to build bigger facilities for some larger structures that, Jeff has, so Jeff's business has some much larger airframes that are much bigger than the ones that we're doing here, such as HAPS, right? The SunGlider or that platform or other ones that he's working on. Those could require more, but that would be incremental, and it'll be way more than our top-line growth as well. So that'll be, you know, much, much bigger dollars.
When do you expect to be able to announce where the next Switchblade location production facility will be, and when do you expect that to be starting to actually produce product?
Should I say?
Yeah.
No, I'm sorry. We're not, we're not allowed to actually say the location, but I think that we'll probably make an announcement within our fiscal year.
Yeah, within this fiscal year, we'll do that.
Um-
And, you know, there's, it's a lot of other factors that goes into it. It's so the supply base, the ability to be able to integrate the warhead with the airframe is really important. And also for the customer to be able to do... As you know, all Switchblades we deliver gets a lot acceptance test, which means customer comes, there's a pile of Switchblades, lots of Switchblades, and they randomly pick five.... and four out of five has to work. And historically, we've never had to fire number five, because we want to save the customer money. That process is, like, have to be done in a field where the actually live fire test is being done. These are government sites.
And so that is critical for us to be able to actually deliver systems and for the government to accept them quickly as well, besides the integration.
Yeah, thank you, Wahid. I'd add that I've selected the location. We will go through the proper internal approvals, including with the board, and then move out with that, and then disclose it before the end of the fiscal year. I'd also go back. I have offered—I really admire the operations group under Uncrewed Systems, and I've offered that we would take that over for our capacity expansion, but Trace says he needs it for his business.
There's lots of questions back there.
Good afternoon. This is Louie DiPalma in the front row.
Oh, there you are.
Hi, everyone. I think, Kevin, on one of the slides, you talked about how for the total addressable market opportunity, that the international market for Switchblades presents, what you said, a multiplier in terms of the domestic market. Last night, you discussed the order and the approval with Lithuania, and in the news, there's been the order with Taiwan, and I think previously, you've had Switchblade orders with France and the UK and Ukraine. Can you talk about more the international pipeline and the approval process? I think, Wahid, on past calls, you've said that there's been over 20 countries that have requested the Switchblade. So in terms of that long-term-
Is this what you want?
guidance for 10%-15%, what is assumed
I can just hang up there.
-in terms of, like, more countries, approving it and actually-
Like, tap on it. I think this is on.
delivering the Switchblade to those other countries? Thanks.
Sure.
Would you like me to take that?
Go ahead. You take it.
So if you don't mind, I'll
Yeah
... address that.
The Switchblade guy's gonna answer it.
Yeah. So, it's been a long haul, I have to tell you honestly. Very restrictive U.S. government export policy, only approved the Five Eyes in the beginning, you know, UK, Canada, Australia, New Zealand, and we sold to a number of those, and then expanded a little bit to NATO. And you nailed it. You had exactly which ones have been publicly announced. And then there are some others that are not publicly announced that we're under contract for, and those will probably become released at some point. But we've seen with the Ukraine war, this phase of the war, a big shift. And the number that I would say right now, based on U.S. government policy, would be we could get into the 40-50 different countries that we'd be able to export Switchblade 300 and 600 to.
Similar. There might be just a few of them held back, but very similar to what our small UAS business under Uncrewed Systems is. This year, I'm, from an order standpoint, envisioning that, forecasting, that we'll probably be somewhere close to 50/50 on our orders for domestic versus international. So it's going really fast. You can imagine the countries in Europe, Eastern Europe, are concerned about Russia and what Russia's intentions would be, as well as in the Indo-PACOM. And so we're getting a lot of movement and U.S. government policy is supportive, slow, but supportive.
Yeah. If I were to just add, most of these countries are buying their initial buys, which means that similar to the U.S. customers, they buy the initial systems, and then they kind of sort of finalize the CONOPs and training procedures and uses, which then could lead to more. And besides even not leading to more, because it's a one-time use product, there's always going to be need for training. As you know, for the last decade, we've been delivering thousands, and a lot of them is also for just to keep new soldiers trained on the capability.
Yeah, and we believe that, you know, the publicly announced decision of the U.S. government to sell 720 Switchblade 300s to Taiwan, well, that's a fairly decent piece of business. We believe that's just the start, even just with that one customer. So we're pretty bullish about what international will be.
Great. And, also a follow-up related to the commentary last night in terms of the $300 million awards for Switchblades that aren't yet in backlog. And in terms of the timing in that, I think you said you expect those orders to be finalized over the next 9-12 months. How does that relate to the government fiscal year ending in September, and how the budget was passed, I think, around March 15? And I think there was funding for LASSO, and there was $500 million in funding for Replicator. Do you need those contracts finalized in terms of some type of a budget flush by the end of September?
Or if it's not finalized at the end of September, can that money from the 2024 budget, like, carry over into 2025 in terms of long-term contracts, and how does, how does that work?
Yeah, great question. So the timing, FY-- government FY 2024 funds, what was referred to as the $300 million that's been publicly identified, yet not contracted with us yet, is multiyear money, so it could go past September and still be awarded. The bulk of that, if not all of that number, will probably be awarded before the end of September, but it could go past.
Great, thanks.
Yeah.
I think you have had. Yes.
Great. We're good now? All right. Hey, Andre-
You guys just take a turn and turn.
Yeah. Andre Madrid from BTIG. I don't mean to take away from Switchblade and the UxS business, but you know, I noticed that the TAM on UGV grew. We didn't really talk about it much today. Yeah, what are you thinking about? Like, what's the status update on what's going on there and where it's going?
Sure. You wanna take it or want me to take it? So, let me just add something, if I miss anything, you can add as well. The UGV market, as you know, we got into that business at a time when most of the U.S. program records and initial large program records was already decided and procured. So the U.S. has gone through what I call a sort of trough for the last 3 years or so. In the next 3 to 5 years, it's actually gonna be growing, number one. Number two, we also have R&D investment, so that's one. Two, we've been growing that business internationally, very, very successfully. They also have close to 40 plus or 50 countries, if I'm not mistaken, in terms of countries that they export to from the Telerob product line.
So our international customer base for our UGVs has actually grown, and we have a great reputation with that product in terms of its technology. It's the cutting edge out there. The third piece is also that we are investing in a couple of new ground robots and capabilities that actually expands the TAM. There are certain categories that we were not playing before, which we intend to compete in, you know, given sometimes later this year or next year. And so those three alone is what is allowed the TAM to grow, and the fourth item is actually the U.S. DoD. The U.S. market also has new programs on the horizon beyond two years, and that's actually another part of the growth of the market for us.
Just to follow on, you know, you've heard a lot today about, interoperability, robotic systems working together. One of the thesis basis behind the strategy for the acquisition of Tomahawk Robotics really was, you know, forward thinking and the vision that ground robots will be working with unmanned aircraft, and USVs, and all these systems collaborating together to perform missions that aren't being performed today. So we are continuing to invest in that, in that strategy, with Pumas working with UGVs. You know, Pumas going out and finding IEDs or mines or those type of things, and then sending out the UGV to destroy it or take care of it.
So again, those systems collaborating, working together, talking together through common control and interoperability, performing autonomous missions, as you've heard about today, has been really our strategy for some period of time, and, and we're on the road to implementing that with the UxS and the UGVs.
If I can squeeze in one more follow?
Sure.
So, also on that... I guess, on that path where we talk about just other platforms that didn't get much coverage today. Just looking at VAPOR-
Yeah.
I know that on that interoperability point, I think when we were last in Petaluma, you guys talked about there being some level of that on that, on the, on the 55. So what are we seeing there? What, what's the kind of customer need? How do you guys feel like you're fitting in? Just another status update, I guess.
Sure.
Yeah. I mean, we continue to make traction with the VAPOR 55. The new version, the VAPOR 55 MX, we released this last fiscal year, which really was taking, you know, the product that we acquired through that acquisition of Pulse Aerospace and investing in it to really make it more reliable, more rugged, and really be able to address, you know, the customer needs of a reliable, rugged platform that works in the field. We sold VAPOR 55 MX to over 10 customers last year, which I think was a significant increase, and so we continue to see—we're starting to see that adoption. And then again, bringing on Tomahawk Robotics and SPOTR-Edge into the VAPOR, to really give it the capability to perform autonomous type missions.
It carries a lot of payload, and so it has a lot of capability that the fixed-wing assets don't have, and feels confident about the adoption that we're starting to see.
Yeah. And another thing that's happening in the space is, because of the use of these quadcopters or multirotors in Ukraine, you know, FPVs, it has started this thought process of having platforms that are quadrotors or so. But helicopters of this nature has actually a advantage from a physics perspective. For its pound per pound or apple to apple, it could carry a lot more payload. And so the ability to carry two Switchblades on this or have the ability now that they have a modular rail system where you can snap on a variety of different payloads. If you saw one of the videos, it had a directed munition that we launched off of it. That is starting to open up new missions that a bunch of our customers are actually experimenting with right now.
The purchases they've made is to sort of lead to the next step, which could be larger acquisitions over the next 1 to 2 years of the VAPOR platform. So as part of the family systems, it's very critical. We knew that from a long time ago, that it will become part of the strategy of the portfolio, 'cause the customer's gonna have some missions that this is the best solution for, and we're gonna continue to do that with the platform. Yes, whoever's got the mic, maybe next. Sorry, right there is a-
Greg, over here.
... Greg, okay, good. Greg, go ahead. Sorry.
Greg Konrad from Jefferies. Can you maybe just talk about how you build to that 10%-15% growth rate? I think, Kevin, you said multi-billion-dollar defense technology company. If we take the billion of LMS capacity in 2027, everything arrives at, at maybe a higher number. And then as a follow-up, you know, what is that 20% number? Is that just including M&A relative to the base?
It's 20%+, so it's kind of like a minimum. We hope, obviously, to grow faster than that. Sorry. That's-
Can you turn it on?
That work? Yeah.
Yeah.
So those are intended to be kind of minimums. So it's trying to say we're gonna grow at least 20%. That may include some inorganic growth along the way, very much how we've done over the last few years. And, you know, organic growth, we think, at least could be the 15% range. But obviously, depending upon the timing of things, really, you know, this business is so much about how things play out and the timing of things. You can obviously see much higher growth. We grew 20% in FY 2023, 30% in FY 2024. You're definitely gonna see points of inflection, where you get to the higher numbers. We're just saying, kind of, looking out 3 to 5 years, that's kind of a minimum we can see in terms of growth.
Yeah, and that's it could be a lot of times there's, as you saw from some of the programs that we have, if the timing of those programs work out the way that the customers are intending to say it today, it could be sooner, all organic. If some of them slip, it could be a little later. So timing it exactly at what exact timeframe it's gonna happen, your guess is just as good as anyone, including our customers, actually, because it's really tough to predict exactly when those things are gonna happen. The key is, over the next 3+ years, we should be able to achieve that type of a CAGR overall, very easily, in my view. And it could be a combination of a lot of organic, also some inorganic as well.
And then maybe just a quick follow-up. You know, a lot of impressive stuff going on with Tomahawk Robotics. It seems like you've made a lot of inroads since you acquired that. What is the path to monetization? And when we think about the TAMs, is that implied in that, or is that in that battlefield part? How do you think about really monetizing that technology?
Yeah. So there's fundamentally 2 ways that we could monetize. Number 1, as Brett mentioned, Brad mentioned, as Brett and Brad, sorry, is that it helps our solution set become more relevant to the customer. So we build a competitive differentiator that all of our stuff is integrated, and if you buy a Puma or you buy a JUMP 20, or you buy a Switchblade, or you buy something else from us, they're all gonna work together, and we've got it already designed from the ground up. That's the one of the primary reasons why we did it. The second reason, equally as important, by the way, you saw on Brad's slide, is a whole bunch of other robotic manufacturers and providers, small and large. And there's a bunch more that's gonna come out probably in the next 2 to 3 years that we're working on.
USVs, UUVs, you name it, it's gonna come out, and most of them are gonna rely on some sort of a controlling device. And we're completely agnostic. We are completely open. We've never changed that strategy from the beginning, and it was not our intent to change it anyway, that we're open to any other platform, including competitors. That if the customer chooses a different UAV or USV or loitering munition, we always think that ours is the best, and we will work hard to earn that, but we will be open to that. And then that's why we have customers that are technically, in some areas, competitive overlap with our products. Long term, I call it most of like an Android and Apple ecosystem combination. Internally, it's the Apple ecosystem.
We build the systems up front to be more optimized as a system solution, so they work together from the ground up. But if the customer decides that another widget is better, then we can plug that in, and we can work with that as well. So an Android open model as well. That's the fundamental strategy. Anything that I missed? Yeah. Okay.
Hi, Byron Callan, Capital Alpha Partners.
Hi.
I just want to pick a little bit on the changes that you guys are seeing. You know, you mentioned your customers hitting the I believe button, but if you look at the Army budget justification books, they only have $120 million, I think, this year for FY 2025 for LASSO. When do you really start to see the big institutional buy-ins, you know, the real buys at scale? Do they play with these for a year or two, they develop ConOps, and that's when you really start to see the takeoff? Are they waiting to see more from Ukraine? What's kind of the knee in the curve for you?
Yeah, go ahead.
You want me to start that? Everybody hear me okay?
Yeah.
Okay. All right. Thank you for the question. So right now, the U.S. Army has made a decision that they're gonna move forward with the LASSO program of record. So what you see in the budget documents is just the bridge funding to buy, as you described, very accurately, a number of systems to get Army units trained, develop the TTPs, the ConOps, rules of engagement, release authorities. There's a lot they have to work out. So starting in government FY 2026, we should be seeing bigger and bigger buys as they start to fill out the force structure with loitering munitions.
Okay. Second question-
That's just, I'm sorry, just the Army.
Yeah.
Marine Corps has a similar strategy, and SOCOM is a little bit actually ahead of that. We've been providing that to them as well.
Yeah, so, so very good point is, while we're very proud to be selected by U.S. Marine Corps Organic Precision Fires-Light , which was the Switchblade 300 variant, they're also working a medium-
... which would be a Switchblade 600 variant. But the initial awards are very small, so they do essentially the same thing I just described that the U.S. Army is doing. They're gonna take them through testing, evaluation, and then they turn on the full rate production in a couple of years. So that's where really the knee and the curve, you know, beyond all these urgent needs and priming the pump with the U.S. services, is it really takes off.
Okay. Second related question is counter-UAS. You basically talked about reconnaissance, comms, relays, strike. Is there a counter-UAS strategy in here, akin to like what Raytheon's doing with Coyote?
So counter-UAS, you know, is an area that we have had DoD contracts with and demonstrated capabilities using variants of a Switchblade 300 as an interceptor. We are continuing to work at a lower level, some of those opportunities. We do see that as still a need in the industry, that while some of our competitors have been successful in counter-UAS, it's not filling the gaps that are needed out there, okay? Because of the proliferation of threat UAS and threat loitering munitions. So that is an area we're looking at very closely. It's not built into any of our financials today, but we're taking a serious look at it.
Yeah. Okay.
We have some active projects that are sensitive that we can't talk about. Knowing so much we know about drones in general, and the systems that we have that's deployed, you know, gives us a unique qualification with the customer base. And in some of those cases, like, you know, that you mentioned the Coyote, you know, what's really gonna be important in counter-UAS, if I add to Brett's point, is cost per kill. You just can't get into these businesses and expect this to be really long-term, profitable or viable when the cost per kill is, you know, a disadvantage for us as a, a warfighter entity. So you gotta make it cost advantageous for yourself, so the cost per kill could be a lot lower. That problem is still not totally solved yet.
There are projects that we've got that hopefully will get us there, and, but it's still work in progress.
Wahid, my last question.
Yeah.
How do you guys think about Ukraine, not just as a market, but as a potential source to co-develop product? They're gonna have an awful lot of experience. They've got their own organic industry that's developing. Is there a strategy that you think to work more closely with them in the future?
Very much so. Great question, A.B. We are actively working on that today. We have an internal effort within Brett's team and within Jeff's team, and even actually within Trace's team, that are actively working with partners in the country or working with various entities. We are also working with the U.S. side to make sure that whoever we select to partner with, and the partnerships are in a variety of different forms, including co-development, including local production, including sharing technology, to the extent that the U.S. DoD will allow us, then we feel safe about, to not only serve Ukraine, but way beyond Ukraine.
We think that beyond this conflict, hopefully one day it's gonna be resolved, none of us know exactly when, it doesn't look like any time soon, that Ukrainian companies that are doing this stuff now will become a major player in the global market. And, they really respect our brand and our work already because we've been working with them, and they love to partner with us. We gotta do our homework to pick the right ones, and that's actually actively being worked today. And we're very close with the Ukrainian military today in terms of both the U.S. side as well as the Ukrainian side on those learnings. So we're privy to a lot of that learning as well on the front lines. We've got people actively engaged in that on a daily basis. Yeah.
More questions.
Yeah, he's been waiting for a while.
Pete Skovronsky, Lazard. I was wondering if we could talk about, your strengthening balance sheet in the midterm. Your capacity for M&A is gonna be pretty substantial, you know, and growing. You know, that brings opportunity, it brings risk as well, right? Not all the platform type deals that you've done in the past, I wouldn't necessarily consider them home runs per se. Some of the platforms, it almost seems like MacCready could have developed internally for less money than what you paid. So on a more critical note, how do you guys think about make, buy decisions for platforms? How are you thinking about, you know, home run type of deals in the future, and how to avoid, you know, less accretive deals going forward? Because it's, you're gonna have a lot of firepower, for sure.
Yeah, it's a great question, Pete, and it's a question that we discuss and debate, not only internally as a management team, leadership team, but also at the board level on a very regular basis. Every quarter, if not even more frequently, we do that. There's no doubt in my mind, and most of our minds, that developing some of these capabilities organically, we know how to do. Most, not all, but most. And we probably will do a better job than anything else because we've done that multiple times over and over again. And in fact, every platform that we've done as an acquisition, going in, we knew that we had to improve on it. And that's part of the strategy that we've been in, and you see the VAPOR and JUMP 20 and et cetera. The key question becomes: Do we have enough time?
And how much resources do we have to focus on what? Our number one priority still is organic, because we believe we have tremendous amount of organic opportunities and potential for growth. As we grow organically, we definitely see that inorganic opportunities will pop up, because as our portfolio grows, as the market grows, there's new things that are gonna come up. So it's really a matter of, can we get there faster, better, and cheaper with an inorganic option or not? You could argue that certain categories would qualify quite well for that. You could argue that, for example, another domain like USVs and UUVs, would be a really naturally good candidate for that. Counter-UAS could be another candidate. Both could be hybrid, organic and inorganic.
So we're gonna be—we know that we have the ability, because of the strength of our currency and our balance sheet, that we can do it. But we really are prioritizing organic first, because there's lots of it there. And if we can execute those, and we can achieve those, we're gonna supplement and complement that, as Kevin described in his slide, additionally. There's no guarantee on an inorganic, because we're gonna make decisions at every single time based on the rationale for that particular case. But I think the probability is gonna increase as time goes by, and our ability to do it is actually getting better, not worse, as a company. So-
Thank you.
Anything else you wanna...?
No, that's it.
Yeah. Let me add, if you don't mind, one more comment to that. You added a really good point about, we have the ability to invest organically on this. So I just wanna mention, as much as we love all of our investors, we do, they are long-termers, and they've been with us for a long time. They also look at every quarter. So as you saw, we just published our, guidance for this, for this year, and we have a 12%-13% R&D spend, and maybe there was an expectation that it should be lower. So they do act on that based on, you know, short-term metrics rather than long-term metrics. It is a really tough challenge for a company like us, because the opportunities are really there.
I truly believe that we're on an inflection point that is going to lead to a lot more growth in the future. That's really the key.
Yeah, and so Peter Arment with Baird again. So Wahid, you mentioned last night on the, on the call that eventually you're gonna see a kind of a blanket agreement for purchasing of Switchblades, and it sounds like what Brett described, that there's sort of like this natural cadence of where you're getting the training up, the teams up, and all these, whether it's U.S. Army or, or the Marines. What is the kind of the milestones investors should be looking for before we start to see that, when we know the blanket agreement's probably coming? You know, what do we need to think about? Because it seems like that's not only gonna be important for just the volumes, but also what you've talked about as the, the cash flow aspect, the progress payments.
Sure. So we're technically working right now, two parallel paths of acquisition and contracting. One is, every single one of the opportunities that Brett mentioned for him, as well as actually even for Trace, we are working on individual contracts, individual customers, individual opportunities, to be able to get those converted into contracts and orders. And we've been doing that for the last many years, as you know. And about 2+ years ago, no, 4 years ago, we had this IDIQ contract that the Army actually kept extending its ceiling multiple times. $248 million was the initial for Switchblade, and then they increased the vol- the, that ceiling a couple times during the Ukraine. They would like to have a much larger one.
In parallel to those individual activities, we've got this multiyear contract, which I mentioned on the earnings call, that we've been working with for many months. And so while this larger umbrella contract, IDIQ sole source, is in progress, we may see some orders individually before that. And our, our wish would be, ideal wish, and so is our customer's wish, to get the umbrella contract in place fast. Now, fast is a relative term, number one. Number two, there's also some legitimate arguments for taking your time. Number one, we wanna make sure that this contract is FAR-based contracting rules and regulations, because you do not want a competitor later to come in and protest. Army doesn't want that, we don't want that. Nobody wants it, except our competitors. And so that process takes time.
And there's been some criticism of this publicly, within congressional leadership and the different committees about the contracting process. So that is really the key. And number two is, there are terms and conditions on that contract that we're trying to address, which is quite... We want it to be much more favorable than it is today, because we believe right now, it's not as favorable as it should be. Right now, we're ordering parts in advance of a contract. We're building product. We get a contract, then we recognize revenue because it's over time. But we can't invoice until we actually ship, and the customer accepts the product after the lot acceptance test. We wanna change that to be a better capital structure.
And so we have a desire to make sure that that's addressed in this contract, and our customer is interested in addressing that as well. But we're gonna have to negotiate that, and we're negotiating it actively right now. And so that's the other aspect, and the last aspect is also the economic model in general of the contract in terms of pricing and all that, because it's gonna be a large umbrella contract for multiple years, and we wanna make sure that the price is reflective of the value that we're delivering and the cost that we're gonna be incurring over multiple years in several contracts. So those are the two avenues. I wish I could give you a better milestone. We know that our customer... This is the best thing I could tell you.
Our customer, the U.S. Army, is incredibly motivated at the highest levels of acquisition. We've met with them directly, more than once, that they would like to get this done fast. There's a sense of urgency within the U.S. Army and Pentagon to get these contracts in place, but they do have hurdles and procedures and processes that they gotta go through. And it's a matter. Believe it or not, the time that it's taken for them to do this with us, they will tell you, every one of the contracting experts within the U.S. military will tell you, it's as fast as they've ever seen it. They've told that directly to myself and to him.
Well, there's been other contracts that have been smaller, but the size of this and the magnitude and the importance of this, it's incredibly fast relative to how the U.S. military buys things.
Thank you.
Yeah.
Other questions? Okay.
Okay. Well-
Oh, go ahead.
Yes. I just wanna thank all of you for coming today and investing your morning, and we're finishing ahead of schedule. Really appreciate it. I hope we answered your... the key objectives that I had, and we answered some of your questions. We wanted you to meet the team, that we have a very proven leadership team, and the expertise and the capabilities, number two, and the markets are there, and the growth is gonna be really sustainable over the long term. Now we're gonna break for lunch, I believe, and Jonah is gonna tell us more about that.
Yep.
Okay. Thank you again.
All right. Thank you, Wahid, and I'll echo his sentiment. We really appreciate your time, your questions, and your continued interest in the company. We will be publishing a video recording to our website, along with the presentation slides that were filed this morning, so you can take a look at this in the future. For those of you on the webcast, we will be closing the webcast shortly. For those of you here in person, we will be serving lunch. Feel free to take a look at our demos, grab some food, and mingle with our team. And with that, thank you all very much. Have a good rest of your day.