Operating business14% entry signalMarket screen6 sourced figuresStructure decidesentry cost + regulatory drag

Military Drones & Counter-UAS

Prepared 2026-10-21

The industry — Aerospace product and parts manufacturing

Base industry report for 33641 →
Establishments · CanadaA
283
with employees · summed from 6-digit industries
Under 10 employeesA
37%
most common size: 1–4
Establishments · USA
1,840
Employment · USA
421,482
229 per establishment
Payroll · USA
$43.5B
$103k per employee

Of 283 Canadian establishments with employees, 37% have fewer than ten — an industry where large establishments carry real weight.

Entry signal — what decides who wins here

Structure decides
Structure decides One thing must be true Execution decides

The binding constraint is not executional. Being better than the incumbent does not, by itself, get you in — this one is cleared with capital, an asset, or a permission.

What you would have to beat

Raise or borrow the entry ticket, or buy an operator who has already paid it. The barrier is money rather than permission, so it yields to a balance sheet — and an acquisition is usually cheaper than a start.

How it was read
Binding constraintUNVERIFIEDentry cost + regulatory drag — Capital — being better does not, by itself, clear it.
How fragmented the field isA37% of establishments have fewer than ten employees — Concentrated — a new entrant competes against establishments with real scale.
What it costs to be in the businessUNVERIFIEDhigh capital — The structural profile of subsector 336, inherited by every industry beneath it.
How many new establishments are still tradingA
Manufacturing, US · opened 2020
86.2%
1 year
70.8%
3 years
58.4%
5 years
45.3%
10 years
opened 2015

Measured, not forecast: the share of US establishments opening in one year that were still active later. It counts good operators and bad ones together, which is exactly why it is the honest answer to “what are the odds”. It is for the whole sector rather than this market, and the ten-year figure comes from an older cohort because no younger one has reached ten years.

This is not a probability of success, and it is not a verdict on you. No survival probability is published per market, and inventing one would be worse than saying so. What the bar reads is how much of the outcome sits inside an operator's control: green means the hurdles are ones a better operator clears, red means the binding constraint is capital, an asset or a permission rather than execution. Someone arriving with an advantage this screen did not assume can win a market shown in red.

Companies named in this market · 10

The binding constraint — entry cost + regulatory drag

This is the one corner of aerospace where demand really has moved. AeroVironment's revenue went from $820.6M to $1,976.8M in its year to April 2026 [A], with $1.46B of funded backlog by August [A]. Ukraine's procurement agency signed UAH 333.6 billion of drone contracts in the first half of 2026, twice the year before [A], and the EU set up a €150B loan instrument for common defence buying [A]. Capital is not short either: Anduril raised $5B at $61B, Shield AI $2B, Quantum Systems $1.2B and Helsing $1.8B, all in 2026 [B]. The cut is what has to be in place before the first government sale, and none of it is money an ordinary entrant can raise. In the US a buyer is choosing from the Defense Contract Management Agency's Blue UAS list, and since December 2025 the FCC has closed the normal authorisation route to new foreign-produced drones and critical components [A, as described in Red Cat's 10-K]. In the EU, SAFE money needs at least 65% of component costs from the EU, Ukraine or the EEA [A]. In Ukraine, 80% of drone money goes to products rated on combat data, and only 20% is kept for testing new ones [A]. Add facility clearance, ITAR and CMMC, and the entrant is funding years of qualification against a budget that is mostly still a request: the Pentagon asked for $54.6B for its Defense Autonomous Warfare Group in FY27 after giving it $226M in FY26, and $53.6B of that rides on a reconciliation bill that may not pass [B]. A programme win does not end the cost. Red Cat, an Army Short Range Reconnaissance winner, lost $61.8M on $35.7M of revenue in the first half of 2026 [A]. Incumbents widen the gap by buying in: AeroVironment paid $3.48B for BlueHalo [A]. The sibling record 336410 reads the Canadian side the same way. What can be entered is the supply chain under the primes: compliant components, test services and compliance tooling.

Market scaleinternationalunit: one national procurement system and its approved-supplier list

Firms compete globally but sell into national procurement systems, and each one has its own gate. The US has the Blue UAS list, the FCC Covered List and ITAR. The EU's SAFE loans carry a 65% EU, Ukraine or EEA component rule. Ukraine ranks products on combat data. Demand is everywhere, but a firm can only compete for a buyer once it is qualified there.

Canadian establishments with employees, aerospace product and parts (all of 3364, not drones alone)A 283 (Statistics Canada, December 2023); 20 employ 500 or more; Ontario 132, Quebec 81
US establishments and employment, NAICS 3364 (all aerospace)A 1,840 establishments, 421,482 employees, US$43.5B payroll (County Business Patterns)
AeroVironment revenue by line, fiscal year to 30 April 2026A Uncrewed Aircraft Systems $363.9M (FY25 $352.0M, FY24 $407.7M); Precision Strike and Defense Systems $848.3M (FY25 $359.4M, FY24 $192.6M); total $1,976.8M including BlueHalo lines
Ukraine drone contracts signed by the Defence Procurement Agency, H1 2026A UAH 333.6 billion, twice the same period of 2025; FPV drones the largest share (Ministry of Defence, 17 July 2026)
EU SAFE defence loan envelopeA €150B; 19 member states submitted plans; at least 65% of component costs must come from the EU, Ukraine or eligible EEA/EFTA countries
US Defense Autonomous Warfare Group (Replicator's successor) fundingB $225.9M received in FY26; $54.6B requested for FY27, of which $53.6B depends on budget reconciliation and $1B is in the base budget
US drone and counter-drone request, FY27B more than $70B requested, against $13.4B for autonomous systems and $3.1B for counter-drone in FY26
Angel-backed companies5
in the Canadian portfolio dataset
Province mixON 2, AB 2, QC 1

Sectors joined: Defence Software · Space/Deeptech · Space Tech · Autonomous Drones · Satellite Imaging

[UNVERIFIED] Sector-to-NAICS mapping is analyst judgment — see data/angel-sector-map.json. Counts are a per-record cross-reference and are not additive across records.

I

Who you would be competing with

The operators already at scale here, and whoever is buying these businesses. In most of these industries the competition an entrant meets is local, so this is who sets the terms rather than a list of everyone in the trade.

Largest operator
AeroVironment (NASDAQ: AVAV, Arlington, Virginia) in small and tactical uncrewed systems; General Atomics Aeronautical Systems (private) in large uncrewed aircraft
Scale
AeroVironment: FY2026 (to 30 April 2026) revenue $1,976.8M, up 141%, about 85% from the US government and 63% from the DoD; funded backlog $1,183.0M at 30 April 2026 and $1,457.8M at 1 August 2026, plus $1,366.5M unfunded. General Atomics publishes no revenue.
Concentration
Not published. No agency or filer gives a share of military drone or counter-drone procurement, and the US autonomy money is spread across 348 budget lines (Inside Defense, per search; not opened).
Others in the field
Venture-funded primes in the making: Anduril, Shield AI, Skydio (defence line), plus Helsing and Quantum Systems in Europe. Listed specialists: Kratos (Unmanned Systems segment), Red Cat (Teal), Teledyne FLIR, and DroneShield (ASX: DRO) in counter-drone. Ukraine adds more than 200 domestic manufacturers listed on the DOT-Chain Defence marketplace.
Lock-in mechanism
High once a product is in a fleet. AeroVironment's 10-K says many international customers 'have established fleets of our UAS, which generally allows them to seek and obtain budget for yearly incremental allocations', contracted through multi-year support agreements. Approved lists (Blue UAS), programmes of record and Ukraine's combat-data ratings all favour products that are already fielded.
Price movement
Not assessed as a unit price. AeroVironment's gross margin fell from 39% to 25% in FY2026, partly on BlueHalo's service mix and partly on 'mix shift to a higher proportion of lower margin products driven by the increase in Switchblade production'. Volume is growing faster than margin.
Is the buyer consolidating?
Yes — The buyers are governments. On the supply side, the established firms are buying capability: AeroVironment closed BlueHalo on 1 May 2025 for $3,484.9M net of cash, then booked a ~$241M goodwill impairment in the Space reporting unit in FY2026. Shield AI said it would use part of its 2026 round to buy Aechelon Technology.
F

Financials & market size — sourced

Figures that came from a filing, a results release or reputable reporting, each carrying its evidence tier.

AeroVironment FY2026 revenue and operating resultA $1,976.8M revenue; gross margin $500.6M (25%); loss from operations $311.0M after a $240.7M goodwill impairment
AeroVironment latest quarterA $480.5M revenue in the three months to 1 August 2026, up 6%; funded backlog $1,457.8M
Kratos Unmanned Systems segment revenueA $292.0M in FY2025 (FY24 $270.5M, FY23 $212.2M); $161.7M in H1 2026, up 18.6%; company total backlog $1,573.4M at 28 December 2025
Red Cat Holdings revenue and lossA $40.7M revenue in 2025; $35.7M revenue and $61.8M net loss in the six months to 30 June 2026
Teledyne uncrewed air systemsA Sales of unmanned air systems rose $35.1M in 2025 inside a Digital Imaging segment of $3,163.9M; no stand-alone drone revenue is reported
2026 venture roundsB Anduril $5B Series H at $61B (May); Shield AI $2B at $12.7B (March); Quantum Systems $1.2B Series D at about $8B (July); Helsing $1.8B at $18B (July); Skydio $110M Series F at $4.4B (April)
$

Market size, derived

Built from the competitor set upward rather than quoted from a forecast. Published TAMs in these categories are frequently reverse-engineered from each other, so any published figure is checked against the vendor arithmetic rather than trusted on its own.

Revenue floor
$4.5B

Disclosed revenue from 4 of 11 named vendors. The market is at least this large.

Implied total — revenue ÷ share
—

No vendor has both a disclosed revenue and a published share.

Published forecast
—Floor only

Only a revenue floor is known — the true market is larger by whatever the undisclosed vendors earn.

Competitor set · 11 named · 6 disclose revenue

NameRevenueShareNote
AeroVironmentNASDAQ: AVAVA $2.0B — FY2026 revenue, year to 30 April 2026, Form 10-K; includes BlueHalo space, cyber and directed-energy lines
Anduril IndustriesB $2.2B — 2025 revenue as stated by the CEO at the Series H close (Washington Technology, 13 May 2026); all product lines, not drones alone
Kratos Defense & Security SolutionsNASDAQ: KTOSA $292M — Unmanned Systems segment revenue, FY2025, Form 10-K
General Atomics Aeronautical SystemsC not disclosed — Privately held (General Atomics); large uncrewed aircraft; publishes no revenue
Shield AIB not disclosed — Private; $2B raised at $12.7B in March 2026; projecting more than 80% revenue growth in 2026 (Fortune)
SkydioB not disclosed — Private; $110M Series F at $4.4B post-money (April 2026); lists a $50M, 3,000-drone US Army contract
Teledyne FLIRNYSE: TDYA not disclosed — Part of Teledyne's Digital Imaging segment; unmanned air systems sales rose $35.1M in 2025, no stand-alone figure
Red Cat HoldingsNASDAQ: RCATA $41M — 2025 revenue, Form 10-K; Teal is an Army Short Range Reconnaissance programme winner
DroneShieldASX: DROB AUD 217MAUD — FY2025 revenue from customers, per secondary reports of the results; the earnings call is reported as citing about A$260M, a gap not resolved
Quantum SystemsB €300MEUR — About €300M in 2025, roughly double, as reported at the July 2026 Series D (The Next Web)
HelsingB not disclosed — Private, Munich; $1.8B round at $18B valuation (Germany Trade & Invest, 13 July 2026); no revenue published

AUD and EUR figures are shown in their own currency and are left out of any total below — converting them at today's rate would put a spot rate under a full year of trading.

Evidence

Evidence. Read at source [A]: AeroVironment's FY2026 Form 10-K (filed 29 June 2026) and its Q1 FY2027 10-Q (filed 10 September 2026), both on EDGAR. These give revenue by line, government share, funded and unfunded backlog, the BlueHalo price, the goodwill impairment, the gross margin and the fleet lock-in language. Kratos's FY2025 10-K and Q2 2026 10-Q give the Unmanned Systems segment table. Red Cat's FY2025 10-K and Q2 2026 10-Q give revenue, net loss, the SRR selection and its description of the December 2025 FCC Covered List action. That FCC action is as Red Cat describes it; the FCC order itself was not opened. Teledyne's FY2025 10-K gives the segment table and the $35.1M rise in unmanned air systems sales; Teledyne's 21 October 2026 8-K was not read. The European Commission SAFE page gives the €150B envelope, the 19 plans and the 65% component rule. Ukraine's Ministry of Defence releases of 10 March and 17 July 2026 give the 80/20 rule and the UAH 333.6B. These are official claims and were not independently audited. Secondary [B]: Breaking Defense (9 September 2026) and DefenseScoop (21 April 2026) for the DAWG and FY27 request figures. comptroller.defense.gov refused automated access, so the budget books were not opened. Washington Technology and Anduril's own news title for the Series H. Bloomberg and Fortune, as surfaced by search, for Shield AI (the articles were not opened). Skydio's own page for its Series F. Germany Trade & Invest for Helsing. The Next Web for Quantum Systems. DroneShield's figures come from secondary reports that disagree with each other; its site bars AI agents, so it was not fetched. Not established: any market size for military drones or counter-UAS, any share, any unit price, and the size of Canada's drone-making base. The StatCan and Census counts cover all aerospace manufacturing. The cut factor is analyst judgment.

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Software serving this industry

Vertical software markets filed along the same branch of NAICS — who sells to these businesses, and who an entrant would have to displace.

No vertical software market has been recorded along this branch yet. The base industry report says what the subsector typically runs on.

Other records in this industry