As we all know, there’s a whole lot of private capital going into defense these days, but, as it turns out, there’s a big appetite in the public markets, too.
California-based drone-maker Aevex ($AVEX) went public on the NYSE earlier this month, valuing the company at $2.57B after shares jumped 15 percent in their debut and doubled in two days of trading. That’s since cooled a bit, but as of market open today, the stock price is still up over 26.07 percent since the IPO.
Tectonic sat down with Aevex CEO Roger Wells to get the inside scoop on Wall Street’s demand for defense and taking a pure-play defense company public.
Drone dawgs: Before we get into all the fun stuff, a bit on Aevex. The company—backed by PE giant Madison Dearborn—dates back to 2007 and has since carved a nice little niche for itself in the drone and “attritable autonomy” world.
- Popular offerings include the Disruptor, a long-range Group 3 strike drone; Atlas, a precision strike system chosen by the US Army for the Launched Effects–Short Range (LE-SR) program; and Mako, a small unmanned surface vessel. All that’s underpinned by Aevex’s CompassX AI-based sensor-fusion and autonomous navigation system.
- Several of Aevex’s precision strike drones, including Disruptor, fall under the “Phoenix Ghost” family of systems, developed by the Air Force and secretively deployed en masse to Ukraine starting in 2022.
- In the company’s S-1 filing with the SEC, Aevex said its successfully executed on “critical strategic programs of record, with over 10,200 systems delivered and committed through the end of 2026 to operational environments that validate our battlefield effectiveness.”
- The company has two main segments, Global Solutions and Tactical Systems, the latter of which is responsible for their own tech and makes up about 75 percent of its total revenue.
That track record, according to Wells, made the decision to go public pretty easy.
“We came into this fiscal year with over $500M in funded backlog,” Wells told Tectonic. “That is a significant increase—over 180 percent—from where we ended in FY24, and that was backed also by a pipeline that was over $8B.”
“We’re seeing great interest across our portfolio, but in particular the Group 2 and Group Three kinetic systems and our unmanned surface vessels—there’s a lot of interest and operational need for the types of capabilities we bring,” he said. “There is a significant amount of opportunity in a well-qualified space, further supported by the fact that the FY27 budget ask [included over $50B for exactly the type of systems that that we build—one-way attack, launched effects, precision strike, loitering munitions, so really kind of the sweet spot of where Aevex plays in the market.”
He also sees that demand lasting well beyond the FY27 budget, which is pretty essential for those pesky quarterly reports.
“The [IPO] backdrop, we believe, is really a defense supercycle, where you’re going to see a significant amount of funding going into these types of capabilities,” he added. “It just represented the next phase of growth for Aevex and was really an opportunity to continue to drive brand awareness, attract and retain the best talent, and execute in a capital market environment that is really unique and advantageous.”