The Persian Gulf, of course there's an emerging potential threat that's happening in the Pacific that U.S. has to get ready. We don't have time for any leisure activities. Maybe quickly, how are you thinking about, 'cause you mentioned the $70 billion, how are you thinking about the Defense Autonomous Warfare Group and what that means, and does that change anything? Yeah. I believe this is part of the department's strategic goal to consolidate the decision-making for these areas into one bucket of funding, number one, and two, and one authority that can drive strategic decisions on allocate where the gaps are, how to prioritize those things, and how to execute against them. Still, majority of the execution is going to happen within the services and the program offices and contracting offices that is designed to support the Army, the Navy, the Marine Corps. The DAWG we've been involved in very heavily. Yeah. They are incredibly active in lots of different areas that, you know, directly relates to our stuff. Yeah. It's, I believe, as Under Secretary or Deputy Secretary Feinberg's vision and intent to try to have this realignment and focus and direct line of responsibility and authority to be able to execute and command and drive the ship. We support it. It's been very actually, I think it's a good change that is going to hopefully help move things faster in the next 12 months. Got you. Got you. When we think about, you mentioned your current kinetic events going on in the world right now, Ukraine. Yeah Iran. It does seem like one of the things, at least that speaks to me that's come out of Iran, is the vulnerability of civilian targets to unmanned systems. Can you speak to, you know, what that means for AeroVironment? Sure in terms of an opportunity and, yeah. I mean, this is, like, our moment, if you ask me. The reason why, because four or five years ago, every military leader you met within the building or outside the building or in the world, they thought, "I need more F-35 type airplanes, I need more aircraft carriers, I need more tanks, I need more armored vehicles." That's been the story of defense for the last multiple decades. These two conflicts have shifted the paradigm dramatically. Ukraine basically put a exclamation mark that you've gotta deal with drones that are armed, and how do you defeat how do you make a lot of them, and how do you defeat them. Now the conflict in Iran where U.S. is actively involved, in the other one we were indirectly involved, in this one we're directly involved, has shifted the paradigm even further because we thought, "Okay, they may have, like, 20 or 30 or 50 of these Shahed," but they're in thousands. Thousands of them. Who knows, if Iran can do thousands and thousands, China could probably do hundreds of thousands, if not millions. We don't have the capability to, A, defeat that many, and do it at an economic way. The war of drones has become now the defense against drones in the counter-UAS world. These areas are the areas that we're the number 1 or number 2 player in the world. We're positioned phenomenally well. I think this story and this strategy's going to continue to gain more momentum in terms of spending dollars being more aligned towards these capabilities, 'cause U.S. doesn't have it. I can give you several examples of the areas that we play in. That'd be great. First of all, if you look at our portfolio, it's a very diversified portfolio of first non-lethal drones. We're the number one player in the world on Group 1, 2, and 3, which is by far the lion's share. A Group 1 is small quadcopter, the DJI size, all the way up to Group 3, which is a Shahed drone. We are the leader in small UAS and medium UAS. Our JUMP 20 system and JUMP 20-X is the world leader. We have won seven consecutive program records internationally in the last 12 months alone. These are 5, 10-year programs that our European allies are coming to us and they're actually procuring these systems. We compete, we've won every single one. We lost one out of the eight, that was because of our own fault. We submitted a non-compliant bid. The other seven we won. You get into the lethality systems. This is loading munitions such as Switchblade and our one-way attack drones such as Red Dragon and Dragon family, and then the latest product that we announced called Mayhem and the Switchblade family. That, we're the world leader. We're the largest producer of these systems in the world, and we're the dominant player there as well. On the counter-UAS side, we have a layered approach to the solution set. We do not believe there is a one solution that fits all. There's going to be a layered approach to defending against these drones. The first mechanism is RF jamming. We have the world's best RF jammers that is the most successful, the most predominantly used one in Ukraine as well, and called the Titan Series, and we're that business is doubling every year, literally. That's one. You apply that. Shaheds are actually immune to that. Chinese drones are going to be immune to that 'cause they don't have RF signals. You have to go to the next layer, which is the most economical, it's called directed energy, laser weapon systems. We've got the world's best performing, most reliable directed energy system called the LOCUST Series, and we announced our newest product, like, couple months ago, called the X3. X3 is basically putting a system on top of a Stryker or a JLTV that allows you to go, you know, we'd be driving down the road, you can detect a drone, and you can defeat the drone while you're driving it. The key milestone for that is the first ever historic program record for the U.S. Army called E-HEL. Emerging or emergent high-energy lasers, they are planning on making a decision within the next 30 to 90 days. That will be the first ever production-level program record for a laser weapon system in the U.S. military's history, and we're competing for that. That should open the floodgates. The third layer for us is a kinetic kill. If you can't defeat it with jamming, you can't defeat them with laser weapon systems, then you're going to use a missile or a kinetic kill like a Switchblade. That is not the cheapest, the solution that U.S. has today is only one. The solution that we have is every time a Shahed comes to us or something smaller than a Shahed, we use a $2 million-3 million missile, and we're depleting our inventory of missiles that's supposed to be used against ICBMs and big airplanes and other things. We have a program record that we're competing with U.S. Army called NGCM. That is the next generation counter UAS missile. There was two players. It was us and RTX, we were down selected. We were awarded the contract. We're now going to be delivering 80 some odd systems. It is the first ever missile that is going to be de-developed specifically to a target and defeat Group 1 through 3 drones, and it's going to do it at a fraction of the cost of a missile. It's in the $100,000-150,000 price target, not $3 million targets. Okay. Our solution set, as you can see, it's a very layered approach. We're focused on the long-term, you know, war, not the short-term battles, and we're making sure that we progress in every single at category as we go forward. I mean, if we can just maybe pull on that string a little bit more, how do you think about civilian targets? 'Cause something that jumped out at me was when Burj Khalifa got hit, you have this high-profile civilian target. Is there a world, and I don't want to like kind of get too out there, but where every single high-profile civilian target has some sort of protection system? Absolutely, there's a scenario, and I firmly believe that I hope it doesn't get to this. It's very unfortunate, or it would be very unfortunate if there's a real catastrophic event. You talk about the Olympics, World Cup, music festivals, and NFL games. You know, we were on an airplane, this story. Major League Baseball has a person who is looking after, "How do I protect stadiums and gatherings against drone, you know, attacks?" They're just starting, hiring one person to lead this effort within the entire MLB, and that's going to happen in all these places. Most likely, the most obvious solution first is Golden Dome, which is about military sites and critical infrastructure for the national security, and it's domestic mostly. After that, it's going to be every nuclear power plant, every hydroelectric dam, every water sanitation site, every stadium. Music festival critical data centers. These sites are all going to have to be protected because three or four people can cause a lot of havoc internally. Okay. You may not see a LOCUST X3 high-energy laser, but you will see definitely a Titan jamming system. At the lower end, you'll probably see a 5 kilowatt smaller size LOCUST system installed at these critical sites. The market for that is basically tens of thousands of sites, not a- Yeah -100 site. We're kind of getting ready and positioning ourselves for that. The biggest hurdle that are going to be just regulations. I have one piece of great news where the U.S. Department of Defense and FAA just announced that our product, LOCUST, has been now proven to be safe and operationally deployable domestically. That was a major announcement that just came out literally last month or two. Okay. That's going to most likely open up doors for the adoption of these things in the next couple years. Got you. Maybe switching to Sean real quick. You know, as you've come up to speed on the company and started talking to analysts, investors, is there anything that jumps out at you that are, you know, potentially misconceptions people have about the business and the business model? Oh, yeah. Great question. Looking at the portfolio that we have right now and the key products and franchises that we have current and soon to be rolling out, I think just the understanding of the market sizing for that and the ability for us to bring these to market and win is not quite understood. We've done a lot of communications, a lot of explaining of what the new portfolio looks like. I think we're going to continue to hound that message. Ultimately, I think that's where, you know, looking at the models, we'll be able to see further growth and adoption of these commercialization strategies and the key franchises that we acquired. Maybe as a follow on, and maybe you just, you haven't seen it enough yet, but is there anything you'd want to change in people's models where if you see a outside model, you're like, "Well, that's just not right"? Like, is there anything that jumps out at you like that? I think just looking at the ability for us to deliver and grow profitably has been undervalued from a multiple perspective compared to our peers. You look at a lot of our peers, the multiples are much more favorable, they're losing money or they're just starting up and they're ramp on volume. We've been doing this for years. We understand what it takes to bring products to the market and be successful in it, we think our multiple is really kind of undervalued. Got it. Got it. Then, you know, Wahid, how are you thinking about, the balance between, you know, the smaller UAS and larger ones and procurement priorities? Yeah. Maybe you might add on there. I'll make it a more complicated question. How do you reconcile that with some of the other competitors in the market and, you know. Yeah the Europeans are going into this market and. I mean, we've been competing with the large primes and small startups our entire history and existence. I've been with the firm for over a decade and a half, and there's not been a single year that I don't go to a conference or to an event where the concern about how do you guys going to compete with startups and how do you compete with VC-backed companies? If you recall the drone, commercial drone insanity that happened like 10 years ago, we started counting actually companies. It was over 1,500 of them. I look around now, we stopped counting because there's so many. Okay. All of them shifted to defense. You know, we're not going to make money here, then we're going to find a market in the defense market. I think one or two is still in existence, and they are still not profitable, and they still haven't reached any level of scale whatsoever. That's, that's the fact about the last 30 years, A. B, we are the model that most of these companies are copying, essentially. The business model of investing in R&D, developing products rapidly, the disruption, disruptive capabilities, and bringing it to market and scaling is what they really all want to do. That's not a surprise. The third thing is the market is growing so fast and so becoming so big that there's room for more players. It's obvious it's going to attract more investments, because the investors look at where the buck's going, and there's a lot of money to be made here, and that's why they're doing it. But what differentiates us is exactly what Wahid Nawabi and Sean said, which is, you know, there's one thing that Elon Musk says that I really believe in. You know, 10% of the effort is doing a prototype. 90% of the work is when trying to scale that in thousands of units. How do you scale to deliver reliable, quality product and thousands, if not tens of thousands over the long term? There's a lot of work to be done there. I have this debate with our engineers all the time, 'cause, you know, they're done. They're not done. There's a lot more work to be done. That's something that nobody can match with AV. You know, if you look at small drones, we've got the largest install base of small drones in military ever. You know, 55,000 plus systems. If you look at our number of customers, 55 allied nations besides U.S. Every branch of the U.S. military. We are the dominant player in these categories, and we've been the number one since the beginning. Production capacity on all these categories that we mentioned, we are in full rate production in eight or nine of these 10 products. We're making it now in volume, and we're already in second gen, third gen, fourth gen product. Every single one of them, right? Puma, we're in Puma 3, 3G. The current Puma is like nothing like the original Puma. Everything inside looks different. We have an advantage there. The last thing I'd say is our technology stack is incredibly a huge differentiator too. We design 90% of our subsystems ourselves. We design our structures. We design our motors. We design our autopilots. We design our autonomy package. We design our ATR package. We design our propulsion battery packs even. Gimbals. Having the ability to stack up the technology and optimize the performance of the drone allows us to beat competitors when it comes to program of record competitions. Little difference here and there makes a huge difference on the outcome. You know, I had an investor call or meeting earlier, somebody said, "We have a Group 2 drone called P550." There's a competitor that were the two down selects on the U.S. Army program of record called LRR. Pound for pound, our product outperforms significantly. The program record selection is going to most likely reflect that. We'll see who's going to be the winner, but that's how we also keep a differentiation between us and everyone else. We welcome competition. It allows us to stay competitive and on our toes, but most of our worry is not competitors. Most of our worry is making sure that we execute on our plans and the budget dollars flow so we can go deliver. I mean, just a maybe a tangent to that. Is there an opportunity as the market grows and if, you know, if there's room for other players to be a merchant supplier? Like for example, your gimbals. Yes. Could you sell them to somebody else who needs gimbals or your motors? 'Cause I know getting motors domestically can be tricky, right? A lot of that kit comes from Asia, right? Yeah. The answer is absolutely yes. In fact, we are doing that today in some areas. Okay. Initially, we got into these things because nobody else was producing them or manufacturing them or designing them. There was no such company that made motors for a military-grade drone. What you could buy was a RC helicopter or airplane drone, a motor or servo or whatever. We designed these things ourselves. Now there are players that make subsystems, and they're making them for us too, but we still design them. Lastly, I would say that we are currently doing that in some areas already. For example, if you look at our ground control station, we bought a company four or five years ago called Tomahawk Robotics. The concept behind that is that U.S. Army has got a program record called HMIF, Human-Machine Integrated Formations. Essentially, if you're a soldier, you're going to have multiple robots. Ground robot, two or three drones loading munitions. You don't want to carry five different controllers and radios and battery packs. You want to carry one, you want to be able to control and communicate and operate these. They competed this program, and we competed, and Anduril and others were the competitor. We won. We now are providing that as a solution to a variety of different drone manufacturers. In fact, we ship more of that product with our competitor drones and robots than our own. The goal is obviously to stay agnostic there. Gimbals we've thought about. Gimbal's a little bit more tricky because you have to be involved in a design phase of the product itself unless you get to larger sizes. Certainly, that's another area. There's areas of even propulsion, motors, and others that we could do that. We've been so busy you know, making products and producing to fulfill our own needs, we haven't had the need to go beyond that. That's definitely going to be the case going forward to some extent. Got you. Yeah. Oh, last thing I would say, if you don't mind, sorry. Sure. Yeah. On the autonomy and computer vision, we're currently integrating our autonomy packages, basically the brains of the drone, into a variety of our competitors. Not only just drones, but USVs, UUVs, UAVs, of many of our competitors today. It's because it's the best performing, and we believe in a very modular open systems architecture, so you can swap any of our subsystems with anyone else's, whether it's hardware or software. It's doable today. That's how we built the architecture. Truly open system because you hear an open system gets thrown a lot by some players that maybe aren't really open system, but they say they're open system. Yeah. Well, the best I completely agree with you, right? An open system, there's a spectrum of openness to what where you are. The best way that open system is being implemented, in my view, truly being open system, is what the U.S. Army's doing, called MOSA. MOSA is a very robust effort by the U.S. Army to develop a strategy on how to develop product from ground up that is compliant with open modular approach, where the interfaces are standardized. You share that with the customer, you disclose that, they have that, and any time if someone else has a product that meets that requirement, it could be swapped in and out. Yeah. P550 was designed from the ground up to be 100% MOSA compliant, and it is today. In fact, every module is swappable. Switchblade 400 and MAYHEM 10 is designed from the ground up to be 100% MOSA compliant. We did not go and tweak the product to become MOSA compliant. We designed it from the ground up to be such in that way. Yeah. Very much similar things can be said about JUMP 20. JUMP 20 airplane has 60-plus gimbals and payloads integrated into it. None of them are AV's own payload. They're all third-party payloads. Whether it's a gimbal or EW or a laser designator, we use a variety of different vendors' products that they're flying in the military customers today. We firmly believe in that, and that's open. If you ask me, "Is the radio on our device completely open?" There's only a certain level of openness that we can share there. Got you. Yeah. At the subsystem level, it's completely open modular. Got it. Yeah. Got you. Sean, another question for you. What lessons have as a company learned from the acquisition of BlueHalo? My, my guess is that probably a little more bumpy than- We're one year in now. It's been one year since we closed. On May 1st of last year was our closing date. I've been part of the company for, you know, almost 16 years. I've been part of every M&A that we've done up to this point. Every other one was a tuck-in or bolt-on. This one was transformational. We were very aggressive with that. We were intentionally taking parts of that business and reorganizing ourselves into two operating segments to ensure that we had the product capabilities, the go-to-market, the synergies of our technical teams working together to really set us up for the way we wanted to be projected in the next few years. That was a lot of effort to go under. We were doing that at the same time that we were rolling out a lot of digital infrastructure changes in our own, you know, legacy company. A lot of people changes, tool changes, process changes, but we did it intentionally and aggressively. You know, lessons learned is we're building on this. We're going to continue to be acquisitive. We're going to find other targets, and we are, you know, creating playbooks. We're getting more ahead of the plans on where how we're going to roll people into the company. This was Kind of transformational, the BlueHalo deal. Is there any change to how you're thinking about when you diligence an asset? We go through diligence on many different companies every year. We assess the contracts. We assess their pipelines. You know, all the normal diligence. We do QofE. We look through all that. You know, I think we have a pretty robust process there on the diligence side. Yeah. I think one of the strengths of having Sean in this role is because he's got 15 years plus of experience with AV. Yeah. He is very, you know, aware and knowledgeable and deep into the business processes that we have. The digital transformation that he's referring to, we have basically gone massively invested in our ability to upgrade our ERP system to Oracle Fusion. We are basically the poster child of Oracle when it comes to Oracle adoption Fusion for aerospace and defense industry, and we're on our third we're now starting phase III. We're already done with phase 1 and phase 2. Sean has been instrumental in that. There's a lot of lessons learned in this area, as you mentioned. We're not doing this slow. We're doing it to build that one AV company long term that is truly integrated, diversified, and it's got automation and a, and a lot of what I call business process improvements in most, in almost all of our processes. I know. Kind of back to the beginning of our where we're talking about the DAWG, right? The way the budget process is coming together for fiscal 27, it seems kind of complicated. Right now, there's talk of a third reconciliation. If reconciliation doesn't come through, and a lot of the funding for DAWG is in that, how do you think about that? What's that mean for you guys? What does it mean for the industry? Sure. I'm not an expert in this area, but we have some experts within our company that knows this really, really well because they come from the Pentagon and from the legislative branch. Essentially, what I see is the following. I'll share with you what I believe based on what I've learned, and I think the department is trying to consolidate the decision-making in a lot of these areas. That's why they've taken a whole bunch of line items from a variety of different programs and line item Budget and putting it all into one big bucket called the autonomous systems drones unmanned $75 billion. The likelihood of them getting that money is very high. If they get it all in one bucket or not, I don't know. The reason the question is, why do they get all that put into one bucket? The reason for that has to do with the fact that the secretary, undersecretary, Deputy Secretary Feinberg would like to have direct oversight and decision-making authority over what is being decided and how are we moving forward with that decision, A. B, they really don't know what they're going to buy. They could be buying 1,000 Switchblade 300s or 5,000 Switchblade 400s or 2,000 Red Dragons. The number and these quantities of what flavor of what across the portfolio of all these systems is not really well known because they're developing requirements and playbooks as they're going forward. Their argument to the Congress is, "I need to have some level of flexibility." That is counterintuitive or anti the desire of the Congress. They would like to have line item specificity as to what you're going to buy and why, and how many. Yeah. That is going to be a little bit of a battle between the department and the Congress. Overall, it is bipartisan support, both Houses of Congress and the entire administration that we need to fund defense at a much bigger levels. I think the $1.5 trillion is real, not unreal, and if they even get somewhere close to that number is a significant amount of money. Yeah. Yeah. They're going to have a difficulty spending it fast enough rather than can they actually get the money. You know that we already have a record of them having this problem, and what makes it even more complicated is that there is this election cycle coming up, and if Democrats believe that they're going to pick up some seats and they're going to have control of one of the Houses, that will incentivize them to just not cooperate right now. That I think the likelihood of a CR is probably not low, it's high. However, they're going to eventually get the money, I believe, because the need is there, the support is there. The question is how much, where, in what form, and when. Yeah, that makes sense. When you think about the international demand, how durable is that, and how much do you worry about, you know, as, you know, Europe goes up as they invest in their industrial base and they build out their own industrial base, does that eat into your overseas sales? I mean, how do you think about the durability of international sales? Yeah. I mean, you see from our track record, right? We're a poster child of a success story about being able to successfully become a real significant player internationally. In some years before BlueHalo, 50% of our revenue came from international sales or customers and products. We are very good at it. We've been increasing the number of countries. It's a legitimately significant part of our business. It's part of our diversified portfolio and customer base. Lastly, I do believe this whole European demand could be a little bit overinflated. Yeah. If there is a recession, as we know, the countries that are claiming they're going to spend this much money, A, they want to do it domestically to some extent. They have a lot of incentives to make sure that companies like us become more local, and that's part of our plan. We've been aggressively attacking that, and we continue to expand it internationally. I believe that the demand might be a little bit overstated, too. It may not be realistically realizable for them. Regardless, again, the same scenario applies internationally as domestically. The categories that we're in, it's not like buying more tanks. It's buying the stuff that they have none of, not money at all, and it's going to be a step function increase even if they spend half of that much or one-third of the amount, the amount that they're claiming. Their problems are real. I mean, the Russian, the threat in Europe is not going to go away. The Chinese threat in the Pacific is not going away. Yeah. Both of those two theaters have got a lot of vulnerable countries that need to do something about their, you know, national security. We are really good because the solutions that we make is phenomenally more affordable than getting another F-35 or a F-22 or something like that. Got you. We not only fit the strategic need, we also meet the economic equation very effectively because they can get more stuff with our stuff. I mean, think about like JUMP 20, right? There's a great example. You can have a Group 4, 5 drone that cost $20 million, $30 million, and the operating cost is massive. It's more vulnerable, and it requires a full runway to operate, and the infrastructure is huge. You can have a drone that takes off on the back of a small little fast ship, that's JUMP 20 that flies for 10 to 20 hours. That solution, it does 80% of the missions of that bigger drone. It has lethality, it has ISR, it has EW, it has SIGINT, all these missions you could fly. That's why JUMP 20 has been so successful because we knew that there's a sweet spot that addresses the problem very effectively. Those solutions are going to become more and more relevant because that's the most logical you know, decision for a customer. Fraction of the price. Fraction of the price. Fraction of the logistical footprint. Much easier to retrofit a ship to put that on board than a fixed airplane. Sure. Huge, huge advantages. Safer, you know, autonomy built in, and these things are things that we've been working on them knowing that this is, this moment is going to end up happening eventually. Yeah. Those are the kind of examples that we're into. Then maybe just, you know, as we wrap up here a question for both of you. I mean, how do you think about product development spending? I mean, what for an innovative company, what is the right level of R&D spend? What is the right level of just product development? Yeah. What should you be spending? How should we think about that? Yeah, I would say this, there's always more demand and appetite for investments in R&D and company and AV than I've always been the case. We have so much not only justifiable opportunities, but real legitimate cases. I think it's part of our success strategy in our business model. This is why it's being copied with by hundreds of companies, if not thousands of other competitors now that are getting into the space. Which is we've always believed in developing products at an agile pace ahead of the requirements and delivering solutions to the customer's problems way ahead of even a program record. Working with the customer to tweak it, to make it perfect for the solution, and that's how our franchises were born. Historically, we've been between 10%-18% of revenue, you know, as low as 8%, 9%, as high as that. The BlueHalo acquisition brought the percentage down because the revenue went up and their R&D was much lower. We're like 7%, 8% now. I think 8%-9%, 10% is where we're going to be. We intentionally are not increasing EBITDA margins as we grow because we're going to continue to invest because we don't want to miss out on the growth. There is a significant growth coming our way. We need to develop these products and bring them to market so we can capture the opportunities. There's a dozen different billion-dollar programs that we're, like, the best contender for. That's why we're investing in things. We've been launching new products every quarter, if not, you know, more than two or three times a year. We've got the JUMP 20-X, we've got Switchblade 400, we've got Mayhem, we got X3, we've got Titan 4. These are all products that come out, five, six products in the last 12 months alone, and that's where our money's going, and we're winning programs with them, and we'll continue to, you know, grow our business. I think that is not going to change anytime soon, in my opinion. I agree. Yeah. Yep. Yeah. Of the say that, call it 9%. Yeah picking that out of there. How much of that's customer funded, and how much of that is just you guys, your sweat equity? The 9% is 100% ours. Okay. Yeah, if you add the customer funded R&D on top of that, it'll probably almost get to 15%. Got you. Yeah, our own money alone is about 9% IRAD internal you know, R&D is about 8%-9% a year. Got it. Yeah. Cool. Exactly. Well, thanks. I think we'll wrap it up there. Thank you very much. Thank you. Thank you for having us. Yeah, yeah. Wonderful. Yeah. Yeah. Thank you.