$500MM Titan Award Supports Counter-UAS Scale and FY27 Growth Visibility

Research evidence excerpt

$500MM Titan Award Supports Counter-UAS Scale and FY27 Growth Visibility

data, Jefferies

guided FY27 revenue to $2.125-2.225B only days ago while emphasizing funding timing uncertainty

and a back-half weighted year. This contract adds a substantial source of identifiable demand

entering FY27. Assuming execution through mid-2029, the award implies peak annual revenue

potential of $150-200MM. We estimate Titan generated less than $100MM of revenue in FY26,

implying a significant increase in addressable annual volume for one of AVAV's fastest-growing

franchises. While the award does not replace SCAR, it helps offset investor concerns around the

FY27 growth impact of the SCAR termination by adding a large funded opportunity within one of

AVAV's highest-priority growth markets. Given Titan resides within PSDS, we expect gross margins

above the corporate average. PSDS delivered 80% YoY growth in FQ4, driven by Switchblade, Red

Dragon and Titan, and benefits from increasing manufacturing scale. Incremental Titan volume

should support favorable fixed-cost absorption and EBITDA conversion.

Counter-UAS Is Becoming One Of AVAV's Most Important Long-Term Growth Driver.

Management sized FY26 Counter-UAS revenue at roughly a couple hundred million dollars, noted

Titan more than doubled during the year, and stated Counter-UAS and directed energy could

become 2-3x the size of loitering munitions over the next 3-5 years. The award supports that

framework and follows increasing investment in Titan, LOCUST, Freedom Eagle and broader layered

defense solutions. AVAV also continues to pursue the Army's e-HEL directed-energy opportunity,

which management previously sized at roughly $500MM+.

Bottom Line: Titan was likely a <$100MM revenue business in FY26 but one of the fastest-growing