Anduril generated an estimated $5M in revenue in 2018, which grew to $29M in 2019, marking a roughly 505% YoY increase. Revenue in 2020 reached $67M, up about 128% YoY. By 2021, the figure climbed to $150M for 125% YoY growth.

Revenue for 2022 was $236M, up 57% YoY. For 2023, Sacra projects revenue at $625M, up 165%, after Anduril surpassed its goal for new contract value by 29% in the preceding year.

The company's rapid growth has been fueled by expanding its team size from 400 employees in early 2021 to 1,600 as of September 2023. Their partnership with half a dozen NATO allies and lucrative contracts have played a pivotal role in this growth.

Anduril has raised a total of $2.2B from investors like Valor Equity Partners, Founders Fund, Andreessen Horowitz, General Catalyst, 8VC, Lux Capital, and Thrive Capital. With their last fundraise—a $1.48B Series E in December 2022—their valuation rose to $8.48B.

As of September 2023, Anduril’s valuation on the secondary market was even higher, with their stock hitting $19.33 per share an at an implied valuation of $9.9B on Caplight.

Anduril Industries was founded in 2017 in Irvine, California by Palmer Luckey, co-founder of Oculus VR, Brian Schimpf, and Trae Stephens, with the mission to build cutting-edge technology for defense and security. The cornerstone of Anduril's suite of products is Lattice, an AI software platform designed to integrate data from a multitude of sensors and systems, enabling real-time situational awareness and data-driven decision-making.

Lattice serves as the foundation for a range of hardware solutions, including autonomous drones, surveillance towers, and other sensor systems. It allows for the detection, identification, and tracking of multiple targets, whether they are humans, vehicles, or drones. This enables defense agencies and border control to effectively monitor large areas with minimal human intervention.

To augment Lattice, Anduril has developed a series of other hardware products: 

Anduril’s UAVs and sentry towers pick up and ingest data about the world around them, feed it into Lattice, which then helps human soldiers with decision-making—finally, offensive tools like Anvil can be used to take action.

Anduril Industries flipped the traditional business model of defense contracting—instead of waiting for Requests for Proposals (RFPs) from governmental agencies, Anduril has gone after a strategy where they take on the R&D burden upfront, allowing them to offer pre-developed, cutting-edge solutions to the Department of Defense and other allied military forces worldwide.

Their aim to be a diversified technology provider in the defense sector enables them to compete horizontally against well-established conglomerates like Boeing and Lockheed Martin. Covering a wide spectrum—from airborne and naval systems to sensors and ground software—Anduril strives to be a one-stop-shop for modern defense solutions.

In terms of financials, Anduril targets a margin profile that significantly exceeds the industry norms of 10-15%. They aim for margins that are reflective of the high-risk, high-reward nature of self-funded R&D—roughly in the 40-50% range—allowing them to reinvest back into R&D.

One of Anduril's most novel strategies is their "phrasing as a service" model, wherein they ensure the continuous development and upgrading of both hardware and software stacks for a fixed fee. This not only keeps their offerings at the technological forefront but also assures defense organizations that they will always have solutions optimized for the latest threats.

Anduril's key competition is the large defense primes like Boeing, Lockheed Martin, and Raytheon. 86% of all aerospace and defense revenues went to the 10 largest defense contractors as of 2016, reflecting advanced and continuing consolidation in the space.

Those large defense contractors aren’t unaware of the rapid advancement in technologies like unmanned aircraft and AI, each one starting its own venture capital arm to invest in startups that are working on these technologies—or building out their own versions of similar product lines.

Boeing, for example, already has an autonomous fighter jet in development known as the MQ-28 Ghost Bat. Kratos, the builder of the experimental, AI-run aircraft Valkyrie that the Air Force has now been testing for years, reported $900M of revenue in 2022. Attack drones built by General Atomics ($2.8B revenue in 2022) have already been used in combat across theaters in Iraq and Afghanistan.

Then there are other relatively software- and AI-first startups like Shield AI. But while Anduril and Shield AI might someday be competing for the same contracts, the vast majority of defense spending is going to the big public defense contractors—and any money being diverted to startups under this new kind of business model around procurement is a win-win for all startups like them.

The combination of reverse-globalization and the ongoing decline of unquestioned U.S. technological superiority has created an increasing need for new national defense solutions.

Existing procurement policies that have disproportionately served big defense contractors are currently under review by the Pentagon, and we’re seeing startups—like Anduril—starting to get traction in selling to governments.

We’re also seeing the venture capital landscape, which was once relatively hesitant to invest in defense, begin to put more money into companies like Anduril that are serving national governments. US VCs invested $17B in defense and aerospace companies between January and May 2023—more than 2019’s total of $16B.

Lastly, the United States remains the global leader in military spending, having allocated $727B to the Department of Defense in 2022. With total spending across all of NATO exceeding $1T in the same year, the market for defense technologies is colossal. While the traditional focus has been on hardware, modern warfare and defense are increasingly reliant on software and autonomous systems, fields where Anduril has shown significant prowess.

For context, the FY2021 U.S. defense budget earmarked $1.7B for autonomous technologies aimed at enhancing "speed of maneuver and lethality in contested environments" and the development of "human/machine teaming." An additional $800M was allocated specifically to artificial intelligence. In 2020, the average total investment for autonomy and AI-related programs within the U.S. Armed Services and DARPA was $5.2B over three years.

The scale of these numbers underscores the vastness of Anduril's potential market, which extends beyond the U.S. to include allied nations seeking to upgrade their military capabilities. Anduril is strategically positioned to serve this growing market, making them not just a disruptor but also a key player in an increasingly competitive and crucial sector.

Friction and procurement practices: If the Pentagon's procurement practices remain rigid and continue to favor established defense contractors, Shield AI may find it difficult to secure long-term contracts that are crucial for its sustained growth and scalability.

Government largesse: It’s been typical practice for the DOD to spread contracts around the country to different contractors as part of winning political support and decentralizing their supply chain. These kinds of market dynamics could limit Anduril’s growth and ability to dominate in defense/aerospace.