Al Root

Warfighting in the future will be far more, well, futuristic. Defense technology start-up Anduril is amassing the technology required to meet the needs of a modern military.

On Monday, Anduril announced the acquisition of Klas, an engineering firm specializing in "edge computing" and tactical communications.

Klas has some 150 employees around the world. Financial terms weren't disclosed, and the deal should close in the coming few weeks.

Edge computing refers to processing data at the edge of a network versus at a central hub or data center. The edge for an army can be literally on the front lines of a battlefield. As for tactical communications, think walkie-talkies.

The Army, of course, has advanced well beyond walkie-talkies. Take the Army's Integrated Visual Augmentation System or IVAS. It aims to provide soldiers with all-weather fighting goggles, including heads-up displays integrating battle details. That kind of technology needs to be rugged and connected.

Anduril works with Microsoft on the IVAS program. Klas is a subcontractor.

"Klas is the best...They build the best products on the planet for the tactical edge," says Anduril senior vice president Tom Keane, adding, "Anduril is transforming warfighter capabilities the tactical edge." The deal will enhance his company's abilities in areas such as body-worn computing, resilient communications, and other areas.

It's Anduril's ninth deal and looks like a smart one.

Most investors, however, can't react by buying Anduril stock. The Costa Mesa, Calif.-based company is privately held with a valuation of more than $30 billion. It aims to become a prime defense contractor, building weapons systems using advanced, commercially available technology quickly and at scale.

Investors can pay attention to the deal, learning about where technology is taking the defense business. It also tells them something about the competition for Lockheed Martin, Northrop Grumman, L3Harris Technologies, and others.

Anduril is less than a decade old, but it moves fast, amassing more than $4 billion in contacts. The core of Anduril's technology is an artificial intelligence brain called Lattice, used in everything from the company's drone-tracking Sentry tower to its Ghost reconnaissance drone and its autonomous unmanned aircraft Fury, which can collaborate with manned fighter jets. Lattice can be applied to Klas products, such as its tactical network product Voyager.

Adding Voyager and Klas technology allows Anduril to make more products, that do more things, faster, says Keane. It boils down to that.

Coming into Monday trading, the iShares U.S. Aerospace & Defense ETF was up about 11% so far this year, about 14 percentage points better than the S&P 500.

The aerospace portion of the ETF has been a little steadier than the defense portion. Shares of Lockheed Martin, Northrop Grumman, L3Harris, and General Dynamics are up about 3% on average.

Write to Al Root at allen.root@dowjones.com

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May 05, 2025 00:01 ET (04:01 GMT)

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