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FLIR Systems Buys Drone Assets, to Expand in UAV Market

Zacks Equity Research

FLIR Systems, Inc. FLIR recently bought the intellectual property (IP) and certain operating assets of Aria Insights — a developer of tethered small unmanned aerial systems (sUAS). The deal reflects the company’s yet another move to expand its market share in areas including unmanned solutions and intelligent transportation systems.

Financial terms of the deal were kept under wraps.

Why Tethered Drone?

Cost-effectiveness compared with manned aircraft and zero mortality, which UAS offers, has been bolstering demand for military drones. While demand for military drones is expanding rapidly of late, the predominance of tethered drones that are connected to a base station or vehicle by microfilament wire is on the rise.

This predominance is driven by the fact that tethered drones excel most UAS’ hindrance, which is the need to frequently recharge the batteries. So, for certain applications, a tethered drone offers advantages over a free-flying UAS, enabling sustained operations on longer missions and persistent situational awareness.

To this end, Aria Insights’ name bear strong significance in the American UAS market, with its Persistent Aerial Reconnaissance and

Communications (PARC) tethered drone that offer secure communication and ensures continuous flight. Notably, PARC can last for days, rather than the standard minutes of most battery-powered UAVs. This feature of PARC must have encouraged FLIR Systems to buy Aria Insights’ drone assets, in a bid to strengthen its UAS portfolio.

UAS Prospects

During the 2018-2025 period, the global unmanned aerial vehicle (UAV) market is anticipated to see a CAGR of 14.5% to reach a value of $52.3 billion (per Markets and Markets research firm). To date, North America remains the largest market for UAVs, buoyed by increasing use of UAVs for border and maritime surveillance activities, particularly in the United States and Canada.  

With FLIR Systems being a prominent defense major in the United States, which has been lately enhancing its UAS platform significantly, the aforementioned projections for the UAV market should boost this defense prime’s growth substantially. Notably, the company has been enhancing its UAS portfolio over the past few years through the acquisitions of Prox Dynamics in 2016, and Aeryon Labs and Endeavor Robotics earlier this year. The latest acquisition along with these should boost FLIR Systems’ growth, courtesy of the solid growth projections for the UAV market.

In this context, it is imperative to mention that other defense majors in the United States that work on UAS might also benefit from this market’s growth projection. To this end, Northrop Grumman’s NOC Triton UAS, Lockheed Martin’s LMT Indago platform and Boeing’s BA MQ-25 UAS bear significance.

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