Palladyne AI Corp. announced the creation of a new defense division, Palladyne Defense, after acquiring GuideTech LLC and the two Crucis companies—Warnke Precision Machining and MKR Fabricators—on November 17 2025. The deal brings together Palladyne’s embodied AI platform with advanced avionics, flight‑software engineering, and U.S.‑based precision manufacturing capabilities, positioning the company to design, engineer, manufacture, and sell autonomous systems entirely on American soil.
The transaction was valued at $31 million in total consideration. Palladyne paid $20 million in common stock, $5 million in cash, and assumed $6 million of debt. An earn‑out of up to $25 million is payable over five years, contingent on GuideTech’s revenue exceeding $71 million. The earn‑out structure aligns the new division’s performance with Palladyne’s long‑term growth targets and provides a clear incentive for the acquired teams to hit revenue milestones.
Palladyne’s leadership framed the acquisition as a strategic pivot from a software‑centric business to a vertically integrated defense technology provider. By adding avionics and manufacturing expertise, the company can accelerate time‑to‑market and reduce cost‑per‑effect for future autonomous weapons and support systems. The move also satisfies U.S. Department of Defense priorities to reshore critical defense technology and production capacity, strengthening domestic supply chains.
Prior to the acquisition, Palladyne had experienced a sharp revenue decline—from $7.8 million in 2024 to $860 k in Q3 2025—while sustaining operating losses driven by heavy R&D and sales‑marketing spend. The new division’s backlog of more than $10 million and projected revenue triple the 2024 figure by 2026 provide a path to offset those losses and achieve adjusted‑EBITDA positivity by 2026.
Management highlighted a planned $5 million investment over 12–18 months to advance GuideTech’s loitering munitions systems to operational readiness. This capital allocation underscores Palladyne’s commitment to developing high‑value autonomous platforms and signals confidence that the combined entity can capture a larger share of the growing defense autonomy market.
Ben Wolff, President and CEO, said the creation of Palladyne Defense “transforms us from an AI software innovator into a vertically integrated defense technology company.” He added that the new division “brings together embodied AI, advanced avionics, and American manufacturing to deliver smarter, faster, and more affordable solutions,” emphasizing the company’s focus on reshoring capability and accelerating innovation.
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