The future of warfare is here, and it's a controversial one. Imagine a world where drones swarm battlefields, guided by artificial intelligence, and soldiers are kept out of harm's way. This is the vision of XTEND, an Israeli drone company that has captured global attention and is poised to revolutionize military operations.
From Gaming to Defense:
XTEND's story begins with two brothers, Aviv and Matteo Shapira, who took different paths in life. While Matteo indulged in video games, Aviv's passion for model airplanes laid the foundation for his future endeavors. Fast forward to 2026, and Aviv has become a prominent figure in the defense industry, selling tens of thousands of drones to international armies and sealing a deal with Lockheed Martin.
The Rise of XTEND:
XTEND gained worldwide recognition after a video allegedly showed one of its drones eliminating Hamas leader Yahya Sinwar. Despite the incident's uncertainty, it propelled the company into the spotlight. However, this is just the tip of the iceberg. XTEND is set to play a pivotal role in the US Army's future combat architecture under Project Replicator, a Pentagon initiative aimed at reshaping military preparedness for a potential conflict with China.
Project Replicator's Vision:
China's strength lies in its mass production of inexpensive robots. In response, Project Replicator aims to deploy large numbers of low-cost, expendable systems instead of relying on a limited fleet of high-value assets. AI takes center stage in this new military doctrine, with systems operating autonomously in some cases. The battlefield will be a swarm of small drones, unmanned vessels, autonomous submarines, and ground robots. The strategy is to overwhelm Chinese defenses with sheer numbers, forcing them to waste expensive missiles on cheap targets.
XTEND's Role:
XTEND's loitering attack drones are relatively inexpensive and designed for mass production. Their crown jewel is the XOS operating system, which enables a single operator, aided by AI, to control a swarm of drones executing multiple missions. XTEND's US-based manufacturing facility in Florida aligns with Project Replicator's requirements for domestic production.
A Strategic Partnership:
XTEND has joined the Pentagon's elite list of approved suppliers and even outperformed American manufacturers in competitive tenders. The game-changer is their strategic partnership with Lockheed Martin. This agreement integrates XTEND's XOS into Lockheed Martin's command-and-control architecture, designed to manage the entire US military. Lockheed's Skunk Works unit, renowned for solving impossible technological challenges, values XTEND's technology and real-world battlefield experience in Gaza, Lebanon, and Ukraine.
The Skunk Works Connection:
Skunk Works, known as 'The Skunk Workshop' in Hebrew, is a legendary classified defense development unit. They developed America's first operational jet fighter, the P-80, in just 143 days during World War II, and have since created iconic aircraft like the U-2 spy plane, SR-71 Blackbird, and F-117 stealth fighter. Their mission is to tackle seemingly impossible problems under extreme time constraints and secrecy.
A 'Marsupial' Mission:
XTEND and Skunk Works recently demonstrated a 'marsupial' mission, where a large mother drone deploys multiple small drones at the target, all controlled by a single operator. This cutting-edge approach to drone warfare could become a dominant concept in future US combat plans. Without XTEND's technology, such a mission would likely be infeasible.
The Founders' Journey:
Aviv and Matteo Shapira, along with Robbie Liani and Adir Tubi, founded XTEND in 2018. Aviv, the CEO, studied aeronautical and space engineering with a focus on rocket propulsion. He is a serial entrepreneur, while Matteo, leading AI innovation, has a computer graphics background and co-founded JVP's Animation Lab. Liani, the CTO, is a former naval technology software engineer and robotics enthusiast. The brothers' journey began in Rishon LeZion and led them to St. Louis, Missouri, following their father's footsteps. Their first joint venture, Replay, was born in a bar in England, with Aviv wishing to broadcast sports from a player's perspective. Four years later, he won an Emmy.
From Sports to Defense:
Replay developed a real-time 360-degree sports broadcasting system using high-resolution cameras in stadiums. Intel acquired the company in 2016 for $175 million but shut it down in 2021. XTEND's core concept emerged from Replay's virtual reality technology: experiencing and acting in remote environments through robots. Initially, they created high-speed gaming drones with VR headsets, flying at 150 km/h. However, reality intervened during the 2019 incendiary balloon attacks from Gaza, and Israel's Defense Ministry saw military potential. After a successful demonstration, XTEND secured its first defense contract.
Defense Ministry Support:
The Defense Ministry's research directorate provided extensive support, including funding and operational testing with elite combat engineering units. This experience propelled XTEND's growth, enabling their software to operate drones in GPS-denied and communication-jammed environments using computer vision and onboard AI.
From Gaming to Military:
Matteo reflects on the transition from gaming technology to military applications, emphasizing their influence on classical military thinking. They integrated concepts from computer games into military systems, creating a computer game-like approach to defeating enemies without risking human lives.
A Rapid Rise:
Liani expresses surprise at reaching the forefront of military technology, attributing it to the company's rapid maturity and the dedication of their teams, many of whom served in the reserves. He acknowledges the seemingly impossible nature of their mission.
Civilian Market Ambitions:
XTEND also has its sights set on the civilian market, aiming to develop drone and robot control systems for policing and rescue forces. One of their customers is Boston Dynamics, and their operating system is installed in the robotic dog Spot.
Lockheed Martin's Perspective:
George Hellestren, a senior fellow at Lockheed Martin, is behind the development of MDCX, a strategic platform for managing the US military. He specializes in human-machine teaming, reducing the number of human operators, and lowering their workload through AI. Hellestren values XTEND's technology, integrating it into Lockheed Martin's plans for the coming years. Like a marsupial, XTEND gains a powerful boost from Lockheed, positioning them for major contracts with the US defense establishment and global government customers.
A Collaborative Effort:
Hellestren's collaboration with Aviv Shapira began in 2019, focusing on leveraging the strengths of both companies. They were impressed by XTEND's impact as a force multiplier for the IDF and Ukraine. The goal is to build on their recent demonstration and advance the world of warfare.
Integrating XTEND's Technology:
Lockheed Martin is connecting their multi-domain command-and-control system to XTEND's first-person-view flight technology. The system receives mission targets, and aerial platforms arrive with autonomous routing and execute missions autonomously. Aviv's expertise in the final 100 meters ensures mission completion. They are also exploring the control of ground vehicles from a single ground control station.
Simplifying Unmanned Systems:
Aviv Shapira highlights the challenge of managing numerous unmanned systems from different suppliers, each with its controller. Lockheed Martin's solution is a unified control system, and XTEND was chosen to provide the enabling software. This is a significant problem, and XTEND's technology is crucial.
A Software-Focused Approach:
Aviv Shapira emphasizes that XTEND is not just a drone company but a software company. They aim to keep human operators safe by focusing on software rather than building the best drones. This approach is evident in their partnership with Lockheed Martin.
The Impact of the Partnership:
The partnership with Lockheed Martin provides a significant boost to XTEND's growth. They reiterate their software-focused approach, emphasizing that robots and drones evolve, but their goal is to keep operators out of danger. This message is reinforced by Chen Haim, CEO of XTEND Israel, who manages a large team and often surprises customers with her presence in a male-dominated field.
Training and Support:
Haim emphasizes the importance of training and support in drone operations. XTEND provides simple and fast training, ensuring soldiers can operate drones effectively in various scenarios. Their support teams are integral to the successful implementation of these sophisticated systems.
XTEND's War Efforts:
During the wars in Gaza and Lebanon, XTEND played a significant role, diverting drones intended for the American customer to the maneuver in the south. They collaborated closely with special units and infantry battalions, demonstrating the system's operational capabilities.
Major Deals:
XTEND secured major deals, including a nearly 40 million shekel procurement project for hundreds of systems for the Ground Forces. They won a tender for 5,000 attack drones for all units and are currently delivering and discussing options for an additional 10,000 drones with upgrades.
XTEND's Global Presence:
Israel was XTEND's primary customer and testing ground, but they have expanded globally. Their US subsidiary, XTEND Reality, won a Pentagon tender for loitering munitions for urban combat and supplied hundreds of Wolverine drones to special units. They have sold over 10,000 drones to 32 countries, including the UK, Singapore, UAE, South Korea, and European states. XTEND's technology is also in demand in Ukraine, where their drones perform reconnaissance missions in areas with blocked communications, relying on AI.
The Edge in Ukraine:
XTEND's computer-vision-based software allows drones to complete missions without radio communication or GPS, even in heavily jammed environments. This capability gives them a significant advantage in a world moving towards warfare dominated by swarms of cheap, simple drones. As global military procurement of attack drone systems increases, XTEND's business thrives.
From Manufacturer to Defense-Tech Player:
XTEND has evolved from a low-cost drone manufacturer to a significant defense-tech player. Their software generates recurring annual revenue from licenses and updates, and they employ 150 people worldwide. The company is expanding its Tel Aviv offices and aims to reach 250 employees by year-end. Their Florida factory is a success, and future plans include manufacturing ground and maritime robots for Project Replicator.
Financial Growth and Prospects:
XTEND reported 113% revenue growth last year, with a $50 million order backlog. Shapira predicts surpassing $100 million in annual revenue this year. The Lockheed Martin partnership could lead to even more optimistic forecasts, driven by potential government contracts. The company has raised over $106 million from investors and could achieve a higher valuation with additional capital. If XTEND becomes a preferred supplier in major Pentagon programs, it could secure deals worth hundreds of millions and a valuation of $600 million or more. Particularly optimistic estimates suggest a $1 billion valuation and becoming Israel's first defense-tech unicorn.
A Competitive Advantage:
XTEND's performance is compared to defense-tech giants like Palantir and Anduril, the leading defense-tech unicorn valued at $30 billion with $2 billion in annual revenue in 2022. Shapira believes that if XTEND leads Lockheed Martin to a business victory over Anduril, its valuation could soar into the billions. He highlights XTEND's real-world experience in Ukraine, Gaza, and Lebanon, contrasting it with Anduril's training in the US deserts.
Lockheed Martin's Edge:
Lockheed Martin's advantage lies in its ability to operate with systems from all companies, thanks to XTEND's technology. If XTEND reaches a fraction of Anduril's valuation, it would deliver substantial returns for investors. However, challenges exist, including the need to shift further towards software-driven revenue and the uncertainty of the defense-tech boom's longevity. A return to global stability could impact defense budgets, and changes in US procurement policies may pose challenges. Nonetheless, XTEND's partnership with Lockheed Martin and its innovative technology position it for significant growth and influence in the defense industry.
