Palladyne AI (PDYN) Q1 2026 earnings summary

Executive summary

• Q1 2026 revenue rose 107% year-over-year to $3.5 million, driven by acquisitions and broad-based activity across defense, commercial, and IP development, despite delays from a federal government shutdown.

• Backlog increased to approximately $17 million as of March 31, 2026, with $7 million in new contract awards during the quarter.

• Net loss was $12.6 million for the quarter, compared to net income of $22.8 million in the prior year, primarily due to changes in warrant liability valuations and increased operating expenses.

• The company reiterated full-year 2026 revenue guidance of $24–$27 million, implying 357–415% growth over 2025, and continues to focus on commercializing AI/ML software and expanding in defense and industrial markets.

• Integration of recent acquisitions (GuideTech, MKR Fabrication, Warnke Precision Machining) is ongoing, expanding capabilities in defense and industrial markets.

Financial highlights

• Q1 revenue was $3.5 million, up from $1.7 million a year ago; product revenue was $1.7 million, engineering services $1.8 million, all from recent acquisitions.

• Gross margin was approximately 30%, impacted by low manufacturing utilization and first article costs; cost of revenue was $2.47 million.

• Operating loss was $11.9 million, GAAP net loss $12.6 million ($0.28/share), non-GAAP net loss $10.2 million ($0.23/share).

• Operating expenses totaled $15.5 million, up 79% year-over-year, driven by higher cost of revenue, R&D, G&A, and sales/marketing.

• Cash, cash equivalents, and marketable securities totaled $43.7 million at quarter-end, supported by $6.5–$6.7 million raised via ATM.

Outlook and guidance

• Full-year 2026 revenue guidance of $24–$27 million reiterated, with sequential quarterly growth and acceleration in the second half as backlog converts.

• Majority of $17 million backlog expected to be recognized as revenue over the next 12–18 months.

• CapEx and OpEx cash burn expected at $32–$36 million for the year, or $8–$9 million per quarter.

• Management believes liquidity is sufficient for at least the next 12 months but may seek additional capital opportunistically.

• Manufacturing margins expected to improve as capacity utilization increases and first article approvals unlock higher volume production.