Palladyne AI (PDYN) Q1 2026 earnings summary

Executive summary

• Q1 2026 revenue rose 107% year-over-year to $3.5M, driven by acquisitions and broad-based activity across defense, commercial, and IP development; backlog increased to $17M with $7M in new contract awards.

• Full-year 2026 revenue guidance of $24M–$27M reiterated, implying 357%–415% growth over 2025, with sequential quarterly growth expected.

• Major operational milestones included a demonstration of true heterogeneous autonomous swarming, new space domain contracts, and the first deployment of IQ 2.0 in industrial automation.

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

• Strategic partnerships expanded with Draganfly and Red Cat, and SwarmOS was included in multiple defense prime submissions.

Financial highlights

• Q1 2026 revenue: $3.5M (up from $1.7M in Q1 2025); product revenue $1.7M, engineering services $1.8M.

• Gross margin at 30%, impacted by low capacity utilization and first article costs; cost of revenue $2.47M.

• Operating loss: $11.9M (vs. $6.9M prior year); GAAP net loss: $12.6M ($0.28/share); non-GAAP net loss: $10.2M ($0.23/share).

• Operating expenses totaled $15.5M, up from $8.6M year-over-year; R&D $3.9M, G&A $6.9M, Sales & Marketing $1.9M.

• Cash and equivalents: $43.7M as of March 31, 2026; $6.5M–$6.7M raised via ATM program.

Outlook and guidance

• Revenue expected to grow sequentially each quarter, with acceleration in the second half as backlog converts and new contracts are awarded.

• CapEx and OpEx cash burn projected at $32M–$36M for 2026, or $8M–$9M per quarter; Q1 usage slightly above range.

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

• Manufacturing margins expected to improve as first article approvals unlock higher volume production.

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