Palladyne AI Reports Record Third Quarter 2026 Results

Ben Wolff, President and Chief Executive Officer of Palladyne AI

“We generated record revenues in the third quarter of $8.6 million, an increase of 895% year over year and up 48% sequentially. Compared to Q2, we saw a 26% increase in revenues associated with our components business, driven in part by our first delivery of our next generation BRAIN FC-1 flight computers. Our revenue from government contracts increased 135% quarter over quarter. Given our current trajectory, we are raising the low end of our full-year revenue guidance to $25 million, while reiterating the top end of $27 million. Backlog at the end of the quarter was $18.7 million, of which $15.3 million is funded, reflecting signed net new contracts for $2.7 million in the quarter. Despite the natural timing fluctuations in backlog as customers utilize remaining funding on existing contracts before executing renewals, and continued uncertainty surrounding defense budgets, our backlog remained materially higher than at the start of both Q1 and Q2. Operationally, our technology is proving itself in the field. At the Army's Project Convergence Capstone 6, SwarmOS again integrated with Anduril's Lattice and enabled multi-drone, multi-vendor autonomous operations in front of the U.S. Joint Force and allied partners. Most importantly, SwarmOS was evaluated on nine key performance criteria by the U.S. Army, and we received the highest rating possible on all nine. SwarmOS’ ability to deliver intelligent collaborative autonomy works as advertised and is exceeding our expectations. We shipped more BRAIN flight computers during the quarter than ever before, including the first units of our BRAIN FC-1 variant, which is our cost optimized mission grade flight control computer, demonstrating our ability to commercialize and scale production efficiently and cost effectively. We entered into agreements to extend SwarmOS to fixed-wing aircraft with Orkid Tech and to NORDA Dynamics' combat-proven Underdog module. After quarter end, we launched the joint development of SwarmShot, a counter-UAS swarm system, with Federal Ammunition and Mossberg, and BRAIN was named a finalist in the Army's FUZE xTech Apex Intercept competition. Our IAI partnership continues to gain visibility and attract interest from key constituents. On the commercial side, our collaboration and joint sales motions with FANUC America, a global industrial automation leader with over 40 million products installed worldwide, is putting our software in front of a host of manufacturing companies ranging from Fortune 500 companies to small and mid-sized businesses. We are investing to capture this demand. Operating cash burn(1) decreased sequentially, driven by our strong revenue performance, but remained elevated due to continued research and development across all our product lines and working capital investments to fund revenue growth. We expect full-year burn to land close to or slightly above the high end of our guided range, largely due to opportunistic capex purchases, with fourth-quarter burn below our year-to-date quarterly average due to revenue and margin improvements. With $47.0 million in cash, cash equivalents and marketable securities, we believe we are well funded to execute, and we expect our 2026 growth to extend into 2027.”