$16.7 million revenue rose 687% year over year, while adjusted EBITDA loss narrowed to $400,000.
| Quarter | Q2 FY26 |
|---|---|
| Call date | 2026-08-06 |
| Results reported | 2026-08-06 |
| Length | 43 minutes |
Results, guidance and Q&A analysis for this call
Speaker
Greetings and welcome to unusual machines second quarter 2026 financial results, conference call and Webcast. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press 0 on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Christine Petralia, Investor Relations for Unusual Machines. Christine, over to you. Thank you, operator. Good morning everyone. With us today are Unusual Machines CEO Alan Evans and CFO Brian Hough. During this call, management will make forward looking statements regarding our expectations for product demand, revenue growth, manufacturing expansion, gross margins and anticipated regulatory developments. Actual results may differ materially due to factors including government program funding and timing, customer concentration, inventory risks, manufacturing challenges, supply chain disruptions, tariff impacts and other risks described in our Form 10K for the year ended December 31, 2025. We undertake no obligation to update forward looking statements except as required by law. For a complete discussion of risk factors, please refer to our SEC filings and the shareholder letter accompanying this call. In addition to reporting financial results in accordance with gaap, we will discuss certain non GAAP financial measures, including adjusted ebitda. We believe these measures provide useful supplemental information to investors regarding our operating performance. A reconciliation of non GAAP measures to the most directly comparable GAAP measures is included in the shareholder letter earnings press release which are also available on our website and filed with the sec. As a reminder, this call is being recorded and the replay will be available on Unusual Machines website at www.unusualmachines.com. now let me hand over the call to our CEO Alan Evans. Please go ahead Alan. Thank you Christine. Good morning everyone and thank you for joining us today. During this call I will discuss our second quarter 2026 performance. In the second quarter we generated more than $16.7 million in operating revenue. This is a 687% year over year growth from the second quarter in 2025 and it's more than double the revenue we generated last quarter. The first quarter of 2026 we generated a GAAP loss of approximately 7.8 million for the quarter, which represents a Net loss of $0.16 per share when and that's a reduction in loss when compared to the $0.32 per share from the second quarter of 2025. The key takeaway from this quarter for me is that we are continuing to dramatically increase revenue while getting closer to consistent profitability. The Q2 results begin to reflect the underlying financial structure Unusual Machines is working to achieve. There is rapid continued growth, doubling to almost $17 million in revenue, with the growth driven entirely from our enterprise segment. At the same time, we've managed to reduce our non GAAP adjusted EBITDA from a loss of $1.6 million to last quarter to a loss of only $400,000 this quarter. Our margins have remained consistent and healthy with the slightly lower than target depression that we see from rapid growth and we finished the quarter with a 34.7% gross margin. This is in that backdrop of scaling as our headcount went from 141 employees to 240 employees as of July 1. A healthy balance sheet remains a priority for us and we took the opportunity to raise another $60 million at $30 a share. We did this with block ATM transactions. Right now we have about $367.5 million in total working capital and no debt. It's very important to remember that we don't burn cash, so this money remains in the war chest and enables us to both manage inventory and and make investments that accelerate our customers and the entire drone marketplace. The success of this quarter and of the company just would not be possible without the hard work everyone on the entire Unusual Machines team puts in. Everybody works hard and brings incredible energy to all of the challenges we face. I am confident we can handle continued growth because I am confident in everyone I have the pleasure of working with. So I want to say thank you to everyone working at Unusual Machines. I'll hand this call off to our CFO Brian Hoff to cover our financial results in detail and then once he finishes, I'm going to go into more detail on both this quarter and our plans going forward. With that, I'm handing the call off to our cfo Brian Hoffman. Thank you Alan. And thank you everyone for joining the call. As Alan just mentioned, we've had another strong quarter with 16.7 million recognized in revenue for the quarter, which as he said, is 687% increase from the prior year and 107% increase from the prior quarter. That puts us at revenue year to date at 24.8 million and we continue to see this significant shift toward enterprise revenue. About approximately 95% of our second quarter revenue was generated from enterprise customers, which is across a diverse base of customers and products. Gross margin was 34.7% for the quarter, which is an increase from last quarter and slightly below our 2025 margins. We expect to continue to see these margin fluctuations as we scale our manufacturing and work to capture the market demand. We anticipate additional margin fluctuation for the remainder of 2026 primarily related to our growth initiatives. However, we expect them to kind of continue to recover. Our operating expenses also increased during the quarter to 13.6 million for Q2 of 26. This increase reflects deliberate investments in and strategic decisions to support our continued growth and scale of our business. Things that are including of building out our G and A infrastructure headcount systems process including it is also 5.7 million in non cash stock compensation expense and about 1.8 million in non recurring expenses. We continue to expect additional operating expenses as we continue to hire additional staff, add additional manufacturing space and have additional public company related expenses. Please reference the tables at the end of the shareholder letter for the additional detail which reflects our adjusted EBITDA. As Alan said, we've brought this down from about 1.6 million in Q1 to about 400,000 Q2, so showing very positive trends in other income and expense. We had additional positive results from our investments. These investments are designed for strategic purposes and they create goodwill in the US Drone industry and develop supplier partnerships and customers customer relationships. Our strategy is continuing to work. The results show a 2.3 million realized gain from investments during the quarter which is a nice add on to our overall cash without adding additional dilution. We also had interest income of about 1.8 million during the quarter. Our balance sheet also remains very strong and reflects our focus on positioning for anticipated growth. Our cash balance ended the quarter at 229 million which included the $60 million from our ATM block funding in May at $30 a share. The balance sheet is also further supported by our short term investments of over 86 million and inventory which includes raw materials and finished goods and deposits paid of about 42.4 million. And we're going to see this continue to increase in Q3 and Q4 as we can make significant purchases to meet demand and do our part in managing supply chain issues as much as possible. Our total working Capital is over 367 million which puts us in a great position to capitalize on demand moving forward. I'd also like to reiterate what Alan just said. None of this is possible without the fantastic team working extremely hard to make things move. It's an exciting time to be at Unusual machines and looking forward to the rest of the year. Thank you to our shareholders and partners for continuing to support our mission throughout it all back Alan Thanks Brian. At a high level it's been an impressive quarter. We keep scaling both sales and company size. We maintain a strong cash position. We've added product categories through activities like the upgrade energy acquisition and we've been able to achieve these results while reducing our operating losses. We believe we remain well positioned to be a supply chain leader for components for small drones as the domestic industry expands. I'm about to go into a lot more detail in the second quarter and also discuss our outlook going forward. I'd like to remind everyone that my comments coming forward from here definitely contain forward looking statements and actual results may differ from those anticipated Quarter two the second quarter is worth talking about in more detail. The second quarter is the moment where I've gone from hoping we could be a major supplier in the emerging drone industry to believing that we will be. Two major threads emerged in the second quarter that are not going to show up in the financial statements but are really core to unusual machines ability to effectively grow forward and be a larger company. The first was the supply chain issue. During the quarter we outgrew one of our electronics vendors and we had to work through challenging supply chain challenges as we replaced different components and where we got parts as we still fulfilled products for our customers. Our sales and operations team did an incredible job of navigating this and putting in the extra hours and working with customers and I could not be more proud of those teams and how they handled what was this really challenging situation to deliver for our customers and keep our business on track. The second challenge was that we had a quality issue with one of our motor SKUs. There was this intermittent issue that required deep coordination with our product team, our motor production team and our customers to to go in and find the root cause of the intermittent challenge. They then had to go through and create remedies to our production processes as well as new ways to do quality testing to eliminate the issue from everything we're doing going forward. These two challenges are both pretty normal types of issues for a company like ours. At scale they should be expected, but this is really the first time that we faced either one of these types of challenges at this scale. At the same time they both showed up simultaneously. Either one of these operating issues could have easily been used to justify a flat quarter, could have easily derailed what we were doing or slowed it down. Our team members could have treated this as routine. They could have not put in the 10 to 12 hour days and work the long hours required to be sure our customers were in the best place they could be. They didn't. Watching everyone, and I mean everyone involved, work through these challenges and still deliver the kind of growth we've seen and the margins that we've seen has me fully believing that we have the team and the mindset to be successful as we continue to grow. I absolutely believe in the team we have and what we are continuing to build. That's probably enough on the second quarter, but I think it's important for everyone to understand that as it doesn't show up. So now let's talk about the future. First and foremost, demand remains strong. The current US Marketplace remains very supply constrained and we still see demand outstripping supply both this year and deep into 2027. We are continuing to build the company and procure raw material to grow into this demand as fast as we possibly can. And we don't see any signs of softness now or in the near future. The primary driver of this demand growth continues to be the Department of War. The drone dominance gauntlet program remains on track as phase two is currently in the final selection process and more than 60,000 drones are expected to be ordered in the second half of 2026, mostly in the fourth quarter. The NDAA continues to move forward through legislation with big increases in spending for autonomous systems. And in addition to that, there are drone programs and counter drone orders for the same parts. That counter drone is really becoming another emergent, addressable market segment that's creating immediate and near term demand. There also have been orders that have been propagating through the sort of Department of War procurement process. And I just want to give some examples. There was a $90 million counter UAS order for Power US. There was $500 million in counter UAS from Arrowvironment, $500 million in encounter UAS orders from Perennial Autonomy, a $500 million IDIQ for FPV drones from Neros, which is an extension of the PBAS program, and very recently an $820 million loan from the OSC to PDW. These and other orders are really just starting to propagate through the supply chain and we expect that they're going to create additional demand here in late Q3, Q4 and then into 2027. So one thing we did learn in the second quarter is that we do not yet have the infrastructure to support hundreds of millions or billions of dollars in annual revenue. The massive amount of money flowing into the drone marketplace is coming faster and is larger than we anticipated. And so we are in the middle of transforming unusual machines. And we now very strongly believe that we only have until the end of the third quarter to complete this transformation. Because of this demand wave, our high speed motor production line is just in the process of being installed. The components are in Florida and it's going to take some time to bring that online. Our HR team is very busy in California even this week, actively working on helping upgrade energy, hire people, scale their team and process, and prepare for integration into the Unusual machines greater umbrella. Even though we're not going to see any revenue from that acquisition in this quarter until we close, our supply chain team is working closely with them to drive battery vendors and work on bringing in the cells and the material. And that is a long term endeavor in terms of transitioning and qualifying new electronics providers. And these are all to address some of the challenges we had in the second quarter and are a ton of work that we're setting up for the long term future. These activities, all of this work will not show up in the top line for the third quarter, but this is the work that positions us to continue our dramatic growth during the fourth quarter and into 2027 as this massive demand wave starts to fully manifest. To summarize, the second quarter of 2026 showed strong results despite operating challenges. We doubled revenue to almost $17 million and reduced our adjusted EBITDA loss to $400,000. We continued our staircase financing strategy and we're now focused on building a strong foundation with the industry through the end of 2016 and into 2027. Unusual machines remains at the forefront of the domestic components market and the market is growing in a way never anticipated, with additional demand from counter drone pushing things even faster. Our business is well capitalized and healthy and we're continuing to grow as fast as we possibly can. And I am now confident and believe that our team is positioned to meet this demand. I want to say thank you again to our entire staff and to all of our shareholders who are part of this with us. And with that, I would like to open up the call to questions. Thank you very much. We are now opening the floor for questions. If you would like to ask a question, please press Star one on your phone keypad. Now, we ask that while you're posing your question, you please pick up your handset. If you are listening on the screen speakerphone to provide optimum sound quality. So Star one for questions, please wait a moment whilst we poll for questions. Thank you.
Speaker
Our first question is coming from Austin Bolig of Needham Co. Austin, your line of life. Thank you guys for taking my question and congrats on the great results. First, Alan, just wanted to kind of dive a little bit more into kind of the revenue outlook for the rest of the year. I Think prior you guys were talking about trying to grow internally 50% quarter over quarter. Understanding this is at a much larger base is the plan to still try and grow sequentially throughout the year. Austin, appreciate your question. You know, we don't historically give guidance. I think I'm going to give you what our internal targets are and why here. And you know, this is a unique situation. In the second quarter we ran in front of our inventory a little bit. So we have some shortages as we go through the changeover to different electronics vendors. And we also honestly, our motor factory right now is a construction zone and we're prioritized putting in our high speed line. So our internal targets, which are not the same as guidance, these are sort of where we really work toward. And we've done a good job of this historically internally because of all the efforts we're putting in, we're targeting 12 to $14 million in the third quarter. And then that positions us to go after our internal target of $25 million for the fourth quarter. So those are our internal targets and we're really spending this quarter rushing to build out everything to start to meet what'll be drone dominance and the counter drone demand coming in the fourth quarter. And so we're applying a lot of work not toward building and selling, but to positioning to start to explode into quarter four and the time after that. Okay, perfect. And then I guess too on kind of the counter UAS market because I think that's just as hot as the FPV drone dominance market. How many customers are you guys working with in that space? I am not sure if the number right now. It is definitely more than one already. And some of the same customers that are FPV customers buy the same parts for counter drone. So I would have to dive into that specifically. But it is definitely a major driver for us. And the first customer that we announced that we were doing it with, where we were the furthest along was power us. And they were the first ones to start to see large contracts. So now that we're seeing other companies get counter drone contracts, you know we'll, we'll have better granularity on that probably in another month or two as they finalize their supply chains. Okay. And then just was curious on the pricing environment. I think historically you guys have just tried to for your customers maintain pricing. But I've just heard just due to the really imbalance of supply and demand definitely is an environment that favors you. Just curious of how you guys have been thinking about pricing of components this year. And next, yeah, I think we could absolutely increase our pricing to drive margin. But we view our company and always will is competing in the global marketplace. And so our customers very often have had overseas suppliers and they're, they're being forced to switch. And we really think it's important for us to be understand their cost sensitivities as well and be a place where they can switch and not break their downstream costs or make products that are too expensive for the American people. So we try to combine the, looking at it to have a 40% gross margin so we have a healthy business, but also being price competitive to imported motors from Taiwan or Japan or China so that we don't break their downstream model. So we're not looking to use this moment to create margin expansion at the expense of our customer. We think if we serve them really well, then we'll have a multi year relationship with all of them and be able to provide them with the parts they need at a competitive price so they can compete in the marketplace. All right, well guys, thanks for taking my question again. Keep up the great work. Thanks Austin. Thank you very much. Our next question is coming from Josh Sullivan of Jones Trading. Josh, your line is live on the big ramp here in quarter. Just wanted to get some additional thoughts on working capital positioning now and where it might need to be next year as this ramp really comes through. And then where are the supply chain stress points currently for yourselves? Yeah, so if you look, this is a great example, as Brian had mentioned, we have about $42.7 million in inventory, raw material, finished goods, prepaid inventory, and that's on a $16 million quarter. Multiply that by four year at $60 million. We, I think have historically said we always expect about 1x working capital to forward looking revenue. So you know, I think that is in that ballpark. It matches sort of our baseline models as we go into next year. You know, I think we're going to be seeing still a year forward looking revenue in there. And we've always said that we aspire to do about $250 million of revenue if possible in 2027 if we were successful and don't run into hiccups. So we think we're going to need to land around there across the next year. I do think as we scale into that there are options that are not equity financing. Right. There's loans, et cetera, that could be possible. And then hopefully that answers the first question. And do you mind repeating the second question so I, we have it on record. Yeah, yeah. The Second one is just here's where your stress points are in the supply chain at this point. So the stress points are everywhere. If you look electronics vendors across the board, and this is especially true because you just saw yesterday China make drone export restrictions harder and would be. It's a very dynamic environment where the sort of isolation is creating regulatory changes. So if there's even, you could say, like on an F7 flight controller, the only place where they make the OSC chip is out of China. So working around that, that is more expensive if you use a microcontroller and program it and then you have to go find it. We've had to place orders for Sony sensors already for cameras that won't even be delivered till December because there's a shortage of camera sensors that are outside of China. If you look for magnets, we have to order nine months out for magnets from Japan. As we scale our production line and do design where magnets from other areas can be shorter. There's probably 20 different very challenging items to source where our supply chain team is on top of it and does an incredible job. And those are just some, I know off the top of my head. And it gets harder as the rules are changing on short notice. Maybe just one last one. Just follow up on the counter drone market. What do you think the magnitude of the counter drone market is going to be versus the legacy SUV market? So I think the counter drone market is probably going to be larger and I think it's going to be larger because I think counter drones will be used more. I think there's a lot more global defense activity and I think a lot easier US Export for defense activity. I'll give you an example right now in Iran, in the Middle east, you know, the Gulf states all would want counter drones in addition to things like Patriot missiles. And I think it's a lot easier to say, hey, here are counter drones, where then we're not facilitating or engaging in a conflict. And you know, I think if you look there was a great effort done by the government during FIFA. We get full drone task force and you know, I think you're going to see the same thing with the Olympics, et cetera. So I think if you think the counter drone and the small, small, attritable drone markets are the same size, I think you're going to see more routine rollover and deployment in the counter drone market. And so I think that's going to be a more consistent demand driver long term. Great. Thank you, Litan. Thanks, Josh. Okay, thank you very much. Our next question is coming from Craig Irwin of Roth Capital. Craig, your line is live. Good morning and thanks for taking my questions. So, Alan, it's rare for a growth company to have, you know, a double in revenue and for margins to hang in there. Usually there's fairly substantial margin compression when companies are scaling. And you've delivered the opposite, despite some of the challenges that you had in the quarter. Can you maybe give us a little bit more detail on your planning for scaling as far as how you allocate resources for employees, hiring infrastructure necessary. How are you actually delivering on margins that are healthy and expanding modestly while scaling at such a rapid rate? I think that's a great question and thank you for the observation. Everybody in the company cares about building a sustainable business. I think where you see a lot of companies reduce margin for growth, they have to create demand. And as we've always talked about, there's a market vacuum here. And so our cost to create demand aren't the same as other emergent environments. And so we have the benefit then of being able to understand and build with discipline to maintain and grow those margins. Our goal and our belief is that we're going to be able to be operating cash flow positive in the new year. Now, again, as I mentioned, for the third quarter, we're putting in a ton of work. So right now we were at about 70,000 square feet of total space. And we've added 15,000 square feet in Orlando for batteries, another 4,000 square feet in Orlando for operating staff, like overhead staff GNA. The 18,000 square feet for upgrade energy will close and we're actually looking for another 100 to 200,000 square feet over the next nine months because at our current rate, we've sort of filled up the space that we have faster than we expected. It's all been operational and it's all generating margin. The other thing that is true is everybody on our team puts in the work. And so I think when you look at gross margin expansion, a lot of our gross margin costs are come from labor and people are really efficient and work really hard. And I think we have an incredible workforce that has helped us achieve that. So those are the two pieces that I think have let us do that is not having to spend wildly on demand generation and then a really effective workforce with a senior leadership that has an attitude toward constantly building a business with profitability. I think one other thing to note, and this will create a changeover in 2027, most of our loss is driven by equity comp equ Myself and the senior executives have no longer taken restrictive stock. We move to options. And so I think where you may see some more gap stuff in the third and fourth quarters, by 2027, a lot of that gap loss will be ameliorated as we all believe in the future and are structured for growth. Thank you for that. So another major item that wasn't specific to UMAC this last quarter, but specific to the industry was performance. Droneworks getting their conditional loan commitment. That's 820 million. That's a big, a big amount of money for the Department of War to commit to the build out of this infrastructure, this industry that you are clearly a leader in. You were obviously mentioned, your company was mentioned in several of those press reports that talked about potential government investments. So I don't want to ask specifically about your status there, but I'd love to ask about how you could potentially use money if you did have a couple hundred million dollars come in. What would this mean now that you've proven that you can use your capital wisely? Great question. I'd like to say congratulations to the PDW team. I've known Ryan and James and Matt since the early DRL days and they're great stewards of what they're doing. I think they're a great company in the industry. What we would do, what we could contribute is very shortly we're going to have a complete, let's call it, motor production unit, a full supply chain, a mid tier introductory line with the ability to do things all the way through a high volume line where we could do, let's call it 100,000 motors a month with hundreds of millions of dollars, we could take that production unit and parallelize it. We could rubber stamp it out and adjust it to match. So if there was a desire to do a million motors a month to support the drone and counter drone industry, we could take that base unit, which was confirmed and validated, along with a full supply chain and, and the variants that we have there. And at this point we could stamp out 10 of them. And I think in that way, with our leadership position in motor production and our quality improving through strong partnership and feedback with our customers and the hard work of our team, I think that's where you would see us go and what you could see us do with sort of a mandate that it would be desirable. Excellent. Well, congratulations on the strong progress. I'll go ahead and hop back in the queue. Thank you, Craig. Thank you very much. Just a reminder, if you would like to ask a question, you can still join the queue by pressing star1 on your phone keypad. Our next question is coming from Amit Dayel of HC Wainwright. Amit, your line is live. Thank you. Good morning, everyone. Thank you for taking my questions. Just to begin with, did I just hear the Targeted revenue for 2027 is roughly 250 million? That is not guidance we said all the way along. That is the available TAM from the drone dominance program. And so we are aggressively trying to grow our company to as much of that demand as we can. Just so in that context, what revenue capacity will your manufacturing infrastructure support going into 2027? I would say as of today, with the 70,000 square feet, we're probably getting close to the limit. So that's probably 20 million. We'll know better when we put in the high speed automated line, but we're actively looking for another couple hundred thousand square feet to scale out. So we're trying to build the infrastructure, and that's really what quarter three is about, is that foundation. We're trying to build the infrastructure to meet the, you know, the market potential of $250 million in 2027. And we have. We're going to, you know, have to take a moment and really build out the base to. To be ready to do that. Understood, thank you. And just any update on, you know, the announcement in May or the news in May about potential US Government investment in umac? Any has that discussion, move forward. Any update on that would be helpful. Thank you. Yep. As I've said all the way along, we are in discussions with the osc and that's all I can say. Okay. That's all I have, guys. Appreciate it. Thank you so much. Thank you, Ahmed. Appreciate you. Thank you very much. Our next question is coming from Barry Sein of Litchfield Hills Research. Barry, your line is live. Hey, good morning, gentlemen. A couple questions, if you don't mind. First, Alan, you've been incredibly busy on the MA front. If you look back at the stack now, number one, if you look at the components required to manufacture a drone, you pretty well filled that out, especially with batteries recently. Maybe frames or antennas. Anything else there? And anything else you might go beyond just drone components. You thought about services in the past, that pull back. What are you thinking on M and A? Right now, we're really focused on closing, upgrade energy. And then when we look at M and A, integration is a lot of work. We don't take that lightly. And I think until we have scaled to service, what is the powertrain that we're working on and we feel more comfortable that we're there, that we're really focused on driving this organic growth that we saw in the last quarter. And I think our team's demonstrated we can really start to drive rapid organic growth. So we're always looking at adjacencies or new product categories. I think with where we sit in terms of capitalization and support from the shareholders, we're in a position that if something makes sense, we could go after it. But at the same time, you know, our core focus right now is getting batteries in house and really scaling what we have because there's a lot of demand for it. Okay, so it sounds like you're in pretty good shape for now, shifting gears, talking about gross margin. There's a lot of work in progress. You're ramping up the facilities now, but you're going to do a step change increase in square footage next year. You've got to get batteries closed and up and running and a mirror plant in Orlando. If we look out. Once that's done, I don't know if there's a steady state ever for universal unusual machines. What does gross margins look like longer term on this business? Are we at 50% gross margin? What should investors think about you can do once you're really at scale? Yeah, I think what we've said is why we're scaling. We figure, you know, around 30 low, 30% gross margin is our target. I think we've demonstrated we can hit that. I think that's what you're going to look at. As long as we're scaling, you know, we're doing everything we can structurally to keep 40% gross margin. As we start to flatten out as our target, which we think is fair to both us and our customers, I think once we get there and we don't see the growth that we're seeing, you know, if we settle into 10% year over year growth or some really mature state, we'll have to look around and decide then, do we need to expand into other industries to drive continued growth or do we need to look at margin improvements? And I would say very recently the FCC just put out another ban which creates central TAM expansion in that they banned all light show drones immediately. But more importantly, they banned humanoid robots and even robot vacuums from being imported to China. So if we see a components ban in those categories, which would follow the same pattern as the drone marketplace, there are millions of robot backends that were sold in the US Last year, and right now all of them are made in China. So there could Be we would have the choice to pursue margin expansion or continued TAM and revenue expansion at that point. And I think when we get there, investors should be excited that we have decisions we get to make. And just lastly, just a detail question. What percent of revenue was rotor riot this quarter? The retail channel, not the brand, was only about 6% of revenue. Great. Those are my questions. Thank you. Thank you very much, Barry. Okay, thank you very much. Our next question is coming from Matthew Galinko of Maxim Group. Matthew, your line is live. Hey, nice result and thanks for taking my question. Alan, you frame the market of supply constraint through 2027. So is that a function of line of sight that you have today or do you expect suppliers to catch up with demand in 2028? Just line of sight? I think there's no, no suppliers that are close and the continued regulatory environment is restricting supply further. And so I think, you know, we'll continue to pay attention. And Q2 2027, I think we'll have better lines sight looking forward to right now. That's just as far out as we can see. Great, thanks. Thanks. Thank you very much. Our next question is Josh Sullivan of Jones Trading. Josh, your line is live. Hey, I just wanted to get your thoughts on the evolution of the commercial drone delivery market at this point. I know you already have a lot on your plate scaling in the drone dominance alone, but given the longer term battery swap opportunity, just wanted to check in on your thoughts on any developments. Yeah, I think, you know, most importantly, you saw Doordash just got their 135. They'll begin testing. I think they're going to have very interesting results and that'll be my belief is food delivery is going to be the first thing that unlocks with 108. And so I think what we see from them publicly in terms of how customers are reacting to their early testing with the 135, I think is going to tell us a lot about what to expect from that market. I do think that you're looking at drone delivery being constrained in terms of developing new products by the FAA finishing the regulation for Part 108, in particular the sort of detect and avoid requirement because it requires an antenna and a radio, et cetera. Then any companies building drones for that next FAA cycle won't be able to launch them until after they can qualify them. So right now my guess as to the scaling of component demand for delivery is going to be probably late 2027 with deployment. My guess is in 2028. And I think food delivery is really the first use case that's going to scale. And so I think it'll be really interesting to see what information doordash shares over the next year to give us really good indicators of what that market's going to look like. Thank you. Thank you, Josh. We appear to have reached the end of our question and answer session. I will now hand back over to Alan for any closing comments. Yeah. Again, this, this quarter is the one where I've gone from hoping to believing. Because of the team and the energy that everyone's put in and our ability to rise to the occasion, I think we're extremely well positioned going forward. And I want to say thank you to everyone for their time. I appreciate everybody that's a shareholder, and I look forward to working with everyone to continue to build the drone industry. So thank you. I hope you have a great morning. Thank you very much, Alan. And thank you, everybody. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. We thank you for your participation.
Other transcripts: Q1 FY26 transcript · Q4 FY25 transcript · Q2 FY25 transcript
All UMAC earnings · Back to UMAC overview
Transcript produced by Signals.AI from the company's own earnings call audio; speech recognition can mishear a word. Not personalized investment advice.