Palladyne AI Corp.

Revenue for Q2 2026 was $5.8 million, up 63% sequentially from $3.5 million in Q1 and up 470% from $1 million a year ago. Product revenue was $2.7 million, Engineering Services revenue was $1.9 million, and AI product development contract revenue was $1.2 million. Cost of revenue was $4.1 million and gross margin was approximately 29%. Operating loss was $13.4 million versus $8.1 million a year ago; GAAP net loss was $12.3 million, or $0.27 per diluted share, versus $7.5 million, or $0.20 per diluted share, a year ago. Non-GAAP net loss was $10.8 million, or $0.23 per diluted share, versus $6.4 million, or $0.17 per diluted share, a year ago. Backlog ended at $24.6 million, up 43%, and cash, cash equivalents and marketable securities were $43.7 million. Guidance was reiterated: full-year 2026 revenue of $24 million to $27 million, which management said implies roughly 357% to 415% growth over 2025 revenue of $5.2 million. Full-year operating cash burn guidance was also reiterated at $32 million to $36 million, or roughly $8 million to $9 million per quarter on average. Management said cash burn should trend lower in the second half as revenue and margins ramp, and that most of the current backlog is expected to convert over the next 12 to 18 months.

Ben Wolff’s tone was notably more optimistic than in prior quarters, saying he is “more bullish” than he has been since returning to the company. He framed Palladyne’s strategy as combining decentralized embodied collaborative AI with U.S.-based manufacturing so the company can deliver affordable, attritable autonomous systems at scale. He pointed to field exercises, repeat orders, new contracts, and a larger proposal pipeline as signs that the pieces are starting to reinforce one another.

Trevor Thatcher focused on the financial bridge between growth and cash use. He highlighted Q2 revenue of $5.8 million, gross margin of approximately 29%, operating loss of $13.4 million, and GAAP net loss of $12.3 million, while noting stock-based compensation was $2.3 million and a noncash warrant revaluation added about $800,000 of other income. He said the company ended with $43.7 million in cash, cash equivalents and marketable securities, raised $17.3 million net via the ATM in the first half at an average price of $6.84 per share, and still has about $24 million of ATM capacity remaining.

Analysts pressed on the IAI partnership, and management said it has already engaged about half of the targeted U.S. government prospects, sees meaningful interest, and is identifying additional facilities so domestic manufacturing could ramp quickly if demand appears. On Gremlin-X, management said TRL 7 was reached after five design iterations and real customer field use, but it would not call TRL 8 until live-fire battlefield conditions. Questions about Q3 bookings and backlog conversion were met with caution: management said it is too early to know how much of backlog will land in 2026 and described near-term government funding opportunities as uncertain despite the larger pipeline.