cash flow, use that cash flow to help really get us to profitability much sooner and reduce our burn across the civil markets, which can allow the overall strategy to build much better products and build a much bigger company for the long term while minimizing the dilution. And so, again, this is still early days in us, you know, figuring out the exact strategy on how to deploy it. But I think that general framework is how we're thinking about it. And the enhanced capabilities we get from the WISC platform and Situ platform and SkyGrid platform gives us a really nice go-to-market that we did not have before.

Excellent. Thank you so much. That's super helpful. Thanks, Adam, for all that color. Maybe just a quick follow-up, coming back to your recent unveil of your first dual-use aircraft jointly built with Andurl. Just help us understand, you know, how are you thinking about commercialization of Thunder and Halo, and how might those be complementary to Midnight? Thank you.

Thanks, Andres. So we're building the core platform, the base platform, which we call Halo. And that will have all of the kind of basic functionality that that aircraft, you know, needs to operate. We can then take that aircraft and give it to Andrel, which will ultimately missionize that aircraft. And so that's something that Archer is not doing. That's something that Andrel is going to be doing for the ultimate end defense products. There, of course, will be different programs of record that that platform will go after on the Thunder side. But on the Halo side, there are customers that we will go after that have needs that have a similar use case without any of the defense capabilities. So think search and rescue or offshore energy, areas where you need to carry more payload, much longer distances than what the Midnight platform would be. So we've already announced an earlier customer, which is Murabeni. And there's been a ton of inbound and we've had a lot of interest with existing customers we've been working with to find new solutions. So the goal will be to find ways to take that platform and build it as quickly as we can, but also really try to minimize the spend on that platform by leveraging a lot of the core capabilities that we've already built from that platform. So like another great example, you know, is the flight control system where we are leveraging a lot of work that we had started with Midnight, but now we can also enhance with Boeing. So ultimately, the goal is a low-cost platform that can really scale significantly, and by having civil and defense capabilities, you get really both those benefits.

Excellent. Thank you very much. Congrats again. Exciting new times. We'll pass it on. Thanks.

Your next question comes from the line of James Kirby from J.P. Morgan. Please go ahead.

Hey, good afternoon, guys. Maybe just following up, asking a different way from the previous question, where do you see in situ fitting into the longer-term portfolio at Archer? And maybe could you just speak to the extent you can on the revenue growth drivers in that business?

In the ISR world, the revenues that you see today are largely a result of the macro environment and the sales that happened from years ago. So when you look forward from here, it seems very clear that there will be an increased demand for ISR drones, not just overall, but even new capabilities. And so there is a broad set of new products that are being requested. And I think there is a huge market growth potential across the broader ISR world. So in the very near term, there will be revenue and cash flow that will be generated from the existing product portfolio, but there's a whole new suite of products that can be built, that can be expanded, and generate a significantly higher revenue given the macro environment we live in today.

Got it. I appreciate it. And then for a second question, I wanted to ask you to unpack the collaboration agreement with Boeing a little bit more. It seems from the shareholder letter and the press release that, you know, they'll retain the WISC autonomous stack for their future aircraft, potentially. Does it go further than that in the sense of what you guys have been building at Archer with, you know, the Z platform and now SkyGrid on top of that, as well as what you're doing with the Halo Thunder platform?

Does Boeing, all is there more avenues behind just the whisk autonomous stack so the transaction was set up where archer will own the ip but we will share the ip back with with boeing as it relates to products built specifically around flight control systems autonomy and several other areas the concept is really one of partnership so boeing took all stock in the transaction They locked up the stock, and we will work together through a collaboration agreement on enhancing and developing that product portfolio and also future products. Boeing, of course, has an entire suite of plans on both the civil and defense side, so there are lots of areas that I'm sure that they are interested in developing. From the Archer perspective, it gave us the ability to have a head start on a lot of the core autonomy stack, the pathway to certifying the autonomy stack on the civil side, and a pathway to deploying the flight autonomy on the defense side. And so it really is a win-win here where by Archer developing this platform across flight controls, flight control computers, full autonomy, Boeing can benefit too. And by them taking all stock, it's really a win-win across the transaction.

That's great. I appreciate the question, Tom. Thanks.

Your next question comes from the line of Austin Moeller from Canaccord Genuity. Please go ahead.

Hi, good afternoon. So for the in situ acquisition, should we be thinking about this from the context of Boeing already manufactures a variety of like Group 1 through Group 3 or Group 4 drones under that product line and also the EOR, IR gimbal payloads that go on them? And you can now combine those products with the Group 5 Thunder drone and also incorporate the gimbal payloads onto Thunder, the green version of the Thunder airframe that you could sell commercially or internationally to other MODs.

So, In-Situ manufactures the drones themselves. It's not being manufactured by some other Boeing entity. It's all contained within In-Situ. and Archer will start producing those drones and looking at ways of scaling up the capabilities there. As it relates to other companies and working with other companies, I think right now we're going to be focused on really building just the core products that Infitu sells and really trying to grow that fleet and not really trying to push that to some other customers or other partners that Archer has. And so that's going to be the core focus is how do we get that portfolio in a really healthy spot? How do we take advantage of the macro environment that we're in where there's an increased demand for these types of products and really try to increase the manufacturing, you know, of, you know, group two, group three, group four drones that they manufacture today.

Okay.

And if we're thinking about the roadmap to getting to Thunder First Flight in 2027, just given it's a dual tilt rotor design, can you just talk about some of the the puts and takes and challenges to to get to that point next year yeah hey austin this is tom um well like like i was mentioning to savvy earlier while the aircraft looks pretty different you know standing 100 feet away if you look under the skin the platforms the systems on board are really similar so again flying with the same battery technology same electric motor technology same flight control software in fact we literally took the actual code that flies midnight put it in the sim for halo and the aircraft flew beautifully without any control design specific to that platform which obviously we'll go do so you know certainly there's a lot of hard work for the team we're excited about partnering with some of the new folks joining uh you know as part of this uh this deal and feel really good about it awesome i'll pass it back there thanks your next question comes from the line of amit dayal apologies your next question comes from the line of edison you from dutch bank please go ahead hey thanks for for taking our questions and congratulations on on the deal today uh first thing i want to ask is you know you've obviously

picked up quite a few assets over the last couple years right you think of over air um you think of the Lillian patents, I guess, what is the vision here on putting together all these assets? And I think, you know, with WIS, you obviously have a lot of autonomy stuff. So just could you maybe share the vision, you know, you have all these assets, and clearly you got some of them for a very good price. What is the vision on putting these all together and what we will get?

Thanks, Edison. This is Adam. So some of the previous acquisitions we've done that focused a lot on the early patent portfolios that existed in the eVTOL space were a result of companies that were either shutting down or going out of business. And so I think that was pretty different where there were groups that had spent hundreds of millions or in some cases greater than a billion dollars developing IP that was available for us to pick up at a very low dollar cost. And in fact, we're heavily competed, you know, across the, you know, the eVTOL community as there were some very interesting IP there. As it relates to WISC in situ and SkyGrid, it's a totally different and unique value proposition. A lot of this just came about as there are products and platforms that I think are actually more valuable as it relates to Archer than might have been in the hands of Boeing. So for example, Boeing is focused on some of the biggest platforms in the world. So big platforms like an F47 or 737. In situ is a much smaller company, but that impact to Archer is substantial versus the impact, even if in situ 5X would have minimal impact to Boeing. So our investment in that platform can have substantial rewards in the very near term. And so in a lot of the cases that these assets actually can perform much better on our side, the same thing as it relates to air traffic control. So the ATC product SkyGrid is highly attractive to us for two reasons. One is there's a macro environment where air traffic control needs to get upgraded. And two, we've been building this foundation model Z that's highly complementary to that product that really can enable that product in a way that they couldn't have done by themselves. So by combining them together and allowing Archer to focus on it, we can get to market in a new space that is, I think, going to be ultimately very valuable, but will start out small. Again, probably more difficult for a larger company to go after just because of the size of the starting base.

Gotcha. And just to follow up on Boeing, obviously, Boeing is now a partner, very big investor in our share. How does one think about the future areas of collaboration? I don't know if you can elaborate more than what was announced in press release. It seemed like this is pretty long term. You know, they clearly don't trust you guys a lot. Any kind of color you can provide there. Thank you.

I don't want to speak for Boeing and speculate on, you know, from their perspective. But what I'm hopeful is that Archer can be a great partner to Boeing. And by building a lot of these advanced capabilities and really taking the torch and completing the task on a lot the products that they had built um and then sharing some of that ip back with boeing to enable some of their products i think that would make it a true win-win and that's really my goal thank you thanks your next question comes from the line of amit dayal from hc wainwright and co please go ahead thank you good afternoon everyone and congrats on you know today's announcement really interesting setup for you guys going forward um you know adam can you maybe just provide some additional color and what allows you to keep the burn rate contained you know despite recent developments with andrew and our boy sure so i can't say much as it relates to the transaction just given where we are in that process but as i mentioned before if there ever were two companies that could come together uh you know these are really attractive because we have the same architecture to start so there's a lot of great synergies there where we can be working on the second is we do have multiple programs in on the defense programs you know the goal is to have you know, programs ultimately won where R&D dollars can be created. And then InSitu also provides a platform to generate cash flow. And so when you put all this stuff together, you're going to work really hard to do this, but the goal is to keep the cost structure similar.

And then just a follow up, in terms of the next set of milestones for Halo Thunder, can you maybe give us some sense of, you know, what some of those catalysts could be?

Hey, Matt, this is Tom. So like I mentioned, we're working hard to get the aircraft in the air next year, and obviously, you know, in the background, there's work going on on the kind of customer program side that I can't get into details on, but we're pretty confident we'll be in the air next year. And then, you know, the idea is, the whole idea of going to market with a defense product first, or I should say the defense variant of the dual-use vehicle, is that the certification pathway is much more straightforward. So like this first vehicle will have a, you know, military specific airworthiness, and then will incrementally be increased from there as we get into civil markets. And so that really just provides a great setup to take this technology that's already been hardened on Bindite and get it out there, you know, in flying products very rapidly. Understood.

Thank you guys. That's all I have.

A reminder, if you would like to ask a question, please press star one on your telephone keypad. At this time, I would like to turn the call over to Adam for our retail questions. Adam, please go ahead.

There's been a lot of questions on Archer's priorities, commercial versus defense, and how should we think about which will be the larger revenue driver in profitability. So we are certainly not taking our eye off the prize on Midnight. Midnight is core to our platform here at Archer, and we will work on that platform and get it to market. But defense does give us a pathway to deploy products faster, and that does come with revenue and learnings. And now within Situ, we'll be generating substantial revenue in a high growth industry, which can help bridge the path to getting to profitability sooner. And so with Thunder, we'll look at the Halo Thunder platform. We're looking at several multi-decade programs of record with allied forces, but the commercial markets will remain the larger market, and we have not taken our eye off the prize there.

At this time, there are no further questions. I will now turn the call back to Adam for closing remarks. Apologies. We actually have one more question from the line of Savi Sik from Raymond James. Please go ahead.

Okay. Thanks for the additional question. Could you kind of briefly talk about, you know, I think Priya mentioned that maybe software generating kind of revenue and profitable by kind of the back half of next year. Just generally kind of what needs to happen on that line to kind of get that generating cash flow?

Sure, Savi. So I think, you know, part of this has to do with Z, which is our Archer's Aviation Foundation model. And so a way to think about it is, you know, America's airspace moves over 3 million people per day, and it's built on systems from decades ago. And the data behind all those flights are siloed from cockpits to towers. And so Z turns that data into a single intelligence layer that gives pilots, airline operators a window into the future. So think better decisions, safer, more efficient operations. So Z is like the brain, and we're building products that will span three markets, pilot applications, air traffic management, and airline operations. And we've designed it to be built anywhere that aviation is needed, whether it's in the cloud or on the edge, which is fully offline. So it's not theoretical. These are already, you know, discussions we're having with government agencies, industry partners, and in early deployments. So the goal is to take those products, send them out into the market. We've seen a lot of interest in them and start producing revenue and ultimately profitability.

Got it. And then if I might just on the EIPP and flying in LA, just wondering kind of the kind of the progression there, you know, what milestones you need to kind of meet flying in LA before you start working on EIPP, just any high level kind of flight testing updates?

Hey, Sadie. So first, just real quick at the high level testing update we've actually we've flown over 150 piloted test flights and we're flying up to five times a day and many flights over 50 miles and we're flying between airports now so and of course we're on track to full transition later this year so lots of great progress on the piloted flight test front with regards to eivp you know as we talked about last quarter you can expect us to begin that initial eivp operations later this year and that plan is largely on track and so we'll start with CETAL, and then we've got more aircraft coming on at the end of this year and beginning of next year, and then we'll roll further as we go. So I think that probably captures your question. Back to you.

It does. Thank you.

At this time, there are no further questions. I would now like to turn the call back over to Adam for closing remarks.

Well, thank you, everyone, for joining the call today. It was an important day for Archer, and I think a broader industry. I'm grateful for everyone here at Archer for all their tireless work. And I also want to say how appreciative I am of Kelly Ortberg and the Boeing team for their trust throughout this transaction that we announced this morning. So thank you everyone for joining and we look forward to sharing more over the course of the quarter.

This concludes today's call. Thank you all for attending. You may now disconnect.