Earnings Call Transcript - ACHR Q1 2026

Operator, Operator

Hello, everyone. Thank you for joining us, and welcome to the Archer Aviation Company Q1 2026 Financial Results Conference Call. After today's prepared remarks, we will host a question-and-answer session. I will now hand the conference over to Kate Kiewel, Head of Investor Relations. Kate? Please go ahead.

Kate Kiewel, Head of Investor Relations

Welcome to Archer's earnings call. This is Kate Kiewel, Archer's Head of Investor Relations. Today, we will be making forward-looking statements that are based on current assumptions. We don't undertake any obligation to update those assumptions as a result of new information or future events. Risks and uncertainties may cause our actual results to differ materially from those contemplated by these statements. For more information about potential risks and uncertainties, please review the risk factors in our SEC filings. Today, we will also be discussing both GAAP and non-GAAP financial measures. A reconciliation of those measures is included in our earnings release from today. Now I'll turn it over to Adam. Adam?

Adam Goldstein, Chief Executive Officer

Thank you, and good afternoon. I want to start by stepping back because the opportunities unfolding across the aerospace and defense market right now are massive. The future is arriving all at once, and the investments we are making across our civil, defense and AI software businesses are forming a flywheel that increasingly reinforces itself. We are seeing that momentum unfold across the ecosystem. The U.S. government is leaning in. President Trump, the DOT and the FAA delivered the eVTOL Integration Pilot Program last year, creating real-world testing environments for next-generation aircraft. And recently, Archer was selected as a partner in three of the winning EIPP applications across eight states. We are on track to begin flying under that program in U.S. cities later this year. Simultaneously, this administration is targeting to deploy over $20 billion for air traffic control modernization, an investment that would unlock new levels of safety and throughput across the national airspace. Foreign governments are following suit — the UAE, Saudi Arabia, Korea, Japan and numerous others are building infrastructure and accelerating regulatory pathways to position themselves at the forefront of this new form of transportation. The largest airlines worldwide are also recognizing this moment and stepping up. We already work with seven of them across our businesses and our multibillion-dollar order book for Midnight continues to grow. On the world's biggest stages, people are eager to showcase this future. We are collaborating closely with the LA '28 Olympic Games, DOT, FAA, surrounding communities and other stakeholders to plan our launch of air taxi operations as the official provider for the Games. It will be millions watching as the future is being built in America. Let's focus on our air taxi progress. The reason we are positioned where we are today, a leader in the industry, traces back to the decisions that we made on day one. Archer's path to commercializing eVTOL has always been rooted in our first-principles approach to designing a safe passenger-carrying aircraft, purpose built for rapid back-to-back trips of 20 to 50 miles in urban environments at low cost with a low noise profile. When I entered this sector, most of the competitors had spent a decade cycling through configurations. Archer committed very early on to a partial-tilt architecture designed for the air taxi use case and for FAA certification from day one. That discipline has compounded. Eight years in, no one else in the eVTOL industry has moved as fast as we have. And while the majority of our team is battling day to day to get through the final phase of certification and bring this new mode of transportation to market, I am focused on ensuring we future-proof our ability to scale. A type-certifiable design is not enough. It requires us to solve two additional challenges. The first key unlock is industrial scale. We need to continue pushing our entire industrial base forward here in the U.S., which will deliver meaningful cost and performance improvements with each new generation of Midnight: advanced materials, new manufacturing processes, further advanced propulsion systems and components built for volume production on the scale of autos. We have to prove out these innovations before the FAA will allow us to use them in commercially certified aircraft. We will deploy them first in autonomous, attritable, dual-use aircraft for cargo and defense and then flow these technologies back to future iterations of Midnight, helping unlock step-change improvements in cost and performance. This is just one example of how our three business lines compound on one another. The second key unlock is modernizing our national airspace. America's aerospace system today is a limiter on America's GDP growth, and we have to give it the ability to scale. While it can likely safely handle the additional traffic we expect over the next three to five years, the long-term scale of air taxis and advanced air mobility will require the U.S. to rework the infrastructure and software underlying air traffic control. The good news is this administration, and in particular Secretary Duffy and Administrator Bedford, get this and are tackling it head on. Today's system was not built for the volume or the kind of traffic that's coming over the next decade. This is why we have partnered with category-defining technology leaders, including Palantir, which was recently down selected as a finalist for the FAA's SMART program, as well as NVIDIA and Starlink, both of which will bring next-generation capabilities to Midnight. We are focused on bringing the most innovative technologies to address the challenges we face. These are not adjacencies. They are the imperatives that will drive the flywheel unlocking massive scale, but they are years-long efforts. The time to invest is now. And the good news is we are already executing against all of them. Let me turn to how we executed this quarter. We had a banner quarter on certification. Archer became the first eVTOL company to close Phase II of the FAA's four-phase type certification process, and we have been advancing Phase I in parallel for some time now. Coupled with that exciting progress, this was also our most active quarter for our flight test program with piloted VTOL and STOL flights across our expanded Midnight fleet on a nearly daily basis and often multiple times a day. This quarter, we also took over operations at Hawthorne Airport in L.A. We have begun modernizing it so it can serve as an air taxi and mobility hub for the city of L.A. and its surrounding communities, and as our innovation hub for the next-generation aerospace technology we are developing with our partners. On the defense side, our work with Anduril continues to accelerate. As I discussed in my letter to the shareholders, defense procurement is a performance and cost equation. You cannot retrofit your way into the right solution. You must take a first-principles approach. Our partnership with Anduril is doing just that. We chose to partner with Anduril because, among other strengths, they deeply understand what the U.S. and its allies need in a next generation of vertical-lift aircraft beyond the legacy programs that have been entrenched for 50-plus years. Together, we have designed and begun building our clean-sheet hybrid aircraft, drawing on the technologies Archer has developed for Midnight and the IP we acquired from Karem, Overair and Wisk. The window for these decades-long programs of record is approaching fast, and we will be ready. I continue to be amazed by what our teams can do. I firmly believe the Archer-Anduril team is one of the greatest aerospace teams of this generation: top technical fellows from Boeing, former chief engineers from Lockheed, leading PhD researchers from Stanford. You only get a chance to be part of a team like this once. I believe our hybrid, dual-use autonomous aircraft will be the most sophisticated vertical-lift platform ever developed in its category. It is not incremental. It is generational. When people see what we have built, they will recalibrate their beliefs about what America can field. I cannot wait to show it off — stay tuned. Archer is now a multi-threat company. We expect to start initial air taxi operations in U.S. cities, begin winning phased government defense awards and begin to deploy our AI solutions later this year. And we are executing from a position of strength with $1.8 billion in liquidity. I have never been more confident in what Archer is building. We're more proud of the team building it. With that, I'll turn it over to Priya.

Priya Gupta, Chief Financial Officer

Thanks, Adam, and good afternoon, everyone. I'll now take you through the key financial highlights for the quarter and provide our guidance for Q2. We continue to maintain a very healthy balance sheet with $1.8 billion in liquidity, one of the strongest positions in our sector. And with less than $100 million in debt, our liquidity is clean, flexible and fully available to fund our strategic priorities without the overhang of significant leverage. Our spend for Q1 came in on guidance, a reflection of the rigor and intentionality we bring to every capital allocation decision. As discussed on our last call and in line with the updates Adam shared today, this planned increase in our spend directly correlates to the opportunities we are seeing across civil, defense and software and the platforms we are building in each of those areas that we believe will allow us to capture a meaningful portion of the market. Our revenue for Q1 began to grow as we expanded operations at the Hawthorne Airport in L.A. We expect this revenue to increase in Q2 as we continue to progress our plans to modernize that airport and its operations. Looking ahead, as we advance our commercial readiness with Midnight's expanded flight test program and operations under the EIPP and launch edition, make advancements in the design, development and build of our next-generation hybrid autonomous aircraft platform and advance our AI software platform, we expect to slightly increase our investments for the quarter. For Q2, we estimate our adjusted EBITDA loss to be in the range of $170 million to $200 million. This expansion of our investment reflects our level of conviction in the multibillion-dollar opportunities in front of us, not a deviation from discipline. We believe our multi-platform strategy is what separates Archer from the field, and our liquidity gives us the strength to execute it. And with that, I will turn it back over to the operator.

Operator, Operator

We will now begin the question-and-answer session. Your first question comes from the line of Andres Sheppard from Cantor Fitzgerald.

Andres Sheppard-Slinger, Analyst at Cantor Fitzgerald

Congrats on all the great progress so far. Adam, for the first question, I wanted to touch on maybe defense and autonomy. It's sounding more and more that this is going to be a big focus for Archer going forward. So I'm just curious if you could maybe give us a bit more color there? What kind of opportunities might you be pursuing, or are you excited about to the extent that you can talk about it? But how should we think about defense and autonomy for Archer going forward?

Adam Goldstein, Chief Executive Officer

Thanks, Andres. I'm going to let Tom answer that question to go through some of the defense opportunities. And as you might recall, as I explained in the past, Tom has been leading the defense platform, while Benjamin has been really pushing hard to get the Midnight platform through certification. I'll turn it over to Tom.

Thomas Muniz, Head of Defense Platform

Andres, Adam touched on some of the themes earlier in the call, but just to recap how we are thinking about defense. Going back to the beginning of Archer, it was all about building towards a mission and taking a first-principles approach — and so Midnight was optimized around this mission of moving people in and out of cities: optimized for low cost, high safety, low noise and, obviously, designed bottom-up for certain manufacturing. Initially, if you looked at whether we could use a version of Midnight for defense, we did work with the Air Force over the years, and there might be some niche applications there, but for the significant opportunities — the ones with the largest need that we're targeting now — you can't expect to modify Midnight and have that function well for this different mission; it just doesn't make sense. So, as we've said, we're developing a clean-sheet new aircraft that's a hybrid vehicle, partnering with Anduril. We've taken this first-principles approach for that aircraft, and it's obviously optimized around a different mission. This dual-use mission we're looking at has very specific payload, speed, range and cost targets, quite different from Midnight. I can't get into the details on any of those numbers, but we're now pretty far into the development of this vehicle, and I'm confident it's going to be a pretty incredible machine. Based on that progress and what we've seen from some of the customers that we're targeting, we've got a really strong conviction and optimism that our aircraft is going to be selected for some of these very large opportunities that are coming up in defense. Our goal is to show that aircraft later this year and ultimately win some of these phase-down selects this year. So it's a super exciting time.

Andres Sheppard-Slinger, Analyst at Cantor Fitzgerald

Wonderful. Got it. That's super helpful. I appreciate all that color. And maybe just as a quick follow-up: I'm curious if we can get an update on piloted transition flight. Any updates there? Or when should we be targeting it?

Benjamin Lyon, Head of Flight Test

Andres, this is Benjamin. Thanks for the question. As we were saying, we're already very much in the midst of our piloted VTOL test campaign, and we've been rapidly expanding our cadence. We're flying multiple aircraft multiple times a day. The focus right now is on progressing and advancing through more and more complex test points ahead of full transition. Central to that is the software verification and validation, which requires a higher level of rigor for piloted operations. We're working through that methodically, and we're confident in the timeline. To give a little more color: we moved through the hover regime, which is that first phase, faster than any prior phase. This is the fastest we've progressed from a first flight through this point in a test campaign and also with the fewest issues. So we're not too far away, but it will be in the second half of the year, and our goal is to complete piloted transition and enter EIPP operations this year.

Operator, Operator

Your next question comes from the line of Edison Yu from Deutsche Bank.

Edison Yu, Analyst at Deutsche Bank

I wanted to ask about the ATC modernization efforts that you cited and the need for it in the U.S. Can you give us a sense of what kind of ecosystem you envision for this? And sort of what are the roles of the various parties, whether it's some of those partners that you mentioned like Palantir, the airlines — just how the stakeholders come together to get this ATC modernized?

Adam Goldstein, Chief Executive Officer

Thanks, Edison. This is a new and really evolving discussion that's taking place right now. The good news is we've been working on our broader AI products, specifically around ATC solutions, for several years now. Lots of different groups are participating. Palantir, for example, one of our partners, is participating in the SMART program. Whether Palantir wins or not, I think Archer has an opportunity to be part of the modernization effort as we've already built a lot of tools that I think can add a lot of value. We haven't shown our solutions publicly as it's still a very competitive space, but we do intend to show it pretty soon. So more on that to come.

Edison Yu, Analyst at Deutsche Bank

Okay. And then back to the commercial side. I know you talked about scaling and the importance of that. As you evaluate the manufacturing process, what are you finding to be the biggest bottleneck, if any? And how are you addressing those?

Adam Goldstein, Chief Executive Officer

Today, a lot of our work really has to do with getting the aircraft through the certification process. We got through Phase II of certification, which was a big deal because completing that unlocked our ability to go through the Type Inspection Authorization process. When your type inspection authorization is not finished, that means you likely have existing issue papers, which are things that you are unwilling to agree to, meaning things that you can't actively solve. When we solved those and were able to agree, it really unlocked our ability to keep moving through this process and ultimately get through TIA and certification. On the manufacturing front, a lot of the work we're doing has to do with putting the processes, manufacturing tools and equipment in place to allow us to scale. We have put those in place as we've been building out this first initial fleet of eight to ten aircraft, but ultimately we're building towards a 50 aircraft per year production capacity. We've been working through the tooling to do that. It really comes down to the timeline of type certification. Once we get through the certification side, we can really scale our production side. Of course, all of this is about balancing the EIPP with our own certification flight test program and the launch edition program.

Operator, Operator

Your next question comes from the line of James Kirby from JPMorgan.

James Kirby, Analyst at JPMorgan

Maybe just following up with the previous questions. You mentioned you're advancing Phase I for some time now. Do you mind expanding on that in terms of what milestones are left or what should we be looking for for what remains in that stage?

Benjamin Lyon, Head of Flight Test

Sure. As we talked about, we just completed Phase II, and we're deep in Phase I. What this really means is we don't have any unsolvable technical challenges, and we're deep in execution. While this is not easy, the rules are in place and we've got our maintenance of compliance done. The next step is making sure that all of our test artifacts, which are now materially in final form, are working with the FAA in order to get through those administrative processes to get full approval.

James Kirby, Analyst at JPMorgan

Okay. That makes sense. I appreciate that. I guess for my second question, there was a house bill that was signed last month in Florida for vertiport network build-out. Adam, just your thoughts there in terms of the infrastructure build-out needed to align with the EIPP. Is there more needed? How do you expect that to ramp up over the next three years once the EIPP starts?

Adam Goldstein, Chief Executive Officer

Yes. The infrastructure is really going to be a mix of public-private partnerships. We've been working on the infrastructure side for several years. Domestically, we focused on a lot of what turned out to be EIPP markets: New York, Florida and California. On the New York side, we worked with the Port Authority and some private airports. In Florida, we've worked with Related and Hard Rock, and we're targeting Miami up to West Palm Beach. In California, Los Angeles has been our central focus where we took control of Hawthorne Airport. We partnered with SoFi Stadium, USC and then a bunch of the major stakeholders ahead of LA '28. You're seeing a mix of groups coming into place. As it relates directly to the EIPP, we're still finalizing a lot of the details with the different cities and specific routes. There's still more to come, but it's really opened up the level of interest, and we've now seen a lot of folks that want to partner on this side. I think you'll start to see that expand. We've also done a lot of work with battery and charging vendors and talking through the charging infrastructure that will be necessary. I think you'll see the industry, the different cities and public-private partnerships come together to build all the infrastructure needed.

Operator, Operator

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

Austin Moeller, Analyst at Canaccord Genuity

My first question: can we talk about the restricted type certificate that was issued for Midnight in the UAE — what kind of flight test can be performed under the restricted type certificate? And can that data be fed back to the FAA to facilitate certification in the U.S.?

Adam Goldstein, Chief Executive Officer

Yes. What we've been working on with the UAE has been transitioning Midnight into the restricted type certificate program. This is a difference from what we were previously working on, which was a type qualification. The restricted-type certification program is a more internationally recognized pathway that would allow Midnight to begin limited commercial operations. We are still working through that. It will help us accelerate our launch edition program in the UAE and allow for early commercial operations in Abu Dhabi, which we work with Abu Dhabi Aviation to fulfill. Ultimately, what it does is give us the ability to generate early revenue and early real-world flight experience.

Austin Moeller, Analyst at Canaccord Genuity

Okay. And I was wondering if you could comment on the opportunity to help improve the aerospace infrastructure with Palantir — do you see that as providing software or hardware to the FAA to deconflict airspace? Or do you view it more as using eVTOLs as a vector to test these technologies before they're implemented on aircraft nationwide?

Adam Goldstein, Chief Executive Officer

A lot of this is still new and being worked on. From Archer's perspective, we've been working on the application layer — actual software that would be used. We think about this as part of the flywheel we need to create. We're not just building aircraft; we have to build aircraft that ultimately can scale. Because the air traffic control system is constrained, it will limit what we can do. So we want to participate in any way we can, even if it means we ultimately are not generating a significant amount of revenue from that participation; it's still valuable to help the larger flywheel of the industry expand. That being said, we do have some neat products we've been working on that I do think will become adopted and can generate significant revenue. So we've really focused more on the application layer versus companies like Palantir that are focusing more on the integration layer.

Operator, Operator

Your next question comes from the line of Savanthi Syth from Raymond James.

Savanthi Syth, Analyst at Raymond James

Hey, good afternoon, everyone. A question similar to Edison's if I might follow up on. Just curious: how many aircraft have you built with this current configuration where you plan to do transitions as well? And as you launch the EIPP and do certification, how many aircraft do you expect to need and to have built this year?

Adam Goldstein, Chief Executive Officer

Thanks, Savi. We have two aircraft that are flying today, and we're still working through that initial fleet of eight to ten aircraft. Those will be allotted across the flight test program, EIPP launch edition and the infrastructure we're putting in place to ramp production up to 50 aircraft per year. So it's really a mix of the two.

Savanthi Syth, Analyst at Raymond James

Got it. That's helpful. And just another follow-up on the defense side. I know you have some U.S. programs you're going after and some in the U.K. I was curious if there's any pacing we should consider between the U.S. and U.K. programs?

Thomas Muniz, Head of Defense Platform

Savi, there's interest around the world for vehicles like the one we are developing with Anduril. There's an active program that the U.K. is working through in their procurement process, and we're competing along with Anduril. I can't talk about specifics, but the opportunity is massive and global. New capabilities have become very clear that governments are interested in, and as we've identified those opportunities, it's become clear there's an aircraft we can build that meets that need and can leverage a lot of the tools, systems and supply chain we've already put in place for Midnight, even though it's a new type of aircraft. We've taken the Anduril approach where we are doing early work ahead of these programs being announced because by the time they get announced, we want to be in a position to win them. As we've gone down that path, what we're building has turned out to be very capable, and that's why we have a lot of confidence that the aircraft will become very interesting around the world. We'll all have to wait and see what happens, but we have an increased level of conviction that the aircraft we're building will have global demand.

Operator, Operator

Your next question comes from the line of Amit Dayal from HC Wainwright & Co.

Amit Dayal, Analyst at HC Wainwright & Co.

Congrats on all the progress. I had one question on the burn for this year. How much of that is going towards manufacturing preparedness?

Adam Goldstein, Chief Executive Officer

Thanks, Amit. Let me give the bigger picture, and then I'll let Priya provide some more specifics. We are executing a multi-platform strategy across civil and defense. On the defense side, it's a generational product and that does take real investment, but we've already invested in a world-class engineering team, infrastructure, testing assets, and we're deploying those across both of our platforms. As our certainty has increased that we will win some of these defense contracts, it's given us the ability to spend more. The good news is, if we do win a defense contract, there will be dollars awarded which will help offset the spend. If we don't win a defense contract, we will immediately cut the spend. So you'll likely see a few quarters of elevated spend followed by the potential to reduce that from current levels. I'll turn it to Priya.

Priya Gupta, Chief Financial Officer

Amit, digging a little deeper, specific to the quarter, we're ramping spend in two core areas. Adam talked about our increased spending on the defense platform, and the other area is Midnight: as we're advancing our commercialization effort, we are increasing our spend in Midnight for a slight expansion and ramping the production efforts ahead of operations in the EIPP and other launch markets. We expect these elevated levels to be short-lived and then potentially come down thereafter.

Amit Dayal, Analyst at HC Wainwright & Co.

Understood. And just a follow-up to that: is there any certification activity going on for the manufacturing facilities that are in place so far?

Adam Goldstein, Chief Executive Officer

Yes, there is. We've been working through the production certificate as well, and we will try to time that with our type certificate progress.

Operator, Operator

Your next question comes from the line of Chris Pearce from Needham.

Christopher Pierce, Analyst at Needham

Just one big-picture question and one near-term question. When I hear you talk about the defense opportunity, is there a world where in three to five years Archer is primarily a defense company — you're winning contracts and ramping manufacturing there, and Midnight is less central? Or will you always want to work on both paths because of both opportunities?

Adam Goldstein, Chief Executive Officer

Good question. From a big-picture perspective, I think the opportunity for civil products is substantially larger than for defense because we're talking about global consumer use. For example, if you think about selling a few dozen aircraft in the top 1,000 markets, you can build or sell over $100 billion worth of aircraft. That's a large market. On the defense side, it will be more targeted and go to U.S. allies for specific use cases, so I do think the defense market will ultimately be smaller. That said, the beauty of the defense market is you can start to deploy some of these aircraft without going through the same FAA certification process, which can be faster, and you can start to use advanced materials and processes that can lead to a better civil product. That's the flywheel we're trying to create: building amazing products that reinforce each other and allow for a big market in both. We'll be involved in both, but I expect the civil products to be bigger.

Christopher Pierce, Analyst at Needham

Okay. And then more near-term: going back to Savi's question, you have two aircraft now and are building more, but you need to keep a certain number in locations like Hawthorne. What should we expect for EIPP deployment? Should it be multiple aircraft per site, or more likely one aircraft per site? Could there be cargo use? What would be disappointing and what would be an upside surprise?

Adam Goldstein, Chief Executive Officer

We are still in talks with the different EIPP markets and partners and are awaiting the different cities and routes that ultimately come to fruition. We are balancing our own certification process against EIPP opportunity and the launch edition opportunity. We are building to support all three but will have to weigh those different opportunities. As there's more clarity, we'll provide more detailed information.

Operator, Operator

And now I would like to turn the call over to Adam for our retail questions. Adam, please go ahead.

Adam Goldstein, Chief Executive Officer

We received a question that I thought was more personal and will relate to many people. The question was: I'm a regular person who doesn't have an apartment in New York or a house in the Hamptons — how will I be able to use Midnight? I think it's a great question and an important one. This product was not designed for the rich. It was designed for the masses. We are targeting use cases that are applicable to most people. A typical example we like to give is flying from city center to an airport. I grew up in Tampa, Florida, and it took me an hour to get to the airport. If you're able to fly over the water and fly 150 miles per hour in a straight line, that would be a real shortcut. If you could do that at a cost similar to a rideshare, that would be an attractive alternative for a typical person. Hopefully you can see yourself in a product like this and know it is made for everyone, not just a select few.

Operator, Operator

Thank you very much. There are no further questions at this time. I would now like to turn it back to Adam for any closing remarks.

Adam Goldstein, Chief Executive Officer

Thank you, everyone, for dialing in and listening to us. We'll talk to you next time.

Operator, Operator

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