Palladyne AI reported record third-quarter revenue of $8.6 million, up sharply from a year earlier and 48% from the prior quarter, as sales of components and revenue from government contracts increased. The autonomy-software and defense-components company raised the lower end of its 2026 revenue outlook and highlighted new field evaluations, product deliveries and commercial partnerships.
The company also said the expiration of warrants and contingent shares reduced its fully diluted share count by 9%. It ended the quarter with $47 million in cash, cash equivalents and marketable securities, while continuing to spend on product development and growth.
Financial and operating results
- Revenue reached $8.6 million, a company record. That was an 895% increase year over year and 48% sequentially.
- Components revenue rose 26% from the second quarter, helped in part by the first delivery of Palladyne’s next-generation BRAIN FC-1 flight computers. The company shipped more BRAIN flight computers during the quarter than in any prior quarter.
- Revenue from government contracts increased 135% quarter over quarter.
- 2026 revenue guidance now starts at $25 million, up from the previous lower-end target; the company maintained its $27 million upper end. The range implies year-over-year growth of 377% to 415%.
- Backlog was $18.7 million at quarter-end, including $15.3 million in funded work. Palladyne signed $2.7 million of net new contracts during the quarter. It said backlog remained materially above its level at the start of both the first and second quarters, while noting that backlog can fluctuate as customers use existing contract funding before renewing.
- Cash and marketable securities totaled $47 million. Palladyne said operating cash burn fell sequentially, but remained elevated because of research and development and working capital needs. It expects full-year cash burn—defined by the company as cash used in operations plus capital spending—to be near or slightly above the high end of its previously guided range, partly because of opportunistic equipment purchases. It expects fourth-quarter burn to be below the average quarterly pace for the first nine months, citing improved revenue and margins.
- Warrant and contingent-share expirations cut the fully diluted share count by 9%. No further detail on the share-count change was included in the announcement.
Product, defense and commercial developments
- At the U.S. Army’s Project Convergence Capstone 6, Palladyne’s SwarmOS software worked with Anduril’s Lattice system to coordinate autonomous operations involving drones from multiple vendors. The Army evaluated SwarmOS against nine performance criteria and gave it the highest possible rating on all nine, the company said.
- Palladyne delivered the first units of BRAIN FC-1, a lower-cost, mission-grade flight-control computer. The company described the launch and higher shipment volume as evidence of its ability to scale production.
- Palladyne entered agreements with Orkid Tech to extend SwarmOS to fixed-wing aircraft and with NORDA Dynamics to integrate the software with its Underdog module.
- After quarter-end, Palladyne launched joint development of SwarmShot, a counter-drone swarm system, with Federal Ammunition and Mossberg. BRAIN was also named a finalist in the Army’s FUZE xTech Apex Intercept competition.
- The company continued its partnership with Israel Aerospace Industries, which it said was drawing increased interest.
- In manufacturing, Palladyne is working with FANUC America to pair FANUC industrial robots with its physical-AI software. The companies are pursuing joint sales to manufacturers ranging from large corporations to small and midsize businesses.
- Palladyne also participated in the Northern Strike 2026 military exercise in Michigan, continuing a series of Department of War exercises.
The quarter’s results show a combination of rapid revenue growth, a larger funded backlog and continued investment in product development and production capacity. Palladyne said it believes its available cash is sufficient to execute its plans and expects 2026 growth to carry into 2027.