AIRO Group Holdings, Inc. (AIRO) Q2 2026 Earnings: Revenue $43M (+75.9%)
AIRO — Q2 2026 Financial Report Analysis
Q2 · Fiscal year 2026 · Published by Pham Hop
Drone sales nearly doubled to $41.0M, lifting revenue 76% to $43.2M and producing AIRO's first operating profit since its IPO, though a Danish tax bill left a $2.0M net loss.
Revenue
$43M
+75.9% YoY
Net income
-$2.0M
Diluted EPS
$-0.06
Operating margin
3.8%
This period vs a year ago
Same period last year
This period
Revenue▲+75.9%
≈$25M
$43M
Year-ago figures (≈) are worked out from the growth rate the company reported. Each row has its own scale.
AIRO Group's second quarter of 2026 was a drone quarter. Revenue rose 76% to $43.2 million, and $41.0 million of it came from the Drones segment, almost all of it delivered to European customers. That one segment carried the company to its first operating profit since going public in 2025: $1.7 million, against a $19.7 million operating loss a year earlier. The bottom line still showed a $2.0 million net loss, because the company paid $4.1 million in income tax on $2.1 million of pre-tax profit (explained below). Full-year guidance did not change.
At a glance
$43.2 million revenue, up 76%: almost all of it from drones. Drones revenue rose from $22.0 million to $41.0 million. The other three businesses shrank.
$1.7 million operating profit vs. a $19.7 million loss: most of that swing comes from last year's IPO-related stock awards falling away, not from the business itself. The real underlying improvement is a few million dollars, not twenty.
$163 million drone backlog, up 9% from the first quarter: this is orders for drones not yet delivered. The company expects most of it to turn into revenue within 12 months, though some of it is still unsigned NATO allocations.
The numbers
Metric
Q2 2026
Q2 2025
YoY Change
Revenue
$43.2M
$24.6M
+75.9%
Gross profit
$27.7M
$15.0M
+84.2%
Gross margin
64.1%
61.2%
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+2.9 pts
Operating income (loss)
$1.7M
$(19.7)M
n/m
Operating margin
3.8%
(80.2)%
n/m
Net income (loss)
$(2.0)M
$5.9M
n/m
Diluted EPS
$(0.06)
$0.30
n/m
Adjusted EBITDA (company measure)
$6.8M
$4.7M
+44.8%
Drones segment revenue
$41.0M
$22.0M
+86.7%
Drone backlog (non-U.S.)
$163M
n/a
+9% vs. Q1 2026
n/m = not meaningful (the figure changed sign). Gross margin is the share of revenue left after the direct cost of making the product. Operating margin is the share left after all running costs, before interest and tax.
Takeaway: AIRO is in effect a European military-drone maker (its Sky-Watch business in Denmark) with three small loss-making businesses attached. In Q2, Drones brought in 95% of revenue and made a $13.0 million segment profit. The other three segments together lost $5.7 million and corporate costs took another $9.7 million. Drone deliveries are lumpy: Q1 revenue was only $8.9 million at a 27% gross margin, and the company's own full-year guidance still implies a loss in the second half. One good drone quarter does not yet make the whole company profitable.
Where the revenue came from
The 10-Q splits the business into four segments. All of the growth came from one of them:
Segment
Q2 2026 revenue
Q2 2025 revenue
Change
Q2 2026 segment profit (loss)
Drones (Sky-Watch, RQ-35 / RQ-70)
$41.0M
$22.0M
+86.7%
$13.0M
Avionics (Aspen Avionics)
$1.4M
$1.5M
-6.3%
$(1.0)M
Training (Coastal Defense)
$0.7M
$1.1M
-30.1%
$(1.6)M
Electric Air Mobility (Jaunt eVTOL)
$0
$0
—
$(3.1)M
Corporate (not allocated)
—
—
—
$(9.7)M
eVTOL means "electric vertical takeoff and landing": an aircraft that takes off like a helicopter and flies on electric power.
Drones: the 10-Q puts the increase down to "higher drone sales." $40.9 million of the segment's $41.0 million revenue was booked in Europe. The segment's gross margin rose to about 66% from 64%. The press release says the margin gain came from "a favorable product mix shift back toward higher-margin drone products," after a weaker mix in Q1. The RQ-35 drone was added to the U.S. Department of War's "Blue UAS" list in the quarter. That list approves drones for U.S. government purchase, so a U.S. revenue stream that barely exists today ($0 in Q2) is now possible.
Avionics: revenue slipped on "lower demand and temporary disruption associated with facility relocation" in Q1. Avionics are the cockpit displays and GPS sensors in an aircraft. Over the first half, this segment's gross margin fell 15.6 points because of "pricing concessions to support sales."
Training: revenue fell on "lower task orders" (fewer individual work orders under existing contracts). The 10-Q says expected contract awards have been delayed. It also says the company "is evaluating the strategic fit and long-term role" of the segment because it is "capital-intensive." Read that as a possible sale or wind-down.
Electric Air Mobility: this segment has no revenue yet. Its $3.1 million quarterly loss is mostly R&D (research and development) on the JC250 cargo aircraft and JX250 multi-role aircraft. The company expects certification of a one-third-scale cargo drone "as early as 2027."
What the headline numbers hide
Most of the jump in operating profit is accounting, not operations. Q2 2025 included $18.6 million of stock-based compensation, most of it stock awards that vested at the IPO. Q2 2026 had $1.1 million. Count stock compensation back in and the year-ago operating loss is about $1.1 million, against about $2.8 million of operating profit this quarter. That is still an improvement, but it is about $4 million, not $21 million. General and administrative costs fell from $28.9 million to $16.1 million, and the 10-Q attributes the drop mostly to "lower stock-based compensation that vested with the IPO."
Last year's net profit wasn't real either. Q2 2025's $5.9 million net income came from one-off gains: $15.6 million on paying off debt, $17.5 million from revaluing acquisition earn-outs (payments owed to the sellers of acquired businesses, which were settled at the IPO) and $1.8 million on warrants. Without those, the year-ago quarter was a large loss. "Net income fell from +$5.9 million to −$2.0 million" points the wrong way. The underlying trend improved.
The tax bill exceeded pre-tax profit. AIRO paid $4.1 million of tax on $2.1 million of pre-tax income. The 10-Q says the tax is "primarily attributable to positive pre-tax income generated by Sky-Watch." The profitable Danish drone business pays tax locally, and the losses elsewhere in the group can't be used to reduce that tax. This will repeat whenever drones are profitable and the rest of the group isn't.
Cash conversion was very weak in the first half, but most of that has since reversed. Operating cash flow for the first six months was −$48.7 million, compared with a net loss of $17.4 million. The biggest single cause was a $34.9 million rise in money owed by customers (receivables). Receivables reached $46.2 million at June 30, up from $12.4 million at year-end, because of drone deliveries late in the quarter. The company says it collected $43.2 million of those receivables in July. It put cash at about $56 million on July 31, up from $25.9 million on June 30. That July figure is preliminary and unaudited.
A related-party payment takes part of the drone profit. Under an agreement with Dangroup ApS, AIRO pays 20% of Sky-Watch's EBITDA as an "incentive bonus." EBITDA is earnings before interest, tax, depreciation and amortization. Dangroup is about 60% owned by AIRO board member Edvard Per Erik Svehag. The expense was $2.6 million in Q2 (up from $1.8 million), and the $6.1 million bonus for 2025 was paid in June. As drone profit grows, so does this payment.
Adjusted EBITDA margin actually fell. The company's adjusted figure rose to $6.8 million, but as a share of revenue it dropped to 15.8% from 19.1%. Adjusted EBITDA is the company's own profit measure, which leaves out stock compensation and one-off items. Its margin fell because R&D grew 85% to $7.6 million, ahead of revenue. In this quarter the adjusted figure is close to GAAP (the standard accounting rules), since the only exclusions were $1.1 million of stock compensation and $0.6 million of severance costs. The big gap between the two was in 2025.
More shares spread any future profit thinner. The average diluted share count rose to 31.5 million from 19.5 million after the 2025 IPO, an increase of about 62%. Divided over today's share count, the year-ago $5.9 million profit would have been about $0.19 a share instead of $0.30.
Most of the balance sheet is goodwill. Goodwill is the premium paid for acquired businesses over the value of their identifiable assets. It is $568 million of the $757 million in total assets. That is typical for a company built from acquisitions, but if the acquired businesses keep underperforming (Avionics and Training already are), the company may have to write some of that goodwill down.
Outlook
Management repeated its 2026 guidance:
Revenue growth of 15% to 25%. On 2025 revenue of $90.9 million, that is roughly $104.5–113.6 million for the year. First-half revenue was $52.1 million, so the second half has to bring in about $52.5–61.5 million. That is at least as much as the whole first half, and most of it would need to come from the drone backlog.
Adjusted EBITDA "in the negative mid- to high-teens dollar range" (in millions). After −$6.0 million in the first half, that means a further loss on this measure in the second half, roughly $9–13 million if read as −$15 to −$19 million for the year. This is the most telling part of the guidance. Second-half revenue is expected to at least match the first half, yet the company still expects to lose money on its own adjusted measure. So spending on R&D, eVTOL development and the U.S. push is planned to keep growing faster than drone gross profit.
Our read: Two things matter here: how much of the backlog turns into revenue, and how fast. The $163 million backlog is non-U.S. only. It includes NATO orders where "funds have been allocated" but no contract is signed yet, and it is translated at August exchange rates, so it can move with currencies. If most of it converts within 12 months as management expects, that is more than $80 million of drone revenue over the next year. That alone would come close to the whole company's 2025 revenue of $90.9 million. The Q1/Q2 pattern (from $8.9 million to $43.2 million in one quarter) shows how lumpy that conversion is. Watch three things over the next two quarters: whether a U.S. drone order shows up after the Blue UAS listing; what the company decides about the Training segment; and whether the July cash rebound holds, given that the full-year guidance implies the company will keep burning cash.
Source: AIRO Group Holdings Form 10-Q for the quarter ended June 30, 2026 (filed August 13, 2026), and the Q2 2026 earnings release (Form 8-K Exhibit 99.1) for backlog, guidance and the July 31 cash estimate.