Airship AI's Q2 2026 revenue nearly doubled to $4.1 million on commercial orders while federal awards lagged; the operating loss narrowed to $1.5 million and cash rose to $12.4 million with no debt.
Revenue
$4.1M
+92.1% YoY
Net income
-$2.4M
Diluted EPS
$-0.07
Operating margin
-36.1%
This period vs a year ago
Same period last year
This period
Revenue▲+92.1%
≈$2.1M
$4.1M
Year-ago figures (≈) are worked out from the growth rate the company reported. Each row has its own scale.
Revenue nearly doubles on commercial orders, but two customers are 84% of the quarter
Airship AI, a Redmond, Washington company that sells AI software and edge hardware that turns video and sensor feeds into searchable data (mostly for US federal law enforcement and homeland security), reported second-quarter 2026 net revenue of $4.12 million, up 92.1% from $2.15 million a year earlier. The 10-Q attributes the increase to "increased commercial orders, which more than offset variability in the timing of federal awards during the period." Gross margin rose to 75.1%, and the operating loss narrowed to $1.49 million from $2.02 million. The net loss fell to $2.41 million from $23.76 million, but almost all of that improvement is an accounting effect from warrant and earnout revaluations, not the business itself (explained below).
The base is small and lumpy: two customers made up about 84% of quarterly revenue, and backlog was $6.9 million.
At a glance
Revenue $4.12M, +92.1% YoY. Commercial orders, not the federal government, drove the quarter, which matters for a company whose revenue has mostly come from federal agencies.
Gross margin 75.1% (vs 71.4%). The company credits more sales of its own Airship-branded hardware and software, which carry better margins than resold equipment.
Cash $12.4M, no debt, operating cash flow +$0.58M for the half-year. Management says there is no substantial doubt about the company's ability to keep operating for the next twelve months. The first half was cash-positive only because customers paid down receivables; Q2 alone used $235,000.
Key figures
Metric
Q2 2026
Q2 2025
YoY Change
Net revenue
$4.12M
$2.15M
Read 0 community reports on Airship AI Holdings, Inc, or write your own.Write a report
+92.1%
– Product
$2.50M
$0.73M
+242.6%
– Post-contract support
$1.61M
$1.38M
+17.3%
Gross profit
$3.10M
$1.53M
+102.1%
Gross margin
75.1%
71.4%
+3.7 pts
Operating expenses
$4.59M
$3.55M
+29.1%
Operating loss
$(1.49)M
$(2.02)M
Loss narrowed 26.3%
Operating margin
-36.1%
-94.2%
+58.1 pts
Net loss
$(2.41)M
$(23.76)M
Loss narrowed 89.9%
Diluted EPS
$(0.07)
$(0.75)
n/m (loss narrowed)
Backlog (Aug 6, 2026)
$6.9M
—
—
Cash and equivalents (Jun 30)
$12.37M
$6.31M
+96.1%
Post-contract support is the recurring maintenance and software-support fees customers pay after buying a system. Operating margin is the share of revenue left after running the business (before interest, tax and the non-cash revaluations below); here it is negative because the company still spends more than it earns. n/m = not meaningful, since percentage changes between two losses are hard to read.
For the first half, revenue was $10.48 million (+37.0%), gross profit $6.26 million (+66.2%), and the operating loss $3.07 million versus $3.74 million.
Takeaway: Airship AI's revenue growth this quarter came from commercial customers, while its large federal opportunities (tied to Department of Homeland Security procurement) are still in the pipeline, not in the numbers. With two customers at 84% of revenue and only $6.9 million of firm backlog, the next quarter depends on whether those federal deals actually close in Q3 as management expects.
What drove the quarter
Product sales more than tripled. Product revenue (hardware and software licenses sold up-front) was $2.50 million versus $0.73 million. Recurring support revenue grew more steadily, from $1.38 million to $1.61 million. The 10-Q gives no split between commercial and government revenue. The earnings release says commercial pipeline growth came from "new business going through business partners or integrators," plus a $1.9 million one-year maintenance renewal from an existing Fortune 100 customer that uses the Acropolis platform.
Margins improved on mix. Cost of revenue rose 67.1% to $1.03 million, much slower than revenue. Per the 10-Q, this "reflects product mix with increased higher margin commercial sales... offset by raw material cost increases."
Costs grew mostly through stock pay. Selling, general and administrative (SG&A) expense rose $921,000 to $3.73 million, "primarily due to an increase in stock-based compensation expense of $579,000 and other personnel costs." R&D rose 15.2% to $854,000 for product development in the US and Taiwan. Total stock-based compensation for the quarter was about $951,000.
What the headline numbers hide
The huge drop in net loss is almost entirely non-cash. Since its 2023 SPAC merger, Airship carries warrants (rights to buy shares at $4.50) and an earnout (extra shares owed to former owners if targets are hit) as liabilities, re-valued every quarter as the share price and its volatility change. In Q2 2025 those revaluations produced a $21.8 million loss; in Q2 2026 they produced a $1.03 million loss ($193,000 earnout, $833,000 warrants). That swing, not the business, accounts for about $20.8 million of the $21.4 million improvement in net loss. The operating loss, which excludes these items, is the better guide to how the business is doing: it narrowed by $531,000.
Cash flow was flattered by collections. Operating cash flow for the six months was +$579,000 versus -$3.92 million a year ago, but $2.72 million of that came from receivables falling (customers paying invoices from late 2025). Q2 on its own used $235,000, per the earnings release. Inventory, which was zero at year-end, rose to $844,000, in line with backlog that is expected to ship in Q3.
Stock-based pay is a real cost even though it isn't cash. Six-month stock compensation of $1.62 million roughly doubled from $800,000. That keeps cash burn low but dilutes existing shareholders. Share count is up about 8% year on year (34.4 million vs 31.9 million weighted shares), mostly from the 2.16 million shares issued when warrants were exercised in October 2025.
The cash cushion depends on warrant money from last year. Cash nearly doubled from a year ago largely because holders exercised warrants for $9.73 million in gross proceeds in October 2025. 16.7 million warrants remain outstanding at $4.50, a possible future funding source if the share price allows. The balance sheet still shows a $8.6 million stockholders' deficit, but that is driven by the $16.2 million warrant and earnout liabilities, which would be settled in shares rather than cash.
Customer concentration is extreme. Two customers made up about 84% of Q2 revenue. Losing or delaying one award can swing a quarter's growth from strongly positive to negative, as federal timing did in 2025.
Backlog, pipeline and the federal picture
Backlog was about $6.9 million as of August 6, 2026: firm, fixed-price contracts awarded in Q1 and Q2 that are expected to ship and be invoiced mostly in Q3. The earnings release cautions that backlog is a weak guide to quarterly revenue, since about 75% of a quarter's revenue is booked and recognized in the same quarter.
The validated pipeline (opportunities the company has identified and qualified, but not yet won) was $206.1 million, with expected award timing over 18–24 months. The 10-Q says plainly that it "can give no assurance as to whether, when, or in what amount pipeline opportunities will convert into backlog or revenue." For scale, the pipeline is roughly ten times the company's current annual revenue pace (first-half revenue annualized is about $21 million), so converting even a small share of it would be material.
On federal funding, management says 2025 budget uncertainty and federal cost-cutting delayed awards, and that it now sees "an improving federal funding environment" in border security and public safety. The release says several of its largest pipeline opportunities, tied to Department of Homeland Security procurement, are "anticipated to close in the third quarter of 2026." Operationally, the company says its platform was used for drone and counter-drone support for several DHS agencies during the FIFA World Cup and America 250 events, and it made the first deployment of a vehicle-mounted product, Outpost AI Sentinel.
Outlook
Airship does not give numeric revenue or earnings guidance. Its stated 2026 aims are to win business it expects to be funded through the One Big Beautiful Bill Act (the 2025 federal budget law that includes border-security spending), to improve gross margin, and to reach cash-flow-positive operations by the end of 2026. It is also building new products: Ask Airship (a tool that lets users query their data in plain English, to be sold by subscription or pay-per-use) and software for robotic and autonomous sensors aimed at commercial buyers.
Our read: The operating picture is improving. Gross margin is in the mid-70s, the operating loss is shrinking, and $12.4 million of cash with no debt is enough at the current burn of a few hundred thousand dollars per quarter. The cash-flow-positive target looks reachable if Q3 brings the DHS awards management describes, but Q2 itself was cash-negative, and the first half's positive cash flow relied on collecting old receivables. What to watch in the Q3 report: (1) whether backlog rises above $6.9 million, which would show federal awards are actually being signed; (2) whether revenue growth holds without one or two large commercial orders; and (3) whether stock-based compensation keeps growing faster than revenue.
Source: Airship AI Holdings Form 10-Q for the quarter ended June 30, 2026, filed August 6, 2026, with additional detail from the company's August 6, 2026 earnings release (Form 8-K, Exhibit 99.1).