AIRO Group Holdings Inc's Drone Revenue Timelines, Blue UAS Certification Schedules Clash in Q4 Earnings Call

Date of Call: Mar 31, 2026

Financials Results

• Revenue: $48.3M for Q4, up from $39.7M in Q4 2024 and sequentially from $6.3M in Q3 2025. Full year 2025 revenue was $90.9M vs $86.9M in 2024.
• Gross Margin: 61.4% for Q4, down from 69.9% in Q4 2024. Full year gross margin was 59.9% vs 67.1% in 2024.

Guidance:

• Full year 2026 revenue growth expected to be 15%-25% year-over-year.
• Significant portion of the $150M drone backlog expected to convert in the next 12 months.
• Guidance does not include potential revenue from the Nord Drone and Bullet joint ventures, which are expected to be additive in 2026.
• Blue UAS certification expected in first half of 2026.

Business Commentary:

Revenue Growth and Strategic Focus:

• AIRO Group Holdings, Inc. reported revenue of $90.9 million for full year 2025, with the drone segment representing approximately 87% of total revenue.
• The growth was driven by strong demand for combat-proven ISR systems and the company's strategic focus on mission-ready drone platforms.

Backlog and Demand Visibility:

• As of March 31, 2026, the company had a drone segment backlog of approximately $150 million.
• This backlog reflects continued demand for AIRO's drone platforms and provides meaningful visibility as the company enters 2026.

U.S. Manufacturing and Expansion:

• AIRO completed the first U.S.-manufactured RQ-35 drones at its facility in Phoenix, Arizona, marking a significant milestone in its Made in America expansion strategy.
• The move to U.S. manufacturing was aimed at strengthening its ability to serve domestic and allied defense customers.

Joint Ventures and Market Expansion:

• AIRO announced joint ventures with Nord Drone Group and Bullet to accelerate the deployment of battlefield-tested unmanned aerial systems.
• These partnerships are expected to expand AIRO's global reach and production scale, particularly in the U.S., Ukraine, and NATO defense markets.

Certification and Technological Advancements:

• The company remains on track to receive Blue UAS certification in the first half of 2026, which is expected to expand its addressable U.S. Department of Defense opportunities.
• AIRO is also investing in counter-electronic warfare technology, which will provide operators with greater mission assurance in denied or degraded environments.

Sentiment Analysis:

Overall Tone: Positive

• Management expressed strong momentum and visibility, stating 'We exited the year with strong momentum and increasing visibility into 2026.' They highlighted 'continued strong execution,' 'recorded $74.4 million in cash,' and are 'excited about our results from 2025 and really looking forward to a very successful 2026.'

Q&A:

• Question from Colin Canfield (Cantor Fitzgerald): As we think about the strategy change on air mobility, we estimate about $15 million of R&D in 2026 and $10 million in 2027 related to the human-rated portion of that project. Is it fair to assume that both of those line items of specific investment roll off? If that’s fair, can you perhaps talk about kind of how you think about the profitability of the business in 2026 relative to that tailwind?
  Response: Capital expenditure will drop off as the focus shifts from passenger eVTOL to multi-role medium-lift drones, with meaningful revenues expected post-2027.

• Question from Colin Canfield (Cantor Fitzgerald): In terms of the line of sight for kind of the next set of orders, can you maybe talk about kind of how you see the mix of customer demand between U.S. international? How is the team thinking about accounting treatment? It sounds like we’re getting a more crystallized definition of backlog. Is it fair to assume that when we see essentially orders from U.S. or orders from international, like we’ll see those recognized as firm backlog?
  Response: Backlog is ~$150M with good visibility on conversion over next 12 months; demand remains primarily international with U.S. pipeline building. Revenue recognized upon delivery with customer acceptance.

• Question from Andre Madrid (BTIG): You know, another one on drone backlog. You know, it seems like there’s some unfilled definitive orders and then there’s some in backlog that is kind of undefinitive. Could you maybe provide more color as to what the mix exactly is?
  Response: Management has strong visibility and comfort with the $150M firm backlog over the next 12 months based on bottoms-up assessment of NATO orders.

• Question from Andre Madrid (BTIG): I mean, you know, your current backlog seems to, you know, last you through 2026. I mean, when do you expect orders to meaningfully step up to the point where we can be confident in growth into 2027 and beyond?
  Response: Growth is supported by RQ-35 performance and ongoing NATO orders; further guidance will be released, with expectations for meaningful growth from joint ventures and U.S. pipeline.

• Question from Andre Madrid (BTIG): You previously said, I mean, to your point, you were talking about the Phoenix facility, and you previously said the 2026 outlook doesn’t assume any U.S. sales. Is that still kind of the case? If so, I mean, just how much upside could we see to 15%-25% growth if we see any orders come in earlier than that?
  Response: Guidance is based on NATO backlog; any meaningful upside from U.S. sales will be released when orders materialize. Phoenix facility is operational, targeting up to 100 units per month capacity.

• Question from Brett Linzey (Mizuho): Just back to the full year 2026 revenue growth outlook. The 15%-25%. Maybe just a finer point on the individual pieces within that. And how much of the 150 backlog are you expecting to ship this year, so within 2026, as part of that outlook for drones?
  Response: Significant portion of the $150M backlog is expected to convert in the next 12 months; guidance is below backlog to provide a margin of error if shipments shift to later quarters.

• Question from Brett Linzey (Mizuho): Maybe just shifting to the U.S. pipeline that you indicated was seeing pretty good momentum. Is there any way to dimension or quantify the level of activity relative to maybe 150 that you’re seeing within the U.S. pipeline? Is it a magnitude of that? Is it, you know, a small fraction? Any color would be helpful.
  Response: U.S. sales are not in 2026 guidance, but are expected to become a significant portion of overall drone sales in the future as the pipeline fills.

• Question from Brett Linzey (Mizuho): Then just a quick follow-up on some of the JV structure and what the contribution could look like this year. I understand it’s not contemplated within the framework in the outlook, but what are you thinking in terms of the financial impact this year potentially, both on the cost side and the revenue side?
  Response: Joint ventures are expected to be additive to financials in 2026; they are structured as close to 50/50 partnerships, with all sales from conflicts rolling into the JVs.

Contradiction Point 1

Timeline for Revenue from New Air Mobility Platforms

It involves a contradiction on when revenue from new drone platforms will become meaningful, impacting long-term financial projections.

Colin Canfield (Cantor Fitzgerald) - Colin Canfield (Cantor Fitzgerald)

2025Q4: Revenues from these new platforms are expected to be meaningful after 2027. - Dr. Chiranjeev Kathuria(CFO)

Will the $15M 2026 and $10M 2027 R&D investments for the human-rated air mobility project roll off, and how might this impact 2026 profitability? - Colin Canfield (Cantor)

2025Q3: Building blocks include: R&D investment in drones, new product delivery in avionics, equipment investment in training, and government-supported R&D in air mobility (30% funding already confirmed). The Phoenix facility is open for U.S. drone manufacturing... expected to be online by year-end. - Joe Burns(CFO), Dr. Chirinjeev Kathuria(CFO), Mariya Pylypiv(CFO)

Contradiction Point 2

Blue UAS Certification Timeline

Conflicting statements on the timeline for Blue UAS certification affect expectations for near-term revenue drivers.

Colin Canfield (Cantor Fitzgerald) - Colin Canfield (Cantor Fitzgerald)

2025Q4: Blue UAS certification is planned for mid-2026 but is not the primary driver of near-term revenue. - Captain Joe Burns(CFO)

How is the team accounting for the mix of U.S. and international customer demand in terms of backlog recognition and treatment? - Brett Lindsay (Mizuho)

2025Q3: Blue UAS certification (targeted first half 2026)... DoD orders are contingent on Blue UAS certification... Confidence remains in the path forward. - Joe Burns(CFO)

Contradiction Point 3

Revenue Timeline for New Air Mobility Platforms

Contradiction on when revenue from new drone platforms will become meaningful, impacting strategic investment outlook.

Colin Canfield (Cantor Fitzgerald) - Colin Canfield (Cantor Fitzgerald)

2025Q4: Revenues from these new platforms are expected to be meaningful after 2027. - Dr. Chiranjeev Kathuria(CEO)

Will the $15 million 2026 and $10 million 2027 R&D investments for the human-rated air mobility project roll off, and how might that impact 2026 profitability? - Andre Madrid (BTIG)

2025Q2: Near-term CapEx is targeted, with the largest investment in the new U.S. manufacturing/engineering facility. Other spend includes facility upgrades, new tooling for drone production... - Joseph Burns(CEO)

Contradiction Point 4

Inclusion of U.S. Sales in 2026 Revenue Outlook

Contradiction on whether U.S. sales are part of the 2026 financial guidance, affecting revenue growth expectations.

Andre Madrid (BTIG) - Andre Madrid (BTIG)

2025Q4: The 2026 guidance is based on NATO backlog. Any meaningful upside from U.S. sales will be released throughout the year as orders materialize. - Dr. Mariya Pylypiv(CFO) and Captain Joe Burns(CEO)

Does the 2026 outlook still assume no U.S. sales, and what upside potential could we see for 15%-25% growth if orders come in earlier? - Andre Madrid (BTIG)

2025Q2: Near-term CapEx is targeted, with the largest investment in the new U.S. manufacturing/engineering facility. Other spend includes facility upgrades, new tooling for drone production... - Joseph Burns(CEO)