AIRO Group Holdings Inc(AIRO) - 2025 Q2 - Quarterly Results

Executive Summary & Company Overview AIRO Group Holdings, Inc. reported strong Q2 2025 results following a successful IPO, highlighting significant financial and operational advancements Introduction & IPO AIRO Group Holdings, Inc. announced its second quarter 2025 financial results following a successful initial public offering (IPO) on June 16, 2025. The IPO raised $69.0 million in gross proceeds, which the Company intends to use for growth initiatives, debt repayment, and general corporate purposes - AIRO Group Holdings, Inc. announced financial results for the second quarter ended June 30, 2025[2] - The Company successfully completed its IPO of 6,900,000 shares of common stock on June 16, 2025[3] - The IPO raised $69.0 million in gross proceeds, intended to support growth initiatives, repay debt, and for general corporate purposes[3] Second Quarter 2025 Highlights AIRO reported strong financial and operational performance in Q2 2025, marked by significant revenue growth, a shift to net income, and strategic advancements in drone production, defense contracts, and electric air mobility Financial Highlights Key financial metrics for Q2 2025 demonstrate significant year-over-year growth in revenue, gross margin, and a shift to positive net income and EBITDA Selected Financial Highlights | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | Change YoY | | :---------------- | :---------- | :---------- | :--------- | | Revenue | $24.6 million | $9.8 million | +151% | | Gross margin | 61.2% | 59.0% | +2.2 ppts | | Net income | $5.9 million | ($5.6 million) | Shift to profit | | EBITDA | $18.9 million | ($1.1 million) | Shift to positive | | Adjusted EBITDA | $4.7 million | $0.6 million | +710% | Operational Highlights Operational achievements in Q2 2025 include manufacturing expansion for drones and securing substantial defense contracts - Announced U.S. Manufacturing Expansion to scale RQ-35 Heidrun ISR drone production, enhancing capacity and fostering innovation in autonomous unmanned systems[6] - Completed Naval Special Warfare Training Mission and secured over $30 million in defense contracts to date, reinforcing leadership in military training[6] Management Commentary CEO Joe Burns highlighted the successful IPO and strong commercial traction in the Drone segment, positioning AIRO for accelerated investments. Executive Chairman Dr. Chirinjeev Kathuria emphasized the company's strengthened capital base and focus on unlocking long-term value through innovation and strategic execution - CEO Joe Burns: IPO positions AIRO to accelerate investments in next-generation aerospace capabilities across all four strategic segments, with strong commercial traction and technology milestones in the Drone segment[7] - Executive Chairman Dr. Chirinjeev Kathuria: The IPO strengthened AIRO's capital base, and the focus is now on unlocking long-term value through innovation and strategic execution[7] - Introduced a next-generation, medium-lift cargo drone capable of transporting 250–500 lbs. over 200+ miles, expanding into Quebec's YMX Innovation Zone for electric air mobility solutions[7] Financial Performance AIRO's Q2 2025 financial performance shows substantial revenue growth and a shift to net income, driven by key segment contributions Second Quarter 2025 Financial Results AIRO's Q2 2025 financial results demonstrate substantial revenue growth, primarily driven by the Drones segment, and a significant shift from net loss to net income, boosted by a gain on debt extinguishment and favorable fair value adjustments Revenue Analysis Revenue analysis for Q2 2025 reveals substantial growth, primarily driven by the Drones and Training segments Selected Revenue Data | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | Change YoY | | :---------------- | :---------- | :---------- | :--------- | | Total Revenue | $24.6 million | $9.8 million | +151% | | Drone Revenue | $22.0 million | N/A | +216% | | Training Revenue | $1.1 million | N/A | +91% | - The increase in revenue was primarily driven by a 216% increase in Drone revenue (due to deferred Q1 orders) and a 91% increase in Training segment revenue (due to increased activity under IDIQ contracts), partially offset by decreased revenue in the Avionics segment[8] Profitability (Gross Profit, Net Income, EBITDA) Profitability metrics for Q2 2025 show improved gross margin and a significant shift to positive net income and EBITDA Selected Profitability Data | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | Change YoY | | :---------------- | :---------- | :---------- | :--------- | | Gross Profit | $15.0 million | $5.8 million | +158.6% | | Gross Margin | 61.2% | 59.0% | +2.2 ppts | - Gross margin improvement was driven by increases in the Training and Avionics segments, partially offset by a decrease in gross margin within the Drones segment due to product discounting and product mix[9] Selected Profitability Data | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | Change YoY | | :---------------- | :---------- | :---------- | :--------- | | Net Income (Loss) | $5.9 million | ($5.6 million) | Shift to profit | | EBITDA | $18.9 million | ($1.1 million) | Shift to positive | | Adjusted EBITDA | $4.7 million | $0.6 million | +710% | | Adjusted EBITDA Margin | 19.1% | 5.9% | +13.2 ppts | - Net income benefited from a gain on the extinguishment of debt and favorable fair value adjustments to the Company's contingent liabilities[10] Cash Position The company's cash and cash equivalents position as of June 30, 2025, is detailed - Cash and cash equivalents totaled $40.3 million as of June 30, 2025[12] Company Information & Disclosures This section provides details on AIRO's conference call, company profile, forward-looking statements, non-GAAP measures, and investor contact Conference Call Details AIRO will host a conference call on August 14, 2025, at 8:00 AM ET to discuss its second quarter 2025 results and business outlook, with a live webcast and replay available on the Company's investor relations website - Conference call to discuss Q2 2025 results and business outlook on August 14, 2025, at 8:00 AM ET[13] - A live webcast and accompanying presentation will be available on investor.theairogroup.com, with a replay available for 12 months[13] About AIRO AIRO is a technologically differentiated aerospace, autonomy, and air mobility platform targeting 21st-century aerospace and defense opportunities, organized into four critical growth segments: Drones, Avionics, Training, and Electric Air Mobility - AIRO is an aerospace, autonomy, and air mobility platform targeting 21st-century aerospace and defense opportunities[14] - The Company is organized into four operating segments: Drones, Avionics, Training, and Electric Air Mobility[14] Forward-Looking Statements This section contains forward-looking statements regarding future performance, IPO proceeds use, product development, market demand, and other non-historical facts, which are subject to risks, uncertainties, and assumptions detailed in SEC filings. AIRO undertakes no obligation to update these statements except as required by law - Statements in the press release that are not historical facts are forward-looking statements, identifiable by words such as 'believes,' 'expects,' 'may,' 'will,' 'should,' etc[15] - Forward-looking statements are subject to risks, uncertainties, assumptions, or changes in circumstances, including those described in AIRO's Form 10-Q[15] - AIRO undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date of the press release, except as required by law[15] Non-GAAP Financial Measures AIRO utilizes non-GAAP financial measures, including EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin, to analyze financial trends and for internal planning. The Company provides definitions for these measures and acknowledges their inherent limitations compared to GAAP measures - AIRO uses non-GAAP financial measures (EBITDA, Adjusted EBITDA, Adjusted EBITDA margin) to analyze financial and business trends and for internal planning[16] - Definitions: EBITDA is net income (loss) before interest, tax, depreciation, and amortization. Adjusted EBITDA further adjusts for gain on debt extinguishment, stock-based compensation, contingent consideration, warrant fair value adjustments, and IPO-related one-time adjustments. Adjusted EBITDA margin is Adjusted EBITDA divided by revenue[16] - Limitations: These non-GAAP measures should not be considered alternatives to GAAP performance measures and may differ from similarly titled measures used by other companies[17] Investor Relations Contact Provides contact information for investor relations inquiries - Investor Relations Contact: Dan Johnson, InvestorRelations@theairogroup.com, media@theairogroup.com[18] Condensed Consolidated Financial Statements (Unaudited) Unaudited consolidated financial statements present AIRO's balance sheets, statements of operations, and Adjusted EBITDA reconciliation for Q2 2025 Condensed Consolidated Balance Sheets The unaudited condensed consolidated balance sheets for AIRO Group Holdings, Inc. as of June 30, 2025, and December 31, 2024, show an increase in total assets and stockholders' equity, alongside a significant decrease in total liabilities, primarily due to the elimination of contingent consideration and reduced debt Selected Balance Sheet Data | Metric | June 30, 2025 (in $) | December 31, 2024 (in $) | | :-------------------------------- | :-------------- | :---------------- | | Total assets | $747,849,810 | $700,998,787 | | Total liabilities | $68,290,214 | $152,269,358 | | Total stockholders' equity | $679,559,596 | $548,729,429 | | Cash | $40,341,555 | $20,740,590 | | Accounts receivable, net | $23,655,866 | $8,960,705 | | Goodwill | $572,031,507 | $557,508,331 | | Total current liabilities | $66,517,428 | $96,606,536 | | Current maturities of debt | $8,079,126 | $27,992,450 | | Contingent consideration | $- | $42,782,276 | - Total assets increased by approximately $46.8 million, driven by increases in cash and accounts receivable[20] - Total liabilities decreased significantly by approximately $84.0 million, primarily due to the elimination of contingent consideration and a reduction in current maturities of debt[20] Condensed Consolidated Statements of Operations The unaudited condensed consolidated statements of operations highlight a substantial increase in revenue and a shift from a net loss to net income for both the three and six months ended June 30, 2025, primarily driven by significant other income Selected Income Statement Data (Three Months Ended June 30) | Metric | 2025 (in $) | 2024 (in $) | | :-------------------------------- | :---------- | :---------- | | Revenue | $24,550,193 | $9,780,336 | | Gross profit | $15,034,567 | $5,775,085 | | Loss from operations | ($19,689,341) | ($2,693,556) | | Total other income (expense) | $27,617,077 | ($2,467,276) | | Net income (loss) | $5,870,429 | ($5,599,841) | | Net income (loss) per share – basic | $0.32 | ($0.34) | Selected Income Statement Data (Six Months Ended June 30) | Metric | 2025 (in $) | 2024 (in $) | | :-------------------------------- | :---------- | :---------- | | Revenue | $36,344,878 | $23,520,272 | | Gross profit | $21,967,092 | $14,262,166 | | Loss from operations | ($22,770,090) | ($3,157,030) | | Total other income (expense) | $29,012,043 | ($3,023,913) | | Net income (loss) | $3,897,674 | ($7,609,530) | | Net income (loss) per share – basic | $0.22 | ($0.46) | - For the three months ended June 30, 2025, revenue increased by 151% year-over-year, and net income shifted from a loss of $5.6 million to a profit of $5.9 million, largely due to a significant increase in 'Total other income (expense)'[22] Adjusted EBITDA Reconciliation The reconciliation details the adjustments from net income (loss) to EBITDA and Adjusted EBITDA for the three and six months ended June 30, 2025 and 2024, highlighting the impact of non-recurring items like gain on debt extinguishment, stock-based compensation, and fair value adjustments Adjusted EBITDA Reconciliation (Three Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | Net income (loss) | $5,871 | ($5,600) | | EBITDA | $18,926 | ($1,099) | | Gain on extinguishment of debt | ($15,559) | $- | | Stock-based compensation | $18,638 | $179 | | Contingent consideration fair value adjustments | ($17,534) | $1,500 | | Warrant fair value adjustment | ($1,843) | $- | | IPO contingencies | $2,070 | $- | | Adjusted EBITDA | $4,698 | $580 | | Adjusted EBITDA Margin | 19.1% | 5.9% | Adjusted EBITDA Reconciliation (Six Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | Net income (loss) | $3,898 | ($7,610) | | EBITDA | $21,645 | $1,405 | | Gain on extinguishment of debt | ($15,559) | $- | | Stock-based compensation | $18,763 | $471 | | Contingent consideration fair value adjustments | ($20,272) | $1,700 | | Warrant fair value adjustment | ($1,843) | $- | | IPO contingencies | $2,070 | $- | | Adjusted EBITDA | $4,804 | $3,576 | | Adjusted EBITDA Margin | 13.2% | 15.2% | - Key adjustments for Q2 2025 include a $15.6 million gain on extinguishment of debt, $18.6 million in stock-based compensation, and favorable contingent consideration fair value adjustments of $17.5 million[24]