The Numbers
Revenue: $16.7M, up 687% year-over-year and 106% quarter-over-quarter (Q1 2026 revenue was $8.1M)
Gross margin: 34.7%, up from Q1 2026, below the 37.4% margin in Q2 2025
Operating expenses: $13.6M, producing a GAAP loss from operations of $7.8M
Net loss: $7.8M, or $0.16/share, compared to a net loss of $6.9M, or $0.32/share, in Q2 2025. Share count increased over the period, which reduced the per-share loss more than the dollar loss.
Adjusted EBITDA loss: $0.4M, down from $1.6M in Q1 2026
Cash: $229.6M as of June 30, 2026, up from $103.3M at year-end 2025, no debt
Working capital: $367.5M
Headcount: grew from 141 to 240 employees during the quarter, and reached 255+ by the call date
Non-cash stock compensation of $5.7M was the largest component of the GAAP loss. Management said it and senior leadership have shifted from restricted stock to options, which they expect to reduce this expense in 2027.
The largest customer accounted for approximately 42% of Q2 revenue. The top single product accounted for approximately 13%. Rotor Riot, the company’s retail arm, accounted for approximately 6% of revenue. Management said approximately 95% of Q2 revenue came from enterprise customers.
Capital Raise
UMAC raised $60M in Q2 at $30/share through block trades on its at-the-market (ATM) facility, which management calls a “staircase financing strategy.” The stock fell approximately 4% following the announcement. It remained up more than 100% year-to-date at the time of the call.
Two Operating Issues Disclosed
CEO Allan Evans described two problems that occurred during the quarter and are not reflected in the financial results.
Supply chain disruption. UMAC outgrew one of its electronics vendors mid-quarter and had to source replacement components while continuing to fulfill customer orders.
Motor quality issue. An intermittent defect on one motor SKU required the product, motor production, and customer teams to identify the root cause and build new quality-testing processes.
Evans said either issue alone could have caused a flat quarter, and that the team addressed both without slowing revenue growth.
Internal Targets
UMAC does not issue formal guidance. Evans provided internal targets on the call.
Q3 2026: $12M-$14M in revenue. Management said the company will use the quarter to build infrastructure, including a new high-speed motor line, expanded facilities, and the Upgrade Energy integration, rather than maximize near-term sales.
Q4 2026: $25M internal target, as Drone Dominance and counter-UAS orders begin to convert to revenue.
2027 total addressable market: approximately $250M, tied to the Drone Dominance program. Evans clarified this figure is a market-size estimate, not a revenue forecast, after an analyst referred to it as guidance.
Management expects gross margin to decline below 34.7% in Q3 as new products and processes are introduced, then recover in Q4. The company’s 40% margin target may not be reached until late 2026 or early 2027. Evans said 30% is roughly the margin floor while the company scales.
At the current facility footprint of approximately 70,000 square feet, Evans estimated manufacturing capacity at around $20M per quarter. UMAC is looking for an additional 100,000-200,000 square feet over the next nine months.
Demand Drivers
Drone Dominance program (Department of War, $1.1B): Phase 2 finalists are expected to be selected by the end of August. More than 60,000 drones are expected to be ordered in the second half of 2026, mostly in Q4.
Counter-UAS (cUAS): Evans said this market could exceed the FPV/small-drone market in size, citing recurring deployment needs at events such as FIFA and the Olympics.
Named contracts referenced in the letter and call: a $90M counter-UAS order for Powerus, $500M counter-UAS orders each for AeroVironment and Perennial Autonomy, a $500M IDIQ for FPV drones for Neros, and an $820M Office of Strategic Capital loan for PDW (Performance Drone Works).
FCC action: a ban on light-show and swarming drones took effect immediately, alongside a new ban on importing humanoid robots and robot vacuums from China. Management said this could expand the company’s addressable market into adjacent robotics categories.
China export restrictions: China tightened drone-related export restrictions the day before the call. Evans cited this as an example of ongoing sourcing constraints, including electronics components, camera sensors, and magnets sourced from Japan.
Upgrade Energy Acquisition
The Upgrade Energy acquisition, which adds battery pack manufacturing, is expected to close by the end of Q3 2026. It will not contribute revenue until it closes. Evans said the company’s near-term focus is on integrating Upgrade Energy and scaling existing operations rather than pursuing additional acquisitions.
Q&A Highlights
Pricing: Evans said UMAC could raise prices given current supply and demand conditions but is not doing so. The company is targeting approximately 40% gross margin while remaining price-competitive with imports from China, Taiwan, and Japan, citing long-term customer relationships as the priority.
Working capital: Management said it models working capital at roughly one times forward-quarter revenue. Evans said non-equity financing options, including loans, are under consideration for 2027 scaling in addition to the ATM facility.
OSC investment: An analyst asked for an update on a potential U.S. government investment in UMAC first reported in May. Evans said discussions with the Office of Strategic Capital are ongoing, with no further update.
Drone delivery: Evans said food delivery, citing DoorDash’s Part 135 approval, will likely be the first use case to scale delivery drones. He does not expect meaningful component demand from delivery until late 2027, with deployment more likely in 2028, pending FAA Part 108 detect-and-avoid rules.
Powerus: Evans confirmed Powerus is one of UMAC’s most advanced counter-UAS customer and the first to secure contracts in that category. He said the company expects more visibility into that relationship within one to two months, as Powerus finalizes its own supply chain.
Summary
Revenue grew 106% quarter-over-quarter to $16.7M, and adjusted EBITDA loss narrowed to $0.4M from $1.6M in Q1. Cash stood at $229.6M with no debt. Management disclosed two operating issues during the quarter, a vendor transition and a motor quality defect, and said both were resolved without slowing revenue growth. Internal targets call for $12M-$14M in Q3 revenue, described as a quarter focused on infrastructure buildout, followed by a $25M internal target in Q4. Margin is expected to dip in Q3 before recovering. Named demand drivers include the Drone Dominance program, counter-UAS contracts referenced for Powerus, AeroVironment, Perennial Autonomy, and PDW, and recent FCC import restrictions.
This is a summary of publicly available information from Unusual Machines’ Q2 2026 shareholder letter and the company’s live earnings call. Not investment advice.
