Sign in

    Archer Aviation Inc (ACHR)

    Q1 2024 Earnings Summary

    Reported on Mar 21, 2025 (After Market Close)
    Pre-Earnings Price$3.77Last close (May 9, 2024)
    Post-Earnings Price$3.88Open (May 10, 2024)
    Price Change
    $0.11(+2.92%)

    What went well

    • Archer Aviation has secured strong international partnerships and plans to launch operations in the UAE as early as next year, leveraging supportive ecosystems and existing partnerships with local operators like Falcon Aviation and Air Chateau, both of which have placed orders for Midnight aircraft.
    • The company's capital-light strategy, partnering with top aerospace suppliers and leveraging automated manufacturing technologies, is paying off, enabling rapid progress toward commercializing electric aviation while maintaining sufficient liquidity to cover expenses, including prototype development essential for certification.
    • Archer is making significant strides toward certification, expecting to receive their final airworthiness criteria with the FAA shortly, positioning them alongside industry peers and advancing toward commercialization.

    What went wrong

    • High cash burn and peak spending rates ahead of certification may strain Archer's liquidity and could necessitate additional capital raises. Mark Mesler stated that they are at "peak spending rates" currently, with non-GAAP operating expenses of $80 million to $95 million expected for Q2 2024. If cash needs exceed current liquidity, this could dilute existing shareholders.
    • Potential delays or deprioritization of Department of Defense (DoD) contracts may impact expected cash inflows. William Peterson noted that DoD efforts appear to be deemphasized, and while Archer expects $5 million to $10 million from DoD for non-flight test related items, delivery of aircraft to DoD is being balanced with other priorities. Reduced DoD revenues could impact financial projections.
    • Uncertainties in certification timelines, especially for international markets, may delay commercialization and revenue generation. When asked about entering markets like the UAE and India, Thomas Muniz stated that while they aim to bring a safe aircraft to market "as soon as next year," he can't tell exactly when they will be to market in the UAE or U.S.. Delays in certification could postpone market entry and cash flows.

    Q&A Summary

    1. Cash Burn and Liquidity
      Q: How much cash will you use for building prototypes, and how does it compare to your $520 million liquidity?
      A: The cost of building prototypes is fully contemplated within our $520 million liquidity, and we're comfortable with our cash position. Our peak spending is occurring in the current quarters, with guidance of $80 million to $95 million in cash burn. We expect spending rates to be at their peak now, as we build out our capabilities and facilities.

    2. Certification Progress and Piloted Testing
      Q: What remains before full transition and piloted flight testing? Are there delays?
      A: We are close to transitioning our first Midnight aircraft, which we expect in the coming months. Regarding piloted flight testing, safety comes first, and we're methodically working towards that milestone this year. While we'd like to move faster, we're confident in our progress and plan to fly when it's safe and we're ready.

    3. UAE Support and Investment
      Q: Can you provide details on the hundreds of millions of support from the UAE?
      A: We have a multi-year agreement with the UAE, focused on reaching scale in the region with our base in Abu Dhabi. It's a comprehensive framework intended to make our move economically attractive, including subsidizing aircraft and operations, and encouraging us to bring engineering to the region. Investment timing is tied to our ramp-up of activity there.

    4. Market Entry into UAE and India
      Q: How do you see entering the UAE and India markets?
      A: We're excited about international opportunities, especially in the UAE and India. In the UAE, we've identified routes and plan to launch intracity flights in Abu Dhabi as early as next year, expanding to flights between Abu Dhabi and Dubai. We have strong government and partner support in the region. In India, we believe it has potential to be one of the largest eVTOL markets, and we're working with InterGlobe to set up operations.

    5. Department of Defense Program Updates
      Q: What's the update on the $142 million DoD program?
      A: We've submitted all the paperwork to begin delivery to the DoD and expect to have our military airworthiness in June, with delivery afterward. We're balancing program priorities and, in the near term, expect more cash from non-flight test related DoD programs, such as testing, training, and simulator work, amounting to $5 million to $10 million in payments.

    6. Battery Testing and Production Capacity
      Q: Any updates on battery drop testing and production capacity?
      A: Battery drop testing went very well; after several drops from 55 feet, the battery pack continued to function, boosting our confidence. We have all we need for for-credit testing and expect to proceed in coming months. Our battery production facility is designed for safety and quality, not just volume, and will support both new aircraft and fleet battery replacements, allowing us to scale as needed.

    7. Boeing Adjustment and Settlement
      Q: Is the Boeing adjustment this quarter fully settled?
      A: Yes, that's fully settled. There was a final mark-to-market adjustment related to our agreements with them, but we won't see any more of that.

    8. Stock-Based Compensation Expenses
      Q: Should we expect further stock-based compensation expenses?
      A: Our typical run rate for stock-based compensation is in the $25 million to $35 million range, which you can consider going forward.

    Related Publications