Archer Aviation Inc. (ACHR) Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 delivered manufacturing and regulatory milestones but a wider loss: GAAP total operating expenses rose to $176.1M, net loss widened to $206.0M, and adjusted EBITDA loss was $118.7M, while cash and equivalents reached $1.724B, the highest quarter-end level to date .
• Versus Q1 2025, Archer increased non-GAAP operating expenses to $123.5M and adjusted EBITDA loss to $118.7M amid ramp-up investments; cash rose by $693.6M q/q primarily from an $850M raise .
• The company advanced commercialization: six Midnight aircraft in production (three in final assembly), UAE launch program initiated with first Midnight delivered and test flights in extreme heat, and selection as the Official Air Taxi Provider of LA28 Olympics, supported by a June White House executive order to accelerate U.S. eVTOL deployment .
• Q3 2025 guidance: adjusted EBITDA loss of $110M–$130M (wider than the Q2 guidance midpoint), reflecting continued investment in manufacturing and operations; capex expected to be similar to Q2 levels .
• Key catalyst watch: FAA certification progress (multiple TIAs planned, ~15% of compliance verification documents accepted), piloted VTOL flights later in 2025, UAE commercial payments expected later in 2025, and defense momentum (Overair IP and Mission Critical Composites assets acquisitions) .

What Went Well and What Went Wrong

What Went Well

• Manufacturing ramp and readiness: “We now have six more Midnight aircraft in various stages of production with three of those in final assembly” and FAA reviews underway for the production certificate, positioning for scale aligned with type certification .
• Piloted test progress and program maturity: “Midnight flew just like the simulator,” validating design and test rigor as Archer expands the flight envelope and prepares for VTOL piloted ops later in the year .
• Commercialization advances: UAE Launch Edition commenced with delivery and flight tests in high-heat, plus LA28 selection as Official Air Taxi Provider, supported by White House Executive Order to fast-track early U.S. deployments .

What Went Wrong

• Wider losses and non-cash volatility: Net loss increased q/q by $112.6M, driven primarily by an $82.0M non-cash decrease in other income (change in warrant fair value) and higher operating expenses; adjusted EBITDA loss increased by ~$9.7M q/q .
• Policy still a gating factor for full conformity and flight tests for credit; FAA indicated no OEM is fully “out of policy” yet, delaying complete TIA execution and necessitating risk-based conformity sequencing .
• Pre-revenue profile persists, limiting margin analysis; management continues heavy investments in people, suppliers, and manufacturing as commercialization and certification timelines extend .

Financial Results

Quarterly Summary (GAAP and Non-GAAP)

EPS and Shares

Q2 2025 Actual vs S&P Global Consensus

Values retrieved from S&P Global.*

KPIs and Operating Progress

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO on manufacturing and government alignment: “We now have six more Midnight aircraft in various stages of production… The Olympics mandate has become a national stage to showcase air taxis at scale… a new executive order established a White House task force… to begin air taxi deployments in the U.S. as early as next year” .
• CTO on piloted flight and simulator fidelity: “When he landed after his first flight piloting Midnight… Midnight flew just like the simulator” and detailed the CTOL-first piloted testing strategy before VTOL with pilots later in 2025 .
• Interim CFO on liquidity and investment cadence: “We closed Q2 2025 with $1.7 billion in cash and cash equivalents… adjusted EBITDA… within our guided range… we expect our UAE Launch Edition to start generating cash inflows later this year” .

Q&A Highlights

• Commercialization road map in UAE: Launch Edition agreements with ADA/ADIO expected to generate “low tens of millions of dollars in payments over the next 18–24 months, with a portion starting this year”; fleet ramp and route proving to precede full commercial ops .
• Manufacturing scale and timeline: Dual-phase approach—“golden line” in California to refine processes, then high-volume Georgia facility; Olympics deadline used to pace scale-up .
• Certification gating and TIA credits: FAA policy (flight test framework) still open for the industry; Archer sequencing conformity and test objectives per aircraft while awaiting finalization to unlock full TIA testing for credit .
• Defense vertical integration: Acquisitions to bring advanced composites in-house and hire critical tilt-rotor talent; target program-of-record opportunities amid strong allied demand .
• CapEx and spending: Q3 capex to remain similar to Q2; continued investments in manufacturing tooling/equipment and UAE operations .

Estimates Context

• Q2 2025 vs Wall Street (S&P Global): Primary EPS missed (actual $(0.2649) vs $(0.1836)), adjusted EBITDA missed (actual $(171.3)M vs $(107.1)M), revenue in-line at $0. The magnitude of the EBITDA miss reflects higher opex and non-cash items amid ramp-up and warrant liability swings; forward estimates likely need to incorporate heavier near-term cash opex and slower conversion to revenue until Launch Edition payments begin later in 2025.
• Forward look: Q3 2025 consensus implies ongoing losses (primary EPS $(0.2002), EBITDA $(121.8)M) consistent with Archer’s guidance; estimate dispersion is low (EPS # of estimates: 2; Revenue # of estimates: 4–5), suggesting limited analyst coverage and potential for estimate volatility as UAE commercialization milestones firm up.

Values retrieved from S&P Global.*

Key Takeaways for Investors

• Liquidity remains a core differentiator: $1.724B cash provides multi-year runway and strategic flexibility across civil and defense programs during the ramp .
• Near-term catalysts: VTOL piloted flights later in 2025, multiple TIAs, UAE early commercial payments, and LA28 execution path supported by federal alignment via the White House Executive Order .
• Watch the EBITDA trajectory: Q3 guidance $(110)M–$(130)M loss indicates continued investment intensity; monitor opex normalization and warrant liability volatility impacting GAAP net loss .
• Commercialization pragmatics: UAE Launch Edition provides a credible revenue bridge (“low tens of millions” in 18–24 months) and operational learning ahead of FAA type certification—track fleet deployments and node build-out .
• Defense optionality: Acquisitions and hybrid VTOL development deepen dual-use moat; programs of record could be chunky and less FAA-cert dependent—an upside lever if timelines materialize .
• Policy and certification are pivotal: Industry-wide FAA policy closure remains the key unlock for full conformity and TIA testing; Archer’s multi-TIA plan and SOI-3 completions are constructive but timing remains the swing factor .
• Trading implications: Expect headline sensitivity around piloted VTOL flights, FAA milestones, UAE payment timing, and Olympics infrastructure announcements; estimate revisions may skew cautious near term until clearer revenue conversion emerges .