AIRO Group Holdings - Earnings Call - Q2 2025

Executive Summary

• AIRO delivered a strong first public-quarter: revenue $24.55M (+151% YoY), gross margin 61.2% (+220 bps YoY), and net income $5.87M versus a $5.60M loss a year ago, driven by Drone segment strength and non-operational gains that lifted GAAP profitability.
• Against S&P Global consensus, revenue beat by ~76% ($24.55M vs $13.91M consensus); company-reported diluted EPS of $0.30 contrasts with a small-loss consensus (−$0.35), reflecting methodology differences vs S&P “Primary EPS” tracking; we compare to company-reported EPS for actuals and S&P Global for estimates.
• Management highlighted U.S. manufacturing expansion (AS9100 target) and Blue UAS certification progress for RQ-35 Heidrun; Europe led demand with accelerating U.S. interest and initial APAC sales.
• No formal guidance issued; management emphasized execution priorities (Blue UAS, converting bookings-in-progress >$200M, facility build-out, selective R&D/CapEx) and improving balance sheet with $40.3M cash at 6/30/25 following the June IPO.

What Went Well and What Went Wrong

• What Went Well

  • Large revenue acceleration and margin expansion: revenue $24.55M (+151% YoY) and gross margin 61.2% (+220 bps), led by Drone segment ($22.0M, +216% YoY) and Training (+91% YoY to $1.1M).
  • Strategic milestones: announced U.S. manufacturing/engineering facility to scale RQ-35 Heidrun and support Blue UAS; completed Naval Special Warfare training mission; $30M+ defense contracts to date.
  • Management tone and focus: “This milestone positions us to accelerate investments in next-generation aerospace capabilities across all four of our strategic segments” – CEO Joe Burns; “We are building Arrow for the long term” – CEO Joe Burns.

• What Went Wrong

  • Quality of earnings: GAAP profitability aided by non-operational items (gain on extinguishment of debt and favorable fair value adjustments), with Adjusted EBITDA of $4.7M (19.1% margin) versus EBITDA of $18.9M.
  • Avionics softness: management deferred some R&D/investment to prioritize drones, contributing to lower Avionics sales in the quarter.
  • No formal guidance; working capital needs expected to rise in 2H (receivables and inventory build for drones/avionics) and Blue UAS certification timing still a dependency (though possibly expedited).

Transcript

Speaker 4

Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to the AIRO Group Holdings Inc. Q2 2025 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press Star, followed by the number one on your telephone keypad. If you would like to withdraw your question, press Star One again. Thank you. I would now like to turn the call over to Dan Johnson, Executive Vice President of Investor Relations. Please go ahead.

Speaker 1

Thank you, Operator, and good morning, everyone. Welcome to AIRO Group Holdings Inc.'s second quarter 2025 earnings call, our first as a publicly traded company. We appreciate you joining us today and look forward to sharing an update on our progress and performance. With me on the call are Dr. Chirinjeev Kathuria, our Executive Chairman, Captain Joseph Burns, our Chief Executive Officer, and Dr. Mariya Pylypiv, our Chief Financial Officer. Replay information for today's call can be found in our earnings press release issued earlier this morning.

Today's call will include forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to statements relating to estimates and forecasts of financial and performance metrics, the intended use of proceeds from AIRO's IPO, the development, expected capabilities, potential customers, and regulatory approval of the Jaunt cargo drone, AIRO's operational landscapes, demand for AIRO's systems and products, AIRO's plans for a manufacturing and engineering development facility, expectations concerning future products and developments, the market acceptance and opportunity of AIRO's products and services, and other statements that are not historical fact. In addition to our prepared remarks, our earnings press release, SEC filings, and a replay of today's call can be found on our Investor Relations website at investor.airogroup.com.

Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results, performance, or achievements to be materially different from those expressed or implied by the forward-looking statements. Forward-looking statements represent our management's beliefs and assumptions only as of the date made. Information on factors that could affect the company's financial results is included in its filing with the SEC from time to time, including the section titled Risk Factors in the company's final prospectus filed with the SEC on June 16, 2025, and the company's upcoming quarterly report on Form 10-Q for the quarter ended June 30, 2025. In addition, during today's call, we will discuss non-GAAP financial measures. These non-GAAP financial measures are, in addition to, and not a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.

Reconciliations between GAAP and non-GAAP financial measures, and a discussion of the limitations of using non-GAAP measures versus their closest GAAP equivalent, is available in our earnings release. With that, I'll turn the call over to our Executive Chairman, Dr. Chirinjeev Kathuria.

Speaker 3

Thank you, Dan, and thank you all for joining us. Today marks an exciting milestone, not just our first earnings call as a public company, but an opportunity to formally introduce AIRO Group Holdings Inc. to the investment community and share the foundations of who we are, what we've built, and where we're going. In a few minutes, Joe will share the progress from the quarter and more recently, and Mariya will cover our financials. First, a little bit about AIRO Group Holdings Inc. We built an integrated aerospace and defense platform to serve the future of mobility, security, and training across high-growth markets. Our mission is to deliver disruptive, dual-use technologies through unmanned systems, pilot training, avionics, and electric air mobility, segments that are individually compelling and collectively transformative.

Our platform is structured around four synergistic business segments: drones delivering fully autonomous, GPS-denied, unmanned aerial systems for military and commercial ISR missions; avionics, a 20-year heritage business through Aspen Avionics, delivering over 14,000 systems with patented displays, sensors, and cockpit integration for both manned and unmanned aircraft; training, elite military and commercial pilot training with a focus on close air support, ISR, and adversary air missions. We are a trusted contractor under the U.S. Department of Defense's $5.7 billion CAF and CAS IDIQ. Electric air mobility, pioneering eVTOLs and hybrid cargo drone solutions through our Jaunt Air Mobility brand, using our patented slow rotor compound technology for safe, efficient, and scalable flight. We currently operate across nine locations with over 151 employees, 61,000 square feet of operational space, and maintain ISO 9001 and AS 9100 certifications. We are strategically located to serve both U.S.

and international defense markets, with headquarters in Albuquerque, New Mexico, and major operations in Denmark and Montreal, where we can deliver directly into NATO without navigating ITAR constraints, providing a structural advantage in cross-border logistics and responsiveness. This is a differentiated model. Our businesses aren't just adjacent but deeply integrated, sharing technologies, supply chains, and operational capabilities. This creates a tangible advantage in cost structure, speed to market, and platform development. This interconnected structure enables several key advantages: one, shared R&D and manufacturing capabilities across drone and eVTOL platforms; two, cross-segment technology applications such as avionics, which are developed in-house and are being deployed across unmanned systems and advanced aircraft; three, training infrastructure that supports our own fleet and serves as a proving ground for next-gen platforms; and four, supply chain overlap and cost synergies, enhancing margin potential as we scale.

Across the board, our technologies are real, proven, and deployed. Take our RQ-35 Hedron, a battle-tested micro-ISR drone with NATO-grade capabilities. With over 500 missions per unit and operations in GPS-denied, high-threat environments, it has become a critical ISR asset for modern militaries. Backed by $200 million NATO-aligned bookings in progress and AS9100 certified facilities, this segment is scaling rapidly to meet global demand due to geopolitical events and increased defense spending. In avionics, our Aspen Avionics business provides the cockpit infrastructure for both manned and unmanned systems. With 20 years of flight heritage and strong OEM relationships, Aspen enhances safety and interoperability while supporting development of future military and civilian platforms. Our training division is another major differentiator, with 10 years of sustained support to U.S. and allied defense contractors, including participation in the $5.7 billion Combat Air Force Commercial Air Service IDIQ program.

AIRO delivers elite close air support and ISR training through our Coastal Defense brand. We operate six wing aircraft and modified systems from two dedicated U.S. training centers and maintain a top-secret facility clearance, an important barrier to entry that reinforces our trusted status. Finally, in electric air mobility, we're advancing a hybrid drone and eVTOL strategy via our Jaunt Air Mobility subsidiary. Earlier this quarter, we unveiled a new middle-mile cargo drone at EAA AirVenture Oshkosh and expanded into Quebec's YMX Innovation Zone, a forward-leaning hub for advanced air mobility innovation. With our patented slow rotor technology, our system combines the vertical lift of a helicopter with the cruise efficiency of a fixed-wing aircraft. With this integrated platform as our key to long-term value creation, where we're targeting a $315 billion total addressable market across all our business lines, we're already seeing robust adoption.

Our 2024 revenues grew to $86.9 million, up from $43.3 million in 2023 and $17.1 million in 2022. We also have strong visibility with a $200 million-plus bookings in progress. Our recent IPO is a natural next step in our evolution, which enhances our financial flexibility, elevates our brand with global customers, and positions us to accelerate execution across our pipeline. Most importantly, it strengthens our ability to innovate, scale, and deliver for our stakeholders. We are building AIRO for the long term. We have the right markets, the right model, and the right team, and we're just getting started. With that, I'll hand the call over to our CEO, Captain Joseph Burns.

Speaker 1

Thank you, Chirinjeev. It's a pleasure to be with you all today. I'd like to echo Chirinjeev's enthusiasm as this is a proud moment for the AIRO team, and I'm grateful to be speaking to you all today on our first earnings call as a public company. AIRO had an excellent second quarter. We made important progress across all segments, advanced key strategic initiatives, and strengthened our operational foundation as we entered life as a public company. Let me walk you through the progress in each of our core businesses. Starting with drones, our flagship RQ-35 Hedron platform continues to gain traction globally. This quarter, we announced the new U.S. manufacturing and engineering facility to support domestic demand, enable Blue UAS certification, and fulfill Buy American requirements.

The Hedron has now been deployed in more than 500 missions, many in high-threat, GPS-denied environments where its electronic warfare resistance, extended range, and elite optics deliver outside battlefield value. With strong interest from NATO-aligned nations, this is a high-margin, high-growth business that we will look to expand further. We delivered over $75 million in drone-related revenue in 2024, representing 167% growth, and our backlog here remains robust. We're also advancing our drones as a service model, offering ISR, cargo, and emergency response capabilities for enterprise and defense customers. In parallel, we're building out Aerolink, a proprietary drone communication and data platform, which we view as a long-term infrastructure asset across autonomous flight operations. In training, we recently completed a specialized 90-day naval special warfare deployment and continue to operate under multiple IDIQs with the U.S. Department of Defense.

We deliver elite close air support and ISR training through our Coastal Defense brand, using a fleet of NATO-certified aircraft, and maintain a top-secret facility clearance, a meaningful differentiator in this space that should not be overlooked. We're an active bidder on the $1.6 billion close air support segment of CAF CAS contract and have a reliable, low-cost, high-utilization model that makes us a compelling alternative to traditional adversary air providers. We believe the growth opportunity in training is not only durable but accelerates our access to broader defense contracts and serves as a valuable R&D testbed across the platform.

In electric air mobility, when we unveiled a new medium-lift cargo drone at EAA Air Venture Oshkosh, capable of carrying 250 to 500 pounds over 200 miles, the subscale platform is built on our patented slowed rotor compound technology, providing the vertical lift of a helicopter and the cruise efficiency of a fixed-wing aircraft. The cargo platform is set for commercialization in 2027, and we've already secured regulatory engagement and site access in Canada's YMX Innovation Zone, which offers a faster certification path than comparable programs in the U.S. This cargo-first strategy de-risked our roadmap to passenger eVTOL and opens use cases in military logistics, medical delivery, and last-mile air freight. Finally, avionics continues to be the heartbeat of interoperability across AIRO. Aspen Avionics has delivered more than 14,000 systems to date and we're actively advancing development of next-generation displays, sensors, and GPS solutions for both manned and unmanned aircraft.

The open architecture of our systems and their proven integration into drones, training aircraft, and future eVTOL platforms creates a feedback loop of innovation that is core to our strategy. We're also pursuing upgrades that reduce installation costs and enhance flight safety, contributing to strong OEM and aftermarket demand. Aspen is an asset-light, cash-generative business with a long runway for margin expansion and category leadership. Taken together, these milestones reinforce what AIRO represents: operational execution, technological differentiation, and a clear path to long-term growth. As we look ahead, we are entering a period of strong momentum and rising demand across our core markets. NATO defense spending is accelerating with a heightened focus on autonomy, ISR, and rapid response capabilities. U.S.

customers are seeking domestic solutions with field-proven reliability and production flexibility, and commercial and civil air mobility infrastructure is beginning to mature, particularly in areas where cargo delivery precedes passenger applications. Let me dive a little deeper into this. NATO defense budgets are expanding with an increasing share allocated to autonomous and unmanned systems. Only 23 of the 32 member countries currently meet the 2% GDP defense spend target, and there's a strong momentum to raise this to 3% or higher. Meanwhile, the U.S. has pushed for a 5% target from its allies. That shift alone creates a long-term, multi-hundred billion dollar opportunity across our core verticals. Our addressable market is estimated at $315 billion U.S., spanning ISR drones, pilot training, avionics upgrades, and air mobility solutions. Our platform is built not just to access that market but to expand into it quickly and credibly.

In 2024, we delivered $86.9 million U.S. in revenue, up from $43.3 million U.S. in 2023 and $17.1 million U.S. in 2022. That's 126% CAGR, driven by real-world adoption of our technology and disciplined execution across the business. We enter our public life with bookings in progress of exceeding $200 million U.S., supported by strong international defense demand and near-term U.S. opportunities. We recently announced plans to expand our U.S. footprint by adding a new manufacturing and engineering development facility dedicated to producing our flagship drone product, the RQ-35 Hedron, here in the U.S. This new site will enable AIRO to scale production efficiently, compete for American-made defense and commercial opportunities, and serve as a hub for future innovation in both commercial and military markets. As part of our U.S.

expansion plans, we are currently in the process of Blue UAS certification, which will enable us to manufacture and sell the RQ-35 Hedron to the U.S. Department of Defense. We conservatively estimate that the full process will take six months, but recent announcements by the Department of Defense expect to significantly expedite this timeline. We've already completed the framework process and are near complete with the foundry and on-ramp stages. We anticipate obtaining certification as soon as this year and are eager to begin selling our battle-proven drone platform to the U.S. military. In the second half of 2025, our priorities are clear: complete Blue UAS certification and expand U.S.

drone production, convert backlog to revenue with continued program delivery, accelerate strategic partnerships, particularly in training and air mobility, maintain disciplined investment across R&D, manufacturing, and certification, and finally, deliver on the promise of our public listing with consistent execution and transparency. With that, I'll turn the call over to Mariya to walk through the financials.

Speaker 0

Thank you, Joe, and good morning, everyone. For the second quarter of 2025, revenue was $24.6 million, an increase of 151% compared to $9.8 million in the prior year period. Growth was driven by continued execution across our core segments: drone, training, and avionics, as we expand existing contracts and begin to scale with platforms. Gross profit for the quarter was $15 million, up from $5.8 million last year. Gross margin was 61.2%, reflecting a favorable product mix and disciplined operational execution. We reported a net income of $5.9 million compared to a net loss of $5.6 million in Q2 2024. The second quarter EBITDA was $18.9 million, a record for AIRO Group Holdings Inc. Adjusted EBITDA was $4.7 million compared to $0.6 million in the prior year quarter. We continue to remain focused on execution as we invest in innovation, infrastructure, and growth.

On a segment basis, we continue to see significant revenue growth in drones, driven by increasing interest for our RQ-35 Hedron platform. Given recent announcements around accelerating drone deployment, particularly in the U.S., we have strategically decided to focus capital on scaling our drone business in response to growing market demand. For training, we recorded high revenues due to a specific government contract related to ground target vehicles. We also believe there are opportunities to grow our training revenues by acquiring additional aircraft to conduct new programs. For avionics, we experienced softer sales given the strategic decision to delay investment in R&D and higher margin products for the general aviation and multi-engine aircraft market, while prioritizing resources towards our drone segment. However, we expect to resume investments in both our training and avionics businesses now that we have completed our initial public offering.

Looking ahead, we expect positive momentum headed into the second half of this year due to increased defense spending globally, particularly for drones and drone-related technologies. Turning to free cash flow and liquidity, we recorded positive net income for Q2 2025, which was affected by non-cash adjustments related to debt extinguishment and fair value adjustment of contingent consideration and warrant liabilities. Free cash flow was also impacted by increases in working capital related to growing our business. As of June 30, 2025, we had $40.3 million in cash and cash equivalents. Following our IPO, we have significantly reduced our total debt and have positioned our balance sheet to support continued execution and growth. Finally, I want to briefly discuss the visibility we have across our drone and training businesses, which will contribute significant revenues in the years to come.

As we have mentioned before, we have a line of sight to approximately $200 million of NATO bookings in progress, which will be converted into revenue over the next 18 months. Commercial agreements with individual NATO member countries, many of which we have strong relationships through demonstrating the high performance of our RQ-35 Hedron. We continue to see strong demand for our drone platform and believe there are significant opportunities to grow our bookings by expanding into uncertain markets, introducing new drone products and services, and improving upon our existing platform. On the training side, we have been selected as one of seven companies for the $5.7 billion IDIQ contract to provide pilot training services for various branches of the U.S. military. Specifically, we are focused on $1.6 billion of that contract related to close air support services.

Looking forward, we remain focused on scaling our operations, converting our bookings to revenue, and driving long-term shareholder value. With that, I'll turn it back to Joe.

Speaker 1

Thank you, Mariya. I want to leave with a few closing thoughts. AIRO is a purpose-built company designed to drive innovation and support emerging markets. We're serving real customers and real-world requirements in markets where reliability, performance, and trust are non-negotiable. We've built a platform that is both agile and scalable, and we're executing a strategy that combines near-term performance with long-term vision. Our public debut marks the beginning of a new chapter, but our mission remains the same: to deliver the technologies, systems, and training that define the future of aerospace and defense. Thank you again for joining us today, and we look forward to keeping you updated on our progress in the quarters ahead. With that, Operator, we are ready for questions.

Speaker 4

At this time, I would like to remind everyone, in order to ask a question, please press Star, then the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Colin Hanfield with Cantor. Your line is open.

Speaker 2

Hey, thank you for the questions. Maybe going through the qualified drone pipeline, if you could kind of talk about how you see demand shaping up in the U.S. versus Europe. I appreciate the Blue UAS certification commentary, but where do you think kind of demand signals are the strongest in terms of the next incremental orders as we look forward? Thank you.

Speaker 1

Thanks, Colin. Maybe Joe, you want to take that. Hey, Colin, good morning. Demand signals, to answer your second question first, highest demand has been, I think, we've seen so far for small and medium class tactical drones, primarily for ISR, which is intelligence, surveillance, and reconnaissance missions, particularly from the NATO expansion orders and other allied defense programs. Europe so far continues to lead the current revenue contributions, but the U.S. demand is accelerating, and we've sold our units to both Asia Pacific as well as North America. The pipeline does remain strong. We have active bookings across NATO customers, other European defense agencies, and some new U.S. defense opportunities. We've seen incremental inbound interest from U.S. agencies following the U.S. Department of Defense's July 10th announcement about drones, and Europe continues to lead the current revenue. As I mentioned, U.S.

demand is accelerating, and we've also sold units into Asia Pacific as well as North America.

Speaker 2

Got it. Maybe focusing on avionics, if you could just talk a little bit about the growth engine there, specifically maybe talking through kind of how we should think about the partnership with Joby Aviation, as well as by extension, the relationship with L3 Harris as we kind of think about not just selling into scaling platforms, right, but the concept of doing more kind of like prime outsourcing type work as we get through the next years and few years of growth.

Speaker 1

Sure. You know, our avionics growth is being driven by both the OEM integration, that is, you know, selling to brand new manufacturing and new platforms, as well as retrofitting. We've traditionally sold the bulk of our equipment into retrofit programs. We are, as you referenced, working with Joby Aviation. We had an announcement on that earlier this week. That really positions us as a trusted outsourcing partner for mission-critical avionics systems, and it opens opportunities in larger defense and advanced air mobility markets as well, beyond just the Joby positioning.

Speaker 2

Got it. Maybe, Mariya, if you could talk through the working capital building blocks through the year and kind of how we should think about the split of working capital consumption versus production in the next kind of six months.

Speaker 0

Our working capital needs are expected to increase in the second half of the year, and it's just due to a higher cost receivable from around Q3 and Q4 for SkyWatch deliveries. We will expect inventory buildup to support drone and avionics production for our new facility. The management of our cost cable will be aligned with supply terms and cash inflows.

Speaker 2

Got it. Thank you.

Speaker 4

Your next question comes from the line of Andrey Mitrid with BTIG. Your line is open.

Speaker 2

Hey, good morning, guys. How are you?

Speaker 1

Good, thanks.

Speaker 2

With the strong second quarter performance, I guess just how should we think about things trending through the balance of the year more broadly? Can you provide any outlook update or anything?

Speaker 1

Sure. Andrey, I think, you know, we can have maybe Joe and Mariya. Joe gave on the earnings, his earnings call what he thinks are the priorities. Joe, if you want to take that and then maybe followed by Mariya to Joe in general.

Speaker 3

Sure. I mean, we're going to be putting near-term CapEx. It's very targeted right now, and the largest of our investments are going to go to our new manufacturing facility, which is going to serve for U.S. drone manufacturing and a U.S. engineering hub for that as well. We have other spend that are directed to facility upgrades. We're looking at new tooling for drones, drone production, and also sending money into our selective, you know, dollars into the training division to really qualify for more and more of the IDIQ task orders. That would be aircraft that are, you know, NATO certified and allow us to operate with more vigor into some of these IDIQs. Most of the gross investment is still going to be reflected in R&D rather than large-scale assets. It allows us flexibility to scale to meet the backlog of demand.

We're continuing to target investments in some core areas with drones, mid-size models for U.S. Department of Defense applications, and obviously to become Blue UAS certified to meet the compliance for that. On the avionics side, we're going to spend and invest into systems that really put us into higher-end general aviation and multi-engine platforms. We also, as referenced earlier, have secured a contract for a large eVTOL OEM. The electric air mobility side is really about focusing on our cargo platform, our hybrid cargo drive, and that would be the development and certification of that. Those all kind of lead into, hopefully, that answers some of your question, Andrey.

Speaker 2

Yeah. I think, Mariya, did you want to maybe add on actual financial targets that we should kind of be thinking about? I mean.

Speaker 0

Currently, we're not getting guidance in terms of the for the market with our financials.

Speaker 2

Okay. No problem. I guess just focusing on the build-out at the Phoenix facility, how many drones do you reckon you could actually produce this year? How are things progressing currently, and is there any possibility that Blue UAS certification might be able to pull to the left a bit?

Speaker 1

It's a great question. A lot of the Blue UAS certification depends on what sort of the new process is. I think everybody on the phone is aware there was an announcement here about a month ago about revamping the whole process to streamline it. There's always that possibility. We certainly would welcome any changes that could pull it into the left just a little bit. You mentioned the Phoenix facility, and we just announced a 10-Q that we did secure a Phoenix facility to allow us the space. Our intention is to make that both an AS 9100 facility. That does take some time. We've done it before with our other processes and our other facilities, but we will make it out of AS 9100. It allows us to manufacture at least a majority of the airframe for drone production in the U.S.

so we could sell within the U.S. as well. This will help us with the compliance for U.S. mandates and further support all that Blue UAS. We have already started the Blue UAS process, and we are underway with the framework around that. Bringing the manufacturing here should help us expand into that area quite a bit. It depends on what the new compliance matrix looks like. We know what the old one is, and we think this one will be even a little bit more flexible than that.

Speaker 3

Andre, just to give you a summary of what you know Joe and Mariya were talking about, I think you saw our results were better than expected. A lot of that is driven by the geopolitical macro environment that Joe spoke about with increase in NATO spending to 5%, the new executive order, and the U.S. beginning to focus on building out their drone capabilities. As you mentioned, opening up our facilities and increasing our manufacturing capabilities in the U.S., I think we're very well positioned, going forward, to grow all the segments of our business. I think our Q2 was, our performance was better than expected just based on the global geopolitical and macro aspects of where we are and our performance of our RQ-35 Hedron drone business. Now we're continuing to really build for the future.

As Joe mentioned, I know our priorities are also strategic partnerships for training and air mobility, focusing on the Jaunt cargo.

Speaker 2

Got it. Got it. Chirinjeev, very, very helpful. One more really quick question that if I could just squeeze in. Can you just give an update on the exact number of nations that you are currently selling to or in the process of trying to work with?

Speaker 1

Joe and Mariya.

Speaker 3

As mentioned.

Speaker 1

Yeah, I'll start and then let Mariya. As mentioned earlier, there are 32 NATO countries right now, and we are selling our RQ-35 Hedron directly into those NATO countries. Approximately 20, 25 of them are upping their contribution level for their GDP into producing and acquiring more aircraft. We've announced, there have been public announcements about multiple countries already. I'm not sure the detail, Andrey, that we're allowed to get into because some of the stuff is classified. Once the government's released information, we certainly can talk about it and we'll have related, but there are multiple NATO countries that we're currently involved in. Mariya, do you want to talk about any more of that?

Speaker 0

I would just add that, outside of NATO countries, we are focusing on Asia Pacific. We already started selling there, as well as looking to North America. We've got an order from North America, and we're actively working on increasing the demand here, especially having a facility in the U.S.

Speaker 2

Got it. Very helpful. I'll leave it there. Thanks.

Speaker 1

Great. Thanks, Andrey.

Speaker 4

Your next question comes from the line of Colin Canfield with Cantor. Your line is open.

Speaker 2

Hey, just one quick follow-up. Maybe talk through, you mentioned avionics as a growth engine for the business. Maybe kind of talk through how you think about TNSS versus GPS and essentially how the team is participating or how the team thinks about all PNT as kind of a driver of both the OE side of that demand algorithm as well as the retrofit side of it. Thank you.

Speaker 1

Do you want to maybe?

Speaker 3

Thanks, Colin. Yeah, I'll field that one. You know, GNSS, actually, GPS is sort of the U.S.-branded name run by the U.S. Department of Defense for the original navigation technologies. GNSS is sort of the global word for GPS amongst other systems that are out there, Galileo, BeiDou, etc. We have a multi-constellation receiver set that can pretty much look at every nav signal that's available. We have a broadened horizon. It's a great question because as we see right now in the Ukraine conflict and in our operations there, the entire country of Ukraine is pretty much either jammed or spoofed from GPS. Alternative signals are really important. We have one of the few products that can actually navigate through that system in that challenged environment without any real issues on our airframe. Having that capability, and that is truly alternative PNT, as we call it.

PNT stands for position, navigation, and timing for those on the phone that weren't sure of that. We're very, very engaged in that through high-level engagements with the U.S. government as well as foreign agencies and have a technology that can receive multiple receiver sets. As with anything that's jammed or spoofed, the more satellites and constellations you look at, you have a better chance of getting a good solid signal. Our current GPS receiver set is really a true GNSS receiver set where it actually looks at multiple constellations. We've got a fantastic product. We've proven in battlefield deployments that we can fly through a lot of those types of environments. Really excited about the future in that because it is where we see all sorts of signaling going.

We're in a good, strong position to be able to build products that can really kind of look through all the noise and give you good navigation and timing signals.

Speaker 2

Got it. Great call. Thank you.

Speaker 4

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Speaker 2

Thank you.