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UM

Unusual Machines, Inc. (UMAC)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 delivered record revenue of $2.12M (+51% YoY) and materially higher gross margin (~37%), driven by a rising enterprise mix (31% of revenue) and onshoring efforts; GAAP net loss widened due to $5.5M non‑cash stock comp tied to financing and equity awards .
  • Results beat S&P Global consensus: revenue above by ~$0.31M and S&P “Primary EPS” less negative than expected; GAAP EPS was ($0.32) as reported in the 8‑K. Expect estimate revisions upward on revenue and margin trajectory (see Estimates Context) . Primary EPS consensus and actual values from S&P Global.*
  • Balance sheet and liquidity inflected: cash rose to $38.9M at quarter‑end, with subsequent financing lifting cash above $81M and no debt—providing capacity to scale the motor factory and meet enterprise demand .
  • Strategic catalysts: Orlando motor factory on track for September 2025 operations, Blue UAS component approvals, and the Rotor Lab acquisition agreement to accelerate motor development and second‑source supply; Aloft deal terminated to prioritize near‑term manufacturing scale .

What Went Well and What Went Wrong

What Went Well

  • Record revenue quarter and margin expansion: “another record revenue quarter…gross margins to 37% which represents our highest quarterly margins to date” .
  • Enterprise mix ramp: enterprise sales reached ~31% of Q2 revenue, supporting margin gains and resilience into H2 2025/H1 2026 .
  • Liquidity and capital strength: ended Q2 with $38.9M cash; subsequently raised ~$44.9M, now over $81M cash and $0 debt, enabling rapid scale and better supplier/customer terms .

What Went Wrong

  • GAAP loss inflated by non‑cash items: operating loss ($7.2M) and net loss ($6.9M) driven largely by $5.5M non‑cash stock compensation; management emphasized GAAP “seem exaggerated” vs adjusted net loss (~$0.8M) .
  • Tariff headwinds and consumer hesitancy: management noted tariffs created consumer hesitancy and may slow consumer sales growth; expenses ran above expectations due to financing costs .
  • Elevated OpEx: total operating expenses increased to $8.0M in Q2 (vs $2.0M in Q2’24), reflecting growth, public company costs, and equity comp .

Financial Results

Headline vs. Estimates (Q2 2025)

MetricActualConsensusBeat/Miss
Revenue ($USD)$2,123,970 $1,811,400*Beat
Primary EPS (S&P) ($)($0.0367)*($0.075)*Beat
GAAP EPS Basic/Diluted ($)($0.32) N/AN/A

Values with asterisks retrieved from S&P Global.*

Quarterly Trends (Oldest → Newest)

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD)$1,411,124 $2,042,300 $2,123,970
Gross Profit ($USD)$388,440 $496,807 $794,679
Gross Margin (%)N/A24.33%*37.41%*
Net Income ($USD)($1,612,238) ($3,266,279) ($6,964,739)
EPS Basic/Diluted ($)($0.16) ($0.21) ($0.32)

Gross margin percentages marked with * are values retrieved from S&P Global (derived from reported statements).*

Segment/KPI Mix

KPIQ1 2025Q2 2025
Enterprise Sales (% of revenue)~15% ~31%
Cash And Equivalents ($)$5.0M $38.9M
Total Debt ($)$0 $0
Shares Outstanding (Quarter-end)16,830,170 25,287,786
Weighted Avg Shares (Basic/Diluted)15,902,473 21,771,954

Non‑GAAP Adjustments (Q2 2025)

ItemAmount
Stock compensation expense$5.5M
Investor relations$0.4M
Filing fees related to S‑3$0.1M
Legal expenses related to acquisitions$0.1M
Adjusted net loss($0.8M)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Cash flow positive revenue run‑rateStructural target$15–20M ARR to reach cash‑flow positive in 4–6 quarters (from Q1 letter) $20–30M ARR needed to reach cash‑flow positive in 2026 Raised threshold; timeline extended
Gross margins2025–2026Expect to improve with tariffs/onshoring (directional) Expect continued margin increase through 2025 into 2026 Maintained upward trajectory
Enterprise sales mix2025Expansion expected (15% in Q1) Expanded to ~31% in Q2; expect expansion to continue Raised (execution ahead of plan)
Capex – Orlando motor factory2025“Substantial CapEx” and aggressive buildout Lease signed; first deliveries targeted Sept 2025 Timeline firmed/maintained
Liquidity postureOngoing~$40M cash after May raise >$81M cash incl. Q3 financing; $0 debt Strengthened

No formal quantitative revenue/EPS quarterly guidance was provided; management emphasized directional priorities and structural targets .

Earnings Call Themes & Trends

Note: No Q2 2025 earnings call transcript was available. Themes reflect Q4 2024 and Q1 2025 calls, with Q2 derived from the shareholder letter.

TopicQ4 2024 (Transcript)Q1 2025 (Transcript)Q2 2025 (Letter)Trend
Tariffs & macroTariffs a tailwind for margin vs Chinese imports Tariff uncertainty pressured margins in Q1; alternative suppliers pursued Tariff environment “settled” to steady state; margins improved despite some cost increases Improving margin visibility
Supply chain/rare earthsT‑Motor sanctions created market vacuum; opportunity for domestic supply China bans rare earth magnet exports; cash position helps secure long‑lead components Larger inventory orders and onshoring to offset tariff costs Building resilience
Motor factory/CapExPlan aggressive buildout in Orlando Equipment ordered; factory targeted for Sept; contract manufacturing bridging demand Lease signed; first deliveries Sept 2025 Execution on track
Enterprise/B2G demandBlue UAS components launched; enterprise ~15% of Q4 revenue Government budget delays; pipeline forming; expect uptick late Q2/Q3 Enterprise ~31% of Q2 revenue; expect continued expansion Accelerating
Regulatory/legalBlue UAS approvals, options trading enabled Focus on compliance; NDAA‑compliant kits Additional Blue UAS VTX approval communicated via industry PR Strengthening compliance portfolio
R&D/ProductsComponent business scaling; margin focus Margin expansion expected with internal motor production Multiple motor classes co‑developed (2207/2807/3220) for production Productization milestone

Management Commentary

  • “It has been another record revenue quarter…We were also able to improve gross margins to 37% which represents our highest quarterly margins to date.” — Allan Evans, CEO .
  • “We started the second quarter with $5.0 million and finished the quarter with $38.9 million…We have over $81 million in cash (which includes the Q3 financing), and $0 in debt.” .
  • “We anticipate substantial capital expense outlay as we work to very quickly scale a motor factory in Orlando…add Fat Shark headset assembly to a new leased facility in the Orlando area.” .
  • “Our net loss for the second quarter was approximately $6.9 million driven mostly from expenses related to equity compensation…Adjusted net loss…approximately $0.8 million.” .

Q&A Highlights

From the latest available call (Q1 2025):

  • Motor factory timing: equipment ordered, lease finalization, electrical setup; quality/process ramp allows first units by September 2025 .
  • Demand visibility: significant anticipated demand contingent on government orders; sampling underway; contract manufacturing used to bridge near‑term needs .
  • Margin trajectory: internal motor production expected to expand margins and reduce tariff uncertainty .
  • Government budget flow‑through: 6–8 week lag from budget passage to procurement; shipments likely begin roughly a quarter after PO .

Estimates Context

  • Q2 2025 beat: revenue actual $2.12M vs $1.81M consensus; S&P “Primary EPS” actual ($0.0367) vs ($0.075) consensus (less negative). GAAP EPS reported at ($0.32) reflects significant non‑cash items (stock comp) . S&P values marked with asterisks retrieved from S&P Global.*
  • Implications: Consensus likely to adjust upward on revenue and margin trajectory given enterprise mix expansion and onshoring progress; expect continued divergence between GAAP EPS and normalized/primary EPS due to non‑cash adjustments .

Consensus Detail (Q2 2025)

MetricConsensusActual
Revenue ($USD)$1,811,400*$2,123,970
Primary EPS ($)($0.075)*($0.0367)*
# of Estimates (Revenue/EPS)2 / 2*N/A

Values with asterisks retrieved from S&P Global.*

Key Takeaways for Investors

  • Revenue/mix: Revenue growth and enterprise mix expansion are driving structural gross margin improvement; Q2 achieved the highest margins to date .
  • Liquidity: >$81M cash post‑Q2 with no debt supports inventory builds, supplier credibility (rare‑earth magnets, stators) and capacity to scale the Orlando motor factory .
  • Manufacturing ramp: Lease signed and first deliveries targeted for Sept 2025; co‑developed motor SKUs (2207/2807/3220) position UMAC to fill the T‑Motor vacuum; watch execution milestones .
  • Regulatory tailwinds: Blue UAS approvals and tariff regime favor domestic suppliers; expect continued compliance wins and enterprise demand conversion .
  • GAAP vs Non‑GAAP: Large non‑cash stock comp drives GAAP losses; adjusted net loss (~$0.8M) better reflects core operations—investors should track margin, cash flow and enterprise conversion .
  • Strategy focus: Aloft termination removes integration risk near‑term; Rotor Lab agreement accelerates motor engineering and provides second‑source resiliency .
  • Near‑term trading: Revenue/EPS beats vs consensus, margin inflection, and tangible manufacturing milestones (September start) are positive catalysts; monitor further contract wins and enterprise revenue recognition .

Additional Q2‑related press releases and events:

  • Orlando motor factory lease with Sept 2025 delivery target .
  • Termination of Aloft acquisition to prioritize manufacturing and core mission .
  • Definitive agreement to acquire Rotor Lab (earnout structure, engineering center in Canberra) .
  • Industry coverage citing Blue UAS VTX approval for Fat Shark Aura (component compliance) .

No Q2 2025 earnings call transcript was found in the document catalog for UMAC. Trend analysis references Q4 2024 and Q1 2025 calls and Q2 2025 shareholder letter .

Values with asterisks retrieved from S&P Global.*