Earnings call transcript: XTI Aerospace Q1 2026 earnings beat expectations

XTI Aerospace reported its Q1 2026 earnings, showcasing a significant improvement in financial performance. The company reported an EPS of -0.46 USD, beating the forecast of -1.14 USD and surprising analysts with a 59.65% improvement. This positive result was reflected in an initial stock surge of 21.84%, although aftermarket trading saw a decline of 8.7%, bringing the price to 1.68 USD. The company also provided strong revenue guidance for the full year 2026, further boosting investor confidence.

XTI Aerospace’s Q1 2026 performance marks a positive shift, with the company showing progress in cost reduction and operational alignment following the acquisition of Drone Nerds. The company’s efforts have resulted in a significant reduction in cash burn and improved financial metrics, positioning it well for future growth.

XTI Aerospace’s actual EPS of -0.46 USD greatly surpassed the forecast of -1.14 USD, resulting in a 59.65% earnings surprise. This improvement reflects the company’s successful cost management and operational strategies.

The stock initially surged by 21.84% following the earnings announcement, reflecting investor optimism about the company’s improved financial health. However, the aftermarket decline of 8.7% suggests some investor caution or profit-taking, highlighting the stock’s volatility.

XTI Aerospace has set a revenue guidance of approximately $160 million or greater for the full year 2026, with expectations of positive operating cash flow starting in Q3 2026. The company anticipates accelerating performance in the second half of the year, particularly in Q4.

CEO Scott Pomeroy emphasized the company’s focus on operational execution and financial discipline. "We are at an inflection point, with steadily decreasing cash burn and a stable balance sheet," he stated. This reflects management’s commitment to achieving sustainable growth.

During the earnings call, analysts inquired about the company’s EBITDA generation cadence for the second half of 2026 and the expected exit run-rate. CEO Scott Pomeroy highlighted that while the second half would see positive cash flow, Q4 2026 would be the strongest quarter, indicative of ongoing performance improvements.

Moderator, Call Moderator, XTI Aerospace: Good afternoon, and welcome to the XTI Aerospace first quarter 2026 earnings call. Joining us today from XTI Aerospace are Scott Pomeroy, Chief Executive Officer, Brooke Turk, Chief Financial Officer, and Jeremy Schneiderman, CEO of Drone Nerds. Before we begin, please note that certain statements made during today’s call may be considered forward-looking statements within the meaning of federal securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Additional information regarding these risks and uncertainties can be found in the company’s filings with the Securities and Exchange Commission. The forward-looking statements made today speak only as of today, and the company undertakes no obligation to update these statements except as required by law. In addition, during this call, we will make reference to certain non-GAAP financial measures.

A reconciliation of these non-GAAP financial measures are available on the investor relations section of our website. Earlier today, the company posted its earnings news release, slide presentation, and prepared remarks to the investor relations section of its website. Today’s session will be conducted as a live video-based earnings call. Scott Pomeroy, Brooke Turk, and Jeremy Schneiderman will be responding to questions from participants. The discussion today will focus on first quarter 2026 results. I will now turn the call over to Scott Pomeroy. Mr. Pomeroy, you may begin.

Scott Pomeroy, Chief Executive Officer, XTI Aerospace: Great. Thank you. Thanks everybody for joining us here this afternoon. It’s great to have you here. As the moderator just pointed out, we did file earlier today, along with the 10-Q, the earnings release, as well as the script. As with last quarter, our objective with that is really to avoid having to spend time on this call reading through the script and maximizing the time that we have to answer questions. We hope that continues to be an effective mechanism and platform for you, and we’ll continue to do that. We’ve gotten good feedback that it’s helpful to carve out the time just for Q&A, we intend to do that.

Really since the acquisition in November last year, we’ve continued the transformational journey of XTI, we are now a revenue-generating unmanned systems platform. We’re focused on operational execution, on margin improvement, and cash flow discipline. The first quarter of 2026 marks the first quarter that we’ve had the full operating performance of Drone Nerds in our results. We’ve believe that we’ve demonstrated meaningful progress in reducing costs, improving operational alignment, and lowering our cash burn. That will continue throughout the balance of the year, we’re off to a good start.

Based on our current operating plan, we continue to expect to achieve positive and growing cash flow from operations throughout the balance of the year, starting in the third quarter as revenue scales and operating efficiencies improve. During the quarter, we continued to see broad-based demand across enterprise and government markets. That includes areas such as public safety, infrastructure, utilities, agriculture, education, surveying, mining, and energy customers. We also continue to benefit from the growing industry demand for NDAA-compliant and domestically aligned drone solutions as customers are increasingly focused on secure supply chains and regulatory compliance. Jeremy can provide more color on that as we continue with our conversation here today. Our enterprise B2B pipeline strengthened throughout the quarter, and the momentum has continued into the second quarter.

Based on the current operating plan, we continue to expect full year 2026 revenue of approximately $160 million or greater, with projected gross margins of between 19% and 21% and EBITDA margins of between 9% and 10%. We ended the quarter with about $15.2 million in unrestricted cash and cash equivalents, along with some substantial liquidity available under our asset-based lending arrangement. As we move through the remainder of 2026, our priorities remain clear. It’s about improving margins, strengthening liquidity, reducing cash burn, and continuing to build long-term shareholder value through disciplined execution. With that, let me turn it back over to the moderator.

Moderator, Call Moderator, XTI Aerospace: Thank you. At this time, we will now open the floor for questions. If you would like to ask a question, please click on the Raise Hand button, which can be found on the black bar at the bottom of your screen. When it is your turn, you will receive a message on your screen from the host allowing you to talk, and then you will hear your name called. Please accept, unmute your audio, and ask your question. We will wait one moment to allow the queue to form. Our first question is a written submission. Our question is: How should investors think about the difference between average EBITDA generation during the second half of 2026 versus the EBITDA run rate the company expects to exit the year with?

Scott Pomeroy, Chief Executive Officer, XTI Aerospace: Great question. As you know, we guided to second half of between $2 million-$3 million of positive cash flow. I think the real key point there to keep in mind is that the quarter-to-quarter performance is not flat. We expect revenue and EBITDA to continue to grow throughout the second half of the year and cost efficiencies and initiatives to continue to take effect. You can’t really take the guidance of the full entire second half and extrapolate that into an average monthly or average quarter performance. The strength of the cash flows continues to grow as the year progresses.

It’s really, you know, we’re looking to a solid fourth quarter and end of fourth quarter as being much more reflective of what our ongoing run rate will be.

Moderator, Call Moderator, XTI Aerospace: The next question is a written submission. Our question is: How should investors think about the seasonality and quarterly revenue cadence during 2026?

Scott Pomeroy, Chief Executive Officer, XTI Aerospace: Jeremy, why don’t you take that one?

Jeremy Schneiderman, CEO of Drone Nerds, XTI Aerospace / Drone Nerds: Absolutely. Well, first, thank you everybody for joining us today. To tell you a little bit historically about Drone Nerds, you know, first quarter has always traditionally been one of our slower quarters, and we always see an eventual ramp up into the fourth quarter for multiple reasons. You have procurement cycles, you have seasonality in agriculture. Public safety has different budget timelines. Historically, if you look at our business, fourth quarter is always our strongest quarter, with that ramp up into fourth quarter. If you were to compare Q1 2026 versus Q1 2025, you’d have to really look a little bit deeper into what happened in Q1 2025. We had major supply constraints in the fourth quarter of 2024, where we saw some of those sales move over into Q1 2025.

If you were to look comparatively over the two, it really wouldn’t be true indicative of what normal business would look like.

Scott Pomeroy, Chief Executive Officer, XTI Aerospace: Q1 was a little bit overstated, Jeremy, of 2025, and Q4 understated.

Jeremy Schneiderman, CEO of Drone Nerds, XTI Aerospace / Drone Nerds: Correct

Scott Pomeroy, Chief Executive Officer, XTI Aerospace: In that demand delay.

Jeremy Schneiderman, CEO of Drone Nerds, XTI Aerospace / Drone Nerds: Absolutely.

Moderator, Call Moderator, XTI Aerospace: The next question is a written submission. Our question is: Drone Nerds is the largest U.S. enterprise drone