Archer Aviation Inc.

11/09/2026 | Press release | Distributed by Public on 11/09/2026 16:02

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related accompanying notes included elsewhere in this Quarterly Report and the audited consolidated financial statements as of and for the year ended December 31, 2025 set forth in our Annual Report. The following discussion includes forward-looking statements, which are based on our current expectations and beliefs concerning future developments and the potential effects of such developments on us. There can be no assurance that future developments affecting us will be those that we have anticipated. See the section titled "Special Note Regarding Forward-Looking Statements" in this Quarterly Report. Our actual results could differ materially from such forward-looking statements. Factors that could cause or contribute to those differences include, but are not limited to, those set forth in Part I, Item 1A, "Risk Factors" in our Annual Report.
Overview
Headquartered in Silicon Valley, California, Archer is building an end-to-end advanced aersopace and defense platform to deliver air taxis, unmanned aircraft systems ("UAS"), aviation-related physical artificial intelligence ("AI") solutions, and other technologies to customers worldwide across the commercial aerospace and defense sectors.
Air Taxis
Midnight is our electric vertical takeoff and landing (eVTOL) aircraft purpose-built for air taxi operations. To prepare for commercial operations, we are working with aviation authorities, governments, and strategic partners in key U.S. and international markets to certify Midnight and build out air taxi networks. These networks will connect major population and business centers with key transportation hubs in select metropolitan areas, through partnerships with airline operators to integrate eVTOL flights into passenger journeys and collaborations with infrastructure partners to develop vertiports.
•In the U.S., we were recently selected as a partner in multiple winning applications under the White House-backed eVTOL Integration Pilot Program (eIPP). Through the program, we have the opportunity to begin early operations this year in several key states, such as Florida, Texas and New York. The eIPP paves the way for us to bring our technology directly to U.S. communities in parallel with our continued work to receive FAA type certification of Midnight. As part of our broader commercialization strategy in the U.S., we acquired control of the Hawthorne Airport located near Los Angeles International Airport, SoFi Stadium and Downtown Los Angeles. We plan for Hawthorne to serve as the operational hub for our Los Angeles network and an innovation hub for developing and commercializing next-generation AI-powered aviation technologies.
•Outside the U.S., through our Launch Edition program, we are offering aircraft, technologies, and services to governments and customers to support the commercialization of Midnight in select international markets, with the UAE leading the way. In the UAE, we have been working closely with the country's federal aviation regulator, the GCAA, to establish the optimal regulatory pathway for commercial operations. Following hot weather flight testing last year, we are on track to deliver additional Midnight aircraft this year, in preparation for initial passenger operations and are working with strategic partners to build out a vertiport network across Abu Dhabi and the UAE.
Our commercial readiness progress is driving growing global demand across Europe, Middle East, Africa and Asia-Pacific for this new category of transportation.
UAS
We are also advancing the development of our hybrid-electric, autonomous vertical take-off and landing ("VTOL") aircraft platform, called Halo, intended for dual use by both commercial and defense customers. As part of the defense opportunities with this aircraft, we are working closely with our strategic partner, Anduril Industries Inc. ("Anduril"), to ensure this platform meets their next generation vertical lift needs, which are based on what they believe is necessary to win programs of record with allied nations. For commercial customers, Halo is expected to be used primarily for cargo and rescue operations.
AI
We are also developing physical AI and autonomy technologies to support the advancement of our aircraft and the modernization of U.S. and international airspace and air traffic control systems. We recently announced our aviation-specific AI foundation model, ZEE, that is purpose-built to turn disparate data from ADS-B, ATC communication, maps and charts, aircraft state, terrain and weather into a unified intelligence layer that can help operators, airlines and pilots make better, more informed decisions with the goal of increasing safety and efficiency across the entire aviation system, from air taxis and UAS to commercial airlines and air traffic management.
To date, we have not generated significant revenue from these planned areas. We will use our cash and cash equivalents for the foreseeable future as we continue to develop our aircraft, related technologies, manufacturing operations and urban air mobility ("UAM") operations, and work to commercialize both the commercial and defense sectors of our business.
Components of Results of Operations
Revenue
We continue to design, develop, certify, and bring up manufacturing of our aircraft and do not expect to begin generating significant revenues until we complete the design, development, certification, and manufacturing ramp-up of our aircraft, as well as the development of related technologies and services.
We began generating revenue from the leasing of space at Hawthorne Airport in the fourth quarter of 2025. Lease revenue is recognized on a straight-line basis over the lease term, beginning on the lease commencement date. In the second quarter of 2026, we also began generating fixed base operator ("FBO") revenue from aviation fueling, ground handling, and related services at Hawthorne Airport. We expect revenue from both our hangar and FBO operations to increase as we bring additional spaces into service and expand FBO service offerings at Hawthorne Airport.
Operating Expenses
Cost of Revenue
Cost of revenue primarily consists of master ground lease payments to the City of Hawthorne, fuel and supplies costs associated with FBO operations, amortization of operating rights, depreciation and other operating costs. Master ground lease payments are accounted for in accordance with ASC 842, Leases. Fuel and supplies costs are recognized as incurred upon delivery of services. Amortization of operating rights associated with the Hawthorne FBO acquisition is recognized on a straight-line basis over their respective estimated useful lives. All other costs are recognized as incurred. We expect cost of revenue to increase as FBO operations scale and we bring additional spaces into service.
Research and Development
Research and development ("R&D") activities represent a significant part of our business. Our efforts focus on the design and development of our aircraft and certain systems within it. As part of those activities, we continue to work closely with U.S. and international regulators towards our goal of commercialization. Research and development expenses consist primarily of personnel-related costs (including salaries, bonuses, benefits, and stock-based compensation) for employees focused on research and development activities, costs associated with developing and building prototype aircraft, associated facilities and IT infrastructure costs, and depreciation. We expect research and development expenses to increase significantly as we progress towards commercialization and manufacturing.
We cannot determine with certainty the timing, duration or the costs necessary to complete the design, development, certification, and manufacturing bring up due to the inherently unpredictable nature of our research and development activities. Development timelines, the probability of success, and development costs may differ materially from expectations.
General and Administrative
General and administrative ("G&A") expenses consist primarily of personnel-related costs (including salaries, bonuses, benefits, and stock-based compensation) for employees associated with administrative services such as finance, legal, human resources, information technology, associated facilities and IT infrastructure costs, depreciation, and amortization expense. We expect our general and administrative expenses to increase as we hire additional personnel and consultants to support our operations and comply with applicable regulations.
Other Income (Expense), Net
Other income (expense), net consists of miscellaneous income and expense items, including the change in fair value of our warrant liabilities.
Interest Income, Net
Interest income, net primarily consists of interest income from our cash and cash equivalents and short-term investments in marketable securities, net of interest on debt.
Results of Operations
Comparison of the Three and Nine Months Ended September 30, 2026 and 2025
Revenue
Three Months Ended September 30, Change Nine Months Ended
September 30, 		Change
2026 2025 $ % 2026 2025 $ %
(In millions except percentages)
Revenue $ 5.1 $ - $ 5.1 100.0 % $ 11.7 $ - $ 11.7 100.0 %
We generated revenue of $5.1 million and $11.7 million for the three and nine months ended September 30, 2026 from FBO operations, the lease of space at Hawthorne Airport, and other sources. We did not generate revenue for the three and nine months ended September 30, 2025.
Cost of Revenue
Three Months Ended September 30, Change Nine Months Ended
September 30, 		Change
2026 2025 $ % 2026 2025 $ %
(In millions except percentages)
Cost of revenue $ 5.0 $ - $ 5.0 100.0 % $ 10.6 $ - $ 10.6 100.0 %
Cost of revenue increased by $5.0 million for the three months ended September 30, 2026, compared to the three months ended September 30, 2025. This increase primarily consisted of fuel and supplies costs associated with FBO operations, amortization of operating rights and master ground lease expense, depreciation, utilities, property taxes, and insurance associated with the leased spaces.
Cost of revenue increased by $10.6 million for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025. This increase primarily consisted of fuel and supplies costs associated with FBO operations, amortization of operating rights and master ground lease expense, depreciation, utilities, property taxes, and insurance associated with the leased spaces.
Research and Development
Three Months Ended September 30, Change Nine Months Ended
September 30, 		Change
2026 2025 $ % 2026 2025 $ %
(In millions except percentages)
Research and development (1)
$ 198.3 $ 120.7 $ 77.6 64.3 % $ 556.0 $ 346.8 $ 209.2 60.3 %
(1) Stock-based compensation included in R&D
$ 32.6 $ 26.2 $ 6.4 24.4 % $ 105.9 $ 60.1 $ 45.8 76.2 %
Research and development expenses increased by $77.6 million, or 64.3%, for the three months ended September 30, 2026, compared to the three months ended September 30, 2025, primarily due to increased investment in people and materials to advance technology development. The increase consisted of $28.7 million in personnel-related expenses driven by workforce expansion, $18.4 million in facilities, travel, and other operating costs, $15.8 million in engineering services and tools and materials to support our increased research and development activities, $7.8 million in warrant expense and $6.4 million in stock-based compensation expense.
Research and development expenses increased by $209.2 million, or 60.3%, for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, primarily due to increased investment in people and materials to advance technology development. The increase consisted of $79.2 million in personnel-related expenses driven by workforce expansion, $45.8 million in stock-based compensation expense, $45.7 million in engineering services and tools and materials to support our increased research and development activities, $32.2 million in facilities, travel, and other operating costs and $6.2 million in warrant expense.
General and Administrative
Three Months Ended September 30, Change Nine Months Ended
September 30, 		Change
2026 2025 $ % 2026 2025 $ %
(In millions except percentages)
General and administrative (2)
$ 91.0 $ 54.1 $ 36.9 68.2 % $ 268.1 $ 148.1 $ 120.0 81.0 %
(2) Stock-based compensation included in G&A
$ 53.9 $ 26.6 $ 27.3 102.6 % $ 136.6 $ 74.5 $ 62.1 83.4 %
General and administrative expenses increased by $36.9 million, or 68.2%, for the three months ended September 30, 2026, compared to the three months ended September 30, 2025. The increase was primarily due to an increase of $27.3 million in stock-based compensation expense, an increase of $8.9 million in professional services and IT infrastructure expenses, an increase of $4.4 million in personnel-related expenses, driven by an increase in our workforce, partially offset by a decrease of $3.7 million in facilities, travel, and other operating costs.
General and administrative expenses increased by $120.0 million, or 81.0%, for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025. The increase was primarily due to an increase of $62.1 million in stock-based compensation expense, an increase of $16.1 million in personnel-related expenses, driven by an increase in our workforce, an increase of $37.0 million in professional services and IT infrastructure expenses and an increase of $6.0 million for litigation settlement-related expense, partially offset by a decrease of $1.2 million in facilities, travel, and other operating costs.
Other Income (Expense), Net
Three Months Ended September 30, Change Nine Months Ended
September 30, 		Change
2026 2025 $ % 2026 2025 $ %
(In millions except percentages)
Other income (expense), net $ 2.0 $ 28.7 $ (26.7) (93.0) % $ 24.4 $ 30.7 $ (6.3) (20.5) %
Other income (expense), net decreased by $26.7 million, or 93.0%, for the three months ended September 30, 2026, compared to the three months ended September 30, 2025. The decrease was primarily due to non-cash changes in fair value of our warrant liabilities. Refer to Note 12 - Warrants in the accompanying notes to our condensed consolidated financial statements for further details.
Other income (expense), net decreased by $6.3 million, or 20.5%, for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025. The decrease was primarily due to $4.0 million of higher non-cash amortization of premium paid on purchase of short-term investments, $0.9 million of lower gain from non-cash changes in fair value of our warrant liabilities and $0.8 million increase in net loss from foreign currency denominated monetary assets and liabilities.
Interest Income, Net
Three Months Ended September 30, Change Nine Months Ended
September 30, 		Change
2026 2025 $ % 2026 2025 $ %
(In millions except percentages)
Interest income, net $ 12.6 $ 16.3 $ (3.7) (22.7) % $ 43.2 $ 35.2 $ 8.0 22.7 %
Interest income, net decreased by $3.7 million, or 22.7%, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The decrease was primarily due to lower interest income from lower average cash, cash equivalents and short-term investments.
Interest income, net increased by $8.0 million, or 22.7%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The increase was primarily due to higher interest income from higher average cash, cash equivalents and short-term investments.
Liquidity and Capital Resources
As of September 30, 2026, our principal sources of liquidity were cash, cash equivalents, and short-term investments of $1,353.6 million. We have incurred net losses since inception and have not generated any significant revenues to date. We expect to incur additional losses and higher operating expenses for the foreseeable future. We believe that our existing cash, cash equivalents, and short-term investments will be sufficient to fund our operations for at least the next 12 months, including meeting our working capital and capital expenditure requirements.
Debt
As of September 30, 2026, we had $93.1 million of principal outstanding under three debt arrangements, as summarized below. Refer to Note 8 - Debt for additional information, including collateral, covenants, and compliance.
Credit Agreement. $65.0 million, fully drawn, to fund construction of our Covington, Georgia facility. The loan bears interest at SOFR plus 2.0% (SOFR floor of 0.0%). Interest-only payments continue through October 2026, followed by 84 equal monthly principal installments of approximately $0.2 million from November 14, 2026 with remaining principal balance becoming due at maturity on October 5, 2033.
Hawthorne Airport Loan. $15.8 million outstanding on a loan assumed in the Hawthorne Airport acquisition. The loan bears a fixed interest rate of 6.3% and matures in April 2030, with an option to extend to April 2035.
Promissory Notes. $12.3 million aggregate principal on two asset-backed promissory notes entered into in September 2026. The notes bear fixed interest rates of 7.52% and 7.49%, require monthly principal and interest payments through October 2031, and require a balloon payment of approximately $8.3 million at maturity. The notes contain a minimum liquidity covenant.
Registered Direct Offerings
On February 12, 2025, we closed a registered direct offering in which pursuant to the securities purchase agreement dated February 11, 2025, by and between us and certain institutional investors, we issued and sold 35,500,000 shares of our Class A common stock for gross proceeds of $301.8 million.
On June 16, 2025, we closed a registered direct offering in which pursuant to the securities purchase agreement dated June 12, 2025, by and between us and certain institutional investors, we issued and sold 85,000,000 shares of our Class A common stock for gross proceeds of $850.0 million.
On November 10, 2025, we closed a registered direct offering in which pursuant to the securities purchase agreement dated November 6, 2025, by and between us and certain institutional investors, we issued and sold 81,250,000 shares of our Class A common stock for gross proceeds of $650.0 million.
Vendor Share Issuances
During the nine months ended September 30, 2026 and 2025, we issued 19,355,170 and 7,124,609 shares of Class A common stock, respectively, to certain vendors to satisfy $122.8 million and $68.1 million of current and future obligations.
In the long term, our ability to support our working capital and capital expenditure requirements will depend on many factors, including:
•the level of research and development expenses we incur as we continue to develop our aircraft, technologies and services to be provided in our planned business lines;
•capital expenditures needed to bring up our aircraft manufacturing capabilities, including for both the build out of our manufacturing facilities, component purchases necessary to build our aircraft and support the development of our airline operations, vertiport infrastructure, UAM networks, and development of Hawthorne Airport;
•general and administrative expenses as we scale our operations; and
•sales, marketing and distribution expenses as we build, brand and market our business lines, products and services.
Until such time as we can generate significant revenue from our business operations, we expect to finance our cash requirements primarily through existing cash and cash equivalents, pre-delivery payments, equity issuances, and debt financings.
The following includes our short-term and long-term material cash requirements from known contractual obligations as of September 30, 2026:
Leases
We lease office, lab, hangar, manufacturing and storage facilities in the normal course of business. Under our operating leases as noted in Note 9 - Commitments and Contingencies in the accompanying notes to our condensed consolidated financial statements, we have undiscounted future lease payments of $19.1 million due within the next 12 months and $189.7 million due thereafter.
In July 2026, we entered into an operating lease for a manufacturing and research and development facility in Morgan Hill, California. The lease commenced in July 2026, when we obtained access to the premises and has a non-cancellable term of 10.5 years, with a right to sublease subject to landlord consent. Aggregate undiscounted fixed base rent is approximately $96.5 million over the lease term, of which $2.3 million is payable within the next 12 months. At commencement, we recorded an operating lease ROU asset of $42.4 million and an operating lease liability of $44.1 million.
Cash Flows
The following table summarizes our cash flows for the periods indicated:
Nine Months Ended September 30,
2026 2025
(In millions)
Net cash provided by (used in):
Operating activities
$ (470.1) $ (303.6)
Investing activities
227.9 (1,102.6)
Financing activities
16.8 1,167.7
Cash Flows From Operating Activities
We continue to experience negative cash flows from operations as we are still working to design, develop, certify, and bring up manufacturing of our aircraft and thus have not generated any significant revenues. Our cash flows from operating activities primarily reflect our continued investments to support the growth of our research and development activities and related general and administrative functions. Our operating cash flows are also impacted by the working capital requirements to support growth and fluctuations in personnel-related expenditures, accounts payable, accrued interest and other current liabilities, and other current assets.
Net cash used in operating activities during the nine months ended September 30, 2026 was $470.1 million, resulting from a net loss of $755.5 million, reflecting our continued investment in our research and development activities. The net loss adjustment for non-cash items consists primarily of $242.5 million in stock-based compensation expense, a gain of $29.9 million due to a change in fair value of our warrant liabilities, and $29.7 million in depreciation and amortization. The net cash from changes in our net operating assets and liabilities was $21.2 million.
Net cash used in operating activities during the nine months ended September 30, 2025 was $303.6 million, resulting from a net loss of $429.3 million, adjusted for non-cash items consisting primarily of $134.6 million in stock-based compensation, a gain of $30.8 million due to a change in fair value of our warrant liabilities, and $14.0 million in depreciation and amortization. The net cash provided by changes in our net operating assets and liabilities was $2.4 million.
Cash Flows From Investing Activities
Net cash provided by investing activities during the nine months ended September 30, 2026 was $227.9 million, driven by proceeds from maturities of short-term investments of $368.0 million, partially offset by purchases of property and equipment of $101.4 million, business acquisition of $28.7 million, and $10.0 million investment in a private company.
Net cash used in investing activities during the nine months ended September 30, 2025 was $1,102.6 million, driven by purchases of short-term investments in marketable securities of $1,048.1 million and purchases of property and equipment of $49.2 million within the period.
Cash Flows From Financing Activities
Net cash provided by financing activities during the nine months ended September 30, 2026 was $16.8 million, driven by $11.8 million of proceeds from issuance of promissory notes, $5.2 million of net proceeds from purchases under our employee stock purchase plan and $0.1 million of proceeds from exercise of stock options, partially offset by $0.3 million of principal repayments on debt.
Net cash provided by financing activities during the nine months ended September 30, 2025 was $1,167.7 million, driven by gross proceeds from the registered direct offering of $1,151.8 million, gross proceeds from the First 2024 PIPE Financing of $10.0 million, and proceeds from shares issued under the ATM Program of $46.3 million, partially offset by payments of offering costs in connection with financing activities for $44.2 million.
Critical Accounting Policies and Estimates
Our condensed consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, and expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Actual results may differ from these estimates. To the extent that there are material differences between these estimates and our actual results, our future financial statements will be affected.
For a discussion of our critical accounting policies and estimates, see "Critical Accounting Policies and Estimates" included under Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report. There have been no material changes in our policies from those previously discussed in our Annual Report.
Recent Accounting Pronouncements
Refer to Note 1 - Description of Business and Basis of Presentation in the accompanying notes to our condensed consolidated financial statements for a discussion about accounting pronouncements recently adopted and recently issued and not yet adopted.
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