This article first appeared on GuruFocus .
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Revenue:$8.4 million, up 49.5% sequentially from Q1 but down 20% year-over-year.
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Revenue Mix:Services and training represented 57% of Q2 revenue, while product and equipment represented 43%.
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Gross Margin:29.3% in Q2, compared to 35% in Q1 and 32% in Q2 of last year.
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Six-Month Gross Margin:31.6% for the first half of 2026, essentially stable compared to 31.9% in the same period last year.
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Adjusted EBITDA Loss:$4.35 million in Q2, compared to approximately $0.3 million a year ago.
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Cash Position:$59.2 million in cash at the end of June.
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Working Capital:Approximately $64 million.
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Total Assets:Almost $119 million.
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Shareholders' Equity:Approximately $87 million.
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Deferred Defence Revenue:$2.6 million of contracted defence revenue not delivered in Q2 due to supply chain issues, expected to be completed in the second half of the year.
Release Date: August 14, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Revenue increased 49.5% sequentially to $8.4 million in Q2 2026.
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Strong balance sheet with $59.2 million in cash and $64 million in working capital.
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Mirabel facility is operational, with 53,000 square feet of manufacturing capacity and initial production of docking stations underway.
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Advanced to phase two for US SOCOM's modular kinetic lethal drone program, demonstrating allied market relevance.
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Defence Drone Initiative submission completed, with first qualified supplier list expected in early September, positioning the company for upcoming procurements.
Negative Points
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Revenue declined 20% year-over-year in Q2 2026, with $2.6 million of contracted defence revenue delayed to H2 due to supply chain issues.
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Adjusted EBITDA loss widened to $4.35 million in Q2 2026, up from $0.3 million a year ago, due to increased investment ahead of revenue.
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Gross margin fell to 29.3% in Q2 2026, down from 35% in Q1 and 32% in Q2 2025, impacted by delivery mix and fuel prices.
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The $56 million revenue guidance for 2026 is at risk as anticipated M&A activities have not occurred within the assumed timeframe.
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Supply chain challenges, particularly for batteries and motors, continue to pose risks to delivery schedules and production scalability.
Q & A Highlights
Q: Can you provide more color on the $2.6 million defence contract that shifted out of Q2 and your confidence around delivery in the second half? A: Glen Lynch (CEO): The delay was due to supply chain issues, specifically around batteries, which are underdeveloped in North America. We have overcome the problem, and our confidence level is extremely high that we will deliver on time. The delivery is expected in Q3 and could trail into Q4, but the confidence level is very high.
Q: The main presentation showed a revenue guidance of $56 million for 2026. How should we now be thinking about the rest of the year? Could you provide details about the main assumptions, contract wins, M&A, and what's already in the backlog? A: Abhinav Singhvi (CFO): The $56 million presented in May was a planning target that included assumptions around both organic growth and M&A contribution. Some anticipated M&A activities have not occurred within the timeframe assumed. On the organic side, we continue to expect a stronger second half compared to Q1, including the delivery of the $2.6 million deferred revenue. Glen Lynch (CEO) added that the company does not issue guidance due to uncontrollable timing factors, such as the delayed legislation for the Defence Investment Agency, which is now expected in late September or early October.
Q: Could you remind us what Mirabel's annual capacity potential is, and how you envision scaling up production growth in 2027 and beyond? A: Glen Lynch (CEO): The factory is designed for about $250 million worth of revenue, depending on the business mix. We have started production of our docking systems, with units shipped to Western Canada for wildfire deployment. The challenge is working with the Canadian military to acknowledge adaptable manufacturing as a national sovereignty capability, allowing us to scale from 10,000 drones a year to 10,000 drones a month at the push of a button. This requires government investment in capacity and supply chain components as a strategic reserve.
Q: We missed revenues in both Q1 and Q2. What is being done to diversify the supply chain specifically? If we can't fulfill a smaller order, how are we going to be trusted to do anything more? A: Glen Lynch (CEO): The critical supplies boil down to batteries and motors, which were dependent on Southeast Asia. We are actively engaging in supply chain development, including a partnership with Concordia University's Voltage program to address battery and energy requirements for Canada. We are also working with BDC to identify new companies developing this capability and are diversifying our connections with existing suppliers.
Q: Today's article on Canada's deep precision strike capabilities implies that within two years, Canada should be able to have sovereign manufacturing capabilities. What is Volatus' involvement in this opportunity? A: Glen Lynch (CEO): This is a very new opportunity, with a government briefing within the last two to three weeks. Volatus contributes guidance systems, including our V-Cortex AI, seeker tracker, and assured navigation module. We are actively working on partnerships with sovereign Canadian companies that specialize in propulsion and energetics. The initial capability is expected by June 2027, which will require strategic partnerships with non-Canadian entities, followed by a phase two focused on developing sovereign Canadian capability.
Q: Are you seeing signs of interest in cargo delivery? You mentioned the potential for commercial use of the Condor this year. Could that be cargo? A: Glen Lynch (CEO): Yes, the Condor can carry up to 180 kilograms and has applications for CASEVAC, frontline supply, and remote community delivery. We also have a partnership with Singular Aircraft for the FlyOx, which can be reconfigured for cargo delivery. Additionally, our Canary aircraft achieved the first pre-validated declaration for a complete remotely piloted aircraft system with onboard detect and avoid, enabling cargo deliveries in and out of Edmonton Airport.
Q: Could you please connect the dots for us as to the strategic relationship between the KH and Singular announcements and your overall strategy with respect to wildfire support, response to civil emergencies, as well as supply of equipment and materials using the Singular aircraft platform? A: Glen Lynch (CEO): The wildfire capability has been of interest since 2022, but the regulatory environment and technology maturity were not ready. Canada provides the perfect operating theater for these aircraft. The proposal is not to replace the current water bomber fleet but to provide better information, identify ignitions more quickly, and address fires while they are small. The FlyOx can deliver 1,500-litre loads of fire suppressant, and remotely piloted technologies can operate around the clock, unlike daytime-limited conventional assets. The proposal has been well received at both federal and provincial levels.
Q: What is the strategic importance of the Defence Drone Initiative (DDI) and how is Volatus positioned? A: Glen Lynch (CEO): The DDI is creating a pre-qualified marketplace of Canadian suppliers for uncrewed systems. We completed our request for supplier arrangement submission, and the first qualified supplier list is expected in early September. Subsequent procurements are expected to flow through this marketplace. This is part of a broader shift where Canada is moving from announcing a defence industrial strategy to implementing procurement mechanisms, with the Defence Investment Agency expected to become a standalone entity when Parliament returns in the fall.
Q: Can you provide more detail on the financial results, specifically the gross margin and adjusted EBITDA loss? A: Abhinav Singhvi (CFO): Gross margin was 29.3% in Q2, down from 35% in Q1, due to delivery mix and fuel prices. However, the six-month gross margin was 31.6%, essentially stable year-over-year. The adjusted EBITDA loss was $4.35 million, reflecting deliberate investments in personnel, engineering, defence talent, V-Cortex AI, and the Mirabel facility. These investments were made ahead of revenue to build capacity for larger defence programs. The balance sheet is the strongest in company history, with $59.2 million in cash and $64 million in working capital, providing the financial capacity to support production and pursue larger programs.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
