Merlin, Inc. Common Stock NASDAQ: MRLN used its first earnings call as a public company to outline its autonomous flight strategy, highlight the launch of its first named product, Condor, and report first-quarter 2026 financial results that reflected higher operating investment and significant non-cash financing-related charges.
Founder and Chief Executive Officer Matt George said Merlin is building what it calls the Merlin Pilot, a core autonomous flight software system intended to be adaptable across aircraft types, missions and customers. George described the system as “physical AI for the sky” and said the company’s strategy is to scale one software platform across multiple civil and defense aviation markets.
“For us, autonomous flight means one certifiable AI system adaptable to any airframe and any mission, which becomes more capable with each adaptation,” George said.
Merlin Highlights Certification Progress and Defense Work
George said Merlin has spent eight years developing certifiable autonomy and now has nearly 200 employees. The company is headquartered in Boston, with flight test facilities in Quonset, Rhode Island, and Kerikeri, New Zealand.
During the call, George emphasized several milestones, including Merlin’s role as prime contractor on a U.S. Special Operations Command indefinite-delivery/indefinite-quantity contract for the C-130J with a $105 million contract ceiling. He also said Merlin executed its first fully automated takeoffs on certification candidate aircraft this year, on April 11 and April 21, using two aircraft on two continents.
George said the company is working with multiple regulators in two countries on the same software stack. Merlin has cleared the first two major certification milestones, known as SOI 1 and SOI 2, with the New Zealand Civil Aviation Authority in a concurrent validation program with the U.S. Federal Aviation Administration. The company is currently working on SOI 3, which George described as the stage where Merlin must demonstrate that its software verification holds up under regulator scrutiny. SOI 4 is the final software compliance gate.
George said Merlin is aiming to be the first company to achieve civil certified, fully automated takeoff-to-touchdown flight on a fixed-wing aircraft. He described certification as a key part of the company’s competitive position.
Condor Launch Targets Large Multi-Crew Aircraft
Merlin announced Condor as its first product launch. George defined a Merlin product as the combination of the Merlin Pilot core, an airframe, a mission and a customer. Condor is designed to bring certified autonomy into large multi-crew aircraft while operating alongside human pilots already in the flight deck.
George said Condor applies to both civil and defense markets. In civil aviation, he pointed to demand in narrow-body and wide-body freighter markets and global pilot shortages as potential tailwinds for single-pilot and augmented operations. He cited International Air Transport Association data stating that air cargo moves roughly one-third of world trade by value, or more than $8 trillion of goods annually. He also cited a National Air Carrier Association forecast projecting a cumulative U.S. pilot shortfall of nearly 30,000 pilots, with a larger shortfall globally.
Merlin is collaborating with World Star Aviation, which George described as a leading freight lessor, and is developing relationships with commercial cargo conversion market participants. George said Merlin expects to collaborate with additional operators over time.
On the defense side, George said Condor could support future single-pilot and augmented operations. He said work on the C-130J, a large four-engine aircraft used in tactical missions and contested environments, should translate to additional defense aircraft and help support Merlin’s case for civil airframes.
First-Quarter Revenue Rises, Loss Reflects Non-Cash Items
Chief Financial Officer Ryan Carrithers said first-quarter revenue was approximately $1 million, up about 15% from the prior-year period. He said most revenue in the quarter was recognized under Merlin’s defense IDIQ structure as task orders were funded and work was performed.
Merlin reported a GAAP net loss of approximately $90 million. Carrithers said the figure was heavily influenced by non-cash items tied to completion of the company’s business combination, including an $88 million non-cash fair value adjustment on convertible promissory notes. That was partially offset by an approximately $27 million non-cash gain on warrant liabilities.
Adjusted EBITDA was a loss of $23.3 million, compared with a loss of $10.4 million in the prior-year quarter. Carrithers said the increase reflected “deliberate investment in engineering, certification, and program execution.” Research and development expense was $14 million in the quarter.
Capital expenditures were approximately $2 million, compared with about $100,000 in the year-earlier period. Carrithers said the spending primarily reflected flight test equipment and ground infrastructure across Merlin’s three operational sites.
Cash Position Strengthened After Financing
Merlin ended the first quarter with approximately $123 million in cash equivalents and short-term investments and no debt. After quarter-end, the company closed a private placement with an existing long-term institutional shareholder on May 1. Carrithers said Merlin’s cash position was approximately $183 million as of that date.
Carrithers said the business combination and additional capital raise strengthened Merlin’s balance sheet and provided flexibility to continue work on certification, engineering and integration capacity, and the commercial introduction of Condor. He said the company’s financial trajectory is tied to certification milestones, program awards and Condor’s rollout, noting that timing and revenue magnitude can shift based on procurement cycles and regulatory processes.
Analysts Ask About M&A, C-130J Milestones and Pricing
During the question-and-answer session, analysts asked about Merlin’s use of capital, potential acquisitions, defense programs and product pricing. George said M&A is an important part of Merlin’s strategy as it seeks to build what he called a “neo-prime” focused on autonomy, particularly in the air domain. He said the company would look for opportunities to apply its autonomy core to platforms, programs or existing contracts, though he said there was nothing to announce.
On the C-130J program, George said Merlin previously announced preliminary design review, or PDR, and that the next milestone to watch is completion of critical design review, or CDR. He said there was nothing to announce yet.
Asked about Condor pricing, George said Merlin expects a two-part model. He said the physical hardware installed on aircraft could be sold at relatively low margins to enable a higher-margin software deployment. George said software pricing should be structured around shared savings and shared value with customers, including potential operating cost savings or higher aircraft utilization.
George also said Merlin is investing in safety and airspace deconfliction capabilities, referencing prior work related to ACAS X with MIT and Lincoln Laboratory. He said Merlin plans to continue announcing features as Condor is rolled out to target customer aircraft.
In closing remarks, George said investors should watch Merlin’s progress in developing the Merlin Pilot platform, launching vertical products such as Condor, advancing certification and building commercial collaborations.
About Merlin, Inc. Common Stock NASDAQ: MRLN
Merlin Inc is focused on developing autonomous flight software for legacy and next-generation airborne systems. Its aircraft-agnostic, AI-based software supports takeoff-to-landing autonomous operations for military and civil aviation programs. The company aims to build an AI-based operating software platform intended to support autonomous flight operations across a range of aircraft types.
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