XTI Aerospace NASDAQ: XTIA said its first quarter of 2026 marked the first full reporting period that included the operating performance of Drone Nerds, the unmanned systems platform it acquired in November, as management emphasized cost reduction, margin improvement and a path toward positive cash flow later this year.
Chief Executive Officer Scott Pomeroy said the company has continued a “transformational journey” since the acquisition and is now a revenue-generating unmanned systems platform focused on operational execution. He said XTI has made “meaningful progress” in reducing costs, improving alignment and lowering cash burn.
“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,” Pomeroy said.
Management Reaffirms 2026 Outlook
XTI reiterated its expectation for full-year 2026 revenue of approximately $160 million or greater. The company also maintained projected gross margins of 19% to 21% and EBITDA margins of 9% to 10%.
In response to an investor question about second-half EBITDA generation, Pomeroy said investors should not view the second half as flat from quarter to quarter. He said the company expects revenue and EBITDA to grow as the year progresses and as cost initiatives take effect.
“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,” Pomeroy said. He also referenced prior guidance for $2 million to $3 million of positive cash flow in the second half of 2026.
The company ended the quarter with about $15.2 million in unrestricted cash and cash equivalents. In comments attributed during the call to Chief Financial Officer Brooke Turk, management said XTI established a $20 million asset-based lending facility with JPMorgan in the first quarter, had drawn about $4.8 million by quarter-end and had a little more than $8 million of borrowing base still available. The company said it expects to end the year with about $15 million to $17 million in cash.
Drone Nerds Expected to Drive Revenue Ramp
Drone Nerds CEO Jeremy Schneiderman said the first quarter has historically been one of the company’s slower periods, with revenue typically ramping into the fourth quarter. He cited procurement cycles, agricultural seasonality and varying public safety budget timelines as factors behind the cadence.
Schneiderman also cautioned that comparing the first quarter of 2026 with the first quarter of 2025 requires additional context. He said supply constraints in the fourth quarter of 2024 pushed some sales into the first quarter of 2025, making that period less representative of a normal seasonal pattern.
Asked about visibility into the coming nine to 12 months, Schneiderman said Drone Nerds is focused on execution against the company’s $160 million revenue target. He said the company has increased its enterprise direct sales channel, invested in marketing and is focusing on verticals such as public safety and agriculture, where it is seeing strong growth.
“Our pipeline is larger than it was year-over-year, which is a good indication of what sales are gonna be,” Schneiderman said.
Demand Supported by Enterprise and Government Markets
Pomeroy said the company continued to see broad-based demand across enterprise and government markets, including public safety, infrastructure, utilities, agriculture, education, surveying, mining and energy. He said the company is benefiting from growing demand for NDAA-compliant and domestically aligned drone solutions as customers place more emphasis on secure supply chains and regulatory compliance.
Schneiderman said Drone Nerds is already selling NDAA-compliant products and Blue UAS products, adding that he expects the market to become easier to serve as original equipment manufacturer partners scale up. Pomeroy said the margin profile for newer NDAA-compliant OEMs is better for XTI and that a favorable product mix could help margins over time.
Pomeroy also said services such as repair, maintenance and training could support margin expansion, though he noted that services currently represent a relatively low percentage of the overall mix. He said the company believes margins can improve beyond the 19% to 21% range it has guided for 2026 in future years.
Management Points to Fragmented Market
Schneiderman described the U.S. enterprise drone distribution and services market as a multi-billion-dollar opportunity. He said Drone Nerds, with more than $100 million in revenue, is the largest domestic player, while the rest of the market includes more than 100 regional resellers, many with less than $5 million in revenue and limited infrastructure to deliver broader solutions.
Pomeroy said that fragmentation creates opportunities both for organic share gains and selective consolidation. He said the company does not need to acquire a large number of businesses but may consider “a handful” of companies that make strategic sense.
Schneiderman said Drone Nerds is differentiated from a traditional drone reseller because it operates as a platform between manufacturers and enterprise customers. He cited inventory scale, a broad product portfolio, repair infrastructure and training capacity as key advantages.
“A reseller is really good at selling one or two boxes, but if you wanna stand up a large program, there’s a lot more to it than just buying the drone,” Schneiderman said.
XTI Narrows Focus on Drone Nerds Platform
During the closing remarks, Pomeroy said XTI’s focus is “squarely” on optimizing Drone Nerds. He said the company will limit spending on areas outside Drone Nerds while continuing to realign its cost structure after moving away from what he described as a longstanding design and development business.
Schneiderman also said Drone Nerds operates globally, citing a strategic partnership in Colombia, activity in the Latin American market and support for Poland and Israel with technology.
Pomeroy said XTI expects continued revenue growth, margin expansion and cash flow improvement, while emphasizing the need to keep the company’s operating base solid before pursuing broader opportunities.
About XTI Aerospace NASDAQ: XTIA
XTI Aerospace Inc NASDAQ: XTIA is an early‐stage aerospace company headquartered in Englewood, Colorado, focused on the design and development of vertical takeoff and landing (VTOL) aircraft for the business and specialty aviation markets. The company's core mission is to deliver a next‐generation hybrid wing–body aircraft capable of both VTOL and short-takeoff and landing (STOL) operations, addressing the growing demand for point-to-point air transportation without the need for traditional airport infrastructure.
The company's flagship product, the TriFan 600, is a six- to eight-seat business aircraft powered by a proprietary tri-fan propulsion system.
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