Unusual Machines (UMAC) Q2 FY26 earnings call: guidance and Q&A

Is the company still targeting 50% quarter-over-quarter growth, especially given the larger base?

Management clarified that while they don't give formal guidance, their internal targets are $12M-$14M for Q3 and $25M for Q4, acknowledging a temporary sequential dip in Q3 due to infrastructure build-out for future growth.

“Internally, because of all the efforts we're putting in, we're targeting $12 million to $14 million in the third quarter, and then that positions us to go after our internal target of $25 million for the fourth quarter.”

asked by Austin Bohlig · answered by Allan Evans

How many customers is the company working with in the counter UAS space?

Management stated they are working with more than one customer, and some FPV customers also buy parts for counter-drone applications. They expect better granularity on customer specifics as supply chains finalize.

“It is definitely more than one already. And some of the same customers that are FPV customers buy the same parts for counter drone.”

asked by Austin Bohlig · answered by Allan Evans

Given the supply-demand imbalance, how is the company thinking about pricing components?

Management stated they could increase pricing but prioritize being price competitive globally to support customers switching from overseas suppliers. Their goal is a 40% gross margin while maintaining long-term customer relationships.

“We're not looking to use this moment to create margin expansion at the expense of our customer. We think if we serve them really well, then we'll have a multiyear relationship with all of them and be able to provide them with the parts they need at a competitive price so they can compete in the marketplace.”

asked by Austin Bohlig · answered by Allan Evans

What is the working capital position, where might it need to be next year, and what are the current supply chain stress points?

Working capital is $367.5M, with $42.7M in inventory. They expect 1x working capital to forward-looking revenue, aspiring to $250M revenue in 2027. Supply chain stress points are 'everywhere,' including electronics vendors (OSE chip), Sony sensors (December delivery), and magnets (9-month lead times), exacerbated by regulatory changes.

“So the stress points are everywhere. If you look electronics vendors across the board, and this is especially true because you just saw yesterday, China make drone export restrictions harder.”

asked by Joshua Sullivan · answered by Allan Evans

How is the company achieving healthy and expanding margins while scaling rapidly, contrary to typical growth company trends?

Management attributes it to a market vacuum reducing demand generation costs, an efficient workforce, and a disciplined senior leadership focused on profitability. They are expanding physical space and transitioning executive compensation to options to reduce GAAP losses.

“I think that's a great question, and thank you for the observation. Everybody in the company cares about building a sustainable business. I think where you see a lot of companies reduce margin for growth, they have to create demand. And as we've always talked about, there's a market vacuum here.”

asked by Craig Irwin · answered by Allan Evans

How would the company use a significant government investment, given its proven capital efficiency?

Management stated they could parallelize their motor production unit, which can produce 100,000 motors/month, to stamp out 10 such units to support 1 million motors/month for the drone and counter-drone industry, leveraging their leadership in motor production.

“With hundreds of millions of dollars, we could take that production unit and parallelize it. We could rubber stamp it out and adjust it to match. So if there was a desire to do 1 million motors a month to support the drone and counter drone industry, we could take that base unit...”

asked by Craig Irwin · answered by Allan Evans