Merlin, Inc. Common Stock (NASDAQ:MRLN) reported higher third-quarter revenue and a narrower adjusted EBITDA loss as the aviation autonomy company advanced a military aircraft integration contract and outlined plans to reduce spending in 2027.
Revenue for the quarter ended September 30, 2026, rose to approximately $3.5 million from $2.2 million in the second quarter, an increase of 58%. Adjusted EBITDA loss narrowed to $24.1 million from $27.8 million, while cash equivalents and short-term investments fell to $161.6 million from $183.9 million.
Founder and CEO Matt George said Merlin is finalizing an operating plan intended to extend its cash runway into fiscal 2029 without relying on additional capital raises. CFO Ryan Carrithers said the company expects 2027 operating expenses to be meaningfully below 2026 levels, but did not provide a specific target.
Military Contracts Advance
Merlin announced an $8.9 million task order under its existing indefinite-delivery, indefinite-quantity contract with U.S. Special Operations Command, or USSOCOM. The third task order moves the company’s C-130J autonomy program from adaptation into integration, George said.
The work includes system integration, ground-test preparation, cybersecurity approval and airworthiness acceptance to support future flight demonstrations. George said the program could eventually inform Merlin’s work on large civil aircraft.
President Mark Brunner said Merlin has completed six of approximately eight acquisition gates required to get the Merlin Pilot flying on the aircraft. The integration contract is expected to run for about six months, with the company expecting to negotiate the next phase around April. Brunner also said Merlin expects to recognize the $8.9 million over roughly six months.
Following integration work, the program would move toward ground and flight tests and installation of the Merlin Pilot on a C-130 aircraft, Brunner said. George said Merlin is testing software on its own simulators in Boston and working with subcontractor Lockheed Martin at its C-130J facility in Marietta, Georgia.
Separately, U.S. Africa Command selected Merlin for the initial phase of its Autonomous Casualty Evacuation Challenge. The revenue-producing contract is worth roughly $500,000 and calls for a demonstration using a Grand Caravan in austere conditions, according to Brunner. He said Merlin believes there is a follow-on path to operational scale using a King Air variant.
George also highlighted the SkyCourier UX concept aircraft introduced with Textron, which explores combining Merlin’s software with the SkyCourier platform.
Financial Results and Spending Plans
Carrithers said the substantial majority of third-quarter revenue came from Merlin’s defense contract structure as task orders were funded and work was performed. Revenue had been $1 million in the first quarter.
The company reported GAAP net income of approximately $73.8 million, compared with a $58.4 million net loss in the second quarter. Carrithers cautioned that the swing was driven almost entirely by a noncash fair-value gain on warrant and other financial instrument liabilities as the company’s stock price moved, rather than an improvement in operating performance.
Merlin’s cumulative adjusted EBITDA loss for the first three quarters was approximately $75.3 million. The company had no debt at quarter-end, Carrithers said.
For 2027, Merlin plans to concentrate investment on customers and programs with funded work and a clear path to revenue. Carrithers said the company expects to share more of its spending framework with investors when it reports fourth-quarter results.
Funding and Outlook
Asked about the potential impact of a federal continuing resolution, Brunner said appropriations can affect government contractors, but the money for Merlin’s next USSOCOM task order was already budgeted. He said the AFRICOM contract was also fully funded.
Carrithers did not provide updated revenue guidance for the fourth quarter. He said investors could use the third-quarter result to calibrate expectations. He also confirmed that Merlin reversed part of a previously booked contract loss provision after completing its prior task order.
George said the company’s current programs leave it focused on execution rather than acquisitions for now, though it may consider other opportunities as it delivers on those contracts.
About Merlin, Inc. Common Stock (NASDAQ:MRLN)
Merlin, Inc. develops autonomous flight technology for aircraft. Its Merlin Pilot system is designed to automate flight tasks and integrate with existing aircraft, with the goal of supporting operations in sectors such as commercial aviation and defense. Founded in 2018, the company works on adapting its technology for different aircraft and operational requirements. Merlin is focused on developing and certifying systems for use in real-world aviation environments.
