Q1 2025 Archer Aviation Inc Earnings Call
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Eric Montel: Thank you for joining <unk> earnings call. This is Eric Montel <unk> General counsel.
Eric Montel: During today's call, we will be making forward looking statements.
Eric Montel: These statements are based on assumptions as of today and we undertake no obligation to update them as a result of new information or future events.
Eric Montel: There are risks and uncertainties that may cause our actual results to differ materially from those contemplated.
Eric Montel: For more information about these risks and uncertainties. Please refer to the risk factors in our SEC filings.
Eric Montel: Today, we will also be discussing both GAAP and non-GAAP financial measures.
Eric Montel: A reconciliation of those financial measures is included in today's shareholder letter and earnings release.
Adam: And now I will turn it over to Adam.
Eric Montel: Adam.
Adam: Thanks, Eric Alright, let's dive in.
Adam: <unk> pushing the boundaries of what's possible and reshaping the future of aviation for years to come.
Adam: Today, we're going to talk about how we're making that future happen as.
Adam: As I've talked about before 2025 at an inflection point departure on.
Adam: On the commercial front after years of engineering work and flight tests. The team is focused on transitioning the piloted operations and early commercial deployments. We remain on track to launch later this year in the UAE and are preparing for subsequent deployments with midnight launch edition customers and several other international markets.
Adam: The Archer defense team is deeply integrated with their counterparts at anvil through our exclusive partnership to build the next generation hybrid electric VTOL for the U S and its allies. All of this is complemented by the work we're doing to build an AI based aviation software platform of the future can partnership with talent here.
Our progress speaks for itself, but it's made even clearer by the caliber of the companies who have chosen to partner with us.
Adam: <unk> selected Archer to jointly shape. The next generation of defense Aviation Pelletier chose Archer to pioneer AI, driven aviation technologies and soon we'll be announcing but I think it will be one of the industry's most important partnerships stay tuned.
Adam: Today I'll share more about this quarter's progress and what you can expect to see over the remainder of 2025.
Adam: At the risk of sounding like a broken record our number one goal remains to bring midnight safely to market as quickly as possible. This is the impetus behind our launch additional programs.
Adam: We are doing something that has not been done in decades, bringing a new type of aircraft to market.
Adam: The launch program creates a scalable commercialization framework for safely deploying aircrafts in early adopter markets.
Adam: The goal is for us to demonstrate the aircrafts capabilities drive public acceptance build operational excellence and generate early revenue we remain on track to deliver our first piloted aircraft as part of that program to Abu Dhabi Aviation in the UAE later this year.
Adam: We have already started the flight test program for that aircraft here in California, and we expect piloted flights to begin in the coming days.
Adam: I think it is important to revisit how we got here we.
Adam: We started with maker a sub 5000 pound aircraft with a 40 foot wingspan.
Adam: It's clear to us the size of that aircraft platform would not support the payload necessary for the business case. So we chose not to take that aircraft through to certification and mass production instead.
Adam: Instead, we designed and built midnight around the same configuration, but scaled up to 6500 pounds with a 50 foot wingspan.
Adam: We believe the industry will consolidate around that size of aircraft in order to support a pilot plus four passenger payload.
Adam: The second key decision, we made was the shift away from pouch cells, which we used in maker to cylindrical cells used in midnight battery pack. We made this decision for multiple reasons, but primarily because of the concerns about the safety and reliability of the pouch cells that were available when we were building maker and because the readily available sources, where Chinese <unk>.
Adam: Players those concerns obviously would have presented a number of problems from a safety certification defense and tariff perspective.
Adam: That's what led to our decision to partner with moly sell on an aviation specific variant of their cylindrical cells that offers both high power and energy density, while also being exceptionally safe reliable and scalable.
Adam: This has been key to putting us in a position to certify our battery pack and scale. Our powertrain manufacturing. This cylindrical cells is being used by others across the industry, including beta.
Adam: The advantage, we the FAA Molly sell in beta get from this joint effort is the sharing of test and reliability data across programs.
Adam: We're deliberate about both of these choices as aviation has long design and development cycles and the need to redesign for these types of reasons can result in years of delay.
Adam: Focusing on a commercially viable product has been core to the mission of Archer.
Adam: The aircraft testing, we've been doing leading up to our planned early deployment in the UAE is critical for ensuring safety and it's just one of the facets of the larger team effort, we have underway in the UAE to support our launch plans.
Adam: In addition to the aircraft our team is working with local government and industry partners across the other five key building blocks for lunch.
Adam: Building block number one government support.
Adam: The government of Abu Dhabi has been incredibly helpful in launching in the UAE in particular, the Abu Dhabi investment office and two of the country's largest sovereign wealth funds, which are invested in Archer building.
Adam: Building block number two regulatory pathway. This support from audio and those investors has helped us forge a great partnership with the nation's regulator. The G C. A a to carve out a regulatory framework the certified midnight.
Adam: Our teams are collaborating through joint working sessions in both the UAE and California, and the GC EE EE is closely tracking all of the progress we are making with midnight as they work with us on the pathway to begin flying passengers in country.
Adam: Building block number three operating partner.
Adam: Earlier this year, we announced that Abu Dhabi aviation the region's largest helicopter operator was signing on to be our first launch addition customer over.
Adam: Over the last quarter, our teams have been working together hand in hand to map out our initial network operations within the country.
Adam: We are close to having alignment on the first dozen nodes and we'll be sharing more on this thing.
Speaker Change: Building block number for pilot training.
Speaker Change: Archer and <unk> are working together with Etihad, one of the world's leading operators of aviation training to recruit and train pilots and prepare local MRO facilities. In fact, we just delivered the first midnight flight simulator 30 Hot.
Speaker Change: The plan is for it to reside at their headquarters in Abu Dhabi as we are jointly training pilots for our aircraft in the region.
Speaker Change: Building block number five infrastructure.
Speaker Change: Finally, we're collaborating with numerous partners to ready a handful of Abu Dhabi 70, plus existing Helipads for E. VTOL operations. This is an example of how we can rapidly standup takeoff and landing infrastructure without significant spend or regulatory work stay tuned for a lot more excitement to come as we continue to gain momentum in the UAE.
Speaker Change: Other potential early adopter markets are taking stock of what they are seeing from us in the UAE and we're seeing demand in a number of other countries for a launch edition program. For example earlier this quarter, we announced our second launch additional customer Ethiopian Airlines one of United's key partners in the Star Alliance with the plan being to establish uhm.
Speaker Change: First foothold in East Africa is rapidly growing aviation market expect to see more of these strategic partnerships from us.
Speaker Change: In parallel to our tremendous progress overseas, we continue to see strong momentum here in the U S. Just last month in New York City, We jointly hosted an event with United bringing together key regulatory municipal and industry leaders to unveil our shared vision for our initial New York City network.
Speaker Change: Thank you to the Port Authority of New York, and New Jersey, as well as the New York Economic Development Council for their continued support and partnership.
Speaker Change: As a longtime new Yorker, I am deeply passionate about the impact our midnight aircrafts could have on the commute for those who live in and visit Manhattan.
Speaker Change: We designed our network to take advantage of the existing aviation infrastructure in the New York area, including all three major international airports, Manhattan's III urban Hello ports, including the newly dubbed downtown Skyboard and important regional hubs, such as Peterborough and Westchester.
Speaker Change: To support our launch plans. So we continue to ramp up manufacturing across our facilities in Silicon Valley and Georgia, both of which are now fully operational I look forward to sharing more milestones as we continue to scale those capabilities.
Speaker Change: This quarter I spent a significant time in Washington D C with senior lawmakers, including Secretary of Transportation, Shawn Duffy enacting FAA administrator Christopher shallow.
Speaker Change: Just in the last few weeks, we've had important conversations with key members of the house and Senate leadership, including Senator Ted Cruz, who leads the congressional subcommittee on aviation safety operations and innovation as well as important the whitehouse leaders, including Michael <unk> Director of the office of Science technology and policy.
Speaker Change: With all the recent announcements from this administration. It is clear that they are committed to rapidly upgrading Americas commercial and defense aviation technologies to ensure we retain our global leadership.
Speaker Change: I'm proud that Archer is in a position to play a leading role in that effort.
Speaker Change: This comes in the form of ramping up our aircraft manufacturing here in the U S safely launching commercial air taxi operations in major cities across the U S. Designing and building. The next generation of defense aircraft here in the U S and utilizing AI to build the future systems that will power our country's airspace.
Speaker Change: I'm also grateful that secretary of defense, Pete <unk> and his team are supportive of modernizing our fleet through efforts such as our Archer Defense initiative, we continue to deepen our exclusive partnership with Andrew as we work in earnest to mature the design for our first joint product a hybrid electric autonomous VTOL that is targeting a program of record as of.
Speaker Change: Indicated before because of the nature of this work I cannot share more at this time, but we will as soon as I'm able what I can share is that this technology is compelling dual use potential is already attracting significant interest from leaders across both civil and defense sectors. Additionally.
Speaker Change: Additionally, we recently executed on two strategic acquisitions that we believe will help accelerate Archer defense first we acquired a key IP portfolio from an industry player.
Speaker Change: We acquired a specialized high performance composite manufacturing facility tailored for defense applications significantly strengthening our capabilities.
Speaker Change: This quarter. We also took a decisive step forward on our software plants partnering with talented to jointly architect the AI Foundation for what we believe can be the next generation of aviation systems across manufacturing operations moving control and route planning.
Speaker Change: This collaboration has the opportunity to be a key contributor to our country's ambitious vision modernizing our aviation ecosystem in record time. So that we can ensure that we continue to safely manage the ever growing volumes of air traffic, we are seeing and laid the foundation for the scale, we plan to achieve with urban air mobility.
Tom: We ended Q1, maintaining over $1 billion of liquidity the highest cash balance in the industry as I said last quarter, we still remain in the early innings of a generational opportunity. Our team is relentless in its commitment to build I can't wait to continue to showcase it for all of you over to Tom.
Tom: I'll kick off with the most exciting news we're entering the next phase of our midnight aircraft program operating with a pilot we have already begun the knights piloted testing as we complete the ground test campaign and are on track to start piloted flights with our latest midnight aircrafts over the next week.
Tom: This milestone is the culmination of years of effort that has gone into verifying that the hardware and software in our midnight aircrafts are safe to fly with people onboard.
Tom: I'll walk you through what has gone into getting us here highlighting that most of this testing needs to be done once and advanced with pilot and flight rather than being repeated for each airplane, we build from here on out.
Tom: To prepare midnight for piloted flight the team first executed an extensive lab in ground test campaign, covering all core aircraft functionalities.
Tom: Including high voltage battery and propulsion systems.
Tom: Over the last couple of months. This has included weeks of incremental restrained ground tests methodically ramping engine power refining propeller balance and achieving maximum thrust while the aircrafts remained safely tethered.
Tom: We then moved into ground handling costs again, taking an incremental approach validating braking handling and incrementally increasing speeds towards slight readiness, putting us firmly on track to begin piloted flights imminently.
Tom: Our test aircraft are extensively instrumented with a custom built specialized flight test instrumentation system composed of a myriad of sensors and software to capture critical data for testing and certification.
Tom: For example, we've equipped midnight with hundreds of strain gauges measuring structural integrity accelerometers, capturing vibration data and an extensive array of temperature sensors, all supplementing the data gathered by the core systems on the aircraft that will be utilized in normal commercial operations.
Tom: In total midnight now measures over 40000 data parameters.
Tom: The ability to capture and process. This data is critical to our company testing and certification flight testing.
Tom: It's crucial to recognize that our transition to the piloted phase of our flight testing program builds upon extensive unmanned and transitioned testing with midnight validating the safety of the aircrafts in all stages of flight prior to putting a pilot onboard.
Tom: Over the past several years, we've completed hundreds of midnight flights rigorously evaluating everything from crosswind ever performance and complex transition trajectories to severe failure scenarios.
Tom: Notably last year, we successfully demonstrated midnight ability to complete a flight during a propulsion system shutdown in one of the engines showcasing the redundancy, we get from our proprietary 12 until six configuration.
Tom: We shared a photo of that in our shareholder letter today and will soon be sharing footage of that test flight later, this week, where youll be able to see how the aircraft responded to this failure mode flawlessly, performing a smooth transition and landing exactly as designed.
Tom: The safe and successful testing of midnight is what gives us confidence in our path ahead on early deployments and FAA certification, particularly for our upcoming plans with our launch edition program in the UAE and other countries.
Speaker Change: As Adam mentioned, we plan to send one of the aircrafts from our California facilities to the UAE later this summer for a region specific testing and deployment later in the year.
Speaker Change: On the certification front, we've made continued progress alongside the FAA to finalize the remaining compliance areas that I've highlighted in previous quarters.
Speaker Change: I am pleased to report the FAA has now aligned to industry standards addressing total propulsion loss that's covered in our rule 2100 <unk>.
Speaker Change: <unk> clarified standards were as we expected, meaning they do not result in any necessary modifications to midnight design.
Speaker Change: So it's not an archer specific rule, but rather an industry rule that everyone was waiting for closure on as.
Speaker Change: As we transition into piloted flight and prepare for formal TIAA testing.
Speaker Change: A marked acceleration of compliance validation with both the FAA and GCI a regulatory bodies.
Speaker Change: Scaling up our ability to build aircrafts also continues to advance rapidly.
Speaker Change: We have multiple aircraft being assembled across both our Georgia, and California facilities scheduled to begin piloted flight testing later this year.
Speaker Change: During our aircraft builds we have leveraged many of the manufacturing systems, we've put together to enable the scaling of our manufacturing and are taking the time to learn and improve these so that we have a stable foundation to support our production ramp in the future.
Speaker Change: Lastly on the new hybrid aircraft program with Andrew Our engineering teams are integrated and working well together.
Speaker Change: We've recently passed key milestones that give me confidence run a great path to build an amazing product.
Speaker Change: As my ninth VTOL aircrafts under development.
Speaker Change: This new platform Leverages core powertrain and software innovations, we've perfected at Archer.
Speaker Change: We remain bullish on this initiatives potential and believe it can be a substantial component of our <unk> business portfolio moving forward.
Speaker Change: And now I'll turn it over to Korea to talk about the financials for the quarter.
Speaker Change: Thanks, Tom.
Speaker Change: So as Adam discussed earlier, our focus this year remains on investing in the rapid development and commercialization of our business, while staying disciplined cash management as we work to get to significant revenue generating operations as soon as possible.
Speaker Change: As you know during the first quarter of 2025, we closed on an additional approximately $300 million of equity capital.
Speaker Change: That round of financing enabled us to exit Q1, 2025, with our highest ever quarter end balance of $1.03 billion in cash and cash equivalents, putting us in the strongest cash position in our industry.
Speaker Change: This cash position excludes the additional funding of up to $400 million. That's to not just have preliminary agreed to fund to support the scaling of midnight aircraft production.
Speaker Change: With regards to our spending for the quarter, we maintained strategic investments across three critical focus areas.
Speaker Change: First advancing the development certification and testing of our midnight aircraft.
Speaker Change: Second scaling our aircraft this capabilities and.
Speaker Change: Good.
Speaker Change: <unk> in country presence and operational infrastructure.
E to support our launch activities. There later this year and into next.
Speaker Change: These investments support our commercialization roadmap.
Speaker Change: Q1, 2025 financial results were in line with our guidance.
Speaker Change: We reported an adjusted EBITDA loss of $109 million falling within our guided range of $95 million to $110 million.
Speaker Change: This represents a $14 2 million increase from the previous quarter.
Speaker Change: Collecting planned investment in personnel and material spend for aircraft build and components to support those critical focus areas.
Speaker Change: Our GAAP operating expenses for Q1 'twenty five.
Speaker Change: $144 million.
Speaker Change: Which increased $20 million over the previous quarter due to the increased head count and material spend mentioned earlier.
Speaker Change: This included approximately $30 million of noncash stock based compensation.
Speaker Change: With regards to cash burn or cash used in operations and investing activities for Q1 'twenty five.
Speaker Change: $104 $6 million.
Speaker Change: This included approximately $5 million of remaining spend from the work to complete the build out of our arc facility.
Speaker Change: Clothing, which our quarterly cash burn stayed consistent at around <unk> hundred million per quarter estimate as previously discussed.
Speaker Change: Despite these core investment we increased our quarter end cash position by $196 million compared to year end, 'twenty 'twenty, four and more than doubled our cash balance year over year.
Speaker Change: Notably this marks our third consecutive quarter of simultaneously growing our cash reserves, while advancing our strategic business objectives.
Speaker Change: Looking ahead, our 2025 priorities, we're going to be focused on the following key initiatives.
Speaker Change: One thing midnight aircraft certification testing and manufacturing capabilities.
Speaker Change: Rapidly progressing our defense aircraft and software platform development and.
Speaker Change: And successfully rolling out our midnight launch edition program in the UAE and beyond.
Speaker Change: We approach these objectives the confidence backed by exceptional internal talent strong strategic partnerships and a secured capital Foundation.
Speaker Change: For the upcoming quarter Q2 of 2025, we estimate an adjusted EBITDA loss between $100 million to $120 million.
Speaker Change: To support the focus areas I talked about earlier.
Speaker Change: As highlighted in previous earnings discussion.
Speaker Change: Strong financial position is enabling us to accelerate strategic investments in these areas, helping us create what we believe is a defensible moat between us and our competition we.
Speaker Change: We are making marked progress on several of these high value projects such as the acquisition of the composites related asset and the IP portfolio acquisition that Adam mentioned earlier.
Speaker Change: Given the strength of our cash position, we anticipate both train.
Speaker Change: 2025 capital expenditures by approximately $15 million to $20 million beyond Q1, 'twenty five levels to help strengthen our market leadership position.
Speaker Change: Our strategic approach to U S based sourcing and manufacturing has significantly shielded us from the current tariff uncertainties affecting global trade.
Speaker Change: Mr. First approach to our supply chain helps us minimize the potential for disruption. We continue activity monitoring policy development to ensure we can respond appropriately to changes, while maintaining business stability and cost efficiency in this developing macroeconomic environment with.
Speaker Change: That I will turn it back over to Adam for Q&A Adam.
Adam: Thanks Maria.
Adam: Add a bunch of retail questions that were submitted but most were answered in the prepared remarks. So after the analyst questions any of those questions remain I'll address them at that point. So for now let's open up the call for Q&A operator.
Thank you if you'd like to queue for a question you can do so by pressing star one on your telephone keypad if for any reason you'd like to remove your question at Star two.
Adam: But again to join the question queue. Please press star one it has been asked that you hold yourself to one question with a follow up question.
Speaker Change: Our first question is from Andreas Shepherd with Cantor Fitzgerald. Your line is now open.
Andreas Shepherd: Hey, everyone.
Speaker Change: We're taking our questions and congrats on all the progress.
Speaker Change: Adam one of the leading pretzel.
Speaker Change: Launching in the UAE by year end.
Speaker Change: Curious if you could only hope for your vision.
Speaker Change: What that might look like so by now we know some of the hybrid Hellebores, we know some of the routes.
Speaker Change: But just curious if you could maybe enlighten us as to how you see that launch developing and how we should think about as we get closer and closer.
Speaker Change: Thanks, Andreas the UAE is really all about early commercial launch it's a chance for the World series aircraft, It's a chance for the world to see how these aircraft will handle and different conditions.
Speaker Change: And it's a chance for us all really to learn so you can expect this to be a low level of operations with the handful of aircrafts going back and forth from established point to point operations.
Speaker Change: And really.
Speaker Change: Wafer Archer to start deploying aircraft in a very safe, but also very efficient manner.
Speaker Change: Let Tom give a brief introduction on how we plan to get there and give a little more color on that.
Tom: Yes sure.
Speaker Change: First thing keep in mind, our dresses the certification, where there is really well laid out between occupancy GTA and we've been executing on that over the last couple of quarters, which has been great.
Tom: Much of that work overlaps with what we're already doing with FAA and so.
Tom: It's really just giving us another source to deliver the data because we've been gathering for certification.
Tom: Keep in mind is we're partnered with Abu Dhabi Aviation UAE and so they are ultimately going to be the.
Tom: Group operating these aircraft out there with us delivering vehicles selling vehicles to them the scholarship program.
Tom: So to give you a sense for what you can expect to see over the next several months.
Tom: First we're going to deliver in aircrafts to the UAE later this summer.
Tom: I will start by doing some incremental testing out there, mostly doing things like validating performance and a higher temperature environment and we'll move on to a proving routes on our networks and Abu Dhabi on broader UAE and then ultimately working towards sharing passengers again with Abu Dhabi aviation.
Speaker Change: Wonderful Thanks, Adam Thanks, Tom maybe just as a quick follow up regarding the launch edition.
Speaker Change: I would obviously aviation will be the first customer as previously disclosed you've mentioned now that if he opened airlines will be.
Speaker Change: Maybe it's the second customer just curious if you can maybe share with us how you see that.
Speaker Change: Customer and that commercialization developing and maybe some timing around that thank you.
Andreas Shepherd: Thanks Andreas.
Andreas Shepherd: There are actually a lot of countries and partners that have been interested in the <unk> program and so we are focused on balancing.
Andreas Shepherd: The deliveries to launched customers alongside our own testing here in California.
Andreas Shepherd: So we'll have more to report on that coming in the next few months and quarters and so I will say goodbye.
Speaker Change: We have a question from Edison you with Deutsche Bank. Your line is now open.
Andreas Shepherd: Okay.
Andreas Shepherd: Alright, Thank you for taking our questions I had a follow up just on launch.
Andreas Shepherd: Any sense on how to think about the gross of that in terms of.
Andreas Shepherd: Revenue over the next few years is that something that could be.
Andreas Shepherd: Tens of millions of dollars per.
Speaker Change: Per quarter.
Andreas Shepherd: Allison This is Adam.
Andreas Shepherd: The launch of additional aircraft, it's really all about early adopter markets and then of course, we have the.
Speaker Change: The FAA big Western markets as well and so it's a way for us to be able to deploy aircraft pretty much on a basis.
Speaker Change: Being able to manufacture them. So it will turn into a manufacturing question here and so yes, you can think about it in terms of the ability to generate a significant amount of revenue, but also really trying to get aircraft out into the wild.
Speaker Change: And putting a bunch of our capability in learning from that and a very safe.
Speaker Change: So there are lots of countries around the world lots of markets around the world that are interested in us and it's a good way for us to get.
Speaker Change: The aircraft out there.
Speaker Change: Yeah.
Speaker Change: Understood.
Speaker Change: And then just on the on the AI based efforts I think you alluded to upgrading the infrastructure in the U S. What could a potential go to market of that look like would you be working with the airlines that you partner with or is it more working directly with the FAA.
Speaker Change: So aren't sure of course has a lot of partners in the airline industry and we've been working with them to really understand the different capabilities that they have as we look to build out our own internal capabilities. So for example move in control of our own human control out that we've been building.
Speaker Change: As we've gone deeper into these discussions with our with our partners. It was very apparent that there is a great opportunity to involved in a much.
Speaker Change: A much larger scale.
Speaker Change: Operation So taking a lot of the software that we've built internally and finding different ways to actually monetize it with some of our partners who are just the general broader aviation industry. So we announced a partnership with talented which kind of covers a couple of core areas.
Speaker Change: The first one is in scaling manufacturing we.
Speaker Change: We are building a factory of the future that can scale to thousands and hopefully tens of thousands of aircraft or more but this will require a new way of manufacturing aircraft that heavily relies on software.
Speaker Change: Second is building the aviation infrastructure of the future, which is what you are mentioning and so we have several products in development that could have substantial impact to our business and to the broader aviation industry and as we did all core and those products mature we will be happy to share those.
Josh Sullivan: Our next question is from Josh Sullivan with the Benchmark Company. Your line is now open.
Josh Sullivan: Hey, good evening.
Josh Sullivan: I know <unk> commented on the Andrew.
Josh Sullivan: I know you commented on the Andrill partnerships sensitive at this point in time, but I'm curious as we look at some of the initial skinny defense budgets or other items out there any any supporting programs. We can see externally at this point.
Josh Sullivan: As I've mentioned, Josh I appreciate the question.
Josh Sullivan: Limited just in the nature that we are able to say, but what I can say is the hybrid VTOL program.
Josh Sullivan: <unk> has achieved several internal milestones that have.
Josh Sullivan: Really given us a lot of confidence internally that this will become a major part of our business and it really fits in to the messaging a lot of what this administration talk stock building.
Josh Sullivan: Aircrafts of the future and so I think that this is going to be an exciting part of our business, but more to come on that.
Speaker Change: Got it and then maybe as a related follow ups.
Josh Sullivan: Deepen your relationships in the middle East and with other international entities.
Speaker Change: Conversations are you having.
Speaker Change: Greetings to the defense aspects.
Speaker Change: That partnership you're generally.
Speaker Change: Yeah.
Speaker Change: We've actually had a lot of inquiries from a bunch of our partners in a bunch of the countries that we've been talking to.
But as a reminder, the way the relationship with Andrew structured Archer is.
Speaker Change: Manufacturing of the aircraft and then effectively we will sell the aircraft to Andrew who is representing the customer. So all the customer based conversations run through Andrew and I think enroll as.
Speaker Change: Well equipped to handle those types of conversations so it's probably a question that's better more directed towards them and so I appreciate it but how much market share.
Speaker Change: Got it well thank you for the time.
Speaker Change: Our next question is from Bill Peterson with Jpmorgan. Your line is now open.
Speaker Change: Yes.
Speaker Change: Thanks for taking the questions and the last quarter, you talked to at the time with us.
Speaker Change: Sites will be coming soon.
Speaker Change: If there was an expectation might've been happening within the quarter and now you are saying.
Speaker Change: I'm curious, maybe what kind of caused any sort of one or two months delay if any in.
Speaker Change: Maybe you could just elaborate on what's what's required all between powder was titled Chuck's ahead of the milestone.
Speaker Change: And thanks for elaborating the flight testing program from here.
Speaker Change: Yeah, absolutely so.
Speaker Change: Actually the first powered flight to take place within days.
Speaker Change: And we have the aircraft on the airports being piloted testing for weeks at this point and we've got a lot of confidence that.
Speaker Change: It will be in there soon.
Speaker Change: Taking a step back all of this kind of thing. We're doing now is really based off of the hundreds of flights over the last year and a half or so that we've done on the unmanned aircraft and now we're just putting a power onboard and continuing the testing.
Speaker Change: But to get at your question one of the main differences between this aircraft and the previous one is how heavily we have instruments that when its flight test instrumentation hardware and software and so I mentioned earlier on the call are measuring its over 40000 parameters aircrafts and so just to be straight up.
Speaker Change: It was a lot trickier than we thought to get that system working and that caused a modest delay.
Speaker Change: But the good news is we're through this now and we've got a lot of confidence that we'll be in there very shortly.
Speaker Change: Okay, great. Thanks for that and maybe a bit of a minute longer term question is also about the hybrid.
Speaker Change: Program, especially being positioned for passenger I guess, you mentioned earlier.
Speaker Change: Casualty these cases in civil I guess on one hand, the visionary maybe with a more complex powertrains.
Speaker Change: In the longer short time, but on the other hand with all the heavy lifting that you and other things we're doing are batteries and perhaps it won't be as onerous I guess just trying to consider if you and maybe you can sort of a hybrid variant.
Speaker Change: Or even maybe a short takeoff and landing within the passenger segment in the not too distant future given I think.
Speaker Change: Some of the focus on fully electric.
Speaker Change: More.
Speaker Change: Support and a different administration, well hybrid certainly could open up the envelope inquiries for longer range.
Bill Peterson: You're very observant Bill and yes that is.
Bill Peterson: Yeah, I'll just call. It a good observation, we are considering lots of different potentials for the powertrain of that aircraft, including both civil and defense applications.
Speaker Change: Our next question is from Savi <unk> with Raymond James Your line is now open.
Speaker Change: Hey, good afternoon.
Speaker Change: If I might ask I think on the last call ad.
Speaker Change: You had mentioned Tom that there was some issue papers that they if they have to close out does the one that you talked about standardizing the propulsion loss does that address all of them are they still some pending and does that affect your.
Speaker Change: Youre planning on building additional certification aircrafts.
Speaker Change: Yes. He is avi thanks for the question.
Speaker Change: Yes, So we did as I mentioned earlier in the call resolve total loss of propulsion issue paper with.
Speaker Change: And so that unlocks.
Speaker Change: Vast majority of the remaining kind.
Speaker Change: A small percentage of compliance items that have been open and so with that now behind us we can really just.
Speaker Change: Just get back and execute and then so that positions us really well.
Speaker Change: But definitely for the upcoming months and.
Speaker Change: I think youll see a marked increase in performance over the rest of the year.
Speaker Change: So.
Speaker Change: You can add on that the production that hasn't been something that's holding you back on production that part that's not tied to two are.
Speaker Change: Waiting on that production is going to go ahead.
Speaker Change: With that.
Christine: Thank you Christine.
Speaker Change: Yes, I think I understand the nature of the question you can always build that risk.
Speaker Change: I think the good news the issue paper that Tom was referring to was it did not result in any changes that we have to make and I think we have accurately don't that but it does give us more confidence to accelerate some of our plants and so it's just a balance of what you want adult again. This was not something unique to Archer. This was an industry wide issue paper and.
Speaker Change: We're fortunate that it came out the way that we thought it would but it is the unlock that we needed to.
Speaker Change: Keep things moving.
Speaker Change: Okay. Thank you.
Speaker Change: Yeah.
Speaker Change: We have a question from Austin Moeller with Canaccord. Your line is now open.
Speaker Change: Hi, Good afternoon, Adam and Korea, just my first question here. So in the Skinny budget, there was $1 $2 billion added to FAA spending for personnel.
<unk> and infrastructure upgrades I'll make this benefit you either from a share perspective or support your plans with with voluntary on air traffic management.
Speaker Change: Yes Austin.
Austin Moeller: I think it's early.
Speaker Change: Judge that at this point.
Speaker Change: I think we've had good traction with the FAA to date through what its been so anything additional that gets out of it I think is Oh, we will we'll be happy to receive that.
Speaker Change: But I think it's early to give any comments on any of that yet.
Speaker Change: Okay and can you comment on the production scaling and is that still on track for two aircraft per month by end of year.
Speaker Change: So a lot of this has to do with us balancing our ability to do testing internally with delivering aircraft and so we have a lot of aircrafts.
Speaker Change: Or are in production right now as well as additional aircraft parks that are on order and we're just really trying to balance out the ability to deploy for stability.
Speaker Change: To manufacture there's also a lot of lessons being learned in terms of manufacturing and really trying to refine the manufacturing process that will enable us to scale.
Speaker Change: <unk>.
Speaker Change: The goal really is to make sure that we can do it efficiently and then also do it in a very economical not economical way. So we are ramping up those capabilities, but again, that's just all balanced against up deployment.
Speaker Change: Great. Thanks ill pass it back there.
Speaker Change: We have a question from David Zulu with Barclays. Your line is now open.
David Zulu: Hey, good afternoon, Thanks for taking my question.
Speaker Change: Just to piggyback a little bit on surface question earlier, you mentioned the loss of propulsion Finalization unlock some testing can you just give us a preview on what sort of things that unlocks.
Speaker Change: What sort of progress you might be able to make based on that.
Speaker Change: Yeah sure David So.
Speaker Change: As we showed in the shareholder letter.
Speaker Change: We have a picture from a tax actually from the end of last year, where we are.
Speaker Change: Sure.
Speaker Change: Testing the aircraft with lots of propulsion.
Speaker Change: Systems, one of the engines.
Speaker Change: And Youll see in video will release later this week.
Speaker Change: Aircrafts.
Speaker Change: It really well to that task and so that's just one example, honestly it was the one hundreds of tasks we've done over there.
Speaker Change: Over the last couple of years not vehicle and so now we're getting back into this.
Speaker Change: Next phase of testing with pilots onboard repeating a lot of the same number.
Speaker Change: Spansion working towards TIAA, So it's kind of just business as usual execution mode.
Speaker Change: Very helpful. I think a couple of times you've used the word <unk> progress towards certification.
Speaker Change: To expand a little bit or give investors some way that they can kind of bought it or the.
Speaker Change: But the progress towards that.
The progress towards this.
Speaker Change: Market improvement both on the FAA at UCSF.
Speaker Change: Sure well.
Speaker Change: Yes in general our job is to build a safe aircrafts, we can take to market and it's up to the FAA for when the vehicle will be certified and all that but we're making great progress. So we showed in our shareholder letter is now accepted at about 15% of the final bnb documents that support that certificate.
Speaker Change: Asian, and with the opening up of that 'twenty 105 G.
Speaker Change: Tissue paper now a lot of the remaining other areas are available to build confirming hardware and start executing all the tests for credit.
Speaker Change: Working towards TIAA and so.
Speaker Change: I think it's really just the culmination of all these things coming together along with the fact that <unk> highlighted before we've taken this.
Speaker Change: I think really good strategy of leveraging <unk>.
Speaker Change: Arts that certification heritage from vendors that have sort of experience and putting them in.
Speaker Change: Vehicle, that's certifiable in Manufacturable and.
Speaker Change: It's heavy enough to carry a pilot for passengers.
Speaker Change: And so now we're just executing on that path.
Speaker Change: Other part of your question that you mentioned is yes. It is true now we also have UAE work going on and so the team is very much balancing our focus across.
Speaker Change: Go to market launch with GCI as well as with the FAA.
Speaker Change: The good news there is that it's almost the same work just sort of different customers for the data.
Hopefully that gives you some color.
Speaker Change: That is correct.
Speaker Change: Would we expect a potential quantification on the GSA side similar to what we're getting from the FAA I thought at some point.
Speaker Change: Hey, David This is Adam.
Speaker Change: I don't have a good answer for that today.
Speaker Change: I think theres, just some sensitivities there and how that.
Speaker Change: And how that's all being collected but we'll follow up and get back to you on that.
Speaker Change: Awesome, Thanks, Adam have a great one.
Speaker Change: We have a question from Chris Pierce with Needham Your line is now open.
Chris Pierce: Hey, good afternoon.
Speaker Change: I know you can't comment on what you're building with Andrew but can you talk about.
Speaker Change: How should we feel about your confidence and ability to build it as you sort of.
Speaker Change: Figure out flesh out what's actually going to happen is it supplemental to the <unk>.
Speaker Change: Production guidance you gave in the <unk> last year or is it really to the acquisitions you made on that you kind of flagged or like what's the right way to think about production to the extent you can talk about that.
Speaker Change: Yeah.
Chris Pierce: Hey, Chris.
Speaker Change: So what we are looking to build is a vehicle that can have both.
Speaker Change: Dual use civil and defense application that reuse is as much as possible from the existing programs. We have today with a hybrid powertrain and so that gives us the ability to.
Speaker Change: Be able to build a lot of vehicles, because we already have a hotline that's running on this on the civil side. That's what we're using a lot of that so hopefully that gives you a perspective.
Speaker Change: It's not something totally out of left field that while we're building that is something that makes.
Makes sense based on like what stop Archer's building in makes sense versus you know what the what the midnight aircraft is and yes. It is expected that we will be able to build these aircrafts out of the Georgia facility and.
Speaker Change: And we can flex between on the civil side and the defense side.
Speaker Change: And give upside to ability to.
Speaker Change: To deliver more aircrafts.
Speaker Change: We're able to build and there are programs that are in place.
Speaker Change: Okay and then just thank you for that on the so the longer flight times Greater mileage is this something where I'm just trying to picture something being a helicopter for our fleet is that something that.
Speaker Change: I guess would you push back that that's what it would feel like.
Speaker Change: I wanted to get a better sense of how they can sort of go into regional air travel candidate or is it more modifications need to be made.
Speaker Change: And so if you're asking about use cases hybrid.
Speaker Change: <unk> could potentially have.
Speaker Change: There are longer helicopter missions that are used today. So for example in servicing.
Speaker Change: The oil rigs is a good one that are typically further than typical EV Tal range there.
Speaker Change: There are other examples that are more cargo based that could have longer ranges that are use case. There is also some civil cases, I do think the civil side will likely be limited by not range of the aircraft, but willingness of a consumer to sit in the vehicle for a certain period of time, meaning I don't think somebody's going to want to sit for five hours, but.
Speaker Change: They may be one to two hours. So I think there are limitations there that we will learn as we take products and get them out I do think there are good go to market use cases on the civil side.
Speaker Change: That will certainly explore and it will just open up the ability to.
Speaker Change: Deliberate aircrafts.
Speaker Change: Okay. Thank you.
Speaker Change: Okay.
Speaker Change: Our next question is from Amit Dayal with H C. Wainwright. Your line is now open.
Amit Dayal: Thank you. Good afternoon, everyone. My question is around just the aircraft cost.
Speaker Change: Wanted to see if you can share any color on how via cross build costs are tracking against expectations you might have about 12 months ago.
Amit Dayal: Especially in the context of all of these various etc.
Amit Dayal: Are you close to you know what you may have been anticipating or you know.
Amit Dayal: Are you Mark maybe tracking as close we just wanted to see if you can share any color on that thank you.
Amit Dayal: Sure. So it's obviously early in the sense that we're building is very low volumes, so I wouldn't expect to see.
Amit Dayal: Some significant.
Amit Dayal: Cost performance when you're building, let's call it in the.
Amit Dayal: Single or low double digits with aircrafts I think it's when you start to get to a larger scale that you see those benefits. What we've said historically is that we think around the 250 level of aircraft builders, where we can get to our target gross margins and so that's something that we still believe is true from a tariff perspective, most of our systems are built.
Amit Dayal: Or manufactured here in the U S. So I think there is a limited exposure from that.
Amit Dayal: So we don't see that having a material impact at this point.
Amit Dayal: Thank you that's all of them I appreciate it.
Adam Goldstein: I'll now turn the call back over to Adam Goldstein for any closing remarks.
Adam Goldstein: Alright. Thank you everybody for joining the call today I am Super proud of what the team has been able to accomplish but this is just the beginning of 2025 as an inflection point for the company enter the industry I'm excited to share more in the weeks and months ahead, let's keep building.
Adam Goldstein: That concludes today's call. Thank you all for your participation you may now disconnect your line.