Airship AI Reports Second Quarter 2025 Financial Results

Rhea-AI Summary

Airship AI Holdings (NASDAQ: AISP), a provider of AI-driven surveillance solutions, reported Q2 2025 financial results with net revenues of $2.1 million and a gross margin of 71%. The company posted an operating loss of $2.0 million and other expenses of $21.7 million, primarily due to earnout and warrant liabilities.

The company maintains a robust pipeline of approximately $128 million in opportunities across various customer verticals. Significant tailwinds include the passage of the Big Beautiful Bill, which allocated over $70 billion in funding for U.S. Customs and Border Protection, including $6.2 billion specifically for AI and border security technology.

Airship AI projects 30% revenue growth for 2025, supported by improving margins and recurring revenue. The company is expanding into commercial sectors, particularly focusing on combating organized retail crime through AI-driven security solutions.

Positive

• Strong gross margin of 71% in Q2 2025
• Substantial pipeline of $128 million in opportunities
• Secured access to $70 billion government funding through Big Beautiful Bill
• Projected 30% revenue growth for 2025
• Successfully expanding into new commercial verticals
• Healthy cash position of $6.3 million as of June 30, 2025

Negative

• Operating loss of $2.0 million in Q2 2025
• Significant other expenses of $21.7 million due to warrant liabilities
• Net cash burn of $3.9 million from operating activities
• Potential dilution risk from $25 million ATM offering agreement

Insights

Financial Analyst

Airship AI shows promising margins but faces cash burn challenges amid strong government contract pipeline and border security tailwinds.

Airship AI's Q2 2025 results present a mixed financial picture. The company generated $2.1 million in revenue with an impressive 71% gross margin, demonstrating strong unit economics for its AI surveillance solutions. However, the $2.0 million operating loss and $3.9 million cash burn this quarter are concerning when measured against the $6.3 million remaining cash balance, indicating roughly 1.5 quarters of runway at current burn rates.

The $21.7 million non-cash expense from earnout and warrant liabilities, while not affecting cash flow, significantly impacts reported profitability. This accounting adjustment, triggered by share price increases, actually signals positive market sentiment despite appearing negative on the income statement.

Looking at growth indicators, the $128 million pipeline presents substantial potential relative to current revenue levels. The recent passage of the Big Beautiful Bill with $70+ billion in border security funding creates a significant addressable market opportunity, particularly the $6.2 billion explicitly earmarked for AI and machine learning technologies.

The company's strategic pivot to a partner-driven sales model and expansion beyond government into commercial sectors (retail, healthcare, logistics) demonstrates efforts to diversify revenue streams. However, the financial projection of 30% revenue growth and positive cash flow for 2025 appears ambitious considering the current quarterly burn rate and would require significant revenue acceleration in H2.

The establishment of an ATM offering agreement for up to $25 million suggests management anticipates needing additional capital despite projections of reaching cash flow positivity. This dilution risk must be weighed against the substantial government contract opportunities ahead of the September 30 fiscal year-end, traditionally a strong procurement period.

Government Contracting Specialist

Airship AI is strategically positioned to capitalize on $70+ billion in border security funding with specialized AI surveillance solutions.

The timing of Airship AI's business development activities aligns perfectly with the federal procurement cycle. The company has intensified customer engagement precisely as federal agencies approach their September 30 fiscal year-end—the critical "use it or lose it" period when unspent budget allocations must be committed.

The passage of two significant pieces of legislation creates exceptional market conditions for Airship's surveillance solutions. The Full-Year Continuing Appropriations Act ended budget uncertainty that had frozen procurement activities, while the Big Beautiful Bill (P.L. 119-21) provides $70+ billion in supplemental border security funding over four years. Specifically, the $6.2 billion allocation for AI and machine learning technologies for combating illicit substances aligns precisely with Airship's capabilities.

The company's $128 million pipeline consists of opportunities at various stages, with expected awards spread across an 18-24 month timeframe. This is typical for government contracting cycles, where sales development to contract award often spans multiple quarters or years.

Airship's limited disclosure about specific contracts is standard practice in the government security sector. Many contracts involve sensitive deployments or classified applications that prohibit public announcement. The company's mention of "closed or restricted contract vehicles" indicates they have gained access to specialized government procurement mechanisms that limit competition to pre-approved vendors.

The expansion of sales staff with individuals possessing "deep industry expertise, partner relationships, and customer knowledge" suggests they're hiring former government officials or experienced government sales professionals with established networks—a common and effective strategy in this sector. The increased participation in trade shows also demonstrates the company is pursuing a classic government contractor business development approach focused on relationship building.

Second Quarter 2025 Net Revenues of $2.1 Million, Gross Profit of $1.5 Million and Gross Margin of 71%

Significant Customer Engagement Activities Throughout the Quarter Provide Strong Tailwinds Heading into Government Fiscal Year End

New Pro-U.S. Border Security Administration Provides Additional Macro Tailwinds for 2025 & Beyond

REDMOND, Wash., Aug. 05, 2025 (GLOBE NEWSWIRE) -- Airship AI Holdings, Inc. (NASDAQ: AISP) (“Airship AI” or the “Company”), a leader in AI-driven video, sensor, and data management surveillance solutions, today reported its financial and operational results for the second quarter ended June 30, 2025.

Q2 2025 Financial Highlights

• Net revenues for the quarter ended June 30, 2025, were $2.1 million.
  
  
• Gross profits for the quarter ended June 30, 2025, were $1.5 million.
  
  
• Gross margin percentage was 71% for the quarter ended June 30, 2025.
  
  
• Operating loss was $2.0 million for the quarter ended June 30, 2025 reflected in non-cash expenses of $0.5 million. The Company increased sales and marketing, research and development and technical support expenses which is expected to increase future sales.
  
  
• Other expense was $21.7 million for the quarter ended June 30, 2025, primarily due to a loss from the change in the fair value of earnout and warrant liabilities. The Company’s share price increased during the quarter ended June 30, 2025.
  
  
• Net cash used in operating activities was $3.9 million in the quarter ended June 30, 2025.
  
  
• Cash and cash equivalents was $6.3 million as of June 30, 2025.
  

Q2 2025 & Subsequent Operational Highlights

• Our total validated pipeline at the end of the quarter was approximately $128 million, consisting of single and multi-year opportunities for AI-driven edge, video, and sensor and data management platform across all our customer verticals. Our pipeline includes opportunities at varying stages of progression with expected award timeframes throughout the next 18-24 months.
  
  
• Due to the sensitive nature of many of our customers and deployment use cases, we are often restricted from publicly disclosing awards and or limited as to the specifics of the customer and use case. Consequently, most of our awards are executed on closed or restricted contract vehicles, which further limits the sharing of information that might otherwise be available.
  
  
• We significantly grew our internal sales and sales engineering force, adding seasoned sales professionals with deep industry expertise, partner relationships, and customer knowledge that we expect will allow us to ramp up quickly.
  
  
• We participated in multiple customer facing tradeshows during the quarter including brand new industry wide and vertically focused shows where we had a significantly increased level of participation and visibility as compared to historical participation.
  
  
• As part of our transition to a partner driven sales model, we participated in several partner shows and events, including those sponsored by integrators and dealers, and those by manufacturers of hardware sensors and solutions that we integrate with and manage for our customers.
  
  
• On April 23, 2025, the Company entered into an At the Market Offering Agreement with Roth Capital Partners, LLC, as sales agent, pursuant to which we may, from time to time, offer and sell shares of our common stock up to a maximum of $25 million. The shares that may be issued pursuant to this offering is a part of a registration statement that the Company filed with the U.S. Securities and Exchange Commission (the “SEC”), using a “shelf” registration process. Under this shelf registration process, the Company may offer to sell any of the securities, or any combination of the securities, described in such prospectus, in each case, in one or more offerings, up to $50 million.
  
  
• Featured in Fox News Article.
  

2025 Outlook

• 30% revenue growth and positive cash flow expected for calendar year 2025 supported by a strong and validated pipeline of ~$128 million, improving gross profit margins, and a strong recurring revenue model.
  
  
• Make tactical and strategic investments across our sales and business development organizations through organic cash flow from business operations and the potential cash exercise of public warrants.
  
  
• Release new Outpost AI product offerings as well as expand custom-trained AI models supporting emerging edge analytic workflows.
  
  
• Continue innovation across our core Acropolis software platform supporting new workflows for cloud-based deployments in highly secure operational environments.
  
  
• Develop and execute expansionary opportunities in the commercial and retail markets, particularly around those companies involved in combating organized retail crime (“ORC”).
  
  
• Improve sourcing, supply chain management and production-based process efficiencies to help drive continued margin expansion.
  
  
• Focus on brand awareness and engagement in new verticals through targeted marketing outreach opportunities, social media platforms, Airship AI hosted technology events, and industry tradeshow events.
  

Management Commentary

“The second quarter of 2025 was incredibly busy with the Full-Year Continuing Appropriations and Extensions Act of 2025 being passed, as well as the passage of the Big Beautiful Bill (P.L. 119-21) (“BBB”), which provided substantial additional funding to federal agencies across the Department of Homeland Security and Department of Justice,” said Paul Allen, President of Airship AI. “With the full year continuing resolution approval and BBB passage, supported agencies were finally able to begin procurement activities in support of several critical efforts that Airship AI has been working on during the last twelve to eighteen months.

“Included in the BBB was more than $70 billion over the next four years in supplemental funding for U.S. Customers and Border Protection (“CBP”), which includes $6.2 billion for border security technology, specifically calling out artificial intelligence, machine learning, and “other innovative technologies” to combat the trafficking of illicit substances. Also included was $46.55 billion for physical barriers along the southern and northern borders, which includes cameras, lights, sensors and more, as well $5 billion for the construction and improvement of CBP facilities, which includes new, enhanced, or upgraded video surveillance capabilities.

“Based on the increased procurement activities we saw as we exited the second quarter, and the follow-on activities we have seen through the third quarter thus far, we are anticipating a very busy close to the September 30 of fiscal year end for our U.S. Government partnered federal agencies.

"In the commercial segment, our strategic push into new market verticals, driven by partnerships with integrators and business collaborators, has continued to result in pipeline expansion beyond our traditional customer segments. Early wins around our AI driven differentiated physical security solution have led to further expansionary opportunities across retail, logistics, healthcare, and oil and gas customer verticals.”

"With our AI digital transformation strategy fully underway, the efficiencies created are allowing us to roll out new models at the edge at an increasingly faster rate, while in parallel build out more advanced back-end AI tools to create efficiencies for our customers who are already overwhelmed with the sheer volume of video and associated data being collected. Most notably, our natural language generative AI based approach to interfacing with our software stack is creating significant interest as we change the way customers think about their data and how they best extract real-time information from it.

“With these significant tailwinds in place, we expect to leave the third quarter with a significant backlog of awarded business. Due to our digital transformation efforts already underway, we believe we have the tools and processes in place that allow us to promptly execute to-be awarded business. Additionally, we have started to pre-order and position critical components that will be needed, as well as lock in deal registration through strategic partnership plans with our OEM vendors and sub-contractors. We believe these preparatory actions will allow us to best execute in a timely manner against urgent customer requirements as we head into the fourth quarter,” concluded Mr. Allen.

About Airship AI Holdings, Inc.

Founded in 2006, Airship AI (NASDAQ: AISP) is a U.S. owned and operated technology company headquartered in Redmond, Washington. Airship AI is an AI-driven video, sensor and data management surveillance platform that improves public safety and operational efficiency for public sector and commercial customers by providing predictive analysis of events before they occur and meaningful intelligence to decision makers. Airship AI’s product suite includes Outpost AI edge hardware and software offerings, Acropolis enterprise management software stack, and Command family of visualization tools.

For more information, visit https://airship.ai.

Forward-Looking Statements

The disclosure herein includes certain statements that are not historical facts but are forward-looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “plan,” “project,” “forecast,” “predict,” “potential,” “seem,” “seek,” “future,” “outlook,” and similar expressions that predict or indicate future events or trends or that are not statements of historical matters, but the absence of these words does not mean that a statement is not forward looking. These forward-looking statements include, but are not limited to, (1) statements regarding estimates and forecasts of financial, performance and operational metrics and projections of market opportunity; (2) changes in the market for Airship AI’s services and technology, expansion plans and opportunities; (3) the projected technological developments of Airship AI; and (4) current and future potential commercial and customer relationships. These statements are based on various assumptions, whether or not identified in this press release, and on the current expectations of Airship AI’s management and are not predictions of actual performance. These forward-looking statements are also subject to a number of risks and uncertainties, as set forth in the section entitled “Risk Factors” in its Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 28, 2025, and the other documents that the Company has filed, or will file, with the SEC. If any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. In addition, forward looking statements reflect the Company’s expectations, plans or forecasts of future events and views as of the date of this press release. The Company anticipates that subsequent events and developments will cause its assessments to change. However, while it may elect to update these forward-looking statements at some point in the future, the Company specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing the Company’s assessments as of any date subsequent to the date of this press release. Accordingly, undue reliance should not be placed upon the forward-looking statements.

Investor Contact:

Chris Tyson/Larry Holub
MZ North America
949-491-8235
AISP@mzgroup.us

AIRSHIP AI HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS As of June 30, 2025 and December 31, 2024
		June 30, 2025				December 31, 2024 (1)
ASSETS		Unaudited
CURRENT ASSETS:
Cash and cash equivalents		$	6,306,274			$	11,414,830
Accounts receivable, net of allowance for credit losses of $0			2,557,427				1,226,757
Prepaid expenses and other			50,090				17,883
Total current assets			8,913,791				12,659,470
OTHER ASSETS
Other assets			160,528				165,960
Operating lease right of use asset			1,006,359				882,024
TOTAL ASSETS		$	10,080,678			$	13,707,454
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable - trade		$	393,341			$	759,480
Advances from founders			-				1,300,000
Accrued expenses			48,731				51,649
Current portion of operating lease liability			416,583				305,178
Deferred revenue- current portion			4,629,075				3,238,483
Total current liabilities			5,487,730				5,654,790
NON-CURRENT LIABILITIES:
Operating lease liability, net of current portion			650,748				638,525
Warrant liability			33,153,619				34,180,618
Earnout liability			15,500,664				23,304,808
Deferred revenue- non-current			2,167,307				2,951,850
Total liabilities			56,960,068				66,730,591
COMMITMENTS AND CONTINGENCIES (Note 9)
STOCKHOLDERS' DEFICIT:
Preferred stock - no par value, 5,000,000 shares authorized, 0 shares issued and outstanding as of June 30, 2025 and December 31, 2024			-				-
Common stock - $0.0001 par value, 200,000,000 shares authorized, 31,909,096 and 30,588,413 shares issued and outstanding as of June 30, 2025 and December 31, 2024			3,188				3,056
Additional paid in capital			28,118,957				21,918,867
Accumulated deficit			(74,990,656	)			(74,941,590	)
Accumulated other comprehensive loss			(10,879	)			(3,470	)
Total stockholders' deficit			(46,879,390	)			(53,023,137	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT		$	10,080,678			$	13,707,454

AIRSHIP AI HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) For the three and six months ended June 30, 2025 and 2024  (Unaudited)
		Three Months Ended								Six Months Ended
		June 30, 2025				June 30, 2024				June 30, 2025				June 30, 2024
		Unaudited				Unaudited				Unaudited				Unaudited
NET REVENUES:
Product		$	728,978			$	5,358,808			$	4,770,694			$	14,757,584
Post contract support			1,375,372				1,042,223				2,828,947				2,218,462
Other services			42,540				-				50,277				-
			2,146,890				6,401,031				7,649,918				16,976,046
COST OF NET REVENUES:
Cost of Sales			273,721				1,306,386				3,217,328				9,095,795
Post contract support			332,769				588,438				624,270				745,917
Other services			7,883				-				40,799				-
			614,373				1,894,824				3,882,397				9,841,712
GROSS PROFIT			1,532,517				4,506,207				3,767,521				7,134,334
RESEARCH AND DEVELOPMENT EXPENSES			740,571				702,771				1,459,953				1,398,137
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES			2,813,827				2,827,120				6,043,806				6,162,414
TOTAL OPERATING EXPENSES			3,554,398				3,529,891				7,503,759				7,560,551
OPERATING (LOSS) INCOME			(2,021,881	)			976,316				(3,736,238	)			(426,217	)
OTHER INCOME (EXPENSE) :
(Loss) gain from change in fair value of earnout liability			(7,301,585	)			14,876,927				2,522,020				(6,607,923	)
(Loss) gain from change in fair value of warrant liability			(14,494,184	)			1,542,347				1,026,999				(5,304,744	)
Gain (loss) from change in fair value of convertible debt			-				1,527,193				-				(512,184	)
Loss on note conversion			-				-				-				(158,794	)
Interest income (expense), net			60,599				(421,500	)			138,153				(453,324	)
Other expense			-				(39,288	)			-				(39,288	)
Total other (expense) income, net			(21,735,170	)			17,485,679				3,687,172				(13,076,257	)
(LOSS) INCOME BEFORE PROVISON FOR INCOME TAXES			(23,757,051	)			18,461,995				(49,066	)			(13,502,474	)
Provision for income taxes			-				-				-				-
NET (LOSS) INCOME			(23,757,051	)			18,461,995				(49,066	)			(13,502,474	)
OTHER COMPREHENSIVE (LOSS) INCOME
Foreign currency translation (loss) income, net			-				3,239				(7,409	)			8,984
TOTAL COMPREHENSIVE (LOSS) INCOME		$	(23,757,051	)		$	18,465,234			$	(56,475	)		$	(13,493,490	)
NET (LOSS) INCOME PER SHARE:
Basic		$	(0.75	)		$	0.80			$	(0.00	)		$	(0.59	)
Diluted		$	(0.75	)		$	0.61			$	(0.00	)		$	(0.59	)
Weighted average shares of common stock outstanding
Basic			31,873,639				23,220,709				31,789,346				23,059,598
Diluted			31,873,639				30,272,228				31,789,346				23,059,598

AIRSHIP AI HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  For the six months ended June 30, 2025 and 2024 (Unaudited)
		Six Months Ended
		June 30, 2025				June 30, 2024
		Unaudited				Unaudited
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(49,066	)		$	(13,502,474	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization			-				1,861
Stock-based compensation			800,425				530,625
Amortization of operating lease right of  use asset			180,004				151,091
Issuance of common stock for services			-				198,500
Noncash interest expense			-				521,582
(Gain) loss from change in fair value of warrant liability			(1,026,999	)			5,304,744
(Gain) loss from change in fair value of earnout liability			(2,522,020	)			6,607,923
Loss from change in fair value of convertible note			-				512,184
Loss on note conversion			-				158,794
Changes in operating assets and liabilities:
Accounts receivable			(1,330,670	)			(1,791,217	)
Prepaid expenses and other			(32,207	)			11,394
Other assets			5,432				1,901
Operating lease liability			(180,711	)			(124,583	)
Payroll and income tax receivable			-				(2,410	)
Accounts payable - trade and accrued expenses			(369,056	)			(1,426,970	)
Deferred revenue			606,049				(1,299,813	)
NET CASH USED IN OPERATING ACTIVITIES			(3,918,819	)			(4,146,868	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from warrant exercise, net			59,850				293,249
(Repayment of) proceeds from advances from founders			(1,300,000	)			800,000
Proceeds from stock option exercises			57,822				146,972
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES			(1,182,328	)			1,240,221
NET DECREASE IN CASH AND CASH EQUIVALENTS			(5,101,147	)			(2,906,647	)
Effect from exchange rate on cash			(7,409	)			8,984
CASH AND CASH EQUIVALENTS, beginning of period			11,414,830				3,124,413
CASH AND CASH EQUIVALENTS, end of period		$	6,306,274			$	226,750
Supplemental disclosures of cash flow information:
Interest paid		$	-			$	-
Taxes paid		$	-			$	2,410
Noncash investing and financing
Issuance of common stock for debt conversion		$	-			$	835,610
Issuance of common stock for debt interest payment		$	-			$	487,642
Issuance of common stock for earnout shares		$	5,282,125			$	-
Recognition of operating right-of-use asset		$	304,339			$	-
Recognition of operating lease liability		$	304,339			$	-

FAQ

What were Airship AI's (AISP) key financial results for Q2 2025?

Airship AI reported net revenues of $2.1 million, gross profit of $1.5 million, and a gross margin of 71%. The company had an operating loss of $2.0 million and other expenses of $21.7 million.

How much funding was allocated for border security in the Big Beautiful Bill that affects Airship AI?

The Big Beautiful Bill allocated over $70 billion over four years for U.S. Customs and Border Protection, including $6.2 billion specifically for border security technology such as AI and machine learning.

What is Airship AI's (AISP) current business pipeline value?

Airship AI reported a validated pipeline of approximately $128 million, consisting of single and multi-year opportunities across all customer verticals with expected award timeframes throughout the next 18-24 months.

What is Airship AI's revenue growth projection for 2025?

Airship AI projects 30% revenue growth for calendar year 2025, supported by their strong pipeline, improving gross profit margins, and recurring revenue model.

How much cash does Airship AI (AISP) have available?

As of June 30, 2025, Airship AI had cash and cash equivalents of $6.3 million. The company also entered into an ATM offering agreement for up to $25 million in additional funding.

What new markets is Airship AI expanding into?

Airship AI is expanding into commercial and retail markets, particularly focusing on companies combating organized retail crime (ORC), as well as logistics, healthcare, and oil and gas customer verticals.