Merlin, Inc. Reports Third Quarter 2026 Results

Rhea-AI Summary

Merlin (Nasdaq: MRLN) reported third-quarter 2026 revenue of $3.5 million, up from the preceding quarter and the year-earlier period. GAAP net income was $73.837 million, including a $103.620 million non-cash gain from changes in warrant liabilities, while operating loss widened to $31.473 million from $16.607 million a year earlier. Adjusted EBITDA, an adjusted earnings measure, showed a $24.110 million loss, narrower sequentially but wider year over year.

Cash, cash equivalents and short-term investments ended September at $161.6 million, down from $183.9 million at June 30, with no debt. November awards included an $8.9 million USSOCOM task order and a $500,000 USAFRICOM demonstration contract. Merlin expects lower operating expenses in 2027 and targets funding its plan into 2029 without capital raises by focusing investment on funded programs.

12 points · 1 major

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2 major · 12 points

Hollow bars mark forward-looking points. How the balance works

Positive

• Major pointThird-quarter GAAP net income reached $73.837 million, versus losses of $26.696 million year-over-year and $58.427 million sequentially.
• Moderate pointThird-quarter revenue rose to $3.461 million from $1.924 million a year earlier and $2.2 million sequentially.
• Moderate pointUSSOCOM awarded an $8.9 million task order for the C-130J autonomy program's integration phase. 8.7% of market cap
• Moderate point. Forward-looking: it has not happened yet and may not happen.Merlin expects 2027 operating expenses below 2026, concentrating investment on funded work with a revenue path.
• Moderate point. Forward-looking: it has not happened yet and may not happen.Merlin targets funding its plan into 2029 without capital raises through a lower cost base.
• Moderate pointNine-month gross loss narrowed to $81,000 from $1.826 million, including $2.229 million in favorable contract-loss adjustments.

6 minor points

• Minor pointThird-quarter earnings included a $103.620 million non-cash gain from changes in warrant liabilities.
• Minor pointThird-quarter gross loss narrowed to $1.777 million from $2.021 million a year earlier.
• Minor pointUSAFRICOM awarded a $500,000 contract funding an autonomous casualty-evacuation demonstration using a Cessna 208B Grand Caravan.
• Minor pointSeptember 30 balance sheet had no debt, versus debt and convertible notes at December 31, 2025.
• Minor pointNine-month revenue increased to $6.657 million from $5.899 million a year earlier.
• Minor pointThird-quarter diluted earnings reached $0.37 per share, versus a $5.24 loss a year earlier.

Negative

• Major pointThird-quarter operating loss widened to $31.473 million from $16.607 million a year earlier.
• Major pointNine-month net loss widened to $75.009 million from $55.725 million a year earlier.
• Moderate pointCash, cash equivalents and short-term investments fell to $161.6 million from $183.9 million at June 30.
• Moderate pointThird-quarter adjusted EBITDA loss was $24.110 million, narrower than $27.834 million sequentially but wider than $13.578 million year-over-year.
• Minor pointThird-quarter research and development expense increased to $14.712 million from $8.164 million a year earlier.

7 minor points

• Minor pointThird-quarter general and administrative expense increased to $12.944 million from $6.141 million a year earlier.
• Minor pointThird-quarter selling and marketing expense increased to $2.040 million from $281,000 a year earlier.
• Minor pointThird-quarter preferred-stock dividends and accretion totaled $8.072 million, versus none a year earlier.
• Minor pointNine-month operating loss widened to $92.021 million from $39.021 million a year earlier.
• Minor pointNine-month adjusted EBITDA loss widened to $75.283 million from $34.121 million a year earlier.
• Minor pointNine-month convertible-note fair-value expense rose to $87.824 million from $3.118 million a year earlier.
• Minor pointNine-month preferred-stock down-round deemed dividend totaled $60.864 million, versus none a year earlier.

News Explained

The third-quarter balance sheet reports 101,693,656 common shares issued and outstanding at September 30, 2026, versus 69,663,395 at December 31, 2025; the higher share count reduces existing holders’ percentage ownership absent offsetting changes, the ownership effect of issuing additional shares.

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Key Figures

Revenue: $3.5 million GAAP net income: $73.8 million Adjusted EBITDA loss: $(24.1) million +3 more

Revenue

$3.5 million

3Q26; compared with $2.2 million in 2Q26

GAAP net income

$73.8 million

3Q26; compared with a $58.4 million loss in 2Q26

Adjusted EBITDA loss

$(24.1) million

3Q26; compared with $(27.8) million in 2Q26

Cash, cash equivalents, and short-term investments

$161.6 million

At September 30, 2026; compared with $183.9 million at June 30, 2026

USSOCOM task order

$8.9 million

Next phase of the C-130J autonomy program

USAFRICOM contract

$500,000

CASEVAC demonstration contract

Previous Earnings Reports

2 past events · Latest: Aug 13

Same Type 2 events

1. Aug 13

   Q2 earnings report

   24h Move

   -15.1%

   Reported a GAAP net loss and an Adjusted EBITDA loss alongside higher revenue.

2. May 14

   Q1 earnings report

   24h Move

   -9.4%

   Reported a GAAP net loss and an Adjusted EBITDA loss alongside initial quarterly revenue.

24h Move is the share-price change in the day after each event; other market factors may also have contributed.

Key Terms

gaap, evtol, idiq, convertible promissory notes

4 terms

gaap financial

"Third quarter 2026 GAAP net income of $73.8 million"

GAAP, or Generally Accepted Accounting Principles, are a set of standardized rules and guidelines that companies follow when preparing their financial statements. They ensure consistency, transparency, and comparability across different companies, making it easier for investors to understand and compare financial information accurately. This helps investors make informed decisions based on trustworthy and uniform financial reports.

View in glossary

evtol technical

"Electric Vertical Takeoff and Landing (eVTOL) Integration Pilot Program"

eVTOL stands for "electric vertical takeoff and landing" aircraft, which are small, electric-powered vehicles capable of taking off and landing vertically like a helicopter. They are designed to provide quick, on-demand transportation within cities or between locations, potentially transforming urban mobility. For investors, eVTOLs represent a growing segment of innovative transportation technology with potential for significant market impact and future growth.

idiq regulatory

"With $100M+ total in IDIQ contract ceiling value"

An IDIQ (Indefinite Delivery/Indefinite Quantity) is a type of government procurement contract that sets terms and maximum limits for buying goods or services over a period without specifying exact delivery dates or quantities up front. For investors, an IDIQ signals a potential steady revenue stream and easier repeat business because it gives a company preferred access to future orders under agreed terms—think of it as a standing shopping account that can generate unpredictable but recurring sales.

convertible promissory notes financial

"Convertible promissory notes"

A convertible promissory note is a loan a company takes that can later be turned into shares instead of being paid back in cash; think of lending money now in exchange for a voucher that can become ownership later. Investors care because it mixes credit risk and potential ownership upside—it can protect lenders if a company struggles while also diluting existing shareholders when converted, affecting future share value and investor returns.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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Ended Third Quarter 2026 With $161.6 Million in Cash, Cash Equivalents, and Short Term Investments, and No Debt

BOSTON, Nov. 12, 2026 (GLOBE NEWSWIRE) -- Merlin, Inc. (Nasdaq: MRLN), an aerospace and defense technology company building the operating system of record for autonomous flight, today announced operating and financial results for its third quarter ended September 30, 2026.

Business Highlights

• USSOCOM C-130J contract progress. On November 10, 2026, Merlin announced it was awarded a new task order worth $8.9 million for the next phase of its C-130J autonomy program with the U.S. Special Operations Command (USSOCOM).
• AFRICOM. On November 11 2026, Merlin announced it had been selected by U.S. Africa Command (USAFRICOM) for the initial phase of its Autonomous Casualty Evacuation (CASEVAC) Industry Technology Challenge. Included with the selection, Merlin received a $500,000 contract, which will fund a demonstration of Merlin Pilot™ autonomously executing a CASEVAC mission using a Cessna 208B Grand Caravan.
• Texas Project Nexus eIPP Demonstration. In early September 2026, Merlin participated as an invited guest in the kickoff event for the Texas Department of Transportation’s (TxDOT) Electric Vertical Takeoff and Landing (eVTOL) Integration Pilot Program (eIPP).
  
  

“We’re advancing our defense programs in the places our customers need autonomy most,” said Matt George, CEO of Merlin. “The new $8.9 million task order with USSOCOM moves our C-130J autonomy program into its integration phase, laying the groundwork for future flight demonstrations and production revenue with SOCOM and ultimately the global C-130J fleet including hundreds of aircraft. Additionally, USAFRICOM selected Merlin to demonstrate Merlin Pilot flying casualty evacuation missions, where time is critical and logistics are complex, on an aircraft we already fly. Every new program builds on the work that came before, and we believe that compounding advantage, paired with disciplined use of our capital, marks meaningful progress toward autonomy for any aircraft.”

Third Quarter 2026 Financial Results

• Third quarter 2026 total revenue of $3.5 million, compared to $2.2 million in the second quarter of 2026
• Third quarter 2026 GAAP net income of $73.8 million, compared to a loss of $(58.4) million in the second quarter of 2026
• Third quarter 2026 Adjusted EBITDA* loss of $(24.1) million, compared to an Adjusted EBITDA loss of $(27.8) million in the second quarter of 2026
• Cash, cash equivalents, and short-term investments of $161.6 million at September 30, 2026, compared to $183.9 million at June 30, 2026
  
  

^∗ For all Non-GAAP financial measures, see the reconciliation table at the end of this earnings release for further discussion

Business Outlook

Merlin’s planning process for 2027 is underway. We expect to bring our 2027 operating expenses meaningfully below our 2026 level. We will do that by concentrating our investment on the programs and customers with funded work and a clear path to revenue. Our objective is a lower, more focused cost base that preserves our balance sheet and funds our plan into 2029, without depending on capital raises.

Mr. George commented, “the goal of our planning process is to ensure that we not only meet the opportunities presented by our current contracts, but also the broader market potential we detailed on last quarter’s call. We believe that it is imperative for Merlin to continue to advance the Merlin Pilot, but it is also imperative that we demonstrate discipline in the investments we make along the way.”

Conference Call Details

Merlin will host a live webcast on November 12, 2026 beginning at 4:30 pm ET to discuss its third quarter 2026 financial results. A registration link as well as the live webcast will be accessible on the Company’s investor relations website at investors.merlinlabs.com. A replay will be available for a limited period following the call.

About Merlin

Merlin is an aerospace and defense technology company building the operating system of record for autonomous flight. Through a first-principles approach, Merlin is redefining what’s possible across aviation, aerospace, and defense with the goal of delivering full-stack autonomy for any aircraft, military or civilian, from takeoff to touchdown. The Merlin Pilot system powers a growing range of aircraft and mission profiles, proven through hundreds of autonomous flights from test facilities across the globe. With $100M+ total in IDIQ contract ceiling value under its C-130J autonomy program with USSOCOM, Merlin is advancing American leadership in autonomous aviation by helping to solve national security challenges through safe, reliable autonomy. To learn more, visit www.merlinlabs.com or follow us on X @merlinaero.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements regarding Merlin’s expected financial performance, Merlin's 2027 annual operating plan and expected reductions in its operating expenses; the sufficiency of Merlin’s cash to fund its operating plan; expected reductions in engineering costs and regulatory timelines for future programs, expected improvements in platform performance and adaptability from operational data, expected compounding advantages across engineering, regulatory, and data dimensions, Merlin’s competitive position relative to other developers of autonomous flight technology, program milestones and execution timelines, including automated flight targets, the commercial launch and scaling of Condor, including anticipated revenue from platform adaptation, integration, and recurring software licensing arrangements, civil certification progression, including for novel AI/ML-based functionality within Merlin Pilot, commercial pipeline conversion, anticipated market demand for autonomous aviation and Merlin’s estimates of the total addressable market for autonomous flight, platform portability and expansion to additional aircraft types, reduced-crew and single pilot operations, the development and performance of commercial and government partnerships, the deployment of capital resources, including recently completed equity financing, the sufficiency of capital resources to fund operations and milestones, anticipated operating investment and R&D spending levels, and the anticipated contributions of recently joined executive personnel. Forward-looking statements can be identified by words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “potential,” “project,” “target,” “will,” and similar terms. These statements reflect management’s current expectations based on information available at the date of this release and involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from those expressed or implied. Important factors that could cause actual results to differ materially include, but are not limited to: Merlin’s ability to execute on its defense program obligations, including under the USSOCOM C-130J prime contract and the USAFRICOM contract; the performance, reliability, and scalability of Merlin Pilot across current and future aircraft platforms; Merlin’s dependence on U.S. government contracts and the risk of changes in government budget priorities, procurement decisions, or contract modifications or terminations for convenience; Merlin’s ability to develop, maintain, and scale commercial partnerships; Merlin’s ability to convert its identified pipeline into contracted and awarded revenue; Merlin's ability to finalize and implement its 2027 operating plan and achieve planned reductions in operating expenses; the risk that Merlin’s cash resources are insufficient to fund its operating plan for the period anticipated; competition from established aerospace and defense companies and other autonomous systems developers; Merlin’s ability to attract and retain key technical, operational, and commercial personnel; the accuracy of Merlin’s estimates of the size of its addressable markets; Merlin’s history of net losses and its ability to achieve and sustain profitability; and the other risks and uncertainties described under “Risk Factors” in our final prospectus, dated May 13, 2026, filed with the SEC on May 13, 2026, and in other documents we subsequently file with the Securities and Exchange Commission. Merlin does not undertake any obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law.

Contacts

Investor Relations: investor.relations@merlinlabs.com 

Media: media@merlinlabs.com 

MERLIN, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (UNAUDITED) (in thousands, except share amounts)
	As of:
	September 30, 2026				December 31, 2025
ASSETS
Current assets:
Cash and cash equivalents	$	161,444			$	59,343
Short-term investments		182				330
Accounts receivable, net		1,197				368
Prepaid expenses and other current assets		4,244				3,328
Capitalized transaction costs		—				7,562
Total current assets		167,067				70,931
Property and equipment, net		14,398				7,108
Operating lease right-of-use assets, net		2,268				979
Restricted cash		2,570				—
Deposits		140				1,564
Total assets	$	186,443			$	80,582
LIABILITIES, MEZZANINE EQUITY, AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable	$	5,687			$	3,154
Accrued expenses		7,450				7,937
Contract loss provision		72				4,173
Operating lease liabilities, current		1,235				657
Long-term debt, current portion, net ($19,175 at fair value and $96 at amortized cost, net as of December 31, 2025)		—				19,271
Convertible promissory notes		—				29,107
Total current liabilities		14,444				64,299
Operating lease liabilities, non-current		1,197				331
Warrant liabilities		26,517				76,766
Long-term debt, non-current portion, net ($12,207 at fair value and $577 at amortized cost, net as of December 31, 2025)		—				12,784
Total liabilities		42,158				154,180
Commitments and contingencies
Series A Preferred Stock: $0.0001 par value; 50,000,000 shares authorized and 18,655,078 shares issued and outstanding as of September 30, 2026		170,577				—
Redeemable convertible preferred stock		—				—
Stockholders' deficit:
Common stock: $0.0001 par value; 800,000,000 and 138,655,675 shares authorized; 101,693,656 and 69,663,395 shares issued and outstanding as of September 30, 2026 and December 31, 2025, respectively		10				7
Additional paid-in capital		599,760				477,448
Accumulated deficit		(626,062	)			(551,053	)
Total stockholders' deficit		(26,292	)			(73,598	)
Total liabilities, mezzanine equity, and stockholders' deficit	$	186,443			$	80,582

MERLIN, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands, except share and per share amounts)
	Three Months Ended September 30,								Nine Months Ended September 30,
	2026				2025				2026				2025
Revenue	$	3,461			$	1,924			$	6,657			$	5,899
Cost of revenue		5,238				3,945				8,967				7,725
Contract loss adjustments		—				—				(2,229	)			—
Gross loss		(1,777	)			(2,021	)			(81	)			(1,826	)
Operating expenses:
Research and development		14,712				8,164				45,189				21,699
General and administrative		12,944				6,141				42,613				14,467
Selling and marketing		2,040				281				4,138				1,029
Total operating expenses		29,696				14,586				91,940				37,195
Loss from operations		(31,473	)			(16,607	)			(92,021	)			(39,021	)
Other (expense) income:
Interest income		1,504				430				3,468				862
Interest expense		—				—				(9	)			(2,956	)
Other income (expense)		13				18				(183	)			(193	)
Change in fair value of warrant liabilities		103,620				(683	)			104,030				(4,562	)
Change in fair value of convertible promissory notes		—				(3,118	)			(87,824	)			(3,118	)
Loss on exchange of warrant liabilities		—				(3,320	)			—				(3,320	)
Loss on issuance of financial instruments		—				(585	)			—				(585	)
Loss on extinguishment of long-term debt		—				(2,157	)			—				(2,157	)
Change in fair value of long-term debt		—				(672	)			(2,470	)			(672	)
Total other income (expense)		105,137				(10,087	)			17,012				(16,701	)
Income (loss) before provision for income taxes		73,664				(26,694	)			(75,009	)			(55,722	)
Provision for (benefit from) income taxes		(173	)			2				—				3
Net income (loss)	$	73,837			$	(26,696	)		$	(75,009	)		$	(55,725	)
Series A Preferred Stock dividends and accretion		(8,072	)			—				(17,713	)			—
Income attributable to participating securities		(28,087	)			—				—				—
Series A Preferred Stock deemed dividend on down round		—				—				(60,864	)			—
Deemed dividend on exchange of redeemable convertible preferred stock		—				(345,717	)			—				(345,717	)
Net income (loss) attributable to common stockholders	$	37,678			$	(372,413	)		$	(153,586	)		$	(401,442	)
Net income (loss) per share:
Basic	$	0.37			$	(5.24	)		$	(1.72	)		$	(5.66	)
Diluted	$	0.37			$	(5.24	)		$	(1.72	)		$	(5.66	)
Weighted-average shares outstanding:
Basic		101,217,672				71,045,916				89,253,660				70,986,625
Diluted		103,174,834				71,045,916				89,253,660				70,986,625

Non-GAAP Financial Measures

In addition to our results determined in accordance with U.S. GAAP, we believe that EBITDA and Adjusted EBITDA, non-GAAP financial measures, provide investors with additional useful information in evaluating our performance. We define EBITDA as net income (loss) before interest expense or income, income tax expense or benefit, and depreciation and amortization. We define Adjusted EBITDA as EBITDA adjusted for stock-based compensation, equity-based compensation to non-employees, changes in fair value of warrant liabilities, changes in fair value of financial instruments accounted for at fair value, transaction and merger-related costs, and other non-cash items. Changes in fair value of warrant liabilities reflect periodic mark-to-market adjustments that will recur each reporting period as long as warrants remain outstanding and are excluded because they are non-cash and not reflective of our core operating performance. Changes in fair value of convertible promissory notes and long-term debt relate to instruments settled in connection with the Merger and are excluded because they are not expected to recur in future periods. Transaction and merger-related costs are excluded because they relate to specific non-recurring corporate events and are not indicative of our ongoing operating performance.

We believe that each of these non-GAAP financial measures provide additional metrics to evaluate our operations and, when considered with both our U.S. GAAP results and the reconciliation to the closest comparable U.S. GAAP measures, provide a more complete understanding of our business than could be obtained absent this disclosure. We use the non-GAAP financial measures, together with U.S. GAAP financial measures, such as net revenue, gross profit margins and cash flow from operations, to assess our historical and prospective operating performance, to provide meaningful comparisons of operating performance across periods, to enhance our understanding of our operating performance, and to compare our performance to that of our peers and competitors.

The non-GAAP financial measures are presented here because we believe they are useful to investors in assessing the operating performance of our business without the effect of non-cash items, and other items as detailed below. The non-GAAP financial measures should not be considered in isolation or as alternatives to net income (loss), income (loss) from operations or any other measure of financial performance calculated and prescribed in accordance with U.S. GAAP. Our non-GAAP financial measures may not be comparable to similarly titled measures in other organizations because other organizations may not calculate non-GAAP financial measures in the same manner as we do.

The following tables provide a reconciliation of EBITDA and Adjusted EBITDA to net income (loss), the most directly comparable financial measure presented in accordance with U.S. GAAP (unaudited).

	Three Months Ended September 30,								Nine Months Ended September 30,
($ in thousands)	2026				2025				2026				2025
Net income (loss)	$	73,837			$	(26,696	)		$	(75,009	)		$	(55,725	)
Depreciation		574				375				1,703				1,145
Amortization of right-of-use assets		320				183				871				549
Interest income		(1,504	)			(430	)			(3,468	)			(862	)
Interest expense		—				—				9				2,956
Provision for (benefit from) income taxes		(173	)			2				—				3
EBITDA		73,054				(26,566	)			(75,894	)			(51,934	)
Stock-based compensation		6,375				526				12,278				1,472
Equity-based payments to non-employees		81				—				833				—
Change in fair value of warrant liabilities		(103,620	)			683				(104,030	)			4,562
Change in fair value of convertible promissory notes		—				3,118				87,824				3,118
Change in fair value of long-term debt		—				672				2,470				672
Loss on exchange of warrant liabilities		—				3,320				—				3,320
Loss on issuance of financial instruments		—				585				—				585
Loss on extinguishment of long-term debt		—				2,157				—				2,157
Transaction costs		—				1,927				1,236				1,927
Adjusted EBITDA	$	(24,110	)		$	(13,578	)		$	(75,283	)		$	(34,121	)

	Three Months Ended June 30,
($ in thousands)	2026				2025
Net loss	$	(58,427	)		$	(16,296	)
Depreciation		712				389
Amortization of right-of-use assets		342				183
Interest income		(1,447	)			(131	)
Interest expense		—				1,342
Provision for income taxes		125				1
EBITDA		(58,695	)			(14,512	)
Stock-based compensation		4,608				433
Equity-based payments to non-employees		109				—
Change in fair value of warrant liabilities		26,144				3,925
Change in fair value of convertible promissory notes		—				—
Change in fair value of long-term debt		—				—
Transaction costs		—				—
Adjusted EBITDA	$	(27,834	)		$	(10,154	)

FAQ

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

What were Merlin's third-quarter 2026 revenue and earnings?

Merlin reported $3.461 million in revenue and $73.837 million in GAAP net income for the quarter ended September 30, 2026. Net income included a $103.620 million non-cash gain from changes in warrant liabilities. Diluted earnings were $0.37 per share, while operating loss was $31.473 million.

What is Merlin's spending and funding outlook for 2027?

Merlin expects 2027 operating expenses meaningfully below 2026 levels and targets funding its plan into 2029 without capital raises. Its planning process is underway, with investment focused on programs and customers that have funded work and a clear path to revenue.