Archer Aviation’s third quarter had two stories in it. One is about money: $274.6 million of net loss and a $207 million drop in cash and investments in three months. The other is about getting off the ground: an FAA certificate that lets its Midnight aircraft fly piloted in Los Angeles, and a Boeing deal that would make Archer a real defense supplier with real revenue. The market will price the second story as long as the first one stays funded.
The numbers
Revenue was $5.1 million, up from $5.0 million in the second quarter and from nothing a year earlier. Most of it is not air taxi revenue. Archer delivered its first engines for Anduril’s Omen program in the quarter. Net loss widened to $274.6 million, or $0.35 a share, from $263.2 million in the second quarter and $129.9 million a year earlier. Adjusted EBITDA was a loss of $178.5 million, at the better end of the $170 million to $200 million range Archer had guided.
Cash, equivalents and short-term investments ended September at $1.354 billion, plus $18.4 million restricted. The $207 million decline came mostly from $164.6 million used in operations and $31.7 million of capital spending, with a $10 million investment in a private company on top. At that pace Archer has well over a year of runway without raising more, which for a pre-revenue aircraft maker is comfortable.
Fourth-quarter guidance calls for revenue of $5 million to $6 million and an adjusted EBITDA loss of $185 million to $205 million. The burn is going up, not down.
Los Angeles and the certificate
The FAA granted Midnight a Market Survey Special Airworthiness Certificate. Archer says it unlocks piloted operations in Los Angeles, where it plans to carry passengers under the Transportation Department’s eVTOL Integration Pilot Program and ahead of the LA28 Olympics. Operations are expected in the coming weeks. This is not type certification, the approval that lets an aircraft carry paying passengers in normal commercial service. It is a narrower permit to fly and show the aircraft. Investors should read it as a step, not the finish line.
Boeing’s three businesses
The bigger change is the pending purchase of Boeing’s Wisk, Insitu and SkyGrid units, which Archer says is close to completion, subject to regulatory approvals. Wisk is Boeing’s autonomous air taxi program, a direct rival. SkyGrid works on air traffic management software for drones and air taxis. Insitu makes military drones such as ScanEagle and Integrator, and Archer says it alone should add more than $200 million in annual revenue.
That last number is the one that changes the model. Archer would go from roughly $20 million a year in revenue to more than $200 million, mostly from defense. Boeing would become Archer’s largest shareholder and a strategic partner. No price was disclosed in the release.
How to read it
Archer is building two companies at once. One is a defense business, with the Anduril engine work, the Halo and Thunder hybrid VTOL program now testing its turboshaft engine, and soon Insitu. The other is an urban air taxi that still needs full FAA certification and a business case nobody has proven. The defense side can carry the cash burn for a while. The Formula 1 tie-up and the Olympics are marketing for the air taxi side. Watch two things over the next two quarters: the Boeing closing terms and how much dilution they carry, and whether passenger flights in Los Angeles actually start on time.