XTI Aerospace — Third Quarter 2026 Earnings Summary

Financial Performance:

• Third quarter 2026 revenue was $35.3 million, representing an 8.8% sequential increase from Q2 2026 and a 46.1% increase from Q3 2025 proforma revenue.
• Gross profit for the quarter was $7.7 million.
• Gross profit margin was approximately 21.7% of revenue, inclusive of one-time benefits primarily related to tariff recoveries; excluding nonrecurring amounts, the margin was 16.0%.
• General and administrative expenses were reduced to 29.2% of sales in Q3 2026, down from 39.2% in the first six months of 2026.
• Adjusted EBITDA was $1.6 million for Q3 2026, compared to a negative $4.9 million in Q2 2026.
• As of September 30, 2026, the company held $5.7 million in unrestricted cash and cash equivalents.
• The company had $11.9 million of remaining availability on the borrowing base under its credit facility at Drone Nerds.
• Average monthly operating cash outflows for corporate and ADS operations (excluding Drone Nerds) were approximately $1.1 million in Q3 2026, a 42% reduction from Q2 and a 62% reduction from Q1.
• Nine months ended September 30, 2026, revenue was $95.459 million compared to $79.881 million in the prior year period.
• Nine months ended September 30, 2026, net loss from continuing operations was $5.921 million, compared to a loss of $38.685 million in the prior year period.
• Nine months ended September 30, 2026, Adjusted EBITDA was negative $8.238 million, compared to negative $20.419 million in the prior year period.

Guidance and Future Outlook:

• Full year 2026 revenue guidance is reiterated at $125 million to $130 million.
• Full year 2026 gross profit margin guidance is 17% to 19% of revenue.
• Management expects a transition to positive ongoing operating cash flows during the fourth quarter of 2026.
• The outlook assumes continued access to the asset-based credit facility and no material further changes in tariff policy.

Business Segments and Product Lines:

• The strategic pivot to focus on the Drone Nerds business is substantially complete, with the discontinuation of the XTI aircraft business.
• New product and program additions to the portfolio include pressure washing, airport detection, and first responder programs.
• The company introduced the ABZ Innovation C30 High-Pressure Cleaning Drone to its Enterprise Portfolio.
• The company launched the Evolver Drone as First Responder (DFR) program for police, fire, and emergency agencies.
• A partnership was announced with AirSight, a drone detection and airspace security software solutions provider, to expand drone detection offerings within the enterprise solutions portfolio.
• The company provides services covering the drone program lifecycle, including hardware sourcing, deployment, training, service, repair, and the proprietary Always Flying™ program.

Market and Competitive Landscape:

• Q3 revenue growth was partially driven by September demand ahead of Section 232 tariffs implemented in 2026.
• The company positions itself as a go-to-market partner for drone manufacturers and software developers seeking to scale in the domestic market.
• The company serves commercial, enterprise, and government customers across sectors including public safety, agriculture, construction, and energy.

Risks and Challenges:

• The company faces risks related to the ability to continue as a going concern and maintain Nasdaq listing.
• Potential impacts from Section 232 tariffs and other trade measures are noted.
• Pending regulatory inquiries and proceedings relating to the company and its subsidiaries present a risk.
• Liquidity risks include the ability to access additional capital on acceptable terms or at all, and restrictions/covenants under the ABL credit facility.
• Risks include the wind-down of the ADS division and the development of the ATM division, which has not generated revenues.
• Significant non-cash charges related to changes in the fair value of warrant liabilities could impact results.
• The company has pending legal proceedings and conflicts of interest arising from the Interim CEO's economic interest in holders of acquisition-related notes.

Management Commentary and Tone:

• Jeremy Schneiderman, Interim CEO, stated the strategic pivot to the Drone Nerds business is substantially complete and the company is rightsized with reduced corporate overhead.
• Management emphasized a focus on the significant opportunity in the commercial and enterprise drone market.
• Jeremy Schneiderman noted the company is uniquely positioned to manage drone programs from payloads to service and repair.
• Management expressed confidence that growth opportunities combined with disciplined expense management will lead to positive operating cash flows in Q4 2026.

Other Key Points:

• The company appointed Dr. Allan Evans as Chairman of the Board of Directors and Jeremy Schneiderman as Interim CEO.
• The company restructured $4.7 million of promissory notes that were previously in default.
• A cross-default waiver was secured from JPMorgan Chase Bank, N.A. on the revolving credit facility.
• The company discontinued the operation of the Inpixon business, with results reflected in discontinued operations.
• Cost realignment initiatives included reductions in corporate and development-division headcount, consolidation of office footprint, and termination of non-core consulting, vendor, and software contracts.
• The company hosted a conference call on November 12, 2026, with Interim CEO Jeremy Schneiderman and CFO Brooke Turk.