Merlin (MRLN): Merlin Pilot Reaches SOI 3 With Two Components Verified

On its August 13, 2026 earnings call, Merlin, Inc. (MRLN) disclosed that two critical components of its Merlin Pilot autonomous flight software passed requirements verification and that the certification review advanced to SOI 3. The company still does not disclose revenue from this software separately.

What Merlin Pilot is and where it sits in the business

Merlin, Inc. (MRLN) builds autonomous flight software for aircraft. Its revenue currently comes mainly from U.S. defense customers, most of it under indefinite-delivery, indefinite-quantity (IDIQ) procurement vehicles that settle as program phases advance rather than as a monthly software license. The core product, Merlin Pilot, is a certifiable AI system installed on large fixed-wing aircraft and used by military and civil cargo aircraft operators and their flight crews [1].

The software does two things. First, it performs the act of flying in place of a person: taking off, flying the route, talking to air traffic control by voice, and landing. Second, it carries out what the aircraft was sent to do — the tasking, sensing and decision-making inside a cargo run, a surveillance mission or a tactical resupply. The same core software is adapted to different airframes, and each adaptation requires its own engineering integration and a civil aviation regulator's review before it can actually be used in flight. It is the product the company sells, and it sits at the center of the business.

From first automated takeoffs to verified components

The company first described this application in full on its May 14, 2026 earnings call. It presented Merlin Pilot as one core software stack reused across airframes and gave a first set of checkable results: on April 11 and April 21, 2026, first fully automated takeoffs were completed on two certification-candidate aircraft in the United States and New Zealand, with the same software under review by the regulators of both countries [2]. At that point the readout stopped at flight demonstrations and regulatory coverage; no component had been verified.

By August 13, 2026 the readout had moved one layer. The flight control computer and the automated communication system software — two components — had been tested and verified against their requirements, the C-130J platform had completed Critical Design Review and entered aircraft integration, and the AI- and machine-learning-driven voice interaction with air traffic control had obtained a regulator-agreed compliance path. Neither the name nor the software changed; the yardstick used to measure it changed, and it is now regulatory milestones and customer program milestones.

What SOI 3 does and does not establish

SOI 3 measures whether the software development process itself holds up under regulatory scrutiny. It examines whether verification processes, testing evidence, traceability and engineering controls are mature enough to support certification, and it covers the two named components — the flight control computer and the automated communication system software — rather than an airworthiness conclusion for the whole aircraft [1]. The company itself says SOI 4 is the final software compliance gate, and the C-130J line still has integration, ground testing and flight testing ahead of it. What passing this verification means is that the software can now account for itself against the evidence standards of civil aviation regulation. It is not a basis for concluding that the software can legally fly carrying cargo.

How management links this to revenue, and what stays unquantified

Management ties near-term revenue directly to this progress: revenue depends on how the C-130J indefinite-delivery, indefinite-quantity contract advances, and that program has now reached the second of the three revenue phases the company defines, the integration phase. Component verification and the completed Critical Design Review are the preconditions for moving that program from drawings to installation, so progress on the application first sets the pace at which the contract advances and only then shows up as revenue.

The mechanism is stated clearly; the amount is not. The company does not break out revenue for Merlin Pilot, and it did not say how much money each of these certification milestones corresponds to. Certification milestones do not themselves produce revenue. Civil certification, fleet deployment and a formal commercial agreement have not happened, and the civil cargo collaboration is currently only a non-binding memorandum of understanding. Revenue in the same period also mixes in progress on other defense contracts, so there is no basis for counting it as product revenue for this software.

What would change the read

The operating change that can be confirmed is that Merlin Pilot has gone from being able to show only flight demonstrations to having named components pass a regulator-recognized verification process, and has pushed its main customer program into the integration stage. What remains unquantified separately is equally clear: the software still has no revenue line of its own in the company's accounts, and certification is not finished until SOI 4. What would change this read is the contract amount confirmed when the C-130J completes integration, ground testing and flight testing and enters the next revenue phase, or the company's first separate disclosure of revenue tied to Merlin Pilot.

Application assessment

• Merlin Pilot Autonomous Flight | Business position: core business | Deployment stage: limited production | Scope: multiple businesses or regions | Value type: revenue growth

Sources

[1] Drillr · Merlin, Inc. (MRLN) · 2026-08-13 · earnings call

"Two critical components of the Merlin Pilot Autonomy Platform The flight control computer and the automated communication system software have been tested and verified against their requirements. To our knowledge, this is a first for large aircraft autonomy. Achieving SOI 3 represents an important certification milestone, demonstrating that our verification processes, testing evidence, traceability, and engineering controls are sufficiently mature to support certification."

[2] Drillr · Merlin, Inc. (MRLN) · 2026-05-14 · earnings call

"The second is that we have executed our first fully automated takeoffs on certification candidate aircraft this year. We did this on April 11th. and April 21st in both the US and New Zealand on two aircraft on two different continents."