Archer Aviation Inc. (ACHR) Earnings

Management highlights

### Strategic Positioning & Industry Context - The global advanced air mobility (AAM) market has massive opportunity, with growing government support: the U.S. launched the eVTOL Integration Pilot Program (EIPP), Archer was selected for three winning EIPP applications across 8 states, and the administration plans to allocate over $20 billion for U.S. ATC modernization - Multiple foreign governments (UAE, Saudi Arabia, Korea, Japan, etc.) are accelerating regulatory pathways and building infrastructure for AAM, and Archer holds a multi-billion dollar order book for Midnight that continues to grow - Archer plans to launch commercial air taxi operations as the official provider for the LA28 Olympic Games, with widespread public exposure expected ### Civil eVTOL (Midnight) Certification & Testing Progress - Archer became the first eVTOL company to complete Phase 3 of the FAA's 4-phase type certification process, and has been advancing Phase 4 in parallel - The company is conducting piloted VTOL and CTOL flights nearly daily across its expanded Midnight test fleet, and completed the hover test phase faster than any prior development phase with fewer issues - The company took over operations at Hawthorne Airport in LA and has begun modernizing it to serve as an air taxi mobility hub and innovation center for next-generation airspace technology ### Defense Business Updates - Archer is developing a clean-sheet, hybrid, dual-use autonomous vertical lift aircraft in partnership with Anduril, optimized for specific defense payload, speed, range, and cost requirements that cannot be met by modifying the civilian Midnight platform - The design leverages existing Archer eVTOL technology and intellectual property acquired from Karam, Overair, and Lilium, and development is already well underway, with plans to unveil the aircraft later in 2026 - Opportunities exist in both the U.S. and U.K. defense markets, and Archer is building the aircraft ahead of formal program awards to be positioned for selection ### Airspace Modernization & Software - Long-term scaling of AAM requires upgrades to U.S. ATC infrastructure, which is not built for the volume and type of future traffic - Archer has partnered with Palantir, NVIDIA, and Starlink to develop next-generation ATC solutions; Palantir is a finalist for the FAA's SMART program - Archer is building AI software applications for ATC de-confliction and airspace management, which supports the broader AAM market flywheel and may also generate independent revenue ### Financial Position - Archer holds $1.8 billion in total liquidity with less than $100 million in debt, giving it a strong, flexible balance sheet to execute its multi-platform strategy

Guidance

- Q2 2026 adjusted EBITDA loss is projected to be between $170 million and $180 million, representing a slight planned increase in investment to match growing opportunities across civil, defense, and software segments - The elevated spend level is expected to be short-term: if Archer wins large defense contracts, award funds will offset current investment; if contracts are not won, spend will be cut from current levels within a few quarters - Archer expects to complete piloted transition flight testing for Midnight and begin EIPP flight operations in U.S. cities in the second half of 2026 - The company projects to begin initial commercial air taxi operations, compete for phased defense government awards, and deploy initial AI airspace solutions all before the end of 2026 - Archer is building manufacturing capacity to reach a 50 aircraft per year production rate to support demand for Midnight following certification

Segment performance

Archer Aviation operates three business segments: Civil eVTOL (Midnight air taxi), Defense, and AI Air Traffic Control (ATC) Software. The only reported revenue for Q1 2026 came from initial operations at the recently acquired Hawthorne Airport in Los Angeles, with small absolute revenue that began growing in the quarter, and no specific revenue contribution percentages were disclosed for any segment. All three segments are in pre-revenue or early revenue development stages, with 100% of current investment focused on product development, certification, and operational preparedness rather than large-scale commercial revenue generation.

Risks & headwinds

- All forward-looking statements are subject to inherent risks and uncertainties that could cause actual results to differ materially from expectations, including delays in FAA certification, changes in government funding and procurement priorities, and slower-than-expected ATC and vertiport infrastructure buildout - Certification milestones and flight testing timelines depend on successful completion of rigorous software verification and validation, and unforeseen technical issues could delay planned progress - Defense contract awards are competitive, and there is no guarantee Archer will be selected for any of the large programs it is targeting - The long-term scaling of eVTOL air taxi operations is dependent on completion of ATC modernization and public-private vertiport infrastructure buildout, which may progress slower than expected - Current elevated operating spend is tied to expected defense opportunities, and underperformance in contract awards would require cost cutting that could impact other business segments

Analyst Q&A

• Q: What is Archer's strategic approach to the defense and autonomy opportunity, and how should investors think about this segment going forward? /

  A: Unlike niche modifications of the civilian Midnight platform for defense, Archer is developing a purpose-built, clean sheet hybrid autonomous aircraft optimized for specific large defense mission requirements in partnership with Anduril. Development is already well advanced, and the company expects to showcase the aircraft later this year and compete for major phase down-select awards by the end of 2026, with strong confidence in its competitive positioning. Opportunities exist in both the U.S. and U.K. defense markets, with global demand for this new class of vertical lift aircraft. (512 characters)

• Q: When will piloted transition flight testing for Midnight be completed, and what is the current progress? /

  A: Archer is already conducting daily piloted VTOL testing, working through rigorous software verification and validation ahead of full transition flight. The company progressed through the hover test phase faster than any prior development phase with the fewest technical issues. Piloted transition flight testing is on track to be completed in the second half of 2026, aligned with the goal of launching EIPP operations this year. (367 characters)

• Q: What is Archer's role in U.S. ATC modernization, and how do different stakeholders like Palantir fit into the ecosystem? /

  A: Archer has been developing AI-powered ATC application software for several years, focused on de-conflicting airspace for new eVTOL traffic. Palantir is focused on the broader system integration layer for the FAA's SMART program, and regardless of Palantir's outcome, Archer's software adds tangible value to modernization efforts. Participation in ATC modernization is critical to unlock scaling for Archer's core air taxi business, and the company expects its software solutions to be adopted and generate meaningful revenue long-term. (419 characters)

• Q: Could defense become Archer's primary business in 3-5 years, pushing the civilian Midnight program to the background? /

  A: The long-term civilian air taxi market opportunity is substantially larger than the defense market, with potential for over $100 billion in cumulative aircraft sales across global markets. The defense opportunity is more targeted, but offers the benefit of faster deployment (as it does not require full FAA civilian certification) and allows Archer to test advanced manufacturing and materials that will improve future generations of Midnight. The flywheel of technology sharing between the two segments creates value for both, and Archer will continue pursuing both opportunities strategically. (445 characters) Total characters: 1743 / 2000 limit