Unusual Machines, Inc.

machines third quarter 2025 earnings conference call and webcast at this time all participants are in a listen only mode a question and answer session will follow the formal presentation if anyone should require operator assistance during the conference please press star zero on your telephone keypad please note this conference is being recorded I will now turn the conference over to Christine Petrullia investor relations for unusual machines

Thank you, Operator. Good afternoon, everyone. With us today on Usual Machines, CEO Alan Evans and CFO Brian Haas. During this call, management will make forward-looking statements, including statements that address Unusual Machines' expectations regarding the impact from tariffs, our ability to add more employees to our ranks, our factory expansions, our ability to increase our margins and revenues, our ability to achieve aggressive growth, our expectation that the marketplace will change in quarter four of 2025 and 2026, our plan of keeping our cash burn low, our ability to scale our motor and headset manufacturing capabilities, our ability to scale supply chains to meet our customers' needs, receipt of orders from the U.S. Department of War, our ability to continue to grow revenue, the timing of our 2026 inventory and other expenses, revenues, expected gap profits, and positive cash flow from operations and our expectation that the U.S. drone market will continue to explode. Forward-looking statements involve risks and other factors that may cause actual results to differ materially from those statements. For more information about these risks, please refer to the risk factors described in Unusual Machines' most recently filed 10-Q, Form 10-K, and Prospective Supplements. Except as required by law, Unusual Machines disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. As a reminder, this call is being recorded, and a replay will be available on Unusual Machines' website at www.unusualmachines.com. Now let me hand the call over to our CEO, Alan Evans. Please go ahead, Alan. And there's Alan.

Oh, I'm sorry. I was muted. Thanks, Christine. Sorry, everyone. Before we get into the meat of the call, I want to address the format change to this audio-only format. We moved to this channel for our earnings calls because of direct integrations with a lot of investor portals like Bloomberg Terminals. This should give all of our investors, especially the ones unable to make the call, faster and easier access to information. As our company keeps evolving, we really do appreciate feedback, and we would love to hear any thoughts that you have, both good or bad, on the new format. So please email us at investors at unusualmachines.com if you have anything to say. Now, today is a good day. We were profitable in the third quarter. Let me repeat that. We were not just cash flow positive. We actually had our first profitable quarter as a company. The good news doesn't stop there. It was the sixth quarter in a row we achieved record revenues. It was our best gross margin quarter of all time. It is the first quarter where more than 50% of our revenue was from enterprise sales, and we already have enterprise purchase orders totaling more than $16 million from a diverse set of customers going forward. We closed the rotor lab acquisition. Our motor factory in Orlando is turned on, and we're currently producing American-made motors. We executed our staircase financing strategy and currently have more than $130 million in the bank. Our strategic investments have improved partnerships and yielded financial returns. Finally, our team has grown from 19 people at the start of the quarter to over 60 people today, and we're continuing to scale to meet demand. Eighteen months ago, we set out with an idea to transform this company from a retail channel into a leader in the onshore production of drone components. The results of this quarter finally show initial results from those seeds we planted and all the hard work we have done. It is not just a good quarter, but rather it's the first signs of a successful transformation and the beginning of rapid growth for unusual machines. This would not be possible without the work our entire team puts in. As we continue to grow, both old and new employees are working hard and bringing incredible energy to the challenges we face. The culture and quality of our workforce made me just very excited for what we can collectively achieve going forward. And the way that we've maintained our culture as we've grown has made me very confident our workforce can handle the imminent wave of demand we're starting to face. We've been aggressively growing as the marketplace changes, and I am sure that is what most of you really want to hear about. I'll hand this call off to our CFO, Brian Hoff, to cover our financial results in detail. And once he's finished, we'll talk about the future. With that, I'm handing the call over to our CFO, Brian Hoff. Thank you, Alan.

As Alan just noted, we're seeing the initial signs of our transformation from growing from our seasonal retail operation into an organization with significant focus on enterprise sales with expanding margins. We ended Q3 with over 2.1 million in revenue for the three months ended September 30, 2025, which is a 39% growth from the prior year. Year to date revenue is at 6.3 million, which is a 55% increase year over year. We see the shift from retail to enterprise first through our margin expansion, from 28% year-to-date in 2024 to 34% year-to-date in 2025. And second, we continue to maintain top-line revenue quarter-over-quarter, which typically we saw larger fluctuations from seasonality that typically comes with our retail operations. Now, looking into Q4, we are bringing those strong enterprise orders that we will start fulfilling in Q4, along with our strongest retail quarter with the holidays coming up. We did see an increase in our operating expenses quarter over quarter, which is intentional given our investment in our motor and headset production and in scaling our operations. We fully expect to see an increase. We fully turned on our motor production facility, hired the additional staff, and continue to build for the future. Our G&A expenses increased in Q3 as well, which includes non-cash stock compensation expense of $2.1 million, and non-recurring expenses of $1.2 million related to investor relations and other professional fees. I'd reference Table 2 in our shareholder letter that we issued today for additional breakdown of our non-GAAP operating results. We had interest income for our cash balance of $0.7 million for the quarter and recorded unrealized gains, as GAAP requires us to record a fair value based on current market values, from our short-term investments of $5.8 million, which brings us to net income of $1.6 million for the quarter. Now shifting to our balance sheet. This is a reflection of our continued investment in growth and the momentum that has been building here. We ended the quarter with $64.3 million in cash, which included a $48.5 million raise in July at $9.70 a share, and subsequently we raised an additional $72 million in gross proceeds at $15.46 per share off our ATM. giving us over $130 million in cash today. In addition, as of September 30th, we have approximately $16.8 million in short-term investments. We've grown our inventory and prepaid inventory balances to over $10 million in preparation of our enterprise orders, the start of our motor and headset production, and the holiday push. We've grown our PP&E by $1.7 million during the quarter to purchase for our motor equipment and related items. We closed the acquisition of Rotor Lab at the beginning of September and currently working on our gap purchase price allocation related to that. Overall, balance sheet is a very strong position to take full advantage of the growth that Alan's going to talk to you about. I'd like to thank our entire team, old and new, for their continued hard work and willingness to get things done. We look forward to a strong finish in 2025 and rolling that into 2026. I'll send it back to Alan. Thank you all.

Thanks, Brian. It should be obvious by now that we're excited for unusual machines. We are extremely well positioned in the current domestic and global political landscape, and we generally continue to have favorable market conditions for the American drone subsegment outside maybe some of the very short-term hiccups given the government shutdown. We also have the capital to execute. I'm about to go into more detail, but I want everyone to note that my following comments are forward-looking and are in no way guaranteed. Let's start with an update on internal production. Development of our motor production has matched our expected timeline so far. Phase 1 of motor production is now fully operational. We've just started scaling production and expect to have thousands of motors shift by the end of the month. As this grows, we're beginning to source material for a highly automated production equipment that we expect to bring online through the second quarter of next year. Headset production is just starting to move forward. We're finalizing space and have already ordered the materials to produce 5,000 headsets domestically. Our internal expectation is that we'll start shipping headsets from our U.S. assembly facility in January of 2026. We have $130 million in cash. We have enough money to build out motor and headset production, as well as scale supply chains to meet our customers' needs. As a general rule of thumb, we want to have at least 12 months of forward-looking revenue in cash to meet our working capital needs. So our growth is not resource-constrained, and we'll be able to right-size our company regardless of how fast or big this marketplace requires us to be. This also provides us with enough extra capital that we can consider potential acquisitions if the right opportunity presents itself without having to under-resource our current plans. This moment of scaling with uncertainty is one reason why hardware is hard. As a component manufacturer and supplier, we ask our customers to give us both forecasts and then purchase orders. It's typical for customers to give us forecasts that extend 12 to 18 months out, but purchase orders are generally only placed for material that they need delivered in the next six months. Our growth ultimately requires purchase orders. We're excited. We have $16 million in purchase orders, and we expect delivery on those purchase orders to occur through the second quarter of 2026. We also have forecasts past that that have us confident in our continued scaling past that run rate way into the second half of next year. For us to meet these demands, we have to place orders and provide forecasts to our vendors. Our supply chains outside of China are about six to eight months long, and that's the lead time on several critical components, not just one. So this is causing us to and will continue to cause us to have to place large orders and put significant amounts of cash in deposits and other payment for material. This material management is critical to our company and is going to likely result in significant cash outlays over the next few quarters. And then we expect revenue and gap profits to catch up in the second half of 2026 as we reach a new larger revenue equilibrium. This uncertainty has been further complicated by the shutdown of the U.S. government. Our primary enterprise business model is B2B2G, and the shutdown has prevented our customers from getting any additional orders. This in turn prevents them from placing orders with us. We see this as a competitive advantage. That's right, an advantage for our company relative to our competitors for two reasons. First, we expect the Department of War and other government agencies to still want the drones and drone parts as soon as possible, regardless of how long the shutdown lasts. This allows us to continue to build because we have the capital and then we'll be in a position where we are in stock when those customers place orders. Any of our undercapitalized competitors, they have to wait for the actual orders to come to their customers and then to them to even start their supply chains. So this allows us to get further ahead every day the shutdown continues. Second, the shutdown in the government has stopped the SEC from processing S1s for new IPOs. Most companies' numbers go stale in February, so there's likely to be a massive backlog and a challenge in the IPO market until at least May of 2026. There are very likely several wonderful mid-sized companies that will have trouble with access to capital due to the combination of the shutdown preventing orders and the IPO market being inaccessible. This could create an opportunity for us to potentially make a larger acquisition at a reasonable value and further accelerate our business. Regardless of the shutdown and when it ends, we believe the government demand is going to be very strong through 2026. and we are scaling as quickly as we can to capture as much of the emerging market as we are able to. To summarize, our third quarter was a standout performance in my book. We are well capitalized, growing the team and the facilities, and have started to see government orders materialize for our customers and ultimately for us. Even though we had a profitable quarter, our goal is to sustain positive cash flow, and we expect to need $30 million in annual revenues to get there. I believe this will happen in the latter half of 2026. Unusual Machines is at the corner where we think the market is maturing right now. Our business is capitalized and extremely healthy, and now we are aggressively pursuing growth. The U.S. drone market is about to explode, and we expect to fearlessly seize the opportunity. I want to say thank you again to our entire staff. And with that, I want to open up the call to questions.

Certainly. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Your first question for today is from Matthew Glanko with Maxim Group.

Not sure if you're muted, Matt.

Matthew, your line is live.

Hi, can you hear me now? Yes, sir. Alright, thank you and congrats on the strong quarter. Ellen, you touched on expecting to reach a new revenue equilibrium sometime in 26. But to your point, in the growth cycle we're in for drones and domestic components, do you expect that 27 will be – I realize you're not guiding at this point to 27, but do you expect we'll still be in a growth cycle in 27? And to the extent that we might be, is the working capital investment cycle going to continue past 2026?

Yeah, so I think everybody's going to try to scale as fast as humanly possible in 26. The drone industry, particularly for defense, is going to fall short of the objectives. Not fall short, but the government programs have increasing numbers of drones they want from now through about 2030. And so I do expect working capital to continue to probably be sort of outlaid in front of revenues in that growing pattern. But I think toward the latter half of 26, we'll have a better idea of what that growth looks like. Because I think the next year is sort of the zero to one or the 5,000 to 100,000 plus drones. And then after that, it's 100,000 to 200,000. So it's less of a dramatic step function. But right now, all indicators suggest, you know, grow as fast as we all possibly can because of market demand until 2028.

Got it. Thank you. And maybe just one quick follow-up for me. Just given all the additions and ramp-up in production that, you know, we're talking about that's happening in pretty quick succession, I'm wondering if you could give us a kind of reset view on your operating expense run rate.

excluding spot com you know starting in the fourth quarter or first quarter 26 you know that you have line site too yeah so if you look in quarter three we put this in our shareholder letter our our cash burn which we try to pay attention to is still 900 000 and that's without any of the added income from the investments or anything we still really stare at that pretty hard and you know i'm personally proud that we've kept it under a million dollars every quarter for Now, we might grow a little bit past that, and that'll just come down to some of the gap elements that just, you know, when our customers receive material. But our goal is going to be to keep it down. And in quarter four, quarter one, it'll be a little bit variable just based on when our customers are able to accept product. from when they can get it to the government. So a little tough to project it just because the shutdown will affect the day-to-day stuff. But, you know, we try to keep it under a million dollars every quarter. That's been our goal since we started. Great. Thank you.

Your next question is from Austin Bolig with Needham.

Hey, guys, can you hear me? Yep. All right. Hey, Alan and team, congrats on the nice quarter and especially the margin expansion. Super exciting. I guess my first question, guys, is I just want to dive into kind of what your guys' current capacity is at as maybe we enter 2026. Like, is there a way you guys could frame up, like, the revenue that you guys could capture, whether it's through, like, your internal capacity plus the contract manufacturing? If we get a a perfect strong scenario next year with this demand?

Yeah, I mean, this is a little speculative on my end, because we keep scaling as we see demand, of course. Right now, we said we have $16 million in purchase orders, and we expect holidays big for us. So I would say between here and the end of Q2, everything we on delivering $20 million worth of stuff. You know, I think if we got a $100, $150 million worth of orders, we'd figure out how to get it done. More than that, we'll have to start to add space and equipment and there's longer lead times on that, on the CapEx. But I think you could see, you know, somewhere in the 100 to 150 range as being the capacity that we're scaling to and what we already have machines in for and CapEx in for and partnerships for. We'd have to get the orders, you know, if it was Sky Foundry or PBAS or any of these very large programs. If we had indicators before the end of the year, we could bring in CapEx and exceed that, but we'd need those indicators here before the end of the year. And, of course, if we had them, we'd share them with everybody, so.

Okay. No, perfect, perfect. And then I just kind of had a question just on the consumer business. It was down kind of a little bit lower than what expected. Anything specific to kind of call out for that near-term weakness?

Yeah, a couple things. The summer tariff weird uncertainty, I think, caused a little consumer hesitation in the marketplace. You know, we weren't focusing on it with the same thing. So we had some shipments early in this quarter because we had a little bit of out-of-stock stuff. So we would have been – I think on par for where we would have expected to be had we not run into a little bit of a stock thing with gap rules. And I think you'll see it rebound this holiday. So, you know, you get a little shifting across that time barrier, but my expectation is we'll see us back to normal with consumer in quarter four here.

Gotcha, gotcha. And then my last question is just kind of around this $30 million annual run rate for you guys to reach a break even. On a quarterly basis, is it fair then to assume that it's around, like, $7 million, $8 million? Or how should I think about, like, the quarterly revenues you need to degrade even?

Yeah. Yeah, I would say I'd figure $8 million a quarter with the margins that we've been able to move to. I mean, we're there. Okay. Awesome. Well, guys, keep up the good work. Thank you so much. Thanks, Austin.

Your next question for today is from Josh Sullivan with Jones Trading.

Hey, good evening. Congratulations on the quarter. I suppose the strategy coming together here. Just to actually follow up on that last question, on that $8 million, can we get there on the enterprise next where it is, or is that assuming the enterprise next is materially higher?

Oh, I think it's going to be on the enterprise next. So enterprise is going to grow much faster than retail. And, you know, as long as it continues to even show up the way we're there, I feel pretty good about it. Hopefully that answers the question. If it doesn't, ask it again.

I'll try to be better about it. Yeah. And then just, you know, you talked a bit about the competitive advantage you guys have, regardless of how long the shutdown lasts, which is great. But, You know, curious, is this just something you see from your vantage point, or do customers see this? Is it helping build your reputation, awards, or, you know, even the M&A opportunities that might be out there when you talked a bit about the S1 dynamic? You know, is this competitive advantage? Does it need to play out, or is it now when people are coming to you?

A combination thereof. So, you know, we can finance some inventory. So for our customers that want to be aggressive, we're willing to take a chance with them, and that builds – That gives them an advantage right now and us as a parts vendor. But it also builds relationships. And when you're a supplier, you know, relationships are 10 years long. You don't lose spots very often. And so I think it's both a right now advantage in that we can help our customers gain the same advantage on their competitors, even if they aren't as well financed. And in doing that, we're creating very long-term relationships with our preferred vendors.

And then, you know, the other dynamic is, you know, speed to market, and we talk about this, you know, this big opportunity coming up here. Can you frame, you know, where you guys are relative to the competition and, you know, how you're being successful winning these awards?

Yeah, we started earlier. I think we messaged really well, but my understanding, we're the only ones doing thousands of motors right now. You know, we – anything we do – when we go place orders into our component supply chain, it's for at least 10,000 units. So when customers come to us and they want 15,000 of the thing we can deliver. So we really haven't seen any of our competitors do that for value components in the U.S. market. And that puts us way ahead because it gives us the long-term relationships with our suppliers. It means that if somebody needs 500 units for like a, an L rip run or something, we have them right away because it doesn't affect our material flow. And then when they scale up, we're a trusted vendor. So this was, we're starting to see the results from work we put in more than a year ago when our first flight controller came out because we did 10,000 of those out of the gate. And it's really starting to create sort of an avalanche advantage where, you know, even if you go do a design with somebody else, how do you get to 10,000 real fast? Well, you call us.

I'll leave it there. Thank you for the time. I appreciate the questions.

Your next question for today is from Barry Sine with Litchfield Hills Research.

Hey, good afternoon, gentlemen. Lots of questions for you. So I want to talk about the outlook for orders. You've talked about the confirmed purchase orders, but that's really a subset. you know, of what's out there and what you're likely to win. So we've seen some of the announced customers. Presumably there's a lot more wins that you've won on platforms. Can you talk about the part of the iceberg that's under the ocean that, you know, we don't see? What is out there that you've won or, you know, you've won a placement on a platform, you know, that we don't see, at least size-wise? I know you probably can't name the companies.

Yeah, so I think there's several different pieces to this. First, there's the government issues our customers often programs in long-term contracts. And there are some things being competed like PBAS, Purpose-Built Retrievable Systems. And they haven't awarded the final awards for it yet. But, you know, we have parts on, I think, every finalist. So that's an example of where we have forecasting if they win, but haven't seen purchase orders yet necessarily. So when you look, And also the purchase orders we get for anybody are really only for the things they want the next three to six months. And we're setting up inventory for the forecast. So I think there's still some uncertainty because the Department of War hasn't finalized contracts and they're still trying to figure it out. But my expectation is that what we put out there is well under 50% of what I expect to see in demand. Where that falls exactly will depend on which ones of our customers win which contest, whether we're a smaller portion or a larger portion of the bill of materials. But I'm very confident in where we're at going forward, and that's why we continue to scale. We know that when the government comes back, those will be awarded, and they'll still want the initial drones for those programs at the same time.

And then if we look at your product catalog on the blue list, your hot seller seems to be motors. You seem to be selling a lot of motors, I guess, you know, goggles maybe, you know, second. Where do you see holes in your product line? You know, for example, do you need to have a digital, you know, more digital solutions? And along those lines, I had a good conversation with your new hire, Al Ducharme at Rampage, and he's got a pretty strong background there. So, what might we see product-wise in components with his fingerprints on this?

Yeah, so product roadmap, we'll start to really flush that out in quarter one. What I would say is right now we're trying to scale for the FPV segment because there's a ton of demand, and we want to focus on that scaling. I would say initially where you'd see adjacencies, into other drones even before there's a lot more technology necessary in the powertrain. So motors plus motor controllers plus batteries is kind of a sweet spot to go look at delivery drones or aerial photography drones or otherwise. And then I think once we have moved to scale, you know, we'll know what customers were successful and we'll work on technologies that they need. You know, I do think there's some really good other companies that do some of the high-value stuff, like Digital Links. There are several companies that do that, Mobilicom, Doodle Labs, et cetera. And so we're not trying to go compete with other people that are trying to build out the Western drone ecosystem. We're trying to be complementary. And I think once we hit scale and we start to build, you know, the components for our customers that are doing tens of thousands, they'll tell us where to go, and we'll just listen. and we'll get those parts done as quickly as they need them.

So my ears perked up when you said the word batteries because I don't think you make your own batteries today, so that sounds like it might be a potential area of acquisition.

Yeah, I would say when we look at powertrain, I think batteries is one of the things that we'd have to look at in the next year and see if we can be part of the solution there.

And then on the retail business, as you had a question before, kind of flattish, sequential, although 3Q is never historically a big quarter, I don't believe. A couple questions on that. First of all, some of that is actually enterprise where prospective customers are buying lots of units to try out before they place a large order. So if you have any sense on that. And secondly, the other person I had a good conversation with at Rampage was Nate Kennedy, and he seems to have some ideas on, you know, growing that business. And I think I'm happy to see that because you guys are so focused on enterprise. It's nice to see somebody focusing back on, you know, Rotor Riot, which is where you, you know, what started the company.

Yeah, so we see our retail channel as a massive sales funnel, as you mentioned, and it's great. And we realized that as we were being overwhelmed as a small team with the very rapidly scaling demand for enterprise that we were making some compromises. So we definitely brought in some senior personnel to help be sure that our retail channel is better than ever this holiday and passed it. And that's why I think the hiccup is just that, it's a hiccup. And otherwise, we're really excited about our brands and what we're doing going forward on the retail side. And see it as just first our customers that are awesome. So I'd like to thank every Roteri customer and Thatcher customer and everybody that went to Rampage. I mean, they're just awesome. And, you know, we want to be sure to continue to service that customer base as even better than we did before as we grow.

Okay. And, Alan, my last question is, You made three strategic investments during the quarter, SafePro, LightPath, Copen, and we proved that you're a great portfolio manager with that ice game there. But from a strategic standpoint, could you talk about each of those briefly? Why did you make that investment? What do you see in them? And when might we see the benefits of those new partnerships show up on your income statements?

Yeah, so SafePro was the first one. It was a smaller one. It was done in collaboration with OnBus, and that was more – that was done because they're, you know, finding landmines, and that helps generate value whether there's conflict or not. I think it's a really great use case, and we just wanted to be sure that, you know, if they were using FPV drones, it worked fine. That was probably the most financial, in air quotes, of the investments – in that it's a little further removed from our platforms. So I don't know how much that will drive value for our company in deep strategic relationships, just because we are not building too many cameras that'll be special purpose for that. But we do want to be sure it works. If you look at Lightpath, they're doing non-Germanium thermal cameras. Pretty much everybody, every enterprise customer wants multi-spectral or thermal cameras. So You know, Sam's just across the way in Orlando, like literally 20 minutes away, and has just so much business that that investment can put us in a position to do thermal cameras. Cameras are a little further down on our roadmap, so we're not there yet, but I think that will start to materialize in collaborative stuff, assuming we execute and we set up our roadmap probably mid to late 2026 and pop up offerings would be the goal. And then Copen does panels, display panels, and we're building headsets. So I expect our headset assembly to be online here in January, but we're, you know, we're starting conversations to figure out how to include their panels. And again, that'll probably be late 2026. Just, you know, new products take 18 months generally. So I wouldn't expect anything faster than that.

Okay. Thanks for taking all my questions, Alan.

No problem. Thank you for them, Barry.

Your next question for today is from John Roy with Water Tower Research.

Hey, Alan. I wanted to discuss a little bit about the domestic motor and headset production. Kind of two twin questions here. One is, how do you expect to really turn this, you know, what seems to be a reshoring competitive advantage into a long-term competitive advantage? with production of those? And the second thing would be, how do you expect, you know, margins might ramp as you really put some more into production costs, et cetera?

We always set out and said that nothing we did could be more than 20% greater in cost than what came out of China. And, you know, that's how we try to price. And we think in doing that and building really high-quality products and using things like automation to be able to be competitively priced, that once we win slots in this sort of disintermediating moment, that we'll keep those slots with those customers through customer service and being local. And also, it's just expensive to change suppliers. So, you know, what I think we're going to see is a dip in margin, a little dip in margin as we really ramp, as we figure out how to get these things working again. But what I'm really proud of the whole team of is we've demonstrated we can get to 39, 40% margin. We're on the way we are, and that's at lower revenues. So I think you might see a dip as we scale, but then at even greater volumes, I'd expect us to be able to probably break through that 40% margin level and be really competitive. And, you know, that's where I think this quarter – where it's not like blowout revenues, we've done a really good job of taking what we were doing and refining it and polishing it. And so we're not scaling problems. We're scaling solutions. And that has me feeling pretty confident that even though we'll run into probably some yield stuff as we, you know, some other ripples and margin as we scale that, we'll get back to it and probably exceed 40%.

Cool, one last question for me, maybe a little bit broader one. How do you see the competitive landscape evolving maybe a little longer term? We're hearing rumblings from some European companies that they expect to start doing US manufacturing. I was curious as to how you might see the competitive landscape evolving.

Yeah, my personal belief, is that sort of in the deglobalization we're seeing right now as part of the macro trend, we're going to see regionalization. And so in the same way people ask, hey, are we trying to sell in Europe? Not aggressively, no, because I think Europe's going to buy from Europe. And I think there's going to be so much demand with all the duties, e-budgets in Europe increasing that it would be there. And then I think U.S. money is going to favor U.S. companies. I mean, it's taxpayer money when you want it to go to people that pay taxes and are other Americans. So I think That is, in a tie, I think the local option wins. So I think we just need to play for the tie, and we'll win in North America, and we'll really focus on North America rather than those other geos for that reason. So that's the direction we're making and how we're going forward.

Sounds good. Well, congrats on the quarter, and we'll talk to you soon.

I really appreciate it. We also have a couple of questions from an analyst that came in via email, which I'll read and then answer. The first one, can you please discuss how you expect the timing of major drone awards to interact with U.S. government shutdown dynamics versus looser budget spending requirements for drone purchases? What does reclassifying drones as munitions mean for UMAX growth versus regular way spend? How is growth appearing between acquisition officers and base combatant commanders? So I think the Major drone awards for the U.S. government shutdown, I really don't expect them, if the shutdown goes on much longer, to probably occur until early 2026. Where I do see a lot of the overly allocated stuff, the looser, the smaller buys, occurring when the government gets back online, because those are just easier. They require less oversight, less people for approval if someone's on vacation, etc., Reclassifying drones as an emissions helps our growth in that it allows much smaller groups to just buy drones and not have to track them. And so it means our customers can sell $100,000 or $200,000 worth of drones to these sort of base level buyers rather than have to be all centralized and go through a really long process. So those looser spends I expect to come online much faster when the government comes back and to drive sort of maybe fewer headlines for a lot of the revenue in the category. And then growth between acquisition officers and then base combatant commanders, that to me is pretty opaque. I would say we'd have to go talk to our specific customers. And it also feels like they're still figuring that out, like what is the ratio or who's in charge of what. And so I think in another six months we'll have a good idea there. The second question, can you discuss the acceleration of customer interest post-AUSA? How does getting the 101st Airborne as a customer raise awareness, not just for UMAC, but also the importance of domestically sourced drone components? AUSA was a great event. You know, we were able to go and see a bunch of our parts that were priced out on a wall with members of the armed services flying those drones. We're really excited about it. One of the things I think it does is there's an initiative called Sky Foundry where the Department of War, and I think the Army in particular, is considering spending several hundred million dollars, two or three hundred million dollars, starting to build drones inside the military to understand them better. And I think really AUSA drives a lot of awareness as us as a vendor for that. And I really think it being... so inherent even in our customers wanting to use American source components. I think it points out to everybody that this is an important thing from a redundant supply chain perspective. And so it's been a real positive. And it's also helped highlight that we don't have like just at scale suppliers yet. And so there's a real need for that. The next question, what engineering approaches, materials, or form factors are you most excited about with respect to drone components? How do you expect those dynamics to feather into your growth algorithm? You know, I would say right now I am the most excited about doing the powertrain. I think we sit really well there and can be complementary. And so, you know, as I alluded to earlier on Barry's question, I think batteries is something we're going to have to look at, and that will come into our growth algorithm. There may be some opportunities to move to like cameras, like gimbal cameras and the ISR stuff if our customers want it. I think that's a little further out. But I do think putting this all together is going to put us in a place to continue to add new components and get a more diverse group of customers, but also a more diverse portfolio to, again, really prevent any concentration risk. And I think that's what's awesome about where we're already at is, We're getting this growth and we don't have customer or product concentration. And so we're able to be really dynamic and not really put ourselves in a situation where it could all come tumbling down. And I think that's what I like the most about it. And those are the questions from the email. So I think that's all the questions.

As a reminder, if you would like to ask a question from the phone lines, please press star one. We have reached the end of the question and answer session and I will now turn a call over to Alan for closing remarks.

Again, I would like to thank everybody for being on the call. Really appreciate it. We wouldn't be here without our customers, our shareholders, and people that support us. So thank you. Wouldn't be here without the team. We had 30 people start Monday. They're building motors this week. So thank you for being part of the team. Everybody with us, you know, since we started. Again, thank you guys all. To Brian for being here. Brian, you're the best. And I just, you know, it's a great quarter. It's profitable. We're growing. Everything is set up for this to scale and there are no roadblocks in our way. So it's time to go. Thank you.

This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.