Archer Aviation Inc.

Good afternoon, thank you for attending today's Archer Aviation Q2 2025 financial results conference call. My name is Tamia and I'll be the moderator for today's call. All lines will be muted during the presentation portion of the call. It's an opportunity for questions and answers at the end. If you would like to ask a question, please press star one on your telephone keypad. I'd now like to pass it over to Eric Lentil. Please go ahead.

Thanks for joining Archer's earnings call. This is Eric Lentel, Archer's Chief Legal and Strategy Officer. During the call, we will be making forward-looking statements. These statements are based on assumptions as of today, and we do not undertake any obligation to update them as a result of new information or future events. There are risks and uncertainties that may cause our actual results to differ materially from those contemplated by the statements. For more information about these risks and uncertainties, review the risk factors in our SEC filings. We will also be discussing both GAAP and non-GAAP financial measures on the call. A reconciliation of those financial measures is included in our shareholder letter and earnings release from today. And now I'll turn it over to Adam.

Adam? Thanks, Eric. We are living through the re-industrialization of America. Just 10 years ago, the best and brightest minds in the country were building SaaS products, marketplaces, and consumer electronics. Now think of what's going on today. We are building flying cars, modular reactors, and autonomous fighter jets. The new heroes of today aren't influencers, they're builders. People like Palmer Luckey, Alex Karp, and Zuck. If you're listening to this while trading on Robinhood or doomscrolling Reddit, I would encourage you to put your phone down, pick up a tool belt, and come build a future world with us and others out there doing it. What a time to be alive. All right, let's dive in. This quarter, we made some tremendous strides in ramping our manufacturing, which we highlighted in our shareholder letter today. First, I want to step back to talk about how unprecedented the level of support is for our sector within the highest levels of the US government. There has been a clear shift in our industry from ambition to execution, focused on scaling commercial air taxi operations in the US and select forward-leaning cities around the world. First, there were multiple presidential executive orders directing an imperative for US leadership in advanced aviation. Second, showcasing air taxis at the 2028 LA Olympics was made a national priority. And third, there was a series of unprecedented changes to FAA rules that will help unlock near-term commercial ops in the US. Just a few weeks ago, I was in D.C. meeting with Vice President J.D. Vance, FAA and DOT leadership, and Secretary of Defense Pete Hegseth. I left more convinced than ever. This is the most coordinated national effort in modern aviation history. My message to them was simple. Archer is committed to furthering America's lead in advanced aviation by building and deploying eVTOLs here at home, and then exporting that innovation globally. The Olympics mandate has become a national stage to showcase air taxis at scale. Two years ago, the FAA published its Innovate 28 roadmap for scaling eVTOL ops in American cities by 2028. Earlier this quarter, the LA 20 Olympics announced that they selected Archer to be the official exclusive air taxi provider for the games. And just last week, a new executive order established a White House task force personally led by President Trump and the Vice President to ensure maximum safety, secure borders, and world-class transportation at the 2028 LA Olympics. This level of commitment is allowing us to rally our infrastructure partners, supply chain, and the FAA around a national priority. Our existing infrastructure partners, including SoFi Stadium and USC, as well as new real estate groups, are working with us to prepare over a dozen eVTOL VertiPorts to support Archer operations. Our key suppliers are ramping production and component level certification to align with our manufacturing scaling timelines. And the FAA is working closely with our teams to advance midnight certification to support our operational readiness. The executive order in June, crafted in partnership with the White House, DOT, and FAA, is the most significant federal action to date in the eBTOL sector. It establishes a national directive for American dominance in this industry and a presidential imperative to begin air taxi deployments in the U.S. as early as next year. These early operations will allow us to validate midnight's performance, safety, and scalability in real-world conditions in advance of the games. But to make all of this a reality, we must quickly ramp manufacturing to support our certification programs and early commercial deployments. Tom will unpack the details, but here's the headline. We now have six more midnight aircraft in various stages of production, with three of those in final assembly across our facilities. When those are complete, that will bring our midnight fleet to a total of eight aircraft. Each of those will carry our production four-bladed rear propeller design and will either go directly into certification flight testing or early commercial deployment. Completion of these aircraft will bring our fleet to eight midnight aircraft. The capital we have deployed over the last few years to build out our test and manufacturing is now paying dividends. We are the only ones in the eVTOL sector capable of executing what we are doing today. Using a golden line approach as a blueprint to scale our high volume facility. If you remember, we began construction on our high volume facility in Covington in early 2023. Our team built that in two years at a record pace. And no other company in the eVTOL sector has even started construction on a comparable facility. We are pacing the industry. And location matters too. The FAA's Atlanta Aircraft Certification Office manages our certification program, and our Covington site is located in the suburb on the eastern side of Atlanta. The proximity enables frequent on-site engagement as we work through our certification program. Further, we begin working on our production certificate in January, And the FAA is conducting regular reviews and inspections with our team as we go through these early builds. The goal here is to ensure we are aligning the progression of our type certification with our production certificate so that we can ramp manufacturing as soon as we receive midnight's type certification. This quarter, we also commenced the piloted flight phase of our flight test campaign. By design, we deliberately started with conventional takeoff and landing flights. as Midnight is uniquely capable of handling both vertical and conventional takeoff and landing as part of normal operations. In recent years, our flight test campaigns have predominantly focused on VTOL and transition to wing-borne flight. As we eye TIA later this year, it was essential to first work through the CTOL campaign. The good news is that we are rapidly progressing through the flight envelope, hardening the aircraft's ability to handle our expected commercial operations. For example, we've recently focused on flights in the 20 to 30 mile range, which are representative of many of our planned commercial operations. We also expanded our flight test program internationally with our first launch edition operations in the UAE, where we first focused on testing midnight's performance in Abu Dhabi's extreme summer heat. This is important to validate midnight safety and reliability in high heat, high humidity conditions essential for regulatory approval and subsequent commercial operations across the region. We plan to deploy several of these early aircraft commercially under our launch addition program with strategic partners ahead of FAA type certification. We've announced three launch addition program partners so far, with the first being in the UAE, the second being in Ethiopia, and most recently, Indonesia. Demand from global operators and governments continue to grow. This summer, we signed definitive agreements with Abu Dhabi Aviation and the Abu Dhabi Investment Office and kicked off operations under our first launch addition program in the UAE. This unlocks a multi-year commercial partnership that I expect will generate tens of millions of dollars for Archer, with initial payments expected later this year. Let's run through some of the key activities from this launch program. delivering our first midnight aircraft and began flight testing with the GCAA in June. Deploying our first flight simulator with Etihad, which our teams will be using to build local readiness across pilot training. Converting existing aviation infrastructure into turnkey eVTOL vertiports in partnership with local stakeholders, including JetX, the UAE's leading FBO operator. Over the next several years, expect to see us to deliver additional midnight aircraft to the region and begin early exhibition flights with passengers ahead of more robust commercial operations under authorization from the GCAA. We also expanded launch addition into Asia, beginning with Indonesia, anchored by Jakarta, one of the world's fastest-growing megacities, and Bali, a high-demand destination with limited access options. You can expect to see us both announce more global launch addition partners and continue to grow our multibillion-dollar order book with the world's top governments and airlines. As we partner with the countries at the highest level of government, our growing commercial momentum is also attracting defense momentum. For over a century, every major conflict has been defined by a breakthrough in military technology. World War II introduced the fighter jet. The Gulf War showcased precision-guided munitions and stealth. Drones reshaped the war on terror. Today, the war in Ukraine is being fought in real time with unmanned systems and satellite-linked targeting. The next paradigm shift will be defined by advanced vertical lift. The U.S. and its allies, however, are still reliant on legacy platforms such as But future conflicts will be one with low cost, low thermal, low acoustic systems capable of rapidly moving through contested airspace without risking human pilots. Over the last 18 months I've learned from the global defense industry that our customers demand a purpose-built system designed to stay relevant for decades. You cannot simply slap a heavy fuel powertrain onto an existing eVTOL design. I am confident that Archer's technology positions us at the forefront of that shift, delivering the speed, agility, and deployability modern militaries will require to win. To accelerate our progress, we completed two strategic acquisitions this quarter. First, we acquired a key patent portfolio and technical team from Overair, a Karim aircraft spinoff focused on advanced fixed-wing and rotary-wing platforms powered by high-efficiency tiltrotors. Second, we bought a supplier of specialized defense composite manufacturing capabilities in-house by acquiring a 60,000 square foot facility in Southern California from Mission Critical Composites. These moves continue to build our proprietary moat as we push to meet the demands of our growing defense pipeline. Following recent meetings in Washington with Secretary Hegseth and Secretary of the Army Dan Driscoll, it's clear that Archer Defense is positioned to become a strategic pillar of our business. With over $1.7 billion in liquidity, we're not waiting on the future of aviation. We're building it now at global scale. This is what execution looks like.