Beta Technologies, Inc. Class A

Welcome to the Beta Technologies third quarter 2025 earnings conference call. All participants are now in a listen-only mode. We will open the line for questions after our prepared remarks. If you would like to ask a question, please press star 1 on your phone keypad. If at any point your question has already been answered, you can remove yourself from the queue by pressing star 2. So that everyone can hear your question clearly, please pick up your handset for best sound quality. If you should need operator assistance, please press star zero. I will now turn the call over to Devin Rothman, head of investor relations. Please go ahead.

Thank you, operator, and good morning, everyone. My name is Devin Rothman, and I lead investor relations here at Beta Technologies. We appreciate you joining us for our third quarter 2025 earnings call. Joining me today are Kyle Clark, our founder and chief executive officer, and Herman Kudo, our chief financial officer. Following their prepared remarks, we will open the call for Q&A. Before we begin, I'd like to remind everyone that earlier this morning, we issued a press release announcing our third quarter financial results. We also published our Q3 investor presentation. You may access this information on the investor relations section of beta.team. Additionally, please note that today's discussion of our business, operations, and financial performance will include forward-looking statements under federal securities law. These statements are based on our current expectations and assumptions and involve risks and uncertainties that may cause actual results to differ materially. For a detailed discussion of these risks and uncertainties, please refer to our filings with the SEC, including our IPO prospectus dated November 3rd, 2025, and our Form 10-Q for the third quarter that will be filed later this morning. We do not undertake any obligation to update our forward-looking statements. During the call, we will reference both GAAP and non-GAAP financial measures. Reconciliations between historical non-GAAP and the nearest GAAP measure can be found in our earnings materials posted on our investor relations website. Our slide deck for today's call is also available on the site for those who wish to follow along. With that, let me turn the call over to Kyle.

Thanks, Devin. Good morning, everyone. helped us through a successful IPO. Fidelity has been with us from the very first round, along with Amazon, Chuck Davis, John Abley, TBG and our Series B, and more recently, Larry Culp and the entire GE Aerospace team. And of course, the overwhelming support from all of you throughout the IPO process. This support has made it possible for us to enter the public markets with a uniquely aligned and world-class group of investors. Since this is our first earnings call, before we dive into our quarterly numbers and updates on our aircraft, our target network progress, GE, aerospace, and GD programs, and new orders from Embraer EVE, I'd like to take a few minutes to introduce myself and our company, our mission, and specifically how we think about redefining aviation and why this team has earned the credibility it has and is uniquely capable of changing the way people fly. My name is Kyle Clark. I'm an engineer, a pilot, and the founder of Beta. Beta began as my senior thesis in college more than 20 years ago and has shaped my life's work ever since. I still spend as much time as possible designing, flying, and building airplanes. That's all I've ever wanted to do. Prior to Beta, many of the team members here and I spent our professional careers designing and building high reliability power electronics and control systems for organizations like the National Nuclear Labs, Raytheon, Tesla, and many others, helping them to electrify and control things that once seemed impossible, like the Patriot missile system. In every case, we created systems that were far superior to what they replaced. Throughout those years, I kept refining the idea that would become Beta. thinking about how electric aviation could serve the industry in a practical, impactful way. When I met Martine Rothblatt of United Therapeutics in 2017, I felt like two missions were aligning. We shared the belief that electric aviation could reshape the future of flight, and even more importantly, save lives by enabling large-scale transport of organs. Martine became our first customer, helping to finally focus on cargo, medical, and logistics. For the first time, the work we had been doing with others converged with a mission of our own, one that had the potential to make a real difference. The electrification of aviation is inevitable. The electric aircraft that we are certifying are safer than their traditionally fueled counterparts. Electric aircraft are less expensive to operate, quieter, more sustainable, and have a higher reliability and dispatch rates than complex legacy aircraft. But these advantages and others aren't just things that come for free because the aircraft are electric. They come from a disciplined engineering approach, a product philosophy rooted in simplicity, reliability, and pragmatism. Our dedication to simplicity through design and first principle physics is the foundation of our entire business and the reason electric aviation will deliver on its full promise. Here are the guiding principles of Beta's business. Beta owns and controls the enabling technologies for electric aviation. This includes the batteries, motors, flight controllers, and chargers. We work extremely close with the customers and the regulators. We have earned their respect and they have earned ours. We offer a full-stack solution to our customers, everything they need to operate. From the aircraft, to the batteries, to the data systems, to the training, to a global charging network. Our aircraft and designs are a platform for new technologies such as advanced batteries, fuel cells, hybrid, and autonomy. We've put all the hooks and the flexibility into our aircraft to adopt these improvements. We understand and respect physics. This has enabled us to hold every meaningful world record in electric aviation, range, payload, and both speed records. We're a show not tell business that's focused on keeping our promises and hitting our milestones. we let our accomplishments speak for themselves. We focus on safety, performance, and reliability through simplicity. At the very core of Beta are the people. We are a team of scientists, engineers, aviators, and builders. We fly what we build. We expose the issues early. We believe in data, integrity, and honesty. We are intensely connected to the mission. And the financial success of this business and the economic benefits to our customers are directly aligned with our mission of creating a sustainable aviation future. Now that we've established who we are, let's talk about what we do here at Beta. We design and build both electric conventional takeoff and landing airplanes and vertical takeoff and landing powered lift aircraft. We also sell high-performance systems that power them, the motors, batteries, flight computers, and sensor systems. We manufacture, sell, and install thermal management and charging infrastructure. We're the only OEM with a certified charger and a nationwide interoperable and multimodal charging network. And now we're expanding that footprint internationally. The mature propulsion and charging products are producing positive contribution margin today, and these technologies are sought after by the most respected aerospace and defense companies in the world. We fly what we build. Our family of electric aircraft has logged more than 100,000 nautical miles across three continents and 10 countries, landing at over more than 380 airports. We've flown in the rain, the sleet, the snow, the fog, dust, and every class of airspace from Class Golf to busy Class Bravo airspace across a wide range of payloads. And we've done it with more than 10 times as many different pilots in the left seat than any other company in our sector. Nobody has as much real-world data as we do, not even close. When we go out and fly, I typically close our briefs by saying, let's go expose the issues. The data produced in these flights is critical feedback to our engineers, our manufacturing teams, and for training our AI models. We've executed real-life flight missions on our aircraft with United Therapeutics, UPS, Bristow, Air New Zealand, and many others, including the U.S. military. This real-world flying with executives and chief pilots from these companies has resulted in a deposit-backed commercial aircraft backlog of $3.5 billion and a component backlog that just crossed $1 billion. mostly due to a major deal with Embraer Air Mobility. This aircraft backlog doesn't include the post-sale services and aftermarket components, which makes the total backlog about four times higher. We sell aircraft at a good margin, but that isn't the insight to our business. The beautiful thing here is that Beta gets both the aircraft sale and high-margin recurring revenue from battery and aftermarket sales. This is highly unique for airframers, even among electric aircraft developers. All the while, our customers get a lower cost of operation and ever-increasing performance. This model is an entirely new paradigm for aviation. The philosophy of simplicity and pragmatism is clearly reflected in our certification strategy. We've taken a strategic stepwise build-up approach to certification, which is also unique within our industry and rooted in a deep understanding and the current regulatory readiness to certify new and novel technologies. It started with the propeller in partnership with Hartzell, which we achieved a full type certification last summer. In parallel, but phase-shifted, we went on to the electric aircraft engine, the H500A, then the CX-300, which is being certified as a Part 23 FAA airplane. We presently are building conforming articles for this program. And again, in parallel, but phase shifted, the A250 vertical takeoff and landing aircraft, which has a closed G1 certification basis. Each of these steps are done so that the success and certification of one builds directly into the next. Another piece of our strategy is shown at the bottom of this slide, where the propeller and engine are ported directly into the CX-300 airplane. And then the designs, conformities, and requirements of the CF-300 airplane, they complete over 80% of the A250 power lift aircraft. The commonality between these models streamlines not only certification through the reuse of artifacts, but also production systems and pilot and maintenance training. Our dedication to simplicity and first principle physics has positioned us to be the leading voice in the industry, especially when it comes to working closely with the regulators. In addition to leading Beta, I chair the Gamma Electric Propulsion and Innovation Committee, an industry group comprised of the top subject matter experts in new technologies, specifically around electric propulsion and autonomy. This position has given Beta the unique opportunity to work directly with the FAA, as well as international authorities, as we develop policy for our industry. Through our work with the FAA, I've seen firsthand their focus, commitment, and a renewed prioritization of safely bringing electric aviation into the national airspace. Major thematic shifts led by this administration have resulted in the Powered Lift Type Certification Advisory Circular being published this past summer and a transformative executive order, American Drone Dominance, which mandates the implementation of an eVTOL Integration Pilot Program, or EIPP. This will allow us to launch commercial operations next summer. Our industry has seen remarkable political, regulatory, and commercial tailwinds recently. doing all over the world demonstrating that electric aviation is fundamentally better. The world now recognizes that the United States is leading the AAM industry and maintaining that leadership is essential to realizing the full benefits to our GDP, our national security, and our planet. The current administration through the Department of Transportation and ultimately the FAA has cleared the path for near-term operations domestically. Here at Beta, we put a high value on the transparency and intellectual honesty. I wanted to spend a moment outlining five key performance indicators that we'll be using on a regular basis to share with you our progress. The first KPI is our backlog. You should expect this to steadily increase as exposure to the company and the aircraft grows. Today, the combined number of orders stands at 891 aircraft, with hundreds more in active negotiation. These are deposit-backed orders. The second KPI is real-world flying. We measure nautical miles flown by our beta electric aircraft. Our aircraft are out flying every day on three continents. These miles don't just represent a number. They represent exposure, experience, safety, and reliability and produce extremely valuable data for our engineering certification and service efforts. I don't believe anyone in the industry has even flown half this many miles. And yes, the units are nautical miles. Our third major KPI is our charging network. It's large and growing. It covers the majority of the East Coast into the Southeast and we're actively filling in those gaps. Note that these are sites. Some of these sites have multiple chargers on site. They are multimodal, which means you can charge cars, trucks, and vans, and interoperable, which means it's usable by anyone flying. We also track charging cycles, which exercises our mobile applications, billing, data management, and customer experience. We have over 62,000 so far this year. The fourth KPI we acutely track is the production readiness of all of our facilities. Both at our primary manufacturing facilities, making composites, metallics, welding, paints, and coatings, as well as our final assembly facility, like this one I'm in now, the 188,000 square foot production facility. We exercise these lines intermittently at max rate to ensure that we expose the issues of rate production early. Our KPI for production readiness will be defined as our maximum demonstrated aircraft output on a monthly basis. We plan to provide guidance for 2026 rate in our year-end call. And fifth is arguably our most important metric to track as a new OEM, our certification progress and the completion steps to our primary product. We are in the last stages of certification now for the H500A, and we just hit another first this quarter when we became the first OEM to begin four-credit testing with the FAA on an electric engine certification project. I believe we're on track to be the first electric engine certified standalone in the United States. On the CX-300, which is a Part 23 airplane, we're building conforming articles now, and we're working in partnership with the FAA, who has a great team deployed to support this. And the ALEA A250 aircraft, which has a clean and clear certification basis. We will add to these KPIs in future years as production ramps and our industry matures. Now on to the quarterly update. It's been a big quarter, and we have big goals. And the pace we set for ourselves to deliver on these goals, plus the drive that meets or exceeds it, is what makes this team different. We've had several key accomplishments this quarter that position us to successfully deliver on those KPIs we discussed in this coming year. In addition to our successful financing and the certification milestones I mentioned, we've proven our aircraft in demanding real-world operations that position us to lead the deployment of aircraft into the eVTOL integration pilot program. We now have 10 beta-supported state applications in play for DOT review, And beta chargers have been specified in applications that has the potential to add 57 charge sites. We are conducting demos with Republic Airways in the Midwest and other major operators in the Pacific Northwest. We're carrying cargo with Bristow in Norway and operating with Air New Zealand down under. Over the summer, one of the Air New Zealand pilots was the first pilot to earn their FAA commercial license in any advanced air mobility aircraft. And of course, it was in beta Zalia. After comprehensive flight test campaigns on multiple prototypes in the past years, this quarter we've been flight testing our first Alia VTOL aircraft built in our production facility and on our production tooling. I've personally flown this aircraft model many times in New York and Vermont and it flies beautifully. The team here at Beta never ceases to amaze me with their ability to keep promises. We delivered our first products to General Dynamics this quarter. The undersea propulsion work we're doing with General Dynamics in support of DARPA is indeed classified, but it serves as a powerful validation of our core technologies. The simplicity and performance of our systems are being trusted for some of the most demanding applications and missions in the world. Our vision is to deploy charging to every suitable airport and vertiport in the world and own the flow of energy into the future of aviation. This quarter, on the charge network development, in addition to commissioning several chargers and thermal management systems in Michigan, we also won the contract to electrify the Abu Dhabi airports, and we recently installed, commissioned, and tested the first aircraft chargers in the UAE. Like our certification, our market entry strategy is stepwise. I believe that deploying chargers in Abu Dhabi will lead to an airport-to-airport electric cargo and medical flights before urban air mobility really takes hold. With our recent order from eSmart Logistics and the UAE, a leading provider to global cargo airlines, Beta will be the one to provide these steps. This quarter, our relationship and technical work with the GE Aerospace team grew once again. GE Aerospace continues to be a mentor and a supporter of our certification work and a great partner to Beta. This relationship is rooted in complementary technical expertise and a strategic alignment to field hybrid electric power systems. We completed phase one of our joint development CT7-based turbo generator program, and we even increased our scope of work. Beyond the technical and specific program work, the financial relationship has grown as well, and GE Aerospace participated in both our Series C private placement investment round and, again, in the IPO. This past quarter, we delivered all the motors necessary for EVE to enter their next phase of flight test campaign. I've spent significant time in Brazil this past year and I can attest to the fact that Eve has amazing people and a great development process. I'm confident they will deliver with their thorough, methodical, and comprehensive approach. Embraer is a world-class company and Eve's genetics are closely tied. However, they don't do propulsion. They come to us for this and we're proud to partner with Eve. Although this production supply deal is in the works for the last year, we said Earning this production contract for motors and aftermarket services has worth more than $1 billion in revenue over the next 10 years alone. This wasn't included in our financial model shared with the sell side analysts and represents a transformative upside to our backlog. I believe this is a testament to our industry leading motor designs for safety critical applications vetted by the most respected air framers in the world. The motor we're selling to Eve is the H500B. which we're testing now and proving a significant increase in power and power density. You see the data point occupies the top right corner of this comparative chart. We're excited to begin this next phase of our business as a public company and humbled by the support we've received in the process. By drastically lowering the cost of aviation through electrification, the growth potential in the TAM expands and is nearly unbounded. There's a ton of work ahead of us, but we love what we do and we're excited for the work. This is a team that thrives on engineering a vision into reality, solving challenges, and delivering results. Lastly, I just want to say thank you again to our existing investors, and thank you to our new investors who joined us in the IPO. We're excited to partner with you and build the future of aviation. With that, please let me introduce our CFO, Herman Kudo. Herman is a trusted colleague and a friend. He comes from a background of manufacturing and assembly of high-quality products within a very regulated environment. He has extensive experience in the things that matter most to Beta and has earned the unwavering respect of his team and his peers here at Beta. Herman, please brief us on the financial results this quarter and our cash position.