BETA Technologies (NYSE:BETA) reported third-quarter financial results on Tuesday. The transcript from the company’s third-quarter earnings call has been provided below.
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Summary
BETA Technologies reported its strongest revenue quarter ever, surpassing Q3 guidance by over 50% with $17.7 million in revenue, marking a 98% year-over-year increase.
Key strategic milestones include earning the FAA Market Survey Airworthiness Certificate for the Alia A250 as the first electric eVTOL to achieve this, and launching service in six EIPP sites.
The company has completed three of its five aggressive year-end targets: $4 billion in aircraft backlog, over a quarter million nautical miles flown, and 168 charging sites, surpassing the initial target of 150.
In manufacturing, BETA Technologies is progressing towards a production capacity equivalent to 4.5 aircraft per month, focusing on establishing capabilities for certified aircraft production.
The defense business is advancing with the MV250 building on the commercial A250 platform, and engagement with the defense community highlights a capability gap that the MV250 can fill.
The components business is growing faster than expected, with a $1 billion backlog, and contributes significantly to revenue with high margins.
BETA Technologies is advancing an $830 million financing package with EXIM Bank to support domestic manufacturing and vertical integration expansion.
The company raised its full-year 2026 revenue guidance to $52 million to $57 million, reflecting strong Q3 performance and durable underlying programs.
Full Transcript
OPERATOR
Results conference call. After today’s prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. I will now hand the call over to Devon Rothman, Head of Investor Relations. Please go ahead.
Devon Rothman (Head of Investor Relations)
Thank you, operator, and good morning, everyone. Thank you for joining us for BETA Technologies’ third quarter 2026 earnings call. Joining me today are Kyle Clark, our Founder and Chief Executive Officer, and Herman Cueto, our Chief Financial Officer. Following their prepared remarks, we will open the call for Q&A, where Kristen Costello, our Head of Government and Regulatory Affairs, will also join us. Earlier today we issued a press release announcing our third quarter 2026 financial results as well as an investor presentation, which are both available on the Investor Relations section of our website. Before we begin, I’d like to remind everyone that today’s discussion will include forward-looking statements within the meaning of securities laws. These statements are based on our current expectations and assumptions and involve risks and uncertainties that could cause actual results to differ materially.
Please refer to our filings with the SEC for a discussion of these risks. We will also reference certain non-GAAP financial measures; reconciliations to the most directly comparable GAAP measures can be found in our earnings materials. With that, I’ll turn the call over to Kyle.
Kyle Clark (Chief Executive Officer)
Thanks, Devin, and good morning, everyone. On our last call we covered the MV250 debut at Farnborough, EIPP launch with United Therapeutics carrying organs, motor certification, policy interpretation issues, and an aircraft backlog approaching the year-end goal of $4 billion. This morning we will cover the commercial, military and certification momentum, and financials through this last quarter. Quarter three was the strongest revenue quarter in BETA Technologies history.
We beat the midpoint of our Q3 guidance by more than 50%. We also crossed more than a quarter million nautical miles of electric flight. We launched service in six EIPP sites, including Florida this past week. Our exceptionally strong partnership and collaboration with GE continues to make us a better company, and in September we beat delivery promises to Embraer Eve’s program. We also hosted Chairman Yovanovic from the EXIM Bank and continue to advance the $830 million financing package to fund our domestic manufacturing and vertical integration expansion.
More recently, on October 16th we earned the FAA Market Survey Airworthiness Certificate for the Alia A250, November 250 X-Ray T, marking the first electric eVTOL aircraft in history to receive one. Four days after receiving this authorization, we flew the first vertical-to-vertical Market Survey flight, New York to Vermont across Lake Champlain. It was a 34 nautical mile flight in less than 20 minutes. That’s a drive that typically takes an hour and a half and includes a ferry.
A few years ago, BETA Technologies was the very first to fly piloted eVTOL transition flights on full-scale aircraft. We were the first to produce a training-compliant eVTOL and qualify many pilots to fly. And now we are the first to earn an FAA authorization to give prospective customers the experience of an eVTOL aircraft through vertical takeoff, transition to wingborne flight, and vertical landing. Getting here has required years of work. Each step builds on the foundation for the next.
Our maniacal focus on simplicity has driven this progress, and it remains central to how we certify, manufacture, and commercialize our aircraft. As the eVTOL industry advances towards certification and commercialization, FAA authorizations provide concrete and objective measures of progress. This authorization had several prerequisites. We had to show stable flight in every corner of the flight envelope, covering all flight load cases and speeds. We had to show stability in all wind conditions, both vertical and runway landings. And we had to produce maintenance manuals and implement a maintenance program.
Most importantly, we had to have a stable aircraft configuration across a meaningful number of flight hours. A focus on the customer has led us to a deliberate choice to remove complexity. No liquids, no gearboxes, no complex software algorithms, no extra blades, no thrust vectoring, no propeller actuators. Simpler systems have fewer failure modes. Fewer failure modes means the aircraft is available when the operator needs it and it is generating revenue.
BETA Technologies now holds an FAA Market Survey authorization for both our CTOL and our VTOL aircraft. Both are built on a simple common platform, sharing the same wing, tail, flight control systems, motors, and batteries. They are manufactured on the same production lines. That commonality allows progress in each certification program to support the other. Shifting to our defense business. In September, the CX300 flew at the Miramar Air Show by invitation. We were the first electric aircraft to fly at that military air show. The hybrid and autonomous MV250 was on static display, and our prospective customers really dug into the detail of the aircraft. The response we are hearing from the defense community is direct and consistent: There is an existing capability gap we can fill with longer range, faster speeds, a very small logistics tail, autonomy, and we can do it at a significantly lower upfront and recurring operational cost.
The MV250 builds on our commercial A250 platform, sharing its wing, tail, electric motors, flight controls, and other core systems, achieving near total technical commonality by adding the Sikorsky Matrix autonomy and the GE BETA turbogenerator for hybrid operation and a fuselage designed for uncrewed military missions. We deliver enhanced military performance without the time and cost of a clean-sheet design. This foundational dual-use architecture allows the MV250 to immediately inherit the manufacturing economies of scale and existing supply chain and the flight time from our commercial programs.
We’ve had very strong engagement at all levels of the armed services, and we’ve seen commercial demand for hybrid and autonomous systems as well. We are currently assembling our second hybrid VTOL aircraft, with the components for a third demonstration aircraft coming together. We will have more to share soon. Transitioning over to our EIPP projects that went live since our last call. We now have launched six of the seven programs that we were awarded. We brought the aircraft to the customer operations. We flew their routes, their schedules, and their conditions. We showed them what dispatch reliability looks like when there’s no fuel system, no hydraulics to troubleshoot, and no oil to change. We flew in good weather and in bad weather. We showed them a very low cost per flight hour.
We showed up early, quietly tested the routes, and delivered in every case. With these selections live, cargo moving and medical transport happening, operators are building the institutional knowledge that will turn a pilot program into long-term commercial relationships. Phase one of the EIPP is about three things: one, proving mission closure; two, demonstrating measurable cost savings; and three, building a record of safe and reliable operations.
We are generating the data that will inform the policy for this entire category. Our components business continues to grow faster than we forecasted and has its own $1 billion backlog. We put our motors, batteries, flight control computers, and other systems into other companies’ aircraft, potentially creating long-term service and parts relationships. We are presented with many more opportunities than we take. We run each of these opportunities through a rigorous evaluation to ensure it’s aligned with BETA Technologies’ overall development and commercial strategies.
We have also recently invested in large-format composite manufacturing capabilities. We are building FAA-conforming composite and metallic structure for our flight test aircraft. We have brought precision, traceability, and quality controls together on the factory floor. We have consistently made the strategic choice to spend capital on vertical integration. It isn’t only in composites; it’s also in the motors, the batteries, and the flight control computers.
This vertical integration has allowed us to move extremely quickly and keep our cost of bill of materials in check. Our loan application with the EXIM Bank for an additional $830 million financing package continues to advance to support our vertical integration and production. We expect to be the first company in advanced air mobility to reach a maturity level that allows access to this scale of non-dilutive debt capital. On to KPIs. At the beginning of this year we set five aggressive year-end targets: book $4 billion in aircraft backlog; cross a quarter million nautical miles of flight; secure 150 charging sites; prove a 4.5 aircraft per month production rate; and advance certification. Today, two months early, three of the five are complete. Our commercial aircraft backlog stands at just over $4 billion with over 1,000 aircraft in firm and option orders backed by financial commitments.
A recent sales focus has been on securing high-quality medical and cargo CTOL customers to support a successful entry into service. Airline customers continue to struggle with high fuel prices and are watching the EIPP missions closely, specifically for the realized cost savings. Our sales organization has successfully established a service and support organization, and they’ve developed a comprehensive forecasting and aircraft data awareness application called BETA Operate.
This will be the backbone of the customer support channel into BETA Technologies in the future. As of this call we have crossed a quarter million nautical miles flown. When we set that target we thought it was achievable but hard. The all-weather IFR capability, high reliability, and high dispatch rates are the drivers behind us reaching this goal more than two months in advance. The aircraft have been flying in the snow and the sleet here in the Northeast. They’ve been to New Zealand, Australia, Japan, Hawaii, across the country many times, into Florida humidity, into the desert, into the Arctic and the Nordics.
Fourteen countries in total. The exposure to a variety of environmental and operating conditions has made our aircraft better. We’re at 168 charging sites, ahead of our year-end target of 150. These aren’t urban showcase installations; they’re in the communities our EIPP operators serve: hospitals, regional airports, emergency response staging areas. That infrastructure is where the missions are. In manufacturing, we continue to make meaningful progress towards our target of demonstrating a production capacity equivalent to four and a half aircraft per month. Our focus at this stage is on establishing and validating the manufacturing capability we will need when we ramp production on certified aircraft, rather than staffing for sustained production at this rate today. We’ve already demonstrated capacity of four and a half aircraft per month across several key vertically integrated component lines including flight control computers, battery packs, wire harnesses, and inverters.
We’re now extending that work across our major airframe structures through targeted pulse builds. Our highest manufacturing priority remains in the production of fully conforming flight test aircraft and support certification, which requires additional FAA oversight, inspection, and part traceability. We’re making deliberate investments in capacity while prioritizing those critical certification builds, with the underlying manufacturing infrastructure targeted to be in place by year-end and additional rate demonstrations continuing into early 2027.
This approach positions us to scale production efficiently as we acutely manage our direct labor and material cost, and it positions us to add direct labor at the right time. Turning to our H500A certification program, we continue to complete and submit for-credit testing documents and data to the FAA. Durability and lightning testing are complete. Software development is substantially complete with all runs performed on for-credit tests of the software. We are through the hardest phases of the engine program and carrying what we learned directly into our other programs. We have aligned with the FAA on how to demonstrate compliance across every test area.
Reaching this level of progress put us in the right positions to move forward formally with our next engine certification project. We submitted the H500B amended type certification application earlier last month. Through early engagement with the FAA, we have confirmed conceptual alignment that the B is a derivative product and will be an amended type certification. The B will follow the path the A has paved while introducing improvements in cost, performance, weight, and producibility.
I want to also provide an update on our CX300 program. The certification plans we need to start early system testing have all been accepted by the FAA, and testing is underway. We continue to host FAA pilots for the flight familiarization activities that help us move towards type inspection authorization, or TIA. The aircraft we are building today will have operational use cases well beyond certification tests. In a moment, Herman will walk through the implications of how we account for this, which also reflects the maturity of our programs as we transition towards commercial operations.
On the A250, beyond the Market Survey certificate, two regulatory developments moved in our direction. The noise testing we conducted jointly with Penn State and the FAA came back strong. The FAA is using that data to define the noise requirements for this aircraft class and inform the rules. And the FAA published its Safety Continuum policy for powered-lift aircraft. The safety levels it establishes confirm the cross-platform compliance approach we designed at the CX300 and A250.
From the start, the team here at BETA Technologies has kept their heads down, focused on the quiet work of certification, production, quality, and safety of flight data. We’ve earned the respect and trust of the best in aerospace, and our partnerships with GE Aerospace, Embraer, General Dynamics, APS and others are strong and growing. The current administration has been very supportive of the AAM industry. The leaders in the FAA continue to reduce unnecessary friction while prioritizing simple, reliable and safe aircraft.
At the start of this year we told you what we were setting out to do: a quarter million nautical miles, 150 charging sites, and $4 billion in the backlog. Today I can say confidently we did those things with time to spare. Our focus is being rewarded and our strategy is working. Herman, over to you.
Herman Cueto (Chief Financial Officer)
Thank you, Kyle, and good morning, everyone. At the start of this year we laid out a series of milestones and investments designed to advance certification, demonstrate commercial readiness, and build the manufacturing capabilities that will underpin our long-term unit economics. The progress Kyle outlined brings that strategy to life. The ALIA A250 becoming the first electric VTOL to hold FAA market survey authorization; six EIPP selections now live; continued investment in vertical integration and industrialization enabled by advancing EXIM Bank financing; and surpassing three of our five year-end KPI targets—backlog, nautical miles, and charging sites—all ahead of schedule. Further, on October 20th we performed the inaugural VTOL market survey flight: Plattsburgh to Burlington, 34 nautical miles, 20 minutes. The cumulative impact of these achievements highlights how we are translating capital into measurable progress, reducing risk across the business, and strengthening the foundation for commercial scale.
On October 21st I had the privilege of meeting with senior leadership at the Pentagon to discuss the MV250, our development progress, our industrialization timeline, and how this aircraft fills a gap in the existing fleet. The conversations were encouraging and we expect to have more to say on this program in the coming quarters. With that backdrop, let me turn to our third quarter financial results. Third quarter revenue was $17.7 million, the highest quarterly revenue in BETA Technologies’ history and meaningfully above our guidance of $8 million to $12 million. Revenue grew approximately 98% year over year and we delivered our second consecutive quarter of sequential growth, all organic, no inorganic revenue through acquisitions.
This performance was driven by an increase in component deliveries, continued progress across partnership programs, infrastructure revenue pulled forward by the EIPP, and integration and flight test support for third-party aircraft using our motors, batteries, and flight control computers. While the timing of when these activities can be recognized as revenue can vary from quarter to quarter, the underlying relationships and programs are durable.
Year-to-date revenue reached $42.5 million, already exceeding the low end of our full-year guidance range of $42 million to $50 million with a full quarter remaining. Operating expenses in the quarter were $140.5 million, including R&D expenses of $90.5 million and G&A expenses of $50 million. Adjusted EBITDA was negative $97.4 million, better than our guidance range of negative $115 million to negative $125 million. Three factors drove the outperformance: higher revenue, operating expenses below our quarterly forecast, and the commencement of capitalization of qualifying aircraft components.
The initial aircraft components will be utilized for internal business operations and certification, with subsequent manufactured units deployed to expand EIPP operations and future campaigns. This reflects the progress and maturity of the CX300 program. As CX300 production advances, we expect to capitalize qualifying aircraft components on the balance sheet, an important transition as we build towards certified aircraft production and commercial sale.
Year-to-date adjusted EBITDA stands at negative $305 million against a full-year guidance range of negative $400 million to negative $445 million. We ended the quarter with approximately $1.3 billion in cash and cash equivalents. Since the quarter ended, EXIM Bank has continued to make progress in closing the incremental $830 million in financing to support our domestic manufacturing expansion. We’ve started clearing the Bank’s review committees. This is long-duration, low-cost, non-dilutive capital that comes directly from the Treasury’s balance sheet and is pointed at strategic gaps in American manufacturing.
This is capital designed for what we are building and work is already underway. The continued support by the EXIM Bank is a validation of our strategy. The world’s largest export credit agency reviewed what we are building in Burlington, Vermont, and is working to put $830 million behind it. We expect to be the first company in Advanced Air Mobility to close a commitment of this scale. As that financing advances, we believe BETA Technologies has the strongest balance sheet in our sector.
Turning now to our outlook for 2026, we are raising our full-year 2026 revenue guidance. We now expect revenue to be in a range of $52 million to $57 million. Our full-year adjusted EBITDA and capex guidance remains unchanged. We look forward to providing 2027 guidance on our fourth quarter call in the new year. With that, let me turn it back to the operator to open the call for questions.
OPERATOR
We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q and A roster. Your first question is from the line of Anthony Valentini with Barclays.
Your line is now open. Please go ahead.
Anthony Valentini (Analyst at Barclays)
Hey guys, good morning. I’m curious if, given the announcements in the quarter and the progress that you’ve made on some of the key steps here in certification, if you guys feel like you’re the furthest along to getting your VTOL certified relative to competitors in the industry.
Kyle Clark (Chief Executive Officer)
Hey, Anthony, Kyle here. It’s an interesting question, the furthest along, and I do firmly believe we will be the first to certify in the VTOL industry. And it’s not necessarily because we’re the furthest along; it’s because we have less total to do. We’ve made a bunch of choices to not have to certify obscure new and novel technologies like what they call simplified vehicle operations, which is a convoluted flight algorithm on flight controllers laid over the fundamental first-principle physics—flight, flight control system, thrust vectoring, liquid cooling, all the gearboxes, all the things that go into certification that have to be extremely reliable, well tested, and then produce statistically relevant data for certification—and taking those off the airplane gives us just a clearer path to certification.
So, you know, just adjusting your question from further along. People are working hard across the industry. I think some of the choices we made a long time ago have given us a clearer path to certification. And with the recent publication of the safety continuum for powered lift, it gives us this kind of stepwise approach that mirrors our entry-into-service strategy.
Anthony Valentini (Analyst at Barclays)
Okay, that’s very helpful. Maybe on the defense side, it seems like there’s a great opportunity here for the VTOL industry to maybe pull forward some revenue given that the Defense Department is looking for autonomous and attritable systems. But it also seems like there’s a lot of different offerings from different companies. Between Anduril and Archer, I think Boeing and even Lockheed have their own products. Can you guys maybe just provide a little bit of detail of where you think that you’re differentiated from a product standpoint, and then are you guys going after contested logistics or missionized programs, and are there programs of record that we should be expecting to come out? Maybe just some high-level explanation on what you guys are seeing there to the extent that you’re able to talk about it. Thanks.
Kyle Clark (Chief Executive Officer)
Yeah, thanks for that question. I think the very first kind of entry point is extremely important. BETA Technologies didn’t elect to do a clean-sheet aircraft. We took an aircraft that we already had and we’re adding hybridization and autonomy, so it’s the same wing, tail, flight controls, batteries, all the same structure. It’s really nice, a nice transition. That’s what’s enabled us to build multiple examples of this aircraft very, very quickly.
And recall we’re already getting paid by DEVCOM within the Army to do hybridization and autonomy—the two gaps between our existing product and what they’re asking. The second part of your question about contested logistics. Contested logistics is definitely the prime target, but this is kind of a multi-mission aircraft. We’ve been evaluating SAR, launched effects, some type of CASEVAC. There’s a lot of good momentum. As Herman said in his remarks, he spent time down in the Pentagon. I certainly have, kind of talking through the capability gap of the military, and then we’ve just been demonstrating out with—you know, we were out on the Russian border in Aurora 2026 with the U.S. Army doing a ton of demonstrations alongside Black Hawks, evaluating the cost of moving material.
It’s a great fit. That was, by the way, with the CTOL electric aircraft, for the sake of clarity. It was a great fit for aircraft. And then just kind of looking forward, I think it’s really important to note that all this design commonality then gets recaptured again when we talk about manufacturing synergies and commonality down the road. So yeah, we’re aware there’s a lot of people out there offering contested logistics VTOL aircraft. We chose to take a very simple and pragmatic approach to it.
And I do believe that whether you’re UPS or a healthcare provider like United Therapeutics or the U.S. military, you want the same thing. You want a simple, reliable, high-dispatch-rate aircraft that has high survivability, that is low cost to operate, that does not demand an entirely new aircraft design. You pick up stuff, you move it to a new place, you put it down. There are minor mission changes that demand autonomy and hybridization, but it’s largely the same aircraft.
So that’s our strategy.
Anthony Valentini (Analyst at Barclays)
Makes sense. Thank you, Kyle. I’ll turn it over there.
OPERATOR
Your next question is from the line of Sheila Kayu with Jefferies. Your line is now open. Please go ahead.
Kira (Analyst at Jefferies)
Good morning, everyone. This is Kira on for Sheila. Thank you so much for taking my question. Great to see the progress on the EIPP and with the FAA this quarter. With that, you mentioned generating the data that will inform the policy for the entire category. What have you learned about the BETA Technologies aircraft in these early EIPP operations, and what are the key data metrics you’re focused on? Thank you.
Kyle Clark (Chief Executive Officer)
Yeah, thanks, Sheila. Key data metrics: dispatch reliability, availability of the aircraft. And then of course the nuances of that. As I mentioned in my remarks, we’ve developed a pretty sophisticated program called Data Operate that extracts the data from the self-aware aircraft and evaluates the health of every system within the aircraft before and after, and actually during, every flight. Every aircraft is outfitted with a Starlink bi-directional downlink that allows that aircraft to report its status at all times.
The amount of data that we’re getting is awesome. That’s on the technological side. On the operational side, I’ll give you an example. We went down to North Carolina. EIPP day was low, overcast, clouds mostly IFR. It was VFR in the vicinity of the airport. I was able to fly with the governor and the head of the Department of Transportation. North Carolina really reminding us that an all-weather capability of the aircraft was critical if we’re going to propose this aircraft as a cargo medical logistics aircraft.
I don’t know this, but I would speculate that there’s no way that UPS would ever fly a VFR-only aircraft. So flying all-weather has been a big operational thing. And then of course as we’ve cycled our customer pilots through our training system, we’ve continuously improved and refined the training system. I’d say those are the three biggest things. There are some nuanced ones around insurance and financing, engagement with the customer, all the edge elements of supporting a successful launch into the market on the airplane. And lastly, we’ve designed a charge system that has eight modules in it—eight times redundancy.
We knew that chargers on the ground couldn’t fail for airplanes because you can’t go to the next McDonald’s down the street. You’ve got to charge and you’ve got to fly. And so our charge system reliability has been another important learning point, which has been also very successful for us. And I think we made the right design choices early to add reliability to that.
Sheila Kayu
Great, that’s super helpful, thank you.
OPERATOR
Your next question is from the line of Andres Shepherd with Cantor Fitzgerald. Your line is now open. Please go ahead.
Andres Shepherd (Analyst at Cantor Fitzgerald)
Hey everyone, good morning. Congratulations on the quarter and thanks for taking our questions, and congrats on the market survey—certainly a big differentiator there. Kyle, I wanted to come back to the EIPP now that we have the market survey for the eVTOL. Wondering if you can maybe update us on how you plan to use both the CTOL and the eVTOL for the different EIPP projects and, for the VTOL specifically, what kind of applications you are targeting?
Thank you.
Kyle Clark (Chief Executive Officer)
Yeah, thanks for the question. The team here has architected an EIPP proposal that has this stepwise approach into service. It starts with the CTOL and then moves into the VTOL in phases. The first VTOL missions—and by the way, we inserted autonomy in there as well, so we have autonomous all-electric CTOL flights between the CTOL and the VTOL EIPP. The first demos will be airport-to-airport, of course, and then the likely next one will be to hospitals.
This is part of United Therapeutics’ early philosophy on the eVTOL aircraft that they sponsored the development of and, out of respect to them and because we think it’s a great entry market, that’s really where we’re going to start VTOL flights. Another part of that charging network: we put our first chargers into hospitals recently as well. So that was a big milestone for the company, positioning ourselves to answer the call with the EIPP flights—moving organs, tissues, and blood products.
Andres Shepherd (Analyst at Cantor Fitzgerald)
Excellent, very helpful. And maybe just as a quick follow-up, wanted to come back to the defense side. So on the MV250, can you remind us again how we should think about those initial deliveries—what kind of opportunities specifically you’re looking at—and what kind of ramp-up we should expect for the MV250, maybe ahead of the eVTOL? Thank you.
Kyle Clark (Chief Executive Officer)
Yeah, I think you’re accurate in saying that the ramp-up of the MV250 will be slightly ahead of the eVTOL. The Department of Defense, from the war, has been very clear about this capability gap, and a lot of momentum has generated recently. We are past the individual system tests. Like I said, we’ve been paid by DEVCOM to develop and show them hybridization and autonomy. There’s been a lot of flying on our electric aircraft. We put those different pieces together on our CTOL aircraft and now we’re putting them together on MV250.
This particular product will land in a rapid prototyping contract that will get deployed out into the world, and we’ll do the same thing we’ve done on the CTOL this year on the MV250 in the coming months and years. And it’s all built, as you know, on this partnership with GE around the turbogenerator, providing this extended range, extended speed, and higher payload of the aircraft, which puts it out of the league of existing resources the Army specifically has.
Andres Shepherd (Analyst at Cantor Fitzgerald)
Excellent. Thank you very much, and congrats to the team again on the quarter.
OPERATOR
Your next question is from the line of John Godian with Citigroup. Your line is now open. Please go ahead.
Max (Analyst at Citigroup)
Hey guys, this is Max on for John. Thanks for taking my question. You referenced the demonstration goals in phase one of the EIPP program earlier, including proving mission closure, demonstrating cost savings, and building your record of safe operations. Can you speak a bit on some of the next phases in this program and what you hope to demonstrate in each of these programs that you have been awarded? Curious on what this looks like over the medium term.
Kyle Clark (Chief Executive Officer)
Yeah. So these first operations are done under Part 91, with a very close collaboration between the customers, engaged states, the FAA, the Department of Transportation, and of course BETA Technologies. The phase two of the operations—if you have a follow-up on the details of it, I’ll hand it off to Kristen here—but the phase two of the operations really leans into 135 operations and revenue-generating flights. Naturally, doing 10, 20, 30, 50 flights under Part 91 is no problem.
We wouldn’t leave an asset there just to fly without some type of long-term customer benefit and revenue from it. So the next step will be revenue-generating flights under 135.
Kristen Costello (Head of Government & Regulatory Affairs)
Yeah, and John, I think to Kyle’s point, what we did in phase one with the route validation, the pilot training, carrying the representative payloads in the areas, and really demonstrating the full capability of the aircraft—now stepping into phase two, we’re working with the FAA, with the operators. As these questions are being answered for us in real time, we’re getting the pathways for those operational approvals, working with the FAA and the DOT, who have been rigorously working towards this for us.
Those answers are still in the works, but we’re anticipating to have that pathway.
Max (Analyst at Citigroup)
Great, that’s helpful. And then switching gears a bit: you mentioned the components business having a billion-dollar backlog itself and driving a bunch of the revenue beat this quarter. I recall last quarter we spoke about this opportunity driving attractive margins across your value chain. Could you provide an update there and discuss how this business is progressing in terms of volume and margins, and any further insight you can provide? Thanks.
Kyle Clark (Chief Executive Officer)
Yeah, this is interesting. If I think back about five years, we had listened closely to this group of analysts, frankly, about how the components business was something that we should pursue for a number of reasons, including the margins associated with components in this space. We have since leaned in, and having partners like GE and the Embraer EVE program, General Dynamics, and a bunch of other programs—there are actually five aircraft programs using our batteries, flight controls, motors, props, some combination thereof out there right now.
The revenue numbers are obviously important, and it was great for Herman and his team to post a significant beat, but the makeup of those revenue numbers is significantly more important. They’re seeds that we’ve planted. As everybody knows, getting a motor or a battery or a flight controller embedded into an aircraft that ultimately is type designed—or type certified, excuse me—is sticky. It’s extremely sticky, and that’s how we select the programs that we’re engaged in.
Not only does it contribute meaningfully to our revenue right now, it contributes at a high margin, and it gives us a path towards future revenue. That billion dollars is largely made up by one customer, and that’s a seed that we planted when we gave them our first set of pusher and lifter motors. I think it’ll return in their initial production and then, of course, in the service support and aftermarket.
Herman Cueto (Chief Financial Officer)
Max, maybe I could just add a little bit of context as well. Stepping back, when you look at BETA Technologies, we have multiple ways to win—whether it’s through components, charging, partnership programs. You saw it this quarter when you look at the product revenue and the service revenue. We had product revenue growing 78%, a lot of that enabled by charge, for example. Service revenue grew 108%, and all of that is enabled by partnership programs.
Keep in mind, these partnership programs are a lot of times about taking BETA Technologies’ technology and integrating it onto their systems, and as Kyle described, it just makes it very sticky. To your question on margins, the margin acceleration that we saw, if you were to look at Q3.25 versus Q3.26, was about 300 basis points of gross margin acceleration. So volume through the shop floor—things like that—all starting to stack up as we move towards industrialization.
Max (Analyst at Citigroup)
Great. That’s super helpful. Thanks, guys.
OPERATOR
Your next question is from the line of Christine Lewag with Morgan Stanley. Your line is now open. Please go ahead.
Christine Lewag (Analyst at Morgan Stanley)
Hey, good morning, everyone, and congrats again for the FAA survey approval for the VTOL. So Kyle, earlier you mentioned that you now expect to be the first eVTOL to be certified with the FAA. I think this is the most confident statement you’ve had regarding timing. I was wondering what you learned in the past few months, and maybe from the survey period, that gives you the confidence that you would be the first—especially as you were previously focused on the fixed wing before and the CTOL.
It sounds like there’s a change here in your view on certification.
Kyle Clark (Chief Executive Officer)
Well, Christine, if I told you we weren’t the first, it would be a little bit ironic considering we’ve made the decisions we’ve made because we truly do believe in it. And the reason I have confidence is I observe the quiet work that happens every day here at BETA Technologies by the people that are focused on certification, industrialization, our quality systems, and the other things that aren’t as flashy. And those people and those teams are extremely dedicated to doing it right.
Because there’s a saying in aviation, there’s always time to do it right because there’s rarely time to do it again. And that’s the track we’re taking across decisions on the engineering, the implementation and production, the conforming article builds. So, you know, I don’t see what’s going on at the other folks in this industry. I’m sure there’s a lot of really hard-working people, but we do see the high-level strategic choices that are made. And I think that we have established and continue to establish a differentiation.
And as I said in the prepared remarks, it often is lost on people that everything that we did on the propeller to get that certified, everything we did on the motor to get that to the state it’s in, near certification on the CTOL, all leads into a VTOL that largely contains systems that have already been approved by the FAA for a VTOL or CTOL aircraft and then roll into the VTOL. So it’s part of our strategy. I believe it’s working. I can’t obviously say with any type of certainty, but I was asked my opinion on it and I’m going to give you an honest answer.
Christine Lewag (Analyst at Morgan Stanley)
It’s helpful, Kyle. Now, regarding the revenue outlook, you raised that for the full year, but that seems to be reflected mostly for the stronger 3Q. Were there any one-time items, or will you quantify some sort of pull-forward? And could you see similar acceleration in your 4Q results that you saw in 3Q?
Herman Cueto (Chief Financial Officer)
Christine, that’s a great question. As you know, revenue exceeded the high end of guidance by more than 50%. And as we always do, our Q4 outlook reflects revenue that we have really high confidence in delivering. Keep in mind, as BETA Technologies evolves, our shop floor right now is—we go through a lot of balancing. So there’s work that we do for customers, there’s work that we do for our own certification, production priorities. So that mix between the two things can impact quarterly revenue timing.
We do have line of sight to be on the higher end of the range, but we wanted to give you the 52 to 57. It implies somewhere between $9–14 million in the quarter. But if you step back and you look at it on a full-year basis, at the midpoint of the current guide, we’re growing more than 50%, and we feel that’s a better way to look at it.
Christine Lewag (Analyst at Morgan Stanley)
Great. Thank you very much.
OPERATOR
Your next question is from the line of Chris Pierce with Needham. Your line is now open. Please go ahead.
Chris Pierce (Analyst at Needham)
Hey, good morning, everyone. You know, kind of following up on Andres’ question, I guess I’d just love to hear, you know, what are you hearing from customers as you’ve done these demonstrations for them, and what should our expectation be for what’s next? Not just autonomous and VTOL, but what should we see on the customer side? Would it be deposit-backed orders? Would it be just we would see it in the order book? Like what should our expectation be based on the enthusiasm from customers as you fly for them?
Kyle Clark (Chief Executive Officer)
Yeah, I mean, I’ll just give you a fun visceral answer. Flying a fly-by-wire aircraft with a really stable configuration—when I fly with the chief pilots or our team flies with their teams—the feedback is exceptional. I mean, the visibility, the modern avionics, it’s a safe airplane. It’s got all the technologies that prevent the mistakes that have put people in danger in the past. So that’s like number one. The data-rich aircraft, as I talked about before, I won’t retrace those steps, but that’s a huge benefit to customers.
Awareness is the ability for them to make good decisions. The cost is a big one. But to answer your question more acutely on what do we expect out of kind of the market survey ticket and the VTOL, you know, it’s a third-party validation that this aircraft has a stable configuration, and that’s important to our customers. And, you know, part of getting a market survey is also having maintenance manuals and a maintenance process, and those are the types of questions you get from the more sophisticated customers. They’re asking, kind of lastly, how much does the aircraft cost?
They ask how much does it cost to operate? Why? What are the things I have to do? What’s frequency of downtime, dispatch rate? And then like the tenth question down the list is, how much does it cost? So being able to answer those questions, not just with speculative forecasts, but with real data, has been really, really helpful. And we’ve accumulated enough hours and miles to really wring that out. The other thing that has surprised me personally is that we’ve seen some really neat customers step up—customers that are doing things that you didn’t even really know was a big market. I mean, we were flying radioisotopes, for example, car parts to factories that didn’t want to be down. It’s very expensive to have a car line down. These cargo and logistics things, we kind of talk about it abstractly, but buried within that, our economy moves on the things that get to the factories to build the stuff.
And we want to be a part of that. And it’s a huge and growing market that we think that is the right entry point. So learning about those obscure applications has been— and I can’t talk about it yet, there’ll be a press release soon—one of the orders that tipped us over the $4 billion backlog balance was from a company moving one of these obscure cargo elements.
Chris Pierce (Analyst at Needham)
Okay, perfect. Thank you for the detail. And then just one for Herman. I know that, you know, if we kind of roll back maybe six months ago, you had guided us towards 2Q R&D and sort of kind of where things landed. Now that we’ve seen things step down in 3Q, but as we think about phase 2 or additional phases of the EIPP, I know you’re not guiding ’27, but should we think about there being sort of a kind of a bubble step up in R&D in ’27 as well, as we think about all the flying you guys are doing and the more flying that you’re going to do now that the VTOL is ready to kind of get up there?
Herman Cueto (Chief Financial Officer)
Yeah, you said it perfectly. We’re not going to guide 2027 right now. But what I would say, Chris, is there have been so many opportunities that have presented themselves this year. You know, when you look at the work we’re doing on the MV250, we talked about pulling in that investment this year. EIPP has been wildly successful, and it’s unlocking a big revenue opportunity with things like charge. So I would expect that on the R&D side that you will see a step up year over year, and maybe it’s with EIPP, but there are other exciting investments that we want to put dollars behind.
And we’ll talk more about that in the new year when we guide 2027.
Chris Pierce (Analyst at Needham)
Okay, that’s very helpful. Thank you very much and good luck.
OPERATOR
Your next question is from the line of Noah Poponak with Goldman Sachs. Your line is now open. Please go ahead.
Tomas Ruserwan (Analyst at Goldman Sachs)
Good morning. This is Tomas Ruserwan for Noah Poponak. I wanted to ask, on the large passenger aircraft, how are you thinking about allocating capacity between that program and ALIA? And given the higher battery content per airframe, what’s the right framework we should think about for sizing how much this program expands the total aftermarket opportunity?
Kyle Clark (Chief Executive Officer)
Yeah, I think, you know, just along the themes that I mentioned before. For the large passenger aircraft, as I mentioned in the S-1, it is built from the same common technology and manufacturing capability that we have developed for these aircraft. It is a consideration. I’ll give you an example. In the flight control computers, for a cargo and logistics aircraft, you could reduce the design assurance level of the flight computers. We elected to make flight computers that were fit for the application in a Part 29 or Part 25 aircraft.
And that allows us to reuse that technology. Same with the composites—the allowables associated with composites, the design guides, drawing standards, all the things that we do kind of behind the scenes to give ourselves a safe and reliable aircraft at a smaller scale. We can turn the knob just slightly and make that technology immediately applicable to large aircraft. We have a relatively small—what we call an advanced systems team. We set that team up in groups of six to 12 people, and they have been working quite hard on the development and setting the table for all of our future programs, including a larger passenger aircraft that I had mentioned in the past. And the results are extremely promising. I think it’s important to note, when you think about the improvement of a vehicle like a Tesla automobile, for example, people think that the range improved because the batteries got better.
Just under half of the range improvement came from the batteries. The rest came from lightweighting structure, aerodynamics, propulsive efficiency, gear train efficiency. These are things that we work just as hard at as the adoption of new energy storage technologies. So we’re seeing longer and longer ranges of the aircraft. As you know, we’ve flown our CTOL aircraft 336 nautical miles. We intend to go invest that. And it’s a strategy that’s looking at the longer form. So, you know, it’s rooted in knowing what we’re going to do in the future and setting the table now to enable us to do that efficiently.
Tomas Ruserwan (Analyst at Goldman Sachs)
Thank you. And I want to quickly ask, with the uptick in flight operations this quarter, is there any color you can provide on how the operating economics for ALIA are tracking toward your initial expectations?
Kyle Clark (Chief Executive Officer)
Yeah, I’ll tell you—probably the first time I’ve said this publicly. We now have enough data on the batteries to show that the degradation is less than we forecasted. That means a more economic operation. We have aircraft that are getting into enough cycles that they’re hitting past their half-life of what we anticipated in batteries; we have a measurable difference in the degradation of the batteries. That’s really good for us and for the customers to lower the cost of operation.
Because when you really dissect the recurring cost of operation, the battery degradation is a big part of that. And the lower that cost can be on a per-flight basis, the more often our customers will fly, and therefore the more profitable the aircraft will be for them. And focusing on the customer has been a philosophy here from day one. And frankly, we’ve done millions of cycles on individual cells, modules, and packs in our laboratories. But you have to go fly it to prove it. The temperature, the environment, the cooling, the cadence—the actual exercise of the batteries that causes that irreversible degradation, which we measure in terms of capacity—is really only realized with a ton of hours of flying. So it’s been, frankly, quite positive.
And I think that’s the first time we’ve actually disclosed what the results are showing us. Thanks for the question. I appreciate it.
Tomas Ruserwan (Analyst at Goldman Sachs)
I appreciate the insight. I’ll pass it back there.
OPERATOR
Your next question is from the line of Andre Madrid with BTIG. Your line is now open. Please go ahead.
Ned Morgan (Analyst at BTIG)
Hey, good morning. You got Ned Morgan on for Andre. Herman, you alluded to it a moment ago, but as EIPP operations expand, how should we think about the monetization opportunity? I recognize a lot of the value is operational learning and accelerating adoption, but could it ultimately also be a meaningful source of revenue?
Kyle Clark (Chief Executive Officer)
Yeah, I think so. When we move from Part 91 to Part 135, I think that creates an opportunity to do different things with the aircraft, whether that’s renting it or leasing it. I think that opportunity will present itself. But the real opportunity that we’re seeing, and we’re seeing it today, is the states who are participating in the EIPPER leaning forward with Charge. As we had spoken about in the past, we received an order from Florida for 34 chargers that we’ve been manufacturing and deploying. We’re seeing other states in the EIPP start to do different things with Charge as well to put the infrastructure in place today for electric aviation. I think that’s where you’re going to see the big revenue drivers.
And then of course there’s going to be pilot training, there will be maintenance-type things, but the large driver will be Charge.
Herman Cueto (Chief Financial Officer)
Yeah, no, we’re not going to provide guidance on our KPIs for next year. We do have internal goals that are closely tracked within the team and the board, and we’ll disclose our next year’s guidance, including KPIs, on our fourth-quarter earnings call. But look, the reality is we’ll keep accelerating, and that’s the baseline.
OPERATOR
Thank you for your questions. I will now turn the call over to Kyle Clark for closing remarks.
Kyle Clark (Chief Executive Officer)
Awesome. Thank you, everybody. I just really appreciate people sticking around and getting through this call. The results this quarter, in my estimation, are just a product of the team here and their commitment and focus by those 1,500 people who, as I said before, are dedicated to the quiet work. I think that they’re focused on the right thing and the fundamentals, the first-principles physics, and improving the way that we fly. I think this company as a whole is on sound strategic footing and unquestionably a solid technological foundation. What’s really gratifying this quarter, and I got to tell you, I just feel really good about the energy and the momentum here, is that those things are being validated. They weren’t validated on day one, but they’re validated years after those decisions are made and that work has been done.
And I feel like we’re on really solid footing to take the next steps into finishing this year strong and continuing this momentum into next year. So thank you, everybody, for believing in this team, and we’ll continue to keep our heads down and delivering for you.
OPERATOR
This concludes today’s call. Thank you for attending. You may now disconnect.
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