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DATE
Tuesday, Nov. 10, 2026
CALL PARTICIPANTS
- President and U.S. Chief Executive Officer - Alex Fink
- Chief Financial Officer - Brooks Ensign
TAKEAWAYS
- Revenue -- $25,554, representing a decrease from $35,771 year over year driven by a focus on support services under existing customer agreements.
- Gross Loss -- $47,093, reflecting a fixed allocation of cloud storage costs compared with a loss of $9,670 in the prior year period.
- Operating Expenses -- $9.4 million, representing increased investments in engineering, product development, and strategic initiatives.
- Net Loss -- $9.3 million, compared with a net loss of $3.4 million in the third quarter of 2025.
- Cash and Cash Equivalents -- $37.3 million, an increase from $25.3 million at the end of the second quarter primarily driven by capital raised through an equity line of credit.
- Stock-Based Compensation -- $1.7 million, recorded as a noncash expense during the quarter.
- Ratel Robotics Year-to-Date Revenue -- $42.1 million (unaudited), including $32.5 million generated during the third quarter.
- Ratel Robotics September Revenue -- $14.9 million (unaudited), reflecting the expansion of manufacturing capacity to meet government demand.
- Ratel Robotics Q4 Guidance -- $35 million to $40 million in revenue, with projected operating margins between 13% and 17%.
- Ratel Robotics Backlog -- $65.1 million, in previously signed government contracts as of Sept. 30, 2026.
- Ratel Robotics 2026 Revenue Target -- $77 million, serving as the first performance threshold for acquisition earn-outs.
- Ratel Robotics 2027 Targets -- $130 million in revenue and $14.3 million in operating income.
- Ratel Robotics 2028 Targets -- $187 million in revenue and $20.57 million in operating income, with a bonus available if revenue reaches $249 million.
- Ratel Robotics Market Share -- 37% of all unmanned ground vehicle purchases by the Ukrainian government during the Spring 2026 procurement cycle.
- Vectus Air Defense Projections -- 40 systems in the first year following the start of production and at least 80 systems in the second year.
- Vectus Air Defense MSRP -- $5 million to $6 million per system, with the company acting as the intended manufacturer under a memorandum of understanding.
- Vectus Equity Ownership -- 20%, representing the company's current interest in Vectus Air Defense Systems.
- Combat Mission Count -- 100,000, representing real-world missions in Ukraine supported by the company's software since April 2024.
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RISKS
- Fink noted, "we understand the uncertainty of geopolitics and of Ukraine's future budgets," when discussing the long-term outlook for government procurement.
- Management cautioned in the earnings release that Ratel's preliminary financial figures "were not prepared in accordance with U.S. generally accepted accounting principles, and may change."
SUMMARY
Swarmer, Inc (NASDAQ:SWMR) reported a strategic transition toward becoming an end-to-end provider of autonomous defense hardware and software for allied nations. Management announced the pending acquisition of Ratel Robotics, a major manufacturer of unmanned ground vehicles in Ukraine, and the planned acquisition of intellectual property from Vataga Drone. The company also signed a memorandum of understanding to manufacture complete air defense systems for Vectus Air Defense Systems. These developments are intended to capture the entire value chain of autonomous systems, moving beyond the company's original software-only licensing model. Management indicated that these hardware and software capabilities will be unified into integrated kits starting in Q1 2027.
- The company expects to complete the acquisition of Ratel Robotics in November 2026.
- CEO Fink stated, "We are making the strategic, proactive investment to own the entire value chain end-to-end."
- Management is pursuing manufacturing partnerships with General Dynamics and entities in Germany, Denmark, and the Netherlands to scale capacity under the Build With Ukraine program.
- The acquisition of Vataga Drone personnel and intellectual property will add combat-tested quadcopters and interceptors to the hardware portfolio.
- CEO Fink stated, "We believe this complete end-to-end kit can be codified in Q1 and help make autonomy more widely adopted on the Ukrainian battlefield."
INDUSTRY GLOSSARY
- UGV: Unmanned Ground Vehicle, a robotic platform that operates on land without an onboard human presence.
- MOU: Memorandum of Understanding, a non-binding agreement outlining the terms and details of a mutual understanding between parties.
- B2G: Business-to-Government, a business model involving the sale of products or services to government agencies.
- MSRP: Manufacturer's Suggested Retail Price.
- Earn-outs: Performance-based payments made to the sellers of a business after an acquisition is completed.
- Interceptors: Drones specifically designed to locate and neutralize other unmanned aerial vehicles.
- Initiation boards: Electronic components used to trigger payloads or systems on a drone.
Full Conference Call Transcript
Operator: Good afternoon. Welcome to the Swarmer, Inc. Third Quarter 2026 Earnings Conference Call. Joining us for today's presentation are the company's President and U.S. CEO, Alex Fink; and Chief Financial Officer, Brooks Ensign. [Operator Instructions] Before we begin, I want to remind everyone that today's call will include forward-looking statements within the meaning of the federal securities laws. These statements include, among others, statements regarding Swarmer's strategy, market opportunity, customer engagement, product development, technology integrations, expansion into new markets, future revenue opportunities, expected customer mix, potential deployments and the anticipated benefits of the company's relationships, memorandum of understanding, partnerships and commercial initiatives.
Forward-looking statements are based on current expectations and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially. Additional information about factors that could cause actual results to differ is included in the company's earnings release issued today and in the company's filings with the Securities and Exchange Commission, including the risk factors described in those filings. The company undertakes no obligation to update the forward-looking statements, except as required by law. Finally, I'd like to remind everyone that this conference call is being webcasted, and a recording will be made available for replay on the company's Investor Relations website.
In addition to the webcast, the company has posted a press release that accompanies these results, which can also be found on the Investor Relations website. I will now turn the call over to Swarmer's President and U.S. CEO, Alex Fink, for his comments. Sir, please proceed.
Alexander Fink: Thank you, operator, and thank you, everyone, for joining us. The third quarter was pivotal for Swarmer. Over the past year, we have spoken frequently about our vision to build a platform for combat-tested technologies from Ukraine to spread to all allied nations. We have taken meaningful steps towards realizing this vision. Most notably, we announced our pending acquisition of Ratel Robotics, one of the largest manufacturers of unmanned ground vehicles in Ukraine. Ratel accounted for 37% of all purchases of unmanned ground vehicles by Ukraine's government in the previous procurement cycle in spring 2026.
We also announced the pending acquisition of intellectual property and R&D personnel from Vataga Drone, which adds multiple models of combat-tested quadcopters, interceptors and initiation boards to our hardware portfolio. Finally, we signed a memorandum of understanding to manufacture and deliver complete air defense systems for Vectus Air Defense. Throughout all this, we have strengthened our cash position and finished the quarter with more than $37 million of cash on our balance sheet compared to approximately $25 million in Q2. These developments are a major expansion. Swarmer is no longer a software provider who relies on drone manufacturers to gain access to the battlefield.
It is becoming a direct seller of end-to-end solutions with a growing portfolio of ground vehicles, quadcopters, interceptors and air defense systems that can be deployed in Ukraine and in all other allied nations. We are making the strategic, proactive investment to own the entire value chain end-to-end. We know there is enormous demand for autonomous drones and autonomous interceptors. We know the military units that want it, and we know they are willing to pay for it. And with the pending Vataga deal, we should soon have the intellectual property and the hardware team to fulfill this demand with a complete kit where autonomy is built in and not bolted on.
We believe this complete end-to-end kit can be codified in Q1 and help make autonomy more widely adopted on the Ukrainian battlefield. This does not mean we are stepping away from software sales or from vendor-agnostic solutions that can be used by any drone maker in the market, but it means we are no longer relying on the strategy exclusively. I expect us to focus more heavily on B2G sales, selling directly to the Ukrainian government and to other governments around the world, with B2B software sales becoming one out of many revenue streams and not the primary one. With this in mind, I'd like to cover Ratel Robotics in more detail.
The definitive agreement was signed on September 9, and our shareholders approved the related share issuance on November 2. We expect the deal to close in November 2026 as there are no governmental approvals required. We have Ratel's audited financials through Q2 of this year and their unaudited financials for Q3 as well. Ratel's year-to-date revenue for the first 3 quarters of 2026 was $42.1 million, with $32.5 million in the third quarter. Moreover, $14.9 million were booked in September alone. While these numbers are unaudited, I believe they reflect the growth that the company is undergoing as it is increasing manufacturing capacity to fulfill its existing $86 million of previously signed government contracts.
With this, I'm comfortable providing revenue guidance for Q4 this year, estimating that Ratel's revenue for Q4 will likely be between $35 million and $40 million with operating margins of between 13% and 17%. Our definitive agreement with Ratel makes the majority of their consideration contingent in the form of earn-outs on Ratel's continued ability to grow the revenue and operating income. The revenue targets set in the agreement are $77 million in 2026, $130 million in 2027 and $187 million in 2028, with operating income targets of $8.47 million, $14.3 million and $20.57 million, respectively.
There is an additional bonus payment due if Ratel reaches a revenue target of $249 million in 2028, along with an operating income target of $27.39 million. Ratel's willingness to commit to these targets and make its consideration contingent on hitting them shows that they are confident in their ability to achieve these targets. They are manufacturing at full capacity, and they are increasing their manufacturing capacity each quarter as we have seen from the Q3 numbers. We have seen evidence of this team's ability to perform, and we believe in Taras Ostapchuk and his team.
While we understand the uncertainty of geopolitics and of Ukraine's future budgets, we believe that this team will do everything within their control to deliver on their commitments. We are further encouraged by the announcement of cooperation between Ratel and General Dynamics as well as discussions with other manufacturers in Germany, Denmark, Netherlands and other countries that have joined the Build With Ukraine program, which could provide additional manufacturing capacity and additional sales outside of Ukraine. Our own Q3 results do not reflect these numbers, but we have a high degree of confidence that our results from Q4 onwards will reflect them going forward. In parallel, we continue to make progress in air defense.
Earlier this year, we became a founding partner and 20% equity holder in Vectus Air Defense Systems. The rest is held by an entity managed by Erik Prince, the founder of Blackwater and our Non-Executive Chairman. During the quarter, we announced a memorandum of understanding under which Swarmer intends to manufacture and sell complete air defense systems for Vectus. Importantly, Vectus has confirmed its intent to purchase at least 40 systems during the first year following the start of production and 80 or more systems during the second year, subject to definitive agreements and customary approvals. The MSRP of each system is estimated to be between $5 million and $6 million.
So we believe it is fair to expect that air defense will become an important pillar of our future earnings profile. These are the 3 pillars of our current market position: ground vehicle, air defense and autonomous drone kits that combine both hardware and software, all built from combat-tested real technologies that have already had an impact on Ukraine's battlefield. With that, I will turn it over to Brooks to walk over the financials in more detail.
Brooks Ensign: Thank you, Alex. Before I review the quarter, I'd like to remind everyone that additional details regarding our financial results can be found in today's earnings release and our Form 10-Q to be filed this week with the SEC. For the third quarter ended September 30, 2026, revenue was approximately $26,000 compared with approximately $36,000 in the prior year period. Revenue recognized during the period was primarily associated with support services provided under existing customer agreements. We reported a gross loss of approximately $47,000 in the third quarter of 2026 compared with a gross loss of approximately $10,000 in the prior year third quarter. Cost of revenue primarily reflected a fixed allocation of cloud storage costs.
Operating expenses were approximately $9.4 million compared with approximately $0.8 million in the prior year period. The increase reflects investments we are making to build the foundation for future growth, including expanding our engineering and product development capabilities, scaling our operational infrastructure, supporting our public company requirements and pursuing strategic initiatives such as the pending acquisition of Ratel Robotics. Operating expenses during the quarter also included approximately $1.7 million of noncash stock-based compensation expense. Net loss for the quarter was approximately $9.3 million compared with a net loss of approximately $3.4 million in the prior year period. Turning to the balance sheet.
We ended the quarter with approximately $37.3 million in cash and cash equivalents compared with $25.3 million at June 30, 2026. The increase in cash was primarily driven by capital raised during the quarter from our equity line of credit. We remain committed to managing our capital responsibly while investing in opportunities that we believe can generate long-term shareholder value. And with that, I'll turn the call over to the operator for questions. Operator?
Operator: [Operator Instructions] Now our first question will come from Alex Fuhrman with Lucid Capital Markets.
Alex Fuhrman: Alex, I was hoping you could help me understand your current mix of business and how the Ratel acquisition is going to change that. From what I read in the media, it seems like there's obviously some concern that Democratic control of Congress could potentially put some pressure on defense budgets broadly, but it certainly seems like Ukraine specifically could be a bright spot. There was a Reuters article recently, I think, that quoted Democratic aides in both chambers saying that funding for Ukraine could be a big priority for the new Congress. If I'm not mistaken, I believe all of your revenues to date have been in Ukraine.
As you think about Ratel and obviously, they have a road map to several hundred million in sales here over the next couple of years, how much of that projection is based on the war in Ukraine versus sales to the U.S. or other countries in Europe? Just can you help us understand that mix of business, please?
Alexander Fink: Yes. Thank you so much for this question. Right now, to date, all of our revenue has been in Ukraine, all of Ratel's revenue and the current guidance that was provided is in Ukraine. And the same is true of Vataga. So indeed, I think that we are somewhat different from other defense companies in the U.S. in that most of them rely on procurement in the U.S. and rely on defense budgets in the U.S., whereas we to date have relied mostly on Ukraine and as we think about expanding to air defense into other markets, those are worldwide markets that are also not U.S.-centric. So I hope that helps people understand and view this more broadly.
I think, obviously, when we're looking at General Dynamics or other partnerships in the future, those may sell worldwide as well and to the U.S. as well. But everything within the short to intermediate term that has been discussed so far has been in Ukraine.
Alex Fuhrman: Okay. That's really helpful, thank you for that clarification, Alex. And then just as you think about Ratel, I think you've mentioned previously even ahead of the transaction closing, it sounds like Ratel has been working on prototypes of UGVs that would, kind of, expand beyond their existing use cases and more getting into launching UAVs from them. Can you give us an update on how much progress has been made there? Have there been any successful launches of UAVs from UGVs yet?
Alexander Fink: So they have had successful prototype launches, which you can find in their social media. They've also had successful mounting of machine guns and other military hardware on UGVs and many other use cases like demining. Again, all of this, I can just refer people to Ratel social media. They can speak for themselves. So they have clearly been quite prolific when it comes to prototyping and experimentation. Obviously, if the deal closes as we anticipate, we will be working together on scaling and productizing this in the best way.
Operator: At this time, this concludes our question-and-answer session. If you have any additional questions, you may contact Swarmer's Investor Relations team at swmr@gateway-grp.com. I'd now like to turn the call back over to Mr. Fink for his closing remarks.
Alexander Fink: Thanks again, everyone, for joining us today. As a reminder, you can find out more about our company, receive additional updates and learn about upcoming events from the Investor Relations section of our website. We look forward to updating you on the exciting progress we are making in the defense technology market. Finally, I'd like to thank our employees, partners and shareholders for their continued support. Operator?
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