Unusual Machines’ Revenue Jumps 551% to $13.9 Million in Third Quarter

Key Facts

Unusual Machines reported results on November 5, 2026, for the third quarter ended September 30, with revenue of $13.9 million, up 551% from $2.1 million a year earlier. Revenue exceeded the consensus estimate of $12.39 million by $1.51 million, according to MarketBeat data. The loss per share was $0.02, compared with a consensus estimate for a loss of $0.1950 per share. But the quarterly figures also included a net loss attributable to common stockholders of $25.0 million, or $0.50 per share, according to the company’s shareholder letter. The discrepancy between the two loss-per-share measures in the results stands out alongside strong sales growth and a wider net loss compared with the year-earlier period.

The net loss followed net income of $1.6 million, or $0.05 per share, in the third quarter of 2025. The shareholder letter attributed most of the loss to two items: an unrealized loss of $18.4 million on short-term investments and $5.5 million in noncash stock-based compensation expense. Adjusted EBITDA loss was about $0.7 million for the quarter. These items show that the net loss was affected by large investment and accounting charges, while the adjusted earnings measure remained negative. They did not prevent the company from recording a sharp year-over-year increase in revenue, but they coincided with a decline in gross margin.

Gross margin was 35.4% in the third quarter, down from 39.4% in the same period a year earlier, according to the shareholder letter. The company attributed the decline to ramping up manufacturing, a shift toward higher revenue from enterprise customers and near-term inventory costs. Management said enterprise customers accounted for about 90% of quarterly revenue. Revenue was $16.7 million in the second quarter of 2026, so it fell sequentially despite its large year-over-year increase in the third quarter. Management said on the earnings call that the decline from the second quarter was related to a focus on operational investments and “delivery timing.”

The manufacturing focus was reflected in about $3.0 million of equipment purchases during the quarter, according to the shareholder letter. Inventory and prepaid inventory also rose from $42.4 million at the end of the second quarter to $65.9 million at the end of the third quarter. The company said the increase was tied to near-term inventory costs that weighed on margins as production ramped up. Cash stood at about $162.0 million on September 30, 2026, compared with $103.3 million on December 31, 2025. This shows spending and inventory expansion coinciding with a higher cash balance than at the end of last year, as the company continues to direct investment toward manufacturing.

The revenue surge did not hold up against the market’s reaction on the day of the results; UMAC shares closed at $10.74 on November 5, after closing at $13.03 on November 4, according to EL7 data. The shares closed lower between the two sessions on the day the company announced its third-quarter results. The results combined a revenue beat with a larger net loss than the income recorded in the year-earlier period, alongside a year-over-year decline in gross margin. Second-quarter revenue had been $16.7 million, up 687% year over year and 106% sequentially from the first quarter, according to the company’s filing with the U.S. Securities and Exchange Commission. That comparison places third-quarter performance within a rapid annual growth trajectory, with revenue declining sequentially from the second-quarter level.

Management maintained its $25 million revenue target for the fourth quarter of 2026 and said current orders fill most production capacity through the first quarter of 2027. “Our fourth-quarter revenue target remains $25 million,” it said on the earnings call, adding that capacity is “largely already allocated through the first quarter of 2027.” The shareholder letter also said the company expects adjusted EBITDA to turn positive in 2027. The company linked that trajectory to investments to increase motor manufacturing capacity and expand additive manufacturing. The company completed its acquisition of Upgrade Energy on October 19, 2026, and valued the deal at about $52 million, according to its quarterly filing.