Merlin Posts GAAP Profit on Warrant Fair-Value Gain

The Tip Desk · November 13, 2026 · 3 min read

Third-quarter revenue was $3.5 million and cash, cash equivalents, and short-term investments stood at $161.6 million with no debt.

Merlin, Inc. (MRLN), an aerospace and defense technology company building the operating system of record for autonomous flight, reported GAAP net income of $73.8 million for the third quarter ended September 30, 2026, reversing a $58.4 million net loss in the second quarter.

The profit was produced by a $103.6 million non-cash gain from the change in fair value of warrant liabilities. Adjusted EBITDA remained a loss of $24.1 million, narrower than the $27.8 million Adjusted EBITDA loss in the second quarter.

Total revenue was $3.5 million, up from $2.2 million in the second quarter of 2026. A year earlier, in the three months ended September 30, 2025, revenue was $1.9 million. Gross loss narrowed to $1.8 million from $2.0 million in the year-ago quarter.

Research and development expense was $14.7 million, general and administrative expense $12.9 million, and selling and marketing expense $2.0 million. Loss from operations widened to $31.5 million from $16.6 million a year earlier.

Cash, cash equivalents, and short-term investments declined to $161.6 million at September 30, 2026 from $183.9 million at June 30, 2026. The company said it had no debt. Cash and cash equivalents were $161.4 million and short-term investments $182,000 at quarter-end.

On November 10, 2026, Merlin said it was awarded a new $8.9 million task order for the next phase of its C-130J autonomy program with the U.S. Special Operations Command. Chief executive Matt George said the order moves the program into its integration phase, laying the groundwork for future flight demonstrations and production revenue with SOCOM and ultimately the global C-130J fleet. The company has more than $100 million in IDIQ contract ceiling value under that program.

On November 11, 2026, Merlin said it had been selected by U.S. Africa Command for the initial phase of its Autonomous Casualty Evacuation Industry Technology Challenge and received a $500,000 contract to demonstrate Merlin Pilot executing a CASEVAC mission using a Cessna 208B Grand Caravan.

George said the company is advancing its defense programs in the places customers need autonomy most.

Merlin’s planning process for 2027 is underway. The company said it expects to bring 2027 operating expenses meaningfully below its 2026 level by concentrating investment on programs and customers with funded work and a clear path to revenue. Its objective, it said, is a lower, more focused cost base that preserves the balance sheet and funds its plan into 2029 without depending on capital raises.

George said the goal of the planning process is to meet the opportunities presented by current contracts and the broader market potential detailed on last quarter’s call, and that it is imperative for Merlin to continue to advance Merlin Pilot while demonstrating discipline in the investments it makes.

The company will host a live webcast on November 12, 2026, beginning at 4:30 p.m. ET, to discuss the results.