Company Demonstrates Meaningful Progress on Strategic Transformation While Expanding Recurring Revenue Streams
The first half of 2026 reflected continued execution against Mynd.ai's operating transformation: stronger gross margin, materially lower operating expenses, improved Adjusted EBITDA, and reduced cash used to fund operations, while the Company continued to build recurring revenue through services and software-as-a-service ("SaaS"). Management believes these actions are creating a more efficient operating model and positioning the Company to pursue sustainable growth as market conditions improve.
Key highlights for the first half of 2026 compared with the first half of 2025:
- Gross margin expanded 220 basis points to 24% from 22% in the prior-year period
- Total operating expenses reduced 35% to
$31.5 million from$48.5 million in the prior-year period - Net loss narrowed 30% to
$20.2 million from$28.9 million in the prior-year period - Adjusted EBITDA1 improved 52% to a loss of
$9.1 million from a prior-year loss of$19.0 million - Net cash used in operating activities improved 36%, or
$14.8 million , compared to the prior-year period - Free cash flow1 improved 36%, or
$15.4 million , compared to the prior-year period - Service and SaaS revenue grew year-over-year, demonstrating continued momentum in recurring revenue streams despite lower total revenue in the period
"Our first half results show that our structural transformation is delivering measurable progress," said
Strategic Updates
During the first half of 2026, the Company enhanced its financial flexibility through a strategic inventory financing arrangement with its majority shareholder, NetDragon Websoft Holdings Limited, providing access to up to
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1 | Non-GAAP financial measure. Reconciliations to the most directly comparable |
About
Forward-Looking Statements
This press release contains "forward-looking statements," within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements reflect Mynd's current expectations and projections about future events at the time, and thus involve uncertainty and risk. The words "believe," "expect," "anticipate," "will," "could," "would," "should," "may," "plan," "estimate," "intend," "predict," "potential," "continue," "optimistic," and the negatives of these words and other similar expressions generally identify forward looking statements. Such forward-looking statements are subject to various risks and uncertainties, including those described under the section entitled "Risk Factors" in Mynd's Annual Report on Form 20-F, filed with the
Discussion of Non-GAAP Financial Measures
We believe that providing the non-GAAP ("Generally Accepted Accounting Principles") information to investors, in addition to the GAAP presentation, allows investors to view the financial results in the way management views the operating results. We further believe that providing this information allows investors not only to better understand our financial performance, but more importantly, to evaluate the efficacy of the methodology and information used by management to evaluate and measure such performance. The non-GAAP information included in this press release should not be considered superior to, or a substitute for, financial statements prepared in accordance with GAAP.
We utilize a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of the business, for making operating decisions and for forecasting and planning for future periods. Our annual financial plan is prepared both on a GAAP and non-GAAP basis, and the non-GAAP annual financial plan is approved by our board of directors. Continuous budgeting and forecasting for revenue and expenses are conducted on a consistent non-GAAP basis, in addition to GAAP, and actual results on a non-GAAP basis are assessed against the non-GAAP annual financial plan. In addition, and as a consequence of the importance of these measures in managing the business, we use non-GAAP measures and results in the evaluation process to establish management's compensation. For example, our annual bonus program payments are based in part upon the achievement of consolidated revenue and Adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA") targets.
Reconciliations with respect to the Non-GAAP figures included in this press release to such Non-GAAP figure's most comparable GAAP figure are included in the financial tables below.
Financial Tables Follow
| ||||
ASSETS | ||||
Current assets: | ||||
Cash and cash equivalents, including restricted cash of | $ 7,040 | $ 18,481 | ||
Accounts receivable, net of allowance for credit losses of | 26,630 | 24,849 | ||
Inventories | 23,030 | 29,713 | ||
Prepaid expenses and other current assets | 8,120 | 7,971 | ||
Due from related parties | 3,626 | 3,095 | ||
Total current assets | 68,446 | 84,109 | ||
Non-current assets: | ||||
44,622 | 44,961 | |||
Property, plant, and equipment, net | 9,801 | 11,767 | ||
Intangible assets, net | 36,149 | 36,185 | ||
Right-of-use assets, net | 1,938 | 2,073 | ||
Deferred tax assets, net | 89 | 87 | ||
Other non-current assets | 3,260 | 3,345 | ||
Total non-current assets | 95,859 | 98,418 | ||
Total assets | 164,305 | 182,527 | ||
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) | ||||
Current liabilities: | ||||
Accounts payable | 32,064 | 37,947 | ||
Accrued expenses and other current liabilities | 25,286 | 34,836 | ||
Loans payable, current | — | 2,897 | ||
Contract liabilities, current | 12,062 | 12,272 | ||
Accrued warranties | 13,696 | 15,918 | ||
Lease liabilities, current | 896 | 1,011 | ||
Due to related parties | 23,980 | 5,343 | ||
Total current liabilities | 107,984 | 110,224 | ||
Non-current liabilities: | ||||
Loans payable, non-current | 64,261 | 61,083 | ||
Contract liabilities, non-current | 18,095 | 17,971 | ||
Lease liabilities, non-current | 1,652 | 1,751 | ||
Deferred tax liabilities | 9,000 | 9,000 | ||
Total non-current liabilities | 93,008 | 89,805 | ||
Total liabilities | 200,992 | 200,029 | ||
Shareholders' deficit: | ||||
Ordinary Shares par value of 10,000,000 shares, | 474 | 465 | ||
(454) | (454) | |||
Additional paid-in capital | 488,275 | 487,481 | ||
Accumulated other comprehensive income | 3,810 | 3,648 | ||
Accumulated deficit | (528,792) | (508,642) | ||
Total shareholders' deficit | (36,687) | (17,502) | ||
Total liabilities and shareholders' equity | $ 164,305 | $ 182,527 | ||
| ||||
Six Months Ended | ||||
2026 | 2025 | |||
Revenue | $ 73,369 | $ 89,272 | ||
Cost of revenue | 55,831 | 69,884 | ||
Gross profit | 17,538 | 19,388 | ||
Operating expenses, net: | ||||
General and administrative | 9,671 | 14,928 | ||
Research and development | 4,888 | 7,782 | ||
Sales and marketing | 15,941 | 21,399 | ||
Transaction-related costs | — | 53 | ||
Restructuring and other expenses | 985 | 4,353 | ||
Total operating expenses | 31,485 | 48,515 | ||
Operating loss | (13,947) | (29,127) | ||
Other income (expense): | ||||
Interest expense | (5,139) | (4,913) | ||
Interest income | 30 | 637 | ||
(Loss) gain on embedded derivative | (22) | 2,143 | ||
Other (expense) income | (992) | 2,409 | ||
Total other (expense) income | (6,123) | 276 | ||
Net loss before income taxes | (20,070) | (28,851) | ||
Income tax expense | (80) | (41) | ||
Net loss | $ (20,150) | $ (28,892) | ||
Net loss per share, basic and diluted | $ (0.04) | $ (0.06) | ||
Weighted average shares outstanding, basic and diluted | 469,301,078 | 456,872,902 | ||
| ||||
Six Months Ended | ||||
2026 | 2025 | |||
Net loss | $ (20,150) | $ (28,892) | ||
Other comprehensive loss, net of tax of nil: | ||||
Change in foreign currency translation reserve | 162 | 256 | ||
Total comprehensive loss | $ (19,988) | $ (28,636) | ||
| ||||
Six Months Ended | ||||
2026 | 2025 | |||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||
Net loss | $ (20,150) | $ (28,892) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Depreciation and amortization | 2,878 | 4,697 | ||
Deferred taxes | — | (113) | ||
Non-cash lease expense | 565 | 766 | ||
Non-cash interest expenses | 3,259 | 2,799 | ||
Loss (gain) on embedded derivative | 22 | (2,143) | ||
Share-based compensation | 967 | 1,037 | ||
Amortization of RDEC credit | (1,345) | (1,005) | ||
Net realizable value adjustments to inventory | 887 | 396 | ||
Changes in accounts receivable provision | 10 | 479 | ||
Other | 53 | 24 | ||
Change in operating assets and liabilities: | ||||
Accounts receivable | (284) | 1,030 | ||
Inventories | 5,649 | 811 | ||
Prepaid expenses and other assets | 175 | 3,062 | ||
Due from related parties | (556) | (857) | ||
Accounts payable | (5,698) | (5,075) | ||
Accrued expenses and other liabilities | (9,824) | (17,545) | ||
Accrued warranties | (2,126) | (375) | ||
Due to related parties | — | 445 | ||
Contract liabilities | 23 | (129) | ||
Lease obligations - operating leases | (945) | (681) | ||
Net cash used in operating activities | (26,440) | (41,269) | ||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||
Acquisition of property, plant and equipment | (63) | (33) | ||
Internal-use software development costs | (833) | (1,467) | ||
Net cash used in investing activities | (896) | (1,500) | ||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||
Repayment of Revolver | (3,000) | (11,000) | ||
Proceeds from Revolver | — | 8,000 | ||
Proceeds from related party inventory financing agreement | 18,637 | — | ||
Repayment of Paycheck Protection Program Loan | — | (82) | ||
Share repurchase | — | (110) | ||
Taxes withheld and paid related to net share settlement of share-based compensation awards | (173) | (49) | ||
Net cash provided by (used in) financing activities | 15,464 | (3,241) | ||
Net change in cash, cash equivalents, and restricted cash | (11,872) | (46,010) | ||
Cash, cash equivalents, and restricted cash, beginning of period | 18,481 | 75,317 | ||
Exchange rate effects | 431 | (245) | ||
Cash, cash equivalents and restricted cash, end of period | $ 7,040 | $ 29,062 | ||
Supplemental disclosure of non-cash investing and financing transactions: | ||||
Lease assets acquired in exchange for lease liabilities | $ 392 | $ — | ||
Forgiveness of related party payables | $ — | $ 5,217 | ||
Convertible notes issued in exchange for accrued PIK interest | $ 1,789 | $ 1,703 | ||
Supplemental disclosure of cash transactions: | ||||
Cash paid for interest | $ 3,397 | $ 1,841 | ||
Cash (paid for taxes) received for tax refunds, net | $ (410) | $ 1,450 | ||
Reconciliation of Adjusted EBITDA to Net Loss
| |||
Six Months Ended | |||
2026 | 2025 | ||
(in thousands) | |||
Net loss | $ (20,150) | $ (28,892) | |
Interest expense | 5,139 | 4,913 | |
Interest income | (30) | (637) | |
Income tax expense | 80 | 41 | |
Depreciation and amortization | 2,878 | 4,697 | |
Share-based compensation | 967 | 1,037 | |
Loss (gain) on embedded derivative | 22 | (2,143) | |
Other expense (income), net | 992 | (2,409) | |
Transaction-related costs | — | 53 | |
Restructuring and other expenses (1) | 985 | 4,353 | |
Adjusted EBITDA | $ (9,117) | $ (18,987) | |
(1) Refers to employee severance costs, contract termination costs, facility restructuring, and business restructuring efforts undertaken by management. |
Reconciliation of Free Cash Flow to
| |||
Six Months Ended | |||
2026 | 2025 | ||
(in thousands) | |||
Net cash used in operating activities | $ (26,440) | $ (41,269) | |
Internal-use software development costs | (833) | (1,467) | |
Acquisition of property and equipment, other than internal-use software development costs | (63) | (33) | |
Free Cash Flow | $ (27,336) | $ (42,769) | |
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SOURCE Mynd.ai