Key Highlights

  • Palladyne AI shares are trading down 5.92% at $3.26 versus a prior close of $3.46.
  • Third quarter Revenue was a record $8.6 million, up 895%.
  • Backlog was $18.7 million, down 24% from the second quarter.
  • 2026 revenue guidance was raised at the low end to $25 million to $27 million.
  • Gross Margin improved to 44% from 29%.

Palladyne AI (NASDAQ:PDYN) is trading down 5.92% at $3.26, a Penny Stock slipping as a falling Backlog offsets record third quarter revenue. Revenue was $8.6 million, up 895% from a year ago and 48% from the second quarter. Peer BigBear.ai (NYSE:BBAI) is trading down 8.04%.

Record Revenue, Bigger Loss

Gross margin was 44% versus 29% in the second quarter. The operating loss was $13.4 million, and the GAAP net loss was $12 million, or $0.25 per share.

Guidance Edges Up

Full-year 2026 revenue guidance was raised at the low end to $25 million, with the top end reiterated at $27 million, implying growth of 377% to 415% over 2025 revenue of $5.2 million. Management expects growth to extend into 2027, with the budget to be finalized early next year.

Backlog Declines

Backlog ended at $18.7 million, $15.3 million of it funded, down 24% from the second quarter after $2.7 million of net new awards, but up 35% from year-end. A majority is expected to convert to revenue over the next 12 to 18 months. Defense budget uncertainty, a seasonally slow third quarter and diverted promised funding weighed on bookings, and management said the timing of a fourth quarter rebound is unpredictable.

Army Evaluation Progress

Swarm OS received the highest rating on all nine Army criteria at PCC-6, and the company moved from free demonstrations to paid exercises. New partnerships include OrcaTec, Norda Dynamics and the SwarmShot counter-drone effort with Federal Ammunition and Mossberg. Pricing is targeted at about 10% of drone platform cost, and management said there are no large contracts yet.

Brain shipments hit a record, including the first FC1 units, and a defense prime placed a follow-on order.

Analyst View

Northland maintained a Buy rating while cutting its target. The one analyst covering the stock has a $5.50 target. The stock trades in a 52-week range of $2.66 to $10.00.

Bookings Decide the Next Move

Revenue is growing quickly, so the bookings pace matters most. Investors will watch whether net new awards rebuild backlog from $18.7 million, whether a large contract follows the Army evaluations and whether the final defense budget in early next year supports 2027 growth.

The $25 million to $27 million guide is the near-term marker.