Palladyne AI Corp. Reports 63% Revenue Decline and $7.5 Million Net Loss in Q2 2025

Palladyne AI Corp. reported its financial results for the second quarter of 2025, revealing a significant decline in revenue and continued operational losses. The company generated $1.0 million in net revenue for the three months ended June 30, 2025, a decrease of 63% from $2.7 million in the same period last year. For the first half of 2025, total revenue was $2.7 million, down 56% from $6.2 million in the first half of 2024. The decline was primarily attributed to reduced funding and the timing of milestone completions in product development contracts.

Operating expenses for the second quarter increased to $9.1 million, up 7% from $8.5 million in the prior year, driven by a 33% rise in research and development costs, which reached $3.1 million. This increase reflects ongoing efforts to enhance the company's AI/ML Foundational Technology and related products. Despite the rise in expenses, Palladyne reported a net loss of $7.5 million for the quarter, compared to a loss of $5.3 million in the same quarter of 2024. The company’s accumulated deficit as of June 30, 2025, stood at approximately $475.6 million.

In terms of strategic developments, Palladyne AI has focused on the commercialization of its AI/ML software products, Palladyne IQ and Palladyne Pilot, which are currently in the early stages of market introduction. The company has engaged with potential customers, indicating a sales cycle of 12 to 18 months. As of June 30, 2025, Palladyne reported a backlog of $1.7 million, with expectations of recognizing approximately half of this backlog over the next year.

Palladyne's liquidity position improved, with cash, cash equivalents, and marketable securities totaling $62.7 million as of June 30, 2025, compared to $40.1 million at the end of 2024. The company raised approximately $60.7 million in gross proceeds from equity offerings in late 2024 and early 2025, which it plans to use for product development and operational expenses. However, Palladyne continues to face challenges in achieving positive cash flow and profitability, with management indicating that significant losses are expected to persist in the near term.

Looking ahead, Palladyne AI Corp. remains focused on advancing its AI/ML technology and expanding its customer base, particularly in the industrial and defense sectors. The company acknowledges the uncertainties surrounding market demand and the competitive landscape, which could impact its ability to generate revenue and achieve its business objectives.