Merlin, Inc.

What they do

Merlin develops the Merlin Pilot, a non-human pilot system combining hardware and software for autonomous flight from takeoff to touchdown. The system uses sensor technologies and AI to assess aircraft state and environment, with a certification program that includes military airworthiness plans and civil certification progress with the New Zealand Civil Aviation Authority. The company targets both military and civilian fixed-wing aircraft markets.

Revenue drivers

• USSOCOM C-130J autonomy program — Merlin is the sole prime contractor on a $105 million IDIQ contract to integrate autonomy into the C-130J for the U.S. Air Force, covering initial adaptation and potentially extending to low-rate and full-rate production. This program represents the primary source of current and near-term revenue.
• Hardware integration and software support — Revenue is expected from hardware integration and recurring, high-margin software support, though specific segment revenue figures are not disclosed in the excerpts.
• Civil certification and commercial partnerships — Merlin's partnership with Israel Aerospace Industries (IAI) and civil certification progress aim to open the commercial cargo and broader civil aviation markets, but these are future opportunities not yet generating revenue.

Recent performance

Second quarter 2026 total revenue was $2.2 million, up from $1.0 million in the first quarter of 2026. GAAP net loss was $(58.4) million in Q2 2026, compared to $(90.4) million in Q1 2026. Adjusted EBITDA loss was $(27.8) million in Q2 2026, versus $(23.3) million in Q1 2026. Cash, cash equivalents, and short-term investments were $183.9 million at June 30, 2026, compared to $123.1 million at March 31, 2026, with no debt.

Strategy

Merlin aims to be the leading U.S.-based developer of autonomy solutions for fixed-wing aircraft, targeting both military and civilian sectors. Key priorities include completing the USSOCOM C-130J program, advancing civil certification with the New Zealand Civil Aviation Authority, and expanding partnerships like the non-binding MOU with IAI for Part 25 commercial cargo aircraft. The company plans to deploy the first Merlin Pilot on commercial or military aircraft within the next three years.

Risks

• No operating history as a public company — Merlin (formerly Legacy Merlin) has a limited operating history and incurred net losses of $148.8 million for the six months ended June 30, 2026, and may not achieve profitability.
• Dependence on key contract — A significant portion of current and near-term revenue depends on the USSOCOM C-130J IDIQ contract, and any delay or cancellation could materially harm results.
• Certification and deployment uncertainty — The Merlin Pilot is still in development and requires military and civil certifications that may not be obtained on schedule or at all, delaying commercialization.
• Negative shareholder equity and cash burn — As of June 30, 2026, shareholder equity was $(99.9) million, and the company continues to incur significant losses, which may require additional financing.

Outlook

Management highlights progress on the USSOCOM C-130J contract, including the completion of the Critical Design Review in June 2026, with next steps being system integration and ground testing. The company plans to deploy the first Merlin Pilot on commercial or military aircraft within the next three years. Merlin also aims to advance civil certification and commercial partnerships, such as the MOU with IAI, to address global markets.