Palladyne AI (PDYN) Stock: Revenue Drops but Backlog Is Telling a Different Story

TLDR

• Full-year 2025 revenue fell 33% to $5.2 million, but Q4 revenue jumped 118% year-over-year to $1.7 million
• Operating loss widened to $32.4 million for the full year, though GAAP net income hit $10 million due to warrant fair value changes
• Three acquisitions in November 2025 — GuideTech, MKR Fabricators, and Warnke — added avionics, fabrication, and machining capabilities
• Backlog grew to nearly $18 million by mid-February 2026, with 2026 revenue guidance set at $24–$27 million
• The company secured its first paying customer for Palladyne IQ 2.0 and signed a missile propulsion subsystem contract with a defense prime

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Palladyne AI had a rough 2025 on the revenue line, but the company’s story is about what’s being built for what comes next.

Full-year revenue came in at $5.246 million, down 33% from 2024. The drop was driven by the loss of one-time legacy hardware sales and the timing of services milestone deliveries. That’s a notable headline number, but the Q4 figure tells a different story — revenue jumped 118% year-over-year to $1.7 million in the final quarter.

Palladyne AI Corp., PDYN

Operating loss widened to $32.4 million from $26.9 million in 2024. R&D spending rose 24% to $12.9 million as the company pushed forward on software testing and product development.

Net income came in at $10 million for the year, swinging from a net loss of $72.6 million in 2024. That improvement was largely driven by changes in warrant fair value, not operations.

Basic earnings per share were $0.26, with diluted EPS at $0.24.

The Acquisition Play

November 2025 was a busy month for Palladyne. The company closed three acquisitions — GuideTech, MKR Fabricators, and Warnke Precision Machining. Together, they brought in-house avionics, fabrication, and precision machining capabilities under one roof.

Those new manufacturing arms generated $0.6 million in revenue in a short window. It’s a small number now, but it signals the company is no longer just a software shop.

The company also launched Palladyne Defense during the year, marking a formal push into the defense sector that goes well beyond its autonomy software roots.

Software, Drones, and Space

Palladyne IQ 2.0 was commercially released in 2025, and the company signed its first paying customer for the platform. The company also demonstrated collaborative autonomous swarming between its Gremlin-X UAV and Red Cat platforms — a technical milestone for its SwarmOS software.

A missile propulsion subsystem contract was signed with a new defense prime, adding another program to the growing pipeline.

On the space side, Palladyne expanded its work with the Air Force Research Laboratory and Portal Space Systems. The company also picked up a new patent and filed multiple applications around swarming and decentralized autonomy architectures.

The company hired a new President of Commercial and Industrial to lead growth in non-defense markets.

Backlog stood at $13.5 million at year-end 2025. By mid-February 2026, it had grown to nearly $18 million — mostly funded.

Management reiterated 2026 revenue guidance of $24 million to $27 million. The most recent analyst rating on PDYN is a Buy with a $11.00 price target.

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