Palladyne AI reports $3.5M revenue, eyes growth in defense AI despite missing estimates

Palladyne AI Corp. reported $3.5 million in quarterly revenue, missing analyst estimates due to delayed government contracts. Despite this, the company maintains its full-year revenue guidance of $24–27 million, supported by a strong backlog. Gross margin stood at 30% with current manufacturing utilization, but significant margin improvements are expected as production scales and software sales increase. The company is evolving into a vertically integrated defense contractor focused on automation and AI-driven defense markets, with potential growth from UAV and software contracts.