Archer Aviation’s Financial Performance and Outlook

Archer Aviation Inc. is a company designing and developing electric vertical takeoff and landing (eVTOL) aircraft for use in urban air mobility (UAM) networks. The company has not yet generated any revenue, as it continues to focus on the design, development, certification, and manufacturing of its eVTOL aircraft, known as “Midnight.”

Financial Highlights

For the three and six months ended June 30, 2024, Archer Aviation reported the following financial results:

The key takeaways from these financial results are:

1. Increased Investment in R&D: Archer Aviation significantly increased its research and development spending by 41.9% in Q2 2024 compared to the prior year period. This reflects the company’s focus on advancing the design and development of its Midnight eVTOL aircraft.

2. Reduced General & Administrative Costs: General and administrative expenses decreased by 73.4% in Q2 2024, primarily due to a one-time charge related to the Wisk Warrant in the prior year period, as well as lower legal and professional fees.

3. Narrowing Net Losses: The company’s net loss decreased by 41.9% in Q2 2024 compared to the same period in 2023, indicating improved financial performance despite the continued investment in R&D.

Liquidity and Funding

As of June 30, 2024, Archer Aviation had $360.4 million in cash and cash equivalents. The company believes this, combined with an additional $55 million raised from Stellantis in July 2024, will be sufficient to meet its cash requirements for at least the next 12 months.

To further strengthen its financial position, Archer Aviation has taken the following actions:

1. Credit Facility: In October 2023, the company entered into a $65 million credit agreement with Synovus Bank to fund the construction and development of its manufacturing facility in Covington, Georgia.

2. At-the-Market (ATM) Equity Offerings: Archer Aviation has filed two shelf registration statements, allowing it to sell up to $95 million in Class A common stock. Under the first ATM program, the company raised $48.1 million in net proceeds during the first half of 2024. The second ATM program has an additional $44.2 million remaining for future sales.

3. Stellantis Forward Purchase Agreement: In June 2024, Archer Aviation drew down the remaining $55 million available under its forward purchase agreement with Stellantis, issuing 17.4 million shares of Class A common stock.

These funding sources provide Archer Aviation with the necessary capital to continue its research and development efforts, as well as the buildout of its manufacturing capabilities.

Operational Highlights and Outlook

Archer Aviation’s primary focus is on the design, development, certification, and manufacturing of its Midnight eVTOL aircraft. Key operational highlights include:

• Midnight Aircraft Development: Archer Aviation unveiled its Midnight eVTOL aircraft in November 2022, which is designed around the company’s proprietary 12-tilt-6 aircraft configuration. In August 2023, the company received a Special Airworthiness Certificate from the FAA for its first Midnight aircraft and began its flight testing program in October 2023.

• Certification Efforts: The company is working closely with the FAA to certify its Midnight eVTOL aircraft, which is a critical step before the aircraft can enter commercial service.

• Manufacturing Capabilities: Archer Aviation is in the process of building up its manufacturing capabilities, including the construction of a facility in Covington, Georgia, which is being funded in part by the credit facility with Synovus Bank.

Looking ahead, Archer Aviation plans to operate two complementary lines of business once its eVTOL aircraft are certified and ready for commercial service:

1. Archer UAM: The company intends to operate its own UAM ecosystem, initially in select major cities, using its Midnight eVTOL aircraft.

2. Archer Direct: Archer Aviation also plans to sell its eVTOL aircraft to third-party customers, as evidenced by its existing agreements with United Airlines and the U.S. Air Force.

The company’s ability to successfully execute on these business lines will depend on its continued progress in the design, development, certification, and manufacturing of its Midnight eVTOL aircraft.

Analysis and Outlook

Archer Aviation’s financial results for the first half of 2024 demonstrate the company’s commitment to advancing its eVTOL technology and preparing for the commercialization of its Midnight aircraft. The significant increase in research and development spending reflects the company’s focus on refining its aircraft design and working towards certification with the FAA.

The reduction in general and administrative costs is also a positive sign, as it suggests Archer Aviation is effectively managing its overhead expenses as it scales its operations. The narrowing of net losses indicates the company is making progress in improving its financial performance, though it remains in the early stages of its development and has not yet generated any revenue.

Archer Aviation’s strong liquidity position, with over $360 million in cash and cash equivalents, provides the company with the necessary runway to continue its R&D efforts and manufacturing ramp-up. The additional funding sources, such as the credit facility, ATM equity offerings, and the Stellantis forward purchase agreement, further strengthen the company’s financial flexibility and ability to execute on its strategic plans.

However, the company still faces significant challenges and risks in the development and certification of its eVTOL aircraft. Any delays or setbacks in the certification process could require Archer Aviation to raise additional capital and delay its timeline to commercialization. Additionally, the company’s ability to successfully operate its planned UAM ecosystem and sell its aircraft to third-party customers remains uncertain, as the urban air mobility market is still in its early stages of development.

Overall, Archer Aviation’s financial results and operational progress demonstrate the company’s commitment to bringing its Midnight eVTOL aircraft to market. While the company has made significant strides, it still has a long road ahead to achieve its goal of unlocking the skies and reimagining how people move and spend time. Investors and stakeholders will need to closely monitor the company’s continued progress in the design, development, certification, and manufacturing of its eVTOL technology, as well as its ability to execute on its planned business lines.