Airship AI Holdings, Inc.: Q4 FY2025 earnings call

What management said about Q4 FY2025, from the documents filed with the SEC on 17 February 2026: press release. The quarter’s numbers.

Key takeaways

Q4 revenue and margin rose: Fourth-quarter net revenues were $6.5 million, with gross profit of $3.3 million and gross margin of 51.2%. Revenue rose 102% and gross margin rose 169% against Q4 of the prior year. Source
Full-year net income from noncash gains: Full-year net income was $29.3 million, or $0.90 basic per share, with noncash income of $36.5 million. Full-year net revenues were $15.3 million, against $23.1 million a year earlier. Source
Pipeline rose to $173 million: The validated pipeline was about $173 million at year-end, up from $166 million at Q3, with expected award timeframes across the next 18 to 24 months. Source
Backlog fell to $3.3 million: Backlog at year-end was $3.3 million, down from $11 million at Q3, covering firm fixed-price contracts to ship in later quarters. Management said backlog does not indicate future quarterly revenue. Source
Agency funding slowed some spending: Management said appropriation processes have slowed some agencies' ability to spend, while mission-critical homeland security programs moved forward in the quarter. Source
Q4 operating cash used $3.5 million: Net cash used in operating activities was $3.5 million in Q4, reflecting a $5.2 million rise in accounts receivable. Full-year operating cash used was $8.0 million. Source
Partner and integrator channel expanded: Management said the partner and integrator channel added significantly to the pipeline, across large federal and commercial projects. Source

“The fourth quarter of 2025 saw positive contracting momentum with multiple agencies across the federal government”
Paul Allen, President of Airship AI

What changed from last quarter

New: Ask Airship, an agentic natural-language search tool, was released to select customers at year-end. Source
New: Edge AI capabilities were extended to mobile autonomous platforms, starting with bipedal and quadrupedal robots. Source
New: A datacenter and cloud server offering called Fortress was released. Source

Results and growth drivers

Q4 revenue and margin rose: Fourth-quarter net revenues were $6.5 million, with gross profit of $3.3 million and gross margin of 51.2%. Revenue rose 102% and gross margin rose 169% against Q4 of the prior year. Source
Full-year net income from noncash gains: Full-year net income was $29.3 million, or $0.90 basic per share, with noncash income of $36.5 million. Full-year net revenues were $15.3 million, against $23.1 million a year earlier. Source
Q4 operating loss from spending: The Q4 operating loss was $612,000, which the release ties to higher stock-based compensation and higher sales and marketing investment. Source
Other income from fair-value gains: Q4 other income was $23.6 million, mainly from fair-value gains on the earnout liability ($14.5 million) and the warrant liability ($9 million), as the release states. Source

Products and offerings

Product revenue fell, support rose: Full-year product revenue was $10.1 million against $18.7 million, while post contract support rose to $5.1 million from $4.3 million. Source
Branded hardware and software mix: Management attributed the higher Q4 margin partly to more Airship AI branded hardware and software in solution sales. The prior quarter's lower margin was linked to more third-party hardware. Source
Outpost and Acropolis roadmap continues: Management said it will keep training and refining the Outpost AI and Fortress analytic platforms and keep innovating on Acropolis for secure cloud deployments. Source

“Entering into 2026 we are highly optimistic about the opportunities in our pipeline and the strength of our team to collectively execute against them.”
Paul Allen, President of Airship AI

Demand, awards and pipeline

Pipeline rose to $173 million: The validated pipeline was about $173 million at year-end, up from $166 million at Q3, with expected award timeframes across the next 18 to 24 months. Source
Backlog fell to $3.3 million: Backlog at year-end was $3.3 million, down from $11 million at Q3, covering firm fixed-price contracts to ship in later quarters. Management said backlog does not indicate future quarterly revenue. Source
Named DHS and commercial awards: Named awards include $1.9 million from DHS for National Special Security Events in 2026, and a $2.8 million commercial customer technical refresh. Source
Smart Wall work with prime contractors: Management cited $4.5 billion in new CBP Smart Wall contracts and said Airship is working with prime contractors on the IDIQ requirements for video surveillance. Source
Agency funding slowed some spending: Management said appropriation processes have slowed some agencies' ability to spend, while mission-critical homeland security programs moved forward in the quarter. Source
Restricted contracts limit disclosure: Management said most awards are on closed or restricted contract vehicles, which limits how much detail about customers and use cases can be shared. Source

Costs and margins

R&D and SG&A both rose: Full-year R&D expense was $3.08 million, up from $2.80 million, and SG&A was $11.84 million, up from $11.23 million. Source
Stock-based compensation climbed: Full-year stock-based compensation was $1.63 million, up from $1.36 million, and is cited in the release as part of the Q4 operating loss. Source
Cost of revenue fell with volume: Full-year cost of net revenues was $7.6 million, down from $12.5 million, alongside lower net revenues. Source

“the growing breadth of our pipeline helps hedge the risks of funding challenges at any specific agency or component level.”
Paul Allen, President of Airship AI

Cash, receivables and balance sheet

Q4 operating cash used $3.5 million: Net cash used in operating activities was $3.5 million in Q4, reflecting a $5.2 million rise in accounts receivable. Full-year operating cash used was $8.0 million. Source
Year-end cash and receivables: Cash and cash equivalents were $11.8 million at year-end, against $11.4 million a year earlier. Accounts receivable were $6.5 million, up from $1.2 million. Source
Warrant exercises provided $9.5 million: Net proceeds from warrant exercises were $9.5 million for the year, and founder advances of $1.3 million were repaid. Source
Warrant and earnout liabilities fell: The warrant liability fell to $13.3 million from $34.2 million, and the earnout liability to $2.6 million from $23.3 million, reflecting fair-value changes. Source

Capital and share count

Shares outstanding rose to 34.4 million: Shares outstanding were 34,368,162 at December 31, 2025, up from 30,588,413 a year earlier. Diluted EPS was $0.76 on 38,681,401 weighted diluted shares. Source
Earnout shares issued in year: Common stock issued for earnout shares totaled $5.28 million in the year, per the cash flow statement. Source
Option exercises brought $0.15 million: Proceeds from stock option exercises were $149,288 for the year, against $240,507 a year earlier. Source

Strategy and go-to-market

Partner and integrator channel expanded: Management said the partner and integrator channel added significantly to the pipeline, across large federal and commercial projects. Source
Multi-year pursuits with support contracts: Management said some added pipeline items are multi-year efforts that could expand its presence within a customer or agency, with long-term support contracts attached. Source
Pilots moved to programmatic status: Management said some pilot efforts moved to programmatic status, with some gaining authority to operate on trusted federal government networks. Source

Coming up, as management said on 17 February 2026

OBBB-funded business development in 2026: Management said long-term business development efforts are forecast to be funded in 2026 through the One Big Beautiful Bill Act, as the company moves into the new fiscal year. Source
Pipeline awards over 18 to 24 months: Management said pipeline opportunities are at varying stages, with expected award timeframes throughout the next 18 to 24 months. Source
Brand reach into new verticals: Management said it plans targeted marketing, social media, company-hosted events and trade shows to build brand awareness in new verticals. Source

Risks management discussed

Demand: Management said 2026 DHS budgets are not fully resolved, and existing funding covers contingency and mission-critical requirements for now. Source
Financial: Management said investment is funded from operating cash flow and the cash exercise of public warrants, so warrant exercise is part of the funding plan. Source

Earlier plans management reported on

Not stated: The prior release listed a return to positive operational cash flow as a fiscal year objective. The current release reports net cash used in operating activities for the year.
Not stated: The prior release expected delayed opportunities to advance in the coming months. The current release says appropriation processes have continued to slow some agencies' spending.
Not stated: The prior release planned sourcing and production efficiencies to drive continued margin expansion. The current release reports a 51.2% gross margin for Q4.

Other quarters

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.

As filed with the SEC

Open the filing on EDGAR

Airship AI Reports Fourth Quarter 2025 Financial Results

Fourth Quarter 2025 Net Revenues of $6.5 Million, Gross Profit of $3.3 Million and Gross Margin of 51.2%

Net Revenue Increase of 102% and Gross Margin Increase of 169% as Compared to Q4 of the Prior Year

Cash flow positive business operations for the quarter.

Redmond, WA - February 17th, 2026 - Airship AI Holdings, Inc. (NASDAQ: AISP) (“Airship AI” or the “Company”), a leader in AI-driven video, sensor, and data management surveillance solutions, today reported its financial and operational results for the fourth quarter ended December 31, 2025.

Q4 2025 Financial Highlights

Net revenues for the quarter ended December 31, 2025, were $6.5 million.
Gross profits for the quarter ended December 31, 2025, were $3.3 million.
Gross margin percentage was 51.2% for the quarter ended December 31, 2025. Higher margins were in part due to increased solution sales with more Airship AI branded hardware and software offerings.
Operating loss was $612,000 for the quarter ended December 31, 2025, reflected in increased stock-based compensation and increased investments in sales and marketing-related expenditures which should increase future sales.
Other income for the quarter ended December 31, 2025, was $23.6 million, primarily due to a gain from a change in the fair value of earnout liability of $14.5 million and change in fair value of warrant liability of $9 million.
Net income for the year ended December 31, 2025, was $29.3 million, or $0.90 per basic share, primarily related to noncash income of $36.5 million.
Net cash used in operating activities was $3.5 million in the quarter ended December 31, 2025. This reflected a $5.2 million increase in accounts receivable.
Cash and cash equivalents was $11.8 million as of December 31, 2025 and accounts receivable was $6.5 million.

Q4 2025 & Subsequent Operational Highlights

Backlog as of December 31, 2025 was $3.3 million, representing firm fixed price contracts awarded in the fourth quarter of 2025 that will be shipped and invoiced in the following quarter(s). Backlog is not indicative of future quarterly revenue as approximately 75% of quarterly revenue is transactional and recognized in the same quarter.
Our total validated pipeline at the end of the quarter was approximately $173 million, consisting of single and multi-year opportunities for AI-driven edge, video, and sensor and data management platform across all our customer verticals. Our pipeline includes opportunities at varying stages of progression with expected award timeframes throughout the next 18-24 months.
New significant contract awards during Q4 and into Q1 2026 include:
$1.9 million award from Department of Homeland Security (DHS) supporting large National Special Security Events scheduled for 2026.
$2.8 million award from a large commercial customer supporting a technical refresh of deployed hardware and software.
Multiple awards at the DHS component agency level for critical infrastructure facilities to replace existing failing physical security solutions.
Pilot opportunity for a DHS component agency level in-car vehicle recording system designed around officer and public safety.
Through our expanding partner engagement activities, our pipeline substantially increased in both the commercial and federal sectors. Several opportunities added to the pipeline are enduring multi-year efforts that have the potential to expand Airship’s presence within the customer or agency significantly overtime, with long-term support contracts attached to them.
Due to the sensitive nature of many of our customers and deployment use cases, we are often restricted from publicly disclosing awards and / or limited as to the specifics of the customer and use case. Consequently, most of our awards are executed on closed or restricted contract vehicles, which further limits the sharing of information that might otherwise be available.

2026 Outlook

Capitalize on growing momentum coming out of Q4 into the new fiscal year around long-term business development efforts that are forecasted to be funded in 2026 through the One Big Beautiful Bill Act (OBBB).
Maintain focus on improving gross margin percentages supporting our goal of cash flow positive operations before the end of 2026.
Continue tactical and strategic investments across our sales and business development organizations through organic cash flow from business operations and the cash exercise of public warrants.
Continue training and refinement of our edge (Outpost AI) and datacenter / cloud (Fortress) based analytic platforms supporting emerging edge analytic workflows.
Continue innovation across our core Acropolis software platform supporting new workflows for cloud-based deployments in highly secure operational environments.
Expand brand awareness engagements in new verticals through targeted marketing outreach opportunities, social media platforms, Airship AI hosted technology events, and industry tradeshow events.

Management Commentary

“The fourth quarter of 2025 saw positive contracting momentum with multiple agencies across the federal government” said Paul Allen, President of Airship AI. “While fiscal appropriation processes put in place by the current administration have continued to slow down or impact some agencies ability to spend, those agencies engaged in mission critical activities around homeland security were able to move forward on several programs to solve for critical technology-based gaps in the quarter.

“Notable new procurement activities under OBBB included movement on the CBP “Smart Wall” construction with $4.5 billion in new contracts awarded. Airship is actively working with numerous prime contractors in support of meeting requirements as part of the “Smart Wall” IDIQ, providing traditional and AI based video surveillance capabilities that will further strengthen our ability to control the border.

“Additionally, progress was made on transitioning pilot / non-programmatic efforts that Airship was engaged with to the programmatic level, in some cases including new authorities to operate on trusted federal government networks. We believe this progression cements Airship’s position as a trusted vendor for highly secure AI driven solutions supporting federal government mission critical requirements now and into the future.

"Our continued expansion into the partner / integrator space also added significantly to our pipeline, as we were exposed to multiple large projects supporting both federal and commercial customer opportunities, leveraging in part our existing footprint and trusted reputation as a solution provider. Being able to provide partners a turn-key market ready solution that is hardened and secure yet operator friendly is something that the market has been needing, one that operates as easily on-premises as it can in a datacenter or the cloud.

"Our AI offerings increased as we closed out the end of the year with our Agentic AI natural-language search tool called “Ask Airship” being released to select customers, allowing them to easily interact with data created by our growing sets of computer vision models running at the edge on our existing Outpost AI appliance and now released datacenter / cloud server offering called Fortress.

“We expanded the use of our edge AI capabilities across additional sensor modalities and operational platforms, including mobile autonomous platforms, starting with bipedal and quadrupedal robots. We believe these platforms present the opportunity to reach a wider range of customers and solve a growing number of operational requirements as customers and agencies look to best leverage the efficiencies that robotic platforms offer when combined with AI at the edge.

“Entering into 2026 we are highly optimistic about the opportunities in our pipeline and the strength of our team to collectively execute against them. While 2026 budgets at the DHS level aren’t fully resolved yet, with the existing funding in place for contingency and mission critical requirements, the growing breadth of our pipeline helps hedge the risks of funding challenges at any specific agency or component level.” concluded Mr. Allen.

About Airship AI Holdings, Inc.

Founded in 2006, Airship AI (NASDAQ: AISP) is a U.S. owned and operated technology company headquartered in Redmond, Washington. Airship AI is an AI-driven video, sensor and data management surveillance platform that improves public safety and operational efficiency for public sector and commercial customers by providing predictive analysis of events before they occur and meaningful intelligence to decision makers. Airship AI’s product suite includes Outpost AI edge hardware and software offerings, Acropolis enterprise management software stack, and Command family of visualization tools.

For more information, visit https://airship.ai.

Forward-Looking Statements

Forward-looking statements notice

The disclosure herein includes certain statements that are not historical facts but are forward-looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “plan,” “project,” “forecast,” “predict,” “potential,” “seem,” “seek,” “future,” “outlook,” and similar expressions that predict or indicate future events or trends or that are not statements of historical matters, but the absence of these words does not mean that a statement is not forward looking. These forward-looking statements include, but are not limited to, (1) statements regarding estimates and forecasts of financial, performance and operational metrics and projections of market opportunity; (2) changes in the market for Airship AI’s services and technology, expansion plans and opportunities; (3) the projected technological developments of Airship AI; and (4) current and future potential commercial and customer relationships. These statements are based on various assumptions, whether or not identified in this press release, and on the current expectations of Airship AI’s management and are not predictions of actual performance. These forward-looking statements are also subject to a number of risks and uncertainties, as set forth in the section entitled “Risk Factors” in its Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on February 17, 2026, and the other documents that the Company has filed, or will file, with the SEC. If any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. In addition, forward looking statements reflect the Company’s expectations, plans or forecasts of future events and views as of the date of this press release. The Company anticipates that subsequent events and developments will cause its assessments to change. However, while it may elect to update these forward-looking statements at some point in the future, the Company specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing the Company’s assessments as of any date subsequent to the date of this press release. Accordingly, undue reliance should not be placed upon the forward-looking statements.

	December 31, 2025	December 31, 2024
AIRSHIP AI HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
As of December 31, 2025 and 2024
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$11,750,021	$11,414,830
Accounts receivable, net of allowance for credit losses of $0	6,462,675	1,226,757
Prepaid expenses and other	294,191	17,883
Total current assets	18,506,887	12,659,470
OTHER ASSETS
Other assets	160,528	165,960
Operating lease right of use asset	807,915	882,024
TOTAL ASSETS	$19,475,330	$13,707,454
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable - trade	$1,149,811	$759,480
Advances from founders	-	1,300,000
Accrued expenses	27,966	51,649
Current portion of operating lease liability	438,635	305,178
Deferred revenue- current portion	4,668,105	3,238,483
Total current liabilities	6,284,517	5,654,790
NON-CURRENT LIABILITIES:
Operating lease liability, net of current portion	425,109	638,525
Warrant liability	13,328,006	34,180,618
Earnout liability	2,620,933	23,304,808
Deferred revenue- non-current	3,966,407	2,951,850
Total liabilities	26,624,972	66,730,591
COMMITMENTS AND CONTINGENCIES (Note 9)
STOCKHOLDERS' DEFICIT:
Preferred stock - no par value, 5,000,000 shares authorized, 0 shares issued and outstanding as of December 31, 2025 and 2024	-	-
Common stock - $0.0001 par value, 200,000,000 shares authorized, 34,368,162 and 30,588,413 shares issued and outstanding as of December 31, 2025 and 2024	3,434	3,056
Additional paid in capital	38,478,030	21,918,867
Accumulated deficit	(45,620,227)	(74,941,590)
Accumulated other comprehensive loss	(10,879)	(3,470)
Total stockholders' deficit	(7,149,642)	(53,023,137)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$19,475,330	$13,707,454

	Year Ended	Year Ended
	December 31, 2025	December 31, 2024
AIRSHIP AI HOLDINGS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
For the years ended December 31, 2025 and 2024
NET REVENUES:
Product	$10,135,562	$18,716,196
Post contract support	5,099,756	4,334,017
Other services	86,031	-
	15,321,349	23,050,213
COST OF NET REVENUES:
Cost of Sales	6,178,868	10,843,766
Post contract support	1,372,604	1,679,692
Other services	72,111	-
	7,623,583	12,523,458
GROSS PROFIT	7,697,766	10,526,755
RESEARCH AND DEVELOPMENT EXPENSES	3,076,466	2,804,894
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES	11,837,086	11,226,974
TOTAL OPERATING EXPENSES	14,913,552	14,031,868
OPERATING LOSS	(7,215,786)	(3,505,113)
OTHER INCOME (EXPENSE) :
Gain (loss) from change in fair value of earnout liability	15,401,751	(18,171,380)
Gain (loss) from change in fair value of warrant liability	20,852,612	(33,512,633)
Loss from change in fair value of convertible debt	-	(141,636)
Loss on note conversion	-	(1,144,676)
Interest income (expense), net	282,786	(1,003,096)
Other income	-	13,644
Total other income (expense), net	36,537,149	(53,959,777)
INCOME (LOSS) BEFORE PROVISON FOR INCOME TAXES	29,321,363	(57,464,890)
Provision for income taxes	-	-
NET INCOME (LOSS)	29,321,363	(57,464,890)
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency (loss) income, net	(7,409)	9,338
TOTAL COMPREHENSIVE INCOME (LOSS)	$29,313,954	$(57,455,552)
NET INCOME (LOSS) PER SHARE:
Basic	$0.90	$(2.34)
Diluted	$0.76	$(2.34)
Weighted average shares of common stock outstanding
Basic	32,413,133	24,585,955
Diluted	38,681,401	24,585,955

	Year Ended	Year Ended
	December 31, 2025	December 31, 2024
AIRSHIP AI HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 2025 and 2024
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$29,321,363	$(57,464,890)
Adjustments to reconcile net income (loss) to net cash used in operating activities
Depreciation and amortization	-	1,861
Stock-based compensation	1,629,992	1,362,822
Amortization of operating lease right of use asset	378,448	222,780
Issuance of common stock for services	-	198,500
Noncash interest expense	-	1,008,419
(Gain) loss from change in fair value of warrant liability	(20,852,612)	33,512,633
(Gain) loss from change in fair value of earnout liability	(15,401,751)	18,171,380
Loss from change in fair value of convertible note	-	141,636
Loss on note conversion	-	1,144,676
Changes in operating assets and liabilities:
Accounts receivable	(5,235,918)	422,147
Prepaid expenses and other	(276,308)	485
Other assets	5,432	16,373
Operating lease liability	(384,298)	(174,875)
Payroll and income tax receivable	-	7,230
Accounts payable - trade and accrued expenses	366,649	(2,294,698)
Deferred revenue	2,444,179	(2,780,447)
NET CASH USED IN OPERATING ACTIVITIES	(8,004,824)	(6,503,968)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock and warrants for offering, net	-	7,290,000
Proceeds from warrant exercise, net	9,498,136	7,704,540
Repayment of advances from founders	(1,300,000)	-
Advances from founders	-	(450,000)
Proceeds from stock option exercises	149,288	240,507
NET CASH PROVIDED BY FINANCING ACTIVITIES	8,347,424	14,785,047
NET INCREASE IN CASH AND CASH EQUIVALENTS	342,600	8,281,079
Effect from exchange rate on cash	(7,409)	9,338
CASH AND CASH EQUIVALENTS, beginning of period	11,414,830	3,124,413
CASH AND CASH EQUIVALENTS, end of period	$11,750,021	$11,414,830
Supplemental disclosures of cash flow information:
Interest paid	$-	$11,913
Taxes paid	$-	$2,410
Noncash investing and financing
Issuance of common stock for debt interest payment	$-	$1,008,442
Issuance of common stock for debt conversion	$-	$4,114,831
Issuance of common stock for earnout shares	$5,282,125	$-
Recognition of operating right-of-use asset	$304,339	$-
Recognition of operating lease liability	$304,339	$-

Contacts
Chris Tyson/Larry Holub
MZ North America
949-491-8235
AISP@mzgroup.us