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Volatus Aerospace is turning Ottawa's drone push into orders.
The Montreal-based company reported third-quarter revenue of $10.5M on Tuesday, up 24.9 per cent from the second quarter. Its adjusted EBITDA loss narrowed by a third over the same stretch.
Why it matters: In September, Volatus turned its spot on the federal Defence Drone Initiative (DDI) Marketplace into its first Canadian Armed Forces contract. Uncrewed and autonomous systems are one of the 10 sovereign capabilities named in Canada's Defence Industrial Strategy, and the company says the strategy is now reaching procurement through the DDI Marketplace.
By the numbers
For the quarter ended Sept. 30:
Revenue: $10.5M, up 24.9 per cent from Q2 and 0.9 per cent below Q3 2025
Gross margin: 30.4 per cent, up from 29.3 per cent in Q2
Net loss: $6.2M, down from $7.5M in Q2 ($4.5M a year earlier)
Adjusted EBITDA loss: $2.9M, down 34.3 per cent from $4.4M in Q2
Cash: $50.6M, with working capital of $57.8M
The company said the jump from Q2 fits its normal seasonal pattern. Revenue for the first nine months came in at $24.6M, down 8.7 per cent from a year earlier, which Volatus tied to delays in some commercial contract awards and in deliveries under an ISR system contract.
The CAF deal
On Sept. 10, Volatus won a five-year Government of Canada contract to supply Low-Cost Tactical intelligence, surveillance and reconnaissance (ISR) uncrewed aircraft systems to the CAF. It starts with an initial order of 100 systems, with options for up to 4,900 more.
The award came two days after Volatus confirmed it had qualified across all five DDI Marketplace streams. The company calls it its first Stream 1 award.
"We qualified across all five DDI streams and won our first Canadian Armed Forces contract in the same month. That is what sovereign capability looks like when it turns into orders," said Glen Lynch, CEO of Volatus Aerospace.
Order book
As of Nov. 10, Volatus reported total contract value of about $101.7M, expected to be executed through 2031:
$75.7M in signed contracts and multi-year agreements across defence, government, energy and infrastructure
Up to $26M in customer options, including under the DDI contract and NATO-allied contracts
On the NATO side, Volatus delivered the first tranche, about $4.5M, of a NATO-allied ISR training system contract on Oct. 7. The customer has begun exercising its option on a second tranche of up to about $4.5M, available through the end of 2027.
Building out
The quarter and the weeks since brought a run of moves:
Mirabel: opened its 53,000-square-foot manufacturing and systems integration facility in Mirabel, Que., on Sept. 29, with production of proprietary technology underway
Autonomy: completed initial flight testing of its V-Cortex AI flight controller, demonstrating navigation without satellite positioning using onboard sensors
Europe: closed the acquisition of AISPECO UAB, a Vilnius, Lithuania, maker of modular airborne sensor systems, for US$10.5M plus up to US$2.5M in milestone payments
Arctic: signed a memorandum of understanding on Nov. 4 with Calian Group and Instrumar to evaluate ice detection, de-icing and Arctic-hardening technology for uncrewed aircraft
Margins
Gross margin sat below last year's 32.7 per cent. Volatus said that reflects a heavier weighting of defence programs, which carry lower margins in the initial fulfilment phase than its established commercial lines.
The company expects a shift toward long-term defence sustainment, services and training to lift margins heading into 2027. Services and training made up 54.7 per cent of Q3 revenue.
What's next
Management expects adjusted EBITDA to improve as defence pipeline opportunities convert to revenue, with the path to breakeven built on revenue growth rather than further cost cuts.
"Our job now is execution: converting a growing pipeline into revenue and closing the gap to Adjusted EBITDA breakeven," Lynch said.
