Hyliion Lifts 2026 Revenue Outlook to $18 Million on Navy Work

Hyliion raised its 2026 revenue outlook to approximately $18 million, up from $15 million last quarter and roughly $10 million at the start of the year, after third-quarter revenue of $7.5 million beat management's expectations on accelerating U.S. Navy work.

Chief Financial Officer Jon Panzer said the company expects about $3 million in fourth-quarter revenue — down from the prior two quarters — as work winds down on an 800-kilowatt Navy power system. By Grace Kim's read of the numbers, this is a company whose top line is scaling fast off a small base, with the details worth a closer look.

What drove the third-quarter beat?

Third-quarter revenue came in at $7.5 million, versus $759,000 a year earlier and $4.9 million in the second quarter of 2026. All of it came from research and development services, Panzer said.

The figure blew past the company's prior outlook of just under $5 million, mostly because of faster progress on the 800-kilowatt Navy module and roughly $3 million in additional funding for that work. Cost of revenue was $6.9 million, leaving gross profit of $552,000 — thin, but positive.

Operating expenses fell 15% year over year to $13 million, partly because spending shifted from research and development toward revenue-generating Navy services. Net loss narrowed to $11.1 million from $13.3 million a year earlier. For the first nine months of 2026, revenue reached $15.2 million, up from $2.8 million in the same period of 2025, while the nine-month net loss narrowed to $36.7 million from $44 million.

Takeaway: revenue is compounding quickly, and the loss is shrinking, but gross margins are still razor-thin.

What's happening with the Navy contracts?

Chief Executive Officer Thomas Healy said Hyliion is in final negotiations on two additional military contracts: an approximately $1 million Navy agreement to evaluate the KARNO Power Module for a new application, and an approximately $7 million contract with a different military branch. Neither was signed at the time of the call.

Together with a $41.7 million Navy contract announced in July, the expected awards would bring new military contracts for 2026 to roughly $50 million — the high end of the company's target range, Healy said. The July contract calls for two multi-megawatt KARNO Power Modules, with most of that work expected in 2027 and 2028.

Excluding the two potential new deals, Hyliion had $45.5 million in remaining authorized funding under existing military contracts, with the bulk of that work expected over the next couple of years.

One timing wrinkle: Hyliion now expects to complete the 800-kilowatt system for the Navy's USX-1 Defiant autonomous ship early in the first quarter of 2027. Healy described the shift from the previous year-end plan as about six weeks and said he doesn't expect it to materially affect the company's 2027 scale-up or commercialization plans.

Takeaway: the Pentagon is carrying the business right now, and the pipeline could hit $50 million for the year.

Where does commercialization stand?

Healy said Hyliion expects to complete its first commercial field deployment of the KARNO Power Module in the coming weeks, and equipment has already begun moving to the first deployment site. The company delivered another early adopter unit to the Navy during the third quarter and expects to finish remaining early adopter deliveries by its fourth-quarter earnings release in mid-February 2027.

A second commercial unit is planned for a large data center's AI test facility, and Hyliion intends to use some units for temporary customer demonstrations in 2027. Healy said the company has signed letters of intent representing interest in about 750 units, though customers generally want to test initial systems at their own sites before larger purchases.

On manufacturing, Hyliion is consolidating printer and production operations in Texas, moving roughly six additive manufacturing machines (3D printers that build metal parts layer by layer) from Ohio. Ohio stays as an R&D site and handles initial work on 800-kilowatt systems. The existing printer fleet has capacity of about 5 to 10 megawatts annually, potentially up to 15 megawatts with planned improvements. Hyliion plans to resume buying printers in 2027.

The KARNO Core remains on track to target 200 kilowatts of 800-volt DC output by year-end, though Healy cautioned that auxiliary equipment consumes some power and actual output varies. A newer regenerator component developed small cracks after extended operation; Hyliion reverted to an earlier design and changed the print file, with validation testing on redesigned parts expected to begin soon.

Takeaway: first commercial units are moving out the door, but hardware validation is still a live process.

What about cash?

Hyliion ended the quarter with $121.4 million in cash and short- and long-term investments. It maintained its year-end forecast of $115 million to $120 million, though Panzer said the balance may land near the low end because the company no longer expects to complete an equipment financing transaction this year — the market for the proposed secured debt wasn't favorable.

Panzer said higher revenue, lower expenses and improved working capital should offset the absence of financing proceeds. There was no activity under the at-the-market equity facility during the quarter. Management still believes existing capital is sufficient to bring the KARNO module through commercialization, but additional capital will ultimately be needed to support production growth, including more printers.

The bottom line: an $18 million revenue year, a narrowing loss and $121 million in the bank — but the commercial story beyond the Navy starts in 2027.