Orbital UAV Faces Cash Burn While Testing New High-Capacity Engine
Orbital Corporation reports a $0.5 million operating cash outflow for Q2 2025, while progressing development of a larger UAV engine now entering customer flight trials.
- Operating cash outflow of $0.5 million for the quarter
- Cash, receivables, and undrawn loans total $5.9 million
- Spent $1.2 million on developing a larger capacity UAV engine
- Prototype engines have begun customer flight trials
- Maintains $2 million unsecured working capital loan facility
Quarterly Financial Overview
Orbital Corporation Limited, a specialist in propulsion systems for tactical uncrewed aerial vehicles (UAVs), has released its quarterly activities report for the period ending 30 June 2025. The company recorded an operating cash outflow of $0.5 million during the quarter, reflecting ongoing investment in product development and operational costs.
Despite the cash outflow, Orbital UAV maintains a solid liquidity position with cash, trade receivables, and undrawn loan facilities totaling $5.9 million at quarter-end. This financial buffer provides the company with an estimated six quarters of funding based on current cash flow trends, offering a runway to continue its strategic initiatives without immediate funding pressures.
Product Development Progress
A key highlight of the quarter was the $1.2 million expenditure on advancing a new, larger capacity engine designed to meet rising market demand for UAVs capable of carrying heavier payloads. This development aligns with Orbital UAV’s focus on long endurance and high reliability propulsion systems, critical factors in tactical UAV applications.
Significantly, prototype engines have now commenced customer flight trials and evaluations in the second quarter of the 2025/26 financial year. This milestone marks a crucial step from development to potential commercialisation, as customer feedback during these trials will inform final refinements and readiness for broader market deployment.
Funding and Financial Facilities
Orbital UAV continues to benefit from an unsecured working capital loan facility of $2 million provided by shareholders UIL Limited and Boneyard Investments Pty Ltd. The facility remains undrawn, offering additional liquidity if required. The company’s prudent cash management and access to this facility underpin its ability to sustain operations and invest in growth initiatives amid the current cash outflow.
Management has not indicated any immediate plans to raise additional capital, suggesting confidence in the existing funding structure to support ongoing development and operational needs.
Outlook and Market Positioning
Orbital UAV’s continued investment in a higher capacity engine reflects a strategic response to evolving UAV market demands, particularly in tactical and endurance applications. The commencement of customer flight trials signals progress toward commercial validation, which could unlock new contracts and revenue streams if successful.
While the company’s cash outflow highlights the costs associated with innovation, the current liquidity position and loan facilities provide a cushion to navigate this phase. Investors will be watching closely for updates on trial outcomes and any subsequent commercial agreements that could drive revenue growth and improve cash flow dynamics.
Bottom Line?
Orbital UAV’s development strides and solid funding position set the stage for potential commercial breakthroughs, but upcoming trial results will be pivotal.
Questions in the middle?
- What feedback will customers provide from the prototype engine flight trials?
- When might Orbital UAV expect to convert development progress into commercial contracts?
- Could the company’s cash burn accelerate if trials require further iterations or delays?
