What Corpay (CPAY) Said on Its Q3 Earnings Call

Key Points

• Volatus Aerospace’s third-quarter revenue rose 24.9% sequentially to CAD 10.5 million, while its adjusted EBITDA loss narrowed 34% to CAD 2.9 million. Gross margin was 30.4%, down from 32.7% a year earlier as defense deliveries weighed on margins.
• The company secured its first Canadian Armed Forces contract and plans to deliver the initial 100 drone systems in late November or early December. It reported CAD 101.7 million in contract value through 2031, including customer options.
• Volatus ended September with CAD 50.6 million in cash and CAD 9.4 million in borrowings, and completed its acquisition of sensor and software business AISPECO in October. Management expects the acquisition’s projected CAD 7 million–CAD 12 million in revenue synergies over two years to arrive sooner than initially anticipated.

Volatus Aerospace reported third-quarter revenue of CAD 10.5 million, up 24.9% from the prior quarter, as the drone company prepared to deliver its first Canadian Armed Forces order and integrated a newly acquired European sensor business.

Chief Financial Officer Abhi Singhvi said the company’s adjusted EBITDA loss narrowed 34% sequentially to CAD 2.9 million, while operating expenses fell 7.5%. The loss widened from a year earlier, reflecting investments in engineering, defense personnel, product development, software and the company’s Mirabel manufacturing facility, he said.

Revenue through September totaled CAD 24.6 million. Services and training accounted for approximately 55% of third-quarter revenue, with products and equipment representing the remainder.

Defense Deliveries and Committed Orders

Chief Executive Officer Glen Lynch said Volatus qualified across all five streams of Canada’s Defence Drone Initiative marketplace in September and secured its first Canadian Armed Forces contract shortly afterward. The company is targeting delivery of the first 100 systems in late November or early December, ahead of the September 2027 delivery schedule, he said.

Lynch said the initial systems are being produced by a partner rather than at Mirabel. Volatus plans to prepare its workforce and factory to manufacture subsequent orders, potentially using parts sourced from foreign markets while it develops a Canadian supply chain.

The timing of any expansion beyond the initial 100 drones remains uncertain. Lynch said the military plans to deploy the equipment in the field and gather feedback, but added that his expectation of a quick ramp-up was an impression rather than a confirmed timetable.

Separately, Volatus completed the initial delivery of a NATO Allied intelligence, surveillance and reconnaissance training program on Oct. 7. Singhvi said the customer had exercised approximately CAD 3 million of a second tranche worth up to CAD 4.5 million and had indicated that the remainder would also be exercised. Delivery is required by March 31, 2027, he said.

The company reported CAD 101.7 million in contract value through 2031, including up to CAD 26 million in customer options. Singhvi said Volatus refers to the figure as committed orders rather than backlog because some items are subject to purchase orders. Approximately 25% relates to defense, while roughly CAD 76 million relates to commercial contracts and agreements, he said.

Margins and Cash Position

Third-quarter gross margin was 30.4%, up 1.1 percentage points from the second quarter but down from 32.7% a year earlier. Singhvi attributed the annual decline to a greater share of defense deliveries, which have lower margins in their initial fulfillment phase than the company’s established commercial services.

Singhvi reiterated a long-term gross margin objective of 35% to 40%. Larger production runs, proprietary platforms, defense software and commercial growth could help improve margins over time, he said. Reaching adjusted EBITDA breakeven depends on growing revenue through capacity the company has already built.

Volatus ended September with CAD 50.6 million in cash, approximately CAD 58 million in working capital and CAD 9.4 million in borrowings. The company also redeemed its remaining preferred shares during the quarter, Singhvi said.

AISPECO and Manufacturing Plans

On Oct. 28, Volatus completed its acquisition of Lithuania-based AISPECO, adding airborne sensors, mission software and a European engineering operation. Lynch said AISPECO’s modular HELIUX sensor pods can combine technologies including LiDAR, optical, thermal and gas detection. Approximately 50 systems have been sold across five continents, he said.

Singhvi said Volatus had initially anticipated CAD 7 million to CAD 12 million in revenue synergies over two years and now expected to realize them sooner. Lynch cautioned that the company was only two weeks into the acquisition and that it was too early to measure customer acceptance fully.

At Mirabel, Volatus is primarily producing docking stations for commercial deployment while developing a manufacturing system intended to scale for future orders. Lynch described the facility’s approximately 53,000 square feet as an investment in Canadian manufacturing and systems integration.

Singhvi said three docking stations were active and generating revenue under a model that includes software as a service. The company also won offshore wind turbine project contracts, he said, with execution awaiting regulatory approvals.

Looking toward 2027, Lynch said Volatus plans to develop its commercial and defense businesses around shared investments in engineering, autonomy, manufacturing and operations. Its near-term priorities include the Canadian Armed Forces delivery, additional defense opportunities, commercial expansion and the integration of AISPECO.

About Corpay (NYSE:CPAY)

Corpay is a global corporate payments company that provides businesses with a range of payment and expense management solutions. Its services are designed to help organizations manage payables, card programs, travel and fleet-related expenses, and cross-border transactions more efficiently. The company serves customers across a variety of industries and geographies, offering software and payment tools that streamline accounts payable, vendor payments, and workforce payments. Corpay also provides specialized solutions for fleet management and international payments, helping businesses control costs and simplify financial operations.

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