Key Business Highlights
- Awarded a $41.7 million US Navy contract for multi-megawatt KARNO Power Modules for shipboard and military base power, with additional contracts anticipated in 2026
- Announced the US Navy’s USX-1 Defiant vessel as the platform for KARNO Core sea trials, supporting both ship propulsion and auxiliary power
- Achieved significant additive manufacturing advancements expected to deliver up to three times improvement in printing speed and throughput depending on the component
- Introducing a capital-efficient manufacturing scale-up plan, in which each megawatt of annual production capacity requires approximately $1.5 million of one-time capital investment and supports $2.5 million to $3.0 million of annual revenue at current pricing
- Executed a beta machine agreement with Colibrium Additive, a GE Aerospace company, to develop the next generation of additive manufacturing systems
- Demonstrated multi-KARNO Power Module operation, enabling multiple systems to function as a single larger power plant
- On track to complete the approximately 10 early adopter units in 2026
- Increasing full-year 2026 revenue guidance from $10 million to $15 million, following second-quarter revenue of $4.9 million, up more than threefold from Q2 2025
- Finished the quarter with $132.4 million in cash and investments and improved the year-end 2026 outlook to $115 to $120 million from prior guidance of $100 million
“This quarter, we signed the largest military contract in our history, increased our revenue outlook by 50%, and achieved additive manufacturing advancements that we believe can improve printer throughput by up to 3x,” said Thomas Healy, Founder and CEO of Hyliion. “At the same time, interest from data center customers continues to accelerate, with demand now being discussed at a scale of tens to hundreds of megawatts. We believe the progress we are making positions our KARNO Power Modules to address these increasingly large opportunities.”
Military and Government Progress
Hyliion was awarded a $41.7 million contract with the US Navy to scale the KARNO Power Module into multi-megawatt systems. Under the contract, Hyliion will deliver two systems, one rated above 2 megawatts and the other rated above 3 megawatts, both based on the same modular 800-kilowatt architecture the Company is developing today. The larger systems are expected to broaden the range of military applications for KARNO to include larger vessels and military bases. The contract also includes funding to advance Hyliion’s additive manufacturing capabilities, with work under the program expected to occur primarily in 2027 and 2028.
The Company anticipates additional military contract awards this year, including a potential award from another branch of the US military. If awarded as expected, these contracts would bring total new military funding awarded to Hyliion in 2026 to nearly $50 million, reaching the high end of the Company’s objective of $40 million to $50 million.
Hyliion also announced that the US Navy’s USX-1 Defiant will serve as the platform for KARNO Core sea trials, supporting both ship propulsion and auxiliary power. The 800-kilowatt KARNO Power Module being developed for the vessel under existing Office of Naval Research contracts is currently in assembly, with completion expected in 2026.
KARNO Commercial Updates
Hyliion believes it remains on track to complete the approximately 10 early adopter customer units during 2026, and the Company is accumulating run hours across multiple systems in parallel in preparation for field deployment. The Company expects to begin delivering units to customer sites over the next quarter.
Looking ahead to 2027, Hyliion plans to prioritize deliveries under existing military contracts while deploying additional 200 kW KARNO Power Modules with commercial customers, particularly data center operators, to demonstrate the product’s capabilities. Hyliion believes this strategy will support near-term revenue from military programs while accelerating data center adoption and building a larger long-term customer pipeline. As a result, commercialization of the 200 kW KARNO Power Module is now expected in 2027.
Customer interest continues to strengthen across both military and commercial applications, with data center interest growing at an accelerating pace. Hyliion is currently engaged with multiple hyperscalers and leading independent data center developers regarding potential demand ranging from tens to hundreds of megawatts. The Company has executed non-binding letters of intent representing approximately 750 KARNO Cores, more than half of which are with data center providers.
To support larger-power configurations, Hyliion demonstrated the ability to operate multiple KARNO Power Modules together as a single scalable power unit during the quarter, completing a key milestone established for 2026. This capability enables multiple Power Modules to operate together as a larger power plant and is an important requirement for the multi-megawatt deployments being sought by data center customers.
Additive Manufacturing and Production Scaling
Following the installation of approximately 30 additive printers over the past several years, Hyliion’s focus in 2026 has shifted from acquiring additional machines to increasing the speed and throughput of its existing fleet. These efforts are focused on three areas: more fully utilizing the available laser power and capabilities of the printers, implementing software enhancements that optimize how parts are printed, and further refining part designs. Collectively, these initiatives have the potential to increase printer speed and manufacturing throughput by up to three times, depending on the component, with initial improvements already demonstrated in production printing.
These advancements provide a capital-efficient path to scaling KARNO production. Based on its current manufacturing roadmap, Hyliion estimates that approximately $1.5 million of manufacturing capital investment can support one megawatt of annual production capacity, representing approximately $2.5 million to $3.0 million of annual revenue at current product pricing. These estimates remain subject to further testing and validation.
With a viable and capital-efficient roadmap now in place, Hyliion expects to begin accelerating its production scale-up and printer purchases in 2027, earlier than previously anticipated. The Company intends to fund future manufacturing capacity through a combination of equipment financing, potential customer financing, and balance sheet cash.
Hyliion also executed a beta machine agreement with Colibrium Additive, a GE Aerospace company and the manufacturer of the additive printers used at Hyliion. Through this collaboration, the companies are working together on the next generation of additive manufacturing systems.
Financial Highlights and Guidance
Hyliion recorded second-quarter 2026 revenue of $4.9 million from research and development services, compared with $1.5 million in the second quarter of 2025. The increase primarily reflects accelerated work under the Company’s contracts with the Office of Naval Research, including production of components for the 800-kilowatt Power Module. Cost of revenue was $4.6 million, resulting in gross profit of $0.4 million.
Operating expenses for the second quarter were $15.7 million, approximately flat with the second quarter of 2025. R&D expenses were $9.5 million, down 6% year-over-year, primarily reflecting a shift of activity toward revenue-generating work for the Navy. SG&A expenses were $6.4 million, up approximately 8% year over year. Hyliion reported a second-quarter 2026 net loss of $13.9 million, compared with $13.4 million in the second quarter of 2025. For the first six months of 2026, revenue was $7.8 million, compared with $2.0 million in the first half of 2025. Operating expenses were $29.1 million, down 18% year-over-year, and the net loss was $25.7 million, a 16% improvement compared with $30.7 million in the first half of 2025.
Net cash spending was $6.9 million during the second quarter, compared with $13.5 million in the second quarter of 2025. Capital spending was $2.1 million year to date, compared with $11.6 million in the first half of 2025. Hyliion ended the second quarter with $132.4 million in cash and short- and long-term investments.
Hyliion is increasing its full-year 2026 revenue guidance to approximately $15 million, a 50% increase from its previous outlook. The Company also continues to expect to complete an equipment financing transaction during 2026, with anticipated proceeds of $10 million to $15 million.
As a result of higher revenue, lower capital spending, and planned equipment financing, Hyliion now expects net cash use of $30 million to $35 million during 2026, resulting in a year-end cash and investments balance of $115 million to $120 million, compared with its previous outlook of approximately $100 million.
