HawkEye 360 Q2 2026 earnings: Revenue grows 87% but GAAP profitability reverses

HawkEye 360 (NYSE: HAWK) reported Q2 2026 revenue of $49.8 million, up 87% from $26.6 million a year earlier, while diluted EPS swung to a loss of $0.07 from earnings of $0.01. Record international revenue supported the top line, but faster expense growth produced a $15.3 million GAAP net loss even as quarterly free cash flow turned positive.

Core Financial Results

International revenue was the clearest growth driver, rising 134% to $21.0 million. It represented approximately 42% of quarterly revenue, up from about 34% in the prior-year period.

Profitability moved in the opposite direction. Total operating expenses increased approximately 138%, faster than revenue, while adjusted EBITDA declined despite the higher sales base. Cash generation was more favorable, with operating cash flow increasing and free cash flow moving above zero.

Adjusted EBITDA and free cash flow are non-GAAP measures. The company defines free cash flow as operating cash flow less purchases of satellites, property and equipment.

Business Growth and Backlog

Backlog reached $292.2 million at June 30, 2026, compared with $285.0 million at March 31, an increase of $7.2 million, or approximately 2.5%. The increase was modest relative to quarterly revenue growth but provides additional contracted revenue visibility.

HawkEye 360 announced a multi-year contract serving the Indian Navy and regional partners, supporting the expansion of its international business. It also received a NASA contract for its RFIQ data product and reached full operational capacity for Cluster 14, which increased the constellation’s collection capacity.

Investors should treat backlog as an operating indicator rather than guaranteed revenue. The company’s definition includes cancellable contract portions and may include remaining ceilings on certain single-award IDIQ contracts before task orders are issued.

Revenue Growth Did Not Translate Into Higher Profitability

The company’s cost base expanded substantially faster than revenue. Selling, general and administrative expense rose to $25.0 million from $8.8 million, while direct cost of sales increased to $14.9 million from $5.0 million. Research and development expense reached $8.2 million, compared with $5.9 million, and depreciation and amortization increased to $8.6 million from $5.9 million.

As a result, the operating margin fell from approximately 3.0% to negative 23.2%. Adjusted EBITDA remained positive but declined to $7.0 million, reducing the adjusted EBITDA margin to approximately 14.1% from 29.4%.

The gap between the $15.3 million GAAP net loss and positive adjusted EBITDA reflected several excluded or non-operating items. These included $7.5 million of stock-based compensation, $2.7 million from extinguishing debt, $2.2 million from changes in warrant liability values, $1.5 million of IPO-related costs and $8.6 million of depreciation and amortization. Other income and expense also shifted from $0.8 million of net income in Q2 2025 to $3.5 million of net expense this quarter.

Cash Flow and Balance Sheet

Quarterly operating cash flow increased to $11.6 million despite the GAAP loss. After $6.2 million of satellite, property and equipment purchases, free cash flow was $5.4 million. However, free cash flow for the first six months of 2026 remained negative at $1.9 million, improving from negative $12.0 million a year earlier.

The major change in liquidity came from financing rather than operating cash generation. HawkEye 360 completed its IPO in May, raising $437.5 million in net proceeds, and ended June with $503.4 million in cash and cash equivalents, compared with $92.7 million at the end of 2025. The company also repaid $49.5 million of term loans and reported no long-term debt on its June 30 balance sheet.

HawkEye 360 entered into a $125.0 million revolving credit facility maturing in May 2031. Combined with the IPO proceeds, the facility provides additional capacity for constellation expansion, product development and other strategic investments.

Full-Year 2026 Guidance

HawkEye 360 expects full-year revenue of $215.0 million to $220.0 million and adjusted EBITDA of $30.0 million to $36.0 million. The supplied materials do not include a previous guidance range, so no change can be determined.

After first-half revenue of $99.6 million, the outlook implies approximately $115.4 million to $120.4 million of second-half revenue. The adjusted EBITDA range similarly implies approximately $15.6 million to $21.6 million in the second half, compared with $14.4 million generated during the first six months.

The company did not reconcile its adjusted EBITDA outlook to a GAAP measure because items including stock-based compensation, warrant liability revaluations and depreciation and amortization could not be reasonably predicted.

Management Commentary

CEO John Serafini attributed revenue growth to rising government demand for space-based RF intelligence, surveillance and electronic warfare capabilities, particularly among international defense and intelligence customers.

Management expects Clusters 15 and 16 and the first Block 3 Kestrel satellite cluster to expand collection capacity and global coverage. The company also said ISA’s algorithms have improved processing latency, automation and military radar products, although the release did not quantify their financial contribution.

Recent Insider Transactions

The supplied transaction records include two reported purchases by director Francis Alphonse Finelli and several conversions or exercises of derivative securities. Conversions and exercises are economically different from open-market purchases and should not be interpreted in the same way.

The records do not provide sufficient evidence to infer insiders’ views about the company’s prospects.

Risks Investors Should Watch

• Expense growth is outpacing revenue: Operating expenses increased approximately 138% against 87% revenue growth, pushing the company from operating income to a substantial operating loss.
• Second-half execution is important: Full-year guidance requires second-half revenue and adjusted EBITDA to exceed their respective first-half levels.
• Backlog may not fully convert into revenue: The company’s backlog definition includes cancellable amounts and certain IDIQ contract ceilings that may not become recognized revenue.
• Constellation expansion carries execution and capital requirements: Expected capacity gains depend on the planned deployment and commissioning of additional satellite clusters, while satellite purchases continue to consume cash.
• GAAP and adjusted results remain far apart: Stock compensation, depreciation, financing-related losses and IPO costs created a wide gap between the GAAP net loss and adjusted EBITDA.

Summary

HawkEye 360’s Q2 2026 results showed rapid revenue growth led by international demand, but the expansion in operating costs prevented that growth from translating into higher profitability. Positive quarterly free cash flow and the IPO-funded balance sheet provide financial capacity for further investment. The main issues to monitor are cost control, conversion of backlog into revenue, execution of the satellite expansion plan and the higher second-half performance implied by full-year guidance.