Hyliion (NYSEAMERICAN:HYLN) raised its 2026 revenue outlook to approximately $18 million after third-quarter revenue exceeded management’s expectations, as work accelerated on a power system for the U.S. Navy.
The new forecast is up from $15 million last quarter and approximately $10 million at the start of the year. Chief Financial Officer Jon Panzer said the company expects about $3 million in fourth-quarter revenue, down from the preceding two quarters as work winds down on an 800-kilowatt Navy system.
Chief Executive Officer Thomas Healy said Hyliion expects to complete its first commercial field deployment of its KARNO Power Module in the coming weeks. The company also delivered another early adopter unit to the Navy during the third quarter and expects to complete its remaining early adopter deliveries by its fourth-quarter earnings release in mid-February 2027.
Revenue rises, but losses continue
Third-quarter revenue was $7.5 million, compared with $759,000 a year earlier and $4.9 million in the second quarter of 2026. All third-quarter revenue came from research and development services, Panzer said.
Revenue exceeded the company’s prior outlook of just under $5 million, primarily because of faster progress on the 800-kilowatt Navy module and approximately $3 million in additional funding for that work, Panzer said. Cost of revenue was $6.9 million, leaving gross profit of $552,000.
Operating expenses fell 15% year over year to $13 million, partly because spending shifted from research and development to 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 was $15.2 million, up from $2.8 million in the same period of 2025. The company’s nine-month net loss narrowed to $36.7 million from $44 million.
Navy work and potential contracts
Healy said Hyliion is in final negotiations on two additional military contracts: an approximately $1 million Navy agreement to evaluate KARNO for a new application and an approximately $7 million contract with a different military branch. Neither contract had been 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 approximately $50 million, at the high end of the company’s target range, Healy said. The July contract calls for two multi-megawatt KARNO Power Modules, with most work expected in 2027 and 2028.
Excluding the two potential new contracts, Hyliion had $45.5 million in remaining authorized funding under existing military contracts. Healy said the company expects to perform the bulk of that work over the next couple of years.
Hyliion 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 change from the previous year-end plan as a shift of about six weeks and said he does not expect it to materially affect the company’s 2027 scale-up or commercialization plans.
Deployment and manufacturing plans
Healy said equipment has begun moving to the first commercial deployment site. A second commercial unit is planned for a large data center’s AI test facility, while Hyliion also intends to use some units for temporary customer demonstrations in 2027.
The CEO said Hyliion has signed letters of intent representing interest in about 750 units and is discussing potential deployments with other customers. He said customers generally want to test initial systems at their own sites before making larger purchases, with evaluation periods varying by customer.
Hyliion is consolidating printer and manufacturing operations in Texas, including moving approximately six additive manufacturing machines from Ohio. Ohio will remain an R&D site and the location for initial work on 800-kilowatt systems.
Healy said the existing printer fleet has production capacity of approximately 5 to 10 megawatts annually at current speeds. With planned improvements, Hyliion believes it could reach up to 15 megawatts annually from that fleet. The company plans to resume purchasing printers in 2027 but has not specified how many it will add.
The company also remains on track to target 200 kilowatts of 800-volt DC output from the KARNO Core by year-end, Healy said. He cautioned that auxiliary equipment consumes some power and actual output varies with customer configuration and operating conditions.
Healy said a newer regenerator component developed small cracks following extended operation. Hyliion reverted to an earlier design to keep systems moving and has changed the print file for the affected part. The first redesigned components are being printed, with validation testing expected to begin soon.
Cash and financing
Hyliion ended the third quarter with $121.4 million in cash and short- and long-term investments. It maintained its forecast of $115 million to $120 million at year-end, though Panzer said the balance may be near the low end because the company no longer expects to complete an equipment financing transaction this year.
Panzer said the market for the proposed secured debt was not favorable and that Hyliion expects higher revenue, lower expenses and improved working capital to offset the absence of financing proceeds. The company recorded no activity under its at-the-market equity facility during the quarter.
Management continues to believe its existing capital is sufficient to bring the KARNO Power Module through commercialization, Panzer said, but additional capital will ultimately be needed to support production growth, including purchases of more printers.
About Hyliion (NYSEAMERICAN:HYLN)
Hyliion Holdings Corp. develops power generation technology for commercial and industrial applications. Its primary product is the KARNO power module, a distributed generator designed to produce electricity using a range of fuels. The company is developing the system for uses that may include data centers, industrial facilities and other sites needing on-site power. Hyliion was founded in 2015 by Thomas Healy, who serves as its chief executive officer. The company previously developed electrified powertrain systems for heavy-duty trucks before shifting its focus to stationary power generation.
