BETA Technologies, Inc. (BETA)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and related notes, and other financial information, included elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on March 9, 2026. As discussed in the section titled “Special Note Regarding Forward-Looking Statements,” the following discussion contains forward-looking statements reflecting our current expectations, estimates and assumptions concerning events and financial trends that may affect our future operating results or financial position. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors. Factors that could cause or contribute to such differences include, but are not limited to, capital expenditures, economic and competitive conditions, regulatory changes and other uncertainties, including those discussed below and in the section titled “Risk Factors” included under Part II, Item 1A below, as well as in the Annual Report on Form 10-K for the year ended December 31, 2025, all of which are difficult to predict. In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur. We assume no obligation to update any of these forward-looking statements. Unless otherwise indicated or the context otherwise requires, all references in this section to the “Company,” “BETA,” “we,” “us,” or “our” refer to BETA Technologies, Inc. and its consolidated subsidiaries.

Overview

We are continuing to redefine the aerospace industry. We design, manufacture, and sell high-performance electric aircraft, advanced electric propulsion systems, charging systems, and components that are positioned to transform the aviation industry. Further, we have invested in the underlying infrastructure of this breakthrough technology, which is critical to bringing electric aviation to life. We believe we have developed a differentiated presence in North America and are well positioned to expand globally.

We are continuing to develop highly scalable technologies that can be tailored to and deployed for cost-effective and safe missions across cargo and logistics, medical, defense, and passenger end markets. Our simplified approach to designing electric aircraft allows us to service a variety of end markets and mission types while leveraging the same core technologies. The portability of our technologies and systems across various aircraft also unlocks flexibility to innovate on future generations of aircraft.

Since inception, the Company has devoted substantially all of its time and efforts to performing research and development activities, raising capital, recruiting management and technical staff to support these operations, and designing manufacturing processes. During the three and six months ended June 30, 2026, the Company continued to make investments across facilities, equipment, and tooling needed to manufacture its aircraft and charging systems.

Recent Developments

BETA served as the systems integrator, supported flight tests in the U.S., and ferried GE Aerospace’s hybrid-electric aircraft to the UK for the Farnborough International Airshow (“Farnborough”). In collaboration with BETA, NASA and Boeing, GE Aerospace conducted the first hybrid electric flight above 30,000 feet, reaching the same altitude levels of passenger commercial aircraft. On July 20, 2026 at Farnborough, the Company unveiled the MV250, an autonomous hybrid-electric VTOL aircraft giving military operators greater range, higher speed, increased payload capability, and lower operating costs for contested on- and off-airport logistics.

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Results of Operations

Comparison of Results for the Three and Six Months Ended June 30, 2026 and 2025

The following table presents selected financial information for the periods presented (dollars in thousands):

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*    Percentage increase (decrease) is not meaningful

Revenues

Our product revenue is primarily generated from the sale of tangible products such as our batteries, engines, flight control systems, and an international network of electric charging and related equipment (“Enabling Technologies”). Our service revenue is primarily generated from engineering, consulting, and other service arrangements for our customers. Service revenue also includes revenue associated with usage of and priority access to our charging stations.

Product revenues increased by $0.7 million, or 29%, during the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The increase was attributable to the delivery of ground service equipment (“GSE”) to commercial and foreign government customers of $2.7 million during 2026, offset by the delivery of electric propulsion engines and batteries to commercial customers totaling $2.0 million during 2025.

Product revenues decreased by $0.8 million, or 16%, during the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The decrease was attributable to the delivery of electric propulsion engines and batteries to commercial customers totaling $4.3 million during 2025, offset by the delivery of GSE to commercial and foreign government customers of $3.5 million during 2026.

Service revenues increased by $8.0 million during the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The increase was attributable to contracts with commercial customers of $6.9 million related to engineering and consulting services to support our customers’ research and development activities, $1.0 million related to completion of services for the U.S. government, and $0.1 million related to priority access to the Company’s charging stations.

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Service revenues increased by $10.0 million, or 95%, during the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The increase was attributable to contracts with commercial customers of $13.1 million related to engineering and consulting services to support our customers’ research and development activities and $0.3 million related to priority access to the Company’s charging stations, offset by $3.4 million related to completion of services for the U.S. government during 2025.

Cost of Revenues

Cost of product revenues and service revenues may include the direct cost of materials, labor, subcontractors, and overhead costs (where allowable), depending on the nature of the agreement. Included within cost of product revenues are purchases made directly for contractual performance obligations primarily recognized over time and as such, no inventories are recorded in the condensed consolidated balance sheets.

Cost of product revenues increased by $1.6 million and $1.7 million during the three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025, respectively. The increase was attributable to labor and material costs to fulfill contracts with commercial and foreign government customers.

Cost of service revenues increased by $3.8 million and $6.3 million during the three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025, respectively. The increase was attributable to labor and material costs to fulfill contracts with commercial and U.S. government customers.

Research and Development Expenses

Research and development expenses are attributable to continued spend related to the development, testing, certification, and prototype production of our electric aircraft, electric propulsion systems, charging solutions, and network. The increases to research and development expenses were attributable to the following (in millions):

General and Administrative Expenses

General and administrative expenses increased $17.7 million, or 68%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The increase was attributable to increased stock-based compensation expense of $5.9 million, salaries and benefits of $7.7 million due to increased headcount, and $4.1 million of other administrative costs.

General and administrative expenses increased $36.7 million, or 68%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The increase was attributable to increased stock-based compensation expense of $16.3 million, salaries and ben

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes and other financial information included elsewhere in this Annual Report. This discussion and analysis and other parts of this Annual Report contain forward-looking statements based upon our current plans and expectations that involve risks, uncertainties and assumptions, such as statements regarding our plans, strategies, objectives, expectations, intentions and beliefs. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” and elsewhere in this Annual Report. The “Risk Factors” section of this Annual Report should be carefully read to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements. Please also see “Special Note Regarding Forward-Looking Statements.” Our historical results are not necessarily indicative of the results that may be expected for any period in the future.

Overview

We are redefining the aerospace industry. We have developed an electric aircraft platform and propulsion systems that are positioned to transform the aviation industry forward into a new phase of growth. We design, manufacture, and sell high-performance electric aircraft, advanced electric propulsion systems, charging systems and components. Further, we have invested in the underlying infrastructure of this breakthrough technology, which is critical to bringing electric aviation to life. We believe we have developed a differentiated presence in North America and are well positioned to expand globally.

Our company was purpose-built to capture the significant, untapped market opportunity in sustainable, reliable and efficient electric aviation.

Vertical integration allows us to innovate rapidly and capture meaningful economic value throughout an aircraft’s lifetime, by providing batteries and aftermarket services for BETA aircraft and other customers. Our focus is on the Enabling Technologies essential to electric aviation, including batteries, motors, flight control, charging systems and an international network of electric charging and related equipment. With proprietary control over these core technologies, we offer customers a complete platform to support their adoption of electric aircraft to enable both existing and new missions. This multilayered approach provides us with recurring, high margin opportunities.

We are developing highly scalable technologies that can be tailored to and deployed for cost-effective and safe missions across cargo and logistics, medical, defense and passenger end markets. Our simplified approach to designing electric aircraft allows us to service a variety of end markets and mission types leveraging the same core technologies. The portability of our technologies and systems across various aircraft also unlocks flexibility to innovate on future generations of aircraft.

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Industry Trends and Outlook

The emergence of electric aviation is ushering in a new era of aviation, with the potential to dramatically lower costs, reduce environmental impact and open up entirely new markets. By leveraging electric propulsion technologies, aircraft can be made quieter, more efficient and less expensive to operate than traditional, fuel-based aircraft. This shift is especially significant for urban and regional routes, where electric aircraft can enable point-to-point travel within and among cities and underserved areas, bypassing the need for large airport infrastructure. This will be impactful for cargo and logistics, medical, defense and passenger operations. This opportunity will continue to grow and, as battery technology and regulatory frameworks evolve, electric aviation is set to further unlock a wave of innovation, of which we believe we are at the forefront. Moreover, as the global installed fleet of BETA aircraft continues to grow, replacement batteries and maintenance requirements are also expected to grow. These maintenance requirements are recurring and often times non-deferrable, even during periods of economic downturn or reduced demand for commercial air travel. In addition, to support growing fleets of electric aircraft, charging infrastructure will be required at airports and vertiports globally. We primarily compete across four end markets within the aerospace industry: cargo and logistics, medical, defense and passenger.

Cargo and Logistics: We believe cargo and logistics represent a near-term, sizable and compelling opportunity for our aircraft and products. Based on the demand for timely supply chain solutions caused by the rise of e-commerce, large global parcel and e-commerce companies have tested and placed orders for electric aircraft and drones to address supply chain constraints. In 2024, e-commerce made up approximately 16% of total retail sales in the United States, based on the U.S. Census Bureau, 2024 Annual Retail Trade Survey. In parallel, customers are increasingly demanding faster delivery times, pressuring traditional distribution networks. The introduction of electric aircraft in cargo and logistics, specifically in rural areas, received additional support in the June 2025 Executive Order. Customers including UPS and Bristow have placed Firm Orders for BETA aircraft.

Medical: Electric aviation, both CTOL and VTOL, are well-suited to meet the growing demand for fast, reliable and environmentally sustainable healthcare logistics. Our aircraft are uniquely suited for medical operations with their large and flexible interior spaces. Lower operating costs of electric aircraft make them well-suited for Medical Cargo and Low-Acuity Patient Transfer missions. Customers including United Therapeutics, Metro Aviation and New Zealand Air Ambulance have placed Firm Orders for BETA aircraft.

Defense: Our ALIA platform is well-suited for emerging necessities of modern warfare in both their low maintenance burden and its autonomy-ready designs. Current events and conflicts across the globe have resulted in increased defense and national security spending, both nationally and internationally. Existing defense logistics platforms, mainly helicopters, are poorly suited for imminent threats, including conflicts across wide expanses of ocean. In the United States, defense and national security spending benefits from strong bi-partisan support, which has resulted in a stable and growing investment over time. Our demand forecast consists of nearly 2,000 BETA aircraft for defense applications through 2035, based on U.S. Military estimates and internal opportunity sizing. We believe that our Enabling Technologies and their high degree of mission flexibility align closely with key national security focus areas and that meaningful new opportunities exist as the U.S. defense budget is expected to expand.

Passenger: We believe that the demand for urban and regional air mobility services will usher in a new wave of growth for the commercial aerospace market. Based on 2025 airline schedule data, 20% of flights globally are under 300 miles, demonstrating this trend. As traditional, ground-based transportation alternatives become increasingly expensive and population growth accelerates, their scalability is becoming highly questionable. At the same time, technological advances in battery energy density, propulsion, design and materials are enabling aircraft to serve shorter distances in a more cost-effective and environmentally sustainable manner. The convergence of these forces has led airlines, aircraft lessors and charter companies to place orders for over 10,000 aircraft worth over $80 billion. We expect these trends to continue and create new opportunities to convert terrestrial transportation demand to aircraft.

Factors and Trends Affecting Our Business

Development of the Urban and Regional Air Mobility Markets

We expect to derive revenue from the continued development of aerial transportation for cargo and logistics, medical, defense and passenger applications globally. Our ALIA CTOL and ALIA VTOL aircraft are well-positioned to serve the urban and regional air mobility markets. While we believe the global market for urban and regional aerial transportation will be large, it remains in the early stages of development and there is no guarantee of future demand.

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Government Certification

In the U.S., new aircraft must undergo a rigorous FAA certification process to ensure the design, manufacturing and individual aircraft meet all applicable safety and airworthiness standards. This process begins with Type Certification, in which the FAA evaluates the aircraft design through extensive ground and flight testing to verify compliance with federal regulations. The Type Certification process is conducted in five phases. Phases one to three cover definition of requirements and the applicant's plan to meet the FAA requirements. Phase four covers collecting the data to prove the design meets the FAA's requirements. Phase five maintains the aircraft during commercial operations. We began working with the FAA in 2020 and have made significant progress toward the certification of both our eCTOL aircraft and our eVTOL aircraft, as well as the certification of our electric engines. We expect to be an early manufacturer to achieve Part 23 FAA Type Certification for an electric aircraft, which we believe will allow us to reach a large addressable market of cargo and logistics, medical, defense and passenger operators, while simultaneously building momentum for our VTOL and larger passenger aircraft variants. We are currently building CTOL aircraft, to be completed in 2026, that will be conformity inspected by the FAA and used in certification flight testing. Our business will require continued focus leading up to certification of our aircraft, including, but not limited to, prototyping and testing, manufacturing, software development, certification, infrastructure and commercialization. Further modifications required by the FAA to our CTOL electric aircraft’s existing certification basis, or other regulatory changes or revisions, could delay our ability to obtain Type Certification for our VTOL aircraft, and could delay our ability to commercialize our electric aircraft and Enabling Technologies. We have not yet delivered any certified aircraft and therefore, no associated revenue has been recognized.

We expect the FAA Type Certificate will be reciprocated in certain global markets pursuant to bilateral agreements between the FAA and its counterpart civil aviation authorities. This reciprocal recognition provides the regulatory foundation for civil operation of our aircraft in non-U.S. markets. Following FAA Type Certification, we intend to pursue validation with foreign regulators, in support of Firm Orders from customers. We have also initiated discussions with EASA regarding validation of H500A and ALIA CTOL. We anticipate that we will start the validation process on H500A with EASA immediately following FAA Type Certification, which we believe can position us for efficient international expansion as we develop commercial operations around the world.

In addition to certifying our aircraft and engines, we are also working towards Production Certification of the facilities and processes that we use to build our products. While we expect to meet the applicable requirements, if we fail to obtain any of the required authorizations or certifications, or do so in a timely manner, or if any of these authorizations or certifications are modified, suspended or revoked after we obtain them, we may be unable to launch our comm

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