2024 Financial and Product Development
Objectives Met; Focus Turns to Securing Customers for 2025
Palladyne AI Corp. (NASDAQ: PDYN and PDYNW) (“Palladyne AI”), a
developer of artificial intelligence software for robotic platforms
in the industrial and defense sectors, today announced key business
and financial achievements for 2024 in conjunction with the filing
of its 2024 Annual Report on Form 10-K.
Full Year 2024 Highlights and Recent Developments
- Substantially improved balance sheet, with $40.1 million cash,
cash equivalents and marketable securities on hand as of December
31, 2024, and an additional $14.4 million (before commissions and
offering expenses) raised between January 1, 2025, and February 12,
2025, with no debt for borrowed money or other long-term financial
obligations on the balance sheet other than the Company’s long-term
office lease.
- Second half 2024 target of $1.6-$2.0 million net cash burn per
month achieved, with approximately the same rate expected to
continue through 2025.
- Commercial version of Palladyne IQ product for industrial
robots and cobots launched, with new customer trials expected to
occur in the first half of 2025.
- Commercial version of Palladyne Pilot product for small drones
on track for commercial release by end of Q1 2025, with integration
on Red Cat drones expected to quickly follow.
- Year over year revenues increased by 27% while operating
expenses decreased by 73%.
- New three-year employment contract entered into with President
and CEO, with Mr. Ben Wolff to receive targeted 2025 net cash
salary received of $1 (after deductions for taxes and employee
benefit contributions) for the first year, plus a significant
long-term incentive opportunity based on stock value that, subject
to certain acceleration provisions, is generally scheduled to vest
after three years of continued service.
CEO Commentary
“2024 was a transformative year for the Company. We set out
early in 2024 with an objective to commercialize our novel AI/ML
software products which are designed to enable robots and other
remote controlled machines to learn, reason, and act in a manner
similar to humans. I’m delighted to report that we achieved this
objective, with an improved commercial version of Palladyne IQ --
which is ready for on-site customer trials and purchase -- and our
Palladyne Pilot drone product, which is expected to be commercially
available by the end of the first quarter of 2025. Another key
milestone for 2024 was to materially extend our financial runway by
substantially reducing costs and opportunistically raising capital.
Again, we achieved this objective, hitting our internal targets for
expense reductions while also raising capital at valuations that
were many multiples of the Company’s valuation at the beginning of
the year.
Palladyne IQ
Palladyne IQ is a closed-loop, full-stack, AI software product
built on our AI/ML foundational technology intended to make robots
smarter so that they can perform jobs that have historically been
too complex to automate. It is designed to enhance the utility and
functionality of third-party robotic systems by enabling these
systems to quickly observe, learn, reason and act in structured,
unstructured and dynamic environments. It incorporates our
artificial intelligence (AI) and machine learning (ML) foundational
technologies that enable robotic systems to perceive their
environment and quickly adapt to changing circumstances by
generalizing (i.e., learning) from their past experience using
dynamic real-time operations “on the edge” (i.e., on the robotic
system) without extensive programming and with minimal robot
training.
We are frequently asked whether we compete with the likes of
OpenAI and whether the advancements of companies like DeepSeek have
any impact on our business opportunity. The simple answer is “No”
for a number of key reasons.
First, companies such as OpenAI and DeepSeek focus on what we
refer to as digital world AI by building foundation models that
leverage decades of internet-based information to provide humans
with insights and information that would be virtually impossible
for humans to develop at the same speed on their own. In contrast,
we focus on what we refer to as physical world AI, where our AI is
being applied to robotics to manipulate real objects in the real
world. There is no existing massive repository or database of robot
movements or actions that can be fed into a foundation model that
will enable a robot to autonomously function in the real world.
Furthermore, every robot is different – they come in a wide variety
of shapes, sizes, and forms, and every environment is different.
The diversity of robot designs means that data would need to be
collected for each robot type, not to mention data from every
environment in which each robot is expected to operate.
Secondly, many tasks are comprised of a sequence of discrete
movements. Take, for example, the task of making a single cup of
tea: one must fill the kettle, turn it on, pour hot water into a
mug, and add a tea bag. If we want to teach a robot how to perform
this task using a foundation model, we would need to send torque
commands to all motors comprising the robot arm (industrial robotic
arms commonly have seven motors) at a speed of around 40 Hz/second.
Over five minutes, that adds up to 7*40*60*5=84,000 correct torque
commands. Get one torque command wrong, and the robot will not
complete the task as expected. This example is for a stationary
robot arm -- things get even more complex with the addition of
mobility or additional arms. In long lasting, complex tasks, errors
compound over time, which is why even large language models (LLMs)
struggle with fully coherent long texts. Similarly, robotic tasks
involving thousands or hundreds of thousands of torque commands are
challenging, even for well-performing models.
Compounding these challenge is that foundation models require
massive compute power and enormous amounts of electricity to
function. This kind of compute power can only live in the cloud,
which means physical robots using foundational models would need to
be continuously (or at least frequently) connected to the cloud to
operate. Beyond the obvious communications challenges that could
occur, particularly for mobile machines, there are substantial
costs and potential latency issues associated with continuously
connected robots functioning in the real world. We estimate that
mobile robots functioning in unstructured environments could need
to transmit and receive data from the foundation model in the cloud
between one and four times per second in order to function as
expected. Any connection or latency issues would then interrupt the
robot’s task and have significant negative impacts on productivity,
not only of the robot, but of any larger system or work flow in
which the robot is working. The bottom line is that, at least for
now, the digital world approach just doesn’t translate well to the
physical world.
Our approach is fundamentally different and has been purpose
built from the ground up to operate on real machines in the real
world, without having to spend potentially years and hundreds of
millions of dollars to collect, label and collate massive datasets.
Furthermore, we believe our edge compute solution which avoids the
need for cloud connectivity will yield better performance at a
substantially reduced cost.
We begin 2025 with Palladyne IQ ready to be put through its
paces by prospective customers. Earlier versions of the software
were trialed by a large global manufacturer and by the U.S. Air
Force, and their feedback is now being incorporated into the
commercial version. We expect our AI to get more capable over time,
just as one would expect an infant’s cognitive functioning,
dexterity and skill to improve rapidly after birth. While it is
early days, we are seeing strong interest from companies across a
wide range of industries, including electronics manufacturing,
heavy equipment manufacturing, automobile manufacturing, and
aviation. We expect this interest to convert into customer on-site
trials and ultimately sales. However, at this point, we are still
discovering the typical buyer’s journey, including the duration of
the sales cycle, who the key decisionmakers typically are, and how
to overcome potential sales objections. As a result, we are still
too early in our own journey to be able to provide near-term
revenue projections.
Palladyne Pilot
Palladyne Pilot is an AI platform for unmanned systems that
enables persistent detection, tracking, and classification of
objects of interest by synthesizing multi-modal sensor fusion data
in real-time. It facilitates shared situational awareness across
multiple drones and autonomous navigation, including in GPS denied
environments, when integrated with drone autopilot systems. We
continue to test and improve the software, and currently expect to
commercially release the initial version of Palladyne Pilot by the
end of Q1 2025.
In October 2024, we jointly announced with Red Cat Holdings that
we would be working together to make Palladyne Pilot available for
some of Red Cat’s drones, including those already in the field. We
subsequently announced the first successful completion of a flight
in which multiple Red Cat drones equipped with Palladyne Pilot AI
software autonomously collaborated to identify, prioritize, and
track objects of interest on the ground. We have engaged in initial
discussions with several other manufacturers about incorporating
Pilot with their small drone platforms, and we believe that some of
these discussions will gain traction after the commercial release
of Pilot.
It is important to note that just as there are many different
types of software programs that have different purposes and
functionality for use on computers, so too are there many different
types of AI that can be used on drones and other autonomous
vehicles. For example, Red Cat recently announced a partnership
with Palantir to provide certain AI capabilities for its drones,
but Palantir’s AI offers very different features, functionality,
and outcomes than Palladyne Pilot. We do not view these two AI
products as competitive, and, in fact, we believe they could be
complementary. The same could be said for many other AI or ML
software programs that could be implemented on all manner of mobile
machines. Oracle’s software is not the same as Microsoft’s, nor is
Boeing’s software the same as Tesla’s -- different purposes,
different architecture, and different value propositions.
Looking Forward
For 2025, you can expect us to be focused on securing customers
for both IQ and Pilot, while continuing to hone and optimize both
products based on customer feedback. We think we have developed a
better mouse-trap, so now we need to prove it to our customers and
our investors. We will continue to manage our expenses closely to
give the Company the longest possible runway, while also continuing
to strategically invest in marketing and sales opportunities to
secure customers and be mindful of the impacts of dilution
resulting from raising new capital. Based on the expenses we can
foresee today, we believe that we have funds to operate the
business for a minimum of two years of financial runway on hand,
even if the sales cycle for our new products is substantially
longer than we expect, which should give us ample time to generate
real momentum with product sales.
Our policy regarding press releases, earnings calls, and
investor conferences will largely remain the same as we announced
last year when I rejoined the Company; we will keep investors
informed of material developments, but we will resist talking just
to talk.
For more information, please visit www.palladyneai.com and
connect with us on LinkedIn at
www.linkedin.com/company/palladyneaicorp.
About Palladyne AI Corp.
Palladyne AI Corp. (NASDAQ: PDYN) has developed an advanced
artificial intelligence (AI) and machine learning (ML) software
platform poised to revolutionize the capabilities of robots,
enabling them to observe, learn, reason, and act in a manner akin
to human intelligence. Our AI and ML software platform empowers
robots to perceive variations or changes in the real-world
environment, enabling them to autonomously maneuver and manipulate
objects accurately in response.
The Palladyne AI software solution operates on the edge and
dramatically reduces the significant effort required to program and
deploy robots enabling industrial robots and collaborative robots
(cobots) to quickly achieve autonomous capabilities even in dynamic
and or complex environments. Designed to enable robotic systems to
perceive their environment and quickly adapt to changing
circumstances by generalizing (i.e., learning) from their past
experience using dynamic real-time operations “on the edge” (i.e.,
on the robotic system) without extensive programming and with
minimal robot training. Palladyne AI believes its software has wide
application, including in industries such as automotive, aviation,
construction, defense, general manufacturing, infrastructure
inspection, logistics and warehousing. Its applicability extends
beyond traditional robotics to include Unmanned Aerial Vehicles
(UAVs), Unmanned Ground Vehicles (UGVs), and Remotely Operated
Vehicles (ROVs). Palladyne AI’s approach is expected to elevate the
return on investment associated with a diverse range of machines
that are fixed, fly, float, or roll.
By enabling autonomy, reducing programming complexity, and
enhancing efficiency, we are paving the way for a future where
machines can excel in tasks that were once considered beyond their
reach.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, including statements regarding future cash burn, business
strategy, software product development, expectations and timing
related to commercial software product launches, the capabilities
or future capabilities of the Company’s foundational technology and
products, the benefits of the software foundational technology and
products and the industries that could benefit from them, the
applicability of the foundational technology, Palladyne IQ and
Palladyne Pilot to different kinds of machines (such as UAVs, UGVs
and ROVs) and the potential success of Palladyne AI’s strategy.
Forward-looking statements are inherently subject to risks,
uncertainties, and assumptions. Generally, statements that are not
historical facts, including statements concerning possible or
assumed future actions, business strategies, events, or results of
operations, are forward-looking statements. These statements may be
preceded by, followed by, or include the words “believes,”
“estimates,” “expects,” “projects,” “forecasts,” “may,” “will,”
“should,” “seeks,” “plans,” “scheduled,” “anticipates,” “intends”
or “continue” or similar expressions. Such forward-looking
statements involve risks and uncertainties that may cause actual
events, results, or performance to differ materially from those
indicated by such statements. These forward-looking statements are
based on Palladyne AI’s management’s current expectations and
beliefs, as well as a number of assumptions concerning future
events. However, there can be no assurance that the events,
results, or trends identified in these forward-looking statements
will occur or be achieved. Forward-looking statements speak only as
of the date they are made, and Palladyne AI is not under any
obligation and expressly disclaims any obligation, to update, alter
or otherwise revise any forward-looking statement, whether as a
result of new information, future events, or otherwise, except as
required by law.
Readers should carefully review the statements set forth in the
reports which Palladyne AI has filed or will file from time to time
with the Securities and Exchange Commission (the “SEC”), in
particular the risks and uncertainties set forth in the sections of
those reports entitled “Risk Factors” and “Cautionary Note
Regarding Forward-Looking Statements,” for a description of risks
facing Palladyne AI and that could cause actual events, results or
performance to differ from those indicated in the forward-looking
statements contained herein. The documents filed by Palladyne AI
with the SEC may be obtained free of charge at the SEC’s website at
www.sec.gov.
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version on businesswire.com: https://www.businesswire.com/news/home/20250220636093/en/
Investor Contact: IR@palladyneai.com
Press Contact: PR@palladyneai.com
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