Red Cat (NASDAQ:RCAT) Releases Earnings Results, Misses Expectations By $0.08 EPS

Key Points

• Red Cat missed earnings expectations, reporting a Q1 loss of $0.22 per share versus the $0.14 loss analysts expected. Revenue, however, came in well above estimates at $26.24 million and was up 849.1% year over year.
• The company’s conference call highlighted rapid operational growth, including record revenue, a positive gross margin of 12.7%, and a strong cash position of $131.9 million. Management said it is targeting $150 million to $180 million in annual revenue in the near to medium term.
• Despite the top-line surge, profitability remains a challenge as operating expenses rose to $29.3 million and Red Cat still posted a large net loss. The stock traded slightly higher after the report, while analysts remained split with a consensus rating of Buy.

Red Cat (NASDAQ:RCAT - Get Free Report) issued its earnings results on Thursday. The company reported ($0.22) EPS for the quarter, missing analysts' consensus estimates of ($0.14) by ($0.08), Zacks reports. Red Cat had a negative return on equity of 37.69% and a negative net margin of 138.36%.The company had revenue of $26.24 million during the quarter, compared to analysts' expectations of $18.78 million. The business's revenue for the quarter was up 849.1% compared to the same quarter last year.

Here are the key takeaways from Red Cat's conference call:

• Record Q1 revenue of $15.5M (up 849% YoY) with gross margin turning positive to 12.7%; company reports cash of $131.9M, net working capital of $190.6M and is targeting $150–$180M annual revenue and ~30% gross margin in the short-to-medium term.
• The Black Widow is presented as a combat‑proven ISR sensor platform (deployed in three theaters, 52+ minute endurance, 10+ km range) integrated with Anduril Lattice and SignLink, with on‑hand capacity to build ~$220M worth and large addressable opportunities (Ukraine, Drone Dominance, U.S. services, Japan, Taiwan).
• Blue Ops USV manufacturing is operational in Valdosta with ~145 fiberglass hulls and ~100 3D‑printed 5m boats planned this year (management cites ~ $150M in potential USV sales) and participation in INDOPACOM/Taiwan RFPs and regional engagements.
• Strategic tech integrations and tuck‑ins — acquisition of Apium (swarming), integration work with Anduril and SignLink, ongoing talks with Palantir, and a pending Quais deal — are positioned to expand software, swarming and platform capabilities and improve competitive differentiation.
• Operating expenses rose to $29.3M (including $8.0M R&D) with expected OpEx increases in H2 and a $62.7M inventory/prepaid balance; management also warns of manufacturing tooling limits for USVs, creating near‑term execution and margin pressure despite stated liquidity.

Red Cat Trading Up 0.1%

RCAT traded up $0.01 during trading on Friday, hitting $10.37. The company's stock had a trading volume of 8,703,799 shares, compared to its average volume of 9,665,742. Red Cat has a twelve month low of $5.71 and a twelve month high of $18.78. The business's fifty day simple moving average is $13.39 and its 200 day simple moving average is $11.44. The firm has a market capitalization of $1.27 billion, a price-to-earnings ratio of -14.81 and a beta of 1.21.

Red Cat News Summary

Here are the key news stories impacting Red Cat this week:

• Positive Sentiment: Red Cat reported strong Q1 revenue growth, with sales rising 849% year over year to about $15.5 million, and gross margin improved meaningfully versus last year, showing the business is scaling quickly.
• Positive Sentiment: The company highlighted expanding global defense demand, including deeper Asia-Pacific defense relationships and Japan’s order for 173 Black Widow systems, which may support future bookings and investor optimism. Red Cat Holdings (RCAT) Is Down 11.6% After Surging Sales But Ongoing Losses And Japan Defense Deal
• Positive Sentiment: Ladenburg Thalmann upgraded Red Cat to strong-buy, adding a bullish analyst signal after the quarterly report.
• Neutral Sentiment: Management’s earnings call transcript is now available, giving investors more detail on the company’s execution and outlook. Red Cat Holdings, Inc. (RCAT) Q1 2026 Earnings Call Transcript
• Negative Sentiment: Red Cat posted a Q1 loss of $0.22 per share, wider than the $0.14 loss expected by analysts, and revenue came in below consensus, which likely pressured the stock.
• Negative Sentiment: Despite stronger sales, the company still reported a large net loss, underscoring ongoing profitability challenges that may limit near-term upside.

Wall Street Analysts Forecast Growth

Several brokerages have commented on RCAT. LADENBURG THALM/SH SH raised Red Cat to a "strong-buy" rating in a report on Wednesday. Weiss Ratings reissued a "sell (d-)" rating on shares of Red Cat in a report on Tuesday, April 21st. Northland Securities set a $22.00 price objective on Red Cat in a report on Tuesday, January 20th. Clear Str raised Red Cat to a "strong-buy" rating in a report on Wednesday, April 29th. Finally, Wall Street Zen lowered Red Cat from a "hold" rating to a "sell" rating in a report on Saturday, May 2nd. Two equities research analysts have rated the stock with a Strong Buy rating, one has given a Buy rating and one has assigned a Sell rating to the stock. Based on data from MarketBeat, the company has a consensus rating of "Buy" and a consensus target price of $20.67.

Hedge Funds Weigh In On Red Cat

Several hedge funds and other institutional investors have recently made changes to their positions in the company. Virtu Financial LLC purchased a new position in shares of Red Cat in the fourth quarter valued at approximately $196,000. Invesco Ltd. lifted its position in shares of Red Cat by 36.3% in the fourth quarter. Invesco Ltd. now owns 237,038 shares of the company's stock valued at $1,880,000 after acquiring an additional 63,098 shares in the last quarter. Vident Advisory LLC purchased a new position in shares of Red Cat in the fourth quarter valued at approximately $1,009,000. Janus Henderson Group PLC lifted its position in shares of Red Cat by 29.5% in the fourth quarter. Janus Henderson Group PLC now owns 47,115 shares of the company's stock valued at $374,000 after acquiring an additional 10,723 shares in the last quarter. Finally, Concentric Capital Strategies LP purchased a new position in shares of Red Cat in the fourth quarter valued at approximately $1,624,000. Hedge funds and other institutional investors own 37.97% of the company's stock.

About Red Cat

Red Cat Holdings, Inc NASDAQ: RCAT is a technology holding company that develops and delivers advanced robotics, autonomy, and sensing solutions for defense, national security, public safety and commercial customers. Headquartered in American Fork, Utah, the company brings together a portfolio of specialized operating businesses focused on unmanned aerial systems (UAS), mission management software, precision mapping sensors and engineering services.

Through its UAS segment, Red Cat designs and manufactures small to medium-sized fixed-wing and vertical-takeoff drones that support intelligence, surveillance and reconnaissance (ISR) missions.

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