Company Story
2017 - Red Cat Holdings, Inc. was founded by Jeff Thompson
2018 - Acquired Fat Shark, a drone technology company
2019 - Acquired Skypersonic, a drone software company
2020 - Acquired Teal Drones, a drone manufacturer
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In addition, it is involved in the sales of FPV drones and equipment primarily to the consumer marketplace.Red Cat Holdings, Inc.is based in San Juan, Puerto Rico. Show Full description
1. Company Snapshot
1.a. Company Description
Red Cat Holdings, Inc., through its subsidiaries, provides various products, services, and solutions to the drone industry.It offers commercial and government unmanned aerial vehicle technology for reconnaissance, public safety, and inspection applications.The company also provides First Person View (FPV) video goggles; and software and hardware solutions that enable drones to complete inspection services in locations where global positioning systems are not available.
In addition, it is involved in the sales of FPV drones and equipment primarily to the consumer marketplace.Red Cat Holdings, Inc.is based in San Juan, Puerto Rico. Show Full description
1.b. Last Insights on RCAT
Red Cat Holdings' recent performance is driven by its growing presence in the drone defense sector, fueled by notable military contract achievements, including the execution of the TD3 LRP contract with the U.S. Army to deliver up to 690 SRR Black Widow systems. The company's launch of its maritime division, Blue Ops, Inc., and appointment of Barry Hinckley as President to lead expansion into uncrewed surface vessels, also contributed positively. Additionally, potential upside from a possible DJI ban in the US next year could yield $160 million per year.
1.c. Company Highlights
2. Red Cat's Q3 2025 Earnings: A Record-Breaking Quarter
Red Cat's third-quarter 2025 earnings conference call revealed a record-breaking quarter with revenues of $9.6 million, up 200% from the second quarter of 2025. The company's gross profit stood at $638,000, up from $375,000 in Q2 2025. The actual EPS came out at -$0.16, relative to estimates at -$0.07. Red Cat's financial performance reflects the success of its strategic initiatives, with the company expecting to generate almost $40 million in revenue in 2025.
Publication Date: Nov -20
📋 Highlights
- Revenue Growth:: Q3 2025 revenue surged to $9.6 million (+200% QoQ), with full-year guidance raised to $34.5–$37.5 million and a $100 million annual run rate in Q4.
- Product Validation:: Black Widow drone approved for NATO NSPA catalog, and FANG FPV added to Blue UAS cleared list, enhancing defense market access.
- Capital Deployment:: $20–25 million allocated for Blue Ops (maritime division), alongside $6 million R&D and $9.2 million G&A investments in Q3 2025.
- Margin Projections:: Gross margins expected to rise to 10% in Q4 2025, 20% by 2026, and 30–35% long-term, driven by production scaling and cost efficiencies.
- Future Growth Drivers:: USV division poised for $225 million in 2026 demand (President’s budget), with 1,000 drone-unit/month output target by early 2026 and USV deliveries starting Q2 2026.
Operational Highlights
The company has achieved several milestones, including the expansion of its limited rate initial production Tranche 2 contract to $35.1 million, the launch of Blue Ops, its new maritime division, and the addition of its FANG FPV drone to the Blue UAS cleared list. Red Cat's Black Widow system was approved for NATO NSPA catalog, opening doors to NATO members and partner nations. The company's product portfolio has reached new levels of validation and market acceptance, particularly in the defense and national security sectors.
Guidance and Outlook
Red Cat has adjusted its full-year revenue guidance range for 2025 to $34.5 million to $37.5 million, with Q4 guidance just below a $100 million annual run rate. The company expects to scale up drone output to 1,000 units a month by early 2026 and start delivering USVs in Q2 2026. Red Cat is optimistic about its prospects, citing the success of its Black Widow drone in Europe and its plans to continue improving the product. As the company's President mentioned, the President's budget plan includes $225 million for USVs, which is expected to drive demand and sales.
Valuation and Growth Prospects
Analysts estimate next year's revenue growth at 65.7%. The current valuation metrics indicate that the stock is trading at a P/S Ratio of 36.98 and an EV/EBITDA of -8.74. With a ROE of -64.98% and ROIC of -18.38%, the company's profitability is still a concern. However, the significant revenue growth and improving gross margins, projected to reach 20% by the end of next year, could potentially drive the stock's performance.
Investment Strategy
Red Cat is focused on deploying capital across three key areas: its USV division build-out of Blue Ops, estimated to be a $20 million to $25 million investment, strategic investments in technologies, and facility expansion. The company ended the quarter with $212.5 million in cash and receivables, positioning it well to execute on its SRR obligations and pursue strategic growth opportunities.
3. NewsRoom
Why Red Cat Holdings Stock Crushed it Today
Dec -03
Red Cat Announces Key Leadership Transitions
Dec -02
Red Cat Holdings: Cautiously Optimistic After The FY 2025 Guidance Downgrade
Nov -30
Red Cat: Sell-Off Gift
Nov -24
Red Cat (NASDAQ:RCAT) Shares Gap Down on Analyst Downgrade
Nov -15
Red Cat Misses Estimates, Expands Operations
Nov -14
Red Cat Holdings, Inc. (RCAT) Financial Results For 2024 Transition Period Conference Call Transcript
Nov -14
Red Cat Holdings, Inc. (RCAT) Q3 2025 Earnings Call Transcript
Nov -13
4. Business Breakdown
4.a. Revenues by Country
4.b. Revenues by Segment
5. Expected revenues mid-term growth (15.47%)
6. Segments
Consumer
Expected Growth:
Red Cat Holdings, Inc.'s 11.53% growth is driven by increasing adoption of drone technology in consumer markets, rising demand for aerial photography and videography, and growing popularity of recreational drones. Additionally, advancements in drone autonomy, safety features, and decreasing prices are making drones more accessible to consumers, further fueling growth.
Enterprise
Expected Growth:
Red Cat Holdings' Enterprise segment growth of 19.4% is driven by increasing adoption of drone technology in various industries, expansion into new markets, and strategic partnerships. Additionally, the company's focus on providing comprehensive solutions, including hardware, software, and services, has contributed to its rapid growth.
7. Detailed Products
Drone Services
Red Cat Holdings, Inc. offers drone services for various industries such as construction, agriculture, and filmmaking. The company provides aerial data collection, inspection, and monitoring services using its fleet of drones.
Skypersonic Drones
Red Cat Holdings, Inc. designs and manufactures Skypersonic drones, which are high-performance, rugged, and waterproof drones designed for industrial and commercial use.
Teal Drones
Red Cat Holdings, Inc. offers Teal Drones, which are high-performance, AI-powered drones designed for industrial and commercial use cases such as inspection, surveying, and mapping.
Fat Shark Drones
Red Cat Holdings, Inc. designs and manufactures Fat Shark drones, which are high-performance, waterproof drones designed for industrial and commercial use cases such as inspection, surveying, and mapping.
Rotor Riot Drones
Red Cat Holdings, Inc. offers Rotor Riot drones, which are high-performance, customizable drones designed for industrial and commercial use cases such as inspection, surveying, and mapping.
8. Red Cat Holdings, Inc.'s Porter Forces
Forces Ranking
Threat Of Substitutes
The threat of substitutes for Red Cat Holdings, Inc. is medium due to the availability of alternative products and services in the market.
Bargaining Power Of Customers
The bargaining power of customers for Red Cat Holdings, Inc. is high due to the concentration of buyers and the availability of alternative products.
Bargaining Power Of Suppliers
The bargaining power of suppliers for Red Cat Holdings, Inc. is low due to the large number of suppliers and the lack of concentration in the supply market.
Threat Of New Entrants
The threat of new entrants for Red Cat Holdings, Inc. is medium due to the moderate barriers to entry and the availability of resources.
Intensity Of Rivalry
The intensity of rivalry for Red Cat Holdings, Inc. is high due to the high level of competition and the presence of well-established players in the market.
9. SWOT Analysis
10. Capital Structure
10.a. Balance Sheet
10.b. Weighted Average Cost of capital
| Value | |
|---|---|
| Debt Weight | 3.66% |
| Debt Cost | 3.95% |
| Equity Weight | 96.34% |
| Equity Cost | 2.63% |
| WACC | 2.67% |
| Leverage | 3.80% |
11. Quality Control: Red Cat Holdings, Inc. passed 3 out of 9 key points
12.a Historical Valuation
12.b Price/Earnings Ratio
12.c Margin Valuation
12.d Peers Valuation
Peers Group Analysis
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Red Cat Holdings
Value: 6.0
Growth: 2.8
Quality: 3.3
Yield: 0.0
Momentum: 10.0
Volatility: 0.3
1-Year Total Return ->