Red Cat (NASDAQ:RCAT) Issues Quarterly Earnings Results, Misses Estimates By $0.05 EPS

Red Cat (NASDAQ:RCAT) announced its quarterly earnings data on Thursday. The company reported ($0.26) earnings per share for the quarter, missing analysts’ consensus estimates of ($0.21) by ($0.05), Zacks reports. The company had revenue of $20.20 million for the quarter, compared to the consensus estimate of $22.65 million. Red Cat had a negative net margin of 136.26% and a negative return on equity of 39.64%.

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

• Record revenue and improving margins: Q2 revenue rose 520% year over year to $20.2 million, while gross margin improved to 16.1% from 11.6% a year ago and 12.7% in Q1. Management attributed the gains to higher production volumes, overhead absorption, and manufacturing efficiencies.
• Management maintained its $150 million–$180 million 2026 revenue target and expressed confidence in a substantial second-half ramp, citing approximately $50 million–$80 million of potentially shippable drone inventory, expanding defense demand, and expected contract activity in August and September.
• Red Cat reported increasing customer diversification: Army revenue represented roughly 50% of first-half sales versus 73% in 2025, while Japan and NSPA Europe became important customers. The company also cited international activity across Japan, Korea, Taiwan, the Middle East, and Ukraine.
• Product and manufacturing expansion continued: production capacity reached approximately 270,000 square feet, Blue Ops moved its Variant 7 maritime platform into mass production, and the company advanced Black Widow, Hellcat, APM swarm autonomy, and Quaze wireless charging technologies.
• Operating expenses increased to approximately $41.9 million, including $14.2 million of R&D spending, and the company continued to operate at a loss despite positive gross profit. Management is targeting approximately 30% gross margin and division-level profitability by late 2026, but acknowledged that contract awards and delivery timing remain uncertain.

Red Cat Stock Up 6.2%

Shares of RCAT traded up $0.54 during trading hours on Friday, reaching $9.21. 10,232,080 shares of the company traded hands, compared to its average volume of 7,984,091. The stock has a market capitalization of $1.13 billion, a P/E ratio of -11.37 and a beta of 1.31. Red Cat has a 12-month low of $5.77 and a 12-month high of $18.78. The business has a fifty day moving average price of $9.89 and a 200-day moving average price of $11.83.

Wall Street Analyst Weigh In

A number of brokerages have commented on RCAT. Wall Street Zen downgraded shares of Red Cat from a “sell” rating to a “strong sell” rating in a research note on Saturday, July 18th. UBS Group assumed coverage on Red Cat in a report on Wednesday, May 27th. They issued a “buy” rating for the company. HC Wainwright reissued a “buy” rating and issued a $20.00 price objective on shares of Red Cat in a research note on Friday. Weiss Ratings restated a “sell (d-)” rating on shares of Red Cat in a report on Friday, July 17th. Finally, Roth Capital assumed coverage on Red Cat in a research report on Monday, June 1st. They set a “buy” rating and a $25.00 target price for the company. Two investment analysts have rated the stock with a Strong Buy rating, four have issued a Buy rating and one has issued a Sell rating to the company. According to data from MarketBeat.com, the company currently has a consensus rating of “Buy” and an average price target of $20.40.

Insider Transactions at Red Cat

In other Red Cat news, Director Paul Funk II sold 165,028 shares of the business’s stock in a transaction dated Thursday, June 11th. The stock was sold at an average price of $11.50, for a total transaction of $1,897,822.00. The transaction was disclosed in a filing with the SEC, which is accessible through this hyperlink. 12.50% of the stock is owned by company insiders.

Institutional Trading of Red Cat

Large investors have recently made changes to their positions in the business. Bank of Montreal Can grew its position in Red Cat by 21.5% during the fourth quarter. Bank of Montreal Can now owns 15,008 shares of the company’s stock valued at $119,000 after buying an additional 2,656 shares during the period. State of Wyoming acquired a new position in shares of Red Cat in the fourth quarter worth about $73,000. BNP Paribas Financial Markets boosted its stake in shares of Red Cat by 118.0% during the 3rd quarter. BNP Paribas Financial Markets now owns 15,741 shares of the company’s stock worth $163,000 after acquiring an additional 8,521 shares in the last quarter. Russell Investments Group Ltd. purchased a new stake in shares of Red Cat during the 3rd quarter worth about $76,000. Finally, Riggs Asset Managment Co. Inc. acquired a new stake in shares of Red Cat during the 2nd quarter valued at about $62,000. 37.97% of the stock is owned by hedge funds and other institutional investors.

Key Stories Impacting Red Cat

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

• Positive Sentiment: HC Wainwright reaffirmed its Buy rating and maintained a $20 price target, implying substantial upside from the recent share price. The endorsement suggests the firm remains confident in Red Cat’s growth prospects. Benzinga article
• Positive Sentiment: Red Cat reported 527% year-over-year revenue growth for the second quarter. Gross margin rose 39% from the prior-year quarter and increased 27% sequentially, indicating improving operating performance and demand for its drone products. Business Insider article
• Neutral Sentiment: Management guided for fiscal 2026 revenue of $150 million to $180 million, broadly surrounding the $155.4 million analyst consensus. The range signals continued expansion but does not clearly represent a major forecast upgrade.
• Neutral Sentiment: Needham lowered its price target from $20 to $15 while retaining a Buy rating. The target reduction reflects more cautious valuation assumptions, though the firm still sees meaningful upside. The Fly article
• Negative Sentiment: Second-quarter results fell short of expectations: Red Cat reported an adjusted loss of $0.26 per share versus the expected $0.21 loss, while revenue of $20.2 million missed the $22.65 million consensus. The company remains deeply unprofitable, which could pressure the stock despite its growth rate. Zacks article

Red Cat Company Profile

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.