Red Cat Holdings — Q2 2026 Earnings Summary

Financial Performance

• Total revenue for the quarter ended June 30, 2026, was $20.2 million, representing a 527% year-over-year increase compared to $3.2 million in Q2 2025.
• Gross profit was $3.3 million, an increase of $2.9 million from $0.4 million in Q2 2025.
• Gross margin was 16.1%, a 39% year-over-year improvement from Q2 2025 and a 27% sequential improvement from Q1 2026.
• Net loss for the quarter was $35.3 million, compared to a net loss of $13.3 million in Q2 2025.
• Loss per share (basic and diluted) was $0.26 for the quarter, compared to $0.15 in Q2 2025.
• For the six months ended June 30, 2026, net loss was $61.8 million compared to $36.4 million in the same period of 2025.
• Cash on the balance sheet totaled $325.6 million as of June 30, 2026, up from $167.9 million at December 31, 2025.
• Inventory and prepaid inventory totaled $84.8 million as of June 30, 2026, compared to $30.4 million at December 31, 2025.
• Total current liabilities were $28.6 million as of June 30, 2026, compared to $14.8 million at December 31, 2025.
• Short-term debt obligations were $0.9 million as of June 30, 2026, compared to $0.4 million at December 31, 2025.
• Adjusted EBITDA for the quarter ended June 30, 2026, was $(31.8) million, compared to $(9.9) million in Q2 2025.

Guidance and Future Outlook

• The company reaffirmed its full-year target revenue range of $150 million to $180 million.
• Management stated the company is positioned to capitalize on the accelerating adoption of unmanned and autonomous systems.
• The company highlighted expanding manufacturing capacity and a growing Family of Systems spanning air, land, and sea as key drivers for future growth.

Business Segments and Product Lines

• Teal Drones advanced to Gauntlet II of the Drone Dominance Program, positioning it among finalists for a significant procurement opportunity for low-cost, attributable drone systems.
• The company completed the acquisition of Quaze Technologies, adding wireless power transfer technology to enable autonomous recharging for drones, robotic systems, and uncrewed maritime platforms.
• Hellcat™, a globally configurable small UAS platform based on the Black Widow architecture, was introduced to expand the international addressable market.
• Blue Ops was scaled into a leading maritime operations platform, driving the U.S.-built Variant 7 uncrewed surface vessel (USV) to full-rate production and validating a new 5-meter USV variant.
• Apium and Blue Ops were selected to participate in the U.S. Office of Naval Research Global's mACE3 and mACE4 operational experimentation events.
• New orders were secured from the U.S. Air Force Security Forces for Black Widow™ drones, train-the-trainer support, batteries, and mission-critical spares.
• A contract was secured between Blue Ops and the U.S. Navy to lease Variant 7 vessels and participate in testing, integration, and electronic warehouse operations under the Office of Naval Research.
• Joint product development with Apium demonstrated a multi-vendor, find, fix, finish solution combining Black Widow ISR with Fang 7 kinetic finish orchestrated by Apium's Paradigm autonomy.

Market and Competitive Landscape

• Red Cat is positioning itself as a leading all-domain autonomy platform for defense and national security.
• The company is expanding its addressable market globally through the Hellcat™ platform designed for allied defense customers.
• Continued engagement with the U.S. Navy and Marine Corps is highlighted through participation in operational experimentation events and new contracts.

Risks and Challenges

• The press release notes that forward-looking statements are subject to substantial risks and uncertainties, including expectations regarding revenue guidance, gross margins, product diversity, and the ability to scale operations.
• Risks include assumptions regarding future defense budget allocations and the timing of the Quaze Technologies acquisition.
• Specific risk factors are detailed in the Form 10-K filed March 19, 2026, and subsequent quarterly reports on Form 10-Q.

Management Commentary and Tone

• Jeff Thompson, Chairman and CEO, stated that Q2 results reflect the execution of a strategy transforming Red Cat into a leading all-domain autonomy platform.
• Management highlighted that revenue increased more than fivefold year-over-year due to scaled deliveries, expanded production capacity, and continued technology investment.
• Thompson noted that the 39% year-over-year and 27% sequential gross margin improvements demonstrate the benefits of scale, production efficiencies, and a diversified product portfolio.
• The tone emphasized confidence in the company's unique position to capitalize on market opportunities with over $325 million in cash and an expanding Family of Systems.

Other Key Points

• The company raised cash through public offerings, generating $258.8 million in proceeds for the six months ended June 30, 2026.
• Proceeds from the exercise of warrants totaled $4.3 million for the six months ended June 30, 2026.
• The company paid $13.5 million in costs related to public offerings for the six months ended June 30, 2026.
• Cash paid for the acquisition of Quaze Technologies, net of cash acquired, was $0.4 million.
• Purchases of property and equipment totaled $12.6 million for the six months ended June 30, 2026.
• Goodwill and intangible assets increased to $67.3 million as of June 30, 2026, from $24.6 million at December 31, 2025.
• The company hosts a live video webinar to discuss results on August 6, 2026, at 4:30 p.m. Eastern Time.