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

Red Cat (NASDAQ:RCAT) released its earnings results on Thursday. The company reported ($0.22) EPS for the quarter, missing the consensus estimate of ($0.14) by ($0.08), Zacks reports. The business had revenue of $26.24 million for the quarter, compared to the consensus estimate of $18.78 million. Red Cat had a negative net margin of 138.36% and a negative return on equity of 37.69%. The firm’s quarterly revenue was up 849.1% on a year-over-year basis.

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 Stock Up 0.1%

Shares of Red Cat stock traded up $0.01 during trading on Friday, reaching $10.37. 8,703,799 shares of the stock were exchanged, compared to its average volume of 9,665,742. Red Cat has a 1 year low of $5.71 and a 1 year high of $18.78. The firm has a market cap of $1.27 billion, a price-to-earnings ratio of -14.81 and a beta of 1.21. The stock’s fifty day moving average is $13.39 and its 200 day moving average is $11.44.

Institutional Investors Weigh In On Red Cat

A number of large investors have recently made changes to their positions in RCAT. New York State Common Retirement Fund purchased a new stake in Red Cat in the second quarter worth $173,000. BNP Paribas Financial Markets raised its holdings in Red Cat by 118.0% in the 3rd quarter. BNP Paribas Financial Markets now owns 15,741 shares of the company’s stock worth $163,000 after purchasing an additional 8,521 shares in the last quarter. Bank of Montreal Can lifted its position in shares of Red Cat by 21.5% in the 4th quarter. Bank of Montreal Can now owns 15,008 shares of the company’s stock worth $119,000 after purchasing an additional 2,656 shares during the period. Cetera Investment Advisers purchased a new stake in shares of Red Cat in the 2nd quarter worth about $97,000. Finally, Russell Investments Group Ltd. boosted its stake in shares of Red Cat by 35.3% during the 4th quarter. Russell Investments Group Ltd. now owns 9,936 shares of the company’s stock valued at $79,000 after purchasing an additional 2,591 shares in the last quarter. 37.97% of the stock is currently owned by institutional investors.

Analyst Upgrades and Downgrades

Several analysts have issued reports on the stock. Clear Str upgraded shares of Red Cat to a “strong-buy” rating in a research report on Wednesday, April 29th. LADENBURG THALM/SH SH raised Red Cat to a “strong-buy” rating in a research note on Wednesday. Northland Securities set a $22.00 price target on Red Cat in a research report on Tuesday, January 20th. Needham & Company LLC boosted their price objective on Red Cat from $16.00 to $20.00 and gave the company a “buy” rating in a research report on Thursday, March 19th. Finally, Wall Street Zen lowered Red Cat from a “hold” rating to a “sell” rating in a research note on Saturday, May 2nd. Two analysts have rated the stock with a Strong Buy rating, one has given a Buy rating and one has issued a Sell rating to the stock. Based on data from MarketBeat.com, Red Cat presently has a consensus rating of “Buy” and a consensus price target of $20.67.

Key Stories Impacting Red Cat

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.

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.