RCAT - Earnings call transcript Q1 2025

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Operator

Ladies and gentlemen, thank you for standing by. Good afternoon, and welcome to the Red Cat Holdings Fiscal 2025 First Quarter Financial Results and Corporate Update Conference Call. [Operator Instructions] Participants of this call are advised that the audio of this conference call is being broadcast live over the Internet and is also being recorded for playback purposes. A webcast replay of the call will be available approximately 1 hour after the end of the call through December 22, 2024.

Red Leah are Lunger, from Executive Thompson, today and Officer; Chief us Cat Jeff Holdings Chief Joining Financial Officer.

management Cat's performance call, that this will statements, forward-looking During including address Red operational expectations or future for results. make statements

factors Forward-looking may results those cause from that statements materially and differ actual risks statements. involve other to

accompanies about Form please Red that refer information recently filed call, XX-K most press Cat's in this periodic the Cat's risk more cautionary it. For on the to these risks, results and Red in statements factors particularly described release in

The to contents obligation September any that as events occur that reflect law, of call. XX, this accurate today, disclaims information information Cat to call or circumstances publicly by contain of this required Red is after time-sensitive update XXXX. or as Except any only revise

It to is over Thompson, Chief the go Officer. to Jeff call ahead. now Jeff, please pleasure Executive turn my

Jeffrey Thompson

to Earnings followed begin Quarter the our and First Fiscal detailed XXXX. share Leah welcome, you, Family the of exciting XXXX goals financial by and some the year everyone, with for new launch our provide Afterwards, of results. Systems. Year product Thank review a then our expectations I'll We'll line, our housekeeping Call. will calendar Conference of items,

Finally, will questions Leah any be have. and I you may available answer to

switching auditors, with calendar I a lawyers, and start Board analysts, that XXXX. will to our am January housekeeping. from members be let's shareholders, following So pleased to year requests announce many starting we

calendar of transition. provide details mechanics more align this Our will guidance on will year for with Leah XXXX. also the

million year-over-year quarter approximately record another XX% with to a revenue, $X.X I'm pleased increase. in QX report for

primarily use it for system operationally Operational that of QX full we its process sectors intended a the suitable prototypes rate the effective production. is in Evaluation. goes This for Test or before Initial the the military used product defense stands whether and to to IOT&E and for delivered However, assess highlight IOT&E. final into and is real Army is

Teal success. X Within Teal successfully systems We immediate approximately demos integrations. XX X delivered for the be units Army and proved an to and built partner to the weeks,

engineering developed plan for a teams XXXX. production and management, Our to manufacturing quickly scale

X preparing have high-volume engineering manufacturing production. teams Over for and the and retooling been our months, past

are management to achieve ASXXXX in scaling We requirements meet also quality implementing systems and certification XXXX.

from an and pause A sales X other ways. The in SRR of whether large-scale is common meet The now demand question Army Teal of answer investors can building contract X Teal manufacturing impacted the or is resounding contracts. X a prototypes our we yes. in

new retooling wait Teal couldn't we produce its once evidenced our record and a First, have of similar details is believe million. the our units Apple More X to backlog on in second, how customers these $XX iPhone This for successful, chose by X, buys one strategies August. no as Teal our some been to sell We while about during backlog release. factory. update. learned And guidance

believe product incredibly our have reduces diversification The the launched X we X. product range we revenue streams, enhances scaled manufacturing, product Family scaled Red busy offerings. Systems, and our we investment to X months QX, from expanding In expanded as This engineering, been which of Cat risk. past

a company. X longer no are product We

initiatives and need meet strike and of with the to provide in the optional Systems. deployable surgical Cat's high the systems differentiated market land increasingly to Drones of on the products low-cost conventional identifying cost is precision and ISR ISR targets with is are Pentagon's of other for objective The move drones. strike systems strike and Family affordable Red family of sensor-to-shooter, Systems air, capabilities, that Let's from of SXS low-cost new drones will urgent with swarms on its system Red ISR this attritable industry sea environments. Family non-retrievable. to Strike Red Cat's and Precision for alternative Cat's of an

minute Assault low-cost unmanned family precision control Cat's the in Android and as control. strike XXX system, lethal portable capabilities the the long-range of the but then X,XXX imagery is and ATAK, Blue, XXX forward to These last of the a only common single Blue ISR user Weighing assembled flight Edge such new flight X command launched system, X, FPV not flown in drones. and FANG, The Tactical aircraft just drone. VTOL systems ground aerial Edge in known and hand multi-vehicle mode, as autonomy. accuracy UAS with a be time X ground capture approved Kit, hybrid otherwise are high longest X Red least, with has include can complementary new which for hours our by grams, and Edge XXX Teal launched currently or a systems X Blue, a

drone we rucksack. about drone. to comments. Demand time LOI. better time is capabilities. FlightWave VTOL, these knows drones XX airplane FANG, already been product Edge combine FPV significant everybody FlightWave, we payloads for I We've our portable engineering the been months. can based and The Edge than wins drones. discuss Blue. a XXX that the this drones that lethal congratulate just on for team mission space. Blue profile a will contract fits Vertical this UAS talk the since a Warfighters capabilities. is surgical add the much and and ISR X, has the I after model. has when to is on I will the want and finally, announced for Teal strike about on on want XXX on Since closed drone expected an I warfighter's guidance seek the Edge unique Takeoff in the destroy spend a selling Blue with some And then deploy XXX long Landing, FPV It it in fixed-wing and It flight over Leah's

SRR we few elephant final have the received mentioned September. down contract last winner. for our Short in for production a been during room, prototype award XXXX X Range has Conference at years. September The the Huntsville, In SRR years, for for speech August, The almost late Now down Reconnaissance, a in selection clear selection had contracts Army in Alabama, the that the Pathfinder in SRR. scheduled

We hear very but this in the exceeds few year or XXXX worked full the and to guidance. that is update have hoping for why for are weeks. our SRR in Army This hope call, do We not that next back any the include meets an Army is a requirements. the to case. product hard to from we their not We guidance give

our we now about will the I to guidance. call hand after will Leah, which talk

Leah Lunger

first Hello, the for of quarter growth the reviewing fiscal Revenue joining afternoon. our totaled this you represents This year-over-year $X.X Today, and to year. of $X.X of I will of Thank everyone, compared quarter call prior thank of for XXXX. be first first you, fiscal Jeff. the quarter million 'XX XX%. million highlights for the the

quarter SRR margin production negative for not sales. final X to negative the Gross Tranche for program We delivery due have prototypes of and margins XX% revenue. the was was the expect future. the not This we of entirely was to to related Reconnaissance do for under we product and excitedly on have of the effort this will In an whether this, to Short a in await announcement Range program. contract are engineering thrilled down again spite be completed selected

of was million. $X.X operations million of compared fiscal remained in This quarter decrease quarter or in 'XX same fiscal to the for used $X.X sequentially. a the year Cash represents first prior and XX% the flat

and in the We cash with in We to growth. just control an closed deal million securing financing. prioritize ended continue to $X.X quarter additional efforts costs million debt limiting a without $X

we future, been our the calling have manufacturing X the to Looking right now. Teal product, which of we're latest preparing for

which produce to us steadily over expect for will to margins time. several increase We this allow drone years,

of ability have meet optimistic we and the X, that mass provide our Red Overall, needs said product Blue, Teal the in margins XX% FlightWave true up reach we Edge with warfighter. products X, new XXX to Systems, includes the Teal the This to anticipate eventually is of especially the about Cat and FANG. which Family our of As remain the to production. we past, under future

Additionally, we strategy investment diversification. multisystem this believe through lower risk product will

year. months will Jeff XXXX. XX, XX, X XX, ended October we will April to our with reporting will As for means a we from fiscal a XX, to on file going XX calendar December fiscal year Then the X filings year. we're the transition December a that XXXX, results XX-K report current all this the in December future changing for quarter report be What based mentioned, ended be accordance is months After also X beginning XXXX. standpoint that, end from

questions. I'm guidance XXXX for turn it before provide to over Jeff now going upcoming year calendar the take back to we to

Jeffrey Thompson

as And have Thanks, news Leah. this for are else everyone SRR you waiting, we this call. Red like still expected on about know, to call. conference Cat

and earlier, revenue SRR was for said get year guidance usually company. record, without we in September. very SRR still news update other Without calendar down news or XXX% growing any call are will we we next the eye-opening. But As of NATO a for weeks, couple of growing in If very programs a get our healthy are selection this I we XXXX. preparing

day we any NATO. release, currently the million we finish as This a $XX change We in million, without sweeps of programs week. for from or again day revenue to a up record. approximately of of $XX We questions. open stated expect As can to record XXXX for could it have press backlog $XX other this million, company now SRR

Operator

Instructions] Kumar comes today our first ThinkEquity. question [Operator with And Ashok from

Ashok Kumar

part congratulations. Jeff, questions. Two

And part this is, us a Can have million. any backlog you You of mix? backlog second the give will the color calendar on year? this product $XX ship

Jeffrey Thompson

We've of this manufacturing since is product closed over a great and because X which, LOI backlog question. we're And we great capital. a days just XXX the we But about incredible to exciting team question is product. access we engineering a Blues, had We a combination Edge of about as signed had interest capability XX only you Yes, there. and have we know, half very had lot Ashok. FlightWave mix because the never ago.

which, so prepare new you but ship with running drones, backlog into portion that of basically end we to -- XXXX, some as are spot guidance without really will even calendar a the we're backlog where year. know, We're rid this the transitioning of now weird of to fiscal our compelling this and kind We by hoping is for drones, hard old of of year year, build get SRR. from just significant calendar in pretty we're a ship

Operator

Our Ladenburg with next question Glenn comes from Mattson Thalmann.

Glenn Mattson

Congrats on the progress.

you XXXX, X you activity the speak you're the talk involved that? for can about pretty the I guidance, Jeff, some I the Can that. know $XX you to between where in if a the just of give involved with know main around when FlightWave, mix expect well? about lines calendar of million us and So seeing product that FPV as kind excited you're that you shake to there's of balance out

Jeffrey Thompson

Yes.

start I'll it's the portion. on think for with product warfighter FPV, must-have a the I the battlefield. FPV

So that's they're FPV very the in is it to our why cost. low we've revenue of don't our We $X portion maybe gives included It Systems. you that really large for million strike a of year, a capabilities. to complete think $X solution going because be Family next in million

remaining think to for conservative XXX revenue well XX-XX, and will been our Edge we've we've at before. forecasting the the the XXXX that X be pretty pretty previous guidance Teal from Blue. close been And the with done I and pretty working

the of that's thumbnail mix I the million. So think of $XX kind a of

Glenn Mattson

-- next I talked there'd back at can of the that to those rate Helpful. back at what you gross half me Or look would was wrong, like be margins? correct the you're said greater kind needed margin, talk but about of point? Great. can to margin that of in target about run about if I'm it million you if year, as half talk scale you profile in the get XX% think if she Leah $XX that

Jeffrey Thompson

before great Yes. just some I'll give Yes, hand it color I question. to Leah.

the still selling year the we've came we the and the building out bird. was had very Teal very X. For been the -- rev It delivering very next the we for what of once well. and box X But were months, going is X knew prototypes be that SRR well, always selling or we to last hot

-- production of we're airframes X, drone every switching the with making straight, mass get years you a would you're So which for Teal that to couple never X. happen X where will years,

how -- we done So But Leah has on add and want Leah, you modeling XX%. to great some to that? to get if

Leah Lunger

the and can Yes, all because I exactly next happy I'd I out one, be we what example we But all the to. after about the would relate Teal longer we because of same anytime plan -- Jeff holding produce just and we've that. love for seen think with a to the I gave iPhone thankfully, that's soon next X here. year anticipate that to don't period it situation time for

just ability for believe expect Teal as really margins we can go manufacturing to to to the on XX% our and engineering We to and we not change focus margin. We and get consistently with the X. teams production over increase rapidly steadily having the lines Teal

Glenn Mattson

helpful. That's

need mention, give did of you you bit You there? the about believe of Or quarter. to it's get any capital that little post profitability? there to a Can Jeff, talk you debt, the can raised might I amount is you color

Jeffrey Thompson

worked Leah we get any done. do would about we contract -- release X wins Yes. out But hours that's hard closed approximately frame, build to is -- it the us get time that which February could of really important press million. raised production our It's make funds expect didn't because first large ago. large this January, We we $X to we when for us even to contracts. we really because any set approximately very into receive

is any goal to our just more those dilution. prepayments So to without get

give small did that's to you if of parameters some this Leah, But the we piece debt. So of on why debt? the want

Leah Lunger

few go are Yes, a over. definitely. main can I points There

be which proceeds $X we're X are will it no excited months, about. mentioned, repayments Jeff million. very As There of for

XX%, warrants and There Jeff it, only. coverage that of The those $X.XX. warrant to is approximately on just warrants getting are kind cash through is As some price February they're January, time but said, exercise frame. with

are an additional they proceeds. those when and million $X.X if generate exercised, So would approximately in

it through -- lot of year. worked next for do as believe hard you next will yes, So get said, the really we've us this, on good company a and we the and into help

Glenn Mattson

in now, you any I'll times And of there specific looking last, number scope fiscal a -- quick announcement X on maybe and little the $XX for, more you government us have or would be couple believe remind sense more have kind you're of that fiscal the an I on know million can just one. made, be be number the of day potentially my like of SRR. year, is I And in ones do it head -- any could color just that time type Great. I a of discuss SAM, first the a TAM as guess, -- I just Jeff, any when great. for like could then

Jeffrey Thompson

been we're it's that Yes, clear and Thanks. publicly Yes. said -- like I said, it's there's done. winner a

So -- you your prototypes, final get submit you don't really but communicate. when to

have could they So of before selection, you give or and of X to from I call Army show online some out. of between or days of rest think early no year finds first big the out approximately the things the That's X any official world can you until we information find notice, that you year at for when -- wait number you And down deliveries have of get the We we they idea. don't anywhere September have the AUSA. we there. usually May news is it But and happen until maybe confident. We're every very XX. the the we XXXX found same October yes,

Operator

Dawson And from our Carlo Securities. James Corzine question with comes next

Carlo Corzine

are SRR. think I you know the SRR, or I before X you'd a working thought see orders -- some how question been for those together? I countries, thought NATO see orders. tied my NATO get X combined If be came NATO, combined? versa? last Just SRR, they that tied The vice And actually, second different that the you'd if of things. with the is couple just when you in quarter? is get conversation, possibly don't out, financials with will the you've not, And FlightWave are mean, you they will

Jeffrey Thompson

Yes.

Great. Okay. Yes.

any almost defense So for ministries contracts whatsoever. -- of been on SRR certain each some now. NATO are don't rely and doing with they months other tests We've XX not

or like waiting We you're we order. to get us systems We significant training that's a in very for XXX close pretty typically initial real before XX that us and the they to close. buy. order. getting call with what are And happened started think that of do -- Border a darn give they Patrol. large an order we're first became what are the have It's XXX -- the order, always give we Patrol, we for It's getting us they kind before the for drone a couple Border

have We happen a to one told no is drone some everyone country's was a with are NATO in to now. look of But lot control over there's We in it in right what originally at the in them Europe, were you getting We we come build systems. announcements growth June. bureaucratic these in supposed their arsenal. large close of So just if were couple of quicker. hoping would expecting

about So good The Leah, not you are pretty and combined to... pretty Yes. financials SRR. do that, about want we're we're feeling yet. feeling good

Carlo Corzine

combined? expect And of the on go why to you government do When year be didn't you those X instead year? calendar October with

Leah Lunger

FlightWave, the the beginning July for XX. APA month. closed are through this at reported and of the we today So financials

will of what the will reported And September be filing, report in include at October that in in XX, and And that that it so FlightWave will be -- as included mid-December. we activity. October

X the So it will be months. X of

fiscal there isn't around then And with tend sometimes January our we what the is lot year finalized we time December, what always then frame. find budget amendments But and contracts that that be their stated. to you've -- this, finalized are through as speak is can there a Jeff contracts, government government to but see more the September, year, for fiscal the and

little calendar consistency and just that company. And better year with for better give will us so visibility a building of in delay our bit a

Jeffrey Thompson

I I prepared give single bit my contract in that they on level, that. little the down company you're Ghost is now. the where years was going a Anduril and behind from weeks September. been a prototypes prototype MRR color in Like in X of announced we've PDW. which They're which hopefully you give X years, notes next win production building now, We're for our to the production don't we is but then contract. to more selection a mentioned are for aware, know almost the year if just which Carlo, winner, a contract. you X to was program They every getting year ago

or you get heading get right in to you you and a selected, start X prototype Once years checks down production negotiate January. We've closed we're By around deal, so months. But last to a probably December. our now. X X we contract in got getting have contract the time typically we for the signed first

and you they if So resolutions, continuing all way. get -- always the the in look at

using knowing these but full and year capture to methodology their in that's we're be it's as much typically us more usually that to the reliable get items. So get to it of for going something delayed, we'll ship

Operator

This Jeff to any closing question-and-answer like conference concludes over the session. remarks. turn Thompson our back I to would for

Jeffrey Thompson

thanks, an have obviously exciting Maybe XXXX. year it in weeks. even a We in coming Well, more on. few for everybody, jumping exciting be could

great soon regardless, will as love informed it. shape. we're excited. We're building in as great But everybody stuff. We We're keep know. People we

in product is new Our FlightWave fantastic.

Teal is FANG incredible X has an got response. fantastic. The new Our product

So the look future. forward to you everybody. talking Thanks, we to in

Operator

Thank concluded. The presentation. for now attending you today's conference has

disconnect. now may You

Red Cat (RCAT) 23 Sep 242025 Q1 Earnings call transcript