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

Red Cat (NASDAQ:RCAT) announced its earnings results 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. Red Cat had a negative return on equity of 35.86% and a negative net margin of 138.36%.

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 Performance

Shares of Red Cat stock traded up $0.01 on Thursday, reaching $8.67. 9,886,140 shares of the stock were exchanged, compared to its average volume of 7,752,057. The firm has a market cap of $1.06 billion, a PE ratio of -12.39 and a beta of 1.31. The firm’s 50 day moving average is $9.99 and its 200-day moving average is $11.85. Red Cat has a one year low of $5.77 and a one year high of $18.78.

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 that occurred on Thursday, June 11th. The shares were sold at an average price of $11.50, for a total transaction of $1,897,822.00. The sale was disclosed in a filing with the Securities & Exchange Commission, which is available through this link. 12.50% of the stock is owned by company insiders.

Hedge Funds Weigh In On Red Cat

Several hedge funds and other institutional investors have recently modified their holdings of the business. Virtu Financial LLC bought a new stake in shares of Red Cat during the 4th quarter worth $196,000. Invesco Ltd. boosted its stake in Red Cat by 36.3% in the fourth quarter. Invesco Ltd. now owns 237,038 shares of the company’s stock valued at $1,880,000 after buying an additional 63,098 shares in the last quarter. Vident Advisory LLC bought a new position in Red Cat in the fourth quarter valued at about $1,009,000. Janus Henderson Group PLC raised its stake in Red Cat by 29.5% during the fourth quarter. Janus Henderson Group PLC now owns 47,115 shares of the company’s stock worth $374,000 after acquiring an additional 10,723 shares in the last quarter. Finally, Concentric Capital Strategies LP acquired a new position in Red Cat during the fourth quarter worth about $1,624,000. Institutional investors own 37.97% of the company’s stock.

Analyst Upgrades and Downgrades

Several research analysts have weighed in on the company. LADENBURG THALM/SH SH upgraded Red Cat to a “strong-buy” rating in a research report on Wednesday, May 6th. Clear Str raised shares of Red Cat to a “strong-buy” rating in a research report on Wednesday, April 29th. UBS Group initiated coverage on shares of Red Cat in a research note on Wednesday, May 27th. They issued a “buy” rating on the stock. HC Wainwright began coverage on shares of Red Cat in a research report on Wednesday, May 27th. They set a “buy” rating and a $20.00 price target on the stock. Finally, Roth Capital began coverage on shares of Red Cat in a research note on Monday, June 1st. They issued a “buy” rating and a $25.00 price objective for the company. Two investment analysts have rated the stock with a Strong Buy rating, four have given a Buy rating and one has issued a Sell rating to the company. According to data from MarketBeat.com, Red Cat currently has an average rating of “Buy” and an average target price of $21.40.

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.