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Red Cat Holdings Inc (RCAT)
NASDAQ:RCAT
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Red Cat Holdings
(NASDAQ:RCAT)
47Neutral
Red Cat Holdings (RCAT) vs. S&P 500 (SPY)
Market Cap
$527.40M
Dividend YieldN/A
Average Volume (3M)4.97M
Price to Earnings (P/E)―
Beta (1Y)0.74
Revenue Growth49.84%
EPS Growth-2.84%
CountryUS
Employees89
SectorTechnology
Sector Strength54
IndustryHardware & Equipment
Share Statistics
EPS (TTM)-0.54
Shares Outstanding85,616,950
10 Day Avg. Volume3,723,595
30 Day Avg. Volume4,973,293
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)26.38
Price to Cash Flow (P/CF)-10.70
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$15.00Price Target Upside157.73% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering0
Red Cat Holdings Business Overview & Revenue Model
Company DescriptionRed Cat Holdings, Inc., through its subsidiaries, provides various products, services, and solutions to the drone industry. It offers commercial and government unmanned aerial vehicle technology for reconnaissance, public safety, and inspection applications. The company also provides First Person View (FPV) video goggles; and software and hardware solutions that enable drones to complete inspection services in locations where global positioning systems are not available. In addition, it is involved in the sales of FPV drones and equipment primarily to the consumer marketplace. Red Cat Holdings, Inc.is based in San Juan, Puerto Rico.
How the Company Makes MoneyRed Cat Holdings generates revenue primarily through the sale of drones and related technology solutions. Its revenue model includes direct sales of drone hardware, software subscriptions for its flight operations management platforms, and data analytics services. The company also earns money through strategic partnerships and collaborations with other technology firms, which help in expanding its product offerings and market reach. Additionally, Red Cat Holdings may engage in licensing agreements for its proprietary technology, contributing to its income stream. The company's focus on innovation and regulatory compliance positions it well within the growing UAS market, attracting both commercial and governmental clients.
Red Cat Holdings Financial Statement Overview
Summary
Red Cat Holdings exhibits strong revenue growth but faces significant challenges with profitability and cash flow. The income statement reflects negative profitability margins and operational inefficiencies. Despite a stable equity position, the balance sheet is weakened by consistent net losses. Cash flows are consistently negative, indicating issues in generating cash from operations.Income Statement
Red Cat Holdings has shown significant revenue growth over the years, with the latest TTM revenue at $16.47 million, indicating a positive trajectory. However, the company is struggling with negative profitability margins, including a net profit margin of -232.6% and a gross profit margin of 10.9% in the TTM period. The EBIT margin is also significantly negative at -160.4%, highlighting operational inefficiencies. These challenges weigh down the overall income statement score.35
Negative
Balance Sheet
The company's balance sheet shows moderate financial structure with a debt-to-equity ratio of 0.51, indicating a manageable level of leverage. However, the return on equity is negative due to consistent net losses, which is a concern. The equity ratio stands at 52.9%, demonstrating a relatively stable capital structure despite the high liabilities. Overall, the balance sheet reflects a balance between financial risk and stability.50
Neutral
Cash Flow
The cash flow statement reveals challenges with consistently negative operating and free cash flows, with the TTM free cash flow at -$19.52 million. This highlights issues in generating cash from core operations. The company has been relying on financing activities to support cash needs. The operating cash flow to net income ratio is slightly positive, indicating some alignment between reported earnings and cash flow, but overall cash flow performance is weak.40
Negative
| Breakdown | |||||
| TTM | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 | Jun 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 8.10M | 17.84M | 9.91M | 6.43M | 5.00M | 403.94K | Gross Profit |
| 1.18M | 3.68M | -336.80K | 925.51K | 1.07M | 78.56K | EBIT |
| -15.02M | -17.46M | -27.13M | -13.00M | -4.88M | -1.66M | EBITDA |
| -13.15M | -20.03M | -25.29M | -11.28M | -11.98M | -1.66M | Net Income Common Stockholders |
| -13.48M | -24.05M | -27.09M | -10.38M | -14.45M | -1.60M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 480.06K | 6.07M | 16.07M | 48.88M | 277.35K | 236.67K | Total Assets |
| 3.14M | 48.54M | 60.19M | 85.08M | 11.69M | 2.81M | Total Debt |
| 372.93K | 2.27M | 2.08M | 2.97M | 2.02M | 568.77K | Net Debt |
| -107.14K | -3.80M | -1.18M | -1.11M | 1.74M | 332.10K | Total Liabilities |
| 2.01M | 4.97M | 5.58M | 7.16M | 6.43M | 1.28M | Stockholders Equity |
| 1.13M | 43.56M | 54.61M | 77.92M | 5.27M | 1.53M |
| Cash Flow | Free Cash Flow | ||||
| -17.67M | -18.85M | -31.65M | -16.38M | -1.40M | -811.58K | Operating Cash Flow |
| -16.76M | -18.60M | -29.20M | -16.02M | -1.40M | -811.58K | Investing Cash Flow |
| -38.96M | 13.57M | 29.59M | -46.60M | -48.37K | 46.33K | Financing Cash Flow |
| -4.16M | 7.80M | -1.22M | 66.43M | 1.49M | 498.49K |
Red Cat Holdings Technical Analysis
Positive
5.82
Price Trends
7.59
Negative
7.88
Negative
5.11
Positive
Market Momentum
-0.54
Negative
44.84
Neutral
77.31
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RCAT, the sentiment is Positive. The current price of 5.82 is above the 20-day moving average (MA) of 5.49, below the 50-day MA of 7.59, and above the 200-day MA of 5.11, indicating a neutral trend. The MACD of -0.54 indicates Negative momentum. The RSI at 44.84 is Neutral, neither overbought nor oversold. The STOCH value of 77.31 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for RCAT.
Red Cat Holdings Risk Analysis
Red Cat Holdings disclosed 46 risk factors in its most recent earnings report. Red Cat Holdings reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Red Cat Holdings Peers Comparison
Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
59 Neutral | $3.70B | 112.23 | 3.94% | ― | 5.21% | ― | |
59 Neutral | $5.04B | 309.19 | 1.40% | ― | 9.57% | ― | |
58 Neutral | $21.97B | 10.63 | -18.43% | 2.40% | 4.67% | -24.47% | |
47 Neutral | $527.40M | ― | -100.48% | ― | 49.84% | -2.84% | |
39 Underperform | $15.75M | ― | -187.63% | ― | -11.76% | 65.95% |
* Technology Sector Average
Performance Comparison
RCAT
Red Cat Holdings
5.82
5.03
636.71%
AVAV
AeroVironment
126.00
-23.28
-15.59%
BRID
Bridgford Foods
9.03
-2.23
-19.80%
KTOS
Kratos Defense
31.42
13.29
73.30%
UAVS
AgEagle Aerial Systems
1.34
-37.46
-96.55%
DPRO
Draganfly
3.06
-1.56
-33.77%
Red Cat Holdings Earnings Call Summary
Earnings Call Date: Dec 16, 2024 | % Change Since: -44.31% | Next Earnings Date: Mar 31, 2025
Earnings Call Sentiment Neutral
The earnings call was marked by positive developments, such as the strategic partnership with Palantir and increased revenue guidance, which indicate strong future prospects. However, the current financial performance shows challenges with declining revenue and margins, alongside operational cash concerns. The resignation of the CFO adds a layer of uncertainty to the management team.Highlights
New Partnership with Palantir
Redcat Holdings announced a partnership with Palantir to integrate visual navigation and artificial intelligence into the Black Widow drone, enhancing its battlefield capabilities. This is expected to add high-margin software revenue to each drone sold.
Guidance Increase
The company increased its revenue guidance from $50 million to a range of $80 million to $120 million, factoring in SRR-related revenue.
High Demand for Black Widow Drones
Post-SRR announcement, Redcat Holdings has received around $14.7 million in quotes for Black Widow drones, primarily from U.S. DoD and international clients.
FlightWave Acquisition
Redcat Holdings closed the acquisition of FlightWave, adding the Edge-130 drone to its product mix, which is expected to help achieve up to 50% gross margins under mass production.
Potential Funding Opportunities
Redcat Holdings is exploring non-dilutive funding options, including a loan from the Office of Strategic Capital, which could range from $10 million to $150 million.
Lowlights
Decline in Revenue and Gross Margin
Year-to-date revenues decreased by 24% to $4.3 million, compared to $5.7 million last year. Gross margin was negative 12%, down from positive 25% last year, due to the strategic shift to focus on the Black Widow drone.
Resignation of CFO Leah Lunger
Leah Lunger announced her resignation as CFO for family reasons, including increased needs for her child with a disability.
Increased Cash Usage
Cash used in operations increased by 11% to $12.5 million, driven by increased staffing and resources to meet the anticipated demand for Black Widow drones.
Company Guidance
During the RCAT Q2 2025 earnings call, the company provided updated guidance, raising their revenue expectations from a previous target of $50 million to a range of $80 million to $120 million. This increase reflects anticipated revenue from the U.S. Army's Short Range Reconnaissance (SRR) program and a new partnership with Palantir, which will integrate high-margin visual navigation and AI software into their Black Widow drones. The guidance does not yet account for additional revenue from this software, which could further enhance margins. Red Cat Holdings plans to improve gross margins to 50% with hardware production and further enhance profitability through the software integration. They are also preparing for significant production increases, with LRIP (Low Rate Initial Production) set to begin in early 2025. The company is exploring various funding options, including potential non-dilutive financing from the Office of Strategic Capital, to support this growth.Red Cat Holdings Corporate Events
Executive/Board Changes
Red Cat Holdings Appoints Interim CFO Jeffrey Thompson
Neutral
Mar 17, 2025
Red Cat Holdings, Inc. announced the appointment of Jeffrey Thompson, its CEO and Chairman, as Interim Chief Financial Officer starting March 17, 2025, until the filing of the company’s annual report. Thompson, who has been with the company since 2019, will not receive additional compensation for this role. On March 11, 2025, Christian Koji Ericson was appointed as the new Chief Financial Officer, effective after the annual report filing. Ericson brings extensive finance and accounting experience, having previously worked at Western Steel Buildings and PricewaterhouseCoopers. His compensation package includes a $230,000 annual salary, potential bonuses, and a one-time equity award.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.