Red Cat Holdings reported its QQ1 2025 results with revenue of approximately $2.78 million, representing a 59% year-over-year increase per management commentary, and a record backlog of approximately $13.0 million. The quarter featured accelerated development and scale-up activity around the Red Cat Family of Systems (Edge 130 Blue, Teal 2, Teal 3, and FANG) as the company pivots to a multi-product portfolio designed to reduce investment risk and broaden revenue streams. Management emphasized that the negative gross margin of Q1 was driven entirely by the final delivery of SRR prototype work and is not indicative of the product sales mix going forward, with a pathway to significantly higher margins once mass production ramps (targetting up to 50% product margins for Teal 3 under mass production).
Management signaled a strategic transition to calendar year reporting beginning January 2025, with 2025 revenue guidance of $50 million to $55 million articulated in the call, assuming SRR or NATO program wins are not included. The company also disclosed an $8 million debt facility to support near-term production ramp and working capital, alongside a stated objective to scale Teal 3 production and to achieve AS9100 certification in 2025. The guidance underscores a constructive view on the core demand for its Edge 130 Blue and Teal 3 platforms, while SRR-related prospects remain a meaningful source of uncertainty and potential upside or downside depending on timing of Army down-select announcements. Investors should monitor the SRR/NATO cadence, the ramp of the Teal 3 platform, the cadence of Edge 130 Blue orders (including the recent LOI-driven momentum), and the company’s progress toward margin expansion and cash flow improvement as production scales.