Red Cat Holdings (RCAT) reported a net operating loss and ongoing cash burn in Q2 2025 as it transitions from a near-term product mix dominated by TL2 to a broader Black Widow/Mass Production strategy anchored by the US Army SRR program and a newly announced Palantir software integration. Revenue for the quarter stood at $1.5347 million, down 73.8% year over year and 44.7% quarter over quarter, with a gross margin of -1.53% and an EBITDA of -$8.74 million. Management emphasized a deliberate pivot toward high‑margin, software-enabled hardware and a multi‑year runway for scale, forecasting a substantial improvement in gross margins through mass production (target up to 50% gross margins on a consolidated basis) and software upsell on each drone. The company also raised guidance to a baseline of $55 million (from $50 million) with a wide long‑term target range of $80–$120 million, reflecting SRR‑related revenue and anticipated DoD contracting momentum. Near-term liquidity remains tight but manageable given a recent $6 million financing, potential ~$3 million in January from new features, and the prospect of strategic capital facilities. The CFO transition announced during the call adds execution risk but is being mitigated by a pipeline of internal and external candidates. Looking ahead, RCAT is positioned to monetize the SRR program through both hardware production and high‑margin Palantir-enabled software, with LRIP kicking off in January 2025 and full-rate production anticipated in the second half of 2025. The investment thesis hinges on (i) timely SRR program execution and DoD budget release, (ii) successful integration and pricing of Palantir visual navigation software, (iii) the lawful expansion into non‑DoD markets once DJI/Autel constraints materialize, and (iv) disciplined capital deployment to minimize dilution while optimizing working capital needs.