Executive Summary
Red Cat Holdings (RCAT) reported QQ1 2026 results with Revenue of $3.22 million, marking a -48.99% year-over-year decline and a QoQ surge of 97.5% from the prior quarter in a seasonally weak Q4/holiday cycle for many hardware peers. The gross margin remained modest at approximately 11.7%, while operating expenses remained elevated (R&D $3.60m, G&A $6.24m, S&M $3.19m), driving a negative EBITDA of $12.12 million and a net loss of $13.28 million for the quarter. Management commentary, not captured in the provided transcript data, would be critical to understanding the cadence of R&D investments versus near-term revenue catalysts. From a liquidity standpoint, RCATGenerated negative operating cash flow of about $12.9 million, but the company monetized equity financing activities, delivering a net cash inflow from financing of roughly $71.4 million. As a result, RCAT ended QQ1 2026 with roughly $65.9 million in cash and equivalents and a net cash position of about -$44.0 million in net debt, reflecting a cash-rich balance sheet that could provide optionality for strategic investment, working capital normalization, or selective acquisitions as revenue growth drivers emerge. The short-term trajectory hinges on demand for drone inspection technologies, FPV hardware, and related software offerings within commercial and government segments, as well as the company’s ability to convert operating burn into scale. Overall, the stock trades with meaningful near-term execution risk but with substantial balance-sheet flexibility to support a longer-term repositioning in the drone tech ecosystem.
Key Performance Indicators
QoQ: 97.50% | YoY:-48.99%
QoQ: 144.10% | YoY:-68.84%
QoQ: 45.31% | YoY:-147.05%
QoQ: 42.57% | YoY:-87.76%
QoQ: 44.44% | YoY:-57.56%
Key Insights
Revenue: $3.218m (-YoY -48.99%, +QoQ 97.50%); Gross Profit: $0.375m (-YoY -68.84%, +QoQ 144.10%); Gross Margin: 11.65%; Operating Income: -$12.646m (-YoY -147.05%, +QoQ 45.31%); EBITDA: -$12.122m (-YoY not disclosed in data, -QoQ improvement driven by cost dynamics); Net Income: -$13.279m (-YoY -87.76%, +QoQ 42.57%); EPS: -$0.15 (-YoY -57.56%, +QoQ 44.44%); R&D: $3.598m; SG&A: $9.423m; Operating Expenses: $13.021m; D&A: $0.524m; Net Cash from Operating Activities: -$12.897m; Free Cas...
Financial Highlights
Revenue: $3.218m (-YoY -48.99%, +QoQ 97.50%); Gross Profit: $0.375m (-YoY -68.84%, +QoQ 144.10%); Gross Margin: 11.65%; Operating Income: -$12.646m (-YoY -147.05%, +QoQ 45.31%); EBITDA: -$12.122m (-YoY not disclosed in data, -QoQ improvement driven by cost dynamics); Net Income: -$13.279m (-YoY -87.76%, +QoQ 42.57%); EPS: -$0.15 (-YoY -57.56%, +QoQ 44.44%); R&D: $3.598m; SG&A: $9.423m; Operating Expenses: $13.021m; D&A: $0.524m; Net Cash from Operating Activities: -$12.897m; Free Cash Flow: -$13.204m; Cash & Equivalents: $65.93m; Total Debt: $21.92m; Net Debt: -$44.01m; Shareholders’ Equity: $95.57m; Cash Conversion Cycle and other working-capital metrics are not fully disclosed in the provided data; Weighted Avg Shares: 91.296m; Cash from Financing: +$71.411m due to common stock issuance (73061507 shares)
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
3.22M |
-48.99% |
97.50% |
| Gross Profit |
375.05K |
-68.84% |
144.10% |
| Operating Income |
-12.65M |
-147.05% |
45.31% |
| Net Income |
-13.28M |
-87.76% |
42.57% |
| EPS |
-0.15 |
-57.56% |
44.44% |
Management Commentary
No earnings call transcript content was provided in the data set. Consequently, there are no management quotes or thematic highlights to extract. If/when a transcript is supplied, we will categorize quotes by themes (strategy, operations, market conditions) and map them to the accompanying financial data.
Forward Guidance
No explicit forward guidance was included in the supplied material. Given RCAT’s substantial quarterly opex and negative EBITDA, the near-term focus appears to be on monetizing the FPV/product portfolio, expanding government/commercial drone-inspection deployments, and optimizing R&D investments to move toward profitability. Investors should watch for management commentary on revenue cadence, milestone customer contracts, product-revenue mix shifts (hardware vs. software/services), and any updated guidance on operating expense trajectory. The company’s strong cash position provides optionality to fund growth investments or bridge to profitability if revenue accelerates beyond current levels.