RCAT

Download the Complete Report Here Key Takeaways: Revenue accelerated sharply from 1Q26, with SkyKnight license delivery and cash collection providing a better indication of underlying commercial progress than reported revenue alone. SWMR reported 2Q26 revenue of $216,413, up 56.6% y/y from $138,206 and more than 10x the $20,325 reported in 1Q26. The company invoiced approximately $1.5 million under the SkyKnight program and collected $1.4 million following license delivery, while only approximately $0.2 million was recognized as revenue, $0.1 million was deferred and the remaining amount was recorded as an advance. Certain deployment, integration and market-development payments associated with the program also reduced recognized revenue under the combined arrangement, creating a meaningful gap between commercial activity and revenue in the quarter. SkyKnight remains the clearest validation of SWMR’s licensing model, with contracted value expanding approximately 34% only weeks after the initial award without consuming the original upgrade optionality. The program’s contracted license value increased from approximately $2.9 million to $3.9 million after Meta Bureau increased projected production of its fixed-wing platform, while existing operating-system-to-full-autonomy upgrade options remain intact and could still lift the combined arrangement to approximately $14.2 million. Importantly, the approximately $1.0 million incremental award was outside the scope of the initial option structure rather than an exercise of previously disclosed upgrades. The original arrangement covered full-autonomy licenses across SkyKnight’s quadcopter and fixed-wing platforms together with operating-system licenses on planned production that can subsequently be upgraded to SWMR’s full platform. This structure gives SWMR two potential monetization layers as partner volumes grow: additional autonomy licenses as manufacturers increase production and higher-value software attach when OS-only units are upgraded over time. Oak Grove extends SWMR’s commercialization funnel beyond OEM integration into operator training and U.S. defense-channel exposure. SWMR’s relationship with Oak Grove Technologies integrates its autonomy software with the Chimera UAV platform, making Oak Grove the first U.S.-based company to integrate Swarmer’s autonomous software into its platform. Integration, testing and operational fielding were completed in late 2025 in Eastern Europe across ~100 test flights spanning varied weather and mission profiles, providing additional validation of the technology on a U.S. platform. Following the initial integration effort, the integrated Chimera systems remained overseas through early 2026 to support continued testing, operator evaluation and training before returning to Oak Grove’s U.S. headquarters for incorporation of operational feedback into future mission and training requirements. The partnership also benefits from Oak Grove’s established training and operational support activities with the U.S. special operations community, giving operators hands-on exposure to autonomous systems under realistic conditions and broadening SWMR’s customer-acquisition channel beyond direct OEM engagement. Combined with SWMR’s 100,000+ combat missions in Ukraine, the relationship provides a potential bridge between battlefield-proven autonomy and U.S. operator adoption, with the key commercial proof point remaining conversion of testing and training activity into funded defense programs. Lantronix creates a potentially scalable distribution wedge by embedding SWMR’s operating system at the compute layer rather than requiring software adoption after a drone is already designed. The collaboration is developing an NDAA-compliant compute platform for Group 1 unmanned systems with more than 400% greater onboard processing capability, targeting what SWMR sees as an underserved performance gap between lower-end Raspberry Pi systems and higher-end NVIDIA Jetson solutions commonly used for autonomy. With more than seven million drones projected to be manufactured this year, an embedded compute-layer position could provide SWMR with a scalable route into a substantially larger installed base. Strategically, the opportunity is larger than hardware integration alone: SWMR intends for its operating system to be embedded on the compute platform, allowing customers to upgrade to full autonomy through software rather than completing a separate integration. If adopted broadly, that architecture could shift customer acquisition earlier in the OEM design cycle, increase the installed base of upgradeable SWMR-enabled platforms, and create a lower-friction OS-to-full-stack monetization path. It also preserves the software-led business model because SWMR’s primary economics would remain tied to software penetration and upgrades rather than manufacturing the unmanned system itself. Brightline and Molfar expand the combat-data flywheel beyond platforms already running SWMR software, potentially accelerating AI development without waiting for every OEM integration to scale. SWMR continues to cite more than 100,000 real-world combat missions as a core source of telemetry, sensor information and operational feedback, but the new relationships broaden the available training dataset. Brightline provides access to operational data across unmanned platforms already used within the U.S. special operations community, including platforms whose manufacturers have not yet integrated SWMR, while Molfar contributes verified open-source and battlefield intelligence datasets to the AI training pipeline. The strategic implication is that model development can increasingly benefit from third-party operating data rather than only the installed SWMR fleet. This could broaden the range of mission profiles and operating conditions available for model training, strengthening the feedback loop between data capture, model improvement and subsequent deployment as the platform scales. Powerus illustrates both the scalability of SWMR’s integration model and why revenue can remain a lagging indicator even after technical work is complete. Integration work under the Powerus MOU has begun across several air and maritime platforms, with integration on familiar hardware configurations potentially requiring only 2-4 weeks including field testing, while substantially different platforms can require several months. More importantly, software integration does not itself trigger meaningful revenue. Once integration is completed, the manufacturer must still secure buyers for the finished platform, which are typically government customers operating through longer acquisition cycles. This creates a multi-stage funnel from MOU to integration, field testing, OEM production, government procurement and finally software revenue recognition. The relatively short 2-4 week integration period for familiar platforms indicates the technical layer can scale efficiently, but end-customer procurement remains the principal gating factor between integration progress and recognized revenue. The partnership strategy is broadening beyond defense deployments into dual-use autonomy applications, expanding SWMR’s addressable market without changing the core software architecture. In addition to Oak Grove, Lantronix, Brightline, Molfar and Powerus, SWMR is working with Tekmara and Florida International University to evaluate autonomous drone swarms for environmental monitoring and coastal restoration applications. These initiatives broaden the addressable use case beyond kinetic operations while leveraging the same multi-vehicle coordination architecture developed through more than 100,000 combat missions. The Tekmara/FIU initiative will evaluate coordinated autonomous operations across air, surface and underwater domains, using FIU’s Aquarius Reef Base as a real-world testing environment for persistent environmental monitoring and restoration. This supports SWMR’s broader dual-use strategy, with potential applications across environmental restoration, disaster relief, wildfire detection, search and rescue and other public-sector missions. Commercially, however, the initiatives remain at different stages of maturity, and the quarter did not disclose material revenue from these newer programs. We therefore view these programs as incremental extensions of the platform and customer funnel, with greater strategic relevance as they progress toward funded deployments and repeat licensing. Post-quarter leadership changes consolidate executive responsibility under Alex Fink while strengthening SWMR’s communications and market-development capabilities. Effective July 2026, Serhii Kupriienko resigned as Global CEO while remaining on SWMR’s Board, and President and U.S. CEO Alex Fink assumed the role of principal executive officer reporting directly to the Board. SWMR does not intend to appoint a successor Global CEO, streamlining the prior dual-CEO structure as the company scales commercialization and strategic execution. Separately, Swarmer promoted Garrett Kasper to Chief Communications Officer, bringing 30 years of experience across defense, aerospace, intelligence and cybersecurity, including prior work at L3Harris Technologies on the VAMPIRE counter-UAS program. In the expanded role, he will oversee global marketing, branding and corporate communications, supporting customer awareness and market development across U.S. and allied defense channels. SWMR expects gross margins to remain attractive as revenue scales, although they may moderate as engineering services are incorporated into customer contracts. 2Q26 gross margin increased to 84.8% from 59.4% y/y, providing early evidence of the high-margin economics embedded in the licensing model. Currently, cost of sales primarily consists of web-based data services, resulting in relatively low direct costs. As the company scales, engineering support is expected to increase COGS as a percentage of revenue, with management currently targeting approximately 80% gross margins, although the methodology remains under development and may vary by deal. While the current revenue base remains small, sustaining margins near this level as licensing scales would be an important driver of the operating leverage embedded in the 2027E profitability outlook. Operating expenses increased sharply as SWMR scaled its operations and transitioned to a public-company cost structure. 2Q operating expenses rose to $7.5 million from $0.9 million y/y, driven primarily by higher personnel, engineering and product-development costs, as well as increased legal, consulting and professional expenses. SG&A increased to $5.7 million from $0.3 million y/y, while R&D rose to $1.8 million from $0.6 million, reflecting investment ahead of the expected licensing ramp. The quarter also included one-time equipment purchases and $1.2 million of non-cash stock compensation, meaning reported expenses were partly elevated by non-recurring and non-cash items. The key forward consideration is whether software revenue can begin scaling across this expanded cost base, rather than requiring a meaningful reduction in investment to reach profitability. Capital formation is providing SWMR with greater flexibility to fund growth and pursue strategic opportunities as it expands beyond its core autonomy software offering. Cash and equivalents increased to $25.3 million at June 30 from $9.3 million at December 31, supported by IPO proceeds and equity financing, with a further $17.9 million raised through August 10, taking cumulative ELOC proceeds above $26 million. The stronger liquidity supports continued investment in engineering and platform integration while giving SWMR capacity to invest in or acquire complementary defense technologies and potentially broaden its value capture beyond software licensing. This aligns with the broader strategic vision recently articulated by Chairman Erik Prince around identifying and scaling battlefield-proven defense technologies that may lack capital, commercial infrastructure or international distribution. However, the strategy remains subject to acquisition execution risk and shareholder dilution from equity-funded capital deployment. Street estimates embed a hockey-stick revenue ramp as SWMR moves toward scaled license activation. Street estimates sourced from TIKR suggest revenue of $4.24 million in 2026E before rising to $25.0 million in 2027E and $40.0 million in 2028E, with EBITDA margin inflecting to 17.8% in 2027E and 28.3% by 2028E. With 2Q26 revenue of $0.2 million despite $1.4 million received from SkyKnight, the key focus now shifts to whether deferred/advance amounts and the broader partnership pipeline convert into recognized revenue in 2H26 and beyond, with SkyKnight recognition, OS-to-full-autonomy upgrades and additional OEM production providing the clearest paths to the expected 2027E step-up. Disclaimer: Exec Edge does not publish proprietary estimates, ratings, price targets, or investment recommendations. The valuation discussion below is illustrative only and is based on company filings, management commentary, and third-party data and estimates. It does not constitute a recommendation, price target, rating, or prediction of future pricing. SWMR trades at a clear premium to broader public-market peers, but we believe that premium is defensible given its combat-validated software model, hardware-agnostic architecture and higher-margin licensing potential. SWMR currently trades at approximately 22x 2027E sales, reflecting its early commercialization stage and significant operating investment. However, the valuation also reflects SWMR’s positioning as a combat-validated, platform-agnostic autonomy software provider rather than a traditional defense hardware or drone manufacturer, with the company increasingly expanding its ecosystem through OEM integrations, compute partnerships, operational data relationships and potential strategic acquisitions. The multiple declines to 14x based on 2028E sales (source: TIKR), highlighting the meaningful forward valuation compression as the expected software-license ramp scales. In our view, further support for the current premium will depend on converting SkyKnight, Powerus, Lantronix and other integrations into scaled deployments, recurring software revenue and improving profitability. SWMR’s premium to public drone peers is notable, but defensible given its hardware-agnostic software model, combat validation and stronger margin potential. Relative to the broader listed comp set, SWMR’s higher multiple reflects a business model with less hardware intensity, greater software attach potential and a path toward materially higher gross margins as licensing scales, while sustained relative outperformance will depend on converting integrations and license deployments into recurring revenue and positive EBITDA. Street positioning also remains constructive, with a consensus price reference of approximately $60 providing an additional external valuation benchmark. Private-market defense-autonomy valuations also support premium forward revenue multiples for differentiated platforms. A recent Financial Times report indicates Helsing was valued at approximately 32x forecast 2026 revenue, Shield AI at approximately 21x revenue, and Anduril at approximately 13x forward revenue. Against this range, SWMR’s approximately 22x 2027E sales multiple sits within the premium private-market autonomy range. While differences in scale, maturity, valuation period and hardware exposure limit direct comparability, SWMR’s hardware-agnostic architecture, 100,000+ combat missions and high-margin licensing model provide a defensible basis for premium positioning as commercial adoption scales. Read Exec Edge’s Initiation on Swarmer Inc. Here Subscribe to our Weekly Newsletter to Receive All Research Contact: Executives-Edge.com [email protected] The post Swarmer’s SkyKnight & Platform Expansion Builds Commercial Momentum – Quarterly Update Report appeared first on ExecEdge.

Image source: The Motley Fool. Thursday, Aug. 6, 2026 at 4:30 p.m. ET Investor Relations - Ankit Hira Chief Executive Officer - Jeff Thompson Chief Operating Officer - Chris Ericson Chief Financial Officer - Christian Morrison Operator: Greetings, and welcome to the Red Cat 2Q 2026 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I'll now turn the conference over to Ankit Hira, Investor Relations. Thank you, Ankit. You may begin. Ankit Hira: Good afternoon, and welcome to Red Cat's Second Quarter 2026 Earnings Conference Call. Joining us today are Red Cat's CEO, Jeff Thompson; COO, Chris Ericson; and CFO, Christian Morrison. Please note that certain information discussed on the call today will include forward-looking statements for future events and Red Cat's business strategy and future financial and operating performance. These forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict and may cause actual results to differ materially from those stated or implied by those statements. Certain of these risks, uncertainties and assumptions are discussed in Red Cat's SEC filings, including its most recent annual report on Form 10-K and other SEC filings. These forward-looking statements reflect management's beliefs, estimates and predictions as of the date of this live broadcast, August 6, 2026, and Red Cat undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this call. In addition, our comments on the call today contain references to non-GAAP financial measures such as adjusted EBITDA and key business metrics such as annual recurring revenue. Non-GAAP measures should be viewed in addition to and not as an alternative for the company's reported GAAP results. A reconciliation of these non-GAAP measures to their most directly comparable GAAP measures as well as definitions of the key business metrics referenced and management's reasons for including the non-GAAP measures and key business metrics referenced may be found in the press release. Finally, I would like to remind everyone that this call will be recorded and made available for replay via a link available in the Investor Relations section of the company's website at ir.redcatholdings.com. With that, I'll now turn the call over to Chris. Christian Ericson: Thank you, Ankit. Good afternoon, everyone, and thank you for joining Red Cat's Q2 2026 Earnings Call. Operationally, the second quarter was an important quarter as we continued scaling production, expanding our family of systems and building the infrastructure necessary to support Red Cat's next phase of growth. As Jeff will discuss in a bit, demand across our markets remains strong. My team's job is to ensure that we can deliver at scale while maintaining the speed, quality and flexibility of our -- that our customers expect. We continue to improve operational metrics by supporting $20 million in quarterly revenue and improving gross margin to 16% -- the most important operational achievement of the quarter was our continued progress scaling manufacturing capacity across the organization. We previously noted that our manufacturing footprint increased fivefold since 2024 to 260,000 square feet. During this past quarter, we added an additional 12,000 square feet of manufacturing and engineering space in San Diego for APM operations. To be clear, square footage is critical, but not the sole focus and all for capacity. We continue to focus on increasing throughput, improving efficiency and strengthening supply chain resiliency. Throughout the quarter, we continued expanding production capabilities, increasing inventory availability and investing in manufacturing process that support better quality and higher delivery volumes across our product portfolio. We are seeing significant synergy gains through centrally driven collaboration across our multiple product platforms in areas of engineering, system integration, quality programs and supply chain optimization. These efforts help support continued deliveries across our autonomous platforms while positioning us for anticipated future demand. Importantly, this shows that we're not simply scaling capacity, we're building repeatable processes that enable us to consistently deliver as volumes grow. That includes investments in manufacturing systems, quality control, supplier management and operational analytics that improve visibility across the organization. As we continue to scale, maintaining quality and execution discipline remains a top priority. Operationally, we continue to make progress across several important programs. At Teal Drones, advancement to Gauntlet II of the drone dominance program was an important milestone. While the program is still ongoing, moving forward in the process reinforces our confidence in the competitiveness of the platform and the capabilities of our engineering and production teams. We remain focused on execution and supporting the program requirements moving forward. We also support -- we also continue to support growing international demand for secure American-made unmanned systems. Deliveries to international customers, including the Japan Ground Self Defense Force, further demonstrate our ability to deploy and support our platforms globally while expanding Red Cat's international footprint. One of the most exciting developments at Red Cat is the continued expansion of our family of systems. Our Black Widow platform continues gaining traction with customers that require secure, mission-ready small unmanned aerial systems. At the same time, we introduced the Hellcat, which extends our ability to support international defense customers with a globally configurable platform derived from the proven Black Window architecture. This creates additional opportunities to expand our addressable market while leveraging technologies and capabilities already proven in the field. Beyond aerial systems, we're also making meaningful progress in the maritime domain through Blue Ops. During the quarter, Blue Ops completed production validation testing of its V7 holes and moved into mass production of the Variant 7 uncrewed surface vessel, a U.S.-built mission-adaptable maritime autonomy platform designed for the U.S. and allied defense missions. The Variant 7 brings together domestic autonomy, command and control, communications and mission systems while supporting intelligence, surveillance and reconnaissance force protection, harbor and coastal security, contested logistics and other payload adaptable missions. This is an important part of how we are expanding Red Cat from an aerial systems provider into a broader all-domain autonomy platform. Recently, we have been selected to participate in the U.S. Office of Naval Research Global mACE3 and mACE4 operational experimentation events. These programs provide an opportunity to demonstrate advanced autonomous maritime capabilities alongside government and defense stakeholders and further validate the relevance of our Blue Ops and APM technologies and future naval operating concepts. We also continued validating the broader Blue Ops ecosystem in real-world maritime environments. The recent Navy services engagement further validates the demand we are seeing for a scalable U.S.-built maritime autonomy and reinforces our confidence that Blue Ops is addressing a clear and urgent capability gap for naval customers. In May, we demonstrated the Blue Ops Variant 7 with Kymeta during an exercise in Key West, Florida, highlighting resilient communications on the move for autonomous maritime operations. for uncrewed surface vessels. Reliable connectivity is a critical enabler for operations at a distance, real-time data sharing, swarming and coordinated missions in the dynamic or contested environments. That event was another proof of point that the platform is not just a vessel, but a part of the integrated maritime autonomy stack that can support the types of operational requirements naval customers are increasingly prioritizing. Another major operational focus has been integrating the technologies and capabilities we've acquired over the past several quarters, and I would start with swarm autonomy. The Department of Defense's Swarm Forge initiative reflects clear direction of travel across the market. Customers want autonomous systems that can operate collaboratively, adapt in complex environments and generate meaningful effects with fewer operators. The program is designed to accelerate AI-enabled robotic warfare through recurring crucible events and move validated swarm packages, including mission software, coordination logic and interfaces and tactics toward operational transition in 90 days or less. This is why our integration of APM is so strategically important. APM brings multi-agent autonomy and distributed control capabilities that can help enable coordinated operations across air, land and sea. As customers increasingly focus on collaborative autonomous systems, we believe the swarming will be an important differentiator across the Red Cat family of systems. Our engineering teams are working to incorporate these capabilities into our future road map with the goal of supporting more coordinated, resilient and operationally effective mission profiles. Another important step forward during the quarter was our continued work demonstrating interoperability across leading autonomy platforms. During a recent joint demonstration with Anduril, our team showcased a multi-vendor fine, fix and finish workflow operating under a unified command and control architecture. The demonstration combined ISR provided by Black Window autonomous mission orchestration through APM's Paradigm software and kinetic effects capabilities integrated through Anduril's ecosystem. We believe these demonstrations validate our family of system strategy and show how Red Cat technologies can integrate into a broader defense architecture while supporting increasingly sophisticated multi-domain missions. Equally important, these effects demonstrate that Red Cat can serve as a critical contributor within larger defense ecosystems, reinforcing the value of open interoperable architectures that combine the best-of-breed technologies from multiple providers. From there, the next operational constraint is Endurance, and that is what Quaze becomes highly complementary. Quaze adds wireless power transfer capabilities that address one of the most significant remaining barriers to persistent autonomy, keeping systems powered in the field without manual battery swaps, precise alignment or connector-based charging. Its platform is designed to support autonomous recharging across air, ground and maritime environments, including vehicle-mounted systems, drone-in-a-box solutions, uncrewed surface vessels, fixed infrastructure and underwater charging stations. While integration remains ongoing, we're encouraged by the opportunities this technology creates across multiple platforms. Together, APIM and Quaze strengthen 2 foundation pillars of autonomy stack, coordination and endurance. Swarming helps autonomous systems work together more intelligently, while wireless power helps keep those systems operating longer with less operator burden. When combined with our aerial and maritime platforms, these technologies enhance our ability to deliver more complete mission-ready solutions for customers operating across increasingly complex environments. Our customers increasingly want interoperable systems that work together seamlessly. They want common control interfaces. They want integrated data flows. They want a single partner that can support multiple mission requirements. That trend continues to accelerate as military organizations adopt multi-domain operating concepts and seek greater operational flexibility. Our approach is designed around those requirements. As we integrate new technologies, expand our portfolio and continue building common architectures across the organization, we believe Red Cat becomes increasingly valuable to customers looking for comprehensive solutions rather than stand-alone products. Looking ahead, our operational priorities remain straightforward. First, continue scaling production and deliveries; second, continue integrating newly acquired technologies into fielded capabilities; third, maintain the agility and responsiveness that have become hallmarks of the company. We believe the operational foundation we have built over the past several years positions us to support future growth across air, land and maritime autonomy, and we're excited about the opportunities ahead. I'll now turn the call over to Christian to discuss our financial results. Christian Morrison: Thank you, Chris. I'm pleased to present Red Cat's financial performance for the second quarter of 2026, which demonstrates continued revenue growth, improving operating scale and the investments we are making to support our long-term growth strategy. For the second quarter of 2026, revenue was $20.2 million, representing an increase of 520% from $3.2 million in the prior year period. For the first 6 months of 2026, revenue totaled $35.7 million compared to $4.8 million in the prior year period. This performance was driven by continued deliveries across our drone portfolio, including Black Widow, FlightWave and APM platforms as well as ongoing execution against key defense programs and international opportunities. These results reflect growing customer demand, increased manufacturing output and the expanding scale of our operations. Our gross margin performance also continued to improve. Gross profit for the second quarter was $3.3 million, representing a 16.1% gross margin, a significant improvement from 11.6% in the quarter of 2025 and a sequential improvement from 12.7% in the first quarter of 2026. The improvement reflects better absorption of manufacturing overhead, increased production volumes and operational efficiencies as we continue to scale the business. We believe this demonstrates the underlying leverage in our operating model as revenue continues to grow. Capital expenditures totaled approximately $12.6 million during the first 6 months of 2026, primarily supporting manufacturing expansion at our Blue Ops division, facility improvements, production equipment and other infrastructure investments. These investments are intended to support anticipated future demand and expand our production capabilities. Our strategic investments in future growth remained significant during the quarter. Total operating expenses were approximately $41.9 million, reflecting continued investment in personnel, manufacturing capacity, product development, acquisitions and infrastructure required to support our long-term growth objectives. These investments are designed to position Red Cat to capitalize on the significant opportunities we see emerging across defense, autonomy and multi-domain robotic systems. Research and development expense increased to approximately $14.2 million during the quarter, reflecting our commitment to innovation, autonomy, next-gen platforms and the continued expansion of our family of systems. These investments support future product development across aerial, maritime and technology and autonomous technologies while helping maintain our competitive edge in rapidly evolving defense markets. Our balance sheet and liquidity position provides a significant competitive advantage, and we believe that Red Cat now has one of the strongest balance sheets in the sector and a strong foundation for executing our growth strategy. As of June 30, 2026, we held $325.6 million in cash compared to $167.9 million at year-end 2025. Working capital increased to approximately $396.5 million, providing substantial financial flexibility to invest in growth initiatives, pursue strategic opportunities and support increasing production requirements. Our inventory strategy continues to be an important component of our growth plan and use of cash. Inventory, including prepaid inventory, totaled approximately $84.8 million at quarter end, up from $30.4 million at year-end. This increase reflects a deliberate effort to secure critical components, strengthen supply chain resilience and position the company to support anticipated deliveries across existing programs and to deliver faster than our competition. We view this investment as a strategic enabler that allows us to respond quickly to customer demand while mitigating potential supply chain constraints. We view our balance sheet and inventory position as strategic assets with more than $325 million of cash and significant investments in inventory, manufacturing capacity and technology expansion, we believe we are in a prime position to support future growth opportunities in real time as they emerge. These investments provide flexibility to respond to customer demand, pursue strategic initiatives and continue expanding our capabilities across air, land and maritime autonomy. Looking ahead, we remain confident in our long-term growth trajectory. Our target revenue remains between $150 million and $180 million. While the timing of individual contract awards and delivery schedules can create quarter-to-quarter variability, we continue to see substantial opportunities across domestic and international markets and believe the investments we are making today position us well to capitalize on those opportunities. Several key factors support our confidence in that outlook. First, we continue to see strong demand signals across defense and national security markets. Second, our manufacturing footprint, inventory position and production readiness provide us with the ability and speed to scale deliveries as opportunities materialize. Third, our recent acquisitions, including Quaze Technologies and APM Swarm Robotics expand our technology capabilities and addressable market while strengthening our position as an integrated all-domain autonomy platform. We also continue to see multiple growth vectors emerging across air, land and maritime autonomy, supported by increasing production readiness, expanding customer demand and continued progress across our strategic programs. Market conditions remain highly favorable as defense customers increasingly prioritize autonomous and unmanned systems. Combined with our strong balance sheet, expanding product portfolio and growing operational scale, we believe Red Cat is uniquely positioned to participate in what we view as one of the most significant defense technology modernization cycles in decades. With that, I'll now turn the call over to our CEO, Jeff Thompson. Jeffrey Thompson: Thanks, Christian. Good afternoon, everyone, and thank you for joining us on this call. I am thrilled to start with our Q2 2026 results. We delivered a Q2 record of $20 million in revenue this quarter, a strong sequential increase of approximately 30% from the $15 million we reported in Q1 2026. Even more impressive is the gross profit of $3.3 million, which represents a sequential jump of about 66% from what we achieved in the first quarter. This translates to a gross margin of roughly 16% in Q2, up nicely from the 12% we posted in Q1. That is approximately a 20% -- 27% sequential margin increase. These sequential improvements show that our scaling efforts are working, higher volumes are flowing through, manufacturing efficiencies are kicking in, and we're seeing clear operating leverage quarter after quarter. Now let's look at the bigger picture. The first half of 2026 compared to the first half of 2025. This is where the transformation of Red Cat really stands out. In the first 6 months of 2025, we generated just $4.8 million in total revenue and recorded a gross loss of about $0.5 million. Fast forward to the first half of 2026 and the contrast is dramatic. Combined first half 2026 revenue, $36 million, combined first half 2026 gross profit, $5.2 million. First half gross margins, approximately 15%. That's more than a 7x increase equating to approximately 636% growth in revenue year-over-year. And we swung from a gross loss into a solid positive territory. The sequential strength we just delivered in Q2 is accelerating the momentum we built in Q1 and the first half of 2026 already looks completely different from where we stood just 1 year ago. While these financial milestones mark a significant turning point, the underlying engine driving the performance is a fundamental transformation in how we now operate. Beyond the numbers, we have reshaped how Red Cat operates in defense technology. We are actively moving away from traditional requirements documents, many of which predate the lessons learned in Ukraine and shifting business development to sales and toward direct real-time theater feedback. We have rejected the legacy prime contractor model of middlemen resellers and trade show marketing. Instead, we have 4 deployed soldgineers who operate ankle-to-ankle with war fighters in active operational environments. By capturing direct feedback on active battlefields, we've compressed our product development cycles from years down to weeks. We continue to see competitive systems in the field that simply do not work, and we refuse to place substandard crap in the hands of U.S. war fighters. As excited we are about our strong first half performance, the more important question is how we hit our revenue target, an objective we're highly confident in reaching. As we highlighted back in the Innovation Day in February, 2026 is fundamentally a second half story. Last year, we delivered a vast majority of our revenue in just 1.5 quarters across Q3 and Q4. That performance was generated off a single product line with a single primary customer operating out of just 22,000 square feet of manufacturing space. Fast forward to today, our scale, capacity, market positions are completely transformed. We entered the second half of 2026 backed by 9 active products, approximately 270,000 square feet of expanded production capacity and unit economics featuring average selling prices in the hundreds of thousands of dollars rather than tens of thousands. The operational footprint we have built over the last year is designed to drive unprecedented growth, hit our targets and crush our second half execution. In summary, Red Cat has transformed our sales methodology, pioneered a new model of productive product development and compresses cycles from years to weeks, delivered record first half revenue, continued expanding gross margins on a clear path to profitability, launched new products, received our first orders for Blue Ops, closed 2 strategic acquisitions and massively scaled production. The factory is the weapon. And I'll now turn it over to questions. Operator: [Operator Instructions] Our first question comes from the line of Austin Bohlig with Needham & Company. Austin Bohlig: Just maybe first want to dig into kind of like the Q2, like could you highlight maybe specifically what were the main revenue drivers, if you can break out between Teal and Black Widow and Blue Ops would be helpful. Jeffrey Thompson: Yes. Well, there's very little anything other than currently for Q2 other than Black Widows and Hellcats. So that's still Q2 is mostly driven out of Teal -- but that's already -- as we already mentioned today, Apium and Blue Ops are getting paid to go to these exercises. They're on the board. We're very happy that we're finally diversifying our revenue. But we didn't break it out for which stuff is FANG, which stuff is Black Widows or anything like that. Austin Bohlig: Okay. Fair. And can you assume -- was the bulk of this revenue still related to the extended LRIP contract? Or are these new programs and new opportunities that you're selling into? Jeffrey Thompson: No, it was a little less than half was coming out of the Army. There's been a lot of changes. The PM UAS office in Huntsville just got a whole new team put in last week. We're actually going to be meeting with them later, hopefully by tomorrow. They've got General Phillips just got a 2-star upgrade. He used to run it, and now they have new people in there. So we'll be able to continue with that, but only half of that revenue came from. Christian Morrison: Yes. And Austin, if I can jump in. I mean, Jeff is spot on. I mean you look at our 10-K from 2025, Army was 73% of our revenue. That's how concentrated we were with the Army. Love the Army. Everything we've done in our relationship with the Army is very strong. And for the first 6 months, Jeff is right. It's right about 50%. What I'm so excited about as a CFO is the diversification. Our #2 customer is an ally in Japan. Our #3 customer is NSPA in Europe. So Great. Great story. I love how the business is growing and the customer base is expanding. Austin Bohlig: Okay. Perfect. And I guess to kind of lastly, looking at kind of the outlook, I guess, what gives you guys confidence in this big second half ramp? Are there any key programs we should be tracking? And then kind of piggybacking off of that, would love an update on the Ukraine opportunity and where that kind of stands? Jeffrey Thompson: Great. Yes, some great questions, Austin. Yes, so the confidence is coming from -- we've been in Japan twice working with folks on the Variant 7 and now actually the variant -- not Variant 5. We've got a new name for it. You'll hear about it soon. So there's a lot of interest, thousands of boat interest across that whole region. We were just recently in Korea, where we had someone from the Army driving a boat in Palm Beach, 8,000 miles away on a phone using TAC. So there's a lot of interest in that region. We're spending a lot of time there. Like I said, we've been in Japan twice this month. We're in Taiwan. We were in Korea. I'm heading back there in mid-September. So there's a ton of interest there. The Middle East has actually ramped up. Everyone is talking about USVs now. So there's so much interest coming from that. But then back into just budgets, right? So the administration has told the Department of war that they want that the big beautiful bill, I think it's $152 billion. They want most of it at least contracted by the end of 2026, which is the end of next month. That's a massive amount of new money that people weren't really paying attention to. Plus the budget from last year is still not fully spent. And then the international operations are just insane. Like, for instance, again, we're in 4 live theaters currently. We're not going to say which ones, but the Ukraine opportunity is going very well. We've done some very interesting partnerships, again, which you'll hear about soon to position us as that frontline ISR drone, which is also now people are starting to understand that for the Drone Dominance Program, the fact that you need an ISR drone. We're so happy that the GDP has really looking at how that you have to have an ISR drone to complete that. But you should be hearing something from the Ukraine opportunity probably in the beginning of September from us. Operator: Our next question comes from the line of Ashok Kumar with ThinkEquity. Ashok Kumar: Back to the second half coverage question, the roughly $114 million of second half revenue, the low end of your annual target. So how much is covered today by executed purchase orders or funded contract line items and how much remains in the pipeline? And then going back to the cost structure, as you highlighted, the OpEx stepped up 43% sequentially to $42 million. So the R&D is doubling. So what drove the step up, which programs absorbed the R&D increase and is skewed to the new base? And so what quarterly revenue reaches operating breakeven and which quarter do you expect to cross it? And the last question is the margin bridge, right? So gross margin improved from 13% to 16% -- so can you bridge us to the 30% you targeted for late this year, right? What margins do Army Japan and vessel revenues each carry -- and does 30% survive the vessel volumes slip to '27? Christian Morrison: All right. Lots of questions, Ashok. Do you want me to take the R&D first, guys, and then. Jeffrey Thompson: Yes, sure. Christian Morrison: Divide and conquer. Just on the R&D, it's everything that we talked about. Drone dominance is part of why R&D increased. Hellcat, which is our Ukraine variant there. That was a big part of the spending. In addition, we have Blue Ops prototypes that we're working on. TRICHON, we're working on. The team is working really hard. I mean it's easy to see the dollars. It's hard to see the weekend hours and all the time that the team is putting in that you have to, to have those products be successful. So the investments are being made right now real time in R&D. The next question. I'm drawing a blank. You were saying, margin profiles? Jeffrey Thompson: Well, I can take some. Christian Morrison: Okay, Back end? Okay. Jeffrey Thompson: So the contracts that give us confidence, you'll be hearing about again throughout the rest of August and September. As you know, this is sweeps. There's never been this much money in the history of sweeps available that's got to get spent by the end of September. And as those discussions become live contracts, we will let you know. There's also contracts that we have that we're not allowed to talk about. So we won't talk about them. We'll keep our guidelines. We're told not to talk about it whatsoever or just to point to LinkedIn. So there's lots of things that we can elaborate over the next few weeks for everybody to people understand why we're so confident. Ashok Kumar: And the last question on the inventory conversion and gross margin, primarily the gross margin bridge, right, the transition from 16% to 30%? Christian Ericson: Yes. A lot of that gross margin will increase as we approach the end of the year. So as our revenue ramps, our production ramps, there's going to be a lot of economies of scale that's going to drop that down as well as the improvement from a mix of our USVs, but we do expect to hit 30% towards the end of the year. So it might not be cumulative for the year, but towards the end of the year, our margins will hit 30%. Jeffrey Thompson: Yes. And Christian, you might want to comment on what Teal and Blue Ops look like if they hit their forecast that is part of our target revenue. Christian Morrison: We spent a lot of CapEx, a lot of investment in Blue Ops. The great thing about the USV business is that our ROI is pretty fast on that. And Jeff's right, we hit -- if we hit our Q4 internal targets, we will absolutely have a profitable division within Blue Ops. The hurdles are not that high. You're talking boats here. It's less than 10 boats, and we're adding free cash flow to the business. On the Teal side, if we have incremental upside on Hellat, we are there. So on a stand-alone basis, those businesses are performing like we believe they can and will be on track to be profitable by the end of the year. Ashok Kumar: Good. And just the last question on Army transition, right, replacement revenues from new programs arriving on time as the revenue base transitions, right? So are there any developments related to SRR to LRIP to OTA sequence, right, where there might be more of a timing issue there? Jeffrey Thompson: Yes. Well, they just went through a huge change. Once we have more information on that, we will get that to you once I meet the new team, which I'm hoping to later tomorrow or early next week. So as soon as we have something to report, but they just put in a whole new team, which is pretty exciting because we didn't know if they were going to keep going with that. And obviously, they are with a whole brand-new team in the SRR and PMUAS, and they actually just funded some stuff in the LRR portion to AAV. But we have a very unique customer base now for 2027. We really have to focus a lot. If you look at the Department of War, the new drones are, the DIU and DAWG, all of those things are set up to go really fast without long programs of record. And we're about to apply for SWAP that was on the DIU website last week, and you got until Monday to submit for that $100 million, and it's for a boat that has drones on it. So we feel pretty good about that. We'll see. The down select is only like a week after the submissions. So that's a pretty unique item for us. But you can see that these things aren't just coming from old school procurement programs of record. These things are fast hitting. You got to reply for them like DDP Crucible. There's also some stuff going on in Swarm Forge. These crucibles are quick and the allocations to the people that win is quick. So I mean, the drone dominance could be $14 million to $28 million just in Q3 for us. So you've got to adapt to learn how these new organizations like the drones are, the DAWG and DIU work together and how they filter up to the Department of war as we continue to try to be a resource for all of them in giving our lessons learned in Ukraine and other places and other theaters that we've been in recently. Ashok Kumar: Got it. One last question, and congratulations again. Just the finish -- the raw materials, the $60 million, right, which suggests shipping is auto limited rather than production limited and your reserve ratio is down to 2% from 9% in December. So is that just a qualitative comment on that? Christian Morrison: Yes. I'll say -- I mean, Chris, I'm back on this, but on -- we're upgrading cameras right now. We're in the process. It's part of the reason why our margin has improved. I mean before, that's why our margin was negative. I mean if the Army wanted to make an adjustment, tweak engineering, we just take those costs because we're a great partner. Now we're at the part of where we are maturing, doing cost downs in the product, improving it. We have scale. It also means that we have more raw materials than we have before. Christian Ericson: Yes. In our raw materials, there's no indications. Let me see how best say this. As we start to build up the Hellcats as well, they're the same hardware, the same product. And so there's no reason and no need to write off any inventory. So the reserve as a percentage of the total inventory has gone down. Operator: Our next question comes from the line of Alex Latimore with Northland Capital Markets. Alexander Latimore: A question for me. I think I might have had it answered, but I just want to get some clarity. It sounds like the timing of revenues should step up sequentially 3Q into 4Q. I'm assuming that would be on contracts coming online in 3Q, fully materializing in 4Q. So some confirmation there. And then what is the rough split of UAV and USV revenue in the second half that you expect? Jeffrey Thompson: Yes. So we haven't given specific guidance on splits yet. We just got our first revenue from Blue Ops. They're on the board and the division has been around less than a year. and they've won every exercise they've gone to, which is pretty exciting. The boat is getting a great reputation. We just put a Volvo engine in for the USV, which was requested by a certain country in the Middle East. They wanted the Volvo engine is something that they're looking for. So we won't be breaking it out. But you're correct. There's a lot of stuff happening right now contracting, not just us, everyone in the defense industry, you're going to see a lot of contracts coming on board in the next few weeks going into September and people delivering. We've got -- I think we've got between 50 million and 80 million of sellable drones that could ship tomorrow if we got the order. And that's basically the Black Widows, basically and Hellcats. That's sitting there based on our demand that we're seeing and possible contracts that we're hopefully going to sign. Q3 and Q4 are going to obviously ramp dramatically, just like last year. Alexander Latimore: Okay. Understood. And then to dig into APM a bit there. Can you talk about the opportunity, both qualitatively, maybe from partnerships with Anduril, how that positions you to win different market share outside of Swarm Forge? And then if you can comment on the financial pride pool opportunity of Swarm Forge as well. Jeffrey Thompson: Yes. Well, again, we haven't announced anything on projections or forecast specifically for APM. We just recently closed on the deal, and they have hit the ground running. They built -- they needed to build their team up. They did. Their technology is one of the best swarming technologies ever seen. It's super reliable. And if you've ever been to a swarm event, they're not usually super reliable. So we will -- we'll be getting you more details on these new acquisitions, including Quaze, which we did a demo in Fort Eustis, and I couldn't believe the amount of interest that we got on the Quaze mat, mostly for the mounted soldiers for the Army. They were -- they are requesting them already to do a trial actually in California like 2 weeks ago, a week after that Fort Eustis demonstration. The way Quaze can expand things is you can get further into country. You don't have to touch anything. If you're in Ukraine, you can leave those mats out there, stay in the trench and not run out to change batteries. There's so much stuff that Quaze and APM together can do and can drive for revenue. But it's too early for us to start making projections on these acquisitions we just closed. Operator: Our next question comes from the line of Brian Dobson with Clear Street. Greg Pendy: It's Greg Pendy in for Brian Dobson. Yes, just was wondering if you could kind of touch on the gross margin expansion and how that might look out in the second half. You showed good gross margin expansion year-over-year and sequentially in 2Q, but now we're going to see a big pop in revenue. So just how should we be thinking about that? Jeffrey Thompson: Yes, I'll touch upon it and then let the export finish, Christian. So just like we had -- when we had the Teal 2 product we launched, you can see this thing already happening the same way as the TL 2 happened. So when we started the Teal 2, we went from a negative like we did last year with negative margin and to a positive margin. We went from 10%, and I think to 20%, then we get to a 30% gross margin before we kind of turn down the Teal 2. And that's right about where we've been talking about. Christian just mentioned that Teal, if they hit the numbers that they're forecasted to hit, we'll be at cash flow breakeven. And the same thing for Blue Ops. So those margins obviously got to increase to get to those points. And Christian, if you want to be the detailed guy on the margins. Christian Morrison: Yes, sure. I mean we're just at that stage right now, Greg. I mean that's the name of the game where we are a good partner with the Army. They have changes. We made the changes, but we can't operate at such a low gross margin forever. And we've been very strategic and deliberate how we do that. We don't want to suffer any quality. We want better quality, better price, better scaling. That's where we're at right now, but we are really excited about Blue Ops. The higher the Blue Ops concentration, the higher the margins. The margins are that accretive to the overall business. Operator: There are no further questions at this time. I'd like to pass it over to Jeff Thompson for any closing remarks. Jeffrey Thompson: Yes. I just want to say, again, thanks for everybody for joining us on this call. We're hitting our stride. All the hard work we did over the last year is paying off. We really focused on building our revenue. As I said at the Innovation Day, 2026 is huge revenue ramp, and then we want to be going into 2027, focusing on profitability. We're very well financed. We have a lot of money in the bank. We're going to continue to expand our products like we've done with the Hellcat, getting actual support from the front lines, from the zero line that's going to make sure that our war fighters have the best product in their rucksack or whatever the -- or on top of our boats. So again, thanks, everybody, and we'll see you in 3 months. Christian Morrison: Thank you. Operator: This concludes today's webinar. You may disconnect your lines at this time. Thank you, everyone, for your participation. Before you buy stock in Red Cat, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Red Cat wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $400,209!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,375,393!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 13, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Red Cat Holdings (RCAT) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

ONDS dropped 8% post-earnings despite raising its FY2026 revenue outlook, burdened by a forward P/E of 64 and heavy share dilution. RCAT and AVAV fell less than 4% today, confirming the selloff is company-specific and not spreading across the drone sector. Eight analysts rate ONDS a Buy with a $19 target, but defending the 50-day moving average near $9 is the immediate test. It sounds nuts, but SoFi1 is giving new Active Invest users up to $3,000 in stock for a limited time, and all it takes is a $50 deposit to get started.2 See for yourself (Sponsor) Shares of Ondas Holdings (NASDAQ:ONDS) are down 8% at midday Thursday after the drone and counter-UAS company reported second quarter results before the open. The stock opened at $10 and has traded as low as $9 intraday. The move breaks a stretch of momentum that had carried ONDS up 40% over the past month. The unusual part of today's reaction is that Ondas actually lifted its outlook. The Stocktwits headline from August 13, 2026 asks "Why Is ONDS Stock Falling Even After Ondas Raised Its 2026 Revenue Outlook?" That framing matters. The disappointment lies elsewhere. Coming into earnings, Ondas had already raised its FY2026 revenue target to at least $390M in May, and the Q2 8-K filed this morning did not derail that trajectory. What appears to be weighing on the stock is the setup around it. ONDS carries an EV/Revenue of 40. Even looking forward to 2027, Ondas still traded for a forward P/S that was above 10 headed into earnings. Layer on the acquisition complexity. Our prior reporting flagged that Ondas had acquired six companies during 2026, which raises legitimate questions on integration, organic versus acquired revenue mix, and share issuance. And the stock came into earnings trading richly. History supports the sensitivity: across the last seven prints, ONDS averaged a 1-week post-earnings change of -8%. Today's drop fits that pattern more than it breaks it. SoFi Active Invest is offering a limited-time promotion. Open an account, fund it with $50 or more, and you could receive up to $3,000 in complimentary stock for Active Invest accounts. See for yourself by clicking here now. (Sponsor) Ondas' guidance calls for revenue between $525 million and $550 million. At the midpoint, that's comfortably above Wall Street's expectations of $525.6 million. So, once again, this points to losses after the stock had run up recently and expectations drifted above current sell-side expectations. Scaling is expected to continue next year, with Wall Street forecasting $990 million in 2027 revenue. Data from Capital IQ points to Wall Street expectations for 2030 currently sitting at $.55 in normalized EPS and revenues of $2 billion. After today's sell-off, Ondas trades for about 16X that 2030 figure. Short answer: not really. The peer tape is soft, but nothing like ONDS. It appears Ondas may be having an impact across the borader drones space, with other stocks all ranging from slightly down to down 3.5%. Larger defense companies in the industrial sector are also under pressure as investors rotate to AI stocks. Red Cat (NASDAQ:RCAT): Reported Q2 FY2026 on August 6, 2026, with revenue of $20.19 million missing consensus by 10.6% and a GAAP EPS of -$0.26. Management reaffirmed the $150M-$180M FY revenue target. It's holding up today. AeroVironment (NASDAQ:AVAV): Q4 FY2026 filed June 29, 2026, with revenue of $641.62 million beating estimates by 14.76% and adjusted EPS of $1.84 beating by 25%. FY2027 guide is $2.13B-$2.23B. Analyst target: $226. Redwire (NYSE:RDW): Q2 FY2026 filed August 5, 2026, revenue $117.07 million beat by 8.74%, record backlog of $542.13 million, book-to-bill 1.42. Unusual Machines (NYSE:UMAC): Q2 FY2026 filed August 6, 2026, revenue $16.72 million up 687% year over year, beating estimates by 81.87%, though Q3 growth will pause for capacity build. Analyst target on ONDS sits at $19 with 8 Buy or Strong Buy ratings and zero Holds or Sells, so sell-side reaction into tomorrow will matter. I'd keep an eye on whether ONDS defends the 50-day moving average near $9 into the close. Looking to grow your money but unsure where to begin? SoFi Active Invest is offering a limited-time promotion—open a new Active Invest account, fund it with $50 or more, and you could receive up to $3,000 in complimentary stock. From $0 commission trading3 to fractional shares4 and automated investing, this app is designed to simplify investing for everyone, whether you’re just starting or already experienced. Its easy to sign up and secure your bonus.(Sponsor) Contact [email protected] for any questions or corrections.

Ondas Inc. ONDS will release results for the second quarter of 2026 on Aug 13. ONDS’ earnings missed the Zacks Consensus Estimate in the last quarter. Its earnings have missed estimates in three of the four trailing quarters, while beating once, with an average negative surprise of 210.68%. Image Source: Zacks Investment Research Let us see how ONDS is expected to fare in terms of revenues and earnings this time. The Zacks Consensus Estimate for the second-quarter bottom line is a loss of 7 cents, unchanged in the past 30 days. The same for revenues stands at $66.7 million, indicating a 963.5% jump from the year-ago actual. The company’s top line is driven by strong business momentum in its Ondas Autonomous Systems (“OAS”) division. Robust M&A activity is a key factor underpinning rapid OAS scaling. Our proven model does not predict an earnings beat for Ondas this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here. Ondas Holdings Inc. price-consensus-eps-surprise-chart | Ondas Holdings Inc. Quote ONDS currently has a Zacks Rank #3 and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter. You can see the complete list of today’s Zacks #1 Rank stocks here. Ondas entered the second quarter with significant momentum in the OAS. The company reported first-quarter revenues of $50.1 million, up more than 10X year over year, driven by robust demand across counter-drone (Cyber-over-RF platform and Iron Drone interceptor systems), Intelligence, Surveillance, Reconnaissance, or ISR, and other defense-related solutions. The demand is likely to have remained strong amid simmering geopolitical tensions across the globe. This is likely to have cushioned the second quarter performance. ONDS’ active deployment spans more than 45 countries across defense, homeland security, public safety markets and critical infrastructure. Ondas, through rapid M&A, has built a multi-domain autonomy platform spanning ISR, c-UAS, loitering munitions/strike systems, unmanned ground vehicles and stratospheric sensing via World View acquisition. The Mistral acquisition has positioned it to compete more effectively for large-scale, multi-year government contracts. Mistral is a prime contractor on U.S. Army and USSOCOM uncrewed and autonomous platforms procurement vehicles. It brings U.S.-based manufacturing, assembly, integration and quality assurance capabilities to Ondas’ operations, supporting program execution and compliance with the country’s defense sourcing requirements. This expanding reach is complemented by a rapidly growing opportunity set, including a $4.3 billion active pipeline and more than $1.6 billion in strategic program potential, as highlighted by management on the last earnings call. It is advancing in other markets such as Israel. The company is also targeting large-scale defense initiatives such as the LASSO program, which alone represents a potential opportunity nearing $1 billion. Further, on July 22, management noted that the company had secured $70 million in new orders across its defense, security and autonomous technology portfolio over the past four weeks.  As of June 22, 2026, Ondas noted that second-quarter-to-date order activity stood at more than $150 million. Ondas Holdings Inc. revenue-quarterly | Ondas Holdings Inc. Quote On the last earnings call, the company raised its 2026 revenue outlook to at least $390 million, citing a backlog exceeding $450 million. However, with multiple acquisitions announced, such as Omsnisys, Cyberhawk and DZYNE, the growth narrative has become increasingly acquisition-led. Following the DZYNE acquisition (July 2026), Ondas now expects 2026 revenues of at least $525 million, up from the previous forecast of $390 million. DZYNE is expected to contribute approximately $191 million in revenues in 2026 and $300 million in 2027. That said, execution risks remain significant.  So many acquisitions in such a short period can create integration overload and execution risks, as achieving targets depends on timely integration and conversion of backlog into revenues. Even if a single large customer delays, reduces or cancels, revenues would decline materially. Profitability remains concerning despite sharp revenue growth. Ondas faces rising operating costs as it invests in personnel and infrastructure capabilities to capture additional market opportunities. Amid rising costs, management expects adjusted EBITDA losses to have stayed elevated in the second quarter of 2026, likely marking the peak loss period. Beyond that, ONDS expects improvement throughout the year, driven by higher revenues, gross profit and operational scale. Ondas also faces enormous competitive pressure. Players such as Red Cat Holdings RCAT, Kratos Defense & Security Solutions KTOS and Draganfly DPRO are also vying to capture a larger share. ONDS’ shares have inched up 3.8% in the past six months, underperforming the Wireless-National industry’s growth of 86.6%. The S&P 500 composite and the Zacks Computer and Technology sector are up 13.5% and 20.4%, respectively, over the same time frame. Image Source: Zacks Investment Research RCAT, KTOS and DPRO have lost 11.1%, 28.3% and 30.4%, respectively, over the same time frame ONDS stock is trading at a forward 12-month price-to-sales of 6.38X compared with the industry’s 7.82X. Image Source: Zacks Investment Research In comparison, RCAT, KTOS and DPRO trade at multiples of 6.41X, 5.75X and 0.7X, respectively. Ondas is seeing strong structural tailwinds driven by defense demand and an increasingly differentiated multi-domain platform. While acquisitions strengthen the long-term growth narrative, near-term performance will hinge on integration and the company’s ability to convert its expanding opportunity set into consistent financial performance. Investors already holding can remain invested, but new investors would be better off waiting for a more attractive entry point. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Ondas Holdings Inc. (ONDS) : Free Stock Analysis Report Kratos Defense & Security Solutions, Inc. (KTOS) : Free Stock Analysis Report Red Cat Holdings, Inc. (RCAT) : Free Stock Analysis Report Draganfly Inc. (DPRO) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Interested in Red Cat Holdings, Inc.? Here are five stocks we like better. Revenue surged 520% year over year to $20.2 million in Q2 2026, while gross margin improved to 16.1% from 11.6% a year earlier. Red Cat ended the quarter with $325.6 million in cash and reaffirmed its full-year revenue target of $150 million to $180 million. Red Cat expanded production capacity to roughly 270,000 square feet and broadened its product portfolio with the Hellcat drone, Blue Ops’ Variant 7 maritime vessel, and newly acquired swarming and wireless-power technologies. The company is reducing reliance on the U.S. Army through international growth, with Japan and NATO emerging as major customers. Management expects results to be weighted toward the second half of 2026 and projects gross margin could reach 30% near year-end. 3 Drone Stocks That Should Soar After the Summer Slump Red Cat (NASDAQ:RCAT) reported second-quarter 2026 revenue of $20.2 million, up 520% from $3.2 million a year earlier, as deliveries across its drone portfolio and defense programs increased. The company said revenue for the first six months of 2026 reached $35.7 million, compared with $4.8 million in the prior-year period. Gross profit totaled $3.3 million in the quarter, producing a gross margin of 16.1%. That compared with an 11.6% gross margin in the second quarter of 2025 and 12.7% in the first quarter of 2026. CFO Christian Morrison attributed the improvement to greater manufacturing overhead absorption, higher production volume and operating efficiencies. → Meta’s Earnings Drop Shows Wall Street Wants More Than Ad Growth AeroVironment’s Stock Is Down, But Drone Demand Is Taking Off COO Chris Ericson said Red Cat continued to scale its manufacturing operations during the quarter, adding 12,000 square feet of manufacturing and engineering space in San Diego for its APM operations. The company said its manufacturing footprint had expanded fivefold since 2024 to 260,000 square feet, while CEO Jeff Thompson said the company now has about 270,000 square feet of production capacity. Ericson said the company is focused not only on facility space but also on throughput, supply-chain resiliency, quality control, supplier management and operational analytics. Red Cat supported $20 million in quarterly revenue while improving gross margin, he said. → 4 Oil and Gas ETF Plays as Prices Stay Sky-High Drone Stocks Are Down, But Defense Backlogs Tell a Different Story The company highlighted progress across its aerial and maritime autonomy platforms. Teal Drones advanced to Gauntlet II of the Drone Dominance Program, while Red Cat continued international deliveries, including to the Japan Ground Self-Defense Force. Red Cat also introduced Hellcat, a globally configurable platform derived from its Black Widow architecture and intended to address international defense demand. Thompson said second-quarter revenue was primarily generated by Teal operations, including Black Widow and Hellcat systems. He added that less than half of quarterly revenue came from the U.S. Army. → Sandisk Just Delivered a Blowout Quarter—Here's Why the Stock Is Falling Morrison said the company’s revenue base has become less concentrated. The Army accounted for 73% of revenue in fiscal 2025, according to its annual report, but represented about half of revenue during the first six months of 2026. Japan was Red Cat’s second-largest customer during the period, followed by the NATO Support and Procurement Agency in Europe, he said. In the maritime segment, Blue Ops completed production validation testing of its V7 hulls and entered mass production for the Variant 7 uncrewed surface vessel. The company described the vessel as a U.S.-built, mission-adaptable platform for intelligence, surveillance and reconnaissance, force protection, harbor and coastal security, contested logistics and other missions. Red Cat said it was selected to participate in the Office of Naval Research’s Global MACE 3 and MACE 4 operational experimentation events. It also demonstrated the Blue Ops Variant 7 with Kymeta in Key West, Florida, highlighting communications capabilities for autonomous maritime operations. Thompson said Blue Ops had received its first revenue and had won every exercise in which it had participated, though the company did not provide a revenue breakdown by business line. He said Red Cat has seen interest in uncrewed surface vessels in Japan, Taiwan, Korea and the Middle East. Morrison said Blue Ops could become a profitable division under the company’s internal fourth-quarter targets, noting that fewer than 10 boats would be needed for the business to add free cash flow. Red Cat also said Blue Ops revenue is expected to be accretive to overall gross margins. Management discussed the integration of APM Swarm Robotics and Quaze Technologies, which expand Red Cat’s capabilities in multi-agent autonomy and wireless power transfer. Ericson said APM’s technology is intended to support coordinated operations across air, land and sea, while Quaze addresses the endurance challenge of maintaining systems in the field without manual battery swaps or connector-based charging. During a joint demonstration with Anduril, Red Cat said it showed a multi-vendor find, fix and finish workflow combining Black Widow intelligence, surveillance and reconnaissance capabilities, APM’s Paradigm mission-orchestration software and Anduril’s kinetic-effects ecosystem. Thompson said it was too early for Red Cat to provide revenue projections for APM and Quaze, both of which were recently acquired. He said the company has received interest in Quaze’s charging technology, including for mounted-soldier applications. Operating expenses were approximately $41.9 million in the second quarter, reflecting spending on personnel, manufacturing capacity, product development, acquisitions and infrastructure. Research and development expense increased to about $14.2 million, which Morrison said included work on the Drone Dominance Program, Hellcat and Blue Ops prototypes. Capital expenditures totaled about $12.6 million in the first half, primarily for Blue Ops manufacturing expansion, facility improvements and production equipment. Inventory, including prepaid inventory, reached $84.8 million at June 30, up from $30.4 million at the end of 2025. Management said the increase was intended to secure critical components and enable faster deliveries. Red Cat ended the quarter with $325.6 million in cash and approximately $396.5 million in working capital, compared with $167.9 million in cash at year-end 2025. The company reaffirmed its revenue target of $150 million to $180 million. Management said results are expected to be weighted toward the second half of the year, although it noted that contract timing and delivery schedules can create quarterly variability. Ericson said Red Cat expects gross margin to reach 30% toward the end of 2026, rather than for the full year cumulatively. 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. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Red Cat Q2 Earnings Call Highlights" was originally published by MarketBeat. 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Red Cat Holdings, Inc. RCAT is scheduled to report second-quarter 2026 results on Aug. 6, after market close. Over the trailing four quarters, Red Cat’s earnings missed the Zacks Consensus Estimate, with an average negative surprise of 56%. Red Cat Holdings, Inc. price-eps-surprise | Red Cat Holdings, Inc. Quote The Zacks Consensus Estimate for the company’s revenues is set at $22.3 million, a massive upsurge from the year-ago quarter’s $3.2 million. It marks 592.7% year-over-year whopping growth. We have identified several factors that have led to the dramatic acceleration of the top line. During the first-quarter 2026 earnings call, Jeffrey Thompson, the CEO, noted that the U.S. Department of War intends to spend the $156-billion 2025 defense reconciliation bill in fiscal 2026, with $30 billion obligated through April. Government spending of this magnitude is expected to provide a significant boost to the top line. We expect the Teal Black Widow’s $700-million pipeline fueled by U.S. Army contracts to have supported revenue growth in the second quarter of 2026. The operational Valdosta factory has the potential of nearly $150 million in sales during the year, which is likely to have strengthened RCAT growth pillars. The consensus estimate for loss per share is pinned at 21 cents, whereas it incurred a loss of 14 cents in the year-ago quarter. An upsurge in operating expenses induced by rapid scaling, heavy investment in research and development, and increasing holding costs due to heavy prepaid inventory balances are components likely to have dragged the bottom line. Our proven model does not conclusively predict an earnings beat for Red Cat this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here. You can uncover the best stocks before they are reported with our Earnings ESP Filter. RCAT has an Earnings ESP of -1.61% and a Zacks Rank of 3 at present. Here are a few stocks from the broader Business Services sector, which, according to our model, have the right combination of elements to beat on earnings this time around. Nayax Ltd. NYAX: The Zacks Consensus Estimate for the company’s second-quarter 2026 revenues is $120.5 million, indicating 26.1% year-over-year growth. For earnings, the consensus estimate is pinned at 9 cents per share, plunging 43.8% from the year-ago quarter. Over the four trailing quarters, the company surpassed earnings in two quarters and missed in the remaining two, with a negative average earnings surprise of 2.4%. NYAX has an Earnings ESP of +7.14% and a Zacks Rank of 3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here. The company is scheduled to announce second-quarter 2026 results on Aug. 10. NIQ Global Intelligence plc NIQ: The Zacks Consensus Estimate for the company’s second-quarter 2026 revenues is $1.1 billion, hinting at a 6.4% increase from the year-ago quarter’s actual. For earnings, the consensus estimate is pegged at 21 cents per share, suggesting a more than 100% rally from the year-ago quarter’s reported number. The company surpassed earnings estimates in the first quarter of 2026 by 50%. NIQ has an Earnings ESP of +1.94% and a Zacks Rank of 3 at present. The company is scheduled to announce second-quarter 2026 results on Aug. 10. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Red Cat Holdings, Inc. (RCAT) : Free Stock Analysis Report NIQ Global Intelligence plc (NIQ) : Free Stock Analysis Report Nayax Ltd. (NYAX) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

The market expects Red Cat Holdings, Inc. (RCAT) to deliver a year-over-year decline in earnings on higher revenues when it reports results for the quarter ended June 2026. This widely-known consensus outlook is important in assessing the company's earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates. The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on August 6. On the other hand, if they miss, the stock may move lower. While the sustainability of the immediate price change and future earnings expectations will mostly depend on management's discussion of business conditions on the earnings call, it's worth handicapping the probability of a positive EPS surprise. This company is expected to post quarterly loss of $0.21 per share in its upcoming report, which represents a year-over-year change of -50%. Revenues are expected to be $22.31 million, up 592.9% from the year-ago quarter. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period. Investors should keep in mind that an aggregate change may not always reflect the direction of estimate revisions by each of the covering analysts. Price, Consensus and EPS Surprise Estimate revisions ahead of a company's earnings release offer clues to the business conditions for the period whose results are coming out. Our proprietary surprise prediction model -- the Zacks Earnings ESP (Expected Surprise Prediction) -- has this insight at its core. The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier. Thus, a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate. However, the model's predictive power is significant for positive ESP readings only. A positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP. Please note that a negative Earnings ESP reading is not indicative of an earnings miss. Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Rank of 4 (Sell) or 5 (Strong Sell). For Red Cat, the Most Accurate Estimate is lower than the Zacks Consensus Estimate, suggesting that analysts have recently become bearish on the company's earnings prospects. This has resulted in an Earnings ESP of -1.61%. On the other hand, the stock currently carries a Zacks Rank of #3. So, this combination makes it difficult to conclusively predict that Red Cat will beat the consensus EPS estimate. Analysts often consider to what extent a company has been able to match consensus estimates in the past while calculating their estimates for its future earnings. So, it's worth taking a look at the surprise history for gauging its influence on the upcoming number. For the last reported quarter, it was expected that Red Cat would post a loss of$0.14 per share when it actually produced a loss of -$0.22, delivering a surprise of -57.14%. The company has not been able to beat consensus EPS estimates in any of the last four quarters. An earnings beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss. That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. This is why it's worth checking a company's Earnings ESP and Zacks Rank ahead of its quarterly release. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported. Red Cat doesn't appear a compelling earnings-beat candidate. However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release. Amplitude, Inc. (AMPL), another stock in the Zacks Technology Services industry, is expected to report loss per share of $0.01 for the quarter ended June 2026. This estimate points to a year-over-year change of -200%. Revenues for the quarter are expected to be $97.81 million, up 17.5% from the year-ago quarter. The consensus EPS estimate for Amplitude has been revised 0.4% higher over the last 30 days to the current level. However, a higher Most Accurate Estimate has resulted in an Earnings ESP of +12.50%. When combined with a Zacks Rank of #3 (Hold), this Earnings ESP indicates that Amplitude will most likely beat the consensus EPS estimate. Over the last four quarters, the company surpassed EPS estimates just once. Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Red Cat Holdings, Inc. (RCAT) : Free Stock Analysis Report Amplitude, Inc. (AMPL) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Red Cat terminated Chief Revenue Officer Geoffrey Hitchcock for cause after a board review. Hitchcock sued, alleging wrongful termination, while the company denied the claims. Stock decline, CEO share sale and a potential $500 million capital raise plan weigh on sentiment. Red Cat Holdings, Inc. (RCAT) stock is heading toward its second month of losses as it deals with a combination of management turmoil, legal challenges and weakening market momentum after the drone defense company moved to remove Chief Revenue Officer Geoffrey Hitchcock. In a SEC filing on Wednesday, Red Cat said that its board approved the termination of Hitchcock, effective July 23, adding that the decision followed a board review process that determined grounds existed for termination “for cause” under Hitchcock’s employment agreement. See what 10M+ investors are talking about. Get the Stocktwits Daily Rip for what retail is watching right now, free to your inbox Following the announcement, Hitchcock filed a lawsuit against Red Cat alleging retaliatory dismissal, contract violations and a failure to uphold obligations of good faith. The former executive is seeking financial damages, while Red Cat has rejected the allegations and said it plans to defend itself in court. The company said Hitchcock will only receive the salary and benefits he earned until his last day of work. Since the board considered the termination to be for cause, Red Cat said he will not get severance pay or faster access to his stock-based awards. Red Cat Holdings stock edged 0.8% higher overnight, ahead of Thursday. The dispute arrives as Red Cat prepares to release fiscal second-quarter (Q2) financial results on August. Analysts expect the company to report revenue of about $22.58 million and a loss of $0.21 per share, according to Fiscal AI data. The company's shares tumbled 26.5% so far this month after climbing to a all-time high of $18.70 in March on optimism surrounding defense spending and military drone demand. Last week, Red Cat’s Chairman and CEO Jeffrey M. Thompson disclosed the sale of 150,000 shares of the company’s common stock. The transaction was reported through a Form 4 filing with the SEC, showing that Thompson sold the shares at a weighted average price of $8.51 per share, totaling $1.2 million. Thompson retained more than 12.7 million shares of Red Cat Holdings stock after the sale. Last month, Red Cat announced the results of its 2026 annual meeting, where investors voted on directors, the company’s auditor and executive pay. Shareholders approved five board members to serve until 2027 but rejected the company’s advisory vote on executive compensation. Although the vote does not directly change pay packages, it could impact future decisions on executive salaries and benefits. Investors also reacted cautiously after Red Cat established a shelf registration that could provide access to as much as $500 million in future capital in May. On Stocktwits, retail sentiment around the stock remained in ‘bullish’ territory. The stock saw a 545 rise in message volume over the past week with 0.3% gain in watchers. A user said, “wow …. Sure would be nice if RCAT could make some sales like $ONDS.” Another user said, “He[CEO] cashed out the majority of his shares within weeks of their first contract award, then headed for the exit before the ink was dry. Ask yourself the painfully obvious question, if the company had this enormous potential everyone keeps talking about, why would the founder be in such a hurry to leave the thing he built?” RCAT stock has declined over 1% year-to-date. Also See: Why Did PEGA, ISRG, MCD Stocks Plunge To 52-Week Lows Today? For updates and corrections, email newsroom[at]stocktwits[dot]com. Shivani Kumaresan has no position in any of the stocks mentioned in this article. StockTwits' news team content is for informational purposes only and is not intended as investment advice. For more, see our editorial policy. This article was originally published on StockTwits. Related: NVCR Stock Surges 28% For Best Day In Over 1.5 Years — What’s Driving The Rally? SPCX Stock Continues Slide Ahead Of Starship Test Flight — But Retail Bets A Successful Launch Could Send SpaceX Shares Back To $150 TDOC, AMWL Stocks Retreat After OpenAI Lets Users Link Medical Records To ChatGPT

SALT LAKE CITY, July 20, 2026 (GLOBE NEWSWIRE) -- Red Cat Holdings, Inc. (Nasdaq: RCAT) ("Red Cat" or the "Company"), a U.S.-based provider of advanced all-domain drone and robotic solutions for defense and national security, today announced the date for the release of its financial results for the second quarter ended June 30, 2026 and its participation in upcoming investor conferences. Second Quarter 2026 Earnings Call Red Cat will report its second quarter 2026 financial results after the close of U.S. financial markets on Thursday, August 6, 2026, and will host a live Video Webinar at 4:30 p.m. ET to discuss the results. The Video Webinar will be conducted on the Zoom platform and questions will only be taken from Video Webinar participants. Participants may register in advance to join the live Video Webinar on Zoom at Red Cat’s Investor Relations website at ir.redcatholdings.com/news-events. Log-in instructions will be available after registering for the event. An archived replay of the event will be available on Red Cat’s investor relations website beginning approximately two hours after the call concludes. Upcoming Investor Conferences Jeff Thompson, Chief Executive Officer, and Christian Morrison, Chief Financial Officer, will participate in the following upcoming investor conferences: August 17, 2026 – Needham Virtual Industrial Tech, Robotics, & Power 1x1 Conference September 15, 2026 – Piper Sandler Growth Frontiers Conference in Nashville, TN Management will be available for one-on-one and small group investor meetings at the investor conferences. Investors interested in scheduling meetings with Red Cat executives should contact their respective conference representatives. About Red Cat Holdings, Inc.Red Cat (Nasdaq: RCAT) is a U.S.-based provider of advanced all-domain drone and robotic solutions for defense and national security. Through its integrated portfolio of trusted U.S. and allied hardware and software, Red Cat supports military, government, and public safety operations across air, land, sea and space. Its systems span small unmanned aircraft systems, uncrewed surface vessels, wireless power transfer technology, and autonomous swarming software to enhance situational awareness, operational effectiveness, and mission safety. Learn more at www.redcat.red. Safe Harbor Forward-Looking StatementsThis press release contains "forward-looking statements" that are subject to substantial risks and uncertainties. All statements, other than statements of historical fact, contained in this press release are forward-looking statements. Forward-looking statements contained in this press release may be identified by the use of words such as "anticipate," "believe," "contemplate," "could," "estimate," "expect," "intend," "seek," "may," "might," "plan," "potential," "predict," "project," "target," "aim," "should," "will" "would," or the negative of these words or other similar expressions, although not all forward-looking statements contain these words. Such statements include, but are not limited to, statements relating to our intended use of proceeds from the offering, annual revenue guidance, future manufacturing capacities and future market demand. Forward-looking statements are based on Red Cat Holdings, Inc.'s current expectations and are subject to inherent uncertainties, risks and assumptions that are difficult to predict. Further, certain forward-looking statements are based on assumptions as to future events that may not prove to be accurate. These and other risks and uncertainties are described more fully in the section titled "Risk Factors" in the Form 10-KT filed with the SEC on March 19, 2026 and the Form 10-Q filed with the SEC on May 7, 2026, Red Cat’s preliminary prospectus supplement filed with the SEC and the other filings that Red Cat makes with the SEC. Forward-looking statements contained in this announcement are made as of this date, and Red Cat undertakes no duty to update such information except as required under applicable law. Investor Contact:Ankit HiraSolebury Strategic Communications for Red Cat Holdings, Inc.E-mail: [email protected] Media Contact:Peter MoranPhone: (347) 880-2895Email: [email protected] Source: Red Cat Holdings, Inc.

Download the Complete Report Here Key Takeaways: 1Q26 establishes the starting revenue baseline ahead of expected sequential growth. Meta Bureau’s $2.86 million SkyKnight award covers 16,000+ licenses, with $10.4 million of upgrade options creating software attach upside. Japan / Rakuten, HIMERA, and interceptor initiatives broaden SWMR’s funnel across allied markets, resilient communications, and counter-UAS applications. Cash increased to $23.5 million after IPO and Series A-1 proceeds, supporting engineering, product development, and integration capacity. Platform expansion, strategic partnerships, and autonomy adoption support a premium valuation framework. 1Q26 establishes the starting revenue baseline ahead of expected sequential growth. SWMR’s first reported quarter as a public company showed revenue of $20,325, down 81.6% y/y from $110,704, gross profit moving to a $(19,599) loss from $65,162, and net loss widening to $(4.5) million from $(0.7) million. The revenue decline was primarily tied to the wind-down of service-related deferred revenue from the company’s historically largest Ukraine customer, from which SWMR does not expect future revenue, while the current focus has shifted toward higher-volume Ukraine and international opportunities. The quarter therefore looks more like a transition point in reported revenue than a demand signal, with the forward story tied to license activation, deployment timing, and partner production. Street estimates sourced from TIKR show that revenue is expected to increase to $1.0 million in 2Q26, $3.0 million in 3Q26, and $5.0 million in 4Q26, implying that sequential growth is expected to begin immediately as new awards and integrations start contributing to recognized revenue. Nasdaq listing strengthened the balance sheet and funded the next phase of product integration. During the quarter, Swarmer completed its IPO and began trading on the Nasdaq Capital Market under the ticker SWMR, raising approximately $17.3 million in gross proceeds to support continued investment in engineering, product development, and growth initiatives. Combat-proven intelligence layer underpins SWMR’s differentiation as drone coordination demand scales. SWMR’s platform is positioned around the core bottleneck in modern unmanned systems: coordinating, controlling, and automating large numbers of low-cost drones rather than building the hardware itself. The company’s most differentiated product input is its combat operating history, with the technology supporting more than 100,000 real-world missions in Ukraine since April 2024 across nearly 50 military units. That field exposure matters because the autonomy stack is being refined in contested environments involving jamming, operator constraints, multi-drone coordination, and rapidly changing mission requirements rather than only through lab testing or simulation. Meta Bureau’s ~$2.9 million contract expands deployment footprint and creates meaningful upgrade optionality. In May, Meta Bureau LLC awarded SWMR’s subsidiary, Swarmer Estonia OÜ, a contract with an initial value of $2.86 million for more than 16,000 software licenses to be deployed aboard SkyKnight quadcopter bombers and other unmanned aerial vehicles (UAVs). The agreement includes two separate license allocations for Swarmer’s full autonomy platform including Swarmer OS, AI, and UI as well as an additional allocation for Swarmer OS-only licenses, which can later be upgraded to the full autonomy stack via over-the-air software updates. If all upgrade options are exercised, the total contract value could increase by an additional $10.4 million, bringing the potential aggregate value to approximately $13.2 million. Management noted that the deployment is expected to further expand the company’s real-world operational dataset and strengthen integration with battle-proven UAV platforms operating in Ukraine. New initiatives broaden SWMR’s commercialization surface area beyond the initial license ramp, adding three paths to convert platform validation into larger programs: allied-market expansion, resilient communications, and counter-UAS/site-defense applications. Japan/Rakuten expands SWMR’s allied-market commercialization channel. SWMR’s expansion into Japan with support from Rakuten gives the company a local route into one of the world’s more advanced robotics and unmanned systems markets. The initiative broadens SWMR’s funnel beyond Ukraine-linked demand and supports potential applications across defense, emergency response, infrastructure, research, and industrial use cases. The successful demonstration of an autonomous “seek and hit” operation using eight-inch attritable drones also reinforces the company’s focus on low-cost, scalable unmanned systems. The key milestone is whether Rakuten-supported market entry converts into local integrators, signed programs, or paid deployments. HIMERA partnership strengthens SWMR’s autonomy stack with resilient battlefield communications. SWMR’s memorandum of understanding with HIMERA adds jam-resistant, frequency-hopping communications technology to the company’s next-generation autonomy stack. That matters because scaled autonomous operations depend on reliable connectivity in contested and degraded environments, particularly when coordinating multiple vehicles across aerial, ground, and maritime domains. The partnership could lower integration complexity for vendors by combining resilient communications with SWMR’s autonomy and coordination layer in a more deployable solution. Joint engagement with system vendors and integrators should be the next proof point for whether the partnership can move from technical integration to commercial adoption. Interceptor collaboration expands SWMR into counter-UAS and site-defense applications. SWMR announced MOUs with X-Drone, Norda Dynamics, and Kara Dag Technologies to develop an end-to-end drone interceptor system for Group 1-3 UAVs and unmanned surface vessels up to eight meters. The planned solution would integrate detection, targeting, terminal guidance, and autonomous coordination into SWMR’s platform, creating a lower-cost alternative to traditional missile-based defense for critical infrastructure and maritime threats. The partner base adds credibility, with X-Drone having delivered more than 70,000 unmanned systems, Norda software deployed on more than 60,000 attritable drones, and Kara Dag contributing distributed RF / acoustic detection capabilities. Strategically, the initiative extends SWMR from enabling drone operations into autonomous interception, broadening the platform’s use cases while keeping the company anchored in software-led coordination rather than hardware manufacturing. Management indicated initial deployment timelines could range from two-to-four months, making interceptor integration a tangible 2H26 milestone if testing and partner integration progress as planned. We note that publicly announced partnerships likely represent only a portion of the company’s broader commercial pipeline. SWMR acknowledged that several customers and programs remain undisclosed due to the sensitive nature of defense-related engagements and customer confidentiality considerations. Importantly, management noted that currently announced partnerships and reported revenue are generally trailing indicators, with most publicly disclosed projects typically reflecting business development and integration work completed approximately three to nine months earlier. As a result the underlying pipeline may be materially deeper than what is currently visible publicly, with additional updates expected as programs progress and disclosure becomes possible. Appointment of Mykhailo Nestor strengthens product leadership as SWMR scales its autonomy platform. SWMR appointed Nestor as Chief Product Officer to lead product strategy and development across swarm coordination, multi-domain integration, AI-powered collaborative autonomy, and distributed command-and-control systems. Nestor spent seven years as Chief Product Officer and board member at Kyivstar, part of VEON, where he helped build large-scale digital platforms used by millions of customers. His experience scaling complex software infrastructure should support SWMR’s transition from field-tested autonomy software to repeatable, partner-integrated products across allied defense and autonomous systems markets. SWMR’s hardware-agnostic intelligence layer addresses the core coordination problem in modern unmanned operations. SWMR is focused on solving three challenges facing autonomous systems: coordinating large numbers of unmanned platforms across multiple domains, enabling real-time decision making in contested environments, and maintaining effectiveness when communications are degraded or denied. The company operates at the software layer rather than manufacturing drones, positioning SWMR to support interoperability across aerial, ground, and maritime systems. That hardware-agnostic approach is important as defense customers increasingly prioritize scalable autonomy, resilient command-and-control, and coordination across heterogeneous unmanned fleets. Combat mission history shows increasing autonomy and mission complexity over time. SWMR’s combat deployments began in April 2024 with relatively simple multi-drone reconnaissance and mining operations involving approximately three drones, then expanded toward formations of roughly eight-to-10 larger unmanned systems. Early missions were semi-autonomous, with operators maintaining partial control during flight toward target areas, while more recent missions have moved toward higher levels of autonomy. Reconnaissance drones can autonomously identify and transmit battlefield data, while attack drones coordinate target engagement decisions internally based on probability-of-hit calculations rather than direct operator assignment. This progression shows that SWMR’s 100,000+ combat missions are not just validation points, but inputs into more sophisticated mission templates and broader hardware integrations. Per-unit licensing gives SWMR a flexible pricing framework as unmanned system volumes scale. SWMR currently prices its autonomy software primarily on a per-unit licensing basis, with pricing determined case-by-case based on integration complexity, hardware class, and expected production scale. Higher-volume platforms may carry lower per-unit pricing given broader deployment potential, while lower-volume systems such as larger fixed-wing platforms may command higher pricing because upfront integration work is spread across fewer units. The company also noted that percentage-of-system-value pricing could become relevant over time, but the market remains early and commercialization is currently focused on flexible structures that scale with customer deployment volumes. Margins and opex should be viewed through early-stage scale, not 1Q26 profitability. 1Q26 gross margin was (96.4)% because revenue was only $20,325 and gross profit was a $(19,599) loss, versus 58.9% gross margin on $110,704 of revenue in 1Q25. Operating expenses also stepped up to $4.5 million from $0.8 million, reflecting public-company costs, consulting and professional services, and higher engineering and product development investment. Future spending is expected to remain primarily opex-focused, including additional engineering hires and integration capacity across a broader range of hardware platforms. SWMR also suggested that long-term gross margins could exceed 70% as the business scales, reflecting the high-margin potential of a software-centric licensing model despite service and implementation obligations. As revenue begins to scale, the key test is whether new license activations and repeat integrations start to absorb the higher public-company and engineering cost base. Balance sheet supports engineering and integration priorities, with working capital tied to program conversion. SWMR ended 1Q26 with $23.5 million of cash and equivalents, up 152.7% from $9.3 million at year-end 2025, reflecting $17.3 million of IPO gross proceeds and $3.5 million of Series A-1 convertible preferred proceeds. Capital deployment is focused on hiring engineers, expanding integration capacity, and supporting product development rather than balance-sheet-heavy capex. As license awards and partner programs scale, the more relevant working-capital items will be deferred revenue, milestone billings, receivables, and customer advances tied to activation and service obligations. Street estimates frame a sharp 2Q26-2028E revenue ramp and 2027E EBITDA inflection as license activation scales. Street estimates sourced from TIKR forecast revenue of $1.0 million in 2Q26, $3.0 million in 3Q26, and $5.0 million in 4Q26, producing $9.0 million of 2026E revenue before rising to $25.0 million in 2027E and $40.0 million in 2028E. That implies growth of 178% in 2027E and 60% in 2028E, with EBITDA margin improving from (69.3)% in 2026E to 20.2% in 2027E and 30.1% in 2028E. The estimate path is consistent with a software license model moving from activation to scale, but it requires visible conversion from contract value, partner integrations, and development-stage programs into recognized revenue. We view 2Q26 as the first key checkpoint, with the $1 million estimate providing an early read on whether license activation is beginning to convert into the expected revenue ramp. The following valuation analysis is presented for illustrative purposes only and does not constitute a recommendation, investment advice, solicitation, or a price target. The analysis is based on publicly available information and company disclosures and reflects a valuation framework rather than a definitive assessment of fair value. Any implied upside or downside referenced herein is not intended as a prediction of future share price performance. Valuation screens elevated on near-term revenue, but the multiple compresses quickly if SWMR executes against the expected software-license ramp. SWMR currently trades at approximately 41.3x 2026E sales based on Street estimates sourced from TIKR for 2026 revenue of $9.0 million, which is demanding on near-term financial metrics and reflects the company’s early-stage commercialization profile. However, we believe the market is valuing SWMR less like a traditional defense contractor or hardware-centric drone company and more like a scarce autonomy software platform, supported by combat-validated technology, hardware-agnostic positioning, and exposure to growing unmanned systems and counter-UAS demand. The valuation moderates meaningfully as revenue scales, with the P/S multiple declining to 14.9x 2027E sales on projected revenue of $25.0 million and 9.3x 2028E sales assuming revenue reaches $40.0 million. In our view, the key to sustaining a premium multiple versus defense hardware peers will be evidence that license deployments, platform integrations, OS-to-full-stack upgrade opportunities, and international partnerships can convert into recurring software revenue and improving EBITDA visibility. Software-led autonomy positioning: SWMR’s hardware-agnostic autonomy platform supports a premium to hardware-centric defense and drone peers if it becomes an embedded software layer across OEMs, unmanned platforms, and mission types. Asset-light model: Unlike traditional defense manufacturers, SWMR does not manufacture drones or heavy hardware, allowing capital to be directed toward software development, integration capacity, and engineering talent rather than balance-sheet-heavy production infrastructure. Revenue scaling potential: Current revenue reflects early-stage deployments, but Street estimates sourced from TIKR call for revenue to rise from $9.0 million in 2026E to $25.0 million in 2027E and $40.0 million in 2028E as license activation scales. Profitability glidepath: Management highlighted the operating leverage embedded in SWMR’s model, while Street estimates sourced from TIKR show that EBITDA and EPS are likely to turn positive in 2027E as software license revenue scales. Defense autonomy tailwinds: Rising defense spending, accelerating unmanned systems adoption, counter-UAS demand, and battlefield lessons from Ukraine create a supportive backdrop for AI-enabled drone coordination and autonomy platforms. Private-market autonomy valuations support a premium framework for scaled AI-defense platforms. Shield AI, a private-market comparable within the defense autonomy ecosystem, announced a $1.5 billion Series G raise at a $12.7 billion post-money valuation in March 2026, alongside $500 million of fixed-return preferred equity financing. Media reports and private-company estimates indicate Shield AI generated approximately $300 million of revenue for the year ended March 2025 and is projected to exceed $540 million in 2026, implying roughly 42x trailing sales and 24x forward sales. The comparison is relevant despite Shield AI’s larger scale and broader platform mix because both companies are positioned around AI-enabled autonomy, collaborative unmanned operations, and software-centric defense applications. In that context, SWMR’s current 41.3x 2026E sales multiple appears more defensible if the company converts its combat-validated software stack, hardware-agnostic architecture, strategic partnerships, and license deployments into the expected revenue ramp. Download the Complete Report Here Read Exec Edge’s Initiation on Swarmer Inc. Here Subscribe to our Weekly Newsletter to Receive All Research Contact: Executives-Edge.com [email protected]