Red Cat (RCAT) Q1 2026 earnings summary

Executive summary

• Q1 2026 revenue reached $15.5 million, up 849% year-over-year, driven by strong demand for drones and USVs, including scaling deliveries to the U.S. Army SRR program and new orders from NATO and Asia-Pacific allies.

• Gross profit improved to $2.0 million (12.7%–13% margin) from a prior gross loss, reflecting operational leverage and lower inventory write-offs.

• Operating expenses rose to $29.3 million, mainly due to increased R&D, sales, and administrative costs supporting innovation and scaling.

• Net loss widened to $26.6 million from $23.1 million year-over-year, with higher stock-based compensation and headcount.

• Significant new orders, partnerships, and acquisitions, including Apium Swarm Robotics and pending Quaze Technologies deal.

Financial highlights

• Q1 2026 revenue was $15.5 million, an 849% increase from $1.6 million in Q1 2025.

• Gross margin improved to 12.7%–13% from negative in the prior year, with gross profit at $2.0 million.

• Operating expenses rose to $29.3 million, with R&D at $8.0 million.

• Net working capital stood at $190.6 million and cash at $131.9 million as of March 31, 2026.

• Inventory and prepaid inventory totaled $62.7 million, positioning for accelerated deliveries.

Outlook and guidance

• Target annual revenue for the short to medium term is $150–$180 million, with gross margins expected to approach 30%.

• Management believes current liquidity is sufficient for at least the next twelve months.

• Production capacity for Black Widow drones and USVs can support significant contract fulfillment; 245 boats and $220 million worth of drones possible in 2026.

• Expects completion of Quaze Technologies acquisition in May 2026.

• OpEx projected to increase 15–20% in the second half of 2026.