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Red Cat 4Q24 Earnings Recap: Upcoming Town Hall To Provide Better Visibility Into SRR Funding
Red Cat’s $RCAT 4Q24 earnings call was brief, as the company transitions to a December fiscal year-end. No material updates were provided, though management reiterated plans to host an Investor Town Hall in the coming weeks to walk through upcoming SRR milestones and the funding timeline.
Based on the upbeat tone from management, we believe 2025 funding is tracking in-line or better than expectations. As a reminder, Red Cat expects to sign three SRR-related contracts this year:
Features contract – already signed
Limited rate production contract – we believe to be signed around the time of the Town Hall
Full-rate production contract – expected later in the year
The company is asking for $100M in SRR funding this fiscal military year (ending in September), which could drive upside to full-year revenue guidance of $80M–$120M. This guidance includes:
$25M–$65M in SRR-related Black Widow sales
$25M in non-SRR Black Widow sales
$25M in Edge 130 sales
$5M in Fang FPV sales
We expect more clarity and potentially a tightening of the guidance range at the upcoming Town Hall.
One key question raised by analysts on the brief call was international traction. Management noted growing interest globally, particularly as they showcase their technology at international defense events. We wouldn’t be surprised to see new international partnerships announced at the Town Hall.
Looking ahead, we believe Red Cat is well-positioned to capitalize on what we view as a global defense drone supercycle, driven by heightened geopolitical tensions and increased demand for unmanned systems. As a U.S.-based manufacturer and participant in the DoD’s Blue sUAS program, Red Cat is a prime beneficiary of U.S. legislative support for domestic drone production. While shares have pulled back recently amid broader risk-off sentiment, none of the SRR revenue has hit financials yet. We believe Red Cat is on the cusp of transformative growth, with potential short-term margin pressure as they scale. However, we view any meaningful pullbacks as buying opportunities.