Red Cat Holdings Reports Financial Results for Fiscal Third Quarter 2024 and Provides Corporate Update
- Record revenue of $5.8 million in Fiscal Q3 2024, a 250% YoY increase.
- Double-digit sequential growth for the third consecutive quarter.
- Global expansion, partnership with Primordial Labs, and a $750k grant received.
- Closed Consumer segment sale with $1 million cash, 4,250,000 UMAC shares, and a $2 million note payable to Red Cat.
- Strong funded backlog of $5.1 million and $12.7 million in combined Cash and Account Receivable balances as of January 31, 2024.
- None.
Insights
The substantial revenue growth reported by Red Cat Holdings indicates a positive trajectory for the company's financial health and market position. The 250% year-over-year increase in revenue and 49% sequential growth are significant metrics that suggest increasing market demand and successful expansion strategies. The company's entry into new markets like Latin America and the Middle East, alongside strategic partnerships for technology integration, such as with Primordial Labs, are likely to enhance its competitive edge and diversify its revenue streams.
Furthermore, the sale of the Consumer segment and the focus on the Enterprise segment, particularly with Teal Drones, reflects a strategic pivot towards higher-margin and potentially more scalable business operations. The strong funded backlog, which stands at $5.1 million, provides a clear visibility of future revenues and indicates a robust order book, which is a positive sign for investors. The financial flexibility provided by the $12.7 million in Cash and Account Receivable balances is also noteworthy, as it may allow Red Cat to invest in further growth initiatives or weather unforeseen market conditions.
Red Cat's positioning as a finalist in the U.S. Army's Short Range Reconnaissance program and the anticipated participation in the Department of Defense Replicator Initiative are pivotal developments. The defense sector is known for its stringent requirements and long procurement cycles, so being a finalist indicates that Red Cat's products meet high operational standards. The $3M extended contract award is a testament to this and could lead to significant future contracts.
The passing of the American Security Drone Act by Congress is another critical factor, as it could lead to increased demand for secure and domestically produced drones, benefiting companies like Red Cat. The $750k Manufacturing Modernization Grant from the State of Utah for Teal Drones underscores the support and confidence in the company's manufacturing capabilities, which may lead to improved production efficiencies and cost savings in the long term.
The financial health of Red Cat is underscored by the strategic divestiture of its Consumer segment, which resulted in the receipt of 4,250,000 shares of UMAC common stock, a $1 million cash payment and a $2 million note payable. This move not only streamlines the company's focus on its core Enterprise segment but also strengthens its balance sheet. The transaction provides liquidity and potential future income from the stock holdings. Investors should note the implication of this divestiture on the company's financials, as it may lead to a more focused investment in growth areas and potential appreciation in the value of the UMAC stock.
The guidance for the fourth quarter, projecting $7 million in revenue, indicates management's confidence in the company's growth trajectory. However, it is essential to monitor the actual performance against this guidance in the future to assess the accuracy of management's forecasts and the company's ability to meet its targets.
Red Cat reports record revenue for the company in Fiscal Third Quarter 2024, the third consecutive quarter of double-digit sequential growth
SAN JUAN, Puerto Rico, March 18, 2024 (GLOBE NEWSWIRE) -- Red Cat Holdings, Inc. (Nasdaq: RCAT) (“Red Cat” or “Company”), a drone technology company integrating robotic hardware and software for military, government, and commercial operations, reports its financial results for the second quarter ended March 18, 2024, and provides a business update.
Operating Highlights:
- Continued global expansion with entry into Latin America and Middle East markets
- Partnered with Primordial Labs to integrate AI-driven voice control technology to its platforms
- Part of successful joint drone industry effort resulting in the passing of the American Security Drone Act by Congress
- Red Cat subsidiary, Teal Drones, received
$750 k Manufacturing Modernization Grant from the State of Utah - Selected as finalist for US Army's Short Range Reconnaissance program with
$3M extended contract award - In Q4, Retired Four-Star Army General Paul Edward Funk II joined Red Cat’s Board of Directors
Financial Highlights:
- Record revenues of
$5.8 million for fiscal third quarter ending January 31, 2024, representing growth of more than250% compared to the prior-year period and49% on a sequential basis - Funded backlog remained strong as of January 31, 2024, at
$5.1 million - Closed the sale of the Consumer segment on February 16, 2024, resulting in 4,250,000 shares of UMAC common stock issued to Red Cat, a
$1 million cash payment, and a$2 million note payable to Red Cat $12.7 million of combined Cash and Account Receivable balances as of January 31, 2024
"Red Cat has continued to meet global customer demand resulting in record third quarter revenue that is more than 250 percent above the same period in our previous fiscal year," said Jeff Thompson, Red Cat Chairman and Chief Executive Officer. "The Teal 2 drone has quickly become the small uncrewed system of choice and our ability to scale production has been well received by our domestic and international customers. We believe we are well positioned for the U.S. Department of Defense Replicator Initiative and the U.S. Army’s Short Range Reconnaissance Program of Record being awarded later this year, in which we are one of two finalists."
"With the increasing demand for our drone solutions with U.S. Defense and Security Forces and NATO Allies, our growing pipeline and strong backlog, Red Cat is positioned for continued growth. Our guidance for the upcoming fourth quarter of
“We are reporting record revenues again for the third quarter of fiscal 2024,” stated Leah Lunger, Interim Chief Financial Officer. “Having closed the sale of our Consumer segment, we look forward to focusing exclusively on the expanding opportunities for our Enterprise segment, such as external partnerships, entrance into new global markets, and delivering Army prototypes between now and the beginning of fiscal 2025.”
Retirement of Chief Financial Officer and Appointment of Leah Lunger as Interim Chief Financial Officer
“With the sale of the Consumer Segment completed and the focus solely on Teal Drones going forward, it’s a perfect time to slightly accelerate my planned retirement date,” stated Joseph Hernon. “I’ve thoroughly enjoyed working with Leah over the past three plus years and congratulate her on a hard-earned, well-deserved promotion.”
“Joseph and I have worked together for more than 12 years at two technology companies, and I thank him for deferring his previously planned retirement for four years to assist in the maturation of Red Cat from an early-stage development,” said Jeff Thompson. “He built an All-Star corporate finance team and left us in good hands.”
“Red Cat is pleased to announce Leah Lunger as interim Chief Financial Officer. She has done a stellar job, and the company expects this to become a permanent position for Lunger,” added Thompson.
Earnings Conference Call
CEO Jeff Thompson and Interim CFO Leah Lunger will host an earnings conference call at 4:30 p.m. ET on Monday, March 18, 2024, to review financial results and provide an update on corporate developments. Following management’s formal remarks, there will be a question- and-answer session.
Interested parties can listen to the conference call by dialing 1-844-413-3977 (within the U.S.) or 1-412-317-1803 (international). Callers should dial in approximately ten minutes prior to the start time and ask to be connected to the Red Cat conference call. Participants can also pre-register for the call using the following link: https://dpregister.com/sreg/10187092/fbc7e3a874
The conference call will also be available through a live webcast that can be accessed at: https://event.choruscall.com/mediaframe/webcast.html?webcastid=GS7MpfTG
A replay of the webcast will be available until June 18, 2024, and can be accessed through the above link or at www.redcat.red. A telephonic replay will be available until April 1, 2024, by calling 1-877-344-7529 (domestic) or 1-412-317-0088 (international) and using access code 8799674.
About Red Cat
Red Cat (Nasdaq: RCAT) is a drone technology company integrating robotic hardware and software for military, government, and commercial operations. Red Cat’s solutions are designed to “Dominate the Night™” and include the Teal 2, a small unmanned system offering the highest-resolution thermal imaging in its class. Learn more at www.redcat.red.
Forward Looking Statements
This 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. 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 final prospectus related to the public offering filed with the Securities and Exchange Commission. Forward-looking statements contained in this announcement are made as of this date, and Red Cat Holdings, Inc. undertakes no duty to update such information except as required under applicable law.
Contacts:
INVESTORS:
E-mail: Investors@redcat.red
NEWS MEDIA: Indicate Media
Phone: (347) 880-2895
Email: peter@indicatemedia.com
| RED CAT HOLDINGS | |||||||||
| Condensed Consolidated Balance Sheets | |||||||||
| January 31, | April 30, | ||||||||
| 2024 | 2023 | ||||||||
| ASSETS | |||||||||
| Cash and marketable securities | $ | 7,697,335 | $ | 15,987,687 | |||||
| Intangible assets including goodwill, net | 23,685,067 | 24,335,836 | |||||||
| Inventory, including deposits | 10,063,812 | 9,280,073 | |||||||
| Accounts receivable, net | 5,091,724 | 719,862 | |||||||
| Other | 5,061,948 | 4,478,080 | |||||||
| Assets of discontinued operations | 3,717,313 | 5,391,552 | |||||||
| TOTAL ASSETS | $ | 55,317,199 | $ | 60,193,090 | |||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||
| Accounts payable and accrued expenses | $ | 3,270,795 | $ | 1,957,975 | |||||
| Debt obligations | 899,935 | 1,323,707 | |||||||
| Warrant derivative liability | 285,384 | 588,205 | |||||||
| Operating lease liabilities | 492,162 | 661,263 | |||||||
| Liabilities of discontinued operations | 796,210 | 1,052,315 | |||||||
| Total liabilities | 5,744,486 | 5,583,465 | |||||||
| Stockholders’ capital | 121,135,099 | 110,057,535 | |||||||
| Accumulated deficit/comprehensive loss | (71,562,386 | ) | (55,447,910 | ) | |||||
| Total stockholders' equity | 49,572,713 | 54,609,625 | |||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 55,317,199 | $ | 60,193,090 | |||||
Condensed Consolidated Statements of Operations | ||||||||||||||||
| Three months ended January 31, | Nine months ended January 31, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenues | $ | 5,847,933 | $ | 1,667,683 | $ | 11,526,930 | $ | 3,541,846 | ||||||||
| Cost of goods sold | 4,746,282 | 1,764,612 | 9,050,032 | 3,432,804 | ||||||||||||
| Gross Margin | 1,101,651 | (96,929 | ) | 2,476,898 | 109,042 | |||||||||||
| Operating Expenses | ||||||||||||||||
| Operations | 527,447 | 663,668 | 1,675,795 | 3,131,789 | ||||||||||||
| Research and development | 2,125,268 | 1,221,738 | 5,251,285 | 2,938,658 | ||||||||||||
| Sales and marketing | 883,982 | 1,015,412 | 2,546,380 | 1,986,121 | ||||||||||||
| General and administrative | 1,426,531 | 1,397,667 | 4,329,760 | 4,275,385 | ||||||||||||
| Stock based compensation | 585,771 | 788,691 | 2,693,702 | 2,790,958 | ||||||||||||
| Total operating expenses | 5,548,999 | 5,087,176 | 16,496,922 | 15,122,911 | ||||||||||||
| Operating loss | (4,447,348 | ) | (5,184,105 | ) | (14,020,024 | ) | (15,013,869 | ) | ||||||||
| Other (income) expense | (258,015 | ) | 151,818 | 818,901 | (254,762 | ) | ||||||||||
| Net loss from continuing operations | (4,189,333 | ) | (5,335,923 | ) | (14,838,925 | ) | (14,759,107 | ) | ||||||||
| Loss from discontinued operations | (1,299,205 | ) | (330,079 | ) | (2,141,289 | ) | (962,971 | ) | ||||||||
| Net loss | $ | (5,488,538 | ) | $ | (5,666,002 | ) | $ | (16,980,214 | ) | $ | (15,722,078 | ) | ||||
| Loss per share - basic and diluted | $ | (0.10 | ) | $ | (0.10 | ) | $ | (0.31 | ) | $ | (0.29 | ) | ||||
| Weighted average shares outstanding - basic and diluted | 55,688,114 | 54,294,116 | 55,409,930 | 54,050,127 | ||||||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||
| Nine months ended January 31, | ||||||||
| 2024 | 2023 | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net loss from continuing operations | $ | (14,838,925 | ) | $ | (14,759,107 | ) | ||
| Non-cash expenses | 4,250,925 | 2,752,691 | ||||||
| Changes in operating assets and liabilities | (4,766,934 | ) | (4,799,734 | ) | ||||
| Net cash used in operating activities | (15,354,934 | ) | (16,806,150 | ) | ||||
| Cash Flows from Investing Activities | ||||||||
| Proceeds from sale of marketable securities | 12,826,217 | 24,282,117 | ||||||
| Other | (184,532 | ) | (1,985,882 | ) | ||||
| Net cash provided by investing activities | 12,641,685 | 22,296,235 | ||||||
| Cash Flows from Financing Activities | ||||||||
| Payments of debt obligations, net | (423,772 | ) | (498,576 | ) | ||||
| Payments related to employee equity transactions | (20,949 | ) | (594,454 | ) | ||||
| Proceeds from issuance of common stock, net | 8,404,812 | — | ||||||
| Net cash provided by (used in) financing activities | 7,960,091 | (1,093,030 | ) | |||||
| Net cash used in discontinued operations | (683,041 | ) | (4,588,708 | ) | ||||
| Net increase (decrease) in Cash | 4,563,801 | (191,653 | ) | |||||
| Cash, beginning of period | 3,260,305 | 4,084,815 | ||||||
| Cash, end of period | 7,824,106 | 3,893,162 | ||||||
| Less: Cash of discontinued operations | (126,771 | ) | (84,058 | ) | ||||
| Cash of continuing operations, end of period | 7,697,335 | 3,809,104 | ||||||
| Marketable securities | — | 20,730,033 | ||||||
| Cash of continuing operations and marketable securities | $ | 7,697,335 | $ | 24,539,137 | ||||
Source: Red Cat Holdings, Inc.
FAQ
What was Red Cat's revenue for Fiscal Q3 2024?
What major partnership did Red Cat enter into recently?
How much did Red Cat receive as part of the Consumer segment sale?
What was the funded backlog for Red Cat as of January 31, 2024?
Who joined Red Cat's Board of Directors in Q4?
When will Red Cat host an earnings conference call?
How can interested parties listen to the conference call?
Until when will the replay of the webcast be available?
Who was appointed as the Interim Chief Financial Officer of Red Cat?
What is Red Cat's guidance for the upcoming fourth quarter?
