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Red Cat’s September 24 release describes its September 21 Blue Ops Day at the 155,000-square-foot Valdosta facility and the ramp of Variant 7 toward full-rate production. Plans for $30 million of investment and more than 200 jobs are not a new customer award or incremental revenue guidance. Second-quarter revenue of $20.2 million was 527% above a year earlier and the gross margin rose to 16.1%. Cash and inventory both more than doubled, to $325.6 million and $84.8 million, after $245 million of net proceeds from share sales. The company still targets $150-180 million for the year, against $35.7 million in the first half, and one customer produced 51% of that half.
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It is the next scheduled disclosure; the second quarter was published on August 6, so the timing is a pattern rather than a commitment. The one other dated item is January 25, 2027, when the chairman’s second forward contract settles, and it can be settled in cash without any shares moving.
A single customer produced 51% of first-half revenue, against 26% for the largest customer a year earlier. Of the $325.6 million of cash, $84.8 million sits in inventory and prepaid inventory, built for a second half that the company says has to produce three to four times the first. The half used $78.7 million of operating cash.
Market fields carry their own reference dates and reporting lags, and the date beside each figure is the one it belongs to. The market capitalisation is a Merlintrader calculation from the August 4, 2026 share count and the September 18, 2026 close; it is not a provider quote. The gross margin is also a Merlintrader calculation, from revenue less cost of goods sold as the Form 10-Q reports them.
Revenue rose 527% to $20.2 million and the gross margin went from 11.6% a year earlier to 16.1%, 27% better than the first quarter; for the half the gross result turned from a loss of $476 thousand into a profit of $5,225 thousand, which is what scale looks like when it starts to arrive. The balance sheet funds the ramp: $325.6 million of cash, $84.8 million of inventory and prepaid inventory against $56.3 million of total liabilities. The order book side of the story moved too: Teal Drones reached Gauntlet II of the Drone Dominance programme, the Quaze Technologies acquisition added wireless power transfer, Hellcat extended the Black Widow architecture into the international market, and Blue Ops took its uncrewed surface vessel to full-rate production with a U.S. Navy contract.
The company spent $78.7 million of operating cash in six months against $35.7 million of revenue, and the operating loss for the half was $65.9 million. One customer produced 51% of first-half revenue and five customers produced 78% of the receivables balance, which itself fell from $26.2 million to $9.5 million. Inventory and prepaid inventory rose from $30.4 million to $84.8 million, so the cash is now in goods that have to ship. The annual target of $150-180 million requires the second half to produce 3.2 to 4.0 times what the first half did, and the financing that made the balance sheet what it is was $245 million of share sales into a share price of $6.75.
The Form 10-Q filed on August 6, 2026 settles the quarter with figures the release summarised. Revenue of $20,189 thousand against $3,219 thousand; cost of goods sold of $16,929 thousand, leaving a gross profit of $3,260 thousand and a gross margin of 16.1%; research and development of $14,219 thousand, sales and marketing of $6,439 thousand and general and administrative of $21,247 thousand; an operating loss of $38,645 thousand; and a net loss of $35,259 thousand, or $0.26 a share. For the half, revenue of $35,660 thousand, an operating loss of $65,946 thousand, a net loss of $61,812 thousand and $78,749 thousand of operating cash used. Cash was $325,553 thousand at June 30, 2026 and total liabilities were $56,312 thousand, against $471,175 thousand of stockholders’ equity and an accumulated deficit of $258,632 thousand.
Red Cat sells American-made drones and, since this year, uncrewed boats. Its Family of Systems is led by Black Widow, the small drone it supplies to the U.S. Army, and it reaches the sea through Blue Ops. The business is in the middle of a transition that the income statement shows plainly: revenue rose 527% to $20.2 million in the quarter and the gross margin turned positive at 16.1%, while the operating loss widened to $38.6 million because research, development and administration are being paid for before the revenue arrives. The company ended June with $325.6 million of cash and $84.8 million of inventory, both funded by selling shares rather than by operations, and it reaffirmed a full-year revenue target of $150-180 million against $35.7 million delivered in the first half.
At the September 21 event, announced September 24, Red Cat highlighted the Valdosta, Georgia maritime manufacturing facility leased in September 2025. The facility spans 155,000 square feet; Blue Ops plans to invest $30 million and create more than 200 jobs, and says it has begun ramping Variant 7 into full-rate production. These are operating progress and expansion plans, not proof the entire investment or hiring is complete. The release supplies no new customer contract value or incremental revenue guidance. Primary source
Earlier context (September 17, 2026): The chairman settles a forward contract and sells shares
A Form 4 reports that Jeffrey M. Thompson, chairman and chief executive, settled on September 15, 2026 the variable prepaid forward contract he entered on September 15, 2025. The settlement price was the forward floor of $9.14, so he transferred all 750,000 pledged shares; he had received $6,565,293.75 up front a year earlier. The same filing reports a sale of 150,000 shares at a weighted average of $7.74 under a Rule 10b5-1 plan adopted on March 31, 2026. A second contract, from January 14, 2026, covers up to 1,500,000 shares settling on January 25, 2027 against a floor of $11.88, and can be settled in cash.
Revenue of $20.2 million, a gross margin of 16.1% and a net loss of $35.3 million, or $0.26 a share. The company reaffirmed its full-year target revenue of $150-180 million and reported $325.6 million of cash at June 30, against $167.9 million at the end of 2025.
The board determined on July 17, 2026 that grounds existed for cause under the executive employment agreement of Geoffrey Hitchcock, chief revenue officer, and terminated him effective July 23, 2026 with no severance and no acceleration of his equity. On July 21, 2026 he filed a civil complaint alleging retaliatory termination under New York and Oregon law, breach of contract and breach of the implied covenant of good faith, seeking damages in an unspecified amount. The company says the claims are without merit and intends to defend itself.
Five directors were elected, and four of the five had more votes withheld than in favour: Jeffrey M. Thompson 21,607,419 for and 15,652,033 withheld; Joseph Freedman 17,225,491 and 20,033,961; Nicholas Liuzza Jr 14,348,726 and 22,910,726; Christopher R. Moe 17,592,054 and 19,667,398; General (Ret.) Paul E. Funk II 14,585,509 and 22,673,943. KPMG LLP was ratified as auditor with 70,445,245 votes in favour. The advisory vote on executive compensation did not receive a majority of the votes cast: 15,194,017 for against 21,304,013.
The company filed a shelf registration statement on Form S-3ASR which became effective on filing on May 12, 2026, followed by two prospectus supplements, and reported the offering under Item 8.01 in the 8-K of May 18, 2026. During the first half the company raised $258,750 thousand gross from public offerings and paid $13,512 thousand of related costs.
The first quarter of 2026 produced revenue of $15,471 thousand, computed from the first-half total of $35,660 thousand less the second quarter’s $20,189 thousand, which the filings state. The company had drawn no cash on its convertible notes during the half: the $15,000 thousand on the financing line belongs to the first half of 2025.
The Form 10-K for the year ended December 31, 2025 reports revenue of $40,729 thousand, cost of goods sold of $39,455 thousand, a gross profit of $1,274 thousand and an operating loss of $66,597 thousand. The first half of 2026 has already produced 88% of that revenue with a margin five times as large.
The Form 10-Q for the quarter ended September 30, 2025 reports revenue of $9,646 thousand for the quarter and $14,495 thousand for the nine months, which is the last period before the ramp that produced the current numbers.
Better. The annual target is met, which means the second half produces $114-144 million against the first half’s $35.7 million. The inventory that sits in the balance sheet ships and converts, the gross margin keeps climbing from 16.1% as the production efficiencies the company describes arrive, and the Drone Dominance programme moves from Gauntlet II to an award. The cash of $325.6 million is enough to fund the ramp without another raise, and the share count stops growing for the first time in two years.
Flat. Revenue lands at the bottom of the target, the margin stays in the teens and the cash falls by the amount the operating loss exceeds the working capital the company releases. The company ends the year with a smaller but still substantial cash balance and no need to raise, having grown revenue to roughly four times last year’s and still losing money at the operating line.
Worse. The second half does not produce three to four times the first. The inventory built for the ramp stays in the warehouse, the operating loss continues at the $11 million a month the first half averaged, and the cash of $325.6 million, which is 31% of the market capitalisation, becomes the thing that sets the share price rather than the order book. Against that background the customer concentration is the risk that matters: one customer was 51% of first-half revenue, and a programme that slips there has no substitute in the same quarter.
None of the three cases above is a forecast and none carries a price. They are built only from figures the filings state: revenue of $20,189 thousand in the quarter and $35,660 thousand in the half, a gross margin of 16.1%, an operating loss of $38,645 thousand, cash of $325,553 thousand, inventory and prepaid inventory of $84,844 thousand, and the company’s own full-year target revenue of $150-180 million.
One distinction matters in this company more than in most. Red Cat publishes a target, not guidance, and the difference is not cosmetic: a target is the number the company is aiming at, and it has been reaffirmed rather than raised. The second half has to produce between 3.2 and 4.0 times the first half for the target to be met, and everything in the three cases above follows from whether that happens.
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September 24 manufacturing update: the September 21 Blue Ops Day confirms activity at the 155,000-square-foot Valdosta facility and a Variant 7 production ramp. The announced $30 million investment and more than 200 jobs are plans. The next financial evidence is delivered units, accepted orders, revenue and working-capital conversion; the event alone does not establish a new award or raise annual guidance. Primary source
The Form 10-Q filed on August 6, 2026 covers the quarter ended June 30, 2026 and is the source of every balance-sheet and cash-flow line used here, with the Form 8-K of the same date carrying the results as Exhibit 99.1. The Form 10-Q of May 7, 2026 covers the first quarter. The Form 10-K of March 19, 2026 gives the year ended December 31, 2025, and the Form 10-Q of November 13, 2025 the nine months to September 30, 2025. Two current reports matter for governance rather than for the numbers: the 8-K of July 22, 2026 on the dismissal and the subsequent complaint, and the 8-K of June 25, 2026 on the annual meeting. The Form 4 filed on September 17, 2026 is the most recent statement of insider transactions.
The company’s fiscal year ends on December 31, so the quarters run with the calendar and the comparisons in this page are like for like. What is not like for like is the company: the first half of 2025 produced $4.8 million of revenue and the first half of 2026 produced $35.7 million, so almost every ratio in the older filings describes a different business.
Revenue was $20,189 thousand against $3,219 thousand, an increase of 527%. Cost of goods sold was $16,929 thousand, so gross profit was $3,260 thousand and the gross margin 16.1%; a year earlier the gross profit was $375 thousand on $3,219 thousand of revenue, a margin of 11.6%, and the company describes the movement as a 39% improvement in the margin rate. Operating expenses were $41,905 thousand against $13,022 thousand: research and development $14,219 thousand, sales and marketing $6,439 thousand and general and administrative $21,247 thousand. The operating loss was $38,645 thousand against $12,647 thousand, and the net loss $35,259 thousand, or $0.26 a share against $0.15. Adjusted EBITDA was a loss of $31,838 thousand against $9,903 thousand, and for the half a loss of $53,383 thousand against $20,128 thousand.
For the half, revenue was $35,660 thousand against $4,848 thousand, the gross profit turned from a loss of $476 thousand to a profit of $5,225 thousand, and the operating loss was $65,946 thousand. The cash flow statement is the one to read carefully here, because it shows what the growth is being paid with. Operating activities used $78,749 thousand, of which $49,937 thousand is inventory and $4,513 thousand prepaid inventory, so $54.5 million of the $78.7 million went into goods rather than into the loss. Investing used $12,984 thousand, mostly property and equipment, and financing provided $249,421 thousand in.
The balance sheet at June 30, 2026 against December 31, 2025: cash $325,553 thousand against $167,865 thousand; inventory and prepaid inventory $84,844 thousand against $30,394 thousand; goodwill and intangibles $67,293 thousand against $24,590 thousand; total assets $527,487 thousand against $273,677 thousand; total liabilities $56,312 thousand against $27,845 thousand, of which acquisition consideration payable is $17,496 thousand across current and non-current, and convertible notes payable are nil at June 30, 2026 against $4,518 thousand at December 31, 2025; stockholders’ equity $471,175 thousand against $245,832 thousand. The accumulated deficit is $258,632 thousand.
The concentration disclosure is the other half of the picture. In the six months to June 30, 2026 one customer accounted for 51% of total revenue, against 26% for the largest customer in the same period a year earlier. On the receivables side, five customers accounted for 25%, 18%, 13%, 12% and 10% of the balance at June 30, 2026. Revenue that concentrated is revenue that can stop.
Cost of goods sold and operating expenses for the quarter ended June 30, 2026, as the company reports them.
There were 152,714,362 shares outstanding on August 4, 2026, the count on the cover of the Form 10-Q. The share count has grown fast: the weighted average used for the loss per share was 136,888 thousand in the quarter and 128,924 thousand in the half, against 91,295 thousand and 88,400 thousand a year earlier, so the company is issuing into the growth.
The financing that built the balance sheet is in the cash flow statement: $258,750 thousand of gross proceeds from public offerings in the first half, against $13,512 thousand of costs, for $245,238 thousand net, plus $4,305 thousand from the exercise of warrants and $575 thousand from stock options. No convertible notes were issued in the half, and the $15,000 thousand on that line belongs to the first half of 2025. In the first half of 2025 the same lines produced $76,750 thousand gross from offerings and $86,161 thousand of net financing, so the company has raised roughly $330 million of net equity proceeds across the two halves.
The instruments sitting on top of the share count are less visible than the equity sales. The convertible notes payable stood at nil at June 30, 2026 against $4,518 thousand at the end of 2025: they were revalued with an $867 thousand charge in the half and extinguished with a $326 thousand gain as the residual was converted into shares, and no notes were issued or repaid in cash during the period. The acquisition consideration payable of $17,496 thousand is the remaining obligation on the acquisitions, of which Quaze Technologies closed in the quarter. And the company’s inventory and capital expenditure are, in effect, financed by shareholders: $245 million raised, $84.8 million of it now sitting in stock.
Two filings between the start of August and the middle of September describe insider activity, and they need to be told apart because they are not the same kind of transaction.
Jeffrey M. Thompson, chairman and chief executive. The Form 4 filed on September 17, 2026 reports the settlement on September 15, 2026 of a variable prepaid forward contract he entered on September 15, 2025. Under that contract he had received $6,565,293.75 up front from an unaffiliated third-party dealer and had pledged up to 750,000 shares against a forward floor of $9.14 and a cap of $13.44. The settlement price was the floor, so he transferred all 750,000 shares. That is a transfer against a financing arranged a year earlier, not a decision taken that day; the shares had been in a collateral account throughout and he retained the vote. The same filing reports a separate sale of 150,000 shares at a weighted average of $7.74, within a range of $7.64 to $7.89, under a Rule 10b5-1 plan adopted on March 31, 2026. After both, his direct holding was 11,712,202 shares. A second forward contract, entered on January 14, 2026, covers up to 1,500,000 shares settling on January 25, 2027 against a floor of $11.88 and a cap of $15.58, and he has the right to settle it in cash and keep the shares.
Nicholas Reyland Liuzza Jr, director. The Form 4 filed on September 1, 2026 reports a sale on August 28, 2026 of 65,000 shares at a weighted average of $8.50, within a range of $8.47 to $8.52, leaving 424,874 shares held directly.
Both transactions happened at prices between $7.64 and $9.14, which is 13% to 35% above the September 18, 2026 close of $6.75. Neither is a signal about anything, but the arithmetic of what was sold and what was pledged is worth having in one place rather than inferred from a headline.
The shares trade on the Nasdaq Capital Market as RCAT. The reference price is the September 18, 2026 close of $6.75, and the market capitalisation of about $1.03 billion is a Merlintrader calculation from that close and the 152,714,362 shares on the cover of the Form 10-Q at August 4, 2026. The provider’s own figure for the same day was $1,059 million on a slightly higher price, so the two agree to within the price difference.
On the provider fields read on September 21, 2026, insiders hold 9.21% and institutions 57.57%, against a float of 138.65 million shares out of 152.69 million. Short interest is 23.12% of the float, or 3.57 days of average volume, which is among the highest in the sector; the average daily volume is about 8.97 million shares, so the position is large and tradeable at the same time. The provider records book value of $3.09 a share and cash of $2.13 a share, both of which describe a company whose balance sheet is now a substantial part of its valuation.
The company pays no dividend. The provider put the mean recommendation at 1.22 with a target of $16.78 on September 21, 2026, against the September 18 close of $6.75. That is an aggregate with its retrieval date and is reported as an aggregate, not as the note of a named firm: under the rules Merlintrader follows, a single target is published only with the issuing house and the exact date of the note, and no such note was obtained in its original form.
September 24 manufacturing update: the September 21 Blue Ops Day confirms activity at the 155,000-square-foot Valdosta facility and a Variant 7 production ramp. The announced $30 million investment and more than 200 jobs are plans. The next financial evidence is delivered units, accepted orders, revenue and working-capital conversion; the event alone does not establish a new award or raise annual guidance. Primary source
The company’s description of itself has changed twice in two years: from a drone maker to a defence drone maker, and now to an all-domain autonomy platform. The filings and releases name the pieces.
Air. The Family of Systems is led by Black Widow, the small drone supplied to the U.S. Army; Hellcat is a globally configurable small UAS built on the same architecture, intended for allied customers; Teal Drones reached Gauntlet II of the Drone Dominance programme, described as a finalist stage in a procurement for low-cost attributable drone systems; and in the quarter the company secured new orders from the U.S. Air Force Security Forces for Black Widow drones, training support, batteries and spares.
Sea. Blue Ops took the Variant 7 uncrewed surface vessel to full-rate production, launched and validated a new variant of its five-metre USV, and secured a contract with the U.S. Navy to lease the Variant 7 and take part in testing, integration and electronic warehouse work under the Office of Naval Research. Blue Ops and Apium were selected for the Office of Naval Research Global’s mACE3 and mACE4 experimentation events at MCAS Cherry Point.
Autonomy and power. The quarter’s acquisition, Quaze Technologies, adds wireless power transfer, which is the technology that decides whether a drone can recharge without a person. Red Cat and Apium demonstrated a multi-vendor find, fix, finish chain under a single command and control, with Black Widow providing the ISR and Fang 7 the kinetic finish, orchestrated by Apium’s Paradigm autonomy. The pairing with the Quaze acquisition is the argument the company makes for the whole portfolio: the pieces let a customer deploy, sustain and scale autonomous operations rather than buy one aircraft.
Third quarter of 2026, ending September 30. No date has been announced for the report; the second quarter was published on August 6, so a similar timing in early November is the pattern rather than a commitment. The figures to read first are revenue against the second quarter’s $20.2 million, the gross margin against 16.1%, and inventory against $84.8 million, because the whole case for the second half is that the goods in the warehouse ship.
January 25, 2027. The settlement date of the chairman’s second variable prepaid forward contract, covering up to 1,500,000 shares against a floor of $11.88 and a cap of $15.58. It can be settled in cash, in which case no shares move. The company discloses the terms in the Form 4, so the outcome will be visible in the next filing of the same kind.
Undated. The Drone Dominance programme, where Teal Drones is among the finalists at Gauntlet II. Awards of that kind do not arrive on a schedule the company controls, and the company has not attached a value to the opportunity.
Undated, and the one that decides the balance sheet. Whether any further equity is issued. The company raised $245 million net in the first half and holds $325.6 million of cash; the operating loss for the half was $65.9 million, and the second half is guided to be the bigger half by revenue. If the target is met the cash lasts; if it is not, the arithmetic of another raise returns at a share price of $6.75 against the $8 to $9 range at which insiders were transacting in August and September.
Red Cat calls its full-year number a target rather than guidance, and the distinction is worth keeping. On August 6, 2026 the company reaffirmed target revenue of $150-180 million for the year. The first half produced $35,660 thousand, so the second half has to produce between $114,340 thousand and $144,340 thousand, which is 3.2 to 4.0 times the first half.
The base to judge it against is in the Form 10-K. Fiscal 2025 produced revenue of $40,729 thousand with a gross margin of 3.1%, an operating loss of $66,597 thousand and a net loss of $72,075 thousand, so the target asks for roughly four times last year’s revenue with a margin that is already five times better and still in the teens. The intermediate step is visible in the quarterly series: the third quarter of 2025 produced $9.6 million, the fourth quarter of 2025 $26.2 million, the first quarter of 2026 $15.5 million and the second quarter of 2026 $20.2 million. The line is rising, and it is not yet rising at the rate the target needs.
Two things in the filings make that target more concrete rather than more hopeful. The inventory of $84.8 million is roughly five times the cost of goods sold in the second quarter, which is either the goods for the second half or a very expensive warehouse. And the customer concentration of 51% in one customer means the timing of one programme, not the size of the market, decides whether the year lands inside the range.
Revenue in millions of dollars, quarters as the company reports them.
Every company figure quoted comes from the filings listed above, each with the date it was filed. Provider fields are used only for the market, ownership and consensus figures, and each carries its retrieval date. The company’s own label for its full-year number is a target rather than guidance, and this page keeps that word.
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Disclaimer. This content is published by Merlintrader for educational and informational purposes only. It is independent journalism and research. It does not constitute investment advice, an investment recommendation, an offer or a solicitation to buy or sell any security, and it is not a research report within the meaning of applicable United States securities regulation. Nothing here should be read as a recommendation to buy, sell or hold $RCAT or any other security.
Figures are taken from public filings with the U.S. Securities and Exchange Commission, company press releases and market-data providers, and are stated with their reference dates. Data can change without notice, and figures published before a results release become outdated the moment that release is issued. Merlintrader makes no representation that the information is complete or current at the time of reading. Readers should verify every figure against the primary source before acting on it.
Space infrastructure, defence technology and applied artificial intelligence companies carry substantial risk. Programme delays, cost overruns, launch failures, contract cancellations and changes in government procurement can move results sharply from one quarter to the next. Contract ceilings and vendor-pool positions are not orders. Companies that fund themselves through at-the-market equity programmes or convertible instruments can dilute existing holders materially and without advance notice, and businesses at this stage can lose all of their value. Every reader is responsible for their own decisions and should consult a licensed financial adviser where appropriate.
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