Red Cat (RCAT) Q2 2026 earnings summary

Executive summary

• Q2 2026 revenue reached $20.2 million, up 527% year-over-year, with gross profit of $3.3 million and gross margin improving to 16.1% from 11.6% last year and 12.7% in Q1 2026.

• First half 2026 revenue totaled $35.7 million, a 636% increase from $4.8 million in the first half of 2025, with gross profit swinging from a loss to $5.2 million (14.7% margin).

• Operational transformation included scaling production, expanding product lines, and shifting to direct feedback from operational environments, compressing product cycles from years to weeks.

• Revenue diversification improved, with Army now representing 50% of revenue (down from 73% in 2025), and new major customers in Japan and Europe.

• Net loss for Q2 2026 was $35.3 million, with loss per share of $0.26.

Financial highlights

• Q2 2026 revenue: $20.2 million (up from $3.2 million in Q2 2025); first half 2026 revenue: $35.7 million.

• Q2 gross profit: $3.3 million; gross margin: 16.1% (up from 11.6% in Q2 2025 and 12.7% in Q1 2026).

• Operating expenses for Q2: $41.9 million, driven by investments in personnel, manufacturing, R&D, and compliance.

• R&D expense for Q2: $14.2 million, supporting innovation and new platform development.

• Cash balance as of June 30, 2026: $325.6 million; working capital: $396.5 million; inventory: $84.8 million.

Outlook and guidance

• Target 2026 revenue remains $150–$180 million, with a significant ramp expected in the second half.

• Confidence in outlook driven by strong demand signals, expanded manufacturing, and diversified customer base.

• Gross margin expected to reach 30% by year-end, driven by economies of scale and product mix shift toward higher-margin USVs.

• Profitability targeted for 2027, with breakeven possible by end of 2026 for key divisions.

• Sufficient liquidity is expected for at least the next twelve months due to recent capital raises.