Red Cat (RCAT) Q4 2025 earnings summary

Executive summary

• Q4 2025 revenue reached $26.2 million, up 1,985% year-over-year and 172% sequentially, driven by defense and government demand and rapid production scaling.

• Full year 2025 revenue was $40.7 million, a 161% increase from 2024, reflecting robust growth and expanded program wins.

• Expanded production capacity by 520% to 254,000 sq. ft. by year-end 2025, including new USV division and operational factory in Georgia.

• Established an office in Kyiv, Ukraine, and secured a letter of request from Ukrainian forces to replace Chinese ISR drones with Black Widow drones.

• Secured new international military orders and launched new drone and USV platforms.

Financial highlights

• Q4 2025 gross margin was 4.2%, up 85% year-over-year but down 2.4% sequentially; full-year gross margin was 3.1%, up 332 basis points year-over-year.

• Q4 2025 gross profit was $1.1 million, reversing a loss of $1.0 million in Q4 2024; full-year gross profit was $1.3 million, compared to a loss of $30,000 in 2024.

• Operating expenses for 2025 were $67.8 million, up from $32.9 million in the prior year; operating loss for 2025 was $66.6 million.

• R&D expenses rose to $17.9 million from $8.1 million, focused on AI, machine learning, and system interoperability.

• Cash at year-end 2025 was $167.9 million, up from $9.2 million at year-end 2024; inventory rose from $13.6 million to $30.4 million.

Outlook and guidance

• Not providing official annual guidance until government contracts are secured, but internal scenarios range from $100 million to $170 million in 2026.

• Strong momentum in customer engagement and contract activity expected to continue into 2026, with focus on scaling production and expanding customer base.

• Will update the market on guidance as soon as contracts are in hand, not waiting for the next quarterly call.