Q3 2025 Red Cat Holdings Inc Earnings Call
Available approximately one hour after the end of the call through April 30th 2025.
Joining us today from the Red Cat Holdings is that's Thompson, Chief Executive Officer, and interim Chief Financial Officer.
During this call management will be making forward looking statements, including statements that address bred cats expectations for further performance or operational results.
Forward looking statements involve risks and other factors that may cause actual results to differ materially from those statements.
For more information about these risks please refer to the risk factors described in Red Cats. Most recently filed periodic reports on Form 10-K and in bred cats press release that accompanies this call, particularly the cautionary statements in it.
The content of this call contains time sensitive information that is accurate only as of today March 31, 2025, except as required by law Red Cat disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur. After this call.
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It is now my pleasure to turn the call over to Jeff Thompson, Chief Executive Officer, Jeff. Please go ahead.
Great. Thanks.
Speaker Change: Thanks, everybody for joining the call Tonight.
This call is going to be brief.
Speaker Change: We just hosted an Investor day late last month and plan on having another Investor Day Town Hall in a couple of weeks.
Speaker Change: The town Hall, Investor Day will cover defense contracts.
Speaker Change: It was a strategic capital funding a dummy resolution updates new partnerships regulatory opportunities.
Speaker Change: You'll have the entire management team available.
Speaker Change: Some housekeeping for this call and the reason board remedy.
Speaker Change: We hired Chris Ericsson as a CFO a couple of weeks ago.
Speaker Change: Yes, if you're required to CFO sign the 10-K no exceptions.
Speaker Change: This document would have taken weeks to review and you don't even ask Chris to sign it.
Speaker Change: Chris did sign that one sign that would have been a big red flag anyway.
Speaker Change: I do want to give a shout out to see them Pelletier, our VP of finance team did a great job on the 10-K.
Speaker Change: The CFO limited limited quantity to have another investor update later this month, one that he can participate in.
Speaker Change: Two quick updates before we open it up for questions.
Speaker Change: Well just jump onto our long Beach factory.
Speaker Change: Long Beach is up and running and shipped its first runs in March.
Speaker Change: We expect slight waves to be shipping grows every month now on as they expand and scale the long beach facility and as we gain a backlog.
Speaker Change: We'll give more details on the Investor Day Town Hall.
Speaker Change: But based on the black widow.
Speaker Change: Visual navigation is almost complete on the black widow.
Speaker Change: This is a vital feature that gives the black widow, a unique competitive advantage.
Speaker Change: The software as we mentioned previously.
Speaker Change: Well expand our margins.
Speaker Change: The flight data and test looks incredible.
Speaker Change: We also look forward to upgrading the edge 130 soon to be on the trucking visual navigation.
Speaker Change: I told you folks that'd be brief.
Speaker Change: And with that we're going to turn it right over to questions.
Speaker Change: Yeah.
Speaker Change: We will now begin the question and answer session. If you wish to ask a question on today's call you will need to press Star then the number one on your telephone.
Speaker Change: If your question has been answered and you wish to withdraw your question you may do so by pressing Star then two.
Speaker Change: If you were using a speakerphone please pick up your handset before entering your request and speaking on the call.
Speaker Change: One moment please for the first question.
Our first question comes from Glenn Mattson with Ladenburg Thalmann. Please go ahead.
Glenn Mattson: Yeah, Hi, Jeff Thanks for taking the question so yeah.
Glenn Mattson: A quick update just on the kind of stub period. So we're kind of more curious about looking ahead can you give us some sense as to.
Glenn Mattson: A little bit more on the timing, perhaps on a signing of ESR deal and then well.
Glenn Mattson: The scope and over it kind of as you're seeing it is as they're talking to you about it just.
Glenn Mattson: The most recent update on that would be great.
Glenn Mattson: Yeah.
Glenn Mattson: [laughter], everyone who's going to keep going there.
Glenn Mattson: Even though wherever they fall a couple of weeks, but anyway. Thanks for the question Glenn.
Speaker Change: <unk> talked to you quite a bit over the last few weeks and a lot of other investors with you so long.
Glenn Mattson: Yeah. So.
Speaker Change: So in some activity is moving along.
Glenn Mattson: I'll just start at a high level.
Glenn Mattson:
Glenn Mattson: We're pretty excited that.
Glenn Mattson: L Rep who's gonna be a significantly higher than we did a nasty report that came out in January which will be.
Glenn Mattson: That'll be fun to report when once you officially sign and.
Glenn Mattson: Yeah, we did.
For sure that we got yesterday.
Glenn Mattson: Yesterday the day before we got the features.
Glenn Mattson: Contract side.
Glenn Mattson: So we mentioned that it was gonna be three contracts. This year first would be features some additional features for the black widow for the XR program.
Glenn Mattson: Then we signed L Rep, which we hope it's a very soon.
Glenn Mattson: And well, let you know as soon as we do I'm, probably doing a town Hall and then we have a mass production later this year. So again nothing's changed except we knock one of those off the list.
Glenn Mattson: And there we're pretty excited about where else will probably land.
Speaker Change: Oh, great. That's helpful. Just as a quick follow up on the international front could you just talk about opportunities you're seeing with the either NATO allies are in the Pacific.
Speaker Change: The general.
Speaker Change: Update based on versus where you might have thought about it a month ago or so when you did the investor day.
Speaker Change: Yeah actually I've gotten that question quite a bit now mostly because of the shift between press.
Speaker Change: President Trump zelinski, everyone thought that everyone's kind of turn it to anti.
Speaker Change: Our U S based drones.
Speaker Change: Just to be very blunt.
Frank: And Frank here.
Speaker Change: There are almost no drones in the category of the Black widow, just because D.
Speaker Change: T G I am not sure you do Chinese drones with NATO won't use.
Speaker Change: There's almost no companies in that category and the black widow category with the DJ I put them all out of business over the years and specifically, there's nothing is as robust as the black widow.
Speaker Change: Not only robust with the.
Speaker Change: Modular design very rugged drone, unlike the Chinese drone that feels like a toy.
Speaker Change: It's it has EW capabilities are now as visual navigation. So a couple of things one is we're continuing on the previous tenders in RF.
Speaker Change: <unk> that everyone's getting frustrated that we have not updated on yet but those are continuing.
Speaker Change: But there was a consortium put together of all of the Europeans. It wasn't massive but it was $2 billion to push Ukrainian and we were not excluded from some of these people looking to put together two tenders for that so yeah.
Speaker Change: Europe is not ignoring the U S manufacturers because of the tests between them.
Speaker Change: Ukraine, and the United States. So all those things are still ongoing and some of them are actually more enhanced now.
Speaker Change: Oh, Okay, great. Good luck on that and I'll jump back in the queue. Thanks.
Speaker Change: Our next question comes from Mike Latimore with Northland Capital markets. Please go ahead.
Speaker Change: Alright, thanks, very much and great to hear about the future contracts here.
Speaker Change: And then you mentioned the V NAV software in the prepared.
Speaker Change: Prepared remarks, I guess, how should we think about that relative to your guidance or that would cross sales of that would be incremental to guidance or how do we think about that in terms of finance the financial impact.
Speaker Change: Yeah.
Speaker Change: Yeah, Great question, Yes, so we have not added that for any of our guidance yet.
Speaker Change:
Speaker Change: I don't want to piss expenses, that's the wrong word, but it's such a required piece of software on every drone from now on.
Speaker Change: And it's from one of the best software companies in the World.
Speaker Change: We think that we'll be able to get full price or we haven't announced the pricing that we're working on with talented <unk> I got to see the first video the other day, it's just incredible.
Speaker Change: And to have this capability. It is one of the biggest problems.
Speaker Change: The army is having actually every branches happening because GPS shifting not work.
Speaker Change: Putting any modules on a drone like the black widow would reduce lifetime, there's a lot of quick.
Speaker Change: Quick fix hardware.
Speaker Change: Platforms are just really don't work for drones or size.
Speaker Change: And frankly, nobody has basically real time map update volunteer can provide so.
Speaker Change: We're partnered with pounds here on this visual navigation and we couldn't have a better partner because they're going to dominate but you'll navigation.
Speaker Change: But yeah. This is not included in any of our guidance yet so far.
Speaker Change: Once we get a quarter under our belt selling the software feature.
Speaker Change: We will probably update the Street Africa, we have a full quarter of selling this product.
Speaker Change: Got it got it.
Speaker Change: And then how about just in terms of.
Speaker Change: Your company moving to pound tiers operating system, you know maybe a quick update on the status of that and when do you think that might be completed.
Speaker Change: Yes.
Speaker Change: Yeah.
Speaker Change: Just implementing it now.
Speaker Change: It was I actually was able to be a keynote a week before last that Palo Alto, it's got to meet with a lot of other companies that are using it like Palin T like Andrew.
Speaker Change: The cirrhotic and companies like that.
Speaker Change: They think that's going to improve their margins, that's how well the system can work. So we're just in the very first few weeks of the installation. The good news is there they're much quicker than if.
Speaker Change: If you've ever been through an SAP installed a much different game already.
Speaker Change: So we were glad that we're getting it done right now before we're not production but.
Speaker Change: We believe it's going to give us so many efficiencies.
Speaker Change: There are a lot of redundancy across all of the factories.
Speaker Change: And as other companies have stated that they think it's going to improve their margins dramatically.
Speaker Change: Yeah, Yeah, it makes sense.
Speaker Change: Just last one for me.
Speaker Change: Maybe more of a townhall question, but.
At year end.
Speaker Change: Analyst day, you talked about the prospects of potential.
Speaker Change: Additional SRM funds this year not next year, but this year I guess any additional.
Speaker Change: <unk> content per view into that.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: They didn't send that extension and then all kind of.
Speaker Change: As they say on the Hill App, we're gonna be basically leave it.
Speaker Change: But they didn't they did continue with so.
Speaker Change: As Brendan mentioned on our last Investor Day last month <unk>.
Speaker Change: We requested another additional $100 million too.
Speaker Change: What we wanted for 2025, which ended September.
Speaker Change: We're feeling pretty good about what else is gonna be for.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: I also get wonderful quarter.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Right.