Red Cat Holdings Inc. (RCAT) shares plummeted 13.88% on Monday in after-hours trading, following the release of the company's fiscal second-quarter 2025 earnings results.
The drone technology company reported a wider net loss of $13.3 million, or $0.18 per share, compared to a net loss of $5.8 million, or $0.11 per share, in the same period last year. Revenue for the quarter declined by 60.95% to $1.53 million, missing analyst estimates of $4.13 million.
Red Cat's disappointing financial performance overshadowed the company's earlier announcement of a strategic partnership with Palantir Technologies to integrate visual navigation software into its Black Widow drones. While the Palantir partnership initially boosted the stock by as much as 27% during regular trading hours, the subsequent earnings miss led to a sharp reversal in after-hours trading.
In the earnings release, Red Cat cited its decision to halt production of the Teal 2 drone and focus on the Black Widow model as a key factor impacting short-term revenue. However, the company believes this strategy will prioritize long-term growth and position it to meet the demands of a new U.S. Army contract and other programs.
Red Cat also announced plans to build a new manufacturing facility to enhance production and operations, as the company expects full-year revenue for calendar year 2025 to range between $80 million and $120 million, including sales from the U.S. Army's Short-Range Reconnaissance Program.
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