SAN JUAN, Puerto Rico - Red Cat Holdings, Inc. (NASDAQ:RCAT), a drone technology company, reported second-quarter fiscal 2025 results that fell short of analyst expectations, sending shares down 12.92% in after-hours trading Monday.

The company posted revenue of $1.53 million for the quarter ended October 31, 2024, significantly below the consensus estimate of $4.13 million and down 61% YoY. Adjusted loss per share widened to $0.18, worse than the expected loss of $0.09 per share.

Red Cat attributed the revenue decline to its strategic decision to halt production of the Teal 2 drone and focus on the Black Widow model, which recently won the U.S. Army's Short Range Reconnaissance (SRR) Program of Record contract.

"We halted production of the Teal 2 to retool for the Black Widow, prioritizing long-term growth over short-term revenue," said CEO Jeff Thompson. "This strategy has proven successful, enabling us to meet the demands of the new Army contract and all other Black Widow sales and programs of record."

Despite the weak quarter, Red Cat provided optimistic guidance of $80-$120 million in revenue for calendar year 2025, including SRR-related sales. The company ended the quarter with $5.7 million in cash and accounts receivable.

Red Cat also announced a new partnership with Palantir Technologies (NASDAQ: PLTR ) to integrate visual navigation software into its Black Widow drones, which it expects will boost revenue per drone and increase gross margins.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.