Earnings call transcript: Red Cat Holdings Q3 2025 misses forecasts, stock declines

Red Cat Holdings Inc. reported a challenging third quarter of 2025, with earnings per share (EPS) falling short of expectations and revenue missing forecasts. The company posted an EPS of -$0.16 against a forecast of -$0.09, resulting in a 77.78% negative surprise. Revenue came in at $9.65 million, significantly below the expected $14.12 million, marking a 31.66% shortfall. Following the earnings announcement, Red Cat's stock declined by 9.58% in regular trading and an additional 1.52% in aftermarket trading.

Key Takeaways

• Red Cat Holdings' Q3 2025 EPS and revenue both missed analyst expectations.
• The company's stock dropped significantly following the earnings report.
• Red Cat launched new products and expanded its manufacturing capabilities.
• The company maintains a strong cash position with $212.5 million in cash and receivables.
• Forward-looking guidance indicates potential growth in 2026.

Company Performance

Red Cat Holdings experienced a mixed quarter, showing a significant 200% increase in revenue from the previous quarter, reaching $9.65 million. However, the results fell short of market expectations. The company has been focusing on expanding its product line and manufacturing capabilities, which may position it for future growth despite the current financial shortfall.

Financial Highlights

• Revenue: $9.65 million (200% increase from Q2 2025)
• Gross profit: $638,000, representing a 7% margin
• Cash and receivables: $212.5 million

Earnings vs. Forecast

Red Cat Holdings reported an EPS of -$0.16, compared to the forecasted -$0.09, resulting in a negative surprise of 77.78%. Revenue was $9.65 million, missing the forecasted $14.12 million by 31.66%. This marks a significant deviation from expectations, impacting investor confidence.

Market Reaction

The market reacted negatively to Red Cat's earnings announcement, with the stock price falling by 9.58% during regular trading hours. The decline continued in aftermarket trading, with a further drop of 1.52%. The stock is currently trading at $8.43, down from a close of $8.56, and is well below its 52-week high of $16.70.

Outlook & Guidance

Despite the current quarter's challenges, Red Cat Holdings provided optimistic guidance for the future. The company expects Q4 revenues to range between $20 million and $22 million, and it has set a year-end revenue target between $34.5 million and $37.5 million. Additionally, Red Cat is scaling up its production capacity and anticipates significant growth in 2026.

Executive Commentary

CEO Jeff Thompson emphasized the company's strategic positioning, stating, "If we only sold 200 boats, that's $150 million." He also highlighted the importance of manufacturing capabilities, saying, "We believe factories are the moat for defense." CFO Chris Erickson noted the global acceleration of defense spending on autonomous systems.

Risks and Challenges

• Supply chain disruptions could impact production timelines.
• The competitive landscape in the defense and autonomous systems market is intensifying.
• Economic uncertainties may affect defense budgets and spending.
• Execution risks related to scaling production and launching new products.
• Regulatory changes could impact market dynamics.

Q&A

During the earnings call, analysts inquired about the company's production capabilities and potential revenue delays. Management clarified that inventory buildup is underway for the Black Widow drone production and discussed the potential expansion of the Blue Ops maritime division.

Full transcript - Red Cat Holdings Inc (RCAT) Q3 2025:

Operator: Good afternoon and welcome to Red Cat's third quarter 2025 earnings conference call. My name is Steve, and I'll be your operator for today's call. Joining us are the Red Cat CEO, Jeff Thompson, and CFO, Chris Erickson. Please note that certain information discussed on today's call will include forward-looking statements of our future events and Red Cat's business strategy and future financial and operating performance. These forward-looking statements are only predictions and are subject to risk, uncertainties, and assumptions that are difficult to predict and may cause actual results to differ materially from those stated or implied by those statements. Certain of these risks, uncertainties, and assumptions are discussed in Red Cat's SEC filings, including its most recent annual report on Form 10-K and other SEC filings.

These forward-looking statements reflect management's belief, estimate, and prediction as on date of this live broadcast, November 13, 2025, and Red Cat undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this call. In addition, our comments on the call today contain reference to non-GAAP financial measures such as adjusted EBITDA and key business metrics such as annual recurring revenue. Non-GAAP measures should be viewed in addition to and not as alternative for the company's reported GAAP results. A reconciliation of these non-GAAP measures to their most directly compared GAAP measures, as well as definition of the key business metrics referenced and management reason for including the non-GAAP measures and key business metrics referenced, may be found in the press release.

Finally, I would like to remind everyone that this call will be recorded and made available for replay via a link available in the investor relations sections of the company's website at ir.redcatholdings.com. With that, I'll turn the call over to Jeff.

Jeff Thompson, CEO, Red Cat Holdings: The 2025 earnings call. I will start by providing some high-level commentary on our financial results and then share exciting updates about our unique market position and revenue growth initiatives. Red Cat delivered a record-breaking third quarter with revenues of $9.6 million, up 200% from second quarter of 2025. Q4 will be more revenue in one quarter than we have ever done in a 12-month period. A majority of that almost $40 million of revenue in 2025 will have been shipped in the second half of Q3. In Q4, that's just 1.5 quarters. This performance reflects the accelerating adoption of our drone and robotic solutions across defense and national security sectors. Our product portfolio has reached new levels of validation and market acceptance. We are uniquely positioned and have built capacity to meet the U.S. Army's need for 1 million drones. We are ready with speed and volume.

Here are additional milestones we achieved this quarter. The Limited-Rate Initial Production tranche two contract we signed in July 2025 has expanded. It is now $35.1 million. We launched Blue Ops, our new maritime division focused on uncrewed surface vessels, with facilities now established in Georgia, Maine, and southeast Florida. Our FANG FPV drone was officially added to the Blue UAS cleared list, a critical validation for U.S. government use and now being used by other PM UAS categories. We successfully completed flight testing with Palantir's visual navigation software on our Black Widow platform, enabling operations in GPS-denied environments and now a Black Widow product option that will improve Black Widow margins through software sales. We announced a strategic partnership with AeroVironment, enabling deployment of FANG from the P550 UAS, part of the LR program of record, and Edge Autonomy is deploying the Black Widow on their long-range platform.

Our Black Widow system was approved for NATO NSPA Catalog, opening doors to NATO members and partner nations and possible foreign military sales. To unpack that a bit more with added color, our limited-rate production contract for the Black Widow system, valued at $35 million, demonstrates the military's confidence in our technology and manufacturing capabilities. The total contract in 2025 is now approaching $40 million for the U.S. Army alone. While we experience a six- to seven-week delay due to chain doors that pushed the first shipments to mid-August, this reflects the dynamic nature of defense requirements and our ability to adapt to solutions to meet evolving specifications. We received the new changes at the end of July. We iterated and delivered the first LRIP drones three weeks later. We proved that we can do quick changes and continue to ship at volume.

Perhaps our most exciting strategic expansion is the launch of Blue Ops, our new maritime division. This represents a natural extension of our autonomous systems expertise into a high-growth adjacent market. Our partnership in Europe with a battle-proven boat technology gives Blue Ops a three-year advantage in the USV space, and we expect our first boat hulls to be completed in December, with potential pricing from about $750,000 to $1.5 million per unit. This division opens up substantial new revenue opportunities. We now opened a 155,000 sq ft manufacturing facility in Georgia, capable of building more than 500-1,000 vessels per year, and established a sales showroom and lab in southeast Florida, and a prototype partner in Maine that has built some of the most complex boat technology in the industry. We believe this is the most undervalued Red Cat asset.

If we only ship 200 boats at the low end of pricing, that is $150 million in revenue. Red Cat believes factories are the moat. Additional expansion strategies are propelled by the need for manufacturing speed and volume, and we believe factories are becoming the new moat for defense. We have doubled our manufacturing space in Salt Lake City and doubled our manufacturing space in Los Angeles, and we have U.S. capabilities for 1,000 USVs a year and can build a new hull design in months to production. Now, to provide the Army SRR program update, we continue to execute on the U.S. Army's short-range reconnaissance program. The LRIP contract signed in July has been expanded and is now valued at $35.1 million. Let me share some context on changes in our revenue outlook and where our projections are shifting slightly to the future.

The highly anticipated SRR contract took an extended amount of time to finalize. The government budget was not signed until July 4, and we're still receiving changes to the Black Widow as late as the last week in July. The unanticipated delay shifted our expected revenue recognition by about six to seven weeks to the right, but our long-term trajectory remains unchanged. In fact, the recent expansion of the LRIP contract to $35.1 million gives us further excitement of the future trajectory of the U.S. public announcements, specifically the 1 million drones last week. We expect to announce additional contracts and partnerships in the coming months, including developments in our USV segment, Edge 130 move to Trichon, new power capabilities combined with swarming. Given some of the delays mentioned, we are needing to lower our full-year revenue guidance range for 2025 to between $34.5 million and $37.5 million.

Q4 guidance is just below a $100 million annual run rate. We remain very optimistic about our ability to recover revenue from the delayed continuing resolution known as the One Big Beautiful Bill and the government shutdown of 2025. Demand has grown significantly in the last three months, with the Army alone looking for millions of drones. We are currently implementing Warp Speed in Salt Lake City and expect to send Palantir and four deployed engineers to FlightWave Long Beach facility, then soon to Georgia for the Blue Ops facility. We believe running our factories utilizing Palantir's Warp Speed will give us lower cost, higher margin, better operating metrics, better visibility, and help us dominate against old, frosty prime vendors. As you know, we also previously announced our new product with partnership with Palantir for visual navigation.

We also expect to launch other important products from Palantir on the Black Widow and the USV products earlier next year as partnerships continue to grow with Palantir utilizing their AI products. I will now turn the call over to Chris to discuss our financial results.

Chris Erickson, CFO, Red Cat Holdings: All right. Thank you, Jeff. And good afternoon, everyone. Appreciate everyone jumping on today. As Jeff mentioned, we're pleased with our record third quarter 2025 results. Absolutely ecstatic. Our financial performance reflects the success of our ongoing strategic initiatives and our commitment to delivering value to our shareholders. On the income statement side, revenues were $9.6 million for the third quarter of 2025. Now, this is trending up from $3.2 million in the second quarter and up further from the $1.6 million in Q1 of 2025. This improving trend is due to increasing product revenue as we have started delivering drones to the U.S. Army under the SRR program. Gross profit was $638,000 in the third quarter of 2025, up from $375,000 in the second quarter of 2025. Margins have been primarily driven by higher revenues in the two consecutive quarters.

Q3 gross profit was a large increase compared to the gross loss of $392,000 in the third quarter of 2024, an improvement of over a million dollars. On a percentage basis, gross profit for this quarter was 7% compared to a gross loss of 30% during the third quarter of 2024. The year-over-year same quarter change is due to higher utilization of plant capacity and decreased inventory obsolescence in 2025 compared to 2024. On our operating expense side, we've strategically increased the areas of R&D and G&A to support our rapid growth trajectory and market expansion initiatives. During Q3 of 2025, we invested approximately $6 million into R&D, a quarterly increase of 66% over Q2 of 2025.

We've accelerated R&D to focus on growing our technological leadership in all areas, including but not limited to unmanned maritime surface vessels, advanced communication systems, electrical, optical, and thermal sensor technology, universal flight controls, AI-based navigation systems, and swarming capabilities, to say the least. Plenty of other areas that we're spending R&D as well to improve our technologies. General and administrative expenses have grown to $9.2 million for Q3 of 2025, a quarterly increase of 48% over Q2 of 2025. This is to support our larger organization, including the establishment of our Blue Ops division and the operational infrastructure required to manage our expanding operations. Now, onto the balance sheet and cash flow side. The most significant trend across our balance sheet and cash flow metrics is the strengthening foundation we're building for sustained growth and profitability. We've ended the quarter with $212.5 million in cash and receivables.

This liquidity positions us well to execute on our SRR obligations, scale our USV division, and pursue other strategic growth opportunities. The investments we're making in working capital, manufacturing capabilities, and organizational infrastructure are already generating returns through accelerated revenue growth and enhanced market position, positioning us for continued success as we scale our operations and capture the tremendous opportunities in the defense drone market. Despite the timing shift of revenue that Jeff talked about, we remain confident in our ability to meet long-term goals. Our production capacity continues to improve with minimal constraints. We are on track to scale up drone output to 1,000 units a month by early 2026, and our USV manufacturing is building up with first deliveries expected in Q2 of 2026. On the capital allocation side, we are focused on deploying capital across three key areas.

Our USV division built out of Blue Ops, estimated to be a $20-$25 million investment to fully operationalize the division. Strategic investments targeting technologies in swarming, battery tech, AI, and communications, among others. The third, our facility expansion with completion of our facility expansions in Salt Lake City and Los Angeles here in the next three to four months, and then also in Georgia with our Blue Ops facility. General outlook. Turning our guidance to the full year of 2025, as Jeff mentioned, we expect revenues to be between $34.5-$37.5 million. This represents Q4 revenues between $20-$22 million, or a sequentially quarterly increase of 170%, more than doubling the Q3 revenues. This continued strong sequential growth driven by our accelerated Black Widow production ramp and FANG system deliveries following Blue UAS certification.

This guidance reflects our confidence in our production capabilities, with our anticipated manufacturing scaling from 500 to 1,000 drones per month in Q1 of 2026 and our strong order visibility from both existing defense customers and new opportunities generated through our NATO catalog approval. Several key factors are driving our optimistic outlook for the remainder of 2025 and into 2026. Our limited-rate production contract for Black Widow systems provides a solid foundation of committed revenue, while our expanded production capacity position allows us to capture additional opportunities as they emerge. With the launch of Blue Ops, it opens an entirely new revenue stream and significant potential, giving our pricing expectations between $750,000-$1.5 million per vessel and the growing demand for autonomous maritime solutions. Our strategic partnerships with Palantir and AeroVironment are beginning to generate collaborative opportunities that should contribute meaningfully to our revenue growth trajectory.

Market conditions continue to be exceptionally favorable in our solutions. Defense spending on autonomous systems is accelerating globally, driven by evolving geopolitical dynamics and the proven effectiveness of drone technology in modern conflicts. The emphasis on domestic manufacturing and supply chain security creates substantial competitive advantages for Red Cat, while our international expansion through NATO approval opens up significant new market opportunities. We are also seeing increased interest in our maritime capabilities as defense organizations recognize the strategic importance of unmanned surface vessels. Our internal initiatives are positioned to drive sustained growth beyond the current quarter. In closing, we remain focused on disciplined execution, strategy expansion, and delivering shareholder value. We are pleased with the progress we have made on each of our strategic initiatives and operational performances of the business. With that, happy to answer your questions.

Operator Steven, if you would please open up the line for a Q&A.

Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star, then one on your touchscreen phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. Analysts are requested to limit to one question and one follow-up. At this time, we will pause momentarily to assemble our roster. The first question comes from Austin Bowling with Needham. Please go ahead.

Austin Bowling, Analyst, Needham: Hey, guys. Thanks for taking my question. First one, we're just curious on an update regarding the full-rate production order. It sounded like previously you guys were hoping to secure that by the end of the year. Is that still kind of the expectation? Any idea on sizing of that opportunity?

Jeff Thompson, CEO, Red Cat Holdings: Hey, Austin. Thanks for the question. That was going to be by the end of the year, but that was before the shutdown. We're still communicating with them. They're using OTAs from now on, as you probably heard Secretary Hegseth last Friday. We do not know the size yet, but considering that LRIP is closing in on a $40 million size, if you look at the president's budget, it's for 2,250 systems for SRR, which they have at about $148 million. Now, until budgets are approved, no one knows what that's going to be. I think the size is going to be dramatically larger from the $40 million basically we got in 2025.

Austin Bowling, Analyst, Needham: Okay. Great. Thank you for that. And then just on the boat opportunity, shipping, it sounds like in Q2 of next year, what is the type of cadence for revenue opportunity? Do you think that could be next year for you guys?

Jeff Thompson, CEO, Red Cat Holdings: As I said in my comments, if we only sold 200 boats, that's $150 million, and that would be the least expensive five-meter boat. We're starting with the seven-meter variant, which has lots of opportunities for missiles, torpedoes, Black Widows. It comes in many, many different configurations because it's the bigger size. Those will be probably in the mid-range of that $750,000-$1.5 million. We think there's a robust need for shipbuilding, as there was also an executive order just like the drone dominance executive order. The U.S. is way further behind in shipbuilding and way further behind than the Ukrainians are with their naval capabilities. We believe it could be a pretty robust revenue stream for us in 2026. A little too early to start giving guidance on that. We did have a very successful outing in Portugal in September.

Once the first hulls are ready to demo, we're probably booked the first three months of the year giving demos to almost everybody who wants to take our meeting because our partner that we have in Europe has three years of proven battle-proven, not battle-tested, battle-proven, which is a key differentiator in the Black Sea. We expect to get all the meetings. It's going to be up to us to show them how good our brand new hull is and our capabilities are. We're actually probably going to add a lot more robust capabilities with additional cameras than they are in other countries right now.

Austin Bowling, Analyst, Needham: Okay. All right. Thank you, guys, for that. Best of luck the rest of the year.

Jeff Thompson, CEO, Red Cat Holdings: Great. Thanks.

Operator: The next question comes from Mike Latimore with Nordland Capital Markets. Please go ahead.

Mike Latimore, Analyst, Nordland Capital Markets: All right. Great. Yeah. Thanks. I guess on the, you mentioned the six to seven-week delay. Just maybe can you provide a little framework on how much revenue recognition was influenced by that? Which products, which programs were affected?

Jeff Thompson, CEO, Red Cat Holdings: There is a lot of moving pieces to that, Mike. A, because they keep changing the contract from the Army. The good news is we're already delivering on it. We did a delivery today. As we mentioned, we're going to be doing more than 100% growth in Q4. Basically, the way I would look at it, Mike, is if you took instead of our production shipping starting in the beginning of July, if you just shifted everything six to seven weeks to the right, nothing has changed with our demand from our customers from the previous guidance. I would say the only thing that was significantly different that held us up in demand was that we had to do some reconfiguring, which I mentioned this publicly about two months ago.

The FlightWave Edge 130 is a great flying machine, but it's not a very robust tool to hand a soldier that's going to be pretty rough with it. The $25 million that we were expecting to have from FlightWave this year, we decided to rip the Band-Aid off early and start that reconfigure a couple of months ago, as I mentioned on a previous call, to make that Edge 130 a more robust aircraft so that a soldier could handle it and would not be breaking it. The decision was to just move straight to the Trichon instead of messing with the interim version. That's where we are. That's the only and we expected $25 million in 2025 from FlightWave, which we're not going to get because of that.

Mike Latimore, Analyst, Nordland Capital Markets: Okay. Got it. It looks like inventory almost doubled sequentially. Is that largely finished goods, Black Widow? What's in there? Yeah. So that's.

Jeff Thompson, CEO, Red Cat Holdings: I'll let Chris take that.

Mike Latimore, Analyst, Nordland Capital Markets: Yeah. Not finished goods, but raw materials, inventory ramp up, a lot of deposits in there as well. As we've started production now, of course, at the very beginning of any type of process like this, you do have a lot of long lead time items that have to build up. As we built that out to prepare for especially the big ramp starting up in Q1 for these deliveries, we've built up that inventory. That's all in raw materials and parts for those inventories as well as deposits. Did you say that was for Blue Ops or Black Widow or both?

Chris Erickson, CFO, Red Cat Holdings: Black Widow. A majority of that is Black Widow, smaller portion FlightWave. Blue Ops, we're going to start having that to ramp up this next quarter, but you won't see that yet.

Mike Latimore, Analyst, Nordland Capital Markets: Got it. All right. Yeah. And then just thinking about Blue Ops in 2026, I think you're launching again the demos. What's the next, maybe walk through a couple of steps here. Which programs are most visible? What do you think sort of sales cycles are, funding cycles are? When do you think you might get some commercial wins there?

Jeff Thompson, CEO, Red Cat Holdings: Yeah. There is a lot of stuff that is going to be coming up in the 2026 budget for shipbuilding, USVs. It is all out there for the taking. We believe because our platform is mature compared to competitors, it is three years old. It has been the most successful against the Russian Navy. We have actually improved the hulls dramatically, have some of the best boat building capabilities, and we have the capability to scale rapidly with lots of volume coming out of Georgia. That factory used to do 850 lake boats per year before we took it over in September. The USVs that we are making do not require bathrooms. They do not require upholstery. They do not require sound systems. They are much simpler boats to build. There is some great technology in them. There are a lot of sensors. There is a lot of comms.

We actually just tested our tech stack this week on a traditional commercial boat that's not one of our USVs coming out of the factory. We were able to drive that boat from pretty much anywhere in the world through Starlink. We've been demoing that in Florida. Our tech stack's getting mature. We're pretty stoked about that. We'll be able to give you much stronger updates early in Q1. The demo in Portugal was very successful for us. People know that there's a U.S. option of the most successful USV in the industry. We'll be able to update you on where we'll be next year, early next year.

Mike Latimore, Analyst, Nordland Capital Markets: Okay. Great. Thank you.

Operator: Thank you. If you have a question, please press star, then one. The next question comes from Glenn Matson with Ladenburg Thalmann. Please go ahead.

Mike Latimore, Analyst, Nordland Capital Markets: Hi. Thanks for taking the questions. Nice to see the revenue ramp. I imagine there's a lot of moving parts still, but the gross margin is up, obviously, year over year, still sub 10%. What's your expectation, Chris, in Q4 given this higher revenue level? Can you just remind us where you think you'll be when you're at a higher scale, say, later next year or whatever that may be?

Chris Erickson, CFO, Red Cat Holdings: Yeah. Absolutely. Yeah. We do expect this margin of 7% to increase up continuing on to next quarter as well as building up into next year. We are going to expect to see it probably right around 10% for Q4. Breaking into Q1 through the end of next year, that'll continuously increase, projecting towards 20% by the end of next year. This is part of full utilization of the overhead implementing into it and then starting to break down the cost on the supply chain. For the first time, we're ramping up. Things are a little bit more expensive. As we accelerate that, we will be able to bring down the cost of that as well. That'll extend on the low end, 20% by the end of next year, shooting for about 30-35% in the long run.

Jeff Thompson, CEO, Red Cat Holdings: Glenn, just to add to that, we have to look at each system as a separate entity when we're looking at how to get these gross margins up. If you look at the Teal products we had in the past, the Teal 2 went from negative 10% to right around 8-10% in its first quarter to 20%, then to plus 30% each quarter. Previous ramping experience was that it'll go up nice and steadily quarter after quarter, specifically as the revenue grows. We're seeing triple-digit growth next quarter, and we expect similar growth going forward. Each device is going to have a different margin. FlightWave margins are actually slightly higher than the Black Widow. Once we get that switched to the Trichon, that'll probably help our margins on an overall basis. We look at them per unit.

We have the Black Widow, we have the Trichon, we have the FANG, and we have the USVs. They all have different margin capabilities and their maturity.

Mike Latimore, Analyst, Nordland Capital Markets: Great. Thanks. When it comes to the Trichon, what programs are you targeting in terms of the uptake for that UAV?

Jeff Thompson, CEO, Red Cat Holdings: Yeah. What's interesting is the demand's very strong for even the Edge 130. But it's currently not to where we want it to be. We've done some incredible improvements to it in the last couple of months to make it more reliable and adding features, all the things that we're getting feedback on. There's lots of different programs. MRR is still wide open. We could look at MRR with the Trichon. There's a lot of different things. Border Patrols really like the Trichon long-range capabilities with it. We could also turn it into a loitering munition. It's a very unique aircraft. Our sales team love it. We just need to make it more robust. Once it's more robust, there's a lot of things we can do with that platform. It flies the longest on the Blue UAS list. It's one of the fastest drones in the Blue UAS list.

If we can make it a more robust aircraft, it's going to sell very well.

Mike Latimore, Analyst, Nordland Capital Markets: Great. Thanks. I'm just trying to think about the first part of 2026. I know you're not giving guidance, but if your prior guidance at the low end was, say, 80, and you're coming in now, just ballpark, say, 40, although it's lower than that, but 40, say, that's a $40 million delta, and you're saying basically 25 of that is FlightWave. The remaining 15 or so is kick out into Q1. Is that fair? What else backfills into Q1 to rise sequentially, say, from Q4 in your mind, Jeff?

Jeff Thompson, CEO, Red Cat Holdings: Obviously, just to bash the haters, the haters out there said that our LRIP contract was $12 million. It's $35 million. The plan for what you see in the president's budget is for 2,250 next year, which is probably a small number after the Army announcing they need to deliver a million drones over the next year or two. All the numbers seem to be going up. LRIP went up. We believe all of 2026 is going to go up. We're not going to get into guidance yet in 2026. We got burned severely by the government, massive postponements through half the year, and then a government shutdown. We're going to wait until we have our OTA contract, which is going to give us a very great barometer for 2026. If you look at how SRR LRIP worked out, Skydio got 7. We got 35.

The Black Widow is doing some incredible things in Europe right now. We expect the Black Widow to end up dominating this category of drone the way it's performing in very contested environments. We're just going to continue to improve the Black Widow and give the Army a product that we're proud of so that they can be safe and more lethal. Long answer to we're not going to give 2026 guidance with the way this government's been operated. As soon as we sign the OTA contract, which who knows when it's going to be signed? I'm not going to give dates on that. I'm starting to learn at least. Yeah, we're not concerned with 2026 being significantly larger than 2025. Now, just to back up here a little bit, all this revenue that we're talking about, almost all of it, is from the Black Widow.

We're not getting contributions from the Blue Ops yet and from FlightWave. We expect them to significantly contribute next year, but we're not ready to give guidance yet. We're hoping to be able to do that at the beginning of next year.

Mike Latimore, Analyst, Nordland Capital Markets: Okay. Great. Thanks for all that, Keller.

Operator: Thank you. This concludes our question and answer session. I would like to turn back the conference over to Jeff Thompson for any closing remarks.

Jeff Thompson, CEO, Red Cat Holdings: Thanks, everybody, for joining. We're pretty excited about what's going on. We're excited about where we're going with the army. We're excited where we'll go with all the other groups. We're going to continue to just keep building and delivering drones. Thanks again for everybody joining.

Operator: Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Thank you.

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