Red Cat Holdings (RCAT 11.23%) stock crashed 17.8% through 10:40 a.m. ET Thursday after reporting mixed earnings last night.
Analysts expected the company, which makes military drones, to lose $0.14 per share in Q4. Sales were supposed to be $20.9 million, and Red Cat shredded the sales forecast with revenue of $26.2 million. But its quarterly loss topped $0.17 per share -- three cents worse than forecast.
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Red Cat Q4 earnings
The news wasn't all bad. Starting with the sales beat, Red Cat grew quarterly sales nearly 2,000% year over year, and wrapped up its fiscal 2025 with 160% sales growth. It cut its quarterly loss in half and slimmed its year-end losses as well. Still, it's costing Red Cat nearly as much to build its drones as it's able to sell them for.
2025 revenue was $40.7 million. 2025 cost of goods sold was $39.4 million.
So the company did earn gross profits. But after deducting operating expenses (research and development and selling, general, and administrative expenses, for example), the company ended with a $0.73 per share loss for the year.
NASDAQ: RCAT
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What's next for Red Cat stock?
As the company heads into 2026, Red Cat CEO Jeff Thompson is optimistic that the sales growth, at least, will continue. The company has "strong momentum" and is winning contracts -- Black Widow drones for at least two customers in Asia were cited. It's partnering with rival AeroVironment (AVAV 2.07%) so that their respective drone products can operate together within a given military system.
And Red Cat is expanding production to support its growing sales, increasing total production space to 254,000 sq. ft. We just don't know yet at what point production scale will allow Red Cat to pivot from losing money... to earning profit.
