Red Cat Holdings, Inc. Q4 FY2024 earnings call

• Record revenues for the quarter and fiscal year 2024 with revenue up 286% to $17.8M. Fourth quarter revenue was $6.4M, a new top line quarter record.
• Expanded product portfolio to a Family of Systems addressing various mission sets.
• Acquired FlightWave Aerospace for medium- to long-range ISR capabilities and has a partnership with Sentien Robotics for drone swarms.
• Replicator Initiative is a key focus with significant DOD funding for drones.
• SRR program of record is a key opportunity with Red Cat being one of two finalists, expecting down selection soon.
• Controlled costs with adjusted operating expenses decreasing to 98% of revenue in fiscal '24 from 391% in fiscal '23.
• Cash and accounts receivable balances as of April 30, 2024, totaled over $10 million, and secured $4.4M non-dilutive financing in July.

For the full fiscal year 2024, revenue increased 286% to a record $17.8 million compared to $4.6 million last fiscal year. Fourth quarter revenue rose to $6.4 million, a over 100% increase from the same period last year. Gross profit for fiscal '24 totaled $3.7 million or approximately 21% of total revenues. The product portfolio has expanded from one drone to three drones with the Family of Systems. The Teal 2 was the main driver, and the acquisition of FlightWave Aerospace brings medium- to long-range ISR and high-resolution mapping capabilities, while the partnership with Sentien Robotics enables drone swarm capabilities.

• Expect 2025 to be a record year in top line growth and scale.
• FlightWave deal expected to close soon, adding $10 million to $20 million in revenue for 2025.
• Anticipate SRR down selection in the next few weeks.
• Hope to finalize NATO-based programs of record before the end of 2024.

• Forward-looking statements involve risks that may cause actual results to differ materially.
• Risks related to acquisitions not closing as expected or program down selections not occurring as planned.

Q: You had mentioned you had $10 million in cash and receivables. Does that include the $4.4 million you just closed with UMAC?

A: The $10.4 million in cash and accounts receivables was the balance as of April 30, and the $4.4 million mentioned is in addition to cash and AR as of year-end.

Q: Some of the NATO programs of record are larger than the U.S. Army POR. Can you give us the magnitude?

A: One NATO program of record is for 25,000 systems, which is 4x the size of the ~6,000 system SRR program.

Q: Have you received any demand for the FlightWave Edge 130 system?

A: We've got a great response since announcing the LOI, with a lot of customer interest as it's a unique platform with long flight time and portable form factor.

Q: Was production capacity back up and running after lowering production for Teal 3?

A: We are back in production and are in a hiring spree to scale production for the Teal drone submitted for the Army prototype.

Q: When it comes to FlightWave and the acquisition, would you move that manufacturing into your existing facility?

A: We'll be doing simultaneous paths, with FlightWave having high demand and we hope to ramp up their capacity dramatically while preparing our Salt Lake facility for scale.

Q: Which product gives the lethal payload?

A: Both the Teal 3 and Edge 130 are being worked on for strike capability, with the Edge 130 potentially handling a kinetic payload in the future.