Financial Data and Key Metrics - Year-to-date revenues totaled 4.3million,a245.7 million for the same period last year, due to the strategic focus on Black Widow [26] - Gross margin year-to-date was negative 12% of revenue, compared to positive 25% in the same period last year, primarily due to the final delivery of SRR Tranche 2 prototypes and lower production quantities of TL2 [26] - Cash used in operations totaled 12.5million,an115.7 million in cash and accounts receivable and closed an additional 6millionfinancing[29]BusinessLineDataandKeyMetrics−ThecompanyhasshiftedmanufacturingandsaleseffortstoprepareformassproductionofBlackWidow,prioritizinglong−termgrowthovershort−termrevenue[26]−TheacquisitionofFlightWaveaddedtheEdge130totheproductmix,withexpectationstoreachupto5014.7 million for Black Widow customers, with strong demand signals globally [17] Market Data and Key Metrics - The company has been inundated with customer requests for quotes and RFPs following the SRR announcement, with significant interest from both DoD and international markets [17] - The partnership with Palantir is expected to enhance the Black Widow's capabilities, particularly in visual navigation and AI, addressing key battlefield challenges [10][11] - The company anticipates a total addressable market (TAM) of 975milliononcetheDJIbanisimplemented,withpotentialopportunitiesinlawenforcementandfirstrespondermarkets[41][43]CompanyStrategyandIndustryCompetition−ThecompanyisfocusedonintegratingPalantir′svisualnavigationandAIsoftwareintotheBlackWidow,whichisexpectedtosignificantlyenhancemarginsandacceleratethepathtoprofitability[12]−ThecompanyispreparingforLRIP(Low−RateInitialProduction)inthefirsthalfof2025andfull−rateproductioninthesecondhalfof2025,withthesoftwareexpectedtobereadyforLRIP[23]−ThecompanyisapplyingfortheOfficeofStrategicCapital,whichcouldprovideloansbetween10 million and 150 million, offering a low-interest, grant-like funding option [32] Management Commentary on Operating Environment and Future Outlook - The company is optimistic about the future, with the Black Widow expected to be a dominant platform in the global market once the integration with Palantir's software is complete [21] - The company is exploring new and creative ways to address the commercial drone market, particularly in urban environments where RF jamming is a challenge [63] - The company believes the current administration's focus on building a large drone and robot army will be beneficial for its growth [69] Other Important Information - The company is transitioning its fiscal year end from April 30th to December 31st, with the next report being a transition 10-K for the eight months ended December 31st, 2024 [25] - The company is planning an Analyst Day in early January to provide more details on contracts and firm up guidance [13] - The company is working on integrating remote ID into the drone, which will be a key focus after completing the SRR program [63] Q&A Session Summary Question: Can you talk further about the relationship with Palantir? - The partnership with Palantir was driven by a joint customer request, and the integration is expected to be completed in the next couple of months [35] Question: Is there upside from Palantir built into the guidance? - The current guidance of 80 million to 120milliondoesnotincludeadditionalrevenuefromPalantir′ssoftware,whichisexpectedtoaddtothemargins[36]Question:WhatrevenueperdronecanweexpectwithAIsoftwarefromPalantir?−Thecompanyhasnotyetdeterminedtheper−dronerevenuefromPalantir′ssoftwarebutexpectsittosignificantlyenhancemargins[38]Question:HowdoyouexpecttoadaptBlackWidowfornon−Armybusiness?−TheBlackWidow,builtfortheArmy,isalsosuitableforlawenforcementandfirstresponders,withapotentialTAMof975 million once the DJI ban is implemented [40][43] Question: How does the Palantir contract help increase gross margins? - The Palantir software is expected to add high-margin revenue to the Black Widow, potentially increasing gross margins beyond the 50% achieved with hardware alone [50][52] Question: Have we seen any movement on NATO and other EU contracts? - The company is actively engaged with NATO countries and expects to see movement following the SRR announcement [55] Question: How does Red Cat plan to differentiate itself in the drone market? - The company is focused on integrating advanced technologies like Palantir's visual navigation and AI, as well as addressing specific market needs like GPS jamming and RF jamming [63] Question: Does a contract with the U.S. DoD limit you from selling drones to foreign countries? - The company can sell to foreign countries as long as they are not on the "bad boy list," though some software may require export licenses [68] Question: How might the future administration affect the size or volume of contracts? - The company believes the current administration's focus on building a large drone and robot army will be beneficial for its growth [69]
Red Cat (RCAT)2024-12-16 23:58