Red Cat clocks record revenue in Q1 2024 — as U.S. government keeps ordering more drones
The first quarter of fiscal year 2023 was a record breaker for Red Cat, the parent company of Teal (which is most famously known for its Teal 2 drone). Red Cat, which is based in Puerto Rico, reported record revenue for the first quarter of fiscal 2024, which is the three months ending July 30, 2023. In that period, the company reported revenue of $1.75 million for Q1 2024.
What’s more, is that Red Cat only expects revenues to grow. The company said in an earnings report that it is forecasting revenue of $3 million for fiscal Q2 and $5 million for fiscal Q3. Thus, combined revenue from the first three quarters of fiscal 2024 is expected to be nearly $10 million. That is significant for Red Cat, which says its Teal 2 drone had gone from zero revenue to almost $10 million in sales in just four months.
All those figures are based on its track record of current purchase orders, which keep coming in. In mid-September, Teal Drones announced it had signed $1.8 million in contracts with U.S. Customs and Border Protection (CBP) to supply 106 additional Teal 2 drone systems to U.S. Border Patrol. That follows an order made last October, when CBP initially ordered 54 drones from Teal in a separate contract worth just over $1 million.
In total, Red Cat has said it has received approximately $6 million in signed purchase orders, which are expected to be fulfilled by the end of the fiscal third quarter.
That said, the stock market has not been kind to Red Cat over the past six months (Teal was acquired by Red Cat in 2021).
What is the Teal 2 drone?
The Teal 2 drone is designed for military and other industry use cases, and stands out as being the first drone to be equipped with Teledyne FLIR’s new Hadron 640R sensor. With that comes high-resolution thermal imaging in a small form factor. It’s decked out with high-end intelligence, surveillance and reconnaissance technology, offering multi-vehicle control and artificial intelligence capabilities.
Another critical factor of the Teal 2 drone is that it has been approved by the U.S. Department of Defense as Blue UAS and is available to purchase through the federal government’s GSA Advantage website. Blue UAS is the label for a select group of DoD-approved drones for government users, which have been officially vetted as being NDAA compliant, validated as cyber-secure and safe to fly, and available for government purchase and operation. The Teal 2 received Blue UAS Cleared List approval in June 2023, joining the approvals already granted to another older model, the Teal Golden Eagle.
“We designed the Teal 2 to meet the technical requests and features sought by our target customer, the warfighter, such as advanced proficiency for nighttime operations,” said Red Cat CEO Jeff Thompson. “We believe we are well positioned as new opportunities arise, such as the Department of Defense’s recently announced Replicator Initiative. The Replicator Initiative intends to purchase thousands of small, smart drones to counter threats from China and other countries.”
Partnering with ESAero
Another critical driver of Red Cat growth is a partnership with aerospace engineering firm ESAero, which was brought on to assist Red Cat with fast-tracked customer-specific projects.
The first product of the companies in that deal is the design of an ESAero-designed multi-battery charger, which will be offered as an accessory for the Teal 2. Because the Teal 2 drone and its ground control station use the same battery pack, that multi-battery charger can enable charging of backup batteries while the drone is in operation — a critical aspect of better supporting persistent ISR missions. Consider it a sort of all-in-one charging solution.
“Having them lead important ad-hoc projects benefits our customers by rapidly giving them what they need and benefitting Teal by allowing us to focus on production ramping and core R&D,” said George Matus, founder and CEO of Teal Drones.
That follows other deals made with outside companies, including a March 2023 investment in Firestorm, which is a U.S.-based company building a modular drone that is also 3D-printed and payload agnostic.
