Red Cat Holdings Inc (NASDAQ:RCAT) shares are jumping on Wednesday ahead of the company's fourth‑quarter earnings release after the bell.

Traders are expecting a strong report, largely because Red Cat already hinted back in January that revenue could come in as high as $26.5 million — well above Wall Street's $23.95 million estimate.

Expectations Build Ahead Of Red Cat's Q4 Report

Analysts are looking for a quarterly loss of 15 cents per share on roughly $24 million in revenue. But Red Cat's preliminary numbers from January suggested the company is on track to top those expectations comfortably, fueling optimism that tonight's report could deliver both an earnings beat and upbeat commentary about 2026.

Red Cat also projected full‑year 2025 revenue of $38 million to $41 million, more than double last year's $15.6 million. That outlook was a meaningful step up from the company's prior guidance issued in November.

CEO Jeff Thompson said the early results reflect strong execution and accelerating demand from defense and government customers, along with the company's ability to rapidly scale production.

Q3 Strength Sets The Stage For Massive Q4

Momentum was already building heading into the final quarter. In the third-quarter, Red Cat posted $9.6 million in revenue — up 646% year‑over‑year and 200% the prior quarter — easily beating expectations. At the time, the company guided for fourth-quarter revenue of $20 million to $23 million, but later raised that range to $24 million to $26.5 million.

Thompson emphasized on the company’s third-quarter earnings call that “Q4 will be more revenue in one quarter than we have ever done in a 12 month period.”

The company is strategically expanding into new markets, notably with the launch of Blue Ops, a maritime division. Thompson highlighted this as “perhaps the most exciting strategic expansion.”

The Black Widow system’s approval for the NATO NSPA catalog is also a significant milestone, opening doors to NATO members and partner nations. “Almost all of it is from the Black Widow,” Thompson noted, underscoring its importance to current revenues.

Army Contract Expansion Fuels Growth

A major driver behind Red Cat's surge has been the U.S. Army's SRR Tranche 2 program. The Limited Rate Production contract, awarded in July 2025, has since expanded to roughly $35 million. The deal validates Red Cat's Teal drone platform and provides a steady revenue base as the Army ramps up its use of small unmanned aerial systems.

CFO Chris Ericson said the company's financial position reflects improved operational leverage as Red Cat ramps production to meet rising demand.

The ongoing U.S.–Israel conflict with Iran has also increased investor interest in drone and defense stocks.

RCAT Price Action: Red Cat shares were up 6.72% at $18.13 at the time of publication on Wednesday. The stock is trading near its 52-week high of $18.78 heading into the print, according to Benzinga Pro.

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