Red Cat Holdings, Inc.

Ladies and gentlemen, thank you for standing by. Good afternoon and welcome to the REDCAT Holdings Fiscal Second Quarter 2024 Financial Results and Corporate Update Conference Call. At this time, all participants are in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one, on your telephone keypad. To withdraw your question, please press star then Q. Participants of this call are advised that the audio of this conference call is being broadcast live over the internet and is also being recorded for playback purposes. A webcast replay of the call will be available approximately one hour after the end of the call through December 15, 2024. I would now like to turn the call over to Joey Delahousie, Vice President of Core IR, the company's investor relations firm. Please go ahead, sir.

Thank you, Sarah. Good afternoon, everyone. And thank you for joining us for the Redcat Holdings Fiscal Second Quarter 2024 Financial Results and Business Update Conference Call. Joining us today from Redcat Holdings are Jeff Thompson, Chief Executive Officer, and Joseph Hernon, Chief Financial Officer. During this call, Management will be making forward-looking statements, including statements that address REDCAT's expectations for future performance or operational results. Forward-looking statements involve risks and other factors that may cause actual results to differ materially from those statements. For more information about these risks, please refer to the risk factors described in REDCAT's most recently filed periodic reports on Form 10-K and Form 10-Q, and in REDCAT's press release that accompanies this call. particularly the cautionary statements in it. Content of this call contains time-sensitive information that is accurate only as of today, December 15, 2023. Except as required by law, REDCAT disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. It is now my pleasure to turn the call over to Jeff Thompson, Chief Executive Officer. Jeff?

Thanks, Joey. Welcome, everyone, to our fiscal year 2024 second quarter earnings conference call. I'll start by summarizing our recent performance and achievements, and then we'll provide information related to our outlook for fiscal year 2024, after which Joseph will review our financial results, and then we will take your questions. I am pleased to report the second quarter results exceeded expectations and our guidance of $3 million by 30%. Revenue was $3.9 million, 123% sequential growth from Q1. Our margins tripled to 30%. Joseph will supply more detail on this great achievement. On our last quarterly call, I talked about some of the regulatory tailwinds, hopefully leading to the passage of the American Securities Drone Act. I am happy to report that this passed the house and the Senate this week and is on the president's desk to become law. What does this mean? Well, it means the largest drone manufacturer in the world whose largest market is in the United States can no longer by law be bought by anyone that receives federal dollars. It's not just the department of defense, it's local groups, it's fire departments. It's anyone who receives any federal dollars. This will be immediate and significantly increase the total addressable market in the US for teal drones. I'll move on to revenue opportunities and investment tailwinds. I'm going to discuss the current organic revenue growth and the driver of our backlog. Let's start with organic revenue in our backlog. Today we reported Q2 3.9 million in revenue. Our guidance for Q3 is 5 million. We do not steal revenue from Q3 guidance for the 123% sequential growth in Q2. This guidance for Q3 is based on signed purchase orders. We also have $7.4 million and growing of funded backlog. As I said in our last call, Q3 revenues of $5 million puts us at a $20 million run rate after selling the TL2 for just under five months. This is an amazing growth story. I would like to thank the entire Teal team for making it happen. Now let's move on to long-term revenue opportunities. Short-range reconnaissance program, SRR, program of record. Just to review, or for the few investors that are on, new investors that are on the call, the SRR program of record started over three years ago and was originally set to have three tranches. Tranche one, two, and three. Tranche 1 would have a prototype contract and a production contract. The same was supposed to happen for Tranche 2 and then Tranche 3. We were awarded a Tranche 1 prototype contract, and we were not awarded a production contract. That production contract a couple years ago was for 100 million for 1,083 drones. Tranche 2 was supposed to be awarded months ago, but the Army notified us last December and said they were absorbing Tranche 3 into Tranche 2 to accelerate the final product and to get it into the warfighter's hands. This was due mostly because of the Ukraine war and everyone's understanding how important small drones are. So tranche three was absorbed in tranche two. During our last quarterly call for Q1, I mentioned that we expected the finalists would be announced this December or January, 2024. I'm happy to report that we were down selected yesterday as a finalist for the large long-term SRR program of record. Before I hand it over to Joseph, a quick summary. We gave guidance for this quarter of 3 million. We delivered 3.9, and we are reiterating revenue guidance of 5 million for Q3. We told you about the American Securities Drone Act and expect it to pass with the NDA. It passed yesterday. Last quarter, we hoped we'd be a finalist for the Army's SRR program of record. Yesterday, we were awarded a three plus million dollar contract and down selected as a finalist. And I will now hand the call over to Joseph.