Ladies and gentlemen, thank you for standing by. Good afternoon and welcome to the Red Cat Holdings December 31, 2024, Eight-month Sub-period Financial Results and Corporate Update Conference Call. At this time, all participants are in a listen-only mode. Should you need assistance, please send 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 two. 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 April 30, 2025.
Joining us today from Red Cat Holdings is Jeff Thompson, Chief Executive Officer and Interim Chief Financial Officer. During this call, management will be making forward-looking statements, including statements that address Red Cat's expectations for further 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 Red Cat's most recently filed periodic reports on Form 10-K and in Red Cat's press release that accompanies this call, particularly the cautionary statements in it.
The content of this call contains time-sensitive information that is accurate only as of today, March 31, 2025. Except as required by law, Red Cat 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, please go ahead.
Great. Thanks. Thanks, everybody, for joining the call tonight. This call is going to be brief. As we just hosted an Investor Day late last month and plan on having another Investor Day town hall in a couple of weeks. The town hall Investor Day will cover defense contracts, Office of Strategic Capital Funding, continuing resolution updates, new partnerships, regulatory opportunities, and we will have the entire management team available. Some housekeeping for this call and the reason for its brevity. We hired Chris Ericson as our CFO a couple of weeks ago. The SEC requires the CFO sign the 10-K, no exceptions. This document would have taken weeks to review and did not even ask Chris to sign it. If Chris did sign that, would sign that, it would have been a big red flag anyway.
I do want to give a shout-out to Sam Pelletier, our VP of Finance, and his team did a great job on the 10-K. This CFO prompted to have another investor update later this month, one that he can participate in. Some quick updates before we open it up for questions. Let's jump on to our Long Beach factory. Long Beach is up and running and shipped its first drones in March. We expect FlightWave to be shipping drones every month from now on as they expand and scale the Long Beach facility and as we clean up backlog. We'll give more details on the Investor Day town hall. Some updates on the Black Widow. Visual navigation is almost complete on the Black Widow. This is a vital feature that gives the Black Widow a unique competitive advantage. This software, as we mentioned previously, will expand our margins.
The flight data and tests look incredible. We also look forward to upgrading the Edge 130 soon to be on the Triton with visual navigation. I told you folks I'd be brief. With that, we're going to turn it right over to questions.
We will now begin the question-and-answer session. If you wish to ask a question on today's call, you will need to press star, then the number one on your telephone. If your question has been answered and you wish to withdraw your request, you may do so by pressing star, then two. If you are using speakerphone, please pick up your handset before entering your request and speaking on the call. One moment, please, for the first question. Our first question comes from Glenn Mattson with Ladenburg Thalmann. Please go ahead.
Yeah. Hi, Jeff. Thanks for taking the question. I get that this is a quick update just on the kind of sub-period. Kind of more curious about looking ahead. Can you give us some sense as to a little bit more on the timing, perhaps on signing of the SRR deal, and then the scope of LRIP kind of as you're seeing it as they're talking to you about it? Just the most recent update on that would be great.
I figure everybody was going to keep going there even though we're having a call in a couple of weeks. Anyway, thanks for the question, Glenn. I've talked to you quite a bit over the last few weeks and a lot of other investors with you. Yeah, some activity is moving along. On a high level, I'll say we're pretty excited that the LRIP is going to be significantly higher than we did a nasty report that came out in January, which that'll be fun to report once we officially sign. I'm pretty sure that we got the yesterday, the day before, we got the features contract signed. We mentioned that there was going to be three contracts this year. First would be features, some additional features for the Black Widow for the SRR program.
We would sign LRIP, which we hope is very soon. We will let you know as soon as we do, probably during the town hall. We have mass production later this year. Again, nothing has changed except we knocked one of those off the list and we are pretty excited about where LRIP will probably land.
Great. That's helpful. Just as a quick follow-up on the international front, can you just talk about opportunities you're seeing with either NATO allies or in the Pacific? Just a general update based on versus where you might have thought about it a month ago or so when you did the Investor Day.
Yeah. Yeah. Actually, I'm getting that question quite a bit now, mostly because of the tiff between President Trump and Zelensky. Everyone thought that everyone's kind of going to turn into anti-U.S.-based drones. Just to be very blunt and frank here, there are almost no drones in the category of the Black Widow just because DJI, unless you do Chinese drones, which NATO won't use, there's almost no companies in that category, in the Black Widow category, because DJI put them all out of business over the years. Specifically, there's nothing that's as robust as the Black Widow, not only robust with the modular design, it's a very rugged drone, unlike a Chinese drone that feels like a toy. It has EW capabilities. It now has visual navigation. A couple of things.
One is we're continuing on the previous tenders and RFPs that everyone's getting frustrated that we have not updated on yet, but those are continuing. There was a consortium put together of all of the Europeans. It wasn't massive, but it was $2 billion to push Ukraine. We were not excluded from some of these people looking to put together tenders for that. Europe is not ignoring U.S. manufacturers because of the tip between Ukraine and the United States. All those things are still ongoing, and some of them are actually more enhanced now.
Okay. Great. Good luck on that, and I'll jump back in the queue. Thanks.
Our next question comes from Mike Latimore with Northland Capital Markets. Please go ahead.
All right. Yeah. Thanks very much. Great to hear about the future contracts here. You mentioned the VNav software in the prepared remarks. I guess, how should we think about that relative to your guidance? Would cross-sales, would that be incremental to guidance, or how do we think about that in terms of the financial impact?
Yeah. Yeah. Great question. Yeah. We have not added that to any of our guidance yet. I do not want to say it is expensive. That is the wrong word, but it is such a required piece of software on every drone from now on. It is from one of the best software companies in the world. We think that we will be able to get full price. We have not announced the pricing that we are working on with Palantir. I got to see the first video the other day. It is just incredible. To have this capability, it is one of the biggest problems that the army is having. Actually, every branch is having it because GPSs just do not work. Putting any modules on a drone like the Black Widow would reduce flight time. There are a lot of quick-fix hardware platforms that just really do not work for drones our size.
Frankly, nobody has basically real-time map updates like Palantir can provide. We are partnered with Palantir on this visual navigation, and we could not have a better partner because they are going to dominate visual navigation. Yeah, it is not included in any of our guidance yet so far. Once we get a quarter under our belt selling the software feature, we will probably update the street after we have a full quarter of selling this product.
Got it. Got it. How about just in terms of your company moving to Palantir's operating system? Maybe a quick update on the status of that, and when do you think that might be complete?
Yeah. We're just implementing it now. I actually was able to be a keynote a week before last out in Palo Alto. Got to meet with a lot of other companies that are using it, like Palantir, like Anduril, the Saronic, and companies like that. They think it's going to improve their margins if that's how well the system can work. We're just in the very first few weeks of the installation. The good news is they're much quicker than if you've ever been to an SAP install. It's a much different game already. We're glad that we're getting it done right now before we're in mass production. We believe it's going to give us so many efficiencies, get rid of a lot of redundancy across all of the factories. As other companies have stated, they think it's going to improve their margins dramatically.
Yeah. Yeah. Makes sense. Just last one for me. This may be more of a town hall question, but at your analyst day, you talked about the prospects, potential of additional SRR funds this year, not next year, but this year. Any additional context or view into that?
Yeah. It was a little scary. If they didn't send that extension in, then all kind of, as they say on the Hill, approps were going to be basically deleted. They did continue it. As Brendan mentioned on our last Investor Day last month, we requested another additional $100 million to what we wanted for 2025, which ends in September. We're feeling pretty good about what LRIP's going to be for through September. I think we're very comfortable with our 25-65 guidance already, and that's not even we also get one full quarter of 2026 with the SRR contract.
We asked for an additional $100 million, frankly, just because this administration, every single person that's talking to them is talking about that drones are the future for warfare, that you're only going to have drones on the front, whether it's generals that are speaking at West Point, whether it's Elon Musk, whether it's some of the most influential people at the administration. They're all moving away from exquisite, expensive systems into drones like ours. Having a program of record as this is happening with this new administration doesn't hurt. We asked for an additional $100 million for 2025. We're prepared to deliver that if they're able to get that. Maybe it ends up being $50 million, $25 million, $75 million. We don't know. Or it could be nothing. We're not depending on it whatsoever.
As I mentioned, we're very pleased with where we are, probably with LRIP, with the last few meetings that we've had on it.
All right. Great. Thanks very much.
This concludes our question-and-answer session. I would like to turn the conference back over to Jeff Thompson for any closing remarks.
Thanks, everybody, for joining. I apologize for the brief call, but we'll give a detailed update later this month to the entire management team. We believe this will be much more beneficial for investors in reviewing a sub-period covering two months from last year. Thanks again, everyone, and look forward to talking to you in a couple of weeks.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.