Shares of Red Cat Holdings Inc. (NASDAQ: RCAT) tumbled 7.07% in after-hours trading on Wednesday following the release of its first quarter 2025 financial results, which fell short of analyst expectations. The drone technology company reported a wider-than-anticipated loss and a significant revenue miss, raising concerns among investors about its near-term growth prospects.

Red Cat reported quarterly losses of $(0.27) per share, missing the analyst consensus estimate of $(0.08) by a substantial 237.5%. This represents a 145.45% increase in losses compared to the same period last year when the company reported a loss of $(0.11) per share. Additionally, quarterly sales came in at $1.63 million, falling well below the analyst consensus estimate of $3.85 million by 57.62%. This also marks a 6.75% decrease from sales of $1.75 million in the same quarter last year.

Despite the disappointing results, Red Cat's management remained optimistic about the company's future. CEO Jeff Thompson highlighted recent operational achievements, including the expansion of their multi-domain Family of Systems with a new line of Unmanned Surface Vessels (USVs) and partnerships with companies like Palantir to enhance AI capabilities. The company also reiterated its 2025 annual revenue guidance of $80 to $120 million, suggesting confidence in a strong second half of the year. However, the market's immediate reaction indicates that investors may need more convincing evidence of the company's ability to meet these ambitious targets given the current performance.