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Today, I'm sitting down with Jeff Thompson from Redcat Holdings. Redcat is a US-based provider of advanced all-domain drone and robotic solutions for defense and national security. Through its wholly owned subsidiaries, Teal Drones and FlightWave Aerospace, Redcat develops American-made hardware and software that support military, government, and public safety operations across air, land, and sea. Its family of systems, led by Black Widow, delivers unmatched tactical capabilities in small unmanned aircraft systems (SUAS). Expanding into the maritime domain through its Blue Ops Inc., Redcat is also innovating in uncrewed surface vessels. This is an impact company and one to keep a very close eye on.
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Hey everybody, Tim from Alpha Wolf Capital coming at you with a follow-up with one of my favorite stories. Just had a big investor day, big demo of their Blue Ops variant. I mean, it was a good investor day, I think, for you, Jeff. Were you pretty happy with it?
Oh, yeah. It was super well attended. We actually had two days. On Thursday we had customer day, which we had a lot of great folks that love the boat and we've already seen some great outcomes from customer day. And we didn't want to mix the wallets with the customers, so we had them on Friday. So you had three of the variant boats out there doing the demos. And we talked about this before we hopped on, but
I thought the control, the handling of those boats was incredible. I mean, they were just jamming, man.
You know, Barry and Sandy are multigenerational boat builders and they're impressed by the way this boat turns. We had to actually hack a few things to make it turn even better. A turning radius that a human would not be able to handle, but you can see them in the videos. They can turn basically in a boat length going really fast, right? And then even though the engines are diesel, the acceleration they have, and you can see we didn't speed up the videos whatsoever and it's all real. A lot of people ask me some questions. There's an eagle in the video, in one of the videos.
So, there's the funny part. The guys from ACS were flying a camera drone around all this stuff while we're doing all this stuff. And we had the gunboat which can take down small drones and Shaheds. It's got an M240 on there, the Bullfrog. And a bald eagle comes out of nowhere, dives in front of the boat and pulls out a fish and they got it all on camera.
I didn't see the diving in the front of the boat, but I saw
Yeah. After everyone had a few beers, everyone's like, 'Oh, yeah, that's a good sign. America for America.'
Yeah. It was so cool. And we're all like, we didn't believe him. And they're like, you know, 'Do you get it on camera?' 'I have it on camera.' Then he showed us all. Oh, wow, that is cool.
All right. So, listen, man. I know you don't have a lot of time. Everybody would love to hear from you every week with updates on everything that's going on, but you got a little bit happening, right?
Yeah. We finished innovation day. We wanted to chill out and relax, and then I've been on the phone 24/7 since last Saturday. My team, there's just so much going on and I'm kind of really relieved that we have a boat that can do a lot of work in the Persian Gulf, the Strait of Hormuz, and that whole area is going to be a great opportunity for Redcat to protect people, protect boats, escort boats for many, many years to come. It's expensive to have Navy or Coast Guard style people do all of that escorting because each one of those boats has sometimes 12, 50 people on it. Where we could escort boats with 20 unmanned boats, just surround it with guns, and make sure no one pops up or even a drone comes in. We can take down Shaheds with the ACS Bullfrog. That's what they're designed to do. And the aiming is insane on those things. I mean, they can do drones going freaking horizontal at 100 miles an hour, never mind when they're coming down. So it's
So, is that because of the Allen company that you partnered with?
Yeah, the Allen Control Systems. Great group of guys. They're so like-minded. They're really smart. They're building really great stuff. We're going to be working really closely with those guys just because they're really good and they're fun to work with.
Right. That was one of the things that I took away from the investor day, is how you guys said you're willing, if you're good at what you do, we're willing to play with anybody, right?
Yeah, we have the AON missiles. They're like this big. They're actually on one of the boats in the picture behind me. They can do smaller missiles. They can do up to like four ft. So we can load up a boat. We're actually going to be building a canister-style launcher where they'll all be in tubes in a rectangle-style box. We can put 20 or 30 of these things on one of our boats. So yeah, these boats now that we've proven them, they work really well. They're the best in the industry right now. Better than anything even in Europe. Performance-wise, we outperform everybody. They're faster, they're quicker, we do a lot more. We stabilize the boats, which makes them, even though the ACS has a stabilization while it's shooting, we actually stabilize the boat with other technology because we're boat builders. Well, I'm not, Barry and Sandy and their whole team, they have a great all-star team there. So we're doing stuff on boats that no one else is doing. So if you start with the boat, make the boat really awesome to put anything you want on top of it or inside of it to launch. Like everyone's talking about the Wild Hornets and all the counter. We've been working on a pressurized version of launching similar birds to theirs on the front of these things to do counter. We can put that in an ACS gun on the same thing with torpedoes hanging off the back. We had an admiral on our boat the day before customer day. We let him go out on it. We took out one of the hatches and he came back and he said, 'If 20 of these are coming at me, I don't know how I'd protect my boat, my ship.' So it was good to hear that from him. Means a lot.
So, you know, they're low enough, right, that they can't be picked up by regular radar?
Yeah, we do. As you can see, there's some shaping that we've done on the top. We also will be using paint that absorbs radar. And if it's seas that are three ft, the way it bounces up and down, it's going to be like, is that, oh there's something, no there's not, no there's something. They're going to be very hard to detect and by the time you detect them it's kind of like a drone when you can hear the drone, you're already dead.
And these are very disposable when you're comparing them to missiles and torpedoes that cost five million each. So if we send 30 of these at a two billion dollar target, a few of them are getting through.
Right. And then did you have one of them that had the drones on it too?
No, we didn't have the mounting system for the drones, but we had eight drones swarming constantly. We had a CONOP that we briefed everybody at the beginning, what the operation was going to be, and then we performed the operation utilizing the drones, utilizing the three boats. We did our CONOP and then a stray Black Widow, which we're pretending the enemy comes in, and the ACS takes out. Literally four shots, gone.
No, it was cool looking, man. I mean, I started thinking of, are you still thinking about doing the aircraft carrier?
Well, I mean, when we go to like a V11, it's basically, they took down a big aircraft carrier, a World War II style one a couple days ago with all the on it. But we are looking at more like smaller, smaller, smaller
I'm talking about just carrying a fleet of drones, right.
Yeah. So, well, we can put swarms of drones alongside with other weapons. And then at the bottom line, they'll always be filled with kinetics. So when you deplete all the weapons, if you want to, you see something you want to go explode, like the missions they've done in Ukraine where they went in deep into Crimea and then on the way back they said, 'Huh, let's take the bridges out.' Right? So the boat itself is a weapon, but we don't have to use it unless we see something there's a reason to do it, or if we see someone trying to capture it.
I loved the whole thing. One of the analysts, I don't know who he was with, but had asked about, you know, what's to stop somebody from doing boats and catching up with you guys or whatever. And was it Brian that's the boat builder, is that his name?
No, Barry. Barry Hinckley from the yachts, yeah.
Yeah, and he just basically said, you know, look, we've been building boats for like our entire lives and we started figuring, you know, we planned how to build the boat first and then what we'll put on it later, right? I mean, that's the key. I don't think anybody could just build a world-class boat, right?
You can't. And that's why there's a lot of boat, you know, when I'm getting into the boat industry, it's always the recreational boat industry, you know, when rich people try to get into that industry, they instantly learn why most of them go out of business. It's a horrible business. But the Hinckley family's been around 100 years now. They build boats that are so high quality. They've gone through so many cycles of down sessions. And the same with Tim Hodgdon at Hodgdon Yachts. He's almost a 200-year-old company. Makes some of the most high-tech boats in the world. If you want a high-tech boat, if you're one of the richest billionaires in the world and you want some boats for your boat, you go to him. There's no one that you're going to go to besides him.
But are they liking what they're doing here with Redcat?
Tim and his family, they're very, they're patriots. And they're amazing boat builders. So they're supposed to just be our prototype shop, but I think we're going to have them do, we've been meeting for the last week and we spent the week figuring out how can we accelerate even in April to get more boats out of the factory. So we're kind of doing all of the above, telling the prototype shop guys to build some. There's a huge amount of demand right now. And I actually met with all the presidents at FlightWave, Mitch McConnell at Teal, and Barry and Sandy over at Blue Ops. And the message was to each one of them, let's just start building like crazy.
Are you excited? Are you more excited about Blue Ops than you are... and are you
No, they work together. We have a full family of systems. And as I said last week, the Black Widow and the Trikken could only cover 29% of the Earth or get launched from 29% of the Earth. Now we have Blue Ops and we can launch from 100% of the Earth. And can you imagine right now after what's going on this week if we didn't have Blue Ops? It's going to be a significant revenue driver even this year, I think. It was supposed to be more of a second revenue opportunity with Blue Ops because the company didn't really exist five months ago. We were sitting on a whiteboard in August up at Hodgdon and then we dropped our first boat in the water in December, unheard of in the boat industry. And what they've built is one of the most amazing hulls out there. So again, as Barry said, 'We built a boat first.' Now, if you were going to make something that goes on a car, do you want it on a Kia or do you want it on a Maserati? So we have the Maserati. And you can't blame some of the people that invented this space. They're at war and they're not boat builders and they got to make something that's going to not live long and they just put it together and they've done a really good job over there. It's amazing what they've done. But we're boat builders and it's just natural for them. There's not a lot of naval architects over there doing what we're doing. We have naval architects in this process. So these things will last 20 years, but they're designed to possibly not last more than one day in battle.
In battle. But I think it's even, the Trikken, which has also been tested in real theaters now, is very sought after. I've said this a million times. No one believes me yet. You shall see. I was at Fort Hood and had a conversation with some folks and, as I mentioned, very blunt and frank, is that that bird's a very fragile bird. It wasn't designed to have soldiers handle it. And we told them that and they said, 'We just want them anyway so we can learn how, once we get them, we'll be gentle with them. We just want to see the missions they can do while they're flying.' So they took them and they love them. So once we get into full production of the Trikken, which we're aiming for August and I'm pushing for even a week ahead of time, two weeks ahead of time, I'm pushing, pushing, pushing. It's going to be an incredible bird. But the Black Widow also has been very thoroughly tested in real theaters, is doing very well right now, not just with one customer, one product. So the Black Widow is going to do great. So, long answer to your question of are you more excited about Blue Ops, but we can put all of these weapons on Blue Ops.
So you know, and there's so many combinations that we can do. I mean, like these bad boys,
Yeah, the missiles here, we can... there are some pictures of one of the secretaries at Drone Dominance, which I know you're going to want to ask about anyway...
You just froze on me, Jeff.
I don't know if you can hear me.
Blue Ops is also, it does have some unique things that you can't do on a drone. Like, if someone says, 'I want to put this special gadget on...'
I think you might have lost me. My ping
Just went away. You were stuck for a minute, but you're back.
Yeah. So, something very unique about Blue Ops is if we want to put something on it that's 10 pounds, it's not a big deal, to put EW deterrence or something like that. If we want to put something that weighs 300 lb, that's a gun with all its ammunition, we can do that too. So where we're so limited on the drones, but we can put a heck of a lot of drones on each boat and all those things. So it's a great combination between all of our family of systems, including Fang.
Well, you know, I look at you and I think to myself, okay, so you got air and then you got sea and then the only thing that's left is land, right? I mean, then you really have it all.
Yeah. No, we're looking at everything. There's a lot of UGV companies coming at us. Because we're looking at doing a lander. So we could, river crossings are a very important thing for the army. So we're looking at landers. If not, just having a bunch of the Variant 7 with these guns on the front. We can go the other side of the river as they're trying to build a bridge across it and just make sure there's nothing on the other side and just wipe them out without any humans involved. And then we can do a lander where we could put some UGVs to go in a little deeper as we're doing a crossing. So the lander would come down in the front like a traditional D-Day lander.
I know exactly what you're talking about.
Yeah. And a bunch of rovers come out of that with guns on them or missiles or whatever we need and we can do a nonhuman roll to that other side. And there was a great article about the Third Army Corps over in Ukraine, they had a UGV that protected them like 45 days straight, which is fantastic. Those are great guys over there.
So, you know, besides the Department of Homeland Security and all the that's going on with ICE and all that and the shutdown, I mean, where are we at with the government and orders and all that stuff? I know you didn't, what was it? The Gauntlet? The Gauntlet that you said from day one that that was going to be kind of a race to the bottom, right?
Yeah. Well, I'll be very frank. So, we thought we were going to get in that first tranche. We were in week one and there were some very interesting things that were going on. So, we hit the first mission no problem because we had our pilot on it. The second test where you get scored on these things, there's a specific score for each one. We had a pilot that had like three or four hours of sim time and never flown a drone ever. They give you pilots to do certain missions. You don't get to use your own pilot for every mission. And he's never flown a drone ever, a real one. So we're like, he took off and he went completely the opposite direction and we couldn't tell him where to go. So, a lot of the Gauntlet week one, they broke it up into two weeks. Week one, I'm sure there's a lot of guys in week one, not even us, that should have probably made it, but they weren't organized yet pulling that process and they whipped into shape. We want to support that program as much as possible. I think what they're doing is great for this country, great for the DoD. But they're going so fast and I'm getting these stories relayed back to me. I'm like, 'Oh gosh, are you kidding me?' And then there was a nighttime mission and we crushed it. We absolutely crushed it. I don't think anyone came close to what we did there, but we already had that one mission where it was, you know, we were five kilometers the wrong way or something like that. But we look at those 200 drones that everyone's going to get. We already found a new home for them, so we're pretty excited about that. But they had to make it $5,000 a drone to just get people to show up because, as I've said many, many times, even though I've been in the FPV space since 2015, it's a very difficult business model if that's your entire business because you have to make millions of them to make like $10 million. We will always have Fang as a bullet, but more importantly, all those guys that won, they're going to need some Black Widows to help them find the targets because that's just a bullet, but they have no scope because their cameras are so horrible. So we will gladly sell all the Black Widows to help all of those drones get bought. And we hope to get into Gauntlet 2 and kick ass this time. And we'll be very adamant about who's flying our drones for us.
Are you surprised by the demand for the boats? Did you think it was going to come this quickly?
Well, you know, we've been really preparing when we thought about the boat business. We were mostly thinking pretty far ahead for Indo-Pacific. And then I think our biggest competitor is really, they just did a new round at $7.5 billion valuation. I think they're focused on bigger boats now. And this could just be a rumor, I haven't talked to any of those guys in a long time. Is that they're getting out of the small boat business. So that'll be great for us because we'll be the only guys really out there that have a good boat that's proven. The tech stack's proven. We built a great boat. We got lucky. Our first boat is really, really good. Usually it's your second or third rev before you have great success. And we got some small adjustments that we're doing in the factory right now for the next few hulls that are coming out, but there's nothing major we have to fix on that boat, which is fantastic.
So last time we talked you were talking about how there was like a lot of people that were interested in getting their product onto your boat. And that's, I mean, is that simmered down a bit or is that actually accelerating?
No, there's four very large companies at the White House this week that make missiles. So how do you get them into theater? We have an extra almost a thousand nautical miles to get you in theater using these boats. And we have ways using a tanker-style version and/or extra bladders. We can get you deep into theater with their missiles. So this is a Swiss Army knife for the Navy, and actually the Army, the Army has more boats than the Navy, but we're really focused on the Navy right now and what we can do for them.
Okay. I had some questions that said, did you see those questions I sent you?
That was like three or four days ago. That's a million years ago in my world right now.
I know. Hold on a second. Let me see if I can just find them. I don't think there was, let me see. Hold on a second. I mean, what do you, Jeff? Are you still having fun, man?
Oh my god. You know, when those three boats flew by us at like 35 knots on the dock the other day, you know, I got chills. It was amazing what we've done in five months. And the boats weren't autonomous, but all the drones were autonomous. We were swarming. We needed another three days to have a single operator doing all the boats. And we'll have them all swarming in about a week or two. So we'll be able to have just a couple operators and basically we can, if we had three or four drone operators, that's going to be almost 100 drones coming at you and two operators with eight or nine boats. You got a few people that could take out a lot of bad guys.
How the hell does that work? I mean, I can't fly one drone. So, how do you fly?
We, yeah, APM does it way different than everybody else. And I'm not going to give away their special sauce. They have one of the best swarming capabilities out there. It's because they're doing it so different. And as an engineer, I was so impressed on how they're doing it. These are actual real swarms. They actually know what the other drones are doing. A lot of people that did swarm stuff is basically saying this one box controls them all and it's like a one-on-one relationship to the drone and they just go together, but they don't know about each other and they call it a swarm. These things are a true swarm. And because of the different way they do it, swarming is not typically very reliable. I've been to so many swarming demos where even our competitors in the boat industry, they were smashing into each other in San Diego. We reliably go to demos with the APM team and every time they leave, we get phone calls. What they do is just amazing. It's so consistent and so reliable. So you basically say, 'Go, go here.' That's a target. If it's a target, it'll swarm it and face in. If it's an asset, they'll look out. It's just so much. And they have formations, which we did a bunch of formations live. We told them first they came out in a line, then they got in a circle, then they did a V. And the guy was just going, 'Here you go, next formation.' And we let the audience tell us what they wanted sometimes so they knew that wasn't pre-programmed.
