Regulatory tailwinds are propelling the drone industry: Red Cat CEO Jeff Thompson

Red Cat Holdings (Nasdaq: RCAT) is a drone company that mainly serves the US military and American allies. Teal 2, the company’s flagship product that was launched earlier this year, is designed to perform efficiently in low-light conditions, with its advanced night vision camera. Red Cat is becoming a market leader in military-grade small unmanned aerial systems. AlphaStreet had a conversation with Red Cat’s CEO Jeff Thompson, who shared his perspective on how the company operates and what the drone industry is like.

Can you please give an overview of Red Cat’s products and operations?

Our subsidiary Teal Drones operates a 25,000-square-foot manufacturing facility in Salt Lake City, Utah. Its flagship Teal 2 is an affordable, man-portable solution that is designed to “Dominate the Night™” with its best-in-class night vision camera, fully modular design, multi-vehicle control, and artificial intelligence capabilities. Teal 2 is approved by the Department of Defense, making it Blue UAS Certified and FAA Remote ID approved.

We also partner with leading companies to provide the best technical and tactical solutions to our clients. Our partners’ capabilities include computer vision, artificial intelligence, and third-party apps, which help to build a robust tactical ecosystem. Additionally, Red Cat is proud to emphasize customer service, which is often praised by our clients.

How significant is the role of combat drones in today’s world where technology is rapidly transforming warfare?

Unmanned Aircraft Systems (UAS) and other robotics have become game-changing and necessary tools on the battlefield.  This need will continue to grow and adapt with the rise of future conflicts in dynamic environments. Our drone solutions, focused on frontline warfighters, will support their mission in a variety of ways utilizing a technology stack that will bring much-needed capabilities to the tactical edge. Not only will troops be able to map uncertain terrain and identify hidden threats using unmanned systems, but they will soon have the option to perform lethal strikes against these threats allowing for faster and more efficient decision-making on the battlefield.

How does Red Cat position itself to tap into new opportunities like the government’s Replicator program?

Regulatory tailwinds are propelling the industry, and we are a champion of recent drone-specific federal government initiatives and legislation such as the American Security Drone Act (ASDA) and the Replicator initiative. The ASDA, which is part of the National Defense Authorization Act, is expected to be signed into law soon. It bans the federal government from obtaining drones from countries that are deemed security threats, such as China.

Additionally, earlier this year, the Pentagon introduced the Replicator initiative, which is focused on fielding thousands of cheap, smart, small, and autonomous war drones across multiple domains within 18 to 24 months to counter threats from China and other countries.

As a U.S.-based company that manufactures our products in our Salt Lake City facility, we are a proponent of ASDA and the Replicator initiative. We will be able to quickly scale production to meet the needs of these initiatives.

Can you give insights into your growth strategy including geographical expansion, against the backdrop of the recent debut in Latin America?

Our strategy is focused on supporting the U.S. and allied governments across the world. Our Teal 2 product line is an ideal solution for allied governments given its capabilities and affordable price. Teal 2’s U.S. government certifications are particularly notable, as they underscore the effectiveness, ease of use, and security features that set our drones apart.

In early December, we made our debut in the Latin American defense and security market. This region has unique security and defense needs, which we can meet. Teal 2 can support border security, police and public safety, and Latin American military forces, among others.

Finally, how do you look at the current regulatory environment, in terms of opportunities and challenges?

We only see opportunities for Red Cat. The regulatory environment is increasingly focused on moving away from Chinese drones and embracing domestic manufacturing. Given our expansive industrial facility and years of product development, we are well-positioned to support the country as it shifts to U.S.-made drones.