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Redwire Corp (RDW)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 revenue rose 50.7% YoY to $103.4M but missed consensus $132.0M; Primary EPS (S&P) was -$0.191 vs -$0.151 consensus, also a miss. Management cited U.S. government shutdown–driven award delays and $8.3M net unfavorable EACs as key headwinds . Revenue consensus and EPS consensus values marked with * are from S&P Global GetEstimates.
  • Adjusted gross margin improved to 27.1% (vs 17.5% in Q3’24) as the Edge Autonomy purchase accounting inventory step-up ran through Q3; GAAP gross margin was 16.3% .
  • Book-to-bill was 1.25x with contracted backlog up to $355.6M, supporting 12‑month growth visibility despite near-term timing issues; total liquidity ended Q3 at $89.3M .
  • Guidance reset: 2025 revenue cut to $320–$340M from $385–$445M in Q2 as awards slip into 2026; management emphasized demand intact and 2026 setup stronger (not lost awards), while filing for a $250M ATM to support growth and balance sheet flexibility .

What Went Well and What Went Wrong

  • What Went Well

    • Strong top-line and order intake: revenue +50.7% YoY to $103.4M; book-to-bill 1.25x; backlog rose to $355.6M .
    • Margin progress: Adjusted gross margin reached 27.1% as purchase accounting headwinds are now fully recognized; management targets 27–30% forward margin run-rate .
    • Strategic execution: contract win for Axiom ROSA, UAS deliveries (Stalker for U.S. Army LRR; Penguin for Ukraine), and 14 PIL‑BOX microgravity experiments launched, broadening multi-domain platform traction .

  • What Went Wrong

    • Estimate misses: Revenue of $103.4M vs $132.0M consensus*, and Primary EPS -$0.191 vs -$0.151 consensus*; timing of U.S. government awards and $8.3M net unfavorable EACs weighed on results .
    • Profitability still negative: Adjusted EBITDA was -$2.6M (vs $2.4M in Q3’24), and GAAP net loss was $(41.2)M .
    • Cash burn remains a focus: Net cash used in operating activities was $(20.3)M; free cash flow $(27.8)M, though both improved sequentially vs Q2 .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$61.4 $61.8 $103.4
Net Income (Loss) ($USD Millions)$(2.95) $(96.98) $(41.15)
GAAP EPS (Basic & Diluted)$(0.09) $(1.41) $(0.29)
Adjusted EBITDA ($USD Millions)$(2.268) $(27.394) $(2.569)

Margins (YoY view)

MetricQ3 2024Q3 2025
Gross Margin % (GAAP)—16.3%
Adjusted Gross Margin %17.5% 27.1%

Consensus vs Actual (Q3 2025) — S&P Global

MetricActualConsensusResult
Revenue ($USD)$103,432,000 $132,047,910*Miss
Primary EPS-0.191*-0.151*Miss
# of Estimates—Rev: 9; EPS: 7*—
Notes: Values marked with * retrieved from S&P Global GetEstimates.

KPI Trends

KPIQ1 2025Q2 2025Q3 2025
Book-to-Bill (x)0.92 1.47 1.25
Contracted Backlog ($USD Millions)$291.2 $329.5 $355.6
Total Liquidity ($USD Millions)$89.2 $113.6 $89.3
Net Cash from Operating Activities ($USD Millions)$(45.08) $(87.66) $(20.33)
Free Cash Flow ($USD Millions)$(49.14) $(93.55) $(27.81)

Contextual notes:

  • Management disclosed Q3 revenue sequential growth of 67.5% and sequential adjusted EBITDA improvement of $24.8M; Edge Autonomy contributed ~$49.5M to Q3 revenue .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025$385M–$445M (Q2’25) $320M–$340M (Q3’25) Lowered
Adjusted EBITDAFY 2025Withdrawn in Q2’25 Not provided (unchanged) Maintained withdrawn
Footnote: In Q1’25, RDW discussed a combined-company FY25 revenue framework of $535M–$605M (and Adjusted EBITDA $70M–$105M) assuming a 1/1/25 close; this was not reiterated subsequently and should be considered superseded by Q2/Q3 updates .

Earnings Call Themes & Trends

TopicQ1 2025 (Mar 31)Q2 2025 (Jun 30)Q3 2025 (Sep 30)Trend
U.S. budget/shutdown timingCited U.S. agency transitions/budget uncertainty delaying awards .Continued delays but early positive indicators .Ongoing shutdown pushing awards into 2026; demand intact .Near-term worse; 2026 setup stronger.
UAS demand (Stalker/Penguin)—Stalker added to DoD Blue List; awarded U.S. Army LRR prototype phase .Delivered Stalker to U.S. Army LRR and to 8 end customers; Penguin to Ukraine .Strengthening demand and breadth.
Margins/EACsNet unfavorable EACs $3.1M .Net unfavorable EACs $25.2M; margin pressure .Adjusted GM 27.1%; EACs $8.3M .Improving margin profile; lower EAC drag.
Book-to-bill/backlogB2B 0.92; backlog $291M .B2B 1.47; backlog $329M .B2B 1.25; backlog $356M .Sustained order momentum.
Cash/liquidity/capitalLiquidity $89.2M; record cash/liquidity .Liquidity $113.6M; higher cash burn .Liquidity $89.3M; plan to file $250M ATM .Managing liquidity; adds equity optionality.
Microgravity/PharmaNASA contract for 4 drug investigations .SpaceMD formed; royalty deal with ExesaLibero .14 PIL‑BOXes launched; pharma pipeline ambitions .Building commercial microgravity pipeline.
Governance——CFO retirement; CAO to become CFO; Board refresh with new independent directors .Governance refresh, depth increasing.

Management Commentary

  • “These efforts resulted in an Adjusted Gross Margin of 27.1%, driving a significant improvement to our bottom-line.” — Peter Cannito, CEO .
  • “The transformation… including the acquisition of Edge Autonomy, was accretive to our financial performance… revenue growth of 67.5% sequentially and 50.7% year-over-year… book-to-bill ratio of 1.25… backlog of $355.6 million.” — Peter Cannito, CEO .
  • “We reported gross profit of $16.8 million… Included… was an $11.2 million non-cash purchase accounting adjustment… resulting in adjusted gross profit of $28 million, with an adjusted gross margin of 27.1%… We have now fully recognized the inventory fair value step-up…” — Chris Edmunds, Incoming CFO .
  • “27%–30% gross margins should be our forward runway… 30% is… our stated goal…” — Peter Cannito, CEO .
  • “We are adjusting to a narrower expected revenue range of $320 million–$340 million… [Awards] have been pushed out… into 2026. They have not been lost.” — Chris Edmunds, Incoming CFO .

Q&A Highlights

  • Guidance and 2026 setup: Awards are delayed, not lost; LRR production orders expected once shutdown ends, setting up a stronger 2026 .
  • EACs driver: EACs were not due to shutdown; company is “right-sizing” a few space programs; execution improvements continue .
  • Margin outlook: Purchase accounting step-up impact is behind; forward gross margin “27%–30%” run-rate goal, potentially better with fewer EACs and more production mix .
  • Cost actions: Commitment to ~$10M run-rate savings via lean programs and SG&A leverage; expected to benefit cash from operations over time .
  • Capital strategy: Expect to file a $250M ATM to support growth and balance sheet flexibility .

Estimates Context

  • Q3 results vs S&P Global consensus: Revenue $103.4M vs $132.0M*, Primary EPS -$0.191 vs -$0.151* — both misses; 9 revenue and 7 EPS estimates contributed to consensus* .
  • Note on EPS definitions: Company-reported GAAP basic/diluted EPS was $(0.29); S&P “Primary EPS” actual used for estimate comparison was -$0.191*, reflecting methodology differences .
  • Forward estimate implications: With FY25 revenue guidance cut to $320–$340M (from $385–$445M in Q2), street revenue and EBITDA forecasts likely need to move lower near term; management frames the delta as timing into 2026 .
    Notes: Values marked with * retrieved from S&P Global GetEstimates.

Key Takeaways for Investors

  • Q3 showed strong operational momentum (book-to-bill 1.25x; backlog $355.6M) but the quarter missed Street revenue/EPS amid shutdown-driven timing and $8.3M EACs; watch for award flow resumption as a near-term stock catalyst .
  • Margin quality improved: Adjusted gross margin hit 27.1% with purchase accounting headwind now recognized; management’s 27–30% GM target supports path back to positive EBITDA as EACs abate and mix shifts to production .
  • UAS is a key growth vector: Stalker/Penguin deliveries broadened in Q3 (U.S. Army LRR and allied sales), positioning RDW to benefit from U.S. and European defense demand — monitor LRR production awards timing .
  • Liquidity is adequate but monitored: $89.3M total liquidity at Q3 and planned $250M ATM provide optionality to fund growth and working capital; consider dilution risk vs growth acceleration .
  • Guidance reset de-risks 2025; narrative shifts to 2026 catch-up: The cut to $320–$340M reflects timing, not demand; 2026 conversion of backlog/pipeline is the medium-term thesis .
  • Governance refresh and CFO transition (to CAO) aim to strengthen finance execution during scale-up after Edge Autonomy integration .
  • Watch list: award cadence post-shutdown, EAC normalization, UAS program wins, ROSA follow-on orders, and microgravity commercialization milestones (SpaceMD/PIL‑BOX pipeline) .

Relevant documents and citations:

  • Q3 2025 8-K 2.02 earnings press release (Ex. 99.1):
  • Q3 2025 earnings call transcript:
  • Additional press releases: Q3 results PR ; CFO retirement ; Board refresh ; Edge Autonomy partnership Italy
  • Prior quarters for trend: Q2 2025 8-K (results & KPIs) ; Q1 2025 8-K (results & KPIs)
  • S&P Global consensus/actuals for Q3 2025: Revenue and Primary EPS estimates and actuals (values marked with *).