Redwire
Project- and program-based hardware manufacturing on mostly fixed-price and cost-plus contracts for government (NASA, DoD, ESA, allied MoDs) and commercial space customers; revenue recognized over time on milestone/percent-complete; growth via backlog conversion plus M&A roll-up (heritage component shops + Edge Autonomy UAS).
The thesis on this name
State of Space & Launch
A space-infrastructure and (post-Edge-Autonomy) defense-UAS platform with a 1.92 book-to-bill and record $498.1M backlog, Q1 2026 revenue +58% YoY to $97.0M, and reaffirmed FY26 of $450-500M (~42% growth) (Q1 2026). It supplies the satellite-bus, power, and on-orbit-manufacturing components the proliferated-LEO and defense buildout consumes, and the Edge Autonomy drone franchise adds a separately-growing defense-tech leg riding NATO UAS demand. The market discounts it for the acquisition-driven Q1 net loss and integration noise; the underlying order book and component breadth argue for a higher multiple as profitability inflects.
Earnings, margins, COGS & capex
Redwire is a fast-growing but still loss-making space-and-defense hardware platform: Q1 2026 revenue rose 57.9% YoY to $97.0M and gross margin nearly doubled to 26.6%, yet the quarter still posted a $(76.5)M net loss (mostly a $42.5M non-cash Edge Autonomy equity-vesting charge) and $(9.2)M adjusted EBITDA. The story is backlog-driven — a record $498.1M backlog and 1.92 book-to-bill underwrite reaffirmed FY26 revenue of $450–500M (~42% growth at midpoint). The bridge to profitability is volume + mix (higher-margin Edge UAS) converting the backlog while cash burn narrows.
Income statement — where each revenue dollar goes
% of revenueOf every $1 of revenue, ~73¢ is cost of goods and ~26¢ operating expense, leaving ~1¢ of operating profit (~-79¢ net).
Revenue trend
Margins
up sharply from 14.7% PY (fact)
negative; sequentially improved from $(18.1)M in Q4 (fact)
deeply negative, distorted by $42.5M non-cash charge (fact)
improving from $(49)M PY (fact)
COGS structure
COGS is dominated by direct program costs — engineering labor, fabricated/machined hardware, electronics and raw materials (e.g., solar-cell/array materials, composites, avionics components), and subcontractor content on long-cycle fixed-price contracts. Margin is highly mix- and execution-dependent: fixed-price programs carry cost-overrun and estimate-at-completion risk, while the Edge Autonomy UAS line (higher-volume, product-like) is structurally higher-margin and is the main lever behind the Q1 jump to 26.6%. Purchase-accounting deferred-revenue/inventory step-ups also flow through COGS post-Edge.
Capex
Asset-light — capex is modest (tooling, test/clean-room and manufacturing equipment across its facilities); the cash drain is working capital on growing programs, not plant. FCF was $(13)M in Q1 2026, mostly receivables/contract-asset build, not capital spend.
Latest earnings
Revenue MISS — $97.0M vs ~$104.6M consensus (-7.3%); GAAP EPS $(0.40) vs ~$(0.15) consensus (the miss was mostly the $42.5M non-cash Edge equity-vesting charge). Stock fell ~10% on the print (fact).
FY2026 revenue reaffirmed at $450–500M (~42% growth at midpoint); the prior combined-company FY framing also implied a path to positive adjusted EBITDA as Edge scales (fact).
- Backlog
- $498.1M record (+71% YoY); $359.7M space / $138.4M defense (fact)
- Book-to-bill
- 1.92 (space ~2.0x, defense ~0.99x in Q4) (fact)
- Bookings
- $186.5M ($114.6M space / $72.0M defense) (fact)
- Liquidity
- $175.2M ($145.2M cash + $30M undrawn revolver) (fact)
Growth drivers
- Backlog conversion — record $498.1M backlog ($359.7M space / $138.4M defense) and 1.92 book-to-bill convert into the ~42% FY26 revenue ramp
- Defense UAS demand — Stalker/Penguin orders (multiple US Army 1st Aviation Brigade follow-ons, USMC Stalker Block 30, Ukraine-proven Penguin) riding a structural drone-warfare budget tailwind
- Commercial space stations — Roll-Out Solar Arrays for Axiom Space's first module; ISS/LEO commercialization payloads (drug-development, greenhouse)
- Government civil-space programs — NASA (Artemis II imaging/nav on Orion, ISS research) and ESA (quantum-key-distribution satellite consortium with Honeywell)
- Margin expansion — higher Edge UAS mix plus operating leverage lifting gross margin toward profitability
- M&A roll-up optionality — continued bolt-ons of space/defense component and autonomy capabilities
Reported financials — SEC EDGAR
Audited GAAP figures pulled from SEC filings · latest filing 2026-02-27. The audited primary-source spine — not financial advice.
Revenue — annual (GAAP)
Margins & balance sheet — FY’25
Bull & bear
Redwire is a scarce, picks-and-shovels way to own both the space-infrastructure build-out and the drone-warfare super-cycle, with a record backlog and 1.92 book-to-bill that underwrite ~42% FY26 growth and a visible gross-margin inflection toward profitability.
- Backlog $498.1M (+71% YoY) and 1.92 book-to-bill give rare revenue visibility for a sub-$400M-revenue name — bookings are outrunning revenue (fact)
- Gross margin doubled to 26.6% in one year as higher-margin Edge UAS mix flows through — operating leverage path to positive EBITDA (fact)
- Edge Autonomy turns Redwire into a multi-domain space + defense platform exposed to combat-proven, repeat-order UAS demand (Stalker/Penguin) (fact)
- Cash burn is narrowing (FCF $(13)M vs $(49)M PY) with $175M liquidity and FY25 debt paydown — runway to the inflection (fact)
- Blue-chip program roster (NASA Artemis/ISS, ESA QKD, Axiom power, US Army/USMC) is a durable, sticky customer base
Redwire is a perennially loss-making, fixed-price contractor that just levered up and diluted heavily on a $925M acquisition, missed Q1 revenue consensus despite optically huge growth, and trades at a rich ~6x EV/revenue on a business that has never shown a profit.
- No profitability — FY25 net loss $(226.6)M, adj. EBITDA $(50.3)M; the path to GAAP profit is asserted, not demonstrated (fact)
- Q1 2026 revenue MISSED consensus (~$104.6M) by 7% and EPS badly missed — growth is real but execution/timing keeps disappointing (fact)
- Fixed-price program mix carries overrun risk; margins could revert as easily as they expanded
- Acquisition-fueled growth masks modest ~10% FY25 organic growth; $775M stock consideration heavily diluted holders
- Government-appropriation dependence — shutdown already slipped FY25 awards; CR/budget risk is a recurring overhang
- Valuation (~6x EV/sales, $2.1B cap) prices in flawless backlog conversion that the company has not yet proven
What it is worth
EV/Revenue (forward), given no positive earnings or FCF to anchor P/E or DCF
$5–7
revenue misses persist, margins revert, dilution/burn continue; multiple compresses toward a struggling fixed-price contractor
$10–12
roughly in line with current ~$10.80; ~4–5x forward revenue as backlog converts but profit remains a 2026–27 story
$15–18
sustained >1.5x book-to-bill + gross margin holding ~27% + adj. EBITDA turning positive supports a premium defense-tech multiple
~$2.1B market cap on $450–500M FY26 guide ≈ ~4–5x EV/forward-revenue — priced for high-growth, pre-profit defense-tech; re-rates on the EBITDA-positive inflection, de-rates on a backlog-conversion miss.
SWOT
Strengths
- Record $498.1M backlog with 1.92 book-to-bill — demand visibility well ahead of revenue (fact)
- Differentiated, flight-proven IP across deployable solar/power (ROSA), avionics, sensors, and in-space manufacturing on NASA/ESA/DoD programs
- Combat-proven defense-UAS franchise post-Edge (Penguin used in Ukraine; Stalker in repeat US Army/USMC orders) into a budget tailwind
- Gross margin inflection — 26.6% in Q1 2026 vs 14.7% PY as Edge UAS mix lifts profitability
- Dual space + defense exposure diversifies away from any single agency or program cycle
Weaknesses
- Still deeply unprofitable — $(226.6)M FY25 net loss, $(50.3)M FY25 adj. EBITDA, negative FCF; no demonstrated GAAP profit
- Lumpy, fixed-price contract revenue exposed to cost-overrun / estimate-at-completion risk and timing slippage
- Heavy reliance on government appropriations — FY25 awards slipped on the US government shutdown
- Levered and acquisitive balance sheet after a $925M debt+stock Edge deal; heavy share dilution ($775M stock)
- Revenue still missed Q1 consensus despite +58% growth — execution/timing credibility gap
Opportunities
- Drone-warfare super-cycle — allied MoD and US DoD demand for attritable/ISR UAS (Penguin, Stalker)
- Commercial LEO economy — space stations (Axiom), ISS-successor power and manufacturing
- International expansion — ~$150M of backlog is international; ESA/allied programs
- Cross-sell space + defense autonomy and sensors across a now-broader customer base
- Further accretive bolt-on M&A consolidating fragmented space/defense component supply
Threats
- Better-capitalized competitors (Rocket Lab, RTX/Blue Canyon, L3Harris, AeroVironment) with deeper balance sheets
- US budget / continuing-resolution risk and program cancellations delaying awards
- Margin reversion if fixed-price programs incur overruns or UAS pricing compresses
- Equity dependence — dilution and refinancing risk if cash burn persists and capital markets tighten
- Geopolitical/export-control exposure on international defense UAS sales
Moats, dependencies & bottlenecks
Moats
qualified hardware IP (ROSA deployable solar, avionics, sensors, in-space mfg) space heritage/qualification is a multi-year barrier and switching cost on active programs Heritage is sticky once designed-in, but components are contestable by larger primes
ESA, DoD) backlog and qualification lock revenue for years, but re-competes exist $498M backlog is the tangible expression of this incumbency
battlefield validation + repeat orders, but a crowded, fast-moving UAS field Ukraine/US Army repeat orders are real validation; AeroVironment et al. compete hard
scale advantage is still emerging and capital-dependent M&A consolidation thesis, not yet a structural cost moat
regulatory barrier to entry for defense/classified work Gates competition for sensitive DoD/allied programs
Dependencies
Majority of revenue; FY25 awards slipped on the government shutdown — CR/budget cycles drive timing
~42% FY26 growth hinges on converting $498M backlog on schedule and on-cost (fixed-price risk)
Loss-making and levered post-Edge; needs continued equity/debt access if burn persists
Program margins are labor-cost sensitive; talent scarcity inflates COGS
Component lead-times and pricing affect EAC; some sourcing is single/sole-source
Indirect — its hardware needs rides to orbit; abundant launch capacity is a tailwind
Advantages
- Record $498.1M backlog and 1.92 book-to-bill — demand visibility rare at its revenue scale
- Multi-domain space + defense platform diversifies agency and program risk
- Flight-proven, designed-in IP (ROSA solar, avionics, in-space manufacturing) with switching costs
- Combat-validated UAS franchise (Penguin/Stalker) into a drone-warfare budget tailwind
- Gross-margin inflection (14.7%→26.6% YoY) showing the model can scale toward profit
- ITAR-compliant US manufacturing + clearances gating competition on sensitive work
Weaknesses
- Chronically unprofitable — negative GAAP earnings, adj. EBITDA, and FCF
- Lumpy fixed-price revenue with cost-overrun and award-timing risk
- Heavy government-appropriation dependence (shutdown already hurt FY25)
- Levered, dilutive balance sheet after the $925M debt+stock Edge deal
- Repeated revenue misses vs consensus despite optically large growth
- Organic growth modest (~10% FY25) once acquisitions are stripped out
Bottlenecks
- Profitability bridge — turning record backlog into positive EBITDA/FCF without fixed-price overruns
- Working-capital intensity — receivables/contract-asset build consumes cash as programs scale
- Engineering-labor capacity to staff a rapidly growing, ~42%-growth program slate
- Award timing — dependence on government appropriations and shutdown/CR risk slips revenue
- Integration of Edge Autonomy (systems, supply chain, culture) into the space-heritage core
Top signals & trends
Top signals
Demand outrunning revenue; watch for any drop below 1.0 as a backlog-exhaustion warning
Sustaining/expanding margin is the single clearest profitability tell
$(9.2)M in Q1, improving sequentially — the milestone the bull case needs
Q1 $97M already missed consensus; backlog conversion pace is the proof point
Repeat US Army/USMC orders confirm the drone-cycle thesis
Persistent burn raises dilution/refinancing risk; watch FCF trend
Trends
Ukraine-driven, structural DoD/allied demand for attritable ISR UAS — core to Penguin/Stalker
Axiom and ISS-successor demand for power (ROSA), payloads, in-space mfg
Roll-up opportunity for Redwire but also bigger, better-funded rivals forming
Already slipped FY25 awards; recurring timing overhang
Expands addressable mission count for Redwire hardware
Space + defense convergence plays to Redwire's post-Edge positioning
Ecosystem & competitor graph
Suppliers feed the company; customers pull from it. Line thickness shows the strength of each tie (supply-chain dependency, customer earnings contribution). Hover to isolate a tie.
Specialty electronics & avionics component makers Rad-hard parts, FPGAs, sensors feeding Redwire avionics — lead-time and pricing exposure
Cells and substrates for ROSA deployable arrays
Booms, structures, UAS airframes (composites for Penguin/Stalker)
Outsourced fabrication content on fixed-price programs
Consortium partner/supplier on ESA quantum-key-distribution satellite
Artemis II imaging/nav on Orion, ISS research payloads — anchor civil-space customer
Repeat Stalker UAS orders (1st Aviation Brigade, USMC Block 30) — core defense demand
Quantum-secure satellite / QKD program; ~$150M international backlog
Roll-Out Solar Arrays for its first commercial space-station module
Penguin UAS supplied to Ukraine via US aid — combat-proven demand channel
Thales, Boeing as integrators) Redwire components/subsystems sold into larger satellite/spacecraft programs
Closest public comparable — Space Systems builds buses, components, solar; also has launch. Far better-capitalized.
Leading small-UAS / loitering-munition prime — direct rival to Edge's Penguin/Stalker in defense drones.
RTX-owned smallsat-bus/avionics specialist competing in spacecraft platforms and ADCS.
Large space + ISR/defense-electronics prime overlapping payloads, sensors, and space systems.
Established satellite-platform/payload provider (privately held under Advent); competes on space-systems infrastructure.
Commercial space-station and in-space-infrastructure players overlapping Redwire's station/power ambitions.