RR's Pivot to RaaS: Evading Short-Term Setback for Long-Term Growth

Richtech Robotics Inc. RR registered an 18.4% year-over-year decline in its revenues during the third quarter of 2025. This detriment is a result of the company’s strategic shift to a Robotics-as-a-Service (RaaS) model, a tiny hitch that is in line with the company’s long-term growth plan. The primary agenda of this strategy is to build a recurring revenue stream via multi-year service agreements (MSAs) in lieu of a one-time product sale.

Despite the drawback being lower upfront product revenues in the short-term due to the timing of revenue recognition, a gradual rise in the base of contracted recurring revenues is inevitable. Hence, the core objective is to build a machine that generates predictable cash flow by developing strong customer relationships through MSAs. These MSAs will play the vital role of creating revenue stability, particularly during economic headwinds swarming the sector.

What is impressive is that, despite taking a hit in its top-line growth, Richtech Robotics has maintained a lofty gross profit margin of 74.4% during the third quarter of 2025, up 420 basis points from the year-ago quarter. Such operational strength and prudent cost management compel us to expect the company to witness rapid growth in its profitability as soon as the RaaS machinery gathers pace.

Per Future Market Insights, the global RaaS market is expected to witness a CAGR of 18% through 2035, driven by its popularity in logistics, warehouse and healthcare. With cash reserves exceeding $85.4 million, RR’s robust balance sheet enables short-term investments to expand its offerings. This strategy supports RR’s long-term growth vision and creates a path for a compelling growth narrative for investors.

RR’s Price Performance, Valuation & Estimates

Richtech Robotics has surged 447.3% in the past year, significantly outperforming SmartRent, Inc. SMRT, NextNav Inc. NN and the industry as a whole. The industry has rallied 11.1%. SmartRent and NextNav declined 2.8% and 22.3%, respectively.

1-Year Share Price Performance

In the past three months, Richtech Robotics gained 53.7%, outperforming the industry’s 9.7% rise. SmartRent and NextNav declined 4% and 10.4%, respectively.

3-Month Share Price Performance

From a valuation standpoint, RR trades at a 12-month forward price-to-sales ratio of 33.89. It is discounted when compared with NextNav’s 431.25, while trading at a premium compared with SmartRent’s 0.84.

Richtech Robotics and its two industry peers have a Value Score of F.

The Zacks Consensus Estimate for RR’s loss per share for 2025 is pinned at 15 cents, unchanged over the past 60 days. For 2026, the loss per share is pegged at 10 cents compared with a loss of 14 cents per share over the last 60 days.

RR carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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