Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following is a discussion and analysis of our financial condition and results of operations as of, and for the periods presented. The following discussion and analysis of our financial condition and result of operations should be read in conjunction with the sections entitled “Risk Factors”, “Cautionary Note Regarding Forward-Looking Statements” and with the unaudited condensed consolidated financial statements and accompanying notes included in this Quarterly Report on Form 10-Q. Certain information contained in this discussion and analysis includes forward-looking statements, including statements regarding our expectations for the future of our business and our liquidity and capital resources as well as other non-historical statements. These statements are based upon our current plans, expectations, and beliefs, and are subject to numerous risks and uncertainties, including those described in the “Risk Factors” section of our Annual Report on Form 10-K and the “Cautionary Note Regarding Forward-Looking Statements” sections of this Quarterly Report on Form 10-Q. Our actual results may differ materially from those contained in or implied by these forward-looking statements.
Overview
Our company is a market-leading space and defense technology company providing comprehensive mission solutions to national security, government, and commercial customers with an established track record of success. Our mission is to reliably and repeatedly launch, land, and operate space systems from Earth to the Moon and beyond. Backed by our world-class team and proven technology, we have designed, developed, and deployed our class-leading launch vehicles and dynamic spacecraft solutions to support critical customer missions across the space domain. We operate as a single reportable segment and serve this critical domain through our differentiated and scalable platforms of Launch and Spacecraft Solutions.
Launch: Our launch vehicles provide dedicated and responsive launch capabilities for national security, government, and commercial customers. We are the only U.S. company with a liquid-powered orbital launch vehicle in the 1,000-kilogram payload class. Our Alpha launch vehicle employs a distinct combination of technologies designed to ensure high performance and efficiency at low cost. It uses a unique lightweight, rigid, and thermally insulated carbon composite technology for both the primary rocket structure as well as the propellant tanks, which ensures more of the usable mass goes to the mission payload. Alpha is also powered by our patented tap-off cycle engine technology, which is more efficient than legacy systems and provides greater reliability by employing fewer parts than those in traditional rocket engines. We have utilized this proprietary technology in all of our rocket engines, which have been developed and tested in-house. Alpha has five engines: four first stage Reaver engines, and one second stage Lightning engine. In addition to its track record of successful, dedicated, and responsive launch, Alpha is also designed to support testing of hypersonic payloads, providing significant growth opportunities for hypersonic deterrents, reconnaissance, and future national security needs. We are also expanding our launch pad operations from Vandenberg Space Force Base to add Virginia’s Mid-Atlantic Regional Spaceport on Wallops Island and the Esrange Space Center in Sweden to support more missions, customers, and additional launch cadence opportunities. Built in collaboration with the SSC Space, the launch pad in Sweden will be our first expansion outside the U.S. and an initial step in our international market strategy. Sweden represents a proving ground for expansion of Alpha production and operations to U.S. allied nations – such as the United Kingdom, Japan, South Korea, Australia, and additional opportunities in Europe and the Middle East – as we look to serve global market demand for a sovereign-led franchise business model.
Eclipse is powered by eight Firefly-developed engines: seven first-stage Miranda engines and one second-stage Vira engine. The Miranda engine is built using the same engine architecture and patented tap-off cycle as the Reaver engine, while the Vira engine is based on Alpha’s second-stage vacuum-optimized Lightning engine. These common technologies are facilitating the fast, cost-efficient, and reliable development of Eclipse. Eclipse is being built to serve national security, commercial, and international launch markets at competitive pricing. Eclipse’s first stage is designed to be reusable, lowering production costs and improving cycle times for this launch platform. We are planning to construct a refurbishment facility that will facilitate this reusability. The first launch of Eclipse is expected to take place from Virginia’s Mid-Atlantic Regional Spaceport on Wallops Island, and Eclipse is designed to be compatible with additional launch ranges on the east and west coasts of the United States.
Spacecraft Solutions: Firefly is the only company to achieve a fully successful Moon landing, completing 100% of our mission objectives set out before launch. Following the first Blue Ghost mission, we have a total of four additional missions under NASA CLPS task orders. We expect our Blue Ghost lander to fly regular missions to the Moon, with payload services customized to the technology and exploration goals of our customers. Offering ride-share opportunities and dedicated missions, Blue Ghost is built to host and deliver payloads nearly anywhere on the lunar surface, as well as other planetary bodies. The next Blue Ghost Mission is expected to land on the far side of the Moon and conduct at least 10 days of Blue Ghost lander lunar surface operations, with an Elytra spacecraft supporting as a communications relay. This Elytra spacecraft is expected to remain operational in lunar orbit for up to five years. The second Blue Ghost mission is fully manifested with both NASA and commercial payloads, including a commercial rover and a ride-sharing international satellite. The remaining Blue Ghost missions include one to the Moon’s Gruithuisen Domes (for which we have selected
Blue Origin as a partner to develop a rover to be delivered to the lunar surface), as well as another to the lunar south pole. Or most recent award will return to the Moons near side. All Blue Ghost Missions are carrying NASA and commercial payloads.
Elytra is a dynamic spacecraft that is highly maneuverable and extensible to perform hundreds of rendezvous proximity operations in support of space domain awareness and warfighting, long-range communications relay, on-orbit edge processing, and advanced space exploration missions. A constellation of Elytra is expected to power a future long-haul communications relay for multiple customers. Blue Ghost and Elytra are highly complementary and compatible technologies that share a common core. Most of Elytra’s core hardware and software were proven at a variety of orbits through Blue Ghost’s successful first mission. As part of our end-to-end space services, Elytra offers robust on-orbit solutions and responsive defense capabilities when and where customers need them. Elytra is currently contracted to perform a responsive on-orbit mission in support of the U.S. Department of War’s (the “DoW”) Defense Innovation Unit (“DIU”). During this mission, Elytra will serve as a space maneuver vehicle to perform a series of on-orbit tasks including space domain awareness operations in Low Earth Orbit (“LEO”). Firefly is also contracted with NASA’s Jet Propulsion Laboratory to deliver four drones to the Moon’s south pole using an Elytra in support of the agency’s MoonFall mission. Available to launch on Alpha and Eclipse, our Elytra vehicles are positioned to service the entire lifecycle of government and commercial missions. This unique interoperability makes Firefly a one-stop shop and partner of choice for national security, government, and commercial customers requiring these capabilities.
Additionally, Firefly was selected by NASA’s Jet Propulsion Laboratory to manufacture, test, and deliver the aeroshell for NASA’s SkyFall mission to Mars. The mission, which is managed by JPL, will deploy three heritage Mars helicopters to perform science and demonstrate airborne subsurface mapping and resource prospecting. Firefly’s innovation lab is responsible for developing and manufacturing the SkyFall aeroshell, which consists of both a backshell and heatshield.
On October 31, 2025, we completed the acquisition of SciTec, which bolsters Spacecraft Solutions hardware with AI-enabled defense software proven in operations for missile warning and defense, intelligence, surveillance and reconnaissance, space domain awareness, remote sensing and analysis, and autonomous command and control. SciTec’s big data processing for national security and commercial customers includes cloud-based, on-premise, and edge processing of high-volume data at rate from satellites across all orbits to enable rapid decision making for warfighters, supports defense applications, and unlocks new service categories for commercial and government deep space missions. More broadly, SciTec’s support of national security programs advances U.S. and allied defense capabilities, including Golden Dome, with a full suite of hardware and software for space-based interceptor missions, hypersonic test missions, and space domain awareness missions.
Customers: Our track record of success and our reputation as a trusted provider for our customers results in a highly attractive, diversified business model defined by significant backlog and cash flow visibility. Strong customer demand backs our financial profile with approximately $1.5 billion in backlog and multi-launch agreements across our product lines as of June 30, 2026. Underpinning our financial profile is the combination of efficient contract structure and milestone-based billing. Before launch, we typically have collected approximately 90% of the total contract value, which is highly advantageous as production ramps. We are also differentiated in our ability to successfully execute on firm-fixed-price contracts. We are ahead of the curve as the industry shifts in favor of firm-fixed-price contracts and are well-positioned to capitalize on this change. The addition of SciTec further diversifies our customer base and adds a mixture of cost-plus and firm-fixed-price contracts.
As the space market continues to grow and evolve, we are well-positioned to serve our customers’ most complex missions with rapid response times and purpose-built solutions. Our collaborations with leading national security agencies and aerospace companies, such as Lockheed Martin Corporation, Northrop Grumman, L3Harris, NASA, the U.S. Space Force, Missile Defense Agency, National Geospatial-Intelligence Agency, Space Development Agency, and the National Reconnaissance Office demonstrate the value and criticality of our new space defense and technology leadership in this market.
Operations: We strategically deploy capital to build state-of-the-art infrastructure to design, produce, test, and manufacture our products to the highest standard at a regular cadence. We have four primary facilities supporting our corporate operations and launch vehicle and spacecraft production – Nexus corporate headquarters, Hive and Cortex spacecraft facilities, and Rocket Ranch manufacturing and testing site, which are only 25 miles apart, providing unique proximity between design, manufacturing, and production. The proximity of these facilities enables agile and rapid vehicle development and production at lower cost versus competitors. The acquisition of SciTec adds data centers, modeling and simulation labs, mission operations centers, and classified infrastructure with six locations strategically positioned near key space and defense customers.
Our purpose-built research and development, manufacturing, and testing footprint is the product of significant investments and the backbone of our manufacturing process. We designed our advanced manufacturing process through years of optimization that now allow us to replicate our additional facilities with significantly less capital outlay. Each of our launch sites were chosen intentionally to enhance flexibility for our customers. Our early investment in cutting-edge technology and best-in-class facilities is a competitive advantage, creating a platform primed for continued growth.
As we scale, we have and expect to continue to replicate our proprietary manufacturing and testing processes, resulting in reduced cycle times and further capital efficiency.
Additionally, we have deep, long-term relationships with our key suppliers. By maintaining a vertically-integrated manufacturing process, we are less reliant on the timelines of outside suppliers and reduce risk within our supply chain.
Our full suite of manufacturing capabilities is supplemented by multiple launch sites, both active and under development, which will continue to enhance flexibility and responsiveness for our missions. We are currently launching from the Vandenberg Space Force Base launch site in California. Launch sites are under construction at Virginia’s Mid-Atlantic Regional Spaceport on Wallops Island and the Esrange Space Center in Sweden, and we are pursuing additional opportunities to unlock future launch pad capacity. Our significant scale and unique blueprint are strategically planned to support our increasing launch cadence as we grow.
Backlog
We view growth in backlog as a key measure of our business growth. Backlog represents our estimate of the revenue we expect to realize in future periods as a result of performing work on contracts that have been awarded to us, net of any revenue already recognized. We include the aggregate expected revenue of awarded contracts in our backlog upon the execution of a legally binding agreement, even though our contracts include certain termination rights exercisable by our customers with advance notice. Deferred revenue recognized on our consolidated balance sheets consists of payments and billings that we have received in excess of revenue that we have recognized. Because cash receipts from these contracts have not been recognized into revenue, they are included in our backlog calculation.
We view backlog as a key measure of our future business prospects. We monitor our backlog because we believe it is a forward-looking indicator of potential revenue which can be helpful to investors in evaluating the performance of our business and identifying trends over time. Although backlog reflects business associated with contracts that are considered to be firm, terminations, amendments, or contract cancellations may occur, which could result in a reduction in our total backlog and potential future revenue that never gets recognized.
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
December 31, |
|
($ in thousands) |
|
2026 |
|
|
2025 |
|
Backlog |
|
$ |
1,468,081 |
|
|
$ |
1,351,054 |
|
The following amounts relate to executed multi-launch agreements where the missions have not yet been scheduled as of the backlog date. These amounts are included as part of the total backlog.
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
December 31, |
|
($ in thousands) |
|
2026 |
|
|
2025 |
|
Multi-launch agreement backlog |
|
$ |
403,070 |
|
|
$ |
344,800 |
|
Trends and Key Factors Affecting Performance
Macroeconomic Pressures
In recent years, geopolitical instability, including wars and conflicts, as well as impacts from other global events, have resulted in opportunities for companies in the space and defense technology market. However, certain disruptions to the global economy, including market disruptions, monetary, and fiscal policy uncertainty, supply chain challenges, high interest rates and inflationary pressures have contributed to an inflationary environment that has adversely affected, and may continue to adversely affect, the price and availability of certain products and services necessary for our operations, which in turn may adversely impact our business and operating results. Beginning in early 2025, the U.S. presidential administration announced the imposition of tariffs on substantially all countries that trade with the United States, certain of which were subsequently paused. Although the majority of the previously announced tariffs were determined to be unconstitutional, more tariffs may be added in the future under separate statutory authority and countermeasures still may be adopted by other countries. In addition, additional tariffs imposed by the U.S. presidential administration or retaliatory tariffs announced by other countries could result in a trade war, lead to market disruptions, including significant volatility in commodity prices, credit, and capital markets, as well as supply chain interruptions for equipment. These tariffs could adversely impact our business, financial condition, and results of operations, and if we are unable to pass such price increases through to our
customers, it would likely increase our costs and, as a result, decrease our gross margins, operating income, and net income. The impact of tariffs on our business and results of operations will depend on their timing, duration and magnitude.
Government Environment and Regulations
Our industry is affected by government budget and spending levels, changes in demand, changes in policy positions or priorities, the domestic and global political and economic environment, and the evolving nature of the space and defense sectors. In particular, the expansion of adversarial budgets to fund the development of hypersonic technologies poses a direct threat to the U.S., fueling this market momentum. Any changes in budget and spending levels, policies, or priorities, including the current emphasis by the U.S. presidential administration on access to space, may have an adverse impact on our business and operating results. In addition, U.S. government procurement regulations impose various operational requirements on government contractors. Non-compliance with any of these regulations could materially adversely affect our operating results.
Pace of Government Expenditures and Private Enterprise Investment in the Space Economy
Our future growth is largely dependent on our ability to continue to capitalize on increased government spending and private investment in the space economy. Government expenditures and private enterprise investment have fueled our growth in recent years and have resulted in our continued ability to secure increasingly valuable contracts for products and services as well as the ability to continue financing the growth and development of our business. We expect the continued availability and growth of government expenditures and private investment in the space economy will be an important contributor to increased purchases of our products and services; however, any delays or reductions in appropriations for our programs and changes in U.S. government priorities and spending levels more broadly may negatively impact our business.
Any future prolonged U.S. government shutdown or the adoption of a “continuing resolution” requiring the government to operate on funding levels equivalent to its prior fiscal year, could have an adverse impact on our results and growth plans. Additionally, a prolonged shutdown and any subsequent lapse in federal funding could cause U.S. federal government agencies to reduce their purchases under contracts, exercise their right to terminate contracts, or delay or pause new programs or funding existing programs, all of which could decrease our revenue and materially adversely impact our business, revenue, results of operations, and financial condition.
Ability to Continue the Expansion of Launch and Spacecraft Solutions Mission Operations
The markets we serve are rapidly expanding, with significant demand for launch and spacecraft solutions and services. Our success and ability to generate higher revenue will depend in large part on our ability to expand our Launch and Spacecraft Solutions offerings and to continue the deployment and development of our launch vehicles on a timely basis. As a result, our revenue and results of operations are subject to fluctuation depending on the number of launch missions scheduled and completed in a period and any launch delays.
We expect to continue to ramp up our launch cadence as we increase our production rate on Alpha rockets, and complete development of Eclipse. We successfully completed our first lunar landing on March 2, 2025, with four additional Blue Ghost missions planned through 2029. Empowered by our successful Blue Ghost mission and common technologies across spacecraft, we believe we are well positioned to unlock adjacent markets and contracts via our multi-mission orbital vehicle, Elytra. Any delays in commencing our missions, including due to delays or cost overruns in obtaining licenses or other regulatory approvals, launch delays or operational failures (such as our test stand anomaly in September 2025), or entering into future agreements with additional customers could adversely impact our ability to generate revenue, results of operations, and growth plans. We have approximately $1.5 billion in backlog as of June 30, 2026, and we are in active discussions with numerous potential customers, including government agencies and private companies, to potentially add to our backlog.
Ability to Improve Profit Margins and Scale our Business
The growth of our business is dependent on our ability to improve our profit margins over time while successfully scaling our business, including through continued investment in initiatives to improve our operating leverage. We believe continued reduction in costs and an increase in production and service volumes will enable a reduction of the cost of launch vehicles and an improvement of our gross margins. As we increase our launch cadence, we expect to be able to continue to improve our cost structure, as fixed and overhead costs are amortized over a greater number of launches and missions. Revenue, net income, and the timing of our cash flows also depend on our ability to perform on our contracts, and profitability can fluctuate depending on the mix of contracts awarded. To manage these fluctuations, we have implemented several strategies, such as closely monitoring project and related services timelines to anticipate cash flow needs. Despite these measures, the inherent variability in milestone achievements means that quarter-to-quarter comparisons of our results of operations may not necessarily be indicative of future performance.
Ability to Continue to Innovate and Expand our Service Offerings
To continue gaining market share and attracting customers, we plan to continue to make substantial investments in research and development (“R&D”) for the continued enhancements of our Launch and Spacecraft Solutions products. Our growth opportunity is dependent on our continued ability to expand our addressable launch market, win lunar and orbital missions and expand our portfolio of services related to those offerings. For instance, building on our launch, lander, transit, and operations success with Alpha and Blue Ghost, we are on track for our offerings to facilitate payload hosting services, transport services, utility services, and data services in LEO, MEO, and GEO. Our acquisition of SciTec adds the development of adaptable missile defense and mission data processing capability to our Spacecraft Solutions service portfolio. We plan to continue to forge strategic partnerships with industry leaders to enhance our technological capabilities and market reach.
Components of Results of Operations
Revenue – Our revenue is primarily derived from long-term contracts to provide launch and integration services for payloads requiring transportation into orbit via launch vehicles and to provide end-to-end services for the development and integration of platforms and systems for space domain and national defense mission operations.
Launch revenue includes revenues from contracts with commercial and government entities to provide launch and integration services for payloads requiring transportation into orbit via launch vehicles. These contracts may include milestone payments and deposits. We consider the performance obligation to be the initiation of the launch and recognize revenue at that point in time. We also enter into contracts with our customers to provide engineering services, including the development of launch sites and related components, and to develop and provide licenses to intellectual property. In these cases, our service obligation is satisfied over time since the tasks are performed according to the customer’s specifications, which creates an asset with no alternative use to us and we have an enforceable right to payment for performance completed to date.
Spacecraft Solutions revenue includes revenue from contracts with commercial and government entities to provide end-to-end services to integrate payloads into Blue Ghost and Elytra for transport to the Moon and for on-orbit space domain awareness missions, respectively, as well as to develop and provide software, sensor, and data processing capabilities for national defense missions. These contracts include firm-fixed-price, cost-plus, and time-and-materials pricing structures. For commercial payload services we consider the performance obligation to be the integration of customer payloads for delivery to specified destinations. These contracts typically require that the customer make milestone payments as specific conditions and tasks are performed. For software, sensor, and data processing contracts, we consider the performance obligation to be the development and implementation of the contracted solution. These contracts require customers to make milestone payments as specific conditions and tasks are performed, or regular periodic payments as costs are incurred. Performance obligations are satisfied over time since either (1) the tasks are performed according to the customer’s specifications and create an asset with no alternative use to us, or (2) the customer receives and consumes benefits as work is completed and we have an enforceable right to payment for performance completed to date.
Generally, our Spacecraft Solutions contracts do not contain an embedded lease because the Company is able to derive more than insignificant economic benefits from the various capabilities provided through these contracts. However, in the limited instances when the customer is determined at contract inception to obtain substantially all of the economic benefits, the contract is determined to include an embedded lease. For such arrangements, the Company has determined that the customer is the deemed accounting owner of the asset during the construction period. As a result, the Company determined it is providing services for the integration and delivery of the customer payload for those arrangements, and accounts for them based on the guidance for contracts with customers.
For all revenue streams, we consider customer payments that are contingent on the success of a mission or that are dependent on award criteria to be variable consideration. We assess the likelihood of success of a mission or achievement of contractual award requirements at inception and may defer the recognition of some or all of the variable consideration until success of the mission is assured or the award fee amount is determined.
We perform work under contracts that broadly consist of firm-fixed-price, cost-plus, cost reimbursable, and time-and-materials arrangements, or a combination thereof. Pricing is contractually based on specific negotiations with each customer. Advanced payments and billings for milestones in excess of revenues recognized are recorded as current and non-current deferred revenue in our consolidated balance sheets and recognized into revenue as we satisfy the underlying performance obligations. Occasionally we recognize revenue in advance of customer billings which creates a contract asset recorded within other current assets.
For fixed-price contracts satisfied over time, progress is measured using a cost-to-cost method, which accurately reflects the transfer of control to the customer. This method assesses the extent of progress based on the ratio of costs incurred to date against the total estimated costs to complete the performance obligation. Estimating total costs to complete requires us to make informed estimates regarding subcontractor performance, material costs and availability, labor costs and productivity, as well as overhead expenses. Frequently, the period of performance of a contract extends over a long period of time and, as such, revenue recognition and our
profitability from a particular contract may be affected to the extent that estimated costs to complete are revised, delivery schedules are delayed, performance-based milestones are not achieved, or progress under a contract is otherwise impeded. Accordingly, our recorded revenues and operating profit from period to period can fluctuate significantly depending on when contractual obligations are achieved.
Cost-reimbursable, cost-plus, and time-and-materials contracts with the U.S. government are generally subject to the Federal Acquisition Regulations (“FAR”) and are competitively priced based on estimated or actual costs of providing the contractual goods or services. The FAR provides guidance on types of costs that are allowable in establishing prices for goods and services provided to the U.S. government and its agencies. Pricing for non-U.S. government agencies and commercial customers is based on specific negotiations with each customer.
Should the estimated total costs to be incurred on a contract surpass the anticipated total revenue, we recognize a provision for the entire loss on the contract in the period when the loss is identified. For further discussion of the critical judgments and estimates related to our revenue recognition policies, see the section titled “Critical Accounting Estimates.”
Cost of Sales – primarily consists of raw materials, employee and contractor compensation, and other costs directly attributable to fulfilling our obligations under customer contracts. Costs of sales are expensed as incurred. We expect our cost of sales to increase in relative and absolute dollars in future periods as we sell more services and as our products mature to technological feasibility and reach full-rate production.
Research and Development – includes employee and contractor compensation, supplies and materials for new service development, depreciation and amortization, and regulatory compliance costs. Research and development costs are expensed as incurred. We expect to continue investing in research and development and, accordingly, expect our research and development expenses to vary as we continue to invest in developing and improving our services, and as our products reach technological feasibility and full-rate production.
Selling, General, and Administrative – includes personnel-related expenses, depreciation and amortization, and facilities-related costs primarily for our executive, marketing, finance, accounting, legal, and human resources functions. Selling, general, and administrative expenses also include expenses related to advertising, insurance, sales commission and fees for professional services principally consisting of legal, audit, and tax, as well as executive management expenses and transaction-related costs. Selling, general, and administrative expenses are expensed as incurred. We expect to incur additional selling, general, and administrative expenses as we grow as a public company, including expenses related to compliance with public company reporting obligations, and increased costs for insurance, investor relations, and professional services. As a result, we expect that our selling, general, and administrative expenses will increase in future periods and vary from period to period as a percentage of revenue.
Change in Fair Value of Warrant Liability – represents the period-over-period remeasurement gain or loss recognized related to our liability-classified warrants.
Interest Income – consists primarily of interest income earned on cash and cash equivalents and short-term investments.
Interest Expense – consists primarily of interest expense incurred on borrowings.
Gain on Settlement of Contingent Liabilities – reflects the derecognition of contingent liabilities due to the resolution of certain litigation and contract disputes during the year, net of the derecognition of related contract assets.
Other Income (Expense), Net – reflects miscellaneous income and expense unrelated to our core business activities.
(Benefit) Provision for Income Taxes – consists of an estimate for federal and state income taxes based on enacted rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities, and changes in the tax law. We maintain a valuation allowance to offset all federal and state net deferred tax assets, as realization of such assets does not meet the more-likely-than-not threshold required under ASC 740, Income Taxes.
Results of Operations
The following discusses our results of operations for the three and six months ended June 30, 2026 and 2025.
Comparison of the Three Months Ended June 30, 2026 to the Three Months Ended June 30, 2025
The following table sets forth a summary of our results of operations for the periods indicated, and the changes between periods.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
Ended June 30, |
|
|
|
|
|
|
|
($ in thousands) |
|
2026 |
|
|
2025 |
|
|
$ Change |
|
|
% Change |
|
Revenue |
|
$ |
117,683 |
|
|
$ |
15,549 |
|
|
$ |
102,134 |
|
|
|
657 |
% |
Cost of sales |
|
|
93,808 |
|
|
|
11,554 |
|
|
|
82,254 |
|
|
|
712 |
% |
Gross profit |
|
|
23,875 |
|
|
|
3,995 |
|
|
|
19,880 |
|
|
|
498 |
% |
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
71,532 |
|
|
|
45,774 |
|
|
|
25,758 |
|
|
|
56 |
% |
Selling, general, and administrative |
|
|
47,540 |
|
|
|
12,571 |
|
|
|
34,969 |
|
|
|
278 |
% |
Total operating expenses |
|
|
119,072 |
|
|
|
58,345 |
|
|
|
60,727 |
|
|
|
104 |
% |
Loss from operations |
|
|
(95,197 |
) |
|
|
(54,350 |
) |
|
|
(40,847 |
) |
|
|
(75 |
%) |
Other income (expense), net |
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of warrant liability |
|
|
(625 |
) |
|
|
(4,191 |
) |
|
|
3,566 |
|
|
|
(85 |
%) |
Interest income |
|
|
4,336 |
|
|
|
1,761 |
|
|
|
2,575 |
|
|
|
146 |
% |
Interest expense |
|
|
(1,794 |
) |
|
|
(6,998 |
) |
|
|
5,204 |
|
|
|
74 |
% |
Gain on settlement of contingent liabilities |
|
|
926 |
|
|
|
— |
|
|
|
926 |
|
|
* |
|
Total other income (expense), net |
|
|
2,843 |
|
|
|
(9,428 |
) |
|
|
12,271 |
|
|
|
130 |
% |
Loss before benefit for income taxes |
|
|
(92,354 |
) |
|
|
(63,778 |
) |
|
|
(28,576 |
) |
|
|
(45 |
%) |
(Benefit) for income taxes |
|
|
(35 |
) |
|
|
— |
|
|
|
(35 |
) |
|
* |
|
Net loss and comprehensive loss |
|
$ |
(92,319 |
) |
|
$ |
(63,778 |
) |
|
$ |
(28,541 |
) |
|
|
(45 |
%) |
* not meaningful
Revenue
The following table sets forth a summary of our revenue by type for the periods indicated, and the changes between comparative periods.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
Ended June 30, |
|
|
|
|
|
|
($ in thousands) |
|
2026 |
|
|
2025 |
|
|
$ Change |
|
|
% Change |
Launch revenue |
|
$ |
9,400 |
|
|
$ |
6,349 |
|
|
$ |
3,051 |
|
|
48% |
Spacecraft Solutions revenue |
|
|
108,283 |
|
|
|
9,200 |
|
|
|
99,083 |
|
|
1,077% |
Total revenue |
|
$ |
117,683 |
|
|
$ |
15,549 |
|
|
$ |
102,134 |
|
|
657% |
Total revenue increased by $102.1 million, or 657%, to $117.7 million during the three months ended June 30, 2026 from $15.5 million during the three months ended June 30, 2025, primarily driven by the factors discussed below.
Launch Revenue
Launch revenue increased by $3.1 million, or 48%, to $9.4 million during the three months ended June 30, 2026 from $6.3 million during the three months ended June 30, 2025, primarily due to our progress on engineering services contracts for the development of launch facilities.
Spacecraft Solutions Revenue
Spacecraft Solutions revenue increased by $99.1 million, or 1,077%, to $108.3 million during the three months ended June 30, 2026 from $9.2 million during the three months ended June 30, 2025 driven by the inclusion of SciTec, which was acquired in the fourth quarter of 2025, and continued progress on our Blue Ghost and Elytra spacecraft missions.
Cost of Sales
Cost of sales increased by $82.3 million, or 712%, to $93.8 million during the three months ended June 30, 2026 from $11.6 million during the three months ended June 30, 2025, aligning with the increases in revenue related to our Spacecraft Solutions and Launch programs.
Research and Development
Research and development costs increased by $25.8 million, or 56%, to $71.5 million during the three months ended June 30, 2026 from $45.8 million during the three months ended June 30, 2025. The growth is primarily driven by an increase in costs related to the Alpha program associated with ramping production on our Alpha Block II configuration upgrade, stock-based compensation expense, depreciation and amortization from newly acquired assets being placed into service, and other R&D initiatives.
Selling, General, and Administrative
Selling, general, and administrative expenses increased by $35.0 million, or 278%, to $47.5 million during the three months ended June 30, 2026 from $12.6 million during the three months ended June 30, 2025, the increase was primarily driven by the inclusion of SciTec expenses, stock-based compensation expense, and public company costs.
Change in Fair Value of Warrant Liability
Change in fair value of warrant liability decreased by $3.6 million, or 85%, to $0.6 million during the three months ended June 30, 2026 from $4.2 million during the three months ended June 30, 2025. The Company measures the value of the underlying warrant liabilities at fair value which are subject to re-measurement at each balance sheet date, with any change in fair value recognized in the statements of net loss and comprehensive loss. The change from the prior period is primarily driven by changes in the valuation assumptions used to measure the warrants at fair value which differ from the prior period when the Company was not publicly traded.
Interest Income
Interest income increased by $2.6 million, or 146%, to $4.3 million during the three months ended June 30, 2026 from $1.8 million during the three months ended June 30, 2025, reflecting interest income earned on the strategic investment of our IPO proceeds for the benefit of our working capital.
Interest Expense
Interest expense decreased by $5.2 million, or 74%, to $1.8 million during the three months ended June 30, 2026 from $7.0 million during the three months ended June 30, 2025. Interest expense during the three months ended June 30, 2025 was primarily comprised of interest related to the Term Loans.
Benefit for Income Taxes
Our benefit for income taxes consists of an estimate for federal and state income taxes based on enacted rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities, and changes in the tax law. We maintain a valuation allowance to offset all federal and state net deferred tax assets, as realization of such assets does not meet the more-likely-than-not threshold required under ASC 740, Income Taxes.
Comparison of the Six Months Ended June 30, 2026 to the Six Months Ended June 30, 2025
The following table sets forth a summary of our results of operations for the periods indicated, and the changes between periods.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended June 30, |
|
|
|
|
|
|
|
($ in thousands) |
|
2026 |
|
|
|
2025 |
|
|
$ Change |
|
|
% Change |
|
Revenue |
|
$ |
198,562 |
|
|
|
$ |
71,404 |
|
|
$ |
127,158 |
|
|
|
178 |
% |
Cost of sales |
|
|
157,226 |
|
|
|
|
65,189 |
|
|
|
92,037 |
|
|
|
141 |
% |
Gross profit |
|
|
41,336 |
|
|
|
|
6,215 |
|
|
|
35,121 |
|
|
|
565 |
% |
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
139,041 |
|
|
|
|
93,786 |
|
|
|
45,255 |
|
|
|
48 |
% |
Selling, general, and administrative |
|
|
93,160 |
|
|
|
|
25,323 |
|
|
|
67,837 |
|
|
|
268 |
% |
Total operating expenses |
|
|
232,201 |
|
|
|
|
119,109 |
|
|
|
113,092 |
|
|
|
95 |
% |
Loss from operations |
|
|
(190,865 |
) |
|
|
|
(112,894 |
) |
|
|
(77,971 |
) |
|
|
(69 |
%) |
Other income (expense), net |
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of warrant liability |
|
|
(4,309 |
) |
|
- |
|
|
(1,118 |
) |
|
|
(3,191 |
) |
|
|
285 |
% |
Interest income |
|
|
10,310 |
|
|
|
|
2,789 |
|
|
|
7,521 |
|
|
|
270 |
% |
Interest expense |
|
|
(5,399 |
) |
|
|
|
(13,190 |
) |
|
|
7,791 |
|
|
|
59 |
% |
Gain on settlement of contingent liabilities |
|
|
1,307 |
|
|
|
|
— |
|
|
|
1,307 |
|
|
* |
|
Other (expense) income, net |
|
|
(7 |
) |
|
|
|
542 |
|
|
|
(549 |
) |
|
* |
|
Total other income (expense), net |
|
|
1,902 |
|
|
|
|
(10,977 |
) |
|
|
12,879 |
|
|
|
117 |
% |
Loss before provision for income taxes |
|
|
(188,963 |
) |
|
|
|
(123,871 |
) |
|
|
(65,092 |
) |
|
|
(53 |
%) |
Provision for income taxes |
|
|
32 |
|
|
|
|
— |
|
|
|
32 |
|
|
* |
|
Net loss and comprehensive loss |
|
$ |
(188,995 |
) |
|
|
$ |
(123,871 |
) |
|
$ |
(65,124 |
) |
|
|
(53 |
%) |
* not meaningful
Revenue
The following table sets forth a summary of our revenue by type for the periods indicated, and the changes between comparative periods.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended June 30, |
|
|
|
|
|
|
|
($ in thousands) |
|
2026 |
|
|
2025 |
|
|
$ Change |
|
|
% Change |
|
Launch revenue |
|
$ |
22,652 |
|
|
$ |
11,519 |
|
|
$ |
11,133 |
|
|
|
97 |
% |
Spacecraft Solutions revenue |
|
|
175,910 |
|
|
|
59,885 |
|
|
|
116,025 |
|
|
|
194 |
% |
Total revenue |
|
$ |
198,562 |
|
|
$ |
71,404 |
|
|
$ |
127,158 |
|
|
|
178 |
% |
Launch Revenue
Launch revenue increased by $11.1 million, or 97%, to $22.7 million during the six months ended June 30, 2026 from $11.5 million during the six months ended June 30, 2025, primarily due to our successful Alpha Flight 7 launch, increased progress on Eclipse design and manufacturing, and engineering services contracts for the development of launch facilities.
Spacecraft Solutions Revenue
Spacecraft Solutions revenue increased by $116.0 million, or 194%, to $175.9 million during the six months ended June 30, 2026 from $59.9 million during the six months ended June 30, 2025 driven by the inclusion of SciTec, which was acquired in the fourth quarter of 2025, and continued progress on our Blue Ghost and Elytra spacecraft missions. The six months ended June 30, 2025 included revenue related to the successful completion of our first Blue Ghost mission.
Cost of Sales
Cost of sales increased by $92.0 million, or 141%, to $157.2 million during the six months ended June 30, 2026 from $65.2 million during the six months ended June 30, 2025, aligning with the increases in revenue related to our Spacecraft Solutions and Launch programs.
Research and Development
Research and development costs increased by $45.3 million, or 48%, to $139.0 million during the six months ended June 30, 2026 from $93.8 million during the six months ended June 30, 2025. The growth is primarily driven by an increase in costs related to the Alpha program associated with the launch of Alpha Flight 7 and ramping production on our Alpha Block II configuration upgrade, stock-based compensation expense, depreciation and amortization from newly acquired assets being placed into service, and other R&D initiatives.
Selling, General, and Administrative
Selling, general, and administrative expenses increased by $67.8 million, or 268%, to $93.2 million during the six months ended June 30, 2026 from $25.3 million during the six months ended June 30, 2025, the increase was primarily driven by the addition of SciTec, which was acquired in the fourth quarter of 2025, stock-based compensation expense, and public company costs.
Change in Fair Value of Warrant Liability
Change in fair value of warrant liability increased by $3.2 million, or 285%, to $4.3 million during the six months ended June 30, 2026 from $1.1 million during the six months ended June 30, 2025. The Company measures the value of the underlying warrant liabilities at fair value which are subject to re-measurement at each balance sheet date, with any change in fair value recognized in the statements of net loss and comprehensive loss. The change from the prior period is primarily driven by changes in the valuation assumptions used to measure the warrants at fair value which differ from the prior period when the Company was not publicly traded.
Interest Income
Interest income increased by $7.5 million, or 270%, to $10.3 million during the six months ended June 30, 2026 from $2.8 million during the six months ended June 30, 2025, reflecting interest income earned on the strategic investment of our IPO proceeds for the benefit of our working capital.
Interest Expense
Interest expense decreased by $7.8 million, or 59%, to $5.4 million during the six months ended June 30, 2026 from $13.2 million during the six months ended June 30, 2025. Interest expense during the six months ended June 30, 2025 was primarily comprised of interest related to the Term Loans.
Provision for Income Taxes
Our provision for income taxes consists of an estimate for federal and state income taxes based on enacted rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities, and changes in the tax law. We maintain a valuation allowance to offset all federal and state net deferred tax assets, as realization of such assets does not meet the more-likely-than-not threshold required under ASC 740, Income Taxes.
Non-GAAP Financial Measures
Adjusted EBITDA
Adjusted EBITDA is a non-GAAP financial measure. We define Adjusted EBITDA as net loss, adjusted for (benefit) provision for income taxes, interest income, interest expense, depreciation and amortization, stock-based compensation expense, the change in fair value of warrant liability, certain one-time costs related to the IPO, transaction-related expenses, gain on settlement of contingent liabilities, and certain other items that are not expected to recur in the future or that management does not view as reflective of the performance of the business. In addition to net loss, we use Adjusted EBITDA to evaluate our business, measure its performance, and make strategic decisions.
We believe that Adjusted EBITDA provides useful information to management, investors, and analysts in assessing our financial performance and results of operations across reporting periods by excluding items we do not believe are indicative of our core operating performance. Net loss is the U.S. GAAP measure most directly comparable to Adjusted EBITDA. Adjusted EBITDA should not be considered as an alternative to net loss.
Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.
The table below presents Adjusted EBITDA, reconciled to net loss for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended June 30, |
|
|
For the Six Months Ended June 30, |
|
($ in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
Net loss |
|
$ |
(92,319 |
) |
|
$ |
(63,778 |
) |
|
|
(188,995 |
) |
|
$ |
(123,871 |
) |
Adjusted for: |
|
|
|
|
|
|
|
|
|
|
|
|
(Benefit) provision for income taxes |
|
|
(35 |
) |
|
|
— |
|
|
|
32 |
|
|
|
— |
|
Interest income |
|
|
(4,336 |
) |
|
|
(1,761 |
) |
|
|
(10,310 |
) |
|
|
(2,789 |
) |
Interest expense |
|
|
1,717 |
|
|
|
6,998 |
|
|
|
5,399 |
|
|
|
13,190 |
|
Depreciation and amortization |
|
|
14,309 |
|
|
|
3,920 |
|
|
|
30,762 |
|
|
|
7,916 |
|
Stock-based compensation expense |
|
|
17,027 |
|
|
|
760 |
|
|
|
29,539 |
|
|
|
1,191 |
|
Change in fair value of warrant liability |
|
|
625 |
|
|
|
4,191 |
|
|
|
4,309 |
|
|
|
5,107 |
|
One-time costs related to the IPO(1) |
|
|
— |
|
|
|
1,767 |
|
|
|
— |
|
|
|
4,220 |
|
Transaction-related expenses |
|
|
2,724 |
|
|
|
— |
|
|
|
4,633 |
|
|
|
— |
|
Gain on settlement of contingent liabilities |
|
|
(926 |
) |
|
|
— |
|
|
|
(1,307 |
) |
|
|
— |
|
Other(2) |
|
|
— |
|
|
|
— |
|
|
|
15 |
|
|
|
— |
|
Adjusted EBITDA |
|
$ |
(61,214 |
) |
|
$ |
(47,903 |
) |
|
$ |
(125,923 |
) |
|
$ |
(95,036 |
) |
(1) Represents costs incurred related to the IPO that do not meet the direct and incremental criteria per SEC Staff Accounting Bulletin Topic 5.A to be netted against the gross proceeds of the offering and that are not expected to recur in the future.
(2) Other includes loss on foreign exchange.
Free Cash Flow
Free Cash Flow is a non-GAAP financial measure. We define Free Cash Flow as net cash used in operating activities, less purchases of property and equipment and internal-use software. We believe that Free Cash Flow is a meaningful indicator of liquidity that provides information to management and investors about the amount of cash generated from or used in operations, after purchases of property and equipment and internal-use software, that (after any debt service requirements or other non-discretionary expenditures not otherwise deducted from the measure) can be used for strategic initiatives, including continuous investment in our business and strengthening our balance sheet.
Free Cash Flow has limitations as a liquidity measure, and you should not consider it in isolation or as a substitute for analysis of our cash flows as reported under U.S. GAAP. Free Cash Flow may be affected in the near to medium term by the timing of capital investments, fluctuations in our growth and the effect of such fluctuations on working capital and changes in our cash conversion cycle.
The following table presents a reconciliation of net cash used in operating activities, the most directly comparable financial measure presented in accordance with U.S. GAAP, to Free Cash Flow:
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended June 30, |
|
($ in thousands) |
|
2026 |
|
|
2025 |
|
Net cash used in operating activities |
|
$ |
(144,110 |
) |
|
$ |
(84,619 |
) |
Purchases of property and equipment and internal-use software |
|
|
(41,089 |
) |
|
|
(11,837 |
) |
Free Cash Flow |
|
$ |
(185,199 |
) |
|
$ |
(96,456 |
) |
Non-GAAP financial measures have important limitations as analytical tools and you should not consider non-GAAP financial measures in isolation or as a substitute for analyses of our operating results or cash flows as reported under U.S. GAAP. Non-GAAP financial measures may be defined differently by other companies in our industry and may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.
Liquidity and Capital Resources
We measure liquidity in terms of our ability to fund the cash requirements of our business operations, including working capital needs, capital expenditures, contractual obligations, debt service, acquisitions, and other commitments with cash flows from operations
and other sources of funding. Our principal sources of liquidity to date have included amounts raised through issuances of equity capital and borrowings under our financing agreements.
Our expected primary uses of cash on a short and long-term basis are for working capital requirements, capital expenditures, R&D, debt service requirements, and other general corporate purposes. Our primary working capital requirements are for project execution activities including purchases of materials, subcontracted services and payroll, which fluctuate during the year, driven primarily by the timing and extent of activities required on new and existing projects.
As of June 30, 2026, our working capital position was in a surplus, in which our current assets exceeded our current liabilities. We often make advanced payments to suppliers for services that have not yet been received that are recorded as current or non-current assets depending on whether they are expected to be settled within a year. Additionally, as of June 30, 2026, our current deferred revenue totaled $151.2 million. This is primarily due to the timing and nature of our deferred revenue where advanced payments and billings in excess of revenues recognized are recorded as deferred revenue and recognized into revenue as we satisfy the underlying performance obligation. Due to the nature of our supplier and customer contracts as well as the timing of payments, we expect to continue to fluctuate between a surplus and a deficit of net working capital.
Our ability to generate sufficient liquidity from our ongoing operations and capital markets transactions in order to meet our obligations and operating needs will enable us to continue our business operations. If we require additional capital and are unsuccessful in raising that capital, we may not be able to continue our business operations and/or may be unable to advance growth initiatives, either of which could adversely impact our business, financial condition, and results of operations.
As of June 30, 2026, our cash and cash equivalents, and short-term investments amounted to $635.3 million, and our financial debt amounted to $27.0 million. The Revolving Credit Facility was undrawn as of June 30, 2026. We have a limited history of operations and have incurred negative cash flows from operating activities and losses from operations in the past as reflected in our accumulated deficit of $1.2 billion as of June 30, 2026. We believe that our cash and cash equivalents, and short-term investments, in addition to our available Revolving Credit Facility, will be adequate to meet our liquidity requirements for at least the next 12 months. Our future long-term capital requirements will depend on several factors, including our ability to raise additional capital and, over time, our ability to generate positive cash flows from operations. Further, our liquidity is affected by government budget and spending levels, and if a future prolonged government shutdown occurs, we could be at risk of reduced orders, program cancellations, and other disruptions and nonpayment.
Registered Equity Offering
On June 1, 2026, we completed an underwritten primary offering of 4.0 million shares of our common stock at a price of $48.00 per share. In addition, entities affiliated with AE Industrial Partners, an existing stockholder, completed a secondary offering of 8.0 million shares. We received total net proceeds of $181.6 million after deducting underwriting discounts and commissions of $7.9 million and other offering expenses of $2.6 million. We did not receive any proceeds from secondary offering of shares.
Debt
Prior Credit Agreement
On July 17, 2023, we entered into a credit agreement (as further amended from time to time, the “Prior Credit Agreement”) with various lenders and U.S. Bank Trust Company, N.A. in its capacity as collateral agent for the lenders. The Prior Credit Agreement provided term loan commitments in the aggregate principal amount of $136.1 million. The Prior Credit Agreement consisted of a term loan commitment of $103.5 million (“Term A Loans”) and a term loan commitment of $32.6 million (“Term B Loans” and, together with the Term A Loans, the “Term Loan Facility”). Borrowings under the Term Loan Facility bore interest at a fixed rate on the unpaid principal amount thereof of 13.875% provided that the fixed rate for Term Loan B Fixed Rate would increase to 19.135% in July 2026.
On August 8, 2025, we used a portion of the net proceeds from the IPO to repay all of the borrowings under the Prior Credit Agreement, together with the specified prepayment premium of $11.4 million, and accrued interest.
See Note 11 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for more information.
New Credit Agreement
On August 8, 2025, we entered into a new revolving credit agreement (the “New Credit Agreement”) providing for a senior secured revolving credit facility (the “Revolving Credit Facility”) in the aggregate principal amount of $125.0 million, including a sublimit for the issuance of letters of credit in an amount up to $15.0 million and a sublimit for swingline loans in an amount up to $7.5 million.
On November 7, 2025, we amended the New Credit Agreement. The amendment, among other things, increased the commitments under the Revolving Credit Facility by $135.0 million for an aggregate principal amount of $260.0 million.
On April 3, 2026, we further amended the New Credit Agreement. The amendment, among other things, increased the commitments under the Revolving Credit Facility by $45.0 million, for an aggregate principal amount of $305.0 million. The amendment also increased the interest spread applicable to loans under the Revolving Credit Facility by 0.25%. In addition, the amendment removed the minimum free cash flow maintenance covenant and adjusted the minimum liquidity maintenance covenant to required $381.3 million of minimum liquidity, tested as of the last day of each calendar month (commencing with the calendar month ending April 30, 2026).
The Revolving Credit Facility matures on August 8, 2028. Prior to giving effect to the April 3, 2026 amendments, the loans under the Revolving Credit Facility bear interest at a variable rate per annum equal to, at our option, either (a) term SOFR plus a 3.00% spread or (b) an alternative base rate (as set forth in the New Credit Agreement) plus a 2.00% spread. A commitment fee of 0.375% per annum is applied on the unused commitments under the Revolving Credit Facility. After giving effect to such amendment, the loans under the Revolving Credit Facility bear interest at a variable rate per annum equal to, at the Company’s option, either (a) term SOFR plus a 3.25% spread or (b) an alternative base rate (as set forth in the Credit Agreement) plus a 2.25% spread.
The Revolving Credit Facility is guaranteed by certain of our wholly-owned domestic subsidiaries and secured by substantially all of our assets and the assets of certain of our subsidiaries, in each case, subject to customary exceptions.
The Revolving Credit Facility contains customary affirmative and negative covenants, including limitations on our ability and certain of our subsidiaries’ abilities, to (i) incur additional debt; (ii) create liens; (iii) make certain investments, loans and advances; (iv) sell assets; (v) pay dividends or make distributions or make other restricted payments; (vi) voluntarily prepay certain other indebtedness; (vii) engage in mergers or consolidations; (viii) change the business we and certain of our subsidiaries conduct; (ix) engage in certain transactions with affiliates; (x) enter into agreements that restrict dividends from subsidiaries; and (xi) amend certain charter documents and material agreements governing subordinated and junior indebtedness.
In addition, the Revolving Credit Facility requires us to comply with the following financial covenants (subject to certain equity cure rights):
•Maintenance of minimum liquidity of $381.3 million, tested as of the last day of each calendar month (commencing with the calendar month ending April 30, 2026).
•At our election, and upon our achieving positive consolidated EBITDA (as calculated under the New Credit Agreement) (a “Leverage Covenant Triggering Event”), the minimum liquidity covenant will no longer be applicable, and our sole financial covenant following a Leverage Covenant Triggering Event will be maintenance of maximum first lien net leverage ratio not to exceed 4.00:1.00, tested as of the last day of each fiscal quarter.
The Revolving Credit Facility also contains customary events of default, including, among others: (i) failure to pay principal, interest, fees or other amounts under the Revolving Credit Facility when due taking into account any applicable grace period; (ii) any representation or warranty proving to have been incorrect in any material respect when made; (iii) failure to perform or observe covenants or other terms of the Revolving Credit Facility subject to certain grace periods; (iv) a cross default with respect to other material indebtedness; (v) bankruptcy and insolvency events; (vi) a “change of control” and (vii) the invalidity or impairment of any loan document or any security interest.
Borrowings under the Revolving Credit Facility may vary significantly from time to time depending on our cash needs at any given time. As of June 30, 2026, the Revolving Credit Facility was undrawn, and it continues to remain undrawn as of the date of this report.
Preferred Stock and Warrants
Prior to our IPO, we sourced a significant portion of our liquidity through preferred stock issuances. We have had multiple issuances that have raised $925.2 million, net of issuance costs, since inception.
We also have 0.6 million outstanding warrants exercisable for shares of Series J Preferred Stock. We have reserved 0.6 million shares of common stock for issuance upon the exercise of the Series J Preferred Stock Warrants.
On July 10, 2025, our Board of Directors declared a dividend (the “Preferred Stock Dividend”) payable in shares of our common stock in respect of all accrued and unpaid dividends on our outstanding shares of Series C, Series D-1, Series D-2, and Series D-3 Preferred Stock held as of July 11, 2025. We paid the Preferred Stock Dividends on July 16, 2025, upon receipt of consents that were required from certain third parties, and issued approximately 3.3 million shares of common stock to the then-existing holders of our Series C, Series D-1, Series D-2, and Series D-3 Preferred Stock.
On August 8, 2025, in connection with the closing of our IPO, all outstanding shares of preferred stock were converted into 105.8 million shares of common stock. In addition, in connection with the IPO, all outstanding Common Warrants were automatically exercised into 1.0 million shares of common stock. In addition, 0.6 million shares of common stock are reserved for issuance upon exercise of Series J Preferred Stock warrants to purchase preferred stock.
On August 8, 2025, our Board of Directors declared a dividend (the “IPO Closing Preferred Stock Dividend”) payable in cash in respect of all unpaid dividends on our outstanding shares of Series C, Series D-1, Series D-2, and Series D-3 Preferred Stock that had accrued following July 11, 2025 through the conversion of such Preferred Stock into shares of common stock on August 8, 2025 in connection with the completion of the IPO. On August 28, 2025, we paid the IPO Closing Preferred Stock Dividend in an aggregate amount of $5.0 million in cash.
Cash Flows
The following table summarizes our cash flows, for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended June 30, |
|
|
|
|
|
|
|
|
2026 |
|
|
2025 |
|
|
$ Change |
|
|
% Change |
($ in thousands) |
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities |
|
$ |
(144,110 |
) |
|
$ |
(84,619 |
) |
|
$ |
(59,491 |
) |
|
(70%) |
Net cash used in investing activities |
|
$ |
(119,780 |
) |
|
$ |
(11,837 |
) |
|
$ |
(107,943 |
) |
|
(912%) |
Net cash (used in) provided by financing activities |
|
$ |
(69,259 |
) |
|
$ |
180,441 |
|
|
$ |
(249,700 |
) |
|
(138%) |
Net Cash Used in Operating Activities
Net cash used in operating activities increased by $59.5 million, or 70%, to $144.1 million for the six months ended June 30, 2026 compared to $84.6 million for the six months ended June 30, 2025. Net loss, exclusive of non-cash items, increased by $22.0 million in the current period. This was primarily due to increases in labor and contractor costs, purchases of materials used in the manufacturing and development of our products, and general corporate expenses. In addition, net working capital increased by $37.5 million, which was primarily driven by the timing and recognition of prepaid launch services. These increases in operating outflows were partially offset by an increase in cash receipts from customers due to the inclusion of SciTec’s contributions in our operating cash flows, and the completion of milestones for progress achieved across our product lines. Depending on the stages of completion of our various projects, our working capital balances will fluctuate throughout the year due to the timing of cash payments and cash receipts.
Net Cash Used in Investing Activities
Net cash used in investing activities increased by $107.9 million, or 912%, to $119.8 million during the six months ended June 30, 2026 compared to $11.8 million during the six months ended June 30, 2025.
During the six months ended June 30, 2026, net cash used by investing activities was primarily comprised of $75.0 million in net investing outflows related to the purchase of, and proceeds from, short-term investments as part of our treasury management strategy. In addition, during the six months ended June 30, 2026, we paid $41.1 million for investments in our property and equipment infrastructure and internal-use software.
During the six months ended June 30, 2025, net cash used by investing activities consisted of $11.8 million in purchases of property and equipment.
Net Cash Used in Financing Activities
Net cash used by financing activities increased by $249.7 million, or 138%, to an outflow of $69.3 million for the six months ended June 30, 2026 compared to an inflow of $180.4 million for the six months ended June 30, 2025.
During the six months ended June 30, 2026, net cash used in financing activities primarily consisted of $260.0 million to repay the aggregate principal amount then drawn under the Revolving Credit Facility, offset by $182.6 million in net proceeds from our underwritten primary offering of common stock, which does not include $1.1 million of related deferred offering costs that remained unpaid as of June 30, 2026.
During the six months ended June 30, 2025, net cash provided by financing activities primarily consisted of $184.1 million of proceeds from the issuance of convertible preferred stock.
Contractual Obligations and Commitments
Lease Commitments
We lease buildings, launch sites, office facilities, machineries, and computer equipment. These leases are classified as operating or financing leases with various expiration dates through 2042. Our total remaining lease obligations as of June 30, 2026 are $26.4 million, with $4.1 million due in less than one year. See Note 10 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for more information regarding our lease commitments.
Off-Balance Sheet Arrangements
We do not engage in any off-balance sheet activities or have any arrangements or relationships with unconsolidated entities, such as variable interest, special purpose, and structured finance entities.
Critical Accounting Estimates
Our unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. Preparation of the financial statements requires our management to make judgments, estimates, and assumptions that impact the reported amount of net sales and expenses, assets and liabilities, and the disclosure of contingent assets and liabilities. We consider an accounting judgment, estimate, or assumption to be critical when the estimate or assumption is complex in nature or requires a high degree of judgment and the use of different judgments, estimates, and assumptions could have a material impact on our unaudited condensed consolidated financial statements. We periodically review our estimates and make adjustments when facts and circumstances dictate. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations will be affected.
Revenue Recognition
We enter into contracts with our customers to provide launch and spacecraft integration services, engineering services, software development and design, and licenses to intellectual property. Certain of our contracts are structured as firm-fixed-price or cost-plus-award-fee contracts, and some of these contain variable consideration which requires management to estimate the amount of consideration we will ultimately be entitled to receive. Estimates of variable consideration are based on the likelihood of completing a performance obligation or meeting certain award criteria.
We recognize revenue over time for performance obligations within these contracts based on total expected revenue, less constrained variable consideration. The measure of progress over time is based upon an input method using a cost-to-cost measure which best depicts the transfer of control to the customer. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at the completion of the performance obligation. Estimating the total costs for the completion of a performance obligation requires management to make estimates related to items such as subcontractor performance, material costs and availability, labor costs and productivity, and the costs of overhead. For certain contracts, if estimates of total costs to be incurred on a contract exceed total estimates of revenue to be earned, a provision for the entire loss on the contract is recognized in the period the loss is incurred, based on the excess of management’s estimates of total costs to be incurred over revenue to be earned.
Management’s estimates of total costs to be incurred and variable consideration to be earned are highly subjective and dependent on its past experience and operations. Given our limited history of operations, its rapid development and commercialization of new products, as well as its continued focus on improving and refining its manufacturing processes, these estimates are inherently subject to a high degree of estimation uncertainty and may fluctuate significantly from period to period.
Business Combinations
We account for business combinations using the acquisition method of accounting whereby the identifiable assets and liabilities of the acquired business, are recorded at their estimated fair value as the date that we obtain control of the acquired business. The fair value of the consideration paid is assigned to the underlying net assets of the acquired business based on their respective fair values. Any excess of the purchase price over the estimated fair values of the net assets acquired is recorded to goodwill. Acquisition-related expenses are expensed as incurred.
Several valuation methods may be used to determine the fair value of the assets acquired and liabilities assumed. For intangible assets, we typically use a method that is a form of variation of the income approach, whereby a forecast of future cash flows attributable to the asset are discounted to present value using a risk-adjusted discount rate. Some of the more significant estimates and assumptions inherent in the income approach include the amount and timing of projected future cash flows, the discount rate selected to measure the risks inherent in the future cash flows and the assessment of the asset’s expected useful life. Our estimates of fair value are based upon
assumptions believed to be reasonable, but which are inherently uncertain. During the measurement period of up to one year from the acquisition date, based on new information obtained that relates to the facts and circumstances that existed as of the acquisition date, we may record adjustments to the assets acquired and liabilities assumed with corresponding offset to goodwill. We record adjustments identified, if any, subsequent to the end of the measurement period in our consolidated statements of net loss and comprehensive loss.
Warrants
Our warrants are liability-classified on the consolidated balance sheets and, therefore, are recorded at fair value at each reporting period. Following the IPO, we determined the fair value of the warrant liability based on a Black-Scholes option-pricing valuation model and classifies the warrants as Level 2. The most significant estimate in the Black-Scholes model is the derived volatility due to the short trading history of our shares. Prior to our IPO, the Level 3 significant unobservable inputs used in the fair value measurement of our warrant liability were volatility, term, discount for lack of marketability and probability weighting based on different scenarios including change of control, IPO, and default.
On August 8, 2025, in connection with our IPO, all outstanding Common Warrants were automatically exercised into 1.0 million shares of common stock. In addition, 0.6 million shares of common stock are reserved for issuance upon exercise of the outstanding Series J Warrants.
Goodwill
Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations. We test goodwill for impairment at least annually during the fourth fiscal quarter, or more frequently if indicators of impairment exist during the fiscal year.
When testing goodwill for impairment, we first perform a qualitative assessment. If we determine it is more likely than not that a reporting unit’s fair value is less than its carrying amount, then a one-step impairment test is required. If we determine it is not more likely than not a reporting unit’s fair value is less than its carrying amount, then no further analysis is necessary. To identify whether a potential impairment exists, we compare the estimated fair value of the reporting unit with its carrying amount, including goodwill. If the estimated fair value of the reporting unit exceeds its carrying amount, goodwill is not considered to be impaired. If, however, the fair value of the reporting unit is less than its carrying amount, then such balance would be recorded as an impairment loss. We performed our most recent qualitative analysis as of October 1, 2025, where we determined the fair value of our reporting unit with goodwill substantially exceeded its carrying value.
Impairment of Long-Lived Assets
We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparing the carrying amount to the future net undiscounted cash flows which the assets are expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the projected discounted future net cash flows arising from the asset. We have not identified any material impairment losses to date.
Using a discounted cash flow method involves significant judgment and requires us to make significant estimates and assumptions, including long-term projections of cash flows, market conditions, and appropriate discount rates. Judgments are based on historical experience, current market trends, consultations with external valuation specialists, and other information. If facts and circumstances change, the use of different estimates and assumptions could result in a materially different outcome. We generally develop these forecasts based on recent sales data for existing services, acquisitions, and estimated future growth of the market in which we operate.
Recently Issued and Adopted Accounting Standards
Recently issued and newly adopted accounting standards are described in Note 2 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Emerging Growth Company Accounting Election
Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can choose not to take advantage of the extended transition period and comply with the requirements that apply to non-emerging growth companies, and any such election to not take advantage of the extended transition period is irrevocable. We are an “emerging growth company” as defined in Section 2(a) of the Securities Act, and have elected to take advantage of the benefits of this extended transition period, which means that when a
standard is issued or revised and has different application dates for public or private companies, we, as an emerging growth company, may adopt the new or revised standard at the time private companies are required to adopt the new or revised standard. We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of the completion of our IPO; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC, and expect to continue to take advantage of the benefits of the extended transition period. This may make it difficult or impossible to compare our financial results with the financial results of another public company that is either not an emerging growth company or is an emerging growth company that has chosen not to take advantage of the extended transition period exemptions for emerging growth companies because of the potential differences in accounting standards used.