Momentus Q1 2023 Earnings Call Transcript

Quartr
Provided by Quartr
May 11, 2023

There are 6 speakers on the call.

Operator

My name is Emma, and I will be your conference operator today. At this time, I would like to welcome everyone to the Momentous, Inc. 1st Quarter 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer As a reminder, today's call is being recorded.

Operator

I would now like to turn the conference over to Mary Horm. Please go ahead.

Speaker 1

Thank you, and hello, everyone. Welcome to Momentous' Q1 2023 earnings conference call. With me here today are John Rood, Chief Executive Officer of the company and Chairman of its Board of Directors as well as Eric Williams, Chief Financial Officer. Each will provide prepared remarks. Following these prepared remarks, we will take questions from analysts.

Speaker 1

Earlier today, we issued a press release and made a slide presentation available on our Investor Relations website, which provides an overview of our business and financial highlights for the quarter. You can download a copy of the release and presentation slides at investors. Momentus. Space. During today's call, we will make certain forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act of 1934.

Speaker 1

Forward looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward looking statements in this Communication. You should listen to today's call with the understanding that our actual results may be materially different from the plans, intentions and expectations disclosed in the forward looking statements we make. For more information about factors that may cause actual results to materially differ from forward looking statements. Please refer to the earnings press release we issued today as well as the company's filings with the Securities and Exchange Commission.

Speaker 1

Readers are cautioned not to put undue reliance on forward looking statements, and the company specifically disclaims any obligation to update the forward looking statements that may be discussed during this call. Please also note that we will refer to certain non GAAP financial information on today's call. You can find reconciliation of the non GAAP financial measures to the most comparable GAAP measures in our earnings press release. Menifee's non GAAP financial measures is a substitute for or superior to measures of financial performance prepared in accordance with GAAP. With that, I'd like to turn the call over to our Chairman and Chief Executive Officer, John Rood.

Speaker 2

Well, thank you, Mary. It's a pleasure to be here today to provide an update on the progress that we've made at Momentous over the past quarter and our Q1 financial results. I'm also pleased to have Eric Williams here for our first for his first earnings call as our CFO. After I make my comments, Eric will take you through the financial highlights and the outlook. Turning to Slide 4.

Speaker 2

In the Q1, Momentous demonstrated solid progress toward our goal of being one of the market leaders in in space transportation and infrastructure services for U. S. Government and commercial customers. We are at the forefront of this rapidly expanding market, possess key competitive advantages and have confidence in our long term strategy. In my remarks today, I'll focus on 4 things that fuel my excitement about the future of momentous.

Speaker 2

First, our core technology is functional and operational in space. We've come a long way in maturing our technology and we're delighted to be seeing spacecraft and its key technologies performing in space. With every passing day and orbit of our spacecraft around the earth, We gained more flight heritage and increased this important advantage over competitors that have yet to fly their vehicles in space or sure they can do so successfully. 2nd, we continue to see growing interest from customers, both commercial and government customers responsible for U. S.

Speaker 2

National security missions that we plan to translate into contracts over the coming months. 3rd, we're driving new innovation to maximize our competitive edge and are excited about new capabilities and technology that we will be demonstrating in space in the next few months. And 4th, one of the key reasons why we're confident about our future is the cumulative decades of experience within our veteran leadership team. We've taken great strides in our engineering and technology development, whether measured in metrics for productivity, quality, speed of production, testing and improved capabilities. We've been able to do this by leveraging over 150 years of experience leading technology development efforts at space companies by our top 6 leaders in engineering and supply chain.

Speaker 2

These leaders have learned the hard lessons and nuances that can only be learned through experience of what it takes to be successful in developing new technology for the harsh and unforgiving environment in space. When combined with a young talented crop of engineers eager to change the way we operate in space And to be more agile and innovative, we have a very strong talent mix that is a competitive advantage over our peers. Specifically, I'd like to mention Tom Malko. He was our VP of Operations, but we recently expanded his role to oversee engineering

Speaker 3

conference call.

Speaker 2

Tom has more than 40 years of experience overseeing the design, production, launch and operation of satellites and space systems at Lockheed Martin. Under his leadership, Momentous has been implementing improvements and best practice processes that have increased productivity, reduced defect rates and allowed us to produce spacecraft faster at lower cost and better quality. I'd also like to highlight Charles Chase, who recently transitioned from being our VP of Engineering to be our VP of Special Programs where he is focused on winning new business and National Security Business. This is part of our greater focus on growing our business supporting national security missions. Charles has a 30 year track record and notably was the founder and leader of revolutionary technology programs, The organization and the technological front end of the story of Lockheed Martin Skunk Works.

Speaker 2

Turning to Slide 5. Let me begin by providing an update on our technology and missions. In less than a year, Momentous has launched 3 Vigoride Orbital Service Vehicles or OSVs. All three VIGORAD vehicles are currently in orbit and we are on track to launch our 4th orbital service vehicle called VIGORAD 7 later this year of the SpaceX Transport 9 mission targeted for October. Turning to Slide 6.

Speaker 2

As a reminder, VigorIde 3 was launched in May 2022 and we deployed 8 customer satellites from the VigorIde 3 vehicle and a third party deployer. We have since completed operation of this spacecraft, which remains in orbit. BigRide 5 was launched in January 2023 carrying a large hosted payload for Caltech and a satellite for a customer called Kosmosys. Our near term focus with this mission has been testing of our pioneering microwave electrothermal thruster or MET, which I'll discuss in more detail later. On BigRide 5, we deployed a customer satellite for Cosmosis, a Singapore company, and are now transitioning to support a Caltech hosted payload called the Space Solar Power Demonstration that aims to demonstrate the ability to collect solar energy in space and transmit the electricity wirelessly in space and to earth.

Speaker 2

We were under contract to support the Caltech mission for at least months with an option for up to 2 years. Hosted payload missions like we're providing to Caltech are more profitable than transportation missions, particularly for larger hosted payloads and longer duration missions. FigureEye 6 was launched in April and carries 2 satellites from NASA that we plan to deliver in the next few weeks to a unique custom orbit. This is the NASA Lighted Mission or LLITED that will measure and study 2 features of the nighttime making an important contribution toward understanding weather in space that impacts our lives on earth and the reentry rates of satellites. On this mission, we're also flying payloads for 4 other commercial customers.

Speaker 2

BigRide 6 also carries a Momentous developed Solar Array Technology demo, which I'll discuss in detail later in my remarks. We are operating Vigride 5 and Vigride 6 concurrently from our Mission Operations headquarters in San Jose, California, just a few steps away from where we're calling you for this conference call. We've now successfully commissioned and operated and spaced all of the subsystems of our VigRite Orbital Service Vehicle during the VigRite 5 mission. We've also commissioned most of the subsystems on the Vigorite 6 with the remainder scheduled to be completed in the next few weeks. Both spacecraft and their solar arrays deployed are generating power normally and we're commanding and operating both spacecraft through a network of ground stations for communications.

Speaker 2

In October this year, we'll be launching our 4th orbital service vehicle, Vigoroid 7. On that flight, we plan to carry 6 satellites that we plan to deploy for commercial customers as well as 2 hosted payloads for commercial We also plan to carry a Momentous hosted payload that we will use to conduct a rendezvous proximity operations demonstration typically recognize revenue from these customers once we deliver their satellite to orbit or complete their payloads mission. I'm proud to say that these missions and Vigoroid vehicles have allowed us to quickly advance to operations in space and The time to produce and launch each VigRide spacecraft is coming down each iteration much faster than the traditional learning curve, meaning increased productivity, higher quality and lower unit costs. For example, VigorIde 6 assembly integration and test was 36% faster than VigorIde 5. We have vastly improved our engineering and operations capabilities and processes over the past year and we continue to use the lessons learned to improve our most more recent spacecraft and to contribute to the success of future missions.

Speaker 2

We are also pleased to see our technology perform in the space, which has increased our confidence in our technology and its capabilities. During the 3 Vigarad missions that we've conducted in space, we've learned a lot and are continuously improving our spacecraft and its technologies. To be sure, we've had challenges that we've worked to overcome on our initial missions. This is common on early missions in space and what we said to expect. It's part of the learning process and process of developing and demonstrating space technology.

Speaker 2

For example, much like the updates we commonly make to the software in Personal Computers and Cell Phone Operating Systems, we've uploaded improvements and bug fixes to the software used on our spacecraft to address things observed on orbit or to automate processes and operations. We plan to continue to do redundancy and resiliency features like a fully redundant A and B side of the spacecraft with 2 sets of avionics, radios and other features that we have used and demonstrated on Orbit. Turning to Slide 7. Since our last earnings call, we've successfully operated our pioneering microwave electrothermal thruster or MET on the Vigaride Spacecraft on orbit showing it can perform our near term use cases in space. The MET is the Big Ride Orbital Service Vehicle's primary propulsion method that produces thrust by expelling extremely hot gases through a rocket nozzle.

Speaker 2

Unlike a conventional chemical rocket engine, which creates thrust through a chemical reaction, the MET is designed to create a plasma and thrust using solar power to drive a microwave energy source that heats the water propellant. Momentous has 2 patents in support of this proprietary propulsion technology. The MET is an innovative pioneering technology that offers key efficiency, safety and sustainability advantages. We have now performed more than 35 firings of the MET ranging from 30 seconds to 6 minutes. And these burns have shown that we can execute our near term potential use cases.

Speaker 2

In total, we've achieved more than 140 minutes of firing time of the MET and have raised the orbit of the vehicle by more than 3 kilometers. In fact, we've actually exceeded the duration range for the full power or the full duration of the planned firing by 20%, which we consider to be a very significant accomplishment. To be clear, Momentous has now operated the MET successfully in space at full power across the range of durations for firing that we plan to operationally use to deliver satellites to precise custom orbits and to provide in space infrastructure services like hosted payloads. For those of you familiar with Defense Department programs, This means that our MET has achieved Technology Readiness Level 9, which is DoD's highest TRL level. Simply put, We have now shown that water heated by the sun is a viable fuel in space and that our water based solar heated MET thruster As a result, we are seeing growing customer interest engagement about our services.

Speaker 2

Some of our existing commercial customers are planning to launch hundreds of satellites in low earth orbit and some in geostationary orbit over the next few years. Since the last earnings call, we're pleased to have signed some new contracts with customers. First, in Q1, we signed 2 contracts with 1 of our Vigoride 3 customers, FASSA Systems, which is a Spanish company that offers global low power Internet of Things or IoT connectivity and in space services. With a business focused on IoT that requires a wide distribution of satellites, Fawcett chose Momentous for 2 contracts. The first contract is for the delivery of their next generation of satellites planned for launch on the SpaceX Transporter 8 mission targeted for June of 20 23.

Speaker 2

Not only will this showcase the new design features of FOSS' satellites, it will SpaceX Transporter Mission in June of 2024. Combined, these two missions will kick off the deployment of a new constellation of Fossa Satellites and mark progress as Momentous works towards our first stage constellation deployment. The second contract is to support Fossa's Pocketpod, which is a PECO satellite deployer with the capacity for 8 PocketCube satellites. This deployer is targeted to fly with Momentous on our October mission. It will house several small satellites serving different IoT, Earth observation and demonstration platforms for yet to be announced customers.

Speaker 2

We have also signed service agreements with 3 other customers, HelloSpace, LUNISAND and SATREV and a 4th customer that we'll be announcing in the near future. For HelloSpace, We will be providing a hosted payload service for a deployer that will carry 4 PocketCube satellites. HelloSpace is a Turkish Internet of Things company that is part of an alliance working toward creating a global standard for low power, long range, very wide area Internet of Things networks. The company's deployer that it plans to demonstrate on a Momentous orbital service planned for October 2023. Hello Space initiated design of their deployer in 2022 They chose Momentous because of our flexibility and speed.

Speaker 2

For Lunasonde, a subsurface imaging company, We'll be flying the CubeSat for them on our Vigoride 7 orbital service vehicle targeted for launch in October on the SpaceX Transporter 9 mission. We're also happy to announce that we've signed a contract with SatRev, a Polish Internet of Things company to deliver a CubeSat to low earth orbit also on our Vigoride 7 mission. For the soon to be announced customer, we'll be delivering the 1st tranche of Pico satellites for a 100 satellite planned constellation. As I mentioned on our last earnings call, Momentous has started to focus on growing our business with the U. S.

Speaker 2

Government departments and agencies like the Defense Department and NASA. Just a few weeks ago, the Momentous team was at Space Symposium, 1 of the Premier Space Industry Conferences and we received very positive feedback from defense prime contractors and government customers The Momentous has strong capabilities to support their missions for the Department of Defense and that our capabilities offer key advantages over others in the industry. To that end, in Q1, we teamed with AstraScale U. S, a commercial space company and responded to an RFI for years to come. The mission's objectives include safely relocating the Hubble Telescope and removing nearby threatening debris from the celebrated space telescope's new orbit.

Speaker 2

We were able to leverage Momentous' flight heritage with 3 orbital service vehicles on orbit today and AstraScale's expertise in ARPOD or Rendezvous Proximity Operations and docking to offer a commercial solution to extend the life of this important U. S. National asset without risk to humans. The concept included launching a Momentous Vigurite Orbital Service Vehicle to low earth orbit on a small launch vehicle. Once on orbit, AstraScale's ARPOD technology built into the OSV or our orbital service vehicle would be used to safely rendezvous approach and then complete a robotic capture of the telescope.

Speaker 2

Once mated, Our orbital service vehicle for Momentous would perform a series of maneuvers to raise the Hubble by 50 kilometers. We're also very pleased about the growth in our interest in our capabilities from U. S. Government customers responsible for national security missions. The flexibility, payload capacity and power available on the VigorEye Orbital Service Vehicle make it well positioned to support a range national security missions like space situational awareness, surveillance, reconnaissance and other missions.

Speaker 2

The Ziggurat Orbital Service Vehicle can also deliver national security payloads to custom orbits to support their unique mission requirements. The speed with which we can move from initial customer requirements to operation space is a major discriminator that sets us apart from traditional companies that support Defense Department missions. Having large amounts of power available to support intensive high end national security payloads like sensors, communications equipment and other electronics also distinguishes Momentous from our competitors. Coupled with the ability to change orbital altitude and inclination, Our capabilities are well suited to support the kind of maneuvering space that senior U. S.

Speaker 2

Officials like Space Force Chief of Staff, General Salzman I've discussed is a key need in the highly contested space environment. Our technology offers key capabilities and attributes that give us a competitive advantage. In addition, Momentous' highly experienced team of professionals and engineers with decades of national security experience gives us an edge over other U. S. Companies and also over international competitors who are unable to meet the needs of these large customers.

Speaker 2

The combination of our leadership and our discriminating technical and mission capabilities have garnered significant interest from major defense firm customers like the Space Development Agency, Space Force, National Reconnaissance Office and the Naval Information Warfare Center. Additionally, Major Aerospace Prime has stated that our system provides a strong capability and working with us will help them with our government customer activities. We think these government customers can ultimately grow to represent a major portion of our business. And as we increase in scale, we anticipate this will help unlock additional operating leverage and stability in our revenue. To support our focus on the Defense Department market, we're pleased to share that we have been selected for funding from the Space Development Agency or SDA for a Small Business Innovation Research Phase 2 award, which the SDA is complete in collaboration with the Air Force Research Lab Technology Directorate AFWERX, AFWERX.

Speaker 2

We'll have more to say about that work in the near future. We've also signed a memorandum of understanding with Axient, a well established company with a strong track record in defense and classified work for the Defense Department, including the Air Force Research Labs as well as NASA. Momentous and Axcient see advantages in our collaboration to address a variety of industry needs, including but not limited to launch services, space communication, space domain awareness, precision navigation and timing and other related technologies and capabilities to serve customers in a variety of orbits from low earth orbit to geostationary orbit and out to cislunar. We're looking forward to collaborating with Acxiom, which has a strong track record of bringing solutions to these government customers responsible for important national security missions. We also recently provided a letter of support to Catalyst Space for a hosted payload they are developing.

Speaker 2

This development is supported by the Air Force Research Lab and Catalyst, so they see Momentous as a key transition partner for this work. We've also begun pursuing adjacent markets using a slimmed down version of our Vigorate vehicle as a very capable, high power low cost satellite bus. We're very competitive as a commercial satellite bus and have begun bidding jobs with commercial and government who've given us great feedback about our capabilities and competitive pricing. We're also pursuing launch aggregation, which gives us the ability to earn revenue from customers who don't need Delta V, meaning changes in velocity once in orbit. Turning to Slide 9.

Speaker 2

To meet the anticipated demand for our services, we will be flying on the SpaceX Transporter 9 mission October 2023, the Transporter-ten mission in January 2024 and the Transporter-eleven mission in June 2024. We've also signed new launch service agreement with SpaceX for Transporter 12 in October 2024. We therefore have launched service agreements or contracts to reserve ports for Momentous to launch customers to space on SpaceX transport emissions through the end of 2024. Turning to slide 10. According to a recent report by Euroconsult, the global space market grew by 8% last year and is expected to reach a number that's projected to grow to 58,000 by 2,030 according to the Government Accountability Office or GAO.

Speaker 2

Deutsche Bank Research estimates the in space transportation market will double from about $2,000,000,000 currently to about $4,000,000,000 by 2025, just 2 years from now. The Federal Communications Commission or SEC recently implemented a new regulation that requires all satellites after September 29, 2024 below 2,000 kilometers in altitude to be deorbited within 5 years of mission conclusion. This will create a new market with the potential for over 2,000 satellite de orbiting operations annually by the end of this decade, which is a large market opportunity. U. S.

Speaker 2

Space Force and Defense Department space budgets average about $15,000,000,000 to $20,000,000,000 per year over the coming 5 years, providing a significant market opportunity for Momentous. So in sum, there are many market drivers for the growing space Industry and we are confident our solution will continue to see strengthening demand. Turning to Slide 11. Momentous remains well positioned to grow in the burgeoning space industry. Key attributes of our Vigrai design are First, the flexibility of its configuration, allowing us to accommodate many different payloads with different sizes and configurations.

Speaker 2

Secondly, our large payload capacity. 3rd, we have more onboard power to provide the host of payloads to operate sensors, communications equipment and other systems for the full range of military and commercial missions. We've also proven ourselves to be able to rapidly produce spacecraft and deliver payloads to space at low cost. We've seen many new entrants into this market, but our early mover advantage has put Momentous ahead of some relatively inexperienced competition. Our track record of flight heritage helps build trust with target customers and we've proven our team's ability to execute.

Speaker 2

Speed and reliability are not the only factors that matter to customers. Our highly differentiated technology also enables us to win the areas of payload capacity and power at low cost. First, The flexibility of our spacecraft's large completely open and flexible upper deck can accommodate a broad diversity of payloads even at larger payload volumes or those with unusual shapes. This customization ability was the key reason we were chosen by Cal to carry their hosted payload. These unique payloads often have increased power requirements that our competition is not capable of supplying.

Speaker 2

Momentous can provide best in class power and this makes us extremely attractive to customers whose electronics, Satellites and instruments are limited by the power available for missions like communications, data processing, sensing, surveillance and mobility. Importantly, Momentous provides these benefits at a low cost with a short time frame from requirements to operation in orbit, enabling a very attractive value proposition. To further capitalize on this, we plan to offer additional capabilities that others either cannot provide Innovating to meet future needs of the space industry remains a focus for us. We are planning to develop additional features and capabilities to further enhance expansion tanks to extend Viguride's range. We're also incorporating security features and adding a precision pointing option that will allow Viguride to host sensitive and classified U.

Speaker 2

S. Government payloads. We expect to begin introducing some of these features in 2024. In addition, we will be testing our Tape Spring Solar Array or TASSA, TASSA, which launched in April on our VIGORIDE 6 mission. Our team led by Chief Technology Officer, Rob Schwartz has been working on the TASSA concept for several years as a potential means of reducing Vigrai unit manufacturing costs and lead times.

Speaker 2

We've applied the patented technology behind Tassa. You can see the Tassa fully unfurled on the right side of the slide. It's about 11 meters or 36 feet long. To build Tassa, the team bonded large sheets of flexible solar cells to tape springs. Its concave shape provides its structural strength.

Speaker 2

It's very similar to the rollout tape measures you can buy from places like Home Depot to keep their stiffness and strength due to their shape only on a much larger scale. The 4 inch mandrel is much smaller than those used in competing rollout solar arrays providing weight savings. Once development is complete, we estimate that replacing VigRite's 3rd party solar array with Tassa could reduce the overall recurring production cost of VIGRIDE by as much as about 10%, while potentially reducing lead time by several months. These are important improvements as we continue to transition from Vigoraj development to production at lower unit costs. We're also seeing interest from commercial and government customers in Tassa given the efficiency we expect to demonstrate for low cost power and space.

Speaker 2

Big Ride 6 is equipped with its standard fold up solar arrays, so TASA will not be its main power source. Rather, TASA is a hosted payload on the upper deck of Big Rig V six. On the bottom right corner of the chart, you can see the TASA in its stowed position on the Big Rig 6 upper deck. With this mission, we expect to demonstrate that Momentous can generate power at 50 cost by about 10% and lead time by months as well as supporting other commercial and government customers. We're excited about Tassa along with other significant improvements in cost and lead time as we move from development to production.

Speaker 2

It's no surprise that we're seeing commercial and government interest in TASA. We've started to discuss potential business partnerships with solar array companies as a potential way to bring this innovative technology to a broader market. Additionally, we have another technology plan for our Vigorite 7 mission scheduled to be launched on the SpaceX Transporter 9 mission targeted for October 2023. On VIGRIGHT 7, we plan to deploy a satellite and then maneuver closer and farther away as well as RPO capability is key to our ability to expand the menu of services that VigorEye can provide to include in orbit maintenance and refueling of customer satellites, life extension and deorbiting of satellites at the end of their useful life. The RPO mission also supports another innovation focus of ours, which is to evolve toward a reusable version of or refuelable that would stay in space and be refueled and therefore reused on later missions.

Speaker 2

Currently after completing its mission, a Vigoride moves to a decaying orbit and burns up during reentry. A reusable Turning to slide 12. Overall, I believe the combination of a growing space economy, favorable demand outlook for the services we provide, already demonstrated competitive advantages relative to other in space transportation and structure providers. Our attractiveness for Defense Department programs and potential for margin improvement position Momentous well for the future. I'd like to close by thanking our dedicated team for getting us here and would also like to thank our customers and investors for their continued support.

Speaker 2

Now I'd like to turn to our new CFO, Eric Williams, to cover the financial highlights Eric Williams to the team here at momentous on his first earnings call in this role. Eric brings more than 25 years of experience at tech companies in Silicon Valley, proven track record and a growth mindset. He has experience raising capital for early stage tech companies and in M and A. We're delighted to have him on the team and I look forward to working with him as we grow Momentous. I'll now hand the mic off to Eric and then we'll take your questions.

Speaker 4

Thank you, John, for the introduction and kind words. Very much appreciate joining such an experienced team and having the opportunity to contribute towards scaling the business and being a key participant and leader in the space infrastructure market. I am pleased to present highlights of the financial results achieved by the Momentous team during our Q1 of 2023. Our first quarter results reflect our ongoing progress and investments towards our future launches. We have cumulatively signed contracts for approximately $33,000,000 in backlog or potential revenue as of April 30, 2023.

Speaker 4

These contracts include firm orders as well as options. These options give our customers the flexibility to quickly opt into spans across 19 companies and 13 countries. Typically, our customers have the right to cancel a flight, reservation and when doing so will forego their deposits in milestone payments. Should a customer cancel a contract For their rescheduling needs or other reason before all of its payments are made, the resulting revenue will be less than the full value of the backlog. Momentous has historically included in backlog both firm orders as well as options.

Speaker 4

These options give our customers the flexibility to opt into an available launch slot without requiring a separate agreement. We ended Q1 2023 with non restricted cash and cash equivalents of $39,000,000 approximately $12,000,000 in outstanding gross debt consisting of a term loan that we began to repay in March of 2022. Next, I would like to address a topic that will be mentioned in our 10 Q to be filed with the SEC. Our 10 Q will include language regarding our ability to continue as a going concern. This going concern qualification was as we prepared our financial statements for the Q1 after conducting an evaluation of the status of our current liquidity and projected cash flows

Speaker 3

for the next 12 months.

Speaker 4

When taking into account certain external factors, this analysis concluded that given our current cash balance, there is a risk that the company will not meet its obligations for the next 12 months. Momentous has already taken proactive steps to extend our cash runway and in addition have evaluated our strategic business plan to identify the best course of action in clearing this going concern analysis. Going forward, we expect to continue driving bookings and revenue growth, implement the plan management has developed to further reduce our operating expenses and drive the closure of a variety of legal matters. We expect this plan will improve our liquidity and strengthen our balance sheet to allow the company to operate well into 2024. In addition, we continue to explore and evaluate opportunities to raise additional funds and further strengthen our balance sheet.

Speaker 4

We invested approximately $19,000,000 in operations during Q1 compared to $17,000,000 in Q4 2022 $23,000,000 in Q1 2022. We recognized $22,000 in revenue in Q1 comprised of customer deposits forfeited upon contract termination for late payment. BigRide's 56 customer revenue will be recognized upon fulfillment of performance obligations for deployed satellites and hosted payload operations. In the quarter, we generated approximately $21,000,000,000 in losses from operations. On a non GAAP basis, our adjusted EBITDA was negative $16,100,000 or approximately $1,000,000 better than Q1 of 2022.

Speaker 4

Non GAAP SG and A expenses for the Q1 of 2023 totaled $7,400,000 down $800,000 when compared to Q1 of 2022. Non GAAP R and D expenses for the Q1 of 2023 totaled approximately $9,000,000 down $300,000 when compared to Q1 of 2022. We ended Q1 2023 with approximately 95,000,000 shares outstanding. Please refer to the press release issued today for the reconciliation of non GAAP numbers to GAAP. I will now hand the call back to Mary.

Speaker 1

Thank you, Eric. In a moment, we will move on to the question and answer portion of our call. I'd like to remind participants that all disclaimers outlined at the outset of this call extend to the question and answer session. This includes our disclaimers relating to non GAAP financial information, forward looking statements and the technology underlying our planned service offerings. Operator, would you please remind participants how to enter the queue?

Operator

Thank you. Your first question comes from the line of James Ratcliffe with Evercore. Your line is open.

Speaker 5

Good afternoon. Thanks for taking the question. A couple if I could. On the operational side, if you just give us a little more update on the status of the BigRide 6 mission, including the timeline for moving those NASA satellites to the custom orbit and testing of the Tassa array, how long will it be till we know whether both of those worked or not? And second, The financing questions and the like.

Speaker 5

Can you talk about the potential sources of capital and what the process looks like for finding incremental capital, in Capital in addition to the efforts to reduce burn and develop revenue. Thanks.

Speaker 2

Well, thanks for the question, James. As you know, as you asked in your question, Aviguride 6 is the 3rd spacecraft that we've launched and put in orbit. We launched that of course just under a month ago. And prior to that, we've launched VigorEye 5 in January. And so right now, we're operating both of those 2 spacecraft concurrently from our Mission Operations Center here, which is just a few steps away from me in San Jose, California.

Speaker 2

We've now successfully commissioned and operated space all of the subsystems of the VigorIde 5 Orbital Service Vehicle. And we've also commissioned most of the subsystems of VigRite VI with the remainder scheduled to be completed in the next few weeks. The reason being that that was 3 months later than, Vigorate 5. Both of the spacecraft though have their solar arrays deployed. They're generating the power normally.

Speaker 2

We continue to command and operate them through a network of ground stations from a vendor. Now in terms of looking forward on the Big Rig 6 mission, which It's carrying payloads, as he mentioned, for 4 commercial customers and 2 NASA satellites. We'll first deploy the 4 satellites for the commercial customers and then we'll proceed to the NASA mission. And in the NASA mission, there is a very unique custom orbit that NASA wants these payloads to be placed in So that they can study the atmospheric density and solar space rather I should say at that location. It will take us roughly 2 months towards the end of July is our plan to transport those payloads there with arrival around and deployment roughly late July.

Speaker 2

And then After we finish the deployment of those NanoSet payloads, the next on the docket for the Vigaron 6 mission Transitioning to demonstrate our tape spring solar array. That's expected again to occur begin roughly the end of July. And there's some variables that we'll assess as we go towards that date. But we'll be running the task through a series of both Mechanical and electrical tests on orbit that will be conducted over the remainder of the summer. Some of that we're going to want to monitor over time the effects of things Like heating and cooling in space as you complete orbits around the earth.

Speaker 2

Some of the variations that including over different parts of the earth in the radiation fields and some of the things such as there's an anomaly over the South Atlantic area that creates a different set of radiation conditions. And so we'll be monitoring the solar array power output Over time, to better understand its performance and power generation with these different radiation exposure levels. So this will be a long duration test that we intend to conduct over a period of months. And we're really looking forward to Because again, we think this is very innovative technology at its price point. The ability to roll out a solar array And I have all the mass from side booms and other activities into in an ingenious way, use the concave shape of the material and and some techniques that we've applied to keep it rigid and to generate again power at a very low cost efficiency rate such that our aim is to provide power per watt at 50% of the cost of the leading solar array in the market.

Speaker 2

So thanks again for the question. I'll turn now to Eric for the response to your question on the financials.

Speaker 4

Thanks, James. And again, I think 2 parts to your question. With respect to sources of capital, we have been in market and we'll continue to be in market in terms of looking at alternatives to raise additional funds and to support our balance sheet. As you would expect, we'll evaluate the timing and the structure of those raises within the context of execution of our business plan and certain market conditions. Our S3, as a reference, universal self filing still provides us some flexibility to raise additional capital using the ATM over the next 3 years and to help us work our way through that.

Speaker 4

With respect to the other part of your question, we have developed a plan and we are currently implementing such a plan to reduce our operating costs in order to provide us with runway to conduct our demonstration missions and And as John noted in his portion of the call, we continue to see a significant amount of excitement from new business, government, commercial. So we expect The fact that we've demonstrated flight heritage and performance that is enabling us to capture new business, therefore expanding our top line. So our plan is a combination of growth in revenue or top line, being judicious on our trend in focusing on operating the platforms that we have in developing key technologies and resolving certain legal issues that we have in front of us. So

Speaker 2

Yes. James, just to mention one other thing. Anecdotally, I attended the Space Symposium in Colorado Springs in mid April. And if you haven't been, that might be the largest gathering of space industry and customer folks Annually that occurs. And one of the things that was really gratifying about that experience is when you sit down to talk to industry We talked to customers, whether they're commercial or government, and to hear the positive feedback about how rapidly we developed and placed our technology in orbit.

Speaker 2

And while we have had challenges we've had to overcome, the compliments about the speed at which we've done that and Particularly people with their space industry veterans. We're really favorably impressed by the rate at which we've done that and the results that we've shown. And then the positive feedback from customers that's translating into a growth interest. And so our business development and sales teams are Busy right now keeping up with that. But thanks again for the questions.

Speaker 2

Thank you.

Operator

Your next question comes from the line of Michael Matheson with Singular Research. Your line is open.

Speaker 3

Good afternoon, gentlemen. Thank you for taking my call or the question, I mean. Just a couple questions for you. Appreciating that you recognize revenue when there's a deployment. Am I sort of figuring this correct that there will be 2 deployments in Q2 and an estimated 6 in Q3?

Speaker 2

We just in the past few days completed deployment of the Kosmosys satellite from Vigorite 5. Our plan is to deploy 4 commercial satellites onboard Viguite 6 here in the coming days ahead. And so those would occur in this quarter in terms of as we go forward, that's how our contracts are typically For revenue recognition. In assuming the NASA payloads are deployed in late January Early July, excuse me. That would be the time at which we would begin to recognize that revenue.

Speaker 2

Concurrent with that, we have a hosted payload that we are transitioning to operate for Caltech. And depending on how long we operate it for, whether it's the 6 months we're under contract or if they exercise contract option for up to 2 years. I mean that would define how we approach revenue recognition on that as well. And then there's some other things that we plan to have begin to The orders and then we would obviously the revenue would follow at a later date following the revenue from the excuse me, the order that we take.

Speaker 3

Sure. Thank you. I appreciate that later quarters are hard to forecast. So understood. And just in terms of the revenue typically recognized from a deployment, Appreciating that hosting is different.

Speaker 3

Am I still correct to work with a figure of about $15,000 per deployment?

Speaker 2

Per deployment? No. That it would vary. It depends On the value of the contract in which we have concluded with that customer and the value of the contract is heavily dependent on the mass of the items of the satellite in this case. And so The larger satellites have a higher price, hence, because they have a larger mass And the smaller ones would be different.

Speaker 2

So I would not assume the same amount of revenue per satellite as a result. Got it. Okay. That's contracted for.

Speaker 3

Very good. So that's very helpful. Thank you for taking the questions.

Speaker 2

Okay. Thank you.

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Earnings Conference Call
Momentus Q1 2023
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