0001628280-26-035236
SEC filingQ1 2026 revenue surged to $186.7M driven by Lanteris acquisition, but operating loss widened due to acquisition costs and higher expenses.
For the three months ended March 31, 2026, total revenue increased by $124.2 million to $186.7 million compared to $62.5 million in the prior year period. The growth was almost entirely attributable to the acquisition of Lanteris Space Systems in January 2026, which contributed $141.6 million in product revenue from government and commercial satellite contracts, including the Tracking Layer program ($39.5M), NASA Power & Propulsion Element ($30.6M), EchoStar ($23.7M), a proprietary commercial contract ($23.4M), and SiriusXM ($11.8M). Service revenue declined by $20.4 million to $42.1 million, reflecting the completion of the IM-2 lunar mission and wind-down of the OMES III and LTV contracts. Grant revenue of $3.1 million was newly recognized.
Gross profit improved to $30.1 million (gross margin 16.1%) from $6.7 million (10.7%) in the prior year, benefiting from the higher-margin product revenue mix, though Lanteris cost of product revenue was substantial at $113.9 million. Operating loss expanded to $39.2 million from $10.1 million, driven by a $35.5 million increase in general and administrative expense (including $20.0 million in acquisition transaction costs and $6.0 million higher share-based compensation), a $12.4 million rise in depreciation and amortization, and a $4.7 million increase in research and development spending. Net loss of $52.5 million compared to net income of $1.0 million in the prior year, impacted by unfavorable changes in warrant liability fair value ($9.4M loss vs. $43.0M gain in prior year) and interest expense on the new Convertible Notes ($4.9M).
The MD&A highlights three revenue categories: Product, Service, and Grant. Product revenue was virtually all from Lanteris, which added a high-volume, lower-margin satellite manufacturing business. Service revenue, primarily from lunar missions (CLPS) and engineering services, contracted as the IM-2 mission ended and the OMES III and LTV programs wound down. The IM-3 and IM-4 missions are in progress, with IM-3 experiencing a launch delay and a $2.5M increase in accrued contract loss. The backlog surged from $213.1 million at year-end 2025 to $1.1 billion as of March 31, 2026, with $612.8 million from Lanteris and $428.9 million in new awards including the IM-5 mission ($161.4M). Management expects to recognize 60-65% of backlog in the remainder of 2026 and 25-30% in 2027.
Management’s outlook focuses on integrating Lanteris, executing on the expanded backlog, and progressing the IM-3, IM-4, and IM-5 lunar missions. They expect continued investment in R&D and corporate infrastructure, with cost of revenue as a percentage of revenue expected to decrease over time as capacity utilization improves. The company completed a $175.0 million equity offering in February 2026, strengthening liquidity. Significant uncertainties remain, including potential impacts from tariffs, government shutdowns, and the success of future lunar landings. No formal financial guidance was provided beyond the backlog recognition schedule and an expression of sufficient liquidity for at least the next twelve months.
Cash and cash equivalents stood at $231.6M as of March 31, 2026, down from $582.6M at year-end 2025, primarily due to the $403.3M cash consideration for the Lanteris acquisition. Working capital was $89.8M. The company holds $345.0M in 2.500% convertible senior notes due 2030 (net carrying value $335.8M), with a fair value of $607.6M. No borrowings were outstanding under the $40.0M Stifel revolving credit facility. Shareholders' deficit improved to $333.4M from $754.4M, driven by the issuance of Class A common stock in the Lanteris acquisition and the Securities Purchase Agreement.
Total purchase commitments under non-cancelable vendor agreements were $122.7M as of March 31, 2026, with $47.1M due in the remainder of 2026, $73.1M in 2027, and $2.5M in 2028. The company also has $60.3M in securitization liabilities (current and non-current) backed by orbital receivables. Contract liabilities (deferred revenue and loss provisions) totaled $208.3M, including $205.6M current. Operating lease obligations amount to $144.6M in undiscounted cash flows, with $90.5M in present value lease liabilities.
No share repurchases occurred in Q1 2026. Preferred dividends of $0.162M were accrued. Capital expenditures were $9.9M (5.3% of revenue), primarily for satellite and ground network assets. The company issued $175.0M in Class A common stock via a Securities Purchase Agreement on February 27, 2026, incurring $7.5M in transaction costs. No new debt was issued or repaid during the quarter.
The company operates as a single reportable segment. Revenue is disaggregated by contract type (87% fixed price, 10% cost reimbursable, 1% time and materials, 2% grant) and customer type (33% commercial, 38% civil, 27% national security). Most revenue is from U.S. customers; foreign revenue was nil in Q1 2026.
Operating cash flow (CFO) of -$54.8 million contrasts sharply with net income of -$52.5 million, indicating that non-cash charges (depreciation, share-based compensation, fair value adjustments) were more than offset by large working capital outflows. Key working capital drags included a $17.7 million increase in prepaid expenses, $17.1 million decrease in contract liabilities, and $17.3 million decrease in other liabilities. The company's capex intensity rose to $9.9 million (vs. $6.1 million prior year), representing 18% of CFO (absolute basis). Free cash flow (CFO minus capex) was -$64.6 million, with no capital returns to shareholders. The $444.8 million acquisition (net of cash acquired) was financed primarily through $175.0 million in securities issuance and $404.0 million in stock consideration, resulting in a net cash outflow of $342.0 million for the period. The large swing in CFO from +$19.4 million to -$54.8 million year-over-year highlights significant cash consumption from operations, driven by negative working capital changes and the absence of prior-year fair value gains on warrant liabilities.