INFLECTION POINT(IPAX) - 2024 Q1 - Quarterly Report

Part I – Financial Information Item 1. Financial Statements Q1 2024 saw revenue rise to $73.1 million, but net loss widened to $120.7 million due to non-operating items Condensed Consolidated Financial Statements Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $55,242 | $4,498 | | Total current assets | $115,728 | $31,611 | | Total assets | $170,771 | $85,908 | | Total current liabilities | $104,813 | $83,380 | | Total liabilities | $214,708 | $139,327 | | Total shareholders' deficit | $(492,678) | $(263,282) | Condensed Consolidated Statement of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Revenue | $73,068 | $18,236 | | Operating loss | $(5,400) | $(13,963) | | Total other expense, net | $(115,256) | $(6,269) | | Net loss | $(120,656) | $(23,447) | | Net loss per share (basic and diluted) | $(2.70) | $(0.64) | Condensed Consolidated Statement of Cash Flows Highlights (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(6,442) | $(18,666) | | Net cash used in investing activities | $(1,588) | $(8,565) | | Net cash provided by financing activities | $60,754 | $48,268 | | Net increase in cash | $52,724 | $21,037 | Notes to Condensed Consolidated Financial Statements - The company designs, manufactures, and operates space products and services with a near-term focus on lunar systems and infrastructure, becoming publicly traded in February 2023 through a SPAC business combination[29][31] - A single major customer, NASA, accounted for 93% of total revenue for the three months ended March 31, 2024[44] Revenue by Contract Type (in thousands) | Contract Type | Q1 2024 Revenue | % of Total | Q1 2023 Revenue | % of Total | | :--- | :--- | :--- | :--- | :--- | | Cost reimbursable | $42,040 | 58% | $0 | 0% | | Fixed price | $29,208 | 40% | $16,595 | 91% | | Time and materials | $1,820 | 2% | $1,641 | 9% | | Total | $73,068 | 100% | $18,236 | 100% | - The company recorded a favorable change in net losses on contracts of $8.2 million in Q1 2024, primarily due to the successful completion of the first lunar payload services contract in February 2024, which allowed for the recognition of $11.6 million in previously constrained variable consideration[58][61] - In Q1 2024, the company raised significant capital through warrant exercises providing approximately $50.6 million in cash proceeds, and a $10.0 million bridge loan converted into Class A Common Stock and new warrants[76][101] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Successful lunar landing drove 301% revenue growth, but net loss expanded; liquidity improved with $55.2 million cash Overview and Key Performance Factors - The company's Nova-C lander became the first U.S. vehicle to soft-land on the lunar surface since 1972, a key milestone demonstrating its capabilities[150] - The business operates through four units: Lunar Access Services, Orbital Services, Lunar Data Services, and Space Products and Infrastructure[155] - Future success depends on the ability to commence and expand spaceflight missions, expand product offerings, improve profit margins, and capitalize on government and private investment in the space economy[171][173][177][178] Results of Operations Comparison of Results of Operations (in thousands) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | $ Change | | :--- | :--- | :--- | :--- | | Revenue | $73,068 | $18,236 | $54,832 | | Cost of revenue | $60,911 | $23,126 | $37,785 | | Operating loss | $(5,400) | $(13,963) | $8,563 | | Total other expense, net | $(115,256) | $(6,269) | $(108,987) | | Net loss | $(120,656) | $(23,447) | $(97,209) | - Revenue increased by 301% ($54.8 million), primarily driven by the successful completion of the IM-1 mission, which resulted in the release of $12.3 million in previously constrained revenue, and $41.8 million in revenue from the new OMES III contract[200][201] - The increase in total other expense was primarily due to a $68.7 million loss on issuance of securities and unfavorable changes in the fair value of earn-out liabilities ($18.9 million) and warrant liabilities ($24.0 million)[207] Liquidity and Capital Resources - As of March 31, 2024, the company had cash and cash equivalents of $55.2 million and working capital of $10.9 million[223] - In Q1 2024, the company received approximately $60.6 million in gross proceeds from warrant exercises and other equity transactions, significantly bolstering its cash position[223] - Management believes current cash, along with available liquidity from the Cantor Purchase Agreement and a Controlled Equity Offering Sales Agreement, is sufficient to fund operations for at least the next twelve months[225] Key Business Metrics and Non-GAAP Financial Measures Backlog (in thousands) | Date | Backlog | | :--- | :--- | | March 31, 2024 | $222,380 | | December 31, 2023 | $268,566 | Adjusted EBITDA Reconciliation (in thousands) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net loss | $(120,656) | $(23,447) | | Adjustments | $119,596 | $10,000 | | Adjusted EBITDA | $(1,060) | $(13,460) | Free Cash Flow (in thousands) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(6,442) | $(18,666) | | Purchases of property and equipment | $(1,588) | $(8,565) | | Free cash flow | $(8,030) | $(27,231) | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is a smaller reporting company and is not required to provide the information for this item - As a smaller reporting company, Intuitive Machines is exempt from providing quantitative and qualitative disclosures about market risk[256] Item 4. Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of March 31, 2024 - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2024[257] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[258] Part II – Other Information Item 1. Legal Proceedings The company faces ordinary course litigation, with management not expecting a material adverse financial impact - The company is party to various lawsuits, claims, and legal proceedings that arise in the ordinary course of business, but management does not expect them to have a material adverse effect[260] Item 1A. Risk Factors New risk factor highlights litigation vulnerability, including a recent threat over preferred stock conversion - A new risk factor highlights that periods of high stock price volatility may result in securities class action litigation or shareholder activism, which could be costly and divert management's attention[263] - The company disclosed receiving a letter on April 8, 2024, threatening litigation over the number of shares issued in a preferred stock conversion, believing it has strong defenses to any claim[263] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Unregistered equity sales details were previously disclosed in January 2024 Form 8-K filings - Details on unregistered sales of equity securities were previously reported on Form 8-K filings on January 11, 2024, and January 30, 2024[264] Item 5. Other Information Several company insiders adopted Rule 10b5-1 trading plans for Class A common stock sales in Q1 2024 Insider Trading Arrangements Adopted in Q1 2024 | Name | Title | Date Entered | | :--- | :--- | :--- | | Kamal Ghaffarian | Chairman of the Board | 03/22/2024 | | Stephen Altemus | Chief Executive Officer and Director | 03/22/2024 | | Timothy Crain | Chief Growth Officer | 03/22/2024 | Item 6. Exhibits This section lists exhibits filed with the Quarterly Report, including management certifications and XBRL data - The report includes standard exhibits such as CEO and CFO certifications pursuant to SEC rules and the Sarbanes-Oxley Act, along with Inline XBRL documents[271]