Satellogic (SATL) - 2025 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Financial Statements (Unaudited) For the three months ended March 31, 2025, Satellogic reported a slight increase in revenue to $3.4 million, but a significant increase in net loss to $32.6 million, primarily due to a $22.4 million non-cash loss from the change in fair value of financial instruments. The balance sheet shows a stockholders' deficit of $83.1 million and a cash position of $17.7 million. The company's auditors have expressed substantial doubt about its ability to continue as a going concern, though management has secured additional financing subsequent to the quarter's end Condensed Consolidated Statements of Operations and Comprehensive Loss For the first quarter of 2025, revenue was $3.4 million, a slight increase from $3.3 million in the prior year. The company's operating loss improved to $9.5 million from $14.6 million YoY due to reduced operating expenses. However, a significant non-cash loss of $22.4 million on the change in fair value of financial instruments drove the net loss to $32.6 million, a substantial increase from a $15.2 million loss in Q1 2024. Basic and diluted net loss per share was $0.34 Consolidated Statements of Operations Highlights (Q1 2025 vs Q1 2024) | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Revenue | $3,387 | $3,328 | | Total costs and expenses | $12,902 | $17,926 | | Operating loss | $(9,515) | $(14,598) | | Change in fair value of financial instruments | $(22,361) | $(752) | | Net loss available to stockholders | $(32,581) | $(15,178) | | Basic and Diluted net loss per share | $(0.34) | $(0.17) | Condensed Consolidated Balance Sheets As of March 31, 2025, Satellogic's balance sheet showed total assets of $61.4 million, a slight decrease from year-end 2024. Total liabilities increased significantly to $144.5 million from $114.7 million, primarily due to the increased fair value of Secured Convertible Notes and warrant liabilities. This resulted in a worsening of the total stockholders' deficit to $83.1 million from $53.0 million at the end of 2024. Cash and cash equivalents stood at $17.7 million Balance Sheet Highlights (As of March 31, 2025 vs Dec 31, 2024) | Metric | March 31, 2025 (in thousands) | Dec 31, 2024 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $17,716 | $22,493 | | Total assets | $61,402 | $61,691 | | Warrant liabilities | $14,902 | $11,511 | | Secured Convertible Notes at fair value | $96,590 | $79,070 | | Total liabilities | $144,494 | $114,723 | | Total stockholders' (deficit) equity | $(83,092) | $(53,032) | Condensed Consolidated Statements of Cash Flows For the first quarter of 2025, net cash used in operating activities was $4.7 million, an improvement from $10.1 million in the prior-year period, reflecting better management of operating expenses. Net cash used in investing activities was stable at $1.9 million. Net cash provided by financing activities was $1.7 million, primarily from the issuance of common stock, compared to a $0.2 million use of cash in Q1 2024. Overall, the company experienced a net decrease in cash of $5.0 million Cash Flow Summary (Q1 2025 vs Q1 2024) | Cash Flow Activity | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | $(4,722) | $(10,115) | | Net cash used in investing activities | $(1,913) | $(1,942) | | Net cash provided by (used in) financing activities | $1,684 | $(184) | | Net (decrease) in cash | $(4,951) | $(12,241) | Notes to the Condensed Consolidated Financial Statements The notes detail significant accounting policies and events. Key disclosures include a 'Going Concern' warning due to significant operating losses and an accumulated deficit of $432.7 million, with management expressing substantial doubt about the company's ability to continue operations for the next year without additional funding. Revenue is primarily from Asset Monitoring services. The report also details the terms of its $30 million Secured Convertible Notes, the fair value of various warrant liabilities, and a subsequent event in April 2025 where the company raised approximately $20 million through a registered direct offering - The company domesticated from the British Virgin Islands to Delaware on March 26, 2025[30] - Management has concluded there is substantial doubt about the company's ability to continue as a going concern. As of March 31, 2025, the company had an accumulated deficit of $432.7 million and cash of $17.7 million, which is not sufficient to fund operations for the next twelve months[37][44] - Subsequent to the quarter end, on April 15, 2025, the company raised gross proceeds of approximately $20.0 million through a registered direct offering of its Class A common stock[43][136] Revenue by Business Line (Q1 2025 vs Q1 2024) | Business Line | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Asset Monitoring | $2,594 | $2,184 | | Constellation as a Service (CaaS) | $412 | $412 | | Space Systems | $381 | $732 | | Total revenue | $3,387 | $3,328 | - The company has $30.0 million in aggregate principal of Secured Convertible Notes outstanding, which mature in April 2028. These notes are recorded at a fair value of $96.6 million as of March 31, 2025[126][127][128] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's performance, highlighting a 2% revenue increase to $3.4 million in Q1 2025, driven by Asset Monitoring. Operating loss improved by 35% to $9.5 million due to significant cost-cutting in SG&A and Engineering. However, a large non-cash loss on financial instruments increased the net loss to $32.6 million. The company's liquidity remains a critical issue, with substantial doubt about its ability to continue as a going concern despite raising capital through convertible notes, an ATM program, and a post-quarter direct offering. Adjusted EBITDA, a non-GAAP measure, showed improvement, with the loss narrowing to $6.1 million from $9.1 million YoY Company Overview Satellogic is a vertically integrated geospatial company aiming to remap the planet at high frequency and resolution. Its strategy focuses on three business lines: Asset Monitoring, Constellation-as-a-Service (CaaS) for governments, and Space Systems (satellite sales). The company highlights its cost advantages from vertical integration and patented technology. As of the report date, it has 21 satellites in orbit, with 19 operational. A key strategic move was the 2025 domestication to Delaware to better target the U.S. market - Satellogic is a vertically integrated geospatial company focused on providing Earth Observation (EO) data through a scalable, automated platform[141] - The company's strategy is focused on three business lines: Asset Monitoring, Constellation as a Service (CaaS), and Space Systems[143] - As of the report date, the company has 21 satellites in orbit, 19 of which are operational[142] Results of Operations Comparing Q1 2025 to Q1 2024, revenue increased by 2% to $3.4 million, driven by Asset Monitoring. Total costs and expenses decreased by 28% to $12.9 million, reflecting successful cost control measures, particularly in SG&A (down 31%) and Engineering (down 43%). This led to a 35% reduction in operating loss to $9.5 million. However, a $21.6 million increase in non-cash losses from the change in fair value of financial instruments caused the net loss to widen to $32.6 million from $15.2 million in the prior year Results of Operations Comparison (Q1 2025 vs Q1 2024) | Metric (in thousands) | Q1 2025 | Q1 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | $3,387 | $3,328 | $59 | 2% | | Operating loss | $(9,515) | $(14,598) | $5,083 | (35)% | | Change in fair value of financial instruments | $(22,361) | $(752) | $(21,609) | 2874% | | Net loss | $(32,581) | $(15,178) | $(17,403) | 115% | - The decrease in operating loss was driven by a $2.9 million (31%) reduction in SG&A and a $1.9 million (43%) reduction in Engineering expenses, resulting from workforce reductions and other cash control measures[169][170] - The significant increase in net loss was primarily due to a $22.4 million loss on the remeasurement of the fair value of Secured Convertible Notes and warrant liabilities, impacted by the increase in the company's stock price[173] Non-GAAP Financial Measures The company uses non-GAAP measures like Adjusted EBITDA and Free Cash Flow to evaluate performance. For Q1 2025, Adjusted EBITDA loss improved to $6.1 million from a loss of $9.1 million in Q1 2024, indicating better underlying operating performance by excluding non-cash items like stock-based compensation and fair value changes. Free Cash Flow also improved, with a cash use of $6.6 million compared to $12.1 million in the prior year Reconciliation of Net Loss to Adjusted EBITDA | Metric (in thousands) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net loss | $(32,581) | $(15,178) | | Adjustments (Interest, Tax, D&A) | $3,402 | $4,287 | | Non-GAAP EBITDA | $(29,179) | $(10,891) | | Further Adjustments (Fair value changes, stock comp, etc.) | $23,123 | $1,768 | | Non-GAAP Adjusted EBITDA | $(6,056) | $(9,123) | Reconciliation to Non-GAAP Free Cash Flow | Metric (in thousands) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(4,722) | $(10,115) | | Less purchases of property and equipment | $(1,913) | $(1,942) | | Non-GAAP Free Cash Flow | $(6,635) | $(12,057) | Liquidity and Capital Resources The company's liquidity is a significant concern. With $17.7 million in cash as of March 31, 2025, and ongoing operating losses, management has substantial doubt about its ability to continue as a going concern. To address this, the company has been actively raising capital, including a $30 million convertible note issuance in 2024, a $10 million share purchase in late 2024, an ATM program that raised $1.2 million in Q1 2025, and a subsequent $20 million registered direct offering in April 2025. Despite these efforts, future financing is critical for survival - As of March 31, 2025, the company had $17.7 million in cash and cash equivalents and an accumulated deficit of $432.7 million[184][185] - Management has concluded there is substantial doubt about the company's ability to continue as a going concern, as current liquidity is insufficient to meet obligations for the next year[196] - The company has undertaken several financing activities, including a $30 million Secured Convertible Note issuance (April 2024), a $10 million Share Purchase Agreement (Dec 2024), an ATM Program (ongoing, raised $1.2 million in Q1 2025), and a $20 million Registered Direct Offering (April 2025)[187][190][192][193] Quantitative and Qualitative Disclosures About Market Risk This section is not applicable for the reporting period - The company has indicated that quantitative and qualitative disclosures about market risk are not applicable[217] 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, 2025. There were no material changes to the company's internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[219] - No changes were made to the internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, the internal control over financial reporting[220] PART II - OTHER INFORMATION Legal Proceedings The company is not currently involved in any legal proceedings that it believes would have a material adverse effect on its business, financial condition, or results of operations - The company does not believe any currently pending claims, lawsuits, or proceedings would be material to its business[222] Risk Factors There have been no material changes to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K - No material changes to the risk factors previously disclosed in the 2024 Annual Report have occurred[223] Unregistered Sales of Equity Securities and Use of Proceeds This section is not applicable for the reporting period - This item is not applicable[224] Defaults Upon Senior Securities This section is not applicable for the reporting period - This item is not applicable[225] Mine Safety Disclosures This section is not applicable for the reporting period - This item is not applicable[226] Other Information During the first quarter of 2025, no directors or executive officers adopted, modified, or terminated any Rule 10b5-1 trading plans or any non-Rule 10b5-1 trading arrangements - During the quarter ended March 31, 2025, no directors or executive officers adopted, modified, or terminated any Rule 10b5-1 trading plans[227]