Intuitive Machines(LUNR) - 2025 Q1 - Quarterly Report

FORM 10-Q Filing Information Registrant Information This section details Intuitive Machines, Inc.'s (LUNR) official filing information, confirming its status as a smaller reporting and emerging growth company Condensed Consolidated Balance Sheets (in thousands) | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :------------------ | :---------------- | :-------------------------------------- | | Class A Common Stock, par value $0.0001 per share | LUNR | The Nasdaq Stock Market LLC | - The registrant is a smaller reporting company and an emerging growth company, having filed all required reports during the preceding 12 months[3] Outstanding Shares Common Stock Outstanding as of May 8, 2025 As of May 8, 2025, Intuitive Machines, Inc. reported total outstanding shares for Class A and Class C common stock Common Stock Outstanding as of May 8, 2025 | Class of Stock | Par Value | Shares Outstanding | | :--------------- | :-------- | :----------------- | | Class A Common Stock | $0.0001 | 117,330,851 | | Class B Common Stock | $0.0001 | 0 | | Class C Common Stock | $0.0001 | 61,301,804 | Table of Contents Report Structure The Table of Contents outlines the Quarterly Report's two main parts: Financial Information and Other Information, detailing specific items and page numbers - The report is divided into two main parts: Part I for Financial Information and Part II for Other Information, detailing specific items and their corresponding page numbers[6] Cautionary Note Regarding Forward-Looking Statements Forward-Looking Statements and Risk Factors This section highlights forward-looking statements are subject to risks and uncertainties, including reliance on personnel, limited operating history, customer concentration, and market growth failure - The report contains forward-looking statements regarding missions, demand, financial performance, and business strategy, which are subject to material risks and uncertainties[8] - Key risk factors include: * Reliance on key personnel and Board of Directors * Limited operating history and failure to manage growth or win new contracts * Customer concentration and competition * Safety performance of spaceflight systems or security incidents * Failure of the commercial spaceflight market to achieve expected growth * Delayed launches, mission failures, or increased costs * Reliance on a single launch service provider and risks associated with commercial spaceflight * Failure to protect trade secrets and unpatented know-how * Inability to maintain effective internal control over financial reporting * Dependence on U.S. government contracts and funding levels[8][13] Available Information Company Website and SEC Filings The company provides free access to SEC filings and material information on the 'Investors' section of its website - The company's website (www.intuitivemachines.com) serves as a resource for SEC filings and material information, accessible via the 'Investors' section[11][12] Part I – Financial Information Item 1. Financial Statements This section presents Intuitive Machines, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, operations, equity, and cash flows Unaudited Condensed Consolidated Balance Sheets The unaudited condensed consolidated balance sheets provide a snapshot of the company's financial position at specific dates Condensed Consolidated Balance Sheets (in thousands) | ASSETS | March 31, 2025 | December 31, 2024 | | :-------------------------- | :------------- | :---------------- | | Cash and cash equivalents | $373,253 | $207,607 | | Total current assets | $431,312 | $293,161 | | Total assets | $500,014 | $355,404 | | LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS' DEFICIT | | | | Total current liabilities | $98,148 | $98,831 | | Earn-out liabilities | $— | $134,156 | | Warrant liabilities | $25,776 | $68,778 | | Total liabilities | $172,400 | $351,483 | | Redeemable noncontrolling interests | $456,698 | $1,005,965 | | Total shareholders' deficit | $(135,223) | $(1,008,034) | - Cash and cash equivalents increased significantly from $207.6 million at December 31, 2024, to $373.3 million at March 31, 2025 - Total assets increased by approximately $144.6 million, from $355.4 million to $500.0 million - Earn-out liabilities were fully settled, decreasing from $134.2 million to $0 - Warrant liabilities decreased from $68.8 million to $25.8 million - Total liabilities decreased by approximately $179.1 million, from $351.5 million to $172.4 million - Total shareholders' deficit improved substantially from $(1,008.0) million to $(135.2) million[16] Unaudited Condensed Consolidated Statements of Operations The unaudited condensed consolidated statements of operations detail the company's revenues, expenses, and net income or loss over specific periods Condensed Consolidated Statements of Operations (in thousands, except per share amounts) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Revenue | $62,524 | $73,219 | | Total operating expenses | $72,601 | $75,994 | | Operating loss | $(10,077) | $(2,775) | | Total other income (expense), net | $11,052 | $(115,256) | | Net income (loss) | $975 | $(118,031) | | Net loss attributable to the Company | $(11,396) | $(97,486) | | Net loss per share of Class A common stock - basic and diluted | $(0.11) | $(2.68) | | Weighted average shares outstanding - basic and diluted | 107,081,918 | 36,612,270 | - Revenue decreased by $10.7 million (14.6%) YoY - Operating loss increased from $(2.8) million to $(10.1) million YoY - Net income (loss) significantly improved from a loss of $(118.0) million to a gain of $0.98 million YoY, primarily due to favorable changes in fair value of warrant liabilities and non-recurrence of loss on issuance of securities - Net loss attributable to the Company decreased by $86.1 million (88.3%) YoY - Net loss per share improved from $(2.68) to $(0.11) YoY - Weighted-average common shares outstanding increased significantly from 36.6 million to 107.1 million YoY[18] Unaudited Condensed Consolidated Statements of Mezzanine Equity The unaudited condensed consolidated statements of mezzanine equity track changes in redeemable noncontrolling interests and preferred stock Condensed Consolidated Statements of Mezzanine Equity (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :------------------------------------------ | :------------- | :---------------- | | Series A Preferred Stock Amount | $6,139 | $5,990 | | Redeemable Noncontrolling Interest | $456,698 | $1,005,965 | Condensed Consolidated Statements of Mezzanine Equity (in thousands) | Metric | March 31, 2024 | December 31, 2023 | | :------------------------------------------ | :------------- | :---------------- | | Series A Preferred Stock Amount | $5,560 | $28,201 | | Redeemable Noncontrolling Interest | $443,181 | $181,662 | - Redeemable noncontrolling interests decreased significantly from $1,005.9 million at December 31, 2024, to $456.7 million at March 31, 2025, primarily due to subsequent remeasurement[20] Unaudited Condensed Consolidated Statements of Shareholders' Deficit The unaudited condensed consolidated statements of shareholders' deficit detail changes in equity components, including common stock and accumulated deficit Condensed Consolidated Statements of Shareholders' Deficit (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :------------------------------------------ | :------------- | :---------------- | | Total Shareholders' Deficit attributable to the Company | $(136,913) | $(1,009,262) | | Total Shareholders' Deficit | $(135,223) | $(1,008,034) | - Total shareholders' deficit attributable to the Company improved by $872.3 million, from $(1,009.3) million at December 31, 2024, to $(136.9) million at March 31, 2025 - This improvement was driven by significant non-cash activities including subsequent remeasurement of redeemable noncontrolling interests ($561.2 million) and issuance of Class A common stock for warrants exercised ($176.6 million) and Class C common stock for earn-out awards ($167.5 million)[25] Unaudited Condensed Consolidated Statements of Cash Flows The unaudited condensed consolidated statements of cash flows categorize cash movements from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net cash provided by (used in) operating activities | $19,419 | $(6,442) | | Net cash used in investing activities | $(6,122) | $(1,588) | | Net cash provided by financing activities | $152,349 | $60,754 | | Net increase in cash, cash equivalents and restricted cash | $165,646 | $52,724 | | Cash and cash equivalents at end of the period | $373,253 | $55,242 | - Operating activities generated $19.4 million in cash in Q1 2025, a significant improvement from using $6.4 million in Q1 2024 - Investing activities used $6.1 million in Q1 2025, an increase from $1.6 million in Q1 2024, primarily due to higher property and equipment purchases - Financing activities provided $152.3 million in Q1 2025, up from $60.8 million in Q1 2024, largely driven by warrant exercises[29] Notes to Unaudited Condensed Consolidated Financial Statements These notes provide detailed explanations and disclosures supporting the unaudited condensed consolidated financial statements NOTE 1 - BUSINESS DESCRIPTION This note describes Intuitive Machines, Inc.'s core business as a space technology, infrastructure, and services company - Intuitive Machines, Inc. is a space technology, infrastructure, and services company focused on establishing cislunar infrastructure and commerce, headquartered in Houston, Texas[31] - The company completed a business combination with Inflection Point Acquisition Corp. (IPAX) on February 13, 2023, and was reorganized into an Up-C structure, with Intuitive Machines, LLC as the accounting acquirer[33][34] - Class A Common Stock and warrants began trading on Nasdaq under 'LUNR' and 'LUNRW' on February 14, 2023. Warrants were redeemed on March 6, 2025[35] NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note outlines the significant accounting policies and estimates used in preparing the financial statements - The financial statements are prepared in accordance with U.S. GAAP for interim reporting and SEC rules, consolidating subsidiaries like Space Network Solutions, LLC and IX, LLC[36] - The company is an emerging growth company (EGC) and has elected to use the extended transition period for complying with new or revised financial accounting standards[39][254] - Key accounting policies and estimates include: * Use of estimates based on historical experience and economic environment * Operating in one reportable segment * Concentration of credit risks, with one major customer accounting for 78% of revenue in Q1 2025 * Earn-out liabilities were fully vested and no longer exist as of March 31, 2025, following the satisfaction of Triggering Events II-A and III in February 2025[40][42][47][50][51] - Immaterial errors related to historical estimated contract losses were corrected in previously issued financial statements, impacting net income attributable to the Company by an understatement of approximately $5.1 million cumulatively as of June 30, 2024[63][64] NOTE 3 - REVENUE This note details the company's revenue recognition policies and disaggregated revenue by contract type Disaggregated Revenue by Contract Type (in thousands) | Revenue by Contract Type | Three Months Ended March 31, 2025 | % | Three Months Ended March 31, 2024 | % | | :----------------------- | :-------------------------------- | :- | :-------------------------------- | :- | | Fixed price | $38,183 | 61 | $29,359 | 40 | | Cost reimbursable | $22,597 | 36 | $42,040 | 57 | | Time and materials | $1,744 | 3 | $1,820 | 3 | | Total | $62,524 | 100 | $73,219 | 100 | - Fixed-price revenue increased by $8.8 million (30.0%) YoY, becoming the largest revenue source - Cost-reimbursable revenue decreased by $19.4 million (46.1%) YoY - Amortization expense for deferred contract costs was $8.0 million in Q1 2025, up from $3.5 million in Q1 2024 - Revenue recognized from beginning-of-period contract liabilities was $14.9 million in Q1 2025, compared to $7.3 million in Q1 2024 - Net losses related to contracts with customers were $1.3 million in Q1 2025, compared to $1.0 million in Q1 2024[66][68][69][70] - As of March 31, 2025, remaining fixed price performance obligations totaled $135.9 million, with 40-45% expected to be recognized over the next 9 months[72] NOTE 4 - PROPERTY AND EQUIPMENT, NET This note provides details on the company's property and equipment, including gross amounts, accumulated depreciation, and net values Property and Equipment, Net (in thousands) | Asset Category | March 31, 2025 | December 31, 2024 | | :----------------------- | :------------- | :---------------- | | Property and equipment, gross | $34,711 | $27,874 | | Less: accumulated depreciation and amortization | $(4,918) | $(4,510) | | Property and equipment, net | $29,793 | $23,364 | - Net property and equipment increased by $6.4 million (27.5%) from December 31, 2024, to March 31, 2025 - Construction in progress includes $11.1 million for a commercial communications satellite and $9.0 million for a satellite communications and navigation network[74][75] NOTE 5 - DEBT This note outlines the company's debt arrangements, including credit facilities and loan repayments - On March 4, 2025, the company entered into a $40.0 million secured revolving credit facility with Stifel Bank, maturing April 30, 2027, with no outstanding debt as of March 31, 2025[76][78] - The Live Oak Credit Mobilization Facility was fully repaid and terminated in July 2024[79] - A $10.0 million Bridge Loan from Pershing LLC was repaid in full on January 29, 2024, through contributions from a guarantor, resulting in the issuance of Class A Common Stock and Conversion Warrants[80][82] NOTE 6 - INCOME TAXES This note details the company's income tax expense, effective tax rates, and valuation allowances - The company recognized no U.S. federal and state income tax expense for the three months ended March 31, 2025 and 2024, with an effective combined U.S. federal and state income tax rate of 0.0% for both periods[84] - Due to historical losses, management has applied a full valuation allowance to deferred tax assets, and no Tax Receivable Agreement (TRA) liability is expected to be recorded as of March 31, 2025[86] NOTE 7 - MEZZANINE EQUITY AND EQUITY This note provides information on the company's capital stock, preferred stock, and redeemable noncontrolling interests Capital Stock Information as of March 31, 2025 | Stock Type | Authorized Shares | Issued Shares | Outstanding Shares | | :----------------- | :---------------- | :------------ | :----------------- | | Class A Common Stock | 500,000,000 | 119,329,328 | 117,138,248 | | Class C Common Stock | 100,000,000 | 61,301,804 | 61,301,804 | | Series A Preferred Stock | 25,000,000 | 5,000 | 5,000 | - The company repurchased 941,080 shares of Class A Common Stock for $20.7 million in connection with the Warrant Redemption[89] - The Series A Preferred Stock conversion price was reduced from $12.00 to $3.00 per share due to private placement and warrant exercise agreements[90] - Redeemable noncontrolling interests, representing 34.4% ownership in Intuitive Machines, LLC, have the right to exchange common units for Class A Common Stock or cash, subject to Board approval[93] NOTE 8 - WARRANTS This note details the company's warrant activity, including redemptions, exercises, and fair value changes - All outstanding Public and Private Warrants were redeemed on March 6, 2025, for $0.01 per warrant. Prior to redemption, 15,358,229 warrants were exercised, generating $176.6 million in gross proceeds[98] - The Series A Preferred Warrants' exercise price was reduced from $15.00 to $11.50 per share, and the number of issuable shares increased to 706,522. No exercises of these warrants have occurred as of March 31, 2025[102][103] - Conversion Warrants, issued in connection with the January 2024 Bridge Loan Conversion, were initially classified as derivative liabilities. The company recognized a $43.0 million gain from the change in fair value of the Conversion Series A Warrant liability in Q1 2025[109][111] Warrant Activity for Three Months Ended March 31, 2025 | Warrant Type | Balance, Dec 31, 2024 | Warrant Exercises | Warrant Redemptions | Balance, Mar 31, 2025 | | :------------------ | :-------------------- | :---------------- | :------------------ | :-------------------- | | Public and Private Warrants | 21,929,953 | (15,358,229) | (6,571,724) | — | | Series A Preferred Warrants | 706,522 | — | — | 706,522 | | Conversion Series B Warrants | 4,150,780 | — | — | 4,150,780 | NOTE 9 - SHARE-BASED COMPENSATION This note outlines the company's share-based compensation plans, expenses, and unrecognized costs - Share-based compensation expense for options was $47 thousand in Q1 2025, down from $114 thousand in Q1 2024. Unrecognized costs for options are $271 thousand, to be recognized over 2.27 years[117] - The 2023 Long Term Omnibus Incentive Plan authorized 12,706,811 shares of Class A Common Stock, with 7,652,301 shares available for future grants as of March 31, 2025[119] - Share-based compensation expense for RSUs was $2.7 million in Q1 2025 (up from $1.1 million in Q1 2024) and for PSUs was $0.1 million in Q1 2025 (down from $2.7 million in Q1 2024) - Unrecognized costs for RSUs and PSUs are $19.4 million and $0.2 million, respectively, to be recognized over weighted average periods of 3.27 years and 0.42 years[122] NOTE 10 - FAIR VALUE MEASUREMENTS This note describes the fair value measurements of the company's liabilities, including earn-out and warrant liabilities Fair Value of Liabilities (in thousands) | Liabilities | March 31, 2025 | December 31, 2024 | | :------------------------ | :------------- | :---------------- | | Earn-out liabilities | $— | $134,156 | | Warrant liabilities - Series A | $25,776 | $68,778 | | Total liabilities measured at fair value | $25,776 | $202,934 | - Earn-out liabilities were fully converted to equity during Q1 2025, decreasing from $134.2 million to $0 - Warrant liabilities (Series A) decreased by $43.0 million due to changes in fair value[125] - The fair value of Conversion Series A Warrant liabilities as of March 31, 2025, was estimated using a Black-Scholes-Merton model with a Class A Common Stock price of $7.45 and expected volatility of 98%[127] NOTE 11 - NET LOSS PER SHARE This note presents the calculation of basic and diluted net loss per share for Class A Common Stock Net Loss Per Share of Class A Common Stock (in thousands, except share data) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net loss attributable to Class A common shareholders | $(11,543) | $(97,957) | | Basic and diluted weighted-average shares outstanding | 107,081,918 | 36,612,270 | | Net loss per share - basic and diluted | $(0.11) | $(2.68) | - Net loss per share significantly improved from $(2.68) in Q1 2024 to $(0.11) in Q1 2025 - Potentially dilutive securities, including RSUs, PSUs, options, and warrants, were excluded from diluted EPS calculation as their effect would be anti-dilutive during loss periods[130][131] NOTE 12 - COMMITMENTS AND CONTINGENCIES This note discloses the company's legal proceedings, accrued losses, and remaining purchase obligations - The company is involved in legal proceedings, with an accrued amount of approximately $2.1 million as of March 31, 2025, for probable and estimable losses[134] - A breach of contract action was filed in Delaware Chancery Court regarding Series A Preferred Stock conversion, which the company intends to vigorously defend[135] Remaining Purchase Obligations (in thousands) | Period | Amount Due | | :---------------- | :--------- | | Remaining 2025 | $35,800 | | 2026 | $37,700 | | 2027 | $20,300 | | Total | $93,800 | NOTE 13 - RELATED PARTY TRANSACTIONS This note details transactions with related parties, including revenue and expenses with affiliates - Affiliate revenue from KBR, Inc. (a 10% equity holder in Space Network Solutions, LLC) was $0.6 million in Q1 2025, with related cost of revenue of $6.3 million - Affiliate revenue from ASES (a joint venture between Aerodyne and KBR) was $0.3 million in Q1 2025 - Expenses with X-energy, LLC (an affiliate of Kamal Ghaffarian, Chairman of the Board) were $0.3 million in Q1 2025[139][141][143][144] NOTE 14 - VARIABLE INTEREST ENTITIES This note identifies and describes the company's variable interest entities (VIEs), including joint ventures - Space Network Solutions, LLC (SNS), a joint venture with KBR (90% IM interest), is a Variable Interest Entity (VIE) where Intuitive Machines is the primary beneficiary. SNS was awarded the OMES III contract by NASA[147][148] - IX, LLC Joint Venture (IX LLC JV) with X-energy (51% IM interest) is also a VIE, with Intuitive Machines as the primary beneficiary. The JV is developing nuclear space propulsion and surface power systems[149][150] NOTE 15 - SEGMENT INFORMATION This note clarifies that the company operates in one reportable segment, with performance evaluated by consolidated net income and Adjusted EBITDA - The company operates in one operating and one reportable segment, underpinned by three core pillars: delivery services, data transmission services, and infrastructure as a service[152] - The Chief Operating Decision-Maker (CODM) evaluates consolidated Net income (loss) and Adjusted EBITDA for performance assessment and resource allocation[152] - Substantially all revenues are derived from U.S. customers, with foreign customer revenues being immaterial[153] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance, condition, and operational results for Q1 2025, including business model, recent developments, and key factors Overview This overview introduces Intuitive Machines as a space technology company focused on cislunar and deep space commerce - Intuitive Machines is a space technology, infrastructure, and services company focused on cislunar and deep space commerce, operating under three core pillars: delivery services, data transmission services, and infrastructure as a service[159] - The company achieved the first U.S. soft lunar landing since 1972 with its Nova-C lander (IM-1 mission) in February 2024 and completed its IM-2 mission in March 2025, landing at the southernmost location of the moon[160] - Intuitive Machines holds a leading position in NASA's Commercial Lunar Payload Services (CLPS) program, with four awards to date, and is engaging with the U.S. Department of Defense and Space Force to secure cislunar space[160][161] Our Business Model This section describes the company's revenue generation through orbital and lunar access services and its 'land-and-expand' strategy - The company generates revenue primarily through orbital and lunar access services and by collecting/transmitting cislunar data, employing a 'land-and-expand' strategy to increase value and repetitive revenue from customers[162][163] - Three core pillars: * Delivery Services: Transportation and delivery of payloads to space, including lunar surface access. Achieved first U.S. soft lunar landing since 1972 (IM-1) and IM-2 mission to the lunar south pole * Data Transmission Services: Collection, processing, and interpretation of space-based data, including command, control, communications, reconnaissance, and prospecting. Awarded NSN contract by NASA in September 2024 * Infrastructure as a Service: Provides space assets for navigation, maintenance, scientific data collection, and system health monitoring. Awarded $30.8 million LTV contract by NASA in 2024[168] - The company also pursues adjacent market opportunities, such as the JETSON Low Power project for AFRL, scalable reentry technologies, and federal engineering services contracts at NASA centers[166] Recent Developments This section highlights key recent events, including warrant redemption, stock issuance, and new credit facilities - All outstanding warrants were redeemed on March 6, 2025, generating $176.6 million in gross proceeds from exercises. The company also repurchased 941,080 shares of Class A Common Stock for $20.7 million[167][169] - 7,500,000 shares of Class C Common Stock were issued on February 4, 2025, upon the vesting of Earn Out Units related to Triggering Events II-A and III[170] - A new $40.0 million secured revolving credit facility with Stifel Bank was entered into on March 4, 2025, with no outstanding debt as of March 31, 2025[171] - In April 2025, the Texas Space Commission selected Intuitive Machines for a grant of up to $10.0 million to support the development of an Earth reentry vehicle and orbital fabrication lab[172] Key Factors Affecting Our Performance This section identifies critical factors influencing the company's future success, including macroeconomic pressures, product expansion, and innovation - The company's future success is influenced by: * Inflation and Macroeconomic Pressures: Monitoring volatile disruptions, rising interest rates, inflation, supply chain issues, and geopolitical tensions, though no material impact on 2025 results is expected from trade policy changes * Ability to Expand Product and Services Offerings: Dependent on winning lunar missions, expanding service portfolio, and continued investment in R&D, with a focus on lower price points and far-side connectivity * Ability to Expand Spaceflight Mission Operations: Success relies on establishing a regular cadence of missions, with $272.3 million in backlog as of March 31, 2025 * Ability to Capitalize on Government Expenditures and Private Enterprise Investment: Growth is fueled by increased government spending and private investment in the space economy, but subject to changes in U.S. federal budget priorities * Ability to Improve Profit Margins and Scale Business: Dependent on improving operating leverage, increasing utilization, and managing production efficiency, material costs, and supply chain * Ability to Continue to Innovate: Requires substantial investments in R&D for landers, lunar data networks, and other space systems to maintain market share and attract customers[173][174][179][180][182][184][185][187] Components of Results of Operations This section explains the key components of the company's financial results, including revenue, cost of revenue, and general and administrative expenses - Revenue is primarily from fixed-price, cost-reimbursable, and time-and-materials contracts, recognized over time using the cost-to-cost method. Variable consideration, often dependent on successful mission landing, can cause fluctuations - Cost of revenue (excluding depreciation) includes direct material and labor, launch costs, and manufacturing overhead, expected to increase in absolute dollars but decrease as a percentage of revenue over time - General and administrative expense (excluding depreciation) includes personnel, professional services, and public company costs, expected to increase in absolute dollars - Other income (expense), net includes interest income/expense, changes in fair value of earn-out and warrant liabilities, and loss on issuance of securities[188][190][191][193][195][196][198][199] - Net income (loss) attributable to redeemable noncontrolling interest represents the portion of Intuitive Machines, LLC's net income or loss allocated to noncontrolling interests (34.4% in Q1 2025)[202][203] Results of Operations This section analyzes the company's consolidated financial performance for the three months ended March 31, 2025, compared to the prior year Consolidated Results of Operations (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | $ Change | % Change | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | :------- | :------- | | Revenue | $62,524 | $73,219 | $(10,695) | (14.6%) | | Total operating expenses | $72,601 | $75,994 | $(3,393) | (4.5%) | | Operating loss | $(10,077) | $(2,775) | $(7,302) | (263.1%) | | Total other income (expense), net | $11,052 | $(115,256) | $126,308 | (109.6%) | | Net income (loss) | $975 | $(118,031) | $119,006 | (100.8%) | | Net loss attributable to the Company | $(11,396) | $(97,486) | $86,090 | (88.3%) | - Revenue decreased by $10.7 million (15%) YoY, primarily due to a $20.1 million decrease from the OMES III contract (NASA OSAM project cancellation), partially offset by increases from LTV ($6.9 million) and NSN ($3.0 million) contracts - IM-1 mission completed in February 2024, releasing $12.3 million of previously constrained revenue in Q1 2024 - IM-2 mission completed in March 2025, with revenue increasing slightly by $2.7 million YoY - IM-3 mission revenue increased to $7.3 million in Q1 2025 from $5.5 million in Q1 2024, and the IM-4 mission (awarded August 2024) recognized $6.4 million in Q1 2025 - Total cost of revenue decreased by $3.4 million (6%) YoY, mainly due to a $19.4 million decrease from the OMES III contract, offset by increases from mission contracts ($5.3 million), LTV ($7.7 million), and NSN ($1.6 million) - General and administrative expense decreased slightly by $0.3 million YoY, driven by lower share-based compensation and professional fees, offset by higher employee compensation - Total other income (expense), net, showed a favorable change of $126.3 million YoY, primarily due to a $67.0 million favorable change in warrant liabilities fair value and the non-recurrence of a $68.7 million loss on issuance of securities[207][208][209][210][211][212][213][214][215][216] Key Business Metrics and Non-GAAP Financial Measures This section defines and presents key business metrics like backlog and non-GAAP financial measures such as Adjusted EBITDA - Backlog is defined as total estimated future revenue from awarded contracts, less recognized revenue. It serves as a forward-looking indicator of potential sales[218] Backlog (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :------- | :------------- | :---------------- | | Backlog | $272,336 | $328,345 | - Backlog decreased by $56.0 million from December 31, 2024, to March 31, 2025, due to performance on existing contracts, partially offset by new awards - Approximately 45-50% of the backlog is expected to be recognized over the remainder of 2025, and 25-30% in 2026 - Backlog of $272.3 million exceeded remaining performance obligations of $135.9 million, with the difference primarily related to constrained variable consideration and funded value of certain contracts[219][220][221] Adjusted EBITDA Reconciliation (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net income (loss) | $975 | $(118,031) | | Adjusted EBITDA | $(6,610) | $1,565 | - Adjusted EBITDA is a non-GAAP measure used to assess operating performance, excluding non-operating items like interest, share-based compensation, and fair value changes. It decreased from $1.6 million in Q1 2024 to $(6.6) million in Q1 2025[222][226] Liquidity and Capital Resources This section discusses the company's cash position, capital resources, and ability to fund its operations - As of March 31, 2025, the company had $373.3 million in cash and cash equivalents and $333.2 million in working capital[232] - The company received $176.6 million in gross proceeds from warrant exercises in Q1 2025 and entered into a new $40.0 million secured revolving credit facility with Stifel Bank[232][233] - Management believes current cash and cash equivalents are sufficient to fund short-term liquidity needs and the business plan for at least the next twelve months[234] Cash Flows This section summarizes the company's cash flows from operating, investing, and financing activities Summary of Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net cash provided by (used in) operating activities | $19,419 | $(6,442) | | Net cash used in investing activities | $(6,122) | $(1,588) | | Net cash provided by financing activities | $152,349 | $60,754 | | Net increase in cash, cash equivalents and restricted cash | $165,646 | $52,724 | | Cash and cash equivalents at end of the period | $373,253 | $55,242 | - Operating activities provided $19.4 million in Q1 2025, a significant improvement from using $6.4 million in Q1 2024 - Investing activities used $6.1 million in Q1 2025, an increase of $4.5 million YoY, primarily due to capital expenditures for the new NSN contract - Financing activities provided $152.3 million in Q1 2025, up from $60.8 million in Q1 2024, mainly from warrant exercises ($176.6 million) offset by share repurchases ($20.7 million)[236][237][238] Contractual Obligations and Commitments This section details the company's significant contractual obligations and commitments, including operating leases and purchase commitments Significant Contractual Obligations and Commitments as of March 31, 2025 (in thousands) | Obligation Type | Total | 2025 | 2026 | 2027 | 2028 | 2029 | Thereafter | | :---------------- | :--------- | :--------- | :--------- | :--------- | :-------- | :-------- | :--------- | | Operating lease obligations | $68,952 | $1,920 | $2,614 | $2,175 | $2,264 | $2,710 | $57,269 | | Finance lease obligations | $111 | $38 | $45 | $21 | $7 | $— | $— | | Purchase commitments | $93,770 | $35,750 | $37,733 | $20,287 | $— | $— | $— | | Total | $162,833 | $37,708 | $40,392 | $22,483 | $2,271 | $2,710 | $57,269 | - Total contractual obligations and commitments amounted to $162.8 million as of March 31, 2025, with significant portions due in 2025 ($37.7 million) and 2026 ($40.4 million)[239] Critical Accounting Policies and Estimates This section discusses the critical accounting policies and estimates that require significant judgment in financial statement preparation - The preparation of financial statements requires significant estimates and judgments, particularly in revenue recognition for long-term contracts, where total revenue and cost at completion are complex to estimate[245][247][250] - Revenue is recognized over time using the cost-to-cost method for most performance obligations, with variable consideration included only to the extent that a significant reversal of cumulative revenue is improbable[249][251] - As an emerging growth company (EGC), the company has elected to use the extended transition period for new or revised financial accounting standards, which may affect comparability with other public companies[253][254][255] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Intuitive Machines, Inc. is exempt from providing market risk disclosures - The company is exempt from providing quantitative and qualitative disclosures about market risk due to its status as a smaller reporting company[256] Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting - The CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2025, ensuring reasonable assurance for timely and accurate reporting[257] - No material changes to the company's internal control over financial reporting occurred during the three months ended March 31, 2025[258] Part II – Other Information Item 1. Legal Proceedings The company is involved in various legal proceedings and claims, with details on commitments and contingencies in Note 12 - The company is subject to various legal proceedings and claims in the ordinary course of business, with details on commitments and contingencies provided in Note 12[260] Item 1A. Risk Factors This section refers to risk factors from the 2024 Form 10-K, noting no material changes as of this Quarterly Report - No material changes to the risk factors disclosed in the 2024 Annual Report on Form 10-K have occurred as of the date of this Quarterly Report, except as specifically disclosed[261] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Information on unregistered equity sales was previously disclosed in the Form 8-K filed on February 4, 2025 - Information on unregistered sales of equity securities was previously disclosed in the Current Report on Form 8-K filed on February 4, 2025[262] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - There were no defaults upon senior securities[263] Item 4. Mine Safety Disclosures This item is not applicable to the company - Mine Safety Disclosures are not applicable to the company[264] Item 5. Other Information No other information is reported under this item - No other information is reported under this item[265] Item 6. Exhibits This section lists exhibits filed with the Quarterly Report, including CEO/CFO certifications and Inline XBRL documents - The exhibits include certifications from the Chief Executive Officer and Chief Financial Officer, as well as Inline XBRL documents for financial data[267] Signatures Report Signatures The report is signed by Peter McGrath, CFO, and Steven Vontur, Chief Accounting Officer, on May 13, 2025 - The report was signed by Peter McGrath, Chief Financial Officer, and Steven Vontur, Chief Accounting Officer, on May 13, 2025[272]