Q4 2021 Momentus Inc Earnings Call
Thank you for standing by and welcome to the momentous fourth quarter 2021 earnings call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you will need to press star one on your telephone as a reminder, today's program may be recorded I would now like to introduce you.
Your host for today's program Darryl Genovesi. Please go ahead.
Thank you Jonathan and good morning, everyone welcome to <unk> fourth quarter 2021 earnings Conference call.
With me here today are John <unk>, Chief Executive Officer of the company and Chairman of its board of directors as well as <unk>, Kim Chief Financial Officer, each will provide prepared remarks.
Following these prepared remarks, we will take questions from analysts.
In the interest of time, we would ask that you limit yourself to one question and one brief follow up.
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 fourth quarter, you can download a copy of the release and presentation slides at investors that momentous that state.
During today's call, we will make certain forward looking statements.
Within the meaning of section 27, a of the Securities Act of 1933 and section 21 E of the Exchange Act of 1934.
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.
Actual results may be materially different from the plans intentions and expectations disclosed in our 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 Companys filings with the Securities and Exchange Commission.
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 reconciliations of the non-GAAP financial measures to the most comparable GAAP measures in our earnings press release.
None of these non-GAAP financial measures as a substitute for or superior to measures of financial performance prepared in accordance with GAAP.
The technology underlying our anticipated service offerings is still in the process of being developed and has not been fully tested are validated and speed.
Our ability to execute on our business plan is dependent on the successful development and commercialization of our technology development.
Development of <unk> based technologies is extremely complex time consuming and expensive and there can be no assurance that our predicted theoretical and ground based result will translate into operational state vehicle that operate within the parameters, we expect or at all.
With that I'd like to turn the call over to our chairman and Chief Executive Officer John Route.
Thank you Dara good afternoon, I'm delighted to be here with you today to talk about our fourth quarter and the progress that we've made since our last earnings call in early November .
I'd like to start by thanking the team at momentous, which continues to drive progress toward our objective of providing the backbone infrastructure services to support the emerging space economy that continues to experience impressive growth.
I'll provide some high level comments on our progress since our last earnings call and then turn to our current areas of focus and discuss our outlook for 2022 and beyond after I make my comments, our CFO G. Com Kim will take you through the Q4 financial highlights.
Turning to slide three.
To begin I'd like to highlight some new developments from the past few months overall, we continued to make significant progress on our technology, which will be the foundation of our success as a company.
First we have continued work to bring the vigorous orbital transfer vehicle market.
We completed assembly and initial system level functional testing on the vigorous three vehicle that we plan to fly on a demonstration mission later this year.
Subsequent to the close in the fourth quarter, we completed system level thermal vacuum testing on vigor ALS, three which is late stage environmental testing that simulates the environment in space.
Our testing sequences designed to uncover issues on the ground, where we can deal with them more readily and effectively then we couldnt space.
Over the next few weeks the team will be addressing issues that were uncovered during thermal vacuum testing.
We continue to believe our vigorous threes on path to complete ground tests in time for our inaugural launch planned for June although the schedule is tight.
Last October we signed a launch services agreement that reserves to ports for momentous on Spacex as transporter five mission, which is targeted for June 2022.
We plan to use one of these two ports for the inaugural mission of our bigger IP nickel using vigorous three which is designed to take our customer satellites to customer markets.
We plan to use our second port on the transport or five mission to aggregate rideshare demand from customers that do not require a custom market.
On this port we plan to use it deploy your system from a third party to place customer satellites in orbit and I'll talk about this approach more in just a few minutes.
More recently in February and early March we signed launch services agreements reserving space for vigor right on for additional Spacex missions, including the transport or six mission, which is targeted for October 2022, transporter, seven which is targeted for January 2023 transfer.
<unk> eight which is targeted for April 2023, and transporter nine which is targeted for October of 2023.
As we stated on our last earnings call. Our launch plans are subject to the receipt of licenses and other government approvals and successful completion of our current efforts to get big Rod and other space hardware ready for flight.
We also established a strategic advisory group comprised of five leaders and technology experts to advise company leadership on programmatic technical and operational matters. These five individuals bring world class expertise in more than 150 years of combined experience in creating.
Implementing and managing aerospace business and technology programs for industry, leading companies and educational institutions.
They were already challenging our thinking mentoring and helping a supply many hard learned lessons and insights from their distinguished careers.
Beyond our efforts to mature and expand our product offerings, we continue to build out and improve our executive leadership team.
Adding high caliber individuals that bring the type of experience and skill sets that we need to grow our business and implement our national security agreement or NSA with the U S government.
In February we welcomed Jason Darcie as our New Security Officer, Jason reports to security director victim, Ocado, who continues to lead our security function and implementation of our NSA, which is overseen by the department of Defense and Department of Treasury.
Since our last earnings call. We've made significant progress further implementing the compliance tasks required under the NSA.
In our last earnings call in November I mentioned that one of the parts of NSA implementation that was a heavy lift was our effort to upgrade and improve the security of our enterprise information systems I am pleased to say that we've made good progress. Since then having now completed the bulk of this it modernization plan.
While the NSA related work will soon be complete will never stop upgrading safeguarding the infrastructure, we need for both business and mission success.
Turning to slide four our core business objective is to become an industry leader, providing the transportation in space infrastructure services for the burgeoning new space economy achieve.
Achieving this objective requires a well defined strategy with near term progress points I want to remind you of the five key elements of this strategy and pointed out how recent developments contribute to its implementation.
Recall that the first element of our strategy is to bring our initial orbital transfer vehicle vigor ride to market as early as possible when the features and reliability, we know our customers need.
We continue to plan for Nagra mission with dig right as early as June 2022.
If we're unable to fly big ride in June and we plan to do so shortly thereafter.
As I mentioned, we have now signed agreements reports on the October 2022 January 2023 April 2023 in October 2023, Spacex transport emissions, which can function as backup options. If we need them or alternatively is follow on missions subject of course to the caveat that I Miss.
Earlier.
We also completed the critical design review on our next generation vigorous design called block $2, two which I'll discuss in a few minutes.
We see a bright future for our big REIT vehicle and we're investing now to prove out its capabilities and position it to provide the services that our customers will expect from us in the near future.
The second element of our strategy is to broaden our service offerings with big right beyond the hub and spoke transportation issue.
As an initial step in that direction, we're now planning on carrying our first hosted payload customer in 2022.
This will allow us to demonstrate our hosted payload capability and grow our hosted payload business with other potential customers.
We also plan to bring to market a reusable vision version of Vig right towards the middle of the decade.
We expect this will allow us to provide more economical transportation services relative to our early vehicles. This will also further expand the menu of services, we're able to offer our customers to include in orbit maintenance refueling and de orbiting a debris and satellites at the end of their useful life as well as other satellite satellite services.
We have been continuing work ourselves and with partners on the technologies to enable provision of these services such as a robotic arm for vigor IDE.
We're also examining ways that we might broaden our service offerings into Adjacencies.
While some may think of this opportunity set is requiring a larger more capable vehicle that can take larger payloads beyond low earth orbit we.
We also think opportunistically about segmenting market demand within lower orbit and addressing each segment in whatever way is the most effective in terms of customer satisfaction price and profitability.
For some market segments, we may not require an orbital transfer vehicle at all.
To this end.
We're planning to use one of two ports that we purchased for the Spacex transported five mission targeted for June to deploy a vigorous vehicle.
On the second part we plan to launch a third party product from a trusted partner that is designed to deploy customer satellites directly from the launch vehicle.
While the system cannot provide the last mile transportation service that vigorous Kent is less expensive and it meets the needs of some of the customers in our backlog, particularly those that don't need to get to a precise orbit.
This approach allows us to address the market in multiple ways and serves the needs of our customers more economically than we could if we were to fly every one of them on a more capable vigor I've vehicle.
And as demonstration of our core belief that we best serve our customers by tailoring our offerings as much as possible to what they need.
The fourth element of our strategy encompasses technology development and continued innovation.
I mentioned development work on the robotic arm already but the team is also working on two additional prerequisites to reusability, including a sensor package to enable rendezvous and proximity operations and our fluid transfer system. So the invigorate can replenish its propellant tanks in space.
The team also continues to mature our propulsion and power system designs and preparation for vigorous block upgrades as well as larger vehicles that we plan to produce in the future.
Finally, the last element of our strategy is to attract develop and retain a highly skilled and motivated workforce to give us a competitive advantage in the industry.
I continue to view the team and our ability to nurture it is foundational to our success.
I mentioned, the addition of Jason <unk>, our New Security officer reporting to our security director, Nick Mockado Ajay.
Jason and I have worked together in the past and he has the right skills and experience that the company needs to maintain a trusted relationship with the government and is already making a big difference in our efforts to implement our NSA.
We're also building out our engineering staff restructuring the organizational design and making sure that our people have the resources they need to succeed including access to technical experts such as those comprising our new strategic Advisory group.
As we look forward, we will continue to Opportunistically populate our company with talented individuals and develop them to help us simultaneously serve our customers and shareholders.
Turning to slide five.
This slide provides an overview of where we stand in production of our first vehicles.
So far we've produced two complete big rides with four more in various stages of production.
Vigor I'd won our first vehicle, which has a 30 watt thruster is fully built and ground tested.
Big rides to and beyond are much larger than figure out one big Reits, who is also fully built and has completed most of its ground testing program.
As we said in the past we've learned a significant amount from production in these early vehicles that we plan to retain a storage and potentially uses ground test articles in support of future development.
Vigorous three has now completed assembly and initial system level functional testing and just recently completed system level thermal vacuum testing, which simulates the environment that it will encounter wallet space.
Over the next few weeks the team will work to address the issues that were uncovered during thermal vacuum testing.
This will be closely followed by final vibration testing, which simulates the environment, the big rival and counter on the launch vehicle and other ground tests.
The team continues to progress with vehicles and its many sub systems through the testing process correcting issues as they emerge I continue to stress the importance of using ground testing not just to validate our designs and engineering progress, but also is a critical part of a disciplined process to put us in the best position possible for success on <unk>.
Amit.
We're planning for a vigorous three.
To be qualified in time to ship to the launch base for our planned initial inaugural launch in June although as I said the schedule is tight.
This inaugural launch is intended to be a demonstration mission.
Plan to also take some customer payloads to orbit and to generate a small amount of revenue from those mission. However.
However, the primary goals of mission as I said on our last earnings call our to test a big ride on orbit learned from any issues that we encounter and take important steps towards establishing the viability of our initial market offering.
While wed obviously love for our on orbit demonstration mission to go flawlessly as people with experience in the space industry know all too well in the history of space flight, it's not uncommon for issues to arise on early missions. We plan to learn from any anomalies, we experienced during our inaugural flight and apply the lessons learned to improve our technology going.
Forward.
After our inaugural mission will figure out three we plan to begin operating vehicles from our improved while key too big right configuration.
We recently completed our block two two critical design review to incorporate design changes relative to the prior configuration.
These changes include a new modular tank system that allows us to swap propellant for payload depending on mission requirements as well as a more efficient structural design and improved payload hosting capabilities.
We now have three block $2 two vehicles in early stages of production.
Before I hand, the call over to our CFO <unk> Kim for comments on the Q4 financials.
I just wanted to reiterate my excitement for progress in the dedicated team.
We have it.
As well as the bright future that I see ahead for commercial space and momentous so with that I'll hand, the mic off to our CFO <unk> <unk> and then we'll take your questions.
Thank you John before I discuss the fourth quarter financials, I would like to take this opportunity to thank the momentous team for their hard work and dedication.
Turning to slide six our.
Our fourth quarter results reflect our ongoing progress in investment toward our inaugural launch.
We have cumulatively signed contracts for approximately $67 million in backlog or potential revenue as of January 31 2022.
These contracts include firm orders as well as options.
These options gives our customers the flexibility to quickly opt into an available launch slot on short notice without requiring a separate agreement.
The breadth of these signed contracts spanned across 24 companies in 15 different countries.
In general our customers have the right to cancel their contracts with the understanding that they will forgo their deposits and milestone payments.
If a customer cancels the contract before all of the payments are made the resulting revenue will be less than the full value of the backlog.
We ended 2021 with non restricted cash and cash equivalents of $160 million and approximately $25 million and outstanding gross debt.
We started making principal payments on this loan in March.
We invested approximately $19 million in cash during Q4, we expect our quarterly cash investment relates to increase in 2022, driven by higher operational tempo increased launch vehicle milestone payments as well as continued investments in let's say implementation and public company.
The structure.
We did not recognize any revenue in the fourth quarter, we will start to recognize revenue once we begin flying our customers to space and fulfill our performance obligations.
In the fourth quarter, we generated approximately $25 million in losses from operations.
On a non-GAAP basis, the adjusted EBITDA was a negative $16 4 million in the fourth quarter, which was approximately $2 million lower than Q3 results.
Please refer to the earnings press release issued today.
The reconciliation of adjusted EBITDA to GAAP net income.
non-GAAP SG&A expenses for the fourth quarter totaled $7 3 million approximately $1 $4 million higher than the prior quarter.
These increases were driven by continued investments in NSA implementation and public company infrastructure investments.
As a reminder, we became public in the middle of Q3, and Q4 investments reflect a full quarter of being a public company.
non-GAAP R&D expenses for the fourth quarter totaled $9 4 million approximately <unk> 4 million higher than the prior COVID-19 .
We ended 2021 with approximately $81 2 million shares outstanding.
Daryl.
In a moment, we will move to the question and answer portion of our call. However, I would first like to remind participants that all of those parameters outlined at the outset of this call also pertains to the question and answer session.
This includes our disclaimers related to non-GAAP financial information forward looking statements and the technology underlying our service offerings.
Jonathan would you please remind participants how to enter the queue.
Secondly, once again, if you have a question at this time. Please press Star then one if your question has been answered and you'd like to remove yourself from the queue. Please press the pound key our first question comes from the line of Edison Youth from Deutsche Bank. Your question. Please.
Hey, Thanks, I have about three topics wanted to cover first I think.
But most people are interested in is the progress on the edge.
NSA implementation.
Is this something that could literally happened. The next few weeks what can you tell us about.
The potential timing of that.
Well, thank you Allison for the question.
We're continuing to make significant progress on the regulatory front and we are closer to completing the NSA implementation and getting the necessary government licenses and approvals. Then we were on the last earnings call. Our NSA implementation has made significant progress.
We're in regular contact with the Defense Department and the Treasury Department, who will oversee our NSA.
It modernization is of particular focus for the for these departments as I mentioned on the last earnings call. The it modernization plan is a heavy lift for the company, but we've implemented the bulk of this modernization plan and now after we finished implementing the plan. Shortly we will continue to update our.
It security to keep pace with the evolving threat. However.
We've also submitted an FCC application since the last earnings call and we're in dialogue with the FCC.
<unk> licensing process I would add includes an inter agency review similar to the one that the FAA conducts.
With the FAA, we're in conversations with them as well and we intend to get an FAA payload regime. Later this year. So all in all we're making good progress on insane implementation and other regulatory issues.
Thanks Annie.
Any way to sort of.
Determine kind of by what time would you need to get this approved if you want to launch in June is there any way to drill down down.
<unk> period, a little bit more.
In detail.
Sure.
<unk>.
Limiting factors if you will for our launch in June is first we've got to complete the work ahead of us to prepare our vehicle for flight and then on the regulatory side, we will need licenses from the FCC FAA, we're going to apply for an FAA license called the Halo of review.
And then Theres, a slight modification to our Noah.
A license that we need to perform.
We currently plan to fly our inaugural mission with Big arrived in June of 2022 subject to the receipt of these licenses and government approvals.
Completion of the work to get the system ready for flight and so the.
Submission of our application to the FCC last year started that process and again, we're in conversations with them and then with the FAA, we've become that dialogue as well and hope to obtain a payload review from them a little bit later this year the NSA implementation is walnut.
Directly part of those processes is of course, one of the considerations that those other regulatory bodies take into effect and so we are making good progress on NSA implementation and our expectation is over the coming weeks that we're going to get to a much more.
Advanced level of maturity, even though we've come a long distance in the implementation of that agreement thus far.
Understood understood.
Separate topic, you booked several Spacex transporter mission slots ports.
And I'm wondering if you could maybe provide.
Some more detail or some more context on.
The various incremental capacity that you've got I understand part of that is a little bit of redundancy in case the June launch doesn't work.
But is this are these ports can you can you satisfy can you execute on all of these ports, but the backlog or do you need to win.
New business to fill it up.
Well, we've we've signed launch services agreements for ports on Spacex transporter missions, which are rideshare mission sets you know for the remainder of 2022 and for the presently targeted Spacex transport emissions in 2023, so really for the rest of this year and next.
Here, we've reserved course, and we have a production schedule for vigor I'd vehicles, obviously thats intended to match that.
Cadence of the launch services agreement the initial inaugural mission of <unk>.
<unk> III later this year is meant to be a demonstration mission as I mentioned, we do plan to take customers on that mission and generate a small amount of revenue, but its principal objective is to demonstrate our technology and to learn from the experience in any issues we might encounter.
We do have a follow on pork.
Follow on plans for the October .
Transporter mission and so.
Depending on where we stand after our first mission will it if necessary adjust our plans, but otherwise we have follow on vehicles as I mentioned that are in earlier stages of production.
Vigorous five which we would plan to fly in the fall and then additional block two two vehicles that are planned for next year.
And we do think our initial mission will.
Provide an additional boost to our efforts to win follow on business and gather more customers.
And Thats one of the things that will help us in that regard and so we're looking forward to the future and again continuing to put in the calories in the hard work to get our vehicles ready for flight and to address the regulatory matters. So that we can continue to make good progress on that trial.
Last one for me something.
I think that's more high level.
Obviously, a lot going on in this.
Based on industry as it pertains to Russia, Ukraine.
Have you seen any sort of impact either on the manifest in supply chain or or just.
Any sort of.
Impact on on your end.
No I haven't seen an impact from the Ukraine situation on our progress are our manifesto or the business a couple of points to add to that.
<unk> founders of momentous had been divested and have not been part of the company for a long time.
Momentum has continued to make good progress in implementing our national security agreement.
Tragic events at folding in Ukraine or are not related to the implementation of the NSA or obviously our business.
I would add though that on a personal note that during my government paas industry career, I visited Ukraine, including Keith and Crimea, I met with Ukrainian National Security officials and Walt the Defense Department I oversaw the U S security assistance program for Ukraine.
<unk> just heartbreaking to see this Russian aggression play out glad to see my government and allies around the world opposing this Russian aggression in assisting Ukrainians.
Okay.
Alright, thank you.
Thank you. Our next question comes from the line of James Ratcliffe from Evercore ISI. Your question. Please.
Thanks for taking the question a couple first of all can you just give us an update on the status of the trust or to help in particular.
And how the test process has gone and what.
First on the Trust you plan to launch should you go up in June .
We've continued to make good progress on our technology for Vickery to include our microwave electrothermal thruster or MPT.
The.
Our plan for the inaugural launch of vigor I'd a vigorous three.
Targeted for June there will use the current generation of our microwave electrothermal thruster.
<unk>.
Put that system, along with the rest of the space craft through extensive ground testing, including completing the initial assembly and integration and system level integrated testing of that vehicle.
As part of that we fired the MDT or microwave electro thermal trusts that we plan to fly them figure out three for.
For 10 minutes of duration.
Yes.
We have additional work on our next generation thruster that we have been doing in the past.
That's progress some distance, but that will that will be incorporated on future designs.
Got it thank you for the question James.
Sure.
Secondly, can you talk a little bit about the economics of.
The the.
Second point you are taking.
It sounds like you are essentially being a wholesaler there.
Buying a port and then splitting up among smaller customers and can you talk about.
Sort of what the economics of that and how significant you think that is.
This can be going forward.
Sure.
The approach of using rideshare aggregation at lower cost is something that we're exploring for future missions and as mentioned that's what we intend to use the second part on the transporter five mission targeted for June to do.
This is an opportunity for us to explore how we can meet the various needs of our customers and whether this could be an attractive component of our service offering going forward some of our customers need.
To be taken to precise orbitz and we plan to offer them last mile Transportation services with our vigorous vehicle Thats, specifically designed for that but in other cases, some customers don't need last mile delivery to a precise orbit.
I want to be dropped off in the launch vehicles or is it because their mission doesn't require a precision on it.
It's cheaper.
In this case.
The grid has more capability than what is needed in the simple drop off missions. So we're exploring other ways to serve this market segment at lower cost.
<unk> think there's a potential to expand our total addressable market, perhaps quite meaningfully by partnering with one of our suppliers that has the requisite hardware.
We're not certain whether this approach will be part of our long term plans.
And what we're doing doesn't require any upfront investment to develop the hardware or introduce the service. So we've considered this approach since our customers often discuss this simpler service with us as well as more complex precision orbit insertion that would require big right.
As we go forward, we will determine whether this is part this.
Part of the market provides sufficient growth and profitability opportunities for us to include it on a more permanent basis in our menu of services.
Great.
Third.
Do you think quantification for the.
Pickup in cash burn essentially through the year and like what sort of magnitude we should be looking at for that.
Sure, Let me ask <unk>, Kim our CFO to address that question sure. So I think in general.
David last time on the earnings call that we should have sufficient cash through to the earlier part of 2023, that's still the case.
You can see from our earnings release that we burned roughly about seven and a half million dollars a month last year, we do expect that to increase in 2022 lot of a couple of the key drivers are the operational tempo that we're increasing our meaning that we're increasing the number of vehicles that we're building the material.
And we're actually increasing our staffing.
And then we do have you can see that we've booked basically launches going out to 2023, and we will have increased spacex milestone payments for that and then we do need to continue with the NSA implementation as well as other public company infrastructure costs and then lastly, we have started paying down.
Our principal on our debt and so those enhance and so I think based on the data point.
We ended up in and how much runway, we have we should be able to back into a number of their absolute run rate standpoint.
Great. Thank you.
Sure.
Thank you. Our next question comes from the line of Colin Canfield from Barclays. Your question. Please.
Hey, guys. Thanks for the question can.
Can you just update us on what your expectations are for free cash flow positivity I think in this bag size. It was 2023 was the timeframe, but if you could just provide us an update on that front.
Yes, so we.
We stopped giving long term guidance here, but you can see that.
We are a little nascent and early to make those kind of off with long term projections. So I will leave that at that.
Got it and then if we think about the starship pricing update.
Last month, I think you unmask said.
Hundreds of dollars per kilogram versus the original $10 per kilogram cost contemplated in your spec slides so with that in mind can we just talk about what customer appetite looks light for invigorated last mile services versus maybe a dedicated small cell winter.
Okay.
Well.
The starship pricing.
And the advent of larger.
Launched vehicles like Spacex as star ship means youre going to be carrying a much larger capacity to orbit.
Stepping back recall there are two mega trends affecting the industry that are there are fueling among things that are fueling this real growth in the new space economy.
Thing one you do have launch vehicle costs continued to decline in the number of providers growing secondly have another mega trend, which is satellite is getting smaller and increasingly capable. So the two things together mean youre going to have very large vehicles, taking larger volumes of smaller satellites to a single destination, but as you.
You will know the customers for that satellite companies as particularly if they have constellation's don't all want to be in a single drop off location. The alternative to an orbital transfer vehicle like what we intend to provide here at momentum is building.
Propulsion systems per satellite.
Small satellites and Youre using a fair amount of your mass and value content for that we think of this.
Space tug, if you will orbital transfer vehicle or space truck as some people call. It is going to be much more economical for that purpose dedicated smaller rockets that go to single Orbitz.
That are much smaller than star ship. We think also are not as competitive as the ability for an orbital transfer vehicle to work Symbiotically with a large system like star ship that is reducing the cost per kilogram to go to orbit and therefore is likely to generate a higher volume of smaller satellites go into orbit then.
Our system for a vigorous and orbital transfer vehicle works very symbiotically with such a system now looking a little further forward our initial plants arent expandable version of big right.
Later around the middle of the decade, we plan to bring online a reusable version of vigor that it makes the unit economics, even more attractive because we would meet these cargo shipments in space have the ability to reuse the system over time and refuel it with fuel that is carried backup space to meet the space vehicle.
And that will make it even more attractive to provide this sort of last mile delivery our spot in space infrastructure services that we envision providing.
Got it thanks, thanks for the color.
Thank you as a reminder, if you have a question at this time. Please press Star then one our next question comes from the line Michael Mcgarry from Wolfe Research. Your question. Please.
Everyone. Thanks for the time.
So it looks like your backlog came up by about $2 million sequentially. During the quarter. So given that can you talk a little bit about the order activity that you saw during the quarter.
Sure so.
Basically we recognized a $2 million increase quarter over quarter and backlog. This is really tied to a reversal of an impairment that we took last quarter.
We had early indications of a customer who potentially was interested and canceling one of their contracts and so we.
<unk>, our backlog down by $2 million in Q3.
During Q4, our business development team turned this customer around then was able to maintain that contract.
And actually increased our backlog activity slightly.
So it came back up by $2 million all in all we were able to retain the key customer and.
Incrementally added business.
Now having said that we are looking at a lot of opportunity. So we are continuing to bid on a lot of opportunities and so in general the deal market appears to be very active and very strong.
Got it and then I mean, just following on that can you sort of get a little bit more specific about the sales pipeline that youre seeing in.
To that.
Once you're able to launch big arrived for the first time, what sort of.
I will try to pick up do you expect to see in order activity. Once you are able to launch that.
On the pipeline, we continue to see customer opportunities that we're bidding on.
We continue to feel good about how our service offering is aligning with our customers plans to go to market in this new space economy in our 10-K, you'll see there are a number of third party market forecasts that indicate the total addressable market for space transportation is growing rapidly we will continue to do so.
We do think that once we have the opportunity to fly vig right on orbit and demonstrate our capabilities. We would expect to convert more of this customer interest to firm orders and backlog.
Establishing quite heritage is something that we know is very attractive to potential customers. So it's something we hear from customers and so we do think that demonstrating our capabilities on orbit will lead to a pickup in new orders.
Great. Thanks, a lot guys.
Thank you. This does conclude the question and answer session as well as today's program. Thank you ladies and gentlemen for your participation you may now disconnect. Good day.
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