Q1 2022 Astra Space Inc Earnings Call
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Good day and thank you for standing by today's conference is scheduled to begin shortly until that time your lines will again be placed on hold thank you for your patience.
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Good afternoon, and welcome to <unk> first quarter 2022 earnings conference call.
Turning us today are <unk>, founder Chairman and CEO , Chris Kim CFO , Kevin Brennan, and Vice President of compliance and Deputy General Counsel, Michael Stitcher at this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.
Ask a question during this session you will need to press star one on your telephone.
If you require any further assistance please press star zero.
I would now like to turn the call over to Michael for introductory remarks. Please go ahead.
Thank you operator, good afternoon, everyone and thank you for joining us for <unk> first quarter 2022 earnings call. After the market closed we released our financial results. The earnings release is available on the SEC's website, and our Investor Relations website at Investor Dot Astro Dot com. This.
This teleconference is also being broadcast over the internet and will be archived and available on our Investor Relations website.
During our call today, we will be referencing non-GAAP financial measures, which we believe to be useful to investors as our management team uses these non-GAAP financial measures to plan monitor and evaluate our financial performance. These non-GAAP financial measures exclude certain items and should not be considered a substitute for comparable GAAP financial measures.
Astra's methods of computing. These non-GAAP financial measures may differ from similar non-GAAP financial measures used by other companies. The description of these items along with the reconciliation of our non-GAAP financial measures to their most comparable GAAP financial measures can be found in our earnings release today's call will also contain forward looking.
These forward looking statements refer to future events, including astra's future financial outlook when used in this call. The words anticipate could enable estimate.
Intend expect believe potential will should project and similar expressions as they relate to <unk> are as such a <unk>.
Looking statements. These forward looking statements are subject to a number of risks and uncertainties and as a result, astra's actual future results and performance may differ materially from those discussed in this call. We encourage you to review our filings with the SEC and which we describe the factors that could cause actual results to differ materially from our current.
Expectations, we also refer to commercial launches in this earnings press release, when we use the freezes.
Actual launch commercial revenue launch commercial orbital launch we mean the launch conducted under an FAA commercial watch license.
Additionally, each of our launch vehicles as noted by an asset title with the abbreviation of Lv standing in for launch vehicle followed by the serial number for instance, our March 15th and most recent launch vehicle risk referenced as Lv 0009.
Finally, I would like to remind everyone that this call will be recorded and will be made available for replay via a link available on the Investor Relations section of our website.
With that I'll now turn the call over to Chris Ken Astra's, founder, Chairman and Chief Executive Officer, Chris.
Thank you Michael and good afternoon, everyone. Thank you for joining us today for.
For those of you who have just started following Astra I'll begin with a brief introduction to our mission vision and strategy.
<unk> is a space technology company, our mission is to improve life on Earth from space and our vision for a healthier and more connected planet inspires everyone here at Astro and its what unites us with our customers.
In the first phase of our strategy, we're focused on scaling our launch services business as quickly as possible with an aim to dramatically increase access to space for our customers.
Adam and I started astro with the goal of providing daily orbital space delivery and.
In phase II of our strategy, we plan to leverage our frequent low cost prelaunch access to space and vertical manufacturing capability to rapidly develop space technologies in our space qualified market, leading products that are needed by Astra and our customers as we build next generation space services.
The Astro space Craft engine is an example of space technology, we've acquired and product ties this past year.
Finally in phase III, we plan to bring all of these technologies together into a vertically integrated space services platform like.
Like cloud computing has enabled tech companies to build new applications without investing in upfront capital buying servers leasing data centers and operating networks Astro space platform will allow our customers to focus on their applications instead of buying dedicated launches.
Building custom satellites and operating constellations.
As context, let's review some milestones from Q1, and this past calendar year, which had been <unk>.
We are accelerating investment customer adoption of our space technology products and growth in our customer pipeline.
In January NASA awarded Astra Debenture class acquisitions dedicated rideshare contracts, along with other launch and space service providers. This award represents a $300 million opportunity over the next five years in February we conducted our first launch out of Cape Canaveral under the first FAA Park for 50 launch license in history.
Both important accomplishments for our team and as you are aware at anomaly and seek separation prevented us from delivering the payloads for our customer, but we took the opportunity to understand what occurred and we quickly implemented corrective actions and fixed is prior to the next slide.
In March our successful launch out of Kodiak, Alaska was a huge milestone for Astro as it marked our first delivery of 22 customer payloads into orbit just 33 days after our prior flight, which is less than half of the cycle time, we achieved at our prior two launches with.
With these two launches in Q1, Astro tied with the United launch Alliance joint venture between Boeing and Lockheed as the fourth most frequent orbital launched provider in the world last quarter behind Spacex, China and Russia.
The fact that we can make it on this list with only two launches illustrates just how infrequent and inaccessible access just pieces today and why our model a frequent and affordable launches so badly needed as this basic economy continues to expand.
In April we announced that Leo Stella has contracted with Astro to provide multiple Astra space craft engines earliest stellar satellites. This win was a direct result of our strategic acquisition of Apollo fusion last year gastro.
Gastro space craft engine and demonstrated that can assist satellite and achieving and maintaining target orbits and maneuverability to date. We've sold 61 astra's space craft engines and are excited by the continued demand for this product.
And finally in April we added another launch for the department of defense onto our manifest as we continued to demonstrate strength in the mix of commercial and government demand.
Looking ahead to the second quarter.
<unk> team is excited to test our ability to execute a rapid launch cadence for the upcoming tropics launches astra's honored to have the opportunity to serve NASA to further our vision for healthier and safer planet as we prepare for a multi launch campaign out of Cape Canaveral deploy that NASA tropics constellation tropics will observe deepened <unk> cyclone. So we can forecast storms better improve.
<unk> disaster preparation preparation ultimately save lives.
These launches represent a significant milestone for the company and our mission to improve on our space.
As our production and launch operation teams manufacture and launch rockets to provide launch services for our customers. This year, we are increasingly focusing on launch system to point out.
Which will introduce the next version of our rocket four point out which is designed for a weekly production rate and our new rocket factory with increased payload capacity decreased material labor and launch operations costs launch system to point out will allow astro to address a much larger segment of the launch services market.
With more flights and higher margins.
I'd like to thank our employees, whose dedication to our mission has enabled astro to reach orbit, so quickly and within months again and again, we're just getting started and we're thankful for the unwavering support of our customers and investors and their commitment to our mission.
We look forward to sharing even more detail about our strategy our roadmap and launch system to know next Thursday may 12 at our inaugural Astra's based Tech day 2022. This will take place at our newly expanded rocket factory at our headquarters in Alameda, California and will be video streaming the entire event.
This event will showcase our leadership team review the overall strategy, we're going to make some exciting product announcements and we're going to let onsite guests tour a rocket facility, we expect over 100 participants between attendants.
Once again for all of those who've taken the time to join US. During this quarterly results call. Our current investors and is considering investing in Astra industry experts and those who are inspired as we are by the potential to commercialize space in ways that will make all of our lives better I want to thank you.
And now I'd like to turn it over to Kelly to discuss our first quarter financial results before we begin Q&A, Kevin. Thank you, Chris and good afternoon, everyone. As you heard from Chris We continue to see customer adoption of our <unk> product that will be deployed and our customers constellation in the years ahead.
First let me now turn to review our Q1 result.
As a reminder, all non revenue financial figures I will discuss today are adjusted unless I state them as a GAAP measure youll find a reconciliation from GAAP to non-GAAP results in today's press release.
Revenues in Q1 were $3 9 million derived from launch services as we commence paid commercial launch services. During Q1, we launched we launched launch vehicles Triple zero eight on February 10, and launch being called Triple Zero nine on March 15.
Notably the orbital launch conducted on March 15 represented our first delivery of customer payload into Earth orbit.
Cost of revenues were $11 million for the three months ended March 31, 2022. This included $5 5 million and cost of launch services related to launch vehicles Triple zero, eight and Triple zero nine.
As well as a write down of $5 5 million of inventory net realizable value related to launch vehicles.
Triple double zero churn through launch vehicle double zero in 2014.
First quarter adjusted net loss was $50 1 million Q1, adjusted EBITDA was within our guidance range at a loss of 47 5 billion.
On a GAAP basis, our first quarter net loss was $85 7 million.
The increase in net loss was primarily related to the change in the fair value of the contingent consideration or Apollo fusion of $15 5 million.
And a gross loss of $7 1 billion.
For modeling purposes total stock based compensation expense during Q1 totaled $17 million. This breaks down as follows cost of revenues.
2 million research and development $6 7 million sales and marketing $1 6 million and G&A of $8 five.
First quarter additions for capital expenditures were $15 1 million and primarily related to finalizing the expansion of our <unk> manufacturing facility. We now fully occupied the entire facility and have begun installing production equipment for rocket manufacturing cash outflow.
<unk>.
For capital expenditures for Q1 totaled $20 9 million, which includes the addition of $15 1 million and cash paid for current and prior quarter addition.
We ended the quarter with cash cash equivalents in marketable securities of $255 2 million and no debt outstanding.
Next I'll provide an outlook for our second quarter ending June 32022.
For the second quarter, we currently expect adjusted EBITDA loss to be between $58 million and $64 million.
Appreciate <unk> and amortization to be between $2 9 million and $3 2 million.
Stock based compensation doing between 15 million and $18 million.
Cash taxes are forecasted to be zero.
<unk> shares outstanding to be between $267 million and 270 million shares.
Capital additions to be between 18 million and $23 million.
Let me provide some additional color on guidance during Q2, we expect a meaningful increase in operating expenses as we accelerate investment into the development cycle for launch system too.
A rocket for many of the variable expenses incurred during this cycle include development, Cheryl and consulting services, which are not expected to continue at the same rate in later quarters. Additionally, we will continue to target key hires for our engineering and operations functions that will allow us to scale, our second quarter guidance.
It is subject to various important cautionary factors referenced in the section entitled forward looking statements below and our Form 10-K, including risks and uncertainties associated with the ongoing COVID-19 packet.
And Dennis.
Yeah.
As Chris mentioned, there is also risk associated with our supply chain when it comes to the war in Ukraine, I dynamic shared across many companies in the industry.
We believe our investments in our factory and vertically integrated manufacturing processes are one factor that helps mitigate this risk.
We continue to expect calendar 2022 to be a transformative year as Astro continued expanding our product roadmap and scaling production.
As we outlined on our Q4 earnings call during the year, we will embark on a product cycle transition to our next generation launch system too.
As well as expand space product offerings led by Astro space craft engine.
As mentioned earlier in Q2 is an important quarter as we made key investments in the development and execution of our product roadmap.
Capacity to conduct conduct launch operations at scale and implementation of systems that will increase productivity. Lastly, we will continue to focus on ensuring these investments deliver value to shareholders and set us on the path for long term success.
Before I turn the call back over to Chris.
Want to add to his earlier comments of gratitude to our team and growing roster of customers, who trust us to deliver for them as Chris mentioned, we look forward to hosting our inaugural space Tech day for investors and analysts on May 12 at our newly expanded rocket factory in Alameda.
And with that operator would you. Please open the call for questions for Chris and myself.
Absolutely. The floor is now open for a question I would like to remind everyone in order to ask a question you May press star one on your telephone.
The first question that we have is from the line of Edison Chu from Deutsche Bank. Your line is open.
Good at it so thank you for take care.
Thank you for taking our question.
We had about three if I may.
First could you maybe talk about the unit economics embedded into the guidance.
No the first quarter.
There was probably some unfavorable launch pricing.
Any color you can provide on what you're kind of embedding for the second quarter.
Yes, it's a great question I will let Kelvin.
Take the first stab at that and then I'll provide a bit more color as well.
As we look at.
Sure.
The launches of our rocket three series the the revenue economics on those vary by launch I.
I would say on average it's around that $2 million mark, but it does vary.
And.
Is that what you need Edison or is there other unit economics that you won.
Yes.
On gross margin, if we look at that.
We are pleased.
That out of the.
Gross margin that we received that about 25% of that relates to materials and we're really pleased with that because that's what we forecast as we are hearing to that end.
And drive forward, so that leaves kind of launch operations.
And the other items that go in there that we feel comfortable that over time that we are going to be able to make significant improvements.
As you think about fixed cost.
As we continue to scale up and we continue to increase the cadence and the number of rockets that we produce we will benefit from the economy of scale certainly starting with launch system to point out when we accelerate the manufacturing and launch.
As with previous quarters.
The mental model you would have with Astra is a company that is making the investments in our <unk>.
Factory and in our infrastructure production equipment and staffing to produce at a weekly right now a lot of that is amortized into the cost of launches at a monthly rate today, but as we as we invest ahead of the launch it's a two point out to satisfy the demand of our launches at a higher launch right.
It does skew the economics and kind of translate into what looks like a lower margin product at this production rate. So I think this will become a much more interesting thing to dive more deeply into.
Next quarter and the following quarter as we start to in particular next year as we start to get to right on the Nellix systems, you pointed on rocket four point out serious.
Yes.
Got you.
It's fair to assume that the tropics missions I think the numbers out there has better.
Economics relative to what happened in the first quarter correct.
That's correct.
Okay.
Great. So second question.
Any sort of.
Timeline, you can provide on the tropic commissioning cadence.
It can be pretty rapid cadence. So again, we have the goals that we set for the team and the mission and then we have the weather we have other things happening at the range. We have all the typical complexities that youre going to run into launching rockets.
I can tell you that.
This is a mission that wed like to complete before the storm season.
Which is to say before we get into the summer and so.
The objective is is to get it campaign started this quarter and get as many launches done this quarter as we can but it is likely that we're not going to able to get them. All done by the end of the quarter, but keep in mind that that's still a pretty high cadence. So I think the team's goal is to achieve a better than monthly rate for this next series of three launches for tropics, and that's really just to get the mission.
Accomplish before the storm season begins this is a mission that I think is pretty exciting because.
The more of the launches that are successful the more data you get but if two out of the three year successful. It's not mission failure, it's just a lower refresh rate for the constellation. So I think NASA designed this mission.
The first flight that they did on this.
Basic transport emission to have some additional capacity.
They are really effectively paying for this series of launches from Astra, what many of our competitors charge for single launch.
This allowed <unk> to really deliver the capability for them that they wouldn't be able to get from any other provider because they needed three.
Separate launches or multiple launches delivering the satellites into different orbital planes. This is truly my opinion, great mission for Astro because its emission ware.
A new capability like ours can be fielded we can still achieve a success and we can still.
And we can we can deliver NASA fantastic economics at the same time.
I don't think that I would add to that.
Edison and the only thing I would add to that is to say that the rockets already.
I would like to say rocket in a box sort of thing.
And what we're waiting on his license or all the three all the three launches under one license. So that's what's in progress right now but the.
But the rockets already.
Okay.
Certainly.
A great start.
And just last one for me.
Any color you can provide on the 61.
Base craft engine orders in terms of breaking that down by customers or.
Types of customers.
Curious about that.
We can tell you its a number of customers.
And.
They are going to be deployed on satellites constellations over the next couple of years. So I would just think about it as.
There's a lot of demand for that product. We are just getting started we're really delighted to have 61 of them already sold and.
And we're continuing to see that the pipeline for these products continue to grow and.
We see continued success with those after spacecraft engines that are in orbit today and that is driving demand that we see in our pipeline.
Is there a average price.
You've mentioned before that.
We have not we have not on that end.
But they.
I'm just I'm looking over at Martin right now to see whether or not we actually have publicized our price list our standard price list out there we.
We have not.
But perhaps for the next quarter, we can prepare something.
Segment adjusted by the investment community.
But.
Can we discuss that.
As we discussed a couple of weeks ago. The gross margin on the base craft engine is positive.
Totally.
Thank you so much.
Thank you Edison.
Your next question comes from the line of Andrew <unk> from Bank of America. Your line is open.
Andrei.
Hello again your next question Okay.
Yes go ahead Andreas.
Hi, how are you guys.
Great. Thank you.
Just wanted a little bit of color could you give us some details around maybe the capex schedule that you guys are expecting moving forward.
Some color as we've really if you if you have folks that Spacex day next week, you'll see we've completed the expansion of our factories. So we've deployed a lot of capex at our facility to scale up to this weekly production rate for rocket four.
Deployed a lot of capital into equipment, So we're going to see that taper off.
Into next quarter or the following quarter, rather substantially because we've and in fact, what we've seen over this quarter to previous quarters, we've seen a lot of capital deployed to reduce the.
The cost of producing rockets basically so this is why we went public. This is this has been our strategy all along.
Expand the factory lets go from making one rocket a month by hands to making one rocket a week using a lot of more automated equipment robots machines. We've bought a lot of those machines already and we're kind of getting to the end of deploying capital into the infrastructure and the factory ended the building itself and one of the reasons why we thought it would be great to have space that day is a lot.
The analysts in banks and investors I should really see we built out here, it's truly impressive and if you've been to Spacex and some of the other companies I.
I think you'll you'll walk into Astra and Youll see.
The right combination of of investments and they're in the equipment. It will have a direct result of reducing labor and reducing the cost of our products and that's really not three D printing.
Chasing things with helicopters, it's just making a high margin product.
It's driving the cost of our product down through automation that is going to get Astro to scale. So we're all about scale.
And.
Yes.
<unk>.
The capital that we have now largely deployed.
And then the only thing I could add to that if youre thinking about modeling our capex expenditures for 2022 are more front end loaded right. So these orders go in early.
And we want to get the automation equipment and finalize the infrastructure our test infrastructure.
And be ready to start producing rocket or launch system two point.
Moving into the back half of the year and preparing for test flights.
Awesome that's helpful guys. Thanks.
Right.
There are no further questions at this time I would like to turn back the call over to the presenters.
We appreciate everyone's attention today and the questions. We're looking forward to hosting everyone next week on May 12 at <unk>, we will have.
This live streamed and we're going to be welcoming a number of our investors shareholders customers analysts.
Here and this will be an opportunity for you all to you hear about launches from two point out our roadmap, we're going to be making some product announcements and we hope to have launch dates for Lv 10, 11, and 12 as soon as we can provide them and in fact, we're putting together for those investors out there that are less familiar.
With how lunches work, we're going to be putting together and releasing I believe tomorrow.
A detailed primer on what goes into announcing a launch date and frankly, why we haven't announced the launch date, yet and while those websites out there that <unk>.
Published reported launch dates.
Are literally just reporting some of the preparatory work and filings that we do in advance of a launch but are not actual launch dates.
So we appreciate everyone's patience and we're going to get out to Cape Canaveral, and we're going to do three back to back launches.
And we're going to do them faster than we've ever done before so we're excited to see out there on the webcast and we will see its based Tech day next week.
This concludes today's conference call. Thank you all for joining you may now disconnect.
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