Q3 2022 Astra Space Inc Earnings Call
Good afternoon, and welcome to Astra's third quarter 2022 financial results conference call.
All participants are in a listen only mode. After the speaker's presentation, we will conduct a question and answer session. If you'd like to ask a question you will need to press star one on your telephone keypad.
To withdraw your question. Please press Star one again as a reminder, this conference call is being recorded.
I would now like to turn the call over to interesting Vice President strategic financing capital markets. Please go ahead.
Thank you operator, good afternoon, everyone and thank you for joining us for Astral <unk> third quarter 2022 quarterly results call.
After the market closed we released our financial results. The results release is available on the SEC's website, and our Investor Relations website at Investor Day, Astro Dot com.
A supplemental presentation related to our third quarter 2022 results.
Be found on the Investor Relations section of our website.
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 reference 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 as a substitute for comparable GAAP financial measures aster.
Astra's methods of computing. These non-GAAP financial measures may differ from similar non-GAAP financial measures used by other companies a.
A description of these items along with the reconciliation of our non-GAAP financial measures to the most comparable GAAP financial measures can be found in our results release todays call will also contain forward looking statements. 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 Astra are as such a forward 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.
Lee 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, including those updated risk factors included in our quarterly report on Form 10-Q, finally, I would like to remind everybody that this call will be recorded and will also be made available for replay via link available on the investor.
Our relations section of our website.
With that I would now like to turn the call over to Chris kind of Astra's, founder Chairman and Chief Executive Officer, Chris. Thanks, Andrew Good afternoon, everyone and thank you for joining us today.
I am excited to also have our incoming chief financial Officer, Axel Martinez and our Chief business Officer Martin of <unk> on the call with us today.
During this call we will review our operational and financial performance during the third quarter review guidance for Q4 and provide an update on our launch services space craft engine businesses.
Now during the third quarter, we made some difficult, but necessary decisions, which will allow us to focus on our near term priorities with the appropriate level of resources, while also extending our financial runway.
Our operating plan is now fully focused on selling and delivering astra's space craft engines.
And the successful first flight of our new rocket.
We will discuss the progress we've made toward achieving each of these goals during this call.
In the past quarter, we've announced 237 cumulative committed orders of the Astra space craft engine as of today.
An increase of over 130% last quarter, including orders from Airbus <unk> satellites Macs are in astra's scale among others.
We believe our ongoing conversations with customers and increased order book validating our view that the Astro space craft engine is one of the leading in space propulsion systems currently available in the market.
We achieved a positive GAAP gross margin for the first time in the company's history.
We continue to make progress towards the development of launch system to which I'll speak about more in a moment.
And we continue to build out of a new 60000 square foot facility in Sunnyvale, California dedicated to the production of Astro spacecraft engines, we plan on moving into this facility this quarter and completing the build out in Q1 'twenty three.
We strengthened our core leadership team, including hiring axle Martinez as our new Chief Financial Officer, and Matthew <unk> as our new General Counsel.
And we ended the quarter with approximately $151 million in cash cash equivalents in marketable securities.
This quarter with the backdrop of continued macroeconomic and geopolitical uncertainty increasing inflation and interest rates and equity market volatility. The team has prioritized resources on our core businesses.
Specifically, we are focusing investments in delivering reliable space craft engines to our customers, which is rapidly becoming an important revenue stream for Astra, while focusing launch system development on reliability and a successful first flight of rocket four.
We've also decided to reduce our near term investments in space services to direct resources to support the growth of our core launch services based product business. We continue to explore opportunities to develop our partner in the development of our space services offerings as it remains a significant part of our long term business strategy.
Now I'd like to provide an update on the progress we've made on the development of launch system too.
As a reminder, last quarter, we announced that we've increased the design point of rocket four to deliver up to 600 kilograms to meet inclination lower orbit over the course of the product lifecycle.
Launched system two represents an important development for Astra to support satellite operators globally, and deploying space based technology and scale.
We focused our resources on designing and delivering our new launch system with improved reliability and operational excellence increased payload capacity and an increased launch cadence.
We continue to expect to test flights for rocket four to begin in the latter part of 2023.
Since our last earnings call. We have completed the first design loop of launch system too, including rocket for the ground system and software. We provided an update on this progress, which you can view at Astro Dot Com Slash launch on May one, we provisioned critical test infrastructure, including upgrades in the first stage engine test and and commissioned new launch system.
Hmm valve test stands and other test infrastructure at our Alameda factory.
We designed and released tooling required to manufacture the rocket four data for <unk>.
We expect to continue releasing important details and development milestones in the coming weeks and months, including the release of our first payload user guide for rocket four which will allow customers to better understand the capabilities of our rocket and features of our launch service.
I'll now provide some additional detail on our space products business.
As we discussed last quarter Astro leverages, its mass manufacturing capabilities to develop and produce products required for the next generation satellites and space services.
Our launch services will bring customer payloads to space. The Astral spacecraft engine is a key based products that deliver satellites into their final orbits helps them maintain their orbitz avoid collisions and ultimately de orbit them at the end of their life to reduce space debris.
I wanted to discuss the progress we've made with Astral space craft engine.
Since the last earnings call, we've announced an additional 134 committed orders for the asthma space craft engine since June 30 of 2022.
It adds up to 237 cumulative committed orders since July one 2021 inclusive of the 14 committed orders acquired as part as part of the Apollo fusion acquisition with.
We completed delivery of our second full customer order.
And the majority of the space craft engines being delivered are for critical national security programs signifying their importance in our space Tech ecosystem.
We continue to see strong customer demand based on our committed orders and ongoing conversations with customers.
And as a reminder, orders are delivered to customers over a mutually agreed timeline, which is typically nine to 12 months from contract signing.
Now I'll turn it over to Axel to review, our financials and guidance Axel.
Thank you, Chris and good afternoon, everyone first I am pleased to join you on my first earnings call as incoming Chief financial Officer of Astra.
I am excited to bring what I've learned from scaling hyper growth technology companies, including Google and Uber to Australia, as we work to build a sustainable and scalable business.
Let me now review our Q3 results.
As a reminder, all non revenue financial figures, we will discuss today are adjusted unless we state them as a GAAP measure.
You will find the reconciliation from GAAP to non-GAAP results in today's press release.
Revenues in Q3 were $2 8 million.
Driven by the delivery of space growth engines as we now have completed the second Astro space growth engine program.
Coastal revenues related to astra's basically of engines was $1 1 million.
This resulted in our first GAAP quarterly gross profit since astra's founding.
Totaling $1 7 million.
GAAP operating expenses totaled 201, 4 million compared to $67 8 million last quarter.
The difference was primarily attributed to onetime items that I will discuss shortly.
GAAP operating expenses included R&D expenses of $32 8 million, reflecting our continued investments in our core products sales.
Sales and marketing expenses of $4 1 million, reflecting investments in ongoing sales efforts for launch services.
Our space growth engine.
And G&A expenses of $19 2 million, reflecting ongoing investments in key systems and technologies among others.
Now, let's talk about all of the onetime items during Q3 2022.
During the third quarter the company reorganized from one to two reporting segments and as a result.
Assets and liabilities to each of our reporting segments based on each segment's operating activities.
The reorganization together with a sustained decrease in the company's share price <unk>.
Existence of substantial doubt about the company's ability to continue as a going concern.
And macroeconomic factors resulted in the company's determination that triggers we're present, therefore, indicating that the carrying amount of certain company has this may not be recoverable.
A result, we recorded a noncash impairment charge on long lived assets of $73 million related to property plant and equipment.
Ft, $8 3 million impairment of goodwill at.
At $2 1 million impairment of our trademark assets.
And a $2 7 million charge related to definite lived intangible assets.
All of these one time items totaled $133 4 million.
Additionally.
Loss on change in fair value of contingent consideration was $11 9 million.
As a result, both higher revenues forecasted in estimating the fair value of contingent consideration.
A $1 million inventory adjustment related to rugged III was also included in R&D expenses.
Australia also benefited in the third quarter from a onetime $4 3 million employee retention tax credit.
We expect to receive a cash payment from these credits in the first half of 2024.
As a result total onetime items for the quarter were $142 million.
Given these onetime and noncash items on a GAAP basis, our third quarter net loss was $199 1 million.
On a non-GAAP basis.
Third quarter adjusted net loss was $45 2 million.
Q3, adjusted EBITDA was a loss of $41 4 million a.
The $7 million improvement compared to last quarter.
Third quarter additions to capital expenditures were $5 5 million and primarily related to the continued investment in the development of our loan services business and delivery of our space growth engines, we ended the quarter with cash cash.
Cash equivalents and marketable securities.
155 million and no debt outstanding. In addition, we also continue to evaluate various sources of capital as we carefully manage our financial runway.
On October six Astral.
<unk> received a deficiency notice from NASDAQ.
As our per share closing bid price remained under $1 for 30 consecutive trading days.
While we cannot directly control short term market volatility.
We are taking measures to increase topline growth decrease expenses and that capital to strengthen our balance sheet.
Which we believe will ultimately be reflected in our share price.
Next I'll provide an outlook for our fourth quarter ending December 31.
2022.
As Chris mentioned, we focus our operating plan on the delivery of space growth engines, and a successful first flight of rocket four.
Allowing us to optimize our operating plan.
And increase our financial runway amidst market volatility.
As a result as of today.
We have reduced our existing head count by approximately 16%.
Payroll savings from this head count reduction are expected to be realized beginning in Q1 of 2023.
As a reminder, our fourth quarter guidance and all guidance is subject to various important cautionary factors referenced in this section below entitled forward looking statements.
In our Form 10-K, including risks and uncertainties associated with the ongoing COVID-19 pandemic.
And the decision to discontinue their prototypes of launch vehicles supported by loan system one.
There is also risk associated with elevated levels of inflation in our supply chain as it relates to geopolitical tensions.
The dynamic share across many companies and industries. However, we.
We believe our investment in our factory.
And vertically integrated manufacturing processes are one of the factors that helped mitigate these risks.
Now.
We will provide future guidance in the fourth quarter. We currently expect adjusted EBITDA loss to be between 42 and $45 million.
Basic shares outstanding to be between 268, and 270 million shares.
And capital additions to be between five and $7 million.
As we shift our near term priorities to focus on our space products and loan services businesses.
Our guidance will focus on the metrics that we use to manage our business. Thus, we will not be providing guidance on depreciation and amortization stock based compensation and cash taxes at this time.
On the Astros base growth engine, you should continue to expect quarterly variability in shipments until we began ramping up production to support committed customer deliveries beginning in Q1 2023.
As of to date, we have cumulative committed orders for 237 Astro space growth engines.
Including 14 units, we acquired with the Apollo Fusion acquisition on July one 2021.
The vast majority of our space growth engines have been ordered in 2022.
We continue to see strong customer demand for our space growth engines.
As a reminder, space growth engines are typically delivered nine to 12 months from contract signing.
And natural recognize revenue only upon delivery of the space growth engines to our customers.
We continue to expect the remainder of 2022 and 2023 to be transformative period for <unk> as we further develop our new launch system and scaled production for a spacecraft engines.
I will now turn the call back over to Chris. Thanks, Axel and we're glad to have you on the team before we conclude the call I'd like to personally. Thank all of the Astro employees, who have been impacted by the head count reduction today.
Made the very difficult decision to part ways with some very talented individuals.
I'll always appreciate the contributions and the impact that <unk> had a mean and Astra is all.
Finally, I'd like to thank Carolyn for our leadership in helping Astro become a public company and our finance organization is hard work as we've made it through this transition.
Astra is now well positioned to focus and execute on shipping and developing our core product offerings I'm excited to continue to share updates in the coming weeks and months as we deliver on our mission to improve life on Earth from space.
Operator.
Let's open the call for questions.
Thank you as a reminder to ask a question. Please press star followed by the number one on your telephone to withdraw your question. Please press star one again, well pause for just a moment to compile the Q&A roster.
And our first question comes from Edison Chu from Deutsche Bank. Please go ahead. Your line is open.
Hey, everybody thanks for taking the questions.
Three if I may two more strategic one financial.
On the strategic side could you remind us about the agreement with one web and provide maybe some color on the potential to get supplied or win.
Thank you on the Gen two constellation.
Sure. So the agreement is with Airbus <unk> satellites.
Martin the rooms eminent let me provide more color on that.
Yeah, Hey, Edison.
Agreement that we announced with Airbus lowered satellite is for arrow.
Bus platform.
As folks know and the market.
Airbus <unk> satellites provided the Onewest Gen one.
Saturday buses.
And.
We have not yet made a determination on who is going to supply the or has not been enough who's going to supply the one with gen. Two.
Buses and so we don't have anything further to add on top of that.
Do you have any idea when that decision will be made.
No.
Okay.
The second strategic I think in the past you had mentioned you did submitted something about the spectrum.
And spectrum and it sounds like Youre sort of deemphasizing that now is there any sort of kind of value.
That you had there with anything I don't recall the details.
The original plan, but just wondering if theres any sort of like residual value that you can sort of salvage what the with the spectrum that you had I think wanted before.
Both spectrum allocation is a long process and I think one of the things that we tried to make clear here is that these services is the north star for the company.
Some of the space technology in the space launch services are enabling of that long term vision, but given the contracts that we have on hand or both spacecraft.
Spacecraft engines or love services.
Given the current economic climate cost of capital availability of capital.
Pretty clear our focus should be on delivering for customers that is purchased based Pratt engines and launches and so we're really just prioritizing the investment of our capital and human resources in the short term goals for the company right now.
For the next year or so now that could change should we secure additional financing markets change should we secure funding funding these programs or projects, but given right now what we wanted to do for our shareholders and for our customers is focus focus focus and what Youre seeing is youre seeing an emphasis on what's in front of us.
Understood understood and I appreciate it.
And then last one from me just a quick financial one I know, it's a tough tough restructuring 16%.
The way to quantify the benefit next year in terms of how much you're saving on Opex.
Any color there would be I appreciate it thanks.
Yes, well.
So thank you for the question, while we're not providing guidance at this point for 2023, our plan as Chris mentioned is to focus our operations and our top two priorities, which is basically the engines and the development of the new launches.
At the same time, we want to continue.
Optimizing our cost structure and our goal is to our plan is to <unk>.
Increase our runway well into 2024.
Alright, thank you.
As a reminder, if you'd like to ask a question. Please press star followed by the number one on your telephone keypad.
And our next question comes from Ron Epstein from Bank of America. Please go ahead. Your line is open.
Good evening good afternoon guys.
Because I guess a couple of questions.
What assets are being sold.
Just kind of curious about that.
So what's that what's being sold.
I think no assets are being sold all we did was just a revaluation.
No.
Many companies, particularly with <unk>.
Capital markets being what they are and what's happening to the stock market companies are reevaluating their assets and so.
The all the onetime charges related to that for the most part right $133 million was just related to that one specific revaluation.
Got it got it got it and then.
Are there other risks to losing other key people and typically when rich.
Rips happened I mean, it's not so great for morale.
And it looks like what Mike Cassidy left he was the Apollo CEO .
How should we think about that.
Well I think speaking of Apollo I mean that was a company we acquired in the development stage they hadn't.
Tested the product yet over the past year and a half we've seen that.
<unk> product become space qualified and that team has been transitioned to a team thats focused on quality engineering and production and scale and so it's a process that youll see with a development stage company being brought into the company, where we have customers like Max our Airbus somewhat satellites that demand the level of.
Focus on quality and scale that.
Youre not going to see it a small early stage company. So as a result, it looks like Mike who are greatest starting company I think this is a startup.
<unk> often start another company and that was always anticipated by Astra <unk>.
To your broader question I think that we've grown really fast I mean keep in mind that as.
As we announced our intent to go public we had about 150 people.
We now had over 400 people.
We tripled the size of the company.
And the time of the year.
What we're doing areas, we're focusing and we're through that focus I think we're going to give the team here are.
A new level of.
Of energy and intensity around flying rocket four and having that flight work and on delivering aircraft engines for our customers and I think frankly, it's going to it's going to energize the team to have that focus and.
We're pretty excited about it frankly.
And if I can add to it too.
We have an incredible leadership team that goes well beyond the people you see in our website and all of these incredible individuals were very much part of this kind of development of our strategic plan.
Since my Rob will be working with the incredible people and I think when you find that Australia is we have some of the brightest minds working in a really unique opportunity and so theyre all very much.
Part of this process and so this is not something that was done at the C suite was done something across the organization.
So it really reflects the commitment that we have towards each other and so this is this is why we feel like everyone bought into what we're trying to do finally I want to add one thing.
We talk to employees and we talked to customers frankly, one of the most important things is that we have the time to deliver on the contracts that we have we have time to come back and fly rocket four successfully and so when we set out to do this we looked at what gives us well into 2024 from a runway perspective and the required.
Tough choices to be made and I think the team understands that and the team that we have here which is.
With 300 people strong.
Credibly talented team and frankly appreciates the fact that they have the runway to deliver for our customers.
It is to actually increase our.
Level of confidence and leadership.
And then maybe a little more detailed accounting question, what's the contingent consideration and the liabilities.
Yes, that's related to the Pall acquisition.
Yes.
The earn out.
It to shareholders related to the number of units.
We are able to ship over the next year.
Got it got it got it got it okay. Thank you.
Thanks, Rob.
We have no further questions in queue. This will conclude today's conference call. Thank you everyone for their participation you may now disconnect.
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Good afternoon, and welcome to Astra's, <unk> third quarter 2022 financial results Conference call.
All participants are in a listen only mode. After the speaker's presentation, we will conduct a question and answer session.
Like to ask a question you will need to press star one on your telephone keypad.
To withdraw your question. Please press star one again.
This conference call is being recorded.
I would now like to turn the call over to Andrew <unk>, Vice President strategic Finance and capital markets. Please go ahead.
Thank you operator, good afternoon, everyone and thank you for joining us for Astra's <unk> third quarter 2022 quarterly results call.
After the market closed we released our financial results. The results release is available on the SEC's website, and our Investor Relations website at Investor Dot Astro Dot com.
A supplemental presentation related to our third quarter of 2022 results can also be found on the Investor Relations section of our website.
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 reference 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 as 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.
A description of these items along with the reconciliation of our non-GAAP financial measures to the most comparable GAAP financial measures can be found in our results release todays call will also contain forward looking statements. 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 Astra are as such a forward looking statement. 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.
Really from those discussed in this call.
We encourage you to review our filings with the SEC and which we described the factors that could cause actual results to differ materially from our current expectations, including those updated risk factors included in our quarterly report on Form 10-Q, finally, I would like to remind everybody that this call will be recorded and will also be made available for replay via a link available on the investor.
Relations section of our website.
With that I would now like to turn the call over to Chris cap Astra's, founder Chairman and Chief Executive Officer, Chris. Thanks, Andrew Good afternoon, everyone and thank you for joining us today.
I am excited to also have our incoming chief financial Officer, Axel Martinez and our Chief business Officer Martin of <unk> on the call with us today.
During this call we will review our operational and financial performance during the third quarter review guidance for Q4 and provide an update on our launch services space craft engine businesses.
Now during the third quarter, we made some difficult, but necessary decisions, which will allow us to focus on our near term priorities with the appropriate level of resources, while also extending our financial runway.
Our operating plan is now fully focused on selling and delivering Astro space craft engines.
And the successful first flight of our new rocket.
We will discuss the progress we've made toward achieving each of these goals during this call.
In the past quarter, we've announced 237 cumulative committed orders of the Astral space craft engine as of today.
An increase of over 130% last quarter, including orders from Airbus <unk> satellites Macs are in astra's scale among others.
We believe our ongoing conversations with customers and increased order book validating our view that the Astro space craft engine is one of the leading in space propulsion systems currently available in the market.
We achieved a positive GAAP gross margin for the first time in the Companys history.
We continue to make progress towards the development of launch system to which I'll speak about more in a moment.
And we continue to build out of a new 60000 square foot facility in Sunnyvale, California dedicated to the production of Astro spacecraft engines.
We plan on moving into this facility this quarter and completing the build out in Q1 'twenty three.
We strengthened our core leadership team, including hiring axle Martinez as our new Chief Financial Officer, Matthew <unk> as our new General Counsel.
We ended the quarter with approximately $151 million in cash cash equivalents in marketable securities.
This quarter with the backdrop of continued macroeconomic and geopolitical uncertainty increasing inflation and interest rates and equity market volatility. The team has prioritized resources on our core businesses.
Specifically, we are focusing investment in delivering reliable space craft engines to our customers, which is rapidly becoming an important revenue stream for Astra, while focusing launch system development on reliability and a successful first flight of rocket four.
We've also decided to reduce our near term investments in space services to direct resources to support the growth of our core launch services and space product business. We continue to explore opportunities to develop our partner in the development of our space services offerings as it remains a significant part of our long term business strategy.
Now I'd like to provide an update on the progress we've made on the development of launch system too.
As a reminder, last quarter, we announced that we've increased the design point of rocket four to deliver up to 600 kilograms to meet inclination low earth orbit over the course of the product lifecycle launched.
<unk> launched system two represents an important development for Australia to support satellite operators globally, and deploying space based technology and scale.
We focused our resources on designing and delivering our new launch system with improved reliability and operational excellence increased payload capacity and an increased launch cadence.
We continue to expect to test flights for rocket four to begin in the latter part of 2023.
Since our last earnings call. We have completed the first design loop and squash system to cleaning rocket for the ground system and software we provided an update on this progress, which you can view at Astro Dot Com Slash launch up day, one we.
We provisioned critical test infrastructure, including upgrades to the first stage engine test and in commission, new launch system valve test dams and other test infrastructure at our Alameda factory.
Designed and released tooling required to manufacture the rocket four stage for <unk>.
We expect to continue releasing important details and development milestones in the coming weeks and months, including the release of our first payload user guide for rocket four which will allow customers to better understand the capabilities of our rocket and features of our launch service.
Okay.
I'll now provide some additional detail on our space products business.
As we discussed last quarter Astral leverages, its mass manufacturing capabilities to develop and produce products required for the next generation satellites and space services.
While alarm services will bring customer payloads to space. The Astro space craft engine, I think Keith based products that deliver satellites into their final orbits helps them maintain their orbit avoid collisions and ultimately de orbit them at the end of their life to reduce space debris.
I wanted to discuss the progress we've made with Astro spacecraft engine.
Since the last earnings call, we've announced an additional 134 committed orders for the Astro spacecraft engine since June 30 of 2022.
It adds up to 237 cumulative committed orders since July one 2021 inclusive of the 14 committed orders acquired at <unk> as part of the Apollo fusion acquisition.
We've completed delivery of our second full customer order.
And the majority of the space craft engines being delivered are for critical national security programs signifying their importance in our space Tech ecosystem.
We continue to see strong customer demand based on our committed orders and ongoing conversations with customers.
And as a reminder, orders are delivered to customers over a mutually agreed timeline, which is typically nine to 12 months from contract signing.
Now I'll turn it over to Axel to review, our financials and guidance Axel.
Thank you, Chris and good afternoon, everyone first I am pleased to join you on my first earnings call as incoming Chief financial Officer of Astra.
I am excited to bring what I've learned from scaling hyper growth technology companies, including Google and Uber to Australia, as we work to build a sustainable and scalable business.
Let me now review our Q3 results.
As a reminder, all non revenue financial figures, we will discuss today are adjusted unless we stay domestic GAAP measure.
You will find the reconciliation from GAAP to non-GAAP results in today's press release.
Revenues in Q3 were $2 8 million draw.
Driven by the delivery of space growth engines as we now have completed the second astra's base growth engine program.
Cost of revenues related to Astro space Griffith engines was $1 1 million.
This resulted in a GAAP quarterly gross profit since.
Astra's founding.
Totaling $1 7 million.
GAAP operating expenses totaled 201, 4 million compared to $67 8 million last quarter.
The difference was primarily attributed to onetime items that I will discuss shortly.
GAAP operating expenses included R&D expenses of $32 8 million, reflecting our continued investments in our core products sales.
Sales and marketing expenses of $4 1 million, reflecting investments in ongoing sales efforts for loan services.
Our space growth engine.
And G&A expenses of $19 2 million, reflecting ongoing investments in key systems and technologies among others.
Now, let's talk about all of the one time items during Q3 2022.
During the third quarter the company reorganized from one to two reporting segments and as a result.
Assets and liabilities to each of our reporting segments based on each segment's operating activities.
The reorganization together with a sustained decrease in the company's share price <unk>.
Existence of substantial doubt about the company's ability to continue as a going concern.
And macroeconomic factors resulted in the company's determination that triggers we're present, therefore, indicating that the carrying amount of certain company houses may not be recoverable.
A result, we recorded a noncash impairment charge on long lived assets of $73 million related to property plant and equipment.
A $58 3 million impairment of goodwill.
At $2 1 million impairment of our trademark assets.
In a $2 7 million charge related to definite lived intangible assets.
All of these one time items totaled $133 4 million.
Additionally.
Loss on change in fair value of contingent consideration was $11 9 million as a result, both higher revenues forecasted in estimating the fair value of contingent consideration.
A $1 million inventory adjustment related to rocket three was also included in R&D expenses.
<unk> also benefited in the third quarter from a onetime $4 $3 million employee retention tax credit.
We expect to receive the cash payments from this credit in the first half of 2024.
As a result total onetime items for the quarter were $142 million.
Given these onetime noncash items on a GAAP basis, our third quarter net loss was $199 1 million.
On a non-GAAP basis third quarter, adjusted net loss was $45 2 million.
Q3, adjusted EBITDA was a loss of $41 4 million a.
The $7 million improvement compared to last quarter.
Third quarter additions to capital expenditures were $5 5 million and primarily related to the continued investment in the development of our loan services business and delivery of our space growth engines, we ended the quarter with cash.
Cash equivalents and marketable securities.
$150 5 million and no debt outstanding. In addition, we also continue to evaluate various sources of capital as we carefully manage our financial runway.
On October six Astral.
<unk> received a deficiency notice from NASDAQ.
As our per share closing bid price remained under $1 for 30 consecutive trading days.
While we cannot directly control short term market volatility.
We are taking measures to increase topline growth decrease expenses and that capital to strengthen our balance sheet, which.
Which we believe will ultimately be reflected in our share price.
Next I'll provide an outlook for our fourth quarter ending December 31.
2022.
As Chris mentioned, we focus on our operating plan on the delivery of space growth engines, and a successful first flight of rocket four.
Allowing us to optimize our operating plan.
And increase our financial runway amidst market volatility.
As a result as of today we.
We have reduced our existing head count by approximately 16%.
Payroll savings from this head count reduction are expected to be realized beginning in Q1 of 2023.
As a reminder.
Our fourth quarter guidance and all guidance is subject to various important cautionary factors referenced in this section below entitled forward looking statements.
In our Form 10-K, including risks and uncertainties associated with the ongoing COVID-19 pandemic.
And the decision to discontinue their product of launch vehicles supported by loan system one.
There is also risk associated with elevated levels of inflation in our supply chain as it relates to geopolitical tensions.
The dynamic share across many companies and industries. However, we.
We believe our investment in our factory.
And vertically integrated manufacturing processes are one of the factors that helped mitigate these risks.
Now.
We will provide future guidance in the fourth quarter. We currently expect adjusted EBITDA loss to be between $40 million to $45 million.
Basic shares outstanding to be between 268, and 270 million shares.
And capital additions to be between five and $7 million.
As we shift our near term priorities to focus on our space products and loan services businesses.
Our guidance will focus on the metrics that we use to manage our business. Thus, we will not be providing guidance on depreciation and amortization stock based compensation and cash taxes at this time.
On the asset base growth engine, you should continue to expect quarterly variability in shipments until we began ramping up production to support committed customer deliveries beginning in Q1 2023.
As of today, we have cumulative committed orders for 237 asterisks base growth engines.
<unk> 14 units, we acquired with the Apollo fusion acquisition on July one 2021.
The vast majority of our space growth engines have been ordered in 2022, and we continue to see strong customer demand for our space growth engines.
As a reminder, space growth engines are typically delivered nine to 12 months from contract signing in.
And natural recognize revenue only upon delivery of the space growth engines to our customers.
We continue to expect the remainder of 2022 and 2023 to be transformative periods for Hasbro as we further develop our new loan system and scaled production for a spacecraft engines.
I will now turn the call back over to Chris. Thanks, Axel and we're glad to have you on the team before we conclude the call I'd like to personally. Thank all of the Astra employees, who have been impacted by the head count reduction today.
Made the very difficult decision to part ways with some very talented individuals.
I'll always appreciate the contributions and the impact that you've had a mean and Astra is all.
Finally, I would like to thank Carolyn for our leadership in helping Astro and become a public company and our finance organization is hard work as we've made it through this transition.
Astra is now well positioned to focus and execute on shipping and developing our core product offerings I'm excited to continue to share updates in the coming weeks and months as we deliver on our mission to improve life on Earth from space.
Operator.
Let's open the call for questions.
Thank you as a reminder to ask a question. Please press star followed by the number one on your telephone to withdraw your question. Please press star one again, well pause for just a moment to compile the Q&A roster.
And our first question comes from Edison Chu from Deutsche Bank. Please go ahead. Your line is open.
Hey, everybody. Thanks for taking my questions three if I may two more strategic one financial.
On the strategic side could you remind us about the agreement with one web.
And provide maybe some color on the potential to get supplied our win on Gen. Two gen two constellation.
Sure.
The agreement is with Airbus <unk> satellites and Martin in the room, so I'm going to let him provide more color on that.
Yeah, Hey, Edison.
The agreement that we announced with Airbus that satellite is for Arrow.
Bus platform.
As folks know and the market.
Airbus satellite provided the one web Gen one.
Satellite buses.
And.
We have not yet made a determination.
On who's going to supply the or had not been out who is going to supply the <unk> too.
Buses and so we don't have anything further to add on top of that.
Do you have any idea when that decision will be made.
No.
Okay.
The second strategic I think in the past you had mentioned you did you submitted something about the spectrum.
And spectrum and it sounds like Youre sort of deemphasizing that now is there any sort of kind of value.
That you had there with anything I don't recall the details of.
The original plan, but just wondering if theres any sort of like residual value that you can sort of salvage what the with the spectrum that you had I think wanted before.
Spectrum allocation is a long process and I think.
One of the things that we tried to make clear here is that services is the north star for the company and some of the space technology in the space launch services are enabling of that long term vision, but given the contracts that we have on hand for the space.
Space craft engine or love services.
Given the current economic climate cost of capital availability of capital.
Pretty clear our focus should be on delivering for customers that is purchased based craft engines and launches and so we're really just prioritizing the investment of our both capital and human resources in the short term goals for the company right now.
For the next year or so now that could change should we secure additional financing markets change we secure funding funding these programs or projects, but given right now what we want to do for our shareholders and for our customers is focus focus focus and what youre seeing is youre seeing an emphasis on whats in front of us.
Understood understood and I appreciate it.
And then last one from me just a quick financial one I know, it's a tough tough restructuring, 60% any way to quantify the benefit next year in terms of how much you're saving on opex.
Any color there would be I appreciate it thanks.
Yes.
So thank you for the question, we're not providing guidance at this point or 2023, our plan as Chris mentioned is to focus our operations and our top two priorities, which is basically the engines and the development of the new launch system.
At the same time, we want to continue.
Optimizing our cost structure and our goal is to our plan is to <unk>.
Increase our runway well into 2024.
Great. Thank you.
As a reminder, if you'd like to ask a question. Please press star followed by the number one on your telephone keypad.
And our next question comes from Ron Epstein from Bank of America. Please go ahead. Your line is open.
Hey, good evening good afternoon guys.
I guess a couple questions.
What assets are being sold.
Just kind of curious about that.
So let's split what's being sold.
I think no answers are being so all we did was just a revaluation.
No.
Many companies, particularly with <unk>.
Capital markets being what they are and what's happening to the stock market companies are reevaluating their assets and so.
The all the onetime charges related to that for the most part $133 million was just related to that one specific revaluation.
Got it got it got it and then.
Are there other risks, losing other key people and typically win.
Rips happened I mean is not so great for morale and it looks like what might Cassidy left.
Paulo CEO .
How should we think about that.
Well I mean I think.
King of Apollo I mean that was a company we acquired in the development stage they hadn't.
Tested the product yet over the past year and a half we've seen that product becomes space qualified and that team has been transitioned to a team that's focused on quality engineering and production and scale and so it's a process that you will see that the development stage company being brought into the company, where we have cut.
<unk> like Max our Airbus Phillips satellites that will demand a level of.
Focus on quality and scale that.
Youre not going to see at a small early stage company. So as a result, it looks like Mike who are greatest starting company I think this is a startup.
I think often start another company and.
That was always anticipated by Astra.
To your broader question I think that we've grown really fast I mean keep in mind that.
As we announced our intent to go public we had about 150 people.
We now had over 400 people.
We tripled the size of the company.
And the time of the year.
I think what we're doing areas, we're focusing and we're through that focus I think we're going to give the team here.
A new level of.
Of energy and intensity around flying rocket four and having that flight work and on delivering aircraft engines for our customers and I think frankly, it's going to it's going to energize the team to have that focus and.
We're pretty excited about it frankly.
And if I can add to it too.
We have an incredible leadership team that goes well beyond the people you've seen in our website and all of these incredible individuals were very much part of this kind of development of our strategic plan.
Since my Rob will be working with the incredible people.
And I think when you apply that Australia is we have some of the brightest minds working in a really unique opportunity and so theyre all very much.
Part of this process and so this is not something that was done at the C suite does something across the organization.
So it really reflects the commitment that we have towards each other and so this is this is why we feel like everyone bought into what we're trying to do.
I want to add one thing when we talk to employees and talked to customers frankly, one of the most important things is that we have the time to deliver on the contracts that we have we have time to come back and fly rocket four successfully and so when we set out to do this we looked at what gives us well into 2024.
On a run rate perspective, and it required some tough choices to be made and I think the team understands that and the team that we have here which is.
With 300 people strong incredibly.
Incredibly talented team and frankly appreciates the fact that they have the runway to.
To deliver for our customers. So I think it is to actually increase our.
Level of confidence in leadership and the commitment to mission.
And then maybe one little more detailed accounting question, what's the contingent consideration and the liabilities.
Yes, that's related to the Apollo acquisition.
Yes.
The earn out.
Native to shareholders.
Two the number of units.
We are able to ship over the next year.
Got it got it got it got it okay. Thank you.
Thanks, Rob.
We have no further questions in queue. This will conclude today's conference call. Thank you everyone for their participation you may now disconnect.