- Satellite Evolution
Satellogic reports full year 2022 financial results and provides business update
Satellogic Inc., a leader in sub-meter resolution Earth Observation data collection, today provided full year 2022 financial results and a business update.
“2022 was a transformational year for Satellogic, beginning with successfully going public and continuing through a series of milestone achievements that has led us to our position today, with 34 satellites in orbit,” said Satellogic CEO, Emiliano Kargieman. “With the largest commercial fleet of sub-meter resolution satellites in the world, we are well positioned to capitalize on the growing demand for Earth Observation data and satellites.
“During 2022, our revenue grew 42% year-over-year as both our Asset Monitoring and our Constellation-as-a-Service businesses gained momentum. Our three-year agreement with the Republic of Albania to access a dedicated satellite constellation deployed its first two satellites dedicated to task and monitor its sovereign territory for a range of applications including border security, agriculture management, and environmental monitoring.
“Our new Space Systems (satellite sales) business creates a satellite purchase program that aims to lower the financial barrier to Earth Observation spacecraft ownership. Purchase options begin at less than $10 million for a 70cm resolution satellite, offering flexibility as well as time-to-operation in as fast as 3 months. Space Systems is designed to offer governments asset ownership to enhance national geospatial intelligence (GEOINT) with global tasking autonomy.
“We have proven that it's possible to provide high-quality satellite imagery through a constellation of small, low-orbit satellites at what we believe to be the lowest price while retaining strong margins. We expect to build and launch 14 additional satellites, which will give us the capability of remapping the Earth every two weeks by the end of 2023.”
Rick Dunn, Satellogic CFO, commented, “We ended 2022 with $76.5 million of cash on hand. Our revenue grew 42% to $6.0 million for the full year of 2022 and we reduced our net loss from $96.3 million in 2021 to $36.6 million in 2022. As we move through 2023, we have seen increased momentum in terms of revenue, backlog and pipeline. We expect 2023 to be considerably stronger, particularly in the second half. As previously guided, we are targeting revenue for the full year 2023 to be between $30 to $50 million.
“Going forward, revenue will be driven by our continued growth in Asset Monitoring, Constellation-as-a-Service, and sales of Space Systems. We anticipate that Space Systems will contribute considerable per unit cash flow and strong gross margin,” concluded Dunn.
Financial Results for the Year Ended December 31, 2022
Revenue during the year ended December 31, 2022 increased 42% to $6.0 million, as compared to revenue of $4.3 million for the year ended December 31, 2021. The increase was driven primarily by Asset Monitoring, with Constellation-as-a-Service gaining momentum following a multi-million-dollar agreement awarded from the Republic of Albania.
Gross margin during the year ended December 31, 2022 increased 15% to $2.7 million, as compared to a gross margin of $2.4 million for the year ended December 31, 2021. Gross margin was 45% during the year ended December 31, 2022, as compared to 56% for the year ended December 31, 2021, due to higher ground station and cloud services costs associated with our larger constellation.
General and administrative expenses were $37.2 million during the year ended December 31, 2022, as compared to $36.6 million for the year ended December 31, 2021. The slight increase was due to increased costs associated with being a public company, primarily insurance, partially offset by lower professional fees related to elevated going public costs in 2021, and lower stock-based compensation.
Research & Development expenses increased to $13.1 million for the year ended December 31, 2022 as compared to $9.6 million for the year ended December 31, 2021. The increase was driven primarily by a higher average headcount in 2022 as compared to 2021, which contributed to an increase in stock-based compensation, salaries and wages, and other R&D expenses, such as software costs and laboratory supplies.
Net loss for the year ended December 31, 2022 decreased to $36.6 million, as compared to a net loss of $96.3 million for the year ended December 31, 2021. The decrease was primarily driven by a change in fair value of financial instruments related to net gains of $58.3 million for the year ended December 31, 2022, compared to net gains of $18.0 million for the year ended December 31, 2021. The change was primarily driven by the remeasurement to fair value of our warrant and earnout liabilities issued in conjunction with the Merger.
Adjusted EBITDA loss for the year ended December 31, 2022 increased to $56.0 million from an Adjusted EBITDA loss of $31.8 million for the year ended December 31, 2021 due to increased costs associated with being a public company and higher average headcount in anticipation of business growth.
Cash was $76.5 million at December 31, 2022, as compared to $8.5 million at December 31, 2021. The increase in cash is due to the Merger, which resulted in the addition of approximately $168 million in cash.
Net cash used in operating activities increased to $68.5 million for the year ended December 31, 2022, as compared to $28.4 million the year ended December 31, 2021, primarily due to costs and expenses related to development of our products, payroll, fluctuations in accounts payable and other current assets and liabilities.
Key Second Half and Subsequent Highlights
Established new Space Systems business line to sell satellites directly to select customers, with unmatched build-to-launch cycles as fast as three months.
Announced partnership and integration with SkyFi, a leading provider of EO data. This partnership will allow SkyFi’s customers to submit tasking orders to Satellogic satellites directly through the platform either at https://app.skyfi.com or on the SkyFi app for both businesses and individuals.
Executed a three-year agreement with the Government of Albania to develop a dedicated satellite constellation with a Constellation-as-a-Service model to accelerate Albania’s participation in the New Space Economy and provide unprecedented, country-wide situational awareness.
Deployed the “Albania-1” and “Albania-2” satellites that will support the Republic of Albania pursuant to a recent 3-year Constellation-as-a-Service agreement entered into with Satellogic. The dedicated satellites will enable Albania to task and monitor its sovereign territory for a range of applications including agriculture management, border security, and environmental monitoring.
Signed a letter of intent with Agencia Espacial Mexicana to develop a fully-featured and operational Constellation-as-a-Service program to monitor approximately 2 million square kilometers of the nation.
Completed a ~5% investment in Officina Stellare, a leader in the design and production of optomechanical instrumentation, driving strategic focus on vertical integration.
For additional information regarding our long-term outlook and risks and assumptions related thereto, see Item 5.B (Liquidity and Capital Resources) of Satellogic’s recent Form 20-F filing.
Use of Non-GAAP Financial Measures
To supplement our Consolidated Financial Statements, which are prepared and presented in accordance with US GAAP, we use the following Non-GAAP measures: EBITDA; Adjusted EBITDA; and Free Cash Flow. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with US GAAP.
We define Non-GAAP EBITDA as net income (loss) excluding interest, income taxes, depreciation and amortization. We did not incur amortization expense during the years ended December 31, 2022, 2021 and 2020.
We define Non-GAAP Adjusted EBITDA as Non-GAAP EBITDA further adjusted for merger-related transaction costs and other income (expense). Other income (expense) consists of foreign currency gains and losses, changes in the fair value of financial instruments and stock-based compensation.
We use these Non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We believe these measures provide analysts, investors and management with helpful information regarding the underlying operating performance of our business, as they provide meaningful supplemental information regarding our performance and liquidity by removing the impact of items that we believe are not reflective of our underlying operating performance. The Non-GAAP measures are used by us to evaluate our core operating performance and liquidity on a comparable basis and to make strategic decisions. The Non-GAAP measures also facilitate company-to-company operating performance comparisons by backing out potential differences caused by variations such as capital structures, taxation, depreciation, capital expenditures and other non-cash items (i.e., embedded derivatives, debt extinguishment and stock-based compensation) which may vary for different companies for reasons unrelated to operating performance. However, different companies may define these terms differently and accordingly comparisons might not be accurate. There are a number of limitations related to the use of Non-GAAP financial measures. We compensate for these limitations by providing specific information regarding the US GAAP amounts excluded from these Non-GAAP financial measures, and evaluating these Non-GAAP financial measures together with their relevant financial measures in accordance with US GAAP. Non-GAAP measures such as EBITDA, Adjusted EBITDA and Free Cash Flow are not intended to be a substitute for any US GAAP financial measure.
We have included reconciliations from the most directly comparable GAAP metric to Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA for the years ended December 31, 2022, 2021 and 2020 below.
The following table presents a reconciliation of Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA to our net loss for the periods indicated.