Satellogic Q1 2026 Earnings Call - First-Quarter Positive Operating Cash Flow Signals Commercial Inflection

Stacy (Operator), Conference Call Operator, Satellogic: Morning, welcome to the Satellogic First Quarter 2026 financial results conference call. All lines have been placed on listen-only mode, and the floor will be open for your questions following the presentation. During today’s call, we may make statements relating to our goals and objectives for future operations, financial and business trends, business prospects, future financial metrics, statements regarding customer contracts and pipelines, our ability to generate revenue, and management’s expectations for future performance that constitute forward-looking statements under federal securities laws. Any such forward-looking statements reflect management expectations based upon currently available information and are not guarantees of future performance and involve certain risks and uncertainties that are more fully described in our SEC filings, including the Risk Factors section of Satellogic’s quarterly report on Form 10-Q, annual report on Form 10-K for the fiscal year ended December thirty-first, 2025, and our filings with the SEC.

Our actual results, performance or achievements may differ materially from those expressed in or implied by such forward-looking statements. We undertake no obligations to update or revise any forward-looking statements to reflect events or developments after the date of this call. On this call, we will also discuss financial measures not determined in accordance with the US GAAP, including EBITDA, adjusted EBITDA, and free cash flow. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are presented in the earnings materials posted on our website today. Our press release detailing these results was issued this morning and is available in the Investor Relations section of our company’s website at satellogic.com. Hosting today’s call will be Satellogic’s Founder and Chief Executive Officer, Emiliano Kargieman, Chief Financial Officer Rick Dunn, and Vice Admiral Frank Whitworth, U.S. Navy retired. With that, I will turn the call over to Mr. Kargieman.

Emiliano Kargieman, Founder and Chief Executive Officer, Satellogic: Thank you, operator, good morning, everyone. Welcome to Satellogic’s first quarter 2026 earnings conference call. Joining me on today’s call are Rick Dunn, our Chief Financial Officer, and a special guest, Vice Admiral Frank V. Whitworth III, U.S. Navy retired, who recently joined Satellogic as a strategic advisor. We’re pleased to have him with us today. I’ll begin with a brief company overview and the key themes of the quarter before introducing Vice Admiral Whitworth, who will share his remarks on his role and our defense and intelligence engagement. Rick will walk you through our Q1 2026 financial results in detail before I cover our commercial update and recent wins. I will walk through our 2026 product roadmap, including our Aleph Observer platform and Merlin constellation, and close with key takeaways before we open the line for questions. With that, let’s begin.

The first quarter of 2026 marked a clear inflection point for Satellogic. We grew revenue 80%, improved our adjusted EBITDA loss by 32%, generated positive net cash from operating activities for the first time in our history, and exited the quarter with $121.9 million in cash. Just as importantly, the commercial momentum we built exiting 2025 is growing across sovereign defense, recurring intelligence subscriptions, and U.S. government engagement. Based on our current cost base, backlog, growing recurring revenue and current pipeline, we believe 2026 can be a year of substantial progress towards sustained profitability, and we expect Merlin to be an important driver of free cash flow as it enters service. This was one of the strongest starts to a year in our company’s history, and our most ambitious product roadmap to date is now executing on schedule.

There are 5 things I want investors to take away from the quarter. First, on our unique sovereign and defense solutions, our non-ITAR design, vertical integration, and free trade zone manufacturing in Montevideo allow us to deliver disruptively priced sovereign capabilities to allied governments around the world with rapid technology transfer and in-country assembly, integration, and test. In the quarter, we deepened our U.S. defense engagement through the expansion of our partnership with IDT Corporation and the U.S. Office of Naval Research for phases 2 and 3 of the Slingshot program, advancing in-orbit demonstration of our rapid tasking and high-resolution capabilities in support of U.S. Navy mission requirements. Just last week, we announced a $12 million agreement with a sovereign defense customer to deliver the commission in-orbit NewSat from our Aleph-1 constellation, the second sovereign in-orbit transaction in 2 quarters, and I’ll come back to why that matters.

Second, we have significant customer traction. We continue to diversify our customer base internationally, with Asia Pacific revenue growing more than eightfold year-over-year to $3 million in Q1 2026. The growth was led by significant contributions from customers in Australia and Malaysia and reflects the global demand we’re seeing for sovereign and high-frequency monitoring capabilities. Third, we have unmatched capacity and scale. As of March 30th, we continue to operate one of the largest high-resolution constellations in the world. Our capacity advantage is significant. Based not only on the number of satellites, but also on our patent-protected camera design that enables us to capture approximately 10 times more imagery per satellite than our peers at an all-in cost per satellite of approximately $1.3 million, a fraction of the industry standard.

That cost and capacity advantage is what allows us to realize the unit economics to deliver persistent daily monitoring at scale. The capacity of our constellation has enabled us to sell in-orbit satellites to Space Systems customers without impacting our ability to meet existing demand and expected future growth in our data and analytics business. Fourth, revenue growth with operating leverage in action. Revenue grew 80% year-over-year to $6.1 million, while our adjusted EBITDA loss improved 32% to $4.2 million. For the first time in our history, we generated positive net cash from operating activities in a quarter. The recurring revenue shift we’re beginning to see is being driven in part by Aleph Observer, our persistent monitoring product launched in February. That is the operating leverage of our vertically integrated model becoming visible.

Combined with $121.9 million of cash on hand, it materially strengthens our path to sustain profitability. Fifth, a strengthened leadership team. Our board and management team bring deep public company finance, defense, and policy experience. Over the last two quarters, we have built up our sales leadership with the incorporation of Jeff Kerridge and a seasoned team of sales executives. Today, I’m pleased to introduce a new addition who we believe will be meaningful to accelerate our trajectory in defense and intelligence. In late March, we welcomed Vice Admiral Frank D. Whitworth III, U.S. Navy Retired, as a strategic advisor. Vice Admiral Whitworth most recently served as the eighth director of the National Geospatial-Intelligence Agency, the NGA, where he led the delivery of geospatial intelligence supporting U.S. national security operations worldwide.

His decades of experience operationalizing geospatial intelligence at the highest levels of the U.S. defense and intelligence communities position him uniquely to advise our team as we deepen our engagement with that customer base. It’s an honor to have him with us today. Vice Admiral, the floor is yours.

Vice Admiral Frank V. Whitworth III, Strategic Advisor, U.S. Navy Retired (Former NGA Director), Satellogic: Thank you, Emiliano. Good morning, everyone. It’s a privilege to be with you today. Let me start with a few words on why I joined Satellogic. Most recently, I had the honor of serving as the 8th director of the National Geospatial-Intelligence Agency, or NGA for short, from June 2022 until my retirement just last December. In that role, I was responsible for the delivery of geospatial intelligence support of U.S. national security operations worldwide. 1 of the priorities during my tenure was the maturation of NGA Maven, the Department of Defense’s primary initiative for operationalizing artificial intelligence and machine learning. We transitioned that program from an experimental framework into an operational capability that meaningfully increased the speed and scale of intelligence analysis integrated with mission command across the department. That experience reflected my view of where geospatial intelligence needs to go.

What attracts me to Satellogic is that this company is purpose-built to address the same imperative. The combination of scale, frequency, and resolution that the Satellogic constellation is designed to deliver, coupled with low latency analytics and near real-time tipping and queuing and alerts, this is precisely what we need to enable the shift from periodic observation to continuous awareness. In my role as strategic advisor, and always adherent to my ethics restrictions against communicating with NGA and the Navy, I have been and will continue to be working with the team across three areas: strategic engagement with global defense and intelligence customers, the development of the company’s product and technology roadmap, including the Merlin constellation Emiliano will discuss shortly, and the integration of high-frequency Earth observation into modern intelligence architectures. I am impressed by what this team has built.

The U.S. defense and intelligence communities are actively rethinking how they source persistent geospatial intelligence, and Satellogic’s combination of sovereign-grade capability with commercial economics is uniquely matched to that demand. I look forward to helping the team serve that mission and to translate that demand into long-term programs of record. With that, I’ll turn it over to Rick to walk you through the financial results. Rick.

Rick Dunn, Chief Financial Officer, Satellogic: Thank you, Admiral, good morning, everyone. Our first quarter results reflect the commercial momentum and financial discipline we built exiting 2025. They mark several important inflection points in our business. The headlines are: revenue up 80%, adjusted EBITDA loss improved 32%, the first quarter of positive net cash from operating activities in our history, and $121.9 million of cash on the balance sheet, our strongest position to date. Let me walk you through each. Revenue. Total revenue for the quarter was $6.1 million, up 80% year-over-year from $3.4 million in Q1 2025. The increase was driven primarily by a $1.6 million increase in imagery ordered by new and existing data and analytics customers.

By business line, our data and analytics line of business, which includes our constellation as a service offering, generated $4.6 million of revenue, up $3 million in the prior year, compared to the prior year period. Space Systems contributed $1.5 million of revenue. Geographically, the quarter reflected a meaningful diversification of our customer mix. Asia-Pacific generated $3 million in revenue, up more than 8-fold from $0.4 million in the prior period, with Australia and Malaysia as the primary contributors. Europe contributed $1.1 million, up from half a million. Americas contributed $2 million, primarily reflecting timing rather than any change in customer demand. Our U.S. pipeline continues to be very strong, and we look forward to executing on that pipeline in the remainder of the year. South America contributed $0.1 million.

Taken together, this geographic diversification is an important indicator of the increasingly global demand for our services and of the durability of our international customer base. Total costs and expenses for the quarter declined 3% year-over-year to $12.5 million. Within that, cost of revenues, which is exclusive of depreciation, was $1.5 million, up 17% on higher ground station costs that scale with our growing operations. Engineering expense was $3.1 million, up 24%, reflecting investment in software, professional services, and stock-based comp tied to the broader employee population.

SG&A expense was approximately flat at $6.5 million, with an increase in salaries and benefits associated with workforce expansion in anticipation of 2026 growth, offset by a $0.8 million decrease in legal and professional fees that were elevated in Q1 of last year due to our U.S. domestication. Depreciation expense decreased 48% to $1.4 million, reflecting a reduction in the number of satellites with remaining depreciable useful lives, although we continue to utilize these fully depreciated assets so long as they’re capable of capturing commercially viable imagery. The result is an operating loss of $6.4 million for the quarter, an improvement of $3.2 million, or 33% compared to the prior period. Below the operating line, we recorded a $113 million change in fair value of financial instruments.

I wanna be unambiguous about what this is. It is a non-cash, non-op-non-operational charge, and it reflects the increase in our Class A common stock during the quarter, driven by the standard remeasurement of our secured convertible notes, warrants, and earn-out liabilities. A higher share price drives a larger accounting charge against earnings and net income. It has no bearing on the cash generation of the business. Net loss for the quarter, including this $113 million non-cash expense, was $118.3 million. This is not indicative of underlying operating performance, and we report adjusted EBITDA to give investors a clearer view of the operating business. Adjusted EBITDA and operating cash flow. On a non-GAAP basis, adjusted EBITDA loss for the quarter was $4.2 million, an improvement of $2 million or 32% compared to the prior period.

This is a function of both top-line growth and continued expense discipline, and it underscores the operating leverage inherent in our vertically integrated model as revenue scales. Just as importantly, we generated positive net cash from operating activities of $0.2 million in the quarter, an improvement of $4.9 million from the $4.7 million of cash used in operating activities in Q1 2025. This is the first time in Satellogic’s public history that we have generated positive operating cash flow in a quarter, and it is a tangible early indicator of the financial trajectory I’ll come back to in a moment. Balance sheet. We ended the quarter with $121.9 million in cash and cash equivalents, up from $94.4 million at the end of the year 2025.

The increase reflects the $35 million registered direct offering we completed at $4.73 per share in late January, partially offset by capital expenditures of $5.6 million to support the construction of our Merlin constellation. Backlog and remaining performance obligations. Our non-cancellable remaining performance obligations stood at $64.8 million as of March 31st, with $29.2 million expected to be recognized within 1 year, $7.9 million in years 1-2, $7.5 million in years 2-3, and $20.2 million thereafter. Capital structure update. Subsequent to quarter end in early April, the holder of our secured convertible notes initiated a partial conversion of approximately $6 million of principal into 5 million shares of common stock, reducing outstanding principal to $24 million and further simplifying our capital structure.

Our liquidity position is strong, extends our operating runway, de-risks our Merlin development timeline, and provides the flexibility to invest in the growth initiatives Emiliano will discuss in a moment. Looking forward, we are seeing the operating leverage inherent in our vertically integrated model take hold. With our current cost base, growing recurring revenue from Aleph Observer and a strengthening pipeline of multimillion-dollar opportunities across defense, sovereign, and commercial customers, we expect 2026 to be a meaningful step forward on our path to sustained profitability. With that, I’ll turn it back to Emiliano.

Emiliano Kargieman, Founder and Chief Executive Officer, Satellogic: Thank you, Rick. The first quarter delivered a sustained cadence of commercial, operational, and strategic milestones. The through line is that what looked like isolated wins six months ago is now visibly becoming a repeatable commercial engine. Let me walk you through the highlights in three categories. First, on our sovereign defense demand. Demand is real, and it is repeatable. In January, we signed an $80 million agreement with CEiiA, the Center of Engineering and Product Development in Portugal, for the supply and in-orbit delivery of two NewSat Mark V 50-centimeter class satellites. Ownership and operational control are expected to transfer to CEiiA in the second and third quarters of this year. In January, we sold NewSat-34 to Australia, establishing the country’s first sovereign sub-meter Earth observation capability.

Just last week, on April 30th, we announced a $12 million agreement with a sovereign defense customer for the in-orbit delivery of a commissioned NewSat satellite from our Aleph-1 constellation, with full transfer of ownership and operations expected in early 2027. I want to underscore why this transaction matters beyond its dollar value. It is the second sovereign in-orbit transaction we have closed in 2 quarters, and it demonstrates a differentiated value proposition in the market. The ability to deliver a fully commissioned flight-proven satellite to a sovereign customer with speed and cost efficiency that traditional procurement programs simply cannot match. Importantly, we are approaching this model selectively. Our priority is to monetize in-orbit assets where the economics are compelling while continuing to manage constellation capacity to support our data and analytics customers and grow their mission requirements.

Moreover, we may have the ability to buy back capacity at attractive prices from certain space systems customers. With our $1.3 million all-in NewSat cost and frequent contracted launch cadence, we believe sales of in-orbit satellites can potentially play a larger role in our space system strategy as we scale the constellation over time. Second, our commercial engine is broadening and shifting to recurring subscription revenue. Beyond the 8-fold expansion of our Asia Pacific revenue Rick already highlighted, the underlying mix of our commercial business is changing in a way that meaningfully improves revenue quality. In January, we signed a 7-figure monitoring agreement with strategic customer, providing daily revisit and high-resolution coverage over a large portfolio of priority sites. Exactly the kind of recurring engagement that compounds over time.

We also extended our countrywide monitoring agreement with the government of Albania, continuing the persistent national Earth intelligence we have been delivering with our NewSat constellation. In February, we launched Aleph Observer, our persistent geospatial intelligence platform, which is now in market. I’ll spend more time talking about it in a moment, the commercial impact is already visible. We’re converting one-off imagery customers into multi-year subscription customers. Together, the shift from project revenue to platform revenue is what underpins the durability of our growth trajectory. Third, strategic and platform milestones supporting the next leg of growth. On the operational side, on March 30th, we successfully launched NewSat 53 and NewSat 54 on a SpaceX mission from Vandenberg Space Force Base, expanding our in-orbit capacity and flight heritage.

On the capital side, in January, we closed our $35 million registered direct offering at $4.73 per share, materially strengthening the balance sheet and de-risking the Merlin development timeline. On the U.S. defense engagement side, we expanded our Slingshot partnership with IDT Corporation and the U.S. Office of Naval Research into phases 2 and 3. We welcome Vice Admiral Whitworth as strategic advisor. On the commercial leadership side, we have continued to build out our global sales organization with senior defense and intelligence industry veterans, extending the work that began with the appointment of our SVP of Global Sales last year. The commercial muscle of this company today is materially stronger than it was 12 months ago. The takeaway is straightforward.

The breadth and quality of commercial, operational, and strategic activity in the first quarter and in the four weeks since speaks to a commercial engine that has matured. We’re no longer a constellation looking for customers. We’re a vertically integrated platform serving a growing multi-hundred million dollar pipeline of qualified opportunities across defense, intelligence, sovereign, and commercial markets, with the unit economics to win on price and the capability to deliver immediately. I want to take a moment to ground the conversation in what we believe is an important strategic shift happening in the commercial earth observation today. For two decades, the dominant model of commercial earth observation has been transactional. Customers tasked individual images, visibility was episodic, and tasking capacity constrained by a limited number of satellites built at high cost. The result was reactive, event-driven intelligence and an industry that, frankly, struggled to scale.

Persistent global intelligence is fundamentally a different category. It is continuous and always on. The foundation is a daily planetary baseline. With our constellation today, it already enables the simultaneous monitoring of thousands of sites and moves customers from reactive observation to proactive awareness. With the future launch of our Merlin constellation, the foundation layer becomes ubiquitous, going from thousands to an unlimited number of sites. With persistent global intelligence, the commercial model shifts from per scene transactions to recurring subscription revenue, and it materially improves the predictability and lifetime value of every customer relationship. The reason we believe Satellogic is uniquely positioned to lead the category transformation is rooted in physics and unit economics. For patent-protected, stabilized pushbroom camera design, reaches approximately 10 times more imagery throughput per satellite than our competitors.

Combined, we are $1.3 million all-in satellite costs and the vertical integration that allows us to scale our constellation at a fast pace. That throughput is what enables persistent monitoring at unit economics that no one else in the industry can match. We believe the market is still early in this transition from episodic to persistent global intelligence. The customer demand signals are clear. Aleph Observer is a new product that allows customers to subscribe to persistent monitoring of portfolios of strategic sites with reliable revisit cadence, image delivery within hours, and analytics layered on top. It allows our customers to go from monitoring a handful to hundreds of sites on a daily basis. As of February, it is in the market and commercially available. It was built on 3 pillars. 1. The scale.

Aleph is able to persistently monitor hundreds of sites simultaneously at a frequency and cost structure that no traditional tasking-based service can match. Second, assurance. Aleph has capacity to scale and a reliable cadence over priority regions, meaning customers can plan around the data and not the other way around. Third, built-in analytics. Aleph delivers images roughly within 3 hours of capture, with automated object detection layered in at no additional cost. The analytics enable fast triage and prioritization of intelligence analysts’ workflows, a requirement at this scale. The example coverage map you see on the slide illustrates the kind of persistent monitoring footprint Aleph Observer enables. In this case, the regional intelligence picture across Iran. Customer adoption to date includes sovereign government users, defense customers, and commercial monitoring buyers across multiple regions.

This is what we believe is the future direction of the market, we believe Satellogic is the company in the industry best positioned to deliver it today. If Aleph Observer is a product in market today, Merlin is the infrastructure layer that expands that product from high-value targeted monitoring into planetary scale persistent intelligence. Merlin is our AI-first, defense-oriented constellation, purpose-built for daily one-meter global coverage and real-time intelligence. A few things to highlight. First, Merlin is fully funded. Its development is anchored by a $30 million customer contract from a strategic defense and intelligence customer, which means we’re not asking shareholders to underwrite this build-out or customers are. Second, Merlin is designed for planetary scale. The constellation, when fully deployed, is intended to remap the entire planet daily at one-meter resolution.

The architecture combines 10 spectral bands aligned with Sentinel-2, AI-first onboard processing, and intersatellite links to enable real-time alerting. This is a step change in what commercial Earth observation can deliver. Third, we’re happy to mention Merlin is on track. We have made strong progress against production milestones in Q1, and we remain confident in our October 2026 1st launch window, now roughly 5 months away. With the initial constellation rollout expected to be complete in the 1st half of 2027. I’d like to leave you with 4 takeaways from the quarter. First, our commercial momentum continues to strengthen. We completed 2 sovereign in-orbit transactions in 2 quarters, including CEiiA and the $12 million agreement we announced last week, with no impact to the needs of existing and expected data analytics customers. We also expanded Slingshot phases 2 and 3 with the U.S. Navy.

We’re seeing growing demand across both our data and space systems businesses, with customers increasingly moving from pilot programs to our larger operational deployments and longer-term engagements. The business model is beginning to demonstrate meaningful operating leverage. Revenue grew 80% or adjusted, EBITDA loss improved 32%. We generated positive net cash from operating activities for the first time in our history. We exited the quarter with $121.9 million in cash. We believe these results reflect the benefits of a vertically integrated architecture and increasing scale. Aleph Observer establishes Satellogic’s position in persistent geospatial intelligence. Customers are increasingly moving from buying individual images to subscribing to continuous monitoring and actionable awareness over strategic areas of interest. We believe this transition represents a major evolution in the Earth observation market.

Earth observation is evolving from a data business into an intelligence infrastructure business. Q1 showed meaningful progress in our positioning for that transition. Fourth, the technology roadmap is fully funded and on schedule. Aleph Observer is live and in market. Merlin’s first launch is on track for October 2026, and the initial constellation rollout is expected to be complete in the first half of 2027. Our Q1 launches of NewSat 53 and 54 expanded our in-orbit capacity and flight heritage. We’re executing on time, on budget, and at scale. Taken together, this highlights signal we’re on the right path for our continued growth and constitute the basis for our confidence going forward. I want to take a moment to thank our customers, our partners, our employees, and our shareholders for their continued support. A special thanks to Vice Admiral Whitworth for joining us today.

With that, operator, please open the line for questions.

Stacy (Operator), Conference Call Operator, Satellogic: Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Available for questions today are Emiliano and Rick. One moment while we poll for questions. First question, Michael Latimore with Northland Capital Markets. Please go ahead.

Michael Latimore, Analyst, Northland Capital Markets: All right, great. Good morning. Congrats on the excellent results here. I guess I first wanted to touch on Aleph Observer. Can you give a little more detail there? Maybe, you know, how many customers have signed up for that? You know, what are sales cycles like? What kind of incremental revenue do you see when a customer does sign up for it?

Emiliano Kargieman, Founder and Chief Executive Officer, Satellogic: Sure. Hi, Michael. How are you? Yeah, we’re still early commercially on Aleph Observer, right? It was launched in February. We are very encouraged by the engagement we’re seeing. Customers are already using the platform operationally across portfolios in their areas of interest that range from dozens of sites for some customers to hundreds of monitored sites for others, right? Depending on the use case. What is especially important for us is that the conversations we’re having are increasingly centered around ongoing monitoring workflows rather than, you know, isolated imagery requests. That’s kind of the behavioral transition we are looking for.

Our expectation is to sign a number of initial pilots in 2026 for Aleph Observer and as customers factor in this new procurement method for, you know, recurring services into their budget, expand and scale into 2027.

Michael Latimore, Analyst, Northland Capital Markets: Yeah. Yeah, makes sense. Great. Then maybe just a little more color on the pipeline. You know, how many nations, sovereign nations do you see in the pipeline potentially wanting, you know, space systems deal or the portfolio and, maybe a little breakup between, you know, larger tier 1 countries and smaller ones?

Emiliano Kargieman, Founder and Chief Executive Officer, Satellogic: That’s a good question. I don’t have the breakup numbers here in front of me. You know, anecdotally, what I can share is, the pipeline we’re seeing is, you know, is growing very strong in Asia Pacific, in the Middle East, in Europe. Those are the areas where we’re seeing most of the progress. Currently, you know, our space systems pipeline sits just under $1 billion on opportunities that we’re pursuing, and this is mostly obviously sovereign customers.

Michael Latimore, Analyst, Northland Capital Markets: Okay. Perfect. Great. Thanks very much. Good luck this year.

Emiliano Kargieman, Founder and Chief Executive Officer, Satellogic: Thanks, Michael.

Stacy (Operator), Conference Call Operator, Satellogic: Next question, Andres Sheppard with Cantor Fitzgerald. Please go ahead.

Andres Sheppard, Analyst, Cantor Fitzgerald: Hey, good morning, everyone. Congratulations on the quarter, thank you so much for taking our questions. Congrats on all the great progress. I wanted to touch on maybe Merlin. Looks like we are reaffirming the timeline for later this year and operational capacity next year. Rick, just curious if you could maybe give us maybe a high-level view on how we should expect those revenues from Merlin to ramp up, how we should think about those, and maybe what will that do to the cost structure. Thank you.

Rick Dunn, Chief Financial Officer, Satellogic: Thanks, Andres. As you guys know, we have a $30 million contract for the Merlin services, and we’ve collected a decent amount of cash of that upfront, cash from that upfront. In terms of rev rec, that won’t begin really until we get to the point where we’re fully operational in the first half of 2027. That revenue will start getting recognized annually in chunks as we deliver those services. As far as the pipeline, we’re working on a number of opportunities that would also leverage the Merlin constellation, those also would not start to get recognized until we’re fully operational in 2027.

Andres Sheppard, Analyst, Cantor Fitzgerald: Got it. Okay. That’s super helpful. I appreciate it. Maybe just a quick follow-up, bit of a housekeeping one. There was a high concentration of revenue from Asia and Asia Pacific this quarter. Just curious if we should see that more as a trend or more as an outlier going forward. Any color there will be helpful. Thank you.

Rick Dunn, Chief Financial Officer, Satellogic: Yeah, sure. Just a follow-up on your last question. That $30 million contract is also a 5-year deal. It mirrors the expected life of the Merlin satellites themselves. With respect to Asia and Asia Pacific this quarter, I think that will continue. You know, it was buoyed by customers in Australia, specifically HEO that we announced publicly, where they purchased an in-orbit satellite earlier this year. Also a customer in Malaysia. We’re seeing demand for our products and services, you know, globally increase. I think that this isn’t a one-off, and I think you’ll see continued growth across all geographic regions going forward.

Andres Sheppard, Analyst, Cantor Fitzgerald: Very, very, very helpful.

Rick Dunn, Chief Financial Officer, Satellogic: If I can add there.

Andres Sheppard, Analyst, Cantor Fitzgerald: Thanks again, Makor. Oh.

Emiliano Kargieman, Founder and Chief Executive Officer, Satellogic: No, I was just adding something there to Rick. Andres. This is Emiliano. We, you know, we see several, if you want, several structural drivers at work in the defense intelligence procurement. In particular there’s a driver around modernization of defense and heightened focus on sovereign Earth observation capabilities that’s playing out in Asia Pacific in particular. We’ve seen many governments in the region looking to reduce dependency on third-party imagery providers and that’s obviously driving, you know, part of our pipeline there. Yeah, we expect to see continued growth there, as Rick was saying.

Andres Sheppard, Analyst, Cantor Fitzgerald: Excellent. Thanks, Emiliano. Thanks, Rick. Congrats again. We’ll pass it on.

Rick Dunn, Chief Financial Officer, Satellogic: Aleph.

Stacy (Operator), Conference Call Operator, Satellogic: Next question, Jeff Van Rhee with Craig-Hallum. Please proceed.

Jeff Van Rhee, Analyst, Craig-Hallum: Great. I’ll add my congrats, guys. A couple from me. Emiliano, on Aleph Observer, you talked about the ability to monitor unmatched costs, unmatched value overall. Can you just expand a bit more on that, how it stacks up versus the competitive landscape, competitive offerings?

Emiliano Kargieman, Founder and Chief Executive Officer, Satellogic: Sure. I think the biggest differentiator of Aleph Observer starts, if you want, with the underlying economics and capacity of our constellation itself, right? As we mentioned before, our satellites, you know, at a fully loaded cost or NewSat satellites at a fully loaded cost of around $1.3 million. You know, and with 10 times the data collection capacity those of our peers, you know, mean that basically, you know, the unit economics per site that we’re monitoring, and themselves are very differentiated. The other factor is obviously because we’re currently operating one of the largest or the largest commercial constellation for high-resolution imaging. You know, the number of sites that we can monitor compared to those of our peers is significantly larger, right?

We don’t have any encumbered capacity, you know, by in the areas of the world, the areas of interest of, you know, higher demand, and that also helps, right? That’s really, I think, what makes Aleph Observer different from everything else. It’s just the number of sites that you can monitor on a daily basis at a cost, you know, that’s still affordable. On top of that, we’re layering analytics, right? Allowing our customers to use those analytics to triage and to prioritize, you know, the time that human analysts spend on the sites. The reality is, a lot of the industry can generate analytics on top of imagery.

You know, the harder problem is really being able to deliver persistent monitoring at scale with reliable cadence and with economics that support, you know, operational use cases. Our focus really has been on building a system that is capable of monitoring large portfolios of sites continuously and affordably. You know, Aleph Observer you can think of as a software and workflow layer that is built on top of large operational capability, right? That’s really the important part.

Jeff Van Rhee, Analyst, Craig-Hallum: Yep. Very helpful. Rick, a couple for you. The sovereign defense customer signed in April $12 million. Can you just talk to how that likely lands in terms of revenue and if there’s some follow-on opportunity to that in addition to that $12 million?

Rick Dunn, Chief Financial Officer, Satellogic: Sure. you know, with respect to space systems in general, we will be delivering 3 satellites this year to customers and recognizing revenue associated with those. The sovereign defense customer is 1 of those, and that particular 1 should occur. It may straddle second and third quarter, so it’s gonna be in that zone. It’ll be likely June, July. With respect to the other 2 deliveries we have, those are for our Portuguese customer that we announced in January, and we expect to deliver 1 of those in June timeframe and likely the second late in the fourth quarter.

Jeff Van Rhee, Analyst, Craig-Hallum: Mm-hmm. Just the second part of the question there, the opportunity to sell additional imagery down the road or additional follow-on data sales.

Rick Dunn, Chief Financial Officer, Satellogic: Yeah. Sorry, Jeff. I was just remembering that. Yeah.

Jeff Van Rhee, Analyst, Craig-Hallum: Sure.

Rick Dunn, Chief Financial Officer, Satellogic: Absolutely. You know, the sovereign defense customer is a large customer. They, we expect to have follow-on opportunities with them with respect to both data and analytics sales as well as space system sales. We’re pretty excited about that one.

Jeff Van Rhee, Analyst, Craig-Hallum: Maybe on the ONR, on the Slingshot program, one just to clarify, was that in RPOs and does it show up in RPOs? I know it’s in, I believe, 3 C-Three stages. Just trying to get a sense of the scope of the opportunity from that program. Maybe, I don’t know if that’s Emiliano, maybe you or Rick, but just walk through kind of what the opportunity is there.

Rick Dunn, Chief Financial Officer, Satellogic: I can start, and then Emiliano can add some color. You know, it is in the RPOs. It’s not a particularly large contract. I think what’s more important is what we’re doing with IDT and the ONR on that project and how that could translate for other customers going forward. I’ll let Emiliano comment on that.

Emiliano Kargieman, Founder and Chief Executive Officer, Satellogic: Yeah. I think why we see this program being particularly interesting is because it is allowing us to operationalize for the first time, you know, inter-satellite links for tipping and queuing between different satellites in our fleet. There is, you know, scalability in the program we’re doing with ONR that in itself might be interesting. I think what’s more interesting is as these capabilities that we are developing along with the ONR, you know, become part of our standard product offering, right? That’s, I think, where, you know, where the impact of this program is going to be realized.

Jeff Van Rhee, Analyst, Craig-Hallum: Yeah. Helpful. Maybe if I could sneak one last one in. I don’t know if Vice Admiral Frank Whitworth is taking questions. This is obviously right in his wheelhouse, but maybe for you, Emiliano. You know, the U.S. government purchasing, NGA purchasing of commercial data looked like it had a lot of momentum a couple years ago. Obviously, you know, CL put up some very big numbers, and then there was a pause. It seems a lot of entities within the U.S. government sort of rethought that commercial imagery discussion. Then there’s been a discussion for many years of buying more commercial. Just curious if the conviction’s there, A, that we see a ramp in U.S. commercial buys.

B, just to the extent that you’re engaged, you know, with the right buyers, how you see the, you know, the sales track in North America, particularly U.S. government going forward.

Emiliano Kargieman, Founder and Chief Executive Officer, Satellogic: Yeah, happy to take this one. Yes. I mean, what we’re seeing is, you know, the environment currently in the U.S. procurement is just kind of forcing different avenues for procurement and different procurement for a wider set of commercial supply. That obviously includes us. We are seeing a significant opportunity growth for our own engagement with U.S. government in general. Yeah, definitely one of the areas that we expect to contribute future growth.

Jeff Van Rhee, Analyst, Craig-Hallum: Great. Great. Thanks so much, guys. Congrats on the progress.

Stacy (Operator), Conference Call Operator, Satellogic: Thanks, Jeff.

Next question, Suji Desilva with Roth Capital Partners. Please go ahead.

Suji Desilva, Analyst, Roth Capital Partners: Hello, Emiliano and Rick. Congratulations on the progress. I’ll add mine as well. On the data analytics revenue and the transition to more recurring visible revenue from, I guess, per image, where are we in that transition, and what’s a realistic expectation of how that mix can shift in the next year or two? Just to understand the pace of that transition.

Rick Dunn, Chief Financial Officer, Satellogic: I think we’re early in the transition. You know, as you know, you know, in 2025, we did $18 million of revenue. We’ve got a tremendous amount of momentum both on the data and analytics side as well as space systems for 2026. You’re starting to see that as we make announcements on contract wins. You know, in terms of the mix, you know, it’s a tough one because the space systems deals tend to be rather large and episodic. You know, when they hit the period in which they hit, they have an outsized impact typically. That, you know, space systems by definition is going to be a little bit lumpy.

I do think that, you know, with the Aleph Observer and Merlin then coming online in 2027, our data and analytics revenue will also grow substantially. We’ve got, you know, the largest high resolution commercially available in the world, a lot of capacity on it, and, um, you know, a world-class sales team that’s out there selling that data right now. We expect that will scale up more linearly going forward.

Emiliano Kargieman, Founder and Chief Executive Officer, Satellogic: If I can add there, Suji. Yeah, thanks for the question. In particular, you know, if you’re talking about kind of the transition that we’re seeing towards persistent intelligence and recurring monitoring. You know, as Rick said, we’re still very early in the transition, so most of our revenue today is still not recurring in the traditional SaaS sense, if you want. What we’re increasingly seeing is customers that are moving from one-off tasking towards this ongoing monitoring relationship with us. That’s the important shift, right? Like, customers are asking us to monitor portfolio of sites continuously over time and rather than purchasing isolated images. That’s what our Aleph Observer was designed to do. That’s the exact use case that it was designed to fulfill.

While, you know, in the accounting side, accounting profile, if you want, is still evolving, the customer behavior is already changing in that direction. I think that’s the leading signal that we’re excited about.

Suji Desilva, Analyst, Roth Capital Partners: No, that’s great. That’s helpful, Emiliano. A second question maybe for Emiliano. For the product, not the product, but the roadmap really of the satellite capabilities, increasing AI compute on the satellite. Can you talk about that roadmap and what that would look like as it flows forward the next few years in terms of increased opportunity?

You know, co- revenue or products, services, any concepts that would be helpful as we think about the roadmap of the satellite capabilities?

Emiliano Kargieman, Founder and Chief Executive Officer, Satellogic: Yeah. No, for sure. Without speculating too much, you know, I think you see us evolving our roadmap in a few different directions in parallel, right? On one side, we are evolving the resolution of our high-resolution satellite fleet, right? We are currently our NewSat are 50 centimeters of resolution. We’re moving towards our next generation satellites that will be able to do 35 centimeter resolution imagery, right? Higher resolution is one direction. We also are including real-time inter-satellite links and onboard processing with capabilities, enough capabilities and processing power to run multi-headed AI pipelines on top of all of the data that our satellites are collecting. That’s also part of the roadmap. That’s another avenue, right? One is increased resolution.

Second one is real-time analytics and real-time alerting and inter-satellite links. The third one is Merlin. Layering in this broad area monitoring global daily remaps at 1 meter of resolution on top of all of this, right? Those 3 things put together speak of a future where, you know, we will be going very closely to what has been our vision since the very early days of the company of having, you know, persistent global or geospatial intelligence and the ability to basically start asking the planet questions. You know, start asking the Earth questions about what’s going on and, you know, getting daily signals, getting daily intelligence updated in pretty much real time, right?

We’re very excited about the way these 3 different growth areas in our technology and in our the existing roadmap that we’re executing, you know, come together to realize this vision of kind of a searchable planet or, if you want a digital twin of the Earth that, you know, everybody can use to make more informed decisions. I think another part that’s very interesting from where we are in terms of our roadmap is that all of the big capabilities that we are building into our, into our roadmap are actually being funded by our customers, right? That’s also very exciting for us.

Suji Desilva, Analyst, Roth Capital Partners: Yes. Great. Thank you, Emiliano. I appreciate the color.

Emiliano Kargieman, Founder and Chief Executive Officer, Satellogic: Thank you.

Stacy (Operator), Conference Call Operator, Satellogic: Next question, Scott Buck with Titan Partners. Please go ahead.

Scott Buck, Analyst, Titan Partners: Hi. Good morning, guys. Thanks for, thanks for taking my questions. Rick, I’m curious, is positive operating cash flow sustainable in Q2 and beyond? Or was the first quarter aided by timing of, you know, certain contract collections that may not repeat?

Rick Dunn, Chief Financial Officer, Satellogic: Yeah, I mean, we were marginally positive on operating cash flow. I think it’s going to be a little touch and go for a couple 2 or 3 quarters as revenue ramps up. You know, what aided our cash flow positivity this quarter was really some advanced collections from customers. I think going forward, you know, we’re going to be making investments in terms of scaling the business, and that’s going to require some working capital. You know, we are still at an adjusted EBITDA loss, as you know. And with, you know, continued growth and scaling, working capital will bounce around a little bit. We’ll be drawing down on that as we make investments in inventory and so forth.

Scott Buck, Analyst, Titan Partners: Great. That, that’s helpful. Then my second one: Given the current level of geopolitical turbulence, are you seeing an acceleration of sales cycles or seeing interest from, you know, maybe new commercial customers?

Emiliano Kargieman, Founder and Chief Executive Officer, Satellogic: I can take that one. You know, obviously, I think periods of geopolitical instability do tend to increase awareness of the value of persistent intelligence. We are seeing, you know, conversations accelerating across the board. That said, you know, we believe the broader shift we’re seeing in the market is structural, not really event-driven. Governments and enterprises alike increasingly want continuous awareness of infrastructure, supply chains, maritime activity, you know, borders, their strategic assets. This is regardless of any single conflict. You know, while the geopolitical environment can accelerate the procurement cycles here, we do view the demand transition as much broader and longer term.

Scott Buck, Analyst, Titan Partners: Great. Well, I appreciate the added color, guys. That’s all I have.

Emiliano Kargieman, Founder and Chief Executive Officer, Satellogic: Thanks, Scott.

Stacy (Operator), Conference Call Operator, Satellogic: Next question, Chris Quilty with Quilty Analytics. Please go ahead.

Chris Quilty, Analyst, Quilty Analytics: Thanks. I had a somewhat technical and business question, I guess, around the sale of the in-orbit NewSat. If I recall, this is the first time I can think of an operational satellite being sold to a customer. I don’t count HEO because that’s for a different application. Is that first of all, is that true? Do you think that is an expandable business model?

Emiliano Kargieman, Founder and Chief Executive Officer, Satellogic: Hi, Chris. We do see this as an expandable business model. This is, depending on how you count, this is the first or the second one, because the satellite that we sold to in Portugal, I think was a few days after the satellite was launched. So that could count as an in-orbit transfer. Yes, you know, we do see this as a possibility that, you know, that might expand in the future as we have this cadence of launch and manufacturing of satellites, already contracted, already in place. We’re putting satellites in orbit essentially every quarter. We are seeing obviously increased demand on the customer and for, you know, adding very rapid capabilities.

In the past, you know, going from contract signed to satellite delivery within 4 months as we can or 6 months as we can normally do with our launch cadence was, you know, extremely competitive compared to the years that it takes normally to get a functioning satellite in orbit. Obviously we see customers willing to engage and willing to, you know, pay a premium also for getting capacity delivered quicker. Because we have this capacity in orbit and we can do these transfers without affecting our ability to deliver on our data and services business, right? Yes, I think we can selectively continue to see this model going forward as we continue to grow our constellation, right?

Chris Quilty, Analyst, Quilty Analytics: I mean, you have lots of excess capacity now, but, you know, as the revenue per satellite grows, you know, the technical part of the question is, you know, is this an SSO orbit or was it inclined? Because obviously that’s kind of a huge difference in the amount of revisit. Would you, maybe for Rick, think about, you know, changing the inclinations or launching capacity to inclinations where you think customers might purchase them?

Emiliano Kargieman, Founder and Chief Executive Officer, Satellogic: Yep. It’s a good question. In this case, it was a satellite in a orbit. We have built and launched, you know, satellites in many inclination orbits in the past, including one that we did with Tata in India. We have the ability to do that. The satellite design supports that and our operation, concept of operation supports that. I agree with you in the case of customers that want to ramp up their capabilities. You know, in some cases it makes sense to consider mid-inclination launches. If you’re only operating a small handful of satellites, you know, 1, 2, 3 satellites, I would argue that mid inclination is probably not a great solution technically because you have, you know, persistent blackouts.

Customers are typically looking at building predictable capabilities that they can count on for intelligence, right? Mid inclinations are not particularly well-positioned for that if you have a small, relatively small constellation. We do have the flexibility and, you know, we do engage with customers if they want that. We see it as complementary to our SSO offering, right?

Chris Quilty, Analyst, Quilty Analytics: Gotcha. For Rick, how does this get booked? I guess the other question is, we’ve seen some transactions like this where, you know, the customer obviously has a much smaller need for the satellite than its total coverage, and you see capacity sellbacks. Are those sort of arrangements, you know, part of this agreement or something you would look to do, of reselling unused capacity?

Rick Dunn, Chief Financial Officer, Satellogic: You know, when we, in terms of how we book space systems deals, you know, it’s based upon our performance obligations under each contract. At the moment, each of those contracts continue to be fairly bespoke deals. You know, maybe over time they become more consistent and predictable in terms of the specific performance obligations. The largest value that we’re delivering to the customer is the in-orbit satellite. We’re also, you know, in many cases transferring some knowledge and some light transfer technology, as well as providing, you know, support from a mission ops perspective. That’s not where the value is for the customer. Revenue will, you know, revenue recognition will follow those specific performance obligations.

In terms of, in terms of the possibility of buying back capacity, yeah, that’s, it’s absolutely a possibility. We’re not doing that. We don’t have the right to do that currently with any of our existing deals. But that may likely be a possibility going forward. It may be something that we look to negotiate as part of our, you know, discussions with those customers as we enter the contract.

Chris Quilty, Analyst, Quilty Analytics: Gotcha. Just to clarify, Rick, I mean, this is a sale of an asset, so does it show up as a one-time gain or are there elements that are continue to be operational in providing support?

Rick Dunn, Chief Financial Officer, Satellogic: The performance obligation associated with the transfer of the satellite is booked when that, you know, that transfer occurs. That’s a, that’s a one-time, you know, recognition event per satellite. With respect to services like transfer of knowledge, transfer of tech, and mission and ops, that’ll be recognized over, you know, the period of time that we’re delivering those services.

Chris Quilty, Analyst, Quilty Analytics: Great. Thanks, guys.

Rick Dunn, Chief Financial Officer, Satellogic: All right. Thank you.

Stacy (Operator), Conference Call Operator, Satellogic: I would like to turn the floor over to Emiliano for closing remarks.

Emiliano Kargieman, Founder and Chief Executive Officer, Satellogic: Thank you, Stacy, and thank you all for joining us. Q1 was a meaningful step on the path we have been describing for the past 2 years. A leaner, better capitalized, commercially active Satellogic now demonstrating the operating leverage of our vertically integrated model. With our existing constellation, Aleph Observer in the market, Merlin on track for October, and the deepening of our defense and intelligence engagement, we are positioned to lead the transformation of commercial earth observation into persistent global intelligence at a planetary scale. To do it on a path to sustained profitability and free cash flow. If we were unable to address any of your questions today, please reach out to our IR team directly at [email protected]. Thank you.

Stacy (Operator), Conference Call Operator, Satellogic: This concludes today’s teleconference. You may disconnect your lines at this time, and we thank you for your participation.