3 Q2 Themes in 1 Go

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TUE, AUG 15, 2023

Michael Sheetz | Space Reporter
@thesheetztweetz

OVERVIEW: 3 Themes from the 2nd Quarter, in 1 Go

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Credit: NYSE

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Space companies' second-quarter results are in and, overall, performance was about what I expected. But let's dive in on three top themes that emerged, effectively splitting up the pure-play companies by those going from strength to strength, those holding steady, and those facing down a Virgin Orbit-esque ending.

WINS BEGET WINS

A quartet of companies showed up strongest in Q2, and it's easy to see why: Steady revenue growth and improving cost efficiency.

Rocket Lab and Redwire both received praise from Wall Street analysts. A flurry of reiterated "buy" ratings pointed investors to the pair of companies as the strongest among younger space ventures. Yes, there's plenty of nuance in what to like about Rocket Lab versus Redwire. The former, for example, is stacking up orders for its Electron rocket and Space Systems business, all while steadily pushing forward on development of its Neutron rocket. Meanwhile, Redwire reaffirmed 2023 revenue guidance, expecting to bring in more than $220 million this year.

Iridium and Telesat also get shouts in this category, albeit for very different reasons. Iridium's subscribers and revenue growth keep on chugging, while Telesat gave investors new optimism about its coming Lightspeed constellation. The company is projecting $2 billion in savings from switching suppliers.

MAKING DO

Look, you know how I feel about the phrase "space is hard," so I'm glad to say I didn't hear the phrase too many times on earnings calls this quarter. Sometimes companies in this business have to take competition, delays, and unexpected problems on the chin.

Viasat ranks strongest in this middle tier, in my view: Even with an ongoing investigation into its malfunctioning ViaSat-3 Americas satellite, the company's already adjusting its fleet to cover as much of that outage as possible. Plus, revenue is still growing.

EchoStar, like Viasat, is under competitive pressure from the expanding broadband capabilities of SpaceX's Starlink network – which is quickly acquiring consumer customers and expanding into enterprise and government markets. But EchoStar isn't sitting on a pedestal, as chairman Charlie Ergen is consolidating his telecom empire by bringing together the company with Dish Network. I'm curious to see what he, and CEO Hamid Akhavan, make do with the combined entity.

BlackSky and Terran Orbital weirdly sit at similar spots: Generating meaningful revenue, but still a ways to go before I get excited. Then there's AST SpaceMobile: The company has almost $200 million in bolstered liquidity thanks to a largely debt-fueled raise, but it needs to execute on getting its first commercial satellites in orbit as early as possible next year. Meanwhile, it's still early trading days for Intuitive Machines, which aims to launch its first lunar mission by late November.

Finally, (in a moment of vulnerability) I'll admit that I don't understand why the market values Spire so poorly. The company has about $113 million in annual subscription revenue, its quarterly net loss is steadily improving, and it's giving a clear 2024 roadmap toward profitability. But the stock trades for about 70 cents per share, at risk of delisting. For now, Spire is planning to execute a reverse stock split before early September to keep its standing on the NYSE.

COUNTDOWN

I'm generally a glass-half-full kind of person, but I try to avoid being delusional: The clock is ticking down quickly for Momentus, Astra and Sidus. Each trades for about 30 cents a share or less and is scrambling to cut cash burn, with quarterly revenue still minimal (even if it grew "by 3,310% year over year to $1.7 million," as Momentus touted).

I'd love to see a miracle turnaround with any of these, but it'd have to be just that.

Separately, I'm looking forward to when Mynaric and Satellogic start reporting on a quarterly basis. What were your takeaways from Q2? Hit me up!

Michael Sheetz is CNBC's space reporter – send tips, talent moves and more to michael.sheetz@nbcuni.com.