Astra Space Q4 2022 Earnings Report

Astra Space EPS Results

• Actual EPS: -$2.10
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: -$3.30

Astra Space Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Astra Space Announcement Details

• Quarter: Q4 2022
• Date: 3/30/2023
• Time: After Market Closes
• Conference Call Date: Thursday, March 30, 2023
• Conference Call Time: 4:30PM ET

Astra Space (NASDAQ:ASTR) designs, tests, manufactures, and operates launch services, and space products and services primarily in the United States of America. It operates in two segments: Launch Services and Space Products segments. The Launch Services segment provides launch services to satellite operators and government, which conduct the launch operations from Pacific Spaceport Complex in Kodiak, Alaska and Cape Canaveral Space Force Station in Cape Canaveral, Florida. Its Space Products segment design and provide space products for satellite launch including space electric propulsion systems comprising propulsion module, which includes thruster, power processing unit, tank, and feed system. The company offers its products and services primarily to satellite operators, satellite manufacturers, and government agencies. Astra Space, Inc. was founded in 2016 and is headquartered in Alameda, California.

Astra Space Q4 2022 Earnings Call Transcript

Key Takeaways

• Launch Services Milestones: Astra halted Rocket 3 production to focus on mass production of the higher-capacity Rocket 4, targeting test flights later this year with a production line capable of up to one rocket per day.
• Space Products Traction: The Space Products segment secured 278 cumulative engine orders totaling ~$77 million and opened a new 60,000 sq ft Silicon Valley facility to scale production to 500 units annually beginning Q2 2023.
• Q4 Financial Results: Astra recognized no revenue in Q4 (a $3.5 million contract was classified as other income), posted a GAAP net loss of $44.3 million (non-GAAP net loss of $37.3 million), and ended the quarter with $102.8 million in cash and no debt.
• Regulatory & Compliance Updates: The FAA closed its review of the TROPICS-1 mishap, Astra completed launches under the Part 450 license framework, and the company has applied for a Nasdaq extension to maintain listing compliance.

Presentation

[Operator]

Good day and welcome to Astra's fourth quarter fiscal 2022 financial results conference call. Today's call is being recorded. I would now like to turn the conference over to Andrew Cheung, VP of Strategic Finance Capital Markets.

[Andrew Cheung, VP of Strategic Finance and Capital Markets at Astra Space]

Thank you, operator. Good afternoon, everyone, thank you for joining us for Astra's fourth quarter and fiscal year 2022 results call. After the market closed, we released our financial results. The press release is available on the SEC's website and our investor relations website at investor.astra.com. A supplemental presentation related to our 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.

[Andrew Cheung, VP of Strategic Finance and Capital Markets at Astra Space]

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. Today's 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. As a result, Astra's actual future results and performance may differ materially from those discussed in this call.

[Andrew Cheung, VP of Strategic Finance and Capital Markets at Astra Space]

We encourage you to review our filing with SEC in 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 annual report on Form 10-K. I would like to remind everyone that this call will be recorded and will also be made available for replay via link available on the investor relations section of our website. I'll turn the call over to Chris Kemp, Astra's Founder, Chairman, and CEO. Chris.

[Chris Kemp, Founder, Chairman, and CEO at Astra Space]

Thanks, Andrew. Good afternoon, everyone, and thank you for joining us. Joining me on the call today are Axel Martinez, our Chief Financial Officer, and Martin Attiq, our Chief Business Officer. During today's call, we will review our operational and financial results for the fourth quarter, discuss our key accomplishments during 2022, review guidance for Q1, and provide an update on our launch services and space products businesses. First, I'd like to recap our key accomplishments in 2022 for our two core businesses, launch services and space products. 2022 was a productive year for our launch services business. We successfully deployed 22 satellites into Earth orbit in March of 2022 for three different customers.

[Chris Kemp, Founder, Chairman, and CEO at Astra Space]

This success followed Astra becoming the fastest privately funded U.S. company to place a satellite into orbit in November 2021, just five years after we were founded in 2016. Astra also became the first company to launch under the Part 450 FAA license framework. Astra's manufacturing facilities achieved a Rocket 3 production rate of approximately one rocket per month from January through July 2022. We conducted two Rocket 3 launches within 33 days. After the TROPICS-1 mission mishap, NASA agreed to modify its contract with Astra to launch future payloads on our new Rocket 4 vehicle.

[Chris Kemp, Founder, Chairman, and CEO at Astra Space]

Based on customer and market feedback, we stopped launching Rocket 3s and focused on accelerating the introduction of a higher capacity 600 kilogram version of Rocket 4 that can be mass-produced on our new Rocket 4 production line that we expect will be capable of producing up to one rocket per day. We continue to anticipate commencing test flights for Rocket 4 later this year. Perhaps the highlight of 2022 was significant customer traction of our space products business. We announced 278 committed orders as of today, March 30th, including customer contracts with Airbus OneWeb Satellites, Astroscale, Maxar Technologies, and LeoStella, among others, representing approximately $77 million of contract value, the majority of which is expected to be delivered in 2023 and 2024. We successfully delivered on three customer programs of the Astra Spacecraft Engine.

[Chris Kemp, Founder, Chairman, and CEO at Astra Space]

We took important steps to scale the production of Astra spacecraft engines with the build-out of a new dedicated production facility in Silicon Valley. We expect the facility will eventually support production of up to 500 units per year with our production ramp beginning in Q2 of 2023. Since our inception, we have taken a long-term view on the growth of the commercial space industry. In 2022, we saw the number of satellites launched increase by 31%. Global launch rate increased 27%, and the overall space economy grow by 8% to $464 billion. Each of those benchmarks validates the trajectory of the industry that we anticipated and which have guided our strategy, product roadmaps, and investments.

[Chris Kemp, Founder, Chairman, and CEO at Astra Space]

Our strategy to become the leading provider of launch services and space products required long-term investments in our rocket and space product production lines in 2022. In 2022 and early 2023, in spite of the challenges, we stayed the course and completed the build-out of our new Rocket 4 and spacecraft engine production lines and invested heavily in the people and equipment needed to increase the quality and reliability of our products and services. Our team is laser-focused on two key goals. In launch services demonstrating a reliable and scalable launch capability. Astra is one of only five privately funded U.S. companies that has conducted successful orbital launches and successfully delivered satellites into low Earth orbit.

[Chris Kemp, Founder, Chairman, and CEO at Astra Space]

Based on the data and experience gathered from our missions in 2022, by investing in mass-produced rockets and via automation of key manufacturing and launch operations processes, we plan to lead the market in lowest cost launch. We have designed our Launch System 2.0 with the expectation that it could service up to 80% of the addressable satellite market. 2. space products. Scale production. We've moved into a new 60,000 sq ft Astra Spacecraft Engine facility in Silicon Valley toward the end of March. With the expected annual capacity of almost 500 units, this facility is designed to allow us to service our customers' current needs as well as future demand. Astra's mission of improving life on Earth from space has never been more relevant than it is today.

[Chris Kemp, Founder, Chairman, and CEO at Astra Space]

We continue to believe that frequent, reliable, dedicated launches and scaled production of space products are the keys to accelerating the growth of the space economy. In 2022, Astra launched its first customer satellites and sold spacecraft engines that will power a number of new constellations of small satellites in low Earth orbit. We are proud of the team for accomplishing these milestones. We are also humbled by our failures, we've learned a tremendous amount from them. I look forward to providing you with frequent updates as we progress towards our first flight of Rocket 4 later this year and begin to ramp up production of our spacecraft engines in Q2. I'd like to provide an update on the progress we've made on the development of Launch System 2. Our launch services customers include satellite operators, manufacturers, and government agencies.

[Chris Kemp, Founder, Chairman, and CEO at Astra Space]

Rocket 4 is now targeting deliveries of up to 600 kilograms to mid-inclination low Earth orbit. As indicated previously, we continue to expect test flights for Rocket 4 to begin in the latter part of 2023 and continue to remain on track with our key development milestones leading up to our first flight. Since the last earnings call, we've completed the qualification of our new upper stage engine, completed a full flight duration run of our new first stage engine, completed the qualification of key manufacturing processes for the new Rocket 4 propellant tanks, including completing tank burst tests. We released our Payload User's Guide for Rocket 4, which allows our customers to better understand the capabilities of our system and the features of our launch service. We've made substantial progress towards completion of the Rocket 4 production line.

[Chris Kemp, Founder, Chairman, and CEO at Astra Space]

In the past few months, we've also provided details around our quality control lab and our first stage engine mission duty cycle among other updates. After over 6 months of rigorous testing and analysis, we received a formal closure letter from the FAA concluding our TROPICS-1 investigation on March first. You can find additional details on Astra's website. Rocket 4 incorporates key architectural decisions that we believe address the causes of the TROPICS-1 mishap while building on the heritage of flight-proven elements of the Rocket 3 series. I'll now provide an update on our space products business. As I mentioned earlier, we finalized the build-out of our new dedicated spacecraft engine manufacturing facility this month. We believe the facility and our earlier investments in our production capabilities will allow us to eventually deliver up to 500 spacecraft engines per year.

[Chris Kemp, Founder, Chairman, and CEO at Astra Space]

Specifically, as it relates to updates on our space products business, we announced 278 cumulative orders of the Astra Spacecraft Engine as of March 30, 2023. This includes 264 new orders since we closed the Apollo Fusion acquisition on July 1, 2021. As we previously discussed, orders are typically delivered to customers approximately one year from the contract signing. However, actual schedules may vary from customer to customer. This brings our total contracted value to approximately $77 million, the majority of which is expected to be delivered in 2023 and 2024. We delivered on the third full customer program of the Astra Spacecraft Engine in Q4 of 2022. We believe that the Astra Spacecraft Engine is the leading electric satellite propulsion offering in the market today.

[Chris Kemp, Founder, Chairman, and CEO at Astra Space]

We thank our existing customers for their belief and trust in Astra to deliver critical satellite components for their important missions. We also continue to maintain dialogue with prospective customers. We believe we'll continue to see increasing demand for this product. Finally, given the feedback we've received from our customers and shareholders, I want to specifically outline how we've responded to deliver reliable products and services to our customers. Specifically, we've made the following investments, process changes, and organizational changes to maximize the reliability of both our launch services and our space products businesses. We appointed Doug Kunzman, the former launch and test lead for Blue Origin's successful New Shepard first flight to lead launch and test operations.

[Chris Kemp, Founder, Chairman, and CEO at Astra Space]

We've set a new tone at the top on the criticality of reliability, added reliability as a core Astra value, revised and implemented more rigorous Astra development processes that include explicit requirements for failure mode analysis, design reviews, and Test Like You Fly reviews. We've established a new top-level mission assurance organization led by Andrew Griggs as a member of the Astra management team that includes distinct teams focused on reliability, quality engineering, safety, quality control, and supplier quality. Finally, we've invested in state-of-the-art equipment to give our engineers new tools to measure quality during our engineering and manufacturing processes, including a Nikon CT scanner, North Star 2D X-ray scanners, a Renishaw direct computer-controlled coordinate measuring machine or CMM, a Brown & Sharpe manual CMM, Mitutoyo vision measuring system and FLIR thermal imaging cameras, a FaroArm, and many other new tools.

[Chris Kemp, Founder, Chairman, and CEO at Astra Space]

With that, I'd like to turn it over to Axel to review our financials and guidance for the year. Axel.

[Axel Martinez, CFO at Astra Space]

Thank you, Chris, and good afternoon, everyone. I will now review our results for the fourth quarter of 2022. 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 a reconciliation from GAAP to non-GAAP results in today's press release. In Q4 of 2022, we delivered on one new customer program for the Astra Spacecraft Engine. The program was a legacy contract from Apollo Fusion. The value of the contract was $3.5 billion. After significant analysis, we concluded that it should be recognized as other income rather than revenue, and its related expenses to be included in R&D expenses. For that reason, we did not recognize any revenue during the quarter. Nevertheless, the full benefit of this contract is recognized in our income statement in Q4 as other income.

[Axel Martinez, CFO at Astra Space]

If we were to sign this contract today, we would recognize $3.5 million of revenue and $1.8 million of cost of goods sold, leading to a gross margin of approximately 49%. GAAP operating expenses totaled $50.3 million in Q4 compared to $201.4 million last quarter. As a reminder, $133.4 million of GAAP operating expenses in Q3 were attributed to one-time items. GAAP operating expenses in Q4 included the following: R&D expenses of $29.1 million, encompassing our continuing investments in our core businesses, plus costs related to our Spacecraft Engine customer delivery. Sales and marketing expenses of $3.9 million, reflecting investments in ongoing sales efforts for launch services and our Astra Spacecraft Engine.

[Axel Martinez, CFO at Astra Space]

G&A expenses of $24.5 million, including ongoing investments in key systems and technologies, among others. Our G&A expenses in Q4 contain stock-based compensation related to departures of certain executives during the quarter. Excluding stock-based compensation, G&A expenses will have decreased quarter-over-quarter, primarily resulting from a reduction in consultant and legal spend. Now let's talk about all of the one-time items during Q4 2022. During the fourth quarter, we recorded $5.3 million of one-time adjustments, including $3.8 million of severance costs related to the reduction in force implemented in November 2022. Given these one-time items, on a GAAP basis, our third quarter net loss was $44.3 million. On a non-GAAP basis, fourth quarter adjusted net loss was $37.3 million.

[Axel Martinez, CFO at Astra Space]

Q4 adjusted EBITDA was a loss of $36.6 million, a $4.8 million improvement compared to last quarter. Fourth quarter capital expenditures were $7.6 million and primarily related to the continued investments in the development of Launch System 2.0 and the delivery of our Astra Spacecraft Engines. We expect the majority of capital expenditures related to our space products business to be completed in Q1 2023. We ended the quarter with cash equivalents, and marketable securities over $102.8 million and no debt outstanding. In addition, we also continue to evaluate various sources of capital as we carefully manage our financial runway. Regarding our Nasdaq listing status. We published a piece on the Astra website on March 16th.

[Axel Martinez, CFO at Astra Space]

As noted, on March 13th, Astra submitted an application to Nasdaq for an additional 180-day period to comply with the $1 minimum bid price requirement. Based on our discussion with representatives of Nasdaq, we expect to hear back from Nasdaq on or around April 5th. We're not aware of any reason why our application will not be approved. We continue to actively monitor our listing status and are prepared to take the actions that are reasonably necessary to preserve our listing. I'll provide an outlook for our first quarter ending March 31st. As previously mentioned, we continue to focus our operating plan on the delivery of Astra Spacecraft Engines and the successful first flight of Rocket 4. In Q4, we made decisions to optimize our operating plan to increase our financial runway amidst market volatility.

[Axel Martinez, CFO at Astra Space]

Going forward, our goal is to reduce G&A expenses, including consultants, IT system, and other administrative spend to focus all of our resources on our top two priorities, launch services and space products. As a reminder, our first quarter guidance and all guidance is subject to various important cautionary factors, including the risks and uncertainties set forth in our annual report on Form 10-K, as well as the decision to discontinue the production of launch vehicles supported by Launch System 1.0. There is also risk associated with macroeconomic factors, a dynamic share across many companies and industries. Now we will provide future guidance. In the first quarter of 2023, we currently expect adjusted EBITDA loss to be between $37 million and $41 million. Basic shares outstanding to be between 269 million and 271 million shares.

[Axel Martinez, CFO at Astra Space]

Capital expenditures to be between $6 million and $8 million. On the Spacecraft Engine, you should expect a gradual ramp-up in shipments beginning in Q2 of this year, as we have just finalized this month the build-out of our dedicated Spacecraft Engine production facility. As of today, we have 278 cumulative committed orders for Astra Spacecraft Engines. We continue to see strong customer demand for our Spacecraft Engines. We are very excited by the momentum we are experiencing in the development of our new launch system and the continued commercial success of our Spacecraft Engine business. We believe that 2023 will be a transformative year for Astra. We look forward to sharing our progress throughout the year.

[Axel Martinez, CFO at Astra Space]

I will now turn the call back over to Chris.

[Chris Kemp, Founder, Chairman, and CEO at Astra Space]

Thanks, Axel. Astra is well positioned to deliver Astra Spacecraft Engines for our customers. I look forward to sharing details of our first flight of Rocket 4, which we expect later this year. Also, please join us for the live stream of Astra's second annual Space Tech Day on Tuesday, April 25th, 2023. We'll share updates on Launch System 2, the Astra Spacecraft Engine, and more at astra.com/livestream. With that, operator, please open the call for questions.

[Operator]

Thank you. If you would like to ask a question on the phone lines today, please press star one on your telephone keypad. If you would like to withdraw your question, that is star one again. We'll take our first question from Mariana Perez Mora with Bank of America.

[Mariana Pérez Mora, Managing Director at Bank of America]

Good afternoon, everyone. In your prepared remarks, you mentioned the current environment, right? Last year has been really tough from a valuation perspective for the space industry in general, and some companies have recently announced they are actually struggling to get the financing to continue the development efforts. How are you thinking about the $100+ million you have in cash in the balance sheet and this kind of, like, free cash flow that you're burning at about, like, $40+ million every quarter? How should we think about the CapEx coming down or free cash flow usage trends from here and financing options?

[Axel Martinez, CFO at Astra Space]

Hi, Mariana. This is Axel Martinez, the CFO here at Astra. Yes. Of course, look, we always continue to evaluate financing options and, you know, are actively always discussing with different providers. You know, we don't have anything to report right now. From our perspective, as we mentioned in our opening remarks, there's a focus on our part both to make sure we continue to optimize our cost structure. You know, we're gonna be focusing on our administrative expenses because we wanna make sure that we allocate as much of our capital to our two core priorities, the launch services business and our space products business. We're, you know, we're very excited about the momentum we have right now.

[Axel Martinez, CFO at Astra Space]

We think there's, you know, there's a great traction with our spacecraft customers. There's great traction with our development. you know, we think that the market will reflect that. you know, we agree with you that it's been a tough environment, but, you know, the focus that we took at the end of last year, we're seeing it pay off. We're seeing great momentum, as you heard from Chris earlier, about all the different things we've been doing. We're excited about what 2023 looks like for Astra.

[Mariana Pérez Mora, Managing Director at Bank of America]

Thank you. You mentioned in the prepared remarks that the investment on space products or CapEx related to that should be over after first quarter.

[Axel Martinez, CFO at Astra Space]

That's right.

[Mariana Pérez Mora, Managing Director at Bank of America]

How should we think about the CapEx cadence for the launch business?

[Axel Martinez, CFO at Astra Space]

Yeah. you know, as you know, we provided guidance for CapEx for Q1, and we'll continue to do so on a quarterly basis. You are correct that for our spacecraft engine business, our CapEx, our investments are now coming to an end because we moved into our new facility and we're very excited about it. Going forward, you know, we'll continue to provide guidance on CapEx.

[Mariana Pérez Mora, Managing Director at Bank of America]

Thank you. Probably last one from my end. How should we think about timing on the ramp to the 500 units per year that you expect to produce in the new facility for the engines?

[Chris Kemp, Founder, Chairman, and CEO at Astra Space]

Yeah, that's a great question. You know, we're not providing guidance on the future deliveries. We have noted that we've sold about 278 engines as of today, and the majority of those engines will be delivered this year and next year. Typically, engines are delivered about a year from when we sign the contracts. You know, a lot of those contracts, as we've indicated previously, came in in the last half of last year. I think that's all we've shared publicly.

[Chris Kemp, Founder, Chairman, and CEO at Astra Space]

I think the investments that we've made in CapEx, both in the rocket production line and in the spacecraft engine production facility, were critical for meeting these customer contracts that we have and bringing the cost of these products down to where we can compete in the market where we wanna compete, which is kind of with a scaled launch services product and at the scale that we've indicated we wanna produce the spacecraft engines.

[Mariana Pérez Mora, Managing Director at Bank of America]

Great. Thank you very much.

[Operator]

We'll take our next question from Edison Yu with Deutsche Bank.

[Edison Yu, Director and Senior Equity Research Analyst at Deutsche Bank]

Thanks, yeah, for you guys. Wanted to ask on launch first. I know you used to targeting the first flight for Rocket 4 later this year. Assuming that goes well, how should we think about the phasing of launches after that? Do you have a plan to kind of start completing the manifest? Do you need to do a couple more successful tests? What's that cadence sort of look like?

[Chris Kemp, Founder, Chairman, and CEO at Astra Space]

Yeah. Thanks, Edison. I appreciate it. I think that the way we're thinking about the first flight is, we would certainly love to be the first company to ever fly a rocket and have it be flawless the first time. We're also, we've been humbled by the challenges that both Astra and, you know-Organizations across the world have faced over the last year with new rocket programs. We are planning on building an alpha and a bravo test flight and learning as much as we can from those. As we have a number of customers that we have launch contracts with, we obviously wanna get back to servicing those launch services contracts as soon as we can.

[Chris Kemp, Founder, Chairman, and CEO at Astra Space]

You know, we think that demonstrating reliability will unlock a lot of potential given the new 600 kilogram capacity and the price point where we'll be offering that service. Again, I wanna underscore the investments we've made are to ensure that we can scale production and we can ensure the reliability of this new Rocket 4 and Launch System 2. It has received the right amount of attention and the right amount of investment given given the cost to capital both now and in the future. We've been as thoughtful as we can be as a management team at striking that balance and giving the team enough time to build the best possible product and achieve success as quickly as possible.

[Edison Yu, Director and Senior Equity Research Analyst at Deutsche Bank]

Understood. On, on the Spacecraft Engine side, on the propulsion side, very decently sized, you know, backlog order book. I'm wondering what's the latest on getting into some of these mega constellations? And I'm mainly alluding to OneWeb Gen 2. Obviously, you have that relationship with NT already. Any, any updates there? Any, any timing that we should be on the lookout for if you can get some pretty major content on the, on that constellation?

[Martin Attiq, Chief Business Officer at Astra Space]

Hey, Edison, this is Martin. you know, as you know, you know, we've worked with a number of customers and constellations, and we have signed up a number of them, and we continue to work with our existing customers who have larger programs that they have in mind, to execute against those programs and execute contracts against those programs. We don't have anything to announce today. Believe me, like, when we do have something to announce, we'll let you know. We are very excited by, as Chris and Axel alluded to, not only the strength of the backlog, but also the strength of the pipeline that's behind it. The customer discussions we're having that we're trying to convert to contracts, is also very exciting.

[Martin Attiq, Chief Business Officer at Astra Space]

We don't have anything to announce in any of the mega constellations that are out there.

[Edison Yu, Director and Senior Equity Research Analyst at Deutsche Bank]

In terms of the capacity that you're planning for, do you need a mega constellation to run full capacity? Do you think you could fill that up with?

[Martin Attiq, Chief Business Officer at Astra Space]

Yeah.

[Edison Yu, Director and Senior Equity Research Analyst at Deutsche Bank]

without hitting, you know, a bigger one?

[Martin Attiq, Chief Business Officer at Astra Space]

Certainly, a mega constellation would be great, and I think we'd be delighted to support, you know, those programs. We don't need those programs in order to support the capacity that we're trying to build out in Sunnyvale given the pipeline that we have.

[Edison Yu, Director and Senior Equity Research Analyst at Deutsche Bank]

All right. Got it.

[Chris Kemp, Founder, Chairman, and CEO at Astra Space]

Yeah, maybe, Edison, if you're asking about, go ahead.

[Edison Yu, Director and Senior Equity Research Analyst at Deutsche Bank]

No, you go ahead. Go ahead.

[Chris Kemp, Founder, Chairman, and CEO at Astra Space]

No, if you're asking about launch services, you know, I think that we see the demand and the number of launches continue to increase. Also the companies that are out trying to build new capabilities, like Astra has recognized this is a challenging thing to get going. You know, we believe that 600 kilograms is a sweet spot because it'll allow us, as we said earlier, to address at least 80% of the overall addressable market for satellites. We have a lot of visibility into that market because we see the satellites that folks are building with Astra Spacecraft Engines. We wanna be able to service those customers not only from our space products business, but from our launch services business in the future.

[Chris Kemp, Founder, Chairman, and CEO at Astra Space]

What all those customers tell us is that price is really important. We need to get the price per launch down, and we need to get the price per kilogram down as much as possible, given the low price per launch. That is why we have made the investments that we've made in the new Rocket 4 production line. I hope you're all able to come out and see us at Space Tech Day on April 25th, because you'll see that. You'll see the Rocket 4 production line, and you'll see the investments we've made to scale production of the launch vehicle. You know, 600 kilograms, when you look at it, is, you know, If you look at the, even a rocket launch every single day would be about four Falcon 9s worth of rideshare missions.

[Chris Kemp, Founder, Chairman, and CEO at Astra Space]

We're seeing SpaceX increase the number of rideshare missions year-over-year because of the increasing demand for access to low Earth orbit. We've always believed in low Earth orbit. We've always believed in a vibrant space economy that has a large both U.S. and international set of capabilities being deployed. That continues year-over-year to prove itself out. The market just continues to get bigger. We're working really hard because we have customers to deliver for and a large market to serve.

[Edison Yu, Director and Senior Equity Research Analyst at Deutsche Bank]

Great. Last one from me. I'm curious if you entertained any thoughts or thought about, you know, monetizing or separating out the propulsion, the space engine business. Obviously, it's a much different profile. You just mentioned, you know, the almost 50% gross margin even at these low volumes. Do we have any appetite to try to separate that out, monetize it in the future? Curious if any color there.

[Chris Kemp, Founder, Chairman, and CEO at Astra Space]

We think it's a great business, and we continue to leverage the investments we've made at Astra to deliver parts from the machine shop that we built to make rocket parts. I think there's a lot of, there's a lot of complementary opportunities in the market. A lot of the customers that are buying spacecraft engines are interested in buying launches from us, or have bought launches from us. You know, we remain fully committed to that business.

[Edison Yu, Director and Senior Equity Research Analyst at Deutsche Bank]

Great. Thank you.

[Operator]

There are no further questions at this time. I would like to turn the call back over to Chris Kemp, Founder, Chairman, and CEO, for closing remarks.

[Chris Kemp, Founder, Chairman, and CEO at Astra Space]

I really wanna thank everyone for joining today. Again, I want to invite everyone who's listening to this to tune in to Space Tech Day. We have a lot of hard work that our team is excited to share with you all on April 25th. If you're interested in coming out in person, please reach out to us. If we can accommodate you, we'll do our best. Otherwise, we'll have a live stream at astra.com/livestream. We look forward to coming back and chatting with you again at the end of Q1. Thank you.

[Operator]

That concludes today's presentation. Thank you for your participation, and you may now disconnect.

Participants

Executives

• Andrew Cheung, VP of Strategic Finance and Capital Markets
• Axel Martinez, CFO
• Chris Kemp, Founder, Chairman, and CEO
• Martin Attiq, Chief Business Officer

Analysts

• Edison Yu, Director and Senior Equity Research Analyst at Deutsche Bank
• Mariana Pérez Mora, Managing Director at Bank of America