Intuitive Machines Q1 2025 Earnings Call Transcript

Quartr
Provided by Quartr
May 13, 2025

There are 11 speakers on the call.

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Intuitive Machines First Quarter twenty twenty five Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. I would now like to turn the conference over to Stephen Zhang, Head of Investor Relations.

Operator

Go ahead.

Speaker 1

Good morning. Welcome to the Intuitive Machines first quarter twenty twenty five earnings call. Chief Executive Officer, Steve Altimis and Chief Financial Officer, Pete McGrath are leading the call today. Before we begin, please note that some of the information discussed during today's call will consist of forward looking statements setting forth our current expectations with respect to the future of our business, the economy, and other events. The company's actual results could differ materially from those indicated in any forward looking statements due to many factors.

Speaker 1

These factors are described under forward looking statements in the company's earnings press release and the company's most recent 10 ks and 10 Q filed with the SEC. We do not undertake any obligation to update forward looking statements. We also expect to discuss certain financial measures and information that are non GAAP measures as defined in the applicable SEC rules and regulations. Reconciliations to the company's GAAP measures are included in the earnings release filed on Form eight ks. Finally, we posted an earnings call presentation to our website, which provides additional context on our operational and financial performance.

Speaker 1

You can find this presentation on our Investor Relations page at www.intuitivemachines.com/investors. Now I'll turn the call over to Steve Altobis.

Speaker 2

Thank you, and welcome, everyone. On our last call, we emphasized that the company would be focused on execution as the new administration began to take shape. Over the last few months, we have seen the administration rethinking how the federal government acquires emerging technology and services, instigates private sector innovation, and creates long term value. Recently, we have seen signals of alignment at the federal level, including key appointments and clearer budgetary direction from the executive branch in Congress. The President's budget request reinforces NASA's funding priorities, and the House Armed Services Committee has advanced an additional $150,000,000,000 reconciliation package supporting DoD initiatives.

Speaker 2

These developments give us visibility into future opportunities across civil and national security space. The evolving federal landscape, including shifting NASA priorities, presents a clear opportunity for Intuitive Machines. We're leveraging our proven performance and speed to market across LTV, NSNS, and clips the track record of stretching the federal dollar through innovation that scales to expand into adjacent markets like national security space and other non lunar domains. This diversification and track record builds on our core strengths and positions us as a broader infrastructure and data services provider across the space economy. As we anticipated last year, the Artemis campaign is evolving.

Speaker 2

Nominated NASA Administrator Jared Isaacman has articulated a bold dual track vision to pursue lunar and Martian exploration with Artemis as a stepping stone. We believe this vision reinforced by the president's recent NASA budget request signals continued support for deep space initiatives that Intuitive Machines is built to serve. Our technologies developed through projects like CLIPS and SNS and LTV are designed for applications across both Moon and Mars. While Congress continues to debate potential reductions in NASA's science budget, we remain confident in the resilience of our core exploration programs. CLPS initiative and the LTVs program are progressing with three delivery procurements planned this year, and our major contracts are aligned with national priorities and long term strategy.

Speaker 2

As part of this alignment, Intuitive Machines was invited to testify before the House Spaces Aeronautics Subcommittee on NASA's CLIPS initiative. In my testimony, I highlighted how CLIPS drives innovation and reshapes the cost of exploration. I also highlighted the opportunity for larger bulk by CLIPS task orders, showcasing how NASA's early investments in commercial lunar services set the stage for broader participation across various government sectors. For example, through our NSNS contract, we're extending the benefits of this model by enabling other federal agencies beyond NASA to utilize our data infrastructure and payload delivery services on lunar orbit missions. This strategic approach of leveraging NASA's infrastructure investments to support national security space exploration goals exemplifies how the CLIPS model can scale to meet the needs of diverse government initiatives.

Speaker 2

As part of our ongoing efforts to diversify into national security space, the first quarter saw meaningful progress under our stealth satellite and orbital transfer vehicle programs. Additionally, we recently secured a key contract award for an Earth reentry vehicle, broadening our footprint across the space domain for new government and commercial customers. Leveraging our Lunar Lander architecture, the orbital transfer vehicle is designed to deliver payloads to multiple orbital regimes. We initiated phase two activities under a letter contract with a government customer with the full contract scope expected to be finalized by the end of this month. We continue to advance next generation technologies that can transform spacecraft operations in orbit.

Speaker 2

In the first quarter, we prepared to complete phase one of the Air Force Research Laboratories Jetson contract, focused on developing a low power nuclear electric propulsion system designed to enable stealth like satellites without the volume or visibility of traditional solar powered systems. Intuitive Machines is the sole contractor selected for this program, and we anticipate exercise of the follow on option later this year. In the days following Q1, we completed the study to transition the on orbit satellite servicing and manufacturing mission to geostationary orbit for the Space Force, a move that would diversify our revenue base in alignment with the anticipated 2026 budget growth for national security space. We'll continue to support the study through May and expect the government decision later this quarter. Transitioning to an adjacent strategic horizon, intuitive machines is advancing a critical new capability, earth reentry.

Speaker 2

This effort supports our long term vision to deliver end to end space services from the lunar surface to precision return on Earth. In the days following the first quarter, the Texas Space Commission finalized the contract awarding Intuitive Machines ten million dollars to initiate development of a precision Earth reentry vehicle and microgravity research laboratory. This technology is expected to serve as a key element in the architecture for our future Moon and Mars sample return missions. This initiative also demonstrates a forward leaning funding model using state investment to catalyze commercial and federal participation alongside the $10,000,000 state commitment for working to secure additional funds through a diverse pipeline of biopharmaceutical customers and strategic government stakeholders. Our approach will include proprietary precision landing technology differentiated from traditional ballistic reentry and builds on a strategic partnership with Boreon that we announced in 2023 to accelerate investment and commercialization in microgravity applications.

Speaker 2

While we continue to diversify outside of NASA, we are simultaneously advancing and executing on our data transmission services. Under NASA's NSNS contract, we completed a key customer verification milestone and recognized $3,000,000 in revenue during the first quarter. Entering the second quarter, we were issued an additional task order valued at $18,000,000 for the next two near space network services milestones, which we expect to complete this summer. In parallel, we are actively discussing with National Security Space stakeholders to host multi agency payloads on our Lunar Data Relay satellites. The Lunar Data Satellite constellation portion of NSNS is designed to provide secure and continuous connectivity for navigation, command, and control of spacecraft for a wide array of customers while driving higher margin recurring revenue streams.

Speaker 2

To complement the satellite constellation, Intuitive Machines operates and provides data analytics services for the Lunar Reconnaissance Orbiter camera and the ShadowCam. As part of this activity, Intuitive Machines stewards the repository for virtually all US lunar imaging and mapping data collected to date. By pairing high resolution lunar imagery and analysis with real time data relay and positioning from our satellites, Intuitive Machines is working to build the foundation for a lunar navigation operating system, enabling secure mobility, route planning, surface navigation, and logistics coordination across government and commercial lunar missions. Our first data relay satellite deployment remains on schedule for launch along with our IM-three surface delivery mission in the first half of twenty twenty six. In the first quarter, we landed our second lunar mission.

Speaker 2

The IM-two mission landed further south than any mission in history in an area surrounded by mountains and perpetual low angle sunlight, conditions no lunar spacecraft had ever previously navigated. We now have firsthand operational data from that region, and we're using it to harden our systems and inform how the industry approaches this part of the moon. IM-three progress continued in the first quarter. We completed payload testing, including testing of NASA's three jet propulsion laboratory developed rovers. The mission is destined for Rhinor Gamma, a mid latitude region of the moon and one of the most distinctive and enigmatic natural features of the moon known as a lunar magnetic swirl.

Speaker 2

As momentum builds for IM-three, it's important that we stay transparent about the technical outcomes of each flight and the real work we're doing to make our systems better. After completion of the IM-two mission, which ended early due to the landing anomaly, we performed a comprehensive post mission review. It included internal teams, external experts, and independent reviewers working with NASA and our suppliers to analyze every aspect of descent and landing at the moon's South Pole. Landing in this harsh environment requires two things. First, you have to land precisely.

Speaker 2

Second, you have to land softly. Achieving both of these requires our sensors and onboard navigation algorithms to perform nearly perfectly in extreme environments. We identified three primary contributors that affected the IM-two landing. One, laser altimeter interference. In the final phase of descent, we saw signal noise and distortion that did not allow for accurate altitude readings.

Speaker 2

Two, terrain and lighting effects. South Pole topography and low angle sunlight created long shadows and dim lighting conditions that challenged the precision capability of our landing system. Three, crater recognition tuning. Our optical navigation used imagery from LRO at a hundred kilometers from the lunar surface that could not accurately account for how craters appear at lower altitudes with South Pole lighting conditions as you approach the landing site. Moving forward, we will succeed land softly, land upright, land ready to operate.

Speaker 2

We've identified the issues and are making the necessary changes we believe will get us there on IM3. Here's what's different. We've added dissimilar and redundant altimeters to the sensor suite, and they're going through more rigorous and extreme flight like testing than we've done before. We've incorporated an additional lighting independent sensor for surface velocity measurements. We've expanded onboard terrain crater database for enhanced navigation across the surface of the moon.

Speaker 2

Additionally, we collected the most detailed imagery of the lunar South Pole on mission two, and we're feeding this unique flight data directly into our machine learning algorithms to improve crater tracking and navigation performance in these extreme conditions. We must learn fast, fix what needs fixing, and move forward smarter. IM-two gave us data that nobody else has. We're using it to build a better system and applying those lessons directly to IM-three, which remains on schedule. As we continue to lay the groundwork for improved surface delivery, we are maturing infrastructure programs for essential equipment and systems that make space operations possible.

Speaker 2

We continue to grow this area of business, and in January, NASA awarded the company a $2,500,000 contract to define the Moon to Mars architecture for logistics handling and offloading combined with surface cargo and mobility. The award for the architecture definition incorporates intuitive machines, lunar train vehicle, and cargo class lander designs, which made significant strides toward design maturity for NASA's Lunar Terrain Vehicle Services contract, culminating in successfully completing the preliminary design review just last week, building on the human in the loop testing conducted at Johnson Space Center in quarter four last year for Artemis astronauts, as I use the terrestrial LTV mock up, the team implemented key vehicle modifications based on direct astronaut feedback and verified that these changes met or exceeded NASA's expectations through additional testing. Notably, team also integrated a scanning LiDAR system in the terrestrial prototype, enabling autonomous self driving terrain navigation, an essential feature for the extended uncrewed lunar operations, and demonstrates this capability in a live evaluation with NASA's LTV selection team. Additionally, Moonracer activated a high fidelity six degrees of freedom simulator that digitally replicated one sixth gravity conditions using lunar surface data from NASA and a TUDA machine's Phoenix office for lunar reconnaissance imagery.

Speaker 2

This tool advances design validation and astronaut training while reducing dependency on costly physical prototypes. We believe the team is positioned with a distinct competitive advantage by achieving these technical milestones before the final feasibility assessment. Further strengthening its proposal, Intuitive Machines has advanced its heavy cargo class Lunar Lander design and integrated its in house data transmission architecture built on the company's Near Space Network Services contract to provide seamless direct to earth and lunar data relay communications, an offering we believe is a comprehensive offering versus the other competing LTVs companies. As stated at the top of the call, national priorities like LTVs continue to be part of the nation's long term space strategy, and timing remains on track for the award of the next phase of LTVs by the end of twenty twenty five. A second draft RFP was recently distributed with a response date in the coming months with an award later this year.

Speaker 2

On our last call, I said 2025 will be all about execution, and we believe the first quarter set the tone for the rest of the year as we make progress across our diverse list of programs. Financially, we remain strong with sequential revenue growth, positive free cash flow for the first time in the company's history and moving steadily towards EBITDA profitability. We expect opportunities for key contract awards throughout the balance of the year for CLIPS, LTV, and additional NSNS task orders, all of which incorporate Intuitive Machines competitive advantage of delivering technical capability with speed and at an attractive price point. Now I'll hand off to Pete McGrath, our CFO, for further comments on our financials. Pete?

Speaker 3

Thank you, Steve, and thanks to everyone joining us today. We kicked off 2025 with a strong first quarter with revenues and gross margin up sequentially. Q1 revenue was $62,500,000 up 14% over Q4 twenty twenty four, driven primarily by CLIPS, LTVs and NSMS execution. We continue to work with NASA on post mission closeout and the associated IM2 success payments, which we expect in Q2 of this year. BOEM's revenue was $21,700,000 in the quarter, as expected, given the impact of the OSAM project.

Speaker 3

Keep in mind, as Steve mentioned, we completed a study for the Space Force to commercialize the use of OSAM in geostationary orbit. We continue to support NASA and the Space Force on potential path forward for the OSAM program. Gross profit was $6,700,000 for the quarter versus $700,000 in Q4 of twenty twenty four. As we continue to drive consistent and higher profitability through efficient program execution and a focus on higher margin service businesses. This marks our third consecutive quarter of positive gross margins.

Speaker 3

SG and A for the quarter was $16,100,000 versus $16,400,000 in Q1 of twenty twenty four and $13,500,000 in Q4 of twenty twenty four. The higher SG and A in Q1 twenty twenty five versus Q4 twenty twenty four was due to annual incentive compensation and stock compensation costs incurred in the quarter, consistent with Q1 twenty twenty four gs and A. We can expect this G and A increase in the first quarter every year due to annual incentive compensation. Operating loss for the quarter was $10,100,000 versus a loss of $13,400,000 in the fourth quarter of twenty twenty four. The lower sequential operating loss was driven by our higher gross profits.

Speaker 3

When comparing to Q1 twenty twenty four, note that it includes the success payments for IM-one. As stated above, we expect the IM-two closeout and success payments in Q2 twenty twenty five. Adjusted EBITDA was negative $6,600,000 in the quarter, an improvement of $4,600,000 versus Q4 of twenty twenty four, as we will continue to drive towards runway positive adjusted EBITDA by the end of the year. Operating cash generated $19,400,000 in the quarter with capital expenditures of 6,100,000 resulting in positive free cash flow of $13,300,000 in the quarter. Positive operating cash driven primarily by timing of milestone payments received for IM3, IM4 and the LTV in addition to our improved gross margins.

Speaker 3

We will continue to see fluctuations due to the timing of milestones, but are trending towards free cash flow positive in the long term. CapEx was driven primarily by the investment in our first data relay satellite. Going forward, we expect to see continued CapEx for our five satellite constellation around the moon and our ground network in support of NSN. These CapEx levels will be offset by higher margin revenues from the NSN S program. Our cash balance significantly increased in Q1 to $373,300,000 This increase was driven by the redemption process of our 11.5 strike price warrants, which brought in $148,000,000 of cash to the company and our positive free cash flow.

Speaker 3

We now have no outstanding $11.5 strike price points. In the first quarter, we opened a $40,000,000 credit facility with favorable financial terms. This facility remains unused and is meant to smooth out working capital ups and downs as we work through the timing impact of milestone payments for our programs and our cost schedule. With access to over $400,000,000 in capital, coupled with no debt and improving profitability, we continue to believe we have more than sufficient capital to fund our current operations. In terms of capital deployment beyond current operations, we will remain opportunistic on strategic M and A while also evaluating internal investments to accelerate growth and drive long term shareholder value.

Speaker 3

We ended the quarter with contracted backlog of $272,300,000 compared to $328,300,000 in the fourth quarter of twenty twenty four. As noted in Q4, we are executing the contracts that were awarded in 2024 throughout 2025. Expect the next major awards in the second half of twenty twenty five and first half of twenty twenty six. In April, we did receive Task Order two for NSNS for $18,000,000 a grant from TSC for $10,000,000 and a letter contract with a not to exceed of $3,000,000 on an orbital transfer vehicle prior to definitizing the full value of the $11,000,000 Phase II contract. These recent awards will be included in the second quarter reported backlog.

Speaker 3

When looking at our Q1 twenty twenty five backlog, we expect to recognize 45% to 50% in 2025, '20 '5 percent to 30% in 2026 and the remaining thereafter. We are awaiting the outcome of several new awards this year, such as the next CLIPS award, LTV continuation or Phase II, as well as the next phase of Jetson and definitization of our Orbital Transfer Vehicle contract. As of May 8, post award redemption, our shares outstanding are 178,600,000.0, with 117,300,000.0 shares of Class A and 61,300,000 shares of Class C. Moving on to guidance, we continue to expect a revenue range of $250,000,000 to 300,000,000 for the year with a positive run rate adjusted EBITDA by Q4 twenty twenty five and positive adjusted EBITDA for 2026. Overall, this was another strong quarter for Intuitive Machines.

Speaker 3

We ended the first quarter with a significant cash balance, no debt and the flexibility to consider both organic and inorganic growth opportunities. With that, operator, we are now ready for questions.

Operator

Our first question is from Austin Moeller with Canaccord Genuity.

Speaker 2

Hi,

Speaker 4

good morning, Steve and Pete. Just my first question here. I know you had talked about the defense opportunity. Do reductions to the planetary science budget or earth science budget impact the revenue opportunity from any of the NASA payload deployment awards you've been getting?

Operator

Ladies and gentlemen, please stand by. Your conference will resume momentarily. Speakers, you may resume your conference.

Speaker 2

Okay. Apologize for that. We lost the link there. But, Austin, I was talking about the program and our interactions with the science mission directorate. There's two procurements that are that are coming out this year.

Speaker 2

Second, half of the year one is CS six, which we expect to be awarded in the July timeframe for delivery. And then one later in the year for a second science mission directorate award. So we do not see a direct impact into the CLPS budget, our point of entry into science based on the president's budget.

Speaker 5

Okay,

Speaker 4

and just a follow-up considering the SLS program may have considerable changes. Is there any risk of the LTV delivery on a Nova D Lander for either Artemis three or beyond being changed or delayed due to the need to procure an alternative launch vehicle?

Speaker 2

Our feeling about the Lunar Terrain Vehicle Services contract and what's been telegraphed by NASA is that that procurement will our proposals will be due in the late July time frame with an award for a delivery mission in the November timeframe. That's what NASA has been talking about. If you recall our Nova D heavy cargo Lander with our LTV vehicle itself flies on a Falcon nine heavy. And so there's no requirement for an SLS whatsoever. So it's a very nice packaging with the launch vehicle, the heavy cargo lander and the LTV to get autonomous roving assets to the moon.

Speaker 2

And what's important about that is that this continues our moon Mars strategy, which says learning about how to operate and do autonomous mobility on the moon is directly applicable to programs that would need the same capability at Mars. And so we're confident that the LTV procurement is moving forward in spite of the changes to the Artemis program with SLS Orion and Gateway.

Speaker 4

Excellent. That's very helpful. I'll pass it back there.

Operator

Thank you. Our next question is from Edison Yu of Deutsche Bank.

Speaker 6

Hi. Good morning. Thank you for for taking our questions. Wanted to ask about just your very high level view on on the reentry vehicle. There's you know, over the last, I don't know, five years, there's been lots of attempts to to do some type of orbital transfer vehicle, space tag.

Speaker 6

How does one differentiate in that category in your view?

Speaker 2

We talked about two things. We talked about a Texas Space Commission grant for our Zephyr program, which is a guided precision reentry vehicle that has a unique arrow shape that we've been cultivating for since 2022. The other one we talked about was an orbiter transfer vehicle to deliver payloads into orbits in cislunar space. The orbital transfer vehicle competitive edge is the cryogenic stage that we use as NOVA C for the lunar landing that has now been modified to serve as a transfer stage. The reentry vehicle though is unique in that ballistic entry capability is what's been out there.

Speaker 2

We have a listing body, which actually has cross range and down range to be able to land with precision. I'd say roughly about 50 meters accuracy. So it can touch down in a runway setting anywhere in the world. So it's got a strategic component to it, and we can use it as a rapid in space laboratory to deploy biologics and pharmaceutical and smart chip payloads to orbit and bring them back with precision. And the differentiator in particular besides the precision is that it lands with soft touchdown three gs or three gravity touchdown, not the high impact touchdowns of ballistic capsules.

Speaker 6

Understood. And then, I guess, kind of related nuclear propulsion. I I know you're doing some some work around that. What what's what's your sort of vision on how that plays out in space? I think, you know, there's other companies working on it, But, you know, generally, I guess it's perceived to be much further out.

Speaker 6

What's your latest view on that?

Speaker 2

Well, I think there's several different aspects to it that we've been working on and been fairly visible with. What I talked about was the AFRL Jetson Low Power Program, where we use a radioactive nuclear material to generate a power source that replaces essentially solar arrays. And so you can put that small satellite in a very small package instead of the higher volume, higher visibility, large solar array driven satellites and allows us to transport while we're operating payloads. So it has an abundance of power level. That's the beauty of nuclear fuel that runs a Sterling engine.

Speaker 2

The other aspect is that application is directly relatable or correlatable to the fission surface reactor that we were working on for the lunar surface. We proposed a 10 kilowatt nuclear reactor driven by a Sterling engine. That would be the first instantiation of infrastructure on the moon for nuclear power. So we see nuclear as an advancement for long sustained presence and movement in space and deep space. And these kind of startup programs that test the technology are necessary to exercise the muscles for The US to have a nuclear space program.

Speaker 5

Thank you.

Operator

Thank you. Our next question comes from Andre Shepherd of Cantor Fitzgerald.

Speaker 7

Hi, everyone. Good morning. Thank you for taking our questions and congratulations on all the great progress. Steve, I'm wondering, I know you touched on this on your prepared remarks a little bit, but wondering if you can maybe just elaborate a bit on the IM2 milestones that you expect to recognize in Q2, including the success payment? Thank you.

Speaker 2

Yeah. If you recall, we had about $14,000,000 of constrained revenue or success payments lined up for for the I m two mission. You know that mission was partially successful. It was abbreviated. I talked about that.

Speaker 2

We're working with our customers. NASA has multiple customers and commercial customers to to work the closeout payments. We expect about half of those to close here in this quarter, maybe in a little bit into quarter three, but it's on the horizon. Getting those contracts closed out and buttoned up is what we've been focusing on here. So that's really where we expect to end up after it's all said and done with Mission two.

Speaker 7

Got it. Okay. That's super helpful. Appreciate that. And just as

Speaker 3

a quick

Speaker 7

follow-up. With your first positive free cash flow quarter. Congratulations, by the way. How should we think about free cash flow for the rest of the year? Any color you or Pete might be able to give?

Speaker 7

Thank you.

Speaker 2

Well, primarily the free cash flow positive was driven by some milestones that came in, in the first quarter that gave us a nice look there. We do see that our free cash flow or receipts will still be lumpy over the year. And so while this is a positive trend going forward, it's not absolute, you know, until free cash flow estimate in 2026 where you can see it consistently. Got it. Awesome.

Speaker 2

Thank you so

Speaker 7

much and congratulations again. I'll pass it on.

Operator

Thank you.

Speaker 3

Sure.

Operator

Our next question comes from the line of Ronald Epstein with Bank of America.

Speaker 8

Hey, yeah, good morning guys.

Speaker 3

Good morning.

Speaker 8

How do things work for you all if we end up in a continuing resolution for fiscal twenty six? Because mean, my understanding is that that's a possibility. So how does that work for you if that were to happen?

Speaker 2

Yeah, I think we're fairly unaffected with a continuing resolution in that there's no real new program starts for us. We have existing initiatives and programs. They are major contracts with NASA. We are interested in what's gonna happen with the reconciliation bill and see that come forward and what that effect that has on the DOD budgets. And that's one that we're still waiting to see what how fast that would be distributed and allocated against contracts, programs, and procurements.

Speaker 8

Got it. Got it. Got it. And then I I meant and I could have been mistaken here, but I was under the impression that the IMT success payments were gonna be originally in one q. Now they're gonna be in q two.

Speaker 8

What gives you confidence they're gonna be in Q2? And why did they slip from 1Q to 2Q if indeed that's right?

Speaker 2

Yeah, it really, I don't know if it flipped, but Mission one, we closed the success payments in Q1. If you recall, we launched earlier in the year for Mission one. We launched a little bit later here for Mission two in the quarter. And then we have a number of diverse customers and contracts associated with the success payments. Each one of those has to be closed out individually.

Speaker 2

And so NASA in particular, there was a science mission director eclipse contract. There's a space technology mission director at three contracts. Each one of those has to be reworked and they took different approaches in the two mission directorates. And so that's what's taking the time to get all those closed. But we've been in discussions and dialogue, with NASA directly and our commercial payload customers, and that's why we can give you, some degree of confidence that that'll be, buttoned up near the end of the quarter.

Speaker 8

Got you, got you, got you. And then maybe just one more for me. You mentioned in your prepared remarks a couple of times the possibility for M and A, deploying capital that way. What's out there? I mean, how does the market look for space assets?

Speaker 8

And how are you thinking about that? And and and when you do M and A, I mean, how are you thinking about the time frame for your return on it?

Speaker 2

The way I look at M and A is I look opportunistically at adding capabilities to the company that give us competitive advantage or to shore up areas where we need specific skills, very unique skills. It's also an area where we can, if we can accelerate some capability that allows us to open up revenue streams in our existing programs. And, you know, just thinking opportunistically about what might be accretive or additive to the business as a whole. And so we go through this review process on a regular basis to look at those opportunities and discern what might be right for the company at any given time.

Speaker 8

Got it. All right. Thank you.

Operator

Thank you. Our next question comes from the line of Griffin Boss with B. Riley Securities.

Speaker 9

Hi. Thanks. Good morning. I'll just, yeah, start on CLIPS. Given the changes that you need to make for future ion missions, you talked about the the disparate changes, dissimilar redundant altimeters, additional lighting, the the onboard terrain creator database.

Speaker 9

I know these contracts are already low margin. Is this are the or are these changes having a material effect on your cost profile or perhaps competitiveness going forward?

Speaker 2

Well, you know, it's a challenge every time you fly to the moon, and it's not with zero risk. And so I would say, though, on the other side, the alternative is we've made great strides in landing twice on the moon in the harshest environment on the moon. And so we've made incredible progress, even though we had an abbreviated mission and not fully successful in terms of all the data that we brought back. It was a matter of enormous engineering success to land in this harsh environment. There are some additional sensors and things and algorithms that we want to tune for the mission and Mission three.

Speaker 2

And right now, we're not looking at an impact to Mission three in terms of schedule. A slight cost increase as we buy additional sensors, for those missions. But long term, we're still achieving, you know, success with our build delivery, to The Cape and launch of our missions back to back within a year. And we continue that regular cadence admission. So I think the program's healthy and our ability to execute has been demonstrated.

Speaker 9

Okay. Fair enough. Thanks, Steve. And then just shifting to LTV. Curious to hear your thoughts.

Speaker 9

Do do you still think that that NASA, would prefer to choose one winner in this phase two down select later in this year. Have you heard anything on that front, with regards to that changing? Can NASA potentially decide now to choose multiple vendors and, you know, maybe there's a collaboration effort between the multiple, awardees?

Speaker 2

For LPVS, NASA has talked to us about us, including an option that we've seen in the draft RFP that's come out where they plan to select a vendor for the demonstration mission for delivery of the LTV to the surface. And then the possibility as an option to carry another vendor through the critical design review phase, which is about a year extension to the current phase that's out there. So they are thinking about alternatives of awarding more than one follow on contract on LTVs.

Speaker 9

Got it. Okay, thank you for taking my questions. Appreciate it.

Operator

Thank you. Our next question comes from Greg Pendy with Clear Street.

Speaker 5

Hey, guys. Thanks for taking my question. Just one on NSN. Can you just talk about the global competitive environment that you see evolving in that landscape? I believe Europe is making an effort that would be completed on a lag relative to yours, but how does that maybe change the opportunities for commercial revenue opportunities on NSN if more global competitors might be entering the market?

Speaker 2

Well, I think we're in a fledgling state of near space network or lunar data relay network where the market is emerging. And right now we're talking with those companies in Europe that are looking at participating there, both from the ground side, ground station side and the data relay constellation. And we're talking seriously about standards and interoperability so that we can all work together to put a capability in place, both for data relay communications and for PNT. So right now the international work is collaborative as opposed to competitive. And right now I think there's room for successes to raise all boats in that area.

Speaker 5

That's helpful. Thanks a lot.

Operator

Thank you. Our next question comes from the line of Suji Desilva with ROTH Capital.

Speaker 10

Hi, Steve. Hi, Pete. Congrats on the progress here. Can you maybe step back and talk about updating kind of what the key segments are for LUNAR given all the multiple kind of business activities you have? And maybe kind of just going back to the M and A question a little bit, the areas of interest that might fill some of the holes in product segmentation for LUNAR?

Speaker 2

So I didn't talk about it this time in earnings, but I've talked about it the past couple of times and that the three pillars of commercialization of the LUNAR economy and that is the delivery services, the data services and the infrastructure services associated with opening up that economy. Delivery services include things like rideshare as well as landing on the moon rideshare payloads and things like the orbiter orbit transfer vehicle and the reentry capability. You think about all of those as a transportation leg or access to and from the moon. So that all fits within that pillar. The data relays, the PNT, the navigation, all of that, you know, is pretty self explanatory with the NSNS.

Speaker 2

And then with the infrastructure as a service, you see also that we're doing the LTV. And we also work fission surface power for the surface, which is not necessarily aligned by nuclear space. It's just infrastructures as a service. The Jetson work that we were talking about falls into lunar access delivery services because we're using that satellite to position in different locations in space. So it's still all aligned with the three pillars of commercialization.

Speaker 2

It's just because we were able to do the hard thing first, like land on the moon. We're able to branch into other adjacent customers, adjacent markets that kind of feed the whole stack of domains and space from LEO to GEO to XGEO to cislunar. And that's where you're seeing our expansion occur.

Speaker 10

Okay. Appreciate that review there, Steve. And then you talked about higher margin service business in the mix. Can you talk about where it is in the mix today? Where it's coming from and what it can be in the mix twelve to twenty four months out?

Speaker 10

I know it's higher margin. At what point does NSNS inflect up from the current levels that it's at today Potentially,

Speaker 2

I'll let Pete take that one.

Speaker 3

Yeah, so really the high margin business is being driven by things like the near space network services, because what we're doing there is basically we're we're building out a verification capability to verify performance with NASA, but we're building the assets, their capital assets that we own. And then we're going be selling them as a service and there are higher margin services more like you typically would see like with like the Globalstar Iridium type satellite servicing network. And so that's where the higher margin business really aligns. And that's what's really, we mentioned a little bit about, lumpy cash flow. The milestones do come in and timing that doesn't always line up with the milestones on the contracts.

Speaker 3

And that kind of drives that lumpiness in the cash flow. We are still with that higher margin business driving towards that adjusted EBITDA positive at the end of the year and then we'll be EBITDA positive next year, adjusted EBITDA positive next year. Our free cash flow of those will still be a little bit lumpy and that's something we're focused on long term, which will generated primarily by these higher margin business.

Speaker 10

Okay. Thanks, Pete. Thanks, Steve.

Speaker 3

Sure. Our

Operator

next question comes from the line of Josh Sullivan with The Benchmark Company.

Speaker 5

Hey, good morning.

Speaker 2

Good morning, Josh.

Speaker 5

So on the war chest here, there also appears to be some disruption coming to SLS and other NASA legacy projects. How are you looking at your organic opportunities to grow and adding people versus those comments on looking at M and A, just trying to get a sense of, is it more attractive for the opportunities you've developed or filling those technical holes?

Speaker 2

Well, I would say what's attractive here is we've seen that the CLIPS model of fixed price delivery as a service to transport to the moon and bring science data back extends further in clips two point o. We hope to cut across all of NASA and maybe other government agencies for that delivery service where we can start to fly a more regular cadence of missions and with heavier and heavier cargo. So I think with the delay in or the reformulation of Artemis, there's a place for heavy cargo deliveries to put infrastructure on the surface of the moon to use the communications network in the PNT or navigation operating system we talked about in advance of boots on the on the lunar surface. And so we're playing right into that reformulation with these capabilities and extending those. Our speed to market and price affordability and technical capability really do shine in this environment.

Speaker 2

And so we're gonna use that to help The US how we can to make sure that we have a permanent sustained presence on the moon that leads forward to Mars. Now, in light of that, when I talked about the three pillars of commercialization, any M and A activities that we're looking at are aligned with those three pillars to add the capabilities that we might need in or add elements of the ground or data network or infrastructure that we would need to stay competitive.

Speaker 5

Got And then just one on the reentry vehicle opportunity, you know, the soft touchdown sounds like an interesting angle, but just curious on the actual microgravity laboratory, is that going to be a proprietary Intuitive machine process or will that be customer furnished?

Speaker 2

So the reentry capability that we're talking about is proprietary to intuitive machines. And then we have a company that we're working partnership with called rhodium scientific, who does the internal outfitting of the of the biologics and pharmaceutical laboratory inside. They have they have experience with flying to International Space Station. And so we're working together to do that. Our interest is primarily in reentering Earth's atmosphere with precision and an ability to do that.

Speaker 2

That's of interest there for a number of commercial customers as well as DOD customers. And so that's our focus. The idea that we can do a biologics and pharmaceutical and smart chip manufacturing in space without an international space station that's highly responsive to the market needs or what the customers are really looking for. And that's the application that this reentry seems to fit.

Speaker 5

Got it. Thanks for the time.

Operator

Thank you. I show no further questions at this time. I would now like to turn the call back to Intuitive Machines CEO, Steve Altemis for any closing remarks.

Speaker 2

Well, thank you everyone for attending and listening to our call this morning. I appreciate all the questions, and we look forward to supporting this administration's Moons and Mars architecture and priorities. Thank you very much.

Operator

This concludes today's conference call. Thank you for participating. You may now disconnect.

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Key Takeaways

  • Intuitive Machines is capitalizing on federal alignment—including NASA budget support and a $150 billion DoD reconciliation package—to expand from lunar delivery into national security space and broader data and infrastructure services.
  • The company advanced key programs with a stealth satellite and orbital transfer vehicle phase II letter contract, secured a $10 million Texas Space Commission grant for a precision Earth reentry vehicle and microgravity lab, and is sole contractor on AFRL’s low-power nuclear electric propulsion “Jetson” program.
  • Under its NSNS contract, Intuitive Machines recognized $3 million in Q1 revenue, won an $18 million follow-on task order, and remains on schedule to launch the first lunar data relay satellite in H1 2026 toward a lunar navigation operating system.
  • The IM-two lunar mission landed in unprecedented South Pole conditions but experienced a descent anomaly; the team identified three root causes and has added redundant altimeters, lighting-independent sensors, and an expanded crater database to keep IM-three on track for 2026.
  • Financially, Q1 revenue rose 14% QoQ to $62.5 million, gross profit reached $6.7 million, and free cash flow was positive $13.3 million, with cash of $373.3 million and guidance of $250–300 million in full-year revenue and positive adj. EBITDA run rate by Q4 2025.
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Earnings Conference Call
Intuitive Machines Q1 2025
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