Seraphim Space Investment Trust H1 2026 Earnings Call Transcript

Quartr
Provided by Quartr
March 5, 2026

Key Takeaways

  • Positive Sentiment: SSIT reported its strongest results to date, with portfolio value rising 27.6% to £332 million, NAV per share increasing 20% to 142.3 pence, and the discount to NAV eliminated.
  • Positive Sentiment: Defense-driven demand and major contract wins boosted the portfolio, particularly ICEYE’s €1.7 billion German contract with Rheinmetall; the top four holdings accounted for 77% of NAV and all recorded valuation increases.
  • Positive Sentiment: Portfolio companies raised more than £2.2 billion during the period, while 77% of portfolio value has at least 12 months of cash runway and companies representing over 85% of portfolio value expect to reach EBITDA profitability during 2026.
  • Positive Sentiment: Post-period developments included new funding and contracts for Pixxel, SatVu, and Tomorrow.io, while the manager’s latest early-stage fund exceeded its £100 million target, potentially creating future investment opportunities for SSIT.
  • Negative Sentiment: The portfolio remains highly concentrated, with private companies in the top 10 holdings representing 92% of NAV and ICEYE alone accounting for 39%; the NAV also includes a £16.6 million provision for a potential performance fee, although payment conditions have not yet been met.
AI Generated. May Contain Errors.
Earnings Conference Call
Seraphim Space Investment Trust H1 2026
00:00 / 00:00

There are 3 speakers on the call.

Operator

Good morning, everyone, and welcome to the Seraphim Space Investment Trust Interim Results webinar. This presentation is hosted by the Chief Executive, Mark Boggett, Chief Investment Officer, James Bruegger, Chief Operating Officer, Sarah Shackleton, and Chair, Will Whitehorn. Once the presentation has concluded, the team will be available for questions. If you do have a question, please type it into the Q&A box and we will answer them. I will now pass you on to Will to begin the presentation.

Speaker 1

Good morning, everybody, and welcome to the Seraphim Space Investment Trust interim results to December 31, 2025, and how much has happened since December 31, 2025. Before getting into these results, I do want to reference the tragedy and conflict which is escalating in the Middle East, and it's all happened outside the period. It's of strategic importance to the SpaceTech sector, and it's once again brought the sector into very sharp focus. Although you may not have seen them, public statements from the U.S. Department of Defense underlined that space and cyber capabilities were among the first deployed in the conflict that unfolded last week. Disruption of Iranian space-based communications monitoring systems were crucial to the beginning of the conflict.

Speaker 1

It served to significantly degrade their situational awareness and command capabilities ahead of the initial military actions that happened last weekend, effectively rendering the Iranians both blind and deaf to what was unfolding. A new era of instability is upon us, and the last year has seen the generational shift in budgets to address the defense need of many nations, including the U.K. and particularly in Europe, Germany. Procurement processes are being rewritten and a renewed focus is on cutting edge SpaceTech. Evidence that this is impacting the SpaceTech market is now overwhelming. The Seraphim Space Index is a publication released by the manager each quarter, which monitors private investment in the global space domain. As reflected in the latest edition, the private investment landscape set new records last year, surpassing previous heights set in 2021.

Speaker 1

During the quarter, SSIT has seen a clear change in every aspect of our business and investments. Against this backdrop, I'm pleased to report the quarter represents the strongest set of results in SSIT's history. For the first time, the board was required on two separate occasions during this quarter to issue RNS announcements to explain exceptionally strong, positive news now driving NAV performance across the portfolio. Indeed, all four of our largest portfolio companies delivered meaningful operational progress alongside record levels of external funding. As a result, SSIT now ranks among the best performing investment trusts over the past 12 months, and the discount to NAV has now been eliminated. I will now hand you over to Mark Boggett, our CEO, and he will provide further detail on the period and outline how and why we believe this rate of growth is sustainable in the long term. Thank you.

Speaker 2

Thank you, Will. Good morning to everybody. The sun is shining. Before we go into the detail of the interim report, I just wanted to take a step back to remind folks about the big picture for Seraphim. Seraphim is the most prolific investor in space globally, with a portfolio of nearly 150 SpaceTech companies across both our public and our private portfolio. Seraphim was the first VC in 2016 to launch a space fund, and the Seraphim Space Investment Trust, SSIT, represents the one and only listed investment vehicle focused on space globally. Our partners and backers include some of the biggest space corporates globally, and we continue to receive a massive global deal flow, seeing virtually all deals at all stages globally. This provides us with a unique information asymmetry.

Speaker 2

We triage deal flow between early and late stage, with the early stage going to our venture fund and our affiliated accelerator program, and with the growth stage opportunities going to SSIT. We are a value add, hands-on investor. We join the boards of most of our portfolio companies, and over time, this allows us to build conviction in these businesses. Information asymmetry and conviction is the bedrock of our past and of our future success. Now let's turn to SSIT and the interim results. Starting with the headlines, and as Will has already said, these results represent the strongest set of results to date. We are proud to be delivering the fact that the portfolio valuation has increased by 27.6% to GBP 332 million, with a record NAV per share of 142.3 pence, up 20%, and the net assets totaling GBP 338 million.

Speaker 2

As the chart shows, SSIT has materially outperformed all relevant indices and all of our AIC peer group. As we emphasize each quarter, SSIT benefits from a clear number of increasingly well-evidenced drivers that differentiate us from the more generalist technology exposure of our AIC peers. During this presentation, I aim to clearly demonstrate why SSIT is positioned to sustain a premium to NAV and to continue to deliver differentiated performance. Taking us into the detail, let's start with this attribution analysis table. The value of the portfolio has increased from GBP 260 million to GBP 332 million during the period. GBP 2.9 million in follow-ons during the period into existing portfolio companies, and an increase in unrealized fair value of GBP 101.4 million includes the reversal of a previously booked unrealized loss on the Arqit and Spire Holdings.

Speaker 2

The main drivers of the increase in the unrealized fair value were the recently announced through RNS, changes to our top four portfolio companies. Over the period, ICEYE increased by GBP 26.4 million, ALL.SPACE by GBP 23.1 million, D-Orbit by GBP 8.4 million, and HawkEye 360 by GBP 13.5 million. The unrealized fair value increase was partially offset by the realized losses and proceeds from the disposal of the sales of Arqit and Spire. Portfolio fair value to cost for the whole period stands at 198.1% at the end of the period, with no meaningful FX-related movements for the period. Next, let's turn to the balance sheet as at 31st of December. This table sets out the NAV bridge. The NAV increased 20% over the period to GBP 337.5 million.

Speaker 2

As described on the previous slide, this was mostly driven by the unrealized fair value movement, partially offset by costs in the period and a provision of GBP 16.6 million for a performance fee. Let me just spend a minute to explain this provision. The calculation period for the performance fee is the 12 months to the 30th of June 2026. It is just a provision. There is no accrual at this stage. The timing of the payout of any such performance fee is subject to various conditions, including the board being comfortable that there is sufficient cash available. In addition, the aggregate of net realized gains, unrealized IPO gains, listed holding fair value change, and investment income, this must exceed the amount to be paid out before any performance fee can be paid. We note that none of these conditions have yet been met.

Speaker 2

Finally, once payout does occur, 15% of any performance fee must be reinvested by the investment manager into SSIT shares. Turning back to the table here. Lastly, the cash position of the fund remains largely unchanged over the period, thanks to the recycling process and proceeds from Spire Global and Arqit disposals. Cash stood at GBP 22.1 million as at the 31st of December. As in previous quarters, we continue to believe that these cash reserves remain sufficient to meet the fund's near-term requirements, with the portfolio overall now very well capitalized. Moving on to look at the portfolio performance. This page provides a snapshot of key stats. Over the six months, thanks to the growing tailwinds of defense, we have seen very strong performance from the underlying portfolio.

Speaker 2

Private companies in the top 10 holdings now account for 92% of NAV, and as a result of significant uplifts in the value of some of these companies' largest holdings. Private companies have performed well with the private portfolio valuation now hitting the key milestone of 200% of cost. Whilst we have sold down and recycled much of the listed portfolio, the remaining listed holdings are valued at 105% of cost. Portfolio fundraising has been robust. In aggregate, over GBP 2.2 billion was raised by public and private portfolio companies during the period, with $475 million raised by privately held portfolio companies. The key figure on this page is 77%. Let me unpack this figure.

Speaker 2

77% of portfolio by fair value has a robust cash runway with 70% fully funded based on the latest projection from company's management teams and 7% funded for 12 months or more from the 31st of December 2025, and that includes raises they completed post the period end. The management teams of seven companies, all of which are in the top 10, are projecting that their companies are fully funded. They do not need to raise any more capital. These figures are reinforced by the fact that companies representing more than 85% of portfolio fair value are now projecting that their companies will be EBITDA profitable during 2026. I really hope that these figures provide you confidence that the SSIT portfolio is maturing and maturing quickly. Turning next to the investments. Modest follow-on activity during the period, most of which has already previously been reported on.

Speaker 2

Four investments across three different portfolio companies totaling GBP 2.9 million. By the way, the picture here is a military vehicle with one of ALL.SPACE's antennas on the roof. Let's zoom in on ICEYE, the largest and best-performing portfolio company today representing 39% of NAV. As reported via an RNS in December, following several months of sequential major contract wins from NATO, Finland, Poland, Netherlands, Portugal, Greece, and our allies in Japan, ICEYE reported a milestone EUR 1.7 billion contract with the German government via its joint venture with Rheinmetall. A lot's changed over the last year. A year ago, when we last reported our interims, President Trump had just taken office and the world was in a state of flux over threatened trade wars with Europe and severe geopolitical pressure.

Speaker 2

At the Munich Security Conference on the 14th of February in 2025, JD Vance reset the transatlantic relationship, referencing Europe needs to stand on its own two feet regarding defense. You'll remember on the 4th of March, the Trump administration suspended U.S. military aids to the Ukraine. Weapons and munitions was halted along with intelligence sharing. They took until the 11th of March to reverse this course, resuming security assistance to the Ukraine. The problem is massive historic under-investment by Europe in sovereign defense satellites. Just look at this chart and how Europe stands relative to other continents. Over-reliance on the U.S. had come to an abrupt end, and this was most acute in intelligence, surveillance, and reconnaissance. The political response was to rally, not to retreat. The European leaders closed ranks.

Speaker 2

Europe-wide major increases in defense budgets totaling EUR 800 billion, led by Germany, who changed their fiscal policy to access EUR 500 billion in debt to finance their own defense requirements. Space was identified as a key area for Europe's strategic autonomy, and Europe's response has marked a structural change. This is not a temporary fix. This response by European governments was mirrored by industry, best exemplified by ICEYE and Rheinmetall forming a joint venture for large-scale satellite production in Germany. The outcome is that six months later, a EUR 1.7 billion contract was awarded by the German Bundeswehr to ICEYE and Rheinmetall's joint venture to develop a large radar constellation to protect NATO's eastern flank. ICEYE's vertical integration and production velocity were the key to the award of this contract.

Speaker 2

ICEYE has become a de facto standard for European ISR, with countries sharing data through sovereignly owned and operated ICEYE satellites, which can draw upon the larger commercial constellation as and when required. These government defense satellites are hiding in plain sight. Which ones are government-owned, which ones are commercial? It's much harder for an aggressor to knock out this type of capability. Given the importance of ICEYE, we wanted to use this as a case study to demonstrate insight into how we utilize public comps for methodology for our mature holdings. Let me talk you through the process. Stage 1: company maturity. We determine if the portfolio company meets criteria to adopt a public comps valuation methodology. We determine the scale of the business, the predictability of its revenues, and the visibility of its revenues and profits.

Speaker 2

In the case of ICEYE, information in the public domain shows the revenues are consistently more than $100 million, with strong growth, visibility, and profitability. Stage 2 is about public comps selection. This selection is based on a key test of relevancy or similarity to the private company we are endeavoring to value. We apply this relevance test to identify the appropriate cohort of public comps by looking at the following factors: the business focus, what area it operates in, the scale of its enterprise value and its revenues. Is this business profitable or not? If it is profitable, what are the relevant percentages? Growth rates, both historical and forward-looking. It is also worth calling out that we did not just invent this methodology.

Speaker 2

It is based on very clear set of guidelines set by IPEV, the industry standard valuation guidelines adhered to by all private equity and venture capital funds. In the case of ICEYE, we have developed a cohort of 18 relevant companies. It is a mix of new space and high-growth defense companies, but it does not include diversified low-growth incumbents or defense primes. During stage 3, we segment the comps into subgroups and then apply appropriate weightings based on relevancy. Included here is direct competitors, where they are available, recent space and defense-related IPOs, other new space players, and high-growth defense companies. In the case of ICEYE, as you can see here, we have provided some examples of the public comps that meet these relevancy tests in each category. On the slide here, we have used the ticker names of each of these companies.

Speaker 2

In relation to competitors, we have identified Synspective, which is a Japanese SAR company, which is listed. Recent IPOs. Examples include Firefly and Voyager Space. In new space, we include examples such as Planet Labs and Rocket Lab. In high-growth defense, we use examples such as AeroVironment and Kratos. Zooming in on just one of these, Planet Labs, which is a very relevant comparator. Like ICEYE, Planet is an earth observation satellite company operating a large constellation. However, where ICEYE uses SAR sensors, so radar sensors, Planet relies on optical imagery, so they use cameras to take pictures from space. Planet's revenues and growth profile are smaller than ICEYE's, and it is also not yet profitable, in contrast to ICEYE, who are profitable. Despite this, Planet currently trades with a market capitalization of nearly $9 billion.

Speaker 2

On this basis, we believe that ICEYE has significant further upside ahead. The final stage is to calculate the implied enterprise value and fair value. We apply the composite EV revenue multiples to the company's last 12 months and next 12 months revenues. Then we adjust the implied enterprise value for appropriate illiquidity discount and for balance sheet adjustments to calculate the implied equity value. We then apply the implied equity value to the company's capital structure, so its waterfall, to determine the fair value. In the case of ICEYE, we adjusted for positive balance sheet adjustment, such as the cash that they held on the balance sheet, and we applied a 20% illiquidity discount, given that this is a private company rather than a public company.

Speaker 2

Based on the application of this methodology, and driven by the increase in ICEYE's revenues as a result of the €1.7 billion contract win in Germany, ICEYE's valuation now exceeds the $2.5 billion valuation of its recent last equity round. Next, we turn to the key NAV uplifts during the period, each of which was previously disclosed in the 16th of February RNS. In relation to ICEYE, I think we've covered this one pretty extensively. One point to add is the contract win juggernaut continues, with them announcing another contract win outside of the period with the Swedish Armed Forces. This is a step towards Nordic sovereign space cooperation with the Finnish officials explicitly linking Sweden's ICEYE deal to the broader Nordic defense coordination. It reinforces ICEYE's position as a prime supplier of sovereign SAR systems. This is not just about commercial imagery.

Speaker 2

It also demonstrates European non-ITAR defense demand, which ICEYE and analysts explicitly contrast with U.S.-restricted competitors. Like ICEYE, we believe others in the portfolio will ultimately become similar neo-primes. Next, let's talk about HawkEye. The uplift in HawkEye 360 valuation fully reflects the terms of its $150 million Series E funding round, which closed in December 2025. A proportion of this increase has already been captured in the 30th of September valuation. Also to highlight their M&A, acquiring a U.S. company called Innovative Signal Analysis, ISA, a long-standing provider of real-time signal and image processing systems for the U.S. government and defense customers. HawkEye 360's CEO stated that ISA brings meaningful amount of revenue and a material amount of profit to the combined business.

Speaker 2

Finally, outside of the period, HawkEye launched its 13th cluster of three satellites, and with this extra capability supporting persistent monitoring use cases such as maritime tracking of dark vessels and the monitoring of air defense radar activity, which I'm sure you'll agree are very relevant in today's world. Next of all, we'll turn to D-Orbit, where the uplift in D-Orbit's valuation is now fully reflective of the recently announced first close of their Series D funding round, which completed in December 2025. This funding will help support D-Orbit's long-term goals in in-orbit servicing, assembly, and debris removal. Outside of the period, they've also announced a joint venture with ELT Group in Saudi. The agreement aims to create a structured basis for long-term collaboration and localization within Saudi Arabia. ELT Group specializes in electronic warfare systems for defense. Finally, ALL.SPACE's valuation uplift is partially reflective of recent corporate activity.

Speaker 2

This is activity that has not been publicly disclosed by the company, which we need to respect, and therefore we're not able to provide any more detail on what this corporate activity is about. This corporate activity actually completed shortly following the end of the period. In line with the company's valuation policy, on the 31st of December 2025, the valuation reflects 95% of the implied value relating to this corporate activity that occurred shortly thereafter. One of the things that I really want to draw your attention to is the huge amount of important activity that's happened after the period, so outside of the period that we're talking about. First of all, Pixxel. This company's developing into a neo-prime in the giant market of India.

Speaker 2

A Pixxel-led consortium signed an agreement to design, build, own, and operate India's national Earth observation satellite constellation under a public-private partnership framework. This investment is $130 million over a five-year period to build 12 satellites. This agreement is not just a Pixxel milestone, it is a policy-level inflection point. India has formally embraced private-led sovereign Earth observation infrastructure. Earth observation is being treated as a strategic national capability, not as a niche commercial service. The PPP structure creates a repeatable template for future national space systems, and we believe that this is a blueprint that many nations globally as they wrestle with how to rapidly and cost-effectively develop their own space capability. Next of all, SatVu, a U.K. company. SatVu operates a high-resolution thermal infrared Earth observation satellites that deliver less than 3.5 meter resolution thermal imagery day or night.

Speaker 2

The company positions this as thermal intelligence or activity intelligence by detecting heat signatures associated with activity in and around buildings, industrial operations, and critical infrastructure. They have announced the final close of a £30 million funding round with new investment from the NATO Innovation Fund alongside the British Business Bank. This additional funding fully finances the launch of SatVu's next two satellites, plus orders for several further satellites. This is a de-risking event. Funding, manufacturing slots, and launch cadence are now secured with the NATO Innovation Fund directly invested. Next, we will turn to Tomorrow.io. They have recently announced $175 million new equity financing to accelerate the development of its satellite constellation for AI-enhanced global weather forecasting. The round was led by HarbourVest, and it sees Tomorrow.io being valued in excess of $1 billion, making it the ninth unicorn that Seraphim has backed to date.

Speaker 2

DeepSky is the name of their low Earth orbit constellation, and it is equipped with multi-sensor satellites designed for high-frequency atmospheric and oceanic observations, designed to deliver proprietary AI-driven weather models. Tomorrow.io has already launched 13 satellites in its first constellation, and today they can boast more than 250 organizations who use its real-time weather intelligence platform. They have also announced a strategic partnership with Palantir Technologies to integrate Tomorrow.io's proprietary weather intelligence into the Palantir platform. Last but not least on this page, the Seraphim Space Manager announced commitments to its latest early-stage private venture fund that now exceeds the 100 million target that we set for this fund. The fund was cornerstoned by the British Business Bank and several leaders from the space industry. Indeed, corporate investors included the largest European SATCOM player, the largest SATCOM player in Asia, and the largest SATCOM player in the Middle East.

Speaker 2

This fund already has 17 portfolio companies, which includes several that are already achieving breakout success. These provide a potential flow of deals, in high conviction investment opportunities, for SSIT once they start to mature in the future. Noting that SSIT has a circa 5% holding within this private venture fund vehicle. There is good alignment. Next we turn to the divestments during the period. As we have already reported in the previous quarter's results, we completed the divestment of our positions in both Arqit and Spire, in both cases, fully exited, leaving no residual stake. The key message here is that the associated losses have been baked into the NAV for years. We just took the opportunity, due to the rallies in each of these shares, to sell, which we reported last quarter.

Speaker 2

But in total, these transactions generated GBP 6.2 million in liquidity, reinforcing our commitment to active portfolio management and to capital recycling. These slides provide a snapshot of the portfolio as at the 31st of December. Drawing out some of the insights on the donuts on the left into the ecosystem chart, top right, more than half of the portfolio is invested in platform. This means satellite constellations. These are the businesses that are developing the digital platform in the sky, providing capability of data and insights from large fleets of low-cost satellites. Of course, the biggest customer today is defense, but all of these are dual use, so they are applicable to commercial markets as well. In relation to geography, Europe accounts for well over half, with the rest evenly balanced between the U.S. and the U.K.

Speaker 2

Turning attention to the NAV chart on the right, the top 10 companies dominate NAV, accounting for 92%, with cash at 6.5%. ICEYE, the largest holding in the portfolio at 39% of NAV, was one of the companies where we have doubled down on based on our high level of conviction about this business, and that conviction is paying off as this business is performing exceptionally well on all measures. The top four companies all witnessed NAV increases over the period now account for 77% of NAV. Whilst this quarter's performance might seem remarkable, we anticipate further positive developments and valuation growth over the coming quarters. Hopefully, the post-period events that we have walked you through really demonstrate just how much momentum there is within the portfolio. This is the final slide before we close for Q&A.

Speaker 2

Looking at 2025 in review, the global investment in SpaceTech remained resilient over the past year, rising 48% and setting new records. The U.S. and China continue to lead, but Europe has clearly stepped up a gear. Geopolitics has fundamentally reshaped European defense, with a generational realignment now underway. The rubber is really hitting the road. Procurement is increasingly favoring best-of-breed technology startups, not legacy incumbents. Indeed, a new breed of neo-primes is being created, and we believe that the space domain will have its own equivalents to the Andurils and Palantirs. The outlook for the year ahead is very positive. Powerful tailwinds are strengthening. Geopolitical tensions and ongoing conflict in the Ukraine and the Middle East are driving defense budgets that are already at record levels. We believe that this is a structural change, not a temporary fix.

Speaker 2

Critically, nations are procuring sovereign capabilities, have historically been unable to own their own space assets. That is no longer the case. Space capability is now affordable and within reach of many nations. We are seeing many nations who typically do not have space capability now reaching out. The U.S. Golden Dome, and this program underscores the strategic role of space, and we expect similar architecture to be pursued by other nations. Then we have the world's largest IPO, SpaceX, which we believe is going to be transformative for the sector, bringing increased visibility, liquidity, and momentum. We expect this to bolster public market appetite for high-quality space companies. We believe it is going to improve conditions for fundraising for ambitious space private operators, and we believe it is going to act as a catalyst across the broader SpaceTech ecosystem.

Speaker 2

Indeed, Elon Musk's focus on space data centers to power AI leadership highlights the strategic conversions of space, compute, and AI. We expect other players in AI to start exploring their own space infrastructure strategies. Last but not least, the defense sector is a highly acquisitive market, and we anticipate continued M&A activity, potentially including within our own portfolio. We expect further commercial traction, further contract momentum across all holdings, and supporting to continue operational progress and valuation growth. Thank you for taking time to listen to our report today.

Powered by Quartr