Satellogic Inc.

11/10/2026 | Press release | Distributed by Public on 11/10/2026 16:19

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and notes to those statements included in this Report. This discussion contains forward-looking statements that involve risks and uncertainties. In addition to historical information, the following Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties. Please see "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" in this Report.
Company Overview
Satellogic builds the infrastructure to power Persistent Global Intelligence ("PGI"): continuous, proactive awareness of the places, assets, and activities that matter. We combine high-cadence satellite collection, best-in-class technology, AI-accelerated workflows, and sovereign-trusted architecture to help customers move from episodic imagery to persistent monitoring programs.
Our mission is to give governments, intelligence agencies, and commercial customers the persistent awareness they need to make faster, more confident decisions. We serve allied defense and intelligence agencies, civil governments, and commercial markets that need reliable, scalable awareness of change across large portfolios of sites. Through an end-to-end production and operations model, Satellogic provides governments with flexible options across their journey toward sovereign intelligence capabilities. Customers can begin with discovery, expand into persistent monitoring, and build toward dedicated or sovereign-controlled capacity as their mission requirements grow.
This integrated approach enables Satellogic to deploy satellites on predictable timelines and operate with capacity to support persistent coverage across large portfolios of sites. Satellogic enables continuous monitoring and alert-driven workflows that help customers move from reactive tasking to proactive decision-making, providing mission-critical data when it is needed.
Unmatched Capacity and Scale
Today's geospatial data market is supply-constrained with customers demanding more data at lower costs. We operate one of the largest high-resolution constellations commercially available with the ability to significantly leverage existing in-orbit capabilities as capacity and cost champions.
Radical Cost Leadership and Technical Superiority
We produce and launch our satellites for a fraction of the cost of our competitors, which is achieved through our vertical integration, in-house manufacturing, and a design philosophy optimized for low mass and rapid production. We design the core components that go into developing and manufacturing our satellites to be mission specific. We manufacture many of our components, but we also partner with third parties to manufacture certain other components to our design specifications. We assemble, integrate and test the components and satellites in our facilities located in a free-trade zone in Montevideo, Uruguay. Additionally, our patent-protected camera design enables us to capture an exceptional volume of imagery from a smallsat form factor distinguishing our collection capabilities from competitors. Our superior capture capacity, coupled with our radical cost leadership, results in industry-leading unit economics. When taken together with the resolution and frequency we are able to deliver, we believe Satellogic is uniquely positioned to drive a meaningful expansion of today's market with persistent monitoring and actionable data.
Sovereign-Trusted Architecture
We provide a sovereign-trusted architecture that ensures mission continuity independent of third-party priorities. We believe we are fully compliant with all applicable export regimes, which allows us to provide unique, disruptively-priced sovereign and defense solutions rapidly. This approach enables technology and knowledge transfer resulting in local manufacturing capabilities and in-orbit flight heritage, ensuring our customers retain strategic autonomy over their intelligence infrastructure.
Our Strategy
Our strategy is focused along two distinct business lines: Data & Analytics and Space Systems. These two business lines will allow us to serve the existing market and begin to democratize access to a host of new customers. We expect that the Data & Analytics business will continue to represent our most predictable revenue stream, as our business model moves from episodic imagery transactions toward persistent monitoring programs.
Our newest product, Aleph Observer, operationalizes persistent monitoring. Rather than relying on episodic tasking and best-effort imagery delivery, it enables ongoing monitoring of hundreds of sites daily in a customer's area of interest, with predictable delivery over time. This allows teams to detect and assess change without repeated tasking, helping reduce operational friction and increase confidence.
Aleph Observer will also be a foundational platform as Merlin, the connected, global baseline detection layer of our PGI infrastructure, comes online. It scans the entire planet daily to provide real-time insights and connects into the rest of our constellation to immediately task high-resolution image collection for ultimate decision advantage. We launched the first Merlin satellite, Merlin.01 on October 1, 2026, and the satellite is stable and performing as expected. We expect the Merlin Constellation to become operational in the second half of 2027. We believe Merlin will transform continuous global collection into operational insight, expanding the monitoring model from targeted site coverage toward comprehensive global coverage.
Our Space Systems business offers unique solutions to sovereign customers or local partners with their own capabilities and in-orbit flight heritage at a disruptive price. With rapid technology and knowledge transfer, as quickly as three to five months, our customers own, assemble and integrate their own satellites with operational support provided by us in their local AIT (Assembly Integration and Test) facility.
Recent Developments
Persistent Earth Monitoring Contracts and Strategic Collaborations
In June 2026, the Company announced separate strategic collaborations with SynMax and SpaceKnow to develop and deliver AI-powered geospatial intelligence products for defense, intelligence, and commercial customers. These collaborations build on the Company's PGI infrastructure, which utilizes its existing high-resolution satellites, on-satellite AI, and the forthcoming Merlin Constellation. The Merlin Constellation is designed to deliver comprehensive global coverage at one-meter resolution as the network expands, with the first satellite of the new constellation successfully launched in October 2026.
Additionally, on May 26, 2026, the Company announced a one-year agreement valued at more than $18 million with an international defense customer for persistent, high-frequency Earth observation imagery. The agreement represents an expansion from an initial trial to full-scale deployment in under six months.
Sale of In-Orbit Satellites
On April 30, 2026, the Company announced an agreement valued at $12 million with a sovereign defense customer to deliver a commissioned, in-orbit NewSat satellite from its operational Aleph-1 constellation. The agreement encompasses the sale and full transfer of ownership and operations of the satellite to the customer, along with comprehensive support to develop independent capabilities to command the satellite and to process and use its data for military and civilian applications.
Appointment of President
On September 4, 2026, the Company announced that Vice Admiral (VADM) Frank D. Whitworth III, USN (Ret.) was appointed as the Company's President.
VADM Whitworth brings decades of leadership across the U.S. defense and intelligence communities. Most recently, he served as the eighth Director of the National Geospatial-Intelligence Agency (NGA) from June 2022 until his retirement in late 2025, where he led the delivery of geospatial intelligence to support national security operations worldwide. Notably, he oversaw the maturation of NGA Maven, the Department of Defense's primary initiative for operationalizing AI and machine learning, transitioning the program from an experimental framework into a critical operational capability that significantly increased the speed and scale of intelligence analysis.
In his role as President, VADM Whitworth will help lead Satellogic's strategic engagement with global customers, the development of the Company's product and technology roadmap, and the integration of high-frequency Earth Observation into modern intelligence architectures.
Financing Activities
On January 26, 2026, the Company decreased the amount of Class A common stock available under its then current at-the-market program to $0.00 (the "Prior ATM Program"). On March 30, 2026, the Company entered into a new Sales Agreement by and among CF&Co., Craig-Hallum Capital Group LLC, Northland Securities, Inc. and Roth Capital Partners, LLC, as sales agents (the "Sales Agreement"), under which the Company may offer and sell shares of its Class A common stock having an aggregate offering price of up to $50.0 million from time to time (the "Current ATM Program" and, together with the Prior ATM Program, the "ATM Program"). No shares were sold under the Current ATM Program during the three or nine months ended September 30, 2026, and the full $50 million remains available under the Current ATM Program.
Key Factors Affecting Operating Results
We believe our performance and future success depend on several factors that present significant opportunities for us but also pose risks and challenges. Although our industry is highly competitive, we believe that we have advantages that revolve around unit economics, design and technology, a vertically integrated structure, and an efficient build-to-launch cycle. Our success in marketing these advantages to win new customers and convert our pipeline of potential contracts into revenue will largely determine the extent of our financial success.
More specifically, we believe some of our key opportunities include the continued adoption of our high-resolution EO images, primarily with Defense and Intelligence ("D&I") customers within the U.S. government and allied countries. Additionally, the increase in market adoption of next generation high resolution Space Systems (satellite) sales can also positively impact the future performance of our business. However, long and complex sales cycles, which typically accompany government and satellite program sales transactions, can impact our performance. Furthermore, as we are dependent on a small number of customers for a large portion of our revenue, the loss of one or more of our major customers could have a material adverse effect on our business, financial condition, and results of operations.
We are currently an early-stage company that has not demonstrated a sustained ability to generate sufficient revenue from our expected future principal business. While our revenues have increased each year, we have historically generated insufficient revenues to sustain the business and have relied on outside financing, both debt and equity, to supplement the cash flows generated from our operations. To grow our business, we have to continue to improve our technology and regularly launch new and improved satellites, which require capital. Sustained and repeat business, along with securing new debt and equity capital, are critical for our ongoing success.
In addition, we believe the Domestication provides greater visibility to investors and customers, particularly as we continue to pursue U.S. government D&I-related contracts, and our success in leveraging this structure change is a key factor in our future operating results. However, there can be no assurance that the Domestication will allow us to successfully obtain such contracts or resolve other risks related to competing for government contracts.
Key Components of Results of Operations
The following briefly describes the components of revenue and expenses as presented in our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).
We are an early-stage revenue company with limited commercial operations, and our activities to date have been conducted in South America, Asia Pacific, Europe, the Middle East and North Africa, and North America. Currently, we conduct business through one operating segment. The Condensed Consolidated Financial Statements as of September 30, 2026 and December 31, 2025, and for the three and nine months ended September 30, 2026 and 2025, have been prepared in accordance with U.S. GAAP and the rules and regulations of the SEC.
The Condensed Consolidated Financial Statements include our accounts and those of our wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The Condensed Consolidated Financial Statements are presented in thousands of United States dollars (hereinafter "U.S. dollars" or "$"), unless stated otherwise.
Revenue
Revenue is currently derived from our Data & Analytics and Space Systems business lines. We sell our imagery to Data & Analytics customers as a single task and recognize revenue at a point-in-time classified as service revenue, while we enter into arrangements with CaaS customers that provide a stand-ready commitment and we provide subscription-based services and a persistent global intelligence capability via our Aleph Observer product line and recognize that service revenue over time. For our Space Systems business lines, we sell our satellites and related products directly to customers and typically recognize revenue at a point in time. Space Systems revenue is primarily product related; however, certain Space Systems' contracts also include service-related performance obligations.
Cost of revenue, exclusive of depreciation
Cost of revenue includes direct costs related to ground stations, cloud and infrastructure costs and digital image processing. Additionally, the cost of revenue related to sales of our satellites primarily includes bill of materials, launch costs, personnel costs, insurance, and other costs associated with the manufacturing of the satellite. For in-orbit satellite sales, cost of revenue represents the net book value of assets reclassified from property and equipment.
Engineering
Engineering includes research and development expenses, and consists of the costs related to salaries, wages and other benefits, professional fees, stock-based compensation expense and other engineering-related expenses.
Selling, general and administrative expenses
Selling, general and administrative expenses consist of the costs related to salaries, wages and other benefits, professional fees and stock-based compensation expense related to our selling and support functions. Also included in general and administrative expenses are expense for estimated credit losses on accounts receivable and other administrative expenses.
Depreciation expense
Depreciation expense includes depreciation of satellites and other property and equipment.
Interest income, net
Interest income, net is primarily comprised of interest earned on our Cash and Cash Equivalents, partially offset by interest expense. Interest expense on the Secured Convertible Notes recognized at fair value is included in Change in fair value of financial instruments.
Change in fair value of financial instruments
Our Secured Convertible Notes, warrant liabilities, earnout liabilities and OS investments are subject to remeasurement to fair value at each balance sheet date. Changes in the fair value of these liabilities are recorded to Change in fair value of financial instruments in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). Since our Secured Convertible Notes are valued utilizing the fair value option, interest expense on the Secured Convertible Notes is also included.
Other (expense) income, net
Other (expense) income, net consists mainly of differences related to foreign exchange gains and losses as well as gains and losses on disposal of property and equipment.
Income tax expense
As a corporation domiciled in Delaware, we are subject to taxation in the U.S. We may also be subject to withholding taxes paid at source on interest, dividends received and paid in the various jurisdictions in which we operate, other fixed, annual, determinable or periodic income, and/or income earned in other jurisdictions where we have operations. Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities where we operate. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date in the countries where we operate and generate taxable income. Deferred
income tax is provided using the liability method on temporary differences between the tax basis of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted. The OBBBA makes significant tax law changes and modifications, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act and the restoration of favorable tax treatment for certain business provisions, including allowing accelerated tax deductions for qualified property and equipment expenditures and the business interest expense limitation. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The Company continues to assess the potential impacts on its condensed consolidated financial position, results of operations and cash flows.
Results of Operations
Comparison of Results for the three months ended September 30, 2026 and 2025
The following table summarizes our results of operations for the three months ended September 30, 2026 and 2025.
(in thousands of U.S. dollars) Three Months Ended September 30, 2026 vs 2025
2026 2025 $ Change % Change
Revenue $ 16,041 $ 3,633 $ 12,408 342 %
Costs and expenses
Cost of revenue, exclusive of depreciation shown separately below 3,542 1,171 2,371 202 %
Engineering 3,825 2,629 1,196 45 %
Selling, general and administrative 9,851 6,413 3,438 54 %
Depreciation 1,107 1,502 (395) (26) %
Total costs and expenses 18,325 11,715 6,610 56 %
Operating income (loss) (2,284) (8,082) 5,798 (72) %
Other income (expense), net
Interest income, net 829 272 557 205 %
Change in fair value of financial instruments 29,999 11,882 18,117 152 %
Other income (expense), net 18 14 4 29 %
Total other income (expense), net 30,846 12,168 18,678 154 %
Income before income tax 28,562 4,086 24,476 599 %
Income tax (expense) benefit (258) (119) (139) 117 %
Net income $ 28,304 $ 3,967 $ 24,337 613 %
Revenue
During the three months ended September 30, 2026, revenue increased by $12.4 million, or 342% to $16.0 million from $3.6 million for the three months ended September 30, 2025. This growth was driven primarily by a $3.4 million increase in Data & Analytics revenue (service revenue), reflecting increased contract volumes and task orders from new and existing customers. Additionally, Space Systems product revenue increased by $8.4 million generated by the successful delivery of a satellite and Space Systems service revenue increased $0.6 million as we continued the ramp-up of our Space Systems line of business. Revenue for the three months ended September 30, 2026 included $6.6 million attributable to our Data & Analytics line of business and $9.5 million attributable to our Space Systems line of business compared to $3.2 million and $0.5 million, respectively, in the prior year.
Cost of revenue, exclusive of depreciation
Cost of revenue, exclusive of depreciation, increased $2.4 million, or 202%, to $3.5 million for the three months ended September 30, 2026 from $1.2 million for the three months ended September 30, 2025. The increase was driven primarily by a $1.4 million increase in the cost of Space Systems revenue (primarily product revenue), which was directly attributable to the costs associated with the sale of satellites during the period. Furthermore, the cost of Data & Analytics revenue (service revenue) increased by $1.0 million, due primarily to higher cloud computing and ground station costs to support our growing service volume.
Engineering expenses
Three Months Ended September 30, 2026 vs 2025
(in thousands of U.S. dollars) 2026 2025 Change % Change
Engineering
Salaries, wages, and other benefits $ 2,457 $ 1,746 $ 711 41 %
Stock-based compensation 309 233 76 33 %
Professional fees 349 97 252 260 %
Software expenses 173 162 11 7 %
Office and administrative 148 114 34 30 %
Travel and related expenses 197 93 104 112 %
Other 192 184 8 4 %
Total $ 3,825 $ 2,629 $ 1,196 45 %
Engineering expenses increased $1.2 million, or 45%, to $3.8 million for the three months ended September 30, 2026 from $2.6 million for the three months ended September 30, 2025. The increase was primarily to support the continued expansion of our PGI infrastructure, which includes the development of our Merlin constellation, the continued support of our NewSat constellation and the commercial ramp-up of our Space Systems business line. Cost drivers include a $0.8 million increase in personnel costs, reflecting the expansion of our technical workforce. Additionally, professional service fees for outsourced engineering increased by $0.3 million alongside higher clean room, operational travel, and office and administrative costs.
Selling, general and administrative expenses
Three Months Ended September 30, 2026 vs 2025
(in thousands of U.S. dollars) 2026 2025 $ Change % Change
Selling, general and administrative
Professional fees 1,178 940 238 25 %
Stock-based compensation 2,038 1,420 618 44 %
Salaries, wages, and other benefits 3,772 2,034 1,738 85 %
Insurance 238 265 (27) (10) %
Software expenses 1,291 1,315 (24) (2) %
Office and administrative 215 90 125 139 %
Travel and related expenses 376 150 226 151 %
Recruiting 378 7 371 5300 %
Selling, marketing and public relations 60 22 38 173 %
Other selling and administrative expenses 305 170 135 79 %
Total $ 9,851 $ 6,413 $ 3,438 54 %
Selling, general and administrative expenses increased $3.4 million, or 54%, to $9.9 million during the three months ended September 30, 2026, from $6.4 million for the three months ended September 30, 2025. This increase reflects the continued expansion of our operations and was primarily driven by a $2.4 million increase in personnel costs. This workforce expansion was strategically focused on scaling our global go-to-market capabilities, as well as strengthening our corporate infrastructure workforce. Furthermore, we incurred higher operational travel, recruiting, marketing, and office and administrative expenses, which were required to support these heightened commercial and organizational activities.
Depreciation expense
Depreciation expense decreased by $0.4 million, or 26%, to $1.1 million for the three months ended September 30, 2026, as compared to $1.5 million for the three months ended September 30, 2025. The decrease was due primarily to a lower depreciable asset base as satellites reached the end of their estimated useful lives.
Interest income, net
Interest income, net increased $0.6 million, or 205% to $0.8 million for the three months ended September 30, 2026 as compared to $0.3 million for the three months ended September 30, 2025. The increase was due to increased cash and cash equivalents following the Company's equity raises in the fourth quarter of 2025 and the first quarter of 2026.
Change in fair value of financial instruments
The positive change in fair value of financial instruments of $18.1 million was related to net gains on our financial instruments of $30.0 million for the three months ended September 30, 2026, compared to net gains of $11.9 million for the three months ended September 30, 2025. The change was primarily driven by larger gains on warrant and earnout liabilities (reflecting lower liability) whose exercise prices exceeded the market price of our common stock as they approached their first-quarter 2027 expiration dates.
Income tax expense
Income tax expense increased by $139 thousand, or 117%, to an expense of $258 thousand for the three months ended September 30, 2026, from $119 thousand for the three months ended September 30, 2025. The increase was largely driven by higher U.S. tax inclusions related to our foreign earnings.
Results of Operations
Comparison of Results for the nine months ended September 30, 2026 and 2025
The following table summarizes our results of operations for the nine months ended September 30, 2026 and 2025.
(in thousands of U.S. dollars) Nine Months Ended September 30, 2026 vs 2025
2026 2025 $ Change % Change
Revenue $ 38,067 $ 11,460 $ 26,607 232 %
Costs and expenses
Cost of revenue, exclusive of depreciation shown separately below 7,815 3,597 4,218 117 %
Engineering 9,979 7,449 2,530 34 %
Selling, general and administrative 25,008 18,259 6,749 37 %
Depreciation 3,644 6,037 (2,393) (40) %
Total costs and expenses 46,446 35,342 11,104 31 %
Operating income (loss) (8,379) (23,882) 15,503 (65) %
Other (expense) income, net
Interest income, net 2,789 734 2,055 280 %
Change in fair value of financial instruments (102,691) (10,791) (91,900) 852 %
Other (expense) income, net 471 (533) 1,004 (188) %
Total other (expense) income, net (99,431) (10,590) (88,841) 839 %
Loss before income tax (107,810) (34,472) (73,338) 213 %
Income tax expense (2,237) (794) (1,443) 182 %
Net loss $ (110,047) $ (35,266) $ (74,781) 212 %
Revenue
During the nine months ended September 30, 2026, revenue increased $26.6 million, or 232% to $38.1 million from $11.5 million for the nine months ended September 30, 2025. This growth was driven primarily by an $8.1 million increase in Data & Analytics revenue (service revenue), reflecting increased contract volumes and task orders from new and existing customers. Additionally, Space Systems product revenue increased by $17.5 million generated by the successful delivery of satellites and Space Systems service revenue increased $1.0 million as we continued ramp-up of our Space Systems line of business. Revenue for the nine months ended September 30, 2026 included $18.3 million attributable to our
Data & Analytics line of business and $19.8 million attributable to our Space Systems line of business, compared to $10.1 million and $1.3 million, respectively, in the prior year.
Cost of revenue, exclusive of depreciation
Cost of revenue, exclusive of depreciation, increased $4.2 million, or 117%, to $7.8 million for the nine months ended September 30, 2026 from $3.6 million for the nine months ended September 30, 2025. The increase was driven primarily by a $2.6 million increase in the cost of Space Systems revenue (primarily product revenue), which was directly attributable to the costs associated with the sale of satellites during the period. Furthermore, the cost of Data & Analytics revenue (service revenue) increased by $1.6 million, due to higher cloud computing and ground station costs to support our growing service volume.
Engineering expenses
Nine Months Ended September 30, 2026 vs 2025
(in thousands of U.S. dollars) 2026 2025 Change % Change
Engineering
Salaries, wages, and other benefits $ 6,290 $ 5,270 $ 1,020 19 %
Stock-based compensation 615 364 251 69 %
Professional fees 811 287 524 183 %
Software expenses 514 514 - - %
Office and administrative expenses 500 346 154 45 %
Travel and related expenses 410 173 237 137 %
Other 839 495 344 69 %
Total $ 9,979 $ 7,449 $ 2,530 34 %
Engineering expenses increased $2.5 million, or 34%, to $10.0 million for the nine months ended September 30, 2026 from $7.4 million for the nine months ended September 30, 2025. The increase was primarily to support the continued expansion of our PGI infrastructure, which includes the development of our Merlin constellation, the continued support of our NewSat constellation and the commercial ramp-up of our Space Systems business line. Cost drivers include a $1.3 million increase in personnel costs, reflecting the expansion of our technical workforce. Additionally, professional service fees for outsourced engineering increased by $0.5 million alongside higher clean room, operational travel, and office and administrative costs.
Selling, general and administrative expenses
Nine Months Ended September 30, 2026 vs 2025
(in thousands of U.S. dollars) 2026 2025 $ Change % Change
Selling, general and administrative
Professional fees $ 3,497 $ 3,621 $ (124) (3) %
Stock-based compensation 3,900 2,460 1,440 59 %
Salaries, wages, and other benefits 9,624 6,126 3,498 57 %
Insurance 718 849 (131) (15) %
Software expenses 3,823 3,865 (42) (1) %
Office and administrative expenses 400 266 134 50 %
Travel and related expenses 994 486 508 105 %
Recruiting 556 183 373 204 %
Selling, marketing and public relations 425 44 381 866 %
Other 1,071 359 712 198 %
Total $ 25,008 $ 18,259 $ 6,749 37 %
Selling, general and administrative expenses increased $6.7 million, or 37%, to $25.0 million during the nine months ended September 30, 2026, from $18.3 million for the nine months ended September 30, 2025. This increase reflects the continued expansion of our operations and was primarily driven by a $4.9 million increase in personnel costs. This workforce expansion was strategically focused on scaling our global go-to-market capabilities, as well as strengthening our
corporate infrastructure workforce. Furthermore, we incurred higher operational travel, recruiting, marketing, and office and administrative expenses, which were required to support these heightened commercial and organizational activities.
Depreciation expense
Depreciation expense decreased by $2.4 million, or 40%, to $3.6 million for the nine months ended September 30, 2026, as compared to $6.0 million for the nine months ended September 30, 2025. The decrease was due primarily to a lower depreciable asset base as satellites reached the end of their estimated useful lives.
Interest income, net
Interest income, net increased by $2.1 million or 280% to $2.8 million for the nine months ended September 30, 2026 as compared to $0.7 million for the nine months ended September 30, 2025. The increase was due to increased cash and cash equivalents following the Company's equity raises in the fourth quarter of 2025 and the first quarter of 2026.
Change in fair value of financial instruments
The negative change in fair value of financial instruments of $91.9 million was related to net losses on our financial instruments of $102.7 million for the nine months ended September 30, 2026, compared to net losses of $10.8 million for the nine months ended September 30, 2025. The change was primarily driven by the remeasurement of the fair value of the Secured Convertible Notes, warrant and earnout liabilities, which were impacted by the increases in our Class A common stock trading price during the nine months ended September 30, 2026, compared to a smaller increase in our stock price in the same period in 2025. Additionally, $12 million of the outstanding principal of our Secured Convertible Notes was converted into 10 million shares of our common stock during the nine months ended September 30, 2026, resulting in losses from the remeasurement immediately prior to each conversion. The negative change was partially offset by the fair value appreciation of the Company's equity investment in Officina Stellare.
Other (expense) income, net
Other (expense) income, net increased $1.0 million, or 188%, to $0.5 million of income for the nine months ended September 30, 2026, compared to $0.5 million of expense for the nine months ended September 30, 2025. The increase was driven primarily by foreign currency exchange net gains for the nine months ended September 30, 2026 compared to foreign currency exchange net losses for the nine months ended September 30, 2025.
Income tax expense
Income tax expense increased by $1.4 million, or 182%, to $2.2 million for the nine months ended September 30, 2026, from $0.8 million for the nine months ended September 30, 2025. The increase was driven primarily by greater international tax expense related to unrealized gains on our equity investments in the first nine months of 2026.
Non-GAAP Financial Measures
To supplement our Condensed Consolidated Financial Statements, which are prepared and presented in accordance with U.S. GAAP, we use the following non-GAAP measures: EBITDA; Adjusted EBITDA; Adjusted Net Cash Used in Operating Activities; and Non-GAAP Free Cash Flow. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with U.S. GAAP.
We define Non-GAAP EBITDA as net income (loss) excluding interest income, net, income taxes, depreciation and amortization. Interest income, net is interest income less interest expense. We did not incur amortization expense during the three and nine months ended September 30, 2026 and 2025.
We define Non-GAAP Adjusted EBITDA as Non-GAAP EBITDA further adjusted for other (expense) income, net, changes in the fair value of financial instruments, and stock-based compensation. Other (expense) income, net consists primarily of foreign currency gains and losses.
We define Non-GAAP Free Cash Flow as net cash used in operating activities, less payments for capital expenditures, plus proceeds from the sale of in-orbit satellites.
We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We believe these measures provide analysts, investors and management with
helpful information regarding the underlying operating performance of our business, as they provide meaningful supplemental information regarding our performance and liquidity by removing the impact of items that we believe are not reflective of our underlying operating performance. The non-GAAP measures are used by us to evaluate our core operating performance and liquidity on a comparable basis and to make strategic decisions. The non-GAAP measures also facilitate company-to-company operating performance comparisons by backing out potential differences caused by variations such as capital structures, taxation, depreciation, capital expenditures and other non-cash items (i.e., embedded derivatives, debt extinguishment and stock-based compensation) which may vary for different companies for reasons unrelated to operating performance. However, different companies may define these terms differently and accordingly comparisons might not be accurate. There are a number of limitations related to the use of non-GAAP financial measures. We compensate for these limitations by providing specific information regarding the U.S. GAAP amounts excluded from these non-GAAP financial measures, and evaluating these non-GAAP financial measures together with their relevant financial measures in accordance with U.S. GAAP. Non-GAAP measures such as EBITDA, Adjusted EBITDA, Adjusted Net Cash Used in Operating Activities, and Free Cash Flow are not intended to be a substitute for any U.S. GAAP financial measure.
As of January 1, 2026, we updated our methodology to exclude interest income from EBITDA and Adjusted EBITDA. This change aligns our reporting with industry peers and better serves our goal of providing useful information regarding our operating performance by ensuring that non-operating income and losses are excluded from our Non-GAAP profitability measures. The prior period has been recast using the updated methodology.
The following presents our non-GAAP financial measures, along with the most comparable GAAP metric:
Three Months Ended September 30, Nine Months Ended September 30,
(in thousands of U.S. dollars) 2026 2025 2026 2025
Net income (loss) available to stockholders $ 28,304 $ 3,967 $ (110,047) $ (35,266)
EBITDA (non-GAAP) 28,840 5,316 (106,955) (29,169)
Adjusted EBITDA (non-GAAP) 1,170 (4,927) (220) (15,021)
Net cash used in operating activities (10,359) (8,371) (18,831) (17,435)
Adjusted net cash used in operating activities (5,519) (8,371) (5,656) (17,435)
Free Cash Flow (non-GAAP) (11,733) (9,709) (23,055) (21,462)
Non-GAAP Financial Measure Reconciliations
The following table presents a reconciliation of Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA to our net loss for the periods indicated.
Three Months Ended September 30, Nine Months Ended September 30,
(in thousands of U.S. dollars) 2026 2025 2026 2025
Net income (loss) available to stockholders $ 28,304 $ 3,967 $ (110,047) $ (35,266)
Interest income, net
(829) (272) (2,789) (734)
Income tax (benefit) expense 258 119 2,237 794
Depreciation 1,107 1,502 3,644 6,037
Non-GAAP EBITDA $ 28,840 $ 5,316 $ (106,955) $ (29,169)
Change in fair value of financial instruments (29,999) (11,882) 102,691 10,791
Other expense (income), net (1)
(18) (14) (471) 533
Stock-based compensation 2,347 1,653 4,515 2,824
Non-GAAP Adjusted EBITDA $ 1,170 $ (4,927) $ (220) $ (15,021)
(1) Other expense (income), net includes foreign exchange gain or loss and other non-operating income and expenses not considered indicative of our ongoing operational performance.
The following table presents a reconciliation of Non-GAAP Free Cash Flow and Adjusted Net Cash Used in Operating Activities to cash flows used in operating activities for the periods indicated.
Three Months Ended September 30, Nine Months Ended September 30,
(in thousands of U.S. dollars) 2026 2025 2026 2025
Net cash used in operating activities $ (10,359) $ (8,371) $ (18,831) $ (17,435)
Proceeds from sale of in-orbit satellites 4,840 - 13,175 -
Adjusted net cash used in operating activities (5,519) (8,371) (5,656) (17,435)
Purchases of property and equipment (6,214) (1,338) (17,399) (4,027)
Non-GAAP Free Cash Flow $ (11,733) $ (9,709) $ (23,055) $ (21,462)
Liquidity and Capital Resources
We have devoted substantial effort and capital resources to the development of our satellite constellation and image technology. As of September 30, 2026, we had an accumulated deficit of $514.9 million, and for the nine months ended September 30, 2026 net cash used in operating activities was $18.8 million.
We continue to focus on cost and spending control measures, including a disciplined approach to growth in our workforce to preserve liquidity.
On April 12, 2024, the Company, Nettar, and Holder Representative entered into the Note Purchase Agreement with the Purchaser, pursuant to which Nettar agreed to issue the Secured Convertible Notes in the aggregate principal amount of $30.0 million to the Purchaser. The net proceeds from the issuance of the Secured Convertible Notes, after deducting transaction fees and other debt issuance costs, were approximately $27.6 million. The Secured Convertible Notes initially bear interest at a rate of SOFR plus 6.50% per annum, subject to an additional 4.0% per annum if certain events of default occur and are continuing. The Secured Convertible Notes are guaranteed by the Company and each of the Company's material subsidiaries (other than Nettar), and are secured by substantially all of the Company's and its subsidiaries' assets (including all of its intellectual property). Nettar may issue additional Secured Convertible Notes under the terms thereof, provided the aggregate principal outstanding amount does not exceed $50.0 million. The Secured Convertible Notes mature on April 12, 2028.
The Secured Convertible Notes contain certain restrictive covenants, including restrictions on (i) incurring indebtedness, subject to certain exceptions (including the ability to issue additional Secured Convertible Notes; provided
the aggregate principal outstanding amount does not exceed $50.0 million), (ii) creating certain liens, subject to certain exceptions, (iii) the payment of dividends or other restricted payments, (iv) the sale, transfer or otherwise conveyance of certain assets, subject to asset sale pre-payment described above, and (v) affiliate transactions. As of September 30, 2026 we are in compliance with all such covenants.
In connection with the offering of the Secured Convertible Notes, the Company also entered into a registration rights agreement with the Purchaser, pursuant to which the Company agreed to register for resale the Class A common stock issuable upon conversion of the Secured Convertible Notes.
The Purchaser converted $6.0 million of principal under the Secured Convertible Notes in April 2026 and an additional $6.0 million of principal in May 2026 into 5.0 million and 5.0 million shares of Class A common stock, respectively. The principal owed on the Secured Convertible Notes at September 30, 2026, was $18.0 million.
On April 15, 2025, the Company entered into the Securities Purchase Agreement with the purchaser party thereto, pursuant to which the Company agreed to issue and sell in a registered direct offering, 6,451,612 shares of the Company's Class A common stock at an offering price of $3.10 per share. The gross proceeds to the Company from the registered direct offering were approximately $20 million, before deducting the placement agent's fees and estimated offering expenses payable by the Company. Closing of the registered direct offering occurred on April 16, 2025.
On October 15, 2025, the Company entered into an Underwriting Agreement (the "Underwriting Agreement") with CF&Co., as representative of the underwriters named therein, in connection with an underwritten public offering of 27,692,308 shares of the Company's Class A common stock, par value $0.0001 per share, at a public offering price of $3.25 per share.
Under the terms of the Underwriting Agreement, the Company granted the underwriters a 30-day option to purchase up to 4,153,846 additional shares of Class A common stock. The gross proceeds to the Company from the offering were $90 million, before deducting underwriting discounts and commissions and other estimated offering expenses payable by the Company. All of the shares were sold by the Company. The offering closed on October 17, 2025.
On January 26, 2026, the Company entered into a share purchase agreement with the purchasers party thereto, pursuant to which the Company agreed to issue and sell in a registered direct offering, 7,399,578 shares of the Company's Class A common stock, par value $0.0001 per share, at an offering price of $4.73 per share. The gross proceeds to the Company from the offering were approximately $35 million, before deducting the placement agents' fees and estimated offering expenses payable by the Company. The closing of the offering occurred on January 27, 2026.
On March 30, 2026, the Company entered into the Sales Agreement pursuant to which the Company may offer and sell, from time to time, through the sales agents, shares of its Class A common stock, par value $0.0001 per share, having an aggregate offering amount of up to $50.0 million. We expect to use any net proceeds from the ATM Program for general corporate purposes. No shares have been issued under the ATM as of September 30, 2026 and we have the full $50.0 million amount remaining under the Current ATM Program.
As of September 30, 2026, the Company had outstanding letters of credit totaling approximately $3.6 million issued to various beneficiaries to guarantee performance/contractual obligations. These letters of credit are primarily denominated in euros and U.S. dollars. As of September 30, 2026, no amounts have been drawn against these letters of credit, and the Company believes the likelihood of a material draw is remote.
Our cash and cash equivalents are maintained in highly liquid investments with remaining maturities of 90 days or less at the time of purchase. As of September 30, 2026, we had $106.5 million in cash and cash equivalents on hand and total Secured Convertible Note principal and accrued interest outstanding of $18.1 million. We believe our existing cash will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months.
Currently, we primarily rely on our existing cash and cash equivalents to fund our business, including capital expenditures, working capital requirements, and anticipated interest payments. Our current and future revenue depends primarily on our ability to: (i) utilize our available satellite capacity with new and existing customers and (ii) enter into new commercial relationships with new customers. There can be no assurance that we will attain positive cash flow from operations. We have experienced, and may continue to experience, negative cash flows, and if we continue to experience negative cash flows, our existing cash and cash equivalents balances may be reduced, and we may be required to reduce capital expenditures, or make other changes to our operating structure, all of which could have a material adverse effect on our business.
Our future capital requirements may vary materially from those currently planned and our ability to meet those requirements will depend primarily on our ability to generate sufficient revenue to achieve profitability. To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing.
Additionally, we are an early-stage growth company and subject to a number of risks associated with emerging, technology-oriented companies with a limited operating history, including, but not limited to, dependence on key individuals, a developing business model, key customers, initial and continued market acceptance of our services and protection of our proprietary technology. Our sales efforts involve considerable time and expense, and our sales cycle is long and unpredictable. We also have risks from competition from substitute products and services. All of these risks, as well as the risks included in Part I, Item 1A. Risk Factors included in our 2025 Annual Report, could have an adverse impact on our business and financial prospects and cause us to seek additional financing to fund future operations.
Cash Flows Summary
The following table summarizes our cash flow information for the nine months ended September 30, 2026 and 2025.
Nine Months Ended September 30,
(in thousands of U.S. dollars) 2026 2025
Net cash flows:
Net cash flows used in operating activities $ (18,831) $ (17,435)
Net cash flows used in investing activities (4,224) (4,027)
Net cash flows provided by financing activities 31,200 26,982
Net change in cash, cash equivalents and restricted cash $ 8,145 $ 5,520
Cash Flows Provided by (Used in) Operating Activities
The cash flows used in operating activities to date have been primarily comprised of costs and expenses related to development of our products, payroll, fluctuations in accounts payable and other current assets and liabilities. As we continue to expand our commercial operations, we anticipate our cash used in operating activities will remain elevated until we begin to generate material cash flows from the business.
Cash flows used in operating activities are as follows:
(in thousands of U.S. dollars) Nine Months Ended September 30,
2026 2025
Net loss $ (110,047) $ (35,266)
Adjustments for the impact of non-cash items (1)
98,631 17,600
Net loss adjusted for the impact of non-cash items (11,416) (17,666)
Changes in assets and liabilities
Accounts receivable(2)
(4,154) (20)
Inventories (3)
2,027 -
Prepaid expenses and other current assets(4)
(2,453) 2,008
Accounts payable(5)
1,312 (1,475)
Other(6)
(4,147) (282)
Net cash used in operating activities $ (18,831) $ (17,435)
(1)Includes items such as depreciation, changes in the fair value of financial instruments, deferred income tax, stock-based compensation expense, release of estimated credit losses on accounts receivable, changes in foreign currency and others.
(2) The change is primarily due to timing of payments and billings on new revenue contracts.
(3) The change is due to the inventory classification of satellites sold during 2026.
(4) The change is primarily due to the $1.8 million increase in contract assets in 2026 and the expiration of our OS warrants.
(5) The change is primarily due to the timing of payments.
(6) The change is primarily due to a decrease in contract liabilities for delivery of satellites sold during 2026.
Cash Flows Used in Investing Activities
Our cash flows used in investing activities to date have been primarily comprised of purchases of satellite components and other property and equipment. Investing activities have increased substantially as we ramped up satellite production activity and factory development in connection with expanding our production capacity.
Net cash used in investing activities of $4.2 million for the nine months ended September 30, 2026, increased compared to $4.0 million for the nine months ended September 30, 2025. The Company has increased its purchases of property and equipment to $17.4 million to support our build and launch of satellites and to develop our Merlin constellation, partially offset by $13.2 million in proceeds from sales of in-orbit satellites, which were originally intended for our internal constellation and thus were recorded as capital expenditures rather than inventory, precluding us from reflecting these sales in operating activities.
Cash Flows Provided by Financing Activities
Net cash provided by financing activities was $31.2 million for the nine months ended September 30, 2026 compared to net cash provided by financing activities of $27.0 million for the nine months ended September 30, 2025, which resulted primarily from greater proceeds from stock issuances under the Registered Direct Offering in the first nine months of 2026 compared to the proceeds from the prior ATM Program and prior year registered direct offering, partially offset by lower proceeds from exercise of stock options and higher payments for withholding taxes related to the net share settlement associated with higher equity awards in the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025.
Debt
Refer to Note 15 (Secured Convertible Notes) to the Condensed Consolidated Financial Statements for a discussion of our debt at September 30, 2026 and December 31, 2025.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations are based upon our Condensed Consolidated Financial Statements, which have been prepared in accordance with U.S. GAAP. The preparation of our Condensed Consolidated Financial Statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures. The accounting policies that have been identified as critical to our business operations and to understanding the results of our operations pertain to revenue recognition, impairment of assets, fair value of financial instruments, and income taxes. Actual results may differ materially from these estimates under different assumptions and conditions.
Refer to Note 2 Summary of Significant Accounting Policies for updates to our critical accounting policies and estimates during the nine months ended September 30, 2026, specifically regarding our revenue recognition policy for satellite sales and the transition to the fair value method of accounting for our equity investment in Officina Stellare. Aside from these updates, the application of each of these critical accounting policies and estimates is discussed in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our 2025 Annual Report.
Emerging Growth Company and Smaller Reporting Company Status
We are an "emerging growth company" as defined in Section 2(a) of the Securities Act and have elected to take advantage of the benefits of the extended transition period for new or revised financial accounting standards. This may make it difficult or impossible to compare our financial results with the financial results of another public company that is either not an emerging growth company or is an emerging growth company that has chosen not to take advantage of the extended transition period exemptions because of the potential differences in accounting standards used.
As an emerging growth company, we are not required to, among other things, (i) provide an auditor's attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act, and (ii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements (auditor discussion and analysis).
We will cease to be an emerging growth company upon the earliest of the applicable triggering events under Section 2(a)(19) of the Securities Act, including the fifth anniversary of the first sale of our common equity securities pursuant to an effective registration statement. However, because we will be eligible to use the requirements for smaller reporting companies through the end of fiscal year 2026 (discussed below), we will not become an accelerated filer or large accelerated filer as of December 31, 2026. Therefore, the auditor attestation requirement over internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002 will not apply to our Annual Report on Form 10-K for the fiscal year ending December 31, 2026.
We are also a "smaller reporting company" as defined in Item 10(f)(1) of Regulation S-K. As a smaller reporting company, we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.
As of June 30, 2026 our public float exceeded $700 million. As a result, we will cease to qualify as a smaller reporting company. However, we will continue to be eligible to use the requirements for smaller reporting companies through the end of fiscal year 2026, including our Annual Report on Form 10-K for fiscal year 2026. Beginning with our Form 10-Q for the first fiscal quarter of 2027, we will be ineligible to use the requirements for smaller reporting companies and, therefore, will be subject to heightened disclosure and compliance obligations. Compliance with these expanded requirements will require our management to devote additional time and resources and will result in increased legal, accounting, and compliance expenses.
Recent Accounting Pronouncements
Refer to Note 3 (Accounting Standards Updates) in the Condensed Consolidated Financial Statements included in this Report for more information about recent accounting pronouncements, the timing of their adoption and our assessment, to the extent we have made such an assessment, of their potential impact on our financial condition and our results of operations and cash flows.
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