Quarterly Report for Quarter Ending June 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following is a discussion and analysis of our financial condition and results of operations as of, and for, the periods presented. The following discussion and analysis should be read in conjunction with the sections entitled "Risk Factors" and "Cautionary Note Concerning Forward-Looking Statements" included in this Quarterly Report on Form 10-Q and in our other reports filed with the Securities and Exchange Commission (the "Commission"), and with the unaudited condensed consolidated financial statements and accompanying notes included in Item 1 hereto. In addition, the unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Registration Statement on Form S-1 (File No. 333-288646), as amended, initially filed with the Commission on July 11, 2025 (the "Registration Statement"), pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended (the "Securities Act"), in connection with our initial public offering ("IPO"). Certain information contained in this discussion and analysis includes forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to Item 1A. "Risk Factors" and the "Cautionary Note Regarding Forward-Looking Statements" sections of this Quarterly Report on Form 10-Q and our Registration Statement.

Our historical results are not necessarily indicative of the results that may be expected for any period in the future, and our interim results are not necessarily indicative of the results we expect for the full fiscal year or any other period. Unless the context otherwise requires, all references in this section to the "Company," "Firefly," "we," "us" or "our" refer to Firefly Aerospace Inc. and its consolidated subsidiaries.

Overview

Our company is a market leading space and defense technology company providing comprehensive mission solutions to national security, government, and commercial customers with an established track record of success. Our mission is to enable responsive and reliable launch, transit, and operations in space for our national security and commercial customers across the globe. Backed by our world-class team and proven technology, we have designed, developed, and deployed our class leading launch vehicles and dynamic spacecraft solutions, to support critical customer missions across the space domain. As a leader of responsive mission solutions and the only commercial company to achieve a fully successful Moon landing, we are a partner of choice for national security, government, and commercial customers for their critical space missions. As a U.S.-based company, our purpose-built family of products aligns with the ongoing paradigm shift in government missions and procurement processes, where speed, dependability, efficiency, and economics drive customer decision-making.

We operate as a single reportable segment and serve this critical domain through our differentiated and scalable platform of Launch and Spacecraft Solutions. Our offerings include:

Launch:Our launch vehicles provide dedicated and responsive launch capabilities for national security, government, and commercial customers. We are the only U.S. company with a liquid-powered orbital launch vehicle in the 1,000-kilogram payload class.

Our Alpha launch vehicle employs a distinct combination of technologies designed to ensure high performance and efficiency at low cost. It uses a unique lightweight, rigid, and thermally insulated carbon composite technology for both the primary rocket structure as well as the propellant tanks, which ensures more of the usable mass goes to the mission payload. Alpha is also powered by our patented tap-off cycle engine technology, which is more efficient than legacy systems and provides greater reliability by employing fewer parts than those in traditional rocket engines. We have utilized this proprietary technology to develop and test all our rocket engines in-house. Alpha has five engines: four first stage Reaver engines, and one second stage Lightning engine. In addition to its track record of successful, dedicated, and responsive launch, Alpha is also designed to support testing of hypersonic payloads, providing significant growth opportunities for hypersonic deterrents, reconnaissance, and future national security needs. We are also expanding our launch pad operations from Vandenberg Space Force Base to add Virginia's Mid-Atlantic Regional Spaceport on Wallops Island and the Esrange Space Center in Sweden to support more missions, customers, and additional launch cadence opportunities. The Sweden launch pad is intended to expand Alpha production and operations to strategic international locations to service the European, UK, Japan, South Korea, Middle East, and Australia regions, which we expect will provide the foundation for a future business model to service the global market.

Eclipse is powered by eight Firefly-developed engines: seven first-stage Miranda engines and one second-stage Vira engine. The Miranda engine is built using the same engine architecture and patented tap-off cycle as the Reaver engine, while the Vira engine is based on Alpha's second-stage vacuum-optimized Lightning engine. These common technologies are facilitating the fast, cost-efficient, and reliable development of Eclipse. Eclipse is being built to serve national security, commercial, and international launch markets at competitive pricing. Eclipse's first stage is designed to be reusable, lowering production costs and improving cycle times for this launch platform. We are planning to construct a refurbishment facility that will facilitate this reusability. The first launch of Eclipse

is expected to take place from Virginia's Mid-Atlantic Regional Spaceport on Wallops Island, and Eclipse is designed to be compatible with additional launch ranges on the East and West Coasts of the United States.

Spacecraft Solutions:Firefly is the only company to achieve a fully successful Moon landing, completing all 17 objectives set out before launch. We expect our Blue Ghost lander to fly annual missions to the Moon, with payload services customized to the technology and exploration goals of our customers. Offering ride-share opportunities and dedicated missions, Blue Ghost is built to host and deliver payloads nearly anywhere on the lunar surface. Blue Ghost Mission 2 will land on the far side of the Moon and conduct at least 10 days of lunar surface operations with the Blue Ghost lander, with an Elytra Dark spacecraft supporting as a communications relay. Elytra Dark is one of three Elytra configurations supporting on-orbit servicing missions. This Elytra Dark spacecraft is expected to remain operational in lunar orbit for up to five years. Mission 2 is fully manifested with both NASA and commercial payloads, including a commercial rover and a ride-sharing international satellite. Blue Ghost Mission 3, already under contract from NASA, has selected Blue Origin as the partner to deliver their rover to the lunar surface. Firefly recently was awarded Blue Ghost Mission 4 by NASA for landing at the Moon's south pole region. Additionally, we have been selected by a proprietary commercial customer for a separate dedicated Blue Ghost lander mission.

Elytra is a dynamic spacecraft that is highly maneuverable and extensible to perform hundreds of Rendezvous Proximity Operations in support of Space Domain Awareness and Warfighting missions, long-range communications relay missions, on-orbit edge processing missions, and advanced Space Exploration missions. Blue Ghost and Elytra are highly complementary and compatible technologies that share a common core. Most of Elytra's core hardware and software were proven at a variety of orbits through Blue Ghost's successful Mission 1. As part of our end-to-end space services, Elytra offers robust on-orbit solutions and responsive defense capabilities when and where customers need them. As of April 2025, Elytra is contracted to perform a responsive on-orbit mission in support of the U.S. Department of Defense's (the "DoD") Defense Innovation Unit ("DIU") Sinequone Project. During this mission, Elytra will serve as a space maneuver vehicle to perform a series of on-orbit tasks including space domain awareness in Low Earth Orbit ("LEO"). Available to launch on Alpha and Eclipse, our Elytra vehicles are positioned to service the entire lifecycle of government and commercial missions. This unique interoperability makes Firefly a one-stop shop and partner of choice for national security, government, and commercial customers requiring these capabilities.

Customers: Our track record of success and our reputation as a trusted provider for our customers results in a highly attractive, diversified business model defined by significant backlog and cash flow visibility. Strong customer demand backs our financial profile with approximately $1.1 billion in backlog as of June 30, 2025 and multi-launch agreements across our product lines. With Firefly's recent award of Blue Ghost Mission 4 by NASA, our backlog grew to $1.3 billion as of July 31, 2025. Underpinning our financial profile is the combination of efficient contract structure and milestone-based billing. Before launch, we typically have collected approximately 90% of the total contract value, which is highly advantageous as production ramps. We are also differentiated in our ability to successfully execute on fixed firm price contracts. We are ahead of the curve as the industry shifts in favor of fixed firm price contracts and are well-positioned to capitalize on this change.

As the space market continues to grow and evolve, we are well positioned to serve our customers' most complex missions with rapid response times and purpose-built solutions. Our collaborations with leading national security agencies and aerospace companies, such as Lockheed Martin Corporation, Northrop Grumman, L3Harris, Space Force, Space Development Agency ("SDA"), National Reconnaissance Office ("NRO"), and NASA demonstrate the value and criticality of our new space defense and technology leadership in this market.

Operations: We strategically deployed capital to build state-of-the-art infrastructure to design, produce, test, and manufacture our products to the highest standard at a regular cadence. Our three primary facilities - corporate headquarters, Hive spacecraft facility, and Rocket Ranch manufacturing and testing site-are only 25 miles apart, providing unique proximity between design, manufacturing, and production. The proximity of our core facilities enables agile and rapid vehicle development and production at lower cost versus competitors.

Our purpose-built research and development ("R&D"), manufacturing, and testing footprint is the product of significant investments and the backbone of our manufacturing process. We designed our advanced manufacturing process through years of optimization that now allow us to replicate our additional facilities with significantly less capital outlay. Each of our launch sites were chosen intentionally to enhance flexibility for our customers. Our early investment in cutting-edge technology and best-in-class facilities is a competitive advantage, creating a platform primed for continued growth. As we scale, we have and expect to continue to replicate our proprietary manufacturing and testing processes, resulting in reduced cycle times and further capital efficiency.

Additionally, we have deep, long-term relationships with our key suppliers. By maintaining a vertically integrated manufacturing process, we are less reliant on the timelines of outside suppliers and reduce risk within our supply chain. Our suppliers, who are also well diversified, do not include any individual suppliers accounting for more than 20% of our total vendor costs for either the three or six months ended June 30, 2025 or 2024.

Our full suite of manufacturing capabilities is supplemented by four launch sites, which will continue to enhance flexibility and responsiveness for our missions. We are currently launching from the Vandenberg Space Force Base launch site in California. Additional launch sites are under construction at Virginia's Mid-Atlantic Regional Spaceport on Wallops Island and the Esrange Space Center in Sweden, and future launch pad capacity will be unlocked from expansion at Cape Canaveral Space Force Station in Florida. Our significant scale and unique blueprint are strategically planned to support our increasing launch cadence as we grow.

Backlog

We view growth in backlog as a key measure of our business growth. Backlog represents our estimate of the revenue we expect to realize in future periods as a result of performing work on contracts that have been awarded to us (net of any revenue already recognized as of the backlog date). We include the aggregate expected revenue of awarded contracts in our backlog upon the execution of a legally binding agreement, even though our contracts include certain termination rights exercisable by our customers with advance notice. Deferred revenue recognized on our unaudited condensed consolidated balance sheets consists of payments and billings that we have received in excess of revenue that we have recognized. Because cash receipts from these contracts have not been recognized into revenue, they are included in our backlog calculation.

We view growth in backlog as a key measure of our future business prospects. We monitor our backlog because we believe it is a forward-looking indicator of potential sales which can be helpful to investors in evaluating the performance of our business and identifying trends over time. Although backlog reflects business associated with contracts that are considered to be firm, terminations, amendments, or contract cancellations may occur, which could result in a reduction in our total backlog and potential future revenue that never gets recognized.

The increase in backlog from December 31, 2024 to June 30, 2025 was primarily due to two new contracts for Alpha and two new contracts for engineering services. With Firefly's recent award of Blue Ghost Mission 4 by NASA, our backlog grew to $1.3 billion as of July 31, 2025.

The following amounts relate to executed multi-launch agreements where the missions have not yet been scheduled as of the backlog date. These amounts are included as part of the total backlog.

Trends and Key Factors Affecting Performance

Macroeconomic Pressures

In recent years, geopolitical instability, including wars and conflicts, as well as impacts from other global events, have resulted in opportunities for companies in the space and defense technology market. However, certain disruptions to the global economy, including market disruptions, monetary, and fiscal policy uncertainty, supply chain challenges, high interest rates and inflationary pressures have contributed to an inflationary environment that has adversely affected, and may continue to adversely affect, the price and availability of certain products and services necessary for our operations, which in turn may adversely impact our business and operating results. In addition, the global trade environment is uncertain and rapidly evolving. Tariffs imposed by the U.S. presidential administration or retaliatory tariffs announced by other countries could result in a trade war. The impact of tariffs on our business and results of operations will depend on their timing, duration, and magnitude.

Government Environment and Regulations

Our industry is affected by government budget and spending levels, changes in demand, changes in policy positions or priorities, the domestic and global political and economic environment, and the evolving nature of the space and defense sectors. In particular, the expansion of adversarial budgets to fund the development of hypersonic technologies poses a direct threat to the U.S., fueling this market momentum. Total state-sponsored defense spending is projected to grow from $66 billion in 2023 to $180 billion in 2035 according to the World Economic Forum and McKinsey. Any changes in budget and spending levels, policies, or priorities,

including the current emphasis by the U.S. presidential administration on access to space, may have an adverse impact on our business and operating results. In addition, U.S. government procurement regulations impose various operational requirements on government contractors. Non-compliance with any of these regulations could materially adversely affect our operating results.

Pace of Government Expenditures and Private Enterprise Investment in the Space Economy

Our future growth is largely dependent on our ability to continue to capitalize on increased government spending and private investment in the space economy. Government expenditures and private enterprise investment have fueled our growth in recent years and have resulted in our continued ability to secure increasingly valuable contracts for products and services as well as the ability to continue financing the growth and development of our business. We expect the continued availability and growth of government expenditures and private investment in the space economy will be an important contributor to increased purchases of our products and services; however, any delays or reductions in appropriations for our programs and changes in U.S. government priorities and spending levels more broadly may negatively impact our business.

Ability to Continue the Expansion of Launch and Spacecraft Mission Operations

The launch market is rapidly expanding, with significant demand for launch and spacecraft solutions and services. Our success and ability to generate higher revenue will depend in large part on our ability to expand our Launch and Spacecraft Solutions offerings and to continue the deployment and development of our launch vehicles.

We expect to continue to ramp up our launch cadence as we increase our production rate on Alpha rockets, and complete development of Eclipse. We successfully completed our first lunar landing on March 2, 2025, with additional Blue Ghost missions planned in 2026 and 2028. Empowered by our successful Blue Ghost mission and common technologies across spacecraft, we believe we are well positioned to unlock adjacent markets and contracts via our multi-mission orbital vehicle, Elytra. Any delays in commencing our missions, including due to delays or cost overruns in obtaining licenses or other regulatory approvals, or entering into future agreements with additional customers could adversely impact our results and growth plans. We have approximately $1.1billion in backlog, as of June 30, 2025, and we are in active discussions with numerous potential customers, including government agencies and private companies, to potentially add to our backlog. With Firefly's recent award of Blue Ghost Mission 4 by NASA, our backlog grew to $1.3 billion as of July 31, 2025.

Ability to Improve Profit Margins and Scale our Business

The growth of our business is dependent on our ability to improve our profit margins over time while successfully scaling our business, including through continued investment in initiatives to improve our operating leverage. We believe continued reduction in costs and an increase in production and service volumes will enable a reduction of the cost of launch vehicles and an improvement of our gross margins. As we increase our launch cadence, we expect to be able to continue to improve our cost structure as fixed and overhead costs are amortized over a greater number of launches. Revenue, net income, and the timing of our cash flows also depend on our ability to perform on our contracts, and profitability can fluctuate depending on the mix of contracts awarded. To manage these fluctuations, we have implemented several strategies, such as closely monitoring project and related services timelines to anticipate cash flow needs. Despite these measures, the inherent variability in milestone achievements means that quarter-to-quarter comparisons of our results of operations may not necessarily be indicative of future performance.

Ability to Continue to Innovate and Expand our Service Offerings

To continue gaining market share and attracting customers, we plan to continue to make substantial investments in R&D for the continued enhancements of our Launch and Spacecraft Solutions. Our growth opportunity is dependent on our continued ability to expand our addressable launch market, win lunar and orbital missions and expand our portfolio of services related to those offerings. For instance, building on our launch, lander, transit, and operations success with Alpha and Blue Ghost, we are on track for our spacecraft offerings to facilitate payload hosting services, transport services, utility services, and data services in LEO, Medium Earth Orbit, and Geosynchronous Earth Orbit. We plan to continue to forge strategic partnerships with industry leaders to enhance our technological capabilities and market reach.

Components of Results of Operations

Revenue - Our revenue is primarily derived from long-term contracts to provide launch and integration services for payloads requiring transportation into orbit via launch vehicles and to provide end-to-end services for the transportation of payloads.

Launch revenue includes revenues from contracts with commercial and government entities to provide launch and integration services for payloads requiring transportation into orbit via launch vehicles. These contracts may include milestone payments and deposits. We consider the performance obligation to be the initiation of the launch and recognize revenue at that point in time. We also enter into contracts with our customers to provide engineering services, related components, and develop and provide licenses to

intellectual property. In these cases, our service obligation is satisfied over time since the tasks are performed according to the customer's specifications, which creates an asset with no alternative use to us and we have an enforceable right to payment for performance completed to date.

Spacecraft Solutions revenue includes revenue from contracts with commercial and government entities to provide end-to-end services to transport payloads to the Moon. These contracts include milestone payments and deposits. We consider the performance obligation to be the end-to-end commercial payload services. These contracts typically require that the customer make milestone payments as specific conditions and tasks are performed. Our payload services obligation is satisfied over time since the tasks are performed according to the customer's specifications, which creates an asset with no alternative use to the Company and the Company has an enforceable right to payment for performance completed to date.

For all revenue streams, we consider milestone payments that are contingent on the success of a mission to be variable consideration. We assess the likelihood of success of a mission at inception and may defer the recognition of some or all of the variable consideration until success of the mission is assured.

We perform work under contracts that broadly consist of fixed-price, cost-reimbursable, time-and-materials arrangements, or a combination of the three. Pricing is contractually based on specific negotiations with each customer. Advanced payments and billings for milestones in excess of revenues recognized are recorded as current and non-current deferred revenue in our unaudited condensed consolidated balance sheets and recognized into revenue as the Company satisfies the underlying performance obligations. Occasionally we recognize revenue in advance of customer billings which creates a contract asset recorded within other current assets.

For fixed-price contracts satisfied over time, progress is measured using a cost-to-cost method, which accurately reflects the transfer of control to the customer. This method assesses the extent of progress based on the ratio of costs incurred to date against the total estimated costs to complete the performance obligation. Estimating total costs to complete requires us to make informed estimates regarding subcontractor performance, material costs and availability, labor costs and productivity, as well as overhead expenses. Frequently, the period of performance of a contract extends over a long period of time and, as such, revenue recognition and our profitability from a particular contract may be affected to the extent that estimated costs to complete are revised, delivery schedules are delayed, performance-based milestones are not achieved, or progress under a contract is otherwise impeded. Accordingly, our recorded revenues and operating profit from period to period can fluctuate significantly depending on when contractual obligations are achieved.

Should the estimated total costs to be incurred on a contract surpass the anticipated total revenue, we recognize a provision for the entire loss on the contract in the period when the loss is identified. For further discussion of the critical judgments and estimates related to our revenue recognition policies, see the section titled "Critical Accounting Estimates."

Cost of Sales - primarily consists of raw materials, salaries and benefits, depreciation and amortization, and other costs directly attributable to fulfilling our obligations under customer contracts. Costs of sales are expensed as incurred. We expect our cost of sales to increase in absolute dollars in future periods as we sell more services and as our products mature to technological feasibility and reach full-rate production.

Research and Development - includes employee and contractor compensation, supplies and materials for new service development, depreciation and amortization, and regulatory compliance costs. Research and development costs are expensed as incurred. We expect to continue investing in research and development and, accordingly, expect our research and development expenses to vary as we continue to invest in developing and improving our services, and as the Company's products reach technological feasibility and full-rate production.

Selling, General, and Administrative - includes personnel-related expenses, depreciation and amortization, and facilities-related costs primarily for our executive, marketing, finance, accounting, legal, and human resources functions. Selling, general, and administrative expenses also include expenses related to advertising, insurance, sales commission and fees for professional services principally consisting of legal, audit, and tax, as well as executive management expenses. Selling, general, and administrative expenses are expensed as incurred. We expect to incur additional selling, general, and administrative expenses as we begin operations as a public company, including expenses related to compliance with public company reporting obligations, and increased costs for insurance, investor relations, and professional services. As a result, we expect that our selling, general, and administrative expenses will increase in future periods and vary from period to period as a percentage of revenue.

Loss on Disposal of Fixed Assets - reflects the losses associated with the disposal of property and equipment outside the normal course of business operations.

Interest Expense, Net - consists primarily of interest expense incurred on borrowings under our Credit Facility and interest income earned on cash and cash equivalents.

Other (Expense) Income, Net - reflects miscellaneous income and expense unrelated to our core business activities.

Provision for Income Taxes - consists of an estimate for federal and state income taxes based on enacted rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities, and changes in the tax law. We maintain a valuation allowance to offset all federal and state net deferred tax assets, as realization of such assets does not meet the more-likely-than-not threshold required under ASC 740, Income Taxes.

Results of Operations

Comparison of the Three Months Ended June 2025 to the Three Months Ended June 2024

The following table sets forth a summary of our results of operations for the periods indicated, and the changes between periods.

* not meaningful

Revenue

The following table sets forth a summary of our revenue by type for the periods indicated, and the changes between comparative periods.

Total revenue decreased by $5.5 million, or 26%, to $15.5 million during the three months ended June 30, 2025 from $21.1 million during the three months ended June 30, 2024, primarily driven by the factors discussed below.

Launch Revenue

Launch revenue increased by $3.4 million, or 113%, to $6.3 million during the three months ended June 30, 2025 from $3.0 million during the three months ended June 30, 2024. The increase was primarily driven by $2.5 million in revenue recognized from Eclipse contracts as the Company increased the rate of Eclipse development in 2025. Additionally, $0.9 million of revenue was recognized from contracts for certain engineering services that we began providing in 2025.

Spacecraft Solutions Revenue

Spacecraft Solutions revenue decreased by $8.9 million, or 49%, to $9.2 million during the three months ended June 30, 2025 from $18.1 million during the three months ended June 30, 2024. This was primarily due to $6.8 million in revenue associated with the one-time Korea Advanced Institute of Science and Technology ("KAIST") mission in the second quarter of 2024 and a $3.1 million decrease in Blue Ghost program revenue related to normal fluctuations in activity across Blue Ghost missions in progress period over period.

Cost of Sales

Cost of sales decreased by $6.6 million, or 36%, to $11.6 million during the three months ended June 30, 2025 from $18.1 million during the three months ended June 30, 2024, aligning with the decrease in revenue. This was due to a $6.1 million decrease related to the one-time KAIST mission in the second quarter of 2024 and a $3.0 million decrease in Blue Ghost program cost of sales due to the impact of relief of loss provisions in connection with certain contract modifications on Blue Ghost Mission 2, offset by a $2.5 million increase in Eclipse cost of sales.

Research and Development

Research and development costs increased by $6.2 million, or 16%, to $45.8 million during the three months ended June 30, 2025 from $39.5 million during the three months ended June 30, 2024. This is partially due to a $1.0 million increase in payroll and compensation expenses related to additional headcount to support continued development of Eclipse and Elytra. There was also an increase of $3.5 million in material and supplies costs primarily due to Eclipse program development, and an increase of $1.8 million in depreciation and amortization expenses related to the completion of test stands and manufacturing facilities that were placed in service during the current year period.

Selling, General, and Administrative

Selling, general, and administrative expenses decreased by $0.3 million, or 2%, to $12.6 million during the three months ended June 30, 2025 from $12.3 million during the three months ended June 30, 2024. This was primarily driven by a $2.0 million increase in payroll-related expenses due to the expansion of operations, and an increase of $0.4 million in information technology infrastructure costs. This was offset by a decrease of $2.6 million period over period related to the one-time write off and disposal of certain assets during the second quarter of 2024.

Interest Expense, Net

Interest expense, net increased by $1.5 million, or 40%, to $5.2 million during the three months ended June 30, 2025 from $3.7 million during the three months ended June 30, 2024. This increase primarily reflects a $2.3 million decrease in non-cash interest expense related to interest capitalized, resulting from decreased construction in progress period over period resulting from the placement into service of several major assets during 2024. In addition, there was a $1.0 million increase in debt issuance cost amortization from the Company's entrance into the third amendment to the Term Loan Facility in May 2024. These increases were offset by a $1.8 million increase in interest income driven by a more efficient capital structure, including higher yields from money market holdings.

Provision for Income Taxes

Our provision for income taxes consists of an estimate for federal and state income taxes based on enacted rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities, and changes in the tax law. We maintain a valuation allowance to offset all federal and state net deferred tax assets, as realization of such assets does not meet the more-likely-than-not threshold required under ASC 740, Income Taxes.

Comparison of the Six Months Ended June 2025 to the Six Months Ended June 2024

The following table sets forth a summary of our results of operations for the periods indicated, and the changes between periods.

* not meaningful

Revenue

The following table sets forth a summary of our revenue by type for the periods indicated, and the changes between comparative periods.

Total revenue increased by $42.0 million, or 143%, to $71.4 million during the six months ended June 30, 2025 from $29.4 million during the six months ended June 30, 2024, primarily driven by the factors discussed below.

Launch Revenue

Launch revenue increased by $7.2 million, or 169%, to $11.5 million during the six months ended June 30, 2025 from $4.3 million during the six months ended June 30, 2024. The increase was primarily driven by $5.8 million in revenue recognized from Eclipse contracts as the Company increased the rate of Eclipse development in 2025. Additionally, $1.4 million of revenue was recognized from contracts for certain engineering services that we began providing in 2025.

Spacecraft Solutions Revenue

Spacecraft Solutions revenue increased by $34.8 million, or 139%, to $59.9 million during the six months ended June 30, 2025 from $25.1 million during the six months ended June 30, 2024. The increase was primarily driven by $38.0 million of revenue related to the Blue Ghost Mission 1 in the first quarter of 2025, including revenue connected to the successful completion of the mission. There was also a $6.4 million increase in Blue Ghost program revenue due to additional progress on Blue Ghost Mission 2 and the commencement of work on Blue Ghost Mission 3, offset by a $9.6 million decrease related to the one-time Transporter-10 and KAIST missions in the first and second quarters of 2024, respectively.

Cost of Sales

Cost of sales increased by $36.8 million, or 130%, to $65.2 million during the six months ended June 30, 2025 from $28.4 million during the six months ended June 30, 2024, aligning with the increase in revenue. The increase in cost of sales was driven by a $40.5 million increase related to the Blue Ghost program, including the completion of the Blue Ghost Mission 1 during the first quarter of 2025, a $3.2 million increase related to the increase in the rate of Eclipse development, and a $1.2 million increase related to engineering services for the development of launch facilities on Wallops Island, Virginia, which began during 2025. These increases were offset by a $8.2 million decrease in cost of sales related to nonrecurring costs incurred for the one-time Transporter-10 and KAIST missions in the first and second quarters of 2024, respectively.

Research and Development

Research and development costs increased by $16.6 million, or 22%, to $93.8 million during the six months ended June 30, 2025 from $77.2 million during the six months ended June 30, 2024. This was primarily driven by a $6.5 million increase in costs related to the continuing ramp of the Alpha program, a $3.9 million increase in payroll expenses related to the expansion of production capacity, a $3.1 million increase in depreciation and amortization due to additional research and development assets being placed into service, and a $2.4 million increase in insurance expenses and other incremental costs related to our expanding research and development activities.

Selling, General, and Administrative

Selling, general, and administrative expenses increased by $3.5 million, or 16%, to $25.3 million during the six months ended June 30, 2025 from $21.9 million during the six months ended June 30, 2024. This increase was driven primarily by $3.7 million in expenses associated with our IPO, as well as additional costs due to the growth of our corporate operations and information technology infrastructure.

Interest Expense, Net

Interest expense, net increased by $2.9 million, or 39%, to $10.4 million during the six months ended June 30, 2025 from $7.5 million during the six months ended June 30, 2024.This increase was primarily driven by a $4.2 million reduction in interest capitalized and a $0.4 million increase in general interest expense during the six months ended June 30, 2025, offset by increases in interest income driven by a more efficient capital structure.

Provision for Income Taxes

Our provision for income taxes consists of an estimate for federal and state income taxes based on enacted rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities, and changes in the tax law. We maintain a valuation allowance to offset all federal and state net deferred tax assets, as realization of such assets does not meet the more-likely-than-not threshold required under ASC 740, Income Taxes.

Non-GAAP Financial Measures

Adjusted EBITDA

Adjusted EBITDA is a non-GAAP financial measure. We define Adjusted EBITDA as net loss adjusted for interest expense, net, provision for income taxes, depreciation and amortization, stock-based compensation expense, the change in fair value of warrant liabilities, loss (gain) on disposal of fixed assets, certain one-time IPO related costs, and other expenses. In addition to net loss, we use Adjusted EBITDA to evaluate our business, measure its performance, and make strategic decisions.

We believe that Adjusted EBITDA provides useful information to management, investors, and analysts in assessing our financial performance and results of operations across reporting periods by excluding items we do not believe are indicative of our core operating performance. Net loss is the U.S. GAAP measure most directly comparable to Adjusted EBITDA. Adjusted EBITDA should not be considered as an alternative to net loss.

Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

The table below presents Adjusted EBITDA, reconciled to net loss for the periods indicated:

(1) Represents costs incurred related to the IPO that do not meet the direct and incremental criteria per SEC Staff Accounting Bulletin Topic 5.A to be netted against the gross proceeds of the offering and that are not expected to recur in the future.

Free Cash Flow

Free Cash Flow is a non-GAAP financial measure. We define Free Cash Flow as net cash used in operating activities, less purchases of property and equipment. We believe that Free Cash Flow is a meaningful indicator of liquidity that provides information to management and investors about the amount of cash generated from or used in operations that, after purchases of property and equipment, can be used for strategic initiatives, including continuous investment in our business and strengthening our balance sheet.

Free Cash Flow has limitations as a liquidity measure, and you should not consider it in isolation or as a substitute for analysis of our cash flows as reported under U.S. GAAP. Free Cash Flow may be affected in the near to medium term by the timing of capital investments, fluctuations in our growth and the effect of such fluctuations on working capital, and changes in our cash conversion cycle.

The following table presents a reconciliation of net cash (used in) provided by operating activities, the most directly comparable financial measure presented in accordance with U.S. GAAP, to free cash flow:

Non-GAAP financial measures have important limitations as analytical tools and you should not consider non-GAAP financial measures in isolation or as a substitute for analyses of our operating results or cash flows as reported under U.S. GAAP. Non-GAAP financial measures may be defined differently by other companies in our industry and may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.

Liquidity and Capital Resources

We measure liquidity in terms of our ability to fund the cash requirements of our business operations, including working capital needs, capital expenditures, contractual obligations, debt service, acquisitions, and other commitments with cash flows from operations and other sources of funding. Our principal sources of liquidity to date have included amounts raised through issuances of equity capital and borrowings under our financing agreements.

Our expected primary uses of cash on a short and long-term basis are for working capital requirements, capital expenditures, R&D, debt service requirements, and other general corporate purposes. Our primary working capital requirements are for project execution activities including purchases of materials, subcontracted services and payroll, which fluctuate during the year, driven primarily by the timing and extent of activities required on new and existing projects.

As of June 30, 2025, our working capital position was in a surplus, in which our current assets exceeded our current liabilities. We often make advanced payments to suppliers for services that have not yet been received that are recorded as current or non-current assets depending on whether they are expected to be settled within a year. Additionally, as of June 30, 2025, our current deferred revenue totaled $82.7 million. This is primarily due to the timing and nature of our deferred revenue where advanced payments and billings in excess of revenues recognized are recorded as deferred revenue and recognized into revenue as the Company satisfies the underlying performance obligation. Due to the nature of our supplier and customer contracts as well as the timing of payments, we expect to continue to fluctuate between a surplus and a deficit of net working capital.

Our ability to generate sufficient liquidity from our ongoing operations and capital markets transactions in order to meet our obligations and operating needs will enable us to continue our business operations. If we require additional capital and are unsuccessful in raising that capital, we may not be able to continue our business operations and/or may be unable to advance growth initiatives, either of which could adversely impact our business, financial condition, and results of operations.

As of June 30, 2025, our cash and cash equivalents amounted to $205.3 million, and our financial debt amounted to $148.4 million. We have a limited history of operations and have incurred negative cash flows from operating activities and losses from operations in the past as reflected in the accumulated deficit of $918.0 million as of June 30, 2025. We believe that our cash will be adequate to meet our liquidity requirements for at least the next 12 months. Our future long-term capital requirements will depend on several factors, including our ability to raise additional capital and, over time, our ability to generate positive cash flows from operations.

On August 8, 2025, we completed an IPO of 22.2 million shares of our common stock, including the fully exercised over-allotment option of 2.9 million shares granted to the several underwriters, at a public offering price of $45.00 per share, for an aggregate offering price of $998.6 million. We received net proceeds of $933.1 million, net of $57.4 million of underwriting discounts and commissions and $8.1 million of offering costs.

Debt

Prior Credit Agreement

On July 17, 2023, we entered into a credit agreement (as further amended from time to time, the "Credit Agreement") among the Company and various lenders and U.S. Bank Trust Company, N.A. in its capacity as collateral agent for the lenders. The Credit Agreement provided term loan commitments in the aggregate principal amount of $136.1 million. The Credit Agreement consisted of a term loan commitment of $103.5 million ("Term A Loans") and a term loan commitment of $32.6 million ("Term B Loans" and, together with the Term A Loans, the "Term Loan Facility"). Borrowings under the Term Loan Facility bore interest at a fixed rate on the unpaid principal amount thereof of 13.875% provided that the fixed rate for Term Loan B Fixed Rate would increase to 19.135% in July 2026. All obligations under the Credit Agreement were guaranteed by the Company and certain subsidiaries of the Company and were secured by substantially all the Company's assets. The Term Loan Facility was expected to mature on July 17, 2028. The Credit Agreement contained customary mandatory prepayments, customary affirmative covenants and negative covenants, and a minimum cash financial covenant.

The obligations under the Credit Agreement (collectively, "Credit Agreement Obligations") were guaranteed (the "Credit Agreement Guarantees") by the Company's existing and future direct and indirect material wholly-owned subsidiaries, subject to customary exceptions (in such capacity, the "Credit Agreement Guarantors"). The Credit Agreement Obligations were secured by first priority liens on substantially all assets, subject to customary exceptions, of the Company and the Credit Agreement Guarantors.

As of June 30, 2025, there were approximately $136.1 million in principal borrowings outstanding on the Term Loan Facility, consisting of $103.5 million outstanding on Term Loan A and $32.6 million outstanding on Term Loan B.

On August 8, 2025, we used a portion of the net proceeds from the IPO to repay all of the borrowings under the Credit Agreement, together with the specified prepayment premium of $11.4 million, and accrued interest.

See Note 9 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for more information.

New Credit Agreement

On August 8, 2025,we entered into a new revolving credit agreement (the "New Credit Agreement") providing for a senior secured revolving credit facility (the "Revolving Credit Facility") in the aggregate principal amount of $125.0 million, including a sublimit for the issuance of letters of credit in an amount up to $15.0 million and a sublimit for swingline loans in an amount up to $7.5 million.

The Revolving Credit Facility matures on August 8, 2028. The loans under the Revolving Credit Facility bear interest at a variable rate per annum equal to, at our option, either (a) term SOFR plus a 3.00% spread or (b) an alternative base rate (as set forth in the New Credit Agreement) plus a 2.00% spread. A commitment fee of 0.375% per annum is applied on the unused commitments under the Revolving Credit Facility.

The Revolving Credit Facility is guaranteed by certain of our wholly-owned domestic subsidiaries and secured by substantially all of our assets and the assets of certain of our subsidiaries, in each case, subject to customary exceptions.

The Revolving Credit Facility contains customary affirmative and negative covenants, including limitations on our ability and certain of our subsidiaries' abilities, to (i) incur additional debt; (ii) create liens; (iii) make certain investments, loans and advances; (iv) sell assets; (v) pay dividends or make distributions or make other restricted payments; (vi) voluntarily prepay certain other indebtedness; (vii) engage in mergers or consolidations; (viii) change the business we and certain of our subsidiaries conduct; (ix) engage in certain transactions with affiliates; (x) enter into agreements that restrict dividends from subsidiaries; and (xi) amend certain charter documents and material agreements governing subordinated and junior indebtedness.

In addition, the Revolving Credit Facility requires us to comply with the following financial covenants (subject to certain equity cure rights):

The Revolving Credit Facility also contains customary events of default, including, among others: (i) failure to pay principal, interest, fees or other amounts under the Revolving Credit Facility when due taking into account any applicable grace period; (ii) any representation or warranty proving to have been incorrect in any material respect when made; (iii) failure to perform or observe covenants or other terms of the Revolving Credit Facility subject to certain grace periods; (iv) a cross default with respect to other material indebtedness; (v) bankruptcy and insolvency events; (vi) a "change of control" and (vii) the invalidity or impairment of any loan document or any security interest.

Borrowings under the Revolving Credit Facility may vary significantly from time to time depending on our cash needs at any given time.

Preferred Stock and Warrants

We have historically sourced a significant portion of our liquidity through preferred stock issuances. We have had multiple issuances that have raised $877.3 million, net of issuance costs, since inception.

Upon completion of our IPO, all then outstanding shares of our preferred stock was automatically converted into shares of our common stock.

We also have 646,464 outstanding warrants exercisable for shares of Series J Preferred Stock. 0.6 million shares of common stock are reserved for issuance upon the exercise of the Series J Preferred Stock Warrants.

On July 10, 2025, our Board of Directors declared a dividend (the "Preferred Stock Dividend") payable in shares of our common stock in respect of all accrued and unpaid dividends on the Company's outstanding shares of Series C, Series D-1, Series D-2, and Series D-3 Preferred Stock held as of July 11, 2025. We paid the Preferred Stock Dividends on July 16, 2025, upon receipt of consents that

were required from certain third parties, and issued approximately 3.3 million shares of common stock to the then-existing holders of our Series C, Series D-1, Series D-2, and Series D-3 Preferred Stock.

On August 8, 2025, in connection with the closing of our IPO, all outstanding shares of preferred stock were converted into 105.8 million shares of common stock. In addition, in connection with the IPO, all outstanding common warrants were automatically exercised into 1.0 million shares of common stock. In addition, 0.6 million shares of common stock are reserved for issuance upon exercise of Series J Preferred Stock warrants to purchase preferred stock.

On August 8, 2025, the Company's Board of Directors declared a dividend (the "IPO Closing Preferred Stock Dividend") payable in cash in respect of all unpaid dividends on the Company's outstanding shares of Series C, Series D-1, Series D-2, and Series D-3 Preferred Stock that had accrued following July 11, 2025 through the conversion of such Preferred Stock into shares of common stock on August 8, 2025 in connection with the completion of the IPO. On August 28, 2025, the Company paid the IPO Closing Preferred Stock Dividend in an aggregate amount of $5.0 million in cash.

Cash Flows

The following table summarizes our cash flows, for the periods indicated:

Net Cash Used in Operating Activities

Net cash used in operating activities increased by $3.8 million, or 5%, to $84.6 million for the six months ended June 30, 2025 compared to $80.8 million for the six months ended June 30, 2024, primarily due to a year over year increase in net loss of $17.6 million, partially offset by a net increase in cash related to changes in operating assets and liabilities of $4.2 million and a net increase in non-cash expenses of $9.6 million.

The net increase in cash of $4.2 million was primarily attributable to favorable timing of cash receipts and cash payments. We actively manage our accounts receivable and contract liabilities, along with the related aging and collection efforts.

The net increase in non-cash expenses for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 was primarily driven by a $4.9 million increase in depreciation and amortization expense due to additional construction projects being placed into service, a $5.1 million increase in non-cash expense related to the change in fair value of warrant liability, and a $0.5 million decrease in non-cash interest expense.

Net Cash Used in Investing Activities

Net cash used in investing activities decreased by $10.0 million, or 46%, to $11.8 million during the six months ended June 30, 2025 compared to $21.8 million during the six months ended June 30, 2024, reflecting a decrease in cash purchases of property and equipment of $10.0 million.

Net Cash Provided by Financing Activities

Net cash provided by financing activities increased by $136.6 million, or 312%, to $180.4 million for the six months ended June 30, 2025 compared to $43.8 million for the six months ended June 30, 2024.

During the six months ended June 30, 2025, net cash provided by financing activities primarily consisted of $184.1 million of proceeds from the issuance of convertible preferred stock.

During the six months ended June 30, 2024, net cash provided by financing activities primarily consisted of $22.2 million of proceeds from the issuance of convertible preferred stock. Additionally, $24.6 million was raised from the issuance of notes payable.

Contractual Obligations and Commitments

Lease Commitments

We lease buildings, launch sites, office facilities, machineries, and computer equipment. These leases are classified as operating or financing leases with various expiration dates through 2042. Our total remaining lease obligations as of June 30, 2025 are $19.1 million, with $1.4 million due in less than one year. See Note 8 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for more information regarding our lease commitments.

Off-Balance Sheet Arrangements

We do not engage in any off-balance sheet activities or have any arrangements or relationships with unconsolidated entities, such as variable interest, special purpose, and structured finance entities.

Critical Accounting Estimates

Our unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. Preparation of the financial statements requires our management to make judgments, estimates, and assumptions that impact the reported amount of net sales and expenses, assets and liabilities, and the disclosure of contingent assets and liabilities. We consider an accounting judgment, estimate, or assumption to be critical when the estimate or assumption is complex in nature or requires a high degree of judgment and the use of different judgments, estimates, and assumptions could have a material impact on our unaudited consolidated financial statements. We periodically review our estimates and make adjustments when facts and circumstances dictate. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations will be affected.

Revenue Recognition

We enter into contracts with our customers to provide payload services, engineering services, related components, and licenses to intellectual property. Our performance obligation is satisfied over time since the tasks are performed according to the customer's specifications, which creates an asset with no alternative use to us and we have an enforceable right to payment for performance completed to date. The measure of progress over time is based upon an input method using a cost-to-cost measure which best depicts the transfer of control to the customer. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Estimating the total costs at completion of a performance obligation requires management to make estimates related to items such as subcontractor performance, material costs and availability, labor costs and productivity, and the costs of overhead. If estimates of total costs to be incurred on a contract exceed total estimates of revenue to be earned, a provision for the entire loss on the contract is recognized in the period the loss is incurred, based on the excess of management's estimates of total costs to be incurred over revenue to be earned.

Management's estimates of total costs to be incurred and variable revenue to be earned are highly subjective and dependent on its past experience and operations. Given the Company's limited history of operations, its rapid development and commercialization of new products, as well as its continued focus on improving and refining its manufacturing processes, these estimates are inherently subject to a high degree of estimation uncertainty and may fluctuate significantly from period to period.

Warrants

The Company's common and preferred stock warrants are liability classified on the unaudited condensed consolidated balance sheets and, therefore, are recorded to fair value at each reporting period. The Level 3 significant unobservable inputs used in the fair value measurement of the Company's common and preferred stock warrant liabilities are volatility, term, discount for lack of marketability and probability weighting based on different scenarios including change of control, initial public offering, and default. The fair value of the warrants may fluctuate primarily based on the implied volatility which varies based on future market and industry conditions.

On August 8, 2025, in connection with our IPO, all outstanding common stock warrants were automatically exercised into 1.0 million shares of common stock. In addition, 0.6 million shares of common stock are reserved for issuance upon exercise of outstanding Series J Preferred Stock warrants.

Impairment of Long-Lived Assets

We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparing the carrying amount to the future net undiscounted cash flows which the assets are expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured

by the amount by which the carrying amount of the assets exceeds the projected discounted future net cash flows arising from the asset. We have not identified any material impairment losses to date.

Using a discounted cash flow method involves significant judgment and requires us to make significant estimates and assumptions, including long-term projections of cash flows, market conditions, and appropriate discount rates. Judgments are based on historical experience, current market trends, consultations with external valuation specialists, and other information. If facts and circumstances change, the use of different estimates and assumptions could result in a materially different outcome. We generally develop these forecasts based on recent sales data for existing services, acquisitions, and estimated future growth of the market in which we operate.

Recently Issued and Adopted Accounting Standards

Recently issued and newly adopted accounting standards are described in Note 2 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Emerging Growth Company Accounting Election

Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can choose not to take advantage of the extended transition period and comply with the requirements that apply to non-emerging growth companies, and any such election to not take advantage of the extended transition period is irrevocable. 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 this extended transition period, which means that when a standard is issued or revised and has different application dates for public or private companies, we, as an emerging growth company, may adopt the new or revised standard at the time private companies are required to adopt the new or revised standard. We expect to remain an emerging growth company at least through the end of the fiscal year ending December 31, 2025 and expect to continue to take advantage of the benefits of the extended transition period. 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 for emerging growth companies because of the potential differences in accounting standards used.