Investing in Space: What to watch for in Q2 earnings reports – CNBC

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As Wall Street works its way through second-quarter earnings reports, investors are getting a closer look at first-half performance from the space sector — and setting expectations for the second half of the year. 

The big players – Lockheed Martin, Boeing, Northrop Grumman – kicked things off as usual. 

Despite the billions in space-related revenue they pull each quarter, the sector doesn’t typically rank highest on shareholders’ watch items. That said, Lockheed’s and Northrop’s space divisions were top performers in Q2. Boeing, meanwhile, reported another hefty charge from its delayed Starliner spacecraft, bringing that program to $1.5 billion in losses to date.

Iridium was the first of the space pure-plays to report. Wall Street continues to be jazzed about the opportunity in the direct-to-device satellite market, but Iridium cautioned that it will take time for the nascent vertical to mature. Nevertheless, Barclays slapped a buy call on Iridum’s stock, calling the risk-to-reward attractive. 

Most of the other space stocks will report results over the first two weeks of August (aside from Planet, which follows a fiscal year calendar, and Mynaric, Satellogic, Intuitive Machines and Sidus Space).

The macroeconomic environment remains challenging for companies that are unprofitable and have high cash burn, with the Fed recently hiking interest rates to the highest level since 2001. 

As a guide for the upcoming Q2 space results, I’m roughly separating companies into two groups: No surprises wanted, and good surprises needed. Here’s when they’re expected to report, per FactSet, and what I’m watching for:

No surprises wanted:

• Virgin Galactic (Aug. 1): With its first commercial spaceflight in the books, I’m watching for updates on the company’s projection for increasing flight cadence to a monthly rate, while keeping net loss under control as it funds Delta-class development.
• EchoStar (Aug. 7): I’ll be looking for an update on Jupiter 3 satellite commissioning, which should launch this week, and whether Hughes broadband subscribers are still declining.
• Rocket Lab (Aug. 8): Watching for progress toward Neutron’s first flight, especially for any Archimedes engine development milestones.
• Redwire (Aug. 9): Latest timeline to profitability and execution on, as well as building of, its order backlog.
• Telesat (Aug. 11): Performance of LEO 3 demonstration satellite, and pathway (especially financially) toward Lightspeed constellation.
• AST SpaceMobile (Aug. 14 – projected): Updates on BlueWalker 3 satellite performance and latest timeline to launching commercial service.
• Planet (Sept. 11 – projected, Q2 for FY2024): Full-year guidance after last quarter’s unexpected, gloomier forecast.

Good surprises needed:

• Viasat (Aug. 9, Q1 for FY2024): Deep dive on the ViaSat-3 Americas satellite situation, and clarity on its financial ramifications and contingency plan.
• BlackSky (Aug. 9): Contract execution and continued reduction in net loss.
• Spire Global (Aug. 9): Path to profitability and updated growth story.
• Momentus (Aug. 10 – projected): Plan for ramping up production and flights of Vigoride and an updated product roadmap.
• Astra (Aug. 14): Spacecraft engine sales, as well as how the company gets to the first flight of Rocket 4.
• Terran Orbital (Aug. 15): Latest on spacecraft production rate and execution on order backlog.

• Amazon building $120 million Project Kuiper satellite processing facility in Florida: The tech giant is constructing the facility at Space Florida’s LLF at NASA’s Kennedy Space Center. Amazon is entering the final stages of preparation before regular launches of production satellites. – CNBC
• Astranis’ Arcturus satellite malfunctions. During commissioning, and before beginning service to customers in Alaska, Arcturus suffered a failure of both the motors that drive its solar arrays. The company revealed a plan to supplement service with a previously unannounced “UtilitySat” and aims to launch a full replacement in 2025. – CNBC
• SpaceX rolls out $199 third-generation Starlink router to early customers, writing in an email that a “limited launch” of the new Wi-Fi product brings improved performance, reliability and range. – Starlink
• NASA’s Houston mission control lost communications with the ISS for about 90 minutes, after a power outage affected the Johnson center that cut off command, telemetry and voice contact. International Space Station program manager Joel Montalbano said the issue was “purely” on the ground, and “at no time was the crew” or the ISS in trouble. – Orlando Sentinel
• The space economy grew to $546 billion last year, with Space Foundation’s annual report finding the sector increased by 8% year over year. The report projected the space economy will climb another 41% over the next five years. – Bloomberg
• Luxembourg satellite startup Kleos files for bankruptcy, after the company ran out of cash and its financier decided to no longer extend credit. – SpaceNews
• FAA establishes Commercial Human Spaceflight Occupant Safety Rulemaking Committee, to examine the development and cost of potential regulations around private human spaceflights, with the current law on those regulations set to expire in October. – FAA
• SpaceX moves Starship’s next booster to the launch pad, as the company continues to prepare for the next prototype rocket’s flight. – SpaceX
• Arianespace prepares Ariane 6 for first launch, running through a countdown sequence that filled the rocket with propellants. But the French company postponed a static test fire of the rocket’s Vulcain 2.1 engine, saying time ran out to complete that step. – Arianespace

• Space Force expands next round of launch buying to 90 missions, with Space Systems Command planning to award contracts to more companies than ever before. Notably, part of that expansion included adding a third company to Lane 2, which features the most valuable and demanding launches. – CNBC
• Impulse raises $45 million in a round led by RTX Ventures, the venture arm of RTX (formerly Raytheon), and joined by Founders Fund, Lux Capital, Airbus Ventures and Space Capital. – TechCrunch
• Italian ground station startup Leaf Space raises $38.7 million (€35 million) in venture capital and debt, with funds coming from investors including the European Investment Bank, Cassa Depositi e Prestiti, SIMEST, Primo Ventures, RedSeed Ventures and Whysol Investments. – Payload
• L3Harris to complete Aerojet Rocketdyne acquisition, after the Federal Trade Commission told the company that the regulator would not block the deal. – L3Harris
• Lockheed Martin wins $499 million contract to build and demonstrate a nuclear-powered rocket by 2027, under NASA and DARPA’s joint DRACO program, which aims to develop the technology needed to shorten flights to Mars. NASA committed up to $300 million as its share of the partnership. – SpaceNews
• NASA awarded space and lunar exploration tech development contracts to 11 companies: Under the agency’s Tipping Point program, it awarded $150 million in total contracts, with each company contributing between 10% and 25% of each project’s total cost. Astrobotic, Big Metal Additive, Blue Origin, Freedom Photonics, Lockheed Martin, Redwire, Protoinnovations, Psionic, United Launch Alliance, Varda and Zeno Power each won contracts. – NASA
• Sierra Space wins $22.6 million Air Force contract to develop the “Advanced Upper Stage Engine,” or VR35K-A, which aims to improve the performance of rockets. – Department of Defense
• Spire wins $17.6 million (€16 million) contract from ESA, the European Space Agency, to design and demonstrate a satellite-based method of monitoring flights around the world in real time. – Spire
• Hyperspectral satellites startup Pixxel wins grant from India’s iDEX to produce miniaturized multi-payload satellites for the Indian Air Force. The grant amount was not disclosed. – Pixxel

• Iridium keeps growth steady with Q2 results, as the satellite communications company took in operational EBITDA of $115.8 million, up from $105.9 million in the same period a year prior. It posted a second-quarter net loss of $30.7 million on revenue of $193.1 million, attributing the net loss to a write-off from extra satellites that it launched in May. – CNBC
• Northrop Grumman’s Q2 space sales increased 17%, to $3.5 billion from $3 billion a year prior, with the defense giant noting “high volume” in both its launch and space businesses. – Northrop Grumman

• Paul Martin nominated to be Inspector General of the U.S. Agency for International Development: Martin was appointed to his current role as NASA Inspector General in 2009. – White House
• Gayle Sheppard, Erica Newland and Nobuhiro “Matsu” Matsuyama join Astroscale’s board of directors. Sheppard, CEO of Bright Machines, and Newland, former CFO of Baraja, come to the satellite servicing startup as external directors, while Astroscale CFO Matsu becomes an internal director. – Astroscale
• Omar Pimentel joins the Pentagon’s Defense Innovation Unit (DIU) as a policy advisor, coming from his prior role as a researcher at The Hoover Institution of Stanford University. – Pimentel
• Rachel Finn hired by SkyFi as UX Designer, joining the company from fintech startup Wisdm to help the satellite imagery company build out its user experience. – SkyFi

• July 27: SpaceX’s Falcon 9 launches Starlink satellites from Florida.
• July 27: SpaceX’s Falcon Heavy launches EchoStar’s Jupiter 3 satellite from Florida.
• July 28: Rocket Lab’s Electron launches Capella’s Acadia satellites from New Zealand.
• July 30: SpaceX’s Falcon 9 launches Starlink satellites from Florida.
• Aug. 1: Virgin Galactic (SPCE) Q2 results.
• Aug. 1: Northrop Grumman’s Antares launches NASA’s CRS NG-19 mission from Virginia.