Momentus Inc.

Hello, and thank you for standing by. My name is Emma, and I will be your conference operator today. At this time, I would like to welcome everyone to the Momentous Inc. first quarter 2023 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star and the number one on your telephone keypad. If you would like to withdraw your question, press star one again. As a reminder, today's call is being recorded. I would now like to turn the conference over to Mary Horm. Please go ahead.

Thank you, and hello, everyone. Welcome to Momentous' first quarter 2023 earnings conference call. With me here today are John Rood, Chief Executive Officer of the company and Chairman of its Board of Directors, as well as Eric Williams, Chief Financial Officer. Each will provide prepared remarks. Following these prepared remarks, we will take questions from analysts. Earlier today, we issued a press release and made a slide presentation available on our investor relations website, which provides an overview of our business and financial highlights for the quarter. You can download a copy of the release and presentation slides at investors.momentus.space. During today's call, we will make certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act of 1934. Forward-looking statements are predictions, projections, and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this communication. You should listen to today's call with the understanding that our actual results may be materially different from the plans, intentions, and expectations disclosed in the forward-looking statements we make. For more information about factors that may cause actual results to materially differ from forward-looking statements, please refer to the earnings press release we issued today as well as the company's violence with the Securities and Exchange Commission. Readers are cautioned not to put undue reliance on forward-looking statements, and the company specifically disclaims any obligation to update the forward-looking statements that may be discussed during this call. Please also note that we will refer to certain non-GAAP financial information on today's call. you can find reconciliation of the non-GAAP financial measures to the most comparable GAAP measures in our earnings press release. None of these non-GAAP financial measures is a substitute for or superior to measures of financial performance prepared in accordance with GAAP. With that, I'd like to turn the call over to our chairman and chief executive officer, John Wood.

Well, thank you, Mary. It's a pleasure to be here today to provide an update on the progress that we've made at Momentus over the past quarter and our Q1 financial results. I'm also pleased to have Eric Williams here for his first earnings call as our CFO. After I make my comments, Eric will take you through the financial highlights and the outlook. Turning to slide four, in the first quarter, Momentus demonstrated solid progress toward our goal of being one of the market leaders in in-space transportation, and infrastructure services for U.S. government and commercial customers. We are at the forefront of this rapidly expanding market, possess key competitive advantages, and have confidence in our long-term strategy. In my remarks today, I'll focus on four things that fuel my excitement about the future of Momentus. First, our core technology is functional and operational in space. We've come a long way in maturing our technology, and we're delighted to be seeing our spacecraft and its key technologies performing in space. With every passing day in orbit of our spacecraft around the Earth, we gain more flight heritage and increase this important advantage over competitors that have yet to fly their vehicles in space. We're sure they can do so successfully. Second, we continue to see growing interest from customers. both commercial and government customers responsible for U.S. national security missions that we plan to translate into contracts over the coming months. Third, we're driving new innovation to maximize our competitive edge and are excited about new capabilities and technology that we will be demonstrating in space in the next few months. And fourth, one of the key reasons why we're confident about our future is the cumulative decades of experience within our veteran leadership team. We've taken great strides in our engineering and technology development, whether measured in metrics for productivity, quality, speed of production, testing, and improved capabilities. We've been able to do this by leveraging over 150 years of experience leading technology development efforts at space companies by our top six leaders in engineering and supply chain. These leaders have learned the hard lessons and nuances that can only be learned through experience of what it takes to be successful in developing new technology for the harsh and unforgiving environment in space. When combined with a young, talented crop of engineers eager to change the way we operate in space and to be more agile and innovative, we have a very strong talent mix that is a competitive advantage over our peers. Specifically, I'd like to mention Tom Malko. He was our VP of Operations, but we recently expanded his role to oversee engineering and operations. Tom has more than 40 years of experience overseeing the design, production, launch, and operation of satellites and space systems at Lockheed Martin. Under his leadership, Momentus has been implementing improvements and best practice processes that have increased productivity, reduced defect rates, and allowed us to produce spacecraft faster, at lower cost, and better quality. I'd also like to highlight Charles Chase, who recently transitioned from being our VP of Engineering to be our VP of Special Programs, where he is focused on winning new business and national security business. This is part of our greater focus on growing our business supporting national security missions. Charles has a 30-year track record, and notably, was the founder and leader of revolutionary technology programs, the organization at the technological front end of the story of Lockheed Martin's Skunk Works. Turning to slide five, let me begin by providing an update on our technology and missions. In less than a year, Momentus has launched three Vigoride Orbital Service Vehicles, or OSVs. All three Vigoride vehicles are currently in orbit and we're on track to launch our fourth orbital service vehicle called Vigoride 7 later this year on the SpaceX Transporter 9 mission targeted for October. Turning to slide six, as a reminder, Vigoride 3 was launched in May 2022, and we deployed eight customer satellites from the Vigoride 3 vehicle and a third-party deployer. We have since completed operation of this spacecraft, which remains in orbit. VigRide 5 was launched in January 2023, carrying a large hosted payload for Caltech and a satellite for a customer called Cosmosis. Our near-term focus with this mission has been testing of our pioneering microwave electrothermal thruster, or MET, which I'll discuss in more detail later. On VigRide 5, we deployed a customer satellite for Cosmosis, a Singapore company, and are now transitioning to support a Caltech hosted payload called the SPACE Solar Power Demonstration that aims to demonstrate the ability to collect solar energy in space and transmit the electricity wirelessly in space and to Earth. We were under contract to support the Caltech mission for at least six months with an option for up to two years. Hosted payload missions, like we're providing to Caltech, are more profitable than transportation missions, particularly for larger hosted payloads and longer duration missions. Vigoride 6 was launched in April and carries two satellites from NASA that we plan to deliver in the next few weeks to a unique custom orbit. This is the NASA Lighted Mission, or LLITEV, that will measure and study two features of the nighttime upper atmosphere, making an important contribution toward understanding weather and space that impacts our lives on Earth and the reentry rates of satellites. On this mission, We're also flying payloads for four other commercial customers. Vigoride 6 also carries a momentous developed solar array technology demo, which I'll discuss in detail later in my remarks. We are operating Vigoride 5 and Vigoride 6 concurrently from our mission operations headquarters in San Jose, California, just a few steps away from where we're calling you for this conference call. We've now successfully commissioned and operated in space all of the subsystems of our Vigoride Orbital Service Vehicle during the Vigoride 5 mission. We've also commissioned most of the subsystems on Vigoride 6, with the remainder scheduled to be completed in the next few weeks. Both spacecraft have their solar arrays deployed, are generating power normally, and we're commanding and operating both spacecraft through a network of ground stations for communications. In October of this year, we'll be launching our fourth orbital service vehicle, Vigoride 7. On that flight, we plan to carry six satellites that we plan to deploy for commercial customers, as well as two hosted payloads for commercial customers. We also plan to carry a momentous hosted payload that we will use to conduct a rendezvous proximity operations demonstration, and I'll talk more about that later. As you recall, our contracts are structured such that we typically recognize revenue from these customers once we deliver their satellite to orbit or complete their payloads mission. I'm proud to say that these missions and Vigoride vehicles have allowed us to quickly advance to operations in space, and the time to produce and launch each Vigoride spacecraft is coming down with each iteration much faster than the traditional learning curve, meaning increased productivity, higher quality, and lower unit costs. For example, Vigoride 6 assembly integration and test was 36% faster than Vigoride 5. We have vastly improved our engineering and operations capabilities and processes over the past year, and we continue to use the lessons learned to improve our more recent spacecraft and to contribute to the success of future missions. We are also pleased to see our technology performing. which has increased our confidence in our technology and its capabilities. During the three VigRide missions that we've conducted in space, we've learned a lot and are continuously improving our spacecraft and its technologies. To be sure, we've had challenges that we've worked to overcome on our initial missions. This is common on early missions in space and what we said to expect. It's part of the learning process and process of developing and demonstrating space technology. For example, Much like the updates we commonly make to the software in our personal computers and cell phone operating systems, we've uploaded improvements and bug fixes to the software used on our spacecraft to address things observed on orbit or to automate processes and operations. We plan to continue to do so as our missions go forward to continuously improve the operation of our spacecraft. We've also designed our orbital service vehicle with redundancy and resiliency features like a fully redundant A and B side of the spacecraft with two sets of avionics, radios, and other features that we have used and demonstrated on orbit. Turning to slide seven, since our last earnings call, we've successfully operated our pioneering Microwave Electrothermal Thruster, or MET, on the Vigoride spacecraft on orbit, showing it can perform our near-term use cases in space. The MET is the Vigoride Orbital Service Vehicle's primary propulsion method that produces thrust by expelling extremely hot gases through a rocket nozzle. Unlike a conventional chemical rocket engine, which creates thrust through a chemical reaction, the MET is designed to create a plasma and thrust using solar power to drive a microwave energy source that heats the water propellant. Momentus has two patents in support of this proprietary propulsion technology. The MET is an innovative, pioneering technology that offers key efficiency, safety, and sustainability advantages. We have now performed more than 35 firings of the MET, ranging from 30 seconds to 6 minutes. And these burns have shown that we can execute our near-term potential use case. In total, we've achieved more than 140 minutes of firing time of the MET and have raised the orbit of the vehicle by more than three kilometers. In fact, we've actually exceeded the duration range for the full power or the full duration of planned firing by 20%, which we consider to be a very significant accomplishment. To be clear, Momentus has now operated the MET successfully in space at full power across the range of durations for firing that we plan to operationally use to deliver satellites to precise, custom orbits, and to provide in-space infrastructure services like hosted payloads. For those of you familiar with Defense Department programs, this means that our MET has achieved technology readiness level nine, which is DoD's highest TRL level. Simply put, we have now shown that water heated by the sun is a viable fuel in space, and that our water base solar-heated MET thruster can provide capabilities across a broad range of national security and commercial needs. Turning to slide eight, as a result, we're seeing growing customer interest and engagement about our services. Some of our existing commercial customers are planning to launch hundreds of satellites in low Earth orbit and some in geostationary orbit over the next few years. Since the last earnings call, we're pleased to have signed some new contracts with customers. First, in Q1, we signed two contracts with one of our Vigoride 3 customers, Fossa Systems, which is a Spanish company that offers global, low-power Internet of Things, or IoT, connectivity and in-space services. With a business focused on IoT that requires a wide distribution of satellites, Fossa chose Momentus for two contracts. The first contract is for the delivery of their next generation of satellites planned for launch on the SpaceX Transporter 8 mission targeted for June of 2023. Not only will this showcase the new design features of FOSA satellites, it will also serve as a demonstration for a second batch of satellites Momentus expects to launch for FOSA onboard a follow-on SpaceX Transporter mission in June of 2024. Combined, these two missions will kick off the deployment of a new constellation of FOSA satellites and mark progress as Momentus works towards our first stage constellation deployment. The second contract is to support FOSA's pocket pod, which is a PICO satellite deployer with a capacity for eight pocket cube satellites.