Sidus Space, Inc.

Welcome to the Cytus Space second quarter 2025 results conference call. At this time, all participants are in a listen-only mode. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce the management team with Cytus Space. Thank you. You may begin.

Good evening, everyone, and thank you for joining us for Cytus Space's 2025 conference Second Quarter Earnings Conference Call. Joining us today from the company is Carol Craig, Chairman and Chief Executive Officer, and myself, Adarsh Parekh, Chief Financial Officer. During today's call, we may make certain forward-looking statements. These statements are based on current expectations and assumptions, and as a result, are subject to risks and uncertainties. Many factors could cause actual results to differ materially from the forward-looking statements made on this call. These factors include our ability to estimate operational expenses and liquidity needs, customer demand, supply chain delays, including launch providers, and extended sales cycles. For more information about these risks and uncertainties, please refer to the risk factors in the company's filings with the Securities and Exchange Commission. each of which can be found on our website, www.citusspace.com. Listeners are cautioned not to put any 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. At this time, I would like to turn the call over to Carol. Carol, please go ahead.

Thank you, Adarsh. On today's call, I'll start by outlining our key accomplishments for the quarter, along with the strategic direction that continues to guide our growth across government and commercial markets. Following that, Adarsh will provide a detailed overview of our financial results, and I'll return to share our outlook for Q3 and the remainder of the year, including how we plan to build on our momentum. Q2 was a pivotal quarter for Cytospace, as we continue to advance our mission of transforming space access and delivering vertically integrated solutions across hardware, software, and data. We've remained focused on execution across three core growth areas, satellite manufacturing and integration, space-based data and AI services, and commercial product lines, including our high-performance onboard computing system, Fortis VPX. At Citus, we believe we have capabilities and capacity like no other. Agility to scale, creativity to innovate, and differentiation to create long-term value. We're not just building technology. We're building the foundation to expand across new markets, delivering recurring revenue, and leading an evolving space economy. Additionally, the uniqueness of our capabilities and offerings while maintaining lean operations means that we are one of the few vertically integrated space companies with the ability to design, manufacture, and operate space hardware and data platforms entirely in-house. This gives us speed, control, and adaptability that few, if any, can match. So to provide you with operational highlights, I want to start with our most recent success on orbit. We completed commissioning of the ADCS system on LISD-SAT-3 with cutting edge autonomous machine learning powered onboard GNC software to enable full autonomous pointing and set the stage for solar array deployment and payload activation. This demonstrates the ability of our satellites to accept technological software advancements while on orbit. This also represents a major step toward converting our satellite infrastructure into recurring revenue generating assets. We're now moving to activate our sensors, which will initiate subscriptions under existing customer agreements. The activation of these technologies will also support additional government and commercial contracts where on-orbit experience and performance are key differentiators. The successful launch of LISISAT-3 on March 14 marked our third satellite and another step in building a data-generating micro-constellation. Once fully online, LS3 will expand our ability to deliver near real-time Earth observation data, maritime data, and onboard AI processing, unlocking a new revenue channel via data-as-a-service offerings to commercial and government users. This transition from development to commercialization is foundational to our 2025 growth strategy. As an update on our other satellites, LISESat-1, our inaugural platform, has supported multiple customers including NASA Stennis with a follow-on contract, and has been on orbit for approximately 18 months. Recently, we identified a potential orbital debris-related anomaly and are actively working to reestablish contact. LISISAT-2 remains in the commissioning phase as we upload new commands to the flight software. And as we refine the capabilities of LISISAT-3, we plan to integrate those advancements into the flight software for LISISAT-2 to further enhance performance. As part of our growth strategy, we successfully executed a capital raise this quarter to fund key technology initiatives that we expect will drive long-term value. The proceeds are being deployed toward the accelerated commercialization of our dual-use multi-domain products, scaling our LISISAT constellation, and expanding development of our proprietary or late AI ecosystem, which I'll share more about a little later. These investments are critical to expanding our recurring revenue base, increasing operational efficiency, and solidifying our position as a secure U.S.-based technology provider in a rapidly evolving space and defense landscape. We remain disciplined in how we allocate capital with a clear focus on measurable outcomes and shareholder return. This isn't about funding operations. It's about fueling innovation and converting success into sustainable growth. The diversity of our customer base and the multi-domain applicability of our solutions make this an expected high return deployment of capital. As I mentioned, this quarter's capital raise is driving accelerated growth of our dual-use multi-domain Fortis VPX product line, supporting applications across aerospace, defense, energy, robotics, and autonomous systems. Designed for adaptability, Fortis VPX meets the growing demand that we see for modular, ruggedized electronics across diverse platforms. We offer three scalable tiers, Solo, Flex, and Maxima, to deliver high-performance computing solutions for mission-critical operations. Solo offers standalone SO-SO line GPX cards, like our Citus single-board computer, AI-enabled FeatherEdge, and Precision Navigation and Timing, or PNT, and GPS modules. This gives customers modular, space-efficient solutions that they can build on. Flex is an integrated DPX core system with computing, navigation, and power management built in, plus three open slots for custom payloads, which balance capability and adaptability. Maxima is our fully loaded operational suite, which combines AI processing, precision navigation, advanced communications, and near real-time mission control. The full suite's ready to deploy with room for final customization. A cornerstone of this product line is the Citus single-board computer, a SO-SO line DPX-based edge computing platform. Built for mission-critical environments, this single-board computer supports applications ranging from on-orbit analytics to terrestrial command and control. The precision navigation and timing module, which incorporates atomic clocks, M-code GNSS, and IMUs, addresses operational challenges in GPS-denied or contested environments. Seamlessly integrating with FeatherEdge and our satellite radios, it provides a dual-use, plug-and-play, command-and-control solution. With broad cross-sector applications, Fortis DPX creates a scalable, recurring revenue opportunity, positioning it as a key driver of Citus' top-line growth over the next 12 months and beyond. Beyond LEO, our work in geo-support missions and early-stage lunar infrastructure positions Citus for expanded defense collaboration. As space becomes an increasingly strategic domain, our agility, proven heritage, and multi-domain capabilities give us a strong foundation to meet the evolving needs of national defense and allied partners. Recognizing the critical role of lunar communications and sensing, we developed Lizzy Lunar to address the moon's unique operational challenges. By expanding our satellite portfolio, we strengthen our competitive position across multiple market segments, leveraging our expertise in satellite design, integration and operations. Our vertical integration allows us to deliver these programs more cost-effectively while accessing a broader range of markets. Operationally, we're on track to complete our Mobile Launcher 2 contract this year, unlocking additional milestone payments upon hardware delivery. While the timeline has shifted, creating year-over-year revenue variability, the program remains a significant contributor to near-term performance. We also fully staffed our in-house mission operations center, enabling 24-7 spacecraft monitoring. While this increased operating costs in the short term, it positions us to generate new revenue streams from LizzySAT operations and third-party contracts, including LEOP, commissioning, and ongoing satellite management for external customers. As part of our diversified model, we continue expanding our constellation while integrating new solutions that enhance stability and operational capacity with each mission. We're currently manifested to launch two more LISISAT satellites towards the end of 2026. Already in production, these two will have more advanced imagers than the previous three. We will be integrating a software-defined multispectral imager, which allows us to serve multiple industries and customers in a single satellite. So to reiterate, in just over one year, CITUS successfully launched three 3D-printed satellites equipped with onboard AI processing to manage data in orbit. Each satellite, LISISAT-1 through LISISAT-3, was fully designed, engineered, manufactured, and owned by CITUS. This rapid deployment schedule enabled iterative improvement with lessons learned from earlier missions directly incorporated into the subsequent platforms. With technology evolving at a pace that surpasses Moore's Law, we're proud to have developed a platform designed to adapt and thrive amid rapid innovation. As we look back, every milestone we've achieved, whether on orbit, in manufacturing, or through new product sales, lays the groundwork for future revenue. The real power of our business model lies in its lean operations, versatility, and strategic positioning. At Citus, innovation is core to our differentiation. We continue to expand our patent portfolio to protect the intellectual property behind our hardware and AI platforms, reinforcing our competitive edge while building long-term enterprise value. We currently have approximately 28 patents approved or pending, and recently we received a notice of allowance for our modular satellite testing platform, a patent that safeguards the intellectual property behind our adaptable and scalable satellite architecture. This milestone reinforces our vertically integrated model and preserves the flexibility needed to meet evolving machine needs. Our patent portfolio represents more than innovation. We truly believe that a well-established patent portfolio provides significant barriers to entry, ensuring we can protect our proprietary solutions while enabling strategic partnerships, licensing opportunities, and future product development. It also reinforces customer confidence, particularly in highly regulated or mission-critical industries where reliability, security, and innovation are essential. As geopolitical tensions continue to evolve, the U.S. and its allies are investing heavily in national security space infrastructure, and CITUS is well positioned to play a critical role in that effort. The Department of Defense's focus on building a golden dome of space-based defense capabilities spanning threat detection, rapid response ISR, and resilient communications directly aligns with the strengths of our vertically integrated model. Our ability to deliver domestically manufactured hardware, integrate AI-powered sensing capabilities, and support rapid deployment cycles uniquely qualifies us to support both prime contractors and direct government initiatives. We've seen increased engagement around mission-enabling technology, particularly in LEO, where our LIVISAT platform serves as both a demonstration asset and a scalable architecture for future national security applications. Another one of our exciting developments is the Citus 4.0 AI ecosystem, which I mentioned previously. a modular pairing of our FeatherEdge hardware and our Cielo software. Orlate is built for near real-time autonomous decision-making and can be configured for various mission types, from maritime situational awareness to terrestrial to airspace to orbital asset monitoring. Its AIML algorithms support in-orbit reconfiguration, enhanced anomaly detection, and near real-time data processing. creating efficiencies and resilience in even the most extreme environments. And earlier this year, we deployed Orlais in Asia, strengthening our global AI and analytics reach. As I mentioned, this quarter marked the start of a strategic launch of several Citus-developed technologies designed for dual-use applications, systems engineered not only for space, but ruggedized for air, land, and maritime environments. Our goal was to bring true multi-domain interoperability to the market beginning in 2025, and we did. This enables customers in many domains to deploy integrated systems across platforms without the need for redesign or reengineering. As we continue to innovate, this next phase in our multi-domain technology roadmap reflects our commitment to developing breakthrough innovations, that not only meet existing requirements, but also open the door to entirely new market opportunities. These efforts reinforce our three core pillars, technology, AI, and space, by expanding our AI-driven solutions and mission-critical space services that address today's operational needs while anticipating tomorrow's challenges. We're actively bringing our VTF SOSA-aligned space hardware into full production and commercial deployment enabling scalable satellite and data architectures that meet the demands of both government and commercial customers. Another example of this evolution is the advancement of our LEM FlatSat, a lab-based integration and testbed platform designed for next-generation technology demonstrations. LEM provides a flexible environment to validate new systems, accelerate development cycles, and de-risk future mission configurations, which is vital for our long-term scale-up strategy. These innovations represent a key part of our 2025 roadmap and reflect our commitment to designing once, deploying anywhere, accelerating mission readiness while reducing cost and complexity. Our work with Lone Star Holdings, which plans to deploy a purpose-built multi-petabyte data storage spacecraft, continued this quarter. We amended and extended our agreement with a total potential contract value of $120 million. And while revenue recognition has not yet begun, this agreement provides strong visibility and underpins confidence in our commercial roadmap. Additionally, our platforms and products are being used on both Citus-owned and customer spacecraft, which extends our reach and opens doors to licensing and service revenue models. Looking ahead, our priorities are clear. Complete LS3 commissioning, expand commercialization of LISISAT-enabled services, and secure product orders for our VPX SOSA line systems. These initiatives mark our transition from technology development to revenue generation, with the groundwork laid in the first half of 2025 positioning Citus for material revenue growth in the second half of the year. We're also tracking opportunities driven by U.S. manufacturing incentives and rising allied defense spending, particularly in Europe. These trends align with our dual-use strategy and our ability to scale rugged multi-domain technologies from our U.S.-based facility. Again, beyond LEO, we are advancing into lunar satellites, leveraging our proven LISISAT reference design and adapting it for the unique demands of lunar missions, enhanced radios, greater power capacity, and high delta-V propulsion. By designing and delivering a versatile lunar satellite bus, we can integrate communication systems sensors and other mission-critical technologies, serving multiple customers and mission profiles simultaneously. With decades of experience in both LEO and lunar environments, our team understands the operational nuances required for mission success. Our lunar business model mirrors that of our LEO satellites. Once launched, these platforms will deliver data and navigation services to the U.S. government and international partners. In addition to our own missions, we expect to support more commercial customers similar to Lone Star. Few US companies possess the capability to design and build lunar satellites, positioning Citus as a rare and highly valuable provider. In summary, Citus is entering the next phase of growth. Our infrastructure is in place, our products are in the market, and our partnerships are accelerating. We are not just enabling missions, we're redefining how they are conceived, deployed and executed across every domain.