Earnings call transcript Q2 2023

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Operator

Ladies and gentlemen, good afternoon. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to Astra's Second Quarter Fiscal 2023 Financial Results Conference Call. [Operator Instructions] Thank you.

And I will now turn the conference over to Andrew Hsiung, Vice President of Strategic Finance and Capital Markets.

begin. may You

Andrew Hsiung

release archived afternoon, also for operator. the to and at thank for Relations Relations The you closed, website the Thank our and website. our section second everyone, related can quarter us Investor press results. available being financial Astra's released over After available be XXXX joining on Internet our we and is SEC's the you, website our and broadcast is results market A be Investor investor.astra.com. presentation found our also will of This results supplemental Relations on Investor on teleconference the website. call.

non-GAAP reference to and monitor measures our our considered today, investors and to financial management to evaluate During substitute financial non-GAAP be measures. performance. not items measures, as these which comparable our certain non-GAAP a be we measures for financial useful should financial we exclude believe will plan, as call These uses financial GAAP team

of our computing by other Astra's most financial used be may along these to description of financial our similar A with in measures measures measures these items from GAAP non-GAAP measures methods found the reconciliation financial companies. results of non-GAAP non-GAAP release. comparable financial the can differ

performance from should, in anticipate, contain words Astra's actual to call they as and result, uncertainties, number results could, and relate future future similar events, call. These and of and enable, forward-looking financial forward-looking intend, statement. forward-looking statements to are Today's including project a also this forward-looking may the statements are those subject a Astra estimate, as will believe, materially Astra's this expressions, such, in a outlook. discussed These differ statements. future refer will, risks potential, call, to as When expect, used

annual factors differ report the expectations, our risk with we those including encourage XX-K. actual to updated the on results could in filings which to our review included from describe materially our factors We that SEC in cause you Form current

would made I our like that to Relations available this also be website. everybody for be call via available Investor remind link will will of the Finally, replay section recorded and on

the With Founder, Chris? Astra's that, CEO. call Chris I'll Kemp, Chairman over to turn and

Chris Kemp

you Andrew. and us. thank afternoon, everyone, joining for Thanks, Good

on is Officer. Financial me our today's Martinez, Axel Joining call Chief

review today's results and call, review During we recap quarter, the and operational recent the for second announced. strategic provide we've financial will QX decisions our of during guidance an

strategy reductions For on some wanted those I weren't provide of and to you and to related on attend who the optimization. conference August color our strategic expense able around summarize financing, our integrated announcements call to X,

strategic Spacecraft our In we portion organization. early a to August, announced of our Engine reallocation our organization services Astra from of a launch workforce

Our so. our engineering this, have commitments XX to spacecraft priority we support engine the financial business. is manufacturing resources and runway on adequate To ensuring customers an approximately which and to sufficient to do from reallocated we personnel delivering requires services launch

Some end and capacity are programs year. increase of of customer to specific test these the assignments are reassignments and production either support to through others temporary or the permanent

organization and our expenses. to identified reduced optimize, other this areas we In addition to reallocation,

beginning As workforce employees. reduced the approximately of of we've since announcement a XX% including XX of result, the recent approximately by reduction our overall QX

starting reduction per overall of over million to in in savings X result headcount We this of quarter XXXX. expect QX

employees achieve required running near continue capabilities business. SG&A, over We to XXX shared now and included to and and aim a The lean while organization all have of supporting just services within goals. launch employees our workforce term skills functions services, the reduction the maintaining primarily critical the

expected reductions in to cash the quarters. few OpEx These with decreases burn are in CapEx and substantial reductions necessary reduce in painful, over combined were which but expenses result to in next reductions when additional operating ongoing

Overall, mission. impacted to and them the of and commitments for Astra term. to customers resources our and success. intended to our are reorganization about on delivering this serving Spacecraft remain growth the in resourcing I want all near it Engine Astra the thank committed and our to Engine business for Spacecraft is the employees company's focus Astra We supporting excited

senior We important also announced note about Please August secured on we transaction. that Form the X-K facility. the X closing of a filed for see details

combined when represents ability capital closing financing the needed. with demonstrates When transaction the broad and our our this markets access existing of ATM, to a strategy

business Products I'll of highlights Now our some go quarter. of through the during Space the

in the to call, of QX, engines happy shipped we said would results our in of engine first engine provide half Spacecraft we the shipments focused will facility, out second I we production Axel of a in out spacecraft the ramping Silicon facility guidance engines ship QX our report and couple I'm that spacecraft In Valley. four spacecraft few the Astra production year. Engine QX the of new for on remain in first spacecraft minutes. new up

platform. preliminary reviews, customers' between building in activity testing qualification nine a customer and power and As joint involves module, This includes critical XX activity we've system feed Astra's milestones module propulsion modules, and and and typically step shipments prior joint development first that such month readiness production. to are covered proprietary Astra module, integrating design unique satellite development into each before, to production the tank our reviews as conceptual,

delivery the final of revenue delivery upon Astra only following spacecraft these were typically inspection for modules. milestones, shipment completion engines and applicable recognize and receives payments of we of

current preproduction of As programs. of milestones the Astra its customer XX% has customer in today, nondelivery over completed

a team the and organizational our Spacecraft of Engine opportunities Engine both our capital Finally, employees. dedicated Astra distinct combined change business will creation our entity. finance with an spacecraft into legal the in business evaluate Astra each change engine Spacecraft on launch and Astra provides July, as to strategic enable organizational and markets and evaluate assignment businesses opportunities. we basis of increased Astra individual effort This a businesses, we efficiently new for flexibility early to and strategic completed leadership to an of separate This included

important for our in to it a we world-class are and commercial confident customers our roster as dedicated our customers across remain addition, to In to growing for propulsion of to produce demonstrate ability which resources both Overall, business customer each of successful distinct in place. execution spacecraft us engine systems the now government scales, was program, applications. currently

to we in We necessary to obligations on as are delivering seen continue to take weeks. ensure actions recent have our will our customers, you

business. review from I'll key Now highlights this our services launch quarter

committed existing launch We continue We services United stated additional this to announced indicated and to remain discussions recent supportive existing our States focus service changes. had recent contracts, we've our contracts. and launch and X Space customers, launch to Defense of achieving Earlier our including we in unit. the with of business all on We've with the several committed Force the are of our Rocket Innovation development they servicing year, launch contracts. that are launch milestones the

Day QX, Space of In Space readiness Force month. check Rocket our we Tech first completed successfully our fit at which commissioned Rocket line, we prepared material unveiled X for service for annual production STP-XXB the the mission, last and the Astra's SRR, review,

the delay launches flights. and components. of The to scheduled will expected of the of into testing continue the The XXXX launches currently timing we for For development commercial first depend reduction reallocation to review of results paid System our X STP-XXB Rocket timing XXXX. is QX, various design these continue rest in resources services intend test of and on first X Launch launch for prepare of materials mission and and our test the to

me manage This some handing with the and necessary a they maintaining runway for in Astra provide Astra's our incredible pursue weeks final going on part cash strategy. growth call SG&A continue burn arise. Adam, to recent was to financial team opportunities decision while some difficult to plan it very still some I carefully decisions over focused but Astra incredibly and to We launch, flexibility Before Axel, as an the was for thoughts members sustainable on services. to we wanted shared made as long-term the and forward for support to business difficult

that We partner and and to to business. parties our vision, strategic opportunities for supportive our long-term makes are where of continue it we'll also evaluate are sense excited financial with

Axel review financials to to guidance. Axel? over call our the turn and now I'll

Axel Martinez

you, afternoon, Chris, everyone. Thank and good

now for will I of XXXX. quarter our results the review second

adjusted we a today as all reminder, financial are them state non-revenue we a measure. As figures unless GAAP will discuss

a to GAAP results non-GAAP today's in release. You press will from reconciliation find

A Engines and Spacecraft focus we further reiterate In our on our our Astra will guidance refining Engine To going our earlier, what runway. was forward. of allocation shipments employee of profile. financial proper provide report expense on QX, extending Spacecraft near-term shipments towards said Astra's and Chris resources

period inspection engines. were inspection XX QX, but as We our results. revenue review QX, our driven to period let's the XXXX upon contract. of applicable the required XX Revenues Spacecraft expired, deliveries And the Engines. by typically of is million $X.X once Astra's by financial delivery Now The recognize customer has about spacecraft in varies, days.

shipped, may we rather in the be always quarter. for period not quarter occurred has revenue engine in reason, generally inspection that following recognize in which true is will in but that customer quarter, the This the For late shipments after expired. the the

it shipped be for engine we in QX, in on will The example, three four will recognized but the revenue QX. we quarter. engines, For on them revenue recognize of and deemed fourth delivered,

$X.X a million margin achieved representing of a XX%. profit of in gross We QX, gross

the a come level very operation. reflects new of starting is that profitability manufacturing this inefficiencies with it While strong, initial

of scales profitability reason, we operation higher that For time. expect levels continue to as over our

GAAP quarter. and QX, expenses in prior in $XX million operating GAAP QX, a R&D expense, part totaled compensation expenses costs. operating cost reflect in expenses included decrease a million million million, quarters. last in initiatives $XX.X of of the following: other expenses due quarter-over-quarter, compared reduction operating to $XX.X development $X.X GAAP savings lower implemented in in to QX,

decrease an to $X.X million expenses compensation, of of Sales a to G&A expenses. $X.X part and of lower lower $X.X due legal due in and compensation expenses consulting million expense. million million $X.X improvement marketing

spacecraft in XXXX. revenues second $XX.X forecast recorded current reflecting contingent Finally, of fair quarter, the during million contracts on through of XX, value December eligible change the we and engines gain consideration, a

million Now talk special consideration GAAP by and change $X a in QX. $X.X adjustment. value income compensation, fair during $X.X inventory items, in let's on contingent Adjustments and to included million quarter of adjustments million in $XX.X which R&D gain other a mentioned. stock-based million include in about offset during million the $X.X previously non-GAAP

million. our loss adjusted loss these was on $XX adjustments quarter $XX.X On QX of basis, was EBITDA quarter net a second GAAP a net $XX.X was basis, adjusted non-GAAP second a million. Given million. loss

expenditures Second were million. $X.X quarter capital

and $XX.X million. we expenditures May QX line earnings XXXX. adjusted EBITDA XX, capital with with cash, our provided lastly, of quarter shares are and outstanding ended on basic original on securities for loss, results call guidance cash And the the equivalents The marketable QX, XXXX in

approximately of marketable Primarily May XX delays cash, of million, two our a $X.X initially million. on the lower cash collecting for of tax result on government call. the is cash receivables securities factors: and earnings provided to proceeds retention receipt The $X.X equivalents range company's credit the than due and in employee approximately from delay in

during current Had quarter, would previously. these based the believe, have Astra's that two guidance securities views, cash, and we on the being marketable our cash collected within equivalents provided been items

I'll ending quarter provide third September outlook for our XX. Next, an

mentioned, previously plan As Astra's operating Spacecraft XXXX. to of we Engines focus deliveries scaling on continue our throughout

I an Spacecraft production update Astra's facility. from wanted of on to Engines provide our Sunnyvale

last half up non-delivery we indicated the on prior to of majority production ship had as and only equipment standing first we spacecraft engine new quarter, to we milestones our initial us a activities. facility. out expecting year spent commencing completing deliveries were few the Installing facility this of that As of

facility, units four deliveries previously delivered in manufacturing guidance. expect as indicated and QX We out in begin of up to we our new ramping our have product

require As XX with qualification, have work customer. and testing, integration a be configuration extensive often they typically Space the lead and months of approximately a can require Astra's Spacecraft also reminder, Engines delivered. products before time

the business. spacecraft our mentioned, parts temporary Chris As other resources forward towards allocated we through and delivery permanent additional engines going reassignments have from both of of

filings. Form uncertainties a our various and guidance annual and third security is quarter subject forth report reminder, Including all important the other guidance XX-K risks cautionary on factors. to set As and our in

outstanding of this Engines. X to shares Now reverse million and guidance. be In future we These million XX expect million. Astra's XXX XXXX, intend Spacecraft shipments to currently to quarter. Adjusted to the figures between to million ratio are split, and quarter be shares. XX $XX will related EBITDA we between of the stock third conversion loss subject X to we execute Basic the XXX of $XX to provide

cash, to and to expenditures million Capital $X and $XX securities of million $X marketable between be million and cash million. $XX equivalents

our deliveries carefully As cash manage Astra focused executing in recent cash indicated expense our to transactions management, prudent announcements, remains on financing to and on runway burn. and customers,

throughout decline to burn cash year. expect this to continue We

With the a initial steps secured in our closing announced of facility. note August, early senior headcount reduction financial roadmap of our and a including in

the Engine strategic investment investments act we in business, activities, on PJT built In strengthening Spacecraft with engaged the potential financing purpose Astra Astra's for for foundation Astra's Engine the has bank. financial advisory-focused a advisor have addition, sheet. the as To in future based company's balance and Astra's explore the the global connection business of Partners, Spacecraft to -

outcome the is uncertain, Obviously, and to structure diligence any of and investment of such the other factors. any subject process is ongoing potential due

We debt, continue runway, transactions extending to in stockholders. and capital to active our various also market remain and accretive on discussions financial with to equity that financings evaluate participants are

cost consideration necessary of interest Astra considerations. to the continue providers, its capital, runway and will taking dilution, related other financial into take actions to indications for extend financing We receive from of and while

to any and activities We provide on financing when appropriate. updates as continue will future

we In supported expenses, consideration shared expected careful opportunities, our potential and cash by is thoughtful opportunities. conclusion, we to as financing revenue last conversion runway management continue growth, believe of pipeline quarter, of

I turn call will back now over to the Chris.

Chris Kemp

Axel. Thanks,

on and leaner, our To more including summarize, focused X. near-term remain our we forward, Launch deliveries on Spacecraft path System Astra's of Engines effort optimistic

is execute We strategic opportunities you it extend to on your interest to in evaluate financial stockholders. for runway will of our want to all thank and the of continue support. continued I best where

please call questions. With open operator, that, the for

Operator

our And will Thank Madrid of we you. America. question [Operator from Bank Andre with Instructions] take first

open. line Your is

Andre Madrid

understand you call. like actively avenues certain start, being are time right to guys difficult Hi. a guess, what I as shore are just to to But explored. mean, you investors my guys I to I Yes. Thanks pretty seek for just that taking try saying out you are like guess I in mean, position. I it interest? the currently because up take seems now,

looking the what's narrative? here? be So upside How at I want to just the know should we

Chris Kemp

from if largest delivering huge millions of bring and backlog the order a Well, spacecraft couple remain focused you of engines of of of We the in some engine next spacecraft on I think the primes over in aerospace, cash. defense will tens value dollars operators at representing hundreds constellation orders look the quarters, have we business, of commercial of world. on which

bidding been With There we and us constellations Space significant the have innovation have unit within the Force, for we're that and other are commercial Base we particular, FDA are with launch contracts with two our that announced opportunities customers. tranche recently business, milestones commercial other actively defense force new constellations on. in that services achieving. paying active is

finding are We phases focused and distinct different at these in their we're actively two development. businesses that are on of finding investors increasingly

the last transactions to a us great have in the $XX time transaction for recently provides vehicles weeks. that company. Rocket a to ATM announced investors launch We allow completion million here of at businesses of in us We that the our the to of look We We some strategic a of businesses. in of debt gives financing many recently line competitors. that put closed those invest recently production will want the understand couple announced production facility. And to scale these of that some fraction these cost and most

kind large So of again, satellite and we you a looking economics a rockets, or and see are with need you're launch is compelling satellite you're for can what have much very more business you we spacecraft only if have the you operator a engines if services. dedicated that with operator so

much we We unable the with much our so to these We deliver we our our we explain as has have expenses but with can, ensure our So our as Astra size and our of to explain we not contracts commitment possibly we're to that that me customers. explain reducing we're for just focused focus. customers that customers.

Andre Madrid

what to into though, Got investors? you're update with mean, you. now that these Because the rate, launch potential as aside like an firmly - I 'XX burn, in guess operations I testing I at receive 'XX, are with move is mean, XQ pickup And supply could conversations when rather on push And out because number a for cash feel mean could current burn, deliveries guys current we a it business. those pushed seems having even a seems concerning this at next not now kind a targeting spacecraft with I past also with it just from I especially like something chain it's of you the of might that quarter. easily lumpy quarter.

spacecraft supplier ease they How along difficult inward. come business. when the would something put makes about And And there update following those away recognition on reasonable put revenue of things one deliver top from nature? at would that seem could the that It it with that from be small on concerned ease? just just that that, like then one you can't a concerns people of it's actually pickup some at are something standards

Chris Kemp

Well, you characterized lumpy. the spacecraft engine business is

We have we we that we of of first couple did for orders facility. think and rate We that new recognize engines would I the quarter are engines these spacecraft spacecraft our out that. delivering that. We at deliver last a engines. ship noted to quarter now secured following the after where number of we quarter, which increase next revenue quarter, intend the the

pretty is have next near as have components well. over of amount And fact that chain inventory these and we we of and the And the manufacturing understand the we the control visibility engines the well spacecraft the of on of majority into to deliveries over the couple of we're something that at we associated term, in-house, have quarters the due supply risk hands. lot a least with good in the

control characterization deliveries lack to the your with have of would sure. over of next lumpiness be couple I quarters' of the disagree So we of kind or

spacecraft to possible that in that proud focused that continue launch some something as markets market the learned time focus and so successfully efficiently very making sure team cash to the to that, on able six business that into remains the orbit, have well the not refining from as to last we're raise capital and we of, threading of deliveries we're I launching that ramp that of operating have seven beyond and so the the we're continue think lights on into to between to obviously companies see that take And last we're that we going don't needle will vehicle we a engine do. that we we've going have much years much reliably operate do had satellites show opportunity will how few test the have high margins to or very before building opportunity actually and

management's bring these right - to And and for as our as in customers delivering And from is challenging as we possibly we We be revenue challenge that's the products can and be can back understand that's now. bring customers, do markets environment. what capital all we the market. cash efficient out

Axel Martinez

comes of calls, very on our talked it's I deliver last co-engineering just friendly business business. can the in milestones. few And is as is we that our several if I earnings about The our also, recognition revenue significant as cash not about of we times think, to profile when cash it paid amount these

to customers engines. continue on deliver more from our each phase great liquidity so as we And both business bring our a opportunity of continuing contract, there's into co-engineering to to the, deliver also but for just

new in mentioned, of great us and opportunities Chris contracts terms ahead as sales. new And of there's

happy this in in deliveries And customers we we we're why do the we're have market. and allocated resources is make And when want on the that our them. so that for to delivering sure can leading delivering, focus we we to are engine the thing what continue with system things spacecraft the is we because to did best

forward. feel grow continue going opportunities so that we have to the And to we'll business

fact on so in up, be cash put and And gives place will we profile for about wrap ago, that it financial we a to that And - to on capital to we is testament access that, liquidity that in continue a the I a embedded the really company to the is XX just perform us, XX this think, be facility company source already I that business, right? days the of announced markets, due group with that think days has that diligence think, great us. it's

started Of our with we course, ATM.

a bringing the Now this place. - business help fundamentals is PJT to but manage our process strong. in perspective, feel we put going we very in that us We're forward, we from

Andre Madrid

Understood. Thank you.

Operator

take And MKM. next ROTH Suji from we question our with will Desilva

Your open. line is

Your line you is open. check mute button. Please

Suji Desilva

Apologies. Chris. I Hi was Hi muted. Axel.

from of for kind ASC XX. backlog helpful follow the X That's So and to Thanks is units. the the I it quarters just the to wanted shipping Is of shape of What how about from the think know, on linear? up? next initial there. guiding to the shipment the XQ up on - that point kind we backlog should Does forward? it here What ramp out? few

Chris Kemp

XX units would is team we backlog much that the very from the the spacecraft to next supporting see before so Continue way to year. our in we'll focused that And we've And meet the increase over a shipments to and XX first can facility is demands see from the talked we also per the investments pipeline. new gradual up the about made both we that engines what and be all XXX year, ramp. per it's about orders month. on through think from I And

put the hand best some on have and you the of at deliveries constellation look primary Silicon our world's commercial we customers And on we on people right mean, put is in a have focus and that if today. programs - what support I leading relying our literally to we operators now. government Astra, is happening we Valley,

create to our busy. business those durable really focused new category. And significant in customers. focus, on So in that we We're really with long-term that and a customers, see servicing opportunities we're

the aware team the everything in come most industry. can the provides to the vehicle, patent of to to doing back demonstrate the launch ensure I'm and by certainly required that we're business that reliable we the And infrastructure cost-efficient most the vehicle

Suji Desilva

understand for, initial multiple is breadth that customers one of or guided that or two you Great. X the initial XX just shipments. to customer shipments just to the And understand

Chris Kemp

customers. but be across will know the don't That exact Yes. multiple I couple. number,

Suji Desilva

And if and largely OpEx behind? and now guiding, build is it's it sounds Just to like to at it want that of Great. got the is those. low kind is then seems you've Alameda level CapEx that you've Just confirm - because the like been - OpEx understand is right construed. the the CapEx

Axel Martinez

Yes.

So you OpEx on a focus XX look and the SG&A for at it and basis by we $XX we non-adjusted as our on on side, OpEx in launch. almost we days see, made can as headcount QX, million reduced ago, announced when you an reduction additional mostly

to that to besides so get going terms at all is, And think, continue to right headcounts. There's us always optimize looking that areas, will in areas I business looking the of always as to right? now, the But scale. we're we're level headcount the look, other truth

both the built. in And our our talked are right? the enter base, to And $X already this facilities So $X folks the expenditures we've right, just done, past, fully forward. going CapEx, you CapEx on small as expenditures. not are investment see unlike to a about about little we billion why billion in many is industry going that it's to It's to be significant us guiding now because QX in

Suji Desilva

kind that's of already investments value to asset that's about A answer to person's the even you you've value you changed there for the to Obviously, as of there? watch that. try the so question made, It's the then we good approach. move here. forward approach part progress the What Right. And here. with the lot here. the last the That's can changes milestones of the still of in part realize in LSII, on launch

Chris Kemp

Absolutely.

I the highest holding Force, bit the think to process for of overall on our standards little operations. we deliverable of There's of that. engineering course, accountable is which, tried another to Space provide in guidance us rigor and a

this few readiness to we later have passed submitted flying that up the deliverable with this So we and A package quarter, which colors. next to package weeks intend for get quarter. ago, the and we them review service that

of the to hardware coming continue intend is to the also in heavily that testing We together. invest

lot You the saw of a hardware.

indicated, Axel of expensive the As is lot hardware here. already a

of lot a is the such team to a overall system-level of some and integrated software test lot of valves, testing doing testing components as spending the So integrating frankly, time stack. the electronics engines, just the the simulation

tests posting So done those and continuing to videos to to - we you updated continuing producing we the milestones we'll look - can continue and be forward results to keep have as the and well. tests towards you they're completed these share they we'll as make Space small Force as occur as as us of progress

So over fun hopefully, that here. will to be watch quarters couple the of next pretty

Suji Desilva

Great. All the updates. Chris. Thanks for Thanks Thanks Axel. right.

Axel Martinez

Suji. Thanks

Operator

your concludes you today's disconnect. you conference this thank And call. We for participation, and may now

Astra Space Inc - Ordinary Shares (ASTR) 14 Aug 232023 Q2 Earnings call transcript