Intuitive Machines, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024. The company designs, manufactures and operates space products and services, with a near-term focus on lunar access and infrastructure. Its February 2024 IM-1 mission achieved a successful lunar landing. The company reports one operating segment. Unless noted, amounts below are in U.S. dollars.
Financial performance
| Metric | Q1 2024 | Q1 2023 |
|---|---|---|
| Revenue | $73.1 million | $18.2 million |
| Operating loss | $5.4 million | $14.0 million |
| Net loss | $120.7 million | $23.4 million |
| Net loss attributable to Class A shareholders | $98.8 million | $9.7 million |
| Basic and diluted loss per Class A share | $2.70 | $0.64 |
| Net cash used in operating activities | $6.4 million | $18.7 million |
| Capital expenditures | $1.6 million | $8.6 million |
| Free cash flow (non-GAAP) | $(8.0) million | $(27.2) million |
| Adjusted EBITDA (non-GAAP) | $(1.1) million | $(13.5) million |
Revenue less cost of revenue and depreciation was approximately $11.7 million, or 16.1% of revenue, compared with a loss of approximately $5.2 million, or negative 28.4%, in Q1 2023. These are simple calculations from reported figures, not company-reported margin measures. Revenue was 58% cost-reimbursable, 40% fixed-price and 2% time-and-materials.
At March 31, cash and cash equivalents were $55.2 million, restricted cash was $2.0 million, working capital was $10.9 million, and total current liabilities were $104.8 million. Current debt was $8.0 million; total debt was also $8.0 million. The Live Oak facility matures July 14, 2024, bears a 10.62% weighted-average rate on outstanding short-term borrowings, and is secured by substantially all company assets. The separate $10.0 million bridge loan was repaid in January 2024.
Changes and drivers versus the prior period
- Revenue increased $54.8 million, or 301%, primarily reflecting $41.8 million of OMES III task-order revenue, which had no comparable Q1 2023 revenue, and $12.3 million of IM-1 revenue recognized after mission success released previously constrained consideration.
- Operating loss narrowed by $8.6 million as revenue growth outpaced operating expense growth. Cost of revenue rose $37.8 million and general and administrative expense rose $8.4 million; the latter included higher share-based compensation and $1.7 million of bad-debt expense related to an IM-3 payload customer.
- Net loss widened substantially, largely because of $68.7 million of losses on securities issuance and $46.6 million of unfavorable fair-value changes in warrant and earn-out liabilities. These items drove much of the reported loss and are not equivalent to operating cash outflows.
- Operating cash use improved by $12.2 million year over year, but financing provided $60.8 million, including $50.6 million from warrant exercises. Cash and cash equivalents rose from $4.5 million at year-end 2023 to $55.2 million at quarter-end.
- The prior-year per-share comparison reflects results after the February 13, 2023 Business Combination closing; the filing notes this difference in the capital structure and per-share presentation.
Outlook, liquidity and material risks
- Management said quarter-end cash, together with available equity facilities, should fund short-term liquidity needs and execution of the business plan for at least 12 months from issuance of the financial statements. This depends in part on access to equity financing; the company also has a $100 million ATM sales agreement and a $50 million Cantor equity facility, subject to terms and limits.
- As of March 31, backlog was $222.4 million, down from $268.6 million at December 31, 2023. The company expects to recognize approximately 55–60% over the remainder of 2024, 25–30% in 2025 and 10–20% thereafter. Backlog is not guaranteed revenue and may include cancellable orders and constrained variable consideration. Separately, remaining fixed-price performance obligations were $65.8 million.
- Management reported two additional funded lunar missions and a goal of establishing a cadence of multiple missions per year by late 2025. IM-2 was approximately 85% complete; IM-3 was approximately 59% complete. The filing describes expected launch timing and certain task-order modifications as pending, so timing and revenue estimates remain uncertain.
- Two lunar missions remained in loss positions. The filing reported a favorable $8.2 million net change in estimated contract losses in Q1, including release of previously constrained IM-1 consideration; estimates for IM-2 and IM-3 remain sensitive to costs, contract changes and mission schedules.
- Customer concentration is high: one customer represented 93% of Q1 revenue, and the largest customer represented 84% of quarter-end accounts receivable. One supplier represented 38% of Q1 purchases and 45% of accounts payable.
- Non-cancelable purchase commitments totaled $23.5 million, including $16.9 million due within 12 months; approximately $2.2 million of LPOC construction obligations also remained. The company reported no off-balance-sheet arrangements.
- Risks include mission or launch delays or failures, cost overruns, dependence on government funding and a small number of customers and suppliers, contract-loss estimates, capital needs and dilution, and inflation or supply-chain disruption. A customer-related entity threatened litigation over a February preferred-stock conversion; the company said it believes it has strong defenses. Management said ordinary-course legal matters were not expected to materially affect the financial statements.
- The filing reported disclosure controls were effective at March 31, 2024, with no material change in internal control over financial reporting during the quarter. It also identifies internal-control remediation as a risk area in its forward-looking disclosures.
Important facts for investors to verify
- Progress, launch schedules, customer approvals and contract modifications for IM-2 and IM-3, and the assumptions behind the company’s mission cost estimates.
- Whether reported backlog converts into funded, non-cancellable work and how much includes constrained variable consideration or time-and-materials contracts.
- Cash needs relative to operating cash use, near-term debt maturity and construction and vendor commitments; confirm proceeds and share issuance under the ATM and other equity facilities.
- Customer receivable collection, the $1.7 million bad-debt charge and continued dependence on the largest customer.
- Potential dilution and accounting volatility from warrants, preferred stock, earn-out liabilities, equity awards and redeemable noncontrolling interests.
- Status and potential impact of the threatened preferred-stock conversion litigation and any related claims.