Spire Global, Inc. — Q3 2021 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2021. Unless noted otherwise, financial amounts below are in U.S. dollars; the financial statements report amounts in thousands. Spire provides space-based data and analytics through Maritime, Aviation, Weather, and Space Services. The August 16, 2021 NavSight merger was accounted for as a reverse recapitalization, so the financial statements continue Old Spire’s historical reporting; 2021 results include the post-merger period.
Financial results and key metrics
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Revenue | $9.6 million | $7.2 million | $28.4 million | $21.2 million |
| Gross profit / margin | $4.2 million / 44% | $4.8 million / 66% | $16.0 million / 56% | $13.4 million / 63% |
| Operating loss | $(17.4) million | $(6.5) million | $(43.8) million | $(17.8) million |
| Net loss | $(32.7) million | $(7.6) million | $(79.3) million | $(22.3) million |
| Adjusted EBITDA (non-GAAP) | $(11.5) million | $(4.1) million | $(26.9) million | $(11.8) million |
Q3 revenue grew 33% and nine-month revenue grew 34% year over year. Revenue growth reflected more customers and expansion within existing accounts. However, higher satellite depreciation, computing costs, royalties, and Space Services hardware costs reduced gross margin. Operating expenses also rose substantially, particularly research and development, sales and marketing, and general and administrative costs.
- Cash and liquidity: Cash and cash equivalents were $245.8 million at September 30, 2021, up from $15.6 million at year-end 2020. Restricted cash was $13.2 million, including $12.8 million pledged in connection with EIB warrants. Management said available resources were expected to fund operations for at least 12 months and support the proposed exactEarth acquisition.
- Cash flow, nine months: Operating activities used $40.0 million (versus $8.4 million in 2020); investing activities used $9.4 million (versus $8.3 million); financing activities provided $291.4 million (versus $3.2 million). Financing inflows included merger/PIPE proceeds and debt borrowings.
- Debt: The FP term loan had $71.5 million principal outstanding at September 30; its balance-sheet carrying amount, net of debt issuance costs, was $45.2 million. The loan bears 9% interest, matures April 2026, is secured by substantially all company assets, and has restrictive covenants. Convertible notes converted to equity at the merger.
- Recurring-revenue indicators: ARR was $45.2 million, up 51% year over year. The company reported 206 ARR Customers and 225 ARR Solution Customers. ARR net retention was 111% for the quarter and 113% for the nine months, down from 159% and 158%, respectively.
- Contract visibility: Remaining performance obligations were $49.5 million; the company expected to recognize 70% over the next 12 months.
Material changes and unusual items
- The August merger and PIPE generated $264.8 million of reported financing proceeds, including trust-account cash net of redemptions and PIPE investment. Merger-related costs totaled $38.7 million: $32.1 million reduced additional paid-in capital and $6.6 million was expensed.
- Q3 net loss included a $13.4 million loss from changes in fair value of warrant liabilities; the nine-month charge was $23.5 million. These are fair-value accounting expenses and do not represent equivalent current-period cash outflows.
- Nine-month other expense included a $5.0 million loss on extinguishment of the former EIB and Eastward debt facilities, partly offset by $1.7 million of PPP loan forgiveness. The FP loan amendment also increased the interest rate to 9% and led to shares being issued to lenders.
- After quarter-end, EIB cancelled its remaining warrants; the company paid a total of EUR 17.265 million on November 8, 2021. The related $12.8 million cash collateral was expected to become unrestricted.
Outlook, commentary, and risks
- No specific revenue, earnings, or cash-flow guidance is provided. Management expects operating expenses to increase in absolute dollars as it invests in hiring, research and development, and sales and marketing; it expects margins and expense ratios to improve over time as revenue scales.
- Spire agreed to acquire exactEarth for an estimated $161.2 million: $103.4 million cash and $57.8 million in Spire shares. The proposed deal remained subject to shareholder, court, regulatory, and other closing conditions; the filing expected completion in Q4 2021 or Q1 2022.
- Management cited COVID-19-related delayed sales cycles and customer demand, hiring and launch delays, and added costs. Other material risks include satellite and launch failures, reliance on third-party suppliers and AWS, foreign-exchange exposure, government-customer concentration, competition, and acquisition execution. Government customers represented approximately 57% of nine-month revenue.
- Disclosure controls and procedures were deemed ineffective at September 30, 2021 due to material weaknesses in accounting staffing and expertise, risk assessment, segregation of duties, complex-transaction accounting, and IT general controls. Remediation was underway; management expected it to extend beyond December 31, 2021 and had not provided a cost estimate.
- A former employee’s lawsuit seeks $3.0 million in consequential damages plus punitive damages and other relief over stock options. The company says it has strong defenses; the parties agreed to non-binding arbitration by February 2022. The filing says ordinary-course legal matters are not expected to have a material adverse effect, while noting outcomes cannot be assured.
Important facts for investors to verify
- How ARR, retention, customer counts, and remaining performance obligations translate into recognized revenue, renewals, and cash collections.
- Whether gross-margin pressure and operating cash burn improve as the constellation and customer base scale.
- ExactEarth closing conditions, cash funding, share issuance, integration costs, and realized benefits.
- FP loan covenants, effective borrowing costs, prepayment terms, and the effect of warrant settlement on unrestricted liquidity.
- Progress in remediating material weaknesses, and whether subsequent filings report effective controls or further accounting adjustments.