Key First Half and Subsequent Highlights

• Matt Tirman appointed as President, Caitlin Kontgis appointed to Senior Vice President of Commercial Growth and Lorri Kohler appointed to Senior Vice President of Operations; all of whom will be US-based.
• Signed an international government space agency as its first Space Systems customer.
• Awarded contract by a geospatial imagery provider to deliver high-resolution imagery in support of a US government GEOINT program.
• Signed an agreement with Quant Data & Analytics, a leading Saudi provider of Data & AI Products and Enterprise Solutions focused on the real estate and retail sectors. This agreement leverages Satellogic’s high-resolution satellite imagery to serve and evolve the ever-expanding property tech landscape across the Kingdom of Saudi Arabia and the Gulf region.
• Announced partnership and integration with SkyWatch, a leader in the remote sensing data technology industry. This partnership will bring Satellogic’s highest resolution commercially available EO data to EarthCache customers.
• Signed an agreement with Skyloom, a leader in space-based telecommunications, detailing plans to integrate Skyloom’s Optical Communications Terminal onto Satellogic satellites to test new methods of high-resolution EO data delivery.
• Successful Satellite Deployments
  • Four satellites, launched with SpaceX on January 3rd at Cape Canaveral Space Force Station, including the first of the next-generation NewSat Mark-V model designed for high frequency global remapping to support commercial, environmental, and government applications.
  • Four satellites successfully reached low-Earth orbit following the launch of SpaceX’s Transporter-7 mission on April 14th from Vandenberg Space Force Base, California featuring NewSat Mark-IV spacecraft.
  • Four NewSat Mark-V spacecraft successfully reached low-Earth orbit following a SpaceX Falcon 9 launch on June 12th from Vandenberg Space Force Base in California.
• Signed Memorandum of Understanding for the development of joint Earth Observation applications with OHB SE, a German-based aerospace and technology group. The agreement is aimed at expanding opportunities in Europe to support the use of EO data and products for a greener and more sustainable planet, including applications for day-to-day decision-making in the fields of agriculture, forestry, energy, critical infrastructures, and climate change mitigation.
• Announced partnership and integration with SkyFi, a leading provider of EO data. This partnership will allow SkyFi’s customers (both businesses and individuals) to submit tasking orders to Satellogic satellites directly through the platform either at https://app.skyfi.com or on the SkyFi app.

Financial Results for the Six Months Ended June 30, 2023

• Revenue for the six months ended June 30, 2023, increased 33% to $3.2 million, as compared to revenue of $2.4 million for the six months ended June 30, 2022. The increase was driven primarily by Asset Monitoring and Constellation-as-a-Service lines of business.
• Gross profit for the six months ended June 30, 2023, totaled $1.1 million, as compared to a gross profit of $1.1 million for the six months ended June 30, 2022. Gross margin was 34% in the first half of 2023, as compared to 44% for the prior year period, due to higher ground station and cloud services costs associated with our larger constellation.
• General and administrative expenses were $9.9 million for the six months ended June 30, 2023, as compared to $24.6 million for the six months ended June 30, 2022. The decrease was primarily due to lower professional fees related to elevated merger activity during the six months ended June 30, 2022, lower bad debt expense, and lower insurance cost.
• Research & Development expenses increased to $5.8 million for the six months ended June 30, 2023, as compared to $5.7 million for the six months ended June 30, 2022. The increase was due primarily to the employee severance costs, offset by a decrease in stock-based compensation, both resulting from workforce reductions.
• Net loss for the six months ended June 30, 2023, increased to $29.9 million, as compared to a net loss of $8.1 million for the six months ended June 30, 2022. The increase was primarily driven by a decreased gain from the change in fair value of warrant and earnout liabilities, offset by a decrease in professional fees, which were elevated during the six months ended June 30, 2022 as a result of the merger transaction.
• Adjusted EBITDA loss for the six months ended June 30, 2023, decreased to $23.8 million from an Adjusted EBITDA loss of $26.7 million for the six months ended June 30, 2022, due to an increase in interest income on cash and cash equivalents resulting from increased interest rates, as well as a decrease in bad debt expense and insurance costs.
• Cash was $42.0 million at June 30, 2023, as compared to $76.5 million at December 31, 2022.
• Net cash used in operating activities decreased to $26.3 million for the six months ended June 30, 2023, as compared to $34.5 million for the six months ended June 30, 2023, primarily due a reduction in headcount and discretionary spending.

For additional information regarding our long-term outlook and risks and assumptions related thereto, see the Liquidity, Capital Resources and Going Concern section of Exhibit 99.2 of Satellogic’s recent Form 6-K filing.

Use of Non-GAAP Financial Measures

We monitor a number of financial performance and liquidity measures on a regular basis in order to track the progress of our business. Included in these financial performance and liquidity measures are the non-GAAP measures, Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA. We believe these measures provide analysts, investors and management with helpful information regarding the underlying operating performance of our business, as they remove the impact of items that we believe are not reflective of our underlying operating performance. The non-GAAP measures are used by us to evaluate our core operating performance and liquidity on a comparable basis and to make strategic decisions. The non-GAAP measures also facilitate company-to-company operating performance comparisons by backing out potential differences caused by variations such as capital structures, taxation, capital expenditures and non-cash items (i.e., depreciation, embedded derivatives, debt extinguishment and stock-based compensation) which may vary for different companies for reasons unrelated to operating performance. However, different companies may define these terms differently and accordingly comparisons might not be accurate. Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA are not intended to be a substitute for any GAAP financial measure. For the definitions of Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA and reconciliations to the most directly comparable GAAP measure, see “Non-GAAP Financial Measure Reconciliations” below.

Non-GAAP Financial Measure Reconciliations

We have included reconciliations of non-GAAP EBITDA and non-GAAP Adjusted EBITDA for the six months ended June 30, 2023 and 2022. Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA are not intended to be a substitute for any GAAP financial measure.

We define Non-GAAP EBITDA as net income excluding interest, income taxes, depreciation and amortization. The Company did not incur amortization expense during the six months ended June 30, 2023 or 2022.

We define Non-GAAP Adjusted EBITDA as Non-GAAP EBITDA as further adjusted to exclude merger-related transaction costs, other financial income (which consists of foreign currency gains and losses), changes in the fair value of embedded derivative instruments and stock-based compensation.