On Tuesday, Satellogic (NASDAQ:SATL) discussed first-quarter financial results during its earnings call. The full transcript is provided below.
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Summary
Satellogic reported an 80% revenue growth in Q1 2026, reaching $6.1 million, alongside a 32% improvement in adjusted EBITDA loss, and achieved positive net cash from operating activities for the first time.
Strategic initiatives include expanding US defense engagement and launching new products such as Aleph Observer, which is shifting the revenue model towards recurring subscriptions.
The company projects 2026 to be a significant year for achieving sustained profitability, with the Merlin constellation expected to drive free cash flow as it enters service.
Operational highlights include launching new satellites, securing a $12 million agreement with a sovereign defense customer, and the addition of Vice Admiral Frank Whitworth as a strategic advisor.
Management emphasized the company's strong commercial momentum, strengthened leadership, and strategic roadmap, highlighting the transition from episodic to persistent geospatial intelligence.
Full Transcript
OPERATOR
Good morning and welcome to the Satellogic First Quarter 2026 Financial Results Conference call. All lines have been placed on listen only mode and the floor will be open for your questions following the presentation. During today's call we may make statements relating to our goals and objectives for future operations, financial and business trends, business prospects, future financial metrics, statements regarding customer contracts and pipeline, our ability to generate revenue and management's expectations for future performance that constitute forward looking statements under federal securities laws. Any such forward looking statements reflect management expectations based upon currently available information and are not guarantees of future performance and involve certain risks and uncertainties that are more fully described in our SEC filings, including the Risk Factors section of Satellogic's Quarterly Report on Form 10Q, Annual Report on Form 10K for the fiscal year ended December 31, 2025 and our filings with the SEC. Our actual results, performance or achievements may differ materially from those expressed in or implied by such forward looking statements. We undertake no obligations to update or revise any forward looking statements to reflect events or developments after the date of this call. On this call we will also discuss financial measures not determined in accordance with the U.S. gAAP, including EBITDA, adjusted EBITDA and free cash flow reconciliations. Of these non GAAP measures to the most directly comparable GAAP measures are presented in the earnings materials posted on our website today. Our press release detailing these results was issued this morning and is available in the Investor Relations section of our company's [email protected] hosting today's call will be Satellogic's founder and chief Executive Officer Emiliano Cardigan, Chief Financial Officer Rick Dunn and Vice Admiral Frank Whitworth, US Navy, Retired. With that, I will turn the call over to Mr. Cardigan.
Emiliano Cardigan (Chief Executive Officer)
Thank you Operator and good morning everyone. Welcome to Satellogic's first quarter 2026 earnings conference call. Joining me on today's call are Rick Dunn, our Chief Financial Officer, and a special guest, Vice Admiral Frank D. Whitworth III, U.S. navy, retired, who recently joined Satellogic as a strategic Advisor. We're pleased to have him with us today. I'll begin with a brief company overview and the key themes of the quarter before introducing Vice Admiral Whitworth, who will share his remarks on his role and our difference and intelligence engagement. Rick will then walk you through our Q1 2026 financial results in detail before I cover our commercial update and recent wins. Walk through our 2026 product roadmap, including our Alifox server platform and Merlin Constellation and close with key takeaways before we open the line for questions. With that, let's begin. The first quarter of 2026 marked a clear inflection point for Satelogic. We grew revenue 80%, improved our adjusted EBITDA loss by 32%, generated positive net cash from operating activities for the first time in our history, and exited the quarter with 121.9 million in cash. Just as importantly, the commercial momentum we built exiting 2025 is broadening across sovereign defense, recurrent intelligence subscriptions and US government engagement. Based on our current cost base backlog, growing recurring revenue and current pipeline, we believe 2026 can be a year of substantial progress towards sustained profitability and we expect Merlin to be an important driver of free cash flow as it enters service. This was one of the strongest starts to a year in our company's history and our most ambitious product roadmap to date is now executing on schedule. There are five things I want investors to take away from the quarter. First, on our unique sovereign and different solutions. Our non itar design, vertical integration and free trade zone manufacturing in Montevideo allow us to deliver disruptively priced sovereign capabilities to allied governments around the world with rapid technology transfer and in country assembly, integration and test. In the quarter we deepened our US Defense engagement through the expansion of our partnership with IDT Corporation and the U.S. office of Naval Research for Phases 2 and 3 of the Slingshot program advancing in orbit demonstration of our rapid tasking and high resolution capabilities in support of US Navy mission requirements and just last week we announced a 12 million agreement with a sovereign defense customer to deliver the Commission in orbit Musat from our Aleph 1 constellation, the second sovereign in orbit transaction in two quarters and I'll come back to why that matters. Second, we have significant customer traction. We continue to diversify our customer base internationally with Asia Pacific revenue growing more than 8 fold year over year to 3 million in Q1 2026. The growth was led by significant contributions from customers in Australia and Malaysia and reflects the global demand we're seeing for sovereign and high frequency monitoring capabilities. Third, we have unmatched capacity and scale. As of March 30th we continue to operate one of the largest high resolution constellations in the world. Our capacity advantage is significant based not only on the number of satellites but also on our patent protected camera design that enables us to capture approximately 10 times more imagery per satellite than our peers at an all in cost per satellite of approximately 1.3 million, a fraction of the industry standard. That cost and capacity advantage is what allows us to realize the unit economics to deliver persistent daily monitoring at scale. The capacity of our constellation has enabled us to sell in orbit satellites to space systems customers without impacting our ability to meet existing demand and expected future growth in our data and analytics business. Fourth, revenue growth with operating leverage in action. Revenue grew 80% year over year to 6.1 million, while our adjusted EBITDA loss improved 32% to 4.2 million. And for the first time in our history, we generated positive net cash from operating activities in the quarter. The recurring revenue shift we're beginning to see is being driven in part by by ALIF observer or Persistent Monitoring Product, launched in February. That is the operating leverage of our vertically integrated model becoming visible. Combined with 1 21.9 million of cash in hand, it materially strengthens our path to sustained profitability and fifth, a strengthened leadership team. Our board and management team bring deep public company finance, defense and policy experience. Over the last two quarters, we have built up our sales leadership with the incorporation of Jeff Kerridge and a seasoned team of sales executives. Today I'm pleased to introduce a new addition who we believe will be meaningful to accelerate our trajectory in defense and intelligence. In late March, we welcomed Vice Admiral Frank D. Whitworth III, U.S. navy, retired as a Strategic Advisor Vice Admiral Whitworth most recently served as the eighth Director of the National Geospatial Intelligence Agency, the ngi, where he led the delivery of geospatial intelligence supporting US national security operations worldwide. His decades of experience operationalizing geospatial intelligence at the highest levels of the U.S. defense and intelligence communities position him uniquely to advise our team as we deepen our engagement with that customer base. It's an honor to have him with us today. Vice Admiral, the floor is yours.
Frank D. Whitworth III (Strategic Advisor)
Thank you, Emiliano and good morning everyone. It's a privilege to be with you today. Let me start with a few words on why I joined satelogic. Most recently I had the honor of serving as the eighth Director of the National Geospatial Intelligence Agency or NGA for short, from June 2022 until my retirement just last December. In that role, I was responsible for the delivery of geospatial intelligence support of U.S. national security operations worldwide. One of the priorities during my tenure was the maturation of NGA's Maven, the Department of War's primary initiative for operationalizing artificial intelligence and machine learning. We transitioned that program from an experimental framework into an operational capability that meaningfully increase the speed and scale of intelligence analysis integrated with mission command across the department. That experience reflected my view of where geospatial intelligence needs to go. What attracts me to Satellogic is that this company is purpose built to address the same imperative. The combination of scale, frequency and resolution that the satellite Constellation is designed to deliver, coupled with low latency analytics and near real time tipping and queuing and alerts, this is precisely what we need to enable the shift from periodic observation to continuous awareness. In my role as Strategic Advisor and always adherent to my ethics restrictions against communicating with NGA in the Navy, I have been and will continue to be working with the team across three areas strategic engagement with global defense and intelligence customers, the development of the company's product and technology roadmap including the Merlin Constellation Emiliano will discuss shortly, and the integration of high frequency Earth observation into modern intelligence architectures. I am impressed by what this team has built. The US Defense and intelligence communities are actively rethinking how they source persistent geospatial intelligence and Satellogic's combination of sovereign grade capability with commercial economics is uniquely matched to that demand. I look forward to helping the team serve that mission and to translate that demand into long term programs of record. With that, I'll turn it over to Rick to walk you through the financial results.
Rick Dunn (Chief Financial Officer)
Rick thank you Admiral and good morning everyone. Our first quarter results reflect the commercial momentum and financial discipline we built exiting 2025, and they mark several important inflection points in our business. The headlines are revenue up 80%, adjusted EBITDA loss improved 32% the first quarter of positive net cash from operating activities in our history and $121.9 million of cash on the balance sheet, our strongest position to date. Let me walk you through each revenue. Total revenue for the quarter was $6.1 million, up 80% year over year from $3.4 million in Q1 2025. The increase was driven primarily by a 1.6 million increase in imagery ordered by new and existing data and analytics customers by business line. Our data and analytics line of business, which includes our Constellation as a service offering, generated 4.6 million of revenue, up 3 million in the prior year. Compared to the prior year period. Space systems contributed 1.5 million of revenue. Geographically, the quarter reflected a meaningful diversification of our customer mix. Asia Pacific generated 3 million in revenue, up more than Eightfold from 0.4 million in the prior period, with Australia and Malaysia as the primary contributors. Europe contributed 1.1 million, up from half a million. America's contributed 2 million, primarily reflecting timing rather than any change in customer demand. Our US Pipeline continues to be very strong and we look forward to executing on that pipeline in this in the remainder of the year, South America contributed 0.1 million. Taken together, this geographic diversification is an important indicator of the increasingly global demand for our services and of the durability of our international customer base. Total costs and expenses for the quarter declined 3% year over year to 12.5 million. Within that cost of revenues, which is exclusive of depreciation, was 1.5 million, up 17% on higher ground station costs that scale with our growing operations. Engineering expense was 3.1 million of 24% reflecting investment in software, professional services and stock based comp tied to a broad to the broader employee population. SGA expense was approximately flat at 6.5 million, with an increase in salaries and benefits associated with workforce expansion in anticipation of 2026 growth, offset by a 0.8 million decrease in legal and professional fees that were elevated in Q1 of last year due to our US domestication. Depreciation expense decreased 48% to 1.4 million, reflecting a reduction in the number of satellites with remaining depreciable useful lives. Although we continue to utilize these fully depreciated assets so long as they're capable of capturing commercially viable imagery, the result is an operating loss of 6.4 million for the quarter and improvement of 3.2 million or 33% compared to the prior period. Below the operating line we recorded a $113 million change in fair value of financial instruments. I want to be unambiguous about what this is. It is a non cash non operational charge and it reflects the increase in our Class A common stock during the quarter driven by the standard remeasurement of our secured convertible notes, warrants and earn out liabilities. A higher share price drives a larger accounting charge against earnings and net income. It has no bearing on the cash generation of the business. Net loss for the quarter, including this $113 million non cash expense was $118.3 million. This is not indicative of underlying operating performance and we report adjusted EBITDA to give investors a clearer view of the operating business. Adjusted EBITDA and Operating Cash Flow On a non GAAP basis. Adjusted EBITDA loss for the quarter was 4.2 million, an improvement of 2 million or 32% compared to the prior period. This is a function of both top line growth and continued expense discipline and it underscores the operating leverage inherent in our vertically integrated model as revenue scales. Just as importantly, we generated positive net cash from operating activities of 0.2 million in the quarter, an improvement of 4.9 million from the 4.7 million of cash used in operating activities in Q1 2025. This is the first time in Satellogic's public history that we have generated positive operating cash flow in a quarter, and it is a tangible early indicator of the financial trajectory. I'll come back to in a moment. Balance Sheet we ended the quarter with $121.9 million in cash and cash equivalents, up from 94.4 million at the end of the year 2025. The increase reflects the $35 million registered direct offering we completed at $4.73 per share in late January, partially offset by capital expenditures of 5.6 million to support the construction of our Merlin Constellation backlog and remaining performance obligations. Our non cancellable remaining performance obligations stood at 64.8 million as of March 30th 31st, with 29.2 million expected to be recognized within one year, 7.9 million in years one to two, 7.5 million in years two to three, and 20.2 million thereafter. Capital Structure Update Subsequent to quarter end in early April, the holder of our secured convertible notes initiated a partial conversion of approximately 6 million of principal into 5 million shares of common stock, reducing outstanding principal to $24 million and further simplifying our capital structure. Our liquidity position is strong, extends our operating Runway de risks our Merlin development timeline and provides the flexibility to invest in the growth initiatives. Miliana will discuss in a moment. Looking forward, we are seeing the operating leverage inherent in our vertically integrated model take hold. With our current cost base, growing recurring revenue from a Leth observer and a strengthening pipeline of multimillion dollar opportunities across defense, sovereign and commercial customers, we expect 2026 to be a meaningful step forward on our path to sustained profitability. With that, I'll turn it back to Emiliano.
Emiliano Cardigan (Chief Executive Officer)
Thank you, Rick. The first quarter delivered a sustained cadence of commercial, operational and strategic milestones. And the through line is that what looked like isolated wins six months ago is now visibly becoming a repeatable commercial engine. Let me walk you through the highlights in three categories. First, on our sovereign defense demand. Demand is real and it is repeatable. In January we signed an $80 million agreement with Sea, the center of engineering and product development in Portugal, for the supply and in orbit delivery of two Nusat Mark V 50 centimeter class satellites. Ownership and operational control are expected to transfer to SEAA in the second and third quarters of this year. Also in January, we sold Newsat 34 to Australia establishing the country's first sovereign sub meter Earth observation capability. And just Last week on April 30, we announced a 12 million agreement with a soaring defense customer for the in orbit delivery of a commissioned new set satellite from our iLepH1 constellation with full transfer of ownership and operations expected in early 2027. I want to underscore why this transaction matters beyond its dollar value. It is the second sovereign in orbit transaction we have closed in two quarters and it demonstrates a differentiated value proposition in the market. The ability to deliver a fully commissioned flight proven satellite to a sovereign customer with speed and cost efficiency that traditional procurement programs simply cannot match. Importantly, we are approaching this model selectively. Our priority is to monetize in orbit assets where the economics are compelling while continuing to manage Constellation capacity to support our data and analytics customers and broader mission requirements. Moreover, we may have the ability to buy back capacity at attractive prices from certain space systems customers with our 1.3 million all in new set cost and frequent contracted launch cadence. We believe sales of in orbit satellites can potentially play a larger role in our space system strategy as we scale the constellation over time. Second, our commercial engine is broadening and shifting to recurring revenue to recurring subscription revenue. Beyond the Eightfold expansion of our Asia Pacific revenue rig already highlighted, the underlying mix of our commercial business is changing in a way that meaningfully improves revenue quality. In January we signed a semi figure monitoring agreement with strategic customer providing daily revisit and high resolution coverage over a large portfolio of priority sites, exactly the kind of recurring engagement that compounds over time. We also extended our countrywide monitoring agreement with the Government of Albania, continuing the persistent national Earth intelligence we have been delivering with our nuisance Constellation. And in February we launched Aleph Observer or Persistent Geospatial Intelligence Platform which is now in market. I'll spend more time talking about it in a moment, but the commercial impact is already visible. We're converting one off imagery customers to into multi year subscription customers together. The shift from project revenue to platform revenue is what underpins the durability of our growth trajectory. Third, strategic and platform milestones supporting the next leg of growth. On the operational side, on March 30th we successfully launched Musat 53 and Musat 54 on a SpaceX mission from Vandenberg Space Force Base, expanding or in orbit capacity and flight heritage. On the capital side, in January we closed a 35 million registered direct offering at $4.73 per share, materially strengthening the balance sheet and de risking the Merlin developing pipeline. On the US Defense engagement side we expanded our Slingshot partnership with IDT Corporation and the US Office of Naval Research into phases two and three and we welcome Vice Admiral Whitworth as Strategic Advisor and on the commercial leadership side, we have continued to build out our global sales organization and with senior defense and intelligence industry veterans extending the work that began with the appointment of our SVP of Global Safe last year. The commercial muscle of this company today is materially stronger than it was 12 months ago. The takeaway is straightforward. The breadth and quality of commercial operational and strategic activity in the first quarter and in the four weeks since speaks to a commercial engine that has matured. We're no longer a constellation looking for customers where vertically integrated platforms serving a growing multi hundred million dollar pipeline of qualified opportunities across defense, intelligence, sovereign and commercial markets. With the unit economics to win on price and the capability to deliver immediately. I want to take a moment to ground the conversation in what we believe is an important strategic shift happening in the commercial Earth observation today. For two decades the dominant model of commercial earth observation has been transactional. Customers tasked individual images, visibility was episodic and tasking capacity constrained by a limited number of satellites built at high cost. The result was reactive event driven intelligence and an industry that frankly struggled to scale. Persistent global intelligence is fundamentally a different category. It is continuous and always on. The foundation is a daily planetary baseline with our constellation. Today it already enables the simultaneous monitoring of thousands of sites and moves customers from reactive observation to proactive awareness. With the future launch of our Merlin constellation, the foundation layer becomes ubiquitous, going from thousands to an unlimited number of sites. With persistent global intelligence, the commercial model shifts from per scene transactions to recurring subscription revenue and it materially improves the predictability and lifetime value of every customer relationship. The reason we believe Satellogic is uniquely positioned to lead this category transformation is rooted in physics and unit economics for pattern protected stabilized push frame camera Design reaches approximately 10 times more imagery throughput per satellite than our competitors combined with our 1.3 million all in satellite cost and the vertical integration that allows us to scale our constellation at a fast pace. That throughput is what enables persistent monitoring at unit economics that no one else in the industry can match. We believe the market is still early in this transition from episodic to persistent global intelligence, but the customer demand signals are clear. Aleph Observer is a new product that allows customers to subscribe to persistent monitoring of portfolios of strategic sites with reliable revisit cadence image delivery within hours and analytics layered on top. It allows our customers to go from monitoring a handful to hundreds of sites on a daily basis and as of February it is in the market and commercially available. It was built on three pillars. One Scale Aleph is able to persistently monitor hundreds of sites simultaneously at the frequency and cost structure that no traditional tasking based service can match. Second assurance Aleph has capacity to scale and a reliable cadence over priority regions, meaning customers can plan around the data and not the other way around. And third, built in analytics, ALIF delivers images roughly within three hours of capture with automated object detection layered layered in at no additional cost. The analytics enable fast triage and prioritization of intelligence analysts workflows, a requirement at this scale. The example coverage map you see on the slide illustrates the kind of persistent monitoring footprint Aleph Observer enables in this case the regional intelligence picture across Iran Customer adoption to date includes sovereign government users, defense customers and commercial monitoring buyers across multiple regions. This is what we believe is the future direction of the market and we believe SiteLogic is the company in the industry best positioned to deliver it today. Now if AlephObserver is a product in market today, Merlin is the infrastructure layer that expands that product from high value targeted monitoring into planetary scale persistent intelligence. Merlin is our AI first defense oriented constellation purpose built for daily 1 meter global coverage and real time intelligence. A few things to highlight. First, Merlin is fully funded. Its development is anchored by a 30 million customer contract from a strategic defense and intelligence customer, which means we're not asking shareholders to underwrite this build out or customers are. Second, Merlin is the site for planetary scale. The Constellation, when fully deployed is intended to remap the entire planet daily at 1 meter resolution. The architecture combines 10 spectral bands aligned with Sentinel 2 AI first onboard processing and inter satellite links to enable real time alerting. This is a step change in what commercial earth observation can deliver. And third, we're happy to mention Merlin is on track. We have made strong progress against production milestones in Q1 and we remain confident in our October 2026 first launch window, now roughly five months away with the initial Constellation rollout expected to be complete in the first half of 2027. I'd like to leave you with four takeaways from the quarter. First, our commercial momentum continues to strengthen. We completed two sovereign in orbit transactions in two quarters including Portugal FIA and the $12 million agreement we announced last week with no impact to the needs of existing and expected data and analytics customers. We also expanded Slingshot phases two and three with the US naep. We're seeing growing demand across both our data and space systems businesses with customers increasingly moving from pilot programs to to our larger operational deployments and longer term engagements. Second, the business model is beginning to demonstrate meaningful operating leverage. Revenue grew 80% or adjusted EBITDA loss improved 32%. We generated positive net cash from operating activities for the first time in our history and we exited the quarter with 1 21.9 million in cash. We believe these results reflect the benefits of a verically integrated architecture and increasing scale. Third, AlephObserver establishes SateLogic's position in persistent geospatial intelligence. Customers are increasingly moving from buying individual images to subscribing to continuous monitoring and actionable awareness over strategic areas of interest. We believe this transition represents a major evolution in the Earth observation market. Earth Observation is evolving from a data business into an intelligence infrastructure business and Q1 showed meaningful progress in our positioning for that transition. Fourth, the technology roadmap is fully funded on schedule. Aleph Observer is live and in market. Merlin first launch is on track for October 2026 and the initial Constellation rollout is expected to be complete in 1H27. Our Q1 launches of Newsat 53 and 54 expanded or in orbit capacity and flight heritage we're executing on time, on budget and at scale. Taken together, these highlights signal we're on the right path for our continued growth and constitute the basis for our confidence going forward. I want to take a moment to thank our customers, our partners or employees and our shareholders for their continued support. And a special thanks to Vice Admiral Whitworth for joining us today with that operator. Please open the line for questions.
OPERATOR
Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press Star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing. The star keys available for questions today are Emiliano and Rick. One moment while we poll for questions. First question. Michael Latimore with Northland Capital Markets, Please go ahead.
Michael Latimore (Equity Analyst)
All right, great. Yeah. Good morning. Congrats on the excellent results here. I guess. I first wanted to touch on Aleph Observer. Can you give a little more detail there? Maybe. How many customers have signed up for that? What are sales cycles like? What kind of incremental revenue do you see when a customer does sign up for it?
Emiliano Cardigan (Chief Executive Officer)
Sure. Hi, Michael, how are you? So, yeah, we're still early commercially. And Observer. Right. It was launched in February but we are very encouraged by the engagement we're seeing. Customers are already using the platform operationally across portfolios in their areas of interest that range from dozens of sites for some customers to hundreds of monitoring sites for others. Right. Depending on the use case. What is especially important for us is that the conversations we're having are increasingly centered around ongoing monitoring workflows rather than isolated imagery request. And that's kind of the behavioral transition we are looking for. Our expectation is to sign a number of initial pilots in 2026 for Aleph Observer. And as customers factor in this new procurement method for recurring services into their budget, expand and scale into 2027.
Michael Latimore (Equity Analyst)
Yep. Yeah, makes sense. Great. And then maybe just a little more color on the pipeline. You know, how many, how many nations, sovereign nations do you see in the pipeline potentially wanting, you know, space systems deal or the full portfolio and maybe a little breakout between, you know, larger tier one countries and smaller one.
Emiliano Cardigan (Chief Executive Officer)
Yeah, that's a good question. So I don't have the breakout numbers here in front of me, but you know, anecdotally what I can share is the pipeline we're seeing is, you know, is growing very strong in Asia, Asia Pacific, in the Middle east, in Europe. Those are the areas where we're seeing most of the, most of the progress currently, you know, or space systems pipeline sits just under a billion dollars on opportunities that we're pursuing and this is mostly obviously sovereign sovereign customers.
Michael Latimore (Equity Analyst)
Okay, perfect, perfect. Great. Thanks very much. Good luck this year.
OPERATOR
Next question. Andre Shepard answer. Fitzgerald, please go ahead.
Andre Shepard
Hey, good morning everyone. Congratulations on the quarter and thank you so much for taking our questions. Congrats on all the great progress. Again. I wanted to touch on maybe Merlin. So looks like we are reaffirming the timeline for later this year and operational capacity next year. Rick, just curious if you can maybe give us maybe a high level view on how we should expect those revenues from Merlin to, to ramp up how we should think about those and maybe what will that do to the cost structure? Thank you.
Rick Dunn (Chief Financial Officer)
Thanks, Andres. Yeah, no, I think, you know, as you guys know, we have a $30 million contract for the Merlin services and we've collected a decent amount of cash of that up front. Cash from that up front. But in terms of rev rec, that won't begin really until we, we get to the point where we're fully operational in the first half of 2027 so that that revenue will start getting recognized annually and in chunks as we deliver those services. And as far as, as far as the pipeline, we're Working on a number of opportunities that would also leverage the Merlin Constellation. And, and those also would not, you know, start to get recognized until we're fully operational in, in 2027.
Andre Shepard
Got it. Okay, that's super helpful, I appreciate it. And maybe just a quick follow up, a bit of a housekeeping one. So there was a high concentration of revenue from Asia and Asia Pacific this quarter. Just curious if we should see that more as a trend or more as an outlier going forward. Any color there will be helpful. Thank you.
Rick Dunn (Chief Financial Officer)
Yeah, sure. And just a follow up on your last question. That $30 million contract is also a five year deal. So it mirrors the life of the expected life of the Merlin satellites themselves with respect to Asia and Asia Pacific this quarter. Yeah, I think that that will continue. It was buoyed by customers in Australia specifically heo, that we announced publicly where they purchased an in orbit satellite earlier this year and then also a customer in Malaysia. But we're seeing demand for our products and services, you know, globally increase. And so I think that this isn't a one off and I think you'll see continued growth across all geographic regions going forward.
Andre Shepard
Very, very, very helpful and thanks again.
Emiliano Cardigan (Chief Executive Officer)
The quarter. No, I was just adding something there to Rick Andres. This is Emiliano. We, you know, we see several, if you want several structural drivers at work in the defense intelligence procurement and in particular there's a driver around modernization of defense and heightened focus on sovereign earth observation capabilities that's playing out in Asia Pacific in particular. We see many governments in the region looking to reduce dependency on third party imagery providers. And that's obviously driving part of our pipeline there. So yeah, we expect to see continued growth there. As Rick was saying. Excellent. Thanks, Emiliano. Thanks, Rick. Congrats again. We'll pass it on.
OPERATOR
Next question. Jeff Van Ree with Craig Hallam, please proceed.
Jeff Van Ree
Great. I'll add my congrats, guys. A couple from me, Emiliano, on Aleph observer, you talked about the ability to monitor unmatched costs, unmatched value overall. Can you just expand a bit more on that? How it stacks up versus the competitive landscape, competitive offerings?
Emiliano Cardigan (Chief Executive Officer)
Sure. I think the biggest differentiator of Aleph observer starts, if you want, with the underlying economics and capacity of our Constellation itself. Right. As we mentioned before, or satellites, you know, at a fully loaded cost or new satellite at a fully loaded cost of around 1.3 million, you know, and with 10 times the data collection capacity, those of our peers, you know, mean that basically, you know, the unit economics first site that we're monitoring and salts are very differentiated. And the other factor is obviously because we're currently operating one of the largest or the largest commercial constellation for high resolution imaging, you know, the number of sites that we can monitor compared to those of our peers is significantly larger. Right. We don't have any encumbered capacity, you know, by, in the, in the areas of the world, the areas of interest of, you know, higher demand. And that also helps. Right. So that's really, I think what makes ALIF observer different from everything else. It's just the number of sites that you can monitor on a daily basis at a cost, you know, that's still affordable. On top of that, we're layering analytics. Right. And allowing our customers to use those analytics to triage and to prioritize, you know, the time that human allies spend on the sites. But the reality is a lot of the industry can generate analytics on top of imagery. You know, the harder problem is really being able to deliver persistent monitoring at scale, with a reliable cadence and with economics that support operational use cases. So our focus really has been on building a system that is capable of monitoring large portfolios of sites continuously and affordably. And Alif observer, you can think of as a software and workflow layer that is built on top of large operational capability. Right, that's really important.
Jeff Van Ree
Yep, very helpful. And Rick, a couple for you. The sovereign defense customer signed in April, 12 million. Can you just talk to how that likely lands in terms of revenue and if there's some follow on opportunity to that additional. In addition to that 12 million?
Rick Dunn (Chief Financial Officer)
Sure. You know, with respect to space systems in general, we will be delivering three satellites this year to customers and recognizing revenue associated with those. The sovereign defense customer is one of those. And that particular one should occur. It may straddle second and third quarter. So it's gonna be in that zone. It'll be likely June, July. With respect to the other two deliveries we have, those are for our Portuguese customer that we announced in January and we expect to deliver one of those in June timeframe and likely the second in the fourth quarter.
Jeff Van Ree
And just a second part of the question there, the opportunity to sell additional imagery down the road or additional follow on data sales.
Rick Dunn (Chief Financial Officer)
Yeah, sorry Jeff, I was just remembering that. Yeah, absolutely. You know, the sovereign defense customer is a large customer. We expect them, we expect to have follow on opportunities with them with respect to both data and analytics sales as well as space system sales. So we're pretty excited about that one.
Jeff Van Ree
And then maybe on the ONR, on the Slingshot deal one just to clarify, was that in RPOs and does it show up in RPOs? And I know it's in, I believe, three stages, but just trying to get a sense of the scope of the opportunity from that program. Maybe. I don't know if that's Emiliano maybe, or Rick, but just walk through kind of what the opportunity is there.
Rick Dunn (Chief Financial Officer)
Yeah, I can start and then Emiliano can add some color. You know, it is in the RPOs. It's not a particularly large contract. I think what's more important is what we're doing with IDT and the ONR on that project and how that could translate for other customers going forward. But I'll let Emiliano comment on that.
Emiliano Cardigan (Chief Executive Officer)
Yeah, I think why we see this program as being particularly interesting is because it is allowing us to operationalize for the first time, you know, inter satellite links for tipping and queuing between different satellites in our fleet. And there is, you know, scalability in the program we're doing with onr. That in itself might be interesting, but I think what's more interesting is as these capabilities that we are developing along with the owner, you know, become part of our standard product offering. Right. And that's, I think, where, you know, where the impact of this program is going to be realized.
Jeff Van Ree
Yep, helpful. Maybe if I could sneak one last one in. And I don't know if Vice Admiral Whitworth is taking questions. This is obviously right in his wheelhouse. But maybe for you, Emiliano, the. The US Government purchasing NGA purchasing of commercial data looked like it had a lot of momentum a couple years ago. Obviously CL put up some very big numbers and then there was a pause and it seems a lot of entities within the US Government sort of rethought that commercial imagery discussion. And then there's been a discussion for many, many years of buying more commercial. Just curious if the conviction's there, A, that we see a ramp in US commercial buys and then B, just to the extent that you're engaged with the right buyers, how you see the sales track in North America, particularly US Government going forward.
Emiliano Cardigan (Chief Executive Officer)
Yeah, happy to take this one. Yes. I mean, what we're seeing is the environment currently in the US Procurement is kind of forcing different avenues for procurement and different procurement. And procurement for a wider set of commercial supply obviously includes us. We are seeing significant opportunity growth for our own engagement with US Government in general. And yeah, definitely one of the areas that we expect to contribute, future growth.
Jeff Van Ree
Great, great. Thanks so much, guys. Congrats on the progress.
Suji Da Silva
Next question. Suji Da Silva with Ross Capital Partners. Please go ahead.
Rick Dunn (Chief Financial Officer)
Hello Emiliano and Rick, congratulations on the progress. I'll add mine as well on the data analytics revenue and the transition to more recurring visible revenue from I guess perimage. Where are we in the transition and what's a realistic expectation of how that mix can shift in the next year or two? Just understand the pace of that transition.
Emiliano Cardigan (Chief Executive Officer)
Yeah, I think we're early in the transition. As you know, in 2025 we did 18 million of revenue. We've got a tremendous amount of momentum both on the data and analytics side as well as space systems for 2026. And you're starting to see that as we make announcements on contract wins in terms of the mix. You know, it's a tough one because the space system steels tend to be rather large and episodic. You know, when they hit the period in which they hit, they have an outsized impact typically. And so that, that, you know, space systems by definition is going to be a little bit lumpy. But, but I do think that, you know, with the Left observer and Merlin then coming online in 2027, our data and analytics revenue will also grow substantially. We've got the largest high resolution commercially available in the world, a lot of capacity on it and a world class sales team that's out there selling that data right now. So we expect that will scale up more linearly going forward.
Suji Da Silva
If I can add there. Suji. Yeah, thanks for the question. In particular, if you're talking about kind of the transition that we're seeing towards persistent intelligence and recurring monitoring, as Rick said, we're still very early in the transition. So most of our revenue today is still not recurring in the traditional SaaS sense if you want. But what we're increasingly seeing is customers that are moving from one off tasking towards this ongoing monitoring relationship with us. And that's the important shift. Right? Like customers are asking us to monitor portfolio sites continuously over time and rather than purchasing isolated images. So that's what I Live observer was designed to do. That's an exact use case that it was designed to fulfill. And so while, you know, in the accounting side, accounting profile, if you want, still evolving, the customer behavior is already changing in that direction. I think that's the leading signal that we're excited about. That's great, that's helpful Emiliana. And then a second question, maybe for Emiliana, for the product, not the product, but the roadmap really of the satellite capabilities increasing AI compute on the satellite. You talked about that roadmap and what that would look like as it flows forward the next few years in terms of increased opportunity or revenue or products, services. Any concepts that would be helpful as we think about the roadmap of the satellite capabilities? Yeah, no, for sure. And without speculating too much, you know, I think you see us evolving our roadmap in a few different directions in parallel. Right. On one side we are evolving the resolution of our high resolution satellite fleet. Right. So we are currently or new sets are 50 centimeters of resolution. We're moving towards our next generation satellites that will be able to do 35 centimeter resolution imagery. Right. So higher resolution is one direction. We also are including real time inter satellite links and onboard processing with capabilities, nav capabilities and processing power to run multi headed AI pipelines on top of all of the data that our satellites are collecting. And that's also part of the roadmap. That's another avenue. Right. So one is increased resolution, second one is real time analytics and real time alerting and inter satellite links. And the third one is Merlin. So layering in this broad area, monitoring global daily remaps at 1 meter of resolution on top of all of this. Right. Those three things put together speak of a future where we will be going very closely to what has been our vision since the very early days of the company of having persistent global or geospatial intelligence and the ability to basically start asking the planet questions, start asking the earth questions about what's going on and getting daily signals, getting daily intelligence updated in pretty much real time. We're very excited about the way these three different growth areas in our technology and in the existing roadmap that we're executing come together to realize this vision of a searchable primate, or if you want a digital twin off the earth that everybody can use to make more informed decisions. I think another part that's very interesting from where we are in terms of a roadmap is that all of the big capabilities that we are building into our roadmap are actually being funded by our customers. So that's also very exciting for us. Yeah, that's great. Thank you, Miliana. Appreciate the color.
OPERATOR
Next question. Scott Fleck with Titan Partners, please go ahead.
Scott Fleck
Hi, good morning guys. Thanks for, thanks for taking my questions. Rick, I'm curious, is positive operating cash flow sustainable in Q2 and beyond or was the first quarter aided by timing of certain contract collections that may not repeat?
Rick Dunn (Chief Financial Officer)
Yeah, I mean we were marginally positive on operating cash flow. So I think it's going to be a little touch and go for a Couple two or three quarters as revenue ramps up. You know, what aided our cash flow positivity this quarter was really some advanced collections from customers. I think going forward we're going to be making investments in terms of scaling the business and that's going to require some working capital. So, you know, we are still at an adjusted EBITDA loss, as you know, and with, you know, continued growth and scaling working capital, we'll bounce around a little bit. We'll be drawing down on that as we make investments in inventory and so forth.
Scott Fleck
Great, that's helpful. And then my second one. Given the current level of geopolitical turbulence, are you seeing an acceleration of sales cycles or seeing interest from maybe new commercial customers? Yeah, I can take that one. Obviously, I think periods of geopolitical instability do tend to increase awareness of the value of persistent intelligence. So we are seeing conversations accelerating across the board. That said, we believe the broader shift we're seeing in the market is structural, not really event driven. Governments and enterprises alike increasingly want continuous awareness of infrastructure, supply chains, maritime activity, borders, their strategic assets. And this is regardless of any single conflict. So while the geopolitical environment can accelerate the procurement cycles here, we do view the demand transition as much broader and longer term. Great. Well, I appreciate the added color guys. That's all I have. Thanks, Scott.
OPERATOR
Next question. Chris Quilty with Quilty analytics, please go ahead.
Chris Quilty
Thanks. I had a somewhat technical and business question, I guess around the sale of the in orbit newsat. If I recall, this is the first time I can think of an operational satellite being sold to a customer. I don't count HEO because that's for a different application. Is that first of all, is that true? And do you think that is a expandable business model?
Emiliano Cardigan (Chief Executive Officer)
Yeah. Hi Chris. Yes, we do see this as an expandable business model. This is depending on how you count. This is the first or the second one because the first satellite that we sold to Seiya in Portugal I think was a few days after, after the satellite was launched. So that could count as an in orbit transfer. But yes, we do see this as a possibility that might expand in the future as we have this cadence of launch and manufacturing of satellites already contracted already in place. We're putting satellites in orbit essentially every quarter. We are seeing obviously increased demand on the customer and for, you know, adding very rapid capabilities. And in the past, you know, going from contract sign to satellite delivery within four months as we can, or six months as we can normally do with our launch cadence was, you know, extremely competitive compared to the years that it takes normally to get a functioning satellite in orbit. Obviously we see customers willing to engage and willing to pay a premium also for getting capacity delivered quicker. And because we have this capacity in orbit and we can do this transfers without affecting our ability to deliver on our data and services business. So yes, I think we can selectively continue to see this model going forward as we continue to grow our constellation. Right.
Chris Quilty
So I mean, you have lots of excess capacity now, but you know, as the revenue per satellite grows, you know, the technical part of the question is, you know, is this an SSO orbit or was it inclined? Because obviously that's kind of a huge difference in the amount of revisit. And would you maybe for Rick, think about, you know, changing the inclinations or launching capacity to inclinations where you think customers might purchase them?
Emiliano Cardigan (Chief Executive Officer)
Yep, it's a good question. So in this case it was a satellite in a, in a bit. We have built and launch, you know, satellites in many inclination orbits in the past, including one that we did with Tata in India. And we have the ability to do that. The satellite design supports that and or operation concept of operation supports that. And I agree with you. In the case of customers that want to ramp up their capabilities, in some cases, it makes sense to consider main inclination launches. Now, if you're only operating a small handful of satellites, 1, 2, 3 satellites, I would argue that mean inclination is probably not a great solution technically because you have, you know, persistent blackouts and customers are typically looking at building predictable capabilities that they can count on for intelligence. Right. And min inclinations are not particularly well positioned for that if you have a small, relatively small constellation. But we do have the flexibility and we do engage with customers if they want that. We see it as complementary to our SSO offering.
Chris Quilty
Gotcha. And for Rick, how does this get booked? And I guess the other question is we've seen some transactions like this where the customer obviously has a much smaller need for the satellite than its total coverage. And you see capacity sellbacks. Are those sort of arrangements, you know, part of this agreement or something you would look to do of reselling unused capacity?
Rick Dunn (Chief Financial Officer)
Yeah, you know, when we, in terms of how we book space systems deals, you know, it's based upon our performance obligations under each contract. And at the moment, each of those contracts continue to be fairly bespoke deals. You know, maybe over time they become more consistent and predictable in terms of the specific performance obligations. But the largest value that we're delivering to the customer is the in orbit satellite. We're also in many cases Transferring some knowledge and some light transfer technology as well as providing support from a mission ops perspective. But that's not where the value is for the customer. And revenue will, revenue recognition will follow those specific performance obligations in terms of the possibility of buying back capacity? Yeah, it's absolutely a possibility. We're not doing that. We don't have the right to do that currently with any of our existing deals. But that may likely be a possibility going forward and it may be something that we look to negotiate as part of our discussions with those customers as we enter the contract.
Chris Quilty
Gotcha. And just to clarify, Rick, I mean, this is a sale of an asset, so does it show up as a one time gain or are there elements that are continuing to be operational and providing support?
Rick Dunn (Chief Financial Officer)
Yeah, the performance obligation associated with the transfer of the satellite is booked when that, you know, that transfer occurs. So that's a one time, you know, recognition event per satellite with respect to services like transfer of knowledge, transfer of tech and mission and ops that'll be recognized over, you know, the period of time that we're delivering those services.
Chris Quilty
Great. Thanks, guys.
OPERATOR
All right, thank you.
Emiliano Cardigan (Chief Executive Officer)
I would like to turn the floor over to Emiliano for closing remarks.
OPERATOR
Well, thank you, Stacy, and thank you all for joining us. Q1 was a meaningful step on the path we have been describing for the past two years. Leaner, better capitalized, commercially active satellogic now demonstrating the operating leverage of a vertically integrated model. With our existing constellation Aleph observer in the market Merlin on track for October, and the deepening of our defense and intelligence engagement, we are positioned to lead the transformation of commercial Earth observation into persistent global intelligence at a planetary scale and to do it on a path to sustain profitability and free cash flow. If we were unable to address any of your questions today, please reach out to our IR team [email protected] thank you.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.
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