FORT LAUDERDALE, Fla. — Satellogic is relocating from Uruguay to the United States in a bid for more government business as revenues continue falling short of expectations, the publicly traded Earth observation operator announced Sept. 21.
Satellogic is currently registered in the British Virgin Islands and headquartered in Montevideo, Uruguay, meaning it is not subject to U.S. export controls for an imagery business that recently branched into selling its dishwasher-sized satellites to other companies.
The domicile change means Satellogic would lose this export advantage it had over U.S.-based satellite suppliers, its vice president of sales Luciano Giesso said during the South Florida Space Day conference here.
However, it would smooth the way for a business that currently relies on third-party arrangements with local companies to sell high-resolution multispectral imagery to the U.S. government.
Giesso said “we want to be able to be a major player in the U.S. market, because we are already good in the international market — but not so well in the U.S.”
Satellogic plans to redomicile to Delaware in the first half of next year, and has filed an application to license its constellation of 36 satellites with the U.S. National Oceanic and Atmospheric Administration (NOAA).
The company said during Sept. 21 earnings results that it had also appointed chief commercial officer Matt Tirman as president to lead its new focus on the U.S. market.
Post-SPAC trouble
Satellogic shares have steadily declined this year from a high of $4.03 in January to close at $1.36 on Sept. 21, down 11% from the day before its earnings announcement.
While revenue increased 33% year-over-year to $3.2 million during the first half of 2023, it is lagging well behind the $30 million to $50 million Satellogic forecast for the full year in December.
In a November 2021 analyst day presentation, two months before becoming a public company by merging with a special purpose acquisition company (SPAC), Satellogic projected revenue of $132 million for 2023.
Satellogic now only expects between $10 million and $20 million for 2023 after failing to win the customer orders it had expected.
SPACs, shell companies with no prior revenues that list shares and raise money from investors hoping to find an investment opportunity to join them on a public market, require less due diligence than a traditional IPO.
Although SPAC mergers have helped multiple space firms raise capital in recent years, they continue to underperform the stock market — and Satellogic is not the only one to have missed near-term growth projections made to drum up investor support for going public.
AST SpaceMobile, for instance, projected in its 2020 SPAC merger investor presentation that it would make $181 million in 2023 revenue from satellites that would connect standard smartphones outside cell coverage. The Midland, Texas-based company has a single advanced prototype in orbit and recently raised $115 million in debt to begin deploying its first five operational satellites in 2024. The company has said it needs 90 satellites for full service.
Other SPAC-funded space companies falling far short of their rosy pre-SPAC revenue projections include Astra, BlackSky, and Momentus.
Cost-cutting
Satellogic has also reduced its headcount by 25% from the start of 2023 to around 300 people to cut costs, and reduce the level of cash it has been burning through since raising $168 million from its SPAC merger.
The 13-year-old company ended the first half of 2023 with $42 million in cash, compared with $77 million Dec. 31.
Only moderate capital expenditures are expected in the near term, the company added, and it will not launch any additional satellites until early next year on SpaceX’s Transporter 10 rideshare mission.
Satellogic still plans to operate a full constellation of 200 sub-meter resolution satellites in low Earth orbit to map the world daily.
Although the plan is for government, defense, and intelligence customers to help finance this growing constellation, the company said over time it expects them to contribute less than 20% of revenues as its commercial business picks up.
About 25 to 30 of the company’s employees are already based in the United States, Giesso said during the conference — mainly at an office in Davidson, North Carolina.
He said a location for an enlarged base in the country is still under consideration.
“Maybe we’re thinking more Colorado,” Giesso added.
Satellogic has also not yet announced a customer for Earth-observation satellites the company said in March it could sell for less than $10 million.
The company had previously indicated about a quarter of 2023 revenues would come from this new “space systems” business line, weighted towards the second half of this year.
Rick Dunn, Satellogic’s chief financial officer, said Sept. 21 that reaching its $10 million to $20 million revenue target for 2023 “will largely be dependent on closing opportunities” within the space systems business.
The company reported a $30 million net loss for the first half of 2023, compared with a $8 million net loss for the same period in 2022.