Spire Global, Inc.

Previous wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and related notes thereto included in this Quarterly Report on Form 10-Q and the audited consolidated financial statements included in the Annual Report on Form 10-K/A for the year ended December 31, 2024 (the “2024 Form 10-K/A”). This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated by these forward-looking statements as a result of many factors. Factors that could cause or contribute to such differences include those identified below and those discussed in the section titled “Risk Factors” in the 2024 Form 10-K/A and in this Quarterly Report on Form 10-Q. Our historical results are not necessarily indicative of the results that may be expected for any period in the future.

Current wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and related notes thereto included in this Quarterly Report on Form 10-Q and the audited consolidated financial statements included in the Annual Report on Form 10-K/A for the year ended December 31, 2024 (the “2024 Form 10-K/A”). This Quarterly Report on Form 10-Q also includes revisions to previously issued financial statements as of and for the periods ended December 31, 2024 and March 31, 2025, as discussed in Note 2 to the condensed consolidated financial statements. All relevant amounts presented in this section have been revised, as applicable, to reflect these adjustments. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated by these forward-looking statements as a result of many factors. Factors that could cause or contribute to such differences include those identified below and those discussed in the section titled “Risk Factors” in the 2024 Form 10-K/A and in this Quarterly Report on Form 10-Q. Our historical results are not necessarily indicative of the results that may be expected for any period in the future.

Previous wording

The data acquired by our multipurpose satellites provide global weather intelligence, ship and plane movements, and spoofing and jamming detection to better predict how their patterns impact economies, global security, business operations, and the environment. We also offer space-as-a-service solutions that empower customers to leverage our established infrastructure to put their business in space. We provide customers these solutions through an application programming interface (“API”) infrastructure.

Current wording

The data acquired by our multipurpose satellites provide global weather intelligence, ship and plane movements, and spoofing and jamming detection to better predict how their patterns impact economies, global security, business operations, and the environment. We also offer Space Services solutions that empower customers to leverage our established infrastructure to put their business in space. We provide customers these solutions through an application programming interface (“API”) infrastructure.

Previous wording

Our platform applies our value-add insights and predictive analytics to this proprietary data to create commercially valuable datasets. We offer three data solutions to our customers, which vary in complexity and price and can be delivered in near real-time via our API that can be easily integrated into our customers’ business operations:

Current wording

Our platform applies our value-add insights and predictive analytics to this proprietary data to create commercially valuable datasets. We offer four data solutions to our customers, which vary in complexity and price and can be delivered in near real-time via our API that can be easily integrated into our customers’ business operations:

Previous wording

As our fourth solution, we are also pioneering an innovative business model through our Space Services solution. We leverage our fully deployed infrastructure and large-scale operations to enable our customers to obtain customized data through our API. Our Space Services offering provides our customers with fast, scalable, and reliable access to space.

Current wording

As our fifth solution, we are also pioneering an innovative business model through our Space Services solution. We leverage our fully deployed infrastructure and large-scale operations to enable our customers to obtain customized data through our API. Our Space Services offering aims to provide our customers with fast, scalable, and reliable access to space.

Previous wording

On April 25, 2025, we completed the sale of our maritime business to Buyer for approximately $233.5 million, before adjustments. On April 25, 2025, we and L3Harris Technologies, Inc. (“L3Harris”), entered into the Confidential Settlement Agreement and Mutual Release (the “Settlement Agreement”) among us, exactEarth Ltd. (“exactEarth”) and L3Harris, pursuant to which, upon the closing of the Transactions, Buyer paid L3Harris $17.0 million for full and complete resolution and release of all disputes asserted in connection with the Amended and Restated L3Harris Agreement dated January 21, 2020 (the “A&R L3Harris Agreement”) between us and L3Harris. We and Buyer further agreed that we would contribute $7.0 million of the Settlement in the form of a reduction to the cash paid by Buyer to us at the closing of the Transactions.

Current wording

On November 13, 2024, we entered into a Share Purchase Agreement (the “Purchase Agreement”) with Kpler Holding SA, a Belgian corporation (“Buyer”), pursuant to which we agreed to sell our maritime business to Buyer and enter into certain ancillary agreements (the “Transactions”). The maritime business sold pursuant to the Transactions did not include any part of our satellite network or operations. On April 25, 2025, we and L3Harris Technologies, Inc. (“L3Harris”), entered into the Confidential Settlement Agreement and Mutual Release (the “Settlement Agreement”) among us, exactEarth Ltd. (“exactEarth”) and L3Harris, pursuant to which, upon the closing of the Transactions, Buyer paid L3Harris $17.0 million (the “Settlement”) for full and complete resolution and release of all disputes asserted in connection with the Amended and Restated L3Harris Agreement dated January 21, 2020 (the “A&R L3Harris Agreement”) between us and L3Harris. We and Buyer further agreed that we would contribute $7.0 million of the Settlement in the form of a reduction to the cash paid by Buyer to us at the closing of the Transactions.

Previous wording

Over the past two years, we have been impacted by the macroeconomic environment, such as fluctuations in foreign currencies, elevated interest rates, and geopolitical conflicts like the Russian invasion of Ukraine, Israel's war with Hamas, and the increased tensions between China and the United States.

Current wording

Over the past two years, we have been impacted by the macroeconomic environment, such as fluctuations in foreign currencies, elevated interest rates, and geopolitical conflicts like the Russian invasion of Ukraine, Israel's wars with Hamas and Iran, the increased tensions between China and the United States, and the increased tensions between Iran and the United States.

Previous wording

Our reporting currency is the U.S. Dollar. The U.S. Dollar exhibited a decrease in strength against the local functional currencies of our foreign subsidiaries for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024. The U.S. Dollar's decrease had a positive impact on our revenue, as approximately one-third of our sales are conducted in foreign currencies. Conversely, the decrease in the value of the U.S. Dollar had an unfavorable impact on our expenses, given that a majority of our workforce resides in countries other than the United States. Approximately 30% of our revenues were generated in currencies other than the U.S. Dollar. The financial statements of these subsidiaries are translated into U.S. dollars using exchange rates in effect at each balance sheet date for assets and liabilities and average exchange rates during the period for revenues and expenses. To the extent we experience significant currency fluctuations, our results of operations may be impacted.

Current wording

Our reporting currency is the U.S. Dollar. The U.S. Dollar exhibited a decrease in strength against the local functional currencies of our foreign subsidiaries for the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024. The U.S. Dollar's decrease had a positive impact on our revenue, as approximately one-third of our sales are conducted in foreign currencies. Conversely, the decrease in the value of the U.S. Dollar had an unfavorable impact on our expenses, given that a majority of our workforce resides in countries other than the United States. The financial statements of these subsidiaries are translated into U.S. dollars using exchange rates in effect at each balance sheet date for assets and liabilities and average exchange rates during the period for revenues and expenses. To the extent we experience significant currency fluctuations, our results of operations may be impacted.

Previous wording

If any of these factors continue or worsen, and/or if new macroeconomic or geopolitical issues arise, our results and financial condition could be further negatively impacted. We cannot predict the timing, strength, or duration of any economic slowdown, downturn, instability, or recovery, generally or within any particular industry or geography. Any downturn of the general economy or industries in which we operate would adversely affect our business, financial condition, and results of operations.

Current wording

If any of these factors continue or worsen, and/or if new macroeconomic or geopolitical issues arise, our results and financial condition could be negatively impacted. We cannot predict the timing, strength, or duration of any economic slowdown, downturn, instability, or recovery, generally or within any particular industry or geography. Any downturn of the general economy or industries in which we operate would adversely affect our business, financial condition, and results of operations.

Previous wording

As our solutions have grown, we continue to focus on further penetration of our initial industries including maritime, aviation, logistics, and government (civil and defense/intelligence). We believe our technology and solutions give us the ability to expand into additional industries, including energy, financial services, agriculture, transportation, and insurance, and also into additional geographies, including Latin America, Africa and the Middle East. Our revenue growth is dependent upon our ability to continue to expand into new industries and geographies. The costs associated with these expansions may adversely affect our results of operations.

Current wording

As our solutions have grown, we continue to focus on further penetration of our initial industries including aviation, logistics, and government (civil and defense/intelligence). We believe our technology and solutions give us the ability to expand into additional industries, including energy, financial services, agriculture, transportation, and insurance, and also into additional geographies, including Latin America, Africa, and the Middle East. Our revenue growth is dependent upon our ability to continue to expand into new industries and geographies. The costs associated with these expansions may adversely affect our results of operations.

Previous wording

A stronger solar cycle has the potential to impact some of our satellites, accelerating their deorbiting and shortening their useful lives. The solar cycle is the cycle that the Sun’s magnetic field goes through approximately every 11 years. In 2019, the National Oceanic and Atmospheric Administration (“NOAA”), National Aeronautics and Space Administration, and the International Space Environment Services panel forecasted that Solar Cycle 25 (December 2019 to approximately 2030) would be relatively weak after a relatively weak Solar Cycle 24 (December 2008 to December 2019). Subsequently, NOAA noted that Solar Cycle 24 was the weakest cycle in 100 years with sunspots reaching a maximum of 116 – below the average of 179. NOAA's October 2023 projection that Solar Cycle 25 would be more intense than Cycle 24 and would peak by the end of 2024 has since been confirmed. A stronger solar cycle has accelerated the deorbiting of our satellites sooner than expected or planned. Our ability to minimize the solar cycle impact, our ability to replenish our existing constellation in a timely manner and the costs associated with these actions may adversely affect our results of operations.

Current wording

A strong solar cycle has the potential to impact some of our satellites, accelerating their deorbiting and shortening their useful lives. The solar cycle is the cycle that the sun’s magnetic field goes through approximately every 11 years. In 2019, the National Oceanic and Atmospheric Administration (“NOAA”), National Aeronautics and Space Administration, and the International Space Environment Services panel forecasted that Solar Cycle 25 (December 2019 to approximately 2030) would be relatively weak after a relatively weak Solar Cycle 24 (December 2008 to December 2019). Solar Cycle 25 has proven more intense and has progressed more rapidly than initially projected by NOAA in 2023. While the cycle was originally forecast to peak by late 2024, current data indicates the cycle is peaking around mid-2025, with sunspot activity exceeding that of Solar Cycle 24 and approaching the upper range of 125 smoothed sunspots from earlier predictions. This elevated solar activity has contributed to increased atmospheric drag in low-Earth orbit, leading to accelerated satellite deorbiting and unplanned impacts to orbital operations. Our ability to mitigate these solar cycle effects and maintain timely replenishment of our constellation may adversely affect our results of operations.

Previous wording

We continue investing in growing our business and capitalizing on our market opportunities while balancing the uncertainties from the macroeconomic environment and geopolitical factors. We intend to continue to add headcount to our global sales and marketing teams to acquire new customers and to increase sales to existing customers. We also intend to continue to add headcount as needed to our research and development teams and otherwise invest to improve and innovate our nanosatellite, ground station and data analytics technologies. Our total headcount across all functions increased to 439 employees as of March 31, 2025, from 430 employees as of March 31, 2024. The costs of these investments may adversely affect our results of operations, but we believe that these investments will contribute to our long-term growth.

Current wording

We continue investing in growing our business and capitalizing on our market opportunities while balancing the uncertainties from the macroeconomic environment and geopolitical factors. We intend to continue to add headcount to our global sales and marketing teams to acquire new customers and to increase sales to existing customers. We also intend to continue to add headcount as needed to our research and development teams and otherwise invest to improve and innovate our nanosatellite, ground station, and data analytics technologies. Our total headcount across all functions decreased to 370 employees as of June 30, 2025, from 431 employees as of June 30, 2024 primarily due to the sale of the maritime business. We expect headcount will grow, as stated above, from the new post-Transactions baseline. The costs of these investments may adversely affect our results of operations, but we believe that these investments will contribute to our long-term growth.

Previous wording

The increase in our ARR for the three months ended March 31, 2025 was primarily driven by acquiring new high-value customers and increasing business with our existing customer base. Our ARR has fluctuated from period to period in the past due in part to the timing of some of our Space Services contracts, including when engagements start and stop. We expect our ARR to continue to fluctuate from period to period in the future. ARR is a leading indicator and accordingly, will tend to outpace the impact on our revenue as we recognize the contract value of various agreements over time.

Current wording

The decrease in our ARR as of June 30, 2025 was primarily due to the sale of the maritime business. Our ARR is a leading indicator, and accordingly, will tend to outpace the impact on our revenue as we recognize the contract value of various agreements over time.

Previous wording

Number of ARR Customers and ARR Solution Customers

Current wording

ARR Customers and ARR Solution Customers

Previous wording

We define an ARR Solution Customer similarly to an ARR Customer, but we count every solution the customer has with us separately. As a result, the count of ARR Solution Customers exceeds the count of ARR Customers at each period end, as some customers contract with us for multiple solutions. Our multiple solutions customers are those that are under contract for at least two of our solutions: Maritime, Aviation, Weather and Climate, and Space Services. All entities that have contracts for data trials and one-time transactions are excluded from the calculation of ARR Solution Customers.

Current wording

We define an ARR Solution Customer similarly to an ARR Customer, but we count every solution the customer has with us separately. As a result, the count of ARR Solution Customers exceeds the count of ARR Customers at each period end, as some customers contract with us for multiple solutions. Our multiple solutions customers are those that are under contract for at least two of our solutions: Aviation, Weather and Climate, Space Reconnaissance, Maritime, and Space Services. All entities that have contracts for data trials and one-time transactions are excluded from the calculation of ARR Solution Customers.

Previous wording

The decrease in each of our ARR Customers and ARR Solution Customers at the dates presented was driven by our move to de-emphasize sales to customers with very low ARR or revenue. We expect this strategy to ultimately increase our ARR and revenue per customer, increase our ARR in total, and reduce our customer count as we drive towards the most efficient use of our resources.

Current wording

The decrease in our ARR Customers and ARR Solution Customers was primarily driven by the sale of the maritime business and our move to de-emphasize sales to customers with very low ARR or revenue. We expect our strategy to de-emphasize sales to customers with very low ARR or revenue to increase our ARR and revenue per customer, increase our ARR in total, and reduce our customer count as we drive towards the most efficient use of our resources.

Previous wording

We calculate our ARR Net Retention Rate for a particular fiscal period end by dividing (i) our ARR from those ARR Customers at that period end that were also customers as of the last day of the prior fiscal period end by (ii) the ARR from all customers as of the last day of the prior fiscal period. This calculation measures the overall impact from increases in customer contract value (upsells), the decreases in customer contract value (downsells) and the decreases in customer value resulting from customers that have chosen not to renew their contracts with us (lost customers).

Current wording

We calculate our ARR Net Retention Rate for a particular fiscal period end by dividing (i) our ARR from those customers at that period end that were also customers as of the last day of the prior fiscal period end by (ii) the ARR from all customers as of the last day of the prior fiscal period. This calculation measures the overall impact from increases in customer contract value (upsells), the decreases in customer contract value (downsells) and the decreases in customer value resulting from customers that have chosen not to renew their contracts with us (lost customers).

Previous wording

The following table summarizes our ARR Net Retention Rate for the three months ended March 31, 2025 and 2024:

Current wording

The following table summarizes our ARR Net Retention Rate for the three and six months ended June 30, 2025 and 2024:

Previous wording

Our ARR Net Retention Rate can be impacted from period to period by large increases or decreases in customer contract value and large decreases in contract value from customers that have not renewed their contracts with us. An ARR Net Retention Rate greater than 100% is an indication that we are growing the value of the solutions our customers are purchasing from us at a fiscal period end versus the prior fiscal period end. An ARR Net Retention Rate less than 100% is an indication that the value of the solutions our customers are purchasing from us declined at a fiscal period end versus the prior fiscal period end. Our ARR Net Retention Rate decreased by 5% for the three months ended March 31, 2025. The decrease was primarily driven by the reduced value of NOAA’s radio occultation technology (“RO”) weather award in the three months ended March 31, 2025, as compared to the value of the corresponding award in the three months ended March 31, 2024.

Current wording

Our ARR Net Retention Rate can be impacted from period to period by large increases or decreases in customer contract value and large decreases in contract value from customers that have not renewed their contracts with us. An ARR Net Retention Rate greater than 100% is an indication that we are growing the value of the solutions our customers are purchasing from us at a fiscal period end versus the prior fiscal period end. An ARR Net Retention Rate less than 100% is an indication that the value of the solutions our customers are purchasing from us declined at a fiscal period end versus the prior fiscal period end. Our ARR Net Retention Rate decreased by 2% and 1% for the three and six months ended June 30, 2025, respectively, primarily driven by the decreased value of NOAA’s radio occultation technology (“RO”) weather award in the three and six months ended June 30, 2025, compared to the value of the corresponding award in the same periods in 2024.

Previous wording

Cost of revenue consists primarily of personnel costs, depreciation, hosted infrastructure costs, high-power computing costs, third-party operating and royalty costs associated with delivering our data and services to our customers, and costs associated with R&D Services contracts. In addition, cost of revenue includes the amortization of purchased intangibles associated with our acquisition of exactEarth in November 2021 (the “Acquisition”). Personnel costs are primarily related to the cost of our employees supporting and managing our constellation operations including satellite operations, ground station control, and launch management. Personnel costs also include the cost of our employees supporting and managing projects for our research and development services. Costs associated with the manufacture and launch of our satellites, including personnel costs, are capitalized and depreciated upon placement in service, typically over a four-year expected useful life. As satellites reach the end of their expected useful life, they are generally replaced with replenishment satellites to maintain our constellation at optimal performance. Costs associated with the acquisition and development of new ground stations, including the bill of materials and labor to install the ground station, are capitalized and depreciated upon placement in service typically over a four-year to ten-year expected useful life. We anticipate ongoing capital spending to repair and replenish ground stations as they reach the end of their expected useful life to keep our ground station network at optimal performance. Our proprietary ground station network is primarily located in third-party locations where we incur lease and other operational charges. Cost of revenue also includes royalties associated with third-party data sets that we integrate into our data solutions.

Current wording

Cost of revenue consists primarily of personnel costs, depreciation, hosted infrastructure costs, high-power computing costs, third-party operating and royalty costs associated with delivering our data and services to our customers, and costs associated with R&D Services contracts. In addition, cost of revenue includes the amortization of purchased intangibles associated with our acquisition of exactEarth in November 2021 (the “Acquisition”). Personnel costs are primarily related to the cost of our employees supporting and managing our constellation operations including satellite operations, ground station control, and launch management. Personnel costs also include the cost of our employees supporting and managing projects for our R&D Services contracts. Costs associated with the manufacture and launch of our satellites, including personnel costs, are capitalized and depreciated upon placement in service, typically over a four-year expected useful life. As satellites reach the end of their expected useful life, they are generally replaced with replenishment satellites to maintain our constellation at optimal performance. Costs associated with the acquisition and development of new ground stations, including the bill of materials and labor to install the ground station, are capitalized and depreciated upon placement in service typically over a four-year to ten-year expected useful life. We anticipate ongoing capital spending to repair and replenish ground stations as they reach the end of their expected useful life to keep our ground station network at optimal performance. Our proprietary ground station network is primarily located in third-party locations where we incur lease and other operational charges. Cost of revenue also includes royalties associated with third-party data sets that we integrate into our data solutions.

Previous wording

Interest Income. Interest income includes interest earned on our cash balances and note receivable.

Current wording

Interest Income. Interest income includes interest earned on our cash balances and short-term marketable securities.

Previous wording

Foreign Exchange Gain/Loss. Foreign exchange gain/loss consists of the net effect of realized and unrealized foreign currency gains and losses resulting from changes in the currency exchange rates for transactions denominated in non-functional currency relative to each subsidiary’s functional currency. We use the local currency as our functional currency for our subsidiaries in Luxembourg, the United Kingdom, Singapore, Australia, Germany, and Canada.

Current wording

Foreign Exchange Gain (Loss). Foreign exchange gain (loss) consists of the net effect of realized and unrealized foreign currency gains and losses resulting from changes in the currency exchange rates for transactions denominated in a non-functional currency relative to each subsidiary’s functional currency. We use the local currency as our functional currency for our subsidiaries in Luxembourg, the United Kingdom, Singapore, Germany, and Canada.

Previous wording

Three Months Ended March 31, 2025, Compared to Three Months Ended March 31, 2024

Current wording

Three and Six Months Ended June 30, 2025, Compared to Three and Six Months Ended June 30, 2024

Previous wording

Total revenue decreased $10.9 million, or 31%, for the three months ended March 31, 2025, primarily due to items that occurred in the three months ended March 31, 2024 that did not repeat in the three months ended March 31, 2025, including a one-time performance obligation for a space services customer of $9.6 million. Additional drivers include a reduction in year-over-year RO-based revenue primarily from the reduced value of NOAA’s RO weather award during the three months ended March 31, 2025 as compared to the prior year period, partially offset by increased ARR from our existing customers and growth in revenue recognized for both Space Services contracts, excluding the impact of the aforementioned 2024 performance obligation, and R&D Services contracts. Our ARR Customers decreased 15% to 570 as of March 31, 2025, from 672 as of March 31, 2024. The decrease in ARR Customers was aligned with our stated move to de-emphasize sales to customers with very low ARR or revenue and instead focus on high ARR or revenue customers. Our ARR Net Retention Rate was 97% and 102% for the three months ended March 31, 2025 and 2024, respectively. The decrease in ARR Net Retention Rate was driven primarily by the reduced value of NOAA’s RO weather award in the three months ended March 31, 2025, as compared to the value of the corresponding award in the three months ended March 31, 2024.

Current wording

Total revenue decreased $6.2 million, or 24%, for the three months ended June 30, 2025, primarily due to the sale of the maritime business which occurred on April 25, 2025. Additional drivers include a reduction in year-over-year RO-based revenue primarily from the reduced value of NOAA’s RO weather award during the three months ended June 30, 2025, as compared to the prior year period, partially offset by increased ARR from our existing customers and growth in revenue recognized for both Space Services contracts and R&D Services contracts. Our ARR Customers decreased to 160 as of June 30, 2025 down from 663 as of June 30, 2024, or 76%. The decrease in ARR Customers was primarily driven by the sale of the maritime business and our move to de-emphasize sales to customers with very low ARR or revenue. Our ARR Net Retention Rate was 83% and 85% for the three months ended June 30, 2025 and 2024, respectively. The decrease in ARR Net Retention Rate was driven primarily by the decreased value of NOAA’s radio occultation technology (“RO”) weather award, compared to the value of the corresponding award in the same period in 2024.

Previous wording

We derived 57% of our revenue from the Americas, 34% of our revenue from Europe, Middle East, Africa (“EMEA”), and 9% of our revenue from Asia Pacific (“APAC”) for the three months ended March 31, 2025. We derived 65% of our revenue from the Americas, 29% of our revenue from EMEA, and 6% of our revenue from APAC for the three months ended March 31, 2024. We derived 82% of our revenue from subscription arrangements for the three months ended March 31, 2025, compared to 52% for the three months ended March 31, 2024. The distribution of our revenue can fluctuate significantly from period to period driven primarily by the timing of the non-subscription revenue recognition in our contracts. Revenue from subscription-based contracts was $19.5 million, or 82%, of total revenue, for the three months ended March 31, 2025, and was $18.2 million, or 52%, of total revenue, for the three months ended March 31, 2024. The proportional increase in revenue from subscription arrangements was driven by higher revenue recognized for Space Services contracts within the prior-year period.

Current wording

We derived 66% of our revenue from the Americas, 31% of our revenue from Europe, the Middle East and Africa (“EMEA”), and 3% of our revenue from Asia Pacific (“APAC”) for the three months ended June 30, 2025. We derived 55% of our revenue from the Americas, 37% of our revenue from EMEA, and 8% of our revenue from APAC for the three months ended June 30, 2024. We derived 76% of our revenue from subscription arrangements for the three months ended June 30, 2025, compared to 78% for the three months ended June 30, 2024. The distribution of our revenue can fluctuate significantly from period to period driven primarily by the timing of the non-subscription revenue recognition in our contracts. Revenue from subscription-based contracts was $14.6 million, or 76%, of total revenue, for the three months ended June 30, 2025, and was $19.7 million, or 78%, of total revenue, for the three months ended June 30, 2024. The proportional decrease in revenue from subscription arrangements was driven by the sale of the maritime business.

Previous wording

(1) Excludes headcount relating to R&D Services contracts. R&D Services contracts headcount are included in research and development.

Current wording

(1) Excludes headcount relating to R&D Services contracts. R&D Services contracts headcount is included in research and development.

Previous wording

Gross margin was 37% and 27% for the three months ended March 31, 2025 and 2024, respectively. The increase was driven primarily by the expenses as described above. Our gross margin can fluctuate significantly from period to period driven primarily by the timing of the revenue as well as the timing of our technology investments to support future growth.

Current wording

Gross margin was 49% and 43% for the three months ended June 30, 2025 and 2024, respectively. The increase was driven primarily by the decrease in cost of revenue described above. Our gross margin can fluctuate significantly from period to period driven primarily by the timing of revenue recognition as well as the timing of our technology investments to support future growth.

Previous wording

Cost of revenue decreased $10.5 million, or 41%, primarily driven by a decrease in satellite operation expense of $8.9 million, a decrease in personnel expenses of $2.5 million, a decrease in depreciation expense of $1.9 million, and a decrease in other miscellaneous expenses of $0.1 million, partially offset by an increase in downlink data service expenses of $2.9 million. The decrease in satellite operation expense was driven by the recognition of increased launch costs associated with a Space Services contract in the prior year period that did not recur during the three months ended March 31, 2025. The decrease in personnel costs was driven by decreased work related to R&D Services contracts during the period. The decrease in depreciation expense was primarily driven by the acceleration of depreciation, resulting in fully depreciated satellites in the prior year period to account for the impact of increased solar activity related to the current solar cycle. The increase in downlink data service expenses was primarily driven by the purchase of supplemental data to support a radio frequency geolocation contract.

Current wording

Cost of revenue decreased $15.1 million, or 38%, primarily driven by a decrease in satellite operation expense of $8.2 million, a decrease in depreciation expense of $4.5 million, a decrease in personnel expenses of $4.4 million, and a decrease in other miscellaneous expenses of $0.1 million, partially offset by an increase in downlink data service expenses of $2.1 million. The decrease in satellite operation expense was driven by the recognition of increased launch costs associated with a Space Services contract in the prior year period that did not recur during the three months ended June 30, 2025. The decrease in depreciation expense was primarily driven by the acceleration of depreciation in the prior year period to account for the impact of increased solar activity related to the current solar cycle, which resulted in a number of satellites becoming fully depreciated. The decrease in personnel costs was driven by decreased work related to R&D Services contracts during the period, which resulted in a smaller proportion of costs being allocated to cost of revenue. The increase in downlink data service expenses was primarily driven by the purchase of supplemental data to support a radio frequency geolocation contract.

Previous wording

Research and development expenses increased $2.5 million, or 41%, primarily due to an increase in personnel expenses. The increase in personnel costs was driven by decreased work related to R&D Services contracts during the period, which causes a lower proportion of costs to be allocated to cost of revenue.

Current wording

Research and development expenses increased $2.7 million, or 36%, primarily driven by an increase in personnel expenses of $1.9 million, an increase in severance expense of $0.4 million, and an increase in other miscellaneous operating expenses of $0.4 million. The increase in personnel costs was driven by decreased work related to R&D Services contracts during the period, which caused a lower proportion of costs to be allocated to cost of revenue.

Previous wording

General and administrative expenses increased $6.0 million, or 61%, primarily driven by an increase in professional services expenses of $4.9 million, an increase in stock-based compensation expense of $0.6 million, an increase in other miscellaneous operating expenses of $0.3 million, and an increase in bonus expenses of $0.2 million. The increase in professional services fees was primarily driven by higher third-party accounting, legal and other consulting services relating to the restatement of our previously issued financial statements and the Transactions. The increase in stock-based compensation expense was driven by higher stock grants which resulted in a higher total value of stock-based awards recognized in the current period. The increase in bonus expenses was driven by higher bonus accruals for management.

Current wording

General and administrative expenses increased $15.0 million, or 75%, primarily driven by an increase in professional services expenses of $8.4 million, an increase in stock-based compensation expense of $2.9 million, an increase in bonus expenses of $2.0 million, an increase in severance expense of $0.9 million, and an increase in other miscellaneous operating expenses of $0.8 million. The increase in professional services fees was primarily driven by higher third-party accounting, legal and other consulting services relating to the restatement of our previously issued financial statements and the Transactions. The increase in stock-based compensation expense was driven by higher equity grants, which resulted in a higher total value of stock-based awards recognized in the current year period. The increase in bonus expenses was driven by bonus payouts related to the Transactions.

Previous wording

We recognized a non-cash expense of $5.2 million and $0.2 million in the three months ended March 31, 2025 and March 31, 2024, respectively. The increase in loss on decommissioned satellites is a result of the Company’s decision to stop supporting three underperforming satellites.

Current wording

We recognized a non-cash expense of $1.1 million and $0.5 million in the three months ended June 30, 2025 and 2024, respectively. The increase in loss on decommissioned satellites is primarily a result of the deorbiting of three satellites during the three months ended June 30, 2025.

Previous wording

Change in fair value of contingent earnout liability was a gain of $1.0 million for the three months ended March 31, 2025, compared to an immaterial loss for the three months ended March 31, 2024. The gain in the three months ended March 31, 2025, was primarily due to a decrease in the fair value of the liability driven by the decline of the underlying stock price, partially offset by a higher volatility rate used in the model. For additional information, see Notes 2 and 9 to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Current wording

Change in fair value of contingent earnout liability was a loss of $0.2 million for the three months ended June 30, 2025, compared to a loss of $1.2 million for the three months ended June 30, 2024. The loss in the three months ended June 30, 2025, was primarily due to an increase in the fair value of the liability driven by an increase in the price for the underlying Class A common stock of the Company. For additional information, see Notes 2 and 9 to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Previous wording

Change in fair value of warrant liabilities was a gain of $5.8 million for the three months ended March 31, 2025, compared to a loss of $4.2 million for the three months ended March 31, 2024, a change of 239%. The $5.8 million gain for the three months ended March 31, 2025, was primarily due to a decrease in the fair value of the warrant liabilities driven by the decline of the underlying stock price, partially offset by a higher volatility rate used in the model. The $4.2 million loss for the three months ended March 31, 2024, was primarily due to the appreciation of the underlying stock valuation for the warrants issued to Blue Torch and subsequently amended in July 2023.

Current wording

Change in fair value of warrant liabilities was a gain of $3.0 million for the six months ended June 30, 2025, compared to a loss of $2.0 million for the six months ended June 30, 2024, a change of 255%. The $3.0 million gain for the six months ended June 30, 2025, was primarily due to a decrease in the fair value of the warrant liabilities driven by the decline of the underlying Class A common stock price. The $2.0 million loss for the six months ended June 30, 2024, was primarily due to the appreciation of the underlying Class A common stock valuation for the warrants issued to Blue Torch.

Previous wording

There was no issuance of stock warrant expense for the three months ended March 31, 2025. Issuance of stock warrants was a net loss of $2.4 million, relating to a definitive Securities Purchase Agreement with institutional investors during the three months ended March 31, 2024.

Current wording

There was no issuance of stock warrant expense for the six months ended June 30, 2025. During the six months ended June 30, 2024, issuance of stock warrants was a net loss of $2.4 million, relating to a definitive Securities Purchase Agreement with institutional investors.

Previous wording

We recognized a foreign exchange gain of $3.8 million for the three months ended March 31, 2025, compared to a foreign exchange loss of $1.8 million for the three months ended March 31, 2024, a change of 314%. The $3.8 million gain for the three months ended March 31, 2025, was primarily due to the remeasurement of intercompany balances between our Luxembourg entity and our U.K. entity with our U.S. entity denominated in U.S. Dollars. The weakening of the U.S. Dollar for the period ended March 31, 2025, relative to the Euro and British Pound Sterling at December 31, 2024, triggered the remeasurement and unrealized gain. The loss of $1.8 million for the three months ended March 31, 2024, was primarily due to the remeasurement of intercompany balances denominated in U.S. dollars between our Luxembourg entity and the U.S.

Current wording

We recognized a foreign exchange gain of $10.8 million for the six months ended June 30, 2025, compared to a foreign exchange loss of $2.3 million for the six months ended June 30, 2024, a change of 569%. The $10.8 million gain for the six months ended June 30, 2025, was primarily due to the remeasurement of intercompany balances denominated in U.S. dollars held by our Luxembourg and U.K. entities and owed to our U.S. entity. The weakening of the U.S. Dollar for the period ended June 30, 2025, relative to the Euro and British Pound Sterling at December 31, 2024, triggered the remeasurement and unrealized gain. The loss of $2.3 million for the six months ended June 30, 2024, was primarily due to the remeasurement of intercompany balances denominated in U.S. dollars held by our Luxembourg entity and owed to our U.S. entity.

Previous wording

Other expense, net was a loss of $0.2 million for the three months ended March 31, 2025, a decrease of 58% compared to $0.5 million for the three months ended March 31, 2024, primarily driven by loss on disposal of assets during the three months ended March 31, 2025.

Current wording

Other expense, net was a loss of $0.5 million for the three months ended June 30, 2025, a decrease of 50% compared to a loss of $1.0 million for the six months ended June 30, 2024, primarily due to a higher value for disposed of assets in the six months ended June 30, 2024.

Previous wording

We define EBITDA as net income (loss), plus depreciation and amortization expense, plus interest, net, and minus income tax benefit.

Current wording

We define EBITDA as net income (loss), plus depreciation and amortization expense, plus interest, net, and plus income tax provision.

Previous wording

We define Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, further adjusted for any change in fair value of contingent earnout liability, change in fair value of warrant liabilities, issuance of stock warrants, foreign exchange (gain) loss, other expense, net, stock-based compensation, loss on decommissioned satellites, other unusual and infrequent costs, and other acquisition accounting amortization. We believe Adjusted EBITDA can be useful in providing an understanding of the underlying results of operations and trends, an enhanced overall understanding of our financial performance and prospects for the future. While Adjusted EBITDA is not a recognized measure under GAAP, management uses this financial measure to evaluate and forecast business performance. Adjusted EBITDA is not intended to be a measure of liquidity or cash flows from operations or a measure comparable to net income as it does not take into account certain requirements, such as capital expenditures and related depreciation, interest payments, tax benefits, stock-based compensation, other unusual and infrequent costs, and other acquisition accounting amortization.

Current wording

We define Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, further adjusted for any gain on sale of division, loss on extinguishment of debt, change in fair value of contingent earnout liability, change in fair value of warrant liabilities, issuance of stock warrants, foreign exchange (gain) loss, other expense, net, stock-based compensation, loss on decommissioned satellites, other unusual and infrequent costs, and other acquisition accounting amortization. We believe Adjusted EBITDA can be useful in providing an understanding of the underlying results of operations and trends, an enhanced overall understanding of our financial performance and prospects for the future. While Adjusted EBITDA is not a recognized measure under GAAP, management uses this financial measure to evaluate and forecast business performance. Adjusted EBITDA is not intended to be a measure of liquidity or cash flows from operations or a measure comparable to net income (loss) as it does not take into account certain requirements, such as capital expenditures and related depreciation, interest payments, tax benefits, stock-based compensation, other unusual and infrequent costs, and other acquisition accounting amortization.

Previous wording

Other expense, net. We exclude other expense, net because it includes items that do not reflect the underlying cash flows or operational results of our business. Examples of such expenses include equity investment loss and vendor dispute legal settlements.

Current wording

Other expense, net. We exclude other expense, net because it includes items that do not reflect the underlying cash flows or operational results of our business. Examples of such expenses include equity investment loss and disposal of assets.

Previous wording

Stock-based compensation. We exclude stock-based compensation expenses primarily because they are non-cash expenses that we exclude from our internal management reporting processes. We also find it useful to exclude these expenses when we assess the appropriate level of various operating expenses and resource allocations when budgeting, planning, and forecasting future periods. Moreover, because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use under Financial Accounting Standards Board (“FASB”) ASC Topic 718, Stock Compensation (“ASC 718”), we believe excluding stock-based compensation expenses allows investors to make meaningful comparisons between our recurring core business results of operations and those of other companies.

Current wording

Stock-based compensation. We exclude stock-based compensation expenses primarily because they are non-cash expenses that we exclude from our internal management reporting processes. We also find it useful to exclude these expenses when we assess the appropriate level of various operating expenses and resource allocations when budgeting, planning, and forecasting future periods. Moreover, because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use under Financial Accounting Standards Board ASC Topic 718, Stock Compensation, we believe excluding stock-based compensation expenses allows investors to make meaningful comparisons between our recurring core business results of operations and those of other companies.

Previous wording

Other unusual and infrequent costs. We exclude these as they are unusual items that do not reflect the ongoing operational results of our business. Examples of these types of expenses include accounting, legal and other professional fees associated with the financial restatement and the Transactions.

Current wording

Other unusual and infrequent costs. We exclude these as they are unusual items that do not reflect the ongoing operational results of our business. Examples of these types of expenses include accounting, legal and other professional fees associated with the financial restatement.