Spire Global Announces Second Quarter 2022 Results

·21 min read
  • Revenue increased 113% year-over-year to $19.4M

  • Annual recurring revenue increased 133% year-over-year to $85.3 million

  • Improved sequential annual recurring revenue net retention rate to 108%

  • Reaffirmed guidance for annual recurring revenue and positive free cash flow timing

VIENNA, Va., August 10, 2022--(BUSINESS WIRE)--Spire Global, Inc. (NYSE: SPIR) ("Spire" or "the Company") a leading provider of space-based data, analytics and space services, today announced results for its quarter ended June 30, 2022. The company will webcast a management call at 5:00 pm ET today to discuss the results.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20220810005458/en/

"The achievements in the second quarter highlight our continued execution across the business. We again delivered results that were better than expected on both the top and bottom line," said Peter Platzer, Spire’s CEO. "As the world continues to face challenges associated with geopolitical and climate change events, Spire continues to provide customers with unique, mission-critical insights and solutions from space that create a more sustainable, equitable, and prosperous future."

"We successfully executed on our 'land and expand' strategy in the second quarter, adding new solution customers and increasing revenue growth from our existing customers," said Thomas Krywe, Spire’s CFO. "The $120 million credit facility that we successfully closed also highlights the strength of our business, which further improves our balance sheet, and allows us to continue executing on our four growth pillars as we relentlessly drive towards positive cash flow in 19 to 25 months."

Second Quarter 2022 Highlights

Financial:

  • Second quarter 2022 revenue increased 113% year-over-year to $19.4 million, which topped the high end of our guidance of $19.2 million, and was driven by increased adoption by existing customers and recent new customer additions.

  • As of June 30, 2022, annual recurring revenue increased 133% to $85.3 million, with 692 annual recurring revenue solution customers. This is a net increase of 65 customers for the quarter and 27 customers over the high end of our Q2 guidance range.

  • Second quarter GAAP operating loss was $16.4 million and non-GAAP operating loss1 was better than our guidance by $1.9 million at a loss of $10.1 million. Outperformance in the quarter was the result of strong revenue flowing through to margin and lower headcount-related spending. As Spire continues to make investments in future growth, the focus remains on driving efficiencies in the business to reach profitability.

_______________

1 Non-GAAP Financial Measure, please see section titled Non-GAAP Financial Measures for the definition of such measures

Business:

  • Spire was awarded a contract from a Fortune 100 company to provide insights on multiple attributes of ocean vessels including vessel type, capacity, and size along with live data ranging from the vessel's position, current voyage status, reported destination and ETA. This data provides insights on what future products may be beneficial to vessel owner/operators, as well as to perform predictive maintenance by deriving the optimum time and place for the maintenance while ensuring people and resources are ready when the vessel arrives.

  • Spire was awarded its largest numerical weather prediction deal to date, a multi-million dollar subcontract from TCOM for weather forecasts at aerostat sites. Spire’s weather forecasts will play a crucial role in the efficient and effective operations of these large-scale, tethered weather balloons. Spire’s space-based data will be the differentiator between potentially damaging downtime and operational success, especially in remote areas of the world.

  • During the quarter, Spire received a follow-on 12-month, $6 million contract from NASA for Earth Observation data that is critical to the efforts of U.S. government agencies and researchers solving some of humanity's biggest challenges, such as climate change.

Technology:

  • Spire continued to improve its geolocation capabilities by recently deploying satellites equipped with an antenna and software-defined radio tuned to capture signals from L-Band Satcom. The presence of these signals in certain locations and under certain circumstances is indicative of activities that are of critical importance for some of our government customers to help make the world a safer place.

  • Spire developed the ability to fly its satellites autonomously, in formation, using differential drag, a capability that is highly beneficial for signal geolocation and coordinated Earth Observation.

  • Spire developed a capability to provide optimized weather forecasts 15 days out, an increase from the previous 7-day forecast period. Utilizing machine learning, Spire continuously works to optimize its forecasts by leveraging the vast data vault that it has accumulated to train its models to deliver better forecasts.

  • Spire recently announced a partnership with RAL Space, a part of the Science and Technology Facilities Council in the UK, to deploy a Hyperspectral Microwave Sounder on Spire satellites. The microwave sounders will enable a higher level of measurement accuracy for both moisture and temperature, which are essential in numerical weather prediction. Spire expects that the improvement in data quality, as well as the increase in data, will lead to material improvements in weather forecasting, augmenting the numerous other weather data types Spire collects from space today.

Financial Outlook

Spire is providing guidance for the third quarter ending September 30, 2022, and the full year ending December 31, 2022. This guidance assumes continued strength of the U.S. dollar in relation to foreign currencies, which creates a headwind to revenue growth.

Q3 FY22

Full Year FY22

Guidance

Guidance

Revenue (millions)

$19.5 - $20.5

$80.0 - $83.0

Y/Y Growth

104% - 114%

84% - 91%

ARR (millions)

$90.3 - $91.3

$101.0 - $105.0

Y/Y Growth

100% - 102%

43% - 48%

ARR Solution Customers

710 - 720

735 - 745

Non-GAAP Operating Loss (millions)

($11.8) - ($10.8)

($46.5) - ($43.5)

Adjusted EBITDA (millions)

($8.7) - ($7.7)

($33.0) - ($30.0)

Non-GAAP Loss Per Share

($0.11) - ($0.10)

($0.42) - ($0.40)

Basic Weighted Average Shares (millions)

139.9

139.8

The non-U.S. generally accepted accounting principles ("GAAP") operating loss, adjusted EBITDA and non-GAAP loss per share included in the table above are non-GAAP measures. Please see the section titled Non-GAAP Financial Measures for the definition of such measures. Spire has provided a reconciliation of GAAP to non-GAAP financial measures in the financial statement tables included in this press release for its second quarter 2021 and 2022 results, as well as its outlook for such measures for third quarter and full year 2022.

Non-GAAP Financial Measures

In addition to financial measures prepared in accordance with GAAP, this press release and the accompanying tables contain, and the conference call will contain, non-GAAP financial measures, including non-GAAP gross profit, non-GAAP operating loss, EBITDA, Adjusted EBITDA and non-GAAP loss per share. Spire’s management uses these non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to the corresponding GAAP financial measures, in evaluating its ongoing operational performance and trends and in comparing its financial measures with other companies in the same industry, many of which present similar non-GAAP financial measures to help investors understand the operational performance of their businesses. However, it is important to note that the particular items Spire excludes from, or includes in, its non-GAAP financial measures may differ from the items excluded from, or included in, similar non-GAAP financial measures used by other companies in the same industry. In addition, other companies may utilize metrics that are not similar to Spire’s. The non-GAAP financial information is presented for supplemental informational purposes only and is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. There are material limitations associated with the use of non-GAAP financial measures since they exclude significant expenses and income that are required by GAAP to be recorded in Spire’s financial statements. Please see the reconciliation tables at the end of this release for the reconciliation of GAAP and non-GAAP results. Management encourages investors and others to review Spire’s financial information in its entirety and not rely on a single financial measure.

Spire adjusts the following items from one or more of its non-GAAP financial measures:

Loss on satellite deorbit and launch failure. Spire excludes loss on satellite deorbit and launch failure because if there was no loss, the expense would be accounted for as depreciation and would also be excluded as part of its EBITDA calculation.

Change in fair value of warrant liabilities and contingent earned liabilities. Spire excludes this as it does not reflect the underlying cash flows or operational results of the business.

Other expense, net. Spire excludes other expense, net because it includes one-time and other items that do not reflect the underlying operational results of the business.

Stock-based compensation. Spire excludes stock-based compensation expenses primarily because they are non-cash expenses that it excludes from its internal management reporting processes. Spire also finds it useful to exclude these expenses when management assesses 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 FASB ASC Topic 718, Stock Compensation, Spire believes excluding stock-based compensation expenses allows investors to make meaningful comparisons between its recurring core business operating results and those of other companies.

Amortization of purchased intangibles. Spire incurs amortization expense for purchased intangible assets in connection with acquisitions of certain businesses and technologies. Amortization of intangible assets is a non-cash expense and is inconsistent in amount and frequency because it is significantly affected by the timing, size of acquisitions and the inherent subjective nature of purchase price allocations. Because these costs have already been incurred and cannot be recovered, and are non-cash expenses, Spire excludes these expenses for its internal management reporting processes. Spire's management also finds it useful to exclude these charges when assessing the appropriate level of various operating expenses and resource allocations when budgeting, planning and forecasting future periods. Investors should note that the use of intangible assets contributed to Spire's revenues earned during the periods presented and will contribute to Spire's future period revenues as well.

Other Acquisition Accounting Amortization. Spire incurs amortization expense for purchased data rights in connection with the acquisition of exactEarth and certain technologies. Amortization of this asset is a non-cash expense that can be significantly affected by the inherent subjective nature of the assigned value and useful life. Because this cost has already been incurred and cannot be recovered, and is a non-cash expense, Spire excludes this expense for its internal management reporting processes. Spire's management also finds it useful to exclude this charge when assessing the appropriate level of various operating expenses and resource allocations when budgeting, planning and forecasting future periods. Investors should note that the use of this asset contributed to Spire's revenues earned during the periods presented and will contribute to Spire's future period revenues as well.

Mergers and acquisition related expenses. We exclude these expenses as they are transaction costs and expenses associated with the transaction that are generally one time in nature and not reflective of the underlying operational results of our business. Examples of these types of expenses include legal, accounting, regulatory, other consulting services, severance, and other employee costs.

Other unusual one-time costs. Spire excludes these as these are generally non-recurring items that do not reflect the on-going operational results of its business.

Our additional non-GAAP measures include:

EBITDA. We define EBITDA as net income (loss), plus depreciation and amortization expense, plus interest expense, and plus the provision for (or minus benefit from) income taxes.

Adjusted EBITDA. We define Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, further adjusted for loss on satellite deorbit and launch failure, change in fair value of warrant liabilities, change in value of contingent earned liability, other (expense) income, net, stock-based compensation, other acquisition accounting amortization, mergers and acquisition related costs and expenses, and other unusual one-time costs. We believe Adjusted EBITDA can be useful in providing an understanding of the underlying operating results and trends and 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, principal and interest payments, and tax payments. Adjusted EBITDA is not a presentation made in accordance with GAAP, and our use of the term Adjusted EBITDA may vary from the use of similarly titled measures by others in our industry due to the potential inconsistencies in the method of calculation and differences due to items subject to interpretation.

Other Definitions

Annual Recurring Revenue (ARR). We define ARR as our expected annualized revenue from customers that are under contract with us at the end of the reporting period with a binding and renewable agreement for our subscription solutions, or a customer that has a binding multi-year contract that can range from components of our Space Services solution to a project based customer solution. These customers are considered recurring when they have signed a multi-year binding agreement that has a renewable component in the contract or a customer that has multiple contracts that we continue to have under contract over multiple years.

ARR Customers. We define an ARR Customer as an entity that has a contract with us or through our reseller partners contracts, that is either a binding and renewable agreement for our subscription solutions, or a binding multi-year contract as of the measurement date independent of the number of solutions the entity has under contract. All entities that have customer contracts for data trials are excluded from the calculation of ARR Customers. A single organization with separate subsidiaries, segments, or divisions may represent multiple customers, as we treat each entity that is invoiced separately as an individual customer. In cases where customers subscribe to our platform through our reseller partners, each end customer that meets the above definition is counted separately as an ARR Customer.

ARR Solution Customers. 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 in each year as some customers contract with us for multiple solutions. Our multiple solutions customers are those customers that are under contract for at least two of our solutions: Maritime, Aviation, Weather, and Space Services.

Conference Call

Spire will webcast a conference call to discuss the results at 5:00 p.m. Eastern Time today. The webcast is available on Spire’s Investor Relations website at https://ir.spire.com. A replay of the call will be available on the site for three months.

Safe Harbor Statement

The forward-looking statements included in this press release and in the accompanying conference call, including for example, the quotations of management, the statements under the heading "Financial Outlook" above, the information provided in the "GAAP to Non-GAAP Reconciliations – Q3 2022 and Fiscal Year 2022 Financial Outlook" section of the tables below, statements regarding continued growth, statements regarding Spire’s expected timing to generate positive cash flow, statements regarding increasing its ARR, and statements regarding the benefits of its solutions to its customers, reflect management’s best judgment based on factors currently known and involve risks and uncertainties. These risks and uncertainties include, but are not limited to, potential disruption of customer purchase decisions resulting from global economic conditions including from an economic downturn or recession in the United States or in other countries around the world, relative growth of its ARR and revenue, the failure of the Spire and exactEarth businesses (including personnel) to be integrated successfully, the risk that revenue and adjusted EBITDA accretion or the expansion of Spire’s customer count, ARR, product offerings and solutions will not be realized or realized to the extent anticipated, the ability to maintain the listing of Spire’s securities on the New York Stock Exchange, the ability to address the market opportunity for Space-as-a-Service; the ability to implement business plans, forecasts, and other expectations, and identify and realize additional opportunities, the risk of downturns, new entrants and a changing regulatory landscape in the highly competitive space data analytics industries, developments in and the duration of the COVID-19 pandemic and the resulting impact on Spire’s business and operations, and the business of its customers and partners, including the economic impact of safety measures to mitigate the impacts of COVID-19, Spire’s potential inability to manage effectively any growth it experiences, Spire’s ability or inability to develop new products and services, and other risks detailed in periodic reports Spire has filed with the Securities and Exchange Commission, including Spire’s Annual Report on Form 10-K, which was filed with the SEC on March 30, 2022, and any subsequent Quarterly Report on Form 10-Q or Current Report on Form 8-K. Significant variation from the assumptions underlying Spire’s forward-looking statements could cause its actual results to vary, and the impact could be significant. All forward-looking statements in this press release are based on information available to Spire as of the date hereof. Spire undertakes no obligation, and does not intend, to update the information contained in this press release or the accompanying conference call, except as required by law.

About Spire Global, Inc.

Spire (NYSE: SPIR) is a leading global provider of space-based data, analytics, and space services, offering access to unique datasets and powerful insights about Earth from the ultimate vantage point so that organizations can make decisions with confidence, accuracy, and speed. Spire uses one of the world’s largest multi-purpose satellite constellations to source hard to acquire, valuable data and enriches it with predictive solutions. Spire then provides this data as a subscription to organizations around the world so they can improve business operations, decrease their environmental footprint, deploy resources for growth and competitive advantage, and mitigate risk. Spire gives commercial and government organizations the competitive advantage they seek to innovate and solve some of the world’s toughest problems with insights from space. Spire has offices in San Francisco, Boulder, Washington DC, Ontario, Glasgow, Oxfordshire, Luxembourg, and Singapore. To learn more, visit www.spire.com.

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended June 30,

Six Months Ended June 30,

2022

2021

2022

2021

(In thousands, except share and per share amounts)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Revenue

$

19,395

$

9,113

$

37,465

$

18,829

Cost of revenue

9,573

3,727

19,419

7,055

Gross profit

9,822

5,386

18,046

11,774

Operating expenses

Research and development

8,225

7,209

16,882

14,109

Sales and marketing

6,728

4,854

13,633

8,795

General and administrative

11,274

6,896

23,958

15,290

Total operating expenses

26,227

18,959

54,473

38,194

Loss from operations

(16,405

)

(13,573

)

(36,427

)

(26,420

)

Other income (expense)

Interest income

106

1

120

2

Interest expense

(2,785

)

(3,325

)

(5,828

)

(5,875

)

Change in fair value of contingent earnout liability

180

697

Change in fair value of warrant liabilities

3,897

(4,185

)

9,732

(10,176

)

Loss on extinguishment of debt

(22,510

)

(4,954

)

(22,510

)

(3,255

)

Other expense, net

(2,876

)

(513

)

(4,045

)

(136

)

Total other income (expense), net

(23,988

)

(12,976

)

(21,834

)

(19,440

)

Loss before income taxes

(40,393

)

(26,549

)

(58,261

)

(45,860

)

Income tax provision

62

313

352

700

Net loss

$

(40,455

)

$

(26,862

)

$

(58,613

)

$

(46,560

)

Basic and diluted net loss per share

$

(0.29

)

$

(1.44

)

$

(0.42

)

$

(2.56

)

Weighted-average shares used in computing basic and diluted net loss per share

139,687,475

18,642,269

139,482,147

18,190,329

Three Months Ended June 30,

Six Months Ended June 30,

2022

2021

2022

2021

(In thousands)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Net loss

$

(40,455

)

$

(26,862

)

$

(58,613

)

$

(46,560

)

Other comprehensive loss:

Foreign currency translation adjustments

(2,212

)

435

(353

)

467

Net unrealized loss on investments (net of tax)

(83

)

(83

)

Comprehensive loss

$

(42,750

)

$

(26,427

)

$

(59,049

)

$

(46,093

)

CONSOLIDATED BALANCE SHEETS

June 30,

December 31,

2022

2021

(In thousands)

(Unaudited)

(Audited)

Assets

Current assets

Cash and cash equivalents

$

72,531

$

109,256

Marketable securities

20,556

Accounts receivable, net (including allowance of $497 and $339 as of June 30, 2022 and December 31, 2021, respectively)

16,417

10,163

Contract assets

4,402

2,084

Other current assets

6,465

10,071

Total current assets

120,371

131,574

Property and equipment, net

55,073

48,704

Operating lease assets

10,072

Goodwill

52,538

53,627

Customer relationships

22,833

24,388

Other intangible assets

16,920

19,765

Other long-term assets, including restricted cash

11,114

12,136

Total assets

$

288,921

$

290,194

Liabilities and Stockholders’ Equity

Current liabilities

Accounts payable

$

4,380

$

5,824

Accrued wages and benefits

3,766

5,646

Contract liabilities, current portion

12,080

8,627

Other accrued expenses

8,301

4,823

Total current liabilities

28,527

24,920

Long-term debt

96,921

51,124

Contingent earnout liability

10,672

11,369

Deferred income tax liabilities

757

835

Warrant liability

5,328

11,482

Operating lease liabilities, net of current portion

9,444

Other long-term liabilities

1,148

1,600

Total liabilities

152,797

101,330

Commitments and contingencies (Note 9)

Stockholders’ equity

Common stock, $0.0001 par value, 1,000,000,000 Class A and 15,000,000 Class B shares authorized, 139,871,381 Class A and 12,058,614 Class B shares issued and outstanding at June 30, 2022; 139,096,000 Class A and 12,058,614 Class B shares issued and outstanding at December 31, 2021

15

15

Additional paid-in capital

424,884

418,575

Accumulated other comprehensive income

296

732

Accumulated deficit

(289,071

)

(230,458

)

Total stockholders’ equity

136,124

188,864

Total liabilities and stockholders’ equity

$

288,921

$

290,194

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30,

2022

2021

(In thousands)

(Unaudited)

(Unaudited)

Cash flows from operating activities

Net loss

$

(58,613

)

$

(46,560

)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

9,341

3,540

Stock-based compensation

5,198

4,501

Amortization of operating lease assets

1,139

Accretion on carrying value of convertible notes

3,302

Amortization of debt issuance costs

2,673

1,544

Change in fair value of warrant liability

(9,732

)

10,176

Change in fair value of contingent earnout liability

(697

)

Loss on extinguishment of debt

22,271

2,277

Other

(16

)

Changes in operating assets and liabilities:

Accounts receivable, net

(6,708

)

(1,635

)

Contract assets

(2,390

)

Other current assets

3,235

(1,044

)

Other long-term assets

752

151

Accounts payable

(2,788

)

1,133

Accrued wages and benefits

(1,702

)

153

Contract liabilities

4,378

2,862

Other accrued expenses

1,828

456

Operating lease liabilities

(617

)

Other long-term liabilities

(46

)

1,016

Net cash used in operating activities

(32,494

)

(18,151

)

Cash flows from investing activities

Purchases of short-term investments

(20,618

)

Purchase of property and equipment

(12,485

)

(5,581

)

Investment in intangible assets

(2

)

Net cash used in investing activities

(33,103

)

(5,583

)

Cash flows from financing activities

Proceeds from long-term debt

100,360

70,000

Payments on long-term debt

(71,512

)

Proceeds from issuance of convertible notes payable

20,000

Payments on redemption of long-term debt

(29,628

)

Payments of debt issuance costs

(4,342

)

(4,274

)

Proceeds from exercise of stock options

796

673

Proceeds from employee stock purchase plan

332

Net cash provided by financing activities

25,634

56,771

Effect of foreign currency translation on cash, cash equivalent and restricted cash

3,213

403

Net (decrease) increase in cash, cash equivalents and restricted cash

(36,750

)

33,440

Cash, cash equivalents and restricted cash

Beginning of year

109,645

15,986

End of period

$

72,895

$

49,426

GAAP to Non-GAAP Reconciliations

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands, except for share and per share amounts)

2022

2021

2022

2021

Gross profit (GAAP)

$

9,822

$

5,386

$

18,046

$

11,774

Adjustments:

Exclude stock-based compensation

43

26

120

44

Exclude amortization of purchased intangibles

895

-

1,814

-

Exclude other acquisition accounting amortization

174

-

357

-

Exclude merger and acquisition related expenses

50

-

127

-

Gross profit...