Greetings. Welcome to the Firefly Aerospace Second Quarter 2025 Financial Results Conference Call. [Operator Instructions] Please note, this conference call is being recorded. I will now turn the conference over to Michael Sheetz, Firefly's Director of Investor Relations. Michael, you may begin.

Thank you, operator. Hello there. I'm Michael Sheetz, and welcome to Firefly's inaugural quarterly financial results call. I'm pleased to be joined on the call by CEO, Jason Kim; and CFO, Darren Ma, as we report our second quarter 2025 results for the period ending June 30, 2025. Today's call will include forward-looking statements, including, but not limited to, statements the company will make about its future financial and operating performance, growth strategy and market outlook. Actual results may differ materially from those contemplated by these forward-looking statements. Factors that could cause the actual results and trends to differ materially are set forth in the annual and quarterly reports filed with the SEC. Firefly assumes no obligation to update any forward-looking statements, which speak only as of their respective dates. Also in this call, we will discuss both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in the second quarter 2025 filing. Unless otherwise stated, financial information referenced in this call will be non-GAAP. Our earnings press release, SEC filings and a replay of today's call can be found on our Investor Relations website at investors.fireflyspace.com. Now I'll turn the call over to Jason.

Thank you, Michael, and welcome to our second quarter 2025 earnings call. We're proud to be reporting quarterly results for the first time on the heels of our historic IPO, the largest by U.S. space and defense company and one of the largest of any industrial company in the 21st century, raising $1 billion in gross proceeds to supercharge our growth. For those new to our journey, Firefly is a space and defense company delivering rockets and satellites to perform the hardest missions in space for national security, exploration and commercial technology built to keep America as the leader in the space. Our products position us to support the $175 billion Golden Dome opportunity as well as NASA's moon to Mars plan. We have four revenue-generating products: our small lift Alpha rocket, medium lift Eclipse rocket, Blue Ghost lunar lander and Elytra satellite orbiter. Today, these products have a robust backlog of $1.3 billion. Our backlog consists of high-quality customers with critical missions that shape the world we live in. Alpha is differentiated as the only operational 1-ton-to-orbit rocket. It is the first and only rocket to successfully perform a technically responsive space launch with a 24-hour notice for the U.S. Space Force. Alpha's 1-ton capability gives our customers more options to perform critical high stakes missions to help deter threats and maintain our freedom. Earlier this year, Kratos onboarded Alpha to the Missile Defense Agency's MACH-TB 2.0 contract to launch hypersonic missile tests, further diversifying the upside opportunities to our backlog. All of Alpha's proven technologies are scaled up to our larger reusable Eclipse rocket capable of carrying 16 tons of orbit. This medium lift rocket is built to support commercial constellations, exploration and the National Security Space Launch Program. Eclipse is a right-sized launch vehicle, meeting the growing…

Thank you, Jason. With this being our first earnings call, I'm going to review the financials from the second quarter and discuss our revenue outlook for 2025. A more detailed presentation of our financial results is contained in the financial tables included in the news release we published earlier. Before we start, I will take a few minutes to explain how operational metrics drive the financial performance of the company. Key operational metrics include the number of launches and execution on key program milestones across both our spacecraft and launch businesses. For example, in our spacecraft business, we focus on delivery milestones because the revenue is generally recognized as a percentage of completion under each contract. For the launch business, we focus on the number of launches. Revenue for our operational Alpha vehicle is recognized at a point in time when the launch occurs. For Eclipse, which is in development, we recognize revenue as a percentage of completion based on program milestones as part of the Northrop Grumman partnership. Once the Eclipse vehicle is operational, we will recognize revenue as launches occur. It is important to note that the timing of revenue could be impacted by things that are outside of our control, especially on the launch side. Now turning to our second quarter financial results. We generated revenue of $15.5 million. This compares with $55.9 million in the first quarter and $21.1 million in the same quarter a year ago. As a reminder, the successful launch of Blue Ghost Mission 1 drove an increase to our first quarter revenue. Spacecraft revenue for the second quarter was $9.2 million based on achieving key contract milestones. Launch revenue was $6.3 million, driven by nonrecurring engineering for Eclipse development. We ended the second quarter with a total backlog of approximately $1.1 billion.…

Since the end of the second quarter, Firefly is pushing forward with additional wins. NASA's award of Blue Ghost Mission 4 in July represents back-to-back Lunar lander contracts for our team. The contract will see Blue Ghost deliver five NASA payloads to the Moon's south pole in 2029 and increases our backlog to $1.3 billion. As with Blue Ghost Missions 2 and 3, Elytra will support our fourth mission. Our Blue Ghost lander enables NASA to evaluate the Moon's south pole resources such as hydrogen and water as well as study the radiation and thermal environment. We are honored to be supporting yet another critical NASA mission. We are proud to support the United States building a sustainable long-term presence on the lunar surface and fortify U.S. leadership of the ultimate high ground. In late breaking as of this morning, I am pleased to share that NASA added $10 million to our Blue Ghost Mission 1 contract as an addendum to acquire high-value data. This goes above and beyond the base contract to include large amounts of lunar surface images. This is significant as it shows how each NASA CLPS mission has opportunities for additional high-margin recurring revenue generation. This addendum contract also demonstrates the market for our Ocular commercial lunar imaging surface deploying as part of upcoming Blue Ghost missions starting in 2026. As a U.S. Air Force veteran, I'm proud that Firefly is an American-based company with American manufacturing and supported by American suppliers. Firefly is vertically integrated with production hardened facilities and engineering teams that are based in Austin, Texas. The unique co-location of our manufacturing, testing and integration allows us to deliver our products on cost, schedule and at increasing capacity. We have core technology advantages through our carbon composite technology used across all of our product lines as well as patented, scalable top-off cycle engines that are shared across our launch vehicles. For those who are new to Firefly, thank you for joining us in this journey. And for the many long-time supporters, thank you for your years of belief and continued backing. And to our Fireflies, thank you for your bold can-do attitude and your dedication to our mission. Together, we inspire the world, unlock new categories in space and deliver critical national security capabilities for America and its allies.

Thank you, Jason. Operator, we're ready to take questions.

[Operator Instructions] Our first question comes from the line of Sheila Kahyaoglu with Jefferies.

Congratulations on a successful launch in more ways than one. Maybe if we could start on the first question. With the FAA approving return to flight for Alpha, how are you thinking about the timing of Flight 7 and 8? And how does that feed into your targeted launches for '26? What are the range of potential outcomes for next year, thinking about production capacity versus the current backlog?

Thank you, Sheila. We received our FAA return to flight determination at the end of August. We expect to launch Flight 7 in the coming weeks. If you saw our slides in the Alpha slide, you could see that Flight 7 is in a mature state right next to the Flight 8 in a mature state. And so we keep increasing our production capacity, and we're building ahead as well for 2026. So we're working closely with the range and our customer, Lockheed Martin, to share more details on the mission and payload soon. But above all, safety and quality are the highest importance.

Got it. And maybe if we could talk about Golden Dome. We've heard a lot about it, but some companies are starting to solidify what it could mean. How do you think about the opportunity? And what news should we look to hear? What is sort of the framework and expected timing you're thinking about as it relates to Golden Dome?

Yes, being an Air Force veteran, Golden Dome is something near and dear to my heart and the Firefly's. We have three product lines of the company that are well positioned to support the Golden Dome architecture. First off, Alpha. It is a commercially available rocket, and we're increasing our production capacity to deliver more and more Alphas per year. It can support launching surrogate targets for the Golden Dome missions. It can also support launching test missions of things like hypersonic missiles as well as space-based interceptors. And it also can serve as an operational rocket as well. As you know, we were the first and only to launch a 24-hour call-up mission on the VICTUS NOX mission, and that's something that is helpful for the Goldman Dome mission. On the spacecraft side, our Elytra spacecraft with its ample fuel reserves and its high thrust and maneuverability as well as its payload carrying capacity is well suited to support space-based interceptor host missions. And there's optionality there to provide that as a prime or as a subcontractor. And then finally, Eclipse, it's a 16-ton rocket. It is capable of launching constellations, whether they be sensors or space-based interceptors in the future, and that's part of onboarding onto the national security space launch program.

Our next question comes from the line of Seth Seifman with JPMorgan.

I wanted to ask, starting off, maybe if you could talk a little bit about expectations for either EBITDA or free cash flow for the year?

Seth, this is Darren. So as of now, we're guiding to annual revenue. We're focused on hitting the operational metrics, which, as we discussed previously, was -- is very much linked to our financial performance. And that's essentially what we're guiding to right now.

Okay. Okay. And then just maybe a little bit more qualitatively, as we think about the path to Eclipse launch and kind of have the potential perhaps to do that next year, can you walk us through maybe some of the milestones along the way as we think about going from where we are now to the collaboration you'll have with Northrop next year to get that launch up?

Yes. Seth, this is Jason. We're extremely grateful and excited to be partnered with Northrop Grumman. They're our co-developer on the Eclipse program. As you remember, in the second quarter, Northrop Grumman, they invested a first-of-a-kind investment into Firefly at $50 million. We are working on the milestones towards our inaugural launch. We've completed our Miranda flight engine testing as of recently, over 90 hot fire tests that include full mission duty cycle hot fire testing at 206 seconds as well as at 100% plus. We're going to move into qualifying that engine and then building the flight engines. We also have developed the engine bay, and that's undergoing testing. So once we complete testing there, we would integrate the 7 flight Miranda engines with the engine bay. We've also done good checks of the integration of our liquid oxygen tank and our RP-1 tank. We've completed the integration of that. And so we're going to -- the next step would be to make the engine bay with the tanks and the a section. From there, we would deliver that to Northrop Grumman to integrate with the second stage, complete the payload faring with the payload -- integrate the payload and jointly conduct the launch campaign at our Wallace pad.

Our next question comes from the line of Colin Canfield with Cantor.

If you can maybe update us on the time line for [ NSL Lane1 ] and maybe kind of talk about how the team is thinking about their proposal ahead of the December window? And specifically, what are customers saying kind of about the time frame from transition from onboarding to initial contract award?

Thank you, Colin, for that question. We wanted to provide a credible offering. And so one of the requirements of onboarding into the U.S. Space Force's National Security Space Launch program, Lane 1 is to have a credible plan for the first launch. We anticipate that first launch being the late 2026 time frame. And so we're pursuing along with our co-developer, Northrop Grumman, a proposal for late this year to be submitted. Once onboarded, you would need to have a first launch before bidding the first task orders and the first task orders would be around the -- after the first quarter of 2027.

Got it. Okay. And then in terms of the tax responsive space line item in the supplemental that was mentioned in the script, the $135 million. Can you maybe discuss kind of the velocity of the money and what contracting officers are saying with respect to kind of potential near-term unlock in terms of awards? I think one of the things that we've gotten feedback from other supplemental oriented players is that they're seeing a pretty fast acceleration of that kind of related spend versus base accounts, but happy to hear kind of what your experience sounds like?

We're very positive on this additional $135 million that was put into the reconciliation budget because of our VICTUS NOX experience, and we subsequently have been put on contract for VICTUS Hz and VICTUS SOL. We're very much looking forward to working with the Space Safari, Space Force customer on the next missions. We would like to have as many of our alpha rockets that we can fit in storage at our Vandenberg Space Force base so that we could be ready at any time to launch more tactically responsive space launches in a 24-hour time line so that we can continue to deter our U.S. rivals.

Our next question comes from the line of Kristine Liwag with Morgan Stanley.

Maybe on Alpha, you called out that you're going to change the design of the reinforcement of the thermal protection. I was wondering how much of a design change is that? Is that major or minor? And how mature is your progress there? And then second, you talked about changing the angle of attack on the rocket launch. Does that change the -- what kind of missions you could fulfill for your customers?

Kristine, it's Jason. There is no change to the design. It's just adding more layers of the thermal protection system to the bottom of the first stage, and it's negligible in terms of mass. The second part of that question is how does this change the angle of attack. We can control that at different phase -- critical phases of the flight profile. And so that is something that we can plan for and can control as well.

Great. Super helpful. And if I could do a follow-on. You guys called out the addendum contract, $10 million from NASA on Blue Ghost, one, I was wondering, are there more opportunity to sell more data to other governments and commercial customers? And can you size the opportunity of these kinds of potential annuities that you could get from these kinds of additional contracts?

So the answer is yes. We -- at Firefly, we own that data. And so we are able to sell that commercial data license to multiple customers. This was really helpful for us because it was the first of many data sales that we plan to do. You heard Ocula, and that is something that is very core to the Ocula's service that we unveiled a couple of months ago. I'll pass it on to Darren to talk more.

Yes. Kristine, I'd say engineering change proposals are common across our firm fixed price contracts. For example, on Blue Ghost Mission 1 prior to this data buy, we've already been -- the team has already been executing on engineering change proposals, increasing that contract from $93.3 million up over $100 million over time. So we fully expect this trend to continue. It really gives us a differentiated revenue stream with higher margin dollars going forward with things like Ocula, as Jason mentioned.

Great. If I could sneak a third and last one. With the Blue Ghost 4 contract you got this summer, how did that contract turn out versus your expectations? And can you provide some sort of revenue recognition expectations for that since that's not launching until 2029? And also any sort of profitability metrics that we should monitor?

Yes. So Blue Ghost Mission 4, we had two opportunities to win one to win another additional Blue Ghost contract going forward. We did plan on winning of the two. And it's an example of how we -- the team has converted opportunities in the backlog. It's a significant opportunity that the team has executed on. From a revenue recognition perspective, it's recognized over a percentage completion basis, very similar to Blue Ghost Mission 1, which you guys saw how it plays out in our financials.

Our next question comes from the line of Suji Desilva with ROTH Capital.

The backlog, can you just update us on the rough mix of launch and spacecraft? And maybe more specifically within the launch Alpha launch backlog, how much of that is national security responsive versus other? If you could give us some rough estimate there, that would be helpful.

Yes. So -- so today, I'd say we haven't really disclosed the split between launch and spacecraft. But if you reference how we -- our revenue split between Q2, it was a majority of spacecraft. So I'd say prior to Blue Ghost Mission 4, most of our backlog was more on the launch side. But with Jason's background as in the spacecraft sector over decades of experience, we would expect that weighting to shift over time and perhaps even outpace the launch side in the future.

Okay. Great. And then I think there was earlier -- there was an announcement about NASA's VIPER rover launch. And I'm just curious, is there a road map, Jason, kind of how much capacity you can carry to the moon if the Blue Ghost and pairing up with Elytra potentially as we move toward cargo, I know you're taking the UAE Rover yourselves, larger cargo, infrastructure cargo and then over time, [indiscernible]. If you could help us understand the road map you're planning, that would be helpful.

Yes. Thanks, Suji. This is just the beginning. Although we have the most number of commercial lunar payload services contract out of any commercial company right now with NASA. We have a long-term road map where we build big things here at Firefly. If you look at, for example, at our Eclipse rocket, that's a 200-foot rocket like 15 feet diameter. So that's a large structure. If you look at our Blue Ghost 2 mission, we just sent a full stack of our Lunar lander and our [ DPA ] with our electric vehicle, which sits at 22 feet high to get environmentally tested at Jet Propulsion Laboratory. So we're already building bigger and bigger things. We are able to scale our technology because we're using carbon composite structures and tanks and all of our Lunar lander technology that helped us successfully land stable and upright on Blue Ghost 1, is transferable to those bigger systems. So long term, we would like to put not only lunar landers on the moon, but more rovers, potentially light terrain vehicles, infrastructure like power plants. So that is all inclusive of our Lunar lander road map. We see more than just annual missions to the moon, but multiple missions annually to the moon by the end of the decade.

Our next question comes from the line of Edison Yu with Deutsche Bank.

Congratulations on the first earnings call going public. I wanted to ask about the strategy around potentially some M&A. You obviously raised quite a bit of money. Any kind of types of assets out there that you're kind of vetting or interested in? And maybe if you could dimension kind of the size and scope you'd be willing to do.

Thank you, Edison. We look at M&A using our well-defined process as it relates to M&A targets. First and foremost, any M&A target has to fit our strategy. We have a robust long-term strategy. It also has to fit our culture, our Firefly culture, which is one of a can-do spirit as well as speed and collaboration and technology and innovation. Also, there are synergies that the M&A target could provide to our existing product lines. So those are things that we look for in companies.

Understood. And then a follow-up question on Elytra. I think you made a reference to RG-XX in the opening remarks. I was wondering if you could maybe elaborate around that. Is that supposed to be potentially a template for some future program that Elytra would go after? Or how is that -- how should we think about that kind of reference you made?

Well, if you recall, RG-XX is a follow-on to the geosynchronous space situational awareness program, which once was a $6 billion program of record that the traditional prime contractors were developing. It is a requirement that is still needed going forward. But earlier this year, the Pentagon signed out an acquisition decision memo to open up the competition for the next-generation mission called RG-XX to commercial providers like Firefly and bring in our transformative commercial technologies -- it just so happens that earlier this year, we won a DIU contract for our Elytra Mission 3. And that mission is to perform space domain awareness using Rendezvous Group proximity operations. And I already mentioned that Elytra has ample fuel reserves, high thrust maneuverability as well as carrying capacity for different payloads. We're able to apply that same technology to the RG-XX program of record.

Great. If I could sneak in one housekeeping. The $10 million extra, is that going to be recognized in 3Q as revenue? Or what's the, I guess, the rev rec on that $10 million for Blue Ghost?

That's correct, and we did plan for that in our road map.

Ladies and gentlemen, I am showing no further questions in the queue. I would now like to turn the call back over to Michael for closing remarks.

Thank you, everyone, for attending today's call. We look forward to speaking with you all again when we report our third quarter financial results applied.

Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.