Firefly Aerospace Inc. (FLY) Q2 2025 Earnings Call Transcript

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Overview

The earnings call highlighted several positives: improved free cash flow, FAA approval for flights, collaboration with Lockheed Martin, and a significant investment from Northrop Grumman. While there was no specific EBITDA or free cash flow guidance, optimistic guidance for future launches and revenue recognition was evident. Additional revenue from Blue Ghost and potential data sales further enhance prospects. Despite some uncertainties, overall sentiment leans positive due to strategic partnerships and revenue opportunities.

Key Financial Performance

Revenue $15.5 million for Q2 2025, compared to $55.9 million in Q1 2025 and $21.1 million in Q2 2024. The decrease from Q1 was due to the successful launch of Blue Ghost Mission 1 in Q1, which drove higher revenue. The year-over-year decrease was not explicitly explained.

Spacecraft Revenue $9.2 million for Q2 2025, driven by achieving key contract milestones.

Launch Revenue $6.3 million for Q2 2025, driven by nonrecurring engineering for Eclipse development.

Backlog Approximately $1.1 billion at the end of Q2 2025, increased to $1.3 billion in July 2025 due to securing the fourth Lunar mission from NASA valued at $177 million.

Gross Margin 25.7% for Q2 2025, compared to 4% in Q1 2025 and 14% in Q2 2024. The sequential increase was primarily driven by a customer-requested contract modification that increased the contract value for Blue Ghost Mission 2.

Non-GAAP Operating Expenses $55.8 million for Q2 2025, compared to $57.9 million in Q1 2025 and $51.4 million in Q2 2024. The increase year-over-year was due to Eclipse development, Alpha material purchases, and spacecraft development.

Non-GAAP Operating Loss $51.8 million for Q2 2025, compared to $55.7 million in Q1 2025 and $48.5 million in Q2 2024. The year-over-year increase was not explicitly explained.

Non-GAAP Net Loss $57.1 million for Q2 2025, compared to $56.3 million in Q1 2025 and $53 million in Q2 2024. The year-over-year increase was not explicitly explained.

Adjusted EBITDA Negative $47.9 million for Q2 2025, compared to negative $47.1 million in Q1 2025 and negative $47.7 million in Q2 2024. The year-over-year change was not explicitly explained.

Cash and Cash Equivalents $221.5 million as of June 30, 2025. Increased to approximately $1 billion by the end of August 2025 due to the IPO, which raised nearly $1 billion in gross proceeds.

CapEx $9.2 million for Q2 2025, compared to $2.7 million in Q1 2025 and $17.3 million in Q2 2024. The sequential increase was driven by investments in Eclipse infrastructure and the East Coast launch facility.

Free Cash Flow Negative $37.3 million for Q2 2025, compared to negative $59.2 million in Q1 2025 and negative $37.6 million in Q2 2024. The sequential improvement was driven by customer payment for Blue Ghost Mission 1.

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Operating Highlights

Alpha Rocket: Differentiated as the only operational 1-ton-to-orbit rocket, successfully performed a technically responsive space launch with a 24-hour notice for the U.S. Space Force. Onboarded by Kratos for hypersonic missile tests under the MACH-TB 2.0 contract.

Eclipse Rocket: Medium lift rocket capable of carrying 16 tons to orbit, supporting commercial constellations, exploration, and National Security Space Launch Program. Northrop Grumman invested $50 million to advance production.

Blue Ghost Lunar Lander: Successfully completed Mission 1, the longest commercial operation on the moon, supporting 10 NASA payloads. Mission 2 valued at $130 million will deliver a lander to the far side of the moon. Mission 3 and Mission 4 contracts valued at $180 million and $177 million respectively.

Elytra Satellite Orbiter: Supports national security capabilities, including space domain awareness and high-resolution planetary observation. Secured a Pentagon contract for Mission 3 in 2027 and unveiled Ocular imaging service for lunar imaging.

NASA Collaboration: Secured multiple contracts for lunar missions, including Mission 4 valued at $177 million. NASA's CLPS initiative received a $250 million budget increase for fiscal year 2026.

International Expansion: Signed a contract with UAE's Mohammed Bin Rashid Space Center for Blue Ghost Mission 2. Partnered with Swedish Space Corporation to launch Alpha vehicles from Europe.

FAA Approval for Alpha: Alpha rocket received FAA approval to return to flight after a thorough mishap investigation. Plans to launch Alpha two more times in 2025.

Eclipse Development: Progressing with qualification testing and structural load testing. Over 90 hot fire tests completed for Miranda engines.

Blue Ghost Mission 2: Structures entered assembly, and payloads from Fleet Space and NASA's Jet Propulsion Laboratory arrived.

IPO and Financial Strength: Raised $1 billion in gross proceeds through IPO, with $1 billion in cash reserves as of August 2025. Secured a $125 million revolving line of credit.

Technology Safeguards Agreement: U.S. and Sweden signed an agreement enabling international growth opportunities for Alpha launches.

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Risk or Challenges

Regulatory Challenges: The FAA's approval for Alpha to return to flight came after a thorough mishap investigation. This indicates potential regulatory hurdles and delays in the future, especially if further technical issues arise.

Technical Challenges: Alpha's flight safety system required corrective actions, including increasing the thermal protection system thickness and reducing the angle of attack during key flight phases. These technical challenges could impact launch schedules and operational efficiency.

Financial Losses: The company reported a non-GAAP net loss of $57.1 million in Q2 2025, with adjusted EBITDA at negative $47.9 million. This indicates ongoing financial strain, which could impact future operations and growth.

Revenue Volatility: Revenue for Q2 2025 was $15.5 million, a significant drop from $55.9 million in Q1 2025. This volatility, driven by the timing of launches and contract milestones, could affect financial stability.

Supply Chain Risks: The company is heavily reliant on American suppliers and vertically integrated production. Any disruptions in the supply chain could significantly impact production timelines and costs.

Competitive Pressures: Firefly operates in a highly competitive space and defense industry. The need to secure contracts and maintain technological superiority adds pressure to its operations and strategic objectives.

Economic Uncertainties: The company’s financial performance and growth are susceptible to broader economic conditions, which could impact customer budgets and contract awards.

Execution Risks: The development of the Eclipse rocket and other projects involves significant milestones and testing. Delays or failures in these areas could impact the company’s ability to meet customer expectations and secure future contracts.

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Guidance & Outlook

Revenue Guidance for Fiscal 2025: Firefly expects revenue to be in the range of $133 million to $145 million for fiscal 2025.

Blue Ghost Lunar Missions: Firefly is ramping up annual cargo deliveries to the lunar surface. Blue Ghost Mission 2, valued at $130 million, will deliver a lander to the far side of the moon. Blue Ghost Mission 3, valued at $180 million, is in design and development. Blue Ghost Mission 4, valued at $177 million, will deliver five NASA payloads to the Moon's south pole in 2029.

Elytra Satellite Orbiter: Elytra Mission 3, scheduled for 2027, will demonstrate responsive Rendezvous proximity operations. Elytra's first demonstration mission is preparing to launch, and the spacecraft will test and validate its core capabilities.

Alpha Rocket Launches: Firefly expects to launch Alpha two more times in 2025 and is ramping up production to meet demand. The company is also scaling up Alpha production to deliver a more robust vehicle and faster launch cadence.

Eclipse Rocket Development: Eclipse is progressing towards its inaugural launch in 2026. Qualification testing is underway, and the first stage tanks have been built and fit-checked. Structural and load testing of the engine bay is ongoing.

Capital Expenditures: CapEx for the second quarter was $9.2 million, primarily driven by investments in Eclipse infrastructure and the East Coast launch facility in Virginia.

Strategic Partnerships: Northrop Grumman invested $50 million into Firefly to advance Eclipse production. Firefly is also partnering with the Swedish Space Corporation to launch Alpha vehicles from Europe, unlocking international growth opportunities.

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Shareholder Return Plan

The selected topic was not discussed during the call.

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Key Q&A

Q: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?

A:The FAA approved the return to flight for Alpha at the end of August. Flight 7 is expected to launch in the coming weeks, with Flight 8 also in a mature state. The company is increasing production capacity and building ahead for 2026, working closely with Lockheed Martin to share mission and payload details soon.

Q:How do you think about the opportunity related to Golden Dome, and what news should we look to hear?

A:Golden Dome is supported by Firefly's three product lines: Alpha (commercially available rocket for surrogate targets, hypersonic missiles, and space-based interceptors), Elytra spacecraft (suited for space-based interceptor host missions), and Eclipse (16-ton rocket for launching constellations). The company is well-positioned to support the Golden Dome architecture.

Q:What are the expectations for either EBITDA or free cash flow for the year?

A:The company is guiding to annual revenue and focusing on operational metrics linked to financial performance, without providing specific EBITDA or free cash flow guidance.

Q:Can you walk us through the milestones for the Eclipse launch and collaboration with Northrop next year?

A:The company has completed Miranda flight engine testing, including over 90 hot fire tests. Next steps include qualifying the engine, building flight engines, testing the engine bay, integrating the 7 flight Miranda engines, and delivering the system to Northrop Grumman for integration and launch campaign.

Q:Can you update us on the timeline for NSL Lane 1 and the proposal ahead of the December window?

A:The first launch for NSL Lane 1 is anticipated in late 2026. A proposal will be submitted later this year, with the first task orders expected after the first quarter of 2027.

Q:Can you discuss the $135 million tax responsive space line item in the supplemental budget?

A:The company is optimistic about the $135 million in the reconciliation budget. With experience from VICTUS NOX and contracts for VICTUS Hz and VICTUS SOL, Firefly aims to store Alpha rockets at Vandenberg Space Force base for 24-hour tactical responsive launches.

Q:What is the extent of the design change for Alpha's thermal protection and angle of attack?

A:The design change involves adding more layers of thermal protection to the first stage, which is negligible in mass. The angle of attack can be controlled during critical flight phases and does not limit mission capabilities.

Q:Are there opportunities to sell more data to other governments and commercial customers?

A:Yes, Firefly owns the data and plans to sell commercial data licenses to multiple customers. This creates a differentiated revenue stream with higher margins, as seen with the Blue Ghost Mission 1 contract.

Q:How did the Blue Ghost 4 contract turn out versus expectations, and what are the revenue recognition expectations?

A:The Blue Ghost 4 contract met expectations and is recognized on a percentage completion basis, similar to Blue Ghost Mission 1. It represents a significant opportunity for the company.

Q:Can you update us on the backlog mix of launch and spacecraft?

A:The company has not disclosed the exact split but noted that spacecraft revenue was the majority in Q2. The backlog is expected to shift more towards spacecraft over time.

Q:What is the roadmap for lunar missions and capacity to carry cargo to the moon?

A:Firefly plans to scale its lunar capabilities, including larger landers, rovers, and infrastructure like power plants. The company aims for multiple annual missions to the moon by the end of the decade.

Q:What is the strategy around potential M&A?

A:M&A targets must align with Firefly's strategy, culture, and provide synergies to existing product lines. The company uses a well-defined process to evaluate opportunities.

Q:What is the significance of the RG-XX reference for Elytra?

A:RG-XX is a follow-on to a $6 billion geosynchronous space situational awareness program. Firefly's Elytra technology, with its fuel reserves and maneuverability, is well-suited for this program.

Q:Will the $10 million extra for Blue Ghost be recognized in Q3?

A:Yes, the $10 million will be recognized as revenue in Q3.

Q:Review of Unclear Management Responses

A:Management avoided providing specific guidance on EBITDA or free cash flow for the year, instead focusing on operational metrics linked to financial performance.

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Earnings Word Cloud

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FLY Transcript

Firefly Aerospace Inc. (FLY) Q2 2025 Earnings Call Transcript

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