Spire Global, Inc. (NYSE: SPIR) (“Spire” or the “Company”)
announces a milestone for new contract bookings in the third
quarter and provides an update on the ongoing review of its
accounting practices.
During the third quarter, the Company brought in $40.0 million
of new contracts. This is the largest value of bookings the Company
has received in a quarter.
Spire entered the third quarter of 2024 with a cash and
marketable securities balance of $45.8 million and ended the
quarter with a balance of $36.6 million. During the quarter, Spire
made a $10.0 million payment toward the outstanding principal
balance of the term loans under the financing agreement with Blue
Torch Finance LLC (“Blue Torch”).
The Company has been making progress in its review of its
accounting practices and procedures, which has focused on:
- revenue recognition related to certain Space Services
contracts;
- the possible existence of embedded leases within certain Space
Services contracts; and
- revenue recognition for certain research and development
contracts.
As previously disclosed, the Company determined that its
accounting practices and procedures with respect to revenue
recognition related to certain Space Services contracts should be
restated. Previously, the Company identified two performance
obligations in these contracts: a pre-space performance obligation
for asset design, manufacturing, and launch; and a second
performance obligation related to data provision during the
operation of the satellite. After re-evaluating the contractual
terms, the Company concluded data provision is the only distinct
performance obligation in these contracts. The Company will restate
certain previously issued financial statements to remove certain
previously recorded pre-space mission activity revenue from the
period in which pre-space mission activities were performed under
the contracts, and instead, record that revenue over the period in
which data is delivered, which begins on the commissioning of a
satellite and ends at the termination of a contract or the
decommissioning of the satellite, whichever occurs first.
The Company has concluded that most of its satellites do not
qualify for embedded lease treatment. The Company’s satellites are
multi-purpose, and due to the nature of their design, customers do
not have the right to substantially all of the economic benefit
produced by the satellites.
Separately, the Company recently initiated a review of certain
research and development contracts, including technology
development contracts that are funded or co-funded by government
agencies like NASA and the European Space Agency. The agencies
receive a license, and pay the Company a license fee, to use the
intellectual property (IP) developed through these contracts and as
such, these contracts are classified as revenue. However, the
Company concluded that its previous revenue recognition practice
under these contracts, which recognized revenue upon the completion
of each contractual milestone in the amount prescribed in the
contract for that milestone, was not appropriate as the achievement
of a milestone was not a good representation of the pattern of
control transfer for the related IP. The Company concluded that the
pattern of control transfer for the IP occurs over time as the
Company performs its research and development activities. The
Company will revise its revenue recognition practice for these
prior contracts to use a percentage-of-completion methodology to
more accurately measure the pattern of control transfer and for
revenue recognition. The percentage-of-completion measurement
methodology will generally result in earlier revenue recognition as
the Company’s performance precedes the related milestone. In its
previously filed financial statements, the Company classified the
costs associated with its research and development contracts as
part of “research and development” within operating expenses on its
Consolidated Statements of Operations. The Company will reclassify
the entire costs associated with its research and development
contracts from “research and development” to “cost of revenue”
within gross profit.
The Company is in the process of quantifying the amount of the
corrections to revenue recognition and classification of related
costs for the changes in its accounting policies, which will be
included in the restatements of the same previously issued
financial statements affected by the change in revenue recognition
of the Space Services contracts described above. There will be no
cash impact as a result of the adjustments.
The most recent amendment of the Company’s financing agreement
with Blue Torch required that the Company’s Quarterly Report on
Form 10-Q for the period ended June 30, 2024 be filed by October
31, 2024. The Company was unable to timely file the report with the
SEC by October 31, 2024, as a result of its review of its
accounting practices not yet being complete. The Company is in
active dialog with Blue Torch regarding potential waivers and/or
amendments to the financing agreement.
The Company also will not be able to file timely its Quarterly
Report on Form 10-Q for the period ended September 30, 2024, and as
a result, has filed a Form 12b-25 with the SEC. The Company is
working to complete the review of its accounting practices as soon
as practical. The Company expects to file restated prior period
financial statements, its second quarter Form 10-Q, and its third
quarter Form 10-Q within the previously disclosed six-month cure
period provided by the New York Stock Exchange, which will end on
February 19, 2025. The Company plans to hold a call to discuss the
results of its third quarter of 2024 after financial statements are
filed.
About Spire Global, Inc.
Spire (NYSE: SPIR) is a global provider of space-based data,
analytics and space services, offering unique datasets and powerful
insights about Earth so that organizations can make decisions with
confidence in a rapidly changing world. Spire builds, owns, and
operates a fully deployed satellite constellation that observes the
Earth in real time using radio frequency technology. The data
acquired by Spire’s satellites provides 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. Spire
also offers Space as a Service solutions that empower customers to
leverage its established infrastructure to put their business in
space. Spire has nine offices across the U.S., Canada, UK,
Luxembourg, Germany and Singapore. To learn more, visit
spire.com.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the federal securities laws, which statements
involve substantial risks and uncertainties. Forward-looking
statements generally relate to future events or the Company’s
anticipated financial or operating performance. In some cases, you
can identify forward-looking statements because they contain words
such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,”
“could,” “would,” “intend,” “target,” “project,” “contemplate,”
“believe,” “estimate,” “predict,” “project,” “potential,” “seek” or
“continue” or the negative of these words or other similar terms or
expressions that concern the Company’s expectations, strategy,
plans or intentions. Forward-looking statements contained in this
press release include, but are not limited to, statements about
recent contracts entered into by the Company, including the ability
to complete the services and realize the anticipated value under
such agreements; the preparation of the Company’s condensed
consolidated financial statements as of June 30, 2024 and September
30, 2024, and for the three and six months ended June 30, 2024 and
the three and nine months ended September 30, 2024; the annual and
interim periods affected by the matters discussed above and subject
to restatement; the cause of the delay in preparing and filing the
late Form 10-Qs; the timing to restate the Company’s financial
statements and to file the late Form 10-Qs; the potential scope and
impact of the issues discussed above, which are estimates as of the
date hereof; the Company’s compliance with the covenants in the
Blue Torch financing agreement; and the ongoing discussions between
the Company and Blue Torch regarding the financing agreement,
including the possibility of obtaining waivers and/or amendments to
the financing agreement and the terms of any such waivers or
agreements.
The Company cautions you that the foregoing list may not contain
all of the forward-looking statements made in this press release.
You should not rely upon forward-looking statements as predictions
of future events. Factors that may cause future results to differ
materially from the Company’s current expectations include, among
other things, the performance of Spire and its partners under the
contracts discussed above, the timing and nature of the resolution
of the issues discussed in this press release, any further delay in
the filing of required periodic reports, the timing and results of
the Company's review of the effectiveness of internal control over
financial reporting and related disclosure controls and procedures,
whether a restatement of financial results will be required for
other accounting issues and adverse effects on the Company related
to the disclosures made in this press release. For other risk
factors affecting the Company, see “Risk Factors” in the Company’s
Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.
Moreover, the Company operates in a very competitive and rapidly
changing environment. New risks and uncertainties emerge from time
to time and it is not possible for the Company to predict all risks
and uncertainties that could have an impact on the forward-looking
statements contained in this press release. The Company cannot
assure you that the results, events, and circumstances reflected in
the forward-looking statements will be achieved or occur, and
actual results, events, or circumstances could differ materially
from those described in the forward-looking statements.
Neither the Company nor any other person assumes responsibility
for the accuracy and completeness of any of these forward-looking
statements. Moreover, the forward-looking statements made in this
press release relate only to expectations as of the date on which
the statements are made. The Company undertakes no obligation to
update any forward-looking statements made in this press release to
reflect events or circumstances after the date of this press
release or to reflect new information or the occurrence of
unanticipated events, except as required by law. The Company may
not actually achieve the plans, intentions or expectations
disclosed in the forward-looking statements and you should not
place undue reliance on the forward-looking statements.
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version on businesswire.com: https://www.businesswire.com/news/home/20241104428998/en/
For Media: Kristina Spychalski Head of Communications
Kristina.Spychalski@spire.com
For Investors: Benjamin Hackman Head of Investor
Relations Benjamin.Hackman@spire.com
Spire Global (NYSE:SPIR)
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