Ladies and gentlemen, thank you for standing by, and welcome to the Intuitive Machines First Quarter 2025 Conference Call. At this time, all participants are in listen-only mode. After this week's presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to turn the conference over to Stephen Zhang, Head of Investor Relations. Go ahead.

Good morning. Welcome to the Intuitive Machines first quarter 2025 earnings call. Chief Executive Officer, Steve Altemus; and Chief Financial Officer, Pete McGrath, are leading the call today. Before we begin, please note that some of the information discussed during today's call will consist of forward-looking statements setting forth our current expectations with respect to the future of our business, the economy, and other events. The company's actual results could differ materially from those indicated in any forward-looking statements due to many factors. These factors are described under forward-looking statements in the company's earnings press release and the company's most recent 10-K and 10-Q filed with the SEC. We do not undertake any obligation to update forward-looking statements. We also expect to discuss certain financial measures and information that are non-GAAP measures as defined in the applicable SEC rules and regulations. Reconciliations to the company's GAAP measures are included in the earnings release filed on Form 8-K. Finally, we posted an earnings call presentation to our website, which provides additional context on our operational and financial performance. You can find this presentation on our Investor Relations page at www.intuitivemachines.com/investors. Now I'll turn the call over to Steve Altemus.

Thank you, and welcome, everyone. On our last call, we emphasized that the company would be focused on execution as the new administration began to take shape. Over the last few months, we have seen the administration rethinking how the federal government acquires emerging technology and services, instigates private sector innovation, and creates long-term value. Recently, we have seen signals of alignment at the federal level, including key appointments and clear budgetary direction from the executive branch and Congress. The President's budget request reinforces NASA's funding priorities and the House Armed Services Committee has advanced an additional $150 billion reconciliation package supporting DoD initiatives. These developments give us visibility into future opportunities across civil and national security space. The evolving federal landscape, including shifting NASA priorities, presents a clear opportunity for Intuitive Machines. We're leveraging our proven performance and speed to market across LTV, NSS, and CLPS, and the track record of stretching the federal dollar through innovation that scales to expand into adjacent markets like national security space and other non-lunar domains. This diversification and track record builds on our core strengths and positions us as a broader infrastructure and data services provider across the space economy. As we anticipated last year, the Artemis campaign is evolving. Nominated NASA Administrator, Jared Isaacman has articulated an all dual-track vision to pursue lunar and margin exploration with Artemis as the stepping stone. We believe this vision, reinforced by the President's recent NASA budget request, signals continued support for Deep Space initiatives that Intuitive Machines is built to serve. Our technologies developed through projects like CLPS and NSNS and LTV are designed for applications across both Moon and Mars. While Congress continues to debate potential reductions in NASA's science budget, we remain confident in the resilience of our core exploration programs. The CLPS initiative and the LTVS program are progressing with three delivery procurements planned this year, and our major contracts are aligned with national priorities and long-term strategy. As part of this alignment, Intuitive Machines was invited to testify before the House Space Aeronautics subcommittee on NASA's CLPS initiative. In my testimony, I highlighted how CLPS drives innovation and reshapes the cost of exploration. I also highlighted the opportunity for larger bulk-buy CLPS task orders, showcasing how NASA's early investments in commercial lunar services set the stage for broader participation across various government sectors. For example, through our NSNS contract, we're extending the benefits of this model by enabling other federal agencies beyond NASA to utilize our data infrastructure and payload delivery services on lunar orbit missions. This strategic approach of leveraging NASA's infrastructure investments to support national security space exploration goals exemplifies how the CLPS model can scale to meet the needs of diverse government initiatives. As part of our ongoing efforts to diversify into national security space, the first quarter saw meaningful progress under our stealth satellite and orbital transfer vehicle programs. Additionally, we recently secured a key contract award for an earth free entry vehicle, broadening our footprint across the space domain for new government and commercial customers. Leveraging our Lunar lander architecture, the orbital transfer vehicle is designed to deliver payloads to multiple orbital regimes. We initiated Phase 2 activities under a letter contract with a government customer, with the full contract scope expected to be finalized by the end of this month. We continue to advance next-generation technologies that can transform spacecraft operations in orbit. In the first quarter, we prepared to complete Phase 1 of the Air Force Research Laboratories JETSON contract focused on developing a low-power nuclear electric propulsion system designed to enable stealth-like satellites without the volume or visibility of traditional solar-powered systems. Intuitive Machines is a sole contractor selected for this program, and we anticipate the exercise of the follow-on option later this year. In the days following Q1, we completed the study to transition the on-orbit satellite servicing and manufacturing mission to geostationary orbit for the Space Force, a move that would diversify our revenue base in alignment with the anticipated 2026 budget growth for national security space. We'll continue to support the study through May and expect the government decision later this quarter. Transitioning to an adjacent strategic horizon, Intuitive Machines is advancing a critical new capability, Earth reentry. This effort supports our long-term vision to deliver end-to-end space services from the Lunar surface to precise return on Earth. In the days following the first quarter, the Texas Space Commission finalized the contract awarding Intuitive Machines $10 million to initiate development of a precision Earth reentry vehicle and microgravity research laboratory. This technology is expected to serve as a key element in the architecture for our future Moon and Mars sample return missions. This initiative also demonstrates a forward-leaning funding model using state investment to catalyze commercial and federal participation. Alongside the $10 million stake commitment, we're working to secure additional funds through a diverse pipeline of biopharmaceutical customers and strategic government stakeholders. Our approach will include proprietary precision landing technology, differentiated from traditional ballistic reentry, and builds on a strategic partnership with Boryung that we announced in 2023 to accelerate investment in commercialization in microgravity applications. While we continue to diversify outside of NASA, we are simultaneously advancing and executing on our data transmission services. Under NASA's NSNS contract, we completed a key customer verification milestone and recognized $3 million in revenue during the first quarter. Entering the second quarter, we issued an additional task order valued at $18 million for the next two near space network services milestones, which we expect to complete this summer. In parallel, we are actively discussing with national security space stakeholders to host multi-agency payloads on our lunar data relay satellites. The lunar data satellite constellation portion of NSNS is designed to provide secure and continuous connectivity for navigation, command and control of spacecraft for a wide array of customers, while driving higher-margin recurring revenue streams. To complement the satellite constellation, Intuitive Machines operates and provides data analytics services for the Lunar Reconnaissance Orbiter Camera and ShadowCam. As part of this activity, Intuitive Machines stewards the repository for virtually all US lunar imaging and mapping data collected to date. By pairing high-resolution lunar imagery and analysis with real-time data relay and positioning from our satellites, Intuitive Machines is working to build the foundation for a lunar navigation operating system, enabling secure mobility, route planning, surface navigation, and logistics coordination across government and commercial lunar missions. Our first data relay satellite deployment remains on schedule for a launch along with our IM-3 surface delivery mission in the first half of 2026. In the first quarter, we landed our second lunar mission. The IM-2 mission landed further south than any mission in history in an area surrounded by mountains and perpetual low-angle sunlight, conditions no lunar spacecraft had ever previously navigated. We now have firsthand operational data from that region, and we're using it to harden our systems and inform how the industry approaches this part of the Moon. IM-3 progress continued in the first quarter. We completed payload testing, including testing of NASA's three Jet Propulsion Laboratory-developed rovers. The mission is destined for Reiner Gamma, a mid-latitude region of the moon and one of the most distinctive and enigmatic natural features of the moon known as a lunar magnetic swirl. As momentum builds for IM-3, it's important that we stay transparent about the technical outcomes of each flight and the real work we're doing to make our systems better. After completion of the IM-2 mission, which ended early due to the landing anomaly, we performed a comprehensive post-mission review. It included internal teams, external experts, and independent reviewers working with NASA and our suppliers to analyze every aspect of descent and landing at the Moon's south pole. Planning in this harsh environment requires two things. First, you have to land precisely. Second, you have to land softly. Achieving both of these requires our sensors and onboard navigation algorithms to perform nearly perfectly in extreme environments. We identified three primary contributors that affected the IM-2 landing. One, laser altimeter interference. In the final phase of descent, we saw signal noise and distortion that did not allow for accurate altitude readings. Two, terrain and lighting effects. South Pole topography and low-angle sunlight created long shadows and dim lighting conditions that challenged the precision capability of our landing system. Three, crater recognition tuning. Our optical navigation used imagery from LRO at 100 kilometers from the lunar surface that could not accurately account for how craters appear at lower altitudes with South Pole lighting conditions as you approach the landing site. Moving forward, we will succeed, land softly, land upright, land ready to operate. We've identified the issues and are making the necessary changes we believe will get us there on IM-3. Here's what's different. We've added dissimilar and redundant altimeters to the sensor suite, and they're going through more rigorous and extreme flight-like testing than we've done before. We've incorporated an additional lighting-independent sensor for surface velocity measurements. We've expanded the onboard terrain crater database for enhanced navigation across the surface of the Moon. Additionally, we collected the most detailed imagery of the Lunar South Pole on Mission-2, and we're feeding this unique flight data directly into our machine learning algorithms to improve crater tracking and navigation performance in these extreme conditions. We must learn fast, make necessary fixes, and move forward smarter. IM-2 gave us data that nobody else has. We're using it to build a better system and applying those lessons directly to IM-3, which remains on schedule. As we continue to lay the groundwork for improved surface delivery, we are maturing infrastructure programs for essential equipment and systems that make space operations possible. We continue to grow this area of business, and in January, NASA awarded the company a $2.5 million contract to define the Moon to Mars architecture for logistics handling and offloading combined with surface cargo and mobility. The award for the architecture definition incorporates Intuitive Machines' lunar terrain vehicle and cargo-class lander designs, which made significant strides towards design maturity for NASA's Lunar Terrain Vehicle Services contract culminating successfully completing the preliminary design review just last week. Building on the human-in-the-loop testing conducted at Johnson Space Center in the fourth quarter of last year for Artemis astronauts to evaluate the terrestrial LTV mockup, the team implemented key vehicle modifications based on direct astronaut feedback and verified that these changes met or exceeded NASA's expectations through additional testing. Notably, the team also integrated a scanning LiDAR system in the terrestrial prototype, enabling autonomous self-driving terrain navigation, an essential feature for the extended uncrewed lunar operations and demonstrate this capability in a live evaluation with NASA's LTV Selection team. Additionally, Moon RACER activated a high-fidelity six degrees of freedom simulator that digitally replicated one-sixth gravity conditions using lunar surface data from NASA and Intuitive Machines' Phoenix office for Lunar Reconnaissance imagery. This tool advances design validation and astronaut training while reducing dependency on costly physical prototypes. We believe the team is positioned with a distinct competitive advantage by achieving these technical milestones before the final feasibility assessment. Further strengthening its proposal, Intuitive Machines has advanced its heavy-cargo class lunar lander design and integrated its in-house data transmission architecture built on the company's near space network services contract to provide seamless direct-to-Earth and lunar data relay communications, an offering we believe is comprehensive versus the other competing LTVS companies. As stated at the top of the call, national priorities like LTVS continue to be part of the nation's long-term space strategy, and timing remains on track for the award of the next phase of LTVS by the end of 2025. A second draft RFP was recently distributed with a response date in the coming months and an award later this year. On our last call, I said 2025 will be all about execution, and we believe the first quarter set the tone for the rest of the year as we make progress across our diverse list of programs. Financially, we remained strong with sequential revenue growth, positive free cash flow for the first time in the company's history, and moving steadily towards EBITDA profitability. We expect opportunities for key contract awards throughout the balance of the year for CLPS, LTV, and additional NSNS task orders, all of which incorporate Intuitive Machines' competitive advantage of delivering technical capability with speed and at an attractive price point. Now I'll hand off to Pete McGrath, our CFO, for further comments on our financials.

Thank you, Steve, and thanks to everyone joining us today. We kicked off 2025 with a strong first quarter, with revenues and gross margin up sequentially. Q1 revenue was $62.5 million, up 14% over Q4 2024, driven primarily by CLPS, LTVS, and NSNS execution. We continue to work with NASA on post-mission closeout and the associated IM-2 success payments, which we expect in Q2 of this year. OMES revenue was $21.7 million in the quarter, as expected, given the impact of the OSAM project. Keep in mind, as Steve mentioned, we completed a study for the Space Force to commercialize the use of OSAM at geostationary orbit. We continue to support NASA and the Space Force on a potential path forward for the OSAM program. Gross profit was $6.7 million for the quarter versus $0.7 million in Q4 of 2024, as we continue to drive consistent and higher profitability through efficient program execution and a focus on higher-margin service businesses. This marks our third consecutive quarter of positive gross margins. SG&A for the quarter was $16.1 million versus $16.4 million in Q1 of 2024 and $13.5 million in Q4 of 2024. The higher SG&A in Q1 2025 versus Q4 2024 was due to annual incentive compensation and stock compensation costs incurred in the quarter, consistent with Q1 2024 G&A. We can expect this G&A increase in the first quarter every year due to annual incentive compensation. Operating loss for the quarter was $10.1 million versus a loss of $13.4 million in the fourth quarter of 2024. The lower sequential operating loss was driven by our higher gross profits. When comparing to Q1 2024, note that it includes the success payments for IM-1. As stated above, we expect the IM-2 closeout and success payments in Q2 2025. Adjusted EBITDA was negative $6.6 million in the quarter, an improvement of $4.6 million versus Q4 of 2024 as we will continue to drive towards run rate positive adjusted EBITDA by the end of the year. Operating cash generated $19.4 million in the quarter with capital expenditures of $6.1 million, resulting in positive free cash flow of $13.3 million in the quarter. Positive operating cash was driven primarily by timing of milestone payments received for IM-3, IM-4 and the LTV in addition to our improved gross margins. We will continue to see fluctuations due to the timing of milestones, but are trending towards free cash flow positive in the long term. CapEx was driven primarily by the investment in our first data relay satellite. Going forward, we expect to see continued CapEx for our five satellite constellation around the moon and our ground network in support of NSN. These CapEx levels will be offset by higher margin revenues from the NSNS program. Our cash balance significantly increased in Q1 to $373.3 million. This increase was driven by the redemption process of our $11.50 strike price warrants, which brought in $148 million of cash to the company and our positive free cash flow. We now have no outstanding $11.50 strike price warrants. In the first quarter, we opened a $40 million credit facility with favorable financial terms. This facility remains unused and is meant to smooth out working capital ups and downs as we work through the timing impact of milestone payments for our programs and our cost schedule. With access to over $400 million in capital, coupled with no debt and improving profitability, we continue to believe we have more than sufficient capital to fund our current operations. In terms of capital deployment beyond current operations, we will remain opportunistic on strategic M&A while also evaluating internal investments to accelerate growth and drive long-term shareholder value. We ended the quarter with contracted backlog of $272.3 million compared to $328.3 million in the fourth quarter of 2024. As noted in Q4, we are executing the contracts that were awarded in 2024 throughout 2025 and expect the next major awards in the second half of 2025 and first half of 2026. In April, we did receive Task order 2 for NSNS for $18 million, a grant from TSC for $10 million, and a letter contract with a not-to-exceed of $3 million on an orbital transfer vehicle prior to definitizing the full value of the $11 million Phase 2 contract. These recent awards will be included in the second quarter reported backlog. When looking at our Q1 2025 backlog, we expect to recognize 45% to 50% in 2025, 25% to 30% in 2026, and the remaining thereafter. We are awaiting the outcome of several new awards this year, such as the NASA CLPS Award, LTV continuation or Phase 2, as well as the next phase of JETSON and definitization of our orbital transfer vehicle contract. As of May 8, post the warrant redemption, our shares outstanding are $178.6 million with 117.3 million shares of Class A and 61.3 million shares of Class C. Moving on to guidance. We continue to expect a revenue range of $250 million to $300 million for the year with a positive run rate adjusted EBITDA by Q4 2025 and positive adjusted EBITDA for 2026. Overall, this was another strong quarter for Intuitive Machines. We ended the first quarter with a significant cash balance, no debt, and the flexibility to consider both organic and inorganic growth opportunities. With that, operator, we are now ready for questions.

Our first question is from Austin Moeller with Canaccord Genuity.

Hi, good morning, Steve and Pete. Just my first question here. I know you talked about the defense opportunity. Do reductions in the planetary science budget or earth science budget impact the revenue opportunity from any of the NASA payload deployment awards you've been getting?

I apologize for the technical issue we experienced. I was discussing the CLPS program and our collaboration with the Science Mission Directorate. There are two procurements anticipated for this year, one expected to be awarded in July for delivery, and another later in the year for a second award from the Science Mission Directorate. We do not anticipate any direct impact on the CLPS budget or our entry point for the science based on the President's budget.

Okay. And just a follow-up. Considering the SLS program may have considerable changes, is there any risk of the LTV delivery on a Nova-D lander for either Artemis 3 or beyond being changed or delayed due to the need to procure an alternative launch vehicle?

Our feeling about the Lunar Terrain vehicle services contract and what's been telegraphed by NASA is that that procurement will, our proposals will be due in the late July timeframe with an award for a delivery mission in the November timeframe. That's what NASA has been talking about. If you recall, our Nova-D heavy cargo lander with our LTV vehicle itself flies on a Falcon 9 heavy. So, there's no requirement for an SLS whatsoever. So it's a very nice packaging with the launch vehicle, the heavy cargo lander, and the LTV to get autonomous roving assets to the moon. What's important about that is that this continues our Moon Mars strategy, which says learning about how to operate and do autonomous mobility on the moon is directly applicable to programs that would need the same capability at Mars. And so we're confident that the LTVS procurement is moving forward in spite of the changes to the Artemis program with SLS, Orion, and Gateway.

Excellent. That's very helpful. I'll pass it back there.

Thank you. Our next question is from Edison Yu of Deutsche Bank.

Hi. Good morning. Thank you for taking our questions. I wanted to ask about just your high-level view on the reentry vehicle. There have been lots of attempts over the last five years to do some type of overload transfer vehicle to spacecraft. How does one differentiate in that category in your view?

So we talked about two things. We talked about a Texas Space Commission grant for our Zep program, which is a guided precision reentry vehicle that has a unique aero shape that we've been cultivating since 2022. The other one we talked about was an orbit transfer vehicle to deliver payloads into orbit in cislunar space. The orbital transfer vehicle's competitive edge is the cryogenic stage that we use as Nova-C for the Lunar Landing that has now been modified to serve as a transfer stage. The reentry vehicle, though, is unique in that ballistic entry capability is what's been out there. We have a listing body, which actually has cross-range and down-range capabilities to be able to land with precision, I'd say roughly about 50 meters accuracy, so it can touch down on a runway setting anywhere in the world. So it's got a strategic component to it, and we can use it as a rapid in-space laboratory to deploy biologics and pharmaceutical and smart chip payloads to orbit and bring them back with precision. And the differentiator, in particular, besides precision, is that it lands with a soft touchdown, 3D or 3 gravity touchdown, not the high-impact touchdowns of ballistic capsules.

Understood. And then, I guess, kind of related to nuclear propulsion. I know you're doing some work around that. What's your sort of vision on how that plays out in space? I think there are other companies working on it, but generally I guess it is perceived to be much further out. What's your latest view on that?

Well, I think there are several different aspects to it that we've been working on and been fairly visible with. What I talked about was the AFRL JETSON low power program, where we use a radioactive nuclear material to generate a power source that replaces essentially solar arrays. You can put that small satellite in a very small package instead of the higher volume, higher visibility large solar array-driven satellites, and it allows us to transport while we're operating payloads. It has an abundance of power level. That's the duty of nuclear fuel that runs a Stirling engine. The other aspect is that application is directly relatable or co-relatable to the fission surface reactor that we were working on for the lunar surface. We proposed a 10-kilowatt nuclear reactor driven by a Stirling engine. That would be the first instantiation of infrastructure on the moon for nuclear power. So, we see nuclear as an advancement for a long sustained presence and movement in space and deep space. These kinds of start-up programs that test the technology are necessary to exercise the muscle for the U.S. to have a nuclear space program.

Thank you.

Thank you. Our next question comes from Andres Sheppard of Cantor Fitzgerald.

Hi everyone. Good morning. Thank you for your questions and congratulations on the significant progress. Steve, I know you briefly mentioned this in your prepared remarks, but could you please provide more details on the IM-2 milestones that you expect to achieve in Q2, including the success payment? Thank you.

Yes. If you recall, we had about $14 million of constrained revenue or success payments lined up for the IM-2 mission. You know that mission was partially successful. It was abbreviated, I talked about that. We're working with our customers. NASA has multiple customers and commercial customers to work to close out payments. We expect about half of those to close here in this quarter, maybe a little bit into quarter three, but it's on the horizon. Getting those contracts closed out and buttoned up is what we've been focusing on here. So, that's really where we expect to end up after it's all said and done with Mission 2.

Got it. Okay. That's super helpful. I appreciate that. And just as a quick follow-up. With your first positive free cash flow quarter, congratulations, by the way, how should we think about free cash flow for the rest of the year? Any color you or Pete might be able to give? Thank you.

Well, primarily, the positive free cash flow was driven by some milestones that came in the first quarter that gave us a nice look there. We do see that our free cash flow or receipts will still be lumpy over the year. And so while this is a positive trend going forward, it's not absolute until free cash flow estimates in 2026 where you can see it consistently.

Got it. Awesome. Thank you so much and congratulations again. I'll pass it on.

Thank you. Our next question comes from the line of Ronald Epstein with Bank of America.

Good morning everyone. How would you handle the situation if we end up with a continuing resolution for fiscal 2026? I've heard that this is a possible scenario. What would that mean for you if it were to occur?

Yes. I think we're fairly unaffected with a continuing resolution in that there's no real new program starts for us. We have existing initiatives and programs in our major contracts with NASA. We are interested in what's going to happen with the reconciliation bill and see that come forward and what effect that has on the DoD budgets. And that's one that we're still waiting to see how fast that would be distributed and allocated against contracts, programs, and procurements.

Got it. I had the impression that the IM-2 success payments were initially scheduled for Q1, but now they're set for Q2. What gives you confidence that they'll occur in Q2, and why was there a shift from Q1 to Q2, if that's correct?

Yes. I'm not sure if it changed, but for Mission 1, we closed success payments in Q1. We launched Mission 1 earlier in the year and started Mission 2 a bit later in the quarter. We have several diverse customers and contracts tied to these success payments, and each one needs to be finalized individually. Specifically, there is a CLPS contract with NASA's Science Mission Directorate and three contracts from the Space Technology Mission Directorate. Each of these requires different approaches to complete the process. That’s what's causing the delay in closing them. However, we've been actively communicating with NASA and our commercial payload customers, which gives us some confidence that everything will be finalized by the end of the quarter.

I understand. I have another question. In your prepared remarks, you mentioned several times the potential for M&A and the possibility of deploying capital in that way. What opportunities do you see in the market for space assets? How do you view this situation? Additionally, when considering M&A, what is your perspective on the time frame for achieving a return on investment?

I view mergers and acquisitions as a way to strategically enhance our company's capabilities, providing us with a competitive edge or addressing gaps in specific, unique skills. It's also an opportunity to potentially accelerate capabilities that could generate new revenue streams within our current programs. We're always considering what could positively impact the business as a whole. We regularly assess these opportunities to determine what might be the best fit for the company at any given moment.

No. Got it. All right. Thank you.

Thank you. Our next question comes from the line of Griffin Boss with B. Riley Securities.

Hi, thanks. Good morning. I'll start on CLPS. Given the changes needed for future IM Missions, you mentioned the different redundant altimeters, additional lighting, and the onboard terrain crater database. I understand these contracts already have low margins. Are these changes significantly impacting your cost structure or possibly your competitiveness in the future?

Well, you know, it's a challenge every time you fly to the moon, and it's not without risk. On the other side, though, we've made great strides in landing twice on the moon in the harshest environment. So we've made incredible progress. Even though we had an abbreviated mission and not fully successful in terms of all the data that we brought back, it was a matter of enormous engineering success to land in this challenging environment. There are some additional sensors and algorithms that we want to tune for the mission and Mission-3. Right now, we're not looking at an impact to Mission-3 in terms of schedule, a slight cost increase as we buy additional sensors for those missions. But long-term, we're still achieving success with build delivery to the case and launch of our missions back to back within a year, and we continue that regular cadence of mission. So, I think the program is healthy, and our ability to execute has been demonstrated.

Okay. Fair enough. Thanks, Steve. And then just shifting to LTV, curious to hear your thoughts. Do you still think that NASA would prefer to choose one winner in this Phase 2 down select later in this year? Have you heard anything on that front with regards to that changing? Can NASA potentially now decide to choose multiple vendors? And maybe there's a collaboration effort between the multiple awardees?

For LTVS, NASA has talked to us about including an option that we've seen in the draft RFP that's come out where they plan to select the vendor for the demonstration mission for delivery of the LTV to the surface. Then the possibility, as an option, to carry another vendor through the critical design review phase, which is about a year extension to the current phase that's out there. So they are thinking about alternatives of awarding more than one follow-on contract on LTVS.

All right. Okay. Thank you for taking my questions. I appreciate it.

Thank you. Our next question comes from Greg Pendy with Clear Street.

Hi, thanks for taking my question. Just one on NSN, can you just talk about the global competitive environment that you see evolving in that landscape? I believe Europe is making an effort that would be completed on a lag relative to years, but how does that maybe change the opportunities for commercial revenue on NSN if more global competitors might be entering the market?

Well, I think we're in a fledgling state of the near space network or lunar data relay network, where the market is emerging. Right now, we're talking with those companies in Europe that are looking at participating first from the ground station side and the data relay constellation, and we're talking seriously about standards and interoperability so that we can all work together to put a capability in place, both for data relay communications and for PNT. So right now, the international work is collaborative as opposed to competitive. And I think there's room for successes to raise all boats in that area.

That’s helpful. Thanks a lot.

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

Hi, Steve. Hi, Pete, congrats on the progress here. Can you maybe step back and talk about updating what the key segments are for lunar given all the multiple business activities you have? And maybe just go back to the M&A question a little bit, the areas of interest that might fill some of the holes in that product segmentation for Lunar?

So I didn't talk about it this time in earnings, but I've talked about it in the past couple of times that the three pillars of commercialization of the lunar economy are the delivery services, the data services, and the infrastructure services associated with opening up that economy. Delivery services include things like rideshare as well as landing on the moon, rideshare payloads, and things like the orbit transfer vehicle and the reentry capability. You think about all of those as a transportation leg or access to and from the moon. So that all fits within that pillar. The data relay, the P&T, the navigation, all of that is pretty self-explanatory with NSNS. And then with the Infrastructure as a Service, you see also that we're doing the LTV. We also work fission surface power for the surface, which is not necessarily aligned by nuclear space. It's just Infrastructure as a Service. The JETSON work that we were talking about falls into lunar access or delivery services because we're using that satellite to position in different locations in space. So it's still all aligned with the three pillars of commercialization. It's just because we are able to do the hard thing first, like land on the moon, we're able to branch into other adjacent customers and adjacent markets that kind of feed the whole stack of domains in space from LEO to GEO to ex-GEO to Lunar. And that's where you're seeing our expansion occur.

Okay. I appreciate that review there, Steve. And then you talked about higher-margin service business in the mix. Can you talk about where it is in the mix today, where it's coming from, and what it can be in the mix 12 to 24 months out? I know it's higher margin. At what point does NSNS inflect up from the current levels that it's at today potentially?

I'll let Pete take that one.

The high-margin business is primarily driven by offerings like the Near Space Network services. We are essentially establishing a verification capability to assess performance with NASA, while also developing our own capital assets that will be sold as a service. These services are similar to what you would observe with satellite servicing networks like Globalstar or Iridium. This is where the high-margin opportunities really align. We mentioned earlier about the inconsistent cash flow; the timing of the milestones does not always correspond with the contractual milestones, which contributes to the variability in cash flow. However, we are making strides in achieving an adjusted EBITDA positive by the end of this year, and we anticipate being EBITDA positive next year as well. Free cash flow may remain somewhat unpredictable, but our long-term focus remains on generating it primarily through these high-margin businesses.

Okay. Thanks, Pete. Thanks, Steve.

Our next question comes from the line of Josh Sullivan with The Benchmark Company.

Hey, good morning.

Good morning, Josh.

So on the war chest here, there also appears to be some disruption coming to SLS and other NASA legacy projects. How are you looking at your organic opportunities to grow and adding people versus those comments on looking at M&A? Just trying to get a sense of whether it is more attractive for the opportunities you've developed or filling those technical holes?

What's attractive here is that the CLPS model of fixed price delivery as a service to transport to the moon and bring science data back has expanded further in CLPS 2.0. We aim to engage with all of NAFTA and possibly other government agencies for this delivery service, enabling us to conduct missions more regularly and with increasingly heavier cargo. With the delay in or reformulation of Artemis, there’s an opportunity for heavy cargo deliveries to establish infrastructure on the Moon, utilizing the communications network and the navigation operating system we discussed to promote a presence on the lunar surface. We are aligning our capabilities with this reformulation. Our speed to market, affordability, and technical proficiency stand out in this environment. We intend to assist the U.S. in ensuring a permanent, sustained presence on the Moon that leads to Mars. Regarding the three pillars of commercialization, any M&A activities we pursue will be in alignment with these pillars to enhance our necessary capabilities or to fortify elements of the ground, data network, or infrastructure required to remain competitive.

Got it. Got it. And then just one on the reentry vehicle opportunity on the soft touchdown, sounds like an interesting angle. But just curious on the actual Microgravity Laboratory, is that going to be a proprietary Intuitive Machines process? Or will that be customer furnished?

So, the re-entry capability that we're talking about is proprietary to Intuitive Machines. And then we have a company that we're working in partnership with called Rhodium Scientific, who does the internal outfitting of the biologics and pharmaceutical laboratory insights. They have experience with flying to the International Space Station, and so we're working together to do that. Our interest is primarily in reentering Earth's atmosphere with precision and an ability to do that as interest there for a number of commercial customers as well as DoD customers. That's our focus. The idea that we can do biologics and pharmaceutical and smart chip manufacturing in space without an International Space Station is highly responsive to the market needs and what the customers are really looking for. That's the application that this reentry seems to fit.

Got it. Thank you for your time.

Thank you. I show no further questions at this time. I would now like to turn the call back to Intuitive Machines CEO, Steve Altemus, for any closing remarks.

Well, thank you, everyone for attending and listening to our call this morning. I appreciate all the questions. We look forward to supporting this administration's moves Moon to Mars architecture and priorities. Thank you very much.

This concludes today's conference call. Thank you for participating. You may now disconnect.