Earnings Call
Satellogic Inc. (SATL)
Earnings Call Transcript - SATL Q1 FY2026
Operator
Good morning and welcome to the SATA-Logic First Quarter 2026 Financial Results Conference Call. All lines have been placed on listen-only mode, and the floor will be open for your questions following the presentation. During today's call, we may make statements relating to our goals and objectives for future operations, financial and business trends, business prospects, future financial metrics, statements regarding customer contracts and pipeline, our ability to generate revenue, and management's expectations for future performance that constitute forward-looking statements under federal securities laws. Any such forward-looking statements reflect management expectations based upon currently available information and are not guarantees of future performance and involve certain risks and uncertainties that are more fully described in our sec filings including the risk factors section of satalogics quarterly report on form 10q annual report on form 10k for the fiscal year ended december 31st 2025 and our filings with the sec our actual results performance or achievements may differ materially from those expressed in or implied by such forward-looking statements. We undertake no obligations to update or revise any forward-looking statements to reflect events or developments after the date of this call. On this call, we will also discuss financial measures not determined in accordance with the U.S. GAAP, including EBITDA, adjusted EBITDA, and free cash flow. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are presented in the earnings materials posted on our website today. Our press release detailing these results was issued this morning and is available in the Investor Relations section of our company's website at satalogics.com. Posting today's call will be Satalogics founder and chief executive officer Emiliano Cardigal, chief financial officer Rick Dunn, and vice-admiral Frank Whitworth, U.S. Navy retired. With that, I will turn the call over to Mr. Cardenbon.
Emiliano Kargieman, CEO
Thank you, Operator, and good morning, everyone. Welcome to Satellogic's first quarter 2026 earnings conference call. Joining me on today's call are Rick Dunn, our Chief Financial Officer, and a special guest by Admiral Frank D. Whitworth III, US Navy retired, who recently joined Satellogic as a strategic advisor. We're pleased to have him with us today. I'll begin with a brief company overview and the key themes of the quarter before introducing by Samir Whitworth who will share his remarks on his role and all the friends and intelligence engagement. Rick will then walk you through our Q1 2026 financial results in detail before I cover our commercial update and recent wins. Walk through our 2026 product roadmap including our Adifox server platform and Merlin constellation and close with key takeaways before we open the line for questions. With that, let's begin. The first quarter of 2026 marked a clear infraction point for Satellogic. We grew revenue 80%, improved our adjusted EBITDA loss by 32%, generated positive net cash from operating activities for the first time in our history, and exited the quarter with $121.9 million in cash. Just as importantly, the commercial momentum we built exiting 2025 is broadening across sovereign defense, recurrent intelligence subscriptions, and U.S. government engagement. Based on our current cost base, backlog, growing recurring revenue, and current pipeline, we believe 2026 can be a year of substantial progress towards sustained profitability, and we expect Merlin to be an important driver of free cash flow as it enters service. This was one of the strongest starts to a year in our company's history, and our most ambitious product roadmap to date is now executing on schedule. There are five things I want investors to take away from the quarter. First, on our unique sovereign and different solutions, our non-ITAR design, vertical integration, and free trade zone manufacturing in Montevideo allow us to deliver disruptively-priced sovereign capabilities to aligned governments around the world with rapid technology transfer and in-country assembly, integration, and tasks. In the quarter, we deepened our U.S. defense engagement through the expansion of our partnership with IDT Corporation and the U.S. Office of Naval Research for phases two and three of the Slingshot program, advancing in-orbit demonstration of our rapid tasking and high-resolution capabilities in support of U.S. Navy mission requirements. And just last week, we announced a $12 million agreement with a sovereign defense customer to deliver the commission in-orbit in USAT from our Aleph-1 constellation. The second sovereign in-orbit transaction in two quarters. And I'll come back to why that matters. Second, we have significant customer traction. We continue to diversify our customer base internationally, with Asia-Pacific revenue growing more than eightfold year-over-year to $3 million in Q1 2026. The growth was led by significant contributions from customers in Australia and Malaysia and reflects the global demand we're seeing for sovereign and high-frequency monitoring capabilities. We have unmatched capacity and scale. As of March 30th, we continue to operate one of the largest high-resolution constellations in the world. Our capacity advantage is significant. based not only on the number of satellites, but also on our patent-protected camera design that enables us to capture approximately 10 times more imagery per satellite than our peers at an all-in cost per satellite of approximately 1.3 million, a fraction of the industry standard. That cost and capacity advantage is what allows us to realize the unit economics to deliver persistent daily monitoring at scale. The capacity of our constellation has enabled us to sell in-orbit satellites to space systems customers without impacting our ability to meet existing demand and expected future growth in our data and analytics business.
Emiliano Kargieman, CEO
Fourth, revenue growth with operating leverage in action.
Emiliano Kargieman, CEO
Revenue grew 80% year-over-year to $6.1 million, while our adjusted EBITDA loss improved 32% to $4.2 million. And for the first time in our history, we generated positive net cash from operating activities in a quarter. The recurring revenue shift we're beginning to see is being driven in part by Aleph Observer, or persistent monitoring product launched in February. That is the operating leverage of our vertically integrated model becoming visible, combined with $121.9 million of cash on hand, it materially strengthens our path to sustain profitability. And fifth, a strengthened leadership team. Our board and management team bring deep public company finance, defense, and policy experience. Over the last two quarters, we have built up our sales leadership with the incorporation of Jeff Kerridge and a seasoned team of sales executives. Today, I'm pleased to introduce a new addition who we believe will be meaningful to accelerate our trajectory in defense and intelligence. In late March, we welcomed Vice Admiral Frank D. Whitworth III, U.S. Navy retired as a strategic advisor. Vice Admiral Whitworth most recently served as the eighth director of the National Geospatial Intelligence Agency, the NGA, where he led the delivery of geospatial intelligence supporting U.S. national security operations worldwide. His decades of experience operationalizing geospatial intelligence at the highest levels of the U.S. defense and intelligence communities position him uniquely to advise our team as we deepen our engagement with that customer base. It's an honor to have him with us today. Vice Admiral, the floor is yours.
Frank Whitworth, Analyst — Strategic Advisor
Thank you, Emiliano, and good morning, everyone. It's a privilege to be with you today. Let me start with a few words on why I joined Satellogic. Most recently, I had the honor of serving as the eighth director of the National Geospatial Intelligence Agency, or NGA for short, from June 2022 until my retirement just last December. In that role, I was responsible for the delivery of geospatial intelligence support of U.S. national security operations worldwide. One of the priorities during my tenure was the maturation of NGA MAVEN, the Department of War's primary initiative for operationalizing artificial intelligence and machine learning. We transitioned that program from an experimental framework into an operational capability that meaningfully increased the speed and scale of intelligence analysis integrated with mission command across the department. That experience reflected my view of where geospatial intelligence needs to go. What attracts me to Satellogic is that this company is purpose-built to address the same imperative, the combination of scale, frequency, and resolution that the satellite constellation is designed to deliver, coupled with low-latency analytics and near-real-time tipping and queuing and alerts, this is precisely what we need to enable the shift from periodic observation to continuous awareness. In my role as strategic advisor and always adherent to my ethics restrictions against communicating with NGA and the Navy, I have been and will continue to be working with the team across three areas, strategic engagement with global defense and intelligence customers, the development of the company's product and technology roadmap, including the Merlin constellation, Emiliano will discuss shortly, and the integration of high-frequency Earth observation into modern intelligence architectures. I am impressed by what this team has built. The U.S. defense and intelligence communities are actively rethinking how they source persistent geospatial intelligence. And Satellogic's combination of sovereign-grade capability with commercial economics is uniquely matched to that demand. I look forward to helping the team serve that mission and to translate that demand into long-term programs of record. With that, I'll turn it over to Rick to walk you through the financial results.
Richard Dunn, CFO
Rick. Thank you, Admiral, and good morning, everyone. Our first quarter results reflect the commercial momentum and financial discipline we built exiting 2025, and they mark several important inflection points in our business. The headlines are revenue up 80 percent, adjusted EBITDA loss improved 32 percent, the first quarter of positive net cash from operating activities in our history, and 121.9 million of cash on the balance sheet, our strongest position to date. Let me walk you through each. Revenue. Total revenue for the quarter was $6.1 million, up 80% year over year from $3.4 million in Q1 2025. The increase was driven primarily by a $1.6 million increase in imagery ordered by new and existing data and analytics customers. By business line, our data and analytics line of business, which includes our Constellation as a service offering, generated $4.6 million of revenue, up $3 million compared to the prior year period. Space systems contributed $1.5 million of revenue. Geographically, the corridor reflected a meaningful diversification of our customer mix. Asia Pacific generated $3 million in revenue, up more than eightfold from $0.4 million in the prior period, with Australia and Malaysia as the primary contributors. Europe contributed $1.1 million, up from half a million. America's contributed $2 million, primarily reflecting timing rather than any change in customer demand. Our U.S. pipeline continues to be very strong, and we look forward to executing on that pipeline in the remainder of the year. South America contributed $0.1 million. taken together, this geographic diversification is an important indicator of the increasingly global demand for our services and of the durability of our international customer base. Global costs and expenses for the quarter declined 3% year-over-year to $12.5 million. Within that, cost of revenues, which is exclusive of depreciation, was $1.5 million, up 17% on higher ground station costs that scale with our growing operations. Engineering expense was $3.1 million of 24% reflecting investment in software, professional services, and stock-based comp tied to the broader employee population. SG&A expense was approximately flat at $6.5 million with an increase in salaries and benefits associated with workforce expansion in anticipation of 2026 growth, offset by a $0.8 million decrease in legal and professional fees that were elevated in Q1 of last year due to our U.S. domestication. Depreciation expense decreased 48% to $1.4 million, reflecting a reduction in the number of satellites with remaining depreciable useful lives, although we continue to utilize these fully depreciated assets so long as they're capable of capturing commercially viable imagery. The result is an operating loss of $6.4 million for the quarter, an improvement of $3.2 million, or 33%, compared to the prior period. Below the operating line, we recorded a $113 million change in fair value of financial instruments. I want to be unambiguous about what this is. It is a non-cash, non-operational charge, and it reflects the increase in our Class A common stock during the quarter, driven by the standard re-measurement of our secured convertible notes, warrants, and earn-out liabilities. A higher share price drives a larger accounting charge against earnings and net income. It has no bearing on the cash generation of the business. Net loss for the quarter, including this $113 million non-cash expense, was $118.3 million. This is not indicative of underlying operating performance, and we report adjusted EBITDA to give investors a clearer view of the operating business. Adjusted EBITDA and operating cash flow. On a non-GAAP basis, adjusted EBITDA loss for the quarter was $4.2 million, an improvement of $2 million, or 32%, compared to the prior period. This is a function of both top-line growth and continued expense discipline, and it underscores the operating leverage inherent in our vertically integrated model as revenue scales. Just as importantly, we generated positive net cash from operating activities of $0.2 million in the quarter, an improvement of $4.9 million from the $4.7 million of cash used in operating activities in Q1 2025. This is the first time in Satellogic's public history that we have generated positive operating cash flow in a quarter, and it is a tangible early indicator of the financial trajectory I'll come back to in a moment. Balance sheet. We ended the quarter with $121.9 million in cash and cash equivalents, up from $94.4 million at the end of the year 2025. The increase reflects the $35 million registered direct offering we completed at $4.73 per share in late January, partially offset by capital expenditures of $5.6 million to support the construction of our Merlin Constellation. Backlog and remaining performance obligations. Our non-cancelable remaining performance obligations stood at $64.8 million as of March 31st, with $29.2 million expected to be recognized within one year, $7.9 million in years one to two, $7.5 million in years two to three, and $20.2 million thereafter. Capital structure update. Subsequent to quarter end in early April, the holder of our secured convertible notes initiated a partial conversion of approximately $6 million of principal into $5 million shares of common stock, reducing outstanding principal to $24 million and further simplifying our capital structure. Our liquidity position is strong, extends our operating runway, de-risks our Merlin development timeline, and provides the flexibility to invest in the growth initiatives Meliana will discuss in a moment. Looking forward, we are seeing the operating leverage inherent in our vertically integrated model take hold. With our current cost base growing recurring revenue from the left observer, and a strengthening pipeline of multi-million dollar opportunities across defense, sovereign, and commercial customers, we expect 2026 to be a meaningful step forward on our path to sustained profitability. With that, I'll turn it back to Emiliano.
Emiliano Kargieman, CEO
Thank you, Rick. The first quarter delivered a sustained cadence of commercial, operational, and strategic milestones. And the through line is that what looked like isolated winds six months ago is now visibly becoming a repeatable commercial engine. Let me walk you through the highlights in three categories. First, on our sovereign defense demand. Demand is real and it is repeatable. In January, we signed an $80 million agreement with SEIA, the Center of Engineering and Product Development in Portugal, for the supplied and in-orbit delivery of two NUSAT Mark V 50-centimeter class satellites. Ownership and operational control are expected to transfer to CEIA in the second and third quarters of this year. Also, in January, we sold NUSAT-34 to Australia, establishing the country's first sovereign sub-meter Earth observation capability. And just last week, on April 30th, we announced a $12 million agreement with a sovereign defense customer for the in-orbit delivery of a commissioned NUSAT satellite from our ILEF-1 constellation, with full transfer of ownership and operations expected in early 2027. I want to underscore why this transaction matters beyond its dollar value. It is the second sovereign in-orbit transaction we have closed in two quarters, and it demonstrates a differentiated value proposition in the market. The ability to deliver a fully commissioned, flight-proven satellite to a sovereign customer with speed and cost efficiency that traditional procurement programs simply cannot match. Importantly, we are approaching this model selectively. Our priority is to monetize in-orbit assets where the economics are compelling, while continuing to manage constellation capacity to support our data and analytics customers and broader mission requirements. Moreover, we may have the ability to buy back capacity at attractive prices from certain space systems customers. With our 1.3 million all-in new set costs and frequent contracted launch cadence, we believe sales of in-orbit satellites can potentially play a larger role in our space system strategy as we scale the constellation over time. Second, our commercial engine is broadening and shifting to recurring subscription revenue. Beyond the eightfold expansion of our Asia-Pacific revenue rig already highlighted, the underlying mix of our commercial business is changing in a way that meaningfully improves revenue quality in january we signed a seven figure monitoring agreement with strategic customer providing daily revisit and high resolution coverage over a large portfolio of priority sites exactly the kind of recurring engagement that compounds over time we also extended our countrywide monitoring agreement with the government of albania continuing the persistent national earth intelligence we have been delivering we're in use in constellation and in february we launched aleph observer or persistent geospatial intelligence platform which is now in market i'll spend more time talking about it in a moment but the commercial impact is already visible we're converting one-off imagery customers into multi-year subscription customers together the shift from project revenue to platform revenue is what underpins the durability of our growth trajectory. Third, strategic and platform milestones supporting the next leg of growth. On the operational side, on March 30th, we successfully launched NewSat 53 and NewSat 54 on a SpaceX mission from Vandenberg Space for Space, expanding or in-orbit capacity and flight heritage. On the capital side, in January, we closed our $35 million registered direct offering at $4.73 per share, materially strengthening the balance sheet and de-risking the Merlin developing timeline. On the U.S. defense engagement side, we expanded our slingshot partnership with IDT Corporation and the U.S. Office of Naval Research into phases two and three, and we welcomed Vice Admiral Whitworth as a strategic advisor. And on the commercial leadership side, we have continued to build out our global sales organization with senior defense and intelligence industry veterans, extending the work that began with the appointment of our SVP of GlobalSafe last year. The commercial muscle of this company today is materially stronger than it was 12 months ago. The takeaway is straightforward. The breadth and quality of commercial, operational, and strategic activity in the first quarter, and in the four weeks since, speaks to a commercial engine that has matured. We're no longer a constellation looking for customers. We're a vertically integrated platform serving a growing, multi-hundred-million-dollar pipeline of qualified opportunities across defense, intelligence, sovereign, and commercial markets. with the unit economics to win on price and the capability to deliver immediately. I want to take a moment to ground the conversation in what we believe is an important strategic shift happening in the commercial Earth observation today. For two decades, the dominant model of commercial Earth observation has been transactional. Customers tasked individual images, visibility was episodic, and tasking capacity constrained by a limited number of satellites built at high cost. The result was reactive, event-driven intelligence, and an industry that, frankly, struggled to scale. Persistent global intelligence is fundamentally a different category. It is continuous and always on. The foundation is a daily planetary baseline. With our constellation today, it already enables the simultaneous monitoring of thousands of sites and moves customers from reactive observation to proactive awareness. With the future launch of a Merlin constellation, the foundation layer becomes ubiquitous, going from thousands to an unlimited number of sites. With persistent global intelligence, the commercial model shifts from per-scene transactions to recurring subscription revenue, and it materially improves the predictability and lifetime value of every customer relationship. relationship. The reason we believe Satellogic is uniquely positioned to lead this category transformation is rooted in physics and unit economics. Our pattern-protected, stabilized push-frame camera design reaches approximately 10 times more imagery throughput per satellite than our competitors. Combined with our $1.3 million all-in satellite costs and the vertical integration that allows us to scale our constellation at a fast pace, that throughput is what enables persistent monitoring at unit economics that no one else in the industry can match. We believe the market is still early in this transition from episodic to persistent global intelligence, but the customer demand signals are clear. Aleph Observer is a new product that allows customers to subscribe to persistent monitoring of portfolios of strategic sites, with reliable revisit cadence, image delivery within hours, and analytics layered on top. It allows our customers to go from monitoring a handful to hundreds of sites on a daily basis, and as of February, it is in the market and commercially available. It was built on three pillars. One, the scale. Aleph is able to persistently monitor hundreds of sites simultaneously at the frequency and cost structure that no traditional tasking-based service can match. Second, assurance. Aleph has capacity to scale and a reliable cadence over priority regions, meaning customers can plan around the data and not the other way around. And third, built-in analytics. Aleph delivers images roughly within three hours of capture, with automated object detection layered in at no additional costs. The analytics enable fast triage and prioritization of intelligence analyst workflows, a requirement at this scale. The example coverage map you see on the slide illustrates the kind of persistent monitoring footprint Aleph Observer enables. In this case, the regional intelligence picture across Iran. Customer adoption to date includes sovereign government users, defense customers, and commercial monitoring buyers across multiple regions. This is what we believe is the future direction of the market, and we believe Satellogic is the company in the industry best positioned to deliver it today. Now, if Aleph Observer is a product in market today, Merlin is the infrastructure layer that expands that product from high-value targeted monitoring into planetary-scale persistent intelligence. Merlin is our AI-first, defense-oriented constellation, purpose-built for daily, one-meter global coverage and real-time intelligence. A few things to highlight. First, Merlin is fully funded. Its development is anchored by a 30 million customer contract from a strategic defense and intelligent customer, which means we're not asking shareholders to honor right this build-out, or customers are. Second, Merlin is the site for planetary scale. The constellation, when fully deployed, is intended to remop the entire planet daily at one meter resolution. The architecture combines 10 spectral bands aligned with Sentinel-2, AI-first onboard processing, and inter-satellite links to enable real-time alerting. This is a step change in what commercial Earth observation can deliver. And third, we're happy to mention Merlin is on track. We have made strong progress against production milestones in Q1, and we remain confident in our October 2026 first launch window, now roughly five months away. with the initial consolation rollout expected to be complete in the first half of 2027.
Emiliano Kargieman, CEO
I'd like to leave you with four takeaways from the quarter.
Emiliano Kargieman, CEO
Our commercial momentum continues to strengthen. We completed two sovereign-in-orbit transactions in two quarters, including Portugal, CIA, and the $12 million agreement we announced last week, with no impact to the needs of existing and expected data analytics customers. We also expanded Slingshot phases two and three with the U.S. NAID, We're seeing growing demand across both our data and space systems businesses, with customers increasingly moving from pilot programs to our larger operational deployments and longer-term engagements. Second, the business model is beginning to demonstrate meaningful operating leverage. Revenue grew 80 percent, our adjusted EBITDA loss improved 32 percent. We generated positive net cash from operating activities for the first time in our history, and we exited the quarter with $121.9 million in cash. We believe these results reflect the benefits of a very kind of integrated architecture and increasing scale. Aleph Observer established a satellite exposition in persistent geospatial intelligence. Customers are increasingly moving from buying individual images to subscribing to continuous monitoring and actionable awareness over strategic areas of interest. We believe this transition represents a major evolution in the Earth Observation market. Earth Observation is evolving from a data business into an intelligence infrastructure business. And Q1 showed meaningful progress in our positioning for that transition. Fourth, the technology roadmap is fully funded and on schedule. Earth Observer is live and in market. Merlin's first launch is on track for October 2026. and the initial consolation rollout is expected to be complete in the first half of 2017. Our Q1 launches of NewSat 53 and 54, expanded or in-orbit capacity and flight heritage. We're executing on time, on budget, and at scale. Taken together, this highlights signal we're on the right path for our continued growth and constitutes the basis for our confidence going forward. I want to take a moment to thank our customers, our partners, our employees, and our shareholders for their continued support. And a special thanks to Vice Admiral Whitworth for joining us today. With that, operator, please open the line for questions.
Operator
Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Available for questions today are Emiliano and Rick. One moment while we poll for questions. First question, Michael Lattimore with Northland Capital Markets. Please go ahead.
Michael Latimore, Analyst — Northland Capital Markets
All right, great. Yeah, good morning. Congrats on the S1 results here. I guess I first wanted to touch on Alice Observer. Can you give a little more detail there? Maybe, you know, how many customers have signed up for that? You know, what are sales cycles like? What kind of incremental revenue do you see when a customer does sign up for it?
Emiliano Kargieman, CEO
Sure. Hi, Michael. How are you?
Emiliano Kargieman, CEO
So, yeah, we're still early commercially and at an observer, right? It was launched in February, but we are very encouraged by the engagement we're seeing. Customers are already using the platform operationally across portfolios in their areas of interest that range from dozens of sites for some customers to hundreds of monitoring sites for others, depending on the use case. What is especially important for us is that the conversations we're having are increasingly centered around ongoing monitoring workflows rather than, you know, isolated imagery requests. And that's kind of the behavioral transition we are looking for. Our expectation is to sign a number of initial pilots in 2026 for Apex Observer and as customers factor in this new procurement method for, you know, recurring services into their budgets to expand and scale into 2027. Yep. Yep. Thanks. That's great. And then maybe just a little more color on the
Michael Latimore, Analyst — Northland Capital Markets
pipeline. You know, how many, how many nations, sovereign nations do you see in the pipeline potentially wanting, you know, space systems deal or the portfolio and maybe a little breakup between, you know, larger Tier 1 countries and smaller ones?
Emiliano Kargieman, CEO
Yeah, that's a good question.
Emiliano Kargieman, CEO
So I don't have the breakup numbers here in front of me, but, you know, anecdotally what I can share is the pipeline we're seeing is, you know, is growing very strong in Asia, Asia Pacific, in the Middle East, in Europe. Those are the areas where we're seeing most of the progress. Currently, you know, our space systems pipeline sits just under a billion dollars on opportunities that we're pursuing. And this is mostly, obviously, sovereign customers.
Michael Latimore, Analyst — Northland Capital Markets
Perfect, perfect. Thanks very much. Good luck, Basir.
Emiliano Kargieman, CEO
Next question, Andre Shepard.
Operator
Hey, good morning, everyone.
Andre Shephard, Analyst — Analyst
Congratulations on the quarter. and thank you so much for taking our questions. Congrats on all the great progress. Again, I wanted to touch on maybe Merlin. So it looks like we are reaffirming the timeline for later this year and operational capacity next year. Rick, just curious if you could maybe give us maybe a high-level view on how we should expect those revenues from Merlin to ramp up, how we should think about those, and maybe what would that do to the cost structure?
Richard Dunn, CFO
Yeah, no, I think, you know, as you guys know, we have a $30 million contract for the Merlin services, and we've collected a decent amount of cash of that up front, cash from that up front. But in terms of REVREC, that won't begin really until we get to the point where we're fully operational in the first half of 2027. And so that that revenue will start getting recognized annually and in chunks as we deliver those services. And as far as as far as the pipeline, we're working on a number of opportunities that would also leverage the Merlin Constellation. And and those also would not, you know, start to get recognized until we're fully operational in in 2027.
Andre Shephard, Analyst — Analyst
Got it. Okay. That's super helpful. I appreciate it. And maybe just a quick follow-up, a bit of a housekeeping one. So, there was a high concentration of revenue from Asia and Asia Pacific this quarter. Just curious if we should see that more as a trend or more as an outlier going forward. Any color there will be helpful. Thank you.
Richard Dunn, CFO
yeah sure and just a follow-up on your last question that that 30 million dollar contract is also a five-year a five-year deal so um and it mirrors the life of the expected life of the merlin satellites themselves um with um with respect to asia and asia pacific this quarter yeah i i think that i think that that will continue um you know it was it was buoyed by customers in Australia, specifically AGO that we announced publicly, where they purchased an in-orbit satellite earlier this year, and then also a customer in Malaysia. But we're seeing demand for our products and services, you know, globally increase. And so I think that this isn't a one-off, and I think you'll see continued growth across all geographic regions
Emiliano Kargieman, CEO
going forward very very helpful and thanks again the quarter oh no i'm just adding something there
Emiliano Kargieman, CEO
to rick uh andres this is emiliano uh we you know we see several um if you want several structural drivers at work and in in the defense uh intelligence procurement and in particularly there's there's a driver around modernization of defense and and heightened focus on on sovereign earth observation capabilities that's playing out in in asia pacific in particular between many governments in the region looking to reduce dependency on uh third-party imagery providers and uh and and that's obviously driving uh you know part of our or for pipeline there so uh yeah we we expect to see continued growth there as rick was saying excellent thanks
Andre Shephard, Analyst — Analyst
Thanks, Emiliano. Thanks, Rick. Congrats again. We'll pass it on.
Operator
Next question, Jeff Van Rie with Craig Hallam. Please proceed.
Jeff Van Rie, Analyst — Craig-Hallam
Great. I'll add my congrats, guys. A couple from me. Emiliano, on Aleph Observer, you talked about the ability to monitor unmatched costs, unmatched value overall. Can you just expand a bit more on that, how it stacks up versus the competitive landscape, competitive offerings?
Emiliano Kargieman, CEO
I think the biggest differentiator of Aleph Observer starts, if you want, with the underlying economics and capacity of our constellation itself, right? As we mentioned before, OAR satellites, you know, at a fully loaded cost, or new satellites at a fully loaded cost of around $1.3 million, you know, and with 10 times the data collection capacity, those of our peers, you know, mean that basically, you know, the unit economics first site that we're monitoring and solves are very differentiated. And the other factor is obviously because we're currently operating one of the largest or the largest commercial constellation for high-resolution imaging, you know, the number of sites that we can monitor compared to those of our peers is significantly larger, right? We don't have any encumbered capacity, you know, in the areas of the world, the areas of interest of, you know, higher demand, and that also helps, right? So that's really, I think, what makes Out of Observer different from everything else. It's just the number of sites that you can monitor on a daily basis at a cost, you know, that's still affordable. On top of that, we're layering analytics, right, and allowing our customers to use those analytics to triage and to prioritize, you know, the time that human allies spend on the sites. But the reality is a lot of the industry can generate analytics on top of imagery. You know, the harder problem is really being able to deliver persistent monitoring at scale with a reliable cadence and with economics that support, you know, operational use cases. So our focus really has been on building a system that is capable of monitoring large portfolios of sites continuously and affordably. And, you know, Aleph Observer, you can think of as a software and workflow layer that is built on top of large operational capabilities, right? That's really the important part.
Jeff Van Rie, Analyst — Craig-Hallam
Yep. Very helpful. And, Rick, a couple for you. The Sovereign Defense customer signed in April $12 million. Can you just talk to how that likely lands in terms of revenue and if there's some follow-on opportunity in addition to that $12 million?
Richard Dunn, CFO
Sure. You know, with respect to space systems in general, we will be delivering three satellites this year to customers and recognizing revenue associated with those. The Sovereign Defense customer is one of those. And that particular one should occur. It may straddle second and third quarter. So it's going to be in that zone. It'll be likely June, July. With respect to the other two deliveries we have, those are for our Portuguese customer that we announced in January, and we expect to deliver one of those in June timeframe and likely the second in the fourth quarter.
Jeff Van Rie, Analyst — Craig-Hallam
And just the second part of the question there, the opportunity to sell additional imagery down the road or additional follow-on data sales?
Richard Dunn, CFO
Yeah, sorry, Jeff. I was just remembering that. Yeah, absolutely. The Sovereign Defense customer is a large customer. We expect to have follow-on opportunities with them with respect to both data and analytics sales as well as space system sales. So we're pretty excited about that one.
Jeff Van Rie, Analyst — Craig-Hallam
And then maybe on the ONR, on the slingshot deal, I want to just clarify, was that in RPOs and does it show up in RPOs? And I know it's in, I believe, three stages, but just trying to get a sense of the scope of the opportunity from that program. Maybe, I don't know if that's Emiliano, maybe you're Rick, but just walk through kind of what the opportunity is there.
Richard Dunn, CFO
Yeah, I can start and then Emiliano can add some color. You know, it is in the RPOs. It's not a particularly large contract. I think what's more important is what we're doing with IDT and the ONR on that project and how that could translate for other customers going forward. But I'll let Emiliano comment on that.
Emiliano Kargieman, CEO
Yeah, I think why we see this program as being particularly interesting is because it is allowing us to operationalize for the first time, you know, inter-satellite links for tipping and queuing between different satellites in our fleet. And there is, you know, scalability in the program we're doing with ONR that in itself might be interesting, but I think what's more interesting is as these capabilities that we are developing along with the ONR, you know, become part of our standard product offering, right? And that's, I think, where, you know, where the impact of this program is going
Jeff Van Rie, Analyst — Craig-Hallam
to be realized. Yep, helpful. Maybe if I could sneak one last one in, and I don't know if Vice Admiral Whitworth is taking questions. This is obviously right in his wheelhouse, but maybe for you, Emiliano, the, you know, the U.S. government purchasing, NGA purchasing of commercial data looked like it had a lot of momentum a couple years ago. Obviously, you know, CL put up some very big numbers. And then there was a pause. And it seems a lot of entities within the U.S. government sort of rethought that commercial imagery discussion. And then there's been a discussion for many, many years of buying more commercial. Just curious if the convictions there, A, that we see a ramp in U.S. commercial buys, and then B, just to the extent that you're engaged with the right buyers, how you see the sales track in North America, particularly U.S. government going forward?
Emiliano Kargieman, CEO
Yeah, I'm happy to take this one. Yes, I mean, what we're seeing is, you know, the environment currently in the U.S. procurement is kind of forcing different avenues for procurement and different procurement and procurement for a wider set of commercial supply, that obviously includes us. We are seeing significant opportunity growth for our own engagement with U.S. government in general. And, yeah, definitely one of the areas that we expect to contribute future growth.
Emiliano Kargieman, CEO
Great. Great. Thanks so much, guys. Congrats on the progress.
Operator
Next question, Suji Da Silva with Roth Capital Partners. Please go ahead.
Suji De Silva, Analyst — ROTH Capital Partners
Hello, Emiliano. Rick, congratulations on the progress. I'll add mine as well. On the data analytics revenue and the transition to more recurring visible revenue from, I guess, per image, where are we in the transition and what's a realistic expectation of how that mix can shift in the next year to just understand the pace of that transition?
Richard Dunn, CFO
Yeah, I think we're early in the transition. You know, as you know, you know, in 2025, we did 18 million of revenue. We've got a tremendous amount of momentum both on the data and analytics side as well as space systems for 2026. And you're starting to see that as we make announcements on contract wins. You know, in terms of the mix, you know, it's a tough one because the space systems deals tend to be rather large and episodic. You know, when they hit the period in which they hit, they have an outsized impact typically. um and and so that that you know space systems by definition is going to be a little bit lumpy but um but i do think that you know with the left observer and merlin then coming online in 2027 um our data and analytics revenue will also grow substantially we've got you know the largest high resolution commercially available in the world a lot of capacity on it and um and um you know, a world-class sales team that's out there selling that data right now. So, we expect that
Emiliano Kargieman, CEO
will scale up more linearly going forward. If I can add there, Suji, yeah, thanks for the question. You know, in particular, you know, if you're talking about kind of the transition that we're seeing towards persistent intelligence and recurring monitoring, you know, as Rick said, we're still very early in the transition, so most of our revenue today is still not recurring in the traditional SaaS sense, if you want. But what we're increasingly seeing is customers that are moving from one-off tasking towards this ongoing monitoring relationship with us, and that's the important shift, right? Customers are asking us to monitor performance of sites continuously over time, and rather than purchasing isolated images, So that's what Outlet of Observer was designed to do. That's the exact use case that it was designed to fulfill. And so while, you know, in the accounting side, accounting profile, if you want, it's still evolving, the customer behavior is already changing in that direction. I think that's the leading signal that we're excited about.
Suji De Silva, Analyst — ROTH Capital Partners
That's great. That's helpful, Emiliana. And then a second question maybe for Emiliana. Or the product, not the product, but the roadmap, really, of the satellite capabilities, increasing AI compute on the satellite. You talked about that roadmap and what that would look like as it flows forward the next few years in terms of increased opportunity or, you know, revenue or products, services. Any concepts there would be helpful as we think about the roadmap of the satellite capabilities?
Emiliano Kargieman, CEO
Yeah, no, for sure. And without speculating too much, you know, I think you see us evolving on a roadmap in a few different directions in parallel, right? On one side, we are evolving the resolution of our high-resolution satellite fleet, right? So, we are currently, our new sets are 50 centimeters of resolution. We're moving towards our next generation satellites that will be able to do 35-centimeter resolution imagery, right? So higher resolution is one direction. We also are including real-time inter-satellite links and onboard processing with capabilities, not capabilities, and processing power to run multi-headed AI pipelines on top of all of the data that our satellites are collecting. And that's also part of the roadmap. That's another avenue, right? So one is increased resolution. Second one is real-time analytics and real-time alerting and inter-satellite links. And the third one is Merlin, so layering in this broad area monitoring global daily remaps at one meter of resolution on top of all of this, right? Those three things put together speak of a future where, you know, we will be going very closely to what has been our vision since the very early days of the company of having, you know, persistent global or geospatial intelligence and the ability to basically start asking the planet questions, you know, start asking the Earth questions about what's going on. And, you know, getting daily signals, getting daily intelligence updated in pretty much real time, right? We're very excited about the way these three different growth areas in our technology and in the existing roadmap that we're executing, you know, come together to realize this vision of kind of a searchable planet or if you want a digital twin of the earth that, you know, everybody can use to make more informed decisions. I think another part that's very interesting from where we are in terms of our roadmap is that all of the big capabilities that we are building into our roadmap are actually being funded by our customers, right?
Emiliano Kargieman, CEO
So that's also very exciting for us. Yes, great. Thank you, Milian. I appreciate the call.
Operator
Next question. Scott Fluck with Titan Partners. Please go ahead.
Scott Fluck, Analyst — Titan Partners
Hi, good morning, guys. Thanks for taking my questions. Rick, I'm curious, is positive operating cash flow sustainable in Q2 and beyond, or was the first quarter aided by timing of, you know, certain contract collections that may not repeat?
Richard Dunn, CFO
Yeah, I mean, we were marginally positive on operating cash flow. So I think it's going to be a little touch and go for a couple, two or three quarters as revenue ramps up. But, you know, what aided our cash flow positivity this quarter was really some advanced collections from customers. I think going forward, you know, we're going to be making investments in terms of scaling the business, and that's going to require some working capital. So, you know, we are still at an adjusted EBITDA loss, as you know. And with, you know, continued growth and scaling, working capital will bounce around a little bit. We'll be drawing down on that as we make investments in inventory and so forth.
Scott Fluck, Analyst — Titan Partners
Great. That's helpful. And then my second one, given the current level of geopolitical turbulence, are you seeing an acceleration of sales cycles or seeing interest from, you know, maybe new commercial customers? Yeah, I can take that one.
Emiliano Kargieman, CEO
You know, obviously, I think periods of geopolitical instability do tend to increase awareness of the value of persistent intelligence. So we are seeing, you know, conversations accelerating across the board. That said, you know, we believe the broader shift we're seeing in the market is structural, not really event-driven. governments and enterprises alike increasingly want continuous awareness of infrastructure, supply chains, maritime activity, you know, borders, their strategic assets. And this is regardless of any single conflict. So, you know, while the geopolitical environment can accelerate the procurement cycles here, we do view the demand transition as much broader and longer term.
Emiliano Kargieman, CEO
Great. Well, I appreciate the added color, guys. That's all I have.
Operator
Next question, Chris Quilty with Quilty Analytics. Please go ahead.
Chris Quilty, Analyst — Quilty Analytics
Thanks. I had a somewhat technical and business question, I guess, around the sale of the in-orbit new sat. If I recall, this is the first time I can think of an operational satellite being sold to a customer. I don't count HEO because that's for a different application. First of all, is that true? And do you think that is a expandable business model?
Emiliano Kargieman, CEO
Yeah. Hi, Chris. Yes, we do see this as an expandable business model.
Emiliano Kargieman, CEO
This is, depending on how you count, this is the first or the second one, because the first satellite that we sold to CIA in Portugal, I think it was a few days after the satellite was launched, so that could count as an in-orbit transfer. But yes, we do see this as a possibility that might expand in the future, as we have this cadence of launch and manufacturing of satellites already contracted, already in place. We're putting satellites in orbit essentially every quarter. We're seeing obviously increased demand on the customer and for adding very rapid capabilities. And in the past, going from contract sign to satellite delivery within four months or six months as we can normally do with our launch cadence was extremely competitive compared to the years that it takes normally to get a functioning satellite in orbit. Obviously, we see customers willing to engage and willing to pay a premium also for getting capacity delivered quicker. And because we have this capacity in orbit and we can do these transfers without affecting our ability to deliver on our data and services business, right? So yes, I think we can selectively continue to see this model going forward as we continue to grow our
Chris Quilty, Analyst — Quilty Analytics
constellation, right? So, I mean, you have lots of excess capacity now, but, you know, as the revenue per satellite grows, you know, the technical part of the question is, you know, is this an SSO orbit or was it inclined? Because obviously that's kind of a huge difference in the amount of revisit. And would you, maybe for Rick, think about, you know, changing the inclinations or launching capacity to inclinations where you think customers might purchase them? Yep, it's a good question.
Emiliano Kargieman, CEO
And so, in this case, it was a satellite in a satellite orbit. We have built and launched satellites in mid-inclination orbits in the past, including one that they did with Tata in India. And we have the ability to do that. The satellite design supports that, or concept of operation supports that. And I agree with you in the case of customers that want to ramp up their capabilities. You know, in some cases, it makes sense to consider mid-inclination launches. Now, if you're only operating a small handful of satellites, you know, one, two, three satellites, I would argue that mid-inclination is probably not a great solution technically because you have, you know, persistent blackouts. And customers are typically looking at building predictable capabilities that they can count on for intelligence, right? And many inclinations are not particularly well-positioned for that if you have a relatively small constellation. But we do have the flexibility, and we do engage with customers if they want that. We see it as complementary to our FSO offering, right?
Chris Quilty, Analyst — Quilty Analytics
Gotcha. And for Rick, how does this get booked? And I guess the other question is, we've seen some transactions like this where, you know, the customer obviously has a much smaller need for the satellite than its total coverage and you see capacity sellbacks. Are those sort of arrangements, you know, part of this agreement or something you would look to do of reselling unused capacity?
Richard Dunn, CFO
Yeah, you know, when we, in terms of how we book space systems deals, you know, it's based upon our performance obligations under each contract. And at the moment, each of those contracts continue to be fairly bespoke deals. You know, maybe over time they become more consistent and predictable in terms of the specific performance obligations. But the largest value that we're delivering to the customer is the in-orbit satellite. We're also, in many cases, transferring some knowledge and some light transfer technology, as well as providing support from a mission ops perspective. But that's not where the value is for the customer, and revenue recognition will follow those specific performance obligations um in terms of um in terms of the possibility of buying back capacity yeah that's absolutely a possibility um we're not doing that um we don't have the right to do that currently with any of our existing deals um but um but but that that may likely be a possibility going forward and it may be look it may be something that we look to negotiate as part of our, you know, discussions with those customers as we enter the contract.
Chris Quilty, Analyst — Quilty Analytics
Gotcha. And just to clarify, Rick, I mean, this is a sale of an asset, so does it show up as a one-time gain, or are there elements that are continuing to be operational and providing support?
Richard Dunn, CFO
Yeah, the performance obligation associated with the transfer of the satellite is booked when that, you know that transfer occurs so that's a that's a one-time you know recognition event per satellite with respect to um services like transfer of knowledge transfer of tech and mission and ops that'll be recognized over you know the the period of time that we're delivering those services
Operator
great thanks guys all right thank you i would like to turn the floor over to emiliano for
Emiliano Kargieman, CEO
closing remarks well thank you uh stacy and and thank you all for joining us uh q1 was a meaningful step on the path we have been describing for the past two years a leaner better capitalized commercially active satellite now demonstrating the operating leverage of our vertically integrated model uh with our existing constellation aleph observer in the market merlin on track for october and the deepening of our defense and intelligence engagement, we are positioned to lead the transformation of commercial earth observation into persistent global intelligence at a planetary scale, and to do it on a path to sustained profitability and free cash flow. If we were unable to address any of your questions today, please reach out to our IR team directly at ir.satellogic.com. Thank you.
Operator
This concludes today's teleconference. You may disconnect your lines at this time and we thank you for your participation.