Firefly Aerospace (FLY) Q3 2026 Earnings Call Transcript

DATE

Tuesday, Nov. 10, 2026

CALL PARTICIPANTS

• Director of Investor Relations - Michael Sheetz
• Chief Executive Officer - Jason Kim
• Chief Financial Officer - Darren Ma

TAKEAWAYS

• Revenue -- $110.7 million, representing growth of 259% year over year driven by increased volume in the spacecraft solutions segment.
• Spacecraft Solutions Revenue -- $106 million, reflecting the execution of five concurrent lunar missions and orbital vehicle development.
• Launch Revenue -- $4.7 million, representing a decrease from the prior period due to the timing of scheduled Alpha missions.
• Backlog -- $1.7 billion, increasing from $1.5 billion in the previous quarter following new awards in the ground-based radar and hypersonic sectors.
• Full-Year Revenue Guidance -- $440 million to $450 million, representing a narrowing of the previous range of $420 million to $450 million and raising the midpoint to $445 million.
• AST SpaceMobile Agreement Value -- $1.3 billion, established as a three-year partnership involving intellectual property licensing and hardware delivery.
• AST Intellectual Property License -- $800 million, comprised of $400 million in cash and 10 million to 14 million shares of AST Class A common stock.
• AST Support and Engine Deliveries -- $500 million, split evenly between $250 million for engineering support and $250 million for the production of 27 Miranda and nine Vira engines.
• Non-GAAP Net Loss -- $75.4 million, or $0.45 per share, compared to a loss of $67.7 million in the previous quarter.
• Adjusted EBITDA Loss -- $69.5 million, reflecting heightened research and development spending for the Block II Alpha configuration and Eclipse development.
• Total Liquidity -- $839.7 million, consisting of $534.7 million in cash and short-term investments and $305 million in undrawn revolving credit capacity.
• Capital Expenditures -- $15.6 million, representing a sequential decrease from $24.7 million after completing spacecraft clean room and test stand expansions.
• Free Cash Flow -- negative $85.3 million, representing an improvement from the negative $106.3 million reported in the second quarter.
• Alpha Flight 8 Schedule -- first quarter of 2027, rescheduled from late 2026 to accommodate specific requirements from a national security customer.
• Miranda Engine Qualification -- 175 hot fire tests completed, totaling 4,230 seconds of cumulative run time across 20 distinct engines.
• Space Force GBRD Contract -- $94 million, awarded for the Phase 1 modernization of legacy defense radar systems using AI-enabled frameworks.
• NITE-STAR IDIQ Onboarding -- $981 million, providing the company with the opportunity to compete for space-based test and training task orders through 2032.
• NASA Skyfall Subcontract -- $13 million, awarded for the manufacturing and testing of an aeroshell for a mission to Mars scheduled for 2028.
• Synspective Launch Agreement -- up to 10 Alpha launches, contracted through 2030 to support the deployment of synthetic aperture radar satellites.
• Alpha Block II Manufacturing -- 24 Reaver engine chambers in production, intended to support an increased launch cadence throughout 2027.
• Spacecraft Clean Room Expansion -- 400% increase in square footage, enabling the simultaneous assembly and integration of up to 12 lunar landers and orbital vehicles.
• NASA CLPS 2 Onboarding -- $10 billion program, qualifying the company to compete for large cargo lander task orders to support permanent lunar operations.

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RISKS

• Ma warned that "we expect cash burn to tick up through next year" as the company makes significant capital and research investments to support the AST SpaceMobile agreement.
• Kim noted that mission timing remains uncertain as "timing depends on variable external factors such as customer readiness, range availability, weather conditions and more."

SUMMARY

Firefly Aerospace Inc. (NASDAQ:FLY) reported quarterly results highlighted by a significant expansion of its contract backlog to $1.7 billion and the signing of a $1.3 billion technology agreement with AST SpaceMobile. Management reported that the spacecraft solutions segment now accounts for the vast majority of quarterly revenue, while the launch business is transitioning to the Block II configuration for Alpha to improve manufacturing rates and reliability. The company is currently managing five concurrent lunar missions and has secured its first Mars-related subcontract, diversifying its portfolio across national security, exploration, and commercial sectors. CFO Darren Ma indicated that while the AST agreement provides substantial nondilutive funding, it will also necessitate increased capital expenditures and research and development spending through 2027 to scale engine and vehicle production.

• Management confirmed that the AST SpaceMobile deal is complementary to existing launch services, with CEO Kim stating, "AST's vehicle will be purpose-built to launch their own satellite constellation, while Firefly continues to serve the broader commercial and government launch market."
• The company is ramping up engine production to meet demand, with Kim noting that "we currently have 24 Reaver engine chambers and counting in production" to support upcoming Alpha launches.
• Firefly is expanding its global footprint in the launch market, having signed its first European contracts for two Alpha launches from the Esrange Space Center in Sweden.
• The spacecraft business reached a milestone with the completion of a new clean room facility in Austin, which Kim described as "purpose-built to enable simultaneous integration of up to a dozen lunar landers and orbital vehicles."
• Management identified a high degree of pricing power in the current market, with Kim stating that "demand for Alpha remains the most supply-constrained it has ever been in our company's history."
• The company is leveraging its FORGE AI software framework to win adjacent defense contracts, including the $94 million Ground-Based Radar Digitization award from the Space Force.

INDUSTRY GLOSSARY

• AFP: Automated Fiber Placement, a manufacturing technology used to produce composite rocket structures.
• Alpha: Firefly's small-lift launch vehicle designed to deliver payloads to low Earth orbit.
• Block II: An upgraded configuration of the Alpha rocket optimized for manufacturing rate and reliability.
• Blue Ghost: A robotic lunar lander designed for payload delivery and surface operations on the moon.
• CLPS: Commercial Lunar Payload Services, a NASA program that contracts private companies to deliver science and technology to the lunar surface.
• Eclipse: A medium-lift launch vehicle currently in development in partnership with Northrop Grumman.
• Elytra: A maneuverable orbital vehicle used for satellite servicing, transit, and on-orbit missions.
• FORGE: Future Operationally Resilient Ground Evolution, a Space Force system for processing missile warning data.
• GBRD: Ground-Based Radar Digitization, a defense program focused on modernizing legacy radar systems.
• IDIQ: Indefinite Delivery, Indefinite Quantity, a type of contract that provides for an indefinite number of supplies or services during a fixed period.
• Miranda: A high-performance, 230,000-pound thrust engine developed by Firefly for the Eclipse and Blacklift launch vehicles.
• NITE-STAR: A Space Force contract vehicle for developing space test and range capabilities.
• RPO: Rendezvous and Proximity Operations, the process of bringing two spacecraft together in orbit.
• Vira: An upper-stage rocket engine designed for heavy-lift launch vehicles.

Full Conference Call Transcript

Operator: Greetings. Welcome to the Firefly Aerospace Third Quarter 2026 Financial Results Conference Call. [Operator Instructions] Please note, this conference call is being recorded. I will now turn the conference over to Michael Sheetz, Firefly's Director of Investor Relations. Michael, you may begin.

Michael Sheetz: Thank you, Carmen. Hello there. I'm Michael Sheetz, and welcome to Firefly's Third Quarter Financial Results Call. I'm pleased to be joined on the call by CEO, Jason Kim; and CFO, Darren Ma, as we report for the period ending September 30, 2026. Today's call will include forward-looking statements, including, but not limited to, statements the company will make about its future financial and operating performance, growth strategy and market outlook. Actual results may differ materially from those contemplated by these forward-looking statements. Factors that could cause the actual results and trends to differ materially are set forth in our annual and quarterly reports filed with the SEC.

Firefly assumes no obligation to update any forward-looking statements, which speak only as of their respective dates. Also in this call, we will discuss both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in the third quarter 2026 earnings release. Unless otherwise stated, financial information referenced on this call will be non-GAAP. Our earnings press release, SEC filings and a replay of today's call can be found on our Investor Relations website at investors.fireflyspace.com. Now I'll turn the call over to Jason.

Jason Kim: Thank you, Michael, and welcome to our third quarter 2026 earnings call. As tomorrow is Veterans Day, I thank our country's service members for their dedication and sacrifices in supporting our nation. Firefly is proud to employ more than 200 veterans like myself, and we are honored to work on a wide variety of critical national security missions that support our war fighters and allies. Before I get into our business updates, I will discuss the recent transformative deal we signed with AST SpaceMobile. Our intellectual property, Supply and Services Agreement valued at more than $1.3 billion marks the beginning of a 3-year partnership, bringing together 2 full complementary Texas companies.

For those unfamiliar, AST is building a space-based constellation of satellites to provide a global cellular broadband direct to everyday smartphones. The company is working with more than 60 mobile network operators around the world and has launched over a dozen satellites to date. The launch is highly constrained with need for deployment of proliferated constellations like AST's direct-to-device satellites. This agreement is yet another tremendous validation of our technology. When an experienced operator like AST SpaceMobile evaluates the options available and chooses Firefly, it represents a powerful external endorsement of our world-class engine technology. Based on our proven patented tap-off cycle, we have spent years developing and refining our next-generation Miranda engines.

Notably, this agreement is complementary to our existing launch business by design. AST's vehicle will be purpose-built to launch their own satellite constellation, while Firefly continues to serve the broader commercial and government launch market. Fundamentally, this deal does not change Firefly's identity. We are a vertically-integrated space and defense company with diversified lines of business. We build and operate launch vehicles, lunar landers, spacecraft platforms and national security software. This partnership leverages one of our core competencies and is a natural extension of our fundamental business. Our commitment to our core launch services, Alpha and Eclipse is unwavering.

As a nondilutive agreement, this more than $1.3 billion collaboration provides new fuel for Firefly's growth, allowing us to expand rapidly in several areas. We will expand our infrastructure and workforce as well as deepen our supply chain. We are building multiple new test bays at our Rocket Ranch to increase our launch vehicle production and testing capacity. We are adding more team members dedicated to our launch programs. We will make bulk purchases of long lead materials, deepening the resilience and cost efficiency of our supply chain and the new capacity will help further scale the bandwidth of our engineering core.

Under the terms of this partnership, Firefly will build, test and deliver a total of 27 Miranda first-stage engines and 9 Vira upper stage engines, making up 3 complete flight sets. These engines will power AST's new reusable 3-stage heavy lift launch vehicle designed to carry 20 metric tons to low earth orbit. Critically, Firefly retains full ownership of the intellectual property associated with our engines. We are licensing the technology to AST, who will independently configure the engines for their own vehicle's mission profile and integration requirements. When a company sets out to build its own rocket, the engine is the hardest, highest stakes decision they make.

AST chose Firefly, and that tells you everything you need to know about where our technology stands. This agreement is a true win-win. AST gets control of their own launch schedule. Firefly gets steady nondilutive funds to reinforce our launch services production, strengthen our supply chain and infrastructure, grow our team and push the boundaries of what is possible in space. I would now like to hand the call to Darren to discuss selected financial terms of this agreement.

Darren Ma: Thank you, Jason. This partnership is transformative from both an operational and financial perspective. This deal is broken into 3 primary parts worth $1.3 billion. First, there is an approximately $800 million in cash and AST stock associated with the Miranda and Vira Engine IP licenses to AST. The IP license is broken out into $400 million in cash and 10 million to 14 million shares of AST Class A common stock as determined by a forward VWAP calculation. These shares are also subject to various lockup periods. Second, there is $250 million in support services, leveraging our team's expertise. And third, the remaining $250 million is for delivering engines to support their first 3 flights.

Revenue for this contract will be recognized in 2 parts. The fair value of the IP portion of the contract and support services will be recognized over time on a percentage of completion basis. The fair value of the engine deliveries will be recognized at a point in time upon delivery to the customer. Please note that revenues recognized from this agreement will be included in our launch business. Now let me walk through how operational milestones will help shape the revenue ramp for this program. Program begins immediately, but revenue will start in earnest next year, ramping gradually as we hire and execute toward contract milestones.

Engine deliveries will begin ramping in year 2 of the agreement, and we expect this will lead to revenue increasing in the second year and continue ramping through the third year. From a gross margin perspective, the corresponding revenue associated with the intellectual property agreement and support services will steadily expand our gross margin profile. On the cost side, we expect to make significant investments through research and development as well as CapEx and infrastructure related to this agreement. We expect these investments will generate returns in the long term as they benefit our existing launch services business.

The agreement represents a tremendous source of nondilutive funding for Firefly that bolsters our future, partners us with an industry leader and enhances our financial profile. Now I will turn the call back over to Jason for our third quarter business updates.

Jason Kim: Thank you, Darren. We are closing the year with momentum, adding new contracts and achieving milestones across our programs. Our added wins drove our backlog to a record total of $1.7 billion at the end of the third quarter, further supporting our long-term growth trajectory. We opened and moved into the clean room expansion at our spacecraft campus, which quadrupled our square footage for assembly, integration and testing of both Blue Ghost landers and Elytra orbiters. Our expansion comes at an ideal time, as we heard this weekend, NASA is full speed ahead on the moon. We previously talked with you all about building larger landers. That time is now with CLPS 2, and we are thrilled to get started.

Larger cargo landers, which can help deliver bigger payloads such as light terrain vehicles will expand our ability to support moon-based operations. Onboarding to this $10 billion program positions us to compete for and deliver task orders. Firefly is creating the railroad to the moon. The vehicles we build will deliver and support many of the capabilities needed to enable a permanent lunar presence. And the moon is not just about exploration and discovery. The U.S. is locked in the space race with China, and we equally understand that the moon is the ultimate high ground. To quote a recent report published by the U.S.

Defense Intelligence Agency, "China portrays its interest in cislunar space as peaceful, but PRC officials have also discussed pursuing military capabilities in cislunar place." The Pentagon is responding to this adversarial threat with funding. U.S. Space Force Major General Stephen Purdy, who leads the branch's acquisition efforts is urging commercial providers to support national security efforts on and around the moon. Our fleet of spacecraft is ready to support. For those new to Firefly, and as a reminder for others, we are a space and defense company delivering innovative hardware and software to perform the hardest missions in space for national security, exploration and commercial technology.

Our hardware is represented by our spacecraft, the Blue Ghost lunar landers and Elytra satellite orbiters and our launch vehicles, the small-lift Alpha and medium-lift Eclipse. Our spacecraft solutions platform also includes our software portfolio of AI-enabled offerings, which are proven in national security operations as well as autonomous guidance and navigation systems. We are tenaciously focused on and prioritizing safety, quality and reliability as we scale up our hardware and software product deliveries. Now turning to our business updates. We are progressing towards the launch of Alpha Flight 8 in the first quarter of 2027. We received direction from a national security customer that required a readjustment to our launch manifest.

I am proud of the national security demand for Alpha as Alpha is uniquely suited to dedicated orbits for missions such as hypersonics, Tactically Responsive Space and Golden Dome. We did not make this decision lightly as our preference was to launch before the end of the year. However, we are proud to have the confidence from the customer to support this critical mission. Additionally, we have been in this position before, having conducted a similar manifest rescheduling when we launched a historic VICTUS NOX responsive launch on Alpha Flight 3. As always, timing depends on variable external factors such as customer readiness, range availability, weather conditions and more.

We will conduct a thorough review of our post-flight 8 data to ensure any lessons learned flow into subsequent launches. This consequential launch represents the debut of our Block II vehicle configuration, a series of improvements that we have been developing to increase manufacturing rate and enhance reliability. We are focused on the debut of Block II because it's not just about Flight 8. Back at the Rocket Ranch, we have structures and engine chambers for Flight 9, Flight 10, Flight 11 and Flight 12 as we step into an increasing launch cadence in 2027. All the structures and tanks for Flight 9 are complete with all 4 Reaver engines and the Lightning engine in assembly.

The structures for Flight 10 completed proof testing. We've completed manufacturing of all tanks and structures for Flight 11 and the composites for Flight 12 are in production. All of these structures were made using our Automated Fiber Placement machine on which we have continuously refined our processes over the past few years. Our AFP is producing multiple structures simultaneously. To support these launches and more, we are ramping up engine chamber output. We currently have 24 Reaver engine chambers and counting in production. Block II is about unlocking [ rate ] for Alpha, and we're seeing those improvements reflected on the factory floor. I know folks are eager to hear about our plans for Alpha's launches next year.

But right now, we're focused on the debut of Block II. We will give our 2027 launch target during our fourth quarter earnings call. Demand for Alpha remains the most supply-constrained it has ever been in our company's history. We have more customers than we have rockets available in the near-term manifest. This is a very good problem to have and it reinforces our investment in production capacity. We're stepping into rate Block II. During the quarter, we announced our first contract with SSC Space for 2 Alpha launches from Esrange Space Center in Sweden. This is a landmark deal, representing our first European launch contracts.

We are looking forward to serving European customers in a domestic capacity as we build our global franchise. Firefly also added a third hypersonic task order for Alpha from a confidential customer as well as extended our Lockheed Martin multi-launch agreement. We also added another great commercial customer, signing Japanese synthetic aperture radar satellite company Synspective for up to 10 launches through 2030. Alpha will double Synspective's deployment pace per launch by delivering 2 satellites to orbit per mission. We will launch their satellites from both our California and Virginia launch facilities, giving Synspective flexible access to a range of orbital inclinations. A few weeks ago, I visited our future launch site at NASA's Wallops Flight Facility.

I got to see firsthand the progress we are making to prepare for launches of Alpha and Eclipse. This specialized launch pad will be able to launch 2 different vehicles from the same location. Our Fireflies are working on the launch adapters, the strong back, the launch control center, and the commodity systems. I spent time meeting with local authorities, partners and NASA leadership as well as our own employees. It was great to see the work we're getting done toward launching from Virginia no earlier than next year. Finally, during the third quarter, Firefly onboarded to NASA's Spacecraft Processing Operations Contract.

As one of the few commercial payload processing facilities at Vandenberg Space Force Base, this contract allows us to further support NASA missions. We provide flexible infrastructure and services to alleviate bottlenecks for our partners while unlocking a new revenue opportunity that will utilize our existing facilities. Moving to Eclipse, our reusable medium launch vehicle in development alongside Northrop Grumman, we made important progress in the quarter. I'm pleased to say our Miranda engine qualification campaign is underway. To date, we have completed more than 175 hot fire tests, totaling 4,230 seconds of cumulative run time across 20 engines. Miranda's unrivaled development from clean sheet to qual campaign is a testament to the dedicated work of our team.

It's been made possible by the lessons learned from Alpha as the common tap-off cycle engine technology allows us to move faster in bringing this critically needed vehicle to market. Firefly has been hard at work testing out the critical technologies we need for reusability, including multiple re-lights and power throttling. We have simultaneously reduced risk and compressed schedule in developing this powerful next-generation engine. The data we've gathered from Miranda's development gives us high confidence in the engine's performance and reliability. Now that we're in qual, we are able to further proceed with manufacturing and assembling the Miranda engines for the first Eclipse launch.

Alongside our co-developer Northrop Grumman, we're pleased to see Eclipse making progress towards the launch pad. I am enhancing the program team with added technical experts as well as investing in infrastructure to prepare to ramp up Eclipse production. The demand for launch in this segment remains at an all-time highs with capacity more constrained than ever. So I'm actively working to make sure our team has the tools, people and investments needed to bring Eclipse to market. The world needs Eclipse more than ever. Turning to Blue Ghost. Our lunar program carried significant momentum through the third quarter. We are executing on 5 moon missions in parallel, a milestone that demonstrates the maturity and repeatability of our lunar architecture.

Each of these missions is at a different stage of development, and the team is managing this portfolio with tremendous discipline. One of the most significant milestones of the quarter was the completion of our new clean room facility at our Austin, Texas campus. We enjoyed hosting multiple partners at the ribbon cutting, including leadership from the Texas Space Commission, NASA's Moon Base team and both state and local representatives. The ribbon had hardly touched the ground before we began moving in multiple spacecraft for NASA and the Department of War, making the clean room immediately operational. This is no small upgrade.

This is a multi-phase facility that is purpose-built to enable simultaneous integration of up to a dozen lunar landers and orbital vehicles, giving us flexibility to add even more spacecraft contracts. The new clean room is foundational to our Moon Base ambitions. We are scaling production to meet the growing NASA pipeline as well as support commercial demand. On Moon Base Mission 2, known as Riders 2 The Dark, we are getting closer to being launch ready. The lander completed proof testing during the third quarter, which is a final test to verify the full integrated fluid system is complete with pressurization and leak checks.

We stacked both the lander and the Elytra transfer vehicle, installed electronics on the lander and powered it on. Riders 2 The Dark is one of the most complex multi-phase missions to the moon to date with a spacecraft stack that is 22 feet tall. We are proud to carry commercial and government payloads representing the U.S., Australia, Canada, the United Arab Emirates and the United Kingdom. We expect the second Blue Ghost mission will launch next year with specific timing dependent on delivery of our spacecraft to Florida and confirmation of the launch window. Following Riders 2 The Dark, Blue Ghost mission to the Gruithuisen Domes is progressing through flight hardware production.

The team has transitioned from design to build and the hardware is taking shape with launch targeted in 2028. Joining the Gruithuisen Domes mission is a new customer Starcloud, who signed an agreement with Firefly during the third quarter to fly an advanced AI compute payload on the Elytra vehicle. Together, Starcloud and Elytra will look to validate the core capabilities of the future data center in the moon's orbit, which would support the lunar surface and orbital infrastructure. Starcloud's processor will ingest data from Firefly's Solux autonomous vision system, a critical technology we added as part of our acquisition of Space-ng earlier this year.

Our Starcloud deal is a significant validation of our thesis that the moon is a platform for commercial infrastructure, not just a destination for government science. We're bringing together space-based compute and the cislunar economy. We're not stopping there either, as Solux will support other commercial surface efforts related to the moon-based program. I will share more on those in the future. Our Blue Ghost mission to the Lunar South Pole is making progress with the team completing the critical design review to progress the mission's development.

This is another hugely exciting mission as we pursue potentially groundbreaking research discoveries such as looking for water ice that unlock key moon based resources on the surface like breathable oxygen, rocket propellent and science. Firefly also signed Zeno Power Systems as a commercial payload customer to our accelerated Blue Ghost mission of the moon's Near Side. Zeno's radioisotope heater payload is a remarkable cutting-edge technology, which is critical to a sustained lunar presence. Onboard Blue Ghost, Zeno will seek to demonstrate its survive-the-night package, which is intended to allow spacecraft and infrastructure to operate through the extreme cold of the long lunar night, which reaches below negative 275 degrees Fahrenheit. NASA's Moon-based program is seeding the lunar economy.

Our missions have bolt-on opportunities and hosted payload options for commercial customers, which improve each mission's gross margins and unlock additional revenue sources. Switching to Elytra, the MoonFall mission passed through Preliminary Design Review, verifying our spacecraft design to support this flagship NASA mission. As part of our $75 million subcontract, we are collaborating closely with NASA's Jet Propulsion Laboratory to deliver their drones to low lunar orbit. This mission is a new frontier in lunar surface mobility and exploration, and we're excited to be part of it alongside one of the world's premier research institutions. I recently visited NASA's JPL and met with Director Dave Gallagher.

During our fireside chat of the JPL workforce, which you can watch online, I love the way Dave described the drones Elytra is delivering. "There are going to be tremendous scouts for the resources you need, potential moon-based locations, and there is a bit of national security flavor to this as well." During the third quarter, Elytra added another contract with the Department of Water's Defense Innovation Unit. We are designing a mission that would see Elytra provide the orbit services. Once we complete the preliminary design review, Firefly will be eligible to compete for the next phase, which could include launch and spacecraft operations for a low earth orbit mission.

We are also fired up to have won a spacecraft subcontract to support NASA's Skyfall mission to Mars. This is our first effort supporting a mission to the red planet and another statement mission for JPL. And our spacecraft for the DIU's Project Sinequone is entering integration and testing as we prepare for launch next year. Recently, we completed testing the deployment of the folding solar panels for this Elytra maneuver building mission. The orbiter is now at our spacecraft clean room to undergo the remaining steps of testing and integration. And finally, our subcontract with Benchmark Space Systems on the Department of War's DARPA LASSO program is progressing to the next phase after competitive down select.

Benchmark advanced its feasibility and design effort for DARPA, and we're pleased to support this lunar mission with our Solux autonomous vision navigation system. Now let's talk about SciTec. Recently, I had the privilege to visit the FORGE operations floor at Buckley Space Force Base in Colorado. There, I witnessed an amazing group of Space Force guardians and contractors dedicated to serving our nation and our allies. I saw FORGE operations in action with Firefly's SciTec team supporting. It made me very proud to see how we are directly supporting advanced processing of missile warning and tracking data using our in-house AI capability to force multiply the Space Force's work.

When I spoke to high-ranking guardians, they told me that FORGE has been delivering results that not only the Space Force and our nation appreciate, they get phone calls from allied nations that they are grateful for the life-saving capabilities. These same guardians also said they see Firefly's capabilities that no other contractor provides. FORGE continues to be one of our most consequential programs. The current geopolitical environment, including ongoing conflict in the Middle East and evolving global missile threats has only reinforced the strategic importance of FORGE's capabilities to our government customers. FORGE is operational. It is performing and the demand signals from our customers remain strong.

During the third quarter, we added another operational milestone for FORGE, adding data to the system, to the Space Force's GEO Wide Field of View space vehicle. On a personal note, this milestone is a meaningful moment as I built and operated that geostationary orbit satellite in my prior role. The spacecraft adds wide area situational awareness and augmenting time-critical detection capability, further enhancing the FORGE system. We are steadily executing operational advances on FORGE, in just the last few weeks, adding new technical intelligence capabilities. Because our engineers are co-located with Space Force operations, we are able to respond directly to customer needs and advance the technology at unique speed.

And now we're further diversifying our capabilities and revenue into adjacent opportunities and programs of record. During the third quarter, we won a $94 million Space Force contract under the Ground-Based Radar Digitization or GBRD program to support work overhauling legacy defense systems. GBRD applies the FORGE playbook to radar modernization. We onboarded to the $981 million Space Force IDIQ contract for NITE-STAR. This allows us to compete for task orders that will support advanced space-based test and training operations through 2032. This represents another example of the synergies between our hardware and software capabilities.

And we extended the Firefly's Air Force contract for the Air Battle Management System data fusion program, which benefits from decades of expertise in sensor integration and multisource data correlation. Under this ABMS contract, we are integrating a new class of counter unmanned aerial system sensor feeds into the Cloud-Based Command and Control system. CBC2 is a central component of the Air Force Battle network, so we're pleased to support integration of yet another data stream into the system. Since then, we received Air Force System interoperability test certification for the CBC2 system, a critical program milestone that establishes readiness ahead of operational acceptance.

Additionally, during the third quarter, we onboarded to a $66 million IDIQ for work on our instrumentation and testing group, while also executing a test campaign for our missile defense customer. All in, our advanced data and artificial intelligence business is executing well and steadily broadening its scope into new programs of record. We are building toward a future where we provide our customers an on-demand app store with missile warning, space domain awareness, position navigation and timing, targeting and exploration services. With that business summary, I'll turn it over to Darren for a review of the third quarter financials.

Darren Ma: Thank you, Jason. We delivered our second consecutive quarter of more than $100 million in revenue. That brought year-to-date revenue to $309.2 million, representing growth of 203% compared to the first 9 months of the prior year. Our third quarter results demonstrate the strength across Firefly's diversified portfolio and reinforce our strategy to build a fully integrated space and defense technology company. Third quarter revenue of $110.7 million represented a strong 259% increase year-over-year and compares with $30.8 million in the same quarter a year ago. Notably, our third quarter performance was achieved without a revenue benefit recognized in the second quarter from an accelerated national security hardware order.

Within total revenue, spacecraft accounted for $106 million and launch was $4.7 million. Our third quarter results demonstrate the strength and resilience of our business model. To briefly explain our revenue recognition model, the Spacecraft Solutions business generally recognized revenue over time under each contract on a percentage completion basis. For the Launch business, revenue for Alpha is recognized at a point in time when the launch occurs, while Eclipse revenue is recognized over time based on program milestones as part of our Northrop Grumman partnership. Eclipse will shift to point-in-time revenue when the vehicle is operational.

We ended the third quarter with a total backlog of approximately $1.7 billion, up from $1.5 billion last quarter and up from $1.3 billion for the same quarter a year ago, driven primarily by the ground-based radar digitization award, additional hardware server orders and an additional Alpha hypersonics task order. The majority of our third quarter revenue represented backlog conversion, but over $300 million in new customer contracts more than replenished the revenue recognized within the quarter. Backlog remains one of our strongest indicators of future revenue growth for our business. Third quarter GAAP gross margin was 22.9% compared with 20.3% in the prior quarter.

The sequential improvement was driven by favorable product mix as lower-margin hardware server purchases weighed on Q2. As a reminder, the primary GAAP to non-GAAP adjustments to operating expenses are stock-based compensation expense, onetime transaction-related expenses and the amortization of intangibles. Operating expenses for the third quarter were $104 million, compared with $94.3 million in the second quarter. The increase represents R&D investments in our next-generation launch vehicles, bringing online Alpha Block II and ramping up Eclipse development. Operating loss was $78.7 million compared with a loss of $70.4 million in the second quarter. Our net loss in the third quarter was $75.4 million or a net loss of $0.45 per share.

This compares with a net loss of $67.7 million in the prior quarter or a net loss of $0.42 per share last quarter. The third quarter net loss per share figures were calculated using a weighted average share count of 168.4 million. Due to a series of option exercises throughout the period, our third quarter ending share count was 171.6 million shares, and we expect this number will increase by about 1 million shares per quarter. Stock-based compensation expense was $15.3 million in the third quarter compared with $17 million in the prior quarter. Adjusted EBITDA in the third quarter was a loss of $69.5 million compared with a loss of $61.2 million in the second quarter.

Our balance sheet remains strong, ending the quarter with a total liquidity of $839.7 million. This consists of $534.7 million in cash, cash equivalents and short-term investments and $305 million of available capacity from our revolving credit facility, which remains undrawn. Capital investments in the third quarter were $15.6 million compared with $24.7 million sequentially. The sequential decline primarily came from the completion of investments related to test upgrades to support Alpha Block II, the spacecraft cleanroom expansion and other infrastructure improvements to support our growth objectives. Free cash flow was an outflow of $85.3 million compared with an outflow of $106.3 million in the second quarter.

As a reminder, the Q2 number included the final SciTec acquisition-related payment of approximately $24 million. Regarding our revenue outlook for 2026, we are updating the 2026 revenue range to $440 million to $450 million from our prior range of $420 million to $450 million. This increases the midpoint of our guidance to $445 million from $435 million. In closing, our financial strength rests on a diversified revenue base, an expanding backlog and substantial liquidity to support disciplined investment. We continue to identify ways to optimize our programs by leveraging our core technologies while retaining the capital-efficient discipline that has accelerated our development in just 9 years as a company.

To highlight a few examples from our playbook, we are leveraging the proven Blue Ghost lander for subsequent missions and deployed a lift and shift strategy, which leverages many years of investment in the FORGE Industrial Defense System, unlocking adjacent opportunities like GBRD and ABMS. Additionally, we've tapped nondilutive funding sources such as the Texas Space Commission's grant program for a clean room expansion. The AST agreement is the latest example of this playbook. Our Miranda and Vira engines represent proprietary technology that very few companies in the world possess. Now we are leveraging and monetizing that technology. With that, I'll turn the call back to Jason.

Jason Kim: Thank you, Darren. As I think about where Firefly stands today, 3 things come to mind. First, Alpha production is ramping up. The factory is humming with Block II manufacturing and assembly, giving me confidence. After Flight 8 launches, Alpha Flights 9, 10, 11 and 12 are right behind it. We made upgrades to our test stands, our Vandenberg facilities and are making progress on both our Virginia and Sweden launch sites. And we added new international customers, thanks to the deals with SSC Space and Synspective. Second, our platform is expanding. We added multiple commercial partnerships for our upcoming lunar missions. The DIU deorbit contract validates another growth vector for Elytra's orbital services.

FORGE validates the national importance of what SciTec brings to the Firefly platform. And our agreement with AST SpaceMobile validates the extreme scarcity value of our propulsion technology. Third, our team is world-class. They have delivered these results every quarter, and are the reason Firefly wins. Fireflies are bold, resilient and passionate, and I'm proud to support them. Our team has led Firefly to land on the moon, launch in 24-hour call-ups and provide operational no-fail AI defense software. We have a robust, diversified space and defense business. Every quarter, the addressable market for what we are building grows larger. Thank you for joining today's call. Michael, back to you.

Michael Sheetz: Thank you, Jason. We will be attending multiple investor events in November and December, and we look forward to seeing many of you in the coming weeks. Operator, we're ready to take questions.

Operator: [Operator Instructions] One moment for our first question. It comes from Sheila Kahyaoglu with Jefferies.

Sheila Kahyaoglu: Lots of developments this quarter. So 2 questions, if that's okay. With Firefly now onboarded to the $10 billion CLPS 2 IDIQ, can you just talk about how the scope of that opportunity changes relative to the existing program? And maybe more specifically, what additional mission types for larger payload classes can Firefly now address?

Jason Kim: Sheila, we're very pumped and excited about onboarding on to CLIPS 2. Just going back last year, we were the first company to successfully land on the moon, and we did that with our Blue Ghost Mission 1, which was part of the $4 billion CLIPS 1.0 program. There is still a few outstanding bids there that we're still waiting for as well on CLPS 1.0. But CLPS 2, really excited because we began design work on that ahead of time. And a lot of the fundamental technologies that allowed us to successfully land on the moon are also embedded on our larger landers.

And so that gives a lot of confidence to NASA and to Firefly as well as some of our commercial customers that are bolt-on opportunities. And so we're really excited. Some of the things that we can launch with a larger cargo lander is things like light terrain vehicles. I think you remember that Carlos from the Moon Base program mentioning that they awarded a couple of those light terrain vehicles already. So we're excited about that opportunity to take those -- take mobility to the moon. There's also other cargo that can help sustain permanent human presence on the moon. If you remember, the moon is about -- the whole surface area is about the size of Africa.

And then the usable part of the South pole, which we believe has all the resources like water ice and other resources to sustain life is about the size of Washington, D.C. And so we're excited about those missions and supporting any cargo that helps with a permanent presence on the moon with humans. And then there's a lot of other science that we can gather as well. But I'm really particularly excited about manufacturing on the moon as well. There's a lot of resources like water ice that I mentioned that could be converted into propellants. There's some rare earth minerals that could potentially be used for manufacturing.

The regolith itself can be used and converted into different fabrication as well. And then there's a whole economy, a commercial economy that could be built upon what NASA and other global agencies are doing. But in addition to that, we're also seeing a lot of demand on the national security side. You saw that the Space Force stood up, a whole organization to coordinate things in cislunar space, led by Major General, Stephen Purdy. And so we expect that there will be more and more -- maybe it starts out with 10% scope. The moon base is bigger than just the $30 billion opportunity that NASA is talking about with the moon base.

There's potentially 10% of what goes to the moon might be Space Force based. It might go up to 25%. We already saw requests for information for up to 5 satellites to go and look around cislunar space. And those are the kinds of things that we've invested in with our acquisition of Space-ng, with the Vision autonomous navigation camera systems that we have now in-house. And we're able to deploy that, things with like the Oculus service to provide space domain awareness even beyond just space exploration.

Sheila Kahyaoglu: That's really helpful long-term color. If I could ask one more, maybe a little bit more short term. As we think about fiscal '26 guidance, we raised the low end of the revenue guide. But Flight 8 has now moved into Q1. Maybe could you help us bridge what's driving the revenue uptick? And are any Alpha launches assumed in Q4 revenues?

Darren Ma: Sheila, this is Darren. So, for the remainder of this year, there's definitely some moving parts there. There's strength in the spacecraft business. We're working on 5 moon programs all in parallel, and there's strong demand on the AI software solutions side, really offset by some of the revenue impact on launches Jason discussed. One of the strengths of our business model is that we have a diversified portfolio that generates revenues, and basically the ASC deal also adds to this multiple of revenue stream that we already have in place.

Operator: Our next question comes from Edison Yu with Deutsche Bank.

Xin Yu: Congratulations on the deal with AST. I wanted to ask about the AST, the rev rec. I'm sure you guys know better than anyone, rocket programs historically probably average 3- to 5-year delay. If there's any sort of delay on their end, has nothing to do with you, does that impact the rev rec at all if we think in the next couple of years?

Darren Ma: Edison, this is Darren. No, I mean, when you look at the revenue recognition for this program, it's broken up into 2 parts. The IP portion is tied into the services portion, which we'll be recognizing as we perform over the 3-year time period. And then the engine deliveries will also be recognized as we deliver the engine. So if there is any delay on their side, I don't believe it has any impact on us in terms of revenue recognition.

Xin Yu: Okay. And then just a follow-up also on the deal. You mentioned, I think, in the prepared remarks that the gross profit margin contribution is help expand. Any sense how we can think about just the incremental margin? Is this basically kind of almost pure margin? Is there some like small expense? Just how to think about it as we kind of layer in all this revenue?

Darren Ma: Yes. I think the way to think about it is when you look at our gross margin, right now, we're in the mid-20s. And because the IP portion of it is tied closely to the services and recognized at the same time, that will provide incremental gross margin expansion as we execute on this deal. But there will be some gross margin expansion associated with the contract.

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

Kyle Benvenuto: This is Kyle Benvenuto on for Kristine. Congrats on all the progress this quarter. I wanted to ask about SciTec and the outlook for the business. First, with the $94 million GBRD award and onboarding to the $981 million NITE-STAR IDIQ extending the FORGE playbook into the adjacent programs of record. I guess how should we think about SciTec's organic growth heading into 2027? And how much could NITE-STAR task orders and other new programs contribute relative to the existing FORGE base? And then second, as the business scales, you previously discussed moving more of SciTec's work towards fixed price contracts. So how far along is that shift today?

And how much margin uplift do you see as programs like FORGE move from cost-plus development into reputable software-driven deployments?

Jason Kim: Yes. I'll try to unpack all multiple questions, but I am super excited about SciTec just like you are. I'll go back to FORGE. FORGE is built upon a foundation of over 45 years of algorithm development, specifically for national security and more specifically for missile warning/missile tracking. And so when you look at the FORGE program, it's an $800 million program and counting total value. And that program is doing no fail operational missions right now. I was at the floor, the mission operations floor. And it was eye-watering what SciTec is doing in support of that mission, helping to save lives of our war fighters and our allies.

A lot of the work that's on there, both the data center hardware work and the framework that's applied to it and the mission applications for missile warning and missile tracking, a lot of that is transferable, and you can lift and shift that capability into things like winning ground-based radar digitization program. Now what we did was we lifted and shifted the framework in this case, and it helped us accelerate our capabilities compared to the landscape. And we were able to win the Phase 1, which is around the $94 million first phase. There's a lot of upside opportunities there. It could be around $400 million to $500 million of upside.

But we're focused on working with our team that we've assembled to provide an asymmetric capability to modernize the ground-based radar legacy programs so that we can provide more missile warning, missile tracking and space domain awareness for the war fighters. So that's one example. There is growth upside opportunity there. But then I'm also excited about lifting and shifting the things we learned from both FORGE and GBRD into other types of areas like position navigation timing, air moving target indicator, ground moving target indicator and space domain awareness. So a lot of those kinds of algorithms are very transferable and they're proven in battlefield today. And we're using AI. We're improving the AI.

So we're really excited about those opportunities. And then in terms of firm fixed-price contracts, that's been a movement for a few years now. And that's why a lot of the space force migrated to these Other Transactional Authorities or these OTAs, which are primarily firm-fixed price type contracts going away from the cost-plus type contracts. And those have opportunities as long as you execute for gross margin expansion. So we're really excited about the future of what we do with SciTec.

And don't count us out in terms of upside opportunities of taking SciTec algorithms and deploying it to space as well because the name of the game in national security is to be faster than the adversary's OODA loop. And by bringing things to orbit and doing things with lower latencies, we can be within the adversary's OODA loop.

Operator: Our next question comes from Michael Leshock with KeyBanc Capital Markets.

Michael Leshock: I just wanted to ask on -- given how constrained the launch supply-demand market is today and for the foreseeable future, particularly just thinking about Falcon 9 sunsetting over the coming years and then also given the prices that medium-lift vehicles are commanding in the market today for the latter part of this decade. Has that changed your pricing approach at all for future Eclipse or Alpha launch agreements?

Jason Kim: Yes. Absolutely, we're seeing the most highly constrained launch supply environment ever. And we've got a lot of inbound. As you see, we signed 2 Alpha contracts with Sweden as well as up to 10 with Synspective in Japan and another confidential hypersonic test launch with Alpha. So we're seeing that demand turn into actual contracts. And the pricing power is there. When you look at our VICTUS SOL mission that we signed with the Space Force previously, that was a $22 million contract. And we're seeing things with upside opportunities beyond, on the -- higher than those prices lately.

And so we do see that on our Alpha missions, which are very, very uniquely suited for national security, like hypersonic test launches as well as tactically responsive space launches and other. In terms of Eclipse, we are heads down and this deal that we did with AST, it's really a win-win because what it does is injects capital that is helping our Eclipse program at the same time as helping AST. And so we're going to be ramping up our Miranda production and also our production of Eclipse in general with the additional engineering and manufacturing and supply chain stuff, the injection of a hardware-rich long lead materials buys, optimal equipment as well as more integration and test capacity.

So all of that is going to help us get Eclipse up and running as soon as possible because the demand is so high. And we do see that the demand affords higher pricing for medium lift as well.

Michael Leshock: Great. And then on the AST agreement, the release had said it was noncompetitive by design and purpose-built for AST's payloads. Just curious if you could give any color on the formal restrictions on how the engines and IP can be used and what's in place there? Is Blacklift only allowed to launch its own internal AST payloads? Or is there potentially some reality where they could become another launch provider for the commercial market over the long term? Just any clarity on that would be great.

Jason Kim: Yes. It's important to note that Firefly retains ownership of our core intellectual property, that's Miranda, while AST focuses solely on launching its own constellation. They have a great business of direct-to-mobile constellations, and they're going to ramp up continuously. And because they're ramping up their proliferated constellation, they need to basically control their launch schedule and their capacity. And so I see them being laser-focused on launching their own constellations while we are unwavering in terms of launch capability of our Eclipse rocket for commercial and government customers. And so it's truly a strategic transformational deal. It's a win-win.

Operator: Our next question comes from Seth Seifman with JPMorgan.

Unknown Analyst: This is Alex on for Seth. So I wanted to ask, I guess no one's really directly asked about this yet, and get that you guys don't really want to share specific plans on how to think about Alpha rocket's launch cadence next year. But you guys have kind of outlined that, say, the next 5 or so Alpha rockets are under various stages of production. Curious if everything kind of goes according to plan, is that maybe a reasonable baseline to think about how many launches you could do next year?

And then off of that, thinking about this ASP deal, like how much does the capital that you guys are getting from them potentially help accelerate your ability to do launches next year?

Jason Kim: Seth, I just will give you a data point just from today. Within 3 hours today at our Rocket Ranch, which is all co-located, vertically integrated with our test bay and we ripped a bunch of engine tests. Two Reavers were hot fired today, 1 Lightning was hot fired, 1 Miranda qualification was hot fired as well. This was all within 3 hours of each other today. And so you could see that our test capabilities are just ramped up. And then, when you look at Alpha Block II, the whole point of the upgrade was to make it more manufacturable and reliable. And so that's being seen and manifested on the factory floor.

So if you look at Building 3, we've got Flight 8 and Flight 9 there for integration, finishing off integration. Flight 8 is getting ready, prepared for shipping to Vandenberg. Flight 9 is getting all the Reaver engines and Lightning engines assembled to integrate. And then Flight 10, all the composite structures are approved, past proof testing. Flight 11 composites are finishing up, Flight 12, the composites are starting up. We've got 24 Reaver engine chambers that are in flow right now that's about 6 shipsets right there. And this is all within the fourth quarter. So we're really excited about going forward, building upon that success.

We opened up our [ Core-tech ] feeder line for all the avionics and harnessing as well. So that's ramping up. So everything is humming in our production factory floor and the test capabilities are also ramped up, as I mentioned before. And then in addition to that, we've upgraded Vandenberg for Block II. We're -- yes, I just was at Wallace, Virginia earlier this year, and we're making progress there with all the different components of that launch pad. And then Sweden, I was there earlier this year as well. And same thing, we're making a lot of progress there. So we're just ramping up in all areas.

Unknown Analyst: Great. Glad to hear. And then maybe as a quick follow-up with respect to Eclipse, is the expectation that you guys will still get the first launch there in 2027? I know you guys are talking about starting the Miranda engine qualification process, like maybe if there's anything more specific that you guys could say on what you still have to do there? And maybe beyond that, what are kind of like the final long poles in the tent in terms of being able to finally do an Eclipse launch?

Jason Kim: Yes. As I mentioned before, we're heads down on Eclipse. We're laser-focused on delivering the first stage to our co-developer Northrop Grumman. And we're over 175 hot fires on Miranda, count the one from today. And we're looking at all the data, verifying the capability. It's a very mature engine, and we're very confident in its capabilities. We're building ahead the flight engines as well. And so everything is just laser focused on all the milestones in terms of qualifying Miranda and qualifying our composite tanks and fluid systems as well. So we're really, really just excited about the future of Eclipse, especially with this injection of capital that will help accelerate our production line.

Operator: One moment for our next question. That comes from the line of Griffin Boss with B. Riley Securities.

Michael Crawford: Yes. This is actually Mike Crawford from B. Riley Securities. But just further on Eclipse. Your partner, ASTS is building a simpler rocket by design to only go to LEO versus Eclipse can go all the way to translunar injection. But is there a reason why they would be using a 3-stage rocket if it's supposed to be a simpler rocket versus the 2-stage Eclipse?

Jason Kim: Mike, that's AST's design. They are responsible for the overall design of their Blacklift rocket. We're, as we mentioned before, providing the IP for the Miranda engines as well as providing the first 3 shipsets of 36 engines to them for those first 3 launches. There's some engineering services as well that we're going to provide to them. But that is AST's design. They are focused on mass of their constellations of the BlueBirds on each launch. That's why they're focused on what they have in terms of their 3-stage design. Whereas for our Eclipse rocket, we're building the railroad to the moon.

And so we're looking at a number of different missions for commercial and government customers to include moon missions as well. So that's why we have a different stage design.

Michael Crawford: Okay. And then just regarding Elytra, could you maybe help compare and contrast some of its RPO and maneuverability abilities versus competitors like True Anomaly Jackal or Quantum Space Scout or Turion, et cetera?

Jason Kim: Yes. A lot of the fundamental technologies that made the Blue Ghost Mission 1 successful all the way from the 7 major burns that we had to do through translunar injection all the way to low lunar orbit and then finally breaking and maneuvering and descending softly onto the moon surface. All of those things are things that are also built into our Elytra spacecraft and provide us heritage. And as you know, we traversed through many days, 45 days through LEO, NEO, GEO system all the way to the moon. So we have heritage in all those orbits. What I would say is the capabilities that Elytra affords is a lot of fuel. We have chemical propulsion systems.

So there's a lot of fuel that we can carry on board. We use carbon composites for our primary and secondary structures, which means you can put more into the mission payload. And so we have a system that not only is maneuverable with precise millimeter per second kind of precision of thrust, but we also have a lot of lightweight structural technology that allows us to carry more mission payload capability like optics, like camera systems and other systems that can help with space domain awareness. We also acquired Space-ng earlier this year and their autonomous navigation camera system allows us to perform a lot of autonomous maneuvers, including RPO.

And so it's a really great capability that has flight heritage and can operate in all the different orbits. And as I mentioned before, the moon is ultimate high ground. And so everything is moving more towards this Lunar space. And the Space Force is going to need more space domain awareness in that area. And we already have capability that has been proven in that area. In addition to that, we signed some really great commercial hosted options like Starcloud, and now we're providing AI from our Elytra spacecraft as well. So really excited about Elytra's future.

Operator: Our next question comes from David Strauss with Wells Fargo.

Benjamin Tomick: This is Ben Tomick on for David. Can you guys just talk about how should we think about the cash burn for the full year and into 2027? And how much incremental CapEx should we expect related to the AST agreement?

Darren Ma: As I mentioned earlier, as part of the AST agreement, we're going to be making some significant investments into R&D, CapEx and infrastructure as we expand our production facilities and everything. And that not only benefits AST, but also complementary to the production, as Jason mentioned, for other customers on Eclipse. So I mean, we'll be making those investments. And as part of that, we could expect cash burn to tick up through next year as part of this contract.

Benjamin Tomick: Got it. And then switching back to CLPS. I think you mentioned how there were still additional CLPS 1.0 opportunities still out there. How should we think about the timing for that? And then when those initial CLPS 2.0 awards should be coming in?

Jason Kim: I think there's at least 3 outstanding opportunities there. One was an opportunity that could be awarded in the fourth quarter as early as fourth quarter. And that's for a far side south pole mission. We're really excited about that mission because we are going to the far side in our next -- Riders 2 The Dark mission next year. And so a lot of the underlying ConOps and technology that is built into that system is really transferable to this new opportunity as well. We're super excited about hearing back on the results of that competition. And then there's a second mission that is looking for lunar surface imaging.

And it's very akin to our existing commercial Ocula service that is also going to fly on our second mission to the far side of the moon called Riders 2 The Dark, specifically our Ocula service. That's where we put a camera on our Elytra transfer vehicle, and we're going to be able to image the moon and sell the data commercially. Well, the bid that is outstanding from NASA that is in front of us is for a service like that, to do lunar high-resolution imaging as a commercial service. And then there's a third landing mission as well that will most likely come out next -- early first quarter of next year to be awarded in 2027.

So those are the 3 outstanding that I mentioned.

Operator: Our next question comes from the line of Anthony Valentini with Barclays.

Anthony Valentini: When AST came to you guys to start the conversations here, did they start out with just wanting to procure launches from you like any other customer? Because it seems as if -- like I've seen the slides that there's a bullet that says it gives them their control over the launch schedule. But you guys know how hard launch is and that there's delays that happen pretty consistently. And so wouldn't that get them to market quicker? Or are there more things at play with how that decision was made?

Jason Kim: I think ASP is a very innovative company, and that's why this led to a blockbuster deal of this nondilutive funding to basically accelerate our core launch services business, especially when it comes to Eclipse, given we share the Miranda engine with the Blacklift launch vehicle. Now every single launch vehicle program, the hardest part about it is the rocket engine development. And because Miranda is so mature and we're going through qualification, and we've done so many hot fire tests and over 4,200 cumulative seconds of hot fire testing on it, it really accelerates things for a new rocket starting with a mature rocket engine such as Miranda.

And so it's truly a win-win in terms of we get to productionize our Eclipse program and the Blacklift gets these very mature rocket engines. And we're going to start off by delivering the first 3 shipsets. And so this is a win-win.

Anthony Valentini: Okay. That's helpful and makes sense. I guess as I'm looking at this, it seems like this is a good deal. And I guess I'm wondering if there's anything that you guys had to give up, right? If I'm looking at the engine IP license, should I be thinking about that as if ASG in the future does 50 launches, they can make the engines on their own and there isn't revenue that's associated with that because they're paying you for the $400 million cash upfront for the license. And so like that's what you'd be giving up for that cash upfront? Or is there something else?

Jason Kim: Yes. I just wanted to highlight that this does not change our identity or our business model. We're still going to be producing Eclipse, and we're going to be able to service all the government and commercial customers that we've been engaging with. AST is going to eventually build the brand engines themselves and be able to use it for their Blacklift launch vehicle and support their laser focus on launching as many BlueBirds for their direct-to-mobile constellations.

Operator: Our next question is from the line of Colin Canfield with Cantor.

Colin Canfield: So as we think about the AST deal and in terms of working capital dynamics, can you just maybe walk through how you think about AST funding to flow through in terms of the geography of the cash flow statement and whether or not that's going to show up in working capital versus financing cash flow? And then if you could also talk about kind of other key areas of working capital upside that you think through the year, whether that's upsized CLPS 1, faster out of ways to CLPS 2 or other launch areas that you think are particularly favorable?

Darren Ma: Colin, yes, it's actually both. When you talk about cash -- where the cash flow is going to flow, this deal is part cash and part equity. When you look at it, we got essentially $400 million in cash and 10 million to 14 million shares of AST Class A common stock. And then the remainder of it, services are $250 million. We look at delivery of engines at $250 million. So everything other than the equity will be flowing through operating cash for us. And then your second question around -- yes, we always expect to -- we think we're really well positioned to win additional CLPS contracts.

Those have been pretty additive for us from a cash flow perspective in the past, and I think we're really well positioned for it.

Colin Canfield: Got it. And as you think about kind of like cash flow inflection, this obviously helping 2027 a lot and kind of the equity rerating. How do you think about kind of future M&A targets between launch and essentially some of the kind of legacy assets in launch? Or increasing your spacecraft business and maybe intelligence or comms, propulsion, what have you?

Jason Kim: Colin, we have a multiyear strategy, and we're just executing it, and you saw that with the investments in the Lunar Lander business even before it became popular. And then the SciTec acquisition to get us into data center work as well as all the AI defense software. We're ramping up both our Alpha and Eclipse production as well. That's a moat. The launch of the moat allows us to launch these great services that are being provided by our lunar landers and our Elytra orbiting spacecraft. And as we become more autonomous in terms of our constellations on orbit, we're going to be able to provide that app store on demand from space.

And so we're just following that strategy, and part of that strategy is in M&A, and we have a robust pipeline of M&A targets. So it's just executing this multiyear strategy.

Operator: Wait for our next question please. It comes from Suji Desilva with ROTH Capital.

Sujeeva De Silva: Congratulations on all the progress here. For the FORGE products, it sounds like you're targeting multiple areas. Obviously, air moving missiles today with what you demoed in New York, but future ground moving and then space domain. Jason, I'm wondering if the products that would support those other opportunities are already developed or are in development? Just to understand the time frame when you might be able to monetize those.

Jason Kim: Yes. I mean think about the 45 years of algorithm development to support all national security in multi-domains. You heard about missile warning, missile tracking, you heard about space domain awareness. At the end of the day, it's all about tracking needles in the haystack, subtracting the contrasts from the backgrounds and finding and tracking and taking custody of those hard, dim targets. And so a lot of the algorithms are transferable from one mission to another. The phenomenologies are something that SciTec is really good at because they have the scientists co-located with the software developers. So if you know the phenomenology better, you know how to develop the algorithms and process the data better from the sensors.

And so the short answer is, yes, a lot of these algorithms are transferable. SciTec has a lot of R&D that's being developed and constantly transitioning to operations. That's one of the benefits of the FORGE program. And also you heard about the [indiscernible] program. It allows us to battle test our algorithms and get them really hardened. And then once they are, we could deploy them to other mission areas.

Operator: One moment for our next question. That comes from the line of Ryan Koontz with Needham & Company.

Ryan Koontz: Relative to gross margins, appreciate the AST Miranda deal. It's going to be a nice tailwind there, it sounds like, for several years. Remind us how we should think about gross margins in launch relative to scaling Alpha and Eclipse. I know they are different rev rec models. But if you can remind us, Darren, how we think about gross margin on those 2 programs would be great.

Darren Ma: Yes. So with gross margin, right now, until Alpha reaches technical feasibility, the cost for it is expensed in the R&D. And as it reaches technical [ capability ], those costs will be inventoried on our balance sheet. So it goes into production from that perspective. Same thing for Eclipse, follows a similar pattern as well.

Operator: One moment for our next question. It comes from the line of Chris Quilty with Quilty Space.

Christopher Quilty: Guys, I missed it. Could you repeat what the 2027 launch forecast was? Just getting -- actually, just to follow up on something that you said on the last call, I think you're relying on Northrop Grumman for your NSSL certification. But given the fact that their MLV is different than your Eclipse, is that a separate certification that you would have to do? Or is that lane reserved just for Northrop?

Jason Kim: Thanks, Chris. Yes, we're laser focused, head down on qualifying our Miranda engines and our tanks and primary structure. It's a first stage that's usable on both of those vehicles. We've been pretty steadfast on when we're going to be ready to launch before we onboard on to National Security Space Launch program. We want to be able to look to the customer in the eye and say, "Hey, we're launching in this year when we onboard." And so that's where we're focused. And having Northrop Grumman co-developed this with us, we're very confident it's American-made rocket that will meet standards of national security space launch as well as NASA or the Space Force for NASA.

We want to be able to deploy a broad range of payloads for those kind of critical missions because I used to build a lot of those critical missions, and I know how important it is to deploy those into the right mission unique orbits.

Operator: Thank you. And ladies and gentlemen, this will conclude our Q&A session. I will turn it back to Michael for closing remarks.

Michael Sheetz: Thank you all for attending today's call. We look forward to speaking to you again, when we report our fourth quarter earnings results, and we look forward to meeting with you at many of our upcoming investor conferences on the road. Talk soon.

Operator: Thank you all for participating. You may now disconnect.

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