What happened
As the trading week draws to a close, shares of Intuitive Machines (LUNR 5.55%) are notching their fifth straight day of share price gains after the company reported earnings Thursday evening, rising 5.3% through 11 a.m. ET Friday morning.
I say "earnings" a bit euphemistically, however. As it turned out, this space start-up company didn't actually earn anything in the first quarter, reporting a $14 million operating loss instead (three times worse than a year ago). Revenue declined from $18.5 million a year ago to $18.2 million in Q1 2023.
So why are Intuitive Machines shares going up today, rather than down?
NASDAQ: LUNR
Key Data Points
So what
The answer, in a word, is: promises. Because while Intuitive Machines didn't produce a lot of good numbers this past quarter, it did make some pretty bold promises for the future.
Specifically, management stated that it has accumulated $156.1 million worth of contracted backlog, of which $107.7 million will "convert to revenue over the remainder of the year." Add in the $18.2 million in revenue already booked, plus new business immediately executed and turned into revenue, and money from a successful IM-1 moon landing scheduled for the third quarter of this year, and Intuitive Machines is promising investors 2023 revenue "in the range of $174 million to $268 million." It's also promising this revenue will be profitable, at least at the gross margin level.
Farther out, Intuitive Machines touted its recent win of a NASA OMES III contract worth $719 million over five years as securing a long runway for future revenue growth.
Now what
Mind you, Intuitive Machines is still in the start-up phase of its business, and still burning cash as it (hopefully) blazes toward a future in which it will become one of NASA's go-to contractors for returning to the moon. A recent cash infusion, however, brings the company's cash reserves to $60.4 million. By year-end, management expects that number to fall to about $49 million.
This isn't great news -- burning cash rarely is -- but it still implies an annual cash-burn rate of only about $15 million, which if true would give Intuitive Machines four years of runway before it runs out of cash. Given the rate at which it's piling up contracts, and assuming it can execute all of them successfully -- and profitably -- I'm starting to think the odds favor Intuitive Machines coming out of its start-up phase just fine, and maybe even becoming a stock worth buying.
