What happened

Shares of start-up space satellite manufacturer Terran Orbital (LLAP -1.04%) fell by 17.6% on Monday after it missed analysts' targets for both sales and earnings for the first quarter.

Terran Orbital was expected to lose only $0.19 per share on sales of just under $31 million. Instead, its sales came in light at $28.2 million, and it lost $0.38 per share -- twice as much as it was forecast to lose.  

So what

The news wasn't all bad. Sales were up 115% from last year's Q1. The company's gross loss -- $1.4 million -- was only half the $2.8 million it lost near the top line in Q1 2022. Its sales, general, and administrative spending grew by only 8% -- a much slower rate than its revenue growth. As a result, Terran Orbital was able to dramatically reduce its losses by 24% year over year to only $54.4 million.  

Still, a loss is a loss, and Terran's was a big one.

Now what

As such, investors' reaction to the quarterly report was understandable. Yet Terran Orbital remains optimistic.

Management continued to emphasize its $2.5 billion contract backlog, most of which came from little-known Rivada Space Networks in the form of a single $2.4 billion order for 300 satellites. Terran says it expects to book revenues of more than $250 million this year. Furthermore, management notes that it expects to deliver "the majority" of "over 360 satellites" on order over the next three years.

Mathematically speaking, that means a minimum of $1.275 billion (and a maximum of $2.5 billion) in revenue over that period. Subtracting the $250 million in revenue it expects to rake in this year, this would imply revenue of anywhere from $500 million to $1.1 billion in each of the next two years -- or anywhere from 100% to 300% growth from this year's forecast.

You'd think that even the prospect that Terran Orbital could deliver on such a promise would be enough to excite investors today. The fact that they're not doing much buying, however, implies they remain unconvinced that Terran Orbital will deliver on its promise.

Time will tell.