ispace,inc. Q4 FY2025 earnings call

Industry & Business Environment

• Global lunar exploration activity accelerated in the past year, with JAXA's SLIM mission demonstrating successful pinpoint landing and lunar night survival, and 2025 seeing three private landers (ispace's RESILIENCE, Firefly Aerospace, Intuitive Machines) heading to the moon simultaneously.
• Government support for the lunar industry has expanded: Japan launched its 1 trillion yen 10-year Space Strategic Fund, with a 300 billion yen first phase and 300 billion yen second phase open for applications; JAXA and ESA issued a joint statement on large-scale future cooperation highlighting opportunities for Japanese and European private rover providers.
• While the new U.S. Trump administration has created some near-term policy uncertainty, ispace views the reaffirmation of U.S.-Japan partnership on lunar exploration and the Artemis Program in the 2025 U.S.-Japan summit joint statement as a very positive signal.

Mission 2 (RESILIENCE Lander) Progress

• Mission 2 uses the same RESILIENCE lander model proven on Mission 1, cutting development time by 40%, development cost by 50%, and the post-launch initial operations timeline by 60% compared to Mission 1.
• All pre-landing milestones have been completed successfully: lunar flyby in February 2025, completion of all deep space trajectory maneuvers in April 2025, and insertion into lunar orbit in May 2025. Lunar landing is scheduled for June 6, 2025 Japan Time, with live public streaming available.
• After landing, the TENACIOUS micro-rover will conduct 5 post-landing milestones (Venture 1 to 5). Venture 4 plans to collect lunar regolith to complete the first commercial lunar resource transaction, transferring ownership of the collected regolith to NASA under a pre-existing contract. This will be the first commercial lunar resource transaction under Japanese and Luxembourg national space resource laws, a critical milestone for building the cislunar economy.
• ispace secured a 2.1 billion yen lunar insurance policy for Mission 2, covering from launch through completion of trajectory control operations at 100km lunar orbit, reflecting the market's recognition of ispace's proven Mission 1 track record despite tightening global space insurance market conditions.

Mission 3 (APEX 1.0 Lander) Progress

• Mission 3 has secured confirmed payloads from NASA, Rhea Space Activity, CDS Romania, and the Italian Space Agency (ASI), with a total contract value of $65 million.
• The original contracted engine from Agile Space Industries will not meet the original delivery schedule. After consultation with key stakeholder Draper Laboratory and NASA, ispace and Agile will jointly develop a new engine, VoidRunner: Agile will develop the engine body, and ispace U.S. will develop the output control valve. The new engine is expected to deliver increased thrust and reduce required parts by 75%, simplifying the system.
• As a result of the engine development change, the Mission 3 launch is delayed from 2026 to 2027, and the Critical Design Review (CDR) is rescheduled to winter 2025.

Mission 4 (Series 3 Lander) Progress

• Mission 4 was selected for Japan's SBIR program, with a maximum total subsidy of 12 billion yen. Subsidy revenue for development costs is recognized as non-operating income with a two-quarter lag, with limited recognition starting in Q4 FY2025/3 and larger amounts to be recognized starting FY2026/3.
• A lunar water resource exploration project led by Tokyo University of Science, with ispace as a core partner, was selected for the first phase of Japan's Space Strategic Fund. ispace will develop a small terahertz remote sensing satellite and transport it to lunar orbit, marking Mission 4's first confirmed payload.
• The Structural Thermal Model (STM) of the larger Series 3 lander has been completed and passed vibration testing. Mission 4 was originally planned to use the same engine as Mission 3, and the impact of the Mission 3 engine schedule change on Mission 4's timeline is currently under review.

Business Development & Partnerships

• New partnerships have been secured globally: in Japan, ispace won a contract from KDDI to conduct mission requirement research for lunar mobile communication, and signed an MOU with Takasago Thermal Engineering to study feasibility for lunar thermal mining water extraction technology demonstration; in the U.S., ispace signed an agreement with Redwire to jointly bid on upcoming CLPS (Commercial Lunar Payload Services) opportunities; in Europe, the Luxembourg Prime Minister visited ispace's control center, and bilateral cooperation on ispace's rover development was reaffirmed at the Japan-Luxembourg summit.
• ispace continues parallel lander development at its Japanese and U.S. hubs, with cross-regional knowledge sharing to continuously mature mission technology. The company targets government and private prime customers for Mission 5 and beyond, and will start development as soon as a large customer is secured, potentially as early as FY2026/3.
• Total sales pipeline now stands at $655 million (~93 billion yen), up $260 million from the Q3 2025/3 update after adding 10 new MOUs.

ispace operates a single core lunar exploration and payload services business, with geographic operating segments across Japan, the U.S., and Europe. For FY2025/3: Total revenue was 4.743 billion yen, 6.2% above prior guidance, driven by faster-than-planned cost recognition and revenue acceleration for Mission 3 under the cost recovery accounting method. Revenue grew 101% year-over-year: Mission 3 payload service revenue increased ~80% YoY due to full-scale development progress, while Mission 2 revenue was pulled forward into FY2025/3 following a change in revenue recognition policy, leading to a sharp YoY increase in Mission 2 revenue. Gross profit decreased relative to guidance due to increased cost recognition for European subsidiary rover R&D contracted by ESA. Operating loss was 9.795 billion yen, in line with guidance. Net loss came in at 11.945 billion yen, an 1.1 billion yen larger loss than guidance due to Q4 foreign exchange losses from yen appreciation. Selling, general and administrative (SG&A) expenses increased YoY: R&D expense was 7.73 billion yen, up due to one-time full recognition of Mission 2 launch costs and increased development spending on Mission 3 and Mission 4; payroll costs were 1.522 billion yen, up from increased headcount and a higher share of employees at overseas subsidiaries. Total revenue contribution: ~80% of FY2025/3 revenue comes from payload services, with the remainder from contracted R&D services for government and institutional customers.

• For FY2026/3 (ending March 2026), ispace guides total revenue of 6.2 billion yen, a 31% increase from FY2025/3 actual revenue, with a projected net loss of 8.3 billion yen, an improvement from the FY2025/3 net loss of 11.945 billion yen.
• The 31% reported revenue growth is muted by accounting treatment: Mission 4's SBIR 12 billion yen subsidy is classified as non-operating income (not revenue) under accounting rules. When including this subsidy as project revenue, the company estimates total project revenue will nearly double year-over-year, showing strong underlying growth.
• Net loss improvement is driven by two main factors: most Mission 2 costs (including launch expenses) were already recognized in FY2025/3, so only minimal costs will be incurred in FY2026/3; and larger SBIR subsidy revenue from Mission 4 will be recognized in FY2026/3 to offset R&D expenses, after a lag in recognition in FY2025/3. Offsetting this, Mission 3 development will increase R&D spending, leading to a still material net loss for the fiscal year.
• Regional operational priorities: Japan will complete Mission 2 lunar exploration and the NASA resource transaction, advance Series 3 lander development, and pursue selection for Space Strategic Fund Phase 2 themes; the U.S. will complete VoidRunner engine development, start APEX 1.0 assembly, pursue new CLPS awards via the Redwire partnership, and target a prime customer for Mission 5 to start mass production development; Europe will continue pursuing follow-on rover development contracts from ESA and LSA, and develop larger rovers for future missions.
• The company will continue prioritizing securing stable funding and strengthening capital buffers to support parallel development of multiple lunar missions across its three regional hubs.

• Policy uncertainty from the new U.S. Trump administration creates uncertainty for NASA funding and program timelines; ispace is monitoring developments closely.
• The global space insurance market has tightened since Mission 1's 2022 insurance placement, leading to a narrower coverage scope for Mission 2's policy that does not extend through the landing phase, increasing the company's exposure to landing-phase losses.
• The original Mission 3 engine delivery delay led to a one-year launch delay and CDR rescheduling, creating schedule uncertainty and potential additional development costs, and may also impact the timeline of Mission 4 which planned to use the same engine model.
• The company continues to generate operating losses and negative free cash flow, requiring ongoing capital raising to fund multiple parallel mission developments, creating capital market dependency risk.
• U.S. trade and tariff policy under the new Trump administration could increase costs for cross-border component procurement and development cooperation.

Q: How does the partnership with Redwire support ispace's U.S. CLPS bidding strategy? / A: Redwire holds required CLPS bidding eligibility that complements ispace's lunar lander development capabilities. The two companies will jointly pursue upcoming 2025-2026 CLPS solicitations, combining Redwire's institutional access and ispace's lander technology to improve chances of winning new contracts. This partnership expands ispace's ability to compete for larger U.S. government lunar mission awards.

Q: How much progress has ispace made growing its sales pipeline, and what is the breakdown of current opportunities? / A: Since the Q3 FY2025/3 update, ispace has signed new MOUs with 10 additional customers adding $260 million in potential contract value, bringing the total pipeline to $655 million (~93 billion yen). The pipeline spans government institutional payloads, private resource exploration missions, and technology demonstration projects across Japan, the U.S., and Europe, with the company now focused on converting these MOUs to binding final contracts for Mission 3 and future missions.

Q: What is the status of funding and support for Mission 4 from Japan's Space Strategic Fund? / A: Mission 4 already secured 12 billion yen in total SBIR subsidy, with the first payload confirmed from a Space Strategic Fund Phase 1 selected project led by Tokyo University of Science. ispace is also preparing to apply for Space Strategic Fund Phase 2 themes focused on high-precision polar lunar landing technology, which aligns with the company's domestic lander development roadmap. Additional support and payload awards are expected as the fund's program progresses.

Q: How will the tightening space insurance market impact ispace's future missions and insurance coverage? / A: The market has tightened with more restrictive underwriting terms and higher premiums post-2022, but ispace was still able to secure coverage for Mission 2, which reflects industry recognition of the technical improvements and proven track record from Mission 1. The company will continue working with insurance brokers to secure the best available coverage for future missions, and will adjust coverage scope based on prevailing market conditions to balance cost and risk exposure.

Q: What is ispace's approach to capital policy to fund ongoing development? / A: The company will continue maintaining open access to both equity and debt capital markets, prioritizing building sufficient capital buffers to support parallel development of multiple missions. It will time capital raisings to align with key mission milestones and large contract awards to minimize dilution, while ensuring it has enough liquidity to cover development costs through the next set of mission milestones.