9348.T

• Vision and Core Business: ispace's vision is "EXPAND OUR PLANET. EXPAND OUR FUTURE", with the long-term goal of building a sustainable cis-lunar (Earth-Moon) economic sphere to enable human expansion into space, culminating in the Moon Valley 2040 initiative that targets 1,000 permanent residents on the lunar surface by the 2040s. The company's core near-term business is building lunar transportation infrastructure, providing payload delivery services to lunar orbit and the lunar surface priced per kilogram, alongside lunar data sales from exploration activities. Long-term, the company aims to expand into lunar water resource exploration and development, where lunar water can be split into hydrogen and oxygen for rocket fuel to drastically reduce long-distance space transportation costs.
• Recent Program Wins: The company secured up to 20 billion yen in support from the JAXA Space Strategy Fund for its Mission 6 lunar program. It also holds a contracted NASA payload delivery mission for Mission 3, has secured budget for an ESA (European Space Agency) mission (contract pending finalization), and was selected for Japanese METI SBIR program support for Mission 4.
• Past Mission Experience: The company has completed two demonstration lunar missions (Mission 1 and Mission 2), accumulating technical development experience despite both failing to achieve successful landing, with distinct root causes identified for each failure.
• Contract Structure: Payload delivery contracts are structured as non-cancelable with no refund requirements, with approximately 90% of contract value received prior to launch. This structure limits negative revenue impact from mission failures.
• Development Roadmap: Starting with Mission 3, the company will enter a full commercial phase with larger-capacity lunar landers. The company aims to scale to 2-3 lunar missions per year long-term, and expand operations to longer-duration activities in lunar orbit and on the lunar surface. The company is globally organized with subsidiaries in Japan, Europe, and the United States to support international growth.
• Market Tailwinds: Lunar exploration has become increasingly tied to national security and strategic competition globally, with growing government budget allocation for the sector. Under the current Japanese administration, space (and specifically lunar exploration) is a designated priority investment area, and the company holds a unique position in Japan's national lunar development strategy.

• Mission 3 (NASA contract) is currently targeted for launch in 2027, and Mission 4 (Japanese SBIR supported program) is targeted for launch in 2028. A simultaneous launch of both missions in 2028 is logically possible if Mission 3 is delayed, and the company is working toward the original 2027 launch target for Mission 3.
• The company has proposed to the Japanese government that it act as an anchor customer for lunar transportation services, targeting an approximate 200 billion yen program of 20 missions over 10 years, and is awaiting policy discussion of this proposal.
• Long-term, the company expects to transition from a project-based payload transportation business model to a recurring, stock-based lunar data business that will be the core of its long-term revenue model.
• No concrete revenue guidance for future periods is provided in the available transcript.

No detailed financial performance data for specific product or business segments is provided in the available transcript. The firm notes that it currently has 58 billion yen or more in firm contracted payload backlog, and an additional 97 billion yen or more in identified potential customer demand.

• Technical Risk: This is the most material risk for the company. Both Mission 1 and Mission 2 failed to land successfully, with Mission 1 failing due to altitude misidentification in software, and Mission 2 failing due to LRF hardware sensor abnormality. A third consecutive failure on Mission 3 would lead to significant damage to the company's credibility and market reputation.
• VoidRunner Engine Development Risk: The company is currently developing the VoidRunner engine for Mission 3 and Mission 4 in partnership with a U.S. supplier. The engine has not yet achieved the required performance targets, with repeated testing and design changes ongoing. Continued delays could result in launch schedule delays for Mission 3 and Mission 4, and the risk of further schedule overruns and cost increases is recognized. The company is actively evaluating backup options for this risk.
• Government Demand Dependence Risk: The vast majority of the company's current large contracts are with government and public space agency customers. Changes in government policy, budget reductions, or shifting political priorities could create adverse headwinds for the company's business.
• Share Dilution Risk: As a capital-intensive pre-revenue scale business, the company will require continued large capital investments to fund its development roadmap. Future capital raising is expected to potentially come from equity issuance, which would result in shareholder dilution.
• Long Time Horizon Market Risk: Lunar infrastructure development and the cis-lunar economy is a multi-decade long-term initiative. Market expectations are currently ahead of actual commercial demand, and there is risk that actual commercial demand will take much longer to materialize than currently anticipated.

Q: The inauguration of the Kishida administration has created potential strong tailwinds for Japanese space development. How does ispace perceive current information coordination with the Japanese government, the government's level of outreach, and overall current demand for lunar development?

A: Space is one of 17 priority investment areas under the Kishida administration, and Prime Minister Kishida, who previously served as Minister for Space Policy, has been a strong supporter of ispace – he approved the first ever license for lunar resource exploration under Japan's Space Resources Act when he held the portfolio, for ispace's mission to sell lunar regolith to NASA. In updated Japanese national space policy, the number of references to the Moon increased from 8 to 48, highlighting the growing prioritization of lunar development. Globally, the U.S. is advancing the Artemis Program, Japan is collaborating on Gateway development and a pressurized lunar rover with Toyota, and has agreed to send two Japanese astronauts to the lunar surface. This momentum is being driven in part by strategic competition with China's lunar program, which is increasing the priority of lunar activities globally. The company holds a key position providing lunar transportation infrastructure for these national initiatives. I have had the opportunity to represent industry in the aviation and space working group of the Japanese government's growth strategy council, where we have proposed that the Japanese government act as an anchor customer for a steady 10-year program of lunar transportation purchases, equivalent to roughly 200 billion yen for 20 missions, and we are awaiting serious discussion of this proposal within government.

Q: What is the current development progress for the VoidRunner engine that will be used on Mission 3 and Mission 4, and is there a risk of delay to Mission 3? Could Mission 3 and Mission 4 potentially be launched simultaneously in 2028 if delays occur?

A: There have been no material updates to disclose since the last earnings call where we disclosed the development challenge. We are co-developing VoidRunner with a U.S. engine manufacturer, and the engine has not yet achieved the performance targets we require for the mission. We are working together to repeatedly run tests and adjust the design to meet requirements. The supplier leverages 3D printing technology to enable much shorter test iteration cycles than traditional space engine development. We recognize that continued delays could impact the Mission 3 launch schedule, and we are actively working to achieve the required performance as quickly as possible while also developing backup plans for if the current timeline slips. Mission 3 is being developed by the U.S. engineering team and Mission 4 by the Japanese team, so development can proceed in parallel. A simultaneous launch of both missions in 2028 is logically possible, but our priority is to get Mission 3 launched as early as possible.

Q: What were the root causes of failure for Mission 1 and Mission 2, and what key technical improvements have been implemented for Mission 3 and subsequent missions?

A: Both missions reached the final landing phase, but failed at the final step due to altitude measurement and recognition issues, with different root causes for each mission. Mission 1 failed because of a software error that misinterpreted valid altitude data collected by a working sensor. Mission 2, by contrast, had working software but failed because the sensor itself could not collect valid altitude measurements. This was partially due to the need to change sensor suppliers between Mission 1 and Mission 2, and the new sensor did not perform as expected. For Mission 1 and 2, we used a very small, low-cost, low-weight lander design to demonstrate landing capability, which relied on a single-sensor blind landing approach that has no redundancy if the single sensor fails. Starting with Mission 3, the larger lander design allows us to implement major improvements: we will add image-based navigation, where on-board cameras will capture imagery during descent and compare it to mapped lunar features to determine position and altitude, and we will add additional independent sensors to eliminate the single point of failure from relying on one sensor. We expect these changes to drastically improve landing reliability.

Q: What do customers actually value from a successful lunar landing? Are there commercial use cases beyond helium-3 collection?

A: Helium-3 is one well-known potential lunar resource: it is a candidate fuel for nuclear fusion, extremely rare on Earth with a market price of approximately 20 million US dollars per kilogram, and has potential near-term use as a cooling material for quantum computers. The U.S. Department of Energy has already signed a contract to purchase helium-3 collected from the Moon, and multiple startups are entering this sector, one of which has already contracted with ispace for initial exploration transportation. In the near-term, the largest source of demand is from public space agencies: the Artemis Program plans to send astronauts back to the Moon for long-duration stays, which requires extensive new data collection on lunar environment conditions, including radiation levels, surface geology, and construction feasibility. 50 years have passed since the Apollo Program, and there is very limited modern high-resolution data available. NASA has already established the 2.6 billion US dollar (≈350 billion yen) 10-year Commercial Lunar Payload Services (CLPS) program to purchase private lunar transportation services for these payloads, and ispace holds one of these CLPS contracts. Around 60 countries have signed the Artemis Accords, and most will require private lunar transportation services rather than developing their own independent capabilities, creating ongoing long-term demand for ispace's services.

Q: Have you ever traveled to space? Do you plan to travel to space as part of the Moon Valley 2040 initiative? What is the expected cost and return on the long-term vision of 1,000 lunar residents?

A: I have never traveled to space, and I hope to one day be able to go to space (and the Moon) as we build out our vision. Moon Valley 2040 is framed around the 2040s as a long-term target rather than an exact 2040 deadline, and if we reach 1,000 lunar residents it is very possible that I and other ispace employees will travel to the Moon to work there. No specific cost or return figures are available at this stage. The core way we will reduce costs is by leveraging in-situ lunar resources (such as water) to reduce the need to transport all required materials from Earth, but even with this, lunar travel will remain far more expensive than Earth travel for the foreseeable future. Our goal is to build an economically viable system where work on the Moon generates enough value to sustain the economy, and we are building toward that goal step by step.

Q: What was the contract value for Mission 4?

A: (Not explicitly answered in the available transcript, though the question notes the Mission 4 contract value is 5.8 billion yen, which is referenced but not confirmed or contradicted in the available text)