Spire Global Achieves Financial Milestone; Provides Update on Revenue Recognition Review and Restatement

Spire Global, Inc. (NYSE: SPIR) (“Spire” or the “Company”) announces a milestone for new contract bookings in the third quarter and provides an update on the ongoing review of its accounting practices.

During the third quarter, the Company brought in $40.0 million of new contracts. This is the largest value of bookings the Company has received in a quarter.

Spire entered the third quarter of 2024 with a cash and marketable securities balance of $45.8 million and ended the quarter with a balance of $36.6 million. During the quarter, Spire made a $10.0 million payment toward the outstanding principal balance of the term loans under the financing agreement with Blue Torch Finance LLC (“Blue Torch”).

The Company has been making progress in its review of its accounting practices and procedures, which has focused on:

1. revenue recognition related to certain Space Services contracts;
2. the possible existence of embedded leases within certain Space Services contracts; and
3. revenue recognition for certain research and development contracts.

As previously disclosed, the Company determined that its accounting practices and procedures with respect to revenue recognition related to certain Space Services contracts should be restated. Previously, the Company identified two performance obligations in these contracts: a pre-space performance obligation for asset design, manufacturing, and launch; and a second performance obligation related to data provision during the operation of the satellite. After re-evaluating the contractual terms, the Company concluded data provision is the only distinct performance obligation in these contracts. The Company will restate certain previously issued financial statements to remove certain previously recorded pre-space mission activity revenue from the period in which pre-space mission activities were performed under the contracts, and instead, record that revenue over the period in which data is delivered, which begins on the commissioning of a satellite and ends at the termination of a contract or the decommissioning of the satellite, whichever occurs first.

The Company has concluded that most of its satellites do not qualify for embedded lease treatment. The Company’s satellites are multi-purpose, and due to the nature of their design, customers do not have the right to substantially all of the economic benefit produced by the satellites.

Separately, the Company recently initiated a review of certain research and development contracts, including technology development contracts that are funded or co-funded by government agencies like NASA and the European Space Agency. The agencies receive a license, and pay the Company a license fee, to use the intellectual property (IP) developed through these contracts and as such, these contracts are classified as revenue. However, the Company concluded that its previous revenue recognition practice under these contracts, which recognized revenue upon the completion of each contractual milestone in the amount prescribed in the contract for that milestone, was not appropriate as the achievement of a milestone was not a good representation of the pattern of control transfer for the related IP. The Company concluded that the pattern of control transfer for the IP occurs over time as the Company performs its research and development activities. The Company will revise its revenue recognition practice for these prior contracts to use a percentage-of-completion methodology to more accurately measure the pattern of control transfer and for revenue recognition. The percentage-of-completion measurement methodology will generally result in earlier revenue recognition as the Company’s performance precedes the related milestone. In its previously filed financial statements, the Company classified the costs associated with its research and development contracts as part of “research and development” within operating expenses on its Consolidated Statements of Operations. The Company will reclassify the entire costs associated with its research and development contracts from “research and development” to “cost of revenue” within gross profit.