Kleos Space builds a Solid Foundation for a strong 2022

Highlights:

• Converting pipeline to contract backlog for data license subscriptions, as the basis for future recurring revenue, including:
  • 7 Data Evaluation and follow-on contracts signed with Government Intelligence Agencies of the NATO Allies
• 2022 Targets:
  • Monthly EBITDA positive status during mid-2022
  • End 2022 ARR of minimum US$20M
• Global pipeline increased to over 263 qualified deals, including:
  • 73 Guardian LOCATE data evaluation contracts, representing min ARR of US$6 million
  • 7 contracts in negotiation, representing min US$4 million
• Guardian LOCATE API ready for distribution of data
• Finalising commissioning of Vigilance Mission (KSF1) satellites
• Third satellite cluster, Patrol Mission (KSF2), ready to launch in April 2022
• Fourth satellite cluster, Observer Mission (KSF3) satellite build underway, targeting mid-2022 launch
• In-orbit improvements to KSF1’s flight software will be applied to the Patrol and Observer Missions, reducing commissioning times for their launches
• We continue to build a world class team with a global footprint to execute our strategy

Kleos Space (ASX: KSS, Frankfurt: KS1), a space-powered Radio Frequency Reconnaissance data-as-a-service (DaaS) company, provides the following update for the quarter ending 31 December 2021 (Q4 2021)

Commenting on the company’s December quarter progress, Kleos Space CEO Andy Bowyer said:

“Kleos has made significant progress towards increasing the capacity, frequency and quality of its data delivery as well as converting pipeline to contracts to support the generation of recurring revenues from subscription licenses. Despite delays in launch & satellite commissioning, we remain focussed to reach monthly EBITDA positive status during the middle of 2022.

“Processed data from our Scouting Mission provides us with our first data product, and lowest tier subscription license. During the quarter, the team completed optimisation activities to further enhance the quality and frequency of its data delivery to support future revenue generation. By the end of 2022, we will have data from four satellite clusters, enabling tiered subscription licenses and increasing revenue generation from the large existing customer base.”

In 2022 we are focussed on delivering exceptional fundamentals-based value for our shareholders. We will achieve this by executing:

• Exceptional mission capability and data products, whilst pacing business operations growth to hit EBITDA positive and cashflow positive status.
• Long-term value creation through innovation, IP and growth opportunities; communication of value drivers; the model drivers, contracts, execution and technological differentiators.

COMMERCIAL PROGRESS
Kleos’ precision geolocation data is sold globally as-a DaaS to qualified government and commercial entities. Data is sold on a volume basis (million km²/month collected) with each new satellite cluster increasing Kleos’ data collection capability and improving revisit rates over key areas of interest. Subscribers access Kleos’ GUARDIAN Locate data from its satellites through an API.

In Q4, Kleos’ converted further pipeline to contractual backlog, positioned to commence generating repeat subscription revenues supporting the target to achieve monthly EBITDA positive status during mid 2022.

Its subscriber base now comprises:

• 73 Guardian LOCATE data contracts, representing US$6 million minimum ARR
• 23 negotiations and agreements with resellers, integrators, and channel partners

Kleos’ added subscriber backlog in Q4, including:

• New qualified deals (now totalling 263):

• • 16 new defense and security entities
  • 16 new resellers
  • 8 new integrators

• 5 new Guardian LOCATE evaluation contracts were signed in quarter 4 2021, representing US$450,000 ARR post two-month trial period at lowest subscription level
• 15 new customers currently reviewing data [BA1]
• 2 new contracts in negotiation representing ARR of up to $2M

Kleos’ DaaS business model has a low operational cost base and is highly scalable. Subscribers pay license fees to access the data, generating recurring revenues. Importantly, subscribers do not own the data. Each new satellite cluster creates higher-value data sets and tiered subscription licenses. Kleos is targeting to have 4 satellite clusters generating revenues within the next 12 months.

TECHNICAL DEVELOPMENT
Constellation Development
Kleos is targeting a total constellation of up to 20 clusters of four satellites for optimal global coverage and near-real-time revisit rates over key areas of interest. Kleos currently has eight satellites in low earth orbit (Scouting Mission and Vigilance Mission), one cluster awaiting launch (Patrol Mission) and its fourth in development (Observer Mission). The Patrol and Observer Missions will each provide an additional 119 million square kilometres of coverage per day, significantly increasing the volume of data available to subscribers while also improving the value of the data. More frequent revisit rates over key areas of interest provide subscribers with more accurate, and timely, intelligence. As subscribers pay on a volume basis, greater data collection capabilities increase revenue opportunities.

Outlook
Kleos remains focused on continuing to enhance the quality and frequency of data delivery and converting introductory subscriber contracts to repeat recurring revenue, targeting monthly EBITDA positive status during mid 2022. In addition, Kleos will continue to build its constellation to increase the value and volume of its radio frequency geolocation data, growing subscriber numbers and increasing revenue contribution from existing subscribers.

Kleos’ FY22 priorities are:

• Onboard new data subscribers, increasing revenue as higher-value data sets become available
• Data delivery from the Vigilance Mission(KSF1) satellites
• Launch the Patrol Mission (KSF2) satellites in April 2022
• Build and launch the Observer Mission (KSF3) satellites in mid-2022
• Enable subscribers to access additional data sets from the Patrol and Observer Missions