Space company Satellogic to go public via Cantor Fitzgerald SPAC at $1.1 billion valuation

Satellite Earth imagery specialist Satellogic is preparing to go public, announcing on Tuesday that it will be the latest in a string of space companies merging with SPACs.

Satellogic is merging with special purpose acquisition company CF Acquisition Corp. V – a SPAC sponsored by Cantor Fitzgerald that trades under the ticker CFV. The deal gives the space company a $1.1 billion equity valuation and is expected to close early in the fourth quarter, resulting in Satellogic listing on the Nasdaq under ticker SATL.

A SPAC or special purpose acquisition company raises capital in an initial public offering and uses the proceeds to purchase a private firm and take it public.

Satellogic has 17 imagery satellites in orbit so far, but that is a fraction of the number it needs to bring in projected annual revenue of nearly $800 million within four years.

“We’re going to grow the full [satellite] constellation by 2025 to 300 satellites, to get daily remaps of the entire planet,” Satellogic CEO Emiliano Kargieman told CNBC. “We think that’s really going to change the way companies make decisions every day.”

The deal is expected to add about $274 million in cash for Satellogic’s growth, through funds raised by CFV and a $100 million PIPE round – or private investment in public equity – led by SoftBank and Cantor Fitzgerald. The company previously raised more than $100 million in venture capital and debt since its founding in 2010, with existing Satellogic investors including Chinese behemoth Tencent, Brazilian venture capital fund Pitanga, and the Inter-American Development Bank.

“Satellogic is uniquely positioned to dominate the Earth Observation industry. Its technology, data, and analytics have vast use cases across countless industries,” Cantor Fitzgerald chairman and CEO Howard Lutnick said in a statement.

Shares of CFV rose 1.6% in trading from its previous close of $9.71.

With 240 employees around the world, Satellogic is headquartered in Montevideo, Uruguay while its research and development team is based across the border in Argentina. The company also has operations in Spain, Israel, the U.S. and Beijing.

Satellogic joins a trend of space companies going public through SPAC deals, with Virgin Galactic the first of the recent generation in 2019. Rocket builder Astra and satellite broadband focused AST & Science have each begun trading, with companies Rocket Lab, Spire Global, BlackSky, Redwire, and Momentus expected to follow in the coming months.

The company’s ÑuSat satellites weigh just 42 kilograms (or 93 pounds) each to launch and are about the size of a kitchen dishwasher. Satellogic signed a multi-launch agreement with SpaceX earlier this year to launch the rest of the 300 satellites for its “Aleph” constellation – named in reference to a short story by Argentinian writer Jorge Luis Borges “about an object that allows you to see everything that is happening in the world,” Kargieman said.

Satellogic is vertically integrated, which Kargieman emphasized is a “big differentiation that allows us to hit 60 to 100 times better unit economics than any other player in the small satellite market.”

The current ÑuSats capture images at 70 centimeters per pixel and can cover 300,000 square kilometers of Earth in a day. Combined with a cost of $450,000 per satellite, Kargieman says his company has unit economics that “nobody” else in the Earth imagery market can match.

“You don’t really have to focus on the unit economics so much for the defense market, as they are willing to pay a different price point for the data,” Kargieman said. “If you really want to deliver to mainstream applications, as we plan to do, then you have to be able to deliver it at zero marginal cost.”

The Earth imagery marketplace is dominated by demand from defense and intelligence agencies, but is growing in applications for the energy, insurance, agriculture and forestry sectors. A report by space research firm Euroconsult estimates satellite imagery has an $140 billion total addressable market.

“We think this is a winner takes most or winner takes all market,” Kargieman said. “This is a supply limited market – governments just can’t get enough data today; there’s not enough satellites out there.”

Satellogic aims to be able map the entire planet weekly by 2023, and daily by 2025, to tap “over $40 billion” worth of opportunities in the market.

“We will also have the ability to revisit points of interest roughly every five minutes, so we will be able to do things like give you a two-minute long video of any event developing in the world,” Kargieman said.

Satellogic’s investor deck highlighted a use case example with oil pipeline monitoring, as Kargieman said the company did a pilot program with a major oil and gas corporation 18 months ago. The company needed to monitor about 1,800 miles of pipeline every other week, which cost about $750 per mile to check with aircraft. Satellogic “demonstrated similar detection capabilities at costs of less than” $60 per mile, the company said.

While Satellogic’s presence around the world allows it to work with U.S. allies, and the company has a local subsidiary Satellogic North America to work with the U.S. government, it’s also betting on China through its office in Beijing.

“We think the Chinese market for commercial applications will be very interesting and it’s a nascent market for observation … it is growing from practically scratch because Chinese companies have not been allowed so far to build technology to deliver data to the commercial market,” Kargieman said.

The CEO declined to comment on concern about the government ownership structure of many Chinese companies, saying instead that Satellogic is focused on private players.

“In China we’re selling to commercial players in the market – information of what is happening inside of China for consumption inside of China – so we don’t see any concerns,” Kargieman said.

Satellogic booked $0 revenue last year, but expects to see that tick up to near $7 million in 2021 due to new contracts that began generating revenue in April.

“Up until last year we were testing more technology in orbit and improving the technology and validating the commercial model,” Kargieman said.

The company has a backlog of about $38 million in signed contracts so far, and forecasts a “near-term pipeline” of $800 million in opportunities over the next two years, according to an investor slide deck. But Satellogic will need to generate over $100 million in annual revenue to meet its goal of profitability by 2023. The company then expects capital expenditures will remain relatively low as revenue soars, aiming to generate $255 million in free cash flow once it has its full Aleph constellation in orbit.