Astroscale (TYO: 186A) released its annual financial results for its fiscal year ending April 2025. “Project Income,” which Astroscale defines as revenue plus government grants/contracts, totaled ¥6.1 billion. This 30.5% year-on-year growth may appear impressive, but it is a significant shortfall from the ¥12 billion Astroscale targeted at the time of its IPO. While Astroscale exceeded its revised April 22nd forecast of ¥5.5 billion in Project Income, beating a forecast provided just eight days earlier is likely sandbagging. Astroscale formally retracted its FY 2026 Project Income guidance of ¥36 billion, replacing it with a new range of ¥11 to ¥13 billion.
Hat’s off, however, to Astroscale CEO Nobu Okada. He went so far as apologizing to investors, stating: “I would like to sincerely apologize for the downward revisions we made twice during FY2025. As the person responsible for our P&L, I take full responsibility.”
Still, Astroscale’s latest investor presentation appears hyped at best, or misleading at worst. Slide give claims Astroscale secured “5 new major projects” (emphasis added) versus two they previously expected. Three of these projects are CAT-IOD, a BAE Systems project, and a Japanese Ministry of Defense (JMOD) project. Astroscale announced the JMOD project in February, valued at 6.6 billion yen (or ~$47 million). This, by any definition, is a major project. The amount exceeds Astroscale’s total Project Income last year. However, the BAE Systems project totals £5.15 million pounds. And Phase-A of the CAT-IOD project is just €590,000 euros. Two projects are thus far from “major” as Astroscale hyped.
Astroscale’s In-orbit-servicing business: Life Extension In-orbit (LEXI)
Astroscale has long touted being on the cusp of the GEO satellite life extension project LEXI-P, worth $121 million. Astroscale executed a non-binding term sheet with the customer, which, if confirmed, would indeed be a “major project.” In July 2024, Astroscale represented that the LEXI-P customer is a U.S.-based commercial entity with launch planned in 2025 or early 2026. Astroscale later represented it expected to recognize revenue from this customer through April 2026. Astroscale, on December 13, 2024, doubled down, forecasting revenue from LEXI-P would commence in fiscal year FY2025. Now, Astroscale acknowledges LEXI-P remains a work-in-progress and advises, “reaching a final agreement may require additional time.” The launch target has been pushed back to fiscal year 2027.
Astroscale now promotes two business models for LEXI customers. Astroscale illustrates government customers may prepay for the LEXI servicer, taking ownership at the time of successful docking. Under this model, Astroscale realizes all revenue in the near term. The alternative model is for commercial customers, presumably including LEXI-P. Under that model, Astroscale receives a small down payment at contract execution. Then yearly service fees begin upon docking with the customer’s GEO satellite. Under this model, revenue is predominantly realized mid- and long-term, during the period Astroscale’s LEXI servicer satellite stabilizes the customer’s satellite in orbit. This seems to call into question Astroscale’s prior depiction that LEXI-P revenue would be primarily near-term. Astroscale confirms the $121 million LEXI-P project contemplates the former sales model (government prepay). A second potential customer is contemplating the other sales model, and Astroscale advises the satellite for this project will launch approximately three years after contract execution. The fact Astroscale’s second LEX customer contemplates a delayed revenue model severely calls into doubt how realistic Astroscale’s prior forecast of ¥36 billion for FY 2026 Project Income ever was. That forecast required Astroscale securing a second LEXI mission and realizing that revenue in 2026. Now Astroscale discloses the bulk of such revenue is at least three years out from contract signing. Astroscale writes that “Revenue from LEXI-P is expected to be recognized from FY2027 onward,” which is a two-year delay from earlier forecasts.
Shift to defense business
Astroscale states defense-related contracts will be a revenue growth driver for the mid-term. Defense contracts now comprise more than one-third of Astroscale’s contracted backlog: ¥10.4 billion of ¥29.7 billion total. Astroscale’s total backlog, including expected, uncontracted backlog, now stands at ¥44.4 billion.