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Nauticus Robotics, Inc. (KITT)·Q2 2023 Earnings Summary

Executive Summary

  • Q2 2023 was a transitional quarter with commercial traction (Shell, Petrobras, Equinor) but soft revenue due to government contract authorization delays; GAAP results swung to net income on warrant liability fair value changes while underlying operations remained loss-making .
  • Revenue fell to $1.13M vs $2.99M in Q2 2022 and $2.82M in Q1 2023; diluted EPS was $0.49 on GAAP driven by non-cash warrant revaluation, with adjusted diluted loss per share at $(0.20) .
  • Management highlighted imminent commercialization: first 2nd-gen Aquanaut logged 100+ offshore hours; expected qualification for Shell in September; Petrobras award opens >$100M/yr opportunity; additional DIU progress and Leidos extension reinforce defense pipeline .
  • Liquidity tightened: cash fell to $4.4M and working capital to $11.7M; company closed first tranche ($5M) and is finalizing a $15M senior secured debt facility to fund fleet build-out—key near-term catalyst for execution and investor confidence .
  • No formal numerical guidance; management expects Q3 revenue “rebound back to where we’ve been running before” as government contracts reauthorize and commercial deployments ramp, making financing and operational milestones primary stock drivers .

What Went Well and What Went Wrong

What Went Well

  • Signed commercial contracts with Petrobras and Shell; Petrobras initial ~$4.3M ~60-day award positions Nauticus for a >$100M/yr market in Brazil, validating Aquanaut’s capabilities and opening global expansion .
  • Commissioning progress: first 2nd-gen Aquanaut logged >100 offshore hours; two additional units nearing assembly completion—“our robots will be able to do some amazing things for our customers” (Nic Radford) .
  • Defense traction: advanced DIU programs and additional Leidos award; incorporation of wholly owned NautiWorks to better serve sensitive government work .

What Went Wrong

  • Revenue decline to $1.13M (vs $2.99M prior year, $2.82M prior quarter) driven by delays in government contract authorizations; management expects rebound in Q3 .
  • Operating expenses rose to $8.0M (+$2.5M YoY), including $1.7M non-cash stock comp and higher public company G&A during commercial transition; underlying adjusted net loss widened to $8.06M .
  • Liquidity pressure: cash decreased to $4.35M with operating cash outflow of $(12.97)M YTD and capex of $(6.10)M; reliance on new debt financing underscores funding sensitivity for fleet scale-up .

Financial Results

MetricQ2 2022Q4 2022Q1 2023Q2 2023
Revenue ($USD Millions)$2.99 $3.23 $2.82 $1.13
Diluted EPS ($USD)$(0.35) $(0.21) $(0.26) $0.49
Net Income (Loss) ($USD Millions)$(3.36) $(8.22) $(10.18) $20.67
Operating Loss ($USD Millions)$(2.52) $(7.12) $(5.82) $(6.87)
Total Operating Expenses ($USD Millions)$5.51 $10.35 $8.64 $8.00
Cost of Revenue ($USD Millions)$2.54 $3.64 $2.93 $1.90

Non-GAAP and adjustments:

MetricQ2 2022Q4 2022Q1 2023Q2 2023
Adjusted Net Loss ($USD Millions)$(3.37) $(7.73) $(6.76) $(8.06)
Adjusted Diluted EPS ($USD)$(0.35) $(0.19) $(0.17) $(0.20)
Notable AdjustmentsFX, warrant liability Combination, debt extinguishment, warrants Tax assessment, warrants Warrant liability change $(29.67)M

Revenue composition:

Revenue Component ($USD)Q2 2022Q4 2022Q1 2023Q2 2023
Service$2,796,159 $3,213,825 $2,820,780 $1,128,115
Service – Related Party$193,400 $14,000 $0 $0
Product$0 $242,637 $0 $0
Product – Related Party$0 $162,068 $0 $0
Total Revenue$2,989,559 $3,227,825 $2,820,780 $1,128,115

KPIs and balance sheet highlights:

KPIQ4 2022Q1 2023Q2 2023
Cash & Equivalents ($USD Millions)$17.79 $12.48 $4.35
Working Capital Surplus ($USD Millions)$33.10 $25.50 $11.70
Inventories ($USD Millions)$6.67 $11.01 $12.54
Accounts Receivable ($USD Millions)$1.62 $2.63 $1.30
Warrant Liabilities ($USD Millions)$32.69 $34.93 $5.85
Total Assets ($USD Millions)$52.60 $49.49 $48.53
Total Liabilities ($USD Millions)$52.58 $58.37 $38.21

Drivers and context:

  • Revenue decline: “primarily attributable to delays in contract authorization with government entities” .
  • GAAP EPS/Net income swing driven by “positive impact from the change in fair value of warrant liabilities” (gain of ~$29.7M) .
  • OpEx increase: +$2.5M YoY; $1.7M from stock comp; remainder from public-company G&A and scaling for commercial operations .
  • Cash burn and capex: Operating cash flow $(12.97)M YTD; capex $(6.10)M YTD .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue trajectoryQ3 2023“Quarters relatively similar; Q2 dip expected” (qualitative) “Rebound back to where we’ve been running before” (qualitative) Maintained qualitative view (no numeric range)
Commercial launch milestones2H 2023Send initial Aquanauts/Hydronauts to North Sea & Gulf in Q4 2023 First 2nd-gen Aquanaut logged 100+ hours; expected to qualify for Shell in September Progress update (execution advancing)
Financing plan2H 2023Cash $12.5M; WC $25.5M at Q1-end Finalizing $15M senior secured debt; $5M funded in July Raised (debt vs equity preference per warrant revaluation)
OpEx/Margins/Tax2023Not providedNot providedNo formal guidance

Earnings Call Themes & Trends

TopicQ-2 (Q4 2022)Q-1 (Q1 2023)Current (Q2 2023)Trend
AI/autonomy & product readinessNearing production completion; commissioning to begin Splashdown and initial commissioning of first 2nd-gen Aquanaut 100+ offshore hours; two more units nearing completion Steady progress → commercial readiness
Commercial pilots/customersShell demo complete; scoping next phase Preparing offshore pilots later in year Contracts with Petrobras, Shell, Equinor via Stinger Expanding pipeline and awards
Defense programs (DIU/Leidos)Progress on DIU mine countermeasure programs Advanced DIU phases; $2.7M Leidos extension Advanced DIU; additional Leidos award; formed NautiWorks Building momentum
Supply chain/productionPrior delays; most issues resolved Commissioning underway Assembly nearing completion; fleet build ongoing Improving supply/production execution
Financing/liquidityYear-end cash/short-term investments $23.0M Cash $12.5M; WC $25.5M Finalizing $15M debt; $5M funded in July Liquidity tightening; debt solution
Macro/regulatoryNot highlightedNot highlightedNot highlightedNeutral

Management Commentary

  • “As we embark on the commercial launch of the Nauticus Fleet, the demand for our autonomous service offering is increasing... These contracts equate to multi-million-dollar bookings and open up a much larger potential scope of work...” — Nic Radford, CEO .
  • “I’ve never been more optimistic about the future of Nauticus... we are positioned with the right product at the right time to disrupt a $30 billion market.” — Nic Radford .
  • “The recent revaluation of our warrants reflects an updated modeling process and our current belief that debt rather than equity can be used to finance Nauticus’ near-term capital requirements.” — CFO Rangan Padmanabhan .
  • “We’re currently finalizing commitments for an additional $15 million of non-dilutive capital... $5 million has already been funded in July.” — Nic Radford (prepared remarks) .

Q&A Highlights

  • Revenue trajectory: Management expects Q3 to “rebound back to where we’ve been running before,” characterizing Q2’s shortfall as a timing issue in government contract authorizations, with commercial momentum building from Aquanaut production and deployments .
  • Commercial contracts as catalysts: Shell work moves from trials to live offshore assets; successful performance could unlock longer-term contracts; Petrobras award (~$4.3M initial) positions KITT for a >$100M/yr market opportunity; Equinor engagement via Stinger highlights Aquanaut flexibility .
  • Financing: $15M non-dilutive capital underway to avoid delays due to financing; potential larger round contemplated to expand fleet and service capability .

Estimates Context

  • Wall Street consensus (S&P Global) was unavailable at time of query; comparison to estimates could not be completed due to provider limits. We cannot assess beats/misses for Q2 2023 vs consensus based on S&P Global data at this time.
  • Implication: Given revenue shortfall vs prior periods and GAAP EPS uplift from non-cash warrant revaluation, investors should focus on adjusted metrics and forward execution milestones rather than GAAP EPS optics .

Key Takeaways for Investors

  • Commercial validation accelerating: Petrobras/Shell/Equinor awards and September qualification target for Shell are tangible milestones that can catalyze narrative and orders .
  • Near-term revenue recovery depends on government contract timing and initial commercial deployments; management expects Q3 rebound back to prior run-rate (no numeric guidance) .
  • GAAP profitability in Q2 is non-economic (warrant liability mark-to-market); adjusted net loss widened QoQ—use non-GAAP to assess core operations .
  • Liquidity tightness is the key risk; closing the $15M debt (with $5M already funded) is critical to scale fleet and capture customer demand; watch additional financing developments .
  • Capex and inventory build reflect fleet commissioning; execution on deployments should translate these into service revenue and margin scale over coming quarters .
  • Defense pipeline (DIU/Leidos, NautiWorks structure) provides diversified revenue potential; contract authorizations remain a timing variable .
  • Stock narrative likely driven by: financing closure, Shell qualification, Petrobras deployment outcomes, and booking cadence—each can shift investor confidence and estimate trajectories .

Additional Document References (Q2 2023 and prior quarters)

  • Q2 2023 8-K earnings press release and financials .
  • Q2 2023 earnings call transcript .
  • Petrobras contract press release (June 23, 2023) .
  • Q1 2023 8-K earnings press release and financials .
  • Q4 2022 8-K earnings press release and financials .