Nauticus Robotics, Inc. (KITT)·Q3 2022 Earnings Summary

Executive Summary

• Q3 revenue was $3.0M, up 51% YoY, driven by new defense contracts and continued Aquanaut leasing; GAAP net loss widened to $11.0M ($0.67/share) due chiefly to SPAC-related one‑time costs and higher cost of revenue and G&A .
• Non‑GAAP adjusted net loss was $3.7M ($0.22/share), excluding warrant fair value change, business combination expenses, and earnout deemed dividend .
• Supply chain delays pushed initial commercial Aquanaut deliveries to January 2023, with two more by mid‑2023; management now expects material commercial service revenue in 2024, with Q4 2022 revenue “a little more than $3M” (below prior commentary) .
• Strategic momentum: Shell field trial, DIU multimillion contract (TerraNova), and Leidos defense partnership; backlog/unfulfilled performance obligations totaled ~$65.7M (incl. $54.2M Triumph Subsea), with ~$7.7M shifted from 2022 to 2023 .

What Went Well and What Went Wrong

• What Went Well

  • Closed SPAC merger (net proceeds $58.7M) and strengthened strategic base (Schlumberger, Transocean investors); ended Q3 with $35.9M cash and $43.6M working capital .
  • Commercial traction: Shell agreement to deploy Aquanaut with supervised autonomy; DIU multimillion award for TerraNova; defense development partnership with Leidos .
  • Strong pipeline and global engagement (active discussions on five continents) underpin a large TAM; Q3 revenue +51% YoY to $3.0M .

• What Went Wrong

  • Operating expenses surged to $9.0M (incl. $3.5M SPAC costs), with additional one‑time deal-related costs in cost of revenue and G&A; net loss widened to $11.0M .
  • Supply chain delays deferred Aquanaut deliveries to Q1 2023 and pushed the commercial revenue ramp into 2024; Q4 2022 revenue guided to “a little more than $3M,” below prior commentary .
  • Triumph Subsea contract amendment moved ~$7.7M 2022 revenue into 2023, reducing near‑term revenue recognition .

Financial Results

Overall P&L (YoY comparison)

Quarter-on-quarter and vs Estimates

Revenue mix

Balance sheet and liquidity

KPIs / Backlog

Notes: Management disclosed ~$7.7M of 2022 revenue shifted into 2023 from the Triumph contract amendment .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Our commercial pipeline continues to expand and we are now in active discussions with potential customers on five different continents… we expect to have our initial second‑generation commercial Aquanaut delivered in January 2023, with two additional units following by mid‑year.” – CEO Nic Radford .
• “When we first announced our business combination… supply chain delays have generally been worse than anticipated… Aquanauts are now expected to be delivered in the first quarter of 2023, which… pushed out acceleration in growth to later in 2023 and then 2024.” – CEO .
• “Looking forward, we expect fourth quarter 2022 revenues to be a little more than $3 million… lower than what was implied by our previous commentary as supply chain issues have delayed the delivery of commercial units.” – CFO Rangan Padmanabhan .

Q&A Highlights

• Non‑GAAP adjustments: CFO clarified adjusted net loss includes warrant liability fair value change (gain) and one‑time SPAC costs; earnout valuation (~$5M) referenced in adjustments .
• Commercialization cadence: Q1’23 mostly commissioning; qualification transitions through Q2’23; Shell pilot mid‑2023 with stage‑gated milestones .
• Inventory/Capex mix: ~$4M Aquanaut/Hydronaut production and ~$1.6M Olympic Arm within inventory; future fleet units for RaaS will be capex, not inventory .
• DIU opportunities: Milestones every ~60 days; ToolKITT licensing opportunity “in the hundreds to mid‑hundreds” of units; platforms opportunity as well .
• 2023 outlook: Management refrained from specific guidance; acknowledged sliding commercialization due to supply chain; still expects YoY revenue growth in 2023, with significant ramp in 2024 .

Estimates Context

• Wall Street consensus (S&P Global) for Q3 2022 revenue and EPS was unavailable at time of retrieval; as a result, beat/miss vs consensus cannot be assessed. The company guided Q4 2022 revenue to “a little more than $3M,” reflecting delayed commercialization versus prior commentary .
• Implication: Sell-side models likely need to shift 2022 revenue into 2023 and 2024 and increase the mix of defense/software (ToolKITT) near term, while reducing near‑term RaaS contribution given Aquanaut delivery delays .

Key Takeaways for Investors

• Q3 showed strong YoY growth but negative operating leverage as one‑time SPAC costs and higher delivery costs weighed on margins; watch normalization of COGS/G&A post‑deal .
• Supply chain pushed Aquanaut commercialization to 2023/2024; near‑term revenue mix skews to defense, services, and software (ToolKITT) rather than RaaS; timing is the key overhang .
• Backlog/UFPO of ~$65.7M (Triumph $54.2M) underpins medium‑term growth, but cash conversion depends on delivery milestones; ~$7.7M shifted to 2023 highlights execution/timing risk .
• Liquidity is solid (cash $35.9M; working capital $43.6M), but note ~$36.5M principal convertible debt outstanding (effective interest ~15.9% on debentures) and warrant overhang .
• Near‑term catalysts: Q4 revenue print (~>$3M), January 2023 delivery of first second‑gen Aquanaut, Shell mid‑2023 pilot readouts, DIU milestone wins, and updates on Triumph delivery schedule .
• Strategic optionality: ToolKITT licensing into existing ROV fleets offers high‑margin software revenue and broader TAM, potentially smoothing the ramp while Aquanaut deliveries scale .
• Risk/reward skews to execution on deliveries and customer pilots; evidence of successful commissioning, customer conversions, and booking-to-bill on Triumph will likely drive multiple re‑rating.

Citations:

• Q3 press release and financials (Form 8‑K, Ex. 99.1): .
• Q3 10‑Q: financial statements, backlog, contract amendment, warrants/debt details: .
• Q3 earnings call transcript: strategy, supply chain, guidance, DIU/ToolKITT, Q&A: .