Intuitive Machines (NASDAQ: LUNR) delivered a quarter of stark contrasts. Revenue quadrupled to $206 million from $50.3 million a year ago, driven by spacecraft production and program execution. The headline numbers tell a less flattering story: revenue missed the consensus estimate of $216.3 million, and the net loss per share of $(0.29) was more than three times wider than the $(0.09) analysts had penciled in.
The miss was not a demand problem. It was a cost and mix problem. Product revenue, a new line item that didn't exist a year ago, contributed $166.7 million in the quarter. The cost of that product revenue was $119.3 million, implying a gross margin of just 28.4%. Service revenue, meanwhile, fell to $36.7 million from $50.3 million a year ago as the company shifted toward higher-volume, lower-margin production work. The operating loss widened to $47.1 million from $28.6 million, driven by a surge in general and administrative expense to $60.3 million from $15.6 million — a 287% increase that far outpaced revenue growth.
That G&A line deserves attention. It includes transaction and integration costs related to the acquisitions of Goonhilly Earth Station and COMSAT, closed in August, as well as the earlier Lanteris acquisition. The adjusted EBITDA reconciliation shows $7.9 million in transaction and integration costs for the quarter. Even after backing those out, adjusted EBITDA was negative $13.8 million, an improvement from negative $25.4 million a year ago but still a cash drain. The company burned $59.8 million in operating cash during the quarter, and free cash flow for the first half was negative $145.8 million.
The bull case rests entirely on the backlog and the forward guide. Backlog hit $1.8 billion at quarter end, up from $213 million at year-end 2025 — a $1.55 billion increase that includes $612.8 million from the Lanteris acquisition and $920 million in new Q2 awards. The standout was a $600 million-plus contract for three commercial GEO satellites, a sign that Intuitive Machines is winning in the commercial market, not just on NASA contracts. National security revenue grew from 3% to 30% of the mix year-over-year, and a July award for 18 spacecraft under the Golden Dome constellation suggests that trend has further to run.
Management initiated full-year 2026 revenue guidance of $900 million to $1 billion, implying a dramatic acceleration in the second half. To hit the midpoint of $950 million, the company needs to generate roughly $557 million in revenue across Q3 and Q4 — more than double the Q2 run rate. That is an aggressive assumption, and it depends on converting the backlog into recognized revenue at a pace the company has not yet demonstrated. The guidance also calls for positive adjusted EBITDA for the full year, which would require a sharp swing from the negative $13.8 million in Q2 alone.
The balance sheet provides some cushion. Cash and cash equivalents stood at $367 million at quarter end, down from $583 million at year-end 2025, reflecting the Lanteris acquisition and strategic inventory purchases. The company raised $238.8 million in equity during the quarter, which helped fund the cash burn. But total assets of $1.89 billion now sit against $975.8 million in liabilities and $1.19 billion in redeemable noncontrolling interests, a structure that will require careful management as the company scales.
The real tension in this quarter is between the operational present and the strategic future. The present shows a company that is spending aggressively to build capacity — inventory, ground stations, long-lead materials — and is not yet generating returns on that investment. The future shows a backlog that has grown eightfold in six months, a diversified customer base, and a revenue guide that, if achieved, would put the company on a trajectory toward profitability. The market will have to decide which signal to trust. The next two quarters will provide the answer.