Spire Global to revise financials for accounting of space contracts

Spire Global said last night it retained technical accounting experts to help examine and make recommendations regarding the potential existence of embedded leases of identifiable assets in certain contracts in the company’s “Space as a Service” business and the recognition of revenue and related costs for pre-space mission activities under such contracts. The company is reviewing the potential existence of embedded leases of identifiable assets in the contracts. Separately from this ongoing review, Spire has determined that its accounting for these contracts, including primarily revenue and cost recognition timing for pre-space mission activities, need to be revised to remove certain previously recorded pre-space mission activity revenue from the period in which pre-space mission activities were performed under the contracts, and instead, record that revenue over the period in which data is delivered. In connection with this evaluation, on August 23, the audit committee of the board, after discussion with the company’s management and with PricewaterhouseCoopers LLP, concluded that the company’s previously issued consolidated financial statements for the annual and interim periods within the fiscal years ended December 31, 2023 and 2022, and for the quarter ended March 31, 2024 will need to be restated. While the Company’s review is ongoing, at the time of issuing this press release, the type of Contracts that the Company has identified for re-evaluation and restatement resulted in recognized revenue currently estimated to be $10 to $15 million on an annual basis. Depending on the results of the review, additional financial measures such as gross profit could also be impacted. However, the Company believes that the restatement of its revenue recognition for these Contracts will not impact its overall cash flows for any period.