Major Gomspace satellite customer withholding payments

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TAMPA, Fla. — Gomspace delayed the release of financial results Oct. 27 as the European smallsat maker tries to get a major commercial customer to pay its bills.

The company halted work on a contract accounting for just under half its annual revenues earlier this month, following about $3.6 million in unpaid invoices and $1.6 million of work-in-progress it had yet to invoice.

Gomspace expects 2022 revenue to total roughly $17 million to $23 million as a result, down from its earlier $24 million to $27 million full-year forecast.

Gomspace intends to publish financial results for its most recent quarter Nov. 28 as it reviews how to treat the suspended contract in its accounts.

According to Gomspace CEO Niels Buus, the issue with the company he declined to name stems from “a scope increase that the customer has requested that they do not pay their invoices for.”

Buus referred SpaceNews to a recent interview he did with Danish newspaper Nordjyske Stiftstidende, which said this customer had also requested an accelerated timeframe for a project worth around $15 million in total.

In 2018, Gomspace was forced to lay off about a third of its workforce after scrapping a contract with Sky and Space Global, a communications startup, for a 200-cubesat order following missed payments.

Buus told the Danish newspaper that Gomspace is moving employees that had worked on its recently suspended contract to other tasks, meaning there will be no layoffs this time around for its 250-strong workforce.

During Gomspace’s last set of results July 25, Buus said the company had shown strong financial performance in delivering platforms, payloads and subsystems.

“However, this is not enough to offset the increased cost of completing one large commercial project and a few other scientific satellite solutions with a high degree of non-recurring engineering,” he said.

Combined with the effect of fewer scientific satellite orders that usually give significant prepayments when contracts are signed, the publicly listed company reported negative cashflow for the three months to the end of June.

Gomspace also said it was exploring financing opportunities to meet the shortfall.

The manufacturer said net revenues for the second quarter increased 8% to around $4.7 million, compared with the same period last year.

However, it recorded a deeper loss for the period at about $2.6 million. 

Keeping pace with the market

Executives have warned that worsening economic conditions could slow growth in the space industry in the next few years and dry up capital for satellite operators and their manufacturers.

Many less established satellite manufacturers also risk overextending themselves as raw materials and other costs rise for projects they secured after aggressively undercutting the competition, according to Luis Gomes, CEO of smallsat maker AAC Clyde Space.

“There are a lot of companies on the market [and] a lot of competition,” Gomes said in an interview with SpaceNews.

“And that means that sometimes companies take contracts that they can’t deliver.”

Marc Bell, CEO of smallsat maker Terran Orbital, pointed to the dangers of working on credit in this challenging environment. 

Most of the projects Terran Orbital takes on are related to the U.S. government, “and they always pay their bills,” Bell said.

For commercial customers, he said work is paid for in advance, with only rare exceptions for companies with exceptionally good credit scores.