Mynaric — Customer engagement intensifying

Mynaric is expanding capacity to support production of 2,000 laser communications terminals per year in future and has refined its space and airborne terminal designs for volume manufacture. These actions put Mynaric in a good position to take market share as the SDA and others move from the pathfinder phase to full-scale deployment of hundreds of satellites. For example, Mynaric has been selected by SpaceLink to provide terminals for its proposed satellite network providing data relay services and by Cloud Constellation for its proposed network providing secure cloud storage on satellites. The group recently signed a multi-year agreement with Northrop Grumman worth at least US$35m, under which Mynaric will be the strategic supplier of laser communications tailored to the needs of specific US government space programmes. Mynaric has also started a joint demonstration campaign of its airborne terminals with high-altitude platform specialist H3 HATS.

Mynaric’s H121 results show the effects of the preparations across the group for pre-series production. Revenues jumped from €0.1m to €1.3m year-on-year, all attributable to the US space sector. Losses after tax more than doubled to €16.1m, reflecting higher personnel costs and the cost of materials. Net cash (there is no debt apart from finance leases) decreased by €24.8m to €18.4m. Mynaric has recently filed a prospectus relating to a potential IPO and listing in the United States under the ticker MYNA to improve the company’s access to US capital markets.

Management does not expect Mynaric to be profitable until the medium term, so we present a scenario analysis rather than a peer-group comparison of multiples. This analysis shows a constellation of 100 low earth orbit (LEO) satellites could require €75m of Mynaric’s laser communications terminals and a cluster of 250 airborne communications platforms could require equipment, with an estimated €113m in revenues attributable to Mynaric.

We have previously inferred that Mynaric has been selected as one of the vendors of laser communication products for the first phase of the SDA’s proposed satellite communications network, with the associated contract in the mid-seven-digit euros range. Mynaric has also been selected by Telesat to supply multiple units of its CONDOR inter-satellite terminals to the Defense Advanced Research Projects Agency’s Blackjack programme. The terminals are scheduled to be delivered by the end of 2021 to the system integrator. Mynaric has recently signed a multi-year, strategic agreement with Northrop Grumman as a strategic supplier of laser communications tailored to the needs of specific US government space programmes. The agreement encompasses business worth at least $35m over the agreement term from the supply of products and associated services. Northrop Grumman will separately issue a purchase order for a set of spaceborne terminals to seal the new relationship. Earlier this year Mynaric submitted bids relating to multiple US government space programmes with a combined value in the mid-double digit million dollar range to Northrop Grumman. The US government has not awarded the relevant contracts for these programmes yet.

While the US governmental market is by far the most important market for Mynaric at present, the company is also attracting the attention of other customers. The first U.S. company to launch and operate Synthetic Aperture Radar (SAR) satellites, Capella Space, has secured options for up to 20 Condor terminals for delivery from Q422 onwards. The terminals will enable Capella Space to forward the data it collects with compatibly equipped government satellites and military operations on the ground. In August 2021 Mynaric signed an agreement with SpaceLink to provide terminals for satellites in medium earth orbit (MEO) with a total order volume of up to $28m and the first deliveries scheduled for Q123. SpaceLink has also ordered an undisclosed number of smaller, third-generation terminals (see below) for delivery by late 2022. These will be deployed at the LEO end of LEO-MEO relay links connecting third parties’ LEO satellites to SpaceLink’s MEO data relay service. The service will be offered to commercial and government customers. In May 2021 Mynaric and Cloud Constellation signed a memorandum of understanding under which Mynaric’s laser communication products will form the critical connections between Cloud Constellation’s LEO satellites. During the first phase of the planned partnership, Mynaric will provide all the inter-satellite terminals for the first 10 satellites of Cloud Constellations’ proposed SpaceBelt network. SpaceBelt is intended to provide Data-Security-as-a-Service and further secure cloud storage and management services to the US government and security-sensitive commercial customers.

In May 2021 Mynaric successfully demonstrated that its second generation spaceborne terminal was compliant with the SDA’s optical intersatellite link (OISL) standard and will thus be compatible with products from other OISL vendors implementing the same standard. Mynaric was the first manufacturer to demonstrate compatibility. Customer feedback on the second generation spaceborne product has helped define a third-generation product, the CONDOR Mk3. This is smaller, lighter and lower power than the previous generation. Importantly, it is designed for mass-manufacture, supporting the cost, volume and lead-time ambitions of customers such as the SDA.,

On the airborne side of the business, the US aerospace and defence customer who received two pre-series airborne terminals during Q420 has started to use these terminals for demonstrations in various deployment scenarios. In October 2021 Mynaric announced that it had started a joint demonstration campaign with German-based H3 HATS, which specialises in high-altitude platforms. Initial flights used two of Mynaric’s HAWK terminals, one on the ground and one mounted in the fuselage payload bay of an aircraft, to successfully demonstrate stable bidirectional laser links with 10Gbps speed between the terminals. Importantly, the tests used pre-series production terminals rather than one-off prototypes or technology demonstrators, making them the world’s first demonstration of an industrialised optical communications terminal for airborne applications.

After building close to a dozen terminals in FY20, primarily for in-house testing, Mynaric is in the process of constructing around 50 terminals this year which will be used for in-house testing, refinement of production processes and initial customer deliveries. Mynaric believes that this total of 50 terminals represents a higher number than have ever been brought into use by all of its commercial competitors combined. As part of getting ready for volume shipments, in June 2021 Mynaric opened a new production hall at its facility in Germany. This facility recently reached high double-digit annual production rates and is on track for triple-digit production for 2022 to meet the market demand from both commercial and government customers, with an ultimate annual production target of 2,000 terminals. Importantly, Mynaric has brought manufacturing of critical optical components in-house. It has also brought most of the testing in-house, significantly accelerating the development cycle. In In February 2021 Mynaric announced that it was opening an office in Washington DC to be closer to US government organisations. August 2021 the company announced that it was expanding its existing capabilities in the Los Angeles region to include assembly, integration and test capabilities for electronic components. The ability to fully source, design and build terminals in the US supports the requirements of security-sensitive US customers.

Preparing for pre-series production

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