Over the past year, LUNR’s narrative has shifted from speculative lunar play to a more grounded engineering and contract-funded model. What was once viewed as a venture-stage space startup is increasingly operating with sustained, cost-plus style contract revenue that supports ongoing R&D, reducing dependency on equity dilution or risky one-off awards.

Contract Revenue Provides Structural Support

A key underrecognized pillar in the original Hidden Value of Intuitive Machines thesis was the company’s revenue stream through a stable, government-backed contract. Specifically, the NASA OMES/CLPS engagement via a joint venture with KBR offsets much of the company’s R&D burden. That contract alone has an implied run-rate on the order of ~$70 M per year and operates effectively as a cost-plus R&D funding source, insulating Intuitive Machines from the worst effects of uneven mission timing and milestone realizations.  I’ve personally confirmed this with executives at a recent space industry conference.

In publicly reported results, LUNR has demonstrated sequential revenue growth and, importantly, positive free cash flow, driven by milestone payments and contract execution rather than equity raises. In Q1 2025 the company reported ~$62.5 M revenue with a notable increase in cash from operations (free cash flow positive for the quarter) supported by milestone receipts and operational execution.  

This aligns with the cost-plus concept: contract revenues scale with work performed rather than being fixed or timing-dependent, enabling R&D activity to be expensed against earned contract revenue rather than financed solely by dilution or burn.

Investors have rightly been focused on mission outcomes like lunar landings and strategic acquisitions (e.g., the Lanteris Space Systems deal) because of their headline value and future growth potential (see Anand Capital article). But the more durable backbone in the near term is contract-funded engineering, which underpins both the technical effort and the balance sheet.

This means:

LUNR’s R&D pipeline is financed in large part by government reimbursement rather than pure burn.

The company’s cash position and ability to fund long-lead engineering through contract receipts reduces reliance on dilution-driven financing.

Investors can model R&D spend not as an unbounded expense but as partially matched by scalable, reimbursable revenue.

Why This Matters for Investors

Lower execution risk relative to narrative peers: Cost-plus or reimbursable contract structures reduce the binary risk of “all-or-nothing” project outcomes. Rather than being paid only on mission success, Intuitive Machines earns revenue as work is delivered, giving investors a cash-flow buffer even around binary mission events.

Long-term optionality without unanchored dilution: With milestone payments and recurring contract work contributing materially to revenue, the company’s equity dilution pressure moderates. Q1 2025 results showed a strong cash position and improved gross margins, suggesting contracts are meaningfully contributing to a sustainable financial profile.  

Our original thesis that LUNR is funding R&D through stable, contract-based revenue rather than pure speculative borrowing or burn now has real support.