York Space rides defense demand as procurement changes cloud outlook

WASHINGTON — York Space Systems last week reported sharply higher revenue in 2025 and narrowing losses as it scales production tied to Pentagon satellite programs. But a broader overhaul of how the U.S. military buys space systems is introducing some uncertainty for one of its fastest-growing suppliers.

The Denver-based satellite manufacturer said annual revenue rose 52% to about $386 million, driven largely by work on the Space Development Agency’s proliferated low Earth orbit constellation. SDA is building a large constellation in low Earth orbit for missile tracking and data relay.

York’s chief executive Dirk Wallinger said the company has built a sizable backlog tied to that work, with roughly 140 satellites ordered to date. That backlog has provided a steady cadence of production and underpinned York’s recent growth.

Much of that demand, however, has come from a single program whose future structure is now in flux.

Most of York’s orders have been tied to SDA’s Transport Layer, the portion of the proliferated constellation responsible for moving data between satellites and down to users on the ground. The program has been central to York’s rise, providing repeat production contracts as the agency fields successive tranches of satellites.

Under a sweeping acquisition overhaul led by the Department of the Air Force, the Transport Layer is not expected to continue in its current form. Instead, its functions are likely to be absorbed into a broader Space Force effort known as the Space Data Network, a concept still being defined.

The changes are part of a wider shift in how the Air Force buys space systems. The department is moving away from managing individual programs toward a portfolio-based model overseen by Portfolio Acquisition Executives, or PAEs. The aim is to give senior leaders broader authority to align requirements, shift funding across related efforts and prioritize capabilities based on mission needs rather than standalone systems.

Realignment of SDA programs

The reorganization is expected to reshape the Space Development Agency, which has operated with a high degree of autonomy and a rapid, tranche-based acquisition model. Under the new structure, SDA’s missile warning satellites — the Tracking Layer — would fall under a missile warning portfolio, while the Custody Layer, designed to track moving targets, would move into a space-based sensing and targeting portfolio. The Transport Layer would transition to a broader effort known as the Space Data Network.

Taken together, the changes signal a move toward integrating proliferated satellite programs into broader mission portfolios. While the Pentagon has emphasized that demand for missile tracking, targeting and data transport remains strong, the transition raises questions about how future contracts will be structured and when they will be awarded.

For York, the shift carries some risk. In a regulatory filing, the company said it derives a “substantial amount of our revenues and backlog from our largest customer, the Space Development Agency. A material adverse change in the SDA’s mandate could materially reduce our revenues and backlog.”

Wallinger said he doesn’t expect the reorganization to alter the company’s outlook.

In an earnings call March 19 and in an interview with SpaceNews, he pushed back on reports that the Transport Layer is effectively being terminated.

“I don’t agree with that. I don’t think that’s true at all,” he said. “The acquisition authority may change, or the management authority may change from SDA, but the need for the capability continues to exist.”

He said the shift toward a broader space data network reflects an effort to better integrate disparate military communications systems. “What they’re trying to do is make sure that all these systems coexist and can talk to one another, which is a little bit analogous to what you’re seeing on the ground,” he said.

“They’re basically going, Hey, we have Starlink, Starshield, we have transport, we have GEO, HEO birds, we have all kinds of different communication channels, but they’re not integrated with one another,” he added. “They’re not canceling anything.”

Even so, analysts in the earnings call raised concerns about timing. Transitions between programs can create gaps in procurement as requirements are rewritten and authority shifts, potentially affecting the flow of new contracts.

Golden Dome a ‘significant opportunity’

Wallinger said those risks are outweighed by sustained demand for space-based capabilities, whether under SDA’s Proliferated Warfighter Space Architecture or emerging projects such as the Golden Dome missile defense shield.

York said in the regulatory filing that Golden Dome “presents a significant opportunity due to its multi-layer approach that includes space networks.” The company added, “We believe York is well positioned to serve Golden Dome given the satellite function overlap with the PWSA program,” noting the potential for “high margin, recurring revenue” tied to satellite-based services.

The company is also looking beyond government contracts. Wallinger said York has invested in manufacturing capacity capable of producing and testing more than 1,000 satellites annually, a figure based largely on expected military demand but also on commercial growth.

York said its larger M-Class satellite platform is beginning to gain traction outside defense. In February, the company finalized a $187 million commercial contract for a constellation of more than 20 satellites built on the platform, though it did not identify the customer.

The company said the M-Class design is intended to scale with available launch capacity. “We are currently capable of placing 25 M-Class platforms in a SpaceX Falcon 9 and several other close-to-market rockets, and we expect to be able to place 120 units in a SpaceX Starship.”