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AST SpaceMobile Q3 2025 Earnings Call · AST SpaceMobile Podcast

0:00
Good day and thank you for standing by.
0:02
Welcome to the AST Space Mobile Third Quarter 2025 Business
0:06
Update Call. Please be advised that today's
0:08
conference is being recorded. I would now like to hand the
0:11
conference over to your host today, Scott Wisniewski,
0:14
President of AST Space Mobile. Please go ahead.
0:18
Thank you and good afternoon, everyone.
0:20
Today, I'm also joined by Chairman and CEO, Abel Avalon
0:23
and CFO and Chief Legal Officer, Andy Johnson.
0:26
Let me refer you to slide two of the presentation, which contains
0:29
our Safe Harbor disclaimer. During today's call, we may make
0:32
certain forward-looking statements.
0:34
These statements are based on current expectations and
0:36
assumptions and as a result are subject to risks and
0:38
uncertainties. Many factors could cause actual
0:41
events to differ materially from the forward-looking statements
0:43
on this call. For more information about these
0:45
risks and uncertainties, please refer to the Risk Factors
0:48
section of AST Space Mobile's Annual report on Form 10K for
0:51
the year that ended December 31st, 2024.
0:54
Form 10Q filed with the SEC on May 12th, 2025, Form 10Q filed
1:00
with the SEC on August 11th, 2025, and the Form 10Q filed
1:04
with the SEC today, as well as other documents filed by AST
1:07
Space Mobile from time to time. Also after our initial remarks,
1:12
we'll be starting our Q&A section with questions submitted
1:15
by our shareholders. For those of you who may be new
1:18
to our company and mission, there are nearly 6 billion
1:21
mobile phones in use today around the world, but many of us
1:23
still experience gaps in coverage as we live, work and
1:26
travel. Additionally, there are billions
1:28
of people without cellular broadband and who remain
1:30
unconnected from the global economy.
1:33
The markets we are pursuing here are massive and the problem we
1:36
are solving is important and touches nearly all of us.
1:39
In this backdrop, AST Space Mobile is building the first and
1:42
only global cellular broadband network in space to operate
1:45
directly with everyday unmodified mobile devices and
1:48
supported by our extensive IP and patent portfolio.
1:52
It is now my pleasure to pass the conversation over to
1:54
Chairman and CEO, Bell Avalon, who will go through our
1:57
activities since our last public update.
2:01
Thank you, Scott. HT Space Mobile delivers stand
2:05
out progress in the third quarter.
2:06
We continue ceasing the advantages of our leadership
2:09
position in the space based direct to device industry.
2:13
We're executing against all of our key initiatives in this
2:18
rapidly developing market and especially on deepening our
2:21
commercial ecosystem with customers partners over the over
2:25
the past few months. We continue to build commercial
2:29
momentum most recently highlighted by our definitive
2:32
agreements with Verizon and Saudi Telecom Group.
2:36
Scott will discuss our business progress in more detail, but I
2:40
want to highlight the traction we are achieving with our
2:44
commercial initiatives. We signed a definitive
2:48
commercial agreement with Verizon in United States and STC
2:51
in Saudi Arabia and other key markets across the Middle East
2:54
and North Africa. These definitive commercial
2:57
agreements demonstrate the meaningful progress in our
3:00
commercial ecosystem which include agreements with over 50
3:04
MNO partners with nearly 3 billion subscribers globally.
3:09
These agreements are the product of our trusted long standing
3:13
relationship with both partners and they're confident in our
3:16
ability to deliver space based cellular broadband connectivity
3:19
to their subscribers. Our definitive commercial
3:22
agreement with Verizon is an extension of our
3:25
transformational partnership which has been cultivated over
3:29
several years including the 100 million commitment in May of
3:34
last year. The agreement also provide us
3:36
with a former commercial pathway to provide direct to device
3:40
cellular broadband services to their customers starting in
3:43
2026. Our opportunity to bridge the
3:46
digital divide and target 100% coverage of the continental
3:51
United States has never been stronger.
3:54
Together with partner AT&T in premium 850 megahertz low band
3:59
spectrum, our definitive agreement with STC provides us
4:03
with a long term partner in a key region with a large
4:05
geographical area, significant population growth and a strong
4:09
need for broadband connectivity more broadly.
4:12
Our 10 year long term agreement is a promising look into how AST
4:17
Space Mobile can collaboratively shape the future of direct to
4:21
device mobile connectivity and we continue to grow our mobile
4:24
network operator partner ecosystem.
4:28
Our direct to device satellite technology enables native
4:31
cellular broadband capabilities directly to modifying mobile
4:35
devices including voice, text, data, video and full Internet
4:41
access to native cellular apps. As an example of our native
4:45
cellular capability, we recently completed a Blue Bear satellite
4:49
enabled technology milestone with Verizon completing direct
4:53
voice and video calls as well as two way RCS messaging between
4:58
standard and modifying smartphones.
5:01
This follow additional milestone we bet Canada in anticipation
5:04
for a broader commercial roll out specifically which showcases
5:09
Canada's first successful space based direct to sell voice over
5:13
Lt. call, video call and other broadband data and video
5:16
streaming activations. We really can would represent
5:19
another attractive market for our direct to device cellular
5:22
broadband service. Space based cellular broadband
5:25
connectivity is an industry that we invented and a recent
5:30
technology milestone with Verizon and Bell follow several
5:34
breakthroughs using our direct to device technology including
5:37
the first ever 4G and 5G voice calls, voice over LTE calls,
5:43
live video calls, streaming, full Internet access and
5:47
tactical non terrestrial network connectivity for military and
5:50
defence purposes from the space to modify the smartphones.
5:55
Our direct to device cello broadband network will help our
5:58
partners deliver on one of their highest priorities, which is
6:02
extending connectivity for the customers.
6:05
As part of our effort to deliver on those priorities, we are
6:09
advancing partners and ecosystem network integration and we
6:13
progressed over service activation in key partner
6:15
markets. Specifically we have already
6:18
begun activation in fixed network locations.
6:22
We expect to continue scale deployment effort early next
6:27
year as we progress activation of an intermittent nationwide
6:30
service by early 2026 and prepare for continued service
6:34
later in 2026. Taking a step back as DP Mobile
6:39
have now built the largest and most diverse commercial partner
6:42
ecosystem in the industry. Our network include agreements
6:45
and understanding with over 50 MNO partners with nearly 3
6:49
billion subscribers globally. We have access to some of the
6:54
most important markets cover and exposure to billions of
6:57
subscribers as well as long term access to valuable spectrum.
7:02
A key strategy during 2025 has been to deepen this partner
7:06
ecosystem through the Finity commercial agreements.
7:09
Today, we're happy to disclose for our first time that we have
7:12
secured over 1 billion in total contracted revenue commitment
7:17
from our commercial partners. This represent an incredible
7:21
snapshot into how our business is developing and not only do
7:26
the commitments of our partner have to AST Space Mobile, but
7:29
also the way they are starting to think about financial impact
7:33
of this massive opportunity. Turning to manufacturing and
7:38
launch, our manufacturing effort are on track with our goals and
7:43
expectations. Bluebird 8 to 19 are in various
7:46
stage of production and we are on a schedule to complete 40
7:50
saddles equivalent of micro by early 2026 bringing us to
7:54
Bluebird 46. Leveraging our our 95%
7:58
vertically integrated manufacturing, we continue to
8:01
accelerate and improve our manufacturing process and expect
8:04
to exit Calor and calendar 2025 at a manufacturing cadence of 6
8:09
satellites per month. A detailed cadence of our 2025
8:13
and 2026 deployment plan is shown in the company quarterly
8:16
presentation found found on our IR website.
8:21
These efforts are supported by our steady expanding
8:24
manufacturing footprint, soon to be over half a million square
8:28
feet of manufacturing and operation space supported by a
8:31
global workforce of nearly 1800 people.
8:36
We had chip at Bluebird 6 to his launch site in India.
8:39
We launched expected to occur in the first half of December.
8:43
We all suspect to chip Bluebird 7 to Cape Canaveral later this
8:47
month with launch anticipated shortly thereafter.
8:50
Addition, we continue to pay 5 orbital launches by the end of
8:54
Q12026. We launches every one to two
8:57
months on average to reach our goal of 45 to 60 satellites
9:02
launched by the end of 2026. Additionally, we anticipate our
9:06
novel ASIC chip will be integrated into our Block 2
9:10
Bluebird satellite during Q12026, enabling peak data
9:15
transmission speed of up to 120 megabits per second, which is a
9:19
throughput larger enough to achieve the native cellular
9:22
capabilities the customer used to having even when they are in
9:26
areas unconnected by terrestrial networks on our comprehensive
9:30
global spectrum strategy. So in our last earning call, we
9:34
closed our deal to acquire global expand spectrum priority
9:37
rights and our deal to acquire long term access to premium
9:41
lower mid band L band spectrum in the US that has been approved
9:48
by the court. HT Space Mobile owned and share
9:50
spectrum profiles including access to 1150 megahertz, low
9:54
band and mid band tunable MNO spectrum globally, 45 megahertz
9:59
of AST space mobilizing MSS lower mid band spectrum, 60
10:03
megahertz of AST Space mobile license S band spectrum priority
10:07
right and low band spectrum located by our MNO partners.
10:11
Between our own and mobile network operator partner
10:14
spectrum, we had right to access over 80 megahertz of Fair and
10:19
high quality spectrum in United States alone more than any other
10:24
directory by provider. Today and in the future.
10:27
We have developed our comprehensive spectrum strategy
10:30
by balancing costs and a disciplined capital allocation.
10:34
By making a smart and cost effective investment in
10:36
spectrum, we are able to preserve the value of our
10:39
spectrum assets while protecting the long term viability of our
10:44
business. These robust portfolio spectrum
10:47
create a durable competitive advantage for St.
10:49
Space. Mobile spectrum enabled us to
10:52
provide more lanes for direct to device several broadband
10:55
services at a faster speed and a greater capacity.
10:59
And lastly, we strengthened our financial footing significantly
11:02
in the last few months reaching over 3.2 billion in cash and
11:07
liquidity as of quarter end. Pro Forma for our recent
11:11
financial transaction and available liquidity under the
11:15
ATM facility, we continue to fortify our capital base in a
11:20
responsible way while building a long term shareholder value.
11:25
As a result of our funding effort, we're now founded from
11:29
cash on hand to enable continuous service in a
11:32
worldwide key strategic markets. In summary, our manufacturing
11:38
and launch activity are on plan and our commercial activities
11:41
are accelerating. We anticipate an active
11:44
manufacturing and launch cadence for the remaining of 2025
11:48
through 2026 and we progress towards our stated goal of 45 to
11:52
60 satellites for continued service coverage in key markets
11:56
like the United States, Europe, Japan, Saudi Arabia and other
12:00
key strategic market like the US government.
12:02
We're advancing our commercial activities on the growth on on
12:05
the ground, installing gateways, integrating them into partner
12:09
networks and completing key technology demonstrations around
12:12
the world. As we scale our constellation,
12:15
we have built modes around multiple aspects of our
12:18
business, including our extensive IP portfolio with
12:21
approximately 3800 patents upon depending claims, satellite
12:25
technology, partner ecosystem, comprehensive global spectrum
12:30
strategy and a strong capital base.
12:32
I could not be more excited for what's come as we continue to
12:37
run commercial activity going into 2026.
12:40
Let me now turn the call over Scott to provide more detail on
12:44
our progress and initiatives. Thank you, Abel.
12:49
We've been making rapid and continuous progress against our
12:51
key business initiatives. Specifically, the third quarter
12:54
was marked by milestone achievements as we develop our
12:57
commercial ecosystem, delivering on our previously stated goals
13:00
of definitive commercial agreements, non dilutive service
13:03
prepayments and long term revenue commitments.
13:07
Most significantly, we are thrilled to announce today for
13:09
the first time that we have now secured over 1 billion in
13:12
aggregate contracted revenue commitments from our commercial
13:15
partners. These revenue commitments have
13:18
always been integral to our comprehensive capital raising
13:20
strategy, but also provide a powerful validation of our
13:23
ecosystem partner strategy, our business model and the massive
13:27
size of the directed device market we are creating.
13:31
For some context, ASD Space Mobile has incredible strategic
13:35
assets including our breakthrough technology,
13:38
vertically integrated manufacturing capabilities, long
13:40
term spectrum access and an ecosystem partner strategy that
13:44
has set the stage for our commercialization strategy,
13:46
which is really taking shape Since our last public update.
13:51
We signed two additional definitive commercial agreements
13:53
with Verizon and Saudi Telecom Group.
13:56
These agreements represent years of relationship building and
13:59
organizational alignment and are the business and legal
14:02
frameworks through which future services and revenue will flow.
14:06
These agreements represent a key step in our commercialization
14:10
journey as we significantly expand our relationship with two
14:13
additional incredible operators hold from our ecosystem of over
14:18
50 leading global mobile network operator partners who
14:21
collectively cover nearly 3 billion subscribers.
14:25
This adds to previous definitive commercial agreements signed
14:29
with AT&T and Vodafone. Our strategy is to continue to
14:32
sign similar agreements with more of our top partners on a
14:36
rolling basis as we prioritize initial Global Services on the
14:40
AST space mobile network. As you know, Verizon is an very
14:47
important partner as we developed the US market and
14:50
target full geographic coverage of the continental United
14:52
States. This agreement of course builds
14:55
on the strategic partnership with Verizon announced last year
14:58
with a $100 million commitment. Together with AT&T, we plan to
15:02
deploy services next year with two of the major US mobile
15:06
network operators moving to Saudi Telecom Group or STC.
15:12
This is an innovative leading mobile network operator partner
15:15
in the Gulf region who we first signed in MOU with in early
15:18
2023. This agreement signed just last
15:22
month provides A framework for direct device services across
15:25
the Middle East and North Africa.
15:27
Importantly, this agreement also included a prepayment of
15:30
$175,000,000 to be made by the end of 2025 and a significant
15:36
long term commercial revenue commitment.
15:40
Lastly, we announced our intention of further deepen our
15:43
ties in Europe through the Sacco joint venture with Vodafone
15:46
announcing a constellation of mid band satellites dedicated to
15:49
the EU. These satellites will provide a
15:52
scalable European satellite mobile broadband service for use
15:55
by mobile network operators and for the benefit of all European
15:59
citizens, businesses and public sector organizations.
16:03
This step represents further accretive organic growth
16:05
opportunities available to the AST Space mobile platform
16:09
facilitated by our first mover advantages and space based
16:12
cellular broadband, our development of the commercial
16:15
ecosystem as well as our recent strong capital markets access to
16:18
growth capital. Datco based in Luxembourg is
16:23
continuing to scale with key leadership and employee hires
16:26
accelerating our commercialization efforts in
16:28
Europe with MLU signed in 21 of 27 Member States to date.
16:34
Linking our strategies back to third quarter performance, we
16:37
grew to double digit revenue with approximately 15,000,000 of
16:40
recognized revenue on the back of milestones in our U.S.
16:43
government contracts and delivering installation of
16:46
gateway equipment versus approximately 2 million in the
16:49
prior quarter. This represents continued
16:51
progress with our U.S. government work and the
16:54
acceleration of gateway deliveries and installations
16:56
with our mobile network operator customers in the US and
16:59
globally. With this progress and our
17:03
expectations going into year end, we continue to expect
17:05
second-half 2025 revenue in the range of 50 to $75 million.
17:10
We also replenish the pipeline of gateway bookings with
17:13
approximately 14 million in new gateway equipment sales during
17:17
Q3 and we continue to believe we will book over 10 million of new
17:21
gateway equipment sales per quarter on average.
17:25
For a little more detail on our U.S. government business, our
17:28
breakthrough technology continues to garner interest
17:30
from many US defense and government entities for both
17:34
dedicated and dual use applications.
17:37
Our differentiated technology and growing list of capabilities
17:40
across communications and non communications use cases fits
17:43
nicely within the framework of the current administration's
17:46
space and on orbit plans. This is the most positive
17:51
backdrop for U.S. government investment in space since the
17:54
space race of the 1960s. We see no change to this massive
17:58
trend over the past few months despite the government shutdown.
18:02
In fact, we recently received an award as a prime contractor with
18:05
the US government, subject to final contract negotiations when
18:08
the government reopens. In summary, we continue to ramp
18:13
our U.S. government efforts as we plan for large contracts
18:16
going forward. Overall, we are encouraged with
18:19
our commercialization progress to date and believe our recent
18:22
achievements about across both commercial and government
18:25
initiatives serve as important signals of our continued
18:28
positive momentum. I'm now happy to pass the call
18:32
over to Andy to walk through our financial update.
18:36
Thanks, Scott, and good afternoon everyone.
18:38
The progress on commercial objectives, service activation,
18:42
skilled manufacturing and launch of our Block 2 Bluebird
18:45
satellites described by A Bell and Scott was complemented by
18:49
the continued strength and flexibility of our financial
18:52
position during the third quarter of 2025.
18:57
This year has been characterized by rapid growth at AST Space
19:00
Mobile. The transition from an emerging
19:03
R&D focused startup to an operating company on the path to
19:07
optimizing our manufacturing and launch cadence has been hard yet
19:12
invigorating and gratifying work for our now nearly 1800 person
19:18
worldwide workforce. The speed at which we are moving
19:22
across all operational fronts to manufacture and launch a
19:26
constellation of 45 to 60 Block 2 Bluebird satellites creates A
19:31
dynamic financial backdrop that I am pleased to share with you
19:35
in more detail today. We continue to balance a prudent
19:39
approach to our spending while moving quickly to protect and
19:43
capitalize on our first mover advantage of bringing space
19:47
broadband connectivity, direct unmodified smartphones in the
19:52
rapidly growing direct to device market.
19:56
This intentional focus on investing in our operational
19:59
growth led to increased operating expenses in Q3, while
20:04
capital expenditures decreased from the prior quarter as
20:08
capital commitments ebb and flow as expected from quarter to
20:12
quarter. Importantly, this quarter marked
20:15
the start of our revenue ramp with revenue from commercial
20:18
hardware sales, services and contract awards from our U.S.
20:23
government milestone achievements.
20:26
Moving to the operating and capital metrics slide, let's
20:30
review the key operating metrics for the third quarter of 2025.
20:35
On the first chart for the third quarter, we incurred non GAAP
20:38
adjusted operating expenses of $67.7 million versus 51.7
20:45
million in the second quarter. As a reminder, non GAAP adjusted
20:50
operating expenses exclude certain non cash operating costs
20:55
including depreciation and amortization and stock based
20:59
compensation. This quarter over quarter
21:03
increase of 16.0 million resulted from a 7.6 million
21:09
increase in adjusted engineering service costs, a 5.5 million
21:14
increase in the cost of goods sold and a 3.8 million increase
21:19
in adjusted general and administrative costs, which were
21:23
partially offset by an approximately $900,000 reduction
21:27
in R&D costs. This variance and adjusted OpEx
21:32
in Q3 was above the quarterly guidance I provided after the
21:35
second quarter due in part to the approximately 7.1 million of
21:41
non recurring transaction related expenses including our L
21:45
band and S band spectrum transactions.
21:48
The non recourse senior secure delayed draw term loan facility
21:53
and now completed pre regulatory approval bridge loan.
21:56
In addition to the continued work of standing up or joint
21:59
venture with Vodafone which we launched in the second quarter.
22:04
The Q3 adjusted operating expenses guidance I gave in our
22:08
last earnings call did not include any cost of goods sold
22:11
related to gateway sales. If you compare our Q3 operating
22:16
expenses on that same basis by excluding the 5.5 million in
22:21
cost of goods sold, our run rate operating expense would be $55.1
22:26
million, which is approximately 5 million more than the run rate
22:31
guidance for adjusted OpEx previously provided.
22:36
Turning towards the second chart on this slide, our capital
22:39
expenditures for the third quarter of 2025 were
22:42
approximately $259 million versus 323 million for the
22:49
second quarter of 2025. This figure was made-up of
22:53
approximately $231 million of capitalized direct materials
22:59
labor for our Block 2 Bluebird satellites and payments made in
23:04
connection with multiple launch contracts with the balance
23:07
relating to facility and production equipment
23:11
expenditures. This amount was just below the
23:14
midpoint of the quarterly guidance of 225 to 300 million
23:19
that I provided during our last earnings call for the fourth
23:24
quarter of 2025. We estimate there are adjusted
23:28
operating expenses excluding cost of goods sold will come in
23:33
at a similar range in the mid 60,000,000.
23:36
As we continue to design, manufacture, launch and operate
23:40
our growing satellite's constellation as well as pursue
23:44
the monetization of our L&S band spectrum usage rights.
23:50
We expect our capital expenditures to increase
23:53
slightly in Q4 of 2025 as compared to the third quarter to
23:58
a range of 275 to $325 million, primarily driven by the timing
24:04
of launch payments related to our near term launches, which as
24:08
I previous previously explained do vary from quarter to quarter.
24:14
We continue to estimate that the average capital costs, including
24:17
direct materials and launch costs for our constellation of
24:21
over 90 Block 2 Bluebird satellites will fall in the
24:24
range of 21 to $23 million per satellite.
24:29
This is the same range of per satellite cost that I've
24:32
provided since our Q12025 earnings.
24:37
Our cost per satellite estimates are subject to fluctuations
24:40
based on dynamic geopolitical factors which could impact our
24:44
costs within our go forward OpEx profile.
24:47
We continue to believe that the operation of a constellation of
24:51
25 Bluebird satellites will allow us to enable non
24:55
continuous space mobile service in selected targeted
24:59
geographical markets and should enable us to potentially
25:02
generate cash flows from operating activities from both
25:06
commercial and U.S. government opportunities to further support
25:10
the build up of the remaining constellation.
25:13
As a reminder, the timing of the changes in our adjusted
25:16
operating expenses and capital expenditures as I have just
25:19
described could be delayed or may not be realized due to a
25:23
variety of factors. Our revenue ramp began in
25:28
earnest during the third quarter and we expect it to continue to
25:31
grow in Q4. With respect to revenue
25:34
generation, we believe we can enable continuous space mobile
25:38
service across key markets such as the United States, Europe,
25:42
Japan and other strategic markets with the launch and
25:45
operation of approximately 45 to 60 Bluebird satellites and
25:50
additional strategic worldwide markets with the launch and
25:53
operation of approximately 90 Bluebird satellites.
25:57
Further, as we continue to launch and deploy our
26:00
constellation, we will continue to support U.S. government
26:03
applications currently ongoing and accelerating as our
26:07
constellation grows. In the third quarter, we
26:11
recognized GAAP revenue of $14.7 million, primarily driven by
26:16
gateway hardware sales and various commercial and U.S.
26:20
government service milestone achievements.
26:23
Additionally, in Q3, we completed initial technical
26:26
trials with an M&O partner, which revenue will be accounted
26:30
for as we provide future services.
26:34
We are reiterating our belief that we have a revenue
26:37
opportunity for 2025 in the range of 50 to $75 million and
26:42
expect revenue in Q4 will continue to be driven by gateway
26:47
equipment sales, achievement of U.S. government milestones and
26:51
recognition of initial commercial service revenue.
26:55
The achievement of our revenue plan remains subject to several
26:58
contingencies, including one, the successful launch and
27:02
deployment of Block 2 Bluebird satellites related to U.S.
27:06
government applications, contractual milestone
27:08
achievements. 2, critical gateway equipment sales to our
27:13
M&O partners in support of their anticipated commercialization
27:17
efforts of Space mobile service and three, service revenues in
27:22
connection with the activation of our commercial service
27:25
provided by our existing and planned deployed and operational
27:28
satellites. There can be no assurances that
27:31
we will achieve any or all of these objectives and our actual
27:35
revenue results will vary based on a multitude of factors.
27:40
Finally, on the final chart on the slide, on a pro forma basis
27:43
inclusive of cash raised in October via the convertible
27:47
notes offering with a 2.00% ten year coupon at an effective
27:53
strike price of $96.30 per share and the currently available
27:59
liquidity under the at the market or ATM facility are cash,
28:04
cash equivalents and restricted cash as of September 30, 2025
28:09
was approximately $3.2 billion. Primary drivers for this cash
28:15
increase include execution OF2 convertible notes offerings in
28:19
July and October for a total of approximately $1.6 billion of
28:24
net proceeds. Approximately 389,000,000 net
28:29
proceeds raised from the 2025 ATM facilities during Q3 and
28:34
through October and the unwinding of the cap call that
28:37
we purchased earlier this year in connection with the January
28:41
2025 convertible note offering for $74.5 million of proceeds to
28:47
the company. In addition to the work we did
28:50
raising additional capital via the recent 2% ten year
28:54
convertible notes, we also took action since our last earnings
28:57
call by further reducing our outstanding debt related to the
29:01
January 2025 convertible notes due in 2032.
29:06
Among three equitization transactions including another
29:10
$50 million equitized in October, we have now converted
29:14
$410 million of the outstanding $460 million of the 4.25%
29:22
convertible notes due in 2032 into 17.3 million Class A
29:28
shares. We now have just 50 million of
29:31
outstanding notes related to our January 2025 convertible notes
29:36
due in 2032. I should also imagine that
29:41
subsequent to Q3 in October, we put in place a bridge facility
29:45
to manage one time payments related to the Legato L band
29:49
usage rights transaction ahead of planned funding by the SPV
29:54
delayed draw term loan upon receiving FCC approval.
30:00
Given the current strength of our balance sheet that now
30:03
includes Cash, Cash equivalents and restricted cash and
30:06
available liquidity under the ATM facility of over $3.2
30:11
billion on a pro forma basis as of September 30, we are fully
30:15
funded to manufacture and launch a constellation of over 100
30:19
satellites to provide worldwide space mobile service.
30:24
The combination of increasing commercial and government
30:26
opportunities, rapidly scaling manufacturing and satellite
30:30
launch operations and a fortified balance sheet position
30:34
AST Space Mobile for an exciting end to 2025 through the third
30:40
quarter of 2025. We remain on target to execute
30:44
against our plans to bring space mobile service to market in the
30:47
coming periods as we begin to launch our Block 2 Bluebird
30:51
satellites beginning in December.
30:54
And with that, this completes the presentation component of
30:57
our business update call, and I'll pass it back to Scott.
31:01
Thank you. Thank you, Andy.
31:05
Before we go to the queue of analyst questions, we'd like to
31:07
address a few of the questions submitted by our investors.
31:10
Operator, could you please start us off with the first question?
31:15
Kevin from Vancouver AF What is the difference in processing
31:19
capacity between Block 2 FPGA satellite and Block 2A6?
31:25
Hi, Kevin, that's a great question.
31:28
Listen, we have been improving on a, on a on a tenfold steps
31:33
our processing capacity for the satellites.
31:35
We started with 100 megahertz on Blue Walker 3, which by the way
31:42
is still working and functioning.
31:46
Then to upgrade it to 1 gigahertz, which is the current,
31:50
the current. So a tenfold increase with the
31:53
current satellite that are occurring orbit in operations.
31:56
And then the one that we're starting to launch immediately
32:00
here have another, another increase factor of 10 gigahertz
32:05
going down up to 10 gigahertz from 9 gigahertz.
32:07
So another ten time factors when you combine the processing
32:11
capacity that we have on the satellites with AI with the AI
32:15
engine that we're developing to basically managing very
32:18
efficiently the spectrum allocation of both power and
32:22
bandwidth. This is a very, this is the way
32:25
that we do the true broadband connectivity from the space.
32:29
And that that for that we develop our own chip, we call it
32:33
the AST 5000 that had a processing capacity to 10
32:37
gigahertz, win a hand features to take the most of that 10
32:43
gigahertz using our AI engines. Alvin from Massachusetts as as a
32:51
forward-looking investor, I would like to know if the
32:53
company is weighing the benefits of AI for its spectrum
32:57
management. Hi Alvin.
33:02
We are more than weighing the benefit.
33:03
We're working on it. We, we are implementing our, our
33:08
AI engine or managing and administrating the, the, the
33:13
spectrum. Each satellite had a capacity of
33:16
10 gigahertz processing bandwidth.
33:18
But we, we, we feel that effectively we multiply that by
33:22
several factors by effectively managing the allocation of the
33:28
spectrum and resources dynamically across the network
33:32
using AI. And that's something that we've
33:34
been working for a while, that's the, the, the, the the system
33:38
and the satellite have already been decide designed to have all
33:42
the hooks and all the management capability to the maximum
33:46
benefits of AI on the spectrum management.
33:51
Would you think about that in average terrestrial, terrestrial
33:55
operators have you know, per market in countries like United
34:00
States maybe around 250 megahertz to deploy spectrum
34:04
between our our own spectrum and net and and spectrum provided by
34:12
the operators. We yes, in the United States
34:15
alone, we have access to around 80 megahertz or we will have
34:19
access to around 80 megahertz of the spectrum 50 to be our own.
34:24
And and then you add an AI, our AI engine to basically multiply
34:30
that spectrum and make it a much more efficient.
34:33
This is a very significant new leg of the telco stack.
34:39
So we we see a world where you have Wi-Fi terrestrial and now
34:45
with the amount of capacity and a spectrum that we can manage
34:49
with our satellites and our AI engine to basically effectively
34:56
use that spectrum. We believe that the usage of
34:59
satellite become more and more and more relevant as as we are
35:03
satellites and are we at the spectrum to the system.
35:07
Kevin from Oregon As with the next series of launches starting
35:11
possibly next month at Cape Canaveral, I have been wondering
35:16
if or how AFC Space Mobile will structure a future launch event
35:20
for retail shareholders. Thanks Kevin for the question.
35:26
As you can tell from the, the topics on this call, you know,
35:30
we're very, very much in a commercial mindset at this point
35:34
and, and, and moving towards service delivery.
35:36
But but nonetheless, the launch campaign is very exciting and,
35:39
and we're very excited as well. We just shipped Bluebird 6.
35:43
We're getting ready to ship Bluebird 7 and the rest of the
35:46
Bluebirds are, are starting to come out of the factory.
35:48
So we're very excited about the launch campaign.
35:50
It's going to be a fantastic stretch of launches.
35:54
And just like with our last launch where we had about 1000
35:58
retail investors, we plan to invite as many as we can to the
36:02
launch and it's in each of the launches.
36:04
So it's going to be a great campaign.
36:06
We're super thrilled. And you know, 5 launches before
36:11
the end of Q12026 and our 45 to 60 satellites during 2026 is
36:16
going to be a lot of opportunities for retail to to
36:18
come see. And we hope everybody comes
36:20
along to participate on this journey with us.
36:24
Rooper, from Zurich, asked despite confirming fully funded
36:28
for a full consolation through balance sheet cash and future
36:31
revenue, why was additional capital raised?
36:36
I'll take that. This is Andy Rupert.
36:38
Thank you for the question. It it's clear that 2025 has been
36:44
a fantastic opportunity for AST to access the capital markets.
36:48
It's it's been a great climate for that.
36:51
And as you point out, we recently completed our third
36:54
convertible note deal of the year, the 1st in January, the
36:58
2nd in July and the third one just recently last month.
37:02
This is a incredible transaction for us and strengthen the
37:06
balance sheet. As a reminder, we were able to
37:09
raise net proceeds of a little over a billion dollars at a 2%
37:13
coupon with a 10 year term, a convertible note deal that
37:18
hasn't been done in in many, many years.
37:20
So we're very happy with that result.
37:22
The opportunity was there and importantly you point out Rupert
37:26
that it is true and we talked about at the last earnings call
37:30
that we were previously fully funded for a constellation of 45
37:33
to 60 satellites. What this additional financing
37:37
does is it provides us the ability to move faster with more
37:43
flexibility on the balance sheet to go beyond those initial
37:47
markets of the US, Europe, Japan and others that we talked about
37:51
at 45 to 60 and to look worldwide in our coverage at a
37:56
constellation of now being fully funded at at 100 plus
38:01
satellites. So consistent with our STC
38:05
announcement, we are looking and working hard on commercial
38:08
opportunities in other strategic markets across the world and our
38:13
balance sheet is now fortified to provide a runway to
38:17
manufacture and launch satellites to support that
38:21
worldwide constellation base. Thank you.
38:26
And with that, I'd like to thank our shareholders for submitting
38:29
those questions. Operator, let's open the call to
38:31
analyst questions now. Thank you.
38:36
We will now be conducting a question and answer session.
38:39
If you would like to ask a question, please press *1 on
38:42
your telephone keypad. A confirmation tone will
38:45
indicate your line is in the question queue.
38:47
You may press *2 to remove yourself from the queue.
38:49
For participants using speaker equipment, it may be necessary
38:52
to pick up the handset before pressing the start keys.
38:57
Our first question comes from the line of Michael Funk with
39:00
Bank of America. Please proceed with your
39:02
question. Yeah, hi, good evening.
39:05
Thank you for the questions tonight.
39:08
Congratulations on the funny activity during the quarter on
39:11
the the fully funded status. So you know wanted to tie that
39:15
back to the comments on the on the prepayments and the billion
39:20
dollar contracted to to date. So you know what what is your
39:24
appetite or or thoughts on future prepayment deals with
39:29
customers, other commercial financial benefits just signing
39:32
these now that you are fully funded.
39:35
And then maybe Part B to the question if I could you know any
39:39
more broad detail around the prepayment contracts you know
39:42
whether they are poor capacity subscribers, any details on on
39:49
the broad terms would be helpful.
39:52
Hey Michael, that's Scott here. So our hey, how you doing can
39:58
you hear me? OK, I can thank you.
40:01
Great. So our strategy for about two
40:04
years now has been to pursue our our very long funnel of
40:12
agreements, right. We have 50 plus agreements with
40:14
operators globally and we have nearly 3 billion subscribers.
40:18
So the strategy has been. Start with our our best partners
40:23
who are most aligned build out those relationships, build out
40:26
those agreements and bring in prepayments and long term
40:30
capital a long term revenue commitments.
40:33
And so that strategy is unchanged.
40:35
I think clearly we have demonstrated access to the
40:37
capital markets, but signing up these agreements with
40:40
prepayments and commitments is still very much our strategy
40:43
and, and we'll balance all those factors appropriately.
40:48
The way to think about them is, is, is relatively simple.
40:50
You know prepayments are for Commercial Services in the in
40:54
the near term and, and the commitments can be near term,
40:58
medium term, long term and, and we balance each of those on each
41:02
relationship and each situation is appropriate, but the strategy
41:06
is really unchanged. We think it's playing out well
41:09
and we're going to continue it. Great.
41:13
Thank you guys so much. Thank you.
41:22
Our next question comes from the line of Mike Crawford with B
41:25
Riley Securities. Please proceed with your
41:27
question. Thank you.
41:30
When do you start manufacturing L band satellites?
41:33
Feud intend to put L Band and S Band on the theme.
41:39
Satellites and also will you await formal.
41:42
FTC approval before starting to make those.
41:46
Hey, Mike, how are you? We plan to have a start.
41:51
Well, first of all, when we launch the satellite, they have
41:56
all the three GBP frequencies either in the low band on the
41:59
mid band, including all the MSS band, the L and the S that we
42:02
had acquired. Our plan is to interleave them
42:07
between the low band and the mid band.
42:10
Now we're fully funded for doing that and and our plan is to
42:15
start launching mid band satellites by the end of next
42:19
year. We, we want that to to be in in
42:23
line with the, the, the road map that we have for in the US,
42:28
Europe and Japan and now Saudi Arabia.
42:32
And we said we we want to use this, this capital to basically
42:37
probe more globally in, in both operator spectrum and our own
42:46
spectrum and be able to combine in the network both in order to
42:51
facilitate 120 megabits per second basically everywhere that
42:56
we deploy both ours, our bands and the operator bands.
43:02
Oh, OK. Thank you Bell.
43:03
And just a follow up to that is your your Saudi telecom
43:08
agreement you anticipate to launch Commercial Services in
43:12
the fourth quarter 26, so but I don't think you specified over
43:17
what spectrum. And then and then the other part
43:21
for that is if there were, if I heard that there's additional
43:27
service revenue commitments on top of the 175,000,000 prepaid.
43:31
Thank you. I, I, we had a call to explain
43:35
the how, how the agreement with STC works.
43:37
But the, we, we are always starting with operator spectrum
43:41
available in every device. So we focus on on using a
43:47
spectrum that is 3 GBP that is already on devices and that how
43:52
we're starting with STC and all our partners here in the US, in
43:55
Europe, in Japan will will be no different in, in, in, in, in, in
44:02
the Middle East region led by by Saudi Arabia.
44:07
And on the, on the, on the commitment, so you know, we, we,
44:14
we put forward this, this new disclosure, Mike, this quarter
44:17
of over a billion of commitments.
44:20
And those are those are not soft commitments.
44:22
Those are designed to be very valuable to us and very
44:26
indicative of future expectations and very valuable
44:30
both in the debt context and also as guidance to the equity
44:33
market. So when we say we have over a
44:35
billion of revenue commitments, those are, those are those are
44:39
very hard commitments. And so we purposely put that out
44:42
and we we're not going to identify that with individual
44:45
customers or individual contracts.
44:47
But I would point you to the STC press release, we did mention
44:50
that there was a prepayment and then also a long term revenue
44:54
commitment. So we're we're not going to map
44:58
that to individual contracts going forward, but it is our
45:00
strategy and, and we'll provide updates from time to time as
45:03
appropriate. But very importantly, we're now
45:06
over over 1 billion in total, which is, which is a good, good
45:10
outcome for us in line with our strategy and, and, and we think
45:14
consistent with the the customer excitement about us and the
45:17
customer excitement about putting this product into their
45:20
customer hands. Great.
45:23
Thank you very much. Thank you.
45:30
Our next question comes from the line of Brian Craft with
45:33
Deutsche Bank. Please proceed with your
45:34
question. Hi, I had a few if I could. 1st,
45:40
I, I know that you reiterated your launch time and guidance in
45:43
terms of the number of launches you're targeting by the end of
45:46
One Q and the end of next year. It seems like the launch
45:50
timeline though has become a bit more compressed with some
45:53
delays, you know, at the front end the summer and into the
45:55
fall. Just with that in mind, I wanted
45:58
to ask you about your confidence in achieving the five launches
46:01
by the end of One Q and the 60 satellites by the end of next
46:05
year. Is there any more risk now in
46:08
that timeline from your perspectives?
46:10
And then separately, I wanted to ask you about the the EU
46:13
satellite constellation announcement.
46:16
Are these satellites incremental to the plan or are they part of
46:19
the existing 60 satellites by the end of next year?
46:23
And if they are incremental, can you talk about the timing for
46:27
launching them and what the CapEx and funding implications
46:31
are? And then lastly, related to to
46:34
that, there's been some talk in the market about AFT winning
46:39
part of the Iris Squared mandate in Europe.
46:41
Is that something that that is happening?
46:45
Is that real or is that just noise in the market?
46:47
Thanks so much. OK.
46:51
Hey, Brian. I would try to you said the
46:53
question in three parts. Let me start with the launch and
46:57
I want to start with where are we with manufacturing.
46:59
So by by early 2026 Q one first part of Q2 we would have 40
47:07
satellites built. So we are at 19 satellite 19 at
47:11
the moment and we are at a pace of 6 satellites a month starting
47:18
in December. And that match very well with
47:23
the launches that we had already financially committed.
47:28
And we are in the manifest of our partners, our launch
47:31
partners to to to take them starting the one in India
47:35
mid-december and then following the launches from the Cape to
47:41
add up to the five launches by the end of Q1.
47:46
So we feel very confident on our own long campaign.
47:49
This is a been and you know the culmination of our, our road map
47:55
where we now have the ability to start launching by Q1.
48:00
Also our 10 gigahertz satellites that we, we, we plan to take the
48:05
maximum out of them in the way that we manage that 1010
48:08
gigahertz processing bandwidth that satellite.
48:10
So we, we, we, we, we feel very comfortable there.
48:13
As it relates to your question in in Europe, I mean we are an
48:18
American company that operates globally and as such we you know
48:24
where that market by market our go to market is exclusively
48:29
through the partners and telcos that we operate with.
48:34
I mean including European markets.
48:37
If you see the reception of what we're doing in Europe jointly
48:41
with what Afoni had been incredible, 21 of the 25 top
48:45
operators in Europe have basically committed or or
48:52
expected to be part of the network and the constellation
48:55
that that we are building a part of our constellation, but with
49:01
certain features for European MN OS.
49:07
And then that's, that's, that's really, you know, we that,
49:11
that's add up to the 50 plus agreement that we had globally
49:19
reaching us over 3 billion subscribers that we can reach
49:22
through the agreement that we have globally.
49:27
So Bell, just to clarify then, so you're saying that the the,
49:33
the satellites for this constellation are, are part of
49:36
the existing plan, they're not incremental, is that?
49:38
Correct. That's correct.
49:42
OK. And then can you comment at all
49:45
on the just the the talk about Iris Squared and and whether AST
49:50
might be part of that seems like it you could be well positioned
49:54
for it, you know, given this announcement today or over the
49:57
weekend? Yeah, we don't, we don't want to
50:00
comment on you know, new contract awards or anything like
50:02
that. But you know, given that we are
50:05
already building a constellation with multiple capabilities, we
50:08
think we're very well positioned for, for any, any, any country
50:12
or any customer that's looking to get this capability right.
50:14
The the incremental ability for us and the marginal economics
50:19
for us to build out additional capabilities in orbit is very
50:22
high given our tech, given our manufacturing, given our, you
50:26
know, existing ecosystem was created.
50:28
So I think we're very well positioned for opportunities
50:30
like that. But but Brian, we, we're, we
50:33
don't, we're not going to comment on any new contracts
50:35
right now. Sir, certainly understood.
50:37
Thank you so much. Thank you.
50:43
Our next question comes from the line of Colin Canfield with
50:46
Cantor Fitzgerald. Please proceed with your
50:48
question. Hey, thank you for the question.
50:53
Appreciate the sensitivity in terms of kind of Iris
50:55
commentary, but but maybe just talking about kind of your
50:58
supply chain versus the European supply chain.
51:02
I think when when investors kind of saw the the 20-30 targets
51:04
around on around Iris. And so the recent headlines in
51:08
terms of kind of antitrust and mergers between between kind of
51:12
the. We'll see the.
51:14
Existing supply chain folks for that domain it it's pretty
51:18
obvious that that sort of like back and forth is going to limit
51:21
their their capability. So maybe without mentioning
51:25
Iris, if you could maybe talk about kind of how you think
51:28
about your aperture for additional bands and leveraging
51:32
the economies of scale that you have to do more than just pass
51:36
out and see that? Yeah.
51:41
I mean, well, first of all, our, our platform, it is designed to
51:45
basically capture over 1000 megahertz of a spectrum that can
51:51
be tuned across all three GPP bands in the low band and the
51:56
mid band. So, so we, we basically design
51:58
our network where we can take any, any band in any country as
52:03
long as 3 GPP, a lot of these in the devices we can tune into it.
52:07
So and our incremental call for that is practically 0 because
52:11
that is all software defined in terms of we will manufacture or
52:16
how who we are. We are an American company.
52:18
We manufacture in United States. We're based in Midland, TX and
52:23
but we operate globally. So and we're in the business of
52:28
partnering with the Mnos which are local, are in are in the
52:32
local jurisdictions. We partner with them, they
52:34
provide a spectrum. Sometimes we bring our own
52:37
spectrum and complement that in order to deliver the best
52:41
experience possible in the future for, for the end user
52:45
device that basically no matter what phone they're using on
52:49
they, they get 120 megabits per second from the space.
52:53
So that's that really who we are.
52:55
That was our, that was strategy. We're Americans, we're based
52:59
here. We we announced, you know, we
53:03
had over 1800 people working on our system.
53:08
But yeah, we obviously we're going to look very aggressively
53:11
all around the globe to our spectrum that is in local
53:15
jurisdictions that is managed by, by, by, by local, local
53:22
regulators and and partner with local MN OS to offer the best of
53:28
our services to each of, of the customers.
53:30
So, but I, I wanted to make it clear where, where would you
53:33
know our focus is we, we, we, we're an American company that
53:37
operates in America. Got it, got it.
53:41
And, and it was we think about kind of the, the sizing of the
53:43
war chest that AST has put together the tracks, you know,
53:47
kind of roughly in terms of cash on hand to some of the legacy
53:50
satellite communications debt levels.
53:53
How do you think about kind of going out acquiring either
53:56
future spectrum or even, or even something that might kind of get
53:59
you closer to free cash flow positive sooner?
54:02
And and how do you think about kind of that potential take out
54:06
versus investing organically and and essentially kind of taking,
54:09
taking business away for your own investment in IP?
54:15
Yeah, I mean at the core of our strategy is partnering with the
54:20
MN OS. The MN OS in United States we
54:23
had access to around 80 megahertz of spectrum, call it
54:26
fifty of our own and another 30 in combination of low band and
54:32
mid band spectrum available for us.
54:35
So that's we believe is significant amount, especially
54:39
when you start applying AI techniques to maximize it and
54:43
make it more, more efficient. If you take in consideration
54:47
roughly by market and roughly each market in the United States
54:52
have around 250 megahertz of of terrestrial deploy spectrum and
54:58
we had access to around 80 for satellite you you can see that
55:01
that's a very significant portion.
55:03
So we feel that we're very equipped to globally compete.
55:06
So that what we acquire the 50 megahertz in United States, we
55:10
we have a, a priority right for another 60 in United States.
55:16
We, we, we're, we're partnering with the global MNO ecosystem in
55:20
Europe for Europe. So you know, our focus is
55:26
launching satellite building satellites, which we are not at
55:29
A at a rate that we feel proud and, and and meet our business
55:33
need, which is around 6 per month of the largest satellites
55:38
ever launched into Leo. We're doing that.
55:42
We're we're breaking a, a world record every time that we take
55:46
a, a satellite out of the factory is the largest ever
55:48
launched. So we, that's our primary, our
55:52
primary focus manufacturing second to that is launching them
55:56
and 3rd to them is bring this service globally with a
55:59
combination of local spectrum from the MNO and and our own to
56:05
basically offer the the the broadband experience as close as
56:10
possible to terrestrial by using space.
56:15
Got it. Thank you for the call.
56:21
Thank you. Our next question comes from the
56:24
line of Chris Ashol with UBS. Please proceed with your
56:28
question. Great, thank you.
56:31
I just want to follow up on the funding progress.
56:33
I recognize that you are saying you're fully funded, I believe
56:36
for 90 satellites in your queue. But will you continue to be
56:39
opportunistic and how should we think about additional capital
56:41
raises as we go into 2026? And then thank you for the color
56:45
on the four Q OpEx and CapEx. Just given the rampant block two
56:48
production into 26, should we view view 4 Q as a good run rate
56:52
when modelling out next year or will the timing of the launch
56:55
payments cause spending to fluctuate?
56:57
Thanks. Hey Chris.
57:00
I'll take the first part and then Andy can take the second
57:02
part. So in terms of, you know fun
57:08
flows I guess is the best way to think about it.
57:11
You know, I would look to the model on the commercial side and
57:15
the comments we made earlier in the call where we're laser
57:18
focused on bringing in commercial repayments,
57:21
commercial commitments and ultimately commercial revenue as
57:23
soon as possible. You know, we've we've reiterated
57:25
our expectations on revenue in Q4 and going into 2026 we
57:31
certainly expect that expect continued growth.
57:33
So we are very, very focused on the commercial side, which is
57:38
why you saw the big announcements in the last month
57:40
or so and the, and the new disclosure on commitments for
57:44
this call. And so that's, that's definitely
57:47
our focus. We, we thought the, the moment
57:49
was right to continue to build the, the cash balance and, and
57:52
accelerate the timelines and, and, and run towards the growth
57:55
opportunity. But but in terms of our focus
57:58
and our energy and we're going to spend our time, it's, it's
58:01
100% with customers and the prepayments and commitment
58:05
strategy is the right one. And on launch?
58:08
Yeah. I would just add that, you know,
58:12
as Scott said, the focus is commercial.
58:14
I mean we're always going to be opportunistic and open minded
58:18
about a good capital markets of course.
58:21
But you know, given where we are now, we have the flexibility to
58:26
to perhaps pull lodge forward as opportunity allows and we'll be
58:32
prudent about that, continue to kind of weigh opportunities on
58:35
the equity side. We we also look at attractive
58:38
things on the debt side. We believe that that market will
58:41
open up a little bit as we progress.
58:42
So it's, you know, our priority is the commercial aspects of the
58:46
business now and we'll continue to give good thought, but I
58:50
spend my time thinking about how to prudently deploy that capital
58:53
that we've now raised on the balance sheet.
58:58
Great. Thank you.
58:58
And I can just follow up on the four Q OpEx and CapEx.
59:01
Is that a good run rate, run rate when we start thinking
59:04
about next year or can that be a little volatile?
59:08
Will be a little volatile. I think on OpEx, it's pretty
59:10
darn close because we've been growing so dynamically as the
59:15
years progressed and we're at a stage now Isabel and I've said
59:19
it close to 1800 employees and workforce and that OpEx feels,
59:25
feels pretty good and and consistent.
59:28
On the CapEx side, it's going to ebb and flow.
59:31
We've been roughly in that close range the last couple quarters,
59:35
but as we get closer to launch and clearly 26 is closer to
59:41
consistent cadence over every 3045 days, we'll have some
59:45
spikes and some lulls and when launch payments are due.
59:48
I think what our plan is on that though is you know, we we've
59:51
told you how we feel in Q4 and we're halfway through that
59:54
quarter. So we have good visibility and
59:57
then we'll come out after the year and give you an outlook on
1:00:01
on 26 holistically both on Apex and and CapEx when we talk again
1:00:05
toward the end of February, early March.
1:00:10
Hey, great. Thank you very much.
1:00:14
Thank you. Our next question comes from the
1:00:17
line of Louis De Palma with William Blair.
1:00:20
Please proceed with your question.
1:00:24
Belle, Scott and Andy, Congrats on the Verizon and SDC
1:00:29
definitive contracts. Thanks a lot, really appreciate
1:00:35
it. Do do you?
1:00:39
Think that the number that Andy cited having 25 satellites in
1:00:45
orbit is a good estimate for the number to support beta trials in
1:00:52
in North America in 2026. Yeah, no, that, that that's
1:00:59
right, Louis. You know, each, each operator
1:01:01
thinks about these things a little bit differently.
1:01:03
But but yeah, we think that that's a that's a fair proxy
1:01:06
plus or minus. Great.
1:01:10
And also thanks for the color on the the $1 billion in contracted
1:01:16
revenue commitments. Is that for the three definitive
1:01:20
commercial agreements and are you able to disclose the average
1:01:24
duration of the revenue commitments?
1:01:28
I think the STCDL was for 10 years.
1:01:32
Is it appropriate to assume that the others were of similar
1:01:36
duration? So we're not going to give up
1:01:42
you know an average duration, but I would say it does vary.
1:01:45
When you look at the contracts we've signed, they've been as
1:01:49
long as 5610 years, right. So each of the contracts is a
1:01:53
little different and the the revenue commitment number that
1:01:58
we disclosed, it is primarily with the definitive agreements,
1:02:02
but there there is, you know some others and and other
1:02:06
binding agreements as well. So, so that's how to think about
1:02:10
it. It's gonna vary but but it's a
1:02:13
it's a decent mix of short term, medium term and long term and
1:02:16
structured well for the company. Thanks, Scott.
1:02:21
And in the past, you've discussed how your satellite
1:02:24
processing tech can like recombine the disparate spectrum
1:02:29
holdings from AT&T and Verizon to create a a cohesive near
1:02:34
nationwide footprint for approximately 5 megahertz.
1:02:39
How is is that technology working in in trials?
1:02:45
No, it is working very well. We, we, we are you know,
1:02:49
planning to, to, to be ready for nationwide service early in the
1:02:54
year on an intermittent basis. The level of intermittency will
1:03:01
reduce drastically and we keep adding satellites.
1:03:04
But you are correct. Our satellite have enough
1:03:07
flexibility that we were able to take a spectrum from from AT&T
1:03:10
spectrum from Verizon, combine it up and make a nationwide
1:03:14
service or near nationwide service.
1:03:17
And that's, that is a that would be combined with our 50
1:03:22
megahertz and our technology has the ability to pick and choose
1:03:28
the rest of the spectrum combining with satellite
1:03:30
spectrum and offer that as a package to to the end user.
1:03:39
Excellent. So the your technology can
1:03:41
combine the the mobile satellite spectrum in addition to the the
1:03:45
AT&T and Verizon spectrum, correct.
1:03:50
Great. Thanks, Abella, and thanks,
1:03:52
Scott and Handy. Thank you.
1:03:58
Our next question comes from the line of Greg Pendy with
1:04:00
Clearstreet. Please proceed with your
1:04:02
question. Hey guys.
1:04:05
Thanks for taking my question. Just a real.
1:04:06
Quick one, given the MNO momentum that you've seen with
1:04:10
SDC and Verizon, you're I guess your 50 MN OS represent roughly
1:04:16
3 billion Subs if I'm not mistaken, the market or the Tams
1:04:20
probably 5.6 billion. Just can you talk about, given
1:04:23
your partnership model, about how many large MNO opportunities
1:04:29
are left out there in the market?
1:04:31
Thanks. Sure.
1:04:35
Hey, Greg. So we, the, the, the interesting
1:04:40
thing about how we've approached the market and how we built the
1:04:43
company is that we're very favorable to MNO's.
1:04:47
We've, we've structured our, our technology, our network, our go
1:04:51
to market strategy, even our cap stack, right, even the
1:04:55
investors, it's, it's very favorable intentionally towards
1:04:58
our customer, the operators. So as we've built the ecosystem
1:05:03
over the last 5 to 10 years, it's really been around who's
1:05:08
most aligned, who can, who's most forward thinking.
1:05:10
And, and as we get closer to service, it's, it's less forward
1:05:13
thinking and it's more that everybody feels that they need
1:05:15
this capability. So we have this fascinating
1:05:18
dynamic where we're not really constrained by historical
1:05:22
relationships or they, you know, operators that, you know, want
1:05:27
to, to work with us. We we find pretty much nearly
1:05:31
all the operators in the world, if not all you don't want to
1:05:34
want to work with us and, and want to learn more and, and want
1:05:36
to participate. So we're going to continue to
1:05:39
harvest that, that, that base for, for good contracts for the
1:05:42
company for the initial markets that we deploy and then grow
1:05:45
that base into the medium tail and the long tail as we grow.
1:05:50
So, so I think in terms of big, big M&O opportunities, it's,
1:05:56
it's, it's, it's we, we've chosen not to do business in
1:05:58
China or Russia, but and, and, and other, you know, smaller
1:06:01
restricted countries. But other than that, you know,
1:06:05
most operators are good candidates and have some level
1:06:08
of dialogue with us and, and, and we're going to continue to
1:06:10
pursue those opportunities. That's very helpful.
1:06:14
Thanks. Thank you.
1:06:19
Our next question comes from the line of Chris Quilty with Quilty
1:06:22
Space. Please proceed with your
1:06:24
question. Thanks guys.
1:06:26
Maybe a a more nuanced question than Louis about the the billion
1:06:30
dollar commitments. Is that all commercial or is
1:06:33
that a combination of commercial and government?
1:06:36
That's all commercial. Great.
1:06:40
And maybe to follow on, I mean, you're you're capitalized now
1:06:44
for 100 satellites. Again, I'm assuming that that's
1:06:47
all for the commercial side. Obviously Secretary Department
1:06:54
of War Hegseth speech Friday indicating that contractors are
1:06:58
going to have to, you know, commit their own capital to
1:07:01
getting things done. Or is it fair to assume that
1:07:04
most of the programs you're working on will be more in the
1:07:06
the sort of star SpaceX star shield model of vendor built and
1:07:12
operated government? Owned.
1:07:17
Yeah. I mean we, we have been a big
1:07:20
proponent for for long time for the government for the dual use
1:07:24
concept. Basically we we believe that to
1:07:29
maintain competitiveness for United States, the ability to
1:07:33
combine commercial usage with a government usage is a paramount.
1:07:41
And so we basically our funnel with the government, which is
1:07:46
very substantial it it called for that model.
1:07:53
So, so we don't discard, there will be occasions that we will
1:08:00
manufacture certain assets tailor made to the government,
1:08:04
but we're prioritizing the dual use in, in, in, in, in, in, in,
1:08:09
in, in every opportunity that we have.
1:08:12
Great. And final question.
1:08:14
Just on the launch when, when will you give us some visibility
1:08:17
on specific launch vehicles? You know, as we approach the
1:08:22
launch dates, obviously the heavy lift market is extremely
1:08:26
constrained. And you know, I watched in the
1:08:28
last week both, you know, Blue Origin and ULA delay and delay
1:08:33
SpaceX is really the only, you know, operator out there that
1:08:37
that's launching on the regular cadence.
1:08:40
You know it, it's a tight market at current time.
1:08:43
And are you expecting other launch vehicles to become
1:08:46
available? We're, we're expecting other all
1:08:51
other launch vehicles to become available.
1:08:52
But our current existing and immediate launch campaign, it,
1:08:57
it is using the regular suspects SpaceX, New Glenn, ESRO and
1:09:06
there are new new capacity coming up from, from from other
1:09:11
operations like NHI and that that that are available to us.
1:09:18
But the immediate launches are around American launches here in
1:09:22
the US. Gotcha.
1:09:24
And are you still aiming for the same sort of, you know, 3 to 4
1:09:30
Bluebirds per Falcon 9, I think 8 per New Glenn?
1:09:35
And are there things that you're doing or can do in order to
1:09:38
increase the number of satellites per launch vehicle
1:09:42
either in in mass or dispenser design or or other tricks?
1:09:49
Yeah, that, no, that is correct. I mean, we basically can go at
1:09:52
AW speed in terms of number of satellites per launch with the
1:09:57
new Glen platform that we can with the SpaceX platform.
1:10:00
But yes, it's at full capacities 8 in the New Glen and and around
1:10:05
3 in the in in the Falcon 9. We're good.
1:10:10
Well, looking forward to the next one.
1:10:12
Thank you. Thank you.
1:10:17
Our next question comes from the line of Scott Cyril with Roth
1:10:21
Capital Partners. Please proceed with your
1:10:22
question. Hey, good afternoon.
1:10:25
Thanks for taking the questions. Maybe just a couple of quick
1:10:28
follow-ups and clarifications. Now that you're funded up to 100
1:10:32
satellites and the initial phase of the constellation of 45 to 60
1:10:36
gets you to commercialization in the key developed markets.
1:10:39
Should we expect that you're just going to continue to roll
1:10:42
through to build up to the 90 to 100 plus satellites in terms of
1:10:45
all called phase two of the constellation as we go into
1:10:48
2027? Or there's some other milestones
1:10:51
to be thinking about in terms of customer contracts or otherwise
1:10:53
that'll be a precursor that happening?
1:10:55
And also as part of that, from a spectrum standpoint, you had a
1:10:58
very astute buy of the Delgado spectrum in North America.
1:11:01
I know you have access in international markets, but
1:11:03
there's some other costs that come along with that.
1:11:05
I'm wondering if you could just frame for us kind of how you're
1:11:08
conceptually thinking about incremental spectrum costs going
1:11:11
forward? Particularly in international
1:11:12
markets. Thanks.
1:11:15
Yeah, I mean the the architecture basically designed
1:11:20
to basically miss and matches our own spectrum with operator
1:11:23
spectrum until all across the low band and mid band spectrum.
1:11:29
So, so basically our cost of incremental spectrum is
1:11:33
marginal. It doesn't cost us more on the
1:11:38
platform to activate additional spectrum.
1:11:41
So that would make it very attractive.
1:11:43
We can, we can partner with the 700 in, in certain jurisdiction
1:11:48
and in another one we are in the in the in the mid band in
1:11:51
combination with their own spectrum.
1:11:53
So we, we our incremental call for additional spectrum is is
1:11:57
marginal to none as long as 3 GPP spectrum and it's as long as
1:12:02
in devices. We and and our strategy is
1:12:06
always starting a broadband services with a spectrum that is
1:12:11
available in devices. Right.
1:12:18
And just a clarification in terms of your continued launch
1:12:23
cadence if you will, once we get to 60 satellites or are the
1:12:26
milestones that you're thinking about are any sort of call you
1:12:28
could you could add in terms of the continued expansion of the
1:12:31
the global constellation? Thanks.
1:12:35
Sure. So our strategy on satellite
1:12:39
deployment hasn't really changed either, right.
1:12:41
You know, our strategy has been as we have capital access and as
1:12:46
we see positive NPV growth, we're we're going to commit to
1:12:50
it. And so that was the driver
1:12:53
behind how we announced and have thought about the 45 to 60
1:12:57
satellite target that we put in place a year or so ago.
1:13:01
And with further access to capital and, and frankly,
1:13:04
further traction faster and, and, and more attractively on
1:13:08
the operator side and, and potentially the government side
1:13:11
as well, We've, we've recalibrated those expectations
1:13:15
and, and, and that's part of what's behind, you know, the
1:13:17
capital we've raised. So where do we go from here?
1:13:21
How do we continue to build those out?
1:13:22
We, we're, we pride ourselves on being very nimble.
1:13:25
Remember, we're vertically integrated.
1:13:28
We can, you know, put incremental improvements into
1:13:32
our constellation as we go, like the ASIC to come in Q1.
1:13:36
And so we're going to continue to move that way.
1:13:39
We are not making multi year planning decisions.
1:13:41
You know, we're pivoting and moving quickly.
1:13:44
And as we see things move and we see opportunities, we're going
1:13:48
to pivot quickly. But but for us at this point, we
1:13:51
see nothing but opportunity and we see nothing but growth.
1:13:54
So we're we're racing towards more satellites fast and and so
1:13:58
that's how we're thinking about it.
1:13:59
Scott is, you know, there's no, there's no, no real hold up on
1:14:03
us for continuing to build, but we're going to evaluate growth
1:14:07
opportunities on a rolling basis and and that's what you've seen
1:14:09
us do the last couple years. Great.
1:14:13
Thanks so much. Thank you.
1:14:17
And we have reached the end of the question and answer session.
1:14:20
And I'll now turn the call back over to Scott Wisniewski for
1:14:23
closing remarks. Thank you, operator.
1:14:27
We want to thank all of our shareholders and the analysts
1:14:29
for joining the call. We look forward to providing
1:14:33
more updates soon, so please stay tuned.
1:14:35
Thank you. Bye and.
1:14:39
Ladies and gentlemen, this concludes today's conference and
1:14:41
you may disconnect your line at this time.
1:14:43
We thank you for your participation.