AST SpaceMobile Q4 2024 Earnings Report

AST SpaceMobile EPS Results

• Actual EPS: N/A
• Consensus EPS: -$0.18
• Beat/Miss: N/A
• One Year Ago EPS: N/A

AST SpaceMobile Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $2.38 million
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

AST SpaceMobile Announcement Details

• Quarter: Q4 2024
• Date: 3/3/2025
• Time: After Market Closes
• Conference Call Date: Tuesday, March 4, 2025
• Conference Call Time: 5:00PM ET

AST SpaceMobile (NASDAQ:ASTS), together with its subsidiaries, develops and provides access to a space-based cellular broadband network for smartphones in the United States. Its SpaceMobile service provides cellular broadband services to end-users who are out of terrestrial cellular coverage. The company was founded in 2017 and is headquartered in Midland, Texas.

AST SpaceMobile Q4 2024 Earnings Call Transcript

Key Takeaways

• AST SpaceMobile completed a $460 million convertible note offering, bringing cash on hand close to $1 billion to accelerate its satellite manufacturing program.
• The company secured long-term access to up to 45 MHz of prime lower mid-band spectrum in the United States, significantly increasing its capacity for direct-to-device broadband service.
• Manufacturing has been ramped up, with procurement underway for 40 Block II Bluebird satellites and over 50 micros, alongside facility expansions in Texas, Spain and soon Florida.
• AST has agreements with approximately 50 mobile network operators worldwide (including AT&T, Verizon, Vodafone and Rakuten) covering nearly 3 billion subscribers, and formed a Europe joint venture with Vodafone to extend coverage beyond its initial ten markets.
• The company won a $43 million contract with the U.S. Space Development Agency, secured STA approval from the FCC for in-orbit testing with AT&T and Verizon, and continues to pursue both communication and non-communication defense applications.

Presentation

[Operator]

Good day and thank you for standing by. Welcome to the AST SpaceMobile Fourth Quarter twenty twenty four Business Update Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your host today, Scott Wisniewski, President of AST SpaceMobile. Please go ahead.

[Scott Wisniewski, President & Chief Strategy Officer at AST SpaceMobile]

Thank you and good afternoon everyone. Today, I'm also joined by Chairman and CEO of Val Notglog and our Chief Financial Officer, Andy Johnson. Let me refer you to Slide two of the presentation, which contains our safe harbor disclaimer. During today's call, we may make certain forward looking statements. These statements are based on current expectations and assumptions and as a result are subject to risks and uncertainties.

[Scott Wisniewski, President & Chief Strategy Officer at AST SpaceMobile]

Many factors could cause actual events to differ materially from the forward looking statements on this call. For more information about these risks and uncertainties, please refer to the Risk Factors section of ASC SpaceMobile's annual report on Form 10 K for the year ended 12/31/2024, with the Securities and Exchange Commission and other documents filed by AST Space Mobile with the SEC from time to time. Also, after our initial remarks, we will be starting our Q and A section with questions submitted by our shareholders. For those of you who may be new to our company and Mission, there are over 5,000,000,000 mobile phones in use today around the world, but many of us still experience gaps in coverage as we live, work and travel. Additionally, there are billions of people without cellular broadband and who remain unconnected to the global economy.

[Scott Wisniewski, President & Chief Strategy Officer at AST SpaceMobile]

The markets we are pursuing are massive and the problem we are solving is important and touches nearly all of us. In this backdrop, ASP space mobile is building the first and only global cellular broadband networking space to operate directly with everyday unmodified mobile devices and supported by our extensive IT and patent portfolio. We have made significant progress over the past year and I am excited to pass the call to our Chairman and CEO of El Abellon, who will discuss our achievements and our vision going to 2025.

[Abel Avellan, Founder, Chairman & CEO at AST SpaceMobile]

Thank you, Scott. The past several months have been transformational for ASP space mobile, and we continue to accelerate manufacturing, expand our quality ecosystem and demonstrate unique and differentiated space based robot capabilities. 2024 was the year we validated AC SpaceMobile position as a technology leader and inventor in this new industry. And in 2025, we will leverage this position alongside our expansive IP portfolio of more than 3,500 patents and patent pending claims to further enable true face connectivity to the device in your pocket today. Simply put, we entered 2025 with its talent and partners, technology and intellectual property, access to space and spectrum and the funding to move at an accelerated pace in this fast developing market.

[Abel Avellan, Founder, Chairman & CEO at AST SpaceMobile]

Key pieces of our business are now in place. Our technology has capacity to deliver voice, data, video calls and other native cellular broadband capabilities, making us a truly differentiated offering for us and our network partners. We're now moving forward to integrate with our partner networks, which will enable initial service with our mobile network operators partners AT and T and Verizon in United States, Polapol in United Kingdom and Turkey and Rakuten in Japan. Our mobile network operators partners include some of the largest telecom operators in the world and the number of branches continue to grow. We now have agreements with approximately 50 mobile network operators globally, which have been which have nearly 3,000,000,000 existing subscribers around the world.

[Abel Avellan, Founder, Chairman & CEO at AST SpaceMobile]

This year is about building our constellation to reach commercial service. As a reminder, our technology has been designed from the beginning to support broadband, not just text messaging or emergency SOS. As noted recently by our partners AT and T, Verizon and Vodafone, who each completed video calls over our in orbit network. We had the capability for voice and data services at broadband speed to modify the smartphones. Since our last business of day call with investors, we achieved several major milestones.

[Abel Avellan, Founder, Chairman & CEO at AST SpaceMobile]

First, we solidified our balance sheet with a significant financing with an attractive structure. And with that, we are accelerating our manufacturing, which I will speak to you shortly. Second, we signed an agreement that once completed will provide us with the largest block of high value lower mid band spectrum, our making the spectrum owned and operated by our partners. Third, we have celebrated satellite manufacturing effort with planning and production of 40 log two logar service underway alongside with additional components and materials needed for over 50. Fourth, we continue to expand our commercial ecosystem, both with MNOs, with the Bolson agreement and with the government contracts.

[Abel Avellan, Founder, Chairman & CEO at AST SpaceMobile]

In fact, just this past week, we announced a new $43,000,000 contract award in support of the United States Space Development Agency or SDA. Our recent contract is just for the beginning of what we expect to achieve with the U. S. Government. And last, we continue to solidify the regulatory framework for our service with the SEC.

[Abel Avellan, Founder, Chairman & CEO at AST SpaceMobile]

Let me briefly elaborate on each of these achievements. We completed $460,000,000 convertible senior note offering, resulting in nearly $1,000,000,000 in cash on our balance sheet. And on side with this capital raise, we secured CapCo transactions, which increased the effective conversion price of the note to approximately $45 per share. With a 4.25% coupon, we significantly reduced our cost of capital for the company. And with the CapExcap call, we minimize effect in dilution to existing shareholders to approximately 3% at the effective conversion price.

[Abel Avellan, Founder, Chairman & CEO at AST SpaceMobile]

Importantly, as part of the transaction, AT and T, Google, Verizon and Vodafone converted their existing node and became Class A common shareholders. We welcome our loyal partners as shareholders, and we appreciate their ongoing support. Definancing and our new balance sheet enabled us to immediately and aggressively accelerate our manufacturing plans. We have accelerated the procurement of components and materials needed for us to complete 40 fully integrated and assembly Block II Bluware satellites. Additionally, we have accelerated procurement of components and materials needed for us to complete fully assembled microbes, which are the building blocks of our satellites and phase upgrade for over 50 satellites.

[Abel Avellan, Founder, Chairman & CEO at AST SpaceMobile]

As a reminder, the assembly stage is one of the last steps in the manufacturing process and we procure long lead items first to ensure we remain on track for the integration and assemble stages. As part of our accelerating manufacturing, we had increased our global footprint to approximately 194,000 square feet in Midland, Texas, 50 9 Thousand square feet in Barcelona and Spain and soon 85,000 additional square feet in constant Florida perspective. We have completed the bring up and initial validation of our novel ASIC chips, which will support up to 10,000 megahertz 10 gigahertz in processing bandwidth per satellite with peak data speed of up to two twenty megabits per second. We expect to incorporate our ASIC into Block two Bloomberg satellites later this year. We also exercised our contract option for more launches and now we have fully contracted load capacity for approximately 60 satellites during 2025 and 2026, which get us to continue servicing U.

[Abel Avellan, Founder, Chairman & CEO at AST SpaceMobile]

S, Europe and Japan and some selected markets outside United States. Next, we signed an agreement which will provide long term access to up to 45 megahertz of lower mid band specs in United States for directed device satellite application. This agreement, when consummated, will augment our capabilities bearing existing plans for The Continental United States on previous three EPP low line spectrum in the eight fifty megahertz line, which offers superior penetration on COVID characteristics with access to up to 45 megahertz of lower mid band spectrum, the largest available globe or high quality nationwide spectrum in The United States. Spectrum is a scarce resource and our spectrum agreement matches an attractive spectrum position with the largest satellite array for direct to device cellular broadband from the space. The agreement for long term access to this spectrum enhanced our strategy of working with MNO's partners.

[Abel Avellan, Founder, Chairman & CEO at AST SpaceMobile]

Our partner dedicated premium low line spectrum to support our services. The spectrum we're accessing amplified existing capacity. Specifically, more spectrum means increased subscriber capacity and better service in The U. S, enable peak data transmission speed of up to 120 megabit per second for a true broadband experience directed from Spain to everyday smartphone. This position us and our mobile network operator partner for significant growth, while reinforcing our place in the broader wireless ecosystem with a valuable strategic asset.

[Abel Avellan, Founder, Chairman & CEO at AST SpaceMobile]

And just recently, we received a special temporary authority FDA approval from the SEC to commence testing service with AT and T Amber ISO in United States. This approval enabled us to connect and test our Bluebird satellite with a modified smartphone without the need of any specialized software, device support or updates. The SEC approvals underscore the chair goal between ATC SpaceMobile and the commission. We anticipate additional SEC filings soon and we continue integrating our groundbreaking technology with our stake partners. The first five commercial Group one Bluebird satellites launched in September 2024 are fully operational.

[Abel Avellan, Founder, Chairman & CEO at AST SpaceMobile]

As a reminder, our satellites are massive, each the largest ever commercially deployed communication array in low Earth orbit, other than the International Space Station. For context, our upcoming Block II satellites are more than three times the size of Block I satellites, measuring approximately 2,400 square feet. As a result, we need a much smaller number of satellites compared to traditional operators in the low F orbit. These types of our satellites accelerate our path to commercial revenues and the design of our satellites and network decrease any single point of failure reducing our risk profile. I am very pleased to report the first five bluebird salads are all performing as expected.

[Abel Avellan, Founder, Chairman & CEO at AST SpaceMobile]

We have fully tested each exciting to watch Bolasco CEO of Margarita del Valle complete a video call using our state based technology. AT and T and Verizon completed video calls shortly after. This operational milestone demonstrates our unique capabilities that our satellites were designed for, not just test messaging, but full broadband capability and other native cellular capabilities to completely unmodified smartphones. On the government front, we recently secured an additional contract for $43,000,000 of revenue with the space development agencies through a prime contractor. Scott will provide support details momentarily.

[Abel Avellan, Founder, Chairman & CEO at AST SpaceMobile]

But this commercial award highlight the capabilities of our dual use technology for specialized garment applications. Our government contract pipeline continues to show strength, driven by new use cases for our unique technology, which are becoming clearer every day. With our successful initial launch and the progress across manufacturing and our commercial and government agreement, you can see that key pieces of operationalize the integrated mobile network are now in place. I am incredibly proud of the tireless effort from our team and our partners, particularly over the past several months to get us to this critical point. With each step, we move closer to achieving our mission of connecting the unconnected and look forward to bringing two more updates in the months ahead.

[Abel Avellan, Founder, Chairman & CEO at AST SpaceMobile]

I will now pass the scope to provide more details on our commercial focus.

[Scott Wisniewski, President & Chief Strategy Officer at AST SpaceMobile]

Thank you, Abel. As Abel mentioned, the last few months have been truly significant for AST SpaceMobile. All of the facets of our business are coming together nicely and we enter 2025 in our strongest position to be. Let me provide additional details on some of the achievements and what they mean for the commercialization of the company. This last week, we signed a $43,000,000 revenue contract with the U.

[Scott Wisniewski, President & Chief Strategy Officer at AST SpaceMobile]

S. Space Development Agency through a prime contractor. This contract follows successful in orbit testing on our BlueWalker three test satellite under the previous contract announced in February of twenty twenty four. Importantly, this is not a prepaid contract, but rather revenue we expect to receive and recognize alongside service delivered on our five satellites in orbit and our first Block II Bluebird satellite. This contract, as with our other U.

[Scott Wisniewski, President & Chief Strategy Officer at AST SpaceMobile]

S. Government contracts to date, serve as an evaluation of our capabilities in support of potential larger long term contracts. Now taking a step back, this marks our fifth contract award with the U. S. Government and our third supporting the Space Development Agency.

[Scott Wisniewski, President & Chief Strategy Officer at AST SpaceMobile]

We continue to see a strong demand profile for space applications from the DoD, which you can read about in the press and in particular for our unique architecture, which facilitates a diverse set of communications and non communications applications. Our network is also attractively positioned as dual use capable, meaning the same spacecraft can be used for both consumer and government programs. On the commercial front, we continue to advance with our partners, including the approximately 50 mobile network operators we have initial agreements with today. The depth and excitement of these conversations has continued to increase alongside our business milestones, like the high profile video calls with Vodafone, AT and T and Verizon that we recently conducted. During 2025, we expect to round out our strategic markets with additional MNOs, building out the initial planned coverage footprint in The U.

[Scott Wisniewski, President & Chief Strategy Officer at AST SpaceMobile]

S, Europe, Japan and with the U. S. Government. Additionally, during the first half of twenty twenty five, you will begin to see gateway sales or bookings that will bring in cash and revenue during 2025 and also provide a leading indicator for the markets where you will see initial service revenue. Turning to Vodafone in particular, in December, we finalized the definitive long term commercial agreement for space mobile service through 02/1934.

[Scott Wisniewski, President & Chief Strategy Officer at AST SpaceMobile]

This agreement establishes the framework for Vodafone to offer space based cellular broadband connectivity in its home markets, as well as to other operators via its partner markets program. Our agreement with Vodafone is a culmination of the many years working together to advance connectivity, marking another significant step in our historic partnership. And then just yesterday, we announced the further agreement with Vodafone to accelerate the commercialization of the space mobile network across all of Europe. This jointly owned entity will exclusively distribute our space based cellular broadband service, expanding our addressable market significantly in Europe. This means shared ground infrastructure to manage geographic boundaries and turnkey solutions to increase take up with smaller operators earlier in our deployment.

[Scott Wisniewski, President & Chief Strategy Officer at AST SpaceMobile]

Also in support of our European expansion, we are opening a research and validation hub in Malaga, Spain to support space and land mobile broadband research. This strategic expansion, along with our increased manufacturing footprint in Barcelona, will enhance our capabilities to serve the European market and underscore our long term commitment to the continent. And with that, I will hand it off to Andy.

[Andrew Johnson, EVP, CFO & Chief Legal Officer at AST SpaceMobile]

Thanks, Scott, and good afternoon, everyone. I echo the sentiment expressed by Abel and Scott. Twenty twenty four was a pivotal year in the history of ASD SpaceMobile, and we continued our rapid operating transformation during Q4 of twenty twenty four. Our successful launch of five Block one Bluebird satellites in September, coupled with our achievement of full operational status of those satellites in early Q4, has positioned us well to continue our intense focus on expanding our customers, both through commercial and U. S.

[Andrew Johnson, EVP, CFO & Chief Legal Officer at AST SpaceMobile]

Government engagements. As 2024 came to a close, AST SpaceMobile was a transformed company, poised to lead the burgeoning direct to device satellite communication industry. We have the financial resources to support our bold initiatives to accelerate the manufacturing and deployment of our satellites in an effort to scale our revenue in the coming periods. The start of 2025 has been a continuation of this significant progress. As mentioned earlier, we accelerated satellite manufacturing efforts in line with our plans to launch up to 60 Block II Bluebird satellites during 2025 and 2026.

[Andrew Johnson, EVP, CFO & Chief Legal Officer at AST SpaceMobile]

We strengthened our balance sheet through our strategic capital raising, facilitating an increase in our production targets, including the planning and production of 40 Block II Bluebird satellites and fully assembled Microns and phased array to support a total of 53 satellites. Production is well underway at our manufacturing facilities as we expand our footprint globally. Moving to the operating and metrics slide, let's review the key operating metrics for the fourth quarter and full year 2024. On the first chart for the fourth quarter of twenty twenty four, we incurred non GAAP adjusted cash operating expenses of $40,800,000 versus $45,300,000 in the third quarter. As a reminder, non GAAP adjusted operating expenses exclude certain non cash operating costs, including depreciation and amortization and stock based compensation.

[Andrew Johnson, EVP, CFO & Chief Legal Officer at AST SpaceMobile]

This quarter over quarter decrease resulted from $9,300,000 of reduced R and D costs, primarily related to our now completed ASIC bring up and initial validation work, partially offset by a $4,200,000 increase in adjusted engineering services costs and a slight increase of $600,000 in adjusted general and administrative costs in connection with our accelerated plans related to our Block two Bluebird satellites and investments to bolster our critical commercial and administrative functions. For the full year 2024, non GAAP adjusted cash operating expenses totaled $151,800,000 compared to $154,600,000 for the full year 2023. Increased engineering services and G and A costs in 2024 were more than offset by a significant reduction in R and D costs as we reduced third party research and development efforts and pivoted to our internal engineering and cross functional administrative support in connection with our satellite manufacturing, deployment, commercial and U. S. Government engagement efforts related to our Block one and Block two Bluebird satellites.

[Andrew Johnson, EVP, CFO & Chief Legal Officer at AST SpaceMobile]

Turning towards the second chart on this slide, our capital expenditures for the fourth quarter of twenty twenty four were approximately $86,000,000 versus $26,500,000 for the third quarter of twenty twenty four. This figure is made up of approximately $77,000,000 of capitalized direct materials and labor for our Block II Bluebird satellites and additional facility and production equipment for our recently expanded 194,000 square foot assembly integration and test facilities in Midland, Texas. This amount was just slightly less than our guidance of approximately 100,000,000 that I provided on our last business update call in November due to timing of a payment ultimately made in January versus December. Overall and as expected, capital expenditures have continued to ramp in connection with Block II Bluebird satellite production and related launch commitments. Today, we are executing a plan to increase monthly satellite production to six satellites per month in the second half of twenty twenty five.

[Andrew Johnson, EVP, CFO & Chief Legal Officer at AST SpaceMobile]

In connection with scaling manufacturing and continuing payments on our two year launch campaign, we expect capital expenditures will continue to increase as compared to prior quarters. We expect CapEx in the range of $150,000,000 to $175,000,000 in the first quarter of twenty twenty five. Consistent with the fourth quarter of twenty twenty four, we estimate that our adjusted cash operating expenses for the first quarter of twenty twenty five will come in within a range of $40,000,000 to $45,000,000 as we continue to make critical investments across the organization in support of our growth plans. Timing of the changes in our adjusted operating expenditures and capital expenditures as I've just described could be delayed or may not be realized due to a variety of factors. And on the final chart on this slide, we ended the fourth quarter with $567,500,000 in cash, up from $518,900,000 at the end of the third quarter.

[Andrew Johnson, EVP, CFO & Chief Legal Officer at AST SpaceMobile]

Our ability to maintain cash above $500,000,000 during the fourth quarter despite the increased capital expenditures was a result of our effective and disciplined use of our existing at the market facility or ATM, partially offset by the repayment of our previous senior credit facility that I discussed on our last call. We currently have approximately $66,000,000 available on the ATM facility. Our disciplined and effective use of this facility has allowed us to increase liquidity, supplementing our other strategic financing initiatives and accelerating future revenue opportunities, positioning us well to move quickly in building and launching our network. As Abel commented earlier, in 2025, we further strengthened our cash position through the execution of a seven year four sixty million dollars convertible senior notes offering on attractive terms, including a capped call that increased the effective conversion price by 100% to $44.98 per share, thus minimizing dilution considerably to approximately 3%. The offering was more than three times oversubscribed, providing the opportunity to expand our investor base to many new long term holders that believe in our mission and execution plan of connecting the unconnected.

[Andrew Johnson, EVP, CFO & Chief Legal Officer at AST SpaceMobile]

Finally, we continue to make good progress on non dilutive financing from quasi governmental sources of capital in The United States, having passed key milestones, including transaction committee acceptance. If these applications are successful, we can use the proceeds to source cost effective, long term debt funding of large projects. In parallel, we continue to explore financing opportunities through both domestic and global development institutions, providing financial services to businesses like ours in emerging markets. We will provide updates as appropriate, and we will be working with the partner banks and our advisors to refine our alternatives. With our growing revenue profile and further diversified capital market access, we are confident that we can fund our accelerated operational plans with our existing balance sheet, continued focus on non dilutive customer prepayments and prudent use of the ATM facility.

[Andrew Johnson, EVP, CFO & Chief Legal Officer at AST SpaceMobile]

We are proud of the progress we made in 2024 and remain focused on our mission as we continue a fast start to 2025. I look forward to keeping you updated on our financial progress as the year unfolds. And with that, this completes the presentation component of our business update call, and I'll pass it back to Scott.

[Scott Wisniewski, President & Chief Strategy Officer at AST SpaceMobile]

Thank you, Andy. Before we go to the queue of analyst questions, we'd like to address a few of the questions submitted by our investors. Operator, could you please start us off with the first question?

[Operator]

Lee Den from New Zealand asked, when does ASTS expect to reach the six bluebird per month manufacturing target?

[Abel Avellan, Founder, Chairman & CEO at AST SpaceMobile]

Thank you, Lee Den for the question. It's great to see questions coming from New Zealand. We are in the process of manufacturing 40 satellites and we are working already on the long lead items and all key parts of our micros which are the main building block of our satellite which is 53 of them. We believe that by the second half of this year we'll be at rate of six per month. For that we had extended our facility in Midland to around 190,000 square feet of manufacturing.

[Abel Avellan, Founder, Chairman & CEO at AST SpaceMobile]

We're adding additional manufacturing facility in the tune of 85,000 square feet of manufacturing facility in Florida and another 50,000 square feet of manufacturing facility in Barcelona.

[Operator]

Rick from The Netherlands asked, what do the current stats in orbit do for the company besides testing? Is there any progress on the defense or governmental part?

[Abel Avellan, Founder, Chairman & CEO at AST SpaceMobile]

Thank you, Rui, for the question. Yes, well, they are fully in operations at this point. We have got them approved to operate in United States under an STA for both testing of AT and T and Verizon. We already have demonstrated full broadband capability on there including voice, text, data and video calling capabilities that will be in essence become nationwide across United States obviously on an intermittent fashion as there are only five that we're building 45 to 60 between this year and next year. With that also the government usage is planned to start, they're starting doing testing on them and recently announced a new program with the government that is on the basis of the testing that they have done on BlueWalker three and now on the operational satellite that we have in orbit.

[Abel Avellan, Founder, Chairman & CEO at AST SpaceMobile]

We're very bullish about that opportunity and what the government can use with our satellites, which they are using it already with the satellites that are in operation.

[Operator]

Andreas from New York App. The recently announced launch campaign had agreement with SpaceX, Blue Origin and ISRO. Are you planning to expand beyond those three?

[Scott Wisniewski, President & Chief Strategy Officer at AST SpaceMobile]

Thank you, Andres. So as we thought about our launch strategy, we've done a few things on our side to position us for success. One is on the design of the satellite, it's launch vehicle agnostic. There's a lot of commonalities in the designs for launch vehicles and we were careful to design our Bluebird so that they're stackable and configurable for each of the major launch vehicles. So that was the first step.

[Scott Wisniewski, President & Chief Strategy Officer at AST SpaceMobile]

And the second step was last year we did a deep dive on the market, looked at available capacity and we selected these three suppliers as we've talked about. So those were important early steps that we took. And to your direct question, we have the ability to use other launch providers over time for sure. But in order to get the capacity we wanted during 2025 and 2026 up to 60 satellites, which we've as we mentioned on the call earlier, we've actually exercised that option for the full 60. We've got that capacity in the 2025 and 2026 timeframe.

[Scott Wisniewski, President & Chief Strategy Officer at AST SpaceMobile]

And as we build more capacity beyond that, we'll consider all of the supply in the market. But for us we like where we ended up and this gives us a lot of ability to get to the 60 satellite target.

[Operator]

Brian from Maryland asks, what are the remaining risks to full authorization from the FCC for operating a commercial constellation?

[Scott Wisniewski, President & Chief Strategy Officer at AST SpaceMobile]

Thank you, Brian. As you may have seen, we recently received STA authorization from the SEC to do initial services with our satellites for both Verizon and AT and T and that was the basis for the video calls we did with them a few weeks ago. We're also in the final stages of the process for a commercial modification of our existing commercial license and that's something that we're working on. Alongside that, we'll be rolling out a beta service that allows us to do scaled testing and then a paid service will follow thereafter. And with that, I'd like to thank our shareholders for submitting those questions.

[Scott Wisniewski, President & Chief Strategy Officer at AST SpaceMobile]

Operator, let's open the call to handle questions now.

[Operator]

Thank you. We will now be conducting a question and answer session. Our first question comes from the line of Griffin Baugh with B. Riley Securities. Please proceed with your question.

[Griffin Boss, Equity Research Analyst at B.Riley Securities]

Hi, good evening. Thanks for taking my questions. So your agreements with the roughly 50 MNO partners represent 3,000,000,000 subscribers now. How many MNO subscribers could be addressed by this new Satco joint venture with Vodafone? Or yes, what would be more helpful is if you can give us a rough sense of the incremental number of subscribers this partnership could allow you to tap into given this opens up the entire European market, which I assume likely includes MNOs that you didn't already have MOUs with?

[Scott Wisniewski, President & Chief Strategy Officer at AST SpaceMobile]

Thank you, Griffin. It's a great question and it's a key reason why we in Vodafone wanted to put this structure in place. So when you look at the full set of connections in Europe, you get to about 600 plus when you look at all the European countries together. And we were only covering before the Vodafone ten home market. So this does a couple of things.

[Scott Wisniewski, President & Chief Strategy Officer at AST SpaceMobile]

One, it sets a plan for gateways across the continent that will be able to despite smaller country sizes manage borders quite well and at the same time provide an efficient path to bringing on new countries that we hadn't originally contemplated and more MNOs in each country. So it's a big step up in that regard going from just 10 countries to probably 3x that, although certainly we had good countries covered in the beginning, but this adds some really significant countries and some significant operator potential for us. And we think that having a kind of a European based European sovereign operator is really important. It's important for Europe. It's important for European operators.

[Scott Wisniewski, President & Chief Strategy Officer at AST SpaceMobile]

And it's frankly an extension of how we built our network, right? We built it so that operators and regulators can feel comfortable about how the traffic is managed. And we think that this is a great extension of that.

[Griffin Boss, Equity Research Analyst at B.Riley Securities]

That's great context. Thank you, Scott. And then next for me, it's related, but not related to that, but two part question, both are related. First is, this $43,000,000 contract with the FDA, it's great to see. Are these or is it yes, is this for non communication applications and services that you've mentioned for some time now and discussed in the prepared remarks?

[Griffin Boss, Equity Research Analyst at B.Riley Securities]

And then second part of this question, are you able to provide more detail as to what these non communications applications are that your architecture is able to support? Are we talking missile tracking, PNT, remote sensing? Any color that you can provide to us, I think, would be helpful.

[Scott Wisniewski, President & Chief Strategy Officer at AST SpaceMobile]

Thanks, Griffin. So in terms of the capability that we're bringing to bear, it's noncommunications like we said, and we won't offer more definition of that at this time. But it's consistent with the frequencies that we operate. And so that's what the satellite can do, but it's we'll say it's non communications. And in terms of the size of the opportunity, yes, this is kind of a second phase for the contract that we announced last February and that we've earned revenue against on the first satellite.

[Scott Wisniewski, President & Chief Strategy Officer at AST SpaceMobile]

And this is $43,000,000 that we expect to earn in the next twelve months or so off of the first five commercial satellites and the first Block II satellite. And importantly, this is just another further evaluation. So the opportunity we believe to be quite large, small relative to the total opportunity. And it's one that we're very excited about. And like we said, that's a general timeframe and the satellites we need to execute on the milestones to deliver the $43,000,000 of revenue.

[Griffin Boss, Equity Research Analyst at B.Riley Securities]

Okay. And is that so should we expect that to be linear linearly recognized over the next twelve months? Or are you providing some services now that might be more robust in, say, six months?

[Scott Wisniewski, President & Chief Strategy Officer at AST SpaceMobile]

There might be a slight lag in getting going in the next couple of months, but generally speaking, linear is the right way to model it.

[Griffin Boss, Equity Research Analyst at B.Riley Securities]

Okay, great. Thanks, Scott. Appreciate

[Griffin Boss, Equity Research Analyst at B.Riley Securities]

it.

[Operator]

Thank you. Our next question comes from the line of Chris Scholes with UBS. Please proceed with your question.

[Christopher Schoell, Equity Research Analyst - Communications & Media at UBS Group]

Great. Thank you. We saw a lot of buzz with T Mobile and Starlink's recent launch of its beta messaging service. Can you just remind us how your technology differs versus what T Mobile and Starlink are bringing to market and the advantages you have? And appreciate their service is just messaging to start, but given the price points they put out there, how does this influence your own pricing strategy as you ready a full voice and broadband product?

[Christopher Schoell, Equity Research Analyst - Communications & Media at UBS Group]

Thank you.

[Abel Avellan, Founder, Chairman & CEO at AST SpaceMobile]

Thank you, Chris. Well, I think that is a reflection of what I've said pricing is for in which in essence is now still quasi intermittent guest messaging service. Our services as you know is voice, text, data, Internet, video, everything that you can do on your phone normally, you will be able to do it through our system. So it's a very differentiated package, what we can offer to the operators. We believe that our scale, the reason why we had a 10,000 megahertz of spectrum per satellite, that's a 10 gigahertz of spectrum per satellite, 120 megabit per second data rate directly to your phone without requiring any change on the phone or adaptation into the phone using premium existing eight fifty megahertz band is greatly differentiated and it will allow our partner operator to differentiate with much better service and packages that basically enable the consumer to have the full fledged connectivity when they get access to our service.

[Christopher Schoell, Equity Research Analyst - Communications & Media at UBS Group]

Got it. And then if I can just fit one more in on funding. I see the language in the 10 K indicating you have funding that you need for the next twelve months with the ATM. Appreciate there are a number of moving pieces, but as you look to 2026 and the ability to launch the 60 satellites, any help sizing the amount of capital you think you still need to raise and how you evaluate the different sources?

[Andrew Johnson, EVP, CFO & Chief Legal Officer at AST SpaceMobile]

Yes. This is Andy. Thanks for the question, Chris. As we said both in our statements in the K, we're well positioned to get kind of that first threshold of 25 satellites, which starts a service and well beyond that. It is the case that we have 60 satellites under our launch campaign and we feel very good about our ability to manufacture the 40 that are in process right now.

[Andrew Johnson, EVP, CFO & Chief Legal Officer at AST SpaceMobile]

We're well positioned for the near term. We're always looking for smart capital raising opportunities and we'll continue to evaluate them. But with a pro form a balance sheet of about $1,000,000,000 we're absolutely positioned in a very strong way for the next twelve months.

[Operator]

Our next question comes from the line of Brian Graft with Deutsche Bank. Please proceed with your question.

[Bryan Kraft, Analyst at Deutsche Bank]

Hi, good afternoon. I had a few if I could. I guess first on launches, are you still on track for an April launch or the next satellite? I think that's what you said. And can you give us any rough sense for the pacing you expect for launches in 'twenty five and 'twenty six?

[Bryan Kraft, Analyst at Deutsche Bank]

Just roughly how many of the up to 60 would you expect to launch this year versus next year? I had a question about costs per satellite, if that's changed at all or if it's still the $19,000,000 to $21,000,000 per satellite. And then the last thing, I just want to ask you about was sort of following up on that funding topic from the last question. We get a lot of questions regarding how much funding you'll need to fund the business plan and get free cash flow positive. But it seems like the more funding you have available, the wider the scope of the business plan becomes and the faster you accelerate the business plan.

[Bryan Kraft, Analyst at Deutsche Bank]

So it's not really about how much you need, but it's more about how much you can raise on attractive terms and invest at an attractive return. Is that the right way to think about it? And anything you'd elaborate on there from a funding perspective? Thank you.

[Abel Avellan, Founder, Chairman & CEO at AST SpaceMobile]

Yes, Brian. The way that we think about it is, when we combine the non communication application government base and the communications for consumers, we get the ability to monetize and as you see in the recent order, not only by a constellation, but on a per satellite basis. So the last item that we gave is that we believe to be cash flow positive with around 25 satellites. It's not that we get to continue service with our 25 satellites, but with 25 satellites we start getting enough applications that are non communications combined with some other sources of revenue like gateways and infrastructure built up, that allowed us to get to our cash flow positive. With that, we have greatly accelerated our pace of production.

[Abel Avellan, Founder, Chairman & CEO at AST SpaceMobile]

As Sandy indicated, we closed the year, we entered into the year with around $1,000,000,000 in cash that we are basically putting into work into upgrading our capacity of building up to six satellites a month, which it translate to roughly some 0.72 per year, and we need 45 to 60 to get continued service in United States. So that how we are basically planning our network build up is basically start to get finance with revenue rather

[Abel Avellan, Founder, Chairman & CEO at AST SpaceMobile]

than

[Abel Avellan, Founder, Chairman & CEO at AST SpaceMobile]

equity or other type of transactions. In terms of the launch, we have secured 60 launches, 60 satellites to be launched, which we put well in our targeted obtaining continued service in U. S, Europe, Japan and some selected markets. We call selected markets basically countries where there are customers that are getting to pay early access to our constellation and that's another source of revenue that we we'll be utilizing going forward. With the New Glenn, we can launch up to eight satellites per launch, pretty much double the cadence of what is possible with the Falcon nine.

[Abel Avellan, Founder, Chairman & CEO at AST SpaceMobile]

And we expect later in the year to start moving to a launch cadence of around one launch every forty five days on the New Glenn. We have other launches also that have been secured in advance to that. And so we are in the process of manufacturing 40. We have in the process of manufacturing long lead items of 53. That will dictate against how we get them into space.

[Bryan Kraft, Analyst at Deutsche Bank]

Thanks, Devon. Anything on the cost per satellite? Has that changed at all? Are you still in that $19,000,000 to $21,000,000 range?

[Abel Avellan, Founder, Chairman & CEO at AST SpaceMobile]

No. Yes, we're not changing the guidance on

[Bryan Kraft, Analyst at Deutsche Bank]

cost per satellite. Okay. And then if I could just follow-up just on funding. So you still expect to get to free cash flow positive at 25 satellites? Is that I just want to make sure I understand that right or does the acceleration sort of modify that timeline?

[Andrew Johnson, EVP, CFO & Chief Legal Officer at AST SpaceMobile]

This is Andy. The only qualifier I'd add is on an operating basis, we see that we'll generate free cash flow at that basis. So obviously CapEx flexes, we're going to ramp up and we may dial back depending on needs at a point in time and when launch commitments are made. But on an actual operating basis, yes, as Rebel explained, we believe that the 25 satellites are applications and opportunities are sufficient to generate free cash flow.

[Bryan Kraft, Analyst at Deutsche Bank]

Okay. And then, I'm sorry, but just the last, I guess, follow-up to that would then be just trying to understand, so if you can be free cash flow positive, roughly 25 satellites, just trying to understand the need for the $500,000,000 in quasi government funding that you're pursuing? And I understand it's attractive money. Is that more to refinance or do you need that money for other operational purposes?

[Scott Wisniewski, President & Chief Strategy Officer at AST SpaceMobile]

I'd say, this is Scott. That has been a long term strategy of our funding plan and it's an attractive way that companies like us get funding. And I would say that while we do have diverse access to a lot of capital markets, this is another one to open up. So we've been very prudent and conservative with funding over the life of the company and this is a great pocket of capital to have available and we'll assess our cash needs when it becomes available. That particular funding source is a process, Brian, and it's one we're in the middle of and we'll assess how to use that and when to use that when the time is right.

[Scott Wisniewski, President & Chief Strategy Officer at AST SpaceMobile]

But for us, I think we've seen benefits of having good liquidity for the company that we've been able to generate over the last six months and we like having that backdrop a lot.

[Bryan Kraft, Analyst at Deutsche Bank]

Are those quasi government sources? Are those more like a facility that once you have it, you can draw on it and not pay interest on the whole thing? Or is it once you get it, you get it and now you've got this pile of cash that you've got to service the debt on?

[Scott Wisniewski, President & Chief Strategy Officer at AST SpaceMobile]

Well, there's we're pursuing at least three seriously at the moment and different facilities have different structures. But yes, at least one of them does have a structure that's delayed draw like you said or milestone based. Although we're not going to be cheap, penny wise, pound foolish on cost of capital, the key is to maintain good liquidity for the company. But you're right, with the backdrop that I described, having some sort of delayed draw component could be very useful. And in fact, that's one of the ways that we thought about the financing for our recent spectrum deal.

[Bryan Kraft, Analyst at Deutsche Bank]

Okay. All right. Thanks very much. Appreciate the color.

[Operator]

Thank you. Our next question comes from the line of Colin Canfield with Cantor. Please proceed with your question.

[Colin Canfield, Director at Cantor Fitzgerald]

Hey, thanks. Maybe starting off, if you can talk a little bit about the organizational structure with respect to your chipset engineering team and maybe reflect

[Colin Canfield, Director at Cantor Fitzgerald]

a little bit or talk

[Colin Canfield, Director at Cantor Fitzgerald]

a little bit about how that chipset team is working with folks, either at more kind of a handset OE level or even to the higher levels of Vodafone, Google and the like? Thanks.

[Abel Avellan, Founder, Chairman & CEO at AST SpaceMobile]

I think one clarification, our ASIC platform, it is required or used on the satellites only. We do not require new chipsets on the handsets.

[Abel Avellan, Founder, Chairman & CEO at AST SpaceMobile]

So that's

[Abel Avellan, Founder, Chairman & CEO at AST SpaceMobile]

the way that we have organized ourselves, we start launching satellites using a PGA, basically Field Programmable Gate arrays. Now that we have completed the ASIC, we're in the process of packaging and start incorporating them into the second half of this year. So data advanced chip, we had a 10 gigahertz processing capacity, one of the most advanced nodes that exists on the market today and certainly one of the most advanced in space. But I wanted to make clear that we do not require any modification of the chipsets on the phones. Our system, it is designed to work on the phone that you have in your pocket without modifying anything on it.

[Colin Canfield, Director at Cantor Fitzgerald]

Yes. Fully understood on the satellite chip being baked. Just to make sure I kind of understood the level of signals and frequency teaming between OEs and ASC. As we think about the non GAAP OpEx progression to the year, can you just maybe talk about how you think about the current guide and the level of step up through the year and where you expect most of the cost growth through the year to progress?

[Andrew Johnson, EVP, CFO & Chief Legal Officer at AST SpaceMobile]

Andy, I think on the cost growth this year, we've got we'll be talking each quarter about CapEx. But I mean, our CapEx is growth based. It's based on ramping up the 40 plus satellites. We obviously have 40 in production and long lead items, Microns for 53. That will flex.

[Andrew Johnson, EVP, CFO & Chief Legal Officer at AST SpaceMobile]

We started taking out that on and that sort of feeds into that guidance I gave on a ramp up of CapEx in Q1. Otherwise, I mean, we gave guidance consistent with our OpEx that sort of falls in line for the most part with Q4. Our ASIC costs will come down as we finish that work and begin to fully integrate. But we'll make additional investments. We're becoming a commercial enterprise now.

[Andrew Johnson, EVP, CFO & Chief Legal Officer at AST SpaceMobile]

We're building out that muscle. We are investing in administrative functions across the organization as we grow and prepare to be a full operating company. So you'll see you're not going to see any incredible difference over if you look at the past prior periods in terms of how we're thinking about operating expense. But at this point, we'll come to you quarterly, which we have, and give you a view on going forward. And clearly, I mentioned this in my remarks, but it's probably worth restating.

[Andrew Johnson, EVP, CFO & Chief Legal Officer at AST SpaceMobile]

The opportunity for us to really bring costs down is in our R and D function, which in a lot of ways was primarily based on third party expense. That work has been done. We have a satellite that is fully developed and engineered now and we are moving to a full on production environment and you'll see investments in manufacturing. As Abel mentioned in his remarks, we've added space in Midland, Texas, we've added space in Barcelona and we're very excited to add manufacturing space in the very near term in Southern Florida. So you'll see those sorts of investments all feeding into becoming a scaling manufacturing company that optimizes satellite production at about six per month in the second half of the year.

[Colin Canfield, Director at Cantor Fitzgerald]

Got it. And then maybe a little bit on the European opportunity. It seems like the high level structure of IRIS is looking to track towards something like FDA where there's a lot of manufacturing upfront and aspirations for large leveraging of, we'll say, kind of more prime type acquisition approaches. But as we've seen from the supply chain development on kind of The U. S.

[Colin Canfield, Director at Cantor Fitzgerald]

Side, it's clear that there's obviously opportunities for services growth, right, like the $43,000,000 that AST has won. So maybe if you can talk about the structure of AST, how you think about your ability to win contracts like the $43,000,000 from SDA and the types of rev rec that we should expect whether it's more cost or fee and kind of service delivery based approaches?

[Scott Wisniewski, President & Chief Strategy Officer at AST SpaceMobile]

Sure. I'll take that one, Colin. First, just on rev rec. This is milestone based given that this is kind of technology evaluation. And so there are reports, tests, activities we'll be doing with the satellites in orbit and that will drive that revenue rec over the next twelve months plus or minus that we talked about earlier.

[Scott Wisniewski, President & Chief Strategy Officer at AST SpaceMobile]

And in terms of structure of how these contracts will look as they scale, we've the U. S. Government and how they're thinking about buying defense stuff and how they're thinking about space evolves and has a lot of different elements to it. But I would say we think we're really well positioned for all pieces of that. We function well in the desire to have kind of firm fixed price and deliver in an environment where you're buying something, you know what the cost is and you can do that's delivered by the supplier.

[Scott Wisniewski, President & Chief Strategy Officer at AST SpaceMobile]

We don't work on cost plus contracts. So that's a positive dynamic. And in terms of service versus hardware sales, we tend to fall on the service side with how we've built our satellites and how their dual use as we discussed. But we're open to the mission and we evaluate and they evaluate different ways to structure deals. For us, it's important to get a return on the investment that we've put in place in our network and we can be flexible on that.

[Scott Wisniewski, President & Chief Strategy Officer at AST SpaceMobile]

But we tend to fall on the service side more than on the hardware sale obviously.

[Colin Canfield, Director at Cantor Fitzgerald]

Right, right.

[Colin Canfield, Director at Cantor Fitzgerald]

Okay. And then last one for me, maybe latest and greatest in terms of kind of expectations around the Ligado deal closing, whether it's tracking core filings or kind of where you expect the next piece of information to come out?

[Andrew Johnson, EVP, CFO & Chief Legal Officer at AST SpaceMobile]

Yes, this is Andy again. On the Ligado deal, things are tracking nicely. We had publicly disclosed the main tenants of that deal when we signed our binding term sheet. So we have work to do to get to where we need to be to complete the deal, but we are well within the timeframe that the parties are set to do so. And of course, with the bankruptcy proceedings, that all needs to play out.

[Andrew Johnson, EVP, CFO & Chief Legal Officer at AST SpaceMobile]

But we're working hard on that. We've talked a lot about it. It's a strategic initiative for us and we're making good progress.

[Colin Canfield, Director at Cantor Fitzgerald]

Got it. Appreciate the color and thank you for the questions.

[Operator]

Thank you. And we have reached the end of the question and answer session. And I'll now turn the call back over to Scott Wisniewski for closing comments.

[Scott Wisniewski, President & Chief Strategy Officer at AST SpaceMobile]

Thank you, operator. Just again, we want to thank all of our shareholders and research analysts for joining the call and everyone's continued strong support of our very important mission. We look forward to providing you further updates and have a great evening.

[Operator]

And this concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.

Participants

Executives

• Scott Wisniewski, President & Chief Strategy Officer
• Abel Avellan, Founder, Chairman & CEO
• Andrew Johnson, EVP, CFO & Chief Legal Officer

Analysts

• Griffin Boss, Equity Research Analyst at B.Riley Securities
• Christopher Schoell, Equity Research Analyst - Communications & Media at UBS Group
• Bryan Kraft, Analyst at Deutsche Bank
• Colin Canfield, Director at Cantor Fitzgerald