AST SpaceMobile Q1 2025 Earnings Report

AST SpaceMobile EPS Results

• Actual EPS: -$0.20
• Consensus EPS: -$0.17
• Beat/Miss: Missed by -$0.03
• One Year Ago EPS: N/A

AST SpaceMobile Revenue Results

• Actual Revenue: $0.72 million
• Expected Revenue: $3.85 million
• Beat/Miss: Missed by -$3.13 million
• YoY Revenue Growth: N/A

AST SpaceMobile Announcement Details

• Quarter: Q1 2025
• Date: 5/12/2025
• Time: Before Market Opens
• Conference Call Date: Monday, May 12, 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 Q1 2025 Earnings Call Transcript

Presentation

[Operator]

Good day, and thank you for standing by. Welcome to the AST Space Mobile First Quarter twenty twenty five 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 ASD Space Mobile. 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, Abel Avalon and CFO and Chief Legal 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 AST Space Mobile's annual report on Form 10 ks for the year that 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, AST Space Mobile is building the first and only global cellular broadband network in space to operate directly with everyday unmodified mobile devices and supported by our extensive IP and patent portfolio. It's now my pleasure to pass over to Chairman and CEO, Abel Adelon, who will give us an update on our activities since our last public call two months ago.

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

Thank you, Scott. The first quarter was a strong start for us and we're currently in an incredible inflection point for the company. We start to accelerate the launch and scaling of our network and revenue is starting to come in. We continue executing on satellite manufacturing, commercialization, regulatory initiatives and today we are unveiling our Orbital Launch Plan with five scheduled launches over the next six to nine months. I will touch on each of those key pieces in more detail.

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

Let me start by discussing our Orbital Launch Schedule. We expect to deploy over 60 satellites during 2025 and 2026, which will drive continuous coverage in key markets such as The United States, Europe, Japan, The U. S. Government and other strategic markets. We anticipate five Orbital launches occurring over the next six to nine months with Orbital launches occurring every one to two months on average during 2025 and 2026.

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

Our campaign will begin with achievement of our first Block two Blue Bird satellites in Q2. We launched schedule during July. Simply put, speed to orbit means speed to commercial service. Killing our constellation is critical to delivering on the global opportunity of providing space based server connectivity to the modified phone in your pocket today. Salon manufacturing remains on track, accelerating our target of building 40 Block II Blue Bird satellite, each the largest ever commercial communication satellite lower orbit alongside contracted orbital launcher for every 60 satellites as of today.

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

We have accelerated our manufacturing efforts in order to move at the rapid speed to reach our goals. Scaling our satellite manufacturing will enable us to march or exceed the launch cadence necessary to build out our space based cellular network for continued cellular broadband coverage beginning with the key markets mentioned earlier. In doing so, we're also on track to reach manufacturing cadence of six satellites per month during the fourth quarter of this year. We also expect to reach an equivalent manufacturing cadence for our microns and phased array production during the third quarter of this year. We expect to achieve this cadence through our expanded global footprint streamlined process and 95% vertical integration strategy.

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

Our content manufacturing house or through third parties using own intellectual property help drive speed, certainty, lower cost, flexibility and reliability. Specifically, the production of our microns or main building block for our satellites are fully vertically integrated within our manufacturing ecosystem. This is an extremely important process which had helped right size our lines of production and had enabled us to operate with complete control over the entire Micron production process. Now that our solid manufacturing cadence and accelerated production efforts support our launch schedule, we're now confident than ever we're now more confident than ever in our position to continue executing at scale as we lead the industry with cellular broadband from the space. On the ASIC front, our novel ASIC chips are currently undergoing assembly and testing stages while the validation and qualification stages are nearing completion.

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

We expect our ASIC chip will become available for satellite integration as early as June of this year. As you will recall, our custom ASIC chip will support up to 10 gigahertz in processing bandwidth per satellite or 10 times the processing compared to our current FPGAs with peak data speed of up to 120 megabits per cell, supporting many thousands of cells per satellite, which is a key enabler of the first and only space based broadband cellular system, together with the largest ever commercial communication satellites in low dead orbit. On the commercial front, we continue to integrate our services with our MNO partners. Recently, our long time partner Rakuten Mobile completed a two way broadband video call in front of a live audience enabled by Block one satellites over Japan. The call was conducted using modified smartphones as part of our initial activation in the country and followed with successful video calls with partners like AT and T, Verizon and Vodafone in United States and Europe respectively.

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

The live activation is another example of our ability to successfully enable full cellular broadband capabilities including voice, text, data, video and other native cellular capabilities. Japan is a country defined by its diverse geography prone to national disasters. Being able to provide cellular broadband service direct to device over the country, mountain regions, remote islands and densely populated cities during routine and emergency situations are transformational applications for our groundbreaking technology. I am proud of our company's long history of a strategic partnership with Rakuten. I am excited for our continued progress in the country.

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

Globally, we plan to activate initial cellular broadband capabilities in United States, Europe and Japan on premium low band wireless spectrum together with partners AT and T, Google, Rakuten, Verizon and Vodafone as well as other players in the wireless ecosystem. This is an important step for initial service activation, enabling activation across several key markets in The U. S. Or with varying geographic and demographic factors provide us the opportunity to optimize our network ahead of a full commercial deployment. We also received a special temporary authority from the FCC for FirstNet Direct to device satellite connectivity on public safety band 14 spectrum.

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

The FCC grants direct to device cellular broadband connectivity in support of mission critical capabilities. With over 7,000,000 public safety and connection, FirstNet network gives responders the critical connectivity they need across diverse geographies. Our groundbreaking technology stands to provide first responders with reliable and consistent space based cellular broadband connectivity during crucial times of need. On the government business, we continue to expand our U. S.

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

Government opportunity and are ramping up activity against our $43,000,000 contract in support of the United States Space Development Agency. Even more recently, we signed a new contract award with another government agency through a prime contractor to provide support of communications over land, sea and air. Scott will speak more to our new contract award momentarily. But this contract award highlights AST Space Mobile's innovative technology to back critical government missions across various use case, both for communications and non communications applications. In addition to advance the commercial and government effort, we're working closely with regulators and government officials who recognize that our technology is going to make our country both more connected and more secure.

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

In summary, all key elements of our business are progressing as expected or have accelerated to meet the customer demand for our groundbreaking technology. The first quarter was a period of strong execution, serving as a springboard into another pivotal charter of the company's life. We have now reached an inflection point and we scale fundamental aspects of our business towards full scale commercialization. With our launch plan outlined, launch capacity secure and commercial and government partnerships coming together, we expect positive momentum to compound at record speed for our months and quarters to come. Connectivity is a human right and each step in this process is a reminder of the important mission at hand.

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

Let me now turn the call to Scott to provide more details on our progress and initiatives.

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

Thank you, Abel. This was a strong start to the year for ASD Space Mobile and we're expecting continued progress across all aspects of our business as we charge into a pivotal year for the company. Let me expand upon our achievements over the last few months and what they mean for the commercialization of the company. Our commercial efforts are accelerating and we're making major advancements in the deployment of our global network infrastructure, beginning with bookings of our gateway equipment. Gateways serve as a precursor to the rollout of our space mobile service providing a leading indicator of the markets where you'll see the initial service revenue.

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

In the first quarter, we saw gateway equipment bookings of $13,600,000 and expect continued bookings of approximately $10,000,000 on average per quarter during 2025. We'll begin to recognize revenue from these bookings as and when gateways are installed and milestones are met, and we expect to continue to provide updates on bookings as we build out our ground infrastructure. As a reminder, our network infrastructure was designed from inception to closely mirror terrestrial cellular architecture, prioritizing privacy and security of cellular data and information. Our ground based gateways receive signals from our satellites, each the largest ever commercially deployed communications satellites in low earth orbit, and seamlessly link those signals into the networks of our mobile operating partners. On the regulatory front, we were recently granted special temporary authority from the FCC for FirstNet on public safety's band 14 spectrum enabling us to begin activating test services to deliver space based cellular broadband connectivity, supporting features critical to first responders.

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

Through initial test activation, we're now able to address the massive opportunity of extending reliable broadband services to first responder agencies and consumers in emergency situations. This can be done across areas where terrestrial networks are unavailable, as well as during network outages caused by infrastructure failures or natural disasters. Our space based cellular broadband solution provides seamless device compatibility. And our satellites enable automatic handoffs as consumers move in and out of terrestrial networks. Together, this provides first responders with enhanced, reliable broadband connectivity during the most critical situations while maintaining the look and feel of the reliable terrestrial networks that they're used to.

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

The sheer size of our satellites is another benefit in our effort to support first responder communications. Our large antennas enable precise beam forming, meaning we can focus our signals on specific targeted areas over land and water. Emergencies can happen anywhere and responders need to stay connected across both accessible and hard to reach areas without geographical impediments. Continuing on to our partnership with Vodafone, I am also pleased to report that our jointly owned European satellite service business called SATCO is progressing according to plan. Now to the U.

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

S. Government business. Our pipeline continues to strengthen and as anticipated, we continue to expect it to be a meaningful contributor to revenue in the years to come. Our recently announced contract award with the DIU, a government agency through a prime contractor, facilitates initial communication services across various use cases and applications, supporting communications over land, sea and air. We believe this contract could yield low tens of millions of dollars in revenue over the next twelve to eighteen months.

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

And earlier in the year, we also signed a $43,000,000 revenue contract with the U. S. Space Development Agency through a prime contractor for services delivered on our first five Block one Bluebird satellites in orbit and our first Block two Bluebird satellite. As a reminder, that contract is not a prepaid contract, but rather earned revenue we expect to receive and recognize under GAAP as we deliver those services. To date, our government contracts serve as important validation markers for our dual use satellite technology, opening doors to sustained and substantial revenue streams across both communications and non communications applications.

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

I will now pass it over to Andy to walk you through our financial update.

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

Thanks Scott and good afternoon everyone. During the first quarter of twenty twenty five, our global team at AST Space Mobile worked tirelessly to accelerate satellite manufacturing efforts as we prepare to commence our launch campaign beginning this summer. The company's financial performance during Q1 reflects our intense focus on executing on our manufacturing and launch objectives, while simultaneously preparing for a meaningful revenue ramp over the coming periods as we begin to monetize both commercial and government opportunities for our dual use satellites. As Abel and Scott conveyed in their earlier remarks, our progress against corporate objectives in Q1 positions us well to begin executing an extensive launch cadence in support of offering our space mobile service while continuing to facilitate critical US government applications in support of national security efforts. We've established our objective of manufacturing the next 40 satellites and are thrilled to start our launch campaign featuring at least five scheduled launches between Q2 of twenty twenty five and Q1 of '20 '20 '6.

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

Our focus today is to move quickly and responsibly to bring our stakeholders space based broadband connectivity directly to their unmodified smartphones. From a financial perspective, this objective requires careful consideration of our spending, both in terms of operating expenses as we scale up our organization and capital expenditures as we incur the necessary costs to secure not only the materials to manufacture our Block two Bluebird satellites, but also contracts for sufficient launch capacity across multiple providers to successfully deploy our constellation. Inherent to our focus on prudent spending is a strategic and thoughtful approach to raising adequate capital in order to execute on our ambitious plans in the growing direct to device broadband market that AST created and invented. Moving now to the operating and capital metrics slide, let's review the key operating metrics for the first quarter of twenty twenty five. On the first chart for the first quarter, we incurred non GAAP adjusted cash operating expenses of $44,900,000 versus $40,800,000 in the fourth quarter of twenty twenty four.

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

As a reminder, non GAAP adjusted operating expenses excludes certain non cash operating costs, including depreciation and amortization and stock based compensation. This quarter over quarter increase of $4,100,000 resulted from $1,800,000 in increased R and D costs, a $1,700,000 increase in adjusted general and administrative costs, and a slight increase of $600,000 in adjusted engineering service costs. This modest increase in adjusted OpEx for Q1 was expected and in line with the guidance I provided on our last earnings call as we continue to scale manufacturing and importantly, add critical talent to our growing organization. Turning towards the second chart on this slide, our capital expenditures for the first quarter of twenty twenty five were approximately $124,000,000 versus $86,000,000 for the fourth quarter of twenty twenty four. This figure was made up of approximately 105,000,000 of capitalized direct materials, labor for our Block two Bluebird satellites, and payments made in connection with certain launch contracts with the balance relating to facility and production equipment expenditures.

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

This amount was slightly less than the guidance of approximately $150,000,000 to 175,000,000 that I provided during our last earnings call and was primarily driven by changes in timing of certain launch contract payments from Q1 to later quarters during 2025. In line with our adjusted operating expenses for the first quarter of twenty twenty five, we estimate that our adjusted cash operating expenses for the second quarter this year will come in at a similar level of approximately $45,000,000 We expect our capital expenditures to increase significantly as compared to the first quarter, driven by our ramp in manufacturing, enabling us to reach our bold plan of producing six satellites per month in the fourth quarter of this year, as well as planned payments related to our multiple launch contracts for our 2025 and 2026 launch schedule. In line with our increasing CapEx needs, we currently estimate that the average capital costs, including direct materials and launch costs for our constellation of over 90 Block II Bluebird satellites will fall in the range of 21,000,000 to $23,000,000 per satellite. This increase over our previous estimate of $19,000,000 to $21,000,000 per satellite is primarily driven by higher launch costs from our announced near term launch schedule, as well as higher direct materials costs due to recently announced tariffs.

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

Our revised cost per satellite estimates are subject to fluctuations based on dynamic geopolitical factors, which impact our direct materials costs. We believe that the intrinsic value of our future business opportunities far outweighs the modest increase in costs due to tariffs. We are empowered by the rising demand for space based cellular broadband connectivity, an industry that we created and invented. And we are validated by the growing commercial and government opportunities before us and want to execute on them as quickly as possible. Despite this increase in cost per satellite, we reiterate our belief that the operation of a constellation of 25 Bluebird satellites will enable us to potentially generate cash flows from operating activities.

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

We do expect an increase in CapEx in q two to a range we believe will be between 230,000,000 to $270,000,000 to primarily reflect the timing of payments on multiple launch contracts. The 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. While q one and prior recent quarters reflect the company's stage as premonetization with only modest revenue recognized in connection with primarily a limited government application contract, I am pleased to begin speaking to you about our expectations for revenue in the coming periods. Our revenue opportunity is intimately linked to the number of our deployed satellites. As we've previously stated, we believe we can enable continuous space mobile service across key markets such as The United States, Europe, Japan, and other strategic markets with the launch and operation of approximately 45 to 60 Bluebird satellites.

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

We also plan to achieve non continuous space mobile service in selected targeted geographical markets with the launch of a total of 25 Bluebird satellites. Additionally, we will continue to support US Government applications currently ongoing and accelerating as we launch additional satellites. As we execute our launch and operation commencement efforts, we expect revenue to ramp towards the end of the year and into 2026. Specifically, we believe we have a revenue opportunity in 2025 in the range of $50,000,000 to $75,000,000 back end loaded in the second half of the year and based on several contingencies, including one, the successful launch and deployment of Block two Bluebird satellites related to US Government applications, contractual milestone achievements. Two, critical gateway equipment sales to our MNO partners in support of their anticipated commercialization efforts of space mobile service.

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

And three, service revenues in connection with the activation of our commercial service provided by our existing and planned deployed and operational satellites. Currently six in low Earth orbit with more to come over the six to nine months. There can be no assurances that we will achieve any or all of these objectives, and our actual revenue results will vary based on a multitude of factors. Nevertheless, the AST team is proud to be commencing our revenue ramp, and I look forward to updating you in subsequent quarters on our progress. Finally, on the final chart on the slide, we ended the first quarter with $874,500,000 in cash, up from $567,500,000 at the end of the fourth quarter of twenty twenty four.

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

This significant increase in cash was driven primarily by approximately $4.00 3,000,000 received from the convertible notes offering in late January that I discussed last call and approximately 55,000,000 raised from the remaining amount available under the September 2024 at the market or ATM facility. Our effective use of the ATM facility over the past nine months allowed us to increase critical liquidity and supplement other strategic financing initiatives. Now that that facility is fully utilized, today we are establishing an incremental 2025 at the market or ATM facility for up to $500,000,000 over the next three years, available to the company to accelerate our bold operational plans to bring our space mobile service to market as soon as possible. We will continue to utilize this funding source in a disciplined fashion, balancing our capital needs to align with the interest of our shareholders. We are also evaluating a path to provide for an equipment loan facility of between 50,000,000 to $100,000,000 in the form of non dilutive funding to support our manufacturing expansion.

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

We will provide additional information on that facility as we progress our conversations. And finally, we continue to make good progress on non dilutive financing from quasi governmental sources of capital in The United States. We recently completed initial clearances for funding, which commences in approximately six to nine month diligence and documentation phase for over half a billion dollars in potential non dilutive capital from multiple US and international agencies. We will provide updates as appropriate, and we will be working with the partner banks and our advisers to refine our alternatives. Revenue is ramping on plan, and AST SpaceMobile remains well positioned to fund our near term operational plans.

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

We will continue to leverage our balance sheet and ATM facility with prudence while focusing on the myriad opportunities available to us in the forms of nondilutive prepayments. As a stakeholder in AST Space Mobile, your takeaway for the first quarter of twenty twenty five is simple. The company is on target and continuing to execute against its accelerated operational plans for 2025 and 2026. We have a lot to accomplish this calendar year, and the first quarter was a solid start to what we expect to be the most exciting year in AST's short but impressive history. Thank you all for your continued support.

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

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]

Scott from Indiana asks, any further details to share on the Legato transaction?

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

This is Andy. I'll be happy to take that question and appreciate the question, Scott. Yeah. There are some updates that we'd be happy to share. I mean, as a reminder, the transaction that Scott asked about is for AST to acquire usage rights for 45 megahertz of mid band spectrum in The United States.

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

So we view this as huge fuel to our business here in The US as we look to actually access spectrum ourselves that can augment our service. We announced the definitive agreements signed toward the end of the quarter in late March. And we're happy to say that we believe the approval process is on schedule and that we'll have more to say about this in the coming weeks. Importantly, we are looking at a structure in which we are financing our usage rights with collateral that is restricted to the actual spectrum we're acquiring. So there will be a modest impact in G and A in subsequent quarters, we are putting in place separate financing package related to this strategic L band acquisition.

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

So thanks for the question.

[Operator]

Rick from The Netherlands asks, looks like the defense use case is growing. What is the outlook there?

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

Hey Rick, how are doing? We've been talking about the government use case with increasing emphasis over the last four quarters or so, and in general, as everybody can see, government demand for space based solutions like ours and others has been surging. This is driven by an increased focus on defending our nation in space and is something that we're well positioned around because of our extremely innovative new tech and largest phased arrays that we can put into orbit today commercially. So, we've already started deriving revenue from some of our government contract awards, there's now six of them to date that serve as initial validations for this technology. These contract awards provide clear paths for applications in a couple use cases.

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

In late twenty twenty four, we were selected by the Space Development Agency for a $43,000,000 contract and that's a non communications use case, but importantly, today we're announcing a DIU contract and that is, you can read that as communications use cases across many government agencies, across many use cases. So I think we've seen really great progress on several different use cases that our unique technology can offer and we're really excited about continuing to grow that even as early as the second half of the year as Andy talked about.

[Operator]

Matt from Massachusetts asks, do you plan to submit any proposals for the announced $25,000,000,000 Golden Dome project?

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

Thank you, Matt, for the question. We really think that we are very well positioned with our technology to be an important contributor to the actual goals outlined in the Golden Dome. We think the size and power satellites are unique and completely differentiated of what can be done by industry or by our adversaries. And we think that our technology will enable applications for national security that are going to be important for this particular program. Scott, you may want to talk a little bit about the size of the program and where it's approved.

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

Yeah. For those not as familiar with this, the 25,000,000,000 is a reference to what left the House Armed Services Committee recently and will go for a vote with the whole House as part of the budget reconciliation process. Importantly, this is not part of the new budget for fiscal year 2026. This is part of the budget reconciliation package that is only subject to a 50 vote in the Senate. So this is a way that the House Armed Services Committee is looking to pre fund Golden Dome and support this really significant national security goal.

[Operator]

Scott from Indiana asked, are shareholders expected to be invited to future launches this fall?

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

Yes, absolutely. You know, we loved hosting our shareholders at the September launch event at The Cape and we were really excited to host over a thousand people, you know, in the middle of the night in the rain. Many of you enjoyed that and we certainly did. For the upcoming launch in July, you know, for reasons beyond our control, we won't be able to invite folks to our launch in India but as Abel laid out our launch schedule, with an orbital launch every one to two month on average going forward. We expect a lot of exciting events to come at The Cape and we'll be sure to keep everybody updated as these come together and hope to see many of you there.

[Operator]

Murillo from Portugal asks, on Monday, April 28, there was a power outage that led to most of Spain and Portugal being at a standstill, grounding planes, halting public transport, and forcing hospitals to suspend routine operations and mainly cutting all types of communications, landlines, mobile phones, or Internet access. In my case, it was ten hours without access to any type of communications except radio. I don't know if you are aware of it, but I would be happy to know ASD's short term plans for Europe.

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

Thank you, Marilio. We saw this event on the news of course and watched it with interest. Emergencies whether caused by infrastructure failures or natural disasters, these cause immediate and lingering need, which is only compounded when communication, you know, isn't accessible. So our service stands to provide cellular broadband connectivity directly to the phone in your pocket. And this means consumers can feel safer in emergency situations knowing they'll still have this connectivity despite what's happening on the ground.

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

And as this applies to Europe specifically, our joint venture with Vodafone will exclusively distribute our service across Europe. This means that we'll be sharing ground based infrastructure to manage geographic boundaries and drive turnkey solutions to increase take up both for connectivity for citizens across the continent as well as in more very important emergency periods of need like the one you described. And of course, of Europe, we recently received special temporary authority from the FCC to do FirstNet testing activation on public safety spectrum. That's really important to us as a priority here in The United States. And in Japan, of course our long time partner Rakuten Mobile successfully did a video call in front of a live audience.

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

So these are places where this capability, both emergency backup, disaster recovery and consumer emergency support that we can really support quite nicely. And with that, I'd like to thank our shareholders for submitting those questions. Operator, let's open the call to analyst questions now.

[Operator]

Thank you. We will now be conducting a question and answer session. You may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up their handset before pressing the star keys. One moment, while we pull for questions.

[Operator]

Our first question comes from the line of Colin Canfield with Cantor Fitzgerald. Please proceed with your question.

[Colin Canfield, Director at Cantor Fitzgerald]

Hey, thank you. Maybe if you could discuss the nature of the higher launch costs and talk me through kind of talk us through how is that related to is that related to like more ferry configuration for satellite or are there other pricing factors to consider? And then lastly, if you could maybe talk about how AST thinks about passing through those costs to other launch suppliers in the form of liquidated damages? Thank you.

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

Colin, I'll kick off and Andy can add anything additional. Basically, the demand signals we're receiving are to get service to market as fast as possible. So the way we've organized the whole program over the last year, year and a half is against that goal. So what you're seeing is essentially a little bit of pull forward on launch in a time when launch was harder to get. And so we've spent a little bit more than anticipated just to keep the timeline moving fast, as Andy said.

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

And on the tariff side, there's a little bit in there. We, more than half of our CapEx is launched at this point, but the portion that's materials, there's some particularly raw materials that we source from abroad. So I think when you look at the totality of the move there in unit price, it's, you know, those two elements are what's driving it.

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

Scott, this is Andy. I completely agree. I would just add, and I think I mentioned this, that this is a dynamic situation. I mean, we're looking at a tariff impact that many companies are looking at right now, but we all know that's somewhat volatile in ebbs and flows with geopolitical news. So we'll continue to work to optimize.

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

We continue to look at our own ability to optimize things like payload, to look at future launch optionality. But as Scott said, the name of the game is getting our satellites built and launched quickly. And in exchange for doing that, in an environment in which, you know, tariffs are a reality, we have a slight increase from, call it, you know, the 20 midpoint to the 22 midpoint. And we'll continue to press on that. But the good news is, as we started the notes, we're about to kick off a launch cadence that starts in July with every one to two months as we head out of '25 into '26.

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

So that's our priority right now. And as I noted, we reiterate our belief that even an increase like that is mitigated considerably by the opportunity of bringing our service to market as quickly as possible.

[Colin Canfield, Director at Cantor Fitzgerald]

Okay. I appreciate the color. And then maybe talking a little bit about spectrum portfolios and spectrum sharing, like two subject dynamics to consider. One is maybe talk about how you think about EchoStar's spectrum portfolio and maybe where you could unlock the most amount of value across RF bands? And then also maybe some commentary on the FCC spectrum sharing commentary and maybe just communicating kind of how customers are talking about any potential interference in pricing recovery or damages recovery from other players?

[Colin Canfield, Director at Cantor Fitzgerald]

Thank you.

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

Hey, Colin. That's a great question. Well, for those that are not familiar with this business, Spectrum is like fuel for our business. And we are on a strategy that actually maximizes access to existing funds in availability of spectrum on the phones. And also, we have basically split the program in two phases, one that we call low band, which we started with AT and T and Verizon, Vodafone, Rakuten and others, where we're basically sharing the spectrum of the operator and reusing that spectrum that is it was originally allocated exclusively for the rest of what's sharing for a space application.

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

We believe that that's the faster go to market and we believe also that is the best service possible that we can offer to the customers given the premium nature of that spectrum in terms of penetration, ability to go through walls, the frame of an airplane, the fuselage of a car that we have been demonstrated with our current operator operating satellites. But as you're probably aware, we also have signed a definitive agreement to complement our low band spectrum coming from our partner operators with our own spectrum in the mid band in the neighborhood of 45 megahertz, which together with the size of our satellites will enable 120 megabits per second per individual cell and supporting thousands of cells per satellite. So our spectrum strategy is the combination of the low band and the mid band. Low band partner with the operators to get access to the premium band that is available in every phone that works today without requiring any modification to the phone or any new change to the phone. And keep fueling the network with the spectrum in this case, when we conclude the current transaction to own the 45 megahertz, fueling that with probably one of the largest block of spectrum certainly that exists below the six gigahertz in The United States.

[Colin Canfield, Director at Cantor Fitzgerald]

Got it. Thank you.

[Operator]

Thank you. Our next question comes from the line of Mike Crawford with B. Riley Securities. Please proceed with your question.

[Mike Crawford, SMD & Head of Discovery Group at B.Riley Securities]

Thank you. Just continuing on that theme where you have this bifurcated strategy of sharing low band spectrum with your MNO partners, but now getting the cell band spectrum from Legato. Does that change the way you're thinking about future or current MNO agreements where they might become more bespoke versus kind of a very standard template that you initially have been working towards?

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

Well, not really. I mean, our focus is the user experience for the consumer that buy the service from the MNO. We think entering to the market with the low band spectrum give us a great access to billions of phones. I mean, there's 5,000,000,000 phones that have access to the low band spectrum. But this is simply a way to enhance and permit more simultaneous user with higher data rates when we combine both spectrums as part of one network, is our network.

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

So, see it as a technical capability to basically give the user, the vessels both spectrum. One is penetration and availability on phones. Another one is density with a large block of capacity, in this case 45 megahertz.

[Mike Crawford, SMD & Head of Discovery Group at B.Riley Securities]

Okay. Thank you. And then just one final question from me. On the custom ASIC, will we what batch of satellites out of the four you're launching after this Indian launch, would you expect to be the first ones with the Costa Mesa included?

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

It will be approximately two launches after the next launch. It will be very soon. It's in the final integration to the actual satellite build out and that is planned not in this next imminent launch, but one or two launches after that. As we said, we're trying to get into a cadence of that we'll be launching very constantly during the next six nine months.

[Mike Crawford, SMD & Head of Discovery Group at B.Riley Securities]

All right. Thank you.

[Operator]

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

[Christopher Schoell, Equity Research Associate at UBS Group]

Great. Thank you. Last quarter, you indicated you were preparing to run beta tests with your carrier partners. Can you update us on the status of those tests and any early learnings you're willing to share at this stage? And you talked about being able to manufacture six satellites per month by 4Q, which is later than the timeline you mentioned last quarter.

[Christopher Schoell, Equity Research Associate at UBS Group]

Can you just walk us through the cause and what still needs to be done to achieve that milestone? Thank you.

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

Yes. We had already started activations in The U. S, Europe and Japan. I mean, as a matter of fact, Rakuten, Vodafone, AT and T and Bryson, they all announced the initial usage of video capabilities, which is basically the most difficult application to run when you're running a broadband capability. So that means that support streaming, we support voice, we support text, we support email, we support FaceTime, we support any application that you can run.

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

If you can run a video call, which is a live streaming capability, can support basically any native application that is in your phone. So we are at that phase. We will be also starting lighting up all the 5,600 cells in United States. We're starting that process starting in June, July till we complete that into the beta service. And we will start offering a service that it will on our better plan, it will be an offer that resemble as much as possible the final service when we have full constellation but intermittent as we build out more satellites.

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

So we are on target for that this year. We're on target to start a bit of services this year to offer broadband that includes voice, text, data, email, Internet, fixed time and video calls. So, is still on target. The launch for the next generation, which is the largest generation is 3.5 times bigger than the Block one is scheduled for July. And we have maintained our plan to maintain a capacity of six per month, a race which start in June, July, again, also this year.

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

When we're referring to the six satellites per month is a fully integrated satellite, they're more closer towards the end of the year.

[Christopher Schoell, Equity Research Associate at UBS Group]

Thank you. And if I can just fit in one more. Appreciate there's a number of moving pieces, but as you look to 2026 and the ability to fund the launch of the 60 satellites, any help sizing the amount of capital you would need to raise and how you evaluate the different sources, whether it be the ATM or the quasi government progress you mentioned?

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

Yeah, will let Scott and Andy to answer that in more detail. But we are focusing on non diluted capital. For the first time, we're giving initial indication of revenue for the second half of this year between 50,000,000 and $75,000,000 We have advanced significantly our non dilutive financing from sources like IFC and the Ex I'm Bank and more importantly contracts, either government contracts, MNO contracts, infrastructure payments from operators. And that's our focus, is basically getting financed by non dilutive sources.

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

Right. This is Andy here, Chris as well. Just to kind of piggyback on that. Mean, the ATM gives us great flexibility, and we've proven to be very disciplined how we use it. And it's an instrument that we like to have as we look at all optionality.

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

It's not the priority, for sure. Last quarter, we did mention that, you know, our convertible rates put us in a position to fund through the 25 satellites, which is our threshold for non continuous service in major markets and beyond. And as you look at, you know, a constellation for over 60 for The US and similar geographies and over 90, you can do the math and sort of look at what the average cost with materials and launch costs are that we give, and you get a sense for what we need. The reality is we feel very fortunate that we have a lot of opportunities, on the equity side as well as debt programs like the Ex I'm Bank financing different manufacturing equipment, which we're quite mature in our exploration to do. So you put all that together and also layer on top of it the priority to move quickly.

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

Last quarter, we did say six satellites per month, we had a reference to during the second half of twenty twenty five. Our message this quarter is consistent with that. We just are more precise in Q4. So when you're trying to move as quickly as we are, and you're manufacturing at the pace which has never been done before, ever. This is novel, it's never been done.

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

You look at your financing needs as a package of opportunity and you sort of weigh when you access the capital markets versus other alternatives, while always prioritizing the prepayments from our partners, which has proven to be a great structure. So that kind of gives you a flavor. We're in great position with the balance sheet, but if we want to move quickly and if we expedite manufacturing, like we talked about today, we want to make sure that that balance sheet stays incredibly strong in what we all know is a very volatile macro climate for the markets right now. So that's how we'd look at it. And hopefully that's responsive to your question.

[Christopher Schoell, Equity Research Associate at UBS Group]

Yes. Thank you very much.

[Operator]

Thank you. Our next question comes from the line of Caleb Henry with Quilty Space. Please proceed with your question.

[Caleb Henry, Director of Research at Quilty Space]

Hi, thanks guys. A couple of questions. One on the Vegato spectrum and kind of how that would be implemented. Am I right in thinking that, that will require some sort of modification to the satellite like a hosted payload or something? And if so, how does AST plan to kind of go forward with that kind of introducing that new spectrum?

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

Yeah. When we are at pace, which is six per month, that's 72 satellites per year. And our basic design is 96 satellites in low band, 96 satellites in mid band. We already have in our ASICs and our core technology the support of this band and all the mid band spectrum of our partner operators. So the MSS, LS 3GPP spectrums in mid band are already part of our design.

[Caleb Henry, Director of Research at Quilty Space]

Okay. Great. And then a clarification just on the Barcelona facility. I read that it was for manufacturing space, but it wasn't quite clear to me what it would be building. Is that a secondary factory for manufacturing satellites?

[Caleb Henry, Director of Research at Quilty Space]

Is that gateways, ASICs? Can you provide some clarity on what that will be used for?

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

Yes. Our focus is manufacturing here in The United States. We're 95% vertically integrated. All the parts, final integration testing, it happened here in Texas. We are approaching 5,000,000 square feet of manufacturing facility when we add the new Barcelona facility and the new Florida facilities.

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

In Spain, do build certain high reliability parts that are used in the central unit. But all of them get integrated here in finally in Texas where we integrate and test the complete spacecraft.

[Caleb Henry, Director of Research at Quilty Space]

Okay. And then my last question was just on gateways. You mentioned looking at those rolling out and I think it was $10,000,000 expected a year. Do you have a sense of how many gateways AST will have up by the end of the year and kind of how that plots alongside the ramp up of the constellation? I don't know if there's a need of X number of gateways per satellite or something to that effect.

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

Hey, Caleb, just a few reminders for the audience. You know, because our satellites are large, the largest ever in low Earth orbit as say, they have a large field of view. So what that means practically is fewer gateways than is typical in a constellation. And so in The U. S, we'll have, you know, four or more gateways we've applied for.

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

In other countries, it'll be one or two. So it's a much smaller lift on the ground infrastructure side and it's one that we've designed to be shared with the operators because when the operators roll out a new wireless service, they are accustomed to a deployment of base stations and so those base stations are integrated into our centralized gateways. When you look at all of it, and we go country by country, there's one or two in a country, bigger countries will have more in Europe. We've got a more of a continental solution that manages the smaller size of the countries individually. And so what all that means is you're going to see gateways deployed, low single digit millions per gateway and you roll that up and we're building it out and taking orders now.

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

And in terms of how many we have at the end of the year, we won't give a firm target on that, but you've heard us say repeatedly U. S, Europe and Japan are our priorities. So those are certainly places you'll start seeing more gateways installed faster.

[Caleb Henry, Director of Research at Quilty Space]

Got it. Thanks guys.

[Operator]

Thank you. Our next question comes from the line of Tim Horan with Oppenheimer and Company. Please proceed with your question.

[Timothy Horan, Managing Director at Oppenheimer & Co. Inc.]

Thanks guys. Can you give us an update when you might well, when we might see a commercial launch in The United States? And have you worked out a wholesale agreement yet with the carriers in The United States dividing the economics? And to be clear, when you do that commercial launch, it will have the full suite of services that you mentioned? Thanks.

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

Yes. The answer is yes. We did announce a definitive agreement with AT and T and we're working on the details for the commercial agreement with Verizon. The idea is to have a better service sometime by the end of this year, a commercial service fully open for consumers sometime during early twenty twenty six.

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

And it

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

our plan it is for this service to be text, Internet, data and access to applications like video conferencing.

[Timothy Horan, Managing Director at Oppenheimer & Co. Inc.]

Great. And just out of curiosity, why do you think you need the Legato spectrum when you're doing spectrum sharing? And I'm assuming you're doing spectrum sharing in areas primarily where they're not using the spectrum. So I guess can you just maybe elaborate how much spectrum you expect to get from your partners and why would you need Legato if you're getting enough from them?

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

Yeah. One thing that is important to recognize is that we don't only serve where there is absolutely nothing. When you're in a camping location or when you're in a remote location, we have the ability to serve the consumer whatever their service is not good enough or is not supporting a full five gs experience for the end user. So in order to support that, need a lot of capacity in order to basically fill up what we call the imperfections of the network. And you need to be able to overlap terrestrial and satellite over the same footprint.

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

And then you need to have a lot of traffic that make that possible. So with the low band spectrum, we get access to what we call it premium spectrum with great penetration, go through trees, goes through walls, it goes through cards and it's unavailable in every phone. But there's typically limitations on how much spectrum you can allocate in low band. So it's the first I mean like historically operators have deployed spectrum, they always start with the lowest spectrum because that's the one that provides most coverage, better penetration, better user experience. As the network gets filled up by usage, you keep adding spectrum.

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

And that's you go back in time and what happens when initially cellular networks were originally deployed, they always start in the low band and then keep going up in frequency to create more density. And that's the intent of our planned 45 megahertz band is to basically being able to continue adding subscribers for our network partners.

[Timothy Horan, Managing Director at Oppenheimer & Co. Inc.]

Thank you.

[Operator]

Thank you. Our next question comes from the line of Scott Searle with Roth Capital. Please proceed with your question.

[Scott Searle, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

Good afternoon. Thanks for taking my questions. Maybe just to follow-up on the Legato front. In terms of L band support within existing cell phones in North America, how is that progressing? From day one, provided you're able to close the transaction, how long does it take before you have a large supply of users within The United States that support the L band spectrum?

[Scott Searle, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

Then I had a follow-up.

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

Yes. I mean, the L band is already in the Android ecosystem. Actually, you have that band enabled as part of the 3GPP standard. We anticipate with the support of AT and T, Verizon, Vodafone and 50 operators around the globe that will benefit of this ban. We anticipate one or two interactions on the new phones for the phone be available with the full band in every phone.

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

So that's the reason why we always had a hybrid approach where we start with low band, where we get the advantage of is in every phone, it have an RF performance that is much better, maximize coverage and then add the L band in the tail end of our deployment.

[Scott Searle, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

Great. Thank you. Very helpful. And if I could just on the U. S.

[Scott Searle, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

Government and budget front, defense space has done actually very well in terms of whether it's continuing resolution or the projected discretionary budget, guess, for fiscal twenty twenty six. So but there are some give and takes there too because FEMA has been a little bit on the ropes. So I'm wondering as you kind of look at some of the opportunities and programs and discussions you were having, whether it's PLEO or otherwise, I'd even throw FirstNet into the mix there, huge opportunity to be able to support band fourteen. How do you see the gives and takes between what's getting funded, what's not getting funded and you guys still feel very comfortable about the position with U. S.

[Scott Searle, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

Government opportunities? Thanks.

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

Yeah. I mean, what I would say, the U. S. Government is using our satellites now. So what is the capability that they get from our technology?

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

It is actually very, very clear for them at this point. That has resulted in six programs that we have ongoing with them. We see the Golden Dome opportunity as an opportunity that we feel very strong in participating as the government is already using our satellites for applications that are supportive for the needs of that program. So, a portion of that program was prioritized by the government and we believe that there's a good opportunity for us to be part of that.

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

I would also say, Scott, that you've seen us building small contracts over the last couple of quarters with them. It's been pretty broad based dialogue, broad based early contracts. And in terms of where money is flowing and where it's not, one good example is the DIU, which is the contract we just announced today. That's one area that just received another incremental large increase of funding. So we think it's the puts and takes is much more puts than takes of course and we're a novel technology that's being used as Bell said today we're on the shortlist as we have conversations and we see a lot of positive momentum broad based but also in places that are receiving more funding and incremental funding even recently.

[Scott Searle, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

Great. Thanks so much.

[Operator]

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

[Bryan Kraft, Analyst at Deutsche Bank]

Hi, good afternoon. I had two if I could. First question, how many satellites will the first five launches this year actually include roughly? And is that a mix of launch providers? Or is it one particular launch provider that's doing all those or most

[Bryan Kraft, Analyst at Deutsche Bank]

of them?

[Bryan Kraft, Analyst at Deutsche Bank]

And I guess just a high level strategic question. I was wondering if you could just talk about what you think your competitive moat looks like at this point. I mean, obviously, the market, while encouraged by the great progress that you guys have made over the last few years, there's always this concern about another company or companies effectively competing with you, maybe with a much larger fleet of smaller satellites. I was

[Bryan Kraft, Analyst at Deutsche Bank]

wondering if you could

[Bryan Kraft, Analyst at Deutsche Bank]

just talk about that. I would love to hear your perspective on it. Thank you.

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

Yeah. I will say in terms of competitive landscape, what has been proven possible by any other system is simply text messaging. We have a capability that is way beyond that and that basically goes from text, voice, data, internet and video. So is a limitation of what you can do with smaller satellites. That's basically physics.

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

There's also a lot of inherent problems when you have thousands of satellites. The revisit time, these handovers and basically just the practicality of the phone being able to connect to a smaller satellite. So I think at this point, it's been proved. But what the industry has historically been capable of doing, our capability has been supported by the vast majority of the operators. It's a capability for broadband.

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

And we think that our capability is very differentiated. And it's a capability that is also dual use. That means what we mean by dual use is it's used by governments, particularly our government, and the vast majority of the network operators around the globe. We have access through the agreement that we have with operators today, we have access to billions of subscribers, provided that we build enough capacity for them. So that's why we continue to build our portfolio of spectrum starting in The United States.

[Bryan Kraft, Analyst at Deutsche Bank]

Thanks, Ibar. I appreciate that thoughtful answer. And I don't know if you can say anything around the first five launches and how many satellites that will encompass and whether that's a single launch provider providing those first five or if it's a mix of providers.

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

Brian, our strategy has been multi operator all along, launch vehicle agnostic all along and so these early launches we expect will be consistent with that strategy. We do have some flexibility. You know, these things are a little dynamic so we can't make firm commitments on all of it. But in aggregate, we feel that the timeline we laid out makes a lot of sense. So five launches in the next six to nine months.

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

And you know, first one of course will only have one satellite. Some of the earlier launches will have fewer than full capacity but would really like to be in a position to have, 20 satellites up as soon as we can thereabouts. But we're doing everything we can to keep moving to the left on time. We're overproducing with our factory for sure to make sure that we're not the long pole And, and and we've been very proactive on on on this multi operator multi launch provider strategy. So so that's kinda how we're thinking about it, Brian, and and we're gonna we'll play it out month by month and quarter by quarter and give you better updates.

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

But we're pushing pushing hard on this because we know that we'll have the satellites to launch when we have the vehicles to go to orbit.

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

Well, as a guidance, I mean, depending on the vehicle, you're talking about three to four vehicles per satellite or eight vehicles per satellite. And as I reminded, these are very large satellites. I mean, are the largest ever satellite launch for communications. Typically, we try to the first launch, it will be single launch given the vehicle that we're using. But our launch contract support three to four on these motor vehicles and eight in the bulk of the launch agreements that we have.

[Bryan Kraft, Analyst at Deutsche Bank]

Okay. Thanks so much.

[Operator]

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

[Chris Quilty, Co-CEO & President at Quilty Space]

Hi guys. Didn't expect to get a second bite at the apple, but just wanted to follow-up on the Block two Bluebird launch. Should we view that as that a fully operational off the production line or is it still being viewed as more of a pathfinder in terms of testing the unfurling mechanism and other aspects that will be bled into the production? Is it more of the forward than the latter?

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

No, no. It's a full blown operational satellite. It does use the same micron, which as you know is the building block of the phase array, exact same models that we use on the Block one satellites, which we have now in operation. But of course, it's larger. It's three and a half times larger than the Block one satellites.

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

But it's come out of the production line and by the way we're producing we're launching FN1 but we are producing 40 satellites this year. We think that we will get closer to 53 satellite worth of face arrays by the end of this year. It's coming out of the production line. It's an operational satellite. It will be part of the constellation.

[Chris Quilty, Co-CEO & President at Quilty Space]

But to be clear, I think you said by the fourth launch that production line will shift from FPGAs to ASICs, correct?

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

Yes. The first batches are FPGA.

[Chris Quilty, Co-CEO & President at Quilty Space]

Great.

[Chris Quilty, Co-CEO & President at Quilty Space]

Second question, real quickly, I guess in the press release you said the 50,000,000 to $75,000,000 of revenue in the second half of the year. How much of that is actual service type revenue versus contractual payments as milestones with customers?

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

Hey, Chris. I would say a big contributor, of course, is our government business, including the $43,000,000 SDA contract we announced last quarter and is milestone based. But based on work being done on our five block one satellites, and our first block two satellite. So there's a there's a good portion of it that is milestone payments, and they'll probably be some other government revenue in there. But there's also expected to be a good component of commercial revenue as well with early activations and importantly those gateway installations we walked through earlier in the call.

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

So it'll be a balance. Certainly government is a big contributor of our early revenue and that's primarily milestone based. But on the commercial side, you'll see both the gateway installations and then also some initial activations we think.

[Chris Quilty, Co-CEO & President at Quilty Space]

Got you. And just to follow-up on the gateways, thanks for the guidance around $10,000,000 a quarter. Is there any reason that should ever accelerate or is that a good run rate to kind of expect as we look out the next year and the year after? And fair to assume that you're running that mostly as a loss leader, not a profit center in terms of how we should model the margin contribution?

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

Yes, that's correct. I mean, the gateway is just an enabler. I mean, we're taking basically the gateway for United States are ready to operations. So then the JV in Europe is taking up the initial activations that we've been using actually for the initial activations that we had in particular in The U. K.

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

So that will be a chair infrastructure in Europe. And then Japan is also partially activated. We have multiple gateways. We have one in operations now. So as we said, initial focus is U.

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

S, Europe, Japan and then some selected markets where we're getting payments, prepayments from MNOs. To put it in perspective, U. S. Is four gateways. A large country like Brazil is three gateways and then block of smaller countries are sharing infrastructure in Europe.

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

And in

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

terms of modeling, Chris, I would add, there is a margin on those, it's a low margin. We view this as a way to enable the service, but it's not a loss leader. And second, we think there's upside to that quarterly guidance we gave for sure. Note that these can be lumpy as well. So we wanted to be conservative as we started talking about this metric.

[Chris Quilty, Co-CEO & President at Quilty Space]

Great. Thanks for the color.

[Operator]

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

[Colin Canfield, Director at Cantor Fitzgerald]

Thanks for the follow-up. Just want make sure I understand the DIU contract. Maybe talk about kind of how we think about that as a task order as a larger of a larger contract or if that's the ceiling value of the contract? And then maybe talk about the conversations that you've had with folks like Block. You do have former American Tower Corp executives that are leading the company and maybe some of the other fronts?

[Colin Canfield, Director at Cantor Fitzgerald]

Thank you.

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

Thanks, Colin. I think I would say on the DIU, this is they recently received $2,000,000,000 of additional funding. This definitely a place where the government's looking to support new technologies and move fast with them. The way to think about it is that it's a little bit of an incubation place where you know, a broad base of different government agencies can take a look at the tech across different types of applications and it's a good place to get projects moving fast. So I think on the one side, think of it as a place to germinate new use cases and for us, but it's also a place to accelerate use cases we've been discussing that maybe just didn't hit the first half a dozen in our priority conversations.

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

These are and in terms of the dollar amount, you know, I gave some guidance on low tens of millions potential and then we set a 20,000,000 ceiling. Some of these are a little artificial relative to how some of these contracts get initially awarded. I think this is just a great place for us to continue to push the use cases across a broad reach within the DoD and beyond.

[Colin Canfield, Director at Cantor Fitzgerald]

Got it. Thank you so much.

[Operator]

Thank you. And we have reached the end of the question and answer session. I would like to turn the floor back to Scott Wisniewski for closing remarks.

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

Thank you operator. We want to thank everyone for their questions, all shareholders and the research analysts that join the call. We look forward to providing more updates in the future and stay tuned.

[Operator]

Thank you. And this concludes today's conference. And you may disconnect your lines at this time. We thank you for your participation and have a great day.

Participants

Executives

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

Analysts

• Colin Canfield, Director at Cantor Fitzgerald
• Mike Crawford, SMD & Head of Discovery Group at B.Riley Securities
• Christopher Schoell, Equity Research Associate at UBS Group
• Caleb Henry, Director of Research at Quilty Space
• Timothy Horan, Managing Director at Oppenheimer & Co. Inc.
• Scott Searle, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC
• Bryan Kraft, Analyst at Deutsche Bank
• Chris Quilty, Co-CEO & President at Quilty Space