Q2 2022 Spire Global Inc Earnings Call
Greetings welcome to the spire global second quarter 2020 to call at this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad.
Please note that this conference is being recorded I will now turn the conference over to your host Ben Hackman head of IR you may begin.
Thank you Hello, everyone and thanks for joining us for our second quarter 2022 earnings conference call. Our results press release and SEC filings can be found on our IR website at IR dot spire Dot com.
A replay of today's call will also be made available with me on the call. Today is Peter plots are CEO and Tom Cry, We CFO .
As a reminder, our commentary today will include non-GAAP items reconciliations between our GAAP and non-GAAP results as well as our guidance can be found in our earnings press release.
Some of our comments today may contain forward looking statements that are subject to risks uncertainties and assumptions.
In particular, our expectations around our results of operations and financial conditions are uncertain and subject to change.
Should any of these failed to materialize or should our assumptions prove to be incorrect actual company results could differ materially from these forward looking statements.
A description of these risks uncertainties and assumptions and other factors that could affect our financial results is included in our SEC filings with that let me hand, the call over to Peter.
Thank you Pat and thank you everyone joining us on the call today spire continued to drive the business forward in Q2, we again delivered results that were better than expected for revenue and for margin guidance.
Complementing our relentless drive for profitability. We also successfully closed a $120 million credit facility further strengthening our balance sheet, and then allowing us to confidently execute on our four growth pillars. As we continue on our path to what's being free cash flow positive.
In 19 to 25 months.
While the macro environment has continued to deteriorate meaningfully throughout Q2 with mentioning of inflation recession and war on a seemingly daily basis spires business prospects and opportunities. She said continued to be strong there.
The difficult environment requires businesses to make tough decisions with regards to balancing growth and profitability and we remain at the very core of our customers' business plans. One can see this in the continued improvement of our already high retention rates, we delivered yet again.
In Q2.
Our customers look to aspire for data insights and solutions to run a more efficient and reliable business and manage the volatility of the current economic environment.
Q2, we saw a healthy interest in our data and solutions, adding 65, net new ear, our solution customers, beating our expectations.
We they're fully deployed large constellation of satellites monitoring the global flow off assets a round the clock effectively listening to the movement of global trade and weather spire provides a unique perspective that is only available from space.
However, we are not immune from the global macro environment. For example, we now expect several million dollars of negative foreign exchange impact to our 2022 revenue given that spy a south it solutions to customers in roughly 60 countries and exchange rates have.
Being highly dynamic.
The macro environment has also lengthened the time from initial conversation to contract signature for a handful of our larger pipeline deals.
And given the ever changing market conditions that businesses are contending with we're also seeing some of our customers needing to go through additional approval cycles, but all of those are taking longer to obtain the necessary funding.
While the pipeline remains extremely robust and growing we are carefully watching our cycle time to close.
Turning now to our business smiles fully deployed constellation provides global coverage passing over the Earth 100 times, a day and collecting hundreds of millions of data points much.
Much like the Internet in its early days, we can continue to see new and diverse use cases for the data we collect.
Whether it be topical conversations like tracking the first grain vessel departing from a desktop or seeing the changing traffic patterns around Taiwan last week spire listens to the heartbeat of global activity.
We are encouraged to see global conversations gained increasing traction on topics such as climate change for example, evidenced by the U S climate Bill announced last week.
Things to our deployed scale of operations and investments in innovation made to date. We are confident that we are exceptionally well positioned to help government and commercial customers alike solve problems that are becoming front of mind.
I'd like to take a moment to talk about some of these wins, we secured in the quarter.
Maritime team was awarded a contract with a fortune 100 company to provide data that allows them to better meet the needs of their customers.
Analyzing this data from spires allows their customers to cut costs and improve efficiency, but providing insights for example to perform predictive maintenance spires ability to provide rich insights on multiple different attributes of a vessel, including vessel type capacity and size.
Along with life data, including the vessels position current voyage stayed with reported destination in E. T. E was key in winning this competitive account.
Customers continue to appreciate the value off our weather offerings and have consistently awarded us follow on contracts.
During the quarter, we received a follow on contract for $6 million from NASA for Earth observation data.
This data was provided under the commercial small sat data acquisition program inspire has been providing data since 2018.
The C. S D. A program office Earth observation data that is critical to the efforts of U S government agencies and researchers solving some of humanity's biggest challenges like climate change recently heat waves in Europe , and diametrically opposed to weather events of concurrent drought and flooding in the.
States clearly indicate the immediate risks posed by extreme weather.
The U S. Congress is poised to enact a largest bill to date releasing billions in funding to help fight this threat.
The success of the CST a program inspire his role in it is a great example of how partnerships between the private and public sector can accelerate our path to building a batch of more sustainable future.
<unk> is extremely well positioned to take advantage of opportunities to partner with the U S government and others around the world to tackle the risk posed by climate change.
Also during the quarter spire was awarded a T comes up contracts for weather forecast at aerospace sides. The multi million dollar subcontract a spine is the largest numerical weather prediction deal to date.
Spy as weather forecast will play a crucial role in efficient and effective operations off these large scale tethered weather balloons space based data is a differentiator between potentially damaging downtime and operational success, especially in remote areas off the world.
Spy has a unique ability to assimilate large amounts of weather data into spine as proprietary numerical weather model was crucial for T come in placing their trust in us.
Turning to space services spire recently won a highly competitive contract for a greenhouse gas monitoring service from space.
This contract has a potential to grow to over $100 million of revenue for spire showcasing the scalability of our solution.
The customer will leverage spy is robust reliable and scalable infrastructure to receive their data through a simple API on a global basis. The data is used to spots and contain greenhouse gas leaks as well as provide insights for other key decisions on the fight against climate change.
<unk>.
This is a great example of what we can do with space services, helping amazing companies, who are doing important work scale and expand their impact quickly building, a more sustainable and prosperous future for all.
We have continued to see strong customer adoption of our space services model.
Obviously, you announced a deal with North star focus on space situational awareness and space debris that could grow to more than $200 million of revenue to spire, along with an eight figure deal with Sierra Nevada Corporation for his service to the U S government and signal intelligence and signal and geolocation.
Just to give you a rough sense of the scope of phosphates services business over the past several quarters space services as an average accounted for roughly 25% of our business.
Turning now to technology updates, where we continue to make prudent investments in our technology to add value to existing customers and age and the acquisition of new customers.
These investments spend both our hardware and software capabilities and allow us to widen our already substantial competitive mode and pave the way for future business opportunities.
The market continues to be one of our larger long term opportunities with an estimated near term market size of $22 billion listening to our customer needs. We invested in the capability to deliver optimized forecast 15 days out expanding our premise offering of the mall.
Industry typical seven day forecast.
Investing in this technology allows us to solve additional use cases for an even broader set of customers.
Utilizing machine learning, we continuously work to optimize our forecast by leveraging the vast data vault that we have accumulated to train our models to deliver better and more valuable forecast.
We recently announced a partnership with raw space to deploy high perspective microwave sound this to augment our already substantial weather data collection.
These microwave sound as will enable us to deliver a higher level of measurement accuracy for both moisture and temperature, which is essential in numerical weather prediction.
The state it will join our existing data from radio occultation, roughly commentary and Pollari metric Earle.
Third ensure proprietary data assimilation system. This data drives our in house global numerical weather prediction model, which runs on our high performance compute cluster of up to 10000 course.
This affords spire, a unique sustainable competitive advantage in providing our customers with highly valuable accurate weather predictions solutions.
We all don't have continued to invest in our SYGMA and geolocation and intelligence capabilities.
We recently deployed additional satellites and equipped them with an RF chain capable of capturing and Geo locating satcom in the L band.
Presence of these signals in certain locations and I'm not certain circumstances is indicative of activities that are of critical importance to some of our government customers.
Further enhancing all signaling geolocation and coordinated Earth observation offering aspire also developed the ability to fly on our satellites autonomously information using differential drag.
Our autonomous software uses the Earth's atmosphere to control the distance between satellites, causing them to fly in a coordinated formation with out the need for additional hardware or costly propulsion.
System can be enabled on any spire satellite to a remote software upgrade highlighting the power of spires focus on software Upgradable space systems.
The global signals intelligence market is estimated to be over $13 billion currently with a sizeable and rapidly growing contribution from space based geolocation and spectrum monitoring capabilities.
Bringing these capabilities online expands our offering for new and existing customers, providing insights to governments to help make the world a safer place.
Our regulatory and licensing strategy is helping spire to propel the business forward by capturing high value most extending licensees.
For several years spire has been working with the U S government stakeholders to secure U S licensing support for spine is into satellite link technology in.
In Q2, we successfully completed pre coordination efforts with nausea, Noah and the U S Air Force.
The FCC is now processing spires into satellite link all the recession request and we anticipate that the license will be issued shortly.
The more recent.
Recently completed coordination of more than 20 S spend an extra in ground stations.
And this effort another multi year process.
Sends an approximate 30% expansion of spires ground station network.
The ability to implement into satellite links on our U S assets and the coordination of our ground station network I. Great example of how spy as regulatory strategy is designed to help the company maintain its first mover advantage in an increasingly competitive area.
Last but certainly not least.
We bolstered our people team this quarter with leaders, who bring decades of experience to their roles and will help us innovate and implement best practices in people operations talent acquisition and told the rewards as we drive recruitment of top talent and elevate the employee.
Spirits.
Every day my colleagues inspire are pushing the envelope of what is possible.
Our people are the thriving force off our organization continually propelling us forward and are critical to our long term success.
This is yet another way spire is investing to stay ahead of the curve and recognizes the importance of people for our ability to take full advantage of the massive long term opportunity in front of spire.
As we continue to prudently invest in geographical locations, where people can congregate collaborate and innovate together. We are excited about opening a Melbourne office, which is expected to open in Q3.
We have long been committed to the Australian market and the opportunities in the wider APAC region.
A dedicated diversified growing team and a physical location in the region will allow us more direct access to customer opportunities and top talent from the region.
The achievements in the second quarter highlight our continued execution across all four of our growth pillars.
We remained focused on investing in sales marketing and product expanding into new geographies and use cases, expanding the capabilities of our data and analytics and executing strategic acquisitions to strengthen our market position.
Notwithstanding the current headlines I have never seen the long term future for spire as bright as I do today.
And wariness and interest inspire solutions continue to rise fueled by the global trends of fighting climate change, increasing global security demands and ensuring sustainable and peaceful use of space.
With an addressable market of nearly $100 billion over the next several years and countless opportunities beyond that we are well positioned to help build a better future things John of substantial scale competitive advantage and market leadership in our core verticals.
And with that I'll turn it over to Tom.
Thanks, Peter the second quarter saw another strong quarter of results Q2 revenue increased 113% year over year to $19 4 million, which topped the high end of our guidance of $19 2 million and was driven by increased adoption of our solutions by existing customers and recent new customer additions.
There are at the quarter end was $85 3 million up 133% year over year.
<unk> was impacted by the recent macroeconomic environment, which resulted in some of our greater than seven digit deals taking longer to close.
We ended the quarter with 692, AOR solution customers, a 243% increase year over year. This exceeded our expectations by twenty-seven AOR solution customers over the high end of our guidance.
Our organic Q2 are our net retention rate was 108% up from 106% in the first quarter of 2022, we continue to execute on our land and expand strategy as we added just over 90 net new AOR solution customers. During the first two quarters of fiscal year 2020 to.
The addition of these new customers will then provide the future opportunity to expand just like we've seen in our recent quarter over quarter improved air our net retention rates by offering our customers various levels of value for coverage latency datasets and analytics and the number of solutions.
Next I'll be discussing non-GAAP financial measures unless otherwise stated we have provided a reconciliation of GAAP to non-GAAP financials in our earnings release and should be reviewed in conjunction with this earnings call.
We improved our operating margin to negative 52% from negative 124% a year ago, a negative 71% last quarter showcasing our operational leverage and focus on driving profitability.
Our Q2 operating loss was $1 9 million better than our guidance, which was a loss of $10 1 million. The outperformance in the quarter was a result of strong revenue flowing through to margin and lower head count related spend.
While we continue to make investments in our future growth, we remain focused on driving efficiencies in the business to reach profitability.
Total adjusted EBITDA for the second quarter was negative $7 3 million, which was 1.6 million better than our guidance.
We ended the quarter with cash cash equivalents restricted cash and short term marketable securities of $93 5 million.
In addition, we have approximately $20 million in an escrow account that we will be able to access once we reached $96 million of air are which we expect to achieve before the end of the fiscal year 2022.
The $120 million credit facility, we obtained from Blue Torch capital during the quarter highlights the strength of our business and bolsters, our healthy balance sheet proceeds from the new credit facility were utilized to extinguish our existing facility and the remaining balance will be used to drive our four growth pillars, providing the strategic flexibility to run the <unk>.
Yeah.
Now turning to our outlook for the third quarter and full year 2022.
For the third quarter, we expect year over year revenue growth of 109% at the midpoint with a range between $19 5 million and $20 5 million.
The sequential increase in our Q3 2022 revenue reflects the incremental air are added during the first half of fiscal year 2022 while also taking into account exchange rate headwinds.
We expect Q3 year over year, ending are our growth of 101% at the midpoint with a range between $90 3 million a $91.3 million.
AOR solution customers for Q3 is expected to range between 710 and 720.
We expect non-GAAP operating margin to be at negative 57% at the midpoint of both the revenue and non-GAAP operating loss compared to 142% in the year ago quarter.
non-GAAP operating loss for Q3 is expected to range between $11 8 million and $10 8 million.
Our non-GAAP operating loss guidance reflects increased hiring to support our rapid growth and investments in our growth pillars.
Adjusted EBITDA for the third quarter is expected to range from negative $8 7 million to negative $7 7 million and we expect our non-GAAP loss per share for Q3 to range from negative 11 to negative 10 cents.
Which assumes a basic weighted average share count of approximately 139.
9 million shares.
For the full fiscal year, we expect year over year revenue growth at 88% at the midpoint.
With a total revenue range between 80 million and $83 million.
Revenue guidance reflects continued headwinds from both exchange rates and further impact from the macro environment with exchange rates being the primary contributor to our guidance range.
We expect year, ending <unk> to range between 101 million to $105 million and our <unk> solution customers to range between 735 and 745.
We expect non-GAAP operating loss for the full fiscal year to range between $46 5 million to $43 5 million or a negative 55% operating margin at the midpoint of both the revenue and the non-GAAP operating loss.
This compares to negative 105% from the full year fiscal year 2021.
The guidance continues to reflect our ongoing focus on investments in our growth pillars.
Ability to drive operating leverage and improve margins in the pursuit of profitability.
We expect adjusted EBITDA for the full year to range from negative $33 million to negative $30 million.
non-GAAP loss per share for the full fiscal year is expected to range from between negative 42 cents to negative 40 cents and assumes a basic weighted average share count of approximately a $139 8 million shares.
We continue our progression towards being cash flow positive in 19 to 25 months reiterating our previous projections.
In closing this quarter, we saw continued success in our land and expand strategy by adding new <unk> solution customers and increasing our revenue growth from our existing customers.
We also continue the relentless drive towards the path to profitability and took the opportunity to improve the balance sheet and our cash position with the new credit facility.
Thanks for joining us today and with that I'd like to open the call up for questions.
At this time, we will be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad a.
A confirmation tone will indicate your line is in the question queue you.
You May press star two if you'd like to remove your question from the Q4 participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.
Our first question is from Eric Rasmussen with Stifel. Please proceed with your question.
Yeah. Thanks.
Greg.
The results and execution.
Environment.
Maybe just go into the guidance and your outlook for the year you did make the IRR and held a net loss of 45 million, even as you lowered revenue already roughly by $6 billion at the midpoint.
You cited but then you also talked about longer well.
The sales cycles.
Customers having issues.
Having a longer time to get funded if you sort of look at that $6 billion, where does that fall within sort of the aspects in those other areas.
Yeah. Thanks, Eric.
You know I would say the FX was the driving force there was the primary reason for us having to to lower that guidance. We did talk about some of the deals.
Pushing out a little bit, but we are really excited about the Q3 and Q4.
Sales pipeline that we have in front of us the deals that we've closed already in Q3, such as the know a deal of 1.7 number that we announced a couple weeks ago and that is the you know that's reflected in our guidance and why we are maintaining our a R. R. At 100 105 for the end of the year.
Great.
So it seems with the FX, having a fair amount of exposure there.
I think you cited 60 different countries do you have any hedging strategies.
Maybe mitigate.
This risk.
Yeah, we are I mean trying to focus on more customers doing U S. Dollar deals, we we actually did lower our percentage of revenue coming from.
The currencies other than the U S. So that is that that is one big driver or trying to get more contracts in U S dollars beyond that we haven't looked into any specific hedging aspects other than really focusing on getting more contracts in the U S. Do you to start with.
Great. Thanks for taking the questions.
Our next question is from Rick Prentiss with Raymond James. Please proceed with your question.
Good afternoon evening everyone.
Hum.
One a follow up on Eric's question, there a little bit.
On the AOR guidance.
Is that saying that even with FX hits, you expect to achieve one on one to one O five.
Or or or as they are really not.
So the FX pressure.
No. It does the yard is reflective cause we are adjusting the sales pipeline.
To deal with the obviously the ever changing rates.
So yeah. It is it does include that impact so when we are maintaining that and again. It just comes down to the confidence we have with the pipeline and what activity. We have in front of us for the rest of the year, you know such as how well we've been expanding with our existing customer base you can see that the net retention rates are on the climb two quarters in a row.
And the deals that we've been closing and announcing over the over the press releases recently.
Okay.
When you think of on the relentless pursuit of free cash flow positive free cash flow help us understand the different levers there as far as revenue growth cost control, but also willing to invest in the four silos and capital standpoint.
To us in the quarter, but just help us understand.
What levers you're pulling to get to that positive in the next two years.
We're looking at all of them and we're focused on all of them clearly we are driving the top line growth with how many customers we've been adding quarter over quarter. We had over 90 customers. We added since the beginning of the year. So I'm very focused on on that on the landing customers. We're obviously focusing on expanding with them with offering multiple sets of data.
That's across the stack up the value chain stack and we've seen that with the net retention rates on the climb.
You know on the cost front as.
As we mentioned in the past the leverage cost structure is obviously plays a huge dividends, where we're leveraging the constellation in the ground stations of course some of it all four solutions some of it over the three solutions. So you know those are levels, where were looking at them on the you mentioned the Capex you know we do.
Back to the Capex to decline in the in the Q3 and Q4 range to get into more of a $4 million to $5 million range. We just had an anomaly of timing issue. This quarter for Capex. So we're looking at all those levers and finding any which you know any way that we can do that to drive that down and you can see that in the stats right. Our gross margins improved five percentage.
Quarter over quarter, both GAAP and non-GAAP the non the non-GAAP operating loss not only improved on on the margin standpoint, but also on a dollar standpoint quarter over quarter and year over year. So all those are great indicators on that path to profitability.
And if I can maybe add something to that Rick and you've seen us now repeatedly talked about the power of our software defined space infrastructure.
Adding capabilities by software upgrades that allow us to solve for additional use cases with the existing assets monetizing even stronger what we have deployed is yet another lever off the type of technology that we have built and that we are executing against.
Makes sense, one more on the financial side.
Well to maintain the adjusted EBITDA guidance midpoint tightening the range a little bit.
Are the FX benefits that are helping you on the adjusted EBITDA line tend to make up for the revenue shortfalls trying to think of where all the different employees or our base for the cost side.
Yeah, we did of course get the benefits because we did have we do have international employees just like we do a lot of the sales international also so we did get some benefit from that but there was a lot of leverage and efficiencies that we be pulled through some things that we'll be able to announce and hopefully in the next earnings and things like that on improvements, we're making on the cost front.
Last one for me is more strategic.
A lot of interesting news in the space.
Hunting season kind of a.
Ways to merge some of the talking satellites.
Also the FCC came out and kind of a rare for zero ruling Democrats and Republicans together.
It's time for the FCC and it tends to kind of update your view on the space race. Peter can you give us some kind of thoughts about why we're seeing consolidation happening now in some different areas of space and what you would like to see the FCC address as they are they looking more closely.
Oh, that's like that's like a jam and they love talking about this so I think when you when you SaaS to value off of merging or consolidation you need to start with a lot of the cost and the revenue synergies for the combined entity that you get back this fabled one plus one is three.
So it makes a lot of sense when people have a product that are not very differentiated from each other and.
And looking for the same customer.
Obviously, you're gonna get a lot of cost synergies and you're gonna get strong a market leadership position.
And that has been I think a pretty successful consolidation or roll up strategy and I think our spire has done a little bit of that ourselves. So I look for a consolidation where that is true where you have this clear and obvious cost in <unk>.
Have any of synergies I think some of the talk that I have seen and you know curious to have a lot of conversation with you offline is more like sticking things together.
That don't actually have necessarily a big customer overlap or revenue overlap or cost overlap.
And I think that does not necessarily make that my sense.
I think this third type of consolidation.
At either organically or inorganically that sometimes if it makes sense is a vertical integration you know when you think golf I'm off probably the strongest story there Spacex. They started with you know the launch segment and then getting into the data service segment leveraging there.
<unk> capability is being fully vertically integrated and keeping all the margins from the launch business inside the overall data business. So that's how I would think about the consolidation across the industry I think some of the talk quite frankly is quite a bit overblown.
But I think that's where you have highly overlapping technologies that are not very differentiate it with regards to what they offer to the customer is going after the same customer that it's probably that's probably where it makes the most sense.
Did that answer your question.
That's helpful.
And the FCC.
On the FCC side, I think the F. C sees in a powerful position to strengthen the global competitiveness of the U S space environment.
Yeah.
Right.
And I have seen regulators in other countries.
Kill and existing or diminish destroy.
A burgeoning space economy by taking missteps on the regulatory side.
And I think the I mean actually she has been a very very strong and reliable partner for spire. You know you've heard us talk about expanding our assets that behalf with the FCC in terms of off spectrum and I think the F C CS and a really strong position to strengthen the U S global competitive.
Landscape by bringing on board regulation is that enhances the competitiveness rather than diminishes. The competitiveness that is based upon the new technology that exists today and will drive the capabilities that can be delivered from space for everything from Earth observation to national.
Security over the next decades, rather than backward looking and looking at you know what has been in place in the fifties in six states during the Cold War, but everyone was launching bus size devices for the next 25 years. So I am really looking at the new technology and their rapid.
That is happening can give a country a massive competitive advantage and driving innovation inside the country building space Giants, rather than driving it out of the country as I have seen some other countries due by the regulatory regulators, making a bid misstep.
So I'm really looking forward to the FCC leaning into that powerful role in strengthening U S competitiveness and driving commercial capabilities and innovation to deliver to both the commercial market, but also the local.
Government and D O D market capabilities that are becoming more and more relevant as spaces, becoming a contested environment.
Great. That's helpful. Thanks for your thoughts.
Our next question is from Geoff Miller with Baird. Please proceed with your question.
Yes. Thank you.
I know that this is like a third question you've gotten on the topic, but I'll try to ask it a pointed way.
The Q or the 2022 are our guidance it implies I guess at least 12 billion of sequential growth.
Going off of the Q3 guidance that would historically be a really nice quarter for you.
I hear you that the pipeline supports it but anything else you can say.
Seasonal factors just other supporting evidence to give us confidence in that Q3 to Q4 ramp to reconcile with the.
The elongation of the pipeline conversion process, even if the pipeline could remain good. Thank you.
So let me let me try this time around and see if I can add something that that's all amazing sat already I think we have highlighted some of our gross deals Ah in on on the on the space services side, which have the capacity and capability to grow from the current size into the tens and hundreds of them.
Millions of dollars by moving from providing data to our customers from one or two payloads on orbit. Two you know 20 or 30 payloads on orbit that is a huge leverage in our system that we have.
And similarly, I mentioned beforehand. The this software Upgradable nature, which allows us to you know rollout capabilities across our constellation very rapidly and then provide capabilities to customers from a large number of locations so to speak on orbit.
Again, providing that scale that really truly no one else.
I can do about spire.
That adds additional flavor Tom.
Maybe you can add something as well, yeah and I think.
As I mentioned earlier the <unk>.
It just is where the large influx of you know the end of the calendar year tends to be you know bulky quarters everybody's cramming to get things done before the end of the year end and we see that in the pipe we see that in the number of opportunities that are available in the in the quarter, which is significantly higher than other quarters and plus I think there's we had in the early part.
The year.
Some new teams get formed on the sales side and the momentum that they're building and building that pipe is we'll start to really kick in now and in the third and fourth quarter.
Okay and then.
For some of the talking points come off of that answer, but you gave us.
Software upgrade the sales team.
Peter's prepared remarks, he talked about the executive team build out just help us understand any other marks.
Productivity is driving the better profitability instead of.
Being kind of behind on where you'd want to be on the growth investments in what still is a tight labor market for.
The skill set that you pursue.
I mean literally just before this we were talking about the time it takes to go through the earnings script. When we do it the first time and when we do it the second time and that time goes in half and that is just true for just about any human activity that you can think golf that first time you do it you just take.
On the longer.
As we have people now with more and more experienced that have done. This more often we just get better and more efficient in what we do and how we do it and being just very very conscious and having now actual people because we are at the right size, whose job it is to make us faster and more efficient allows us to go.
Guy you know two to take the benefit of those economies of scale as well as the economies of scope that we have it just takes us today substantially less time to do something and then it took US 12 months ago and that is from the hardware side, all the way down to the contract size to give.
You are really Stupid example, it used to take probably a week to two weeks to get an NDA signed because there was lawyers and more of them you have to send it around and mark up and stuff like that now there is a self service form that anyone inspire can click on the link on the internet send it to the customer it gets signed and sell.
Surf within 36 hours and NDA signed and we can engage in detailed conversations with a customer just to give you one stupid Little example, there.
And I think.
Oh, sorry, just to just to add on that I think with a certain business units now we had the acquisition in Q4 of last year things are really starting to click into gear as we get into back half of this year. We are really you know the dialing it in on the on the acquisition and its based services.
Early on a couple of years ago, we started with certain sets of customers and now they're getting to the point, where theyre getting their API theyre getting the data and now they're looking into as Peter mentioned the expansion with those contracts going from say one satellite to five six to eight to 10 satellites you can see a very significant jump in a contract going from you know.
Doing one south to five to six.
It's almost a multiplier effect of how large the deal size gets so why don't we we have a lot of that opportunity as we get in the back half of the year.
And then last for me Tom If you can just help us with understanding kind of the formulaic calculation.
How do you how does how and when does FX impact.
Or so.
FX headwind toughen during Q2 was that a headwind to Rebase thing.
Figure in the Q2 ending are all figure that youre, giving up in FX was also a contributing factor.
<unk>.
To the Q2 <unk> variance for Skagen.
Yeah, I mean, obviously, we we.
When we do the best we can with the pipeline and try to.
Reset things within the CRM tool to make things are revalued at the new rates because what the sales team will do is put it in local currency and then we do our best to try to constantly make those adjustments and then look at the pipeline adjusted Accordingly, So that gets factored in we usually tend to focus on that at the quarter ends.
And reset the bar for the rolling it forward for the rest of the year. So we yeah. We looked at at the end of December at the end of Q1. The end of Q2 are enrolling at all forward them. Obviously, you know the rates got or the currency. The dollar got stronger as we went from last quarter's earning to this one and it had a much.
Further impact.
Or are you only adjusting for the pipeline or are you also adjusting existing subs base to update at the current FX spot rates.
Yeah, I mean, so where we're at.
Constantly looking at and then adjusting for like you mentioned, we are looking at both both factors I mean, especially when obviously the customer comes up for renewals or there's a reset of.
Of course, the AOR gets reset at the exchange rates.
But the current regime yeah.
Thank you.
Yeah.
Our next question is from Stefanos Crist with CJS Securities. Please proceed with your question.
Hey, Thanks for taking my questions.
You mentioned the inter satellite links can you just give us a little more color there.
You're able to add any satellites with the isos and maybe is there an expectation for when the fleet will be fully capable.
Yes, so we did add capabilities on the ISR side, both with regards to our F. I S. L. A as well if the optical I S. L and we continued to launch those satellites as we do replenishment as well as a for our customers that want a cluster is off.
Capabilities of satellites that are into satellite linked and you can expect that again as we keep on going forward and replenishing our satellites that we rollout.
More and more of those satellites with I S. L capability cheese, serving our customers where it enhances our offering and they are willing to pay for the additional services that we provide.
Got it thanks, and then just trying to.
Figure this out so you mentioned longer sales cycles, but then.
The number of air our customers beat expectations by quite a bit do you think that could have been even better or are those headwinds more recent just for the second half and just your expectations for the back half of the year.
Yeah, I mean, it would have been slightly better because what we talked about with some of the deals that slipped were the more of the seven digit one. So then the quantity wasn't necessarily a huge thing there. So we really executed extremely well and some of the deals that have the smaller sizes and we didn't see the impact there as much as the very large deals that were in them.
<unk>.
Got it thank you so much.
Our next question is from Colin Canfield with Barclays. Please proceed with your question.
Hey, Good evening, guys can you talk a little bit about kind of consumer consumption appetites within your customers.
Kind of a trend that we're looking at it it seems like there's a lot of kind of movement towards multi vendor data sources and you know obviously it helps the customer to kind of have one geospatial analytics Tech staff to work through so maybe if you can kind of talk about.
Consumption of its data and end.
You know the level of multi vendor solutions that your customers are pursuing.
So theres.
There's a lot to unpack there.
The number of customers that are looking for overlapping data that say a combination of all of our SAR imagery with that I'm married time RF tracking solution. He's actually very focused on the defense side. So if you look at it of course.
From a number of customers' perspective, it is actually not massive.
Of course, when you look at the budgets that those customers have it is it is actually potentially quite large, but I think people often underestimate overestimate. This oh I want like everything combined and delivered to me.
This is what we actually see our lobs is customers want data as easy and as simply as smoothly to be integrated into their existing dash, but since solutions as possible.
So we see a lot off the latter and we see a little bit of off the former we do see customers they want to double up.
Quite honestly in our field given you know the the leadership position that we have in the data that we collect customers might take a secondary data source, but very often we are their primary even though they're only data source given the.
You know advantage has in terms of coverage latency refresh rate accuracy that.
We provide over anything which might be also available. If there is anything also available.
Got it and just within the context of kind of the that's sort of a joint platform I appreciate that it's not a large percentage of revenues now but over time, you expect kind of a more exquisite customer acquisition customer acquisition appetite. So within the construct that you just kind of put out their leadership with data can you just talk about kind of the maturity of.
Your your geospatial analytics platform and to the extent that you're providing that level of analytics on up sell or is it more of the upsell on the quality of the data.
Oh, no. It's absolutely the upsells that are happening are on the we call. It smart data and predictive data elements. So that clean data is kind of like the entrance door. The data that we have cannot be found by any other means then through a life satellite constellation and very often lead to.
Can only be found and then adequate coverage and accuracy and and revisit rate from spire, but then really where the where the drive a filing that retention rate comes in is adding value added packages I think we talked about our fortune 100 customer that we signed in <unk>.
Our ability to add the basic dataset with predictive solutions like E. T. A when will the vessel arrived in a certain location.
Really made us a win that very very competitive account. So it is absolutely. The analytics platform you know we always have.
Talked about them expanding our weather prediction capabilities from the more you know plain vanilla seven days to 15 days, which allows additional use cases in particular in the logistics and supply chain again that is the additional capability on the raw data driven by anything.
From data fusion and big data analytics to AI and machine learning when you make really smart predictive tools for customers. So that they can make better decisions about their business.
Got it I appreciate the color.
Yeah.
We have reached the end of the question and answer session and I will now turn the call over to CEO , Peter <unk> for closing remarks.
As we wrap up I would like to thank God, nearly 700 customers close to 400 employees and numerous suppliers for partnering with us as we continue our substantial growth trajectory.
Without our customers employees and business partners, we would not be where we are today on a daily basis news remind us that the shocks of climate change and geopolitical events shake the often fragile world in which we live.
With our data and solutions, we strive to provide transparency and stability to that world.
September 16th marks our 10 year anniversary and what an amazing decade it has been.
Yet I could not be more excited about the prospects for spire over the next 10 years and beyond as we hear Steves chops famous call to make a dent in the universe and work together to create a more sustainable equitable and prosperous future right here on <unk>.
Canada.
This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.
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