Q3 2023 Spire Global Inc Earnings Call

Speaker 1: The day ladies and gentlemen, and welcome to the Spire Global Third Quarter, 2023 Conference Call. Our host for today's call is Ben Hackman, Head of Investor Relations.

Good day, ladies and gentlemen, and welcome to the spire global third quarter 2023 conference call.

Our host for today's call is been Hackman head of Investor Relations. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session.

Speaker 1: At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. I would now like to turn the call over to your host, Mr. Hackman, the floor's yours.

I would now like to turn the call over to your host Mr. Heckmann the floor is yours.

Speaker 2: Thank you. Hello, everyone, and thank you for joining us for our third quarter 2023 earnings conference call. Our earnings press release and SEC filings can be found on our IR website at ir.spire.com. A replay of today's call will also be made available. With me, on the call today is Peter Placer, CEO , and Leo Basola, TFO.

Thank you Hello, everyone and thank you for joining us for our third quarter 'twenty to 'twenty three earnings conference call. Our earnings press release, and SEC filings can be found on our IR website at IR Dot spire dotcom.

A replay of today's call will also be made available with me on the call today is Peter plots or C. E O N Leo Masala CFO.

Speaker 2: As a reminder, our commentary today will include non-GAP items. Reconciliation between our GAP and non-GAP results, as well as our guidance, can be found in our earnings press release and in our investor presentation, both of which can be found on our IR website at ir.spire.com.

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 and in our Investor presentation, both of which can be found on our IR website at IR aspire Dot com.

Speaker 2: Some of our comments today may contain forward-looking statements that are subjects to risks, uncertainties, and assumptions.

Some of our comments today may contain forward looking statements that are subject to risks uncertainties and assumptions.

Speaker 2: In particular, our expectations around our results of operations and financial conditions are uncertain and subject to change.

Particular, our expectations around our results of operations and financial conditions are uncertain and subject to change.

Speaker 2: Should any of these expectations fail to materialize, or should our assumptions prove to be incorrect, actual company results could differ materially from these forward-looking statements?

Should any of these expectations failed to materialize or should our assumptions prove to be incorrect actual company results could differ materially from these forward looking statements.

Speaker 2: 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.

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 Matt.

Speaker 3: The third quarter was yet another quarter of strong revenue growth and steady progress to its profitability.

Third quarter was yet another quarter of strong revenue growth and steady progress towards profitability spine and ninth quarter, two our consecutive uninterrupted record of revenue growth since becoming public. Additionally, we exceeded expectations by delivering more revenue than anticipated.

Speaker 3: Spire added a ninth quarter to our consecutive uninterrupted records of revenue growth since becoming public.

Speaker 3: Additionally, we exceeded expectations by delivering more revenue than anticipated while continuing to drive operational leverage and increase non-gap cross margins to nearly 70%.

While continuing to drive operational leverage and increased non-GAAP gross margins to nearly 70%.

Speaker 3: We are holding firm an hour now near-term timeline to profitability as becoming operating cash-flow positive, adjusted EBITDA positives, and free cash-flow positives remain some of the most important near-term objectives for Spire.

We are holding firm on our now near term timeline to profitability is becoming operating cash flow positive adjusted EBITDA positive and free cash flow positive remain some of the most important near term objectives for spire.

Speaker 3: Leo will talk more about this in his section, but I am very excited about producing our own cash. And that means we can start looking into activities like paying down debt, buying back shares or investing for even more growth.

We'll talk more about this in his section, but I am very excited about producing our own cash and that means we can start looking into activities like paying down debt buying back shares or investing for even more growth.

Speaker 3: Additionally, in the coming weeks, we're looking forward to a significant launch that will allow us to provide new data and insights to continue our sustainable growth.

Additionally, in the coming weeks, we're looking forward to a significant launch.

Allow us to provide new data and insights to continue our sustainable growth.

Speaker 3: The Transporter 9 mission will carry 11 Lima satellites aloft, largely for four of our space services customers, and enable an expected recurring multi-year revenue street.

The transports at nine mission will carry 11 Lima satellites aloft largely for four of our space services customers and enable an expected recurring multiyear revenue stream.

Speaker 3: customers continue to turn to fire for our comprehensive space services solution, making it easier for them to implement and benefit as space sliders.

Customers continue to turn to spire for our comprehensive space. So this is solution, making it easier for them to implement and benefit our space strategy.

Speaker 3: The demand for spire solutions continues to be grounded in two large-scale secular trends. Climate change and global.

The demand for <unk> solutions continues to be grounded into large scale secular trends climate change and global security challenges geopolitical events like the recent conflicts have once again highlighted the importance of information and transparency in DIFM.

Speaker 3: geopolitical events like the recent armed conflict have once again highlighted the importance of information and transparency in difficult times.

<unk> times.

Speaker 3: And the rapid intensification of hurricane autists reminds us of the scale and speed at which climate change is occurring.

And the rapid intensification of Hurricane Otis reminds us of the scale and speed and with climate change is occurring.

Spire is global constellation is providing insights that inform decision makers and increase the safety for people across the world.

Speaker 3: Spires global consolation is providing insights that informed decision makers and increase the safety for people across the world.

Speaker 3: Our solutions continue to be highly sought after in these dynamic times.

Our solutions continue to be highly sought after in these dynamic times.

Speaker 3: The market for weather data continues to be large and funding directed at addressing climate change continues to grow rapidly.

The market for weather data continues to be large and funding directed at addressing climate change continues to grow rapidly.

Speaker 3: The weather forecasting services market is a multi-billion dollar market that is projected to grow approximately 50% over the next five.

The weather forecasting services market is a multibillion dollar market that is projected to grow approximately 50% over the next five years. The U S Department of Homeland Security announced a climate resilience funding initiative with 3 billion aiming to fund projects that.

Speaker 3: The U.S. Department of Homeland Security announced a climate resilience funding initiative with three billion, aiming to fund projects that help communities prepare for extreme weather events.

Communities prepare for extreme weather events.

Speaker 3: And after spending billions of dollars in recent years, rebuilding infrastructure impacted by extreme weather events like floods and hurricanes, the US Department of Defense is seeking proposals for commercial products with unique data sources, production-grade models for extreme weather forecasting, and the necessary tooling to ingest, fuse, and leverage pre-existing sources and models.

And after spending billions of dollars in recent years rebuilding infrastructure impacted by extreme weather events like floods and hurricanes. The U S Department of defense is seeking proposals for commercial products with unique data sources production great model for extreme weather forecasting.

And the necessary tooling to ingest fuse and leverage preexisting sources and models.

Speaker 3: These are all areas respire has a significant capability in office.

These are all areas respire has a significant capability and offering.

Speaker 3: We are excited to help the DUD in its desire to enable US government stakeholders to conduct risk analysis and near-term planning by considering future environmental facts.

We are excited to help the DVD and its desire to enable U S government stakeholders to conduct risk analysis and near term planning by considering future environmental factors.

Speaker 3: Additionally, the United States FY23 budget includes nearly $45 billion to address the climate crisis.

Additionally, the United States FY2023 budget includes nearly $45 billion to address the climate crisis.

Speaker 3: to support these critical initiatives given our passionate work for more than a decade to develop capabilities that help countries, communities, and corporations successfully tackle the impact of climate change on our lives and business.

<unk> is well positioned to support these critical initiatives given our passionate work for more than a decade to develop capabilities that help countries communities and corporations successfully tackle the impact of climate change on our lives and businesses.

Speaker 3: As businesses and organizations continue to be ever more aware of the risk and cost associated with severe weather, they are increasingly eager to find solutions to reduce that risk and cost.

As businesses and organizations continue to be ever more aware of the risks and cost associated with the b or whether they are increasingly eager to find solutions to reduce that risk and cost.

Speaker 3: Some of this demand is for new technologies and capabilities that can deliver new insights like our recent award of a 12 months 4.6 million dollar contract to develop a microwave sounder on behalf of NOAA.

Some of this demand is for new technologies and capabilities that can deliver new insights like our recent award of a 12 months $4 6 million dollar contract to develop and microwave sounder on behalf of Noah.

Speaker 3: According to NOAA, microwave sounders provide the highest impact data to input into weather forecast models due to their ability to capture temperature and water vapes.

According to NOAA microwave found us provide the highest impact data to input into weather forecast models due to their ability to capture temperature and water vapor. These.

Speaker 3: These models inform daily forecasts and help plan for extreme weather.

These models inform daily forecast and help plan for extreme weather.

Speaker 3: We have seen additional demand signals that stand from our land and expand straight.

We have seen additional demand signals that stem from our land and expand strategy.

Speaker 3: Wildfires are top of mind given the immense size of Canadian wildfires this summer and the recent resurgence of wildfires in California.

Wildfires are top of mind, given the immense size of Canadian wildfires. This summer and the recent resurgence of wildfires in California.

Speaker 3: In June , we announced an agreement with Aurora Tech to build, launch, and operate their sensor and an orbit AI machine learning platform on a further eight-spire satellites dedicated to fighting a wildfire.

In June we announced an agreement with Aurora attack to build launch and operate their sensor and on orbit AI and machine learning platform on a further eight spire satellites dedicated to fighting wildfires.

Speaker 3: We were able to expand our relationship with Aurora Tech after they successfully operated a precursor sensor in orbit on a spire satellite.

We're able to expand our relationship with Aurora attack. After they successfully operated a precursor sensor in orbit on S via satellite.

Speaker 3: This demonstration exceeded expectations and is now serving as an active fire monitoring instrument for customers across the globe.

This demonstration exceeded expectations and he is now serving as an active fire monitoring instrument for customers across the globe.

Speaker 3: Once the eight satellites are operational, it will represent the first and largest constellation of satellites dedicated to tracking and monitoring wildfires.

Once the <unk> satellites are operational it will represent the first and largest constellation of satellites dedicated to tracking and monitoring wildfires.

Speaker 3: Additionally, we see customers buying new types of data for the first time.

Additionally, we see customers buying new types of data for the first time.

Speaker 3: Spire received nearly $3 million 12-month contract from NOAA for Ocean Surface Win Speed Data.

<unk> received the nearly $3 million 12 months contracts from NOAA, the ocean's surface wind speed data.

Speaker 3: Spire will provide NOAA with global navigation specialized system Reflectometry Observation Data in near real time.

Spire will provide Noah with global navigation satellite system reflect hometree observation data in near real time.

Speaker 3: The initiative directly addresses the agency's critical need for more precise global sea surface wind measurements, essential for applications like hurricane tracking, marine weather forecasts, ocean current analysis, and climate studies.

Key initiatives directly addresses the agency's critical need for more precise global sea surface wind measurements essential for applications like hurricane tracking marine weather forecast Ocean current analysis and climate studies.

Speaker 3: But I also successfully competed to be part of a $476 million NASA IDRQ contract together with six other companies.

Spy also successfully compete it to be part of a $476 million neither idea Q contract together with six out of companies.

Speaker 3: Under this contract, we will provide NASA with our comprehensive catalogue of Earth observation data that can improve global weather forecasting accuracy and be used for climate research.

Under this contract we will provide <unk> with our comprehensive catalog of Earth observation data they can improve global weather forecasting accuracy and be used for climate research spy.

Speaker 3: Spire has one of the highest temporal resolution data offerings due to our large satellite constellation, as well as one of the most diverse data catalogs arising from the flexibility of our RF sensors in capturing a wide range of Earth intelligence and essential climate variable data.

Aspire has one of the highest temporary resolution data offerings due to our large satellite constellation as well as one of the most diverse data catalogs and rising from the flexibility of our RF sensors, and capturing a wide range of Earth intelligence and essentials.

Climate variable data gaining.

Speaker 3: gaining access to this contract vehicle is important for winning new task orders under the contract.

Gaining access to this contract vehicle is important for winning new task orders under the contract.

Speaker 3: Today, over 90 countries have committed to net zero CO2 emission targets, recognizing that increased CO2 content in the atmosphere is a powerful contributor to global warming.

To date over 90 countries have committed to net zero C. O two emissions targets recognizing that increased C. O two content in the atmosphere is a powerful contributor to global warming.

Speaker 3: Recent studies have estimated the aviation and maritime industries are each responsible for approximately 2 to 3% of global CO2 emissions.

Studies have estimated the aviation and maritime industries are each responsible for approximately 2% to 3% of global C. O two emissions.

Speaker 3: beyond the impact of climate change, McKinsey and company estimates the shipping industry, which uses over 200 million metric tons of fuel annually can decrease fuel consumption by 1% to optimize vessel execution and performance management mechanisms, utilizing automatic identification system radius signals or AOS for short and weather data for route maps.

Beyond the impact of climate change Mckinsey and company estimates the shipping industry, which uses over 200 million metric tonnes of fuel annually can decrease fuel consumption by 1% to optimize vessel execution and performance management mechanisms utilize.

<unk> automatic identification system radio signals or are asked for short and whether data what routes mapping.

Speaker 3: and often close to $1,000 per metric ton of fuel and creating over three tons of CO2 for each ton of fuel burned, these savings can make a massive difference.

And also close to $1000 per metric ton of fuel and creating almost three tons of cotwo for each ton of fuel burned. These savings can make a massive difference.

Speaker 3: And in some cases, customers utilizing spire data have seen even larger savings, which can translate into tens or hundreds of millions of euros saved per year and reductions in the thousands or millions of tons of equivalent CO2 emissions.

And in some cases customers utilizing spiced data have seen even larger savings, which can translate into tens of hundreds of millions of euros saves per year and reductions in the thousands or millions of tons of equivalent in C. O two emissions.

Speaker 3: We are seeing continuous demand from the large and growing segment of companies that leverage data to help the world economy reduce its carbon footprint.

We are seeing continued demand from the large and growing segment of companies that leverage data to help the world economy reduce its carbon footprint.

Speaker 3: This portion of the ecosystem is wide and varied and contains around 4,000 potential customers from vessel owners to shipping lines, to ship management companies.

This portion of the ecosystem is wide and varied and contains around 4000 potential customers from vessel owners to shipping lines to ship management companies.

Speaker 3: Customers like Man Energy Solutions are looking to reduce the impact of emissions and optimize marine equipment for integrating SPIRE, EOS, and weather data into its digital, monitoring, and advisory solutions to provide improved performance, maintenance scheduling, and decarbonization insight.

Customers like Mad LNG solutions are looking to reduce the impact of emissions and optimize marine equipment by integrating spire E&S and weather data into its digital monitoring and advisory solutions to provide improved performance maintenance scheduling and de carbonization in.

Speaker 3: Similarly, as to where monitors and analyzes aviation emissions, including CO2, non-CO2, and air-trip life cycle.

Similarly, as to way of monitors and analyzes aviation ambitions, including C. O two non C O two aircrafts lifecycle effects.

Speaker 3: By integrating SPIRE data into its products, Estuair is able to provide precise and up-to-date analysis of flight routes, enabling the company and its customers to analyze and ultimately reduce aviation emissions.

By integrating spire data into its product.

The way our is able to provide precise and up to date analysis of flight routes, enabling the company and its customers to analyze and ultimately reduce aviation emissions.

Speaker 3: Spire submission, since its founding, has been to make a positive impact on climate.

Spire submission since its founding has been to make a positive impact from climate change.

Speaker 3: We are immensely proud of the work we've done for our customers to date. And the continued progress we expect to make in the years and decades ahead.

We are immensely proud of the work we've done for our customers to date and the continued progress we expect to make in the years and decades ahead.

Speaker 3: Turning now from top-line growth to bottom-line improvement, we are consistently looking at ways to fine-tune our business model, which already has high operational leverage.

Turning now from top line growth to bottom line improvement we are consistently looking at ways to fine tune, our business model, which already has high operational leverage.

Speaker 3: One of such metrics we utilize to measure our progress is ARR and revenue per customer.

One such metrics, we utilize to measure our progress is ear art and revenue per customer.

Speaker 3: There is a certain amount of indirect costs that must be expanded to acquire and service a customer.

There is a certain amount of indirect costs that must be expanded to acquire and serve as a customer.

Speaker 3: In many cases, there is not a meaningful amount of difference required between servicing a smaller revenue contract and a six-digit revenue contract.

In many cases, there is not a meaningful amount of difference required between servicing a smaller revenue contract and a six digit revenue contract.

Speaker 3: Having a large number of customers with smaller contracts will require more resources in customer service, billing, collections, and legal contracting than the same amount of revenue generated from a smaller number of six-digit or higher contract customers.

A large number of customers with smaller contract will require more resources and customer service billing collections and legal contracting than the same amount of revenue generated from a smaller number of six digit or higher contract customers.

Speaker 3: With this mindset, Spire is actively focusing now on cross-selling and up-selling solutions to customers that recognize the value of the data and insight Spire can provide, while de-emphasizing sales to customers with very low ARR or revenue.

With this mindset spire is actively focusing now on cross selling and Upselling solutions to customers that recognize the value off the data and insight spire can provide.

Deemphasizing sales to customers with very low ear. Our revenue. We expect this strategy to increase our E. R. R and revenue per customer increased our E. R. In total and reduce our customer count as we drive to what's the most efficient use of our resources.

Speaker 3: We expect this strategy to increase our ARR and revenue per customer, increase our ARR in total, and reduce our customer count as we drive towards the most efficient use of our resources.

Speaker 3: This is one of many initiatives we are embarking on as we seek to extract more value out of our existing infrastructure and in turn increase the positive impact we have in the world by helping larger customers adapt and improve their service offerings and business models.

This is one of many initiatives we are embarking on as we seek to extract more value out of our existing infrastructure and in turn increase the positive impact we have in the world by helping larger customers adapt and improve their service offerings and business model.

Speaker 3: As we approach the end of the year, I could not be prouder of the accomplishments the SPIRE team has achieved in a year marked by a challenging business environment. We have been relentless and moved faster to capture opportunities. We were unbounded when obstacles arose that required us to adjust our business and plan.

As we approach the end of the year I could not be prouder of the accomplishments. The spire team has achieved in a year marked by a challenging business environment. We have been relentless and moved fast to capture opportunities, we were unbounded and obstacles to rose rock.

Quiet us to adjust our business and plans we have remained reliable in delivering business results in particular with regards to our path to profitability.

Speaker 3: We have remained reliable in delivering business results, in particular with regards to our path to profitability.

Speaker 3: all while helping our customers tackle truly global challenges and opportunities.

All while helping our customers tackle truly global challenges and opportunities.

Speaker 3: I could not be more excited about spires, prospects for positive operating cash flow, positive adjusted EBITDA and positive free cash flow in the near future. The impactful ways we intend to deploy the cash we expect to generate. And our continued sustainable growth over the long term as we remain focused on our mission of improving life on Earth with data and insights that can only be collected from space. And with that, I'll turn it over.

I could not be more excited about spires prospects for positive operating cash flow positive adjusted EBITDA and positive free cash flow in the near future. The impactful ways, we intend to deploy the cash we expect to generate and our continued sustainable growth over the long term.

As we remain focused on our mission of improving life on Earth with data and insights that can only be collected from space.

And with that I'll turn it over to Leo.

Thank you Peter we had another strong quarter of execution as we progress on our path towards profitability and positive free cash flow generation.

Speaker 4: Thank you, Peter. We had another strong quarter of execution as we progress on our path towards profitability and positive free cash flow generation.

Speaker 4: For the third quarter in a row, we exceeded the top end of our revenue guidance with Q3 revenues of $27.3 million. This represented 34% growth year over year and was the ninth consecutive quarter of growth above 30% on a year-over-year basis.

For the third quarter in a row, we exceeded the top end of our revenue guidance with Q3 revenues of $27 3 million.

This represented 34% growth year over year and was the ninth consecutive quarter of growth above 30% on a year over year basis gross margins expanded to 65% when he got basis and 69% on a non-GAAP basis, an improvement of about 15 percentage points over Q3 'twenty to 'twenty two.

Speaker 4: Pros margins expanded to 65% on a gap basis and 69% on a non-gap basis. An improvement of about 15 percentage points over Q3 2022 on a gap basis and 14 percentage points on a non-gap.

When he got basis, and 14 percentage points on a non-GAAP basis, our operationally leveraged business model across our four solutions continues to translate into strong gross margin accretion because we then they've grown ourselves targets on March towards our targeted gross margins in the low to mid seventies.

Speaker 4: Our operationally leveraged business model across our four solutions continues to translate into strong gross margin accretion as we deliver on our sales targets and march towards our targeted gross margins in the low to mid 70s.

Speaker 4: ARR at quarter end was 103.1 million, which reflects a previously announced radio occultation or ROO order renewal that we were not awarded by our largest weather customer during the last bidding process.

A R. R. At quarter end was $103 1 million, which reflects the previously announced radio of irritation or R O or their renewal that we were not awarded by our largest whether customer during the last bidding process.

Speaker 4: We have very close relationships with this customer and have one new contract with them this court.

We have very close relationships with this customer and have won new contracts with them this quarter.

Speaker 4: This relatively large RO contract is only one of many contracts we have with.

This relatively large R. O contract is only one of many contracts we have with them. We are a proven provider of high quality R. O data with a strong delivery of record and look forward to participating in the upcoming bid for our own data with this customer before year end.

Speaker 4: We are a proven provider of high quality ROD data with a strong delivery record and look forward to participating in the upcoming bid for ROD data with this customer before ERA.

Speaker 4: Let me make a quick side note here. At 103 million, we missed our ARR guidance by 5 million in Q323. However, most of that variance was driven by a contract with NASA or a microwave sander that Peter mentioned earlier.

Let me make a quick side note here at $103 million, we missed our guidance by $5 million in Q3 23.

However, most of that variance was driven by a contract with NASA or microwave sound there that Peter mentioned earlier.

Speaker 4: We anticipated this contract would include a follow-up commitment for continued services, but that ended up not being the case. We won the 4.6 million order as we shared publicly, but we could not count that towards ARR in the quarter, given our stringent definition.

We anticipated. This contract will include a followup commitment for continued services, but that ended up not being the case, we won the $4 6 million or there as we shared publicly but we could not count that towards a or are in the quarter given our stringent definitions.

Speaker 4: Given our past experience with these kind of orders, we remain optimistic about future service orders in continuation of this country.

Given our past experience with these kind of orders, we remain optimistic about future service or theirs in continuation of this contract I think it's also important to point out that.

Speaker 4: I think it's also important to point out that at the end of the third quarter, we had over 200 million of remaining performance obligations that have not yet been recognized as revenue. You can find this information on our point three of the notes to our non-independent financials of our Q3, 10Q4.

But at the end of the third quarter, we had over 200 million of remaining performance obligations that have not yet been recognized as revenue you can find this information on a 0.3 of the notes to our unaudited condensed financials of our Q3 10-Q filing.

Speaker 4: This creates a good line of sight regarding a meaningful amount of contractually committed future risk.

This creates a good line of sight regarding a meaningful amount of contractually committed future revenues.

Speaker 4: We had 827 ARR solution customers at the end of the quarter. Through the end of the third quarter, we have added 94 net ARR solution customers here to date. Q3 ARR net retention rate was 86%. Reflecting the previously discussed missed renewal for the RO sales over there in July .

We had 827, a or our solution customers at the end of the quarter through the end of the third quarter. We have added 94 net are our solution customers year to date.

Q3, our net retention rate was 86%, reflecting the previously discussed Miss renewal for the R. O sales over there in July.

Speaker 4: rolling 12 months organic ARR net retention rate as of the end of the third quarter was 103%. Reflecting a net retention rate that continues to exceed 100%.

The rolling 12 months organic era net retention rate as of the end of the third quarter was 103%, reflecting a net retention rate that continues to exceed 100%.

Speaker 4: Next I'll be discussing non- GAAP financial measures unless otherwise.

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 Investor presentation.

Speaker 4: We have provided a reconciliation of gap to non- GAAP financial s in our earnings release and investor presentation, both of which are available in our investor relations website and should be reviewed in conjunction with the earnings call.

Of which are available on our Investor relations website and should be reviewed in conjunction with this earnings call.

Speaker 4: A Q3 operating loss was within our expected range at 6.2 million and reflects an improvement of 5.2 million or 45% year over year. Operating margin was negative 23% for the quarter and represents a 33% percentage point operating margin improvement year over year.

Our Q3 operating loss was within our expected range at $6 2 million and reflects an improvement of $5 2 million or 45% year over year.

Operating margin was negative 23% for the quarter and represents a 33 percentage point operating margin improvement year over year.

Speaker 4: I just did a bid for the third quarter. It came in at negative 3.4 million or negative 12% of revenues. It was also within our expected range.

Adjusted EBITDA for the third quarter came in at negative $3 4 million or negative 12% of revenues and was also within our expected range.

Speaker 4: This result reflects a significant year over year advancement on our path to profitability.

This result reflects a significant year over year advancement on our path to profitability.

Speaker 4: Adjusted EBITDA improved 5 million or 60% over the same period a year ago, and the adjusted EBITDA margin improved 29% points.

Adjusted EBITDA improved $5 million or 60% over the same period, a year ago and the adjusted EBITDA margin improved 29 percentage points.

Speaker 4: Let's now move to the balance sheet and specifically our cash position. We ended the quarter with cash, cash equivalents, restricted cash and short-term marketable securities of over $50 million.

Let's now move to the balance sheet and specifically our cash position. We ended the quarter with cash cash equivalents restricted cash and short term marketable securities of over 50 million.

Speaker 4: We continue to see our cash used in operating activities improve sequentially. We finished Q3 by utilizing $5.1 million of operating cash, including approximately $4 million of debt interest payments.

We continue to see our cash used in operating activities improved sequentially with finished Q3 by utilizing $5 1 million of operating cash, including approximately $4 million of debt interest payments.

Speaker 4: This is down from the 11.3 million we used in Q2 2023, which reflects a 54% improvement quarter over quarter.

This is down from the $11 3 million, we used in Q2, 2023, which reflects a 54% improvement quarter over quarter.

Speaker 4: Similarly, cash used in operations in Q322 was 10.2 million.

Similarly cash used in operations in Q3, 22 was $10 2 million.

Speaker 4: This improved performance year over year and sequentially quarter over quarter gives us confidence in our stated goal of generating positive operating cash flow in Q4 of 2020.

This improved performance year over year and sequentially quarter over quarter gives us confidence in our stated goal of generating positive operating cash flow in Q4 of 2023.

Speaker 4: Regarding our current debt and interest payments, we believe our credit profile and rating is better now than what we're currently paying for.

Regarding our current debt and interest payments, we believe our credit profile and rating is better now than what we're currently paying for it.

Speaker 4: When our loan was taken out six quarters ago, Spire was in a very different financial position.

We're not alone was taken out six quarters ago spire was in a very different financial position, we were burning roughly $20 million of cash at quarter end, we were two years away from being free cash flow positive with significantly less a R. R.

Speaker 4: We're burning roughly 20 million of cash a quarter and we were two years away from being free cash flow positive, which significantly less ARR.

Speaker 4: Over the last two quarters we have made significant progress in reducing our operating losses and improving our margins.

Over the last two quarters, we have made significant progress in reducing our operating losses and improving our margins we expect to.

Speaker 4: We expect to generate positive operating cash flow from operations next quarter, along with lower spirer-funded caps.

Generate positive operating cash flow from operations next quarter, along with lower spire funded capex.

Speaker 4: We believe this makes Spire attractive to more traditional lenders and we have already begun to cultivate relationships that might improve our funding costs.

We believe this makes spire attractive to more traditional lenders and we have already begun to cultivate relationships that might improve our funding costs. We expect that we will need several quarters of positive results to refinance our loan but it is our goal to reduce our debt interest costs, we do not intend to hold our current loan too much.

Speaker 4: We expect that we will need several quarters of positive results to refinance our loan, but it is our goal to reduce our debt interest costs. We do not intend to hold our current-

Alrighty.

To achieve our cash goals, we have deployed sensible cash and working capital best practices. They include diligent and timely billing and collections renegotiation of vendor payment terms with key suppliers and on time delivery of critical milestones in our pre space Allied services offerings.

Speaker 4: To achieve our cash goals, we have deployed sensible cash and working capital best practice.

Speaker 4: They include diligent and timely billing and collections, re-negotiation of vendor payment terms with key suppliers, and on-time delivery of critical milestones in our pre-space allied services offerings. Nothing other than focused X-

Nothing other than focused execution and daily management.

Speaker 4: Let me turn now to CapEx to clarify some important concepts associated with our business model. Our CapEx is...

Let me turn now to Capex to clarify some important concepts associated with our business model.

Our Capex is split in two main components. The first is spires reinvestment capex to maintain our satellite manufacturing and testing facilities to replenish our fully deployed constellation of satellites and ground stations that support our data and analytics businesses.

Speaker 4: The first is Spires Reinvestment CapEx to maintain our satellite manufacturing and testing facilities to replenish our fully deployed constellation of satellites and ground stations that support our data and analytics business.

Speaker 4: We have previously disclosed that we spend about 10 to 12 million a year on this.

We have previously disclosed that we spend about $10 million to $12 million a year on this we.

Speaker 4: We have continued to optimize this portion of our investment capital bill, and expect to continue to reduce this to five to seven million on an annual cash flow basis over the coming years.

We have continued to optimize this portion of our reinvestment Capex Bill and expect to continue to reduce this to $5 million to $7 million on an annual cash flow basis over the coming years.

This would result in lower depreciation cost flowing into our cost of revenue, which in turn would be a lever to enhance our gross margins in the future.

Speaker 4: This would result in lower depreciation cost flowing into our cost of revenue, which in turn will be a lever to enhance our gross margins in the future.

Speaker 4: The second main component of CapEx is associated with our space services business.

The second main component of Capex is associated with our space services business.

Speaker 4: These cash flows are generally offset by customer payments and can vary quarter to quarter. Depending on the orders and the amount of build we're deploying for our customer.

These cash flows are generally offset by customer payments and can vary quarter to quarter, depending on the orders and the amount of build we're deploying for our customers. We may see $8 million of Capex in one quarter 3 million of Capex in the next and 11 million and another well let me briefly explain how this works in a space services.

Speaker 4: We may see 8 million of copies in one quarter, 3 million of copies in the next, and 11 million in another. Well, let me briefly explain how this works.

Speaker 4: In a space services deal, the first 12 to 18 months are typically what we call the pre-space portion of the deal.

Neil the first 12 to 18 months are typically what we call the pre space portion of the deal.

Speaker 4: During pre-space, we designed the integration of the payload of the customer's mission into our own bus and satellite form factory.

During free space, we design the integration of the payload of the customer's mission into our own bus and satellite form factor.

Speaker 4: We assemble and test those units. We achieve flight worthiness and integrate the finished product into a deployer that will be used during launch.

We assemble and test those units, we achieved flight worthiness and integrate the finished product into a deploy here that will be used during launch.

Speaker 4: We also coordinate the launch and place the satellites in functioning order when they get to orbit.

We also coordinate the launch and places satellites and functioning or their when they get to orbit.

Speaker 4: a subscription contract, accommodate for fees charged to our customers to fund these activities.

Our subscription contracts accommodate for fees charged to our customers to fund these activities, hence pre space Capex is largely funded by customer billings.

Speaker 4: Hence, free space capex is largely funded by custom mobility.

Speaker 4: Receipts and payments do not always perfectly match month to month or even quarter to quarter. However, typically over the pre-space portion of the deal, we are paid for what we spend.

Seats in payments do not always perfectly much month to month or even quarter to quarter. However, typically over the pre space portion of the deal we are paid for what we spend.

Speaker 4: Since fire retains full ownership of the satellites, we capitalize all non-RND expenses of pre-space as fixed assets or PPNE. The past two quarters have had elevated pre-space capics, as we built a significant number of assets to be launched soon as Peter discussed.

So inspire retains full ownership of the satellites, we capitalized all non R&D expenses of pre space as fixed assets or a P. P. Any if.

The past two quarters have had elevated pre space capex as we built a significant number of assets to be launched soon as Peter discussed.

Speaker 4: Looking to next quarter, we expect CapEx to moderate to approximately 8 million.

Looking to next quarter, we expect capex to moderate to approximately $8 million.

Speaker 4: Well after pre-space, the data provision portion of the contract starts. The assets we built allow us to secure a 3 to 5 year data subscription with Billings and Revenue streams from the data these assets produce.

Well after a pre space.

The data provision portion of their contracts start.

The assets, we built allow us to secure a three to five year data subscription with billings and revenue streams from the data. These assets produce that depreciation expense from those assets match the revenue that emerges from that from those contracts generating a predictable and levels gross margin performance.

Speaker 4: Then appreciation expense from those assets match the revenue that emerges from those contracts, generating a predictable and leveled gross margin performance.

Speaker 4: Not turning to our outlook for the fourth quarter and the full fiscal year of 2020.

Now turning to our outlook for the fourth quarter and the full fiscal year of 2023.

Speaker 4: But the fourth quarter we expect revenues to range between 27 million and 31 million with the midpoint of 29 million as we continue to execute our plans.

For the fourth quarter, we expect revenues to range between 27 million and $31 million with a midpoint of $29 million as we continued to execute on our plan.

Speaker 4: We are increasing the midpoint of our full year guidance by half a million dollars to a hundred and seven million with a range between one of five and one on nine million dollars.

We are increasing the midpoint of our full year guidance by half a million dollars to 107 million with a range between one five and $109 million.

Speaker 4: Despite the misofive million in Q3, we expect ARR to range between 125 million and 135 million, and ARR solution customers to range from 800 to 830. The ARR solution customer guidance incorporates our plans to increase our ARR per-

Despite the Miss of $5 million in Q3, we expect a R. R. The range between $125 million and $135 million and air solutions customers to range from 800 to 830. The E. R. R solution customer guidance incorporates our plans to increase our a R. R.

Customer.

Speaker 4: We expanded the range of outcomes of ARR, and acknowledging that we have a few large potential deals in Q4 that make the outcome slightly more unsu-

We expanded the range of outcomes of a R. R. I noted that we had a few large potential deals in Q4 that make the outcome slightly more uncertain.

Speaker 4: Given the operational leverage, we're continuing to see across our headcount and infrastructure, we anticipate fourth quarter non-gap operating loss to range between 7.5 million and 3.8 million, which is a 4.6 million or 45% improvement year over year at the mid-

Given the operational leverage we're continuing to see across our head count and infrastructure, we anticipate fourth quarter non-GAAP operating loss to range between $7 5 million and $3 8 million, which is a $4 6 million or 45% improvement year over year at the midpoint.

Speaker 4: For the full year, we expect non-GAP operating loss to range between 29.7 million and 26 million, an improvement of 1.7 million at the midpoint versus the guidance given in all.

For the full year, we expect non-GAAP operating loss to range between $29 7 million and 26 million an improvement of $1 7 million at the midpoint versus the guidance given in August.

Speaker 4: Adjusted EBDA for the fourth quarter is expected to range from negative 3 million to positive 1 million, which represents an improvement of 6.3 million or 86% year-to-year at the

Adjusted EBITDA for the fourth quarter is expected to range from negative $3 million to positive 1 million, which represents an improvement of $6 3 million or 86% year over year at the midpoint.

Speaker 4: For the full year, we're expecting a range from negative 16.1 million to negative 12.1 million. This represents an improvement of 1.4 million at the midpoint versus the guidance given in August .

For the full year, we're expecting a range from negative $16 1 million to negative 12.1 million. This represents an improvement of $1.4 million at the midpoint versus the guidance given in August.

We expect our non-GAAP loss per share for the fourth quarter.

Speaker 4: We expect our non-gap loss per share for the fourth quarter.

Speaker 4: The range from negative 62 cents to negative 42 cents.

To range from negative 62 cents to a negative 42 cents, which assumes a basic weighted average share count of approximately 28 million shares.

Speaker 4: which assumes the basic weighted average share count of approximately 20.8 million shares.

Speaker 4: We are improving our non-gap loss pressure guidance for the year by shy of 10 cents at the midpoint, with a range from negative $2.45 to negative $2.24, which assumes a basic weighted average share count of approximately 19.6 million shares.

We are improving our non-GAAP loss per share guidance for the year by shy of 10 cents at the midpoint with a range from negative $2.45 to negative $2.24, which assumes a basic weighted average share count of approximately $19 6 million shares.

Speaker 4: Given our continued execution, we continue to expect cash flow from operations to turn positive in the fourth quarter. Adjusted EBITDA to turn positive in the first or second quarter of 2024. And we expect to reach positive free cash flow in the second or third quarter of 2022.

Given our continued execution, we continue to expect cash flow from operations to turn positive in the fourth quarter adjusted EBITDA to turn positive in the first or second quarter of 2024, and we expect to reach.

Positive free cash flow in the second or third quarter of 2024.

Speaker 4: Thanks for joining us today. Now I would like to open up the call for questions.

Thanks for joining us today now I would like to open up the call for questions.

Speaker 1: If you have a question at this time, please press star then the number one on your telephone key pass.

If you have a question at this time. Please press Star then the number one on your telephone keypad.

Speaker 1: Once again, to ask a question at this time, please press star then the number one on your telephone keeping.

Once again to ask a question at this time. Please press Star then the number one on your telephone keypad.

Speaker 1: Your first question comes from Austin Moller with Canacord. Your line is open. seven.

Your first question comes from Austin Moeller with Canaccord. Your line is open.

Hi, good afternoon Peter.

Hey, Allison.

Speaker 5: So just my first question here. Within the quarter, are you able to talk about the percentage of ARR solution customers that were associated with weather, relative to maritime or global security?

So just my first question here within the quarter.

Are you able to talk about the percentage of AOR, our solution customers that were associated with weather relative to maritime or global security.

Speaker 3: We do not break this out of this point in time. Often, partially because there are some customers which comes to multiple solutions from us. We are looking into finding ways to point to that a little bit more in the future. Is there something particular you are trying to learn? So because maybe there is a different question that I can buy.

We do not break this out at this point in time.

Austin, a partially because there are some customers, which consume multiple solutions from us.

And we are looking into in to finding ways to point to that a little bit more in the future is there something particular, you are trying to learn because maybe there is a different question that I can answer.

Speaker 5: Sure, maybe a second question. Can you talk about the quality of the imagery for wildfire monitoring collected by the Leo satellites so you're building with a raw attack relative to perhaps imagery that you might be able to collect from a surveillance plane?

Sure maybe a second question can you talk about the quality of the imagery for wildfire monitoring collected by the the Leo satellites, you're building with the war attack relative to perhaps imagery that you might be able to collect from our surveillance plane.

Yes, so ed.

As we the all space based products versus aviation products that tradeoff is coverage and response time and the cost associated with it of course, when you fly a plane I'm older I wildfire directly you will have higher resolution imagery right, but you might actually have a bit of a more difficult.

Speaker 3: Of course, when you fly a plane over a wildfire directly, you will have higher resolution imagery, right? But you might actually have a bit of a more difficult time getting the right perspective.

<unk> time getting the rights perspective.

Speaker 3: And then you have to dispatch a plane to learn from somewhere when you know that something is happening.

And then you have to dispatch a plane to lounge from somewhere when you know that something is happening.

Speaker 3: So using planes for early detection is very, very tricky or very, very costly and is often not the preferred method. People try to use other kind of means often to have an early warning system.

And using planes for early detection is very very tricky or very very costly and is often not the preferred method.

People try to use other kind of means Austin have.

I have an early warning system I think the power off out of the system from aspire Neurohr attack is the global coverage that as we are adding more assets to it and as you as you've heard.

Speaker 3: I think the power of the system from spy on the Rorotech is the global coverage that as we are adding more assets to it and as you've heard, you know, building the world's first dedicated constellation for wildfire, monitoring, early detection, and then resource allocation to fight wildfires.

Building the world's first dedicated constellation for wildfire monitoring early detection and then resource allocations, you'll find wildfires is the.

Speaker 3: is the global coverage area and the ability to detect things before you find out on the ground.

Global coverage area and the ability to detect thing.

Before you find out on the ground is all of them, particularly.

Speaker 3: It's all the particularly once there is a fire flying over those fires with smoke and the high turbulence is not necessarily the safest and easiest thing versus what you can do from space.

Once there is a fire flying over those fires with smoke Andy and then I know high turbulence is not necessarily the safest and easiest thing versus what you can do from space.

Speaker 3: So I'm extremely excited about the capabilities that Aurora Tech and Spire bring to bear here, the combination of AI and machine learning now being pushed onto the spacecraft, given the super compute power capabilities that the Spire lemur spacecraft has, combined with the Spire weather forecast and capabilities from a soil moisture to wind forecast to temperature forecast.

I'm extremely excited about the capabilities that are all intact and spire, bringing to bear here the combination of AI and machine learning not being pushed onto this spacecraft given the supercomputing power capabilities that this fire a lemur spacecraft has combined with this mild weather.

For constant capabilities from our soil moisture to win for a constant temperature forecast I think is really starting to put together a package that amit humanity and our customers with a very very powerful weapon to tackle that manage the wildfires that unfortunately is impacting more and more countries community.

Speaker 3: I think it's really starting to put together a package that arms humanity and our customers with a very, very powerful weapon to tackle that man as a wildfire that unfortunately is impacting more and more countries, communities, and people.

And people.

Speaker 5: Great, that's very exciting. And then just to follow up from Leo, did you say that your expectations for 2024 CAF X was 8 million?

Great that's very exciting and then just a follow up.

Leo did you say, but your expectations for 'twenty 'twenty, four capex was $8 million.

Speaker 4: for the fourth quarter of 2023. We're still not providing guidance from 24, but once we close Q4, we will give you some guidance on that.

For the fourth quarter of 2023, we're still not providing guidance on 'twenty four but once we close Q4, where we will give you some guidance on that.

Okay, great. Thank you.

Speaker 1: Your next question comes from Eric Rasmussen with Steeple. Your line is open.

Your next question comes from Erik Rasmussen with Stifel. Your line is open.

Speaker 6: Yeah, thanks so for taking the questions and congrats on the steady results, especially on the profitability.

Yeah, Thanks for taking the questions and congrats.

The steady results, especially on the profitability.

Speaker 6: Thank you. Maybe just, you should, you should, maybe just on the NASA IDIQ Award. How should we think about Spires Opportunity and potential given there are other, six other who have been named in that award? How do you separate yourself to potentially win a higher share of this award?

Thanks, Eric maybe just sure maybe just on the NASA idea IQ Award.

How should we think about.

Spires opportunity and potential given there are other six other who has been named and that award how do you separate yourself to potentially win a higher share of this award.

Yeah.

Speaker 3: Well, I mean, I can't tell you exactly how we are thinking about it other than, you know, we're quite excited about it. I mean, it's certainly a quite sizable award here. But when you think about it from a customer's perspective, what is the customer looking for? You know, one thing that is irrelevant for the customer is high temporal resolution of the data, which basically means you need to have a large number of spacecraft.

Well I mean, I can't tell you exactly how.

How we are thinking about it other than we are quite excited about it I mean, it certainly a quiet sizable.

Awards here, but when you think about it from a customer's perspective, what is the customer looking for you know one thing that is irrelevant for their customized high temporal a resolution of the data.

Basically mean, you need to have a large number of spacecraft.

Speaker 3: Someone has to go and run the actual numbers, but I think Spire might have more spacecraft than the other awardees combined. We have a very, very substantial spacecraft a contingent on orbit. So I think that's the first one, right? The next one that the custom is looking for is for a broad set of data.

And someone has to go and run the actual numbers, but I think.

Spire might have more space than in the other award. These are combined we have a very very substantial spacecraft.

Contingent on orbit. So I think that's the first one right. The next one that the customer is looking for is for.

Broad set of data.

Speaker 3: Not just one or two things, but a broad set of data that describes the Earth's environment and helps them monitoring everything from whether to climate, to space weather, to other kind of areas.

Not just you know one or two things, but a broad set of data that describes the Earth's environment and helps them monitoring everything from weather to climate to space whether to other kind of areas now aspire is known for having the world's largest multi purpose constellation that has the ability to bring down.

Speaker 3: Now, Spire is known for having the world's largest multi-purpose constellation that has the ability to bring down a large number of very, very diverse data fans.

A large number of very very diverse data sets. So we have the temperature datasets from our R. O. You have I don't think these measurements from raising angle you have soil moisture measurement from DNS and are you have ocean surface wind speeds all of the from Genesis rehab space, whether measurements right. We have a new contract wherever you are.

Speaker 3: So we have the temperature data sets from our RO. We have altitude measurements from grazing angle RO. We have soil moisture measurements from GNS and R. We have ocean surface wind speeds, all the from GNS and R. We have space weather measurements, right? We have a new contract where we provide images from our start trackers, given that we have so many satellites in a very, very interesting data point with regards to space situation awareness.

Provide images from us not on track is given that we have so many satellites and a very very interesting data point with regards to space situational awareness. There is a data source without either relationship which is micro space debris on orbitz and the and the list goes on and on and on so spire has a very very broad.

Speaker 3: There is a data source for the Out-Adler relationship, which is microspace debris on orbit. And the list goes on and on.

Speaker 3: So Spire has a very, very broad set of data that makes us really excited about being able to solve not just one or two use cases for the customer and the PI, the principal investigators that this customer supports, but many, many broad sets of customers and these.

Of data that makes us really excited about being able to so not just one or two use cases for the customer and the pis. The principal investigators that these customers supports but many many broad set of customers and use cases.

Speaker 6: Right, thanks. That's helpful. And maybe just this speaks to maybe the growth. Obviously it's been pretty impressive, but you had to make some adjustments given the macro challenges you faced. But what is the current view from your customer base? Are you getting the right signals where you can maybe be more aggressive on the sales front to achieve even higher growth rates?

Great. Thanks, that's helpful and then maybe just.

This speaks to maybe the growth obviously, it's been you know pretty pretty impressive but.

You had to make some adjustments given the macro challenges you faced.

But what is the current view from your customer base are you getting the right signals, where you can maybe be more aggressive on the sales front to achieve even higher growth rates.

Speaker 3: You know, I think overall, I wish I could say that the world is getting calmer and more peaceful, but unfortunately that is not quite the case.

I think overall I wish I could say that the world is getting calmer and more peaceful.

But unfortunately that is not quite the case.

Speaker 3: And the big macro trends that we have based our product on, you know, over a decade ago, climate change, extreme weather and global security continue to dominate headlines.

And the big macro trends that we have based our our products on over a decade ago climate change extreme weather and global security continued to dominate headlines.

Speaker 3: And as such, we continue to see very, very high demand for the products that you provide.

And and as such we continue to see very very high demand for the products that we provide and they start to know encompasses not just you know the more obvious areas right.

Speaker 3: And they start to now encompass not just, you know, they're more obvious areas, right? Maritime aviation, weather, maritime weather, and space services, but also we started to see this in aviation.

The maritime aviation, where their maritime whether and space services, but also we started to see this in aviation.

Speaker 3: You know, we talked about in the past how aviation due to COVID, you know, was a little bit of a smaller segment for us, but recently has picked up tremendously, you know, starting with the, with the contract we talked about recently, Yuri Aloe, for independent air traffic surveillance of GPS.

We talked about in the past how aviation due to Covid. It was a little bit of a smaller segment for us, but recently has picked up tremendously starting with the with the contract we talked about Ah recently urea Allo four independent air traffic surveillance of GPS.

Speaker 3: constellations to geolocate civilian aircraft through a constellation and that multilateral or RF geolocation off those aircraft Independent of any kind of a GMS GPS jamming or interference of degradation or denial in certain areas

Installations to Geo locate civilian aircraft to a constellation that multilateral or RF geolocation off those aircrafts are independent of any kind of <unk>, GPS jamming or interference a degradation of denial in certain areas.

Speaker 3: And generally speaking, the air traffic control is absolutely as its limit as air traffic continues to grow actually now. And it's now reaching and starting to reach beyond the pre-COVID level.

And generally speaking.

And the air traffic control is absolutely limit as air traffic continues to grow actually now and he is now reaching and starting to reach beyond the pre COVID-19 levels. So there is an absolutely massive demand for making more use.

Speaker 3: So there is an absolutely massive demand for making more use of that limited resource.

That limited resource.

Speaker 3: You know, whenever you find that there is a limited resource that is like an economic vessel into a country, you know, people get very, very creative in squeezing the last bit of efficiency out of that vein. Be that in the early days where we got ever more creative in using phone lines for fast internet speed, you know, or how we now getting ever more creative in using different modulation schemes to get more and more bandwidth out of frequency spectrum as it becomes a scarce resource, the same thing is happening with with maritime shipping ways and with the aviation ways.

Whenever you find that there is a limited resource that is like that.

Cannot make lot vessel into a country people get very very creative and squeezing the last bit of efficiency out of that they can be that and in the early days wherever you go evermore creative and using phone line for faster Internet speed or how we now are getting ever more creative and using.

And different modulation schemes to get more and more bandwidth out of frequency spectrum as it becomes S. Gas resource. The same thing is happening with maritime shipping ways and with the aviation ways, where traffic is starting to overwhelm I would say a more pedestrian simple way of managing edge and more.

Speaker 3: where traffic is starting to all around, I would say a more pedestrian, simple way of managing it and more data, more insights, more tracking, further away from any effort or in harbor is needed.

Data more insights more tracking further away from any effort or in harbor its need it. So that we can oh, we can do this right.

Speaker 7: so that we can do this.

Speaker 7: Right? I think overall we see a lot of that land and expand a strategy working for us.

I think overall, we see a lot of that land and expand our strategy working for us on our data side, we just talked about that but all of the on the on this space services side right now more and more customers are coming to us in expanding there.

Speaker 3: On our data side, we just talked about that, but also on the space services side, where now more and more customers are coming to us in expanding their number of assets that they want on orbit from one or two to four or eight. You just heard me talk about mild fires, but we had a couple other customers in this quarter, GHG-1 for example, which is also expanding dramatically because the global demand for these types of solutions keeps on rising rapidly.

A number of assets that they want on orbit from one or two to four eight you just heard me talk about wildfires, but we had a couple of other customers.

In this quarter DHT. One for example, which is also expanding dramatically because the global demand for these types of solution keeps on rising rapidly.

Speaker 8: Great Thanksgiving.

Great. Thanks.

Speaker 1: The next question comes from Rick Prentice with Raymond James. Your line is open.

Your next question comes from Ric Prentiss with Raymond James Your line is open.

Thanks, Good afternoon everybody.

No.

Speaker 9: A couple quick questions. One, appreciate you're looking at the cash and the working capital policies. What do you think you need kind of an enormous basis cash to run the business? Would you like to see the balance this day?

Okay.

A couple of quick questions. One appreciate your.

Looking at the cash and the working capital policy.

Do you think you heard them on a normal basis.

Costs to run the business what would you like to see the balances stay out.

Speaker 4: Yeah, so I think that the balance will remain between 40 and 50 million dollars for the foreseeable future.

Yeah. So I think that the balance will remain between 40 and $50 million for the foreseeable future. So we talked about Q4 being a operating cash flow positive quarter with about $8 million of Capex. So we're gonna be landing gear and north of $40 million of cash.

Speaker 4: So we talked about Q4 being an operating cash flow positive quarter with about $8 million of capital.

Speaker 4: So we're gonna be landing year end north of 40 million hours of cash.

Speaker 4: going forward and as we described there is two components of cash right so we talked about the the spire cash for replenishment of our assets and our fully deployed constellation but then on top of that we have the pre-space

Going forward and as we described there is two components of cash right. So we talked about the the spire cash replenishment of our assets and are fully deployed constellation, but then on top of that we have the pre space Capex that we have that is mostly funded by our customers. So you need to think about that as <unk>.

Speaker 4: Capac that we have that is mostly funded by our customers.

Speaker 4: So you need to think about that as timing, right? So you may see a month or a quarter with a peak on receiver walls and a peak on capex that kind of come hand in hand, but very shortly after we'll receive the cash from the customers to really fund those cash outlay.

<unk> right. So you may see a month or a quarter, where their peak on receivables and at peak on Capex that kind of come hand in hand, but very shortly after we received the cash from the customers to really find those cash outlays. So generally speaking I don't expect that the cash flow to really swing more than maybe 10.

Speaker 4: So generally speaking, I don't expect the cash flow to really swing more than maybe 10 million dollars to 15 million dollars of where we sit right now as of today.

And to that $10 million to $15 million of where we sit right now as of today.

Speaker 9: I appreciate you all looking at your debt because you could get better rates so you're in a different situation where you're at if you put up several four of the positive results. But remind us what the new current that has as far as covenants and requirements on ALR and yet I am about that.

I appreciate you all looking.

It won't you.

Mhm, you get better rates different situations, where that is.

Several quarters of positive results.

Remind us what the new parent that has as far as covenants.

The other items out there.

Speaker 4: Yeah, so the negotiation with Blutorch was very interesting. They were very open and we had a very good relationship with them as we were negotiated the deal with them. actively we have reduced some of the covenants that we had before. So you know this was triggered basically by an ARR covenant that we missed in July .

So so the negotiation with Blue Torch was very interesting and they were very open and we had a very good relationship with them is as we were we negotiated the deal we have with them.

Actively we have reduced some of the covenants that we that we had before right. So you know the strict where this was triggered basically by an a or our covenant that would that we missed in July. So we were able to lower our air Covenant all the way through June which is when we say when we shift from a R. R to EBITDA and we think we are fairly.

Speaker 4: So we were able to lower our ARR covenant all the way through June , which is when we should shift from ARR to EBITDA. And we think we are fairly covered with those, because they allowed us to put the covenants where we expect to have a comfortable buffer for ARR and for EBITDA going forward.

Covered with with those because they allowed us to put our you know the the covenants, where we expect to have a comfortable buffer.

For <unk> and for EBITDA going forward.

Speaker 4: From a cash standpoint, we have a minimum liquidity covenant that was increased from 25 million dollars to 30 million dollars. And again, as I mentioned before, we feel we have significant amount of buffer to operate with the level of cash that we have at the moment.

From a cash standpoint, we have a minimum liquidity covenant that was increased from $25 million to $30 million and again as I mentioned before we feel we have significant amount of buffer to operate with a level of cash that we have at the moment plus the cash improvements that I discussed earlier on in the call. So we are act.

Speaker 4: plus the cash improvements that I discussed earlier on in the call. So we are actively putting in place a working capital cash flow actions, which is really block and tackle.

<unk>, putting in place I'm, working capital and cash flow actions, which is really block and tackle it.

Speaker 4: you know, it's really a playbook that you can have for most industrial settings where you work on receivables, you work on payables, you work basically on your inventory management, and that in itself would free up a significant amount of cash. And then as I said, from a capex standpoint, we think we have a very good plan and a very good strategy in terms of our design of our contracts, where most of the capex that you see for pre-space, which people may look into, you're spending 20 million dollars of capex, what's going on, what's going on is I'm set.

It's really a playbook that you can have for most industrial settings, where you work on receivables you work on payables you work basically on your inventory management and that in itself would free up a significant amount of cash and then as I said from a capex standpoint, we think we had a very good plan and a very good strategy in terms of our design of our contracts where most.

The Capex that you see for pre space, which people may look into into that like all your spending $20 million of capex, what's going on well, what's going on as I'm setting up.

Speaker 4: a paycheck for four years, right, with assets that I'm building. And by the way, the customers are helping us fund these deployments, right, of the assets in the pre-space portion of the deal.

Paycheck for four years, right with assets that I'm building and by the way the customers are helping US fund. These deployments write up the assets and the pre space a portion of the deals.

Speaker 4: So I feel very comfortable that our cash position is way sufficient for us to continue to operate without any problems going forward.

So I feel very comfortable about it that our cash position is.

Wei sufficient for for us to continue to operate without any any problems going forward.

Okay.

Good day.

Thank you.

Speaker 1: Your next question comes from the line of Jeff Mueller with Baird. Your line is open.

Your next question comes from the line of Jeff Mueller with Baird. Your line is open.

Okay.

Speaker 10: Yeah, thank you for seeing Balagun for Jeff. Any commentary can give around how sales fix or trending. It's kind of like last quarter things were stabilizing. Just how that's evolving, whether new business or the late and experienced strategy.

Yes, Thank you seemed polygon for job.

Any commentary you can give around how sales thinks we're trending it sounded like last quarter things were stabilizing.

Just how about your evolving whether new business or a blend and extend strategy.

Speaker 3: Well, I mean, I don't know, we just, we just delivered more revenue than we thought we would deliver. We just came in and rise to revenue guidance for, for the full year.

Well I mean, I don't know, we just we just delivered more revenue than we thought we would deliver we just came in and raise the revenue guidance for <unk> for the full year.

Speaker 7: I don't know what else to tell you. I think it's going pretty well.

I don't know what else to tell you I think it's going pretty well.

Speaker 7: We see customers coming to us both from a, you know, new customer perspective.

And we see customers coming to us both from a if I may.

A new customer perspective, and we see customers coming prosper more which is always a great sign from an expense perspective, we see customers coming to us.

Speaker 3: And we see customers coming for us for more, which is always a great sign from an expense perspective. And we see customers coming to us.

Speaker 3: Some lines with very, very large contracts, you know, unfortunately related, awesome to imminent negative events, speeded on the climate side or speed on the global security side, that we get to monetize very quickly, even though we don't talk them up immediately as ARR, because they're now coming in very quickly, even though we feel very confident, they will eventually turn into very large, often multi-year ARR contracts.

Sometimes with very very large contract.

Unfortunately related Austin too.

And negative events be it on the climate side or be it on the mobile security side that we got to monetize very quickly even though we don't talk them off immediately as they are because there are now coming in very quickly.

Even though we feel very confident they will eventually turn into very large multiyear contracts. So I would say.

Speaker 7: So I would say the underlying premise that we had a long time ago that

Underlying primary is that we had a long time ago that.

Speaker 3: Climate change, extreme weather and global security is going to continue to be a secular, massive trend that is exponential and a describing demand that is impacting massive portions of the global economy and creating a tens, there's not hundreds of billions dollar markets for companies to operate in, continues to be absolutely true.

Climate change and extreme weather and global security G is gone there continued to be a secular massive trend that is exponential and it is driving demand that is impacting massive portions of the global economy.

And trading and tens if not hundreds of billions of dollar markets for companies to operate in continues to be absolutely true. I mean, you know we have set out a profitability targets almost two years ago now way before wars happened before inflation happened before extreme risk cabin before a whole bunch.

Speaker 3: I mean, you know, we have set out a profitability target almost two years ago now, way before wars happened, before inflation happened, before extreme risk happened, before a whole bunch of things happened, and we have been able to hold that course without any deviation. And on the margin, half delivered better profitability results, almost every single quarter, because of the diversified nature of our portfolio. We're not in one trick pony.

Are things happened and we have been able to hold that course without any deviation in on the margin have delivered better profitability results almost every single quarter because of the diversified nature of our portfolio, we're not a one trick pony.

Speaker 3: And you have a balanced book, you know, 55% commercial, 45% government roughly, right? You know, we have at least four different solutions, aviation, maritime, weather, space services, night at R.J.L. to it, that is all supported from one single shared infrastructure that we get to monetize in many, many ways.

A balanced book, you know, 55% commercial 45% government roughly right.

At least four different solution aviation maritime whether its space services, neither our jail to it that is all supported from one single shared infrastructure that would be get to monetize in many many ways.

Speaker 7: And that has allowed us to keep on growing at a rapid pace and improve our profitability and an even more rapid pace. So I don't want to tell you, I think the numbers speak for themselves when it comes to how is the growth going and how is the prospect from that perspective.

That has allowed us to keep on growing at a rapid pace and improve our profitability and an even more rapid pace.

I don't want to tell you I think I think the numbers speak for themselves. When it comes to how is the growth going and how is the how does the prospects from that perspective.

Speaker 10: appreciate that and I hear you on these ARR per customer strategy. I guess just how are you balancing

I appreciate that and on.

I hear you on these sort of the IRR per customer.

Strategy.

I guess, just how are you balancing.

Speaker 10: achieving that with not leaving customers at the table. And then as far as the Salesforce goes, is just a change in priority, or is there a change in the sense of, they come to it on that.

But keeping that with sort of not leaving customers at the table and then as far as the sales force I was it's just a change in priority or is there like a change of incentive.

Any commentary on that.

Speaker 3: It is a changing strategy, right? But I mean, Spire has one of its six values to be collaborative. And that is not just how we operate and turn the new with each other, but that is how we operate with all of our stakeholders. And first and foremost, top of the stack with our customers. So of course, we will never let our customers in the dark, right? We know they're bullied.

It is it changing strategy right, but I mean spire has as one of its six values to be collaborative and that is not just how we operate internally with each other but that is how we operate with all of our stakeholders and first and foremost top of the stack with our customer.

So of course, we will nevertheless, our customers in the dark right now they are building.

Speaker 3: But we do have to look at like, okay, what is efficient for us, right? And do we maybe have to create different mechanisms for customers, maybe meet them completely self-surf and we have nothing to do with that, right? It just, we do have to take care of a customer then writes me a check for $250,000 different then for a customer that writes me a check for $2,500, right? I think that's very understandable for everyone.

But we do have to look at okay. What is sufficient for us right and do we maybe have to create different mechanisms for customers. You know, maybe maybe unique them completely self serve and we have nothing to do with that right.

We do have to take care of the customer then write me a check for $250000 difference than for a customer that writes me a check for 2500 adults right I think I think that's very understandable for everyone.

Speaker 3: And I think we also like taken over a large number of customers through the prior company that we incorporated a couple of years ago, where they've probably gone away with paying a rock bottom price for very, very high value.

And I think we also like taken over a large number of customers through throw out of the prior company that may incorporate it.

A couple of years ago, where they've probably gone away with paying a rock bottom price for very very high value.

Speaker 3: Right? You know, and that's the prerogative. That's what good customers do. You know, they find diamonds and pay for them as if it were like a crystal. Right? I think we just need to have like, you know, in some of those instances, a bit more of a fair relationship between the value of our data and the value that customers provide to us.

Right.

That's the prerogative that that's what most customers do you know they they find diamonds and pay for them as if it were you know like a crystal ball right.

I think I think we just need to have.

And some of those answers a bit more of a fair relationship between the value of our data and the value that our customers provide to us honestly I think thats just part for our business growing.

Speaker 3: Honestly, I think that's just power for a business growing and getting better. We have added a large number of customers over a short period of time. And so now you go back and you just, you know, you structure a little bit better, a little bit more profitable so that you can match the service that you provide to the customer and the value that you provide to every single customer with the value that the customer provides back to you.

And getting better we have added a large number of customers over a short period of time and so now you'll go back and you. Just you know you structured it a little bit better a little bit more profitable. So that you can match. The service that you provide to the customer and the value that you provide to every single customer with the value that the customer provides back to you.

Speaker 3: I think that's totally fair. We're not going to leave anyone in the lurch, but we need to maybe restructure things here. They're a little bit to make them more fair. Which I think in the end of the day will create better value for our customers. It will allow us to have together with and through our customers a larger positive impact on planet Earth.

I think that's totally fair I mean, I'll kind of leave anyone you know in.

In the lurch, but we need to like you know, maybe restructure things here or there a little bit to make them make them more fair, which I think in the end of the day will create better value for our customers. It will allow us to have together with them through our customers a larger positive impact on planet Earth.

Speaker 3: And I think it will please our shareholders as well as we continue to drive profitability.

And I think it will please our shareholders as well as the continued to drive profitability.

Thank you very much.

Of course.

Speaker 1: At this time, there are no further questions. This concludes today's Spire Global Third Quarter, 2023 Conference Call. Thank you for attending and have a wonderful rest of your day.

At this time there are no further questions. This concludes today's spire global third quarter 2023 conference call. Thank you for attending and have a wonderful rest of your day.

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