Q2 2024 Globalstar Inc Earnings Call

August 8, 2024

Operator: Good day, and thank you for standing by. Welcome to the Global Star Second Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 1 again. Please be advised that today's conference call is being recorded. I would now like to turn the conference over to Rebecca. FO, you may begin.

Operator: Good day, and thank you for standing by.

Operator: Welcome to the Global Star, 2nd quarter 2024 earnings conference call. At this time, all participants own of the Sononi mode.

Good day, and thank you for standing by.

Operator: 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. Please be advised that today's conference call is being recorded. I would now like to turn the conference over to Rebecca.

Speaker Change: Welcome to the Globestar Second Quarter 2024 Earnings Conference Call.

Operator: After the speaker's presentation, there'll be a question in the answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To restore your question, please press star 1-1 again.

Speaker Change: at this time all participants on of the snow mode after a speaker's presentation there'll be a question and-answer session to ask a question during the session you will need to pressstar one one on your telephone

Speaker Change: You will then hear an automated message advising your hand is raised.

Operator: Please be advised that today's conference call is being recorded.

rebe ffo: to enjore your question please press starle one one the game please be advised that today's conference call is being recorded i would now like to turn the conference over to rebe ffo you may begin

Rebecca F.O.: I would now like to turn the conference over to Rebecca F.O. You may begin.

Rebecca F.O.: Thank you, operator, and good morning, everyone. Before we begin, please note that today's call contains forward-looking statements intended to fall within the safe harbor provided under the securities laws. Factors that could cause the results to differ materially are described in the forward-looking statements and risk factors section of Global Star's SEC filings, including its annual report on Form 10-K for the financial year ending 2023 and its other SEC filings, as well as today's earnings release.

Rebecca Clary: Thank you, operator, and good morning, everyone. Before we begin, please note that today's call contains forward-looking statements intended to fall within the safe harbor provided under the securities laws. Factors that could cause the results to differ materially are described in the forward-looking statements and risk factors section of Globstar's SEC filings, including its annual report on Form 10-K for the financial year ending 2023 and its other SEC filings, as well as today's earnings release.

rebe ffo: Thank you, operator, and good morning, everyone.

Speaker Change: Before we begin, please note that today's call contains forward-looking statements intended to fall within the safe harbor provided under the securities laws.

Speaker Change: factors that could cause the results to differ materially are described in a forward-looking statements and risk factors section of global sts sec filings including its annual report on form ten -k for the financial year ending two thousand and twenty three and its other sec filings as well as today's earnings release

Rebecca F.O.: I will first cover our financial performance and outlook, then Paul review operational highlights. Global Star had a strong 2nd quarter driven by a 10% year-rear increase in total revenue, reaching a record high of $60.4 million. Service revenue increased 18%, offsetting a decline in equipment revenue, which was impacted by the timing of IoT sales. As we have discussed in the past, the operating leverage of our business leads to a much greater corresponding increase in EBITDA as service revenue grows. Supporting this point, adjusted EBITDA grew by 20% this quarter, with a margin of 54%, up from 49% in the prior year's 2nd quarter.

Rebecca Clary: I will first cover our financial performance and outlook, then Paul will review operational highlights. Globstar had a strong second quarter, driven by a 10% year-over-year increase in total revenue, reaching a record high of $60.4 million. Service revenue increased 18%, offsetting a decline in equipment revenue, which was impacted by the timing of IoT sales. As we have discussed in the past, the operating leverage of our business leads to a much greater corresponding increase in EBITDA as service revenue grows.

Rebecca Clary: I will first cover our financial performance and outlook, then Paul will review operational highlights. As we have discussed in the past, the operating leverage of our business leads to a much greater corresponding increase in EBITDA as service revenue grows. Supporting this point, Adjusted EBITDA grew by 20% this quarter with a margin of 54%, up from 49% in the prior year's second quarter. Turning to the balance sheet, we ended the quarter with $64 million of cash on hand as we continue to build liquidity ahead of milestone payments due to our next generation satellite vendors in the coming months. 95% of these costs will be recovered over the lifetime of the satellites via contractual service fees.

Speaker Change: I will first cover our financial performance and outlook, then Paul will review operational highlights.

Paul: Globstar had a strong second quarter, driven by a 10% year-over-year increase in total revenue, reaching a record high of $60.4 million.

Paul: Service revenue increased 18% offsetting a decline in equipment revenue which was impacted by the timing of IOT sales.

Paul: As we have discussed in the past, the operating leverage of our business leads to a much greater corresponding increase in EBITDA as service revenue grows.

Rebecca Clary: Supporting this point, Adjusted EBITDA grew by 20% this quarter, with a margin of 54%, up from 49% in the prior year's second quarter. Turning to the balance sheet, we ended the quarter with $64 million of cash on hand as we continue to build liquidity ahead of milestone payments due to our next generation satellite vendors in the coming months. 95% of these costs will be recovered over the lifetime of the satellite via contractual service fees.

Paul: Supporting this point, adjusted EBITDA grew by 20% this quarter with a margin of 54% up from 49% in the prior year's second quarter.

Rebecca F.O.: Turning to the balance sheet, we ended the quarter with $64 million in cash on hand as we continued to build liquidity ahead of milestone payments due to our next generation satellite vendors in the coming months. 95% of these costs are recovered over the lifetime of the satellites via contractual services. Importantly, these satellites remain on schedule with an expected first launch in 2025. Rounding out other balance sheet metrics, our leverage ratio remains healthy at three times. Our blended annual cash interest rate is favorable at around 6%, and we expect to pay minimal cash taxes due to our $1.9 billion NOL carry forward.

Speaker Change: Turning to the balance sheet, we ended the quarter with $64 million of cash on hand as we continue to build liquidity ahead of milestone payments due to our next generation satellite vendors in the coming months.

Speaker Change: Ninety-five percent of these costs are recovered over the lifetime of the satellites via contractual service fees.

Rebecca Clary: Importantly, these satellites remain on schedule with an expected first launch in 2025. Rounding out other balance sheet metrics, our leverage ratio remains healthy at three times. Our blended annual cash interest rate is favorable at around 6%, and we expect to pay minimal cash taxes due to our $1.9 billion NOL carry forward. As a reminder, our debt stack is comprised primarily of balances that are expected to be recouped from future service fees.

Speaker Change: importantly these satellites remain on schedule with an expected first launch in two thousand and twenty-five

Rebecca Clary: Rounding out other balance sheet metrics, our leverage ratio remains healthy at three times. At the midpoint of the range, our anticipated results indicate an 8% increase over 2023 total revenue. We are also raising our guidance for adjusted EBITDA margin to 53%, an increase from our previous forecast of 50%. Sorry, we guided towards 2024 being a flat year financially. We are pleased to report that is no longer the case. Because Paul is the controlling stockholder of Fireworks, SEC rules require that when Fireworks sells shares, that sale must be attributed to him.

Speaker Change: Rounding out other balance sheet metrics, our leverage ratio remains healthy at three times, our blended annual cash interest rate is favorable at around 6%, and we expect to pay minimal cash taxes due to our 1.9 billion dollar NOL carry forward.

Rebecca F.O.: As a reminder, our debt stack is comprised primarily of balances that are expected to be recouped from future services. We believe that we have a fully funded business plan and a solid foundation of contractual cash flows that are expected to grow, and we are as strong as we have ever been financially. Based on the continued momentum across our key growth categories, we are raising the low end of our revenue guidance to $235 million. At the midpoint of the range, our anticipated results indicate an 8% increase over 2023 total revenue. We are also raising our guidance for Adjusted EBITDA Margin to 53%, an increase from our previous forecast of 50%.

Speaker Change: As a reminder, our debt stack is comprised primarily of balances that are expected to be recouped from future services.

Rebecca Clary: We believe that we have a fully funded business plan and a solid foundation of contractual cash flows that are expected to grow, and we are as strong as we have ever been financially. Based on the continued momentum across our key growth categories, we are raising the low end of our revenue guidance to $235 million. At the midpoint of the range, our anticipated results indicate an 8% increase over 2023 total revenue. We are also raising our guidance for adjusted EBITDA margin to 53%, an increase from our previous forecast of 50%. During our last Investor Day two years ago, we guided towards 200, Sorry, we guided towards 2024 being a flat year financially.

Speaker Change: We believe that we have a fully funded business plan and a solid foundation of contractual cash flows that are expected to grow, and we are as strong as we have ever been financially.

Speaker Change: Based on the continued momentum across our key growth categories, we are raising the low end of our revenue guidance to $235 million.

Speaker Change: At the midpoint of the range, our anticipated results indicate an 8% increase over 2023 total revenue.

Speaker Change: We are also raising our guidance for adjusted EBITDA margin to 53%, an increase from our previous forecast of 50%.

Rebecca F.O.: During our last investor day two years ago, we guided towards 2024 being a flat year financially. We are pleased to report that is no longer the case. Expansion in our existing revenue streams and the introduction of new ones have continued to increase our profitability, and we are excited about what is to come in the balance of the year.

Speaker Change: During our last Investor Day two years ago, we guided towards 200... sorry, we guided towards...

Rebecca Clary: We are pleased to report that is no longer the case. Expansion in our existing revenue streams and the introduction of new ones have continued to increase our profitability, and we're excited about what is to come in the balance of the year. Before handing the call to Paul, one clarification on some trading activity that we have received questions about. Specifically, some of you have seen a Form 4 filing with what may have looked like a sale of Paul's personal Globstar shares. It was not.

Speaker Change: 2024 being a flat year financially. We are pleased to report that is no longer the case.

Speaker Change: Expansion in our existing revenue streams and the introduction of new ones have continued to increase our profitability and we're excited about what is to come in the balance of the year.

Rebecca F.O.: Before handing the call to Paul, one clarification on some trading activity that we have received questions about. Specifically, some of you have seen a form for filing with what may have looked like a sale of Paul's personal Globstar shares. It was not. Because Paul is the controlling stockholder of Fireworks, SEC rules require that when Fireworks sell shares, that sale must be attributed to him. In this case, the sales, the shares Fireworks was selling were shares we issued to it to support the continued development of XCOM Ran. As supported by the support services agreement, we entered into with Fireworks last year.

Rebecca Clary: Because Paul is the controlling stockholder of Fireworks, SEC rules require that when Fireworks sells shares, that sale must be attributed to him. In this case, the shares Fireworks was selling were shares we issued to it to support the continued development of XCOM RAN, as supported by the Support Services Agreement we entered into with Fireworks last year. Fireworks then sold some of these shares to Thermo, which demonstrates Thermo's continued commitment to invest in Globestar. With that, I'd like to turn the call over to Paul.

Speaker Change: Before handing the call to Paul, one clarification on some trading activity that we have received questions about.

Paul: Specifically, some of you have seen a Form 4 filing with what may have looked like a sale of Paul's personal Globstar shares. It was not.

Paul: Because Paul is the controlling stockholder of fireworks, SEC rules require that when fireworks sell shares, that sale must be attributed to him.

Paul: In this case, the shares Fireworks was selling were shares we issued to it to support the continued development of XCOM RAN, as supported by the Support Services Agreement we entered into with Fireworks last year.

Rebecca F.O.: Fireworks then sold some of these shares to Thermo, which demonstrates Thermo's continued commitment to investing Globstar.

Paul: Fireworks then sold some of these shares to Thermo, which demonstrates Thermo's continued commitment to invest in Globestar.

Paul Jacobs: With that, I would like to turn the call over to Paul. Thanks for back and it is great to be with everyone today. I have to say I am very proud of our strong second quarter performance. We exceeded expectations, and the continued momentum is feeling very positive. This quarter really highlighted Globstar's ability to enable new capabilities through our decades of operating experience and the flexibility of our network to reliably and rapidly support and deploy new technologies and services.

Paul Jacobs: Thanks Rebecca, and it's great to be with everyone today. I have to say I'm very proud of our strong second quarter performance. We exceeded expectations, and the continued momentum is feeling very positive. This quarter really highlighted Globstar's ability to enable new capabilities through our decades of operating experience and the flexibility of our network to reliably and rapidly support and deploy new technologies and services. It's been almost a year since I became CEO, so I thought it would be good to take the opportunity to discuss and update you on some of our strategic and organizational initiatives. I had hoped to provide some of this context last quarter, but of course, I wasn't able to be with you, and I appreciate all those who sent kind thoughts and wishes.

Paul: With that, I'd like to turn the call over to Paul.

Paul: Thanks Rebecca, and it's great to be with everyone today. I have to say I'm very proud of our strong second quarter performance. We exceeded expectations and the continued momentum is feeling very positive.

Paul: This quarter really highlighted Globstar's ability to enable new capabilities through our decades of operating experience and the flexibility of our network to reliably and rapidly support and deploy new technologies and services.

Paul Jacobs: It has been almost a year since I became CEO, so I thought it would be good to take the opportunity to discuss and update you on some of our strategic and organizational initiatives. I have had hope to provide some of this context last quarter, but of course, I wasn't able to be with you, and I appreciate all those who sent kind thoughts and wishes to me. We have organized ourselves now into a few categories of business, all of which leveraged the core asset of our spectrum position. These categories are consumer wholesale, consumer retail, government, commercial IoT, XCOMRAN, and N53 licensing.

Paul: It's been almost a year since I became CEO so I thought it'd be good to take the opportunity to discuss and update you on some of our strategic and organizational initiatives.

Speaker Change: I had hoped to provide some of this context last quarter but of course I wasn't able to be with you and I appreciate all those who sent kind thoughts and wishes to me.

Paul Jacobs: We've organized ourselves now into a few categories of business, all of which leverage the core asset of our spectrum. These categories are consumer wholesale, consumer retail, government, commercial IoT, Xcom, RAN, and N53 license. We've really added some great new talent to augment the team that built and operated the satellite business for so many years, and we're starting to ramp up our team in India even more to support the development and testing of new technologies and products.

Speaker Change: We've organized ourselves now into a few categories of business, all of which leverage the core asset of our spectrum position.

Paul: And these categories are Consumer Wholesale, Consumer Retail, Government, Commercial IoT, XCOM RAN, and N53 Licensing.

Paul Jacobs: We have really added some great new talent to augment the team that has built and operated this satellite business for so many years, and we are starting to ramp up our team and end-to-end more to support the development and testing of new technologies and products. We are very pleased that our wholesale services are growing in both the government and consumer sectors. We're making good progress through this proof of concept that commenced this year for a government services company. Strongly believe we'll be able to generate growth from government customers and have identified a bunch of different opportunities for doing so.

Paul: We've really added some great new talent to augment the team that's built and operated the satellite business for so many years and we're starting to ramp up our team in India even more to support the development and testing of new technologies and products.

Paul Jacobs: We're very pleased that our wholesale services are growing in both the government and consumer sectors, and we're making good progress through this proof of concept that commenced this year for our government services. I strongly believe we'll be able to generate growth from government customers and have identified a bunch of different opportunities for doing so. We are making targeted investments in our consumer retail offerings, really recognizing that there's a window of opportunity to still generate some reasonable economic returns there. While this is a mature part of our business, we've been very proud of our ability to provide consumers with safety, security, and general connectivity through those consumer products. Look at the consumer IoT business.

Paul: We're very pleased that our wholesale services are growing in both the government and consumer sectors and we're making good progress through this proof of concept that commenced this year for a government services company.

Paul: Strongly believe we'll be able to generate growth from government customers and have identified a bunch of different opportunities for doing so.

Paul Jacobs: We are making targeted investments in our consumer retail offerings, really recognizing that there's a window of opportunity to still generate some reasonable economic returns. There. While this is a mature part of our business, we've been very proud of our ability to provide consumers with safety, security, and general connectivity through those consumer products. Look at the consumer IoT business; it continues to grow, and what's really nice about the way our system works is we can make very substantial progress, testing new technologies that really improve our capabilities, and we're engaging with our existing customer base to shape how we'll roll out these capabilities.

Paul: We are making targeted investments in our consumer retail offerings, really recognizing that there's a window of opportunity to still generate some reasonable economic returns there.

Paul: While this is a mature part of our business, you know, we've been very proud of our ability to provide consumers with safety, security, and general connectivity through those consumer products.

Paul Jacobs: It continues to grow. And what's really nice about the way our system works is we can make very substantial progress, testing new technologies that, you know, really improve our capabilities. And we're engaging with our existing customer base to shape how we'll roll out these capabilities. Frankly, we've been slower to deploy some of these new capabilities than we would have liked.

Paul: Look at the consumer IoT business. It continues to grow.

Paul: And what's really nice about the way our system works is we can make very substantial progress.

Paul: testing new technologies that really improves our capabilities, and we're engaging with our existing customer base to shape how we'll roll out these capabilities.

Paul Jacobs: Frankly, we've been slower to deploy some of these new capabilities than we would have liked.

Paul Jacobs: Frankly, we've been slower to deploy some of these new capabilities than we would have liked, and that's really to ensure that, going forward, we bring products and technologies to market in a more streamlined fashion. I also want to express appreciation to our product team, which has now successfully transitioned our manufacturing into Vietnam, which should remove the impact of tariffs on our bottom line going forward. And then we've also added new channel partners that we're engaging with to expand the geographic reach of our sales team.

Speaker Change: frankly we've been slow to ploy from these new capabilities and we would have bliked

Paul Jacobs: With that, we've made significant additions now to our product development organization, both on the commercial and engineering sites, and that's really to ensure that going forward, we bring products and technologies to market in a more streamlined fashion. Our in-house engineering talent's excellent and gives us a really competitive advantage going forward. I also want to express the appreciation to our product team, which has now successfully transitioned our manufacturing into Vietnam, which should remove the impact on tariffs on our bottom line going forward. And then we've also added new channel partners that we're engaging with to expand geographic reach of our sales team.

Paul Jacobs: With that, we've made significant additions to our product development organization, both on the commercial and engineering sides. And that's really to ensure that, going forward, we bring products and technologies to market in a more streamlined fashion. Our in-house engineering talent is excellent and gives us a really competitive advantage going forward. I also want to express my appreciation for our product team, which has now successfully transitioned our manufacturing into Vietnam, which should remove the impact of tariffs on our bottom line going forward. And then we've also added new channel partners that we're engaging with to expand the geographic reach of our sales team. So that'll be a nice opportunity as well.

Speaker Change: With that, we've made significant additions now to our product development organization, both on the commercial and engineering sides. And that's really to ensure that going forward, we bring products and technologies to market in a more streamlined fashion.

Paul: Our in-house engineering talent is excellent and gives us a really competitive advantage going forward.

Paul: I also want to express the appreciation to our product team which has now successfully transitioned our manufacturing into Vietnam which should remove the impact on tariffs on our bottom line going forward.

Paul: And then we've also added new channel partners that we're engaging with to expand geographic reach of our sales team. So that'll be a nice opportunity as well.

Paul Jacobs: So that'll be a nice opportunity as well.

Paul Jacobs: So that'll be a nice opportunity as well, really demonstrating EXCOMM RAND's ability to uniquely support their mission-critical requirements. We also continue to see interest in the use of our N53 spectrum. We remain focused on building on our quite strong customer relationships to create value. And we do this by leveraging our differentiated assets of the Low Earth Orbiting Satellite Network, our Band 53 spectrum, and the XCOM RAN technology.

Paul Jacobs: We are definitely looking forward to the completion launch of the next group of satellites, and we expect those to improve capacity and add longevity to enhance our space business. Turning to the terrestrial side, we've been installing and validating XCOM ran in our customers' micro fulfillment centers, really demonstrating XCOM ran's ability to uniquely support their mission critical requirements. We're also in the midst of a government study of use cases for our XCOM technology. All goes well. We believe the XCOM ran deployments could represent a material opportunity to grow the company's revenue.

Paul Jacobs: We are definitely looking forward to the completion and launch of the next group of satellites, and we expect those to improve capacity and add longevity to enhance our space. Turning to the terrestrial side, we've been installing and validating XCOM RAN in our customer's micro-fulfillment centers, really demonstrating XCOM RAN's ability to uniquely support their mission-critical requirements. We're also in the midst of a government study of use cases for our XCOMP technology. If all goes well, we believe the XCOM RAN deployments could represent a material opportunity to grow the company's revenue.

Paul: We are definitely looking forward to the completion and launch of the next group of satellites, and we expect those to improve capacity and add longevity to enhance our space business.

Paul: Turning to the terrestrial side, we've been installing and validating XCOM RAN in our customers micro fulfillment centers.

Paul: really demonstrating XCOM RAN's ability to uniquely support their mission-critical requirements.

Paul: we're also in the midst of a government study of use cases for our excomp technology

Paul: If all goes well, we believe the XCOM RAN deployments could represent a material opportunity to grow the company's revenue.

Paul Jacobs: We also continue to see interest in the use of our N53 spectrum both in conjunction with our own XCOM ran product and independently, and we intend to demonstrate the synergies at an upcoming investor day, which we expect to hold before the end of the year. We absolutely understand that many investors highly value our terrestrial spectrum asset. Want to assure you that we do as well, and we're very careful not to encumber that spectrum without appropriate compensation. GoStar's been an invader in the connectivity industry, and this team is driven to continue to innovate new technologies and services that are synergistic with the existing asset and businesses.

Paul Jacobs: We also continue to see interest in the use of our N53 spectrum, both in conjunction with our own XCOM RAND product and independently. And we intend to demonstrate the synergies at an upcoming Investor Day, which we expect to hold before the end of the year. We absolutely understand that many investors highly value our terrestrial spectrum assets. I want to assure you that we do as well, and we're very careful not to encumber that spectrum without appropriate compensation.

Paul: We also continue to see interest in the use of our N53 spectrum, both in conjunction with our own XCOM RAN product and independently, and we intend to demonstrate the synergies at an upcoming Investor Day, which we expect to hold before the end of the year.

Paul: We absolutely understand that many investors highly value our terrestrial spectrum asset. I want to assure you that we do as well, and we're very careful not to encumber that spectrum without appropriate compensation.

Paul Jacobs: Globstar's been an innovator in the connectivity industry, and this team is driven to continue to innovate new technologies and services that are synergistic with the existing assets in the business. We remain focused on building on our quite strong customer relationships to create value. And we do this by leveraging our differentiated assets of the Woolworth Orbiting Satellite Network, our Band 53 spectrum, and the XCOM RAN technology. And as our new services ramp up, we expect shareholders will be rewarded by the significant operating leverage and limited CapEx requirements, which we expect will drive increasing margins and cash flow. So I will now turn the call back to the operator for a Q&A. Thanks.

Speaker Change: Globstar has been an innovator in the connectivity industry and this team is driven to continue to innovate new technologies and services that are synergistic with the existing assets and businesses.

Paul Jacobs: We remain focused on building on our quite strong customer relationships to create value, and we do this by leveraging our differentiated assets of the 4th orbiting satellite network, our band 53 spectrum, and the XCOM RAN technology. And as our new services ramp, we expect shareholders will be rewarded by the significant operating leverage and limited CAPEX requirements, which we expect will drive increasing margins and cash.

Paul: We remain focused on building on our quite strong customer relationships to create value. And we do this by leveraging our differentiated assets of the...

Paul: Forth Orbiting Satellite Network, our Band 53 spectrum, and the XCOM RAN technology.

Paul: And as our new services ramp,

Paul: We expect shareholders will be rewarded by the significant operating leverage and limited CapEx requirements, which we expect will drive increasing margins and cash flow.

Paul Jacobs: Well, so I will now turn the call back to the operator for Q&A. Thanks, everybody.

Speaker Change: So, I will now turn the call back to the operator for a Q&A. Thanks, everybody.

Operator: Thank you. As a reminder, if you would like to ask a question, please press star 1 on your telephone. We also ask that you wait for your name and company to be announced before you proceed with your question. One minute for the first question. And our first question will be from Mike Crawford of B. Riley Securities. Your line is open.

Operator: Thank you.

Operator: As a reminder, if you would like to ask a question, please press star one on your telephone. We saw; we also asked the two to wait for your name and company to be announced before you proceed with your question.

Speaker Change: Thank you. As a reminder, if you would like to ask a question, please press star 1 on your telephone. We also ask that you wait for your name and company to be announced before you proceed with your question.

Michael Crawford: One minute for the first question. And our first question will be coming from Mike Crawford of Be Wireless Securities. Your line is open.

Michael Crawford: Thank you. Could you just elaborate a little bit more on the product development efforts the team is doing to incorporate XCOM RAM into your private wireless networking offerings?

Speaker Change: One minute for the first question. And our first question will be coming from Mike Crawford of B. Riley Securities. Your line is open.

Paul Jacobs: Thank you. Can you just elaborate a little bit more on the product development efforts. The team is doing to incorporate XCOM RAM into your private wireless networking offering. Yeah, so we're in the process. We have the first pass of the product in working with our customer. They've asked for a few features to be added to the product, and we're in the process of doing that both on internal development and also some component of the system that we're working with third parties on as well. So there's a small amount of incremental innovation that's going on. It's mostly just product-oriented stuff.

Mike Crawford: Thank you. Could you just elaborate a little bit more on the product development efforts the team is doing to incorporate Xcon RAM into your private wireless

Unnamed: your private wireless.

Paul Jacobs: Yes, so we're in the process. We have the first pass of the product. In working with our customer, they asked for a few features to be added to the product, and we're in the process of doing that, both through internal development and also some components of the system that we're working with third parties on as well. So there's a small amount of incremental innovation that's going on. It's mostly just product-oriented stuff. It's not a science project. It's really just building out a few more features.

Unnamed: Networking offerings.

Speaker Change: Yes, so we're, I mean, we're in the process, we have the first pass of the product in

Speaker Change: In working with our customer, they've asked for a few features to be added to the product, and we're in the process of doing that, both on internal development,

Unnamed: and also some components of the system that we're working with third parties on as well. So there's a small amount of incremental innovation that's going on. It's mostly just product-oriented stuff. It's not a no-science project.

Paul Jacobs: It's not no science project.

Paul Jacobs: It's really just building out a few more features.

Paul Jacobs: And do you expect to test using band 53 as an anchor spectrum to really increase capacity of what a product can do?

Michael Crawford: And do you expect to... test using band 53 as an anchor spectrum to really increase Cassidy's understanding of what the product-

Speaker Change: It's really just building out a few more features.

Speaker Change: And do you expect to...

Speaker Change: test using band 53 as the anchor spectrum to really increase

Paul Jacobs: Yeah, so we're going to show; we expect to show before the end of the year some demonstrations around band 53 and the XCOM RAM technology, and then we'll look to be bringing a product out that incorporates a broad range of frequency bands. So we can tailor that to what the customers want.

Paul Jacobs: Yeah, so we're going to show we expect to show before the end of the year some demonstrations around band 53 and the XCOM RAN technology and then we'll look to be bringing a product out that incorporates broad range of frequency bands, so we can tailor that to what the customers want. But look, when we talk to customers about private network, I mean, it's a huge differentiator, not just to have the technology, but to have the frequency band as an anchor, and one that's guaranteed, because on a standalone basis, Xcom Labs was able to use CBRS spectrum, but it's not 100% mission critical because military can come in, or somebody higher up in the priority stack can come in, and then you don't get to use that spectrum.

Speaker Change: capacity of what the product can do.

Speaker Change: Yeah, so we're going to show, we expect to show before the end of the year some demonstrations around band 53 and the XCOM RAN technology and then we'll look to be bringing a product out that incorporates a broad range of frequency bands.

Paul Jacobs: But when we talk to customers about private network, it's a huge differentiator, not just have the technology but have the frequency band as an anchor and one that's guaranteed because on a standalone basis, XCOM Labs was able to use CBRS spectrum but it's not 100% mission critical because military can come in or somebody higher up in the priority stack can come in and then you don't get to use that spectrum. So if you're going private cellular, you definitely have a mission critical application; otherwise, you just have used Wi-Fi. So we want to make sure that we can provide really the most reliable system, and that's very differentiated for us.

Mike Crawford: So we can tailor that to what the customers want, but look when we talk to customers about private network I mean, it's a huge differentiator not just have the technology but to have the frequency band as an anchor and one that's guaranteed because

Mike Crawford: On a stand-alone basis, XCOM Labs was able to use CBRS spectrum.

Speaker Change: But, you know, it's not 100% mission critical because military can come in or somebody higher up in the priority stack can come in and and then you don't get to use that spectrum. So, you know, if you're going private cellular,

Paul Jacobs: So, you know, if you're going private cellular, you definitely have a mission critical application; otherwise, you'd just use Wi-Fi. So we wanna make sure that we can provide the most reliable system, and that's very differentiating.

Speaker Change: You definitely have a mission-critical application, otherwise you'd just have used Wi-Fi. So we want to make sure that we can provide really the most reliable system, and that's very differentiated for us.

Paul Jacobs: Okay, thank you, Paul. Just maybe want to more, what should we be looking for next with this potential government customer? Yeah, so we're in the process of doing the proof of concept with them. When they are done with that, then we'll see us move into sort of the operational phase of it and full deployment. But what's really nice is a new set of technology runs over our network; the satellites are bent pipes, so all of the technology innovation happens on the ground, so it's very easy for us to upgrade. We're doing things to make sure that the performance is what was expected, that all the compatibility between this new technology and all the other things that we're running over the network are there, and everything has been going quite well so far.

Michael Crawford: OK, thank you, Paul. Just maybe one or two more. What? Um. What should we be looking for next with this potential government customer?

Mike Crawford: OK. Thank you, Paul. Just maybe one or two more. What?

Mike Crawford: um

Speaker Change: What should we be looking for next with this potential government customer?

Paul Jacobs: Yeah, so we're in the process of doing the proof of concept with them. When they are done with that, then you'll see us move into the operational phase of it, and full deployment. But what's really nice is a new set of technology runs over our network. The satellites are bent pipes, so all of the technological innovation happens on the ground, so it's very easy for us to upgrade. We're doing things to make sure that performance is what was expected, that all the compatibility between this new technology and all the other things that we're running over the network is there, and everything's been going quite well so far. So we have high expectations for that and see no reason why we wouldn't do it, and continue to move forward.

Speaker Change: Yeah, so we're in the process of doing the proof of concept with them. When they are done with that, then you'll see us move into...

Speaker Change: the operational phase of it and full deployment. But what's really nice is a new set of technology runs over our network, the satellites are bent pipes, so all of the technology innovation happens on the ground, so it's very easy for us to upgrade.

Mike Crawford: We're doing things to make sure that performance is what was expected.

Speaker Change: that all the compatibility between this new technology and all the other things that we're running over the network are there and everything's been going quite well so far. So we have high expectations for that and see no reason why we wouldn't continue to move forward.

Paul Jacobs: So we have high expectations for that and see no reason why. and you know, continue to move forward.

Paul Jacobs: Okay, thank you.

Paul Jacobs: Okay, thank you. And then the last question is just on the replacement satellites. When... do you expect? to have your first launch window for this?

Paul Jacobs: And the last question is just on the replacement satellites. When do you expect to have your first launch window for just the new satellites? Yeah, so to be in the first half of next year that we worked to launch. And satellites are being built. The progress is being made there. Having great discussions with FCC. And yeah, so that's all moving ahead. Alright, great.

Speaker Change: Okay, thank you. And the last question is just on the replacement satellites. When...

Unnamed: Do you expect?

Speaker Change: Do you expect to have your first launch window for Discover?

Paul Jacobs: Yeah, so it'll be in the first half of next year that we look to launch. And the satellites are being built. The progress is being made there. We have great discussions with FCC. And yeah, so that's all moving ahead.

Unnamed: the new satellites

Speaker Change: Yeah, so it'll be in the first half of next year that we look to launch and satellites are being built, the progress is being made there, having great discussions with FCC, and yeah, so that's that's all moving ahead.

Michael Crawford: All right, great. Thank you very much. Thank you.

Paul Jacobs: Thank you very much. Thank you.

Operator: Thank you. If you would like to ask a question, please press star one on your telephone. And the next question today will be from Logan Lillihard of Craig-Hillam. Your line is open.

Speaker Change: All right, great. Thank you very much. Thank you.

Logan Lillehaug: If you would like to ask a question, please press star 1-1 on your telephone. And the next question today will be coming from Logan, Lillehaug of Craig Killam. Your line is open.

Speaker Change: Thank you. If you would like to ask a question, please press star 1-1 on your telephone.

Speaker Change: And the next question today will be coming from Logan Lillihard of Craig-Hillam. Your line is open.

Paul Jacobs: Hey, good morning, guys. This is Logan on for George. If we could just start with that government services contract, I just said you're in the proof of concept. Just wondering, you know, if you guys are able to kind of move through that, do you think it makes it easier to sell to maybe some other government services companies? Like, is that the necessary hurdle to maybe expand that offering? Actually, so we're having good engagement with government across the board. We have this project that we're working on with XCOM ran right now. But the thing that's actually quite exciting is that, as we've gotten closer with our government services partner, this company together, we've been brainstorming other opportunities together.

Logan Lillihard: Hey, good morning guys. This is Logan on for George.

Logan Lillihard: Maybe if we could just start with that government services contract. Obviously, you guys have said you're in the proof of concept stage. Just wondering if you guys are able to kind of move through that. Do you think it makes it easier to sell to maybe some other government services companies? Like, is that a necessary hurdle to maybe expand that offering?

Unnamed: Hey, good morning guys. This is Logan on for George. Maybe if we could just start with that government services contract. Obviously, you guys have said you're in the proof of concept.

Speaker Change: Just wondering if you guys are able to kind of move through that. Do you think it makes it easier to sell to maybe some other government services companies? Like is that a necessary hurdle to maybe expand that offering?

Paul Jacobs: Actually, we're having good engagement with government across the board. We have this project that we're working on with XCOM RAN right now.

Speaker Change: Um, actually, so we're having good engagement with government across the board. We have this project that we're working on with XCOM RAN.

Paul Jacobs: But the thing that's actually quite exciting is that as we've gotten closer with our government services partner, this company, together, we've been brainstorming other opportunities together, and there's quite a good pipeline for that. So, in some sense, yes, we want to get through this first project together and make sure we work well together. But, you know, we see an excellent opportunity going forward. And then, for sure, there's other potential with other companies that are government contractors.

Speaker Change: right now but the thing that's actually quite exciting is that as we've

Speaker Change: gotten closer with our government services partner this company

Paul Jacobs: And there's quite a good pipeline of that. So, in some sense, yes, we want to get through this first project together, make sure we work well together. But you know, we see an excellent opportunity going forward, and then for sure, there's other potential with other companies that are government contractors. And I'm sure you know it's working with the government building that channel takes time.

Speaker Change: Together we've been brainstorming other opportunities together and there's quite a good pipeline of that so

Speaker Change: In some sense, yes, we want to get through this first project together, make sure we work well together, but we see an excellent opportunity going forward. And then, for sure, there's other potential with other companies that are government contractors, and I'm sure you know.

Paul Jacobs: And I'm sure you know, it's, you know, working with the government. Building that channel takes time, so the idea of partnering with companies that have been at it for a while really is a great go-to-market path.

Paul Jacobs: So the idea of partnering with companies that have been added for a while really is a great go-to-market path for us.

Speaker Change: You know, working with the government, building that channel takes time, so the idea of partnering with companies that have been at it for a while really is a great go-to-market path for us.

Paul Jacobs: Yeah, and then maybe this one kind of quick follow-up for you, Paul. Just any commentary on the AST FCC approval earlier this week. I mean, I know they still have a few steps to go in terms of actual cellular use. I'm just wondering if you have any comments on the competitive environment, whether or not you think it's changing. Yeah, I don't think that particularly changes things. You know, it's five satellites out of, I think they were looking for 250 to run the service. And obviously, you know, it takes a lot of effort. We know well we've been running a network for decades, and you know, we are still the only ones running commercial direct to smartphone services.

Logan Lillihard: Got it. And then maybe just one kind of quick follow-up for you, Paul. Just any commentary on the AST FCC approval earlier this week? I mean, I know, I think they still have a few steps to go. In terms of actual cellular use, I'm just wondering if you have any comments on the competitive environment, whether or not you think it's changed.

Speaker Change: Got it. And then maybe just one kind of quick follow-up for you, Paul. Just any commentary on the AST FCC approval earlier this week? I mean, I know I think they still have a few steps to go.

Speaker Change: In terms of actual cellular use, but I'm just running out of time.

Paul Jacobs: Yeah, I don't think that particularly changes things. You know, it's five satellites out of, I think they were... And thanks for listening, services. So, yeah, you know, as I've said many times, that business model is an unproven business model up to this point. Providing full cellular services outside of cellular coverage areas, Globestar and Iridium went bankrupt doing that 20 years ago, and for sure, cellular networks have grown since then. So, yes, there is an opportunity for connectivity. Obviously, you know, we're showing that right now for connectivity outside of cell coverage.

Unnamed: Yeah, I don't think that particularly changes things. You know, it's five satellites out of, I think they were... For more information, or

Speaker Change: I'm wondering if you have any comments.

Speaker Change: it s pefitive environment whether

Speaker Change: it's changing

Speaker Change: yes i don't think that particularly changes things five satellites out of i think they were

Unnamed: looking for $250 to run the service, and obviously, you know, it takes a lot of effort. We know well we've been running a network for decades and, you know, we are still the only ones running commercial, direct-to-smartphone

Paul Jacobs: So, yeah, you know, as I said many times, that business model is an unproven business model to this point, providing full cellular services outside of cellular coverage areas. You know, global starting to really went bankrupt doing that 20 years ago, and for sure cellular networks have grown since then. So yes, there is an opportunity for connectivity. Obviously, you know, we're showing that right now for connectivity outside of cell coverage. Question is, what's the incremental opportunity beyond what's being provided now. And so that business model, you know, it needs to be proven. And I think for us, we're just going to continue to focus on where we've found the opportunities to, you know, generate real profitability and real revenue streams from this direct to cell business.

Speaker Change: Services. So, yeah, you know.

Speaker Change: As I've said many times, that business model is an unproven business model up to this point. Providing full cellular services outside of cellular coverage areas.

Speaker Change: Globstar and Iridium went bankrupt doing that 20 years ago, and for sure cellular networks have grown since then. So yes, there is an opportunity for connectivity, obviously, and we're showing that right now, for connectivity outside of cell coverage.

Paul Jacobs: The question is, what's the incremental opportunity beyond what's being provided now? And so that business model, you know, it needs to be proven. And I think for us, we're just going to continue to focus on where we've found the opportunities to, you know, generate real profitability and real revenue streams from this direct-to-cell business. And we keep track of everything that's going on. I've got a great team of engineers, lots and lots of experience in building new wireless technologies. So we're on it. We're definitely watching it. But, like I said, it's really about proving that there's a business model there.

Speaker Change: The question is, what's the incremental opportunity beyond what's being provided now? And so that business model, you know, it needs to be proven. And I think for us, we're just going to continue to focus on where we've found the opportunities to generate real profitability.

Operator: Good day, and thank you for standing by. Welcome to the Global Star, 2nd quarter, 2024 earnings conference call. At this time, all participants own of the Sononi mode.

Paul Jacobs: And we keep track of everything that's going on. I got a great team of engineers, lots and lots of experience in building new wireless technologies. So we're on it. We're definitely watching it. But, like I said, it's really about proving that there's a business model there.

Speaker Change: and real revenue streams from this direct to sell business and we we keep track of everything iss going on i' got a great team of engineers

Speaker Change: Lots and lots of experience in building new wireless technologies, so we're on it. We're definitely watching it. But like I said, it's really about proving that there's a business model there.

Unnamed: Yeah, that's all for me. I appreciate it, guys.

Logan Lillihard: Yeah, that's all for me. I appreciate it, guys.

Operator: Thank you. If you would like to ask a question, please press star 1-1 on your telephone. And at this time, there are no more questions in the queue. I would like to turn the call back over to Paul for closing remarks. Please go ahead. Well, thanks.

Operator: Please be advised that today's conference call is being recorded.

Logan Lillehaug: Thank you.

Unnamed: Yeah, that's all for me. Appreciate it, guys.

Operator: If you would like to ask a question, please press star one on your telephone.

Rebecca F.O.: I would now like to turn the conference over to Rebecca F.O. You may begin. Thank you, operator, and good morning, everyone.

Speaker Change: Thank you. If you would like to ask a question, please press star 1-1 on your telephone.

Operator: And if that's time, there are no more questions in the queue.

Operator: And if that's the time, there are no more questions in the queue. I would like to turn the call back over to Paul for closing remarks. Please go ahead. Well, thanks.

Paul Jacobs: I would like to turn the call back over to Paul for closing remarks. Please go ahead. Thanks, everybody, again for joining us. Like I said, when I started a great, great quarter, made a lot of progress in a lot of different areas. It's been an excellent year so far; lots of things to learn, lots of new areas to push on, lots of ways to augment the team that we have. But it's a very exciting time for us. And as we look at all the different areas that I talked about, the different business segments, we see great opportunities to drive growth in all of them.

Rebecca F.O.: Before we begin, please note that today's call contains forward-looking statements intended to fall within the safe harbor provided under the security's laws. Factors that could cause the results to differ materially are described in the forward-looking statements and risk factors section of Global Stars SEC filings, including its annual report on Form 10K for the financial year ending 2023 and its other SEC filings, as well as today's earnings release. I will first cover our financial performance and outlook then Paul review operational highlights.

Speaker Change: And at this time there are no more questions in the queue. I would like to turn the call back over to Paul for closing remarks. Please go ahead.

Paul Jacobs: Thank you everybody again for joining us. Like I said when I started, a great quarter, made a lot of progress in a lot of different areas. It's been an excellent year so far, lots of things to learn, lots of new areas to push on, lots of ways to bolster the team that we have, but it's a very exciting time for us. And as we look at all the different areas that I talked about, the different business segments,

Paul Jacobs: Well, thanks everybody again for joining us. Like I said, when I started, great.

Paul Jacobs: Great quarter, made a lot of progress in a lot of different areas. It's been an excellent year so far, lots of things.

Paul Jacobs: to learn, lots of new areas to push on, lots of ways to augment the team that we have, but it's a very exciting time for us. And, you know, as we look at all the different areas that I talked about, the different business segments,

Paul Jacobs: And so, I appreciate your support and look forward to continuing to have a lot of progress going forward. So, thanks everybody.

Paul Jacobs: We see great opportunities to drive growth in all of them, and so I appreciate your support and look forward to continuing to have a lot of progress going forward. So thanks, everybody.

Rebecca F.O.: Global Star had a strong 2nd quarter driven by 10% year-rear increase in total revenue reaching a record high of $60.4 million. Service revenue increased 18%, offsetting a decline in equipment revenue which was impacted by the timing of IoT sales. As we have discussed in the past, the operating leverage of our business leads to a much greater corresponding increase in EBITDA as service revenue grows. Supporting this point adjusted EBITDA grew by 20% this quarter with a margin of 54% up from 49% in the prior year's 2nd quarter.

Operator: Thank you for joining today's conference call. This concludes today's meeting. You may disconnect.

Operator: Thank you for joining today's conference call.

Operator: This concludes today's meeting.

Operator: You may disconnect.

Speaker Change: Thank you for joining today's conference call. This concludes today's meeting. You may disconnect.

Rebecca F.O.: Turning to the balance sheet, we ended the quarter with $64 million at cash on hand as we continued to build liquidity ahead of milestone payments due to our next generation satellite vendors in the coming months. 95% of these costs are recovered over the lifetime of the satellites via contractual services. Importantly, these satellites remain on schedule with an expected first launch in 2025. Rounding out other balance sheet metrics, our leverage ratio remains healthy at three times.

Rebecca F.O.: Our blended annual cash interest rate is favorable at around 6%, and we expect to pay minimal cash taxes due to our $1.9 billion NOL carry forward. As a reminder, our debt stack is comprised primarily of balances that are expected to be recouped from future services. We believe that we have a fully funded business plan and a solid foundation of contractual cash flows that are expected to grow, and we are as strong as we have ever been financially.

Rebecca F.O.: Based on the continued momentum across our key growth categories, we are raising the low end of our revenue guidance to $235 million. At the midpoint of the range, our anticipated results indicate an 8% increase over 2023 total revenue. We are also raising our guidance for Adjusted EBITDA Margin to 53% and increase from our previous forecast of 50%.

Rebecca F.O.: During our last investor day two years ago, we guided towards 2024 being a flat year financially. We are pleased to report that is no longer the case. Expansion in our existing revenue streams and the introduction of new ones have continued to increase our profitability and we are excited about what is to come in the balance of the year.

Rebecca F.O.: Before handing the call to Paul, one clarification on some trading activity that we have received questions about. Specifically, some of you have seen a form for filing with what may have looked like a sale of Paul's personal Globstar shares. It was not. Because Paul is the controlling stockholder of fireworks, SEC rules require that when fireworks sell shares, that sale must be attributed to him. In this case, the sales, the shares fireworks was selling were shares we issued to it to support the continued development of XCOM ran. As supported by the support services agreement, we entered into with fireworks last year. Fireworks then sold some of these shares to Thermo, which demonstrates thermo's continued commitment to investing Globstar.

Paul Jacobs: With that, I would like to turn the call over to Paul. Thanks for back and it is great to be with everyone today. I have to say I am very proud of our strong second quarter performance. We exceeded expectations and the continued momentum is feeling very positive. This quarter really highlighted Globstar's ability to enable new capabilities through our decades of operating experience and the flexibility of our network to reliably and rapidly support and deploy new technologies and services.

Paul Jacobs: It has been almost a year since I became CEO, so I thought it would be good to take the opportunity to discuss and update you on some of our strategic and organizational initiatives. I have had hope to provide some of this context last quarter, but of course, I wasn't able to be with you and I appreciate all those who sent kind thoughts and wishes to me. We have organized ourselves now into a few categories of business, all of which leveraged the core asset of our spectrum position.

Paul Jacobs: These categories are consumer wholesale, consumer retail, government, commercial IoT, XCOMRAN, and N53 licensing. We have really added some great new talent to augment the team that has built and operated this satellite business for so many years, and we are starting to ramp up our team and end-to-even more to support the development and testing of new technologies and products. We are very pleased that our wholesale services are growing in both the government and consumer sectors.

Paul Jacobs: We're making good progress through this proof of concept that commenced this year for a government services company. Strongly believe we'll be able to generate growth from government customers and have identified a bunch of different opportunities for doing so. We are making targeted investments in our consumer retail offerings, really recognizing that there's a window of opportunity to still generate some reasonable economic returns.

Paul Jacobs: There. While this is a mature part of our business, we've been very proud of our ability to provide consumers with safety, security, and general connectivity through those consumer products. Look at the consumer IoT business, it continues to grow, and what's really nice about the way our system works is we can make very substantial progress, testing new technologies that really improves our capabilities, and we're engaging with our existing customer base to shape how we'll roll out these capabilities.

Paul Jacobs: Frankly, we've been slower to deploy some of these new capabilities than we would have liked. With that, we've made significant additions now to our product development organization both on the commercial and engineering sites, and that's really to ensure that going forward, we bring products and technologies to market in a more streamlined fashion. Our in-house engineering talent's excellent and gives us a really competitive advantage going forward. I also want to express the appreciation to our product team, which has now successfully transitioned our manufacturing into Vietnam, which should remove the impact on tariffs on our bottom line going forward. And then we've also added new channel partners that we're engaging with to expand geographic reach of our sales team. So that'll be a nice opportunity as well.

Paul Jacobs: All goes well. We believe the XCOM ran deployments could represent a material opportunity to grow the company's revenue. We also continue to see interest in the use of our N53 spectrum both in conjunction with our own XCOM ran product and independently, and we intend to demonstrate the synergies at an upcoming investor day, which we expect to hold before the end of the year. We absolutely understand that many investors highly value our terrestrial spectrum asset, want to assure you that we do as well, and we're very careful not to encumber that spectrum without appropriate compensation.

Paul Jacobs: GoStar's been an invader in the connectivity industry, and this team is driven to continue to innovate new technologies and services that are synergistic with the existing asset and businesses. We remain focused on building on our quite strong customer relationships to create value, and we do this by leveraging our differentiated assets of the 4th orbiting satellite network, our band 53 spectrum, and the XCOM ran technology. And as our new services ramp, we expect shareholders will be rewarded by the significant operating leverage and limited CAPEX requirements, which we expect will drive increasing margins and cash.

Paul Jacobs: Well, so I will now turn the call back to the operator for Q&A. Thanks, everybody. Thank you.

Operator: As a reminder, if you would like to ask a question, please press star one on your telephone. We saw, we also asked the two wait for your name and company to be announced before you proceed with your question.

Operator: One minute for the first question.

Michael Crawford: And our first question will be coming from Mike Crawford of Be Wireless Securities. Your line is open. Thank you. Can you just elaborate a little bit more on the product development efforts. The team is doing to incorporate XCOM RAM into your private wireless networking offering. Yeah, so we're in the process. We have the first pass of the product in working with our customer. They've asked for a few features to be added to the product and we're in the process of doing that both on internal development and also some component of the system that we're working with third parties on as well.

Michael Crawford: So there's a small amount of incremental innovation that's going on. It's mostly just product-oriented stuff. It's not no science project. It's really just building out a few more features. And do you expect to test using band 53 as an anchor spectrum to really increase capacity of what a product can do? Yeah, so we're going to show, we expect to show before the end of the year some demonstrations around band 53 and the XCOM RAM technology and then we'll look to be bringing a product out that incorporates a broad range of frequency bands.

Michael Crawford: So we can tailor that to what the customers want. But when we talk to customers about private network, it's a huge differentiator, not just have the technology but have the frequency band as an anchor and one that's guaranteed because on a standalone basis, XCOM Labs was able to use CBRS spectrum but it's not 100% mission critical because military can come in or somebody higher up in the priority stack can come in and then you don't get to use that spectrum.

Michael Crawford: So if you're going private cellular, you definitely have a mission critical application, otherwise you just have used Wi-Fi. So we want to make sure that we can provide really the most reliable system and that's very differentiated for us.

Michael Crawford: Okay, thank you Paul. Just maybe want to more, what should we be looking for next with this potential government customer? Yeah, so we're in the process of doing the proof of concept with them when they are done with that then we'll see us move into sort of the operational phase of it and full deployment. But what's really nice is a new set of technology runs over our network, the satellites are bent pipes so all of the technology innovation happens on the ground so it's very easy for us to upgrade.

Michael Crawford: We're doing things to make sure that the performance is what was expected that all the compatibility between this new technology and all the other things that we're running over the network are there and everything has been going quite well so far. So we have high expectations for that and see no reason why, and you know, continue to move forward. Okay, thank you.

Michael Crawford: And the last question is just on the replacement satellites. When do you expect to have your first launch window for just the new satellites? Yeah, so to be in the first half of next year that we worked to launch. And satellites are being built. The progress is being made there. Having great discussions with FCC. And yeah, so that's all moving ahead.

Michael Crawford: Alright, great. Thank you very much. Thank you.

Operator: If you would like to ask a question, please press star 1-1 on your telephone.

Logan Lillehaug: And the next question today will be coming from Logan, Lillehaug of Craig Killam. Your line is open. Hey, good morning, guys. This is Logan on for George. If we could just start with that government services contract, I just said you're in the proof of concept. Just wondering, you know, if you guys are able to kind of move through that, do you think it makes it easier to sell to maybe some other government services companies?

Logan Lillehaug: Like is that the necessary hurdle to maybe expand that offering? Actually, so we're having good engagement with government across the board. We have this project that we're working on with XCOM ran right now. But the thing that's actually quite exciting is that as we've gotten closer with our government services partner, this company together, we've been brainstorming other opportunities together. And there's quite a good pipeline of that. So in some sense, yes, we want to get through this first project together, make sure we work well together.

Logan Lillehaug: But you know, we see an excellent opportunity going forward and then for sure, there's other potential with other other companies that are government contractors. And I'm sure you know it's working with the government building that channel takes takes time. So the idea of partnering with companies that have been added for a while really is a great go-to-market path for us.

Logan Lillehaug: Yeah, and then maybe this one kind of quick follow up for you, Paul. Just any commentary on the AST FCC approval earlier this week. I mean, I know I think they still have a few steps to go in terms of actual cellular use. I'm just wondering if you have any comments on the competitive environment, whether or not you think it's changing. Yeah, I don't think that particularly changes things, you know, it's five satellites out of I think they were looking for 250 to run the service.

Logan Lillehaug: And obviously, you know, it takes a lot of effort. We know well we've been running a network for decades and you know, we are still the only ones running commercial direct to smart phone services. So, yeah, you know, as I said many times, that business model is an unproven business model to this point, providing full cellular services outside of cellular coverage areas. You know, global starting to really went bankrupt doing that 20 years ago and for sure cellular networks have grown since then.

Logan Lillehaug: So yes, there is an opportunity for connectivity. Obviously, you know, we're showing that right now for connectivity outside of cell coverage question is what's the incremental opportunity beyond what's being provided now. And so that business model, you know, it needs to be proven. And I think for us, we're just going to continue to focus on where we've found the opportunities to, you know, generate real profitability and real revenue streams from this direct to cell business.

Logan Lillehaug: And we keep track of everything that's going on. I got a great team of engineers, lots and lots of experience in building new wireless technologies. So we're on it. We're definitely watching it. But like I said, it's really about proving that there's a business model there. Thank you. If you would like to ask a question, please press star one on your telephone. And if that's time, there are no more questions in the queue.

Paul Jacobs: I would like to turn the call back over to Paul for closing remarks. Please go ahead. Thanks everybody again for joining us.

Paul Jacobs: Like I said, when I started a great, great quarter made a lot of progress in a lot of different areas. It's been an excellent year so far, lots of things to learn, lots of new areas to push on, lots of ways to augment the team that we have. But it's a very exciting time for us. And as we look at all the different areas that I talked about the different business segments, we see great opportunities to drive growth in all of them. And so, appreciate your support and look forward to continuing to have a lot of progress going forward. So, thanks everybody.

Operator: Thank you for joining today's conference call.

Operator: This concludes today's meeting. You may disconnect.

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