Q3 2024 Globalstar Inc Earnings Call

[music].

Operator: Good day and thank you for standing by. Welcome to the Globostar third quarter 2024 earnings conference call.

Good day, and thank you for standing by.

Welcome to the global start third quarter 'twenty 'twenty four earnings conference call.

Operator: 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'll then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again.

At this time all participants are in a listen only mode.

After the speaker's presentation, there will be a question and answer session.

Asked a question during the session you will need to press star one one on your telephone.

Speaker Change: You will then hear an automated message advising that your hand is right to.

Speaker Change: To withdraw your question. Please press star one one again.

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

Speaker Change: Please be advised that today's conference is being recorded.

Rebecca Clary: I would now like to hand the conference over to your first speaker today, Rebecca Clary, CFO. Please go ahead.

Speaker Change: I would now like to hand, the conference over to your first speaker today, Rebecca Clary CFO.

Rebecca Clary: Please go ahead.

Rebecca Clary: Thank you, operator, and good afternoon, 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 risk factors section of GlobalStar'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 afternoon, everyone.

Rebecca Clary: 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 factor.

Rebecca Clary: Factors that could cause the results to differ materially are described in the risk factors section of Globalstar 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: Also note that management may reference EBITDA or adjust EBITDA on this call, which are financial measures not recognized under US GAAP. As required by SEC rules and regulations, these non-GAAP financial measures are reconciled to their most comparable GAAP financial measures in the earnings release, which is available on our website.

Rebecca Clary: Also note that management may reference EBITDA or adjusted EBITA on this call, which are financial measures not recognized under U S. GAAP as required by SEC rules and regulations. These non-GAAP financial measures.

Rebecca Clary: Reconciling to their most comparable GAAP financial measures in the earnings release, which is available on our website.

Rebecca Clary: Before I get into the financials, I wanted to briefly touch on the deal we announced last week and closed on Tuesday, which extends the services agreement with our largest customer. As part of the updated agreement, we will provide a new network, in addition to what we operate today, and separate from the satellite scheduled to start launching next year. An existing subsidiary of ours has been repurposed as a special purpose entity to hold the new network assets. These assets will be funded by a new prepayment agreement, as well as from the sale of 20% of the SPE's equity.

Rebecca Clary: Before I get into the financials I wanted to briefly touch on the deal we announced last week and closed on Tuesday, which extends the services agreement with our largest customer.

Rebecca Clary: As part of the updated agreement, we will provide a new network. In addition to what we operate today and separate from the satellite scheduled to start launching next year.

Rebecca Clary: And existing subsidiary of ours has been repurposed as a special purpose entity to hold the new network assets.

Rebecca Clary: These assets will be funded by a new prepayment agreement as well as from the sale of 20% of the Sce's equity.

Rebecca Clary: For clarity, this is not the equity of Globstar, Inc., the parent company. More details about these terms is provided in the 8K we filed last week, including the elements of consideration to Globstar as the service provider.

Rebecca Clary: For clarity this is not the equity of Globalstar, Inc. The parent company.

Rebecca Clary: More details about these terms is provided in the 8-K, we filed last week, including the elements of consideration to go will star as the service provider.

Rebecca Clary: Moving on to third quarter financial results. Globstar had a strong quarter driven by a 25% increase in total revenue from the third quarter of 2023, reaching a record $72 million for the quarter. Service revenue increased 28% over the same period, driven primarily by wholesale capacity revenue, including an out-of-period item totaling $7.5 million following the recognition of performance bonuses for 2023 and part of 2024. As previously discussed, the consideration under this arrangement can cause variability in our financial results. As we've discussed in the past, the operating leverage of our business leads to a much greater corresponding increase in EBITDA as service revenue grows.

Moving onto third quarter financial results Global start had a strong quarter driven by a 25% increase in total revenue from the third quarter of 2023, reaching a record 72 million for the quarter.

Rebecca Clary: Service revenue increased 28% over the same period, driven primarily by wholesale capacity revenue.

Rebecca Clary: <unk> an out of period item totaling $7 5 million following the recognition of performance bonuses for 2023 and part of 2024 as previously discussed the consideration under this arrangement can cause variability in our financial results.

Rebecca Clary: As we've discussed in the past the operating leverage of our business suites to a much greater corresponding increase in EBITDA as service revenue growth.

Rebecca Clary: During the third quarter, adjusted EBITDA increased 34% with a margin of 59%, up from 55% in the prior year's third quarter. The out-of-period item just discussed contributed to this increase in EPSA margin. Excluding this item, margin would have been in line with the prior score.

Rebecca Clary: During the third quarter adjusted EBITDA increased 34% with a margin of 15, 9% up from 55% in the prior year's third quarter.

Rebecca Clary: The out of period items, just discussed contributed to this increase in EBITA margin. Excluding this item margin would've been in line with the prior year's quarter.

Rebecca Clary: Moving to our balance sheet. We ended the quarter with $52 million of cash on hand, and our leverage ratio remained healthy at 2.9 times. Additionally, the agreement announced last week will impact our financial and capital structure both currently and in the long term, including, among other things, capital for the new MSS network. The refinance of our 13% notes at a more favorable cost of capital. an acceleration of future service fees providing us with increased liquidity and finally additional fees following the launch of services. These fees are expected to contribute to overall revenue, as provided in last week's 8K, that is more than double our current annual run rate and generate a higher EBITDA margin.

Rebecca Clary: Moving to our balance sheet.

Rebecca Clary: We ended the quarter with 52 million of cash on hand, and our leverage ratio remained healthy at two nine times.

Rebecca Clary: Additionally, the agreement announced last week will impact our financial and capital structure.

Rebecca Clary: It is currently and in the long term, including among other things capital for the New MSS network.

Rebecca Clary: The refinance of our 13% notes at a more favorable cost of capital.

An acceleration of future service fees, providing us with increased liquidity and.

Rebecca Clary: And finally additional fees following the launch of services.

Rebecca Clary: These fees are expected to contribute to overall revenue as provided in the last weeks 8-K that is more than double our current annual run rate and generate a higher EBITDA margin.

Rebecca Clary: In short, we are very confident in our future and are well positioned to drive long-term shareholder value from this deal as well as our other business lines. Given the current demand environment and growth through the first nine months of the year, we are raising the low end of revenue guidance for full year 2024 for the second consecutive quarter. We now expect revenue in the range of $245 to $250 million, and we are also raising our guidance for adjusted EPITDA margin to 54% for the full year.

Rebecca Clary: In short we are very confident in our future and are well positioned to drive long term shareholder value from this deal as well as our other business lines.

Rebecca Clary: Given the current demand environment and growth through the first nine months of the year. We are raising the low end of revenue guidance for full year 2024 for the second consecutive quarter.

Rebecca Clary: We now expect revenue in the range of $245 million to $250 million and we are also raising our guidance for adjusted EBITDA margin to 54% for the full year.

Rebecca Clary: Finally, we look forward to seeing you all at our upcoming Investor Day on Thursday, December 12th. As we continue to expand our revenue streams and increase profitability over the past year, we look forward to providing updates to our long-term growth strategy and financial framework.

Rebecca Clary: Finally, we look forward to seeing you all at our upcoming Investor Day on Thursday December 12.

Rebecca Clary: As we've continued to expand our revenue streams and increase profitability over the past year, we look forward to providing updates to our long term growth strategy and financial framework.

Paul Jacobs: With that, I'd like to turn the call over to Paul. Thanks, Rebecca. It's great to be on the call with all of you today. I am quite pleased with the continued momentum we're seeing in our business as our third quarter performance was quite strong. We start by emphasizing the impact that we can make as a company and what really motivates our team to We are proud to bring the power and value of our network and enabling communications continuity when it's needed. The recent hurricanes of Helene and Milton highlighted the critical need for first responders and people living in impacted areas to communicate.

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

Rebecca Clary: Okay.

Paul: Thanks Rebecca.

Speaker Change: Great to be on the call with all of you today.

Speaker Change: I am quite pleased with the continued momentum we're seeing in our business as our third quarter performance was quite strong.

Let me start by emphasizing the impact that we can make as a company and what really motivates our team to excel.

Speaker Change: We are proud to bring the power and value of our network in enabling communications continuity when it's needed most.

Speaker Change: The recent hurricanes.

Speaker Change: Milton highlighted the critical need for first responders and people living in impacted areas to communicate.

Paul Jacobs: We saw our network usage increase significantly during these events. communications using our satellites was widely available to mainstream devices over our fully commercial network. We're proud to play a small but critical part in supporting our customers and helping them maintain communication with loved ones and first responders during such challenging times. Our thoughts remain with all those impacted by these natural disasters.

Speaker Change: We saw our network usage increased significantly during these events.

Speaker Change: As communications using our satellites.

Speaker Change: Widely available to mainstream devices over our fully commercial network.

Speaker Change: We're proud to play a small but critical part in supporting our customers and helping them maintain communication with loved ones and first responders during such challenging times and our thoughts remain with all those impacted by these natural disasters.

Paul Jacobs: That was a key foundation underlying our effort. The FCC approved our application to extend our existing authorization called HBLIO 4. by 15 years to operate up to 26 replacement satellites. This reauthorization not only enhances our more than two decades of leadership in mobile satellite services, but also reaffirms our exclusive rights within the licensed portion of the Big Leo Law. The Commission explicitly acknowledged the essential nature of our voice and data communication services. particularly highlighting our Safety of Life Office. With this regulatory clarity, we are well positioned to meet growing commercial demand and continue executing on our mission of providing critical mobile satellite connectivity worldwide.

Speaker Change: How is the key foundation underlying our efforts.

Speaker Change: The FCC approved our application to extend our existing authorization called for by.

Speaker Change: By 15 years to operate up to 26 replacement satellites.

Speaker Change: This reauthorization not only enhances our more than two decades of leadership in mobile satellite services.

Speaker Change: But also reaffirms our exclusive rights within the license portion of the Big Leo band.

Speaker Change: The commission explicitly acknowledged the essential nature of our voice and data communication services.

Speaker Change: Particularly highlighting our safety of life offerings.

Speaker Change: With this regulatory clarity, we are well positioned to meet growing commercial demand and continue executing on our mission of providing critical mobile satellite connectivity worldwide.

Paul Jacobs: We executed on several other key business objectives over the past several months. So let's get into the updates on May. As a reminder, we operate in various business categories, each leveraging the core asset of our Spectrum position. These business lines are Consumer Wholesale, Consumer Retail, Government, Commercial IoT, XCOM RAN, and N53 Licensing. First, a few remarks on last week's 8K detailing an extension and our existing services agreements with our consumer wholesale customers. As part of these updated services agreements, we will provide expanded mobile satellite services. including a new satellite constellation. expanded ground infrastructure, and increased global MSS light On balance, these efforts will enhance our capabilities in the next phase of growth in this and other space-related areas.

Speaker Change: We executed on several other key business objectives over the past several months, so let's get into the updates on <unk>.

Speaker Change: As a reminder, we operate in various business categories, each leveraging the core asset of our spectrum position.

Speaker Change: These business lines are consumer wholesale consumer retail.

Speaker Change: Government commercial Iot.

Speaker Change: Ex Com ran and 53 licensing.

Speaker Change: First a few remarks on last week's 8-K detailing an extension on our existing services agreements.

Speaker Change: With our consumer wholesale customer.

Speaker Change: As part of these updated services agreements.

Speaker Change: We will provide expanded mobile satellite services, including a new satellite constellation.

Speaker Change: Expanded ground infrastructure and increased global MSS licensee.

Speaker Change: On balance these efforts will enhance our capabilities in the next phase of growth in this.

Speaker Change: And other space related areas.

Paul Jacobs: these agreements and additional new satellites. to give our current and future customers confidence. Globstar will provide vital connectivity solutions well into the We are excited about what this means for Globstar's future and the vital role we will continue to play in delivering important services, and we are pleased with the value creation that this deal provides for our Our wholesale services are growing in both. government, and consumers. We are continuing the proof of concept that commenced this year for our government customers. and have been working through the necessary steps to enter commercial. supporting both the consumer retail and commercial IOT businesses.

Speaker Change: These agreements and additional new satellites should give our current and future customers confidence that globalstar will provide vital connectivity solutions well into the future.

Speaker Change: We are excited about what this means for our global <unk> future and the vital role we will continue to play in delivering important services.

Speaker Change: And we are pleased with the value creation that this deal provides for our shareholders.

Our wholesale services are growing in both the Gulf.

Speaker Change: Government and consumer sectors.

Speaker Change: We are continuing the pre proof of concept that commence this year for our government customer.

Speaker Change: And had been working through the necessary steps to enter commercial service.

Speaker Change: Supporting both the consumer retail and commercial Iot businesses.

Paul Jacobs: We are entering alpha stage testing of the complete system that has been under development since long before I arrived at Global. We expect to progress to beta testing with key customers in the upcoming quarter and have added new leadership to our product engineering teams to focus increased attention on meeting our schedules and specifications going forward.

Speaker Change: We are entering alpha stage testing of the complete system that has been under development since long before I arrived at Globalstar.

Speaker Change: We expect to progress to beta testing with key customers in the upcoming quarter.

Speaker Change: Added new leadership to our product engineering teams to focus increased attention on meeting our schedules and specification is going forward.

Paul Jacobs: With XCOM RAN, we announced earlier in the quarter a strategic partnership with Liquid Intelligent Technologies, a leading technology group operating across Africa, the Middle East, and Gulf regions. This collaboration grants Liquid exclusive distribution rights for our XCOM-RAN private network 5G access solution in these high-growth... with some potential expansion to include our satellite, band 53 spectrum, and IoT. This partnership is expected to not only expand our global footprint, but also positions us to capture significant opportunities in these rapidly growing markets where reliable, high-performance wireless applications are increasingly available. This additional channel augments our targeted direct sales of XCOM RAN into our large retail customer, and that effort continues to progress well.

Speaker Change: With <unk> Com ran we announced earlier in the quarter, a strategic partnership with liquid intelligent technologies, a leading technology group operating across Africa, the middle East and Gulf regions.

Speaker Change: This collaboration grants liquid exclusive distribution rights for our ex Com ran private network fiber access solution in these high growth markets with.

Speaker Change: With some potential expansion to include our satellite band 53 spectrum and Iot solutions.

Speaker Change: As partners partnership is expected to not only expand our global footprint, but also positions us to capture significant opportunities in these rapidly growing markets, where reliable high performance wireless applications are increasingly essential.

Speaker Change: This additional channel augments, our targeted direct sales of X com ran into a large retail customer.

Speaker Change: That effort continues to progress well.

Paul Jacobs: We'll also be adding a small number of sales and business development resources to grow our pipeline of customers for xCommerce. We're making progress in adding Band N-53 support to the XCOM RAN, which should be available in the coming... We also continue to expand the ecosystem with new radio vendors and modules. While CBRS has done a good job of developing the market for private wireless, and we're seeing many opportunities to offer these same users an increase in capacity and reliability by including our band N55. High-value, autonomous deployments like ports, mines, and other industrial facilities offer Band N-53 a large and growing opportunity.

Speaker Change: We will also be adding a small number of business and certain sales and business development resources to grow our pipeline of customers for ex Comm Ram.

Speaker Change: We're making progress in adding band 53 supports the ex com ran which should be available in the coming months.

Speaker Change: Also continued to expand the ecosystem with new radio vendors and modules.

Speaker Change: While <unk> has done a good job of developing the market for private wireless and we're seeing many opportunities to offer these same users and increase in capacity and reliability by including our band 53 spectrum.

Speaker Change: High value economists deployments like ports mines, and other industrial facilities offer banner and <unk> 53, a large and growing opportunity.

Paul Jacobs: I'm really pleased with the significant progress we've made over the quarter and through the first nine months. We are in a stronger position as an innovator in the industry, and we believe we have positioned the company to succeed over the long term. Strategic actions in our operations, coupled with new developments of our technology and expansions with customers, will propel us into a new phase.

I'm really pleased with the significant progress we've made over the quarter and through the first nine months of the year.

Speaker Change: We are in a stronger position as an innovator in the industry and we believe we have positioned the company to succeed over the long term.

Speaker Change: Strategic actions in our operations, coupled with new developments of our technology and expansions with customers will propel us into a new phase of growth.

Paul Jacobs: We're excited to provide more details on our strategy at our upcoming Investor Day and how we will expect to capitalize on the growth opportunities in front of us.

Speaker Change: We are excited provide more details on our strategy at our upcoming Investor day, and how we will expect to capitalize on the growth opportunities in front of us.

Paul Jacobs: I'll now turn the call back to the operator for a Q&A, and thanks, everybody. Thank you.

Speaker Change: I'll now turn the call back to the operator for Q&A.

Speaker Change: Thanks, everybody.

Speaker Change: Thank you.

Operator: As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. One moment.

Speaker Change: As a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced.

Speaker Change: To withdraw your question. Please press star one again.

Speaker Change: Please standby, while we compile the Q&A roster.

Speaker Change: Okay.

Speaker Change: One moment.

Speaker Change: Yeah.

Walter Piecyk: Our first question comes from Walter Piecyk with Light Shed Partners. Your line is open. Thanks. You had mentioned kind of the activity that you saw during the hurricane. I was wondering if you could... Anyway, quantify that, because... There was another company that quantified text messaging in that area, which seemed... Thanks very much. to the consumer product using your satellite. Can you also give a sense of...

Speaker Change: Our first question comes from Walter <unk> with light shed partners. Your line is open.

Speaker Change: Thanks.

Speaker Change: You had mentioned kind of the activity that you saw during.

Speaker Change: During the Hurricane I was wondering if you could in any way.

Speaker Change: Quantify that because.

Speaker Change: There was another company that quantified text messaging in that area, which seemed.

Speaker Change: Relatively high we didn't see any videos or any examples of it being used but any quantification.

Speaker Change: On an aggregate level would be great and then also with the kind of latest software update.

Speaker Change: To the to the consumer products using your satellite can you also give a sense of.

Paul Jacobs: kind of location of usage, not specifically like, hey, it's happening in this state or that state, but more of you know, in the middle of the desert versus. you know, evenly distributed usage across the U.S. So the way that we see the utilization is through parameters off of the satellite in in terms of power usage transmitted power and things like that so I don't I mean the quantification of it's not really that useful I don't I don't think people have a very good sense of power transmitted off of a satellite but I would just to say that it did go up dramatically and and we were using the satellite capabilities quite significantly.

Speaker Change: Kind of location of usage.

Speaker Change: Not specific like Hey, it's happening in the state of that state, but more of.

Speaker Change: In the middle of a desert versus.

Speaker Change: Evenly distributed usage across the U S.

Speaker Change: So the way that we see the utilization is through parameters off of the satellite in terms of.

Speaker Change: Power usage transmitted power and things like that so.

Speaker Change: The quantification of it's not really that useful.

Speaker Change: I don't think people have a very good <unk>.

Speaker Change: Sense of power transmit it off of our satellite, but I will.

Speaker Change: Just to say that it did go up.

Speaker Change: Dramatically and we were using the satellite capabilities are quite significantly.

Paul Jacobs: In terms of locations and so forth, you know, I can't really get into information related to the customer, so I think I won't be able to talk to that. I would say, though, along with what you were mentioning about the other claims, we had people that work for us in those regions trying to use the services and had been told by, say, people from those companies that they were unable to get access, and our people were not able to get access. So I also heard those numbers. We also were not able to substantiate those numbers based off of what we could.

Speaker Change: In terms of locations and so forth I can't really get into.

Speaker Change: Information related to the to the customer.

Speaker Change: I think I won't be able to talk to that.

Speaker Change: I would say, though along with what you were mentioning about the other.

Speaker Change: Claims we had.

Speaker Change: People that work for us in those regions trying to use the services.

Speaker Change: And had been told by people from those companies that they were unable to get access and we are people who are not able to get access so.

Speaker Change: I also heard those numbers, we also were not able to substantiate those numbers based off of what we what we could see.

Walter Piecyk: Got it.

Walter Piecyk: And then in terms of the new, the new announcement, and what it implies in terms of a new consolation with presumably new technology, and presumably, better services. You know, I understand it's obviously, first you have to execute on the satellites for next year, and then this one, you know, comes after that.

Speaker Change: Got it and in terms of the new.

Speaker Change: The new announcement and what it implies in terms of our new constellation with presumably new technology.

Speaker Change: And presumably better services.

Speaker Change: I understand it's obviously first you have to execute on the satellites for next year and then this one comes after that.

Paul Jacobs: How soon does it start to generate customer interest or inquiry saying like, oh, you've got this new consolation, you're going to have this. capacity that you have available to you, you know, let's talk about what, like, when do those conversations begin to give you a sense of the incremental revenue that you can start to ramp on that next consolation. So, obviously, it's early days in terms of our ability to disclose specifics to partners on the capabilities that we'll be getting with our 15%, but we have started some of those discussions.

Speaker Change: How soon does it start to generate customer interest or inquiries, saying like Oh, you've got this new constellation Youre going to have this.

Speaker Change: Passey that you have available to you.

Speaker Change: Let's talk about what you like when do those conversations.

Speaker Change: Began to give you a sense of the incremental revenue that you can start to ramp on that next constellation.

Speaker Change: So obviously, it's early days in terms of our ability to disclose specifics.

Speaker Change: Specifics to partners on the capabilities that we will be getting with our 15%.

Speaker Change: But we have started some of those discussions so it's more around.

Paul Jacobs: So, it's more around choosing the precise services that we will provide over it, whether they're extensions of existing services or new things, and as you know, I have quite a good technology team, so there's a lot of work being done, and we've hired people specifically to work on those capabilities, but I don't have something specific to tell you today. There are quite a number of things that we will be able to do with the new Constellation.

Speaker Change: Choosing the precise services that we will provide over it.

Speaker Change: Whether they're extensions of existing services or new things and.

Speaker Change: As you know we have quite a good technology team. So theres a lot of work being done.

Speaker Change: And we've hired people specifically to work on those capabilities, but it don't have something specific to tell you. Today. There is there are quite a number of things that we will be able to do with the with the new constellation though.

Paul Jacobs: And then just an update on the on the satellite launches for next year, everything. Everything on track and, you know, any more specific timing you want to provide on that? We haven't updated the timing on that, but things continue to progress according to our expectations.

Speaker Change: And then just an update on the on the satellite launches for next year everything.

Speaker Change: Everything on track.

Speaker Change: Any more specific timing you want to provide on that.

Speaker Change: We haven't updated the timing on that but things continue to progress according to our expectations.

Simon Flannery: Thank you. Our next question comes from Simon Flannery with Morgan Stanley. Your line is open. All right, thank you. Good evening.

Speaker Change: Got it thank you.

Paul: Thanks, Paul.

Speaker Change: Our next question comes from Simon Flannery with Morgan Stanley. Your line is open.

Simon Flannery: Alright, Thank you good evening.

Simon Flannery: Congrats on the new extended service agreement. Can you help us understand where we are on contracting for the satellites? Is there a deal with a vendor already? And how should we think about timeline? It seems like this is normally a 2 or 3 year cycle. I know you said the revenues will double after the year after the satellites are deployed, but any sense you could give us around that? And I guess, Rebecca, an interim point, you said previously the revenues would step up when the replacement satellites were launched. Is that still the expectation or is that superseded by this new deal?

Speaker Change: That's on the new extended service agreement.

Speaker Change: Can you help us understand where we are on.

Speaker Change: <unk> for the satellites is third deal with vendor already and how should we think about timeline. It seems like this is normally a two or three year cycle. I know you said the revenues with double.

Speaker Change: The year after the satellites are deployed but any sense you could give us around that.

Speaker Change: I guess, Rebecca and interim point, you had said previously that revenues would step up when the replacement satellites for launch is that still the expectation or is that superseded by this new deal.

Paul Jacobs: In terms of the work on the new satellites, these things take a reasonably long period of time. So we are in work already, but we haven't given any specifics about who or sort of where we are in that progress. And then on the revenue, Simon just real quick on the revenue, the step up in 2025 following the first launch of the MDA satellites has not been impacted by the new agreement.

Speaker Change: In terms of the work on <unk>.

Speaker Change: On the new satellites you know these things take a reasonably long period of time. So we are in and work already.

Speaker Change: But we havent, given any specifics about who or.

Speaker Change: Sort of where we are in the in that progress.

Speaker Change: Yes.

Rebecca Clary: Okay, Rebecca and then and then on the revenue.

Simon Flannery: Yes, Simon just real quick on the revenue the step up in 2025. Following the first launch of the MTA satellites has not been impacted by the new agreement.

Rebecca Clary: Okay, great. And if we just think about run rate, is it fair to strip out the 7.5 from this? quarter and think of that as being your kind of run rate.

Speaker Change: Okay great.

Speaker Change: If we just think about run rate is it fair to strip out the seven 5% from this quarter I can think of that as being kind of a run rate.

Rebecca Clary: it going forward into Q4 and beyond, or might there be other sort of lumpy one-time benefits in the coming quarters as well at that site? There might still be variability, as we've seen for several quarters over the past couple years, but and yes, that is appropriate. The 7.5 is basically 2023 and then first half 2024. So if you're just looking at the third quarter in isolation, you should strip that out.

Speaker Change: Going forward into Q4 and beyond.

Speaker Change: There'll be other sort of lumpy one time benefits in the coming quarters as well at that size.

Speaker Change: There might still be variability as we've seen for several quarters over the past couple of years.

Speaker Change: But and yes that it is appropriate to seven five is basically 2023, and then first half of 2024. So if youre just looking at the third quarter in isolation, you should strip that out.

Simon Flannery: Perfect.

Rebecca Clary: And then just one last one. I know you referenced us to the 8K, and I'm sure we'll get more on the 12th of December, but could you just help us a little bit with the cash in and out from this deal as you go forward and get the money and then pay for the satellite constellation, just to give us a simple sense of what comes in, what goes out over the coming several years. So with the new deal, it's funded by the prepayment agreement, the $1.1 billion infrastructure prepayment, and then a $400 million sale of 20 percent equity in the SPE.

Speaker Change: Perfect and then just one last one I know you referenced us to the 8-K and I'm sure we'll get more on the 12th of December but could you just help us a little bit with the cash in the Nash from this deal.

Speaker Change: As you go forward.

Speaker Change: Get the money has been paid.

Pay for the satellite constellation is just if you give us a simple sense of what comes in and what goes out over the coming.

Speaker Change: Several years.

Speaker Change: So with the new deal is funded.

Speaker Change: By the prepayment agreement the $1 1 billion infrastructure prepayment and then a 400 million sale of 20% equity in the SPE. So that $1 5 billion will come in in advance of the <unk>.

Rebecca Clary: So that $1.5 billion will come in in advance of the CapEx needed on a quarterly basis. And so it'll come in and out pretty quickly, right, over the next few years during the construction period.

Speaker Change: Capex needed on a quarterly basis.

Speaker Change: And so it will come in and out pretty quickly right.

Speaker Change: Over the next.

Speaker Change: A few years during the construction period.

Simon Flannery: Okay, great.

Rebecca Clary: And then there was also the debt refinancing. Yeah, so that is the AK that I think was filed this morning before market. And that AK stated that money has come in and has gone out to fully repurchase those notes.

Speaker Change: Okay, Great and then there was also the debt raise demand Sir.

Speaker Change: Yes, so that as the 8-K that I think was filed this morning before market.

Speaker Change: Is that 8-K stated that money has come in and has gone out to fully repurchase those notes.

Simon Flannery: Great, thanks a lot.

Speaker Change: Great. Thanks, a lot.

Speaker Change: Okay.

Logan Lillehaug: Thank you. Our next question comes from Logan Lillehaug from Craig Hollum. Your line is open. I want to start on the Liquid Intelligent deal that you guys kind of referenced there. First, do you have any sense or can you give us any sense as to when that might hit the financials? And is that sort of a strategy? So we're in the process of working through some proof of concepts with them, and the proof of concepts are really intended to train their team up, because obviously these systems are complex. So that will happen prior to us announcing sort of other customers, but you will see as, you know, coming reasonably soon, you know, other – sorry, proof of concept opportunities with them.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Logan Wuhan from Craig Hallum. Your line is open.

Speaker Change: Hey, good afternoon, guys nice results here today.

Speaker Change: Wanted to start on the liquid intelligent deal that you guys kind of referenced there.

Speaker Change: First do you have any sense or can you give us any sense as to when that might hit the financials and does that sort of a.

Speaker Change: <unk> that you guys will look to.

Speaker Change: Maybe duplicate here over the next few years.

Speaker Change: So we're in the process of working through some proof of concepts with them and the proof of concepts are really intended to train their team up because obviously these systems are complex.

Speaker Change: So so that will happen prior to us announcing sort of other customers, but you will see us.

Speaker Change: Coming reasonably soon and other sorry proof of concept opportunities with them and in terms of duplicating that yes, I mean, it's our intention to.

Paul Jacobs: And in terms of duplicating that, yes. I mean, it's our intention to use value-added resellers. We obviously do that on the satellite side as well.

Speaker Change: Use value added resellers, we obviously do that on the satellite side as well and one main reason is because a lot of these are kind of deep vertical applications and while we have spent a lot of time.

Paul Jacobs: And one main reason is because a lot of these are kind of deep vertical applications, and while we have spent a lot of time understanding and co-developing the solution for the micro-fulfillment centers, we don't expect, with the size of the team, both on the development and sales side, to become experts in every deep vertical. And so having partners that have that expertise has been useful to us in the past on the space side, and we expect it will be the same on the terrestrial.

Speaker Change: Understanding and co developing the solution for the micro fulfillment centers.

Speaker Change: We don't expect with the size of the team both on the development and sales side too.

Speaker Change: Experts in every deep vertical and so having partners that have those.

Speaker Change: Have that expertise has been useful to us in the past on the space side and we expect it will be the same on the terrestrial side.

Speaker Change: Got it. Thank you that's all for me.

Speaker Change: Yes.

Griffin Boss: Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. Our next question comes from Griffin Boss with B. Reilly Securities. Your line is open. Hi, good afternoon. Thanks for taking my questions.

Speaker Change: Thank you.

Speaker Change: As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced.

Speaker Change: Our next question comes from Griffin boss with B Riley Securities. Your line is open.

Speaker Change: Hi, good afternoon. Thanks for taking my questions first one for me Rebecca just curious.

Rebecca Clary: First one for me, Rebecca, just curious, you talked about the out-of-period performance bonuses, kind of driving some of that outsized result. Was this something that was anticipated or incorporated into the prior guidance? Or can we look at that one-time item as kind of being the majority of the reason you're pushing the low end of guidance up? It was, well, first of all, there's several performance bonuses that are available to us under the agreements, as we've talked about before. I don't remember exactly how much this particular bonus was included. We were probably included at the midpoint.

Speaker Change: You talked about the debt.

Speaker Change: Out of period of performance bonuses.

Speaker Change: Driving some of that outsized result.

Speaker Change: Was this something that was anticipated or incorporated into the prior guidance or can we look at that one time item is.

Kind of being.

Speaker Change: The majority of the.

Speaker Change: The reason youre pushing the low end of guidance up.

Speaker Change: It was first.

Speaker Change: First of all there are several performance bonuses.

Speaker Change: That are available to us under the agreements that we've talked about before I don't remember exactly how much. This particular bonus was included.

Speaker Change: We are probably included at the mid point and so it might have.

Rebecca Clary: And so it might have been a factor in lifting that bottom end, but it wasn't the only factor. Okay, got it. Thanks for that.

Speaker Change: Been a factor in lifting that bottom end, but it wasn't the only factor.

Speaker Change: Okay got it thanks for that and then.

Paul Jacobs: And then just more more broadly on the global retail customer, you mentioned, you know, that's, that's progressing. Is there any more detail you could provide on that? Is it is it progressing kind of as you expected? Or is there any sort of expectation of, you know, when you might, say, move forward to whatever the next stage of that rollout could be? I mean, it's going very well. We have been in the process of. upgrading certain of the capabilities that were sort of requirements. For a broader rollout, and that's gone well. And I think that the customer is quite pleased with where we stand, and see the progress that we're making as positive.

Speaker Change: Just more broadly on the global retail customer you mentioned.

Speaker Change: That's progressing is there any more detail you could provide on that is it is it progressing kind of as you expected or is there any sort of expectation of when you might say move forward to whatever the next stage of that rollout could be.

Speaker Change: I mean, it's going very well we have been in the process of.

Speaker Change: Upgrading certain of the capabilities that we're sort of requirements.

Speaker Change: For a broader rollout and that's that's gone well.

Speaker Change: And I think that the customer is quite pleased with.

Speaker Change: Where we stand.

Speaker Change: And see the progress that we're making as as positive so.

Paul Jacobs: So, we are, I think I'm in quite a good position to move forward with them. We're actually more waiting on some of their internal processes at this point in time and hope that we will soon be able to discuss sort of more progress on that. But kind of the internal aspect of it has gone extremely well and we have been meeting the dates to provide the additional capabilities that they had asked us for. Okay, got it. Thanks, Paul.

Speaker Change: We are.

Speaker Change: Quite a good position to move forward with them.

Speaker Change: We're actually more waiting on some of their internal processes at this point in time.

Speaker Change: And hope that we will soon be able to discuss sort of more progress on that but you are kind of the internal aspect of it has gone extremely well and we have been meeting.

Speaker Change: Dates to provide additional capabilities that they had asked us for.

Paul: Okay got it thanks, Paul and then just last one quickly for me.

Paul Jacobs: And then just last one quickly, for me, you were talking earlier about alpha stage testing and progressing to beta testing, Paul, and I think you said in the upcoming quarter, you expect to progress to beta testing. Is that 4Q or upcoming as in first quarter of 2025? 1Q, yeah. Okay. All right. Thank you. Appreciate it. Yep.

Speaker Change: We're talking earlier about alpha stage testing and progressing to beta testing, Paul and I. Thank you.

Speaker Change: Said in the upcoming quarter, you expect to progress to beta testing is that is that <unk> or upcoming as in first.

Speaker Change: <unk> first quarter of 2025.

Speaker Change: <unk> yeah, Okay, alright, thank you I appreciate it thank.

Operator: Thank you.

Speaker Change: Thank you.

Speaker Change: Thank you.

Paul Jacobs: I'm showing no further questions at this time, so I would like to turn it back to Paul Jacobs for closing remarks. I just wanted to thank everyone again for being on the call. Obviously, very exciting time for the company. Lots of opportunity ahead of us. And what I'm quite proud of is as I look across sort of all of the areas, we are doing things that our customers appreciate and therefore we are building these long-term relationships with a lot of sort of mutual support. And that is a testament to how the team's done.

I'm showing no further questions at this time, so I would like to turn it back to Paul Jacobs for closing remarks.

Paul Jacobs: Just wanted to thank everyone again for being on the call. Obviously very exciting time for the company lots of opportunity ahead of us and what I'm quite proud of is as I look across sort of all of the areas.

Paul Jacobs: We are doing things that our customers appreciate and therefore, we are building. These long term relationships with a lot of sort of mutual support and that is a testament to how how the team has done so I want to also say thank you to the whole globalstar team in.

Paul Jacobs: So I wanna also say thank you to the whole Globestar team and also thank you for all the work saving lives in some of these events that have happened. We look forward to seeing all of you on the call, or as many of you as can make it, at the upcoming Investor Day. And so that will be another opportunity to interact and sort of get your questions and answer those as well. So thanks everyone, and we'll look forward to seeing you soon.

Paul Jacobs: And also thank you for all the work.

Paul Jacobs: Living lives.

Paul Jacobs: Some of these some of these events that have happened.

Paul Jacobs: We look forward to seeing all of you on the call or as many of you as can make it at the upcoming Investor day, and so that will be another opportunity to interact in and sort of get your questions in and answer those as well. So thanks, everyone and we'll look forward to seeing you soon.

Paul Jacobs: Yeah.

Operator: This does conclude the program for today. You may now disconnect.

Speaker Change: This does conclude the program for today you may now disconnect.

Speaker Change: Okay.

Speaker Change: [music] okay.

Speaker Change: Okay.

Speaker Change: [music].