Q4 2024 AST SpaceMobile Inc Earnings Call

March 4, 2025

Thank you and good afternoon, everyone.

Speaker Change: Today I'm also joined by Chairman and CEO of <unk>, and our Chief Financial Officer, Andy Johnson.

Speaker Change: Let me refer you to slide two of the presentation, which contains our safe Harbor disclaimer. During today's call. We may make certain forward looking statements. These statements are based on current expectations and assumptions and as a result are subject to risks and uncertainties.

Speaker Change: Many factors could cause actual events to differ materially from the forward looking statements on this call.

Speaker Change: For more information about these risks and uncertainties. Please refer to the risk factors section of Afg's fixed mobile annual report on Form 10-K for the year ended.

131, 24 of the Securities and Exchange Commission and other documents filed by FTE States mobile with the SEC from time to time.

Speaker Change: Also after our initial remarks, we will be starting our Q&A section with questions submitted by our shareholders.

Speaker Change: For those of you who may be new to our company mission. There are over 5 billion mobile phones in use today around the world, but many of us still experienced gaps in coverage as we live work and travel. Additionally.

Speaker Change: Additionally, there are billions of people without cellular broadband and who remain unconnected to the global economy.

Speaker Change: The markets. We are pursuing are massive and the problem. We are solving is important in touch with nearly all of us.

Speaker Change: In this backdrop ASC space mobile is building the first and only global cellular broadband networking space to operate directly with everyday on modified mobile devices and supported by our extensive IP and patent portfolio.

Speaker Change: We have made significant progress over the past year and I am excited to pass the call.

Speaker Change: So our chairman and CEO of dental Avalon, who will discuss our achievements in our vision going into 2025.

Speaker Change: 10 years call. The past several months has been transformational for AC based model, we continue to salary mountain <unk> expand our partner ecosystem and demonstrate the unique and differentiated state basis of robot company.

Tony: Tony going forward was a year, we validated <unk> based mobile position as a technology leader and invent or indeed, new inks.

And in 2025 will be levered equal sejant, alongside our expansive IP portfolio of more than 3500 patents and patent pending claims.

Tony: Further enabled towards bank based connectivity to the device in their pocket today.

Tony: Simply put we entered 2025, we detail in our partners and all.

Tony: And intellectual property.

Tony: Just based on the spectrum and the falling into more at accelerated pace in this fast developing market key pieces of our business are now in place our technology have capacity to deliver voice data video calls and older Navy similar provoked applebee's.

Tony: Making us.

Tony: Totally differentiated offering for us and our network partners.

Tony: We're now moving forward to integrate with our partner networks, which will enable initial service with our mobile network requirements AT&T.

Tony: Horizon in the United States called upon in the United Kingdom, and Turkey, and Rakuten in Japan.

Tony: Our mobile enabled operating apartments include some of the largest telecom operators in the world and the number of biological opinion for growth.

Tony: We now have agreements with approximately 50 mobile network operators globally, which have been which have nearly 3 billion existing subscribers around the world.

Tony: Engineering is about building our constellation to reach commercial service as a reminder, our technology have been designed for them may begin to support broadband <unk> text messaging or emergency Sos.

Tony: As noted recently by our partners AT&T, Verizon and Vodafone will each complete video calls over it.

Tony: Our in orbit network, we have the capability for voice and data services to our broadband speed to modify the smartphones.

Tony: Since our last business update call with investors, we achieved several major milestones.

Tony: We solidified our balance sheet with a significant financing with unattractive as appropriate.

That we are accelerating our manufacturing, which I will speak to you shortly.

Tony: We signed an agreement that once completed will provide us with the largest block of high value lowered mid band spectrum or making the spectrum on an operated by our partners.

Tony: Third we're center in satellite manufacturing airport with planning and production of 40 <unk> underway on loan side with additional components of these needed for overseas.

Tony: We continue to expand our commercial ecosystem.

Tony: <unk> <unk> with the Vodafone agreement with the government contracts in fact, just this past week, we announced a new $43 million contract award in support of the United States Space Development agency or SDA.

Tony: Our recent contract is just for the beginning of what we expect to achieve with the way forward.

Tony: And last we continue to consolidate needed by the regulatory framework for our services with the SEC.

Tony: Let me briefly elaborate on each of these achievements, we completed 460 million convertible senior note offering.

Tony: Resulting in nearly $1 billion in cash on our balance sheet.

Tony: Alongside with this capital raise we secured capped call transactions, which increase the effective conversion price of the notes of approximately $45 per share.

With a $4 two 5% coupon we've significantly reduced our cost of capital for the company and we think Africa core we minimize effecting dilution to existing shareholders to approximately 3%.

Tony: The effective conversion.

Tony: Importantly, as part of the transaction AT&T, Google Verizon and Vodafone converted 16 notes became class a common shareholders.

Tony: We welcome our loyal partners, our shareholders and we appreciate the ongoing support.

Tony: The financing.

Tony: And our new balance sheet enable us to immediately and aggressively accelerated our growth opportunities plus we have accelerated the procurement of components and materials needed for us to complete 40 fully integrated and assembly broke through blue racer.

Tony: Additionally, we have accelerated procurement of components and materials needed to complete fully assembled microbes, which are the building blocks are separate.

Speaker Change: Thanks, operator for over 57 months as a reminder, the assembly stages, he's one of the largest fit in.

Speaker Change: The manufacturing process and we procure long lead items first to ensure we remain on track full integration of our sample status.

Speaker Change: As part of our accelerating manufacturing, we had increased our global footprint. The approximate 194000 square feet in Midland, Texas, 59000 square feet in Barcelona, Spain, and soon 85000 additional square feet and constant Florida perspective.

Speaker Change: We have completed with bringing up an initial validation of our novel ASIC chip.

Speaker Change: Which will support up to 10000 megahertz 10 gigahertz.

Alongside with this capital raise with subdued capital transactions, which increase the effective conversion price of the notes to approximately $45 per share.

Speaker Change: Processing bond with precisely with big data suite.

Speaker Change: 120 Megabits per se.

With a $4 two 5% coupon, we significantly reduced our cost of capital for the company and with the Cabot Cashcall, we minimize effecting dilution to existing shareholders to approximately 3%.

Speaker Change: We expect to incorporate our ASIC into Blue led to numerous others later this year.

Speaker Change: We also exercised our contract option for more launches and now we have fully contracted load capacity for approximately 60, south during 2500, <unk>, six which get us to come to continue servicing U S Europe, and Japan, and some selected markets outside the United States.

The effective conversion price.

Importantly, as part of the transaction AT&T, Google Verizon and Vodafone converted their existing nodes and became class a common shareholders.

Speaker Change: Next we signed an agreement, which will provide long term access to up to 45 megahertz of lower mid band spectrum in the United States for directly by summit obligation. This agreement will also made.

We work on our loyal partners, our shareholders and we appreciate their ongoing support.

The financing.

And our new balance sheet enable us to immediately and aggressively accelerate our growing traction and plus.

Speaker Change: With augment our capabilities in existing plants throughout the continental United States on previously EVP low loan spectrum NDA 50 megahertz.

We have accelerated the procurement of components and materials needed for us to complete 40 fully integrated and assembly broke through blue racer.

Speaker Change: Which offers superior penetration of covered correctly.

Additionally, we have accelerated procurement of components and materials needed to complete fully assembled microbes, which are the building blocks of our separate.

Speaker Change: With access to up to 45 million is the lower mid band spectrum, the largest available below four high quality nationwide spectrum in United States.

On page four over 50 satellites as a reminder, the assembly stages is one of the largest state in the manufacturing process and we procure long lead items first to ensure we remain on track full integration in a sample states.

Speaker Change: Based on these unscarred resource on our spectrum agreement matches.

Speaker Change: Tracking our spectrum position with the largest saw that rate will directly revised set of robust order space.

Speaker Change: The agreement from loan long term access to the spectrum enhanced our strategy of working with <unk> partners, our partner dedicate premium low line space to support our services these beta with accessing.

As part of our accelerating manufacturing, we had increased our global footprint to approximately 194000 square feet in Midland, Texas, 59000 square feet in Barcelona, Spain, and soon 85000 additional square feet and constant Florida perspective.

Speaker Change: I'm pleased by the existing capacity.

Speaker Change: Specifically more spectrum means increased subscriber capacity and data services in voice enabled big data transmission speeds of up to 120 mailings per cycle for a cable broadband experience directly from Spain to everyday smartphone.

We have completed with bringing up an initial validation of our novel ASIC chip.

Which will support up to 10000 megahertz than you've ever seen processing bound with Prasad, but with big data speeds of up to 120 Megabits per second.

Speaker Change: These policy this position as our mobile network, operator partner for significant growth, while reinforcing our place in the broader waters ecosystem with a valuable strategic asset.

We expect to incorporate our ASIC to look to Bloom our summit later this year.

Speaker Change: And just recently, we received a special temporary authority FDA approval from the SEC to come to commence testing services at AT&T and Verizon in the United States.

We also exercised our contract option for more launches and now we have fully contracted load capacity for approximately 60, south during 'twenty five 'twenty six.

Speaker Change: This approval and enable us to connect and test our global <unk> with modified smartphone without the need of any adventure light sulfur device support or updates.

Which get us to come to continue servicing U S Europe, and Japan, and some selected markets outside the United States.

Next we signed an agreement, which will provide long term access to up to 45 megahertz to lower me by the states in United States for directly by summit obligation. This agreement when also maintenance.

Speaker Change: The FCC approvals.

Speaker Change: The score the charitable between AC has been mobile and the commission we anticipate additional execute ruling. So we continue have integrated our groundbreaking technology put our state partners.

With augment our capabilities in existing plants for the continental United States on premium to ETP low loan spectrum NDA 50 megahertz.

Speaker Change: The first cycle Marshall <unk> South at launch in September 2024 are fully operational our 70 minder, our southern are matching each the largest evercore merchant.

Which offer superior penetration of corporate directory.

With access to up to 45 million as the lower band spectrum, the largest available below or high quality nationwide spectrum in the United States.

Speaker Change: Mutation rates in low Earth orbit order downbeat the vessels base station for context, our upcoming block two tablets are more than three times the size of block one satellites nation, approximately 2000 homeowners square feet.

Based on these unscarred resource on our spectrum agreement matches.

Proactive spectrum position with the largest saw that rate will directly revised federal robots on the space.

Speaker Change: As a result, we need a much smaller number of satellites compared to traditional operators in the low Earth orbit. These sides of our sadness accelerate our path to commercial revenues and the design of our cyber as a network decreased any senior quota venue, reducing our risk profile.

The agreement for loans long term access to the spectrum enhanced our strategy of working with <unk> partners. Our partner dedicated premium low line space to support our services. This space are aware accessing.

Speaker Change: I am very pleased to report. These first five <unk> are all performing as expected we are fully tested each pool.

<unk> existing capacity.

Specifically more spectrum increased subscriber capacity and data services in the U S enabled big data transmission speeds of up to 120 miles per cycle for a cable broadband experience directly from Spain to everyday smartphone.

Put them into operations.

Speaker Change: Exciting to watch Vodafone CEO Marguerite driven by the complete up vehicles used in our state based technology.

Speaker Change: <unk> completed vehicles shortly thereafter.

This will see this position apps and our mobile network operator partner for significant growth.

Speaker Change: These operational milestone demonstrate our unique capabilities of our SaaS that were designed for and we'll get that messaging about full broadband capabilities on old Navy similar capabilities completely modified smartphones.

Reinforcing our place in the broader wireless ecosystem with a valuable strategic asset.

And just recently, we received a special temporary authority FDA approval from the SEC to come to commence testing service with AT&T and Verizon in the United States resupply.

Speaker Change: On the government front, we recently secured an additional contract for $43 million of revenue with the space Development Agency.

This improvement enabled us to connect and test our blueberry southern with modified smartphone without the need of any adventure light sulfur revised support for updates.

Speaker Change: Through a prime contractor Scott will provide support VITAS.

Speaker Change: Details momentarily.

Speaker Change: But these commercial were highlighted capabilities more newer technology for especially on our government applications.

The FCC approvals underscore the chair role between AC has been mobile and the commission we anticipate additional SEC ruling. So we continue integrating our groundbreaking technology with our state partners.

Speaker Change: Our government contract pipeline continued to show strength driven by new use cases for our unique technology, which are becoming clearer everyday.

Speaker Change: What a successful initial launch and the progress of <unk> manufacturing and our commercial government agreement you can see the key pieces of operation licensing at Fitbit Mobile network in.

The first FICO Marshall Global <unk> launch in September 2024 are fully operational our 70 minder, our southern are massive each the largest evercore merchant disclosed communication rate in low Earth orbit, all the downbeat the vessels base station for context, our upcoming global.

Speaker Change: In place.

Speaker Change: Im incredibly proud of his tireless effort from our team and our partners, particularly over the past several months to get us to discretely performed with.

But our more than three times the size of block one satellites nation, approximately 2000 homeowners square feet.

Speaker Change: With agents that we move closer to achieving our mission of connecting the unconnected and look forward to bringing two more updates in the months ahead.

As a result, we need a much smaller number of satellites compared to traditional operators in the low Earth orbit. These sides of our sadness accelerate our path to commercial revenues and the design of our cyber network decreased any senior quota venue, reducing our risk profile.

Speaker Change: I will now pass the call to provide more details on our commercial growth.

Speaker Change: Thank you Bill.

Speaker Change: As Bill mentioned in the last few months have been truly significant for IFC space mobile all of the facets of our business are coming together nicely and we enter 2025 and our strongest position to date.

I am very pleased to report the first five <unk> are all performing as expected we are fully tested each pool.

Speaker Change: Let me provide additional details on some of the achievements and what they mean for the commercialization of the company.

Put them into operations.

Exciting to watch Vodafone CEO Marguerite driven by the complete up vehicles used in our state based technology.

Speaker Change: Just last week, we signed a $43 million revenue contract with the U S space development agency through a prime contractor.

AT&T and Verizon completed vehicles shortly thereafter.

Speaker Change: This contract following successful in orbit testing on our Blue Walker three test satellite under the previous contract announced in February of 2024.

This operational milestone demonstrate our unique capabilities of our SaaS that were designed for nausea that messaging about full broadband capability on old Navy similar capabilities completely modified smartphones.

Speaker Change: Importantly, this is not a prepaid contract, but rather revenue, we expect to receive and recognize alongside service delivered on our five satellites in orbit and our first block to Bluebird satellite.

On the government from we've recently secured an additional contract for $43 million of revenue, we'd be space development agency.

Speaker Change: This contract as with our other U S government contracts to date serve as an evaluation of our capabilities and support a potential larger long term contracts.

O'brien: O'brien called Plateau, Scott will provide support.

Details momentarily.

Speaker Change: Now taking a step back this marks our fifth contract award with the U S government and our third supporting a space development agency.

O'brien: But these commercial were highlighted capabilities more newer use technology for specialized government applications. Our government contract pipeline continues to show strength driven by new use cases for our unique technology, which are becoming clearer everyday.

Speaker Change: We continue to see a strong demand profile for space applications from the <unk>, which you can read about in the press and in particular for our unique architecture, which facilitates a diverse set of communications and non communications applications.

O'brien: With a successful initial launch and the progress of 12 month, Vouchering and our commercial and government agreement you can see the key pieces of operation a licensed domestic mobile network in.

Speaker Change: Our network is also attractively positioned as dual use capable meaning the same spacecraft can be used for both consumer and government programs.

O'brien: In place.

O'brien: Im incredibly proud of the tireless effort from our team and our partners, particularly over the past several months to get us to discretely performed with.

Speaker Change: On the commercial front, we continue to advance with our partners, including the approximately 50 mobile network operators, we have initial agreements with today.

O'brien: With agents that we move closer to achieving our mission of connecting the unconnected and look forward to bringing two more updates in the months ahead.

Speaker Change: The depth and excitement of these conversations has continued to increase alongside our business milestones like the high profile video calls with Vodafone AT&T and Verizon that we recently conducted.

O'brien: I will now pass this call to provide more details on our commercial Cogs.

Speaker Change: During 2025, we expect to round out our strategic markets with additional M&A was building out the initial plan coverage footprint in the U S Europe, Japan and with the U S government.

Speaker Change: Thank you Bill.

Bill: As Bill mentioned in the last few months have been truly significant for IFC space mobile all of the facets of our business are coming together nicely and we enter 2025 and our strongest position to date.

Speaker Change: Additionally, during the first half of 2025, you'll begin to see gateway sales or bookings that will bring in cash in revenue. During 2025, and also provide a leading indicator for the markets where youll see initial service revenue.

Bill: Let me provide additional details on some of the achievements and what they mean for the commercialization of the company.

Bill: Just last week, we signed a $43 million revenue contract with the U S space development agency through a prime contractor.

Speaker Change: Turning to Vodafone in particular in December we finalized the definitive long term commercial agreement for space Mobile service through 2030 for this.

Bill: This contract following successful in orbit testing on our Blue Walker three test satellite under the previous contract announced in February of 2024.

Speaker Change: This agreement establishes the framework for Vodafone to offer space based cellular broadband connectivity in its home markets as well as two other operators via its partner markets program or.

Bill: Importantly, this is not a prepaid contract, but rather revenue, we expect to receive and recognize alongside service delivered on our five satellites in orbit and our first block to Bluebird satellite.

Speaker Change: Our agreement with Vodafone is a culmination of many years of working together to advanced connectivity, marking another significant step in our historic partnership.

Bill: This contract as with our other U S government contracts to date serve as an evaluation of our capabilities and support a potential larger long term contracts.

And then just yesterday, we announced a further agreement with Vodafone to accelerate the commercialization of the space mobile network across all of Europe.

Bill: Now taking a step back this marks our fifth contract award with the U S government and our third supporting a space development agency.

This jointly owned entity will exclusively distribute our space based cellular broadband service expanding our addressable market significantly in Europe.

Bill: We continue to see a strong demand profile for space applications from the <unk>, which you can read about in the press and in particular for our unique architecture, which facilitates a diverse set of communications and non communications applications.

Speaker Change: This means shared ground infrastructure to manage geographic boundaries and turnkey solutions to increase take up with smaller operators earlier in our deployment.

Bill: Our network is also attractively positioned as dual use capable meaning the same spacecraft can be used for both consumer and government programs.

Speaker Change: Also in support of our European expansion, we are opening our research and validation hub in Malaga, Spain to support space and land mobile broadband research.

Bill: On the commercial front, we continued to advance with our partners, including the approximately 50 mobile network operators, we have initial agreements with today.

Speaker Change: This strategic expansion along with our increased manufacturing footprint in Barcelona will enhance our capabilities to serve the European market and underscore our long term commitment to the continent.

Bill: The depth and excitement of these conversations have continued to increase alongside our business milestones like the high profile video calls with Vodafone AT&T and Verizon that we recently conducted.

Andy: And with that I will hand, it off to Andy.

Andy: Thanks, Scott and good afternoon, everyone.

Speaker Change: I Echo the sentiment expressed by a balanced Scott.

Bill: During 2025, we expect to round out our strategic markets with additional <unk> building out the initial plan coverage footprint in the U S Europe, Japan and with the U S government.

Speaker Change: 2024 was a pivotal year in the history of ASC space Mobile and we continued our rapid operating transformation. During Q4 of 2020 for our successful launch of five block one Bluebird satellites in September coupled with our achievement of full operational status of those satellites in early Q4.

Bill: Additionally, during the first half of 2025, you'll begin to see gateway sales or bookings that will bring in cash in revenue. During 2025, and also provide a leading indicator for the markets where youll see initial service revenue.

Speaker Change: Has positioned us well to continue our intense focus on expanding our customers both through commercial and U S government engagements.

Bill: Turning to Vodafone in particular in December we finalized the definitive long term commercial agreement for space Mobile service through 2030 for this.

Speaker Change: As 2024 came to a close ASC space mobile was a transformed company poised to lead the burgeoning direct to device satellite communication industry.

Bill: This agreement establishes the framework for Vodafone to offer space based cellular broadband connectivity in its home markets as well as two other operators via its partner markets program or.

Speaker Change: We have the financial resources to support our bold initiatives to accelerate the manufacturing and deployment of our satellites in an effort to scale our revenue in the coming periods.

Bill: Our agreement with Vodafone is a culmination of many years working together to advance connectivity, marking another significant step in our historic partnership.

Speaker Change: The start of 2025 has been a continuation of the significant progress as mentioned earlier, we accelerated satellite manufacturing efforts in line with our plans to launch up to 60 block to Bluebird satellites during 2025 and 2026.

Bill: And then just yesterday, we announced the further agreement with Vodafone to accelerate the commercialization of the space mobile network across all of Europe.

Bill: This jointly owned entity will exclusively distribute our space based cellular broadband service expanding our addressable market significantly in Europe.

Speaker Change: We strengthened our balance sheet through our strategic capital raising facilitating an increase in our production targets, including the planning and production of 40 block to Bluebird satellites and fully assembled microns and phased array to support a total of 53 satellites.

Bill: This means shared ground infrastructure to manage geographic boundaries and turnkey solutions to increase take up with smaller operators earlier in our deployment.

Bill: Also in support of our European expansion, we are opening our research and validation hub in Malaga, Spain to support space and land mobile broadband research.

Speaker Change: <unk> is well underway at our manufacturing facilities as we expand our footprint globally.

Speaker Change: Moving to the operating metrics slide.

Bill: This strategic expansion along with our increased manufacturing footprint in Barcelona will enhance our capabilities to serve the European market and underscore our long term commitment to the continent.

Speaker Change: Review of the key operating metrics for the fourth quarter and full year 2024 on.

Speaker Change: The first chart for the fourth quarter of 2024, we incurred non-GAAP adjusted cash operating expenses of $40 8 million versus $45 $3 million in the third quarter.

Andy: And with that I will hand, it off to Andy.

Andy: Thanks, Scott and good afternoon, everyone.

Andy: I Echo the sentiment expressed by a balanced Scott.

Speaker Change: 2024 was a pivotal year in the history of ASP space Mobile and we continued our rapid operating transformation during Q4 of 2020 for.

Speaker Change: As a reminder, non-GAAP adjusted operating expenses exclude certain noncash operating costs, including depreciation and amortization and stock based compensation.

Speaker Change: Our successful launch of five block one bluebird satellites in September coupled with our achievement of full operational status of those satellites. In early Q4 has positioned us well to continue our intense focus on expanding our customers both through commercial and U S government engagements.

Speaker Change: This quarter over quarter decrease resulted from $9 $3 million of reduced R&D costs, primarily related to our now completed <unk> bring up an initial validation work, partially offset by a $4 $2 million increase in adjusted engineering services costs and a slight increase.

As 2024 came to a close ASC space mobile was a transformed company poised to lead the burgeoning direct to device satellite communication industry.

Speaker Change: <unk> of zero point $6 million and adjusted general and administrative costs in connection with our accelerated plans related to our block to Bluebird satellites and investments to bolster our critical commercial and administrative functions.

Speaker Change: For the full year 2024, non-GAAP adjusted cash operating expenses totaled $151 $8 million compared to $154 $6 million for the full year 2023.

Speaker Change: Increased engineering services and G&A costs in 2024 were more than offset by a significant reduction in R&D costs as we reduced third party research and development efforts and pivoted to our internal engineering and cross functional administrative support in connection with our satellite manufacturing dipped.

Speaker Change: <unk> commercial and U S government engagement efforts related to our block one and block to Bluebird satellites.

Speaker Change: Reduction is well underway at our manufacturing facilities as we expand our footprint globally.

Speaker Change: Moving to the operating metrics slide.

Speaker Change: Review of the key operating metrics for the fourth quarter and full year 2024.

Speaker Change: On the first chart for the fourth quarter of 2024, we incurred non-GAAP adjusted cash operating expenses of $48 million versus $45 $3 million in the third quarter.

Speaker Change: This figure is made up of approximately $77 million of capitalized direct materials and labor for our block to Bluebird satellites and additional facility and production equipment for our recently expanded 194000 square foot Assembly integration and test facilities in.

Speaker Change: As a reminder, non-GAAP adjusted operating expenses exclude certain noncash operating costs, including depreciation and amortization and stock based compensation.

Speaker Change: Midland Texas.

Speaker Change: This amount was just slightly less than our guidance of approximately $100 million that I provided on our last business update call in November due to timing of a payment ultimately made in January versus December.

Speaker Change: Overall and as expected capital expenditures have continued to ramp in connection with block to Bluebird satellite production and related launch commitments.

Speaker Change: Today, we are executing a plan to increase monthly satellite production to six satellites per month in the second half of 2025 and.

Speaker Change: In connection with scaling manufacturing and continuing payments on our two year launch campaign, we expect capital expenditures will continue to increase as compared to prior quarters.

For the full year 2024, non-GAAP adjusted cash operating expenses totaled $151 $8 million compared to $154 $6 million for the full year 2023.

Speaker Change: We expect capex in the range of $150 million to $175 million in the first quarter of 2025.

Speaker Change: Consistent with the fourth quarter of 2024, we estimate that our adjusted cash operating expenses for the first quarter of 2025 will come in within a range of $40 million to $45 million as we continue to make critical investments across the organization and so part of our growth plans.

Speaker Change: Ointment commercial and U S government engagement efforts related to our block one and block to Bluebird satellites.

Speaker Change: Timing of the changes in our adjusted operating expenditures and capital expenditures of EIS as I've just described could be delayed.

Speaker Change: Turning towards the second chart on this slide our capital expenditures for the fourth quarter of 2024 were approximately $86 million versus $26 5 million for the third quarter of 2024. This figure is made up of approximately 77 million of capitalized direct materials and labor.

Speaker Change: Not be realized due to a variety of factors.

Speaker Change: And on the final chart on this slide we ended the fourth quarter with $567 $5 million in cash up from $518 9 million at the end of the third quarter.

Speaker Change: Our ability to maintain cash above $500 million during the fourth quarter. Despite the increased capital expenditures was a result of our effective and disciplined use of our existing at the market facility or ATM, partially offset by the repayment of our previous senior credit facility that I discussed on our lab.

Speaker Change: For our block to Bluebird satellites, and additional facility and production equipment for our recently expanded 194000 square foot Assembly integration and test facilities in Midland, Texas.

Speaker Change: Last call.

Speaker Change: We currently have approximately $66 million available on the ATM facility, our discipline and effective use of this facility has allowed us to increase liquidity.

Speaker Change: Overall and as expected capital expenditures have continued to ramp in connection with block to Bluebird satellite production and related launch commitments.

Speaker Change: Supplementing our other strategic financing initiatives and accelerating future revenue opportunities position us well to move quickly and building and launching our network.

Speaker Change: We are executing a plan to increase monthly satellite production to six satellites per month in the second half of 2025.

Speaker Change: As Bill commented earlier in 2025, we further strengthened our cash position through the execution of a seven year $460 million convertible senior notes offering on attractive terms, including a capped call that increase the effective conversion price by 100% to 44.

Speaker Change: We expect capex in the range of $150 million to $175 million in the first quarter of 2025.

Speaker Change: <unk> 98 per share.

Thus minimizing dilution considerably to approximately 3%.

Speaker Change: The offering was more than three times oversubscribed, providing the opportunity to expand our investor base to many new long term holders that believe in our mission and execution plan of connecting the unconnected.

Speaker Change: Finally, we continue to make good progress on non dilutive financing from quasi governmental sources of capital in the United States, having pass key milestones, including transaction Committee acceptance.

Speaker Change: Timing of the changes in our adjusted operating expenditures and capital expenditures advised as I've just described could be delayed.

Speaker Change: If these applications are successful we can use the proceeds to source cost effective long term debt funding of large projects.

Speaker Change: Not be realized due to a variety of factors.

Speaker Change: And on the final chart on this slide we ended the fourth quarter with $567 5 million in cash up from $518 9 million at the end of the third quarter.

Speaker Change: In parallel we continue to explore financing opportunities through both domestic and global development institutions, providing financial services to businesses like ours and emerging markets.

Speaker Change: We will provide updates as appropriate and we will be working with the partner banks and our advisors to refine our alternatives.

With our growing revenue profile and further diversified capital market access we are confident that we can fund our accelerated operational plans with our existing balance sheet continued focus on non dilutive customer prepayments and prudent use of the ATM facility.

Speaker Change: Last call.

Speaker Change: We currently have approximately $66 million available on the ATM facility, our discipline and effective use of this facility has allowed us to increase liquidity.

Speaker Change: Supplementing our other strategic financing initiatives and accelerating future revenue opportunities position us well to move quickly and building and launching our network.

Speaker Change: We are proud of the progress we made in 2024 and remain focused on our mission as we continue a fast start to 2025.

Speaker Change: I look forward to keeping you updated on our financial progress as the year unfolds and with that this completes the presentation component of our business update call and I'll pass it back to Scott.

Scott: Thank you Randy before we go to the queue of analyst questions, we'd like to address a few of the questions submitted by our investors operator could you. Please start us off the first question.

Speaker Change: <unk> 98 per share.

Speaker Change: Read then from New Zealand and lend.

Thus minimizing dilution considerably to approximately 3%.

Read: When does <unk> expect to reach the sixth Bluebird per month manufacturing target.

Speaker Change: Thank you Lisa for the question Great to see Chris is confirm your ceiling.

Speaker Change: We are in the process of mono fluctuate 40 satellites and we are working already on the long lead items.

Speaker Change: On all key parts of our microbes, which are the main building blocks of our satellite which is 53 of them.

Speaker Change: We believe that by the second half of this year will be at a rate of six per month for that we had to stand in our facility in Midland totaled 19, hundreds 190000 square feet of manufacturing, we're adding additional manufacturing facility in the tune of 85000 square feet of manufacturing facility in Florida.

Speaker Change: If these applications are successful we can use the proceeds to source cost effective long term debt funding of large projects.

Speaker Change: And another 50000 square feet of manufacturing facility in Barcelona.

Speaker Change: We will provide updates as appropriate and we will be working with the partner banks and our advisors to refine our alternatives.

Speaker Change: Rick from the Netherlands as well.

Speaker Change: Does the current.

Speaker Change: And orbit.

Speaker Change: The company precise testing.

Speaker Change: With our growing revenue profile and further diversified capital market access we are confident that we can fund our accelerated operational plans with our existing balance sheet continued focus on non dilutive customer prepayments and prudent use of the ATM facility.

Speaker Change: Is there any progress on the defense or governmental part.

Speaker Change: Thank you for the question.

Speaker Change: Yeah, well they are fully in operations at this point.

Speaker Change: <unk> got.

Speaker Change: Then approved to operate in United States on the ninth da for both testing of AT&T and Verizon.

Speaker Change: We are proud of the progress we made in 2024 and remain focused on our mission as we continue a fast start to 2025 I look forward to keeping you updated on our financial progress as the year unfolds.

Speaker Change: We already have demonstrated full bromont capability, and then including including voice text data and video calling capabilities.

Speaker Change: B.

Speaker Change: In SMB called nationwide.

Speaker Change: Our girls United States, obviously on intermittent.

Scott: With that this completes the presentation component of our business update call and I'll pass it back to Scott.

Speaker Change: On an intermittent fashion as they are only.

Speaker Change: Five hour building, 45% to 60.

Scott: Thank you Andy before we go to the queue of analyst questions wed like to address a few of the questions submitted by our investors operator could you. Please start us off the first question.

Speaker Change: Between this year and next year.

Speaker Change: With.

Speaker Change: With that also the Gorman usage.

Scott: We then from New Zealand as lenders Afcs expect to reach the sixth Bluebird per month manufacturing target.

Speaker Change: We plan to start the study and doing testing on.

Speaker Change: On them.

Speaker Change: <unk> recently announced a new a new program with the government that is only based on the testing that they had on <unk> three and now on the operational satellite that we have in all of it.

Scott: Thank you Lisa for the question great to see glimpses confirm your ceiling.

Scott: We are in the process of mono fluctuate 40 satellites.

Scott: Working already on the long lead items.

Speaker Change: We're very bullish about that opportunity and what the government can use with our satellites, which theyre using it already with the satellites that are in operation.

Scott: On all key parts of our microbes, which are the main building blocks of our satellite which is 53 of them.

Andrea: Andrea from New York at <unk>.

Scott: We believe that by the second half of this year will be a rate to six per month.

Andrea: Recently announced launch campaign had agreement with Spacex will origin and ISR Oh are.

For that we had to stand in our facility in Midland totaled 1900.

Andrea: Are you planning to expand beyond the history.

Scott: <unk> hundred 90000 square feet of manufacturing with adding additional manufacturing facility in the tune of 85000 square feet of manufacturing facility in Florida.

Andres: Thank you Andres.

Andres: So as we thought about our launch strategy, we've done a few things on our side to position us for success. One is on the design of a satellite.

Another 50000 square feet of manufacturing facility in Barcelona.

Andres: Its launch vehicle agnostic Theres a lot of commonalities in the designs for launch vehicles in and we were careful to design our bluebirds. So that they are stackable and configurable for each of the major launch vehicles. So that was the first step.

Rick: Rick from the Netherlands.

Speaker Change: What is the current tax and orbit for the company Besides testing.

Speaker Change: Is there any progress on the defense or governmental part.

Speaker Change: Thank you refer the question.

Andres: And the second step was last year, we did a deep dive on the market looked at available capacity.

Speaker Change: Yeah, well they are fully in operations at this point, we have them approved to operate in the United States on the ninth D. A.

Andres: And we selected these three suppliers as we've talked about so.

Speaker Change: Both testing of AT&T and Verizon.

Andres: Those are our important early steps that we took.

Speaker Change: Already have demonstrated full broadband capability, and then including including voice text data and video calling capabilities.

Andres: <unk>.

Andres: And to your direct question, we have the ability to use other launch providers over time for sure.

Andres: But in order to get the capacity we wanted during 'twenty 'twenty five 'twenty six up to 60 satellites, which as we mentioned on the call earlier.

Speaker Change: That will be an SMB cone nationwide.

Speaker Change: Across the United States, obviously on intermittent.

Andres: Actually exercise that option for.

Speaker Change: One of them in that fashion as they are only.

Andres: For the full 60.

Speaker Change: Five hour building.

Andres: We've got that capacity.

Speaker Change: <unk> 45 to 60.

Andres: The 2025, and 226 timeframe and as we build more capacity beyond that we'll consider all of the supply in the market.

Speaker Change: Between this year and next year.

Speaker Change: With.

Speaker Change: With that also the Gorman usage.

Andres: But for US, we like where we ended up and this gives us a lot of.

Speaker Change: We plan to start the study and doing testing on them.

Andres: The ability to get to the 60 satellite targets.

Speaker Change: <unk> recently announced a new a new program with the government that is only based on the testing that they had on envelope Falcon III and now on the operational satellite that we have in all of it.

Brian: Brian from Maryland Act.

Speaker Change: What are the remaining risks to full authorization from the DC for operating a commercial constellation.

Speaker Change: We're very bullish about that opportunity and what the government can use with our satellites, which they are using it already with the satellites that are in operation.

Brian: Thank you Brian.

Brian: As you May have seen we recently received SBA authorization from the SEC to do initial services with our satellites for both Verizon and AT&T and that was.

Andrea: Andrea from New York at <unk>.

Andrea: Our recently announced launch campaign had agreement with Spacex will origin and ISR O R.

Brian: The basis for the video calls we did with them a few weeks ago.

Brian: We're also in the final stages of the process for a commercial modification of our existing commercial license and Thats something that were working on alongside that we'll be rolling out a beta service that allows us to do scale testing and then paid service will follow thereafter.

Andrea: Are you planning to expand beyond the history.

Andres: Thank you Andres.

Andres: So as we thought about our launch strategy, we've done a few things on our side to position us for success. One is on the design of a satellite.

Andres: Its launch vehicle agnostic Theres a lot of commonalities in the designs for launch vehicles in and we were careful to design our blue bird. So that they are stackable and configurable for each of the major launch vehicles. So that was the first step.

Brian: And with that I'd like to thank our shareholders for submitting those questions.

Brian: Greater let's open the call to analyst questions now.

Brian: Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.

Andres: And the second step was last year, we did a deep dive on the market looked at available capacity.

Brian: Confirmation tone will indicate your line is in the question queue. You May press star two to remove yourself from the queue for participants using speaker equipment. It may be necessary to pick up the handset before pressing the star keys.

Andres: And we selected these three suppliers as we've talked about so.

Andres: Those were important early steps that we took.

Andres: And to your direct question, we have the ability to use other launch providers over time for sure.

Brian: One moment, please while we poll for questions.

Speaker Change: Our first question comes from the line of Griffin boss with B Riley Securities. Please proceed with your question.

Andres: But in order to get the capacity we wanted during 'twenty 'twenty five 'twenty six up to 60 satellites, which as we mentioned on the call earlier, we've actually exercise that option.

Griffin Boss: Hi, good evening. Thanks for taking my question. So your agreements with the roughly 50 MSL partners represent 3 billion subscribers now how many <unk> subscribers could be addressed by this new sat co joint venture with Vodafone or.

Andres: For the full 60.

Andres: We've got that capacity.

Andres: The 2025, and 226 timeframe and as we build more capacity beyond that we will consider all of the supply in the market, but for US we like where we ended up and this gives us a lot of ability to get to the 60 satellite targets.

Griffin Boss: Yes, what would be more helpful is if you can give us a rough sense of the incremental number of subscribers. This partnership could allow you to tap into given this opens up the entire European market, which I assume likely includes am I noticed that you didn't already have and I'll use wet.

Brian: Brian from Maryland Act.

Brian: What are the remaining risks to full authorization from the DC for operating a commercial constellation.

Griffin Boss: Thank you Griffin.

Speaker Change: Thank you Brian.

Griffin Boss: It's a great question and it's a key reason why we and Vodafone wanted to put the structure in place so.

Speaker Change: As you May have seen we recently received SBA authorization from the SEC to do initial services with our satellites for both Verizon and AT&T and that was the.

Griffin Boss: When you look at the full set of connections in Europe.

Griffin Boss: Get to about 600 plus.

Speaker Change: The basis for the video calls we did with them a few weeks ago.

Griffin Boss: When you look at all of the European countries, together and and we were only covering before the Vodafone 10 home market. So so this does a couple of things wanted.

Speaker Change: We're also in the final stages of the process for a commercial modification of our existing commercial license and that's something that we're working on alongside that we'll be rolling out a beta service that allows us to do scale testing and then paid service will follow thereafter.

Griffin Boss: It sets a plan for gateways across the continent that'll be able to despite smaller countries sizes managed orders quite well.

And at the same time, providing efficient path to bring on new countries that we hadn't originally contemplated and more <unk> is in each country. So.

Speaker Change: And with that I'd like to thank our shareholders for submitting those questions.

Speaker Change: Later, let's open the call to analyst questions now.

Griffin Boss: It's a big step up in that regard.

Going from just 10 countries to probably three acts that although certainly we had good countries covered in the beginning but this adds some really significant country than some significant operator potential for us and we think that.

Speaker Change: Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.

Speaker Change: Confirmation tone will indicate your line is in the question queue. You May press star two to remove yourself from the queue for participants using speaker equipment. It may be necessary to pick up the handset before pressing at Easter and Keith.

Griffin Boss: Having a kind of a European European base European sovereign.

Griffin Boss: Operator.

Griffin Boss: It is really important it's important for Europe, it's important for European operators and it's.

Speaker Change: One moment, please while we poll for question.

Unidentified Operator: Our first question comes from the line of Griffin boss with B Riley Securities. Please proceed with your question.

Griffin Boss: Frankly, a and extension of of how we built our network right. We built it so that operators and regulators can be can feel comfortable about how the traffic is managed and we think that this is a great extension of that.

Speaker Change: That's great context. Thank you Scott and then next for me, it's related or not really ended up at two part question. Both are related first is this $43 million contract with the FDA.

Griffin Boss: What would be more helpful is if you can give us a rough sense of the incremental number of subscribers. This partnership could allow you to tap into given this opens up the entire European market, which I assume likely includes M. I noticed that you didn't already have and I'll use wet.

Speaker Change: It's great to see are these or is it yes. This for non communication applications and services.

For some time now and discussed in the prepared remarks, and then second part of this question are you able to provide more detail as to what these non communications applications are that your architecture is able to support our were talking missile tracking PNT remote sensing any any color that you can provide to us I think it would be help.

Griffin Boss: Thank you Griffin.

Griffin Boss: Great question and it's a key reason why we and Vodafone wanted to put the structure in place so.

Griffin Boss: When you look at the full set of connections in Europe.

Speaker Change: Oh.

Griffin Boss: You get to about 600, plus when you when you look at all the European countries together.

Boss: Yeah. Thanks Griffin so in terms of the.

Griffin Boss: And we were only covering before.

Speaker Change: Capability that we're bringing to bear.

Griffin Boss: The Vodafone 10 home market. So so this does a couple of things wanted it sets a plan for gateways across the continent that'll be able to despite smaller countries sizes managed borders quite well.

Speaker Change: It's non communications like we said and we won't offer more definition of that at this time, but it's consistent with the frequency that we operate in so that's what the six satellites can do but it's what we will say, it's non communications and in terms of the size of the opportunity. Yes. This is.

Griffin Boss: And at the same time provide an efficient path to bring on new countries that we hadn't originally contemplated and more <unk> is in each country. So.

Speaker Change: Kind of a second phase for the contract that we announced last February and that we've earned revenue against on the first satellite and this is a $43 million that we expect to earn.

Griffin Boss: It's a big step up in that regard.

Going from just 10 countries to probably three acts that although certainly we had good countries covered in the beginning but this adds some really significant countries in some significant operator potential for us and we think that having a kind of a European European based European sovereign.

In the next 12 months or so.

Speaker Change: Off of the first five commercial satellites and the first block two satellite and importantly, this is just another further evaluation so the opportunity we believe to be.

Griffin Boss: Operator.

Speaker Change: Quite quite large small relative to the total opportunity and it's one that we're very excited about it.

Griffin Boss: <unk> is really important it's important for Europe, it's important for European operators and its Fran.

Speaker Change: Like we said.

Speaker Change: That's a general timeframe in the satellites, we need to execute on the milestones to deliver the $43 million of revenue.

Speaker Change: Okay and is that so should we expect that to be linear.

Speaker Change: Linear only recognized over the next 12 months or are you, providing some services now that.

Speaker Change: That's great context. Thank you Scott and then next for me it's related but it will not really ended up at two part question. Both are related first is this $43 million contract with the FDA.

Speaker Change: It might be more robust than say six months.

Speaker Change: There might be a slight lag in getting going in the next couple of months, but generally speaking linear as the rate we are modeling.

Speaker Change: It's great to see are these or is it yes. This for non communication applications and services.

Speaker Change: Okay, great. Thanks, Scott appreciate it.

Speaker Change: For some time now and discussed in the prepared remarks, and then second part of this question are you able to provide more detail as to what these non communications applications are that your architecture is able to support our were talking missile tracking PNT remote sensing any any color that you can provide to us.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Chris.

Speaker Change: So with UBS. Please proceed with your question.

Chris: Great. Thank you we saw a lot of buzz with T mobile and Starlink <unk> recent launch of its data messaging service can you just remind us how your technology differs versus what T mobile and starlink are bringing to market and the advantages you have and I. Appreciate their service is just the messaging to start but given the price points. They put out there how does this influence your own pricing strategy.

Speaker Change: Yes, I think it would be helpful.

Speaker Change: Yeah. Thanks Griffin so in terms of the.

Speaker Change: Capability that we're bringing to bear.

Speaker Change: It's non communications like we said and we won't offer more definition of that at this time, but it's consistent with the frequency that we operate in so that's what the satellite can do but it's what we will say, it's non communications and in terms of the size of the opportunity. Yes. This is.

Chris: You're already a full voice and broadband products. Thank you.

Thank you Kris.

Chris: <unk>.

Chris: Well I think that that is a reflection of what I've said pricing is for.

Chris: In which in essence is now still quasi intermittent yes messaging service.

Chris: Our services.

Chris: His voice text data internet.

Chris: B deal.

Speaker Change: In the next 12 months or so.

Chris: That you can do on your phone.

Speaker Change: Off of the first five commercial satellites and the first block two satellite and importantly, this is just another further evaluation so the opportunity we believe to be.

Chris: Normally you would be able to do it through our system. So it's a very differentiated.

Chris: Package, where we can offer to the operators.

Chris: We believe our scale the reason why we have 10000.

Quite quite large small relative to the total opportunity and it's one that we're very excited about it.

Chris: Megahertz with respect to per satellite does it relate to 10 gigahertz of spectrum for satellite and 120 megabit per second data rate directly to your phone without requiring any change on the phone or adaptation into the phone.

Speaker Change: And like we said.

Speaker Change: That's a general timeframe in the satellites, we need to execute on the milestones to deliver the $43 million of revenue.

Speaker Change: Okay and is that so should we expect that to be linear.

Chris: Using pre immune existing 50 mega her been greatly differentiate it.

Speaker Change: Linearly recognized over the next 12 months or so you know are you providing some services now that.

Chris: Ernie will allow our partner operator to differentiate with motivated service packages.

Speaker Change: It might be more robust than say six months.

Speaker Change: There might be a slight lag in getting going in the next couple of months, but generally speaking linear is the right way of modeling.

Chris: Basically enable the consumer to have the full fledged connectivity when they get access to our service.

Speaker Change: Got it and then if I could just fit one more in on funding I see the language in the 10-K, indicating you have funding that you need for the next 12 months with the ATM I. Appreciate there are a number of moving pieces, but as you look to 2026 and the ability to launch the 60 satellites any help sizing the amount of capital you think you still need to raise.

Speaker Change: Okay, great. Thanks, Scott appreciate it.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Chris.

Speaker Change: So with UBS. Please proceed with your question.

Speaker Change: Great. Thank you we saw a lot of buzz with T mobile and Starlink <unk> recent launch of its data messaging service can you just remind us how your technology differs versus what T mobile and starlink are bringing to market and the advantages you have and I. Appreciate their service is just the messaging to start but given the price points. They put out there how does this influence your own pricing strategy.

Speaker Change: How do you evaluate the different sources.

Chris: Yeah.

Chris: Yes. This is Andy thanks for the question Chris.

Chris: We as we said both in our statements in the K, we are well positioned to get kind of that first threshold of.

Speaker Change: You're already a full voice and broadband products. Thank you.

Chris: 25 satellites, which starts with service and well beyond that.

Speaker Change: Thank you Kris.

Chris: It is the case that we have 60 satellites under our launch campaign and we feel very good about our ability to manufacture the 40 that are in process right now.

Speaker Change: <unk>.

Speaker Change: Well I think that that is a reflection of.

Speaker Change: That's.

Speaker Change: Said pricing is for.

Speaker Change: In which in essence is now still.

Chris: Well, we're well positioned for the near term, we're always looking for smart capital raising opportunities and we'll continue to evaluate them, but with a pro forma balance sheet of about $1 billion.

Speaker Change: Intermittent yes messaging service.

Speaker Change: Our services you know his voice text data internet.

Chris: We're absolutely positioned in a very strong way for the next 12 months.

Speaker Change: B deal.

Speaker Change: <unk> seen that you can do on your phone.

Chris: Okay, great. Thank you.

Speaker Change: Normally you would be able to do it through our system. So it's a very differentiated.

Chris: Thank you.

Unidentified Moderator: Our next question comes from the line of Bryan Kraft with Deutsche Bank. Please proceed with your.

Speaker Change: Package, where we can offer to the operators.

Speaker Change: We believe our scale the reason why we have 10000.

Bryan Kraft: Hi, good afternoon I had a.

Bryan Kraft: A few if I could I guess first on launches or are you still on track for an April launch of the next satellite. That's what you said and can you give us any rough sense for the pacing you expect for launches in 'twenty five 'twenty six.

Speaker Change: Megahertz with respect to per satellite does relate to 10 gigahertz of spectrum for satellite and 120 megabit per second data rate directly to your phone without requiring any change on the phone or adaptation into the phone.

Bryan Kraft: Roughly how many of the up to 60 would you expect to launch this year versus next year.

Speaker Change: Using pre immune existing a 50 mega had been greatly differentiate it.

Bryan Kraft: I had a question about cost per satellite if that's changed at all or if it's still the $19 million to $21 million per satellite.

Speaker Change: And it will allow our partner operator to differentiate with motivated service packages that.

Speaker Change: Basically enable the consumer to have the full fledged connectivity when they get access to our service.

Bryan Kraft: And then the last thing.

Bryan Kraft: I just wanted to ask you about was sort of following up on that funding topics and the last question, we get a lot of questions regarding how much funding you'll need to fund the business plan and get the free cash flow positive, but it seems.

Speaker Change: Got it and then if I could just fit one more in.

Speaker Change: Funding I see the language in the 10-K, indicating you have funding that you need for the next 12 months with the ATM I. Appreciate there are a number of moving pieces, but as you look to 2026 and the ability to launch the 60 satellites any help sizing the amount of capital you think you still need to raise and how you evaluate the different sources.

Bryan Kraft: The more funding you have available the wider scope of the business plan becomes and the faster you accelerate the business plan. So it.

Bryan Kraft: Really about how much you need but it's more about how much you can raise on attractive terms and invest at an attractive return.

Speaker Change: Yes. This is Andy thanks for the question Chris.

Speaker Change: We as we said both in our statements in the U K, where we're well positioned to get kind of that first threshold of <unk>.

Bryan Kraft: Is that the right way to think about it than anything.

Bryan Kraft: If you would elaborate on there on that from a funding perspective. Thank you.

Speaker Change: Twenty-five satellites, which starts with service and well beyond that.

Bryan Kraft: Yeah, Brian the way that we think about it is when we combine the.

Speaker Change: It is the case that we have 60 satellites under our launch campaign and we feel very good about our ability to manufacture the 40 that are in process right now.

Speaker Change: <unk> known communication application Goldman.

Speaker Change: Base on the communications for consumers.

Speaker Change: We're well positioned for the near term, we're always looking for smart capital raising opportunities and we'll continue to evaluate them, but with a pro forma balance sheet of about $1 billion, where.

Speaker Change: We get the ability to turn monetizing as you see in the recent order not only by our constellation, but on a per satellite basis.

Speaker Change: We're absolutely positioned in a very strong way for the next 12 months.

So.

The last guidance that we gave you that we believe to be cash flow positive. It wrong with around 25 satellites is no that we get to continue service with our 25 satellite, but we don't if I suddenly we start getting in north applications are non communications combined we saw motor.

Speaker Change: Okay, great. Thank you.

Speaker Change: Thank you.

Unidentified Operator: Our next question comes from the line of Bryan Kraft with Deutsche Bank. Please proceed with your.

Speaker Change: Hi, Good afternoon, I had a few if I could I guess first on launches or are you still on track for an April launch of the next satellite. That's what you said and can you give us any rough sense for the pacing you expect for launches in 'twenty five and 26.

Speaker Change: Sources of revenue like gateways on infrastructure built up.

Speaker Change: To get to a cash flow positive.

Speaker Change: With that where we have greatly accelerated.

Speaker Change: Our base of production Sandy indicated we we closed the year, we enter into the year with around $1 billion in cash that we are basically putting into work in into operating network capacity building up to six satellites, amongst which would translate to roughly $1 72.

Speaker Change: Just roughly how many of the up to 60 would you expect to launch this year versus next year.

Speaker Change: I had a question about cost per satellite if that's changed at all or if it's still the $19 million to $21 million per satellite.

Speaker Change: And then the last thing.

Speaker Change: I just wanted to ask you about was sort of following up on that funding topics and the last question, we get a lot of questions regarding how much funding you'll need to fund the business plan and get the free cash flow positive, but it seems.

Speaker Change: Per year.

Speaker Change: And we need $45 to 45% to 60 to get continued servicing the United States. So that how that how we are basically planning. We're nowhere buildup is basically start to get financed with.

Speaker Change: Like the more funding you have available the wider the scope of the business plan becomes then the faster you accelerate the business plan. So it's.

Speaker Change: With revenue rather than Don.

Speaker Change: Done.

Speaker Change: Equity.

Speaker Change: Really about how much you need but it's more about how much you can raise on attractive terms and invest at an attractive return.

Speaker Change: Or all the time.

Speaker Change: Or the type of transactions.

Speaker Change: In terms of the launch we have secured 60 launches.

Speaker Change: 60 satellites do we launch.

Speaker Change: Is that the right way to think about it than anything.

Speaker Change: Which we put within our targeted obtaining continued service in U S Europe, Japan, and some selected markets. We also like the market basically.

Unidentified Operator: If you would elaborate on there from a funding perspective. Thank you.

Unidentified Operator: Yeah, Brian the way that we think about it is when we combine the.

Speaker Change: Countries, where there are customers that are getting get into pay early access to our constellation.

Unidentified Operator: <unk> known communication application Goldman.

Unidentified Operator: Base on the communications for consumers.

Speaker Change: And that's another source of revenue that we would be utilizing going forward.

Speaker Change: We get the ability to turn monetizing as you see in the recent order not only by our constellation, but on a per satellite basis.

Speaker Change: With the new Glenn we can launch up to eight satellites per launch.

Speaker Change: Pretty much doubled the cadence of what is possible with the Falcon nine.

Unidentified Operator: So.

Unidentified Operator: The last item that we gave you that we believe to be cash flow positive. It wrong with around 25 satellites is no that we get to continue service with our 25 satellites, but we don't if I suddenly we start getting a north applications are non communications combined we saw motor.

Speaker Change: We expect.

Speaker Change: It was baked later in the year.

Speaker Change: To start moving to a launch cadence of around one launch every 45 days.

Speaker Change: On the new Glenn we have older.

Speaker Change: Sources of revenue like gateways on infrastructure built up.

Speaker Change: Other launches also there'll be insecure.

Unidentified Operator: The allowed us to get to a cash flow positive.

Speaker Change: Advance to that.

Unidentified Operator: With that where we have greatly accelerated.

Speaker Change: So we are we are we are in the process of manufacturing 40.

Unidentified Operator: Our base of production Sandy indicated we will close the year, we enter into the year with around $1 billion in cash that we are basically putting into work in into upgrading our capacity building up to six satellites amongst which would translate to roughly one point 72.

Speaker Change: The process manufacturing long lead items of 53.

That will take daily games, while we get them into space.

Alan: Thanks Alan.

Alan: Anything on the cost per satellite does that has that changed at all or you saw that 19% to $21 million range no. Yes, we're not changing the guidance on what.

Unidentified Operator: Per year.

Unidentified Operator: And we need 45% to 45% to 60 to get continued servicing the United States. So that how that how we are basically planning nowhere nowhere buildup is basically start to get financed with.

Alan: Or something.

Alan: Okay, and then if I could just follow up just on the funding. So you still expect to get to free cash flow positive with 25 satellites is that I just want make sure I understand that right or or does the acceleration.

Unidentified Operator: With revenue rather than Don.

Alan: Sort of modify that timeline.

Unidentified Operator: Done.

Alan: This is Andy the only qualifier I'd add is on an operating basis, we see that we will generate free cash flow at that basis. So obviously capex flexes, we were going to ramp up and we may dial back depending on.

Unidentified Operator: Equity.

Unidentified Operator: Or all the time.

Unidentified Operator: Or the type of transactions.

Unidentified Operator: In terms of the launch we have secured 60 launches.

Speaker Change: 60 satellites do we launch.

Which will bode well in our targeted obtaining continued service in U S Europe, Japan, and some selected markets. When we go to like the market basically.

Alan: It needs it.

Alan: A point in time when launched commitments are made but on a on an actual operating basis. Yes. There's rebel explained we believe that with 25 satellites, our applications and opportunities are sufficient to to generate free cash flow.

Countries, where there are customers that are getting get into bay early access to our constellation.

Alan: Okay.

Alan: Then I'm sorry, but just the last I guess follow up to that would then be just trying to understand so if you can be free cash flow positive you know roughly 25 satellites.

Speaker Change: And that's another source of revenue that we would be utilizing going forward.

Speaker Change: With the new Glenn we can launch up to eight satellites per launch.

Alan: I'm just trying to understand the need for the $500 million in quasi government funding.

Speaker Change: Pretty much doubled the cadence of what is possible with the Falcon nine.

Speaker Change: Now we expect.

Alan: That youre pursuing and I understand thats attractive money is that more to refinance or or or do you need that money for other operational purposes.

Speaker Change: It was baked later in the year.

Speaker Change: To start moving to a launch cadence of around one launch every 45 days.

Scott: I'd say this is Scott.

Speaker Change: On the new Glenn we have older.

Scott: That has been a long term strategy of our funding plan and it's and it's an attractive way that companies like us get funding and I would say that.

Speaker Change: Other launches also the RMB insecure.

Speaker Change: The answer to that.

So we are we are we're in the process of manufacturing 40.

Scott: While we do have a diverse access to a lot of capital markets. This is this is another one to open up so we've been very prudent and conservative with funding over the life of the company and this is a great pocket of capital to have available and.

Speaker Change: With the proceeds manufacturing long lead items of 53.

Speaker Change: That will dictate the cadence of how we get them into space.

Speaker Change: Thanks anything on the cost per satellite is that has that changed at all or you saw that $19 million to $21 million range no. Yes, we're not changing the guidance on for Selman.

Scott: We will assess our cash needs.

Scott: When it becomes available.

Scott: Particular funding sources of process, Brian and it's one we're in the middle of and we will assess.

Speaker Change: Okay, and then if I could just follow up just on the funding. So you still expect to get to free cash flow positive at 25 satellites is that I, just want make sure I understand that right or or does the acceleration.

Scott: How to use that and when to use that when the time is right but for us.

Scott: I think we've seen benefits of having good liquidity for the company that we've been able to generate over the last six months and we like having having that backdrop a lot.

Speaker Change: Sort of modify that timeline.

Speaker Change: This is Andy the only qualifier I'd add is on an operating basis, we see that we will generate free cash flow at that basis. So obviously capex flexes, we were going to ramp up and we may dial back depending on.

Speaker Change: Is that are those quasi government sources or theres more like a facility that once you have it you can draw on it and not pay interest on the whole thing or is it once you get it you get it and now you've got this pile of cash that you've got it sir.

Speaker Change: Needs at a you know a point in time and when launched commitments are made but on a on an actual operating basis. Yes. There's rebel explained we believe that with 25 satellites, our applications and opportunities are sufficient to to generate free cash flow.

Scott: Service to data.

Scott: Well theres theirs, we're pursuing at least three seriously at the moment and different.

Scott: Different facilities have different structures, but yes at least one of them does have a structure thats delayed draw like you said or milestone based although we're not going to be.

Speaker Change: Okay.

Speaker Change: Then I'm sorry, but just the last I guess follow up to that would then be just trying to understand so if you can be free cash flow positive you know roughly 25 satellites.

Cheap Penny wise pound foolish on cost of capital and the key is to maintain good liquidity for the company, but but youre right.

Speaker Change: I'm just trying to understand the need for the $500 million in quasi government funding.

Scott: With the backdrop that I described having some sort of a delayed draw component could be could be very useful and in fact, that's one of the ways that we've thought about the financing for our for our recent spectrum deal.

Speaker Change: That youre pursuing and I understand it's attractive Mani is that more to refinance or or or do you need that money for other operational purposes.

Speaker Change: Okay, alright, thanks, very much I appreciate the color.

Speaker Change: Yeah.

Scott: I'd say this is Scott.

Scott: Thank you.

Speaker Change: That has been a long term strategy of our funding plan and it's and it's an attractive way that companies like us get funding and I would say that.

Unidentified Moderator: Our next question comes from the line of.

Colin Canfield: Colin Canfield with Cantor. Please proceed with your question.

Colin Canfield: Hey, thanks.

Speaker Change: Maybe starting off if you could talk a little bit about the organizational structure with respect to your chipset engineering team and maybe reflect a little better talk a little bit about how that chipset team is working with folks.

Speaker Change: While we do have a diverse access to a lot of capital markets. This is this is another one to open up so we've been very prudent and conservative with funding over the life of the company and this is a great pocket of capital to have available and.

Speaker Change: There is more kind of a handset OEM level or even.

Speaker Change: The higher levels of Vodafone Google Thanks.

Speaker Change: We will assess our cash needs.

Speaker Change: When it becomes available.

Speaker Change: I think one clarification, our our ASIC platform. It is require or used on the satellites only we do not require new chipsets on the.

Speaker Change: That particular funding sources of process, Brian and it's one we're in the middle of and and we will assess.

How to use that and when to use that when the time is right but for us.

Speaker Change: On the handsets.

Speaker Change: I think we've seen benefits of having good liquidity for the company.

Speaker Change: So that's.

Speaker Change: The way that we have organized our sales we start.

We've been able to generate over the last six months and we like having having that backdrop a lot.

Speaker Change: Launching satellites using EBITDA basically field programmable gate arrays.

Now that we have completed the ASIC when the Brazil packaging and they started cooperating them into the second half of this year.

Speaker Change: So beta that chip you had 10 gigahertz processing capacity one of the most advanced nodes.

Speaker Change: Service to data.

Speaker Change: Well, there's there is we're pursuing at least three seriously at the moment and different.

Speaker Change: That exist.

Speaker Change: On.

Speaker Change: On the market today, certainly one of the most advanced in the space.

Speaker Change: Different facilities have different structures, but yes at least one of them does have a structure that's delayed draw, but like you said or milestone based although we're not going to be.

Speaker Change: But I wanted to make clear that we do not require any modification of the chipsets only phones.

Speaker Change: Our system. It is designed to work on the phone that you had in your bulk of them only find anything on it.

Speaker Change: Cheap Penny wise pound foolish on cost of capital. The key is to maintain good liquidity for the company, but but you're right.

Speaker Change: Yes totally understood.

Speaker Change: The satellite chip being based in taking share I kind of understood the level of signals in frequency tuning between oes.

Speaker Change: With the backdrop that I described having some sort of a delayed draw component could be could be very useful and in fact, that's one of the ways that we thought about the financing for our for our recent spectrum deal.

Speaker Change: At AFC.

Speaker Change: As we think about that.

Speaker Change: non-GAAP opex progression to the year can you just you could talk about how you think about the current guidance the level of step up through the year and where you expect.

Speaker Change: Okay, alright, thanks, very much I appreciate the color.

Speaker Change: Thank you.

Speaker Change: Most of the cost cost growth through the year to progressive.

Speaker Change: Our next question comes from the line of Colin Canfield with Cantor. Please proceed with your question.

Speaker Change: Andy I think on the on the cost growth. This year and we've got you know, we'll be talking to each quarter about about capex, but I mean, you know our Capex is is growth based it's based on ramping up the 40 plus satellites. We obviously have for your production in <unk>.

Colin Canfield: Hey, thanks.

Speaker Change: Maybe starting off if you could talk a little bit about the organizational structure with respect to your chips that engineering team.

Speaker Change: And maybe reflect a little better talk a little bit about how that chipset team is working with folks.

Speaker Change: There is more kind of a handset OEM level or even.

Long lead items Micron's for 53 that will flex we started taken out that that on and that sort of feeds into that guidance I gave on a ramp up of capex in Q1.

Speaker Change: To the higher levels of Vodafone, Google and the like.

Speaker Change: Thanks.

Speaker Change: I think one clarification, our our ASIC platform <unk> require or use on the satellites only we do not require new chipsets and the.

Speaker Change: Otherwise I mean, we're we gave.

Gave guidance consistent with our Opex that sort of falls in line for the most part with Q4.

Speaker Change: The handsets.

Speaker Change:

Speaker Change: Yeah.

Speaker Change: So that's.

Speaker Change: Our Asa cost will come down as we've as we finish that work and begin to to fully integrate but.

Speaker Change: A.

Speaker Change: The way that we have organized our sales we start.

Speaker Change: But we will make additional investments were becoming a commercial enterprise now we're building out that muscle we are investing in our administrative functions across the organization as we grow and prepare to be a full operating company. So you'll see you're not going to see any.

Speaker Change: Launching satellites using EBITDA basically field programmable gate arrays.

Speaker Change: Now that we have completed the AC when the Brazil packaging and they started cooperating.

Speaker Change: Into the second half of this year.

Speaker Change: So beta that chip you had a 10 gigahertz processing capacity one of the most advanced nodes.

Speaker Change: Incredible difference over if you look at the past prior periods in terms of how we're thinking about operating expense, but at this point will come to your quarterly which we have and give you a view on.

Speaker Change: That exist.

Speaker Change: On.

Speaker Change: Okay.

Speaker Change: On the market today, certainly one of the most events in the space.

Speaker Change: And going forward.

Speaker Change: <unk>.

Speaker Change: But I wanted to make clear that we do not require any modification of the chipsets only phones. We our system. It is designed to work on the phone that you had in your bulk of them only find anything on it.

Speaker Change: And clearly there I mentioned this in my remarks was probably worth restating the opportunity for us to really to really bring costs down is in our R&D function, which in a lot of ways was was primarily.

Speaker Change: Yes totally understood.

Speaker Change: Based on third party expense.

Speaker Change: The satellite Chipping basis, just making sure I kind of understood the level of signals in frequency teaming between <unk> and ASE.

Speaker Change: That work's been done we have a.

Speaker Change: And a satellite that is.

Speaker Change: He is fully developed and engineered now and we are moving to a full on production environment and you'll see investments in manufacturing.

Speaker Change: As we think about the <unk>.

Speaker Change: GAAP opex progression to the here.

Speaker Change: If you could talk about how you think about the current guide and the level of step up through the year and where you expect.

Speaker Change: Bill mentioned in his remarks, we've added space in Midland, Texas, We've added space in Barcelona, and we're very excited to add manufacturing space in the very near term in southern Florida. So you'll see those sorts of investments all feeding into becoming a scaling manufacturing company that optimizes satellite production.

Speaker Change: So the cost cost growth through the year to progressive.

Speaker Change: <unk> at about six per month in the second half of the year.

Speaker Change: Got it got it and then maybe a little bit on the European opportunity it.

Speaker Change: Three that will flex, we started taken out that that on and that sort of feeds into that guidance I gave on the ramp up of Capex in Q1.

Speaker Change: Seems like the high level structure of IRS is looking to track towards something like FCA, where theres a lot of manufacturing upfront and aspirations for large leveraging of we'll say kind of more prime type acquisition approaches but.

Speaker Change: Otherwise I mean, we're we gave guidance consistent with our opex that sort of falls in line for the most part with Q4.

Speaker Change: As we've seen from a supply chain development.

Speaker Change: In the U S side, it's clear that there is obviously opportunities for services drove the $43 million.

Speaker Change: Our Asa cost will come down as we've as we finished that work and begin to to fully integrate.

Speaker Change: <unk>. So maybe if you can talk about the structure of.

Speaker Change: ASP.

Speaker Change: How you think about your ability to win contracts like the $43 million from SDA.

Speaker Change: And the types of <unk> that we should expect whether it's more cost or our fee and kind of service delivery based approaches.

Incredible difference over if you look at the past prior periods in terms of how we're thinking about operating expense, but at this point will come to your quarterly which we have and give you a view on the.

Speaker Change: Sure I'll take that one Collin first just on Rev Rec.

Speaker Change: This is milestone based given that this is kind of technology evaluation and so there are reports tests activities will be doing with the satellites in orbit and that'll drive that revenue rec over the next 12 months plus or minus that we talked about earlier.

Speaker Change: And going forward and.

Speaker Change: In terms of structure of how these contracts will look as they scale.

Speaker Change: Was primarily based on third party expense.

Speaker Change: The U S government and how they're thinking about buying defense stuff and how they are thinking about space evolves and has a lot of different elements to it but I would say, where we think we're really well positioned for all pieces of that we function well and the desire to have kind of firm fixed price and deliver an and.

Speaker Change: That work's been done we have a.

Speaker Change: And a satellite that is.

Speaker Change: Is fully developed and engineered now and we are moving to a full on production environment and you'll see investments in manufacturing.

Speaker Change: Environment, where you are you are buying something you know what the cost is and you can do that's delivered by the supplier you know we don't work on cost plus contracts. So that's a positive dynamic and in terms of.

Speaker Change: Service versus hardware sales you know we tend to fall on the service side with how we've built our our satellites and how theyre dual use as we discussed but we're open to the mission and we.

Speaker Change: <unk> at about six per month in the second half of the year.

Speaker Change: Got it got it and then maybe a little bit on the European opportunity it.

Speaker Change: Reevaluate and they evaluate different ways to structure structured deals for us it's important to get a return on the investment that we've put in place in our network and and we can be flexible on that but but we tend to fall on the service side more than on the hardware sale obviously.

Speaker Change: Seems like the high level structure of IRS is looking to track towards something like FCA, where theres a lot of manufacturing upfront and aspiration for large leveraging of we'll say kind of more prime type acquisition approaches but.

As we've seen from a supply chain development costs in the U S side, it's clear that there is obviously opportunities for services growth of $43 million. The ASC is one so maybe if you can talk about the structure of.

Speaker Change: Great Great. Okay, and then last one for me, maybe latest and greatest in terms of kind of expectations around legato deal closing.

Speaker Change: Whether it's tracking court filings or kind of where you expect the next piece of information to come out.

Speaker Change: S T.

Speaker Change: How you think about your ability to win contracts like the $43 million from SDA.

Andy: Yes. This is Andy again legato deal things are tracking nicely, we had publicly disclosed.

Speaker Change: And the types of <unk> that we should expect whether it's more cost or fee and kind of service delivery based approaches.

Andy: The main tenets of that deal when we when we signed a binding term sheet. So.

Speaker Change: Sure I'll take that one Collin first just on Rev Rec.

Andy: We have work due to to get to where we need to be to complete the deal, but we are well within.

Andy: The timeframe that the parties are set to do so and of course.

Andy: With the bankruptcy proceedings that that all needs to play out, but we're working hard on that we've talked a lot about it it's a strategic.

And in terms of structure of how these contracts will look as they scale.

Andy: Initiative for Us and we're making good progress.

Andy: Got it appreciate the color and thank you for the questions.

Speaker Change: The U S government and how they're thinking about buying defense stuff and how theyre thinking about space evolves and has a lot of different elements to it but I would say, where we think we're really well positioned for all pieces of that.

Speaker Change: Thank you and we have reached the end of the question and answer session and I'll now turn the call back over to Scott with <unk> for closing comments.

Andy: Thank you operator.

Speaker Change: We function well and the desire to have kind of firm fixed price and deliver in an environment, where you are you are buying something you know what the cost is and you can do that's delivered by the supplier you know we don't work on cost plus contracts. So that's a positive dynamic and in terms of.

Speaker Change: We just again, we want to thank all of our shareholders and research analysts for joining the call and everyone's continued strong support of our very important mission. We look forward to providing you further updates and have a great evening.

Speaker Change: And this concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.

Speaker Change: Service versus hardware sales you know we tend to fall on the service side with how we've built our our satellites and how theyre dual use as we've discussed but where we are open to the mission and.

Speaker Change: Reevaluate and they evaluate different ways to structure structured deals for us it's important to get a return on the investment that we put in place in our network and and we can be flexible on that but but we tend to fall on the service side more than on the hardware sale obviously.

Speaker Change: Great Great. Okay, and then last one for me, maybe latest and greatest in terms of kind of expectations around legato deal closing.

Speaker Change: Whether it's tracking court filings or kind of where you expect the next piece of information to come out.

Andy: Yes. This is Andy again legato deal things are tracking nicely, we had publicly disclosed.

Andy: The main tenets of that deal when we when we signed a binding term sheet. So.

Andy: We have work due to to get to where we need to be to complete the deal, but we are well within.

Andy: The timeframe that the parties are set to do so and of course, yeah with the bankruptcy proceedings that all needs to play out, but we're working hard on that we've talked a lot about it it's a strategic.

Andy: Initiative for Us and we're making good progress.

Speaker Change: Got it I appreciate the color. Thank you for the questions.

Speaker Change: Thank you and we have reached the end of the question and answer session and I will now turn the call back over to Scott with new ski for closing comments.

Speaker Change: Thank you operator.

Scott: We just again, we want to thank all of our shareholders and research analysts for joining the call and everyone's continued strong support of our very important mission. We look forward to providing you further updates and have a great evening.

Unidentified Operator: And this concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.

Unidentified Operator: Okay.

Unidentified Operator: [music].

Unidentified Operator: Yes.

Unidentified Operator: Okay.

Unidentified Operator: [music].

Unidentified Operator: Yes.

Unidentified Operator: [music].

Unidentified Operator: Yes.

Unidentified Operator: Okay.

Unidentified Operator: [music].

Unidentified Operator: Okay.

Q4 2024 AST SpaceMobile Inc Earnings Call

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