Q2 2025 AST SpaceMobile Inc Earnings Call

Speaker #1: Good day, and thank ou for standing by. Welcome to the AST SpaceMobile second quarter 2025 business update call. Please be advised that today's conference is being recorded.

Speaker #1: I would now like to hand the conference over to your host today, Scott Wisniewski, president of AST SpaceMobile. Please go head.

Speaker #2: Thank you, and good afternoon, everyone. Today, I'm also joined by Chairman and CEO, Abel Avellan, and our Chief Financial Officer, Andy Johnson. Let me refer you to slide two of presentation, which contains our Safe Harbor disclaimer.

Speaker #2: During today's call, we may make certain forward-looking statements. These statements are based on current expectations and assumptions, and as a , are subject to risks and uncertainties.

Speaker #2: Many factors could cause actual events to differ materially from the forward-looking statements on this call. For more information about these risks and uncertainties, please refer to the risk factors section of AST SpaceMobile's annual report on Form 10-K for the year that ended December 31, 2024, Form 10-Q filed with the SEC on May 12, 2025, and Form 10-Q filed with the SEC on August 11, 2025.

Speaker #2: All with the Securities and Exchange Commission and other documents filed by AST SpaceMobile with the SEC from time to time. Also, after our al remarks, we will be starting our Q&A section with questions submitted in advance by our areholders.

Speaker #2: For those of you who may be new to our company and mission, there are over 5 billion mobile phones in use today around the world.

Speaker #2: But many of us still experience gaps in coverage as we live, work, and travel. Additionally, there are billions of people without cellular broadband, and who remain unconnected to the global economy.

Speaker #2: The markets we are pursuing are massive, and the problem we are solving is important and ouches nearly all of us. In this backdrop, AST SpaceMobile is building the first and only global cellular broadband network in space, to operate directly with everyday, unmodified mobile devices, and supported by our extensive IP and patent portfolio.

Speaker #2: It is my pleasure to now pass over to Chairman and CEO, Abel Avellan, who will go through our activities since our last public update.

Speaker #3: Thank you, Scott. The second quarter was one of our most productive quarters ever for AST SpaceMobile. We not only progressed to the date across many important areas, including manufacturing, regulatory, commercial, and government efforts.

Speaker #3: Capital raising and readiness and readiness for intermittent nationwide service in the United States by the end of this year. Just three months ago, I highlighted that the company had reached an inflection point as we progressed towards scale commercialization of our network.

Speaker #3: Since our first quarter conference call, we have made significant advances in our commercialization initiative, while continuing to secure highly valuable spectrum, creating a further barrier of entry when combined with our portfolio of over 30 of over 3700 patents and patent-pending claims.

Speaker #3: This progress comes as we continue to improve our manufacturing program, including the chipping of the largest satellites ever created for low Earth orbits. I am increasingly confident in our direction, strategy, and position in the growing direct-to-device cellular broadband market that we created.

Speaker #3: I want to cover several updates, including highlights of the past few months, before Scott and Andy discuss the details. As of today, we have completed the assembly of microns and phase arrays for eight Block 2 Bluebird satellites, in addition to six we currently have in operations.

Speaker #3: Unexpected to complete assembly of approximately 40 satellites equivalents of microns and phase arrays by early 2026. As we differentiate our approach to satellite manufacturing with 95% vertically integration, it remains on track to reach a ufacturing cadence of six satellites per month during 2025.

Speaker #3: And now, globally, will soon have a manufacturing footprint with over 400,000 square feet of manufacturing space, supported by a great team of over 1,200 global workforce.

Speaker #3: We're anticipating at least five orbital launches by the end of Q1 2026, with orbital launches occurring every one to two months on average to reach our goal of 45 to 60 satellite launches during 2025 and 2026.

Speaker #3: Which will drive continuous coverage in key markets such as the United States, Europe, Japan, US, and other strategic markets like the US government. Regarding our orbital launch campaign, FM1, our first next-generation Block 2 Bluebird satellite, will be ready to chip in August.

Speaker #3: We're working with our launch provider on determining the earliest possible launch date. A detailed cadence of our 2025 and 2026 deployment plan is now shown in the accompanying quarterly presentation found on our IR website.

Speaker #3: Our Block 2 Bluebirds are approximately three and a half times larger, with ten times the capacity, as compared to our Block 1 Bluebirds, which previously held the record for the largest commercial deployment of a communication satellite ever put in low Earth orbit.

Speaker #3: This means our phase arrays or antennas have much larger surface area than before, enabling our satellites to digitally form more cells over air surface with pinpoint precision and reduced interference.

Speaker #3: As a result, we need far less satellites to achieve our goal of connecting the unconnected. Approximately 45 to 60 satellites for continuous coverage in key markets and approximately 90 satellites for continuous global coverage.

Speaker #3: This compared with other systems that need tens of thousands of satellites and even then we will need our superior technology deep partner chips access to low band and premium band spectrum and commercialization strategy will enable a better experience and deliver greater value to customers.

Speaker #3: For AST SpaceMobile, providing native cellular broadband capability at a scale is a function of the number of Bluebird satellites in orbit. As we have laid out a strong launch cadence to match our connectivity goals our satellites provide native cellular broadband capability directly to unmodified mobile devices, including voice, text, data, and video.

Speaker #3: As a consumer's, this means broader cellular coverage, lower latency, and better signal quality as you leave, work, and travel. This capability has been proven multiple times in partnership with our MNO partners.

Speaker #3: Simultaneously, we're continuing to bring together a network of MNO partners that is second to none. Our commercial ecosystem, which includes agreements and understandings with over 50 MNO partners, with nearly 3 billion subscribers globally, represents a robust network of potential SpaceMobile service consumers.

Speaker #3: As our commercialization and manufacturing initiative advance, we're laying the groundwork for commercial services with active versions in key partner markets. We're paring to deploy nationwide intermittent service in the States, by the end of this year, with our US MNO partners AT&T and Verizon.

Speaker #3: Followed by the United Kingdom, Japan, and Canada in Q1 2026. We also completed key milestones from our US government contract awards and continued strong regulatory progress unexpectedly related topics.

Speaker #3: Of note, we demonstrated the first tactical non-terrestrial network or NTN connectivity over a standard mobile device with participation from multiple branches of the US Armed Forces.

Speaker #3: Our cellular spectrum strategy has also been significantly enhanced, with recently announced an agreement to acquire 60 megahertz of global S-band spectrum priority rights held under the International Telecommunications Union.

Speaker #3: This spectrum priority right provides us with paths to offer services in this spectrum band around the world. Subject to country-level regulatory approvals. Access to S-band spectrum rights complements our plan L spectrum, a egy in the US and Canada and enhances our core 3GPP spectrum strategy that we deploy globally.

Speaker #3: Together with our network operator partners, we are in a position to expand subscriber capacity by offering the vast majority of countries around the world.

Speaker #3: The full AST SpaceMobile network capabilities enable a true broadband experience directly from space to everyday smartphones. Premium spectrum is both limited and valuable, and it is a key factor in achieving commercial scalability.

Speaker #3: Our strategy to work with MNOs and utilize their existing low-band spectrum, while augmenting this capacity with our own spectrum, creates a durable competitive advantage around our business.

Speaker #3: Lastly, we're capitalized more than ever before, with over $1.5 billion in cash on the balance sheet, pro forma for our recent convertible note and ATM facility.

Speaker #3: Through a series of differentiated transactions, we have fortified our balance sheet to build our network and manage our capital structure in responsible way while we cultivate long-term shareholder value.

Speaker #3: The first half of 2025 has been keenly focused on advancing satellite production and manufacturing. Our pace of innovation is reflected on the dedicated work, strategic planning, and unrivaled focus driven by our talented team of over 1,200 global workforce.

Speaker #3: With the achievement of our first Block 2 Bluebird soon and subsequent start of our orbital launch campaign, we're moving with precision to scale the number of Bluebird satellites in low Earth orbits, and expand our global cellular broadband network.

Speaker #3: This is an exciting time for AST SpaceMobile, and I thank you for your continued support. Let me now turn the call over to Scott to provide more detail on progress and initiative.

Speaker #2: Thank you, Abel. The past few months have been extremely active for AST SpaceMobile. Let me elaborate on our recent accomplishments, what they mean for the company's overall progress, and what that means for the rest of our year.

Speaker #2: Our recent agreement with Vodafone Idea in India shows the continued and growing demand for SpaceMobile service across both consumer and enterprise use cases. Additionally, we continue to engage in conversations with players in several other key strategic markets and expect to announce dates on this front soon.

Speaker #2: In Europe, our jointly owned distribution entity with Vodafone is progressing on plan. We recently chose Luxembourg as our headquarters, the country's strong digital credentials and strategic location make it an ideal place for SACCO to distribute AST SpaceMobile's broadband satellite services to European mobile network operators under a single turnkey arrangement.

Speaker #2: The demand signals so far for a sovereign integrated direct-to-device satellite service are increasingly evident, with expressions of interest from 21 of 27 EU member states, as well as in other European markets.

Speaker #2: Moving to gateways, in Q2 we delivered gateway equipment bookings of $14.9 million, a sequential increase primarily driven by the accelerated deployment of our global network infrastructure.

Speaker #2: The pace of bookings in the quarter is a promising indicator of demand ahead of the rollout of our SpaceMobile service. We continue to expect quarterly bookings of approximately 10 million on average during the first half of 2025, as we begin to recognize revenue as and when gateways are installed and milestones are met.

Speaker #2: Furthermore, gateway sales and government contract awards, which I will speak to momentarily, provide us with reassurance that we remain on track with expected revenue in the second half the year of 50 to 75 million dollars.

Speaker #2: Now to the U.S. government business. Our dual-use satellite technology continues to garner interest from U.S. defense and government entities. In Q2, we recognized revenue on four milestones related to contract awards with the U.S. government.

Speaker #2: We also won two additional early-stage contracts in quarter, bringing the total to eight contracts to date with the US government as an end customer, showing broad-based interest across the DOD for use cases uniquely available with our satellite technology, and we fully ect to participate in processes for large contracts going forward.

Speaker #2: We expect revenue from our US government business to ramp significantly in the coming quarters, as we continue to achieve milestones tied to our current contract awards in addition to winning net new contract awards.

Speaker #2: Our government pipeline remains robust as the opportunities for collaboration become clearer. As a commitment to our promising government business, we are significantly expanding our organizational capabilities to serve the US government.

Speaker #2: Organizationally, this will streamline objectives, refine strategies, and better align resources in an effort to grow our government business to substantial revenue streams. We have strong conviction of our opportunities across government and defense use cases, driven by our unique and differentiated satellite technology paired with the growing demand for both communications and non-communications applications that we've seen.

Speaker #2: The achievements of this quarter serve as important signals of our continued positive momentum. We are proud of our progress to date and are energized by the opportunity to remain firmly in the driver's seat of what has already been an incredible journey. We are really excited about the additional commercial progress ahead of us.

Speaker #2: I will now pass the room over to Andy to walk through our financial update.

Speaker #4: Thanks, Scott, and good afternoon, everyone. Our performance during the second quarter of 2025 reflects our continuing evolution to a full-fledged operating company executing at scale to facilitate our bold manufacturing and launch objectives during 2025 and 2026.

Speaker #4: All of this hard work is in support of our near-term revenue ramp for both commercial and US government opportunities that I first discussed with you last quarter.

Speaker #4: The progress on manufacturing in the next 40 Bluebird Block 2 satellites continued throughout the second quarter. One of the most significant highlights from Q2 was our work on the financial front and support of these operational efforts, which I'll discuss in more detail.

Speaker #4: We continued our focus on moving quickly and responsibly to bring our stakeholders space-based broadband connectivity directly to their unmodified smartphones. From a financial perspective, this meant increased spending on both operating expenses and capital expenditures to support our rapid growth.

Speaker #4: I'm happy to provide the specifics and context for our overall spend in the second quarter. We are spending to execute on our objectives to bring SpaceMobile service to market as soon as possible, and our financial performance reflects this.

Speaker #4: Moving to the operating and capital metrics slide, let's review the key operating metrics for the second quarter 2025. On the first chart for the second quarter, we incurred non-GAAP adjusted operating expenses of 51.7 million dollars, versus 44.9 million in first quarter.

Speaker #4: As a reminder, non-GAAP adjusted operating expenses exclude certain non-cash operating costs, which include depreciation and amortization and stock-based compensation. This quarter-over-quarter increase of 6.8 million dollars resulted from a 5.5 million increase in adjusted general and administrative costs and a 2.1 million dollar increase in adjusted engineering services costs, partially offset by an approximately $800,000 reduction in R&D costs.

Speaker #4: This increase in adjusted opex in Q2 was above the guidance I provided in our last earnings call, mainly due to large transaction expenses, including completion of the Legato L-band spectrum transaction and the related non-recourse senior secured delayed draw term loan facility as well as significant work on our joint venture with Vodafone that we launched at the end of the quarter, as Scott discussed.

Speaker #4: If you further adjust for these transaction expenses, our adjusted operating expense were closer to 46.5 million dollars, largely consistent with the guidance I provided in May after Q1.

Speaker #4: Turning towards the second chart on this slide, our capital expenditures for the second quarter 2025 were approximately 323 million dollars, versus 124 million for the first quarter 2025.

Speaker #4: This figure was made up of approximately 298 million dollars of capitalized direct materials, labor for our Block 2 Bluebird satellites, and payments made in connection with multiple launch contracts with the balance relating to facility and production equipment expenditures.

Speaker #4: This amount was above the high end of the guidance of $270 million that I provided during our last earnings call, primarily driven by two capital spending decisions.

Speaker #4: First, in support of our manufacturing ramp and scaling activities, we procured satellite materials above previous plans and ahead of an increasingly volatile tariff environment.

Speaker #4: And second, we decided to make a 25 million dollar launch payment at the end of Q2 rather than in early Q3 as contracted in support of our evolving relationship with a strategic launch provider.

Speaker #4: Based on our adjusted operating expenses for the second quarter of 2025, we estimate that our adjusted operating expenses for the third quarter will come in at a similar level of approximately $50 million, adjusted for any transaction expenses, as we continue to onboard employees in support of our operating plan and augment our R&D efforts for mid-band development to support our L- and S-band spectrum rights.

Speaker #4: We do expect our capital expenditures to decrease in Q3 as compared to second quarter, to a range between 225 and 300 million dollars due to the timing certain launch payments, which vary from quarter to quarter.

Speaker #4: We continue to estimate that the average capital costs, including direct materials and launch costs for our constellation of over 90 Block 2 Bluebird satellites, will fall in the range of 21 million to 23 million dollars per satellite.

Speaker #4: This is the same range of per satellite costs that I provided last quarter. Our cost per satellite estimates are subject to fluctuations based on dynamic geopolitical factors, which impact our costs.

Speaker #4: And we reiterate our belief that the operation of a constellation of 25 Bluebird satellites should enable us to potentially generate cash flows from operating activities to further support the buildup of the remaining constellation.

Speaker #4: The timing of the changes in our adjusted operating expenditures and capital expenditures, as I have just described, could be delayed or may not be realized due to a variety of factors.

Speaker #4: Last quarter, I began to talk about revenue opportunities for the second half of 2025. As a reminder, our venue opportunity is intimately linked to the number of deployed satellites.

Speaker #4: As we previously stated, we believe we can enable continuous SpaceMobile service across key markets such as the United States, Europe, Japan, and other strategic markets with the launch and operation of approximately 45 to 60 Bluebird satellites.

Speaker #4: We also plan to achieve non-continuous SpaceMobile service in selected targeted geographical markets with the launch of a total of 25 Bluebird satellites. Additionally, we will continue to support U.S. government applications that are currently ongoing and accelerating as we launch additional satellites.

Speaker #4: We are reiterating our belief that we have a revenue opportunity in the second half of 2025 in the range of 50 to 75 million dollars, the achievement of our revenue plan remains subject to several contingencies, including the successful launch and deployment of Block 2 Bluebird satellites related to the US government applications contractual milestone achievements.

Speaker #4: Critical gateway equipment sales to our MNO partners in support of their anticipated commercialization efforts of our SpaceMobile service. And service revenues in connection with the activation of our commercial service provided by our existing and planned deployed and operational satellites.

Speaker #4: There can be no assurances that we will ieve any or all of these objectives in our actual revenue results will vary based on a multitude of factors.

Speaker #4: Finally, on the final chart on the slide, on a pro forma basis, taking into account the cash raised in July via the convertible notes with an effective strike price of approximately $120 per share, and funds raised in connection with our fully utilized and now terminated ATM, our cash, cash equivalents, and restricted cash as of June 30, 2025, was over $1.5 billion.

Speaker #4: Drivers for this cash increase include approximately 397 million net proceeds raised from the 2024 and 2025 aftermarket or ATM facilities, that not only funded operations in the quarter but allowed us to accelerate our capital investments in Q2.

Speaker #4: We also received 25 million dollars in the quarter from the Trinity Capital Equipment Loan, 100 million dollar non-dilutive funding source to directly support our manufacturing expansion through financed equipment.

Speaker #4: In addition to the work we did to raise additional capital via convertible notes, we also took actions during Q2 and in the month following to reduce our outstanding debt related to the January 2025 convertible notes due in 2032.

Speaker #4: Between two equitization transactions, we converted 360 million dollars of the outstanding 460 million dollars of convertible notes into 15.2 million Class A shares reducing the outstanding debt related to our January convertible offering to just 100 million dollars of outstanding notes, which are due in 2032.

Speaker #4: And finally, we continue to make progress on non-dilutive financing from quasi-governmental sources of capital in the United States. Following the completion of initial clearances for funding, we are progressing towards diligence and documentation for over half a billion dollars in potential non-dilutive capital from multiple U.S. and international agencies.

Speaker #4: We will provide updates as appropriate and we will be working with the partner banks and our advisors to refine our alternatives. AST SpaceMobile remains well positioned to fund our near-term operational plans.

Speaker #4: We will continue to leverage our balance sheet to quickly bring our SpaceMobile service to market. Through the second quarter of 2025, we remain on target to execute against our operational plans for this year and next.

Speaker #4: And with that, this completes the presentation component of our business update call. And I'll pass it back to Scott.

Speaker #1: Thank you, Andy. Before we go to the queue of analyst questions, we'd like to address a few of the questions submitted by our investors.

Speaker #1: Operator, could you please start us off with the first question?

Speaker #3: Rupert from Zurich asks, given the current launch cadence and near-term goals, is your current funding runway sufficient to reach initial commercial revenue, or do you foresee additional capital needs?

Speaker #2: I'll take this. This is Andy Rupert. Thank you for the question. The short answer is yes. We do feel like our balance sheet combined with the opportunities we currently have for both government and commercial inflows in the near term enable us to, you know, to achieve a strategy that, again, set out originally with five satellites for key thresholds, 25 for positive operational cash flow, and ultimately 45 to 60 satellites for continuous service and strategic markets around the world.

Speaker #2: Given our pro forma balance sheet at the end of Q2 of over $1.5 billion, we do believe that we are fully funded now to reach the 45 to 60 satellite level. As part of that, our capital strategy going forward will be one focused not on threshold business delivery needs, but rather on more commercial and strategic development, with an optimal capital structure and additional financial support as appropriate. Of course, we will focus on de-risking the business, but not as the primary inflow for the business.

Speaker #2: Those will quickly convert to those government and commercial opportunities, which are starting to commence.

Speaker #3: Ahmed from Washington asks, investors are confused about the recent achievement of a first-ever native voice call VOLTE and text SMS, how does this differ between the voice video text achievements that you achieved in the past?

Speaker #2: Thank you, Amit, for the question. As you know, from last year, when we did the first voice, the first video, the first text ever done from space, and the first 5G connection directly from our network of satellites to unmodified phones, that was done using partner spectrum and our core and our technology.

Speaker #2: What I use starting to see now, as we are focusing on delivering nationwide service intermittent by the end of the year, with our partners in the US, Europe, Japan, and soon Canada, we are starting to do the full integration to the core infrastructure.

Speaker #2: So what you saw was our ability to actually do native calling directly from the dialer of the phone into space using the operator core and operator infrastructure.

Speaker #2: So we have demonstrated multiple times our ability to do broadband directly from space to any phone. Of any manufacturer without doing any changes into the phone, without any modification to the phone, and this was, yes, another milestone of how to do that natively in the phone directly from the dialer of the phone without requiring any app or requiring any over-the-top application.

Speaker #3: Scott from New York asks, "Are there any further barriers to the Legato transaction formally closing?"

Speaker #2: Thanks, Scott, for the question, Andy here. Since our last public update, the court did formally approve the definitive documents that were signed. Alongside the 80-year long-lived L-band usage rights, which was a huge milestone in this transaction, and that closed the transaction for us as a starting point.

Speaker #2: Separately, we did close the long-term non-recourse SPV level financing; it's in the form of a delayed draw facility that we can use when we receive formal FCC approval.

Speaker #2: And in parallel, we're working to put in place bridge financing ahead of the FCC approval based on our receipt of a sponsor backstop commitment.

Speaker #2: So finally, we do feel good about the FCC on the L-band. It's already authorized for usage from space for geostationary orbits, and we expect that to be a 2026 event for us.

Speaker #2: So look for initial filings on this front in the coming months. That's the next stage in the Legato transaction. What we are achieving with these bands is we have the L-band for US and Canada, as you ow, we recently also acquired rights to seek landing rights on a country-by-country basis for the S-band.

Speaker #2: So that, in essence, will allow us to have direct access to a spectrum globally using either a combination of L, S, and the low-band spectrum from our telco partners.

Speaker #2: So with this, we have the most effective network possible. The low-band which it will be the band that we will use to for penetration.

Speaker #2: And performance. The mid-band for more capacity. And combining that on a global basis, we think that is very strong.

Speaker #3: Kevin from Vancouver asks, what is your current monthly production rate for Block 2 satellites? Microns, phase, arrays, and control stats? And what will it take to ramp up to six satellites per month?

Speaker #3: For example, is it a labor issue, a supply chain issue, or another issue?

Speaker #2: Thank ou, Kevin, for the question. In the next week or so, we will be at nine satellites in addition, viously, of the five that we have already in orbit.

Speaker #2: Built. With that, we also have the capability now to basically get to six per month in terms of phased array production. We feel that we will have around 40 phased arrays built by the end of the year.

Speaker #2: Very early in 2026. And at the rate of six satellites per month. With one launch every 45 to 60 days. So we are at rate of the phase array.

Speaker #2: We think that we will be at rate of the full satellite later in the year, this year. For support, our launch campaign of one launch every 45 to 60 days, with six satellites per launch in average.

Speaker #2: So, six to eight satellites per launch on average; that’s what we have achieved at this point. We also now have close to 400,000 square feet of manufacturing facility.

Speaker #2: So, space will not be an issue. We also have ramped out significantly with our production capacity. We now have over 1,200 people working on the program.

Speaker #2: And we have also secured the launches, with six launches already secured and in the manifest of our partners. Following in 2026, we plan to conduct a launch every 45 days, with six to eight satellites per launch.

Speaker #2: So we're there. We're getting very, very close to basically hit our target of 45 to 60 satellites. As Andy answered before, we're fully funded for that.

Speaker #2: And it's a lot of hard work, but we think that we are getting closer and closer to our goal.

Speaker #1: And with that, I'd like to thank our shareholders for submitting those questions. Operator, let's open the call to analyst questions now.

Speaker #3: Thank you. We will now be conducting our analyst question and answer session. If you would like to ask a question, please press star one on your telephone keypad.

Speaker #3: A confirmation tone will indicate your line is in the question queue. You may press *2 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star cues.

Speaker #3: One moment, please, while we pull for questions.

Speaker #1: Our first question comes from the line of Griffin Boss with B. Riley Securities. Please proceed with your question.

Speaker #4: Hi, good noon. Thanks for taking my question. So I just want to start off. First, generally, can you comment further on the revenue share agreements and economics there with the MNO partners that you have?

Speaker #4: Obviously, that historically has been predicated on a 50-50 revenue share. But, you know, seemingly, I would assume perhaps that changes now depending on how much of their spectrum you access versus what you bring to the table yourself with the new S-band agreement, as well as the potential Legato acquisition.

Speaker #4: So, any updated color you could give us there would be helpful.

Speaker #1: Hey, Griffin, it's Scott here. I ink as you know from the very founding of the company, can you hear me?

Speaker #4: Yes, I an.

Speaker #1: Even from the very founding of the company, we've the 50-50 revenue share was sacrosanct, right? You know we bring the network, the operator partner brings the spectrum and the user, the customer.

Speaker #1: So, that's a very important principle, and our contracts adhere to that very closely. That's important as part of all the agreements we have with the over 50 operators today.

Speaker #1: And how that plays out over time, you know, I think we're most focused on growing the business, obviously. But now that our MSS spectrum strategy is an enhancement to the cellular spectrum, it is becoming clear, I think, over time. You know, we can talk more about how that value is captured.

Speaker #1: But it's very, I am, its spectrum is a rare thing. It's valuable to have, and bringing that to the party is something that's really important that we want to be able to do.

Speaker #1: But to date, I would say you know that the 50-50 rev share with the spectrum bought by others is how we've acted.

Speaker #4: Okay, fair enough. Thanks, Scott, for the color there. Along the same lines, just with the addition of the spectrum, is there any way you can further translate the 120 megabits per second peak data rate per cell that you've mentioned in the past to some real-world examples of perhaps how many concurrent users in a location will be able to access the network to make calls, video calls, et cetera? And how that changes with the addition of the spectrum that you're acquiring, if at all?

Speaker #2: Yeah, Griffin. I mean, the way to think about it, satellites have, depending on the band, between 2,500 to 10,000 cells. 10,000 cells, obviously, is possible with the new ASIC.

Speaker #2: And what we do is that 120 megabits per second is the peak data rate that you can achieve per each of those cells.

Speaker #2: Within those 120 megabits, within approximately 12 kilometers radius, you basically chair that capacity among the users in that area. So the users in that area, they can use voice, text, video, video conference, FaceTime, WhatsApp, basically email, basically do whatever they do normally.

Speaker #2: When they're connected to towers, but in this case, they can do it regardless of where they are, regardless of what phone they have in their pocket.

Speaker #2: The demo number of users per cell depends on the density of the cell. We basically manage that capacity dynamically, and that changes as we add more satellites.

Speaker #2: But as we explained earlier, our strategy is to combine the low-band spectrum from operators for penetration and access to significant amounts of devices on a global basis, while enhancing, at the same time, with our own spectrum on top of that.

Speaker #2: So it's a combination of the two things that deliver the 120 megabits per second capacity, which is a capability that we can actually achieve on the satellites that we have today.

Speaker #2: But in low-band.

Speaker #4: Okay, great. Thanks, Abel. And if I can just squeeze another one in: just regarding the launch cadence, it’s great to see the rapid pace of expected launches in the future.

Speaker #4: But in terms of ISRO, the chairman there recently stated that the launch with a communication satellite, I assume, would be ASTS, would be within a couple of months.

Speaker #4: So I'm just curious if there's anything you guys could say as to what the chances are that we could possibly see a batch launch of Blockbird, sorry, Bluebird 2 satellites ahead of the ISRO launch?

Speaker #4: Within the next uple of ths?

Speaker #2: That is not the plan. I am, the satellite is ready to ship during this month. We are in discussion with them for this update of the actual launch.

Speaker #2: But as you can see in our launch campaign, we have six launches, and they're independent with multiple vendors and multiple launch partners.

Speaker #4: Okay, got . Thanks for taking my questions.

Speaker #3: Thank you.

Speaker #1: Our next question comes from the line of Chris Shalh with UBS. Please proceed with your question.

Speaker #4: Great, thank you. You cited the incremental wins in the government space. I appreciate some of this might be sensitive, but can you just help us better understand the types of use cases you are targeting and the advantages your tech offers, maybe versus others servicing the government sector?

Speaker #4: And given the announcements we've been seeing out of Washington, can you just update us on how you're thinking about the potential U.S. government TAM now relative to several months ago?

Speaker #4: Thank you.

Speaker #2: Well, we're very bullish about the government use cases. Multiple branches of the U.S. government have tested and used, and they are currently using our operational satellites.

Speaker #2: So, we are under contract with eight different programs, and it is sensitive, you said. But I can say the broad range of applications from the government includes both communications and non-communications applications, which are both in use already today in our current satellites.

Speaker #2: So we continue to be very, very bullish about the government application, and also the amount budget that has been approved in appropriation, and the actual usage that they are having today.

Speaker #2: So, we are affirming our plans and our growth opportunity in the government sector.

Speaker #1: And the way to think about the TAM, I think over the last year, year and a half, we've articulated that a little bit. But what you're seeing through these early contracts is a proof of record.

Speaker #1: And programs of record, if you look in this sector, tend to be north of $100 million or several hundred million dollars. So that's really what you're playing for.

Speaker #1: And I think of the use cases that can be done with a large phased array in orbit delivered very cheaply relative to historical standards. There are multiple programs of record opportunities that we feel really good about.

Speaker #1: And how has that changed? You know, really in the last couple of months, or since the new administration, we think that there are more of those types of opportunities, and they're potentially bigger.

Speaker #4: Great, thank you. And I can just follow up on the spectrum with one more question. Now that you have global coverage, should we view this spectrum as being all that you need, or could we see you purchase other licenses here going forward?

Speaker #2: Well, we believe—listen, these are large blocks of a spectrum. They are MSS, and they are sufficient to provide the 120 megabits per second, which is our mark target data rate for offering to consumers.

Speaker #2: Global basis, so we never discard opportunities; but that is what we planned, and with that, we can get to the data rates that we intend and are using for our users.

Speaker #4: Okay, great. Thank you very much.

Speaker #3: Thank you.

Speaker #1: Our next question comes from the line of Brian Kraft with Deutsche Bank. Please proceed with your question.

Speaker #5: Hi, good noon. I had two questions, if I could. First, is the timing of the FM1 launch on the critical path for other launches? In other words, is there a period of time you need before you would do the next launch because you want to test FM1 extensively before the next group goes up?

Speaker #5: And if there does need to be some time in between FM1 and the next launch, what could that timeframe look like? You know, how much time would you need?

Speaker #5: And then I had a question about the service launch plans. What would a nationwide intermittent service look like? What type of product would it be?

Speaker #5: Would you charge for it, or would you use it maybe as an early promotion vehicle to build interest in the full service? What ultimately launches?

Speaker #5: Thank you.

Speaker #2: Yeah, we refer to the first question; the answer is no. And the other satellites are basically at the same few weeks after the FM1.

Speaker #2: So we are treating them separately and we're not conditioning any of the launches to any specific launch. And as for regards of our the way that we're deploying the service, we first we start with initial non-continuous service, nationwide, in countries that we announce the service.

Speaker #2: So starting with the U.S., Europe, Japan, and some strategic markets that we're working on. And then we do that. Then, as we add satellites, we basically... what changes is the persistence.

Speaker #2: The persistence of how much is available each day will rapidly change as we add more satellites. In the case of the U.S., when we get to around 45, we will be very close to a service that we can offer.

Speaker #2: And then, as you get to 60, you are in full continuous service; and as you get to 90, you are in full global continuous service.

Speaker #2: And the plan basically called for a launch of six to eight every 45 to 60 days.

Speaker #5: Thank you. And could you comment at all on how you plan to use that intermittent service as a segue to the full 24-hour service?

Speaker #5: You know, are you thinking about maybe using it as a promotional tool to build that interest, or is it something you would charge for and focus on earning revenue from?

Speaker #2: Well, we will coordinate that. We are in coordination. We had a plan with our telco partners. We prefer to comment on that jointly with them.

Speaker #2: But I will say the government is already using the satellites on an intermittent basis.

Speaker #5: Yeah, okay. Thanks, Abel.

Speaker #3: Thank you.

Speaker #1: Our next question comes from Colin Canfield with Kanter Fitzgerald. Please proceed with your question.

Speaker #4: Hey, thank you for the question. Maybe focusing back on spectrum, if we can commit maybe to talk about how we should think about tech teaming partnerships in essentially kind of affecting both the kind of support of the types of spectrum that you'd be going after.

Speaker #4: As well as the sort of pricing effects and, like specifically on the latter, like how we should think about kind of AST's ability to get spectrum cheaper because you have the tech partners to use it better.

Speaker #4: If we can kind of talk through those two dynamics.

Speaker #2: Yes. I am. You obviously see 60 megahertz of global spectrum. If it were purely terrestrial, it would be a number that nobody can afford. So yes, I mean, we have the ability, with the flexibility of our technology, to basically tune to any spectrum in the low band, that is, 700 to 950 megahertz, or in the mid band, 700 to 2600 megahertz.

Speaker #2: And the ability to basically connect that to regular cell phones by itself creates a lot of value in converting satellite-type spectrum into basically dual-use satellite terrestrial spectrum.

Speaker #2: So we see it like that. So enabling spectrum is like beachfront property, but it is only a beachfront property. If you had a house to build on it, and we believe that our ability to reuse satellite and terrestrial spectrum given the size of our arrays and the ability to chair spectrum between the two applications is what creates this massive opportunity of converting satellite spectrum into spectrum that becomes much more valuable when it's used in our network.

Speaker #4: Got it. And then if we go back to the government question, it looks like the program books that dropped today suggest something like a $2 billion delta of a kind of incremental opportunity.

Speaker #4: So just kind of tying back to the programs of record opportunities that you talked about, Scott, could you maybe kind of think about what sort of timeline we should consider getting through that competitive process? And then maybe, like you discussed, agility and price—are they under kind of variables or factors that are being cited as reasons for AST being able to win?

Speaker #1: Sure. Well, as you noted, the opportunities are dynamic, right? And they're dynamic and up and to the right at the moment. So, all these new pieces of information seem to be very positive for the applications for what we can uniquely offer, right?

Speaker #1: And so, as we're evaluating all these and positioning ourselves around them, I think what I said before still holds true. You know, the specific timing of awards could be even this year.

Speaker #1: Probably you know we won't speak to scale. You know, relative to the end case, but this year is a good timeframe to start seeing more direction on that.

Speaker #1: But like you said, the budget keeps growing. I think the demand is there. The desire is there. And what we're offering is quite unique across, you know, 5 to 10 different types of use cases.

Speaker #5: Yeah. And we solve a

Speaker #2: A very real and tangible problem that the government needs to solve is that the size of the satellites matters a lot. The power of the satellite matters a lot.

Speaker #2: And at the cost, at the cadence that we're building the largest satellites ever launched, basically nobody else is, nowhere even close to it. So those are factors that play into the usability of our technology for both commercial and government.

Speaker #4: And then maybe one more. I'm just kind of the go-to-market strategy. I think as we kind of shape the court of players in the satellite communication space, AST is able, you know, still has opportunities to team.

Speaker #4: With folks that are kind of focused on this. So how do you kind of think you know maybe shaping your strategy to kind of the neoprimes, ou know folks like Anduril that focus on not just the defense hardware side, but also kind of the consumer electronics trends that play into that?

Speaker #4: Thank you.

Speaker #2: Yeah, no, absolutely. I mean, with our technology, first of all, you can get basically— as you don't have devices— and you can get, call it, 120 megabits per second into something of the size of a few square inches.

Speaker #2: You can place it in drones; you can place it in carts; and you can place it, obviously, in the most difficult application, which is actually cell phones.

Speaker #2: And allow for connectivity with all the information that is behind that. So, as we said, the government opportunities are not only in the communications space, which is obviously very sizable, large, and growing, but also include non-communications applications in multiple domains for defense.

Speaker #4: Got it. Thank you for the question.

Speaker #3: Thank you.

Speaker #1: Our next question comes from the line of Caleb Henry with Quality Space. Please proceed with your question.

Speaker #4: Hi, thanks, guys. A question about the S-band. Is that even a team that the ITU level? Is that licensed anywhere? Nationally, or is that a project that's going to effectively now, going state by state?

Speaker #2: It is a project that I started now. Basically, we had a bring to use from around 2016. With that, we basically got administration-by-administration according to the priorities that we set with our partners.

Speaker #2: Telco partners in order to complement the low band, the L-band, and the S-band, on a country-by-country basis.

Speaker #4: Okay. And then on the launch payment that you mentioned was pulled forward, can you just provide any more color on why that was done?

Speaker #4: I'm guessing it was to offset delays with New Glen.

Speaker #5: Thank you. This is Scott. No, it was not related to anything like that. This is just, I think it speaks to a little bit of flexibility we have nothing more.

Speaker #5: And the fact that you know quarter to quarter, it's not always apples to apples. But no, it was not related to anything like that.

Speaker #4: Okay. And then just the last one. I know this may be a bit forward-looking, but the satellites are called Block 2, and AST has talked about them having up to 45 to 60 satellites.

Speaker #4: Is the plan to continue Block 2 all through the 90-ish satellites, or is there an idea of transitioning to a Block 3 before you complete the constellation?

Speaker #2: Well, provided the right market conditions, our plan is to actually produce 72 satellites per year and then split them between low band and mid band with our own spectrum.

Speaker #4: Okay. So it would be two different types of satellites then?

Speaker #2: Yes.

Speaker #1: For commercial.

Speaker #4: So does that mean we're looking at kind of two constellations of similar size, like 72 each or 90 each, for somewhere between 144 to 180 satellites?

Speaker #1: Hey, Caleb, I'd say you know you're thinking a little bit like how you know people put out business plans on LEO rather than how people actually build it, right?

Speaker #1: And I think the smart way we're some parties have been successful is this is really like a mesh we're building, right? Once we are in with our initial constellation that we've talked about, the 45 to 60 satellites that we're so focused on, we have great flexibility with fantastic marginal economics to really expand not only the size of the constellation and the services that it offers.

Speaker #1: So it's a little too prescriptive, but based on the strength of a and profile, we have a lot of we have a lot of flexibility.

Speaker #1: So it's really think of it as, you know, once you have this base constellation, there's a lot of opportunities to flexibly build that based on demand, particularly when you're vertically integrated.

Speaker #4: Right. Totally understand. Thanks, guys.

Speaker #3: Thank you.

Speaker #1: Our next question comes from the line of Tim Warren with Oppenheimer and Company. Please proceed with your question.

Speaker #6: Thanks, guys. On the latest purchase of the S-band spectrum, can you give a little more color on what it's being used for now? I know you used the term "priority rights."

Speaker #6: You know, I guess, any more color on your degree of confidence in being able to utilize that spectrum? Thank you.

Basically, you can do anything that you can do in your phone and uh, and that the model that we have, and that we have over 50, Telos around, the globe that are subscribing to it.

Thank you.

Thank you.

Our next question comes from the line of Scott Zero with Rod Capital. Please proceed with your question.

Hey, good afternoon, thanks for taking my questions. Hey, maybe to follow up on on the uh, sband side of the equation. It's very exciting to see you guys. Now, having a multi-band offering to to provide the Broadband capabilities. But I'm I'm wondering if you could provide a little bit more um color in terms of the regulatory approval and timelines. It sounds like you're going to start that other country by country basis now. But just what what is the timeline that you would expect to be associated with it? And I and I guess if there are any geographies in particular that you're focused on, I would assume it's some more of the developed markets and second in terms of the uh, support for example.

Existing.

Uh, you know, 5 billion plus devices out there today, what sort of support is there today in the installed base for sband and and kind of how do you see? Um you know the Silicon support syncing up with that at the device level over the next couple years and then I had a follow up

Yeah. I mean, the the on that and that's why we deployed our Network in in tranches, and obviously we start with the loan existing 3gpp bands that are terrestrial. So they are in every single phone and that that's that's uh

The The Becoming availability of those bands. It is in line, actually, with our, our, our deployment plan. We start with all we, we start with low band where basically every phone

Support the band and uh, and as as we deploy and get closer to the event, we we we we we to the L and the sban we keep adding into into the capability.

Thanks very helpful and to follow up on the, the non-continuous front of a lot of dialogue about that today when I think of non-continuous I think of applications like iot. Um but I haven't heard that coming up uh in terms of the conversation today. So I'm wondering where iot fits into the carrier partner timeline and Landscape is that part of their near-term deployment plans and focus or is that something that you expect to come later. You know post full commercial launches of uh more traditional Broadband Services. Thanks

I mean, the gap between continuous and non-continuous is relatively short. And, um, and um, er,

We will be opening up for user to Consumers, uh, in coordination with our Telco Partners. But as I said before, the, the early applications are actually governmental applications, uh, iot is, is all something that that that we can serve. It's a relatively, a a small Market compared with the Broadband cellular Market directly to regular handsets and handsets and the government.

Opportunity. But, it's something that we we, we plan to enable in addition to the to the consumer Broadband capabilities that we are enabling to the to the Telecom partners.

Okay, thanks so much.

Thank you.

Our next question comes from the line of Greg at Penny with Clear Street. Please proceed with your question.

Hey, thanks for taking my question. Uh, just a 1 uh quick 1 on the transaction uh of Legato. Did I hear you guys correctly that when we think about proforma uh, liquidity right now that that the cost of that transaction will be primarily asset, backed or financing, um, when the outflow is uh, and can you just remind us? Is it roughly 500 million?

Yeah, absolutely. You have that, right? The um the primary outflow is just North of 500 million and um we have SPV financing, that's not recourse. Meaning, the only rights are held in the special purpose, entity and relate to the Spectrum usage rights. Um, as noted when we completed that transaction and the mediation settlement was approved, that starts um, in October at the end of October this year, with the bulk of it, paid in October 420 million and another 100 million in March of, uh, 2026. So, we're working on that bridge financing right now that gets us from that point in October.

Until we have FCC approval, but it's all. This is all finance separate and apart from ordinary course operations. We will have usage fees that will incur when we, um,

I'm sorry, utilizing the Spectrum and so forth. And uh, those will start up a little bit later this year. Um, that will be become an ongoing part of our operating model. We're not there yet. But the bulk of that um is that what's called a deferred usage obligation in the transaction docs and that's, uh, that's been financed separate and apart from our core operating company.

Okay, great. That’s very helpful. Thanks a lot.

Thank you. Our next question comes from the line of Chris Quilty with Quilty Space. Please proceed with your question.

Thanks, guys. I got dropped, so forgive me if this was asked. But, uh, on the government capability, are the government requirements for orbit and inclination complementary to what you're doing commercially, or is there a need to inject satellites in different orbits specifically for the government?

Hey Chris. Um, we do not have the ability to comment on that because that will...

Implied, where the usage is. Um, but I will say a big interest. It is actually to...

To, to have a dual.

Dual usage of our satellites.

Understand. And you know the current contracts are with the U.S. government. Is there anything that would preclude you from negotiating with other Five Eyes countries, perhaps for the same capability?

No, there is no any any.

Exclusion. But at the moment, our focus is with the UA government.

I think you said something earlier that, uh, in your statement that led me to believe that, you know, perhaps, uh, to the degree that government business grows and supports it, there might be, uh, a Block X, uh, that you might develop with specific capabilities, uh, you know, for government customers. And as part of that question, when the original Block 2 was designed, were some of the government capabilities originally designed in? Were there things that you added after the fact? And additionally, are there things you would like to add to the satellite capability?

Yes, I mean, actually, the capability for the governments is already on the current satellites in operation. They are actually using the satellites today.

But were there major modifications from the original design? Uh, you know, uh, because I think it’d be a point. You were doing the original design; I don’t know that. Well, maybe the government was a perceived customer at that point in time.

Yes, I mean the blog 1—it did require.

Additional, uh, design features, but they were already incorporated.

A year and a half ago.

And Chris, the short answer is kind of yes. All your questions, right? Um, and it's the beauty of the constellation because you can, once you have the constellation, the ability to evolve the technology provide extra tweaks to it. It's not the classic at a transponder at a payload; it's more tweaking the out.

Besides the capability of the large phased array and the ability to evolve that over time, is 1, that as long as we have a constellation, we'll possess that ability to do it in a really attractive way from a financial perspective.

Very good. Looking forward to it. Thanks, guys.

Thank you.

And we have reached the end of the question-and-answer session.

And therefore, I will turn the call back over to Scott Wisniewski for closing remarks.

Thank you, operator. We want to thank all our shareholders and the research analysts for joining the call. We can't wait to give you more updates in the near term, so please stay tuned. Thank you.

Thank you. This concludes today's teleconference, and you may disconnect your line at this time. We thank you for your participation.