AST SpaceMobile Q2 FY2025 Earnings Call Transcript

AST SpaceMobile, Inc. (NASDAQ:ASTS) reported its second-quarter earnings results after Monday’s closing bell.

Below are the transcripts from the Q2 earnings call.

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OPERATOR

Good day and thank you for standing by. Welcome to the AST SpaceMobile second quarter 2025 business update call. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your host today, Scott Wisniewski, president of AST Space Mobile. Please go ahead.

Scott Wisniewski (President)

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 2 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. 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, all with the securities and Exchange Commission, and other documents filed by AST SpaceMobile with the SEC from time to time. Also, after our initial remarks, we will be starting our Q and A section with questions submitted in advance by our shareholders. 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, 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. The markets we are pursuing are massive and the problem we are solving is important and touches 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. It is my pleasure to now pass over to Chairman and CEO Abel Avalon who will go through our activities since our last public update.

Abel Avellan (Chairman and CEO)

Thank you Scott. The second quarter was one of our most productive quarters ever for AST SpaceMobile with notable progress to the date across many important areas including manufacturing, regulatory, commercial and government efforts, capital raising 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. Since our first quarter conference call, we have made significant advances in our commercialization initiative. We while continuing to secure highly valuable spectrum, creating a further barrier of entry when combined with our portfolio of over 3,700 patents and patent pending claims. This program 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 in the growing direct to device cellular broadband market that we created. 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 microsats and phased arrays for eight Block two Bluebird satellites in addition to six we currently have in operations and expected to complete assembly of approximately 40 satellites equivalents of microsats and phased arrays by early 2026. Our differentiated approach to satellite manufacturing with 95% vertical integration remains on track to reach a manufacturing cadence of six satellites per month during 2025 and now globally we will soon have a manufacturing footprint with over 400,000 square feet of manufacturing space supported by great team of over 1200 global workforce. We currently anticipate 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 25 and 26 which will drive continuous coverage in key markets such as United states, Europe, Japan, US and other strategic markets like the US government. Regarding our orbital launch campaign, FN-1, our first next generation Block 2 Blue Bird satellite will be ready to ship in August. 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. Our block 2 bluebirds are approximately 3 1/2 times larger with 10 times capacity as compared to our block 1 bluebirds. We previously held the record for the largest ever commercially deployed communications satellite ever put in loaded orbits. This means our phased array or antenna have much larger surface area than before, enabling our satellites to digitally form more cells over Earth’s surface with pinpoint precision and reduce interference. 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. This compared with other systems that need tens of thousands of satellites and even then we believe 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 for STSPACE mobile providing native cellular broadband capability at Scale is a function of the number of Bluebird satellites in orbit. We had laid out a strong launch cadence to match our connectivity goals. Our satellites provide native cellular broadband capability directly to modified mobile devices, including voice, text, data and video. As a consumer, this means broader cellular coverage, lower latency and better the signal quality as you live, work and travel. These capabilities have been proven multiple times in partnership with our MNO partners. Simultaneously, we’re continuing to bring together a network of MNO partners that is second to none our commercial ecosystem which include agreements and understanding with over 50 MNO partners. We, with nearly 3 billion subscribers globally, represent a robust network of potential space mobile service consumers. As our commercialization and manufacturing initiative advance, we’re laying the groundwork for commercial services with activations in key partner markets. We’re preparing to deploy nationwide intermittent service in the United States by the end of this year with a with our US MNO partners AT&T and Verizon, 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 on spectrum related topics. Of note, we demonstrated the first Tactical Non Terrestrial Network or NTN connectivity over standard mobile devices with participation from multiple branches of the US Armed Forces. Our cellular spectrum strategy has also been significantly enhanced. We recently announced an agreement to acquire 60 MHz of global S band spectrum priority rights held under the International Telecommunications Union. This spectrum priority rights provide us with paths to offer services in this spectrum band around the world. So due to country level regulatory approvals, access to S band spectrum rights complement our Plan L spectrum strategy in the U.S. and Canada and enhance our core 3GPP spectrum strategy that we deploy globally. 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 the full AST space mobile network capabilities, enabling a true broadband experience directly from space to everyday smartphone premium spectrum is both limited, valuable and gating factor in achieving commercial scalability. Our strategy to work with MNOs and utilize their existing low band spectrum while augmenting this capacity where our own spectrum create a durable competitive advantage around our business. Lastly, we’re better capitalized than ever before with over $1.5 billion in cash on the balance sheet pro forma for our recent convertible note that and ATM facility. 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. The first half of 2025 have been keenly focused on advancing satellite production and manufacturing. Our pace of innovation is reflecting on the dedicated work, strategic planning and unrivaled focus driven by our talented team of over 1200 global workforce. With the achievement of our first Block 2 Bluebirds soon and subsequent start of our orbital launch campaign, we are moving with precision to scale the number of Bluebird satellites in loaded orbits and expand our global cell broadband network. 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 and initiative.

Scott Wisniewski (President)

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. Our recent agreement with Vodafone Idea in India shows the continued and growing demand for space mobile 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 updates on this front soon. 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 SATCO to distribute AST SpaceMobile’s broadband satellite services to European mobile network operators under a single turnkey arrangement. 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. 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. The pace of bookings in the quarter is a promising indicator of demand ahead of rollout of our space mobile service. We continue to expect quarterly bookings of approximately 10 million on average during the second half of 2025 as we begin to recognize revenue as and when gateways are installed and milestones are met. 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 of the year of 50 to 75 million dollars. Now to the US 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. We also won two additional early stage contracts in the 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 expect to participate in processes for large contracts going forward. 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, 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 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 and non communications applications that. We’Ve seen. 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 to date. And we’re really excited about the additional commercial progress ahead of us. I will now pass the room over to Andy to walk through our financial update.

Andy Johnson (Chief Financial Officer)

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. 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. The progress on manufacturing the next 40 Bluebird Block II satellites continued throughout the second quarter. One of the most significant highlights from Q2 was our work on the financial front in support of these operational efforts, which I’ll discuss in more detail. We continued our focus on moving quickly and responsibly to bring our stakeholders space based broadband connectivity to direct to their unmodified smartphones. From a financial perspective, this meant increased spending on both operating expenses and capital expenditures to support our rapid growth. 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 space mobile service to market as soon as possible and our financial performance reflects this. Moving to the operating and capital metrics slide, let’s review the key operating Metrics for the second quarter of 2025. On the first chart for the second quarter we incurred non GAAP adjusted operating expenses of $51.7 million versus $44.9 million in the first quarter. 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 resulted from a 5.5 million increase in adjusted general and administrative costs and a $2.1 million increase in adjusted engineering services cost, partially offset by an approximately $800,000 reduction in R and D costs. 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, if you further adjust for these transaction expenses, our adjusted operating expense were closer to $46.5 million, largely consistent with the guidance I provided in May after Q1. Turning towards the second chart in this slide, our capital expenditures for the second quarter of 2025 were approximately $323 million versus 124 million for the first quarter of 2025. This figure was made up of approximately $298 million of capitalized direct materials labor for our Block II Bluebird satellites and payments made in connection with multiple launch contracts, with the balance relating to facility and production equipment expenditures. This amount was above the high end of the guidance of $270 million that I provided during our last earnings call, perhaps primarily driven by two capital spending decisions. 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. And second, we decided to make a $25 million 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. 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 expense as we continue to onboard employees in support of our operating plan and augment our R and D efforts for midman development to support our L and S band spectrum rights. We do expect our capital expenditures to decrease in Q3 as compared to second quarter to a range between 225 and $300 million. Due to the timing of certain launch payments which vary from quarter to quarter, we continue to estimate that the average capital costs, including direct materials and launch costs for our Constellation of over 90 block II Bluebird satellites will fall in the range of 21 million to $23 million per satellite. This is the same range of per satellite costs that I provided last quarter. Our cost per satellite estimates are subject to fluctuation fluctuations based on dynamic geopolitical factors which impact our costs and we reiterate our belief that the operation of a constellation of 25 Bluebird satellites should ...