Good day, and thank you for standing by. Welcome to the AST SpaceMobile Fourth Quarter 2022 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, Chief Strategy Officer of AST SpaceMobile. Please go ahead.

Thank you, and good morning, everyone. 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. 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, 2022, with the Securities and Exchange Commission and other documents filed by AST SpaceMobile with the SEC from time to time. Readers are cautioned not to put undue reliance on forward-looking statements, and the company specifically disclaims any obligation to update the forward-looking statements that may be discussed during the call. Also, after our initial remarks, we will be starting our Q&A section with questions submitted in advance by our shareholders. Now, referring to Slide three. For those of you who may be new to our company and our mission, there are over five billion mobile phones in use today around the world, but many of us still experience gaps in coverage as we live, work, and travel. With this, AST SpaceMobile is building the first and only global cellular broadband network in space to operate directly with standard unmodified mobile phones based on our extensive IP and patent portfolio. Our engineers and space scientists are on a mission to eliminate the connectivity gaps faced by today's five billion mobile subscribers and finally bring broadband to the billion who remain unconnected. With that, it is my pleasure to now pass it over to Chairman and CEO, Abel Avellan.

Thank you, Scott. Good morning, everybody. Very glad to be updating you on what has happened since our last call. Before I start, I want to remind everybody that we're currently operating the first and only satellite designed to deliver space-based cellular broadband, with the largest ever communication array deployed commercially in low Earth orbit. That's a monumental achievement. We're very proud of it. We're also currently testing BlueWalker 3, and we have successfully validated key technologies to deliver cellular broadband directly to standard unmodified phones. We have also taken significant steps to further industrialize our technology with in-house manufacturing of key components and electronics and secured loans for our next five satellites. We continue to progress towards commercializing our services with customers, partners, and regulators on a global basis. Let me take you to Page five. With BlueWalker 3 now in orbit, we have completed successful operations more than 2,000 times. The pictures that you see here are of the satellite prior to its launch, and then in the bottom, you see the satellite unfold in the air and then the satellite floating in space. This is basically around 695 square feet structure flying around the earth and pointing to the ground at around 70,000 miles per hour. Our ability to manage and control it is very important and has been a major step in our technology. So where are we with testing BlueWalker 3? First of all, we are happy to announce that the initial test results indicate that the downlink signal strength necessary to reach 5G cellular broadband speed can be met with our technology. We also have demonstrated our ability to deploy the largest ever communication array in low Earth orbit. We have demonstrated our satellite's ability to fly, control, and deploy our satellite with the array fully deployed, measuring 693 square feet. We have validated our patented technology to compensate for Doppler and delay, which is a key component to achieving 5G speed, and we continue to target the completion of cellular broadband speed directly to standard unmodified phones. Page seven provides an update on the industrialization of our patented technology. We continue to invest in our facilities around the globe with a focus on our facilities in Texas. We have ramped up our initial manufacturing facility starting with the capability of producing two satellites per month, ramping up to six satellites per month. We also have two main facilities in Texas to produce our flight techniques. Progress on key commercialization milestones has been steady; we continue our customer momentum. We have signed seven new MOUs, including Saudi Telecom and Zain in Saudi Arabia. We have also announced plans to explore potential opportunities to market our services to the military and defense market. We continue to formalize our constellation plans. We have signed an agreement with NASA to protect both our assets through the Space Act agreement. We have secured our launch agreement for our next Block 1 satellite and are also negotiating subsequent launches targeting our first Block satellites. Additionally, we are advancing the U.S. regulatory framework by participating in the initial FCC ruling related to Supplemental Coverage from Space, which will allow satellite operators to collaborate with terrestrial service providers to expand coverage for terrestrial licensees and subscribers. With that, I want to pass it to Scott, who will discuss our next key milestones to reach space cellular broadband commercial services.

Thank you, Abel. Looking ahead, we want to summarize the key future milestones we're tracking ahead of initial space-based cellular broadband commercial service. First, we'll look to publish joint test results of BlueWalker 3’s capabilities with our MNO customers and technology partners. We'll also be looking to manufacture and assemble the Block 1 Bluebird satellites at our Texas facilities. Alongside these steps, we will also be pursuing the completion of definitive commercial agreements with initial customers and regulatory approvals in key markets. For our Block 2 program, we'll be looking to finalize the design, including completing ASIC tape out, and then we'll be looking to launch our five Block 1 BlueBird satellites leading into initial commercial service using those Block 1 satellites. And with that, I'd like to hand the conversation over to our CFO, Sean Wallace.

Thanks, Scott. Good morning, everyone. The fourth quarter was another busy three months for AST. Beyond operational execution, including the unfolding of the largest commercial communications array ever deployed in low Earth orbit, we also continue to move forward with our plans to integrate and become an integrated manufacturer, assembler, integrator, and tester of our own satellites. Our Site 2 facility in Texas has been transformed into a large clean manufacturing space with a growing team turning components into satellites. In the finance area, we were active as we raised over $85 million in equity in the fourth quarter, welcoming new investors and raising important capital for the company. Overall, we remain focused on building a constellation designed to eliminate those mobile phone dead zones we all experience and providing productive mobile communication technology to the currently unconnected people across the globe. Let me move on to discuss some key operating metrics that are presented on Slide 10. Looking at the first chart, we see for the fourth quarter of 2022, we had non-GAAP adjusted operating expenses of $39.1 million versus $38.5 million in the third quarter. Our non-GAAP adjusted operating expenses, excluding non-cash operating costs, including depreciation, amortization, and stock-based compensation totaling $3.6 million for both the third and fourth quarters. Our fourth quarter non-GAAP adjusted operating expenses increased by $0.6 million from the third quarter. As expected, our research and development expenses increased again this quarter due to the achievement of certain milestones in our projects, which brought forward milestone payments. Our R&D expenses consist chiefly of non-recurring development activities for which we engage third-party vendors, and payments are based on the completion of milestones. Our other components of non-GAAP adjusted operating expenses, namely engineering services and G&A, are expected to remain about the same range for the next two quarters and will trend up slightly over time due to our commercialization efforts. We expect the level of non-GAAP adjusted operating expenses to remain in the high thirties for at least two more quarters before declining to the low thirties thereafter. Regarding capital expenditures, our fourth-quarter figure was $10.4 million versus $11.3 million for the third quarter and $30.3 million for the full year. We expect our capital expenditures, which include direct material expenditures and launch costs for satellites as well as improvements for our manufacturing facilities, to increase. In our 10-K, we now estimate our capital expenditures for our five Block 1 satellites will be between $100 million to $110 million. Our capital expenditures have been averaging around $10 million to $11 million per quarter and will begin to rise to support the development of our Block 1 satellites, which we currently expect to launch in the first quarter of 2024. We also estimate that the capital cost of each of our Block 2 satellites, including materials and launch costs, ranges from $16 million to $18 million. The increase in Block 2 satellite costs compared to previous estimates reflects material cost increases and an enhanced estimate for future launch costs. Various factors, including inflation, supply chain disruptions, design changes, and increased costs of electronic components and assembly activities, could adversely affect these costs. These preliminary estimates are based on certain assumptions and are subject to change. On the final chart on the slide, we ended the fourth quarter with just shy of $240 million in cash on hand, up from approximately $200 million at the end of the third quarter. We believe this cash, along with other capital-raising capabilities, is sufficient to support our expenditures for at least the next 12 months. We continue to explore other sources of cash and liquidity to supplement our activities. We understand the capital-intensive nature of our project and are focused on a wide range of options to fund our efforts. A key strategy for AST is to develop our constellation on a modular basis, targeting the most attractive commercial markets in collaboration with our mobile network operator partners. I'm encouraged by the progress the team has made, and I'm excited about the company's future as we transition from the development phase to commercial satellite production. Thank you for your continued support of the SpaceMobile mission. With that, I'll turn it back to Scott.

Thank you, Sean. Before we go to the queue of analyst questions, we'd like to address a few of the questions submitted ahead of the call by our investors. Operator, could you please start us off with the first question.

Bob from Washington asked, are you satisfied with where the testing progress and timelines are at right now?

Thank you, Bob, for the question. Well, we are never satisfied, but we are very, very encouraged by what we have learned so far during the testing. We have validated our architecture end-to-end, and we have validated our ability to provide satellite cellular broadband with our architecture. We have accomplished something that nobody has done before. We are building infrastructure alongside this capability, and we are also protected with IP, which is very significant. We are very advanced in our commercial listings of our satellites. So fundamentally, we are happy with where we stand at this point.

Jay from California asked, where is AST SpaceMobile on the production of the 20 full-size BlueBirds for a functional constellation? Will the five BW3 sized satellites to be launched later this year be included in that constellation?

Thanks, Jay. That's right. The first block of BlueBirds will not only offer initial services on their own but we expect their capabilities to be incorporated into the overall constellation as we build it out. Our Block 2 satellites, which will leverage our custom ASIC, are going to provide significant upgrades to the RF capabilities compared to Block 1, but a few networks are designed to be compatible. In terms of timing, we currently plan to launch and deploy Block 2 BlueBird satellites in a phased approach beginning in 2024 after the launch of the Block 1 BlueBird satellites.

Luke from Connecticut asks, how should we think about military use and potential revenue?

Thank you, Luke, for the question. First of all, I want to reiterate that our focus is on providing cellular broadband globally for people who live and work in places lacking satellite connectivity that allows us to participate in the $1 trillion wireless market, which is our core business. Connecting those five billion phones that require connectivity every day. However, we have been considering participating in substantial government-related opportunities in both security and defense, particularly in the United States.

Jay from California asks, in our recent economic environment with VC money, capital constraints, and higher interest rates, where does AST SpaceMobile expect to receive funding for the production of the 20 full-size BlueBirds and beyond?

Thank you, Jay. As we have stated during our earnings presentation and disclosed in our 10-K, we believe we have enough cash on hand and other resources to fund the next 12 months of operations, including the construction and launch of five Block 1 satellites targeted for the first quarter of 2024. Apart from this liquidity, we have been actively developing other sources of cash and liquidity to supplement our future activities, including the construction of 20 Block 1 satellites. This includes exploring a wide range of instruments, such as structured debt, government financing, public debt markets, the potential to presell capacity to key customers, and selling equity in both private and public markets. We are optimistic that we have a window of several quarters to determine the best financing alternatives and are hopeful that our access to capital will continue to remain strong, particularly if we are able to execute our strategy.

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

Our first questions come from Mike Crawford with B. Riley. Please proceed with your questions.

Thank you for the update this morning. Regarding the regulatory framework, what do you want to see from the final report and order from the FCC regarding supplemental coverage from space?

Well, thank you for the question. The steps the FCC has taken are very encouraging for our plans. First, it facilitates the partnership between retail cellular providers and cellular systems like ours. This would provide a framework leading here in the United States. It will streamline the process. That is our expectation. Our expectation is that other countries will follow the lead of the United States with what the FCC is doing here. So we're very pleased with that process. Of course, that process is ongoing, and the actual final shape of that process remains to be seen, but we're very encouraged by the FCC's initiative to move forward.

Okay. And then do you have any greater understanding of what level of revenue you'll be able to generate with the first five Block 1 satellites, and then separately once you have 20 satellites?

Mike, it's Scott here. We referenced on our milestones page signing definitive commercial agreements, and we've begun discussions with initial customers. We are not going to provide guidance on revenue, of course. However, we do believe the first five satellites will generate stand-alone revenue. It's not the primary focus, but there's revenue there, both for service and other related offerings to those MNO customers, and also for government opportunities, where the government market often serves as an early revenue contributor in the overall company cycle. Between those two, we believe there's revenue potential. We do not provide guidance on specific amounts. The Block 2 BlueBirds will be the ones that will provide near-continuous service and profitability, bringing cash flow positive results.

Our next questions come from the line of Chris Quilty with Quilty Analytics. Please proceed with your questions.

Thank you, gentlemen. I was wondering if you could elaborate on the testing that you did and specifically, it's quite encouraging that you're seeing the ability to achieve 5G speed. Maybe you could add a little color on how you conducted that testing and drawn that conclusion?

Hey, Chris. How are you? Thank you for the question. Our testing indicated that we will be able to achieve both 4G and 5G speeds. We have reached that conclusion based on the signal strength we can achieve in each direction to all the connections. We are confirmed in the downlink, meaning we know that we will be able to reach 5G speed in our system. More importantly, we have validated our entire architecture, including the Doppler and delay compensation. At this point, the end-to-end architecture is validated. We are not finished with the testing; there are still steps to complete the end-to-end connectivity to the phone, but we have validated the architecture.

And how would you make that announcement? Would there be a press release or some form of study release?

Chris, we, of course, don't want to get ahead of that announcement, but we think this is an incredible milestone, not just for us, but it represents a significant achievement in the industry, displaying our ability to demonstrate broadband from a satellite directly to an unmodified phone. We see this as a significant development and plan to make a substantial announcement, but we don't want to rush ahead on that too much.

Okay. Just to make sure I get that, the announcement will be significant. The other question I had was concerning the Space Act Agreement with NASA, which is not an easy process to navigate. When was that concluded, and did it have any impact on operations or how you would operate based on that agreement?

Yes. The agreement with NASA, Chris, is to share information regarding our assets and theirs. It essentially outlines our procedures for managing our respective information and won't significantly change how we plan to operate. There have been substantial learnings from successfully flying one of the largest communication arrays ever deployed to LEO. This is simply a step towards how to industrialize and continue to add satellites as we build them.

And Chris, we issued that press release right before the holidays, on December 16.

Great. Well, congratulations. One last question I had was regarding the launch market. Obviously, the big 83 launch order that Amazon placed last year has put some constraints on the heavy-lift market. Are you still targeting Falcon Heavy as your primary launch vehicle, or are you waiting for Starship? Or are there other alternatives?

Chris, as you know, we secured our next launch with Falcon 9 for the subsequent five satellites in a single launch. We have also kept our options open as we see many new entries into the market that are coming up in 2024 and 2025. We are evaluating all available options, especially those capable of launching more than 10 tons into space at once.

Our next questions come from the line of Mathieu Robiliard with Barclays. Please proceed with your questions.

Good morning, all. Congratulations on all the progress. I had a few questions. The first one is regarding regulation, and there was a question about the FCC, but I was also interested to know what progress you've made in obtaining regulatory approval in other markets? There are also reports about the German regulator reportedly requesting cutting the signal once you cover the EC—I don't know if there's any comment you'd like to make about that? That would be my first question.

Great. Good morning, Mathieu. Scott here. On the global progress with regulation, the U.S. has seen the most significant movement this quarter, which is why we highlighted it, and we think the U.S. is a critically important market. Globally, we've held licenses for both 3GPP and V-band for some time in about half a dozen markets and are engaged in many other regulatory discussions. Typically, market progression is more traditional closer to service. We expect to see more movement throughout the year as we remain focused on testing licenses. Some of that is not public and is done behind the scenes before being granted. So our testing licenses are perfect, allowing us to continue our Block 3 test campaign throughout the year. The signals are positive, and given the increased focus on non-terrestrial communications over the last couple of years, we believe we are on the right path. Regarding Germany, we were not contacted by the German regulator about that topic, so I don't think there’s much else to comment on since we have not filed for approval in Germany.

Great. That's clear. Then I had a question about the testing, and I don't know how much you can share at this stage, but I want to understand a bit about what the next milestone is in terms of what else you need to test and work on with BlueWalker 3. Can you share any sense of timing for how long this might take?

The pivotal point we want to emphasize is the validation of the end-to-end architecture. This challenge has not been solved before, and others may struggle to resolve it effectively because of how many components are involved in the architecture. Being able to transmit and complete initial end-to-end testing constituted a significant validation for us, along with flying the satellite and mechanical unfolding. We are making progress quickly; this is unprecedented, with improvements occurring with every pass every 90 minutes. The testing continues in real time.

Thank you. I have one last question regarding CapEx specifically on the unit cost of the BlueBird satellites. I recall you mentioned in the past that the next batch of satellites could be more optimized and scalable in terms of production. I was wondering if that was still your perspective and whether future satellite costs might be lower than those of BlueBird 1.

Scott, would you like to address that?

Yes, please. The estimates for our first batch of satellites range from $15 million to $17 million to $16 million to $18 million, about a 6% increase. Much of this increase is due to changes in our projected launch vehicle costs. Frankly, we have tried to maintain a very conservative approach regarding our material costs and expected launch expenses. Our estimates are grounded in current material and launch costs. We agree that over time we can expect to see rapid reductions in the cost per kilogram for launch vehicles, as well as scalability benefits from our manufacturing and purchasing capacities. We are delivering a conservative estimate for now and we hope to provide positive news if we achieve greater efficiency as we progress.

Thank you very much.

Thank you. Our next questions come from the line of Bryan Kraft with Deutsche Bank. Please proceed with your questions.

Hi, good morning. I had a few questions, if you don’t mind. First, I wanted to ask about regions that the Block 1 and Block 2 satellites will cover. I'm assuming equatorial regions, but I just wanted to confirm how you're thinking about that? Please allow me to throw my second question in as well, which is, at this point, when do you expect revenue to start ramping up in a significant way? Is that potentially early 2025 after the first 25 satellites are in orbit and operational, or will it take longer?

Thanks, Bryan. I'll jump in first. Regarding initial markets for Block 1, we have not announced that yet. Believe it or not, the satellites' focus can be shifted pretty late in the cycle since it's merely a matter of inclination for the launch. However, we have a good understanding; the U.S. market is the most valuable telecom market globally. This decision will depend on strategic considerations, so we'll pinpoint initial markets for Block 1. Yes, we certainly expect revenue from those satellites in 2024. The revenue from Block 2 will follow as quickly as we can. It's crucial for us to note that we are not selling services based on satellites; we are selling based on capabilities and coverage. As we finalize agreements, the expectations for additional coverage and capabilities will increase.

I just want to clarify: you're distinguishing between Western markets, where you're filling in coverage for roaming users, versus primary broadband service where there's no terrestrial service?

Yes. We are strategically deciding where to focus the satellites, and that largely depends on our agreements. Our ability to provide connectivity applies to both markets: established markets where people have sporadic connectivity when hiking or traveling and also in developing areas where residents lack broadband connectivity entirely. We aim to cater to both. The ARPU in established markets is higher, making the U.S. market the largest telecom market in the world. Our decisions about these assets will be guided by the agreements we are negotiating with our telco partners.

Regarding financing possibilities, what is the potential for securing funding through your MNO partners? You have many large, well-funded partners, and even modest investment participation among them could expedite your build-out or at least cover the next phase for the Block 2 satellites. How realistic do you see this as an option, and does that factor into your prioritization of where to focus first?

Absolutely right. We are strategic with our telco partners as we work toward addressing a key issue they face: coverage expansions that have become more costly for them, particularly regarding the last areas in their territories without broadband access. We will explore every possibility, working diligently to engage with them, as we have since inception, focusing our partnerships on developing our constellation.

Sean, do you want to add something there? It seems like you were trying to jump in.

No, I think Abel said it best. As we advance and reduce the risk associated with this business, it's clear from our discussions with MNO partners that this model yields substantial benefits. It significantly reduces their capital expenditures, negating the need for as many towers and potentially less spectrum purchase, which will increase their ARPU and overall returns on investment. This is a unique and complementary business for them that provides an opportunity for significant growth without exorbitant costs.

Thank you. Our next questions come from the line of Landon Park with Morgan Stanley. Please proceed with your question.

Good morning, everyone. Thanks for taking the questions. I'm wondering if we can just start off on the testing you mentioned. Can you define what 5G speeds mean in your context? Are you indicating that the testing suggests a reliable enough connection for consistent voice services as well?

When we refer to 5G, we reference the standards defined by the SEC, essentially what we associate with 5G or 4G speed. Regarding specific speeds, we refer to figures like 30 megabits or more.

In that sense, you're talking about bandwidth and other metrics such as voice capabilities?

To offer broadband access directly to a handset, we must manage calibration, tracking, Doppler effects, and delay compensation, which we can achieve through our patented technology. At present, we have sufficient evidence to indicate that we can achieve the necessary signal strength. While we still have further steps for complete end-to-end connectivity to the phone, we have validated the entire architecture at this juncture. We anticipate that we will support voice quality, text, data, video streaming, and everything that can be done with a 5G device and the supporting architecture. Naturally, we will need to manage this capacity carefully to maximize the number of users per satellite, but we estimate that we can support all applications typically found in terrestrial networks.

Regarding the BlueBirds, you previously indicated capacity estimates ranging from 9 to 13 gigabits. Have you obtained any indications from the testing on potential upsides or downsides relative to those figures you previously provided?

We indicated the first block is the same size as BlueWalker 3 and is FPGA-based. The subsequent generation, the Block 2, will be ASIC-based, showing substantial progress. We soon expect to begin the ASIC rollout, which is anticipated to yield a tenfold increase in capacity per satellite once integrated into our technology. Currently, our testing has primarily focused on BlueWalker 3 and ensuring end-to-end connectivity while accounting for typical impairments in LEO systems, which is central to our technology.

So, is the capacity range of 9 to 13 gigabits for the full-size ASIC-based satellites still valid in your estimation?

Yes, that range is still accurate.

Have you had discussions with MSS spectrum license holders for potential partnerships? It seems there could be benefits to having a unified global band for phones in the future. Is that a direction you are currently pursuing?

What I can share at this moment is that our satellite is designed to support both 3GPP and MSS spectrum from the very beginning. Our ASIC, antennas, transmitters and receivers take years to develop and are designed to support multiple bands. However, our primary focus remains on the 3GPP spectrum since that represents gigahertz capacities allocated to cellular communications, while MSS typically has only tens of megahertz allocated. Our strategy prioritizes reusing 3GPP spectrum, both in shared and dedicated manners, to ensure effective connectivity per country, while we retain the ability to utilize MSS spectrum also.

In terms of potential use cases, would you be able to address small dead spots in populated suburban areas? Would you need the operator to free certain frequencies in those small zones to enable your service?

Yes, we have a comprehensive approach with 3GPP spectrum shared and the substantial size of our arrays allows us to effectively distinguish and utilize the spectrum efficiently. We do not require dedicated spectrum on a national scale; we can allocate it per region, sales, and instances as we work through frequency plans in partnership with operators, allowing us to cover small holes in the network as well as the larger gaps.

So, in that scenario, the operators would need to vacate certain frequencies in those small pockets to enable you to operate, right? Is this allowed under the current FCC framework?

Yes, that's our expectation. We believe that operators, with our system, will be able to efficiently utilize shared spectrum, allowing for coverage of all gaps in their respective territories.

Thank you. I’m showing no further questions. I would now like to turn the call back over to Scott Wisniewski for any closing remarks.

Thank you, everyone. Our company is building the first and only space-based cellular broadband network designed for use with phones in your pocket today. We're excited about the path ahead for AST SpaceMobile. Thank you to our shareholders and analysts for their questions, and have a great weekend, everybody.

Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.