AST SpaceMobile, Inc. Q4 FY2025 Earnings Call

Good day, and thank you for standing by. Welcome to AST SpaceMobile's Fourth Quarter 2025 Business Update. Please be advised that today's call is being recorded. I will now turn the conference over to Max Colbert, Investor Relations Manager of AST SpaceMobile. Thank you. You may begin.

Thank you, and good afternoon, everyone. Today, I'm also joined by Chairman and CEO, Abel Avellan; President, Scott Wisniewski; and CFO and Chief Legal 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 ended December 31, 2025, 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&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 nearly 6 billion mobile phone venues 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 at AST SpaceMobile 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, supported by our extensive IP and patent portfolio. It is now my pleasure to pass this over to Chairman and CEO, Abel Avellan, who will go through our activities since our last public update.

Thank you, Scott. For the first time in 2025, AST SpaceMobile became a revenue-generating business as we significantly advanced all key aspects of our operations, including commercial, government, manufacturing, spectrum rights, IP portfolio, and capital position. The combination of these efforts resulted in the successful launch and unfolding of our next-generation BlueBird satellite, BlueBird 6, the largest ever commercial communication array deploying load at orbit to enable the first and only global space cellular broadband network for government and commercial customers. On the financial front, during 2025, we raised over $3.5 billion in capital and reported revenue of over $70 million for the full year and signed over $1 billion of minimum committed revenue. Operationally, we plan to ramp our satellite manufacturing efforts and launch cadence this year while we're rapidly accelerating our government and commercial businesses. We entered 2026 with strong momentum and a clear vision as we led the space-based cellular broadband industry, a market that we invented. 2026 will be the year we scale our space-based direct-to-device constellation from initial commercial activation to start of commercial service with mobile network operator partners in key markets like the United States, Europe, Japan, Saudi Arabia, and other key strategic markets like the U.S. government. In just over one year since the orbital launch of our first five Block 1 BlueBird satellites, we developed our Block 2 BlueBird program, which is roughly 3.5 times larger and 10 times the capacity of BlueBird 1 to 5, breaking our previous record on both size and capabilities. We expect to fully utilize New Glenn faring capacity as we progress through our orbital launch plans. We are especially excited to share this milestone with many of you who we hope will join us in Florida during our next launch. Looking ahead, we're expecting 2026 to be a very active year, particularly as we progress into the second half. We remain on track to achieve our target of deploying 45 to 60 satellites into loaded orbit by the end of this year, with current expectations closer to 60 satellites ready to ship and 45 satellites in orbit. Our launch plans include a total of 12 additional contracted launches across several launch vehicles. Lastly, we also recently signed an additional agreement to integrate our satellites with a new heavy launch vehicle to be on standby in their manifest. We are laser-focused and working tirelessly on delivering our micron phased arrays and full satellite production goals. On the manufacturing front, we continue to ramp our operations. We exited 2025 having reached a production capacity to support up to six satellites worth of micron and phase array per month, and we expect to achieve a testing assembly and integration cadence of six satellites per month in the first half of 2026. BlueBird 8 to 29 are in various stages of production, and we are scheduled to complete the assembly of 40 satellites equivalent of micron by the first half of 2026, bringing us to BlueBird 46. Our novel ASIC chip will be integrated into our Block 2 BlueBird satellite during the first half of 2026 to support 10 gigahertz of processing bandwidth per satellite, enabling us to exceed the capabilities of up to 120 megabits per second on our in-orbit Block 1 BlueBird satellites. These data rates are high enough to achieve the native cellular capability that consumers now expect everywhere from areas not served or not served good enough by terrestrial connectivity. Another key enabler of producing the largest ever commercial communications array at scale is our 95% vertically integrated manufacturing strategy. Over the past several months, we have expanded our manufacturing site in Midland, Texas and Homestead, Florida, including acquiring a fourth site in Midland for dedicated micron production. We are the first company in the history of commercial satellite manufacturing to produce satellites of our size and power at a scale. Our technology is anchored by our ability to manufacture the largest commercial communications array ever placed into loaded orbits. Creating a durable technology advantage, our satellites enable digital beam forming and are capable of multi-carrier aggregation in multiple frequencies, supporting simultaneous users per beam. When combined with our integrated ground space gateway architecture and growing commercial ecosystem with over 50 leading global mobile network operator partners who collectively cover nearly 3 billion subscribers. We continue to expand our commercial ecosystem. In the fourth quarter of 2025, we announced definitive commercial agreements with Verizon in the United States and stc Group in Saudi Arabia and other key markets across the Middle East and Africa. As part of our 10-year agreement with stc Group, we received a prepayment of $175 million in 2025 indicative of the ambition we both share in bringing connectivity gaps and delivering cellular broadband directly to devices. Recently, we announced partnerships with Orange, Telefonica, CK Hutchison, Taiwan Mobile and progressing initiatives with Vodafone to bring our direct-to-device cellular broadband service to their markets. Our commercial advancements have positioned us to secure over $1 billion in total contracted revenue commitment from our commercial partners.

Thank you, Abel. I want to take this time to reflect on our business accomplishments in 2025 and how we see the business evolving over 2026 and 2027. Last year, 2025 was the year we activated our revenue engine with record revenue of over $70 million, achieving the upper end of our revenue guidance. We are no longer a pre-revenue company. During the year, revenue was primarily driven by commercial gateway deliveries and milestones completed from our government contracts. Importantly, these sales are a leading indicator that our MNO partners are preparing for SpaceMobile commercial service. We have significantly advanced our partner ecosystem, taking advantage of our base of over 50 global MNOs. The U.S. government was also a significant contributor to 2025 revenue. As we turn the page into 2026, we see this year as an inflection point as we enter commercial service with our initial MNO partners while also continuing to generate revenue from the commercial gateway and government strategies. Before the impact of commercial service revenue later in the year, we expect revenue to at least double versus 2025. We see the opportunity in 2027 approaching $1 billion in annual revenue, importantly comprised of revenue both long-term contracted or highly recurring in nature. We enter 2026 with the assurance and conviction needed to win in an ever-expanding total addressable market.

Thanks, Scott, and good afternoon, everyone. During the fourth quarter of 2025, we continued to execute on our commercial objectives while expanding manufacturing and importantly, significantly strengthening our financial position to support our core objectives in 2026. 2025 was best described as the year of scaling at AST SpaceMobile. We began the year focused on building out manufacturing to support our targeted launch schedule through 2026, and we ended the year with the launch of our first Block II BlueBird satellite, BB 6, a seminal moment in the history of our company. We have 29 Block 2 BlueBird satellites in various states of production and are on target to complete the assembly of 40 satellites equivalent of microns during the first half of 2026. We are now a revenue-generating company, and we will work hard to achieve profitability from our growing revenue initiatives linked to the increasing number of Block 2 BlueBird satellites that we put into low earth orbit. Our rapid growth is supported by a fortified balance sheet. Not only do we now have the cash to support the full build-out and launch of a constellation of over 100 satellites to provide worldwide space mobile service, but we have increased our financial flexibility to make further investments to expedite the timing of, and augment the capabilities of our SpaceMobile service. Our planned revenue ramp continued during the fourth quarter, and we expect to continue to grow in 2026 holistically. We achieved revenue of $70.9 million for the full year of 2025, representing the top end of our 2025 revenue guidance range of $50 million to $75 million.

Thank you, Andy. Before we go to the queue of analyst questions, I would like to address a few of the questions submitted by our investors. Operator, could you please start us off with the first question?

Justin from Georgia asks, any interesting learnings from BB 6 and 7? Is the production of composite satellites going to be vastly different? Any unforeseen delays?

Thank you, Justin, for the question. Yes, BB 6 is the largest phased array ever deployed in space. It's 3.5 times bigger than our previous deployments, which were also the world record on size. Going through that first deployment of 2,400 square feet successfully, learning how to capture, control and manage the satellite at that size will allow us to do it much faster as we deploy 7, 8, 9, 10, 11, 12, or 14 satellites together. This was a very important milestone in learning how to operate, deploy, and fly something of this size, which will help us to do it faster in the next deployments. The other thing that will happen going forward, past BB 6 and BB 7, is that we're stacking the satellites. We won't be relaunching individual satellites anymore; they will be packed in groups of three, four, six, or eight in a single launch. That will allow us to meet our launch cadence of this year, for which we're expecting 45 satellites in orbit and 60 satellites ready to ship during 2026.

Justin also asks, is there an updated timeline for the mid-band constellation for using L and S-band spectrum?

Yes, there is. We're planning to start launching the mid-band constellation by the end of the year. The mid-band constellation has the advantage of combining 3GPP standard operator-owned frequencies and also our L and S-bands, which combined give great flexibility to the offering and allow us to continue to increase the data rate capacity that we have in our system going above our 120 megabits per second that we already have in Block 1.

Liden from New Zealand asks, with the larger designs complete and being produced, do you anticipate future R&D or new product lines? This may be data centers, exclusive military constellations, collecting data on usage, providing aircraft and ship traffic, radar, etc.

Thank you, Liden. The most difficult aspect of R&D with the launch deployment and usage of our BB 6 has been completed. So the ability to produce a lot of power, to have a very large aperture with very sensitive capabilities, and to have many gigahertz of processing power with our own ASIC technology has been integral to what we have built. We see many other opportunities for the technology, including radar, power generation, and multiplying spectrum usage. We believe that combining our large aperture with AI capability will create a multiplier for the spectrum, significantly increasing our capabilities.

Kevin from Vancouver asks, can you share more color on the most recent $1 billion convertible note offering? Many investors are confused as your current liquidity was already approximately $3 billion sufficient for around 100 satellites. Were there any specific opportunities in mind when you issued the offering? Or is it really just in case something pops up?

Thanks for that question, Kevin. It's absolutely the case that in Q4, when we finished the convertible in October, we were in a position to fully fund the worldwide constellation at 100-plus satellites. Nothing has changed on that front. The convertible deal that we did provides us extra flexibility to look at investments that go beyond that first 100 constellation. We also have the opportunity to monetize our technology to capture commercial opportunities related to AI, enhance investment in government space opportunities in the United States, and pursue opportunistic investments to accelerate our space mobile services.

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

Our first question comes from Griffin Boss with B. Riley Securities.

So, first, I just want to talk about the expanding total addressable market that you mentioned with the dual-use capabilities and government contracts. Do you see any scenario where you build and launch future BlueBird satellites with different payloads that might be exclusively for government customers or applications?

The satellites are designed to manage all these applications in a single platform. We do not need multiple satellites for multiple payloads. The applications for our government contracts and partnerships with the MNOs are all possible through the same platform.

Got it. Okay. Understood. And then just a second one for me. You always mention your thousands of patents, and you talked about your expertise in building and deploying massive structures in low earth orbit that could be used for myriad opportunities. You specifically called out burgeoning opportunities in AI. Could you elaborate on that specific patent regarding thermal management systems for structures in space and how that could potentially be used for opportunities in data centers in space?

Yes, absolutely. There are many key enablers that we needed to design and deploy in order to solve the difficult problem of connecting broadband to regular handsets. This specific patented thermal management technology enables us to manage high wattage outputs per square meter effectively, contributing to our satellite capabilities. Additionally, our AI capabilities can further enhance our efficiency in spectrum management and other applications.

Our next question comes from the line of Colin Canfield with Cantor Fitzgerald.

As we parse out the comments that you talked about on 2028 revenue potential, just kind of thinking like the ballpark of what you said, with multiple versus $1 billion of potential in '27, how does the team think about the mix of opportunities between government and B2B customers?

I will keep my comments to '27. We're entering commercial service with our initial MNO partners while growing our government applications. Our commercial business is expected to be larger than government, and we are very confident about the strength of demand.

Is it fair to use the 4Q performance as a baseline for 2026? Or is the commentary in terms of growth for '26 more aligned with just growing from the 2025 annual number?

Before we initiate commercial service, we are primarily generating revenue through earlier stage contracts. Quarter-to-quarter, we won't be building revenue consistently until commercial service starts. Our focus is on doubling where we hit in 2025, with additional upside once we activate commercial service in the second half of 2026.

Our next question comes from the line of Bryan Kraft with Deutsche Bank.

Would you mind providing some color on how many satellites beyond BB 7 are built and ready to ship today and maybe how many you expect to be built and ready to ship by midyear?

We are on target to ship at least 60 satellites this year with a minimum of 45 into orbit. We are definitely seeing an acceleration in our manufacturing efforts.

Are you saying that there are specific engineering things that you had to figure out in order to get the stacking right?

Getting them ready for a combined launch is crucial. We're preparing to stack these satellites in groups, allowing us to maximize the number of satellites per launch. We have completed this process, and we will be ready to resume shipments to the launch site.

Our next question comes from the line of Louie DiPalma with William Blair.

First, are you in Barcelona for the conference? And will there be more announcements this week?

Yes, we are in a conference room in Barcelona. We had multiple announcements today, and yes, you can expect more as the week continues.

What service level will your network support when you launch the different beta offerings in the summer?

The peak data rate you can expect on the phone will be directionally proportional to the spectrum we get allocated. The initial service launch will have lower-end peak data rates as we enable more spectrum.

That makes sense. And one financial question regarding the $1 billion revenue goal for 2027, how much of that is customer or subscriber usage-based versus being minimum revenue commitments?

We have a contracted backlog of $1.2 billion currently, which is a testament to our partner ecosystem. However, it's important to note that while this backlog is a positive indicator, it's only a minority portion that would likely contribute to our annual revenue goal.

Our next question comes from the line of Christopher Schoell with UBS.

Looking at your new disclosure, it appears your services gross margins are around 90%. Is this a good way to think about the business longer term?

Indeed, we've seen businesses in the satellite industry achieve operating margins in the 80-plus percent range. There is tremendous operating leverage. With our revenue share model, we believe we can achieve even higher margins over time.

The capital we have raised offers flexibility for investments beyond our planned constellation and the operational growth we are pursuing.

And we have reached the end of the question-and-answer session. I will now turn the call back over to Scott Wisniewski for closing remarks.

Thank you, operator. We want to thank all of our shareholders and research analysts for joining the call. We hope to see many of you down in Florida at our upcoming launch. Thank you. Bye.

And this concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.