AST SpaceMobile, Inc. Q1 FY2026 Earnings Call

Good day, and thank you for standing by. Welcome to AST Space Mobile's First Quarter 2026 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 Space Mobile. 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 Space Mobile's annual report on Form 10-K for the year-end December 31, 2025, with the Securities and Exchange Commission and other documents filed by AST Space Mobile 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 phones 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 who remain unconnected to the global economy. The markets we are pursuing at AST Space Mobile are massive, and the problem we are solving is important and touches nearly all of us. In this backdrop, AST Space Mobile 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, Max. Our start to 2026 reflects our progress in scaling manufacturing and production, mobile network operator partner expansion, ground network integration, multi-provider launch and a fortress capital position. This advancement across nearly all initiatives helps solidify why AST SpaceMobile is the only company whose technology is positioned to capture the direct-to-device cellular broadband opportunity in full. We continue to execute on key business objectives at the company, transitioning from R&D stage to full-scale operational deployment. On the manufacturing front, we have over 0.5 million square feet of manufacturing and operations space globally, as we continue to scale our manufacturing efforts. We're in advanced stages of producing and assembling through Bluebird 33; we have phased arrays completed through Bluebird 28. A detailed cadence of our 2025 and 2026 deployment plan is shown in the accompanying quarterly presentation found on our IR website. Our 95% vertically integrated manufacturing strategy is a significant long-term advantage, with our manufacturing team ramping up significantly over the past several quarters. I am thrilled to report that the leadership we have in place is now producing micron phased-array, stackable satellite composite structure at an accelerating pace to support our target cadence of six fully assembled satellites per month. Our custom ASIC is designed to support up to 10 gigahertz of processing bandwidth per satellite and is expected to nearly double the peak data speed recently achieved using our on-orbit Block 1 Bluebird satellites, helping unlock true space-based cellular functionality and enabling native cellular capabilities that consumers now expect everywhere, all the time. As a reminder, we're building the largest phased array in low Earth orbit. We possess the ability to deploy significant power to orbit at meaningful scale and competitive cost. This gives us an ample opportunity to scale our space-based cellular broadband constellation based on demand signals from our growing list of partners. That is an important and unique concept for the direct-to-device industry with even broader implications as space becomes an edge and data-native industrial environment. We continue to leverage these advantages by driving innovation into every aspect of our satellite capabilities. We are deploying specific AI edge computing and AI spectrum management features for on-orbit capabilities to incorporate into novel AI platforms and maximize user experience. We currently expect to integrate these features into our next-generation Bluebird satellites targeting Bluebirds in production by year-end. Our multi-provider orbital launch strategy includes Blue Origin, SpaceX and others. As a reflection of our multi-provider launch strategy, while returning to the launch pad with New Glenn in mid-June with Bluebirds 8, 9 and 10 on the New Glenn launch vehicle, we are excited to get back to the launch pad very soon and are targeting approximately 45 satellites in orbit by year-end through a combination of our launch providers. Our ground-based gateway architecture acts as a native extension of our network operator partners, interfacing directly with Nokia, Inovis and MNO cores over standard 3GPP protocols. This means our gateway architecture and/or satellite network scales natively with 4G, 5G and future standards, reducing network integration complexity. We're actively scaling our ground network integration efforts around the world, including in the United States, Canada, United Kingdom, India, Brazil, Spain, Germany, France, Romania, Saudi Arabia, Japan, New Zealand, the Philippines, Côte d'Ivoire, Kenya, Nigeria and Senegal, targeting a combined population of 2.9 billion people. It is an incredible fit to scale our business outside of the United States, an effort which requires significant scale and commitment from our company, our partners and global regulators. We continue to make progress on partner and ecosystem network integration as we move closer to service activation in key partner markets. We're actively deploying hundreds of fixed cells per week as part of this effort. We achieved satellite-to-satellite cellular broadband connectivity handoff without disrupting the connectivity experience on the phone. Additionally, we recently achieved a peak data speed of an incredible 98.9 megabits per second using our in-orbit Block 1 satellites. This latest record was conducted over international waters directly to unmodified off-the-shelf smartphones. This achievement is significant for several reasons. In other words, our satellite technology is the only one specifically designed for space-based direct-to-device cellular broadband. Achieving these speeds is what our partners expect for the customer no matter where they are located, everywhere on the planet, and we're just getting started. We expect our on-orbit Block II Bluebird satellite to nearly double the peak data speed recently achieved using our on-orbit Block 1 Bluebird satellites when enabled with additional spectrum on a region-by-region basis. AST SpaceMobile is the network operator partner of choice for space-based cellular broadband because our system integration solution works actively with existing terrestrial infrastructure and is designed to support a space-based serenity. Our ecosystem includes nearly 60 global MNO partners covering over 3 billion subscribers, including key partners like AT&T, Verizon, Vodafone, Rakuten, STC, Bell Canada and Telus. Our commercial advancements have enabled us to secure over $1.2 billion in contracted revenue commitments from our commercial partners and we plan to accelerate this as we further deploy our network. On the regulatory front, we were granted FCC authorization to operate our Bluebird satellite constellation commercially in the United States enabling direct-to-device connectivity in the U.S. on premium low-band spectrum in coordination with our partners Verizon, AT&T and FirstNet. The grant also reflects the FCC recognition of our ability to deliver direct-to-device cellular connectivity from space and operate alongside the terrestrial communications network, further validating our unique technology and network design. We thank the current FCC administration and Commissioner Carr for his leadership in bringing new technologies online to advance United States leadership in space. Our comprehensive spectrum strategy leverages our satellite technology, which is capable of tuning within approximately 1,100 megahertz of low-band and mid-band MNO spectrum globally, including 45 megahertz of L-band spectrum and 60 megahertz of licensed S-band MSS spectrum priority rights outside of North America. In particular, the 45 megahertz of L-band spectrum is currently unused, providing us with an ample opportunity to drive business against the use of that spectrum. Additionally, the lower mid-band L-band spectrum features higher quality propagation characteristics when compared to other MSS frequencies. This means more opportunities to grow subscriber capacity and bring additional service to targeted markets around the world alongside our MNO partners. We expect the combination of our satellite technology, featuring the largest phased arrays and access to MNO-shared spectrum, MSS spectrum and AI spectrum management features will enable us to effectively multiply spectrum efficiencies and develop a completely new layer of connectivity on a global scale. The combination of building a native space-based cellular broadband network with our partner-first integration design is second to none. We're supported by our extensive IP and patent portfolio of approximately 3,900 patents and patent-pending claims. We have successfully advanced from early-stage R&D to scaled deployment of satellites and ground-based gateways. In closing, our company has key assets, including IP, manufacturing, partnerships, spectrum and balance sheet cash with approximately $3.5 billion to build and launch over 100 Bluebird satellites to enable global coverage of SpaceMobile service. Our team is focused, disciplined and executing against our deployment plan. We are encouraged by the progress we are making and the momentum we see across our commercial, regulatory and government initiatives. And with that, I will turn the call back to Scott.

Thank you, Abel. Since our last business update 10 weeks ago, we have continued to execute against the broader commercialization priorities we laid out at the start of the year. Our key task leading the business is to leverage our revolutionary technology deployment and best-in-class partnerships to achieve our 2026 and 2027 revenue objectives as we build out the revenue platform for the company to maximize long-term shareholder value. The market pull for our network, the one we're deploying today — a global, resilient, space-based cellular broadband network with dual-use capabilities — remains extremely strong. Against this backdrop, we have recently signed additional mobile network operator contracts and received additional U.S. government awards. First, we announced an agreement with TELUS as our second partner in Canada, who also made an equity investment in ASTS. Telus and Bell will be our commercial partners in Canada. And in Africa, we are pleased to be partnering with Axiom Telecom, a pan-African operator in 11 different countries, joining our existing agreements with Vodacom, Orange and MTN. Our dialogue globally with mobile network operators has increased in both volume and depth, and we've been building out the broad organizational capabilities to support the rollout of commercial services in these markets. Looking ahead, we expect additional MNO agreements to be signed with increasing velocity throughout 2026. On the U.S. government side, we continue to grow the pipeline with three additional awards through prime contractors. These awards address three unique use cases across secure communications and noncommunications capabilities, reflecting strong proof points ahead of larger contracts. Alongside further developing these important national security capabilities, including those related to Golden Dome, these awards are expected to contribute significantly to 2026 revenue objectives. As a reminder, our goal across all our contracts is to develop capabilities that could grow into programs of record with billions of annual revenue potential in aggregate over the medium and long term for missions important to U.S. national security. As a commitment to these efforts, we've made significant progress expanding our organizational capabilities through AST SpaceMobile's wholly owned government and defense subsidiary. This alignment enables us to better allocate resources and expand our organizational capabilities to best serve the U.S. government customer. Transitioning to revenue, we achieved nearly $15 million in reported revenue during Q1, driven by milestone achievements under our U.S. government contracts and commercial gateway deliveries to MNOs. On the commercial side, we saw execution with four different customers that contributed to revenue in the quarter. With the hardware to deliver initial commercial services now in their respective regions across five continents, the ground readiness initiatives that Abel referenced are firmly underway. This is an important step to have started during 2025 because it gives the teams on the ground time to prepare, deploy real hardware solutions for backhaul and integrate with customer network cores. This is a very significant operational effort that is an important leading indicator ahead of commercial service activation. 2026 revenue will benefit from this commercial deployment effort as we deliver against existing contractual orders and sign new contract wins, both of which show a deep pipeline. Turning to revenue from our U.S. government business: we executed across five existing contracts during the quarter, further demonstrating the in-orbit capabilities of our Bluebird satellites. To give you some additional color, we advanced the milestones under our prime contract with the Space Development Agency as part of the Europa Track 2 Commercial Solutions Program under Halo. This work is focused on delivering operationally relevant tactical communications capabilities directly to government devices. We also advanced our communications efforts with milestones against contracts where Fairwinds is the prime contractor, some of which are follow-ons related to our previously demonstrated NTN tactical SATCOM capabilities. That field test showcased real-time connectivity to a tactical kit over a VPN with multimedia streaming via the tactical kit and secure multiparty video calls, all executed on standard unmodified smartphones with active participation from U.S. end users including representation from multiple branches of the United States Armed Services. Lastly, we also continue to execute against our contract with the Space Development Agency through a prime contractor for noncommunications on-orbit testing and capability development. The progress we are seeing across both commercial and government activities supports our confidence in reiterating our 2026 revenue guidance of $150 million to $200 million. This outlook is supported by our existing contracted pipeline with additional upside potential from new government awards. What we are seeing in the first half of 2026 is continued progress in building out the revenue base ahead of a large jump in 2027. As I described on the last call, we see the 2027 revenue opportunity approaching $1 billion, comprised of revenue both long-term contracted or highly recurring in nature. We expect this growth to be driven from, one, our scaled network in orbit for cellular broadband service as it becomes available in some of the largest markets worldwide; and two, providing one or more increasingly scaled use cases for the U.S. government. Taken together, we are steadily executing across our key priorities, remaining focused on the critical near-term objectives like revenue generation, partner ecosystem and scaled network deployment. I'm now happy to pass the call over to Andy to walk through our financial update.

Thanks, Scott, and good afternoon, everyone. During the first quarter of 2026, we began executing against our annual revenue plan and continued our manufacturing expansion across our growing facilities in Texas and beyond. And importantly, as discussed on our 2025 year-end call in March, we took significant steps to raise critical capital to enable funding our constellation in support of our bold objectives in the months ahead. Revenue in Q1 came in consistent with our internal plans. We expect revenue to build sequentially each quarter during 2026 with contributions from both commercial gateway revenue and U.S. government contracts, which I will discuss further in just a moment. Importantly, we remain on track to meet our full year 2026 revenue guidance of $150 million to $200 million. With respect to manufacturing, we continue to progress toward the achievement of our goals to support our active escalating launch schedule through the end of this year and beyond. We currently have Bluebird 11 to Bluebird 33 in advanced stages of assembly with phased arrays completed through Bluebird 28. Our manufacturing progress positions us well to support our launch target of approximately 45 Bluebird satellites in orbit by the end of 2026. The strength of our balance sheet positions us to complete the full buildout and launch of a constellation of over 100 Bluebird satellites to provide worldwide SpaceMobile service while also funding the deployment of our controlled spectrum bands on a global basis, monetizing the capabilities of our proprietary technology to capture the evolving commercial opportunities related to artificial intelligence, enhancing investment in government space opportunities in the United States, reducing our higher interest debt and pursuing opportunistic investments to accelerate our SpaceMobile services and capabilities. AST SpaceMobile is proud to be the creator and leader in the direct-to-device industry, and we continue making investments to move quickly and responsibly to bring space-based cellular broadband connectivity directly to unmodified smartphones. Our intentional focus on investing in operational growth led to higher adjusted operating expenses in Q1 of 2026, consistent with our expectations previously communicated during our fourth quarter and full year 2025 earnings call. Moving to the operating and capital metrics slide, let's review the key metrics for the first quarter in more detail. On the first chart, for the first quarter of 2026, we incurred non-GAAP adjusted operating expenses of $91.2 million versus $95.7 million in the fourth quarter of 2025. As a reminder, non-GAAP adjusted operating expenses exclude noncash operating costs, including depreciation and amortization and stock-based compensation. The quarter-over-quarter decrease of $4.5 million resulted primarily from a $17.6 million decrease in adjusted cost of revenues due to lower revenue in the quarter together with a $1.9 million decrease in R&D costs, partially offset by a $9.2 million increase in adjusted engineering services costs and a $5.8 million increase in adjusted general and administrative costs. Our Q1 2026 adjusted operating expenses, excluding adjusted cost of revenues, were $79.8 million compared to $66.8 million in Q4 of 2025, which is within the $70 million to $80 million guidance for adjusted operating expenses previously provided. The primary drivers of the increase versus the prior quarter were growth in our workforce, including contractors and consultants, our expanded production facilities and other professional fees including legal fees related to our spectrum usage rights transactions and regulatory initiatives. Turning towards the second chart on this slide: our capital expenditures for the first quarter of 2026 were approximately $257 million versus approximately $407 million for the fourth quarter of 2025. This figure was made up primarily of capitalized direct materials and labor for our Block II Bluebird satellites with the balance relating to facility and production equipment expenditures. This amount was below the quarterly guidance of $350 million to $425 million that I provided during our last earnings call due to a change in the timing of launch contract payments, which will now be reflected in our Q2 guidance. For the second quarter of 2026, we estimate that our adjusted operating expenses, excluding adjusted cost of revenues, will increase to the range of approximately $85 million to $95 million as we further absorb the full quarter cost of our recently expanded workforce and continue growing talent across our organization to scale our efforts to design, manufacture, launch and operate our growing satellite constellation as well as pursue the monetization of our L- and S-band spectrum usage rights. We expect our capital expenditures to increase in Q2 of 2026 to a range of $575 million to $650 million, primarily driven by the timing of launch payments related to our near-term launches which, as I previously explained, vary from quarter-to-quarter. To put this quarterly increase in capital expenditures into context, had the launch payments been made in Q1 like we originally planned instead of making them in Q2, our guidance for Q2 capital expenditures would have remained in the same general range as Q1. Importantly, our continued spend on growth-related CapEx reflects our increasing satellite production and active orbital launch plans. 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, excluding certain initial satellites that are used to validate performance and operations. Our cost per satellite estimates are subject to fluctuations based on dynamic geopolitical factors that could impact our costs. As a reminder, the timing of the changes in our adjusted operating expenses and capital expenditures, as I have just described, could be delayed or may not be realized due to a variety of factors. In the first quarter, we recognized revenue of $14.7 million, primarily driven by commercial gateway deliveries and various U.S. government service milestone achievements. Our revenue declined during the first quarter as we expected due to the timing of gateway deployment to our commercial customers and the timing of completion of certain government contract milestones. With respect to revenue generation, 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 and additional strategic worldwide markets with the launch and operation of approximately 90 Bluebird satellites. Further, as we continue to launch and deploy our constellation, we will continue to support U.S. government applications currently ongoing and accelerating as our constellation grows. As we discussed in our Q4 2025 earnings call, we expect to generate full year 2026 revenue in the range of $150 million to $200 million. We manage the top line with a focus on full year performance given the quarterly variability inherent in our business including the timing of contract signings, equipment sales and milestone achievements. As a result, we believe our revenue performance is best evaluated on a full year basis. As we continue advancing our launch and network activation initiatives, we expect revenue to grow meaningfully each subsequent quarter this year. We expect revenue to continue to be driven by gateway deliveries, achievement of contracted milestones for the U.S. government, MNO consulting services with potential upside related to the recognition of initial commercial service revenue. Quarterly revenue will likely vary significantly depending on achievement of milestones and the timing of customer activities. I'd like to remind you that we believe that approximately half of the revenue opportunity within our commercial pipeline this year is already booked or contracted. The remaining portion consists of a combination of advanced stage opportunities that have not yet been signed as well as net new business we expect to secure over the course of this year. The achievement of our revenue plan remains subject to several contingencies, including the successful launch and deployment of Block II Bluebird satellites, completion of U.S. government contractual milestone achievements, critical gateway equipment sales to our MNO partners in support of their anticipated commercialization efforts of SpaceMobile Service and service revenues in connection with the activation of our commercial service provided by our existing and planned deployed and operational satellites. Finally, on the final chart on the slide, our cash, cash equivalents and restricted cash as of March 31, 2026, was approximately $3.5 billion, inclusive of cash raised in February via the convertible notes offering with a 2.25% 10-year coupon at an effective strike price of $116.30 per share. Our balance sheet continues to provide us with financial flexibility to make further investments to expedite the timing of and augment the capabilities of our SpaceMobile service. Consistent with our last update, we do not have any plans to pursue additional convertible debt in 2026. In closing, we're off to a solid start to the year at AST SpaceMobile and critically, our 2026 objectives fully remain in place. With full recognition of a significant amount of hard work ahead of us, revenue is in plan and satellite manufacturing is increasing to support our orbital launch campaign. We look forward to sharing successful launch milestones with you in Q2 and throughout the second half of 2026. Thank you for your continued support as we continue the hard work of connecting the unconnected at AST SpaceMobile. And with that, this completes the presentation component of our business update call, and I'll pass it back to Scott.

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?

Historically, guidance for Block 2 Bluebird has targeted peak download speeds of 120 megabits per second, presumably requiring your proprietary ASIC chips. In the last quarterly update, it was stated that FM1, which does not have this ASIC chip, is expected to greatly exceed 120 megabits per second peak download speeds. Can you clarify current expectations on how FM1 versus ASIC-enabled Bluebirds are expected to perform?

Thank you, Scott, for the question. This morning, we did announce that over international waters we achieved peak data rates very close to 100 megabits per second to standard devices without any modification to the device. No firmware or software upgrade to the device was required — the device as is today. With BB6, which is already in orbit, and BB8, 9 and 10, we expect to nearly double that capacity. We think that this, in addition to AI features that we will implement into the satellites, the large blocks of spectrum that we'll be adding to the network — particularly the L-band and the S-band MSS spectrum that we plan to add into the constellation — and AI spectrum management features that help us to multiply throughput and performance of the network, make this a complete change of what is possible, far, far ahead of any other technology attempting to enter the market.

You have repeatedly emphasized that you are in a race against yourself in the field of direct-to-consumer broadband technology, given the increasing attempts by other companies to enter the market. Is this still true? And what leads do you currently see over your competitors? What role do your patents play in keeping the competition at bay?

Thank you, Andrew. That's a great question. From the very beginning, we have focused on delivering cellular broadband, and for that you need a very large array, you need spectrum and you need the ability to integrate that with partner MNOs. On that end, we have a very unique position: we have access through our MNO partners to around 3 billion subscribers. We are delivering broadband capacity provided there is enough spectrum attached to the satellites. Today, with in-orbit satellites, we are on the hundreds of megabits already. We plan to nearly double that as we continue to activate BB8, BB9 and BB10, and we launch them in the next few weeks. When you put it in perspective: combine a very large satellite array with significant blocks of spectrum — a combination between IMT/MNO partner spectrum and our own MSS — we have access to more spectrum than anybody else. Also, we have approximately 3,900 patents and patent-pending claims around our technology. So we believe that as of today, we are the only technology that has space-based cellular broadband capability at this scale and architecture.

Can you update us on your composite readiness specifically? Are you now manufacturing all structural carbon fiber reinforced polymer components and reflectors entirely in-house? And if not, is the plan to?

Thank you, Ben, for the question. The way that we stack the satellites is similar to stacking multiple units in a payload stack: on Falcon 9 we put three of them; on New Glenn we can stack up to eight; on Vulcan/ULA we can stack up to five. That structure is our design. It was a very difficult design to achieve because everything you have in terms of mass is multiplied by the rocket, so you have an extraordinary amount of forces applied to the bolt-on satellites in the stack. The answer is yes: we are now producing the composite structures in-house and we own all the IP for how this is done. We have over 1,000 people dedicated to building these composite structures across our satellites, and we are now also extending, automating and robotizing how we do these structures in Midland. All of this to achieve and keep our six-satellite-per-month fully assembled cadence. The composite structure is a very important aspect of what we needed to do. So we are fully vertically integrated. We own the IP; we control the manufacturing of around 95% of the bill of materials from the composite structures to the new composite reflectors and we also own and control everything down to our ASIC and the supply chain of how we build and produce our satellites.

Any perspective you can share on progress made related to Golden Dome, Halo Europa or other government contracts?

I'll take that one. As I said in my remarks, the backdrop for U.S. government contracts continues to be really strong. We most recently saw a budget request for the Space Force of over $70 billion, which was by far the largest, and there was heavy emphasis on space activities. So it's a favorable environment for our capability to mature. We've been doing a lot of both communications and noncommunications work with the agencies who are the big buyers of space capabilities. We are currently deploying the largest-ever phased array in low Earth orbit, and that gives us an unprecedented capability to support regular, small, low-profile handsets as well as do radar-like capabilities. When you look at the backdrop of awards and budgets over the last three to six months, there's been a real strong uptick as expected in the Space Force budget and in allocations related to Golden Dome. Specifically, we're in a stage now where RFPs are being issued and awards are being made for key elements of Golden Dome that will relate to us. This is a really big moment for us. You're going to see some revenue coming in through U.S. government work that's going to be a big contributor to our 2026 revenue. And for 2027, those awards that we expect to receive over the next six months are going to be very significant to that effort.

Our first question comes from Chris Schoell with UBS.

Great. Now that you've had a few weeks to digest, can you just walk us through what happened with Bluebird 7 and what gives you comfort this will not repeat going forward and that New Glenn can scale accordingly? And last quarter, you mentioned you began to integrate your satellites with another heavy launch vehicle. I believe I heard you say ULA earlier. Where does the integration process stand? Could we see you rely upon them this year or is this more a consideration for 2027 and beyond?

Chris, I'll dive in. We were pretty open on BB7 the day of the anomaly. We knew what happened quickly and we were transparent about it. At the end of the day, we have many satellites in advanced stages of production at the factory — over 30 in production — so while the loss was unfortunate, we moved on to the next. We're working closely with Blue Origin; they're working through the investigation. Upper stage anomalies like this are not uncommon early in a program and we feel optimistic about them getting back to the pad soon. When you look at their cadence for the year, they landed a booster, which was a great milestone for cadence, and they have two boosters sitting in their integration facility ready to get into the cycle. So the outlook there looks good and we're optimistic. On the second part of your question, we have contracts with SpaceX and Blue Origin and others. We're also doing integration activities with other heavy launch providers to get ready for potential launches. We've designed our approach to be launch vehicle agnostic, and we're buyers of launch across the entire heavy launcher footprint. We were prepared for this strategy for years, and we think we selected the right partners.

Our next question comes from the line of Scott Searle with Capital Partners.

Maybe just a quick follow-up. Is there a timeline associated with the FAA investigation on when you would expect that to be concluded? And then looking to the expected commercial launch of services at the end of this year, how many MNOs are you expecting to be live at launch? And what are you thinking about in terms of the number of ground stations we should be expecting by the end of calendar 2026?

So Scott, to the first part of the question on Blue Origin, no, there hasn't been a publicly disclosed timeline. These sorts of investigations are commonplace. We've seen similar investigations and returns to flight in the past across the industry. We're really focused on our next launch, obviously, with Falcon 9 and the next three Bluebirds. We're optimistic with Blue Origin and I think we'll be in a good position. As you know, we have a multi-launcher strategy from the beginning. In terms of the number of MNOs you would expect to be live if we got 45 satellites up in the sky in Q4, it's a global network. We disclosed in our remarks and deck the regions and countries we're focused on. Some ground integration efforts are quite advanced, like in the United States and some countries in Europe; others are getting started. It's a pipeline. On the countries listed in our deck, you see a population coverage of about 2.9 billion. Key markets we prioritize include the U.S., Canada, U.K., Japan and Saudi Arabia. That list is growing every day, and we'll provide more incremental detail as appropriate.

Our next question comes from the line of Michael Funk with Bank of America.

Yes. Great. Thank you for the question. I want to go back to the launch target. I think you talked last quarter about stacking up to eight satellites per launch. I'm wondering about the authorizations required to get to those stacking numbers. Abel, earlier in the call you mentioned deploying AI edge computing features on the next generation of satellites. I want to get a better understanding of how that's going to improve the efficiency or performance of next-generation satellites?

Yes. Let me answer both. For stacking: we now have the technology we are manufacturing at rate to stack multiple satellites in a single launch. On New Glenn, we can stack up to eight; on Vulcan/ULA, up to five; and on Falcon 9, up to three. These are self-contained structural composite designs, manufactured under our IP. We have over 1,000 people dedicated to building these structures. We are very close to achieving six assembled satellites per month and being able to stack with each of the different launch partners. Regarding AI: we are not trying to host hyperscaler systems in space, but we are incorporating the ability to edge compute and load AI capabilities on board. You'll start seeing these in production batches toward the end of the year. This includes AI spectrum management, which dynamically administers power and spectrum. As you know, we can tune within approximately 1,100 megahertz of spectrum, and we have blocks of IMT spectrum from our MNO partners that we can tune country-by-country and location-by-location, plus our MSS blocks. AI spectrum management is a system that predicts traffic and user location and then allocates resources very intelligently. From orbit you have a large field of view — you can predict where traffic will be as satellites move and dynamically allocate power and spectrum proactively using our AI agent. The end result is perceived user throughput and spectrum efficiency multiplies because you can allocate resources square kilometer by square kilometer in a highly optimized manner.

Our next question comes from the line of Mike Crawford with B. Riley Securities.

To clarify: AST 5000 ASIC has been expected to enable 120 megabits per second peak data speeds, but is it the AI spectrum management that gets you up closer to 200 megabits per second by year-end? And then on the noncommunications capabilities that you're developing in conjunction with the DOD, would I be correct in assuming we're talking about mid-band military radar capabilities? That's something we wouldn't see with the initial Bluebirds launching now, but once you incorporate L-band into the satellites?

Let me address the defense capability first. I will not be able to describe classified or sensitive details on this forum, but essentially it's a noncommunication capability that uses the same hardware we use on our commercial satellites. That capability has been in work for many years and is in use today in limited tests; it will be extended. Regarding the ASIC: the ASIC (AST5000) is complete and has been incorporated into the production line. The ASIC allows us to upgrade the amount of bandwidth we can manage per satellite. On FPGA-based satellites we had around 1 gigahertz of usable spectrum; with the ASIC we have up to 10 gigahertz. That's an order-of-magnitude increase in available gigahertz per satellite. Peak data rates are not solely dependent on the ASIC; peak per-user data rates depend on the satellite geometry and power per cell. We have demonstrated nearly 100 megabits per second with smaller initial satellites, and we expect to double the 98.9 megabits per second with the larger B6 in orbit and BB9/BB10, even prior to ASIC and AI features. The ASIC increases the total available pipe and the number of simultaneous connections we can support; AI spectrum management intelligently allocates that large pipe (10 gigahertz or other amounts depending on the satellite) to where traffic is needed, predicting user movements and proactively distributing capacity. That is how you multiply the effective throughput for users across the field of view.

And before we leave that topic, Mike, it's important to note that that does not require mid-band spectrum. That's something we can do with low-band spectrum, which we've deployed today.

Correct. The defense and some other capabilities can operate in low-band spectrum. We design flexibility into the hardware so we can meet a variety of government requirements without necessarily needing additional mid-band spectrum for those particular use cases.

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

Apologies for the multipart question. First, do you have contracted launch capacity to do an average of basically one launch per month from June through December because I think that's what you need to do to get close to that 45-satellite number? How diversified is the launch mix? If you can only do, say, one more New Glenn launch this year, could you still get close to that 45 number? I think this is the first time I've heard you mention Vulcan; how much launch did you secure there and could that fill gaps? With 11 through 33 in production, is the next batch of satellites going to be ready to ship for a July launch? Lastly, on stacking, do you need to work your way up to the maximum, i.e., will you ramp gradually (3, then 4, then 5, etc.) or can you go right to eight on New Glenn?

Brian, yes — we do have contracted launch capacity to meet our target for 2026. The way to think about it is basically a handful of New Glenn-class launches and a handful of SpaceX or equivalent launches, and that's what gets us to approximately 45 satellites. We know Blue Origin had an anomaly but we're optimistic about their return to flight. The fact that they have landed boosters and have two boosters in their facility is a strong support for the cadence. On the manufacturing side, we definitely have capacity to keep delivering satellites; you'll see more satellites each month ready for launch and we'll provide 30-, 60- and 90-day updates ahead of launches as they are confirmed. On stacking, we expect on the next New Glenn to launch four satellites as part of ramping into the stacking capability, managing program and schedule considerations. We are mature in the three-stack and will ramp to four and beyond. That's how we get to our constellation size and why we've selected the mix of vehicles we have.

That's very helpful, Scott. If I could just ask one follow-up: where does ULA fit into that? You mentioned a handful of New Glenn and a handful of SpaceX. Is Vulcan a backup or will you use them as well?

Our strategy has always been to have multiple launch providers. We've been developing relationships with other heavy launch providers for some time and will have updates as appropriate. Right now, we plan to use Blue Origin, SpaceX and equivalent heavy launchers as available.

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

Abel, Scott and Andy, what do you view as the impact of Amazon's acquisition of Globalstar? Do you view any potential partnership opportunities with Amazon as they seem to be in the early stages of entering this industry?

Listen, we view the Globalstar transaction as focused on limited capabilities such as SOS/emergency messaging as already enabled on phones. To provide broadband you need hundreds of megahertz of spectrum. Globalstar's contribution is a very small fraction of that. We don't see a dramatic change to the landscape in the foreseeable future, at least for the next several years. When you think about our partners and combine their IMT-3GPP spectrum already on phones plus our allocations like the 45 megahertz of L-band and up to 60 megahertz of S-band in some cases, in aggregate some partners could have quite substantial spectrum allocations. Our focus is broadband. We believe delivering hundreds of megabits directly to a phone from something flying at 500 kilometers above you is a technically demanding capability, and we think our technical advantage in phased arrays, power and integration with MNOs is unique and not matched today.

Great. On the trial announced this morning that generated the peak downlink of 99 megabits per second, do you have a sense of what the average downlink would look like for Block 2 satellites when you and your partners launch trials later this year?

Talk about peak and average is tricky because it depends on the traffic profiles and applications on the phone. That's why we tend to emphasize peak as a clear metric. The peak data rate for our larger satellites — B6 in orbit and BB9 and BB10 — is approximately double what we disclosed this morning. So we're talking about peak speeds closer to 200 megabits per second. Average rates depend on packet sizes, user behavior and network loading, but network capacity on Block 2 satellites will be substantially higher than the initial Block 1 demonstration.

Our next question comes from the line of Chris Quilty with Quilty Space.

I wanted a quick follow-up on the noncommunications satellite effort on the defense side. Since your satellites were specifically designed as a communications platform, does that imply you will have to do large redesigns of satellites and add things like optical cross-links, onboard processing and precision pointing mechanisms? And if so, is that something that would be customer funded or something AST is putting capital into?

Chris, we began work with our defense customers years ago. Many of the capabilities they require are already built into what we produce on the line. There will be additions based on specific requirements, which we are not permitted to discuss in detail publicly, but the core capability that they're using is incorporated into our production. Some mission-specific modifications can be funded by customers or structured through contracts; those terms vary by program and prime contractor.

Great. And speaking of government defense budgets, assuming the administration gets through reconciliation and there's a large budget increase, can you name specific programs where ASP has an opportunity to target? Or are you expecting most opportunities to be on the classified side?

It's a combination and includes public programs and classified programs. The government has publicly discussed Golden Dome and related programs; we are present in many aspects of government usage from FirstNet to classified programs to Golden Dome. We see ourselves as a very important asset for communications and noncommunications capabilities. This has been years in development for them, they're using the capability today in tests, and we expect very significant growth in revenue and opportunities across classified and unclassified programs.

Our next question comes from the line of Greg Pendy with Clear Street.

When you do hit 45 satellites in orbit, what is the commissioning time period we should be thinking about until activation of service with MNOs?

Currently, the first satellites took longer to commission because they are the first-ever deployment of this size and phased array architecture in orbit. Going forward, our target with MNOs is about 45 days from launch to initial activation for either 5G or 4G connectivity through them. As we keep launching and gain operational experience, we plan to reduce that time frame toward two weeks, though we don't want to promise that for the very early batches.

Great. As you're looking at a multi-launch strategy and adding new launch partners, any thoughts if Neutron from Rocket Lab is available in 2027 on what type of capacity they might contribute and whether they could be a partner?

We're not going to comment on specific other launch providers at this time, but you've heard our commentary today about the types of providers we're looking at. Our satellites are designed to fit in standard 5-meter fairings and larger, so we maintain flexibility to partner with appropriate heavy launch providers as they become available.

Thank you. And we have reached the end of the question-and-answer session. I would now like to turn the floor 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 really appreciate it. Have a great week.

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