Spire Global, Inc. Q2 FY2025 Earnings Call

Thank you. Hello, everyone, and thank you for joining Spire's Second Quarter 2025 Business and Financial Update Conference Call. Our business and financial update press release is posted on the company's IR website. A replay of today's call will also be made available. With me on the call today is Theresa Condor, CEO; and Ali Engel, CFO. As a reminder, our commentary today includes preliminary and unaudited values. Some of our comments today contain forward-looking statements that are subject to risks, uncertainties and assumptions. In particular, our expectations around our results of operations and financial condition are uncertain and subject to change. Should any of these expectations fail to materialize or should our assumptions prove to be incorrect, actual company results could differ materially from these forward-looking statements. A description of these risks, uncertainties, assumptions and other factors that could affect our financial results is included in our SEC filings. With that, let me hand the call over to Theresa.

Thank you, Ben. Good afternoon, and thank you for joining us today. This quarter marked a transformative milestone in Spire's journey, the successful sale of our maritime business. This strategic transaction has fundamentally strengthened our financial foundation, eliminating debt entirely and establishing a robust balance sheet. With this significant chapter now behind us, our team at Spire is channeling our collective energy towards what matters most, delivering exceptional operational performance, generating compelling financial results, and unlocking growth opportunities that will define our future. Spire's differentiated capabilities enable us to unlock insights powered by our versatile multipurpose satellite constellation. Our recurring revenue model provides meaningful operating leverage, fueling sustained growth while supporting a rich portfolio of products that address the challenges faced by our diverse customer base. The European Space Agency recently procured historical weather data from Spire's satellite constellation to support advanced scientific research and the development of operational applications. Additionally, NASA awarded Spire a task order extension modification under its commercial satellite data acquisition program for the provision of radio occultation, reflectometry and space weather data. We expect this extension to serve as a bridge contract to a potential annual data purchase, which we hope to announce in the near future. Both contracts contribute to improving global weather forecasting and atmospheric understanding. Spire recently submitted a proposal to deliver near real-time global navigation satellite system reflectometry data with a primary focus on measuring ocean surface wind speeds. This data would support the evaluation of the quality and applicability of commercial GNSS-R observations across a range of domains, including enhanced weather forecasting models. The initiative directly addresses the growing need for accurate global sea surface wind measurements, critical for marine weather forecasting, hurricane tracking, ocean current analysis, and climate science. We are also actively engaged in our annual radio occultation weather data acquisition agreement with NOAA. As discussed during our last earnings call, there is the potential for NOAA to purchase up to 20,000 radio occultation profiles per day in the coming years. We're encouraged by NOAA's growing recognition of the importance of expanding data acquisition to enhance both the accuracy and timeliness of weather forecasts. While we continue to deliver reliable solutions that support our recurring revenue model, Spire is also making thoughtful strategic investments to expand our capabilities and meet evolving market demands. Spire is making remarkable strides in developing its Hyperspectral Microwave Sounder technology. These advanced sounders play a vital role in weather forecasting models because they can peer through clouds to gather crucial atmospheric data, something other instruments cannot do as reliably. Among all sources of weather data, Microwave Sounder observations consistently rank among the most impactful for improving forecast accuracy. Spire's Hyperspectral Microwave Sounder enhances the vertical resolution of atmospheric profiles, enabling more precise measurements of temperature and water vapor from near the surface to the top of the atmosphere. We are pleased to share that our Microwave Sounder has successfully completed flight testing aboard an aircraft test bed, reaching an important milestone in its development. We are targeting the first launch of this sensor in orbit for early 2026. There is significant interest in this technology from government weather agencies and Spire plans to use this data to enhance our own AI and physics-based modeling capabilities. Spire's development of this capability strengthens our comprehensive portfolio of weather data offerings, ranging from radio occultation and Polarimetric Radio Occultation to Reflectometry and soon Hyperspectral Microwave soundings. As severe weather events grow more frequent and intense, the need for diverse and high-quality observational data to improve forecasting models becomes increasingly urgent. Spire is well positioned to meet this demand with a unique and expanding set of satellite-based measurements. As we continue to advance weather forecasting capabilities, customers are also finding creative ways to leverage Spire's aviation data. For example, researchers at Imperial College London purchased our ADS-B data to study contrails and their impact on weather. This data has been instrumental in validating models that simulate contrail formation and behavior with findings incorporated into published scientific research, demonstrating yet another high-impact application of Spire's unique data sets. In addition to cutting-edge research, our aviation data continues to support more traditional applications. Aircraft owners, for instance, use Spire data to track takeoff and landing times for each flight, enabling accurate logging of crew hours, calculation of airport charges and optimization of aircraft utilization. Within our aviation portfolio, we recently launched a new product, Spire Aircraft Exposure Analytics. This solution empowers users to quantify aircraft level exposure to hazardous weather by analyzing real flight trajectories alongside global weather alerts. By integrating flight path with real-time and historical weather hazard data, Aircraft Exposure Analytics pinpoints when and where individual aircraft have encountered conditions such as turbulence, icing, thunderstorms, volcanic ash, tropical cyclones, and more. This valuable insight helps airlines, maintenance teams, OEMs, lessors, and aviation insurers gain a clear understanding of how environmental factors impact asset valuation, aircraft performance, safety, and long-term wear. Geopolitical developments continue to fuel demand for robust space reconnaissance solutions. While we must maintain discretion regarding specific contracts, we are excited to highlight Spire's expanding capabilities. Our latest space reconnaissance offering merges advanced data collection with AI-powered processing to deliver differentiated insights, enabling persistent monitoring, real-time geolocation, and multilayered situational awareness. Spire can now collect, extract, and interpret publicly broadcast voice transmissions from space, applying AI to transcribe, translate, and summarize these communications in near real-time, supporting more effective assessment of intent and potential threats. Today's security landscape demands faster, smarter insights, beginning with real-time awareness of activities on the ground. With our advanced RF detection and geolocation capabilities, we empower partners and agencies worldwide with the critical intelligence needed to make confident informed decisions, even in the most challenging and remote environments from maritime zones and border regions to conflict and disaster areas. Beyond these specific product enhancements, we are making broad-based investments to strategically position ourselves for larger long-term opportunities on a global scale. NATO recently introduced its inaugural commercial space strategy aimed at strengthening collaboration with the commercial space sector by streamlining engagement and expanding business opportunities. The strategy emphasizes leveraging commercial solutions to complement allied space capabilities with the goal of ensuring uninterrupted access to space services during peacetime and conflict and fostering more flexible, resilient partnerships with the industry. Key initiatives include adaptable contracting models, deeper integration of commercial services into NATO operations and exercises, and the establishment of a new space capabilities group to promote cooperation, standardization and interoperability among NATO members and commercial partners. This strategic shift reflects a growing demand for commercial innovation in the defense space market, opening significant opportunities for industry leaders. NATO member countries have committed to increasing defense and security investments to 5% of GDP by 2035, a substantial rise from current levels, which bodes well for companies positioned to deliver sovereign capabilities. In response to these trends and opportunities across the U.S., Canada, the U.K. and Europe, we have made the strategic decision to establish manufacturing facilities in each of these critical markets. Additionally, we continue to invest in top-tier talent to strengthen our regional presence and accelerate market penetration. Earlier this year, we expanded our leadership team with seasoned experts bringing deep European defense experience. And most recently, we announced that Quintin Jones will be joining Spire, adding extensive expertise working with the U.S. government and allied partners. We will continue to prudently make investments in the sales and marketing team to drive growth for the company. And finally, just this afternoon, we announced an 8-figure, 5-year space services contract from a repeat commercial customer, underscoring the value Spire delivers to those seeking reliable, proven technology on an accelerated timeline. Spire has the right resources, team, technology, and opportunities to drive success. We remain focused on execution, agile in adapting to the evolving landscape, and committed to investing in the areas that fuel long-term growth. I'm proud of the progress we've made this quarter and optimistic about the promising opportunities ahead. With that, I will turn it over to Ali.

Thank you, Theresa. I'd like to begin with an update on our efforts to hire a new independent auditor. Over the past few weeks, we've made meaningful progress in this process. After initial exploratory discussions, we've moved into the request for proposal stage, and are now engaged in-depth conversations with several firms. Our goal is to identify the right long-term partner. We expect to receive proposals from all participating firms by mid- to late August after which we will review the proposals and make a decision. We are currently in the final stages of closing our second quarter results. This process is taking slightly longer than usual due to additional complexities, particularly those related to the maritime transaction. While we finalize the full financials, we're providing preliminary unaudited revenue figures to keep you informed in the interim. As a reminder, Spire's Q2 2025 results and prior quarter's results include portions of the maritime business which was sold at the end of April. GAAP revenue for the second quarter is expected to be in the range of $18 million to $19 million, given the deployment of satellites this year we expect space services to be a continued driver of our revenue expansion in the second half of the year, along with revenue growth from our WildFireSat contract and NOAA RO weather data. We finished the quarter with cash and cash equivalents and marketable securities of $117.6 million. We have an active and robust pipeline and are diligently working to close more deals by the end of the year. At this time, we are only providing revenue guidance for the third quarter and full year in addition to reiterating our expectations to finish the year with over $100 million of cash, cash equivalents, and marketable securities. We plan to provide additional guidance upon the filing of our second quarter 10-Q. As we shared last quarter, we anticipate continued momentum in the second half of the year. For the third quarter, we expect revenue to be in the range of $19.5 million to $21.5 million. For the full year, we reiterate our previous expectations for revenue to be between $85 million and $95 million. Now I would like to open the call for questions.

Our first question is from Erik Rasmussen with Stifel.

Congrats on the new 8-figure Space Services award. Maybe can you just offer any additional details on how big this could be for Spire? How many satellites this represents? And maybe what kind of markets it will serve and maybe when you expect to see the revenue impact?

Yes. So I mean, I think it's a really nice contract for us. We mentioned an 8-figure deal. And I think the other thing that we can share is this is a good example of our kind of land and expand strategy. So it's a customer that we've worked with previously who has continued to build out their capabilities with us. This is going to be a standard space services contract in that we will recognize revenue once the assets are in orbit and collecting data. So it's going to have that 12 to 18-month time lag given the new revenue recognition policies that we have in place.

Okay. But along the way, though, you'll get reimbursed for manufacturing and building, right?

That's right. We'll have billings all along the way.

Okay. And then maybe just on sort of the revenue results. Q2 looks like you lowered the midpoint by about $500,000. Can you just maybe provide a little bit of color on that, what drove that? And then on the outlook for the year, you're still targeting $85 million to $95 million. It seems a pretty steep second ramp. Maybe just what gives you the confidence of hitting that?

Thank you, Erik. We provided a $1 million range because we are still completing our close, especially regarding a few larger contracts. The auditor transition and other factors have made the process take longer than expected. By offering a range, we are allowing ourselves some flexibility to avoid any surprises. Our confidence for the second half is largely based on the deployment of 27 satellites in the first half, many of which were for our space services customers, providing us with insight into the revenue increase for the rest of the year. We are also beginning to recognize revenue from our WildFireSat contract, which is an important part of our execution strategy that will drive revenue growth. Additionally, we anticipate an increase in revenue from our NOAA RO weather data efforts, which Theresa has discussed in recent months. This will commence in late September and will provide us with a full quarter of elevated revenue. This is what underpins our confidence in the anticipated revenue ramp-up.

Great. Maybe just one last one. Would you still be targeting 20% plus for next year when factoring the sale of the maritime business on an equal sort of comparison?

Absolutely. We're kicking off our 2026 planning process, and that is the stated objective. So that is where we are targeting for, if not even maybe better, we'll see.

Great. And still positive operating cash flow maybe in the second half of this year, still on track?

We're working through that. We're committed to ending the year at still over $100 million in cash and cash equivalents. We are experiencing increased costs due to certain things with respect to the accounting transition and a few other matters. So I'm a little bit hesitant, but that is where we are focused on managing our cash and hoping to get to that objective, if not in the back half of this year and early next year.

Our next question is from Jeff Van Rhee with Craig-Hallum Capital Group.

I had a question along the lines of the pipeline and maybe specifically around space services. But obviously, there's a lot of disruption with the Kpler sale, maritime sale and the situation with the balance sheet. But now that that's behind you and the balance sheet is in good shape for debt-free. Just I realize it's somewhat early, but how has that resonated in terms of unlocking maybe some frozen sales cycles and impacting those that were already in flight.

What I can say, Jeff, is I feel very good about the pipeline that we have ahead of us. There's a lot of them that we have some visibility into coming up that we already talked a lot about NOAA. We talked about NASA and a lot of the names that we can't talk about a lot on the radio frequency geolocation side. So I want to highlight that not just talking about space services, but what we're doing on the space reconnaissance side. And what I would say is that it's kind of interesting in the current environment, we're having probably more inbound interest than I've seen in a long time at a company. Normally, you have your sales teams out there pushing hard, and we're in a current situation, in particular with RFGL, where we actually have people coming to us because we have a good product. We have something that can be used with customers worldwide, and we're in a very particular moment in time. So I feel very positive about the pipeline that we have and that we felt strongly enough that we can keep the revenue range and really feel optimistic about 2026.

Okay. And then, Ali, I have a few questions for you. First, I didn't hear about the 10-Q. What is the estimated filing time? Second, what is the current headcount? Lastly, regarding the revenue range of $85 million to $95 million, there is quite a bit of difference there with only a couple of quarters left. Could you clarify what factors would lead us to the low end and what factors would push us to the high end? What causes that variability?

I don’t have a specific date for the 10-Q filing, but I assure you we are working diligently towards it. Everyone is eager to get it filed. I hope we can accomplish this in the next few weeks, but I’m reluctant to provide a firm date since we are still addressing a few outstanding items. The maritime transaction involved around 20 contracts, which was quite a bit of work for the company. This is the first quarter we’ve recognized revenue from WildFireSat, which is a significant contract for us. We are currently managing these issues, but we are confident in our top line and will file the 10-Q as soon as possible. Our headcount is around 365, which is a decrease from about 380. We are being selective with new hires, as you may have noticed, and we are trying to maintain this headcount. As for our revenue range for the full year, we feel confident about it based on the services we've launched, the WildFireSat contract, and the NOAA RO deal, which support our ability to meet that range without much doubt.

Our next question is from Brian Kinstlinger with Alliance Global Partners.

You launched 27 new satellites in the first half. I believe that was the number. Is there a way to quantify what the annual run rate of revenue is from the data services that will be delivered on those 27 satellites?

Yes, exactly. I think Ben and I are spending a lot of time thinking about how to reposition our approach to discussing revenue after the maritime phase. We are not there yet, but we are working on it for 2026. The key takeaway is that space services revenue is growing. It is on the rise, and the new deal continues to increase the remaining performance obligation that we can recognize over time. All of this is positive, but we will provide more detail on those numbers in the future.

And the only other thing I think I would add there is just to remind you that we really operate this constellation as a network. All these satellites are doing multipurpose things, and we're operating it altogether as a network. So you also should not think about this as something that is like revenue per satellite, right? We've never talked about it that way, and I don't think that's the right way to think about it. The better way to think about it is really looking at what is the replenishment CapEx that we have per year as that baseline and then all the revenue that we can grow on top of that, that leverage model that we continue to talk about.

You answered my next question without me even having to ask, which is a good job. I'm curious about the 8-figure contract you mentioned; you highlighted that it was already a customer. Can you share what the rough revenue run rate of that customer is before this contract? I’m just trying to understand if they're very big or very small, so anything you can share would be helpful.

Yes. I don't believe we are publicly sharing specific details, but we are focused on the quality and the long-term relationships of the customers we work with in the space services area. We are being selective about our partnerships and the types of agreements we enter into. We consider this particular customer to be a strong long-term partner that we value.

Okay. Last question I have. One of the questions was about cash. I think I heard you have about $100 million, just below $118 million of cash, and you expect to end the year at $100 million. Does that approximate your EBITDA loss in the second half of the year? Otherwise, where does that $18 million burn come from?

I'm considering that. There are some pressures on cash that may not be fully reflected in adjusted EBITDA. Certain items we adjust out do impact cash flow. So, I want to clarify that I’m not certain this is the best estimate, given that we are excluding some things.

Our next question is from Austin Moeller with Canaccord Genuity. I'm considering the factors involved. There are pressures on cash that might not be fully captured in adjusted EBITDA. Certain items that we exclude do involve cash outflows. Therefore, I’m not confident that it's the most accurate estimate since we are adjusting for various factors. I wanted to clarify that.

So just my first question on the microwave sounder. When placed in orbit, would that particular instrument strengthen your competitive positioning versus companies like Tomorrow.io by putting that into your toolbox? And ultimately, do you plan to deploy several of those and add it to the broader LEMUR constellation?

I would say the short answer is yes. I mean we're not doing direct competitive things with them necessarily at the moment, but it's absolutely something that we work with customers today, who are looking at that data and testing that data, including from the test flight that we did. And we do have an expectation that this is something that we start selling the data sets that go into our own forecasting models and becomes part of our product portfolio.

Okay. And just a follow-up. Do you have any update on the development of the 4 EURIALO satellites?

They are being worked on and in process right now. So that contract continues to be executed nicely and on track.

Our next question is from Chris Quilty with Quilty Space.

Theresa, you mentioned you're seeing more inbound interest than you've seen in a long time. Is that specific to the space services side of the business? Or is it the new RF mapping service? Or is it just broad-based?

I would say it's broad-based, but probably more broad-based on the government side. So it's going to include space services. A lot of it is related to inbound looking at sovereign capabilities. So I mean, this is a theme that we've talked about quite a lot. I think the space sector overall is talking about quite a lot. And then it also is going to be related to the space reconnaissance, which I really see as an important growth area for Spire and again, where we have assets in orbit, and we have good competitive differentiation.

Got you. And on that service, that's something you've sort of developed and launched. Was there customer pull for that? And do you have specific customers you're targeting for that service?

We develop the service because there is customer demand for it. We prefer that to be the case when we introduce something to the market. Unfortunately, it's challenging to discuss the customer base for that product. I can only say that we have customers in the United States and customers outside of the United States.

Understand. And how would that service differentiate from what HawkEye 360, Unseenlabs, Sierra Space are doing?

Yes. So I think everyone is doing slightly different things and picking up slightly different spectrum. I think we've got assets in orbit. We have quality geolocation that we're able to deliver. I think we have a really nice automated pipeline where we can get good latency out to the customers. And I think we have the ability to work with a diverse set of customers, which is something that's unique.

Got you. A follow-up on the Canadian Space Agency, the WildFireSat program. Does that one follow the same sort of 12 to 18-month build cycle? Or I think you're doing an AIT facility up in Montreal. Does this one have a much longer lead to get to the service revenue?

So this is a percent completion. So we're actually taking revenue along the way. That's why we talk a lot about that contract being relevant for the revenue recognition in 2025. I don't know, Ali, if you need to add that.

No. Absolutely correct.

Got you. And a question on the sounder program. What size satellite will you use to host that sounder? Is that a standard 3U, 6U, 12U?

So it's on the larger end because this is a more complicated payload, I think has more power requirements, but it fits within the form factors that Spire already does.

Thank you. There are no further questions at this time. This does conclude today's conference call. We thank you for your participation. You may now disconnect your line.