Earnings Call Transcript - SPIR Q3 2021

Operator, Operator

Please stand by. Good day ladies and gentlemen, and welcome to Spire Global's Third Quarter 2021 Earnings Conference Call. At this time, I am pleased to turn the floor over to your host, Head of Communications and Investor Relations, Hillary Yaffe. Ma’am, the floor is yours.

Hillary Yaffe, Head of Communications and Investor Relations

Thank you. Hello everyone. And thanks for joining us for our third quarter conference call. Our results, press release, and SEC filings can be found on our Investor Relations website at ir.spire.com. A replay of today’s call will also be made available. With me on the call today is Peter Platzer, CEO; and Tom Krywe, CFO. As a reminder, our commentary today will include non-GAAP items. Reconciliations between our GAAP and non-GAAP results, as well as our guidance can be found in our earnings press release. Some of our comments today may contain forward-looking statements that are subject to risks, uncertainties, and assumptions in particular, our expectations around the impact of the pending acquisitions, results of operations and financial conditions are uncertain and subject to change. Should any of these 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, and 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 Peter.

Peter Platzer, CEO

Thank you, Hillary. Good afternoon. And thank you for joining us today. I am truly excited to be sharing with you the team's progress along our four growth pillars and our mission to leverage space, to solve problems on earth. This has been a very busy quarter where we became a public company; we are listed on the New York Stock Exchange and signed a definitive agreement to acquire exactEarth, a leader in the maritime data space with over 150 customers and over $18 million in last 12 months revenue, all while growing our ARR Solutions Customers 69% year-over-year. This would not have been possible without our exceptional team of over 330 professionals from over 40 different countries who are relentlessly executing with a true sense of urgency every single day. I am truly fortunate to be part of such a globally diverse, collaborative, and dedicated team. Winning is a team sport, as we say, and we would not be here today without you. So, thank you. Since we started the company in 2012, we had a simple yet powerful mission to leverage data from space to solve global problems on earth. Today, Spire owns and operates the world’s largest multipurpose satellite constellation. Our fully deployed constellation and vertically integrated data platform provides our over 200 customers with unique and comprehensive data and analytics, assisting them in fulfilling their missions and solving their business problems. Be it port operations, commodity trading, route optimization, weather risk mitigation, renewable energy production, logistics planning, or hundreds of other use cases, our customers rely on our data to help them solve some of their most vexing business challenges and grow their businesses faster, more profitably, and more sustainably. Serving 225 global ARR solution customers out of an estimated potential target pool of over 200,000 customers, we believe we have barely scratched the surface of this estimated $90 billion a year market opportunity. Adoption of data and analytics from space has been increasing rapidly by both the commercial and government sectors. We share the conviction from a prominent analyst that in the not-too-distant future, space might touch and potentially disrupt every industry in the same way that computers and the internet have, thanks to the transformation from the mainframe computer to the PC. Today, there is a very analogous transformation happening in space, and Spire sits at the very crest of this massive wave of disruption, leveraging space to solve problems on earth. At its core, this is powered by constellations of small satellites whose capabilities increase exponentially every year alongside the increase in launch opportunities. We are extremely excited about our role in this global transformation and how it impacts industries and humanity. Spire’s leverage here, of course, starts with our cutting-edge space technology, where we continue to innovate and invest. In July of this year, we successfully completed our 31st launch campaign, which put two LEMUR satellites into orbit with new optical inter-satellite link capabilities. The successful incorporation of these capabilities will have a meaningful impact on the next generation of our constellation, enabling more secure data transfers, reducing data latency, and expanding the data and solutions that we are able to offer our current and future customers. We also invested in our software, leveraging the software-defined nature of our constellation, we increased data production across the board, specifically reaching 20,000 RO profiles, a world-leading amount of crucial weather data, affording our customers more accurate weather predictions. Next, I want to spend a minute and highlight again, Spire’s four growth pillars. These are the four core strategies that we execute against to drive our business growth over the next several years: number one, invest in sales, marketing, and product; number two, expand into new geographies and use cases; number three, expand the capabilities of our data and analytics; and four, execute strategic acquisitions to strengthen our market position. During the third quarter, we made great progress on each of these pillars. Today, I'd like to focus on two pillars specifically. First, on executing strategic acquisitions to strengthen our market position. On September 14, we signed a definitive agreement to acquire exactEarth, a leading provider of global maritime data. We expect the transaction to close in late Q4 and if not in Q4, then no later than in Q1 2022. exactEarth has approximately 150 customers across numerous countries to whom we will then be able to offer additional Spire solutions. As mentioned in exactEarth’s latest earnings release, their last 12 months revenue was $18.2 million and their fiscal year-to-date year-over-year growth rate was 30%. Once closed, we believe this transaction would add meaningfully to our customer base and ARR as we head into 2022, strengthening our leadership position in the maritime data and analytics market. This is a market opportunity estimated to be $4 billion annually, growing at a low-teens CAGR over the next five years, powered by the digitalization of the global maritime economy. Even combined, our penetration in this market would still be very small, affording us tremendous upside for gains in market share based on our growing leadership position. The second pillar that I want to cover is expanding the use cases for our data and analytics. One of Spire’s core data sets is in weather, but we produce more radio occultation (RO) data for temperature, pressure, and moisture than anyone else, public or private. Base data, in general, drives 70% of global weather forecast accuracy, according to a recent analysis by ECMWF, the European Center for Medium-Range Weather Forecasts. They also documented the highly beneficial nature of RO data in particular for global weather forecast accuracy. Based on intensive testing and a trial period, Spire has been able to win a contract covering up to three years with EUMETSAT to provide our RO data. This is a first-of-its-kind for them. Now, EUMETSAT, the European organization for the exploitation of meteorological satellites, is in many aspects the European sister organization to NOAA, the National Oceanic and Atmospheric Administration from the U.S. Spire was also able to win a follow-on subscription contract with NOAA for our RO data. With these two contracts combined, Spire’s RO weather data is now used by public agencies, providing weather predictions to protect lives and prevent the loss of property for almost a billion people and almost half of global GDP. With the impact of climate change being increasingly felt all across the world from extreme floods in Europe to freezing temperatures in Texas, frequent hurricanes, and blistering wildfires, Spire is truly proud to collaborate with our customers to help humanity adapt to climate change. Before I turn it over to Tom, who will discuss our Q3 financial results and provide an update on our Q4 and fiscal year 2021 guidance, I want to reiterate our confidence in Spire being on the cusp of an enormous opportunity in the market for space-based data and analytics. One, the market today might be somewhat nascent. However, the speed of development and the adoption of new applications is accelerating. We believe that we're years ahead of the competition with our fully deployed constellation, proprietary ground station network, and our integrated data and analytics offering. Serving over 200 customers today and soon almost 400, we have tremendous resilience in the business. As we focus and execute on our four growth pillars, we expect to increase our market share in this vast and growing market opportunity, drive significant growth in revenue, and ultimately help our customers across the world grow more profitably and sustainably. And with that, I'll turn it over to Tom.

Tom Krywe, CFO

Thank you, Peter. Before I kick off a review of our third quarter results and our outlook for Q4 and fiscal year 2021, I would like to point you to our earnings release sent over the wire today after market close. In the release, you will find both the detail of our GAAP to non-GAAP reconciliation and our outlook for Q4 and fiscal year 2021. Q3 2021 was a solid quarter for us on the topline with the revenue increasing 33% year-over-year to $9.6 million and ARR increasing 51% year-over-year to $45.2 million, with ARR representing a very nice sequential jump of $8.6 million versus Q2 2021 ending ARR of $36.6 million. The year-over-year increase in revenue was driven by the addition of 92 net new ARR solution customers versus the prior period, a 69% increase highlighting our focus during the second half of the year on adding new ARR customers, and our last 12 months net retention rate of 119%. Q3 net retention rate was 111%, which, as mentioned earlier in the year, reflects a lower rate compared to the rates in 2020 due to delays in existing customers' buying decisions and some non-subscription-based business taking longer to deliver due to launch delays and customer workstream delays. Based on the concentration of new versus existing customer activity and having a larger overall base, we expect the net retention rate to generally be lower than what we had in 2020. As this rate can fluctuate per quarter, ranges are likely to be between 100% to 135%, depending on the quarter. We ended Q3 with 225 ARR solution customers, representing a 69% year-over-year growth from the prior year period. We track ARR solution customers as a key metric, which is a good indicator of growth in our recurring revenue base. We define an ARR solution customer as an entity that has a maritime, aviation, weather, or space services contract with us that is either a binding renewable agreement for our subscription solutions or a binding multi-year contract as of the measurement date. We count every solution the customer has with us separately. Two of these new ARR solution customers in the third quarter represented deal values of over seven figures. We witnessed strength in the third quarter across all four of our solutions. Our weather solution saw the highest increase in ending ARR year-over-year, with key wins such as EUMETSAT and NOAA that Peter had mentioned earlier. Space services also had a strong quarter with solid traction and year-over-year ARR growth. Space services bookings benefited not only from the growth within existing customers, but also from the addition of new space service customers like Myriota, a leader in the space-based provision of IoT services. Q3 GAAP gross profit was $4.2 million and non-GAAP gross profit, which excludes stock-based compensation, was $4.3 million, a decrease of 11% year-over-year. The decrease year-over-year was impacted by the timing of revenue recognition on several non-subscription-based contracts and our decision to accelerate certain technology investments to support future revenue growth. We expect gross margins to return to the range of 59% to 65% in the fourth quarter, as we continue to scale revenue relative to our level of investment. Q3 GAAP operating loss was $17.4 million and non-GAAP operating loss, which excludes stock-based compensation, merger, and acquisition-related expenses along with other unusual one-time costs, was $13.6 million. Our Q3 GAAP operating loss was impacted by several large one-time costs related to our merger with NavSight and other financing-related transactions, in addition to general increases in expenditures to support the rapid growth of our business. The non-GAAP increase in operating loss of $8.3 million year-over-year was driven by increased spending on sales and marketing to align with our 2021 growth plan. Further funding of our research and development teams to enhance our solution offerings and customer datasets, as well as increased costs in general administrative to support our transition to being a public company. EBITDA was negative $28 million in the third quarter and adjusted EBITDA, which excludes stock-based compensation, merger and acquisition-related expenses, and other unusual one-time costs, change in fair market value of warrant liabilities and other income or expense net was negative $11.5 million for the quarter. Q3 GAAP net loss was $32.7 million and our Q3 non-GAAP net loss, which excludes stock-based compensation, merger and acquisition-related expenses, and other unusual one-time costs, change in the fair value of warrant liabilities and other income or expense net was $16.3 million. Q3 GAAP net loss per share was $0.49 based on the basic weighted average share count of approximately 67.3 million shares. Our Q3 non-GAAP net loss per share, which excludes stock-based compensation, merger and acquisition-related expenses, and other unusual one-time costs, change in fair value of warrant liabilities and other income or expense net was $0.24. Lastly, we ended the quarter with cash, cash equivalents, and restricted cash of $259 million. We anticipate using approximately $110 million of cash to complete the exactEarth transaction. In Q4, we'll use an additional approximate $20 million of cash to cancel outstanding warrants to purchase approximately 1.6 million shares pursuant to the warrant agreement with the European investment bank previously described in our public filings. Now I'll provide guidance for the fourth quarter, as we expect total revenue to range between $11.6 million and $13.6 million. The sequential increase in Q4 revenue reflects the incremental ARR of $8.6 million from Q2 fiscal year 2021 to Q3 fiscal year 2021, along with Q4 fiscal year 2021 having just over $1 million more of potential non-subscription-based revenue than Q3 fiscal year 2021. We anticipate Q4 non-GAAP gross profit to be between $6.8 million and $8.8 million. The Q4 non-GAAP gross profit primarily reflects the increase in the expected Q4 revenue. Non-GAAP operating loss for Q4 is expected to range between $15.9 million and $11.8 million. Our non-GAAP operating loss guidance reflects increased hiring expenses and costs from operating as a public company. We expect EBITDA to range from negative $15.4 million to negative $12.4 million, and adjusted EBITDA to range from negative $13.3 million to negative $10.3 million. Non-GAAP loss per share for Q4 is expected to range from negative $0.14 to negative $0.11 and assumes a basic weighted average share count of approximately 133.7 million shares. Now turning to the outlook for the full fiscal year; we are on track to hit our previously issued guidance for total revenue to range between $40 million and $42 million. We are also maintaining our guidance for year-ending ARR and year-ending ARR solution customers. We expect year-ending ARR to range between $48.4 million and $52 million and the year-ending ARR solution customers to range between 240 to 252. We expect fiscal year 2021 non-GAAP gross profit to be between $22.9 million and $24.9 million. This is a reduction from our previously issued guidance, and as I explained earlier in the call, it is primarily the result of our decision to accelerate the investment in our infrastructure to support future revenue growth. Despite the reduction in guidance in non-GAAP gross profit, we are maintaining our previously issued non-GAAP operating loss guidance range for the full year of $48.5 million and $44.4 million. We expect full-year EBITDA to range from negative $79.8 million to negative $76.8 million. The change from prior guidance is primarily driven by the significant increase in the change in the fair market value of warrant liabilities and stock-based compensation that resulted from our merger with NavSight. Adjusted EBITDA is expected to be between negative $40.3 million and negative $37.3 million, a reduction from our previously issued guidance. This is the result of both our decision to accelerate investment in our infrastructure to support future revenue growth and certain general and administrative expenses related to operating as a public company being higher than expected. Non-GAAP loss per share for fiscal year 2021 is expected to range from negative $0.99 to negative $0.92, which assumes a basic weighted average share count of approximately 61.7 million shares. As a reminder, our guidance excludes any potential impact from the exactEarth transaction that could close in Q4. According to exactEarth's earnings release, their last 12 months revenue was $18.2 million and their fiscal year-to-date year-over-year growth rate was 30%. Once closed, the transaction would add quality meaningfully to Spire's ARR, as well as about 150 customers. The close of the transaction will also add approximately 5.2 million shares to our basic and fully diluted share counts. In summary, as previously stated by Peter, we continue to deliver solid growth in revenue, ARR, and ARR solution customers by relentlessly executing on our four growth pillars. Our technology leadership delivers innovative solutions that position us well for continued market share capture. And with that, I'd like to open the call up for questions.

Operator, Operator

Thank you. The floor is now open for questions. Our first question comes from Jeffrey Meuler at Baird. Please go ahead.

Jeffrey Meuler, Analyst

Yes. Thank you. We'd love any additional detail you can provide on the ARR progression. Obviously, the nice jump, and you called out the two sizeable wins, but it sounds like it's probably broader than that. The Q4 guidance implies a fairly nice further sequential increase. So, I'd just love any additional color on the breadth of the strength and the pipeline beyond the two mega wins that you discussed?

Peter Platzer, CEO

Sure. I'll start with the first one with the ARR and the sequential jump of $8.6 million from Q2 to Q3. As you mentioned, we did land some really good wins within the quarter. We had customers like EUMETSAT, Myriota, and Hancom as new wins. Not only did we have some really good new wins in the quarter, but we also had upselling with existing customers like NASA and NOAA. We saw positive activity across the board from new customers as well as upselling front. We added 71 net new ARR solution customers from the beginning of the year to Q3, and we had a 69% growth on a year-over-year basis for our ARR solution customers. So, there was a heavy focus on that front.

Jeffrey Meuler, Analyst

Awesome. And then on the accelerated investment to support future revenue growth. I understand that you just raised a lot of capital to do just that, but I guess you had a business plan that was already assuming increased investment. Could you help me understand relative to the prior growth plan and investment plan, like what you are incrementally spending on or investing in?

Peter Platzer, CEO

So, there are two areas, Jeff, that we are investing in; one of them is in the pure technology side, where the optical inter-satellite links are really a technology that we are quite excited about regarding what it can bring to our customers. There are certainly investments that we need to make there. The other one is really related to a dramatic change in the availability of resources to run a public company. By roughly in the middle of the year, we had over a 190% increase in IPOs in the U.S. year-over-year. That has stressed the labor market and the services market, whether that's accountants, lawyers, or financial professionals. A small example: the Director's and Officer's insurance came in over 30% higher than the original quote because the market was so stressed. So, investing in the infrastructure to support being a public company is the other element where we have made investments to account for this increase in costs due to the rise in IPOs.

Jeffrey Meuler, Analyst

Got it. And then lastly for me before I hand it over. Your constellation, as I understand it, has full coverage, and as the frequency that you need, the exactEarth capabilities can you just help me understand if there's some reason why the data aggregation or something about their capabilities is complementary, or should there also be expense synergies at some point, in addition to the cross-selling opportunity and the onboarding of talented headcount and everything else that comes with the acquisition?

Peter Platzer, CEO

The exactEarth transaction, once it closes, supports all four of our growth pillars. It enhances our investment in sales and marketing, bringing on a highly experienced salesforce and marketing team that has been operating in the market for maritime data analytics. On the product side, it expands our capabilities twofold. Number one, it affords us lower latency data; and number two, the transaction will come with about a 10-year database of maritime traction data that will allow us to drive more value for our customers with more efficient and effective use of AI and machine learning. The transaction also brings additional customers that Tom mentioned earlier, over 150 that we can offer our additional products and services to. Of course, it also adds revenue, as Tom noted, over $18 million year-to-date last 12 months revenue that has been growing at 30% over the last 12 months, which will also add meaningfully to our ARR. So it truly supports all four of our growth pillars, which is why we engaged in the definitive agreement in September of this quarter.

Jeffrey Meuler, Analyst

All right. Thank you very much.

Operator, Operator

Our next question or comment comes from the line of Josh Sullivan with The Benchmark Company. Please go ahead.

Josh Sullivan, Analyst

Can you hear me?

Peter Platzer, CEO

Yes.

Hillary Yaffe, Head of Communications and Investor Relations

Yes Josh.

Josh Sullivan, Analyst

Just to put a finer point on that last question, just as far as the sales force build-out here, with exactEarth and what they bring on the marketing and sales front. Is there any way to kind of just help us think about what the salesforce needs would have been versus what they will be with exactEarth? Just how we're modeling that going forward?

Peter Platzer, CEO

Of course. So maritime is one of our four segments, and with the transaction once it closes, we will add significantly to our global coverage, both in the direct salesforce that has been in this market for many years, as well as through distributors which exactEarth has also leveraged successfully over the years. So it wouldn't impact our investment in sales in our other markets like aviation or weather, but it certainly augments our coverage globally and our salesforce in the maritime segment quite substantially.

Josh Sullivan, Analyst

And then on the aviation market, as markets are reopening here, are you seeing an increase in demand out of global airline activity?

Peter Platzer, CEO

We do. We absolutely see that. Yes, the markets are opening, but the cost pressure on the industry is still pretty high. While the aviation industry, in general, is a bit further along in the digitalization of its economy compared to the maritime industry, those cost pressures still drive the accelerated adoption of data and analytics, and we are definitely benefiting from that trend.

Josh Sullivan, Analyst

And then were you represented at COP26? Any specific engagements there that you can size up for us or conversations that you had coming out of those meetings?

Peter Platzer, CEO

I just had two meetings today about COP26. Being right there in Glasgow and having a focus on weather and climate change, clearly there's been a number of engagements and conversations that we were a part of. Honestly, I don't have all of them on top of my head right now. We'd be happy to follow up with the detailed engagements and some of the potential follow-ups from our involvement in COP26.

Josh Sullivan, Analyst

And then just one on Myriota relationship. As far as the ownership that came with exactEarth and then I believe you mentioned that they're also a customer. Can you just help us understand how that relationship moves forward?

Peter Platzer, CEO

Myriota is a fantastic customer, and we are extremely focused on making them very successful. That's really our priority. Yes, we'll get the front-row seat in the IoT from space industry as well, but as a company, we are committed to ensuring our customer's success by delivering our service to them.

Josh Sullivan, Analyst

Thank you for the questions.

Operator, Operator

Our next question or comment comes from the line of Weston Twigg with Piper Sandler. Please go ahead.

Weston Twigg, Analyst

Hey, thanks for taking my question. You had really good ARR traction this quarter, and I'm just wondering if you could help translate that into visibility or revenue growth thoughts through next year. I haven't been using the long-term model that was a pre-stack model but would love some visibility into your growth expectations through next year.

Peter Platzer, CEO

Yes. The $8.6 million incremental from Q2 to Q3 will translate into revenue over the next few quarters, right? That flow-through will occur for Q4 all the way through roughly Q3 of next year. That piece, along with adding all those new ARR solution customers, now gives us the opportunity to expand with them and gain further growth. We're not providing any 2022 guidance at this point, but yes, we're really excited about those ARR solution additions and that incremental piece quarter-over-quarter that contributes to future revenue.

Weston Twigg, Analyst

Well, I guess maybe what I'm getting at is this kind of ARR growth sustainable through the next few quarters?

Tom Krywe, CFO

Again, we're not giving any 2022 guidance because, if we close the transaction with exactEarth in the fourth quarter, we'll combine that guidance and consolidate the companies and provide that in the fourth quarter earnings.

Peter Platzer, CEO

If I were to augment Tom's statement here, we have over 200 customers today. You add in the customers that exactEarth will bring to the table once the transaction closes, but even then, that is still a very small percentage of the estimated 200,000 customers that make up our estimated $90 billion market. So, our penetration rate remains quite low relative to the opportunity set we have ahead.

Weston Twigg, Analyst

Okay, perfect. That makes sense. But just to clarify too, on the sort of the pre-stack back model, that was, I think, the last reference in June that is not something we should reference any longer, correct?

Peter Platzer, CEO

I think the best information to use is always the most recent and latest information. We've provided solid numbers today that could help you understand how the company operates right now.

Weston Twigg, Analyst

Okay, perfect. Another question I had was around gross margin progress through next year. I know you're not giving guidance, but it looks like even the guidance for next quarter was slightly lower than at least I expected. I'm just wondering, you talked about the higher investment. Do you see that gross margin getting back to stabilizing in the mid-60% range, or do you believe it will be in the high-50s to mid-60s level, the outline for Q4?

Tom Krywe, CFO

Yes, that guidance for Q4 is ranging between 59% and 65%. We are getting back up into the 60s, a significant uptick from the third quarter. This mainly results from timing issues that we had on the third quarter, but also that revenue growth that we're realizing from the ARR increase will drive improved metrics. We can provide additional guidance once we finalize the integration with exactEarth and model that out in our next quarter earnings.

Weston Twigg, Analyst

That’s helpful. And then just the last question from me. Can you split out the data solutions and space services revenue in Q3 and the split for Q4 guidance as well?

Tom Krywe, CFO

Yes, we're unable to split out our pieces because of the way our contracts are structured. A lot of things are combined since we have four solutions; multiple customers buy multiple things, which makes it hard to break it all out. Our leverage technology allows us to provide integrated solutions to customers, solving multiple use cases.

Weston Twigg, Analyst

Understood. All right. Thank you.

Operator, Operator

We go next to Ric Prentiss with Raymond James. Your line is open.

Ric Prentiss, Analyst

Good evening.

Peter Platzer, CEO

Hey, Ric.

Ric Prentiss, Analyst

A couple of questions for you all. First, it's been about two months since you announced the exactEarth acquisition. Have you heard anything from your own customers on how they feel about the acquisition, or have you been hearing any feedback from exactEarth customers about coming into your thoughts on what it might mean for them? So, any customer interactions in the last two months from either side?

Peter Platzer, CEO

So, the two companies have to operate very separately until the transaction closes. The simple answer is Ric, no, we have not. It's just a very separate operation. We have not seen people on our side, so I can't speak to anything regarding customers on the exactEarth side. Our business has been growing nicely, and customer interactions have been positive on our end. Unfortunately, I can't share more since we can't communicate with each other until the transaction closes.

Ric Prentiss, Analyst

I understand that. I just had a big transaction in this space this week with Inmarsat and Viasat. There was some talk about how customers were excited about the acquisition, not crossing over public company public lines, sometimes customers call in and express interest. So, I wasn't sure if you had those kinds of incoming calls, not anything about operating separately or anything of that nature. Okay. Second question on my side is obviously everybody is anxious for 2022. Guidance you can't provide yet. Maybe just flip the question this way: how do you feel about your visibility into 2022? As you're coming here into mid-November, looking into 2022, how visible is it from the standpoint of happy full-year, not getting any numbers, but how comfortable are you getting on visibility?

Peter Platzer, CEO

Yes, we've been spending quite a bit of time with the executive team, the sales force, and the leaders that run the sales teams, meeting together regularly to discuss all the opportunities and the pipeline we're seeing. Yes, I can't provide any specifics on 2022 yet, as we move through the activity with hopefully the exactEarth close and the combined outlook. But we're feeling very confident about 2022, given our pipeline and the four solutions we have to offer, along with all the use cases we're solving for our customers. The key wins we've had also keep carrying forward, so we’re quite enthusiastic.

Ric Prentiss, Analyst

Okay. And final one for me, a little more of a housekeeping one, you mentioned the G&A public costs came in higher. How should we think about, is this a good run rate in the third quarter, or is there more to come you think through the impact in the fourth quarter? Just kind of where is a good run rate number on the G&A side of things?

Tom Krywe, CFO

Yes, the one thing that will be hard is we’re going to go through this acquisition. So, we will have to assess all this third-party activity. As Peter mentioned, with all these IPOs, these third parties are taking advantage, unfortunately, for us, which is marking up their prices on all services. So, it's going to be challenging to predict if these third parties continue to raise prices, making things a bit harder for us. But I think we will see similar activity again this quarter, particularly as we undergo another transaction.

Ric Prentiss, Analyst

Okay. Appreciate it. Stay well.

Operator, Operator

We go next to the line of an unnamed analyst at Barclays, please proceed.

Unidentified Analyst, Analyst

Good evening, guys. Bit of a higher-level question here, but earlier this week we got the NGA's commercial earth intelligence strategy. Can you maybe talk a little bit about what that means for you guys and how you expect to sell into the government customer, whether it's subscription-based or imagery data or anything else?

Peter Platzer, CEO

Of course, happy to talk about that. We have a pretty nice mix between commercial and government revenue. There are long-term fundamental trends that drive the demand on both sides. You see ESG adoption to climate change, the digitalization of the global economy on one side, and the intensification of space contested-ness and security concerns on the other side. If you listen to the talks coming out from the U.S. Government, you just mentioned one, but there are many others, not least the creation of the Space Force. The interest in technologies and solutions that Spire has is absolutely increasing, and we have a specific team serving the United States Government. We have teams globally that serve, I would say, friendly governments all around the world. We do indeed see an increase in demand from those customer types looking to help solve their use cases.

Unidentified Analyst, Analyst

Got it. And then, I understand that the spec slides are probably a little dated, but if we think about your CapEx estimates and what you're assuming on launch cost, can you maybe just talk us through how you are thinking about procuring launches, whether it's going to be ride shared services versus small set launchers and the premium that you are on kind of direct orbit insertion versus a ride-share service?

Peter Platzer, CEO

Spire just completed its 31st launch campaign. We have launched with nine different launch vehicles, which means we have an extremely diverse relationship with launch providers and experience working with them. Looking ahead, it seems the market is filled with new launch companies being established. We appreciate that and are eager to work with them. We love that more capabilities are coming online, whether they're dedicated launch vehicles or orbital transfer vehicles utilizing larger rockets with lower launch prices. Our constellations are structured to give us more flexibility than some others. While we'd like to be in a specific area, orbit, or inclination, it's not that tight. We view the launch landscape as one that continues to improve every month. Is it perfect today? No, rockets still have failures and delays, but the situation is getting better.

Unidentified Analyst, Analyst

Got it. And the last question from me, you talked a little about inflation corporate costs. Can you discuss the labor costs you're experiencing within your AI and machine learning build-out and how that affects your ability to deliver complete solutions to the customer versus raw data sales?

Peter Platzer, CEO

Spire has always been set up as a global company, allowing us to take advantage of a significant number of labor markets beyond just competitive areas. This has benefited us when hiring in various markets. With the pending close of the exactEarth transaction, we will also gain access to another labor market in Canada, particularly around the Cambridge-Waterloo University area, which has a highly educated, motivated workforce that offers a unique experience. We have found that people in the AI and machine learning space who can choose where they work tend to get excited when given the option to work with space data.

Unidentified Analyst, Analyst

You say those two, but are you not experiencing any issues with onboarding headcount?

Peter Platzer, CEO

I've always said that the largest execution risk for us is hiring. Finding the right people at the right time, in the right location, with the right skillset and cultural mix is absolutely a challenge because we take pride in our company culture. We want to maintain and grow that. Therefore, anyone who says hiring is easy is mistaken. I'm not going to claim that hiring is simple, but being a space company helps quite a bit.

Unidentified Analyst, Analyst

Got it. Thank you so much for the questions.

Operator, Operator

This concludes our question-and-answer session. We return to CEO, Peter Platzer for closing remarks.

Peter Platzer, CEO

Thank you. In closing, we are immensely positive about the momentum we see in the business and recognizing the fortunate position we occupy at the very crest of this massive transformation wave of leveraging space to solve problems on earth. The team and I are highly encouraged by the progress we continue to make against our four growth pillars. We execute with a typical sense of urgency, like signing a definitive agreement to acquire exactEarth just weeks after becoming a public company. We relentlessly drive for growth, leveraging our cutting-edge technology and innovation we endeavor to help our customers and humanity solve often truly global challenges, striving for a more sustainable and equitable future. With that, I thank you for your time, interest and questions.

Operator, Operator

This concludes today's teleconference. We thank you for your participation. You may disconnect your lines at this time. Have a great day.