Anpanman - AST SpaceMobile Q1 Earnings: Beyond the Headlines and Into Orbit

[00:00:07] Speaker A: This is the AST SpaceMobile Podcast.
[00:00:10] Speaker B: It will just basically come to your phone and be seamless regardless of where you are. We don't want the user even to know that it's connected by satellite. Listen, the opportunity that we have is very, very, very large.
[00:00:25] Speaker C: Hey everyone, thanks for joining. That was a, in my opinion, that was a really great earnings call. Obviously the stock is down and I think that probably has more to do with algos and the headlines. For what it's worth, like, let me see here. I'm just looking at Bloomberg and all the headlines are pretty much related to this quarter's miss, meaning relative to what the Street had expectations, which, you know, on the call, the company reiterated this notion of really looking at the annual number versus what's going to happen quarter to quarter. And so just so people have a sense, I think the Street had modeled $39 million of revenue and let's see, an operating loss of $90 million. And so, you know, what eventually was reported was the, let's see, Sales were $14.7 million. And of course, I guess EPS, which is actually 23 cents per share, the company missed. It was 66 cents per share, which all this stuff, like on a quarterly basis, is pretty much noise. Obviously it'll be more important as we get closer to the end of the year, because then the company will either hit their annual guidance of $150 to $200 million of revenue, or they won't. Right. But I think it's important to understand that this year a majority of the revenues are related to government contracts. And so those are going to be somewhat lumpy depending on when those are signed or when milestones are hit or when they're recognized. And so it sounds like, at least according to Andy Johnson, that the results for this quarter were within plan. But they reiterated, $150 to $200 million, which I think is a positive given that we did lose Bluebird 7. And so there could have been some kind of pullback on full-year guidance, but there wasn't. And so I think that kind of underlines the whole notion that Bluebird 7 was a nice to have but not a need to have for government revenues. And so, but yeah, I think algos are taking the stock down. We'll see how the Street reacts for tomorrow in terms of you know, research updates, and then of course how the stock will actually trade on the open market. What I have seen, and I pointed this out earlier, is that you've had a number of disappointments, or near-term disappointments, whether that was Redwire, for example, or BlackSky. Both reported weaker Q1 results, but then BlackSky in particular— and this is a company that's had, well, I guess both have had very inconsistent execution, but BlackSky did raise their full-year outlook slightly, and so that stock went as low as, I think it went from like $40 or $39 to as low as $30. And then now it's back at, let's see here, it's now back at $41.38. And so a huge swing on those results, which I think underscores, you know, a bit of the volatility around space stocks. As we all know, a lot of these names trade together and based off of factors or, you know, something that's happening with the sector that I think Redwire, for example, when they reported Q1 results, which disappointed, the stock was down heavily and subsequently the entire sector, all the space stocks were down. And since then it's actually more than recovered and outperformed, right? So Redwire, I think got down to like $8.40 and it closed today at $12.16. And this is after, by the way, AE Partners, which is a large private equity firm, they monetized a huge, massive amount of shares that they had been selling over time, which is a huge overhang on the stock. But then they finally got cleaned up, I think at $11, and then of course the stock traded down to the 8s. But now, you know, it's after those shares were digested and they reported results which were, you know, mixed at best. And then, but I think, you know, some people see some upside in the potential outlook for the company. that stock has traded up. And so I think it's part of the expectations for these space companies, which I think for AST, if you peel back layers of the quarter, I mean, obviously the financial results for Q1, if you just look at it on the face of it, it seemed somewhat light. But then if you think about what was really critical and important for this quarter, which is Post Bluebird Seven not being placed in orbit, but you know having a an acute focus, the market being acutely focused on production and launch. I thought this quarterly update was really great, and so so we'll just kind of go into it. I there was a lot to cover in terms of the earnings call, the ten Q, and the presentation. So I actually had ChatGPT help help me summarize it to a degree, and I did listen. to the call, of course, and, and I went through the presentation as well. But, um, there's a lot, there's a lot to peel back. So I think, um, yeah, I think the, the knee-jerk reaction, uh, of the stock price, you know, we'll see ultimately where it settles out tomorrow and then a few days from now. But, um, but I think there are some near-term catalysts. So the shipment of Bluebird 8, 9, and 10, that should happen fairly soon because I think Abel disclosed on the call that It's going to take, you know, call it 3 weeks or so to integrate in the Falcon 9. And so we should, if we're looking for a mid-June launch, the shipment of those blueprints should be fairly soon. And based off of some of the pictures that we saw in the presentation, that seems to be pretty close. And then, yeah, there's also the company hinted they didn't, obviously it's up to Blue Origin to disclose all this stuff, but it sounds like there are a lot of Blue Origin launches scheduled for this year. And so the expectation is that that vehicle is going to be up and running again. Now, we're obviously not going to go all in and, and stack 6 Bluebirds or 8 Bluebirds on, on the first New Glenn. You know, Abel talked about the, the notion of starting out small, which is 4, which, I mean, for Bluebird satellites that are several tons, small is small in terms of number but not small in terms of size. But, um, I think the first Blue Origin New Glenn launch will be 4 satellites and then it will get scaled up from there. But of course, you know, we won't be the first, well, at least I don't think we're going to be the first commercial launch on Blue Origin New Glenn. I think Amazon LEO is going to take that first position and then we'll see, you know, what happens from there. But we did learn today about another launch vehicle, which I'll talk a bit more about later. And yeah, so why don't we just Kind of go through, I try to organize each one of these areas like topic areas, and then I'm going to try to cover some of the key points, but then, you know, I may miss some of them. But I think it's important to, let's just go back to the financials, right? So, you know, the company reported relative to consensus, lighter revenues, but candidly, they're pretty much immaterial at this point, right? $14.7 million versus expectations of What was 39 or 37 according to the Street, but they reiterated 150 to 200, and it sounds like about half of those revenues are already booked. They have visibility, and then the other half is what they see coming in throughout the year and some potential upside to the plan. And so obviously it's a bit more backloaded, and for the company, I think it's important to point out that Q1 ended on. March 31st, and we're now at what, May 11th? And so we're almost halfway through the second quarter. And so the company probably has pretty good visibility on Q2. Hopefully, you know, when they talk to research analysts overnight, maybe they'll get— try to guide these guys to something somewhat more reasonable in Q2. But just to give you an idea, like the Street, in the call, the company talked about Each quarter being sequentially bigger than the prior quarter, but the Street has pretty much modeled this company like any normal, fully mature, scaled business. And so just to give you an idea of like how smooth the quarters are that the Street had laid out, they have $39 million, $41.2 million, $46.5 million, and then $50 million in the 4th quarter. And so I think based off the call, you know, that's going to be a bit more, the ramp is going to be higher and it's not going to be as smooth. But yeah, that's, you know, the company hinted at that or talked about 150 to 200, that then just to focus on the annual number, like don't worry about the quarter-to-quarter fluctuations. So we'll see. The other thing is that, let's see here, I think they mentioned that 4 commercial customers contributed to Q1 revenue, which is good because it's not just one. But we do know that a majority of the contribution is from government customers. And we learned today, which I'll talk a bit more about later, that they also signed another 3 government contracts. And so I think that brings us from 11 to now 14 in total, which is a lot, right? And these are a lot, you know, some of these contracts are ones that can grow into programs of record that could be hundreds of millions to billions over several years. And I think one interesting thing that I'll point out is that Chris Quilty asked on the call in Q&A whether all this government work requires a re-architecting of the satellite. And so he asked, do you need to, which by the way, we don't really know if there are any optical inter-satellite links or any of these other things. But he asked very specifically, based off of the requirements of these government contracts, are you going to have to build A new satellite or modify the existing ones? And Abel interestingly answered, you know, we've actually been working with the Department of Defense for several years now. And so the satellites have everything they need. And so that was actually quite interesting to hear, which I think also there was a reference to someone had asked about Bluebird 6 and performance that we were seeing from Bluebird 6. And he interestingly kind of deflected that. And he said, well, you know, we'll be able to talk more about the performance of Block 2 once Bluebird 8, 9, and 10 are launched and are deployed. And so what that told me is that Bluebird 6 is definitely, we already know this, but it's just definitely a government satellite. And they do not want to talk about that satellite in particular, like any of the metrics or performance or any of that stuff. Because like, That's not really for commercial use. So that's kind of what I took away from it. I don't know what, if you guys feel the same, but that's why I thought it was interesting. He specifically said, we can talk about the performance like once the other 3 are up. And so obviously you can, they are testing with Bluebird 6 and they see and know what's going on with it, but they're not going to talk about it. And there's a reason for that. So. But anyway, let me yeah. So so from a financial perspective, I think you know look it's I wasn't expecting anything for Q1. I thought you know perhaps like they were gonna disappoint relative to consensus, but it really doesn't matter, right? And so I think maybe for people who are you know tourists or like you know short-term traders and of course the algos like that, I guess that will matter. But I think we'll probably see a pretty strong rebound in the stock relative to where it is now, similar to some of these other space names. So we'll see. But anyway, let's talk, let's go back and talk about network deployment and launch cadence. So this is my first topic, right? So the key question here is, you know, can they actually build and deploy the networks? And so the key things that I took away, well, first of all, which I think probably everybody was waiting to hear any color on in this regard was the fact that they reiterated the target of 45 Bluebird satellites in orbit by the end of 2026. And I did see some accounts on Twitter, of course, people who may not be close to the story saying, why are they going to get 45 satellites launched by the end of the year? Well, it's important to remember that we're talking about 45 in total. So that includes the 6 that are already, you know, Block 1 satellites, Bluebirds 1 through 5, and then Block 2 satellites, which is Bluebird 6. You know, that number means, you know, we need to get another 39 launched, right? And so they reiterated that. And not only did they reiterate it, they actually— so I thought this was— and this goes back to like the aspirational goals, right? Like they have a target of November.
[00:13:26] Speaker A: Yeah.
[00:13:26] Speaker C: And so let's just assume like by the end of November, they get 39 satellites launched, right? Now, obviously, like that target to me is a stretch goal. Like I think if they can get 30 launched and deployed or, you know, high 20s, like I think that's going to be a great win. But the key thing is like, what is the production cadence at that point? Right. And so if they can still get to 45, then that would be amazing to me. That would be You know, that would be outperforming if they can get to 45, but they reiterated today. And so for anybody who was concerned, you know, how are they going to do it? You know, is that a possibility? To me, it's a stretch goal, but it's in the realm of possibility. And so I think that was an important data point to highlight. The other thing is that Bluebird 8, 9, and 10 are expected to launch in mid-June on Falcon 9. And so as I mentioned before, that means that We probably have to ship those satellites pretty soon, right? So within the next, call it week, week and a half. And so that's something to look forward to for in terms of a catalyst and you know getting the stock going again. The other interesting thing is that the company talked about their multi-launch provider strategy and how it remains in place. And so they specifically called out SpaceX. Obviously, we're We're launching on, you know, at a minimum, it seems two Falcon 9s, and then I think we have feel pretty comfortable that there might be three. Although I might roll that back. I might just say two Falcon 9s, and then you know obviously we've got Blue Origin, which is going to be a big contributor. And I posted a tweet earlier today about how Blue Origin New Glenn, it sounds like internally they're targeting to get a third booster in the rotation by the end of summer. And this is GS one, the the large. first stage that returns to Earth and can land. But they're looking to get a 3rd booster in rotation by the end of summer. And then by the end of the year, they're looking to have 4 in rotation, right? So that means that if they're on a 30-day refurbishment cadence, they can actually, today they can launch, or theoretically they can launch twice a month, but by the end of the year, they could be launching 4 times a month, which is pretty insane, right? Like, To put that in context, like if you're able to launch 4 New Glens a month, and let's say you max out 8 Bluebirds on each, then you've got, you can deploy, you know, if we had them fully produced, you could deploy 40, yeah, 46 satellites in one pop in a month, which is insane, right? So that's why like Kook focuses on this constellation constellation because like, Once these launch providers, and we're just talking about one, right? Once they get up to, once we get up to production cadence and that matches with launch, then this whole notion of trying to get to, you know, 60, 45, 60 satellites, 90, 100, 248, you can knock that out pretty quickly. And so the constraint, which I think the bears would, one of the key focuses has been the competitive constraint of like, oh my gosh, You're depending on someone else for launch and that's going to be a problem. No, it's not. Launch is actually going to be pretty plentiful depending on, of course, you have to be a paying customer and you have to be, you have to go through the integration process and be set up to launch with someone. Now, you know, for a startup company, they can't just roll up to any, any like Blue Origin or SpaceX or ULA and say, hey, we want to go launch with you guys and here's some money. You know, there's a process to get to that point, right? Which is you have to build a satellite, you have to test it, you have to go, you know, it's not as if like a launch provider will just take any cargo and throw it up there because the cargo itself could be unstable and then, you know, put the rocket at risk. And so there's a lot of process that you have to go through. And so I think it's important to understand that Now we've got, you know, SpaceX, we've already launched with Blue Origin, and now it sounds like, um, it sounds like we're on ULA, uh, which is, to me, that's great news because ULA, uh, obviously they've had some recent, um, setbacks with some mishaps, although there weren't mishaps that caused loss of payloads, um, or cargo. But, um, you know, obviously they've had some challenges, but at the same time, like, they've been a very stable and reliable, um, launch provider, right? And another thing that Cook pointed out is that ULA does a ton of government launch and it just so happens that we're working with the government. And so, yeah, it's kind of interesting that they are the, the other heavy launch provider that we've added to the stable, which I think, you know, someone had asked, um, what about Rocket Lab? Could you put like 2, 2 Bluebirds on a, on the Neutron, like once it's launched? Um, I don't know for sure, but if it's a standard size fairing, then sure. Like if that rocket can launch, um, if it can support 2 Block 2 Bluebirds, like why, why not? Right. Um, like I know the companies, The companies do know each other, and they've probably had meetings. According to some of these, we always talk about these expert calls. According to a former AST employee, like you know, the management teams have talked to each other. And so I don't know how reliable that is. But I'm sure like AST's talking to Rocket Lab. They're talking to Relativity. You know, they're talking to Mitsubishi Heavy, which you know Abel mentioned on the call. He was like, "Oh, MHI." And so they're talking to everybody, right? And so I think it's in the company's interest to have multiple launch providers just in case, for example, if you have a mishap on, you know, if whether it's your cargo or somebody else's, but if you have a mishap and some vehicle gets grounded, like you're not waiting for that to come back, you can then pivot to some of these other vehicles, which I think for ULA, you know, obviously they've got a ton of Amazon LEO launches, but then The part where I think, I don't think Amazon LEO is going to have an issue in terms of being ready, but for AST SpaceMobile, I think ULA is probably going to be a bit of an option for this coming year, meaning later in 2026, where if there are government payloads that aren't ready, then AST can step into the shoes, to the shoes of that launch and use, you know, a Centaur to go up. However, I think in 2027, Then I think Centaur could be a more, you know, material contributor to the company's plans. But my guess is that we might actually have a Centaur launch planned this year. And it's not going to be— so Abel, when he was asked about heavy launch, he kind of spilled the beans. He said, well, we could launch, you know, 5 Block 2 Bluebirds on a ULV Vulcan. And so That, you know, I don't think it was intentional, but yet kind of intentional that he talked about it. And so, but, you know, I think maybe for the first time, maybe you don't launch 5 Bluebirds on a ULA rocket. Maybe you launch like 3 or 4, but then, you know, there was a reference later. I think Scott talked about where we are going to be dependent on Blue Origin New Glenn, and then we're also going to be dependent on SpaceX and SpaceX equivalents. And so when he meant So when he said SpaceX equivalents to me, um, and then, you know, with the Bell's comments about ULA and launching up to 5, my guess is when you talk about SpaceX equivalent and ULA up to 5, that you're probably looking at the different configurations where ULA can either launch 3 or can launch 4 or 5 depending on how many, um, boosters they use, which, um, and I, by the way, I've got to do some research around ULA because, um, now that, now that's publicly known. I've got to dig in. But, um, but ULA, at least the Vulcan Heavy, you can put like, uh, 2 SRBs, which are like side boosters. You can put 4, or in the heaviest configuration, you can put 6. And my guess is like for 5 Bluebirds, you would put 6 SRBs. But, um, but anyway, I might even— I might have the wrong vehicle. It might be a different ULA vehicle, which again, I'll research. But, um, but I think it was important, uh, the call today to to kind of outline the fact that, and this is again, you know, skeptics and bears will harp on the fact that, you know, we're too dependent on SpaceX or Blue Origin. Well, we've got another, we got another, you know, another vehicle in the stable. And so, and I think it's not going to stop there. I think, you know, there probably at some point is going to be, you know, Mitsubishi Heavy and also Ariane added. But we'll see. My guess is like Arianespace, you might use them in conjunction with winning some spectrum from Europe. And if Satco gets traction, Satco Europe, then my guess is they would probably start throwing some business over to Arianespace. But yeah, so management reiterated, let's see, they reiterated 45 to 60 satellites for continuous service in key markets. And then of course, 90 satellites for broader worldwide Cover. The other thing for BB-7, you know, they— and yeah, they have insurance that they're going to get money back for it. Um, I think it's important to note that, um, Blue Origin— again, they didn't talk about it today, they're, they're deferring that to Blue Origin, but, um, I'm pretty certain You know, based off of what we know that that New Glenn is going to launch again very soon, and that will probably be you know an Amazon Leo mission. So moving on, let's talk about manufacturing. So some key things that were disclosed today: Bluebird 11 through 33 are in advanced production and assembly. So the key part about that disclosure is that they didn't talk about 8 through 10. So that means that 8 through 10 are done. In terms of assembly, and they're going through testing right now. That, that's how I read that. So, uh, once that testing is done, as long as like nothing is found, there's no issues, then they'll be ready to ship those things. Uh, and so we should expect a PR, uh, in the near term, uh, that those satellites are being sent. And then, um, the next up is Bluebird 11, 12, and 13. And based off of like some, some work we've done, it seems like 11, 12, and 13 are probably going to be close to done, you know, sometime— or not close to done, meaning, um, I guess not in the next few days, but my guess is towards the end of May, early June. And if that's the case, then we could see a launch of that second batch in, um, early July. And so to reiterate, you know, first batch probably mid And as we all know, like launch kind of can get delayed. And so call it mid to late June. And then the second batch is going to be early to mid-July. Right. And that will be, both of those will be on Falcon 9. And then after that, it's unclear. I think maybe, maybe it will be another Falcon 9 and then it'll be Blue Origin New Glenn, or it could be, crazy enough, it could be Falcon 9 or sorry, Blue Origin. So, but that would probably be August, maybe early September. But anyway, but it seems like the company, in order to get to that 39 number, and I've got to break it down more, they're expecting this whole idea of like one launch every 1 to 2 months on average. I think that's going to be, maybe they're being quite conservative on that because there needs to be quite a few launches, right? In order to meet that stretch goal. So we'll see. I mean, we're going to find out over the coming weeks, you know, how that unfolds. In regards to production, they've talked about phased arrays, so not just microns, but actual phased arrays. So the complete set that you would put onto a satellite, they are completed through Bluebird 28. And that's really important because if you think about the satellite itself, the composite shell is really just like, is really a carrying case for the key like guts of the system, which are the microns. Microns, um, have the batteries, they have the processors, the FPGAs, or, or now ASICs as well, um, the, the antennas, and then the, the solar arrays. And then the, the control sat lives some inside of the, the, um, the ring. However, I think the most important and labor-intensive part of everything are the actual microns. And so the fact that we have Microns fully assembled and done. So if we if we take out eight, nine, and ten, that's basically twelve through twenty-eight, right? And so we have that many microns already completed, which is great. And so now it's a matter of assembling these things and testing them, right? And you know, once we've completed the first eight, nine, and ten, and then ship out the second one, I think the this whole notion of a hockey stick projection for production, we're going to see that in relatively short order. Let's see. So management, they reiterated their target of 6 fully assembled satellites per month. My guess is like they'll probably hit that in the next month or so. So sometime in June based off of some of the color that they gave. And so once we're at that Point, you know, that's essentially one New Glenn's worth of launch every month, right? So 6 and then maybe eventually up to 8. But I think that's the initial target where the company has talked about getting that up to 10 to 12 per month, right? And so going back to the whole idea of, you know, the 45 to 60, if you can build 12 of these per month, then you can put up a full constellation in pretty short order. So 7 months is, you know, that would be, sorry, 6 months, that would be, you know, that would be 7, what is it, 72 satellites? And so yeah, you're pretty close to full constellation needed for coverage. So anyway, but going back to manufacturing, they disclosed that, you know, there are now over 500,000 square feet of global manufacturing and operations space. And the, as we all saw, the Texas Micron production facility is fully operational now. And so there they disclosed that they can make over 10 satellites worth of microns per month, right? And so what was interesting today is that Abel did talk about fully deployed microns. And so not really talking about satellites, but the number of microns that are deployed, like fixed Fix. Let me see if I can find my notes. But he, but he today he talked about maybe finding the presentation. But instead of talking about satellites, yeah. So here he, I guess it was on page 12 in the presentation. He talked about having 650 microns in total on orbit and growing to 10,000 microns, which would represent 45 satellites by year end. And so that was an interesting metric. I think instead of talking satellites, he's talking about like square footage or real estate that you have up in space, which are these phased arrays, which is kind of interesting. But let's see, just going through my notes here. So yeah, in terms of production, yeah, there were— I thought it was pretty positive update. I mean, when I saw So folks will have to remember, we saw an update that the satellites were ready to be shipped or almost ready to be shipped and to be launched mid-June. And then we got another detailed factory walkthrough on the Micron production line. And then of course, we got the update on the performance today. So, but yeah, I think performance of the satellite, but I think The the update around so for production, you know, getting to that six satellites per month, and then that eventually going to. 8 or 7, 8, 9, 10, 11, and eventually 12, right? And so that's a quick, I guess, quick notes on manufacturing and scale-up. Technology validation and performance. So today, I already talked about it this morning, so I won't go into too much detail, but the company disclosed that they hit a peak data rate speed of 99 megabits per second to an unmodified phone. Some sleuthing that Space Mob did when you look at some of the screens that the two engineers were looking at, you could kind of make out that there was some test result on there that was at 168 megabits per second. And so we, I guess it was hard to understand if that was the current test with the Block One Bluebird or it could be with Bluebird Six. But but of course, you know, the company referred to. The target of, or, you know, they believe that they'll get to roughly twice that performance on a Block 2 satellite, right? And so this is the comment that I made about Abel not referencing necessarily Bluebird 6, but Bluebird 8, 9, and 10 in order to validate that, which I think, again, you know, maybe it's due to disclosure issues or whatever it is, but that Louvered 6 satellite, my guess is we're not going to learn that much about it, uh, in the future because I think it's a government satellite and whatever they're doing with that thing, um, they probably don't want the world to know, which is fine with me. So, um, let's see here. But yeah, what was interesting, let's see, so the ASIC is— one disclosure that we had today is that the ASIC is, um, currently in production. And so they're now making Microns with the ASIC. So that was a pretty big, big update for me. I think some folks, as Kuku covered this past weekend, you had some skeptics saying that the ASIC wouldn't enter into production for another 9, 18 months, something crazy like that. Whereas today in the 10-Q and also discussed on the call, the ASIC is in production and it's being integrated into Microns as we speak. And now, and, you know, I think it's important to note that there is a balance between FPGA and ASIC satellites. And so, as Katya has pointed out, you know, having FPGA satellites is good if you want flexibility and you want to change things around, and especially for government use cases. But, you know, for if you're just doing straight commercial applications, then having the ASICs are probably better. And one of the interesting disclosure today, which thankfully someone asked in the investor, the retail investor question section. They asked, what is the performance difference between the FPGA and ASIC? So are you able to get more performance, like for example, higher throughput speeds on the ASIC versus the FPGA? So if the question was posed as if the FPGA were to deliver 120 megas per per second, could you get more performance to the user on the ASIC? And Abel clarified that where the peak speeds are going to be the same for the FPGA or the ASIC. The key thing, of course, is the architecture. The ASIC is lighter, the FPGA is heavier. ASIC uses less power, the FPGA uses more power. But what the ASIC does give you is it gives you more capacity, right? So the ability to serve More simultaneous users versus the FPGA, where you're going to serve less simultaneous users, but the peak speeds will be the same. Right? So any performance that we see in terms of testing from the FPGAs, that should give us a very good view on what the ASIC will do on a per user basis. But then, of course, once the ASIC Bluebirds are out there, you will be able to serve way more users, ten times more users at the same time versus you know. Versus an FPGA. Let's see here. He did talk a bit about AI spectrum management and edge computing capabilities, which are, you know, so they're researching and, you know, I guess developing that technology, which will be incorporated into Bluebird satellites towards the end of this year. And so, I think it'll be interesting to hear a bit about how that will change performance. And, you know, obviously we've gotten some hints that there's a 3x near-term performance boost, and then over the longer term it could be 10 times. But yeah, that's going to be something that we'll probably learn more towards the end of this year. Let's see. So ground network integration and service readiness. Let's see. So they've got ground integration underway in 17 countries representing 3 billion people. And so they listed a whole host of countries countries there where they're actually out on the ground putting up ground stations and doing MNO integration. And so they listed the US, Canada, UK, India, Brazil, Spain, Germany, France, Romania, Saudi Arabia, Japan, New Zealand, Philippines, Côte d'Ivoire, Kenya, Nigeria, and Senegal. So these are all locations that conveniently cover most of the Earth. And so you'll have, when the satellites pass overhead, they'll be communicating with these gateways. But But yeah, that was a pretty interesting disclosure because we're on the cusp of commercial service. So they've got to deploy these gateways. One, and so this was a really good, I don't recall if this was actually on the Q&A or it was in the 10-Q, but this was a very critical disclosure in that they have successfully tested satellite-to-satellite cellular broadband handoff without disrupting the smartphone connection. And so that to me is a big milestone where having seamless data call or what have you, satellite handoff to satellite, they apparently have demonstrated that and have successfully integrated that capability. And so that was a pretty big disclosure. Um, which obviously many people, um, kind of glossed over just given where the stock price is trading, but important. Um, there's a ton of these nuggets, and so I'm going to continue to go through them. Um, let's see here. So let's talk about regulatory progress and US commercialization. They did talk about the FCC grant, which was, uh, was it Febr— uh, April 22nd? Um, which obviously, you know, the company is now authorized to launch its constellation and provide service using low-band spectrum with Verizon, AT&T, and FirstNet. And that's for up to 248 satellites. And let's see, Verizon's $45 million commercial payment that went hard during this quarter because of regulatory approval. And so that was disclosed in the 10-Q. Also, just for people, housekeeping, there were no material changes in terms of risk factors in the 10-Q versus the The 10-K, which is at the end of 2025. So that's good. Let's see. So here in terms of MNO partners on the commercial side, they disclosed that they're now at nearly 60 global MNO partners, and that covers more than 3 billion subscribers. So they've been around that 3 billion number for quite some time. So when they say more than 3 billion, I don't know if that means like 3.1 or 3 billion 50 million. But, you know, who's counting, right? But the good thing is like we've got traction with M&Os. We've gone from, I remember when AST first came public, I think we were in the mid-single digits for M&O partners. And then over the quarters, you can count these things up. Like we went to 17, then went to 20, and now we're at 60. And so that's good progress. And in the disclosures, you know, TELUS was a new agreement and they made a small equity investment. We found out through the 10-Q that they actually entered into a direct subscription agreement with the company. And so they actually, they didn't buy the stock on the open market. They had bought it directly from the company at, I think it was like $80.66. It's a pretty small token investment, $5 million, but nonetheless, they put their money where their mouth is. And then we also had agreements with New Axiom Telecom, which was disclosed during, I think it was like Mobile World Congress in Barcelona. And we tweeted about that before. And then the company reiterated, you know, commercial contracted commercial revenue commits here. They said now exceed $1.2 billion. I think before originally it was like $1 billion and then it got to $1.2 and then now it exceeds $1.2 billion. The new number will be, will it be $1.4, $1.5? We'll see. But going back to revenue guidance, because this kind of fits into that, the company did disclose that, you know, obviously they're targeting $150 to $200 million of revenue in 2026, but the opportunity for 2027, and let me just see what the consensus has, but Scott talked about an opportunity of $1 billion in revenue in 2027. And obviously that, just a reminder, that's a stretch goal. So obviously they've got to get the constellation up and running and commercial operations have to be cooking. And then of course you've got the defense business. But in 2027, just so that people have some calibration, the Street consensus for '27, excuse me, is $710 million. And so the stretch goal is $1 billion and the Street expects $710 million. So That's pretty good considering the company did $71 million of revenue in 2025. If you take the midpoint of this year, they're going to do $175 million in '26, and then, you know, $700, let's say $700 to $1 billion in '27. And then the Street has $1.64 billion in '28 and then $2.5 billion in 2029. So that's, that's a, I don't know. I don't know if I've ever analyzed a company that's had that type of revenue ramp. I'm sure there definitely are out there, but putting that aside, like, I don't think there's any company that's had EBITDA margins of 90-plus percent. But yeah, it'll be interesting to see once a company is up to commercial, you know, they're hitting on all cylinders, how the street will react to those types of margins. But let's see. So moving on, let's talk about US government and defense opportunities. So as I discussed before, the company disclosed 3 additional US government awards since March 2026. They are expected to be contributors, like material or significant contributors this year. So that's good. And I believe those were granted based off of Off of in-space service performance, right? And so my guess is that those 3 contracts may be related to Bluebird 6 and would've been related to Bluebird 7. But because they were just granted, they must have been related to FM1 and FM2. That's my guess. The awards cover secure communications and non-communication capabilities. And I think Scott talked about continued execution across 5 existing government contracts in Q1. And as I mentioned before, I think in total we have 14 now. And so specifically, he called out progress under SDA Halo, Europa Track 2 commercial solutions, some work related to Fairwinds and the tactical SATCOM that they do. Tactical SATCOM meaning communications to warfighters using unmodified phones. And so, yeah, there was a shout out there. Let's see. And they reiterated, you know, the opportunity here where a lot of these contracts can become or grow into programs of record with large, medium to long-term revenue potential, meaning hundreds of millions to billions of dollars over multiple years for each of these things. And so, so yeah, I mean, that's I think that's probably the layperson that only understands the company as like a direct-to-device provider. They probably don't have much of a sense that there is a defense use case here. And so that was good to get that update. Let's see. So spectrum strategy. So based off of the company's satellite architecture of low-band, Block 2 Bluebirds and then eventual Block 3 Bluebirds and Block 4, or actually they probably don't include Block 4 for this, but the satellite technologies for the next few generations can basically utilize 1,100 megahertz of low and mid-band spectrum globally. And so they talked about the idea of utilizing for mid-band spectrum, L-band in the US and Canada, and also You know, across the globe and then also having priority rights to S-band spectrum as well outside of the US. And so, you know, there's been a ton of ink spilled by Space Mob about how it looks like EchoStar and Viasat are going to have access to some of that S-band globally. And then there's OmniSpace too, but there's also a decent amount of S-band that's up for grabs. And so that's probably what AST is focusing on right now, which, you know, that's part of the spectrum allocation process in Europe. But yeah, the company feels good about their position. There was an analogy where they talked about how one of the carriers that they're working with, based off of their low-band spectrum holdings and their mid-band spectrum holdings, that they expect to get around 100 megahertz of Access to 100 megahertz of spectrum, which is pretty crazy. And so I would assume, and, you know, we've talked about this before, like the key thing about direct-to-device is that there are all these like satellite players that are trying to get into it. And Amazon, you know, it's no different. They're buying Globalstar, which has, you know, has like interesting harmonized spectrum globally, but it's MSS and it's not a ton. Like we're talking I think in total, I gotta go back in my notes, but maybe like 15 to 20 megahertz in total of up and downlink together in total. Whereas the key thing that AST has, and it's part of the importance of if you want a seamless experience of service, is that you want to have access to low-band spectrum. And that's the only way to get access to low-band spectrum is through MNO partners. And if you want a seamless experience with your phone, then you need to be integrated into the MNO partner's network core, right? And so it's important that while these other players are trying to get into the market, they're going to have real issues in terms of their go-to-market strategy. How do they access consumers? Obviously, handsets will have to incorporate a chipset that utilizes their spectrum versus AST already works with every existing phone. And so I think it's important in terms of user adoption and usage that, you know, there's no friction for a subscriber on AT&T or Verizon to utilize our service, right? And it's going to be seamless. It's going to work through, you know, one or two walls. It's going to work in your plane, in a plane. It's going to work in a car. And so not all these things are, not all these things are equal, right? And so whether that's Amazon, trying to do something. And by the way, the company did respond to a question about what they thought about Amazon and Globalstar, and their response was, you know, that's an interesting SOS, you know, emergency solution today. It's a backup solution, and it's going to take many years for them, which I agree, it's going to take years for them to figure out what they want to do, which will require new satellites, not the old existing ones that are being produced by MDA Space and the next generation one that that MBSpace is building, but Amazon will have to think of something more than that. And so that could be 3, 4 years from now. But then on top of that, they're going to need to acquire more spectrum, right? And so Globalstar, you're going to have to augment what they have today with like something else, right? And so in my opinion, like at some point in the future, you could see a situation where AST and Amazon work together, but we'll see. It's probably too early for that. Let's see. And, you know, going back to what I was saying before, based off of some AI optimization and management of spectrum, you know, the company believes that it can multiply the efficiency of spectrum. So, you know, get a performance improvement of anywhere between 3 times near-term and 10 times in the future. Let me see here. So yeah, in terms of operating expenses, like the company, they had like $79.8 million of operating costs, which was in line with what they had projected. I think they projected $70 to $80 in the previous quarter. And then CapEx actually came in lower because of the timing of some of these launch payments, which I think Cook covered this before where I do think we have like favorable economics with Blue Origin New Glenn, but I think what was disclosed in the quarter of our prepayments, I don't think you could assume all those are going to go to SpaceX. My guess is like maybe some part of it may go to ULA and then there could be some type of prepayments, albeit low, that go to Blue Origin. But I'm in agreement with Cook. I think we probably have More than, or at least for this year, a handful, or if not more, Falcon 9 launches. But again, you know, we'll see how that kind of unfolds. Let's see. Man, I'm getting tired here because I did like two calls today. So, or spaces. Let's see. Let's talk about strategic positioning. So, you know, the company reiterated this. They're the only, the first and only space-based cellular broadband network. And as we saw with Starlink, like some of the data performance that they've had, it's been pretty anemic. And so just what I reiterated on the call this morning, like SpaceX is hoping with their second version of the direct-to-cell satellite, they're hoping that one will be in line in terms of performance with our current Block 2. And that's going to be in what, 3, 2 to 3 years, maybe 2 at the short end of it. But then by the time they catch up, we will have been on another iteration or multiple iterations of the Block 2 program. And then of course Block 3 program, which is going to be the comparable, because it's mid-band, it'll be the comparable service to Starlink. That one will be at a much higher throughput. So my guess is like, you're talking not, you know, for Block 2, we're looking at 200 megabits per second. I think Starlink is saying 150 megabits per second. Yeah. For their second version of their satellite. Whereas for Block 3, given that we're using mid-band spectrum and you're going to have much more access to much more spectrum, my guess is the potential performance could be in the hundreds of megabits per second. And so with the tweet earlier today, if you do carrier aggregation and you use multiple satellites, you could be looking at A user getting, of course, if there were no other users around, they might be getting, you know, 1 gigabyte per second type of data speeds, right? Eventually when the, you have multiple shells of the constellation and it's densified, um, you could get performance like that. Um, let's see. There was an update on patents and patent pending claims. So we have, I think now 3,900 patents of which roughly 2,000 were granted or allowed. I think in the previous update that was like 3,800 patent pending claims, and then maybe something like 1,600 granted and allowed. I'll have to look at that. But, um, but it's good. It's good to see like they keep stacking patents away. And as we've seen, um, as people have updated, uh, or whenever these patents get filed or published later, um, it's interesting to see, um, what some of these technologies look like, which it, one other thing is that, um, someone had asked. And, and by the way, like when management highlights retail questions, they're picking, they're handpicking those. It's not as if like there's only 3 retail questions that come in. This is a great tool for management where they, they can address like key questions that, that people have, but also they'll use that as a, to highlight something, right? And so it was interesting that they picked the technological moat IP question that someone had, and Abel was very adamant about repeating that we have 3,900 patents and patent pending claims, then 2,800 that are granted or allowed. He kind of implied that, you know, these other competitors have obviously like a very long way to go in terms of developing their technology and trying to hopefully get to something that's comparable to what we have. But the fact that he was talking about the patents, you know, I don't know. if it's in the cards or the company's plans, but, you know, ultimately, do they use those in the future? Um, maybe at the right time, or you let people kind of go down. I think strategically you probably let people architect something, go down the path as far as they can, and then, um, and incorporate or, or come closer, incorporate, you know, your technology, and then you spring it on them later. You're like, hey, you're using my stuff. And so either, um, you have to stop using it because, because I'll sue you or you're going to pay me for it. Um, and so maybe that's the strategy, I'm not sure. So, um, I think that's most of kind of the, the highlights. I probably missed quite a bit. Um, there's just so much to cover. But yeah, I thought today was a really great update. Um, you know, I think there were some expectations that people had of perhaps like some big announcements, commercial announcements, which, um, Yeah, that might've contributed to some disappointment to a degree, but overall, I think the key risks were around launch and production, which, you know, as we've seen, some of us have talked about expert networks. It seems like the hedge funds have been focused on that recently. And I think the company did a good job of addressing launch where we're adding a third, actually technically a fourth launch provider. So we can still launch on ISRO. LVM-3. We also have SpaceX Falcon 9, Blue Origin New Glenn, and now we have ULA, which, you know, after that we probably will end up adding Ariane and perhaps Rocket Lab Neutron when, you know, knock on wood, hopefully if that program is successful in their first initial test this, I think in the 4th quarter of this year.
[00:53:41] Speaker B: Yeah.
[00:53:43] Speaker C: And then, you know, interestingly, I think relatively, yeah, Relativity has been making quite a bit of progress. I've seen like update videos from Mike Schmidt. And so we'll see where that program goes. But yeah, that's kind of the update. You know, we'll see where the shriek comes out on reaction to the quarter. My guess is that people are going to be in this wait-and-see mode where They want to see that first batch go up and successfully deployed. And by the way, oh, Abel did talk about the time of launch between launch and placement and then actual bringing, you know, commercial operations for Bluebird satellites. That's, you know, I think that's currently around 45 days, whereas they're hoping to get that down to what he characterizes as 2 weeks, right? So once satellite's up there, And you know the process to unfold it, turn it on, and get it working commercially. You know, eventually want to get that to two weeks, which is pretty pretty great. Other than that, I think there's some interesting pictures in the presentation, which I'm sure Katzy and other space mob, you know, they'll tear it down and find things that that that perhaps we haven't we haven't seen or we missed. But yeah, I think overall today was a great. update. And, you know, we'll see. I'm, I'm excited to— for that first batch to go out and to go to the launch in June. Um, and yeah, let me actually— I'll just take a quick look, see if there's any questions. But yeah, I'm going to cut this space soon because I'm exhausted. Let's see. Do you catch any new analysts on the call? Expect any initiations or any current coverage updates? Um, That is a good question. I didn't, at that point, I wasn't listening that closely to who the analysts were, but let's take a look. So I have Bloomberg and they list all the analysts who were on the call. So it was Brian Kraft of Deutsche Bank, Chris Quilty of Quilty Space, Christopher Scholl, UBS, Greg Pendy, ClearStreet, Louis DePalma. By the way, that guy sounds like he's 10 years old. William Blair, and then Michael Funk of Bank of America. Mike Crawford of B. Riley and Scott Surley of Roth Capital. So there wasn't any new participants. However, we do know that JP Morgan and Morgan Stanley participated on the last convert. And so it's pretty, I would say it's like close to time for them to initiate coverage and maybe they'll do that at the same time of the SpaceX IPO, but we'll see. Oh, that is a reminder that SpaceX IPO is now a month away. And so in terms of tailwinds, that's going to be as SpaceX goes out on its roadshow and meets with institutions, that's just going to give more exposure to the sector. So that is a positive. Let's see, just going through some of these questions. I think that's it. Someone just told me they sold. Okay, well, good for you. But yeah, I think anybody who is selling down here at $74 post-market, you're going to regret it in a few months. But to each his own, that's fine. I mean, it's up to you, right? And I think part of the psychology as well is that obviously the space sector, and I pointed this out earlier, the space sector has done quite well since the beginning of the year. And AST did initially in January, We were kind of leading performance of the entire sector, but now we've come back and have underperformed relative to the rest of the sector. And we, especially after hours today, we are going to be even more in terms of underperformance. However, as I pointed out before, the sector kind of trades as a basket and I've seen, you know, I think it's important to kind of digest for someone who understands the story, digest what was disclosed in this quarter and that it was very positive. And yeah, we'll see. I mean, for example, I know Space Investor, he's a big fan of Redwire. I'm not a big fan of Redwire, but when I first saw the quarter, I didn't dig into it and I didn't have time that day, but I was like, oh, that's a bad quarter. And most of it honestly was like the fact that the stock was down. So it was like sentiment driven. You know, we have this saying, nothing drives sentiment more than price. However, Redwire did recover and then Since then, it's now well north of where it was heading into earnings, right? It's like $12.16. And so kudos to him for getting that called right. But then also, I think there is this underlying bid to the entire sector. And so if there is some weakness tomorrow, I'm going to be allocating more risk and I expect the stock to perform well, especially heading into the June launch and the SpaceX IPO. So I'm gonna end it there. Thanks everyone for joining. I'm sure Cook is gonna have like a really, or I hope he has a really long thread because he's gonna catch a lot of stuff I missed. I'm sure there'll be a lot of ink spilled overnight from bears who said it was awful and from people who actually understand the stock and the story pointing out the good things from the quarter, which I think there was quite a bit. The only bad thing again was the Q1 numbers relative to consensus, but I wasn't expecting anything. And I think it's pretty much noise at this point. So anyway, thanks everyone for joining, and we'll talk again soon. Take care.
[00:59:23] Speaker A: Thanks for listening to the AST Space Mobile Podcast. If you enjoyed this episode and you'd like to help support the podcast, please share it with others, post about it on social media, or Leave a rating and review. To catch all the latest news about AST SpaceMobile, make sure to subscribe. Thanks again, and I'll see you next time.
[00:59:46] Speaker B: We're doing something very, very big, and I think with this technology we can really affect billion lives. AST SpaceMobile is the only company that has proven technology to deliver cellular mobile connectivity directly People will just basically turn on their phone and be seamless regardless of where you are. We don't want the user even to know that it's connected by satellite. Our role is to bring this into reality, always in partnership with the MNOs.
[01:00:20] Speaker C: Listen.
[01:00:28] Speaker B: Mmm, waffles.