Anpanman - Orbital Supremacy: AST SpaceMobile’s $30M Prime Contract and the Billion Dollar Space Pivot

[00:00:12] Speaker A: This is the AST SpaceMobile Podcast. 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.
[00:00:33] Speaker B: Hey everyone, thanks for joining. It's a big blizzard here in New York City. There's what seems to be never-ending snow that's coming down, and so we are trapped at home with our children. It's been fun, at least. I've gone outside and played in the snow, and then of course I've been online seeing some of the carnage in the market unfold, I guess, in response to this The Trainee Report, or this this article about how you know painting a potential perspective on how AI could disrupt the economy and and of course markets. But that was actually a you know related to that article is actually a good reminder for people who are invested in space. I think you know AI obviously is going to has been and will continue to disrupt a lot of industries, and there's going to be a lot of. second and third order effects. And I don't think this Setrini article, you know, it paints the worst potential picture, but I think it also ignores benefits. And then also I think human, the human condition and preference for things that are non-artificial. And it's something that I've been thinking about for a bit in regards to, you know, all the AI-generated stuff that just appears to have taken over X and these other social platforms, social media platforms, I think in the future there will be this desire to put a premium on human-generated content. And that's whether that's articles, books, even thinking about like when I generate an email and Gemini now tries to make my email more concise or You know, I grammatically correct. I think there will be this desire to have a human touch, which is even with errors. You know, I just like when people write research nowadays and that you can tell that's AI generated. What that often lacks is like judgment or, you know, if someone's, if you have a Swiss watchmaker who has, who's selling you a watch that is several thousand dollars and it has like hundreds of movements, you're probably going to pay a premium for that versus something that was just thrown together by robots. So I think there's a balance to it all. And just like when folks were given a choice of eating food that was organic or not, I think things will, just like in content, things are labeled with AI and then not. I think eventually people are going to gravitate back towards authentic experiences and materials and you know, products and services. And so at some point, I think there'll be, if it does get that bad, there'll probably be a backlash and some government regulations and, you know, a whole host of things to adopt to the new reality. But I think what was painted over the weekend is very extreme and, you know, it's meant to drive eyeballs and engagement. And that's what, you know, that particular individual and the service that they run. That's their business. They're there to be FUD merchants and try to get as many people engaged. And then of course, like, you know, subscribing to whatever service it is. So anyway, the reason why I bring that up though is that obviously the macro backdrop has been pretty rough. And I joked about it earlier, how Anthropic, they should start a hedge fund and take short positions in certain sectors and then announce that Claude is, you know, they're going to release a new tool, Claude Code or whatever it is, right? That's going to disrupt that sector and then profit from being short. Because that in and of itself, like that's a great way to fund Anthropic and it's what the market is totally focused on right now. You know, throwing the baby out with bathwater and shooting first and ask questions later, which I think There's, you know, we're through this, we're in this phase where people are just panicking and just assume that everything's going to go to zero. But in reality, I don't think the— I don't think you can draw conclusions of who winners and losers are going to be that quickly. But, you know, obviously businesses are going to have to adjust. And, you know, I think in particular why, how it relates to AST SpaceMobile, I know people have anxiety and concerns about things taking longer than expected. And that's part of the industry. It's, space is hard, right? And that also is a positive thing, right? Because that's, if you think about space stocks and what companies are doing, the expertise that's required to develop a program, produce it at scale, go launch it in space, go test it, and then and then launch a service, like that's really difficult. That's something that what makes that hard is also a key moat that makes it less susceptible to AI disruption, right? And so I think today there was, I think Anthropic was saying that Claude could now redo code that was done in COBOL and updating it to become modern. And sure, like software code, you can do that, but then Building a 4 or 5-ton satellite that can do direct-to-device communications and radar sensing, PMT, a whole host of military applications, that's not something that AI is going to be able to do on its own. Obviously, AI can be used as a tool to optimize the design of that and then, of course, manage that satellite, but there's a real hard, you know, there's a hard process to do that. And that's not something that can be disrupted overnight. It's going to take time. And once you have infrastructure that's out there in space, then, you know, you've made the upfront investment, then you monetize it, right? And that's hard to, again, going back to this whole idea of AI disruption, um, if you're in finance or, you know, doing legal work, um, or doing outsourced, you know, customer service, like that is going to be disrupted to a degree and it's going to make, it's going to be harder. to maintain some competitive moats. But for some of these harder industries, like whether you're deploying satellites in space or you're building tractors for farms or you're raising animals, like that's something different. And that is, you know, some of these harder industries where you're moving, you know, people say you're moving atoms, that's going to be a bit more difficult to disrupt. And so I was talking with with Cook and Tutte this morning and was just saying that in some respects, like, you know, not only is space a key focus for the US government and the administration for superiority, but we're also, we happen to be lucky that we're invested in the sector that is not susceptible to AI disruption. Now, can AI lower timelines in terms of development? Yeah, absolutely. But in order to You know, you've got to build satellites and then you've got to go deploy them in space and manage them. Those are really hard tasks. They're not ephemeral things that are ideas. You actually have to apply blood, sweat, and tears and go build these things. And that's a very initially human-intensive process. And then perhaps you can automate a factory as well, but But yeah, it's not something that you can disrupt. And then I think also for AI inputs that go into enabling AI, whether that's data centers, so solar panels, batteries, memory processors, space infrastructure, these are all things that I think are pretty defensible. And so if this is a concern for you, it's something to keep in mind. But yeah, so with that, I did want to talk about the contract that was awarded today. And so AST was given a $30 million prime contract by the US-based development agency for the Halo Europa program. And so this was a $30 million award. This was the first ever prime contract award by AST SpaceMobile USA. And so that's an entity that, you know, historically we've actually done, you know, work for the Department of Defense through other contractors. And then we went into those as subprimes. And so whether that was Fairwinds, AT&T, or, and then there's some unnamed ones, whether, you know, we've speculated that perhaps it's Lockheed Martin. But this was the one, this was the first award that we received directly as a prime. And so this is a pretty big milestone for the company. And that today's award now brings the total military awards to 11. And so as of the 3rd quarter, you know, we had signed an additional award and that were— that was 9. And then of course we got the Golden Dome MDA, the missile defense program. We got that award, I think it was in January. And so that brought it to 10. And then today's award brings that grand total now to 11, which is great. In terms of timing, I think this award in particular was expected at some point in 2025, but the government shutdown delayed that. And so the reason why I point this out is that, you know, Scott had guided the second half revenue for the company of $50 to $75 million. And I believe, you know, the expectations For the company were that they were going to beat that range. But of course they did come in, they came within the range, but they didn't beat it. They reported as part of the convertible debt offering of, you know, coming in at a revenue range of $63 million to $71 million. However, if this award had come in on time, then adding $30 million to that range would've got you to You know, second half revenue of $93 million to $105 million, which was significantly higher than what they had estimated, which at the top end was $75 million, at the low end $50 million. And so that would've been a great headline, I think, for the company to deliver at the high end, well above that high end of the range. But I think in the upcoming quarterly call, they'll be able to discuss obviously this $30 million award. And my guess is, you know, and perhaps that's one of the questions I'll ask them, I'll ask if this award was expected in the second half of 2025. And if that had been the case, you know, would they have come well above the range, which I think is the case. But yeah, so today's award, as I mentioned, is $30 million in size. Some of the Space Mob have gone back and looked at some of the the parameters around this award. And it seems like for this program, for the Europa Track 2 commercial solutions, it looked like there was a potential $50 million up for grabs to be awarded. And that was to a potential universe of 19 participants, of which AST was one of them. So, you know, AST SpaceMobile and then 18 other participants out of that $50 million, Today we got $30 million, which is 60%. So that's a really good sign. It means that the government, the SDA, is confident in the company's ability to deliver on the parameters that they've laid out. And in particular, this award, I believe, is focused on direct-to-device tactical communications using a commercial constellation. And so what that means is that the SDA is looking to leverage existing commercial constellations To enable communications with warfighters, you know, various assets, and and and in that regard, you know, it's not as if like one company is going to take the whole thing. Ideally, what the SDA and and this is kind of the mantra for the Department of Defense. What they want to do is create a redundant and resilient infrastructure out in space where. If one, you know, one component is defeated or it's jammed, you can fall back or leverage redundant constellations. And so, for example, you know, you might be using AST SpaceMobile, you might use Starlink, you also might use Iridium, but you want to have multiple sources where even if one part of, you know, one pillar gets taken out, that you'll have resilient communications no matter what in contested area. In terms of sizing this opportunity, I did post something which candidly was generated by ChatGPT. I kind of went through it and made sense. Just to give people an idea though, let's talk about Iridium as an example. And so Iridium is a low-band data InVoice proprietary system, primarily satellite phones, but then they also provide some other types of devices for the Department of Defense. But again, very limited low-band data type of service, but it's global in nature. Iridium, on their current Department of Defense work and a few other government agencies, I think that's about in total $260 million of revenue a year. So that's huge, right? And again, this is for a, it's a global solution, but it's limited in terms of data and capacity. And so, you know, that's a quarter of a billion dollars in revenue, which is pretty, a pretty hefty chunk of Iridium's annual business. But that's the size of, in the magnitude of what we're talking about today. And I think that's kind of a minimum size because if you think about what AST can deliver globally, You know, we're talking about broadband data communications between any 3GPP device, you know, compatible device. And then on top of that, and so that, you know, that could be warfighters, it could be drones, it could be, you know, jets, missiles, planes, whatever you, whatever you, I mean, underwater unmanned vehicles. I mean, all these things, right? But that's a really big opportunity. And so today, you know, the initial award is $30 million, but that can grow in size. But I think Iridium is a good example of just one small use case being worth a quarter of a billion dollars to the US government, right? And so, and this is not me saying like, we're going to put Iridium out of business because in actuality, what the government wants is they want Iridium to survive in its current state. They want to continue to leverage Iridium's technology, but they want to add more layers. They want to add ASD Space Mobile. They're going to add Starlink. They're going to add— they want to have as many layers of redundancy and resilience as possible. And then, yeah, that's what the architecture, what's going to be ideal for this company, or sorry, for the Department of Defense. But again, a quarter billion dollars for that particular application. Just imagine, like, what could that mean for AST that can address 10 different potential use cases for the Department of Defense, right? And so let's just say, like, 3 or 4 of those use cases are worth a quarter billion a year. That's a lot of revenue. So I hope that gives people, you know, some sense of the sizing. But going back to the potential award sizes for this particular Halo Europa Track 2 program. The prototype was $30 million, which we got awarded. And then you have the opportunity for additional task orders. And so what that means is, you know, an opportunity that's tens of millions to low hundreds of millions in revenue. And so that could be more demo work, more mission threat, you know, threads, more capacity buys. These are an expansion of capabilities for the system. And that's something that I think Scott has referred to, you know, the military business being on the order of potentially hundreds of millions, you know, and my guess when he says that is probably $200, $300 million in size for this coming year. But that's where that would be the next order for this award. And then you transition to the proliferated Warfire structure, which you know if the SDA DOD decides to utilize AST, and let's see here. I'm just looking at my notes. You know that could be something on the order of hundreds of millions in revenue, and I tweeted about this. So if folks want to go back for reference, and then eventually once the constellation is up and running, and if the if the company is, and this is where you get to the iridium. Kind of state where you're selling capacity as a service, that's where you can get into the realm of possibility where the DOD grants a multi-year, multi-billion-dollar type of contract. And so yeah, we're pretty early, but obviously with 11 military awards in the hopper, we're going the right direction. And so Again, I think also as part of this too, I mean, there's a lot of different kind of, you know, angles. Again, the 11 different awards, and I'll talk about Golden Dome in a little bit, but it's not going to be a winner takes all. Like, there's going to be multiple players and it's going to be big, right? Let's see. So I did tweet before that this award in particular is separate and in addition to are what we received for, or we got the designation for Golden Dome previously. And so just for people's edification, um, SDA Halo is actually part of Golden Dome. It's under Golden Dome, the umbrella. However, the award that we received today is separate from the MDA Shield that we, um, were able to bid on. And that was, I think that was announced back in January. So, um, so that's You know, this is separate. And the, you know, there's been a few people who've written about MDA shield and what that can mean from a quantitative perspective in terms of dollars. And so that, that's separate as well from the 3rd, or I guess the 2nd Golden Dome area, which we think we have relevance and we'll probably get an award. And I think Space Mob, our batting average for calling these is pretty high. I think it's been 100. Just the timing's been off. But, but I think the, the, you know, Golden Dome Noble Potential Award in particular, that addresses a call by the US government for space-based sensors and integrated non-kinetic and electronic warfare. And obviously we fulfill all those areas, which is space-based sensors and, and of course electronic warfare, jamming. And it was interesting because there was a, I guess the budgets came out today for NDAA and it looks like I just highlighted 2 sections in this tweet, but that air moving target indicator satellites, that's about $2 billion that's been allocated. And then space-based sensors is $7.2 billion. And by the way, like the FY 2025 allocation versus 2026, there was zero. There were zero budget dollars allocated to these 2 areas. And all of a sudden, now we've got $9.2 billion of potential awards to go after for AST SpaceMobile. And so, and I keep saying this and obviously the macro backdrop is tough and people, there's a lot of volatility, but don't overthink it, guys. It's not that hard, right? When it was about to Start this space. The Department of War CTO tweeted out this, this, this tweet that says orbital supremacy, one satellite at a time, powered by the arsenal of freedom. Like, the U.S. government is telling us to our face that this is where the dollars, this is where the interest, everything is going. And yeah, keep it simple. Like, this is, you know, AST clearly 11 awards. Like, we're We're well positioned and there's over $9 billion of being thrown, you know, being thrown at just one year's budget. Yeah, the company is, I mean, it was funny, I guess the other day someone on Twitter was saying AST SpaceMobile is not a defense stock. They are. The company is. We're getting awards left and right and we're well positioned for Golden Dome and proliferated warfighter and all these different you know, programs. Um, I don't, I don't know what else to say about that. But anyway, um, but yeah, so today just builds on that. And again, we're out at 11, 11 awards, um, many of which can grow to hundreds of millions in size. And yeah, we're, we're on a good trajectory. I mean, uh, as we've stated before, um, FM1 and FM2 are halo satellites, and they demonstrated they will demonstrate additional capabilities, which then will lead to more awards. And then of course, we've got our Block 1 satellites and BlueWalker 3 that the government is testing with. And so this year is going to be set up for a tremendous breakout year, I think, for the company. But yeah, I think I will also mention the setup as we head into the Bluebird 7 launch, which I think is going to happen, my guess is like March 6th, March 7th, March 8th. March 8th. The unfortunate news with Artemis that's getting delayed, that frees up the potential timeline for Blue Origin New Glenn 3 and Bluebird 7. So I think we are probably going to get a launch in early March. And so I'm very bullish about the setup for the stock even against this crappy backdrop. But, you know, we'll also get a 4th quarter update on March 2nd. And then There's a number of folks in Space Mob who are pretty bullish about a multi-Bluebird satellite batch delivery, which should be coming up soon. And then, you know, we've got in the hopper, we've got with the FCC, you know, our US market application that's pending and could be granted any day. And then another big one is, you know, this Golden Dome Noble program, which, There's no definitive timeline as to when that's going to be awarded, but it can be awarded at any time. And as we know, the Trump administration wants to have Golden Dome up and running and deployed before the end of his term. And so if you're going to do this, you need to move quickly. So, yeah, that's about it. Those are my comments. I also— I need to update the Catalyst Tracker because we just got another award. So that list will grow even longer. But yeah, that's kind of all I had. I think today, obviously, you know, a very depressing day for the market, but some really great news. And it's kind of funny because I think the company, the stock price has been kind of kept artificially down by all this negative macro backdrop, but then you know, once things, once we get a launch date set, I think all bets are off. Like, you know, I posted an update today. Let me just look on the short interest and, you know, we were back up to pretty high levels here, even though the stock price has come down, which would suggest that convertible ARBs should be covering some of their deltas and should be, so they should be less short. It looks like more guys are short because we're at what, 47.8 million shares compared to a low Of, let's see, 39 million shares as of January 30th. So I think setup is great. Like, we're going to have this launch with Blue Origin New Glenn. It's going to be super high profile. We've got the quarterly update. I think Scott's going to be able to articulate that if it had this $30 million award come in on time as they had expected, not due to the government shutdown, then they would've come in well over their guided revenue. for second half of 2025. And there's gonna be a lot of great updates there. And I think we should expect to get positive production news and potential shipment news as well. So I'm gonna end it there. Actually, let me see before I end it. Let me just look and see if there's any comments or questions. Wait a second.
[00:25:47] Speaker A: Look here.
[00:25:53] Speaker B: Oh, I think I see 3 comments, and one of them is thank you, and the other one is telling me that the time is off. All right, so I'll end it there. Thanks everyone for joining. And yeah, an exciting day. We've got our first contract award as a direct prime contractor, which is huge, and I expect more news to come. And so everyone hang in there. I know this market volatility sucks, but Um, when, when markets stabilize and we get some updates, uh, it's gonna be explosive. So take care, everyone.
[00:26:25] Speaker A: Thanks for listening to the AST SpaceMobile 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. again, and I'll see you next time. We're doing something very, very big. Connecting with this technology, we can really affect a billion lives. AST SpaceMobile is the only company that has proven technology to deliver cellular mobile connectivity directly from space to the everyday smartphone. 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 NMO. Listen. Mmm, waffles.