AST SpaceMobile Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Colin Canfield - Cantor Fitzgerald - Analyst : Maybe if you could discuss the nature of the higher launch costs and talk me through or talk us through how is that related to -- is that related to like more faring configuration per satellite? Or are there other pricing factors to consider? And then lastly, if you can maybe talk about how AST thinks about passing through those costs to other launch suppliers in the form of liquidated damages?

Question: Colin Canfield - Cantor Fitzgerald - Analyst : Okay. Alright, appreciate the color. And then maybe talking a little bit about spectrum portfolios and spectrum sharing, like 2 subject dynamics to consider. One is maybe talk about how you think about EchoStar's spectrum portfolio and maybe where you could unlock the most amount of value across RF bands. And then also maybe some commentary on the FCC spectrum sharing commentary and maybe just communicating kind of how customers are talking about any potential interference in pricing recovery or damages recovery from other players?

Question: Michael Crawford - B. Riley Securities - Analyst : Just continuing on that theme where you have this bifurcated strategy of sharing low-band spectrum with your MNO partners, but now getting the cell band spectrum from Ligado, does that change the way you're thinking about future or current MNO agreements where they might become more bespoke versus kind of a very standard template that you initially have been working towards?

Question: Michael Crawford - B. Riley Securities - Analyst : Okay. And then just one final question from me. On the custom ASIC, will we -- what batch of satellites out of the 4 you're launching after this Indian launch, would you expect to be the first ones with the custom ASIC included?

Question: Christopher Schoell - UBS - Analyst : Great. Last quarter, you indicated you were preparing to run beta tests with your carrier partners. Can you update us on the status of those tests and any early learnings you're willing to share at this stage? And you talked about being able to manufacture 6 satellites per month by 4Q, which is later than the timeline you mentioned last quarter. Can you just walk us through the cause and what still needs to be done to achieve that milestone?

Question: Christopher Schoell - UBS - Analyst : And if I can just fit in one more. Appreciate there's a number of moving pieces, but as you look to 2026 and the ability to fund the launch of the 60 satellites, any help sizing the amount of capital you would need to raise and how you evaluate the different sources, whether it'd be the ATM or the quasi-government progress you mentioned?

Question: Caleb Henry Henry - Quilty Space - Analyst : A couple of questions. One on the Ligado spectrum and kind of how that would be implemented. Am I right in thinking that that will require some sort of modification to the satellite, like a hosted payload or something? And if so, how does AST plan to kind of go forward with that, kind of introducing that new spectrum? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 12, 2025 / 9:00PM, ASTS.OQ - Q1 2025 AST SpaceMobile Inc Earnings Call

Question: Caleb Henry Henry - Quilty Space - Analyst : Okay. Great. And then a clarification just on the Barcelona facility. I read that it was for manufacturing space, but it wasn't quite clear to me what it would be building. Is that a secondary factory for manufacturing satellites? Is that gateways, ASICs? Can you provide some clarity on what that will be used for?

Question: Caleb Henry Henry - Quilty Space - Analyst : Okay. And then my last question was just on gateways. You mentioned looking at those rolling out, and I think it was $10 million expected a year. Do you have a sense of how many gateways AST will have up by the end of the year and kind of how that plots alongside the ramp-up of the constellation? I don't know if there's a need of x number of gateways per satellite or something to that effect.

Question: Timothy Horan - Oppenheimer & Company - Analyst : Can you give us an update when you might -- well, when we might see a commercial launch in the United States? And have you worked out a wholesale agreement yet with the carriers in the United States dividing the economics? And to be clear, when you do that commercial launch, it will have the full suite of services that you mentioned?

Question: Timothy Horan - Oppenheimer & Company - Analyst : Great. And just out of curiosity, why do you think you need the Ligado spectrum when you're doing spectrum sharing? I'm assuming you're doing spectrum sharing in areas primarily where they're not using the spectrum. So, I guess, can you just maybe elaborate how much spectrum you expect to get from your partners? And why would you need Ligado if you're getting enough from them?

Question: Scott Searle - ROTH Capital - Analyst : Maybe just to follow-up on the Ligado front. In terms of L-band support within existing cell phones in North America, how is that progressing? From day 1, provided you're able to close the transaction, how long does it take before you have a large supply of users within the United States

Question: Scott Searle - ROTH Capital - Analyst : Great. Very helpful. And if I could, just on the U.S. government and budget front, defense space has done actually very well in terms of whether it's continuing resolution or the projected discretionary budget, I guess, for fiscal '26. So -- but there are some give and takes there, too, because like FEMA has been a little bit on the ropes. So I'm wondering, as you kind of look at some of the opportunities and programs and discussions you're having, whether it's PLEO or otherwise, I'd even throw FirstNet into the mix there, a huge opportunity to be able to support Band 14. How do you see the gives and takes between what's getting funded, what's not getting funded, and you guys still feel very comfortable about the position with the U.S. government opportunities.

Question: Bryan Kraft - Deutsche Bank - Analyst : I had 2 if I could. First question, how many satellites will the first 5 launches this year actually include, roughly? And is that a mix of launch providers or is it 1 particular launch provider that's doing all of those or most of them? And I guess, just a high-level strategic question. I was wondering if you could just talk about what you think your competitive moat looks like at this point? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 12, 2025 / 9:00PM, ASTS.OQ - Q1 2025 AST SpaceMobile Inc Earnings Call I mean, obviously the market, while encouraged by the great progress that you guys have made over the last few years, there's always this concern about another company or companies effectively competing with you, maybe with a much larger fleet of smaller satellites. So, I was wondering if you could just talk about that. Would love to hear your perspective on it.

Question: Bryan Kraft - Deutsche Bank - Analyst : Appreciate that thoughtful answer. And I don't know if you can say anything around the first 5 launches and how many satellites that will encompass and whether that's a single launch provider providing those first 5 or if it's a mix of providers?

Question: Christopher Quilty - Quilty Space - Analyst : Didn't expect to get a second bite at the apple, but just wanted to follow up on the Block 2 Bluebird launch. Should we view that -- is that a fully operational off the production line or is it still being viewed as more of a pathfinder in terms of testing the unfurling mechanism and other aspects that will be bled into the production? Is it more the former than the latter?

Question: Christopher Quilty - Quilty Space - Analyst : But to be clear, I think you said by the fourth launch, that production line will shift from FPGAs to ASICs, correct?

Question: Christopher Quilty - Quilty Space - Analyst : Great. Second question, real quickly, I guess in the press release, you said the $50 million to $75 million of revenue in the second half of the year. How much of that is actual service type revenue versus contractual payments as milestones with customers?

Question: Christopher Quilty - Quilty Space - Analyst : Got you. And just to follow up on the gateways. Thanks for the guidance, around $10 million a quarter. Is there any reason that should ever accelerate? Or is that a good run rate to kind of expect as we look out the next year and the year after? And fair to assume that you're running that mostly as a loss leader, not a profit center in terms of how we should model the margin contribution?

Question: Colin Canfield - Cantor Fitzgerald - Analyst : Just want to make sure I understand the DIU contract. Maybe talk about kind of how we think about that as a task order of a larger contract or if that's the ceiling value of the contract? And then maybe talk about the conversations that you've had with folks like Lockheed, you have former American Tower Corp executives that are leading the company and maybe some of the other primes?