Spire Global Inc Q4 2024 Earnings Call Transcript

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

Question: Austin Moeller - Canaccord Genuity Group Inc - Analyst : Hi. Good afternoon, Theresa and Tom. So my first question here, to what degree should we expect the -- most of the revenue growth being in the second half has to do with the continuing resolution and the government's inability to issue new program start contracts until a final budget is put into place. Thomas Krywe - Spire Global Inc - Interim Chief Financial Officer, Principal Financial Officer, Principal Accounting Officer Thanks, Austin. Yes, I'll start and I'll let Theresa add in if she wants to. As far as the growth in the second half, a lot of it's just the flow out of the committed revenue that we have on the books. So we have $68 million of revenue that we've got committed that will flow out. We're running about a 70% subscription-based percentage for the 2024 year which we don't expect to change too much in 2025. So a lot of that revenue flow out is all the existing contracts and the flow through of business that we already have. Obviously, for the bookings and other activities, maybe I'll let Teresa answer the question just about how we see it progressing later in the year for how we book new stuff. But most of that revenue will start to flow more into 2026 rather than into 2025.

Question: Austin Moeller - Canaccord Genuity Group Inc - Analyst : Okay. And just a follow-up question. Should we expect customers that are using the new AI weather models and associated data to pay a higher subscription fee? And what is the gross margin profile look at on like subscriptions using AI versus the previous numerical models?

Question: Brent Penter - Raymond James & Associates, Inc. - Analyst : Hey, thanks everyone. This is Brent Penter on for Rick. First question, appreciate the update on the maritime sale. Can you just give us a little bit more color on your level of confidence in Track one in the next kind of two to four-week closing timeline? What milestones need to happen? And is your partner cooperating as expected in terms of weekly progress reports and whatnot?

Question: Brent Penter - Raymond James & Associates, Inc. - Analyst : Got it. And then appreciate the guidance out to 2026. What gives you the confidence in that and accelerating growth next year? I appreciate the second half-weighted part of it. But what areas are really driving that and what portion of that is locked in contractually?

Question: Brent Penter - Raymond James & Associates, Inc. - Analyst : Got it. And then last one for me on free cashflow. You all had talked about summer 2024 as the turning point. And then you did, you achieved it, went positive, but back negative again and a lot of moving pieces in there with the legal costs and the deal costs, but also potentially being debt-free. So how should we think about what free cash flow looks like from here in terms of going positive again, and then staying positive and ramping from there? Thomas Krywe - Spire Global Inc - Interim Chief Financial Officer, Principal Financial Officer, Principal Accounting Officer Yes, I think if you look at the first quarter, it's going to be very similar to the fourth quarter as far as obviously the extra set of expenses in there with the legal, we finished up the restatement so we had some extra accounting in the first quarter. And then we also did some additional funding which triggered some fees in there on the financial advisory side. So first quarter's got a bit more of that. As Theresa mentioned, the transaction closing expected in the two to four weeks. Of course, then we'll have a little bit more expenses as we head into the second quarter around the transaction itself. So there will be a bit more of that that will affect the free cash flow. But if you take away all that noise and the abnormal activity, it's going to be back to the normal flow and the more normal track that you were seeing with a continual progression towards free cash flow positive because of, again, having that diversified set of solutions to sell multiple revenue REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 31, 2025 / 9:00PM, SPIR.N - Q4 2024 Spire Global Inc Earnings Call streams coming in collecting that data one selling it as many times as possible and then having the leveraged cost structure built around that. So it just will keep allowing us to get to that. Now when the transaction goes through, that will bring the revenue down a bit and then obviously there's a build back up again to get to the free cash flow positive because the billings will drop obviously and the revenue will flow down. So we'll have a little bit of a build back up again. But we're still the same functionality, the same foundation of what we've had in the past on that path, profitability will still be there.

Question: Jeffrey Meuler - Baird - Analyst : Thank you. So the guidance for Q1, that's including commercial maritime. So it's something like $12 million at the midpoint excluding commercial maritime. Is that correct for revenue? Thomas Krywe - Spire Global Inc - Interim Chief Financial Officer, Principal Financial Officer, Principal Accounting Officer Yes, the first quarter does include the maritime transaction, so we do have that built in there.

Question: Jeffrey Meuler - Baird - Analyst : Got it. And then just with the pullback, I guess in the weather balloon launches from the weather service, can you just kind of talk about, like, the cost effectiveness of maybe RO profiles relative to weather balloons or other methodologies, radar or whatnot? So, just maybe cost effectiveness and statistical lift or to what degree it's orthogonal, et cetera. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 31, 2025 / 9:00PM, SPIR.N - Q4 2024 Spire Global Inc Earnings Call

Question: Jeffrey Meuler - Baird - Analyst : Got it. And then last one for me, the 20% pro-forma growth that you're talking about in 2026, does that contemplate or require increased investment using some of the divestiture proceeds, or is that just kind of like how you kind of view a normalized growth rate without that increased investment for the remain co-business? Thank you.

Question: Erik Rasmussen - Stifel, Nicolaus & Co Inc. - Analyst : Thanks for taking the questions. Maybe I'll just ask it a different way. Your guidance for this year has 12% to 17%. I'm just trying to understand, though, obviously that growth rate is a little bit lower and you've sort of lost some momentum. But if you had to sort of speak to the two areas where you're probably getting the headwind. One is, lost momentum with customers based on all the different things you guys and challenges you guys faced last year and with the push out of the close of the deal. And versus the headwinds from the restatement, it seems like that's about a $10 million headwind in any given year. Just help me frame sort of -- balance the two in terms of how you arrive at that 12% to 17%.

Question: Erik Rasmussen - Stifel, Nicolaus & Co Inc. - Analyst : That's helpful. Great. And you are in an EBITDA loss again just because of all the noise, but when do you think you could actually get adjusted EBITDA positive? You're looking at about $9 million to $7 million, so $8.5 million negative in Q1. But can you actually see positive adjusts at EBITDA sometime in the second half of the year? Thomas Krywe - Spire Global Inc - Interim Chief Financial Officer, Principal Financial Officer, Principal Accounting Officer As we mentioned, we didn't put out the guidance on this stuff because we want to make sure we just get through the transaction and we have clarity on all those details. But I will say the trajectory that we were on prior to some of this noise and other activity that we had, as you mentioned, we were on that path. We were heading towards free cash flow positive. We were heading for the profitability also on an adjusted EBITDA standpoint. Again, because that structure is still 100% there of having the diversified solutions and having the leverage infrastructure. So we do have that path that we're going to get there. Again, we didn't guide for all the components, but the fundamentals are there. And as that revenue keeps growing, we're going to get to that point. So again, we just have to build back up the revenue to get to the levels that we had when we were getting to that point.

Question: Jeff Van Rhee - Craig-Hallum Capital Group - Analyst : Great, thanks for taking the questions. A few for me. Tom, on the Q1 outlook. Just can you put a little finer point around how much unusual is in there? Maybe I can back into it. You gave quite a few data points for Q1, but just a little finer point on what is your estimate of what's unusual in Q1? Thomas Krywe - Spire Global Inc - Interim Chief Financial Officer, Principal Financial Officer, Principal Accounting Officer You know what? The Q4 and the Q1 are going to be very, very similar. If you kind of look at the numbers, everything's like slightly better than the Q4 numbers, but the flow of how those extracurricular activity is very similar to the fourth quarter. The only bigger difference there is that the revenue -- we're doing better on the revenue for the first quarter guidance than we had for the fourth quarter. That revenue flow down is almost exactly the same. You get to the same sets of margins. So the extracurricular expenses is very similar. We stopped the restatement type of expenses, but then we had a funding expense for getting the $40 million of gross funding into the quarter. So we had that a little extra bit in there. And then the maritime -- the managing the maritime transaction had very similar expenditure in the fourth and the first quarter.

Question: Jeff Van Rhee - Craig-Hallum Capital Group - Analyst : Okay. And then, Theresa, just a question on [Talus] and obviously if you've had some other whales that you've either worked on or had gotten to some degree of a finish line and then presumably the situation with the non-current financials and the Kepler sale and you referenced all these things kind of throwing it back into the air. Presuming we get this Kepler transaction closed in four to six weeks, the debt situation is taken care of, any reason to think things with transactions like Talus have changed other than just simply a pause to wait until you get past these hurdles, namely, are these major contracts, have they gone away or been permanently lost? I'm thinking specifically to Talus, but if you can comment there or a little more broadly, it'd be great.

Question: Jeff Van Rhee - Craig-Hallum Capital Group - Analyst : Okay, great. And last one for me then also for you Theresa on the -- you mentioned the space reconnaissance business unit dedicated resources started as an R&D effort now a scalable unit. Maybe a little more emphasis there than I had expected or maybe you could just flesh that out a little bit more. What's changing there? Tell us about this unit and how we got to this point.

Question: Jeff Van Rhee - Craig-Hallum Capital Group - Analyst : That's great. Last one for me then. The commentary around increased defense spend, certainly a lot of talk and it definitely appears to be headed towards actual output in terms of incremental spend. I'm just curious if there's any other anecdotes or quantification in terms of what it's meant

Question: Brian Kinstlinger - Alliance Global Partners - Analyst : Great. Thanks so much. I think you made it clear the second half revenue ramp is from signed contracts and satellites that are going to have access to -- where customers all have access to data. So what I want to focus on is business development. I'm wondering, I know you haven't provided it, but can you quantify contract awards in 2024 for the non-maritime business, maybe what the pipeline is for 2025, and do you expect 2025 will be a stronger year of business development given the trends you talked about in Europe, or overall will it be weaker given what's going on in the US?