AST SpaceMobile, Inc.

Good day, and thank you for standing by. Welcome to AST Space Mobile's fourth quarter 2025 business update. Please be advised that today's call is being recorded. I will now turn the conference over to Max Colbert, Investor Relations Manager of AST Space Mobile. Thank you. You may begin.

Thank you, and good afternoon, everyone. Today, I'm also joined by Chairman and CEO of Bell Avalon, President Scott Wisniewski, and CFO and Chief Legal Officer Andy Johnson. Let me refer you to slide two of the presentation, which contains our safe harbor disclaimer. During today's call, we may make certain forward-looking statements. These statements are based on current expectations and assumptions, and as a result, are subject to risks and uncertainties. Many factors could cause actual events to differ materially from the forward-looking statements on this call. For more information about these risks and uncertainties, please refer to the Risk Factor section of AST Space Mobile's annual report on Form 10-K for the year ended December 31, 2025, with the Securities and Exchange Commission and other documents filed by AST Space Mobile with the SEC from time to time. Also, after our initial remarks, we will be starting our Q&A section with questions submitted in advance by our shareholders.

For those of you who may be new to our company and mission, there are nearly 6 billion mobile phones in use today around the world, but many of us still experience gaps in coverage as we live, work, and travel. Additionally, there are billions of people without cellular broadband and who remain unconnected to the global economy. The markets we are pursuing at AST Space Mobile are massive, and the problem we are solving is important and touches nearly all of us. In this backdrop, ASD Space Mobile is building the first and only global cellular broadband network in space to operate directly with everyday, unmodified mobile devices, supported by our extensive IP and patent portfolio. It is now my pleasure to pass this over to Chairman and CEO, Abel Avalon, who will go through our activities since our last public update.

Thank you, Scott. For the first time in 2025, ASIS-Premobil became a revenue-generating business as it significantly advanced all key aspects of our operations, including commercial, government, manufacturing, spectrum rights, IP portfolio, and capital position. The combination of these efforts resulted in this successful launch and unfolding of our next-generation Bluebird satellite, Bluebird 6. the largest ever commercial communication array deployed in low-Earth orbit to enable the first and only global space cellular broadband network for government and commercial customers. On the financial front, during 2025, we raised over $3.5 billion in capital and reported revenue of over $70 million for the full year and signed over $1 billion of minimum committed revenue. Operationally, we plan to ramp our satellite manufacturing efforts and launch cadence this year while we're rapidly accelerating our government and commercial businesses. We entered 2026 with a strong momentum and clear vision as we led the space-based cell broadband industry, a market that we invented. 2026 will be the year we scale our space-based direct-to-device constellation from initial commercial activation to start of commercial service. With mobile network operator partners in key markets like United States, Europe, Japan, Saudi Arabia, and other key strategic markets like the U.S. government. In just over one year since the orbital launch of our first five Block 1 Bluebird satellites, we developed our Block 2 Bluebird program. which is roughly 3.5 times larger and 10 times the capacity of Bluebird 1 to 5, breaking our previous record on both size and capabilities. And then scale, test, launch, and successfully unfolded Bluebird 6, our next-generation satellite of approximately 2,400 square feet. Bluebird 7, identical to Bluebird 6, is encapsulated and ready to launch within the next new Glenn launch vehicle at Cape Canaveral and is awaiting orbital launch, which is expected in March. Our upcoming launch advances Our deployment goals aboard New Glenn will feature a 7-meter fairing, enabling twice the payload volume of the 5-meter class commercial launch vehicles to support up to eight of our largest ever Block II Blue Bear satellites. We expect to fully utilize New Glenn fairing capacity as we progress through our orbital launch plans. We are especially excited to share this milestone with many of you who we hope will join us in Florida during our next launch. Looking ahead, we're expecting 2026 to be a very active year, particularly as we progress into the second half. We remain on track to achieve our target of deploying 45 to 60 satellites into loaded orbit by the end of this year. Recurring expectations closer to 60 satellites ready to ship and 45 satellites in orbit. We continue to expect launches planned every one to two months on average, starting with our first New Glenn launch expected in March. The New Glenn launch vehicle is completing final readiness for our fully encapsulated satellite, which was handed off on February 18th. Importantly, this launch will be the first New Glenn launch to use a previously flown first stage. We support our launch cadence during 2026. As we expect, the New Glenn booster to be reused every 30 days or less after our oncoming launch. Our launch plans include a total of 12 additional contracted launches across several launch vehicles. Lastly, we also recently signed an additional agreement to integrate our satellites with a new heavy launch vehicle to be on standby in their manifest. We are laser focused and working tirelessly on delivering our micron phase arrays and full satellite production goals. On the manufacturing front, we continue to ramp our operations. We exited 2025 having reached a production capacity to support up to six satellites worth of micron and phase array per month. And we expect to achieve a testing, assembly, and integration cadence of six satellites per month in the first half of 2026. Bluebird 8 to 29 are in various stages of production, and we are scheduled to complete assembly of 40 satellites equivalent of micron by the first half of 2026. bringing us to Bluebird 46. A detailed cadence of our 25 and 26 deployment plan is shown in the company quarterly presentation found on our IR website. After Bluebird 7, our satellite will support a stackable configuration of three, four, six, and eight satellites per launch, which allow us to meet our 2026 deployment goals. Additionally, we anticipate our novel AC chip will be integrated into our Block 2 Bluebird satellite during the first half of 2026 to support 10 gigahertz of processing bandwidth per satellite, which enables us to exceed the capabilities of up to 120 megabits per second on our in-orbit Block 1 Bluebird satellites. These data rates are high enough to achieve the native cellular capabilities that consumers now respect. everywhere from areas not served or not served good enough by terrestrial connectivity. Another key enabler of producing the largest ever commercial communications array at scale is our 95% vertically integrated manufacturing strategy. Over the past several months, we have expanded our manufacturing site both in Midland, Texas, and Homestead, Florida. including acquiring a foresighted midland for dedicated microproduction, the building block of our satellites. We will soon be over half a million square feet of manufacturing and operational space globally, providing us with greater manufacturing and work capabilities with a tighter control over the manufacturing process from end to end. This rigorous effort, strengthened by our skilled workforce, enabled us to proactively manage nearly every step in the process, including securing long-lead materials well in advance of satellite assembly while keeping our materials and components cost low. Simply put, we are the first company in the history of commercial satellite manufacturing to produce satellites of our size and power at scale. Together, our key technology differentiation in the size of our satellite, spectrum availability, and custom ASIC that support today's capability of cellular broadband from space, supported by our extensive portfolio of over 3,100 patent and patent pending claims. 2026 is the year we scale commercial operations. We are the only company capable of delivering 4G and 5G and in the future 6G broadband speeds sufficient for voice calls, voice over LTE, live video calls, streaming, and full internet access directly to modified devices. Our technology is anchored by our ability to manufacture the largest commercial communications array ever placed into low-Earth orbits, creating a durable technology advantage. Our satellites enable digital beamforming and are capable of multi-carrier aggregation in multiple frequencies, supporting simultaneous uses per beam, behaving like a terrestrial cell tower from space. When combined with our integrated ground space gateway architecture and growing commercial ecosystem with over 50 leading global mobile network operator partners who collectively cover nearly 3 billion subscribers. As Scott will discuss in more detail, we continue to expand our commercial ecosystem. In the fourth quarter of 2025, we announced a definitive commercial agreement with Verizon in the United States and STC Group in Saudi Arabia and other key markets across the Middle East and Africa. As part of our 10-year agreement with STC Group, we received a prepayment of $175 million in 2025. indicative of the ambition we both share in bringing connectivity gaps and delivering cellular broadband directly to devices. Recently, we announced partnerships with Orange, Telefonica, CK Hutchinson, Taiwan Mobile, and progressing initiatives with Vodafone to bring our direct-to-device cellular broadband service to their markets. who are now part of our commercial ecosystem with over 50 leading global mobile network operator partners who collectively recovered nearly 3 billion subscribers. To date, our commercial advancement has positioned us to secure over $1 billion in total contracted revenue commitment from our commercial partners. As a reminder, our comprehensive spectrum strategy is defined by our access to approximately 1,150 megahertz of low-band and mid-band tunable MNO spectrum globally, which includes 45 megahertz of MSS lower mid-band spectrum access in North America and 60 megahertz of licensed S-band spectrum priority right outside North America. Our low-band spectrum strategy is centered around the use of premium multi-operator 850 megahertz cellular spectrums. We have important characteristics like longer reach, better penetration, and compatibility with existing 3GPP standards and devices. We have further strength disadvantages through strategic MSS and cellular spectrum, including both premium, lower band, mid-band, L-band, and S-band spectrum priority rights, positioning us to reliably deliver cellular broadband service at a global scale. We also made significant progress in our government business as our satellite technology continues to be used by the United States government for dual use and dedicated applications. National security is a key priority for the United States, and we continue to see willingness to rapidly adopt, innovate, forward-looking technologies like ours. Taking together this accomplishment and the competitive advantages we have built give us a significant momentum as we progress to 2026. as the partner of choice for the global mobile network operators and unique non-communication capability for the U.S. government. And with that, I will turn the call back to Scott.

Thank you, Abel. I want to take this time to reflect on our business accomplishments in 2025 and how we see the business evolving over 2026 and 2027. Last year, 2025, was the year we activated our revenue engine with record revenue of over $70 million, achieving the upper end of our revenue guidance. We are no longer a pre-revenue company. During the year, revenue was primarily driven by commercial gateway deliveries and milestones completed from our government contracts. We delivered 15 commercial gateways to M&O partners in the second half of 2025. Importantly, these sales are a leading indicator that our M&O partners are preparing for space mobile commercial service and making investments ahead of that rollout. This was also a well-diversified set of initial gateway deliveries across nine different customers across five continents, which starts to paint the picture of our initial commercial markets in the U.S., Canada, Europe, Japan, the Middle East, and Africa. In terms of signing contracts, the major customer deals for 2025 were definitive commercial agreements with Verizon and STC Group, joining AT&T and Vodafone. We continue to see heavy engagement from MNOs, resulting in good progress deepening and growing our partner ecosystem, taking advantage of our base of over 50 global MNOs with nearly 3 billion subscribers. We and our mobile network partners also recently announced additional specific initiatives with Vodafone, Orange, Telefonica, CK Hutchinson, Taiwan Mobile, among others, while formally unveiling Satellite Connect Europe and its leadership team as our European distribution joint venture with Vodafone. In 2026, we expect more MNOs to join the ASD Space mobile network, and we expect to harvest our pipeline for many additional definitive commercial agreements. as the contractual relationships mature with our existing partners beyond the investor M&Os. The U.S. government was also a significant contributor to 2025 revenue. During the year, we executed against our existing 10 contracts across an expanding list of interested agencies, developing and testing additional capabilities using our in-orbit infrastructure, capabilities critical to U.S. national security, including the Golden Dome Project. The revenue derived from U.S. government is not dependent on full constellation deployment, but is more scalable by satellite count, which makes it an early reliable contributor to revenue. As a reminder, the goal of these contracts is to develop capabilities that can grow into programs of record, with billions of annual revenue potential in aggregate for missions incredibly important to U.S. national security. We also recently announced our status as a prime contractor to the U.S. government and received a $30 million contract award from the United States Space Development Agency for the Europa Track 2 Commercial Solutions Program. This contract focuses on developing immediate, resilient, and low-latency tactical satellite communications directly between government and devices. The award demonstrates how commercial space innovation can be rapidly integrated into national security missions. The award further validates the dual-use nature of our technology for both commercial and national security applications. Regarding the Golden Dome project, we continue to execute against our current contract with the Space Development Agency, and we were recently awarded an IDIQ contract under the United States Missile Defense Agency's SHIELD program. These awards position us to compete for a wide range of future activities to support one of the largest and most significant United States defense programs in history. As we turn the page into 2026, we see this year as an inflection point as we enter commercial service with our initial M&O partners, while also continuing to generate revenue from the commercial gateway and government strategies. Before the impact of commercial service revenue later in the year, we expect revenue to at least double versus 2025. In fact, our 2026 expectations are further de-risked given our contracted pipeline, which provides upside with additional government contract wins. Looking ahead to 2027, with a large scale constellation in orbit, we see a really, really strong outlook for both commercial and government service revenue. 2027 will be the first full year impact of commercial service revenue, as the ASD space mobile cellular broadband service becomes available in some of the best markets worldwide to hundreds of millions of subscribers via a low friction service offering provided when the subscriber needs it most. We also expect government revenue to continue to multiply in 2027 with significant upside depending on certain contract outcomes. We see the opportunity in 2027 approaching a billion dollars in annual revenue, importantly comprised of revenue both long-term contracted or highly recurring in nature, subject to achievement of commercial and government service objectives. Going into the end of the decade, we see further multiples of revenue upside, driven by greater subscriber uptake and market extension. All told, we are confident that our business strategy has strong competitive differentiation and is supported by a growing list of industry tailwinds. We enter 2026 with the assurance and conviction needed to win in an ever-expanding TAM. I am now happy to pass the call over to Andy to walk through our financial update.

Thanks, Scott, and good afternoon, everyone. During the fourth quarter of 2025, we continued to execute on our commercial objectives while expanding manufacturing, and importantly, significantly strengthening our financial position to support our core objectives in 2026. 2025 was best described as the year of scaling at ASD Space Mobile. We began the year focused on building out manufacturing to support our targeted launch schedule through 2026, And we ended the year with the launch of our first Block II Bluebird satellite, BB6, a seminal moment in the history of our company. As we speak with you today, we have 29 Block II Bluebird satellites in various states of production and are on target to complete the assembly of 40 satellites equivalent of microns during the first half of 2026. For 2026, ASD SpaceMobile's global workforce is intensely focused on completing our Block 2 Bluebird satellites to support the orbital launch of 45 to 60 total satellites during the year as we work towards commercial service activation in the second half. As Scott described, our focus on launch cadence and commercial service activation in 2026 is complemented by our increasing revenue opportunities, both from commercial and U.S. government partners. We are now a revenue-generating company, and we will work hard to achieve profitability from our growing revenue initiatives that are intrinsically linked to the increasing number of Block 2 Bluebird satellites that we put into low Earth orbit. Our rapid growth is supported by a fortified balance sheet. Not only do we now have the cash to support the full build-out and launch of a constellation of over 100 satellites to provide worldwide space mobile service, our most recent financing activities position us to accelerate the deployment of our controlled spectrum bands on a global basis, monetize the capabilities of our proprietary technology to capture the evolving commercial opportunities related to artificial intelligence, enhance investment in government space opportunities in the United States, reduce our higher interest debt, and pursue opportunistic investments to accelerate our space mobile services and capabilities. All the while, we continue to balance a prudent approach to our spending while moving quickly to protect and capitalize on our first mover advantage of bringing space-based broadband connectivity direct to unmodified smartphones in the rapidly growing direct-to-device market. Our intentional focus on investing in operational growth led to higher adjusted operating expenses and capital expenditures in Q4 of 2025, both consistent with our expectations and previously communicated during our Q3 2025 earnings call. Importantly, our revenue ramp continued in Q4 with significant revenue growth from commercial gateway deliveries, services, and contracted milestones completed for the U.S. government, resulting in 2025 revenue near the top of our guidance range. Moving to the operating and capital metrics slide, let's review the key metrics for the fourth quarter and full year of 2025 in more detail. On the first chart, for the fourth quarter, we incurred non-GAAP adjusted operating expenses of $95.7 million versus $67.7 million in the third quarter. As a reminder, non-GAAP adjusted operating expenses exclude non-cash operating costs, including depreciation and amortization and stock-based compensation. The quarter-over-quarter increase of $28.0 million resulted primarily from a $23.4 million increase in adjusted cost of revenues related to gateway deliveries, the first revenue from our M&O partners, together with a slight $3.5 million increase in adjusted R&D costs, a $3.0 million increase in adjusted engineering services costs, This partially offset by a $1.9 million decrease in adjusted general and administrative costs. Our Q4 adjusted operating expenses excluding those adjusted costs of revenue would be $66.8 million compared to $62.2 million in Q3 of 2025, which is in line with the mid-60s million guidance that I previously provided. For the full year of 2025, non-GAAP adjusted operating expenses, less adjusted cost of revenue, totaled $224.8 million compared to $151.8 million for the full year of 2024. The primary drivers of the increase were growth in our workforce, including contractors and consultants. our expanded production facilities and other professional fees, including legal fees related to our spectrum and financing transactions. Turning now to the second chart on the slide, our capital expenditures for the fourth quarter of 2025 were approximately $407 million versus approximately $259 million for the third quarter of 2025. This figure was made up primarily of capitalized direct materials, labor for our Block 2 Bluebird satellites, and payments made in connection with multiple launch contracts with the balance relating to facility and production equipment expenditures. This amount was above the quarterly guidance of $275 to $325 million that I provided during our last earnings call. mainly due to intentional growth investments to accelerate satellite material purchases and the timing of launch contract payments. For the first quarter of 2026, we estimate that our adjusted operating expenses, excluding cost of revenues, will be in the range of approximately $70 to $80 million as we add to our workforce and continue to design, manufacture, launch and operate our growing satellite constellation, as well as pursue the monetization of our L- and S-band spectrum usage rights. We expect our capital expenditures to remain flat in Q1 2026 with the fourth quarter of 2025, and it will come in at a range of somewhere between $350 to $425 million worldwide. primarily driven by the timing of launch payments related to our near-term launches, which, as I've previously explained, vary from quarter to quarter. We continue to estimate that the average capital cost, including direct materials and launch costs, for our constellation of over 90 Block II Bluebird satellites will fall in the range of $21 million to $23 million per satellite. Our cost per satellite estimates are subject to fluctuations based on dynamic geopolitical factors, which could impact our costs. As a reminder, the timing of the changes in our adjusted operating expenses and capital expenditures, as I've just described, could be delayed or may not be realized due to a variety of factors. Our planned revenue ramp continued during the fourth quarter, and we expect to continue to grow in 2026 holistically. With respect to revenue generation, we believe we can enable continuous space mobile service across key markets such as the United States, Europe, Japan, and other strategic markets with the launch and operation of approximately 45 to 60 Bluebird satellites and additional strategic worldwide markets with the launch and operation of approximately 90 Bluebird satellites. Further, as we continue to launch and deploy our constellation, we will continue to support U.S. government applications, currently ongoing and accelerating as our constellation grows. In the fourth quarter, we recognized revenue of $54.3 million, primarily driven by Gateway hardware sales and various U.S. government service milestone achievements. Additionally, in Q4, we recognized revenue in connection with the provision of critical consulting services for an M&O partner. For the full year of 2025, we achieved revenue of $70.9 million, representing the top end of our 2025 revenue guidance range of $50 to $75 million. Now, turning to our revenue expectations in 2026, we managed the top line with a focus on full-year performance, given the quarterly variability inherent to our business, including the timing of contract signings, equipment sales, and milestone achievements. As a result, we believe our revenue performance is best evaluated on a full-year basis. As we continue advancing our launch and network activation initiatives, we expect revenue to grow meaningfully relative to our 2025 financial performance. Specifically, we expect to generate full-year 2026 revenue in the range of $150 to $200 million. We expect revenue to continue to be driven by gateway deliveries, achievement of contracted milestones for the U.S. government, M&O consulting services, with potential upside related to the recognition of initial commercial service revenue. Quarterly revenue will likely vary significantly depending on achievement of milestones and the timing of customer activities. We believe that approximately half of the revenue opportunity within our commercial pipeline this year is already booked or contracted. The remaining portion consists of a combination of advanced stage opportunities that have not yet been signed, as well as net new business we expect to secure over the course of the year. As previously noted, we anticipate government-related revenue growth to be driven by the factors outlined earlier in Scott's remarks. The achievement of our revenue plan remains subject to several contingencies, including the successful launch and deployment of Block 2 Bluebird satellites related to U.S. government applications' contractual milestone achievements, critical gateway equipment sales to our M&O partners in support of their anticipated commercialization efforts of space mobile service, and service revenues in connection with the activation of our commercial service provided by our existing and planned deployed and operational satellites. Finally, on the last chart on the slide, on a pro forma basis inclusive of cash raised in February, via the convertible notes offering with a 2.25% 10-year coupon at an effective strike price of $116.30 per share and the available liquidity under the at-the-market or ATM facility, our cash, cash equivalents, and restricted cash as of December 31, 2025 was approximately $3.9 billion.

Primary drivers for this cash increase include the execution of the two convertible notes offerings in October of 2025 and February of 2026 for a total of approximately $2.2 billion of net proceeds and approximately $706 million of net proceeds raised from the 2025 ATM facilities during Q4 leaving approximately $80 million available under that facility.

In addition to capital raised via the recent 2.25% 10-year convertible notes, we also took action since our last earnings call by further reducing our outstanding debt related to the January 2025 and July 2025 convertible notes each due in 2032. Following the February equitization transactions, we have now converted approximately $457 million of the outstanding $460 million of the January convertible notes into $19.2 million Class A shares and $250 million of the outstanding $575 million of the July notes into $4.5 million Class A shares. we will continue to look at attractive debt reduction efforts including convertible notes as the year progresses. Given the current strength of our balance sheet that now includes cash, cash equivalents and restricted cash and available liquidity under the ATM facility of over $3.9 billion on a pro forma basis as of December 31, We are now not only fully funded to manufacture and launch a constellation of over 100 satellites to provide worldwide space mobile service, but we have increased our financial flexibility to make further investments to expedite the timing of and augment the capabilities of our space mobile service. At this time, we do not have any plans to pursue additional convertible debt. The combination of increasing commercial and government opportunities Rapidly scaling manufacturing and satellite launch operations and a fortified balance sheet firmly positions ASD SpaceMobile to achieve our objectives on behalf of all of our stakeholders in 2026 and beyond. I am incredibly proud of the significant progress our company made in 2025, backed by the intense focus and tireless efforts of our worldwide workforce. It's now time to further execute on our launch cadence to bring space mobile service to connect the unconnected in the coming periods. And with that, this completes the presentation component of our business update call, and I'll pass it back to Scott. Scott?

Thank you, Andy. Before we go to the queue of analyst questions, we'd like to address a few of the questions submitted by our investors. Operator, could you please start us off with the first question?

Justin from Georgia asks, any interesting learnings from BB-6 and 7? Is the production of composite satellites going to be vastly different? Any unforeseen delays?

Thank you, Justin, for the question. The BB-6, it is the largest phase array ever deployed in space. It's three and a half times bigger than our previous deployments, which were also the world record on size. And, you know, going through that first deployment of 2,400 square feet successfully, learn how to capture, control, and manage the satellite at that size would allow us to actually do it much more faster. We do 7, 8, 9, 10, 11, 12, 14 satellites that are incoming. So, yes, that was a very, very important milestone in learning how to operate, deploy, and fly something of this size, which will help us to do it faster in the next deployments. The other thing that will happen going forward, passing six and seven, is that we're stacking the satellites. So we will not be launching individual satellites anymore. They will be packed in group of either three, four, six, or eight satellites. in a single launch. That is what will allow us to meet our launch cadence of this year, which we're expecting 45 satellites in orbit and 60 satellites ready to ship during 2026.

Justin also asks, is there an updated timeline for the mid-band constellation for using L and S band spectrum?

Yes, there is. We're planning to start launching the mid-band constellation by the end of the year. The mid-band constellation has the advantage of combining 3GPP standard operator-owned frequencies and also our L and S bands, which combine give a great flexibility to the offering and also allow us to continue to increase the data rate capacity that we have in our system going way above our 120 megabits per second that we already have in block one. So that allows a combination of IMT spectrum which we see it like a run extension to extend capability in places where there is no spectrum, there is no spectrum light up, to overlay spectrum in our LNS in order to cover all locations as a supplement and an augmentation of the terrestrial network with data rate that far exceeds our current 120 megabits per second range. in the low-band block one satellites. With the largest satellites and with access to combining certain regions to over 100 megahertz of a spectrum, combining the spectrum of our network partners and our own, this will give a true broadband experience on a global basis.

Leaden from New Zealand asks, with the larger designs complete and being produced, do you anticipate future R&D or new product lines? This may be data centers, exclusive military constellations, collecting data on usage, providing aircraft and ship traffic radar, et cetera.

Thank you, Leaden. Listen, the most difficult aspect of the R&D process With the launch, deployment, and usage of our BB6, the core aspect of it is complete. So the ability to produce a lot of power, the ability to have a very large aperture with very sensitive aperture, the ability to have many, many gigahertz of processing power with our own ASIC, the ability to do it cost-effectively with our own power generation technology. All of that R&D has been completed, and it's an integral part of what we have, of what we're operating, and as you said, being completed. Now, we do see many other opportunities for the technology that we're starting to see usage of them. One is radar. Another is power generation. Another one is multiplying the spectrum usage. So we believe in combining our large aperture with our AI capability, we create a multiplier for the spectrum. So the 50 megahertz that we have, you know, it will fill A multiple of that. It could be three times that. It could be ten times that. So we see a lot of opportunities of combining all this capability, including very precise geolocation, radar communications, all that wrap up with an AI infrastructure. We think that is a significant additional value that we can create with our infrastructure and the already invested R&D.

Kevin from Vancouver asks, can you share more color on the most recent $1 billion convertible note offering? Many investors are confused as your current liquidity was already approximately $3 billion and sufficient for around 100 satellites. Were there any specific opportunities in mind when you issued the offering or is it really, quote unquote, just in case something pops up?

Thanks for that question, Kevin. This is Andy. it's absolutely the case that in q4 when we finished the convertible in october we were in a position to fully fund the worldwide constellation at 100 plus satellites nothing has changed on that front and the convertible deal that we did at just over a billion dollars in february provides us essentially extra flexibility to look at investments that go beyond that first hundred constellation and what i mean by that is Number one, we can accelerate the deployment of our controlled global spectrum with this added fund. We also have the opportunity to monetize our technology to capture commercial opportunities related to AI, which are increasingly coming our way. We will look to deploy funds to enhance our investment in government space opportunities in the United States. We've talked about our debt profile. These funds provide us flexibility to look at reducing higher interest debt that we currently have. And finally, opportunistically, any investments that help us accelerate the time to bring space mobile service and capabilities will be a good use of these funds as well. And I would just close by noting that we've confirmed that we have no current plans to look at an additional convertible deal. We feel that the balance sheet is where it needs to be to provide us the opportunity to execute our objectives in the near and midterm.

And with that, I'd like to thank our shareholders for submitting those questions. Operator, let's open up the call to analyst questions now.

Thank you. And if you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate a line is in the question queue. You may press star 2 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment, please, while we pull forward questions. Our first question comes from the line of Griffin Voss with B Riley Securities. Please proceed with your question.

Hey, good afternoon. Thanks for taking my question. So, first I just want to talk about, you know, this expanding TAM that you talked about with the dual use capabilities and government contracts. Do you see any scenario where you build and launch future BlockBird satellites with different payloads that might be exclusively for government customers or applications?

Hey, how are you? Listen, the satellites are really designed to manage all these applications in a single platform. So we do not need multiple satellites for multiple payloads. The core applications for our government contracts for our partnership with the MNOs are all possible through the same platform, which are in fact already being used in combination of the two. So we want to maximize and take advantage of a platform that can be used simultaneously for the two times.

Got it. Okay, understood, Abel. Thanks for that. And then this second one for me, you know, you always mention your thousands of patents and you talked about on this call, you know, your expertise in building and deploying massive structures in low Earth orbit that could be used for, you know, myriad opportunities and, you know, you specifically call out these these burgeoning opportunities in AI. You called that out with the convertible rays too. But you have this one specific patent that's been of interest to us for a while for thermal management systems for structures in space. And that's a patent that describes a process for satellites wherein heat is dissipated locally at each antenna. and heat could be directed to each antenna assembly during periods of extreme cold. So just curious if you could maybe elaborate on that specifically as well as, you know, your other capabilities and how that could, you know, potentially be used for opportunities in data centers in space or why that makes, you know, ASG satellites attractive for those types of capabilities.

Yeah, no, absolutely. I mean, there are many key enablers that, needed to be designed by us and deployed in patent in order to solve probably the most difficult problem, which is connecting broadband regular handsets. So for that, we needed to develop and vertically integrate 95% of our technology, have the technology to produce a low-cost power. That's a very significant size. we are on a factor of 10 lower per square meter power production of what historically manufacturers had been using, the size of the satellite. And then the ability to generate power at a low cost per square meter, and then being able to dissipate, and effectively run a lot of wattage per square meter within the power constraints of the space. So we have, that's where we have built up a significant portfolio of IP. That is a particular, I think you hit it right, that's a particular technology that enable a lot of things. Then when we talk about the ability to manage the spectrum using AI capabilities, we call it spectrum, AI spectrum management, the ability to use these satellites, not only for communications, but other applications like radar. When you combine that with the ability to store, manage data in a way that uses the spectrum very, very efficiently, it opened a lot of other opportunities on the TAM that we have. We believe the largest TAM is in broadband, through broadband, directly to the handset, where you will be basically becoming what I call the third leg of communications. You have Wi-Fi. you have cellular and now you have space. And our belief is to participate at a scale in a way that is meaningful for our global operators, the broadband capability is essential. And it's something that we have now. I mean, that's what we have with the satellite that we're deploying right now. And we're extremely happy of the performance that we see on our VB6 in the new 2400 square feet platform that we just launched.

Got it. Thanks for all the color, Abel. I'll hand it off here and hop back in the queue. Thanks for taking my questions.

Thank you. Our next question comes from the line of Colin Canfield with Cancer Fitzgerald. Please proceed with your question.

Thank you for the question. As we parse out the comments that you talked about on 2028 revenue potential, just kind of thinking about the bull bear of what you said, so multiple versus 1 billion of potential in 27, which suggests, you know, let's call it 1.5 to 3 for 28. How does the team kind of think about the mix of opportunities between government and B2B customers? And then kind of within B2B, how do you think about tech discussions between communications intelligent and then intelligence and on an on-orbit compute thank you

Thanks, Colin. I'll take that. So we put forward our expectations for revenue in 2026, building on, you know, the high end of our guidance that we achieved in 2025. And then we stated a goal for 2027. So we did not state anything for 2028. So I'll keep my comments to 2027. But I think what we see is as we get this platform on a full year run rate and we're able to put the consumer business, the D2D communications business in place in some of the most favorable markets globally, and then you put that alongside our government applications, getting some time to mature and some potential contract wins we're chasing. That's how we got to that 2027 goal number and And we think that, you know, that's probably, you know, more weighted towards commercial based on that framework. But, of course, upside, I think if government does better. And as you go out into 2028 and later in the decade, ultimately, we do think that our commercial business is going to be bigger. That's always been the premise. So commercial, I think, at scale should be bigger than government. We think that market's really attractive. We think all the demand drivers will attract for commercial. The seven, eight years of the company are intact and growing stronger by the day. But the government business is also very attractive. And as we said, with all the various use cases we're tracking, there's potential for multiple billions of annual revenue through those use cases as well. So we see a really bright picture. I'd say it's largely consistent with how we've always seen it, although governments trended up over the last year or two. But that's how we see the mix playing out. And, you know, I think that's, you know, as we're deploying and as you saw, we put out a number of customer announcements today, we see the strength of that demand as strong as ever.

Thank you. I appreciate it. And then as we think of the progression of growth, is it fair to use the 4Q performance as a baseline for 2026 and then growing from there? Or is the commentary in terms of growth for 2026 more aligned with just growing from the

The way I think about it is, you know, before we initiate commercial service here, we're doing revenue that's kind of earlier stage, right? So the commercial revenue is not as consistent and the government revenue is building nicely, but much lower than where it can be. So quarter to quarter, I wouldn't say we're planning on building quarter to quarter. I think think about it annually, like Andy put it in his speech. It's really about an annual target. And so I think at least doubling where we hit in 2025 is the right way to think about it, with, of course, upside as we launch commercial service. But quarter to quarter, at least in the next few quarters, before commercial service comes into play in the second half of 2026, that's how to think about it is, you know, we're putting commercial infrastructure in place and we're performing against our government pipeline.

That's great. Thank you.

Thank you. Our next question comes from the line of Brian Graff with Deutsche Bank. Please proceed with your question.

Hi, good afternoon. I'm just trying to understand the manufacturing side a little bit better. Would you mind providing just some color on how many satellites beyond BB-7 are built and ready to ship today, and maybe how many you expect to be built and ready to ship by mid-year? I know you talked about the microns, and those are the hardest part, but I think there is some assembly that takes some time beyond the microns themselves. And then, you know, just related to that, I mean, you know, I think, you know, clearly the manufacturing pace is somewhat behind where you had expected it to be. Perhaps you could maybe just give us some appreciation for the kinds of things that maybe took longer than you had expected and whether you think you've now worked through all those issues and you're kind of accelerated or accelerating the pace up to where, you know, you had expected it to get to. Thank you.

Yeah. I think we are at a point where you see that acceleration. We certainly see that in the manufacturing of the key building block, which is the micron, so which we are on satellite 30. We are on target to at least be ready to chip this year 60 satellites. with a minimum of 45 into orbit. So we went through a phase and, you know, just a year ago, the satellites were three and a half times smaller. They were already very big. They were the biggest ever launched. These ones are three and a half times bigger. And those will be six and seven. By that, basically, what is something that help us to accelerate our cadence of satellites in orbit is we are able to stack them. And that stack is difficult, you know. You need to be able to stack either three, four, six, or eight satellites. And that is near completion. So that's where you will... You see batches of six in the getting out of the factory very soon here.

And, okay, so on the stacking, if I may, just in layman's terms, are you saying that there are specific engineering things that you had to, figure out in order to get the stacking right? Or are you just saying that, you know, getting that many done at once so that you could stack and get it ready for a combined launch took some time? Just if you don't mind clarifying.

Getting them ready for a combined launch is the ability of, I mean, you're talking about something like a five-story building worth of satellites. Stacking them in either blocks of three of them Four, six of eight. But that process is completed. And the next batch of six, you see the pictures in the deck that we put in the AR deck. And we pass that phase as we get ready to resume the achievements to the gate.

Thank you. If I may sneak one more in, I know you said that BB7 is expected to go up this month and then, you know, launches every one to two months. Could we expect possibly a launch with multiple satellites in April, or is it likely to be two months post the Mars launch?

Yes. I mean, the All further launches are in a stack configuration. We don't have any more single launches like we did on BB6 and BB7. This next coming launch is super important for us as basically allows to reuse the first stage of the new Glenn, which is the only platform commercial that exists. that can actually stack eight of our satellites. There are other platforms that stack six or three, but with the new Glenn, we get the maximum amount of satellites per launch. And that ability is becoming available with the new satellites.

And, Brian, I'd just add, you know, we expect to ship that next batch in April. So depending on timing and, of course, under ideal conditions, it's about three weeks or so to launch from there. So we're not going to speculate on launch timing for that, but we look like we're going to be in a position to ship those in April. And you can see that on page 10 in our deck.

Great. Thank you.

Thank you. Our next question comes from the line of Louis de Palma with William Blair. Please proceed with your question.

Good evening, Abel, Scott, and Andy. Congrats on all of the partnership announcements and the progress with your constellation. First, I was wondering, are you in Barcelona for the conference? And will there be more announcements this week besides what you've already announced? Are you... Are you holding back certain announcements?

Hey, how are you doing? It's Scott here. Yeah, we are in a conference room in Barcelona, so it's great to do the call this quarter on the road. But, yeah, we had a flurry of announcements today, and, yeah, you can expect more for the rest of the week as well.

Excellent. And my second question is, what service level – will your network support when you launch the different beta offerings in the summer? Will there be different phases in terms of the service capabilities as more satellites come online? Or should the initial beta that launches whenever that takes place, will that have close to a true 5G experience?

Yeah, the way to think about this is peak data rate. So what peak data rate you can expect on the phone will be directionally proportional to the amount of spectrum that we get allocated. And with some partners we have between our spectrum and their spectrum, enough to around 100 megahertz and you you can think you can put a multiple of that number of megahertz to think about what is the big data rate today we're managing between three and four bits per hertz so so that multiple is in that order um so the initial the initial Launch of commercial services is with the lower end of that. As the allocated spectrum, it will be less. But as we enable more spectrum, which the satellites support them now, they have great flexibility to keep adding spectrum and keep adding and later even combining low-band spectrum with mid-band spectrum. then you see the peak data rates keep enhancing. So that's the way to think about the key performance metrics as we launch services.

Thanks. That makes sense, Abel. And one financial question. For the $1 billion revenue goal for 2027, how much of that is is customer or subscriber usage based versus being like minimum revenue commitments that are contractually obligated with your MNO partners such that like if you actually are able to get like between the 45 and 50 satellites online by the end of the year, How much of that $1 billion is then, like, already in the bag, so to speak?

Sure. So remember, we're at $1.2 billion contracted backlog right now, which we're very proud of and is a testament to, you know, how we've built the ecosystem with our partners and how confident our partners are in the business that we're building, right? But that is still past. very, very low number compared to what our expectations are for the revenue potential of the business. So while it's a good indicator, that backlog, which again is over $1.2 billion at this point, but in terms of its contribution to each individual year, it'll be a minority for sure. So if we're – in terms of a goal of $1 billion, you know, you can think of that in the low hundreds of millions, you know, somewhere 100 to 300 range depending on the year.

Great. Thanks, Scott. Thanks, everyone.

Thank you. Our next question comes from the line of Chris Scholl with UBS. Please proceed with your question.

Great. Thank you. Looking at your new disclosure, it appears your services gross margins are around 90%. Is this a good way to think about the business longer term? And as revenue generation starts to kick in, can you just remind us how you're thinking about operating leverage and where you believe steady state EBITDA margins can reach for the business? Thank you.

Yeah, we've been pretty consistent about this over time. And when you look at the history of the satellite industry, when it's been performing well, it has margins in the 80-plus percent range. And even today, if you look across the market, there are businesses with 90-plus percent flow-through margins in certain segments of their business. They just might not report it that way. So this has just tremendous operating leverage in it, and we've always known that off a fixed cost base. So as we've built the business, nothing's really changed. I mean, we struggle to find true variable cost in a meaningful way, and this is compounded by the fact that, remember, our go-to-market strategy is with the revenue share. So that is a big way that we even get greater leverage in the business and make it not just wholesale but super wholesale. So at this point, you know, our flow-through margins and our operating leverage, we think over time could contribute to any bit of margin, you know, in the 90% area or higher.

Great. Thank you. If I can just fit in one more. I recognize the 10K talks about 90 satellites supporting your longer-term business goals, but does your ability to raise capital maybe incentivize you to perhaps go beyond what is contemplated in the original business plans?

I'll pass it over to Andy.

I think having that flexibility, I mean, the market, the capital markets have been wonderful for us over the past year. So that's absolutely the case. But the reality is when we get our constellation built, we're going to get leverage in the P&L to actually be cash flow positive from operations. So We don't feel like at this point we need to look beyond what we've raised right now. It provides us the flexibility to make additional investments, opportunistic, and some of the other things that we're doing on our spectrum strategy. But the real goal is to generate revenue and profit from the constellation as we get a launch. So that's kind of how we're thinking about it right now, but it's certainly nice to have the balance sheet fortified the way it is.

Okay, great. Thank you.

Thank you. Our next question comes from the line of Greg Appendi with Clear Street. Please proceed with your question.

Hey, guys. Thanks for taking my question. Just a real quick one. On the operating expenses that you outlined, could you just remind us what you said, and does that include what will likely be spectrum licensing fees, maybe around 20 million a quarter? Or lease, I'm sorry, spectrum lease payments?

Yeah, this is Andy. So it's a bit of a walk here. You've got, you know, sort of the GAAP OPEX, which includes the normal non-cash items, which we adjust out, which we've talked about. And then from there, we also have the cost of revenues, which, you know, when we get to service, we'll move into a more traditional COGS service. P&L that you'd be more used to there. But then when you net that out, my commentary was that we were just slightly over where we were in Q3 of 25 and right in that guidance that I gave for Q4 in the mid-60s. It does not include spectrum costs, as you described, for licensing, given that those are capitalized until we actually start monetizing that asset. And, of course, we're at the point where we're awaiting FCC approval. So we will speak to that as a specific item when it comes time to kind of build that into the operating expense. But right now, apples to apples, that's been out during the course of 2015.

Very helpful.

Thanks a lot.

Thank you. And we have reached the end of the question and answer session. And therefore, I'll now turn the call back over to Scott Wisniewski for closed remarks.

Thank you, Operator. And we want to thank all of our shareholders and research analysts for joining the call. We hope to see many of you down in Florida at our upcoming launch. Thank you. Bye.

And this concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.