Spire Global, Inc.

Good afternoon and welcome to the SPIRE Global Fourth Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during this conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference call over to our host, Ben Hackman, Head of Investor Relations. Thank you. You may begin.

Thank you. Hello everyone and thank you for joining us for our fourth quarter 2022 earnings conference call. Our results press release and SEC filings can be found on our IR website at ir.spire.com. A replay of today's call will also be made available. With me on the call today is Peter Platzer, CEO and Tom Crywee, CFO. As a reminder, our commentary today will include non-GAAP items, reconciliations between our GAAP and non-GAAP results, as well as our guidance can be found in our earnings press release. Some of our comments today may contain forward-looking statements that are subject to risks, uncertainties, and assumptions. In particular, our expectations around our results of operations and financial conditions are uncertain and subject to change. Should any of these fail to materialize or should our assumptions prove to be incorrect, actual company results could differ materially from these forward-looking statements. A description of these risks, uncertainties, and assumptions, and other factors that could affect our financial results is included in our SEC filings. With that, let me hand the call over to Peter.

Thank you, Ben, and thank you everyone joining us on the call today. When we started this company over 10 years ago, we had a very simple mission, to improve life on planet Earth. The human impact on Earth, both from a climate perspective and a global security perspective, has been profound. And it is therefore up to us to identify ways to mitigate the negative impacts and contribute to building a more sustainable, equitable, and prosperous future. The markets encompassing climate change and global security are large, global, and growing. Climate change impact to the global GDP is measured in the trillions of dollars. Mitigating just 10% of that is worth hundreds of billions of dollars. Ocean shipping accounts for 80 to 90% of global trade and was estimated to hit roughly 25 trillion in 2022. Illegal, unreported, and unregulated fishing causes up to $50 billion of economic loss a year, and piracy accounts for $16 billion of annual economic loss. The global signal intelligence market is estimated to be over $13 billion currently, with a sizable and rapidly growing contribution from space-based geolocation and spectrum monitoring capabilities. These are all massive markets, and they are markets we are just beginning to capture share in. As demonstrated by our increasing net retention rate, our initial foothold in this market is growing, strengthened by substantial sustainable competitive advantages. We believe Spire's addressable market is in the range of $100 billion, encompassing 150,000 to 200,000 customers. And while we are immensely proud of growing from 1 million to nearly 100 million of ARR in just five years, we believe there is so much more opportunity ahead of us. We finished 2022 serving more than 730 ERR solution customers across 65 countries on six continents, leaving substantial opportunity right in front of us for continued growth. If you think about our business opportunities, it's obvious to start by thinking of the shipping companies that own around 55,000 merchant vessels. the 800 container ports, or the 5,000 airlines that own roughly 25,000 cargo and passenger aircraft. However, this is just a small subset of the customers that find value in our solutions. We track hundreds of thousands of vessels and over 60,000 aircraft per day. We are aware of only one other company that has the ability to provide clean satellite ERS data for tracking maritime movements. And another one, very different company, that has the ability to provide clean satellite ADS-B data for tracking global aviation movements and locations. And only two, again, different companies with the ability to provide clean satellite weather data via GPSRO. And we are not aware of any other company other than Spire to have all of these satellite data and analytic solutions combined under one roof, available to help customers solve their most pressing challenges. Our customers include ports, financiers, insurance companies, traders, transportation and logistics companies, renewable energy companies, route planners, sports teams, and asset maintainers to name just a few. These are each large industries that make up the ecosystem around shipping, aviation, and weather. And they're all part of Spire's target customer base. For example, Spire provides our customer Gravity real-time information and analytics based on global maritime automatic identification system technology. This information allows clients to get precise insights about maritime traffic, including the exact location of a ship carrying what they need and when it will get to where they need it to be. This enhanced visibility of vessels for those awaiting their arrival, like logistic companies, enables organizations to make better data-driven decisions. This is one example within the $3.4 billion inventory optimization logistics and reporting market, which is crucially reliant on having access to global, near real-time, precise location and movement data of goods. In another customer example, Shipnext, a freight matching platform covering bulk, oversized and containerized cargo, leverages satellite data from SPIRE to gain real-time insight into fleet operations. There are estimated to be over 800 shipbrokers and freight forwarders providing services similar to ShipNext to the nearly 20,000 shipping lines across the globe. The collaboration between ShipNext and SPIRE has resulted in real-time visibility around ports, including congestion management solutions. This is powerful data as ships spend on average 40% of their time in port waiting to be called. On the aviation side, Spire was selected to provide ADS-B positional information to myAerops so that operators could get an accurate picture of the operational landscape, including aircraft position, weather, crewing, customer requirements, and maintenance. Industry reports estimate that there are roughly 21,000 business jets and a nearly $3 billion aviation analytics market, a market that is expected to grow double digits and top $8 billion in 2030. Our relationship with MyAerops was expanded when it was announced earlier this year that they will be also integrating SPIRE weather data into their platform. This is an example of how our weather data is being utilized beyond only generating weather forecasts. It's being utilized as another layer of insight on top of the maritime and aviation data we provide. And yet another example of how our data is utilized, Blue Pulse combined data and artificial intelligence by integrating SPIRE's weather data forecast to its refrigerated or reefer fleet energy simulation tool. Utilizing SPIRE's historical weather data of temperature, humidity, dew point, solar radiation, and wind, Blue Pulse ran different alternatives over 70 routes across the Atlantic and Pacific Ocean. What it found was that by only going 2% longer than the shortest possible route, 5% to 7% of the ship's fuel was saved on roughly 60% of the routes. and from 300 to 700 megawatt hours of Riescher energy was saved per crossing. This results in over tens of millions of euros saved and tens of thousands of equivalent tons of CO2 emissions saved on an annual basis. This is an exciting area of the business as the maritime industry is poised for a digital transformation. Blue Pulse is part of over 1,000 SME and startup companies in the maritime space, a number that has been growing steadily in the double digits. In the scientific community, we are continuing to see strong demand for our weather data. We currently provide 3,300 radio occultation profiles to NOAA, but the scientific community has studied the significant impacts and improvements in numerical weather prediction by using 25,000 RO profiles a day, 50,000 profiles a day, all the way to over 100,000 profiles a day. These weather prediction improvements are often particularly strong for extreme weather events like hurricanes or heavy snow or rain. With NOAA satellite data and information service budget at roughly $2 billion for FY23, and dozens of similar agencies across the world, these studies are an indication of potential further demand for our data along with growing broader demand for our commercial weather data. This past year, SPIRE was awarded contracts to detect and geolocate certain objects based on targeted radio frequency or RF emissions. One such example was an award from Sierra Nevada Corporation for a cluster of four 6U satellites. This is an example of how SPIRE can compete and win in the $13 billion and growing signals intelligence market. SPIRE's spacecraft are equipped with highly sensitive radio signal detection devices, which listen to the slightest changes of these signals. This capability, for example, allows us to measure the temperature in Earth's atmosphere with incredible accuracy, or measure the level of moisture in the soil on the ground. Identifying, characterizing, and, where possible, mitigating ground-based RF and GPS interferences is a critical component of correctly capturing this data. It also can have great importance to national security and U.S. Space Force operations, an organization whose budget has grown to over $26 billion, up from $19.5 billion in 2022. RF signals intercepted in open air space are liabilities that directly threaten on-orbit space assets of civilian, commercial, and military missions. SPIRE solutions are also utilized to protect life and property. A recent agreement with a launch provider has SPIRE supplying vessel tracking data for the coast of California, Hawaii, Florida, and Texas in support of launch day planning and mission-critical situational awareness. To put this opportunity in perspective, there are over 30 active launch service providers and we're tracking over 50 new launch vehicles. At Cape Canaveral in Florida alone, there are expected to be 87 orbital-class launches in 2023, a sharp increase from the record-setting 57 in 2022. Globally, there has been a rocket launch every two days in 2022. By having better insights on marine traffic around launch operations, lives can be protected and launch delays can be prevented. In another example, one of our partners successfully used SPIRE data to find a lost boat in the Philippines and save the life of the seafarers. In yet another example, we heard from our customer that our data was being utilized to keep seafarers out of the path of hurricanes. With storms in the vicinity of the vessels, this customer was utilizing our dynamic ARS data to track their vessels and keep their employees out of harm's way and their cargo safe. With existing business and ample opportunities in front of us, Spire continued to prudently scale the company during 2022. As we celebrated Spire's 10th anniversary, we grew our revenue 85% year over year and expanded our team by just 10% year over year. showcasing the enormous operational leverage that our business model has. The amazingly talented teammates at Spire are the fuel for our business growth and the source of immense customer satisfaction, highlighted by a net retention rate of 117% for 2022. Our team members representing over 45 countries bring exceptional diversity of thought and experience to our organizations. At Spire, we're continually working to build a company where our teammates can learn, grow, and succeed. This past year, we invested in the employee experience by listening and investing heavily in opportunities for learning and development. These are investments in our team that we are happy and excited to make as we prepare for the opportunities of the next decade. We continue to make prudent investment decisions to replenish and improve our infrastructure and enhance our technology, consistently adding to our already substantial competitive moat. During 2022, we had three launches, and we had our first launch of 2023 shortly after the new year. In total, we have completed 34 launches with 10 different launch providers over the past decade. We have launched more than 160 satellites and accumulated over 500 years of space heritage. Only through the experience of operating in space does one understand exactly what it takes to be successful in the space environment, as that environment cannot be replicated on Earth. Our substantial experience on this front further bolsters our competitive mode. With these recent launches, our Space Services customers were able to bring capabilities to market faster and more efficiently. Customers like Aurora Tech with its Wildfire Detection Service and Austrian Space Forum's Adler One Space Debris Monitoring Satellite are just two examples highlighting capabilities in large growing markets. We were also able to continually upgrade our technology in orbit. Spire's in-house developed optical laser-based inter-satellite links are but one example of how Spire's smart investment in R&D continually enhances the value we can deliver to our customers and the competitive mode we enjoy in our business models. We deployed satellites equipped with an antenna and software-defined radio tuned to capture signals from L-band SATCOM, which further improves our geolocation capabilities and increases the type of products and solutions we can offer in the growing market for global security. We unveiled the 16-year satellite bus that allows for more power, volume, and data capabilities as we're increasingly seeing that our customers' missions require buses that offer the performance of a larger satellite, but with the agility of a nanosatellite. And we invested in hyperspectral microwave sounders and polarimetric radio occultation to augment weather data and forecasting. Microwave sounders will enable a higher level of measurement accuracy for both moisture and temperature, which are an essential in numerical weather prediction. This investment was awarded with a $4 million contract by NOAA for the development, integration, testing, and demonstration of a hyperspectral microwave sensor payload. As we look to the future, there are generational trends that provide reliable tailwinds for our business and align with our mission of leveraging data and analytics from space to improve life on Earth. For decades, climate change has been impacting our planet. As populations continue to grow, humans are exacting an ever larger toll on the place we call home. For the three decades spanning the 1950s, 60s, and 70s, there wasn't a year in which the world experienced economic loss from weather-related disasters of more than $100 billion. Yet during the 21st century, the annual economic loss associated with weather-related disasters has averaged over 300 billion, over three times as much. And in addition to climate change, we have witnessed a rapid change in our global security environment. 2022 was a sober lesson in how quickly the world can change. Overnight, a sovereign country was invaded, millions of people were displaced, and the world was reminded of how fragile peace can be. With these real-time reminders, SPIRE remains steadfast in our mission of providing critical and actionable intelligence to provide truth and transparency from space. We believe that through the application of insights that can only be captured from space, SPIRE is making an outsized impact on the world as we increasingly apply AI and machine learning techniques to our data. Spire has been looking at different ways to detect essential climate variables so companies can reduce their operational weather risk and researchers can understand more about how the Earth is changing. In one such example, GNSS reflectometry, Spire has been using the exceptional RF sensitivity of our space technology to measure and assess different types of sea ice. Sea ice has been explained by scientists as the corner piece of the climate change jigsaw puzzle connecting atmosphere, ocean, and ice processes. With the combination of analytics and machine learning, our customers have been impressed by the results. Scientists have stated that the team has successfully distinguished between Arctic ice and ocean, as well as between first-year and multi-year ice with 90% accuracy. higher accuracy than was hoped for. One customer noted that, this is a data resource that we've never really had. While this is just a single use case of the data that Spire collects, it opens the aperture of what is possible by combining data that is becoming available for the first time along with AI and machine learning. With robust business prospects, and a strategic plan in place to scale the company, we are steadfastly focused on driving the company to profitability. We believe that we have identified the correct key markets for our solutions and remain focused on those markets. This focus has allowed us to extract a high utilization from our assets. Our constellation supports three sizable market opportunities where we collect data once and sell it many, many times. And our expansion into space services further increases that utilization and monetization of the infrastructure and teams we have in place. By leveraging our R&D, our manufacturing and operations teams, and our ground station network, we can provide exceptional solutions to our customers and high operational leverage to our shareholders. Even as the macro environment continues to be challenging and we see extension in the time to sign customer contracts, while businesses dynamically balance growth and profitability, our high asset utilization allows us to fully stay on track in our drive towards profitability. As our margins have continued to expand, our cash usage has declined very meaningfully over the past two quarters, despite our strong year-over-year growth rate. We have remained resolute on our projected profitability timeframe, which has remained unchanged since the time we introduced it one year ago. We feel this creates exceptional opportunities for those looking at the incredible strength, growth, and trajectory of our business. As we remain heads down on execution, we are focused on what we can control. What inspires us is a tremendous long-term demand for our solutions, demand that is rooted in SPIRE's mission of improving life here on planet Earth. And with that, I'll turn it over to Tom.