Spire Global, Inc.

with new real-time RO data that consists of vertical profiles of atmospheric measurements including pressure, humidity, and temperature across all points of the globe, as well as ionospheric measurements. This data has been used successfully for NOAA's operational weather forecasts, space weather models, and climate research, among other applications. SPIRE is the largest producer of radio occultations, a powerful form of weather data gathered by our fully deployed constellation of more than 100 satellites, and offers a vast portfolio of current weather, historical weather data, and weather forecast solutions. They're currently capable of providing 20,000 radio occultation profiles per day and could achieve up to 100,000 profiles per day in as little as 18 to 24 months. Additionally, we recently announced a deal with NCLAIR, Anclair is using SPIRE satellite data to offer up-to-date vessel information and ARS positions to support freight buyers, port agents, ship owners, and charterers with business planning and faster document creation. This enables clients to unlock time savings using automated document generation and reduce late time processing by up to 40 minutes. Anclair is part of over 1,000 small and medium enterprises in the maritime space. a number that has been growing steadily in the double digits as the maritime industry is embarking on a digital transformation journey. Turning to our aviation data analytics business, Spire announced a long-term agreement with CH Aviation to supply global flight analytics and insights that will enhance its airline intelligence database. The agreement includes access to Spire's daily flight report, which aggregates hundreds of millions of satellites and terrestrial ADS-B positions to provide actionable flight, aircraft, and airline data. SPIA's flight report detects both scheduled and unscheduled flights occurring in near real-time across the globe, including in remote regions where it is not possible to track flights with terrestrial data services and traditional radar and radio systems. Leage Aviation is integrating SPIRE satellite data with its own data to derive insights on aircraft utilization, provide post-departure passenger capacity based on actual seat configurations flow, track wet lease contracts and aircraft at maintenance, repair, and overhaul, or MRO providers, automatically update an aircraft status and location, and allow users to create flight reports using fleet data criteria. It will allow MRO providers to track aircraft maintained by competitors, lessors to monitor their assets, airlines to benchmark their operational performance relative to competitors, and charter brokers to see which contracts they missed out on. The aviation MRO market is roughly an $80 billion market and is expected to grow another $50 billion by 2030. To share a handful of examples of the use cases represented by the new logos signed this quarter, multiple customers are using our data for marine domain awareness. Marine domain awareness is a term for monitoring sea-related activities, and it is a fast-growing market. The global maritime surveillance market size is valued at around $20 billion and is expected to grow nearly double digits and reach approximately 40 billion by 2026. This data is being utilized to support both defense and commercial agencies, such as intelligence agencies and agencies monitoring illegal fishing and dock shipping. Marine industry experts have noted that they see a future where all points on the planet are connected at all time. Low-cost tracking devices and continuous coverage is possible, where compliant vessels will be increasingly visible in maritime monitoring systems, causing non-compliant vessels to stand out. As the world becomes a more interconnected place, there is additional interest in monitoring and securing ocean borders and exclusive economic zones. which span approximately 137 million square kilometers across the world and require satellite data to effectively monitor. Beyond marine domain awareness, we are seeing our maritime data being utilized by the broader ecosystem with new customers in industries like trading firms, utility firms, and data intelligence firms with clients that include investors, operators, and government agencies. As we land these new customers and look to expand our business with them, we are encouraged by the continued broad-based demand spanning younger, growing companies taking advantage of the maritime digitalization trend, as well as established Fortune 100 companies. While we are pleased with our continued growth during the first quarter, we are even more proud of our progression towards profitability in this very difficult macro environment. We exceeded our expectations on operating loss, adjusted EBITDA, and loss per share as we continued our pursuit of profitability. This strong execution came against the backdrop of challenging macro headwinds on multiple fronts. We saw near-term disruptions in the launch market with the bankruptcy of a launch provider. We are seeing multiple high-profile bank failures. increasing interest rates, risk appetite sliding to 12-month lows, and tightening lending standards across financial institutions to name just a few. Banking concerns are having an impact and slowing the economic pace. Initial jobless claims have been above expectations. Layoffs in the tech industry are beginning to spread to other industries, and uncertainty over recession continues to be a topic of conversation. According to the Conference Board measure of CEO confidence, CEOs remain cautious at the start of 2023, and 93% of the CEOs surveyed are preparing for a U.S. recession over the next 12 to 18 months. Bayer has not been completely immune from this uncertainty. This macro environment has hampered our ability to upsell and raise prices and has elongated the sales cycle. As a result, we could not raise net retention rate during the quarter, but it still came in at a very healthy 108%, which is higher than the net retention rate in the first quarter of 2022. Even with these macro challenges, we were able to deliver better than expected revenue and bottom line results due to our portfolio of diversified solutions to sell and our operational leverage. Our constellation to support our maritime, aviation, and weather solutions has been fully deployed for a number of years and since then only requires relatively small annual maintenance and replenishment CapEx. We utilize our manufacturing and operations team and all of our ground station assets across all four of our solutions. But beyond this built-in operational leverage, we are continuing to find ways to drive further efficiencies into the business. One area where you can see those results is the improvement in our gross margins, which improved 11 percentage points year-over-year and 5 percentage points quarter-over-quarter. For example, we've seen significant improvements in our satellite checkout and commissioning, or CNC, activities. These are processes we utilize each time we put a satellite in orbit. Once launched to space, the satellite separates from the launch vehicle and we make contact with the satellite. We then proceed through a checkout procedure to ensure the capabilities tested on Earth survived the physical forces of the launch process. By analyzing the behavior of our systems over the past 100 plus satellites, identifying bottlenecks in the CNC process and being deliberate about execution efficiency, we have been able to take advantage of learnings which resulted in process streamlining. Earlier this year, we successfully reduced the CNC time by 50% over the previous deployment. And with our most recent deployment, we have demonstrated the ability to move a satellite through the process five times faster than the previous deployment, and we have plans to accelerate this process even more. This is a particularly timely improvement as we will be deploying more space services satellites later this year. Similarly, we improved our supply chain. While external market forces are providing an uncertain outlook across all sectors, there are many adaptations that SPIRE has undertaken to best mitigate the associated risks while simultaneously improving efficiency in our supply chain. To mitigate the tight capacity everyone is seeing in the market, we have sought out new suppliers and secured capacity with some key suppliers ahead of our manufacturing lead time to ensure that we can flex the supply chain to meet the needs of our customers. We have secured stocks of raw materials and electrical components where we saw a risk in shortages, simultaneously reducing our lead times for these items in the future. We have collaborated extensively with our key suppliers to improve the process time for turning around quotes and orders, as well as using the expertise in the supply base to help us better design our products for more streamlined manufacturing. This helps us get our products into and through the manufacturing process in a faster timeframe, allowing us to deliver products faster while maintaining reliable satellite build performance. Like the improvements we are seeing with leveraging our manufacturing and satellite operation process, we also see improvements in lowering our operating expenses as a percentage of revenue. As we continue to scale the business, we are investing in our employees and upskilling our in-house capabilities. we are leveraging our internal resources and systems and lowered our use of outside consultants. We are seeing lower audit and legal fees. And with our improving business results, we are obtaining lower insurance costs. Again, you can see this in our results as the first quarter 2023 non-GAAP G&A expenses were basically flat year over year, while the revenue grew 34% year over year. Continued improvements across the business like these give us confidence in our ability to reach and sustain profitability and become free cash for positive. While a substantial achievement, becoming profitable is just the first step for us. As we look beyond the point in time SPIRE begins to generate a profit, we have objectives based on our SaaS business model and unique data analytics offerings. It is our objective to achieve average SAS cross margins above 70% in the next two years. And given continued demand for our unique data and analytics, we expect to be able to achieve these margins with substantially less sales and marketing costs as compared with average ratios seen from SAS companies. We expect our operational leverage to continue fueling margin expansion across the board as we pass through breakeven and continue into profitability. Turning now to our technology, we continue to see rapid technology improvements along the curve that has now been in place for decades, and SPIRE continues to benefit from and deliver those improvements. We have been able to demonstrate the geolocation of global navigation satellite system jammers, or GNSS jammers, with a single satellite, by devising a detection solution utilizing our constellation scale and high revisit rate. Traditionally, these geolocation activities have been accomplished with a cluster of satellites at a higher cost. We are one of the only companies that can offer our GNSS detection solutions at scale for commercial entities like airports, civil agencies responsible for weather data, or the U.S. government or other sovereign defense entities truly benefiting global security. Additionally, we have successfully completed a demonstration to detect and geolocate L-band emitters utilizing adapted existing 3U satellites. These L-band frequencies are typically associated with handheld satellite phones, well known for their use in nefarious activities such as piracy. This demonstration is notable for the use of existing satellites, along with minimal non-recurring engineering activities that spend only a few months, in addition to the utilization of only two satellites to geolocate, which makes it a very cost-effective method. The demonstration validates the ability to geolocate these objects without the need for much costlier clusters of satellites. Finally, we have been able to demonstrate that we can run ground-based geolocation algorithms in space on SPIRE hardware and get equivalent results for single-satellite ARS geolocation. This is another step in our continuing journey to process the data on the satellites, which allows us to transmit less data to our ground station, in turn providing faster insights. Before I hand it over to Tom, I want to recap a few of the metrics from the first quarter. This is our seventh quarter in a row reporting steady revenue growth as a public company. During those seven quarters, we demonstrated a strong trend towards profitability. The first quarter of 2023 was no exception and furthers those trends. With an outstanding and reliable team in place, SPIRE exceeded expectations and reported record revenue in the first quarter. We also exceeded expectations and reported our lowest loss from operations in those seven quarters. We reported the best operating margin of those seven quarters. And we exceeded expectations and reported our best adjusted EBITDA and EBITDA margin in the timeframe. the first quarter was yet another quarter of relentless execution. I could not be more excited about SPIRE's future as we continue penetrating our growing and global markets and convert our top-line growth into bottom-line profitability and our growing impact on making the world a more safe, sustainable, and prosperous place for all. And with that, I'll turn it over to Tom.

Thanks, Peter. We had a strong first quarter of execution with revenue, non-GAAP operating loss, adjusted EBITDA, non-GAAP loss per share, and AR solution customers all coming in above the high end of our guidance. Our results also provided another successful quarter of methodically progressing on our trajectory towards profitability. Q1 revenue increased 34% year-over-year to $24.2 million, once again hitting a quarterly record and exceeding the high end of our guidance. ARR at quarter end was 104.8 million, up 28% year-over-year and within our guidance range. We finished the quarter above guidance with 781 ARR solution customers, a 25% increase year-over-year, and a net add of 48 customers quarter-over-quarter. Our Q1 ARR net retention rate was 108%, up from 106% in the year-ago quarter. The rolling 12-month organic ARR net retention rate was 116%, essentially flat from last quarter's rolling 12-month organic ARR net retention rate of 117%. These trends continue to represent a healthy mix of landing a large amount of new customers while expanding with our existing customer base. Now I'll be discussing non-GAAP financial measures, unless otherwise stated. We provided a reconciliation of GAAP to non-GAAP financials in our earnings release that should be reviewed in conjunction with this earnings call. Driven by exceeding our Q1 revenue expectations, our leveraged business model across four solutions, and high asset utilization, our Q1 operating loss came in better than guidance at $9.8 million, an improvement of $3 million year over year, and an improvement of over $400,000 quarter over quarter. Total adjusted EBITDA for the first quarter came in better than guidance at negative $6.7 million. a $3 million or 31% improvement from negative $9.7 million in the same period a year ago. We ended the quarter with cash, cash equivalents, restricted cash, and short-term marketable securities of $73 million, up $2.3 million quarter over quarter. We utilized $15.9 million of free cash flow in the quarter, which was a $3.3 million reduction year over year. As expected, this recent increase in cash usage was due to timing of paying our annual compensation and a one-time transaction. Given the significant improvement in cash utilization over the past few quarters, along with receiving nearly $20 million of cash from the existing credit facility in February, we are feeling comfortable with our balance sheet. We remain on track with our objective of generating positive free cash flow in 10 to 16 months and achieving adjusted EBITDA profitability right before that. Now turning to our outlook for the second quarter and the full fiscal year 2023. For the second quarter, we expect revenue to range between $24 million and $25 million. We expect to finish Q2 with ARR ranging between $112.5 million and $113.5 million, which represents a 32% year-over-year growth rate at the midpoint, and our ARR solution customers to finish between $800 and $810. We anticipate Q2 non-GAAP operating loss to range between $9.8 million and $8.8 million, which is roughly an $800,000 improvement year-over-year at the midpoint and roughly a $500,000 improvement quarter-over-quarter at the midpoint. The improvement in projected non-GAAP operating loss reflects further leverage of our headcount and infrastructure across our four solutions on our path to profitability. Adjusted EBITDA for Q2 is expected to range from negative 6.4 to negative 5.4 million, and we expect our non-GAAP loss per share for Q2 to range from negative 10 cents to negative 9 cents, which assumes a basic weighted average share count of approximately 146.7 million shares. Our full-year guidance remains unchanged from what we previously provided on March 8, 2023, As a reminder, we expect full fiscal year revenue to range from $104 million to $109 million, which represents a year-over-year growth of 33% at the midpoint. We expect to finish the year with ARR ranging from $129 million to $135 million, which also represents a year-over-year growth of 33% at the midpoint. We anticipate full-year ARR solution customers to end at $835 to $885. Non-GAAP operating loss for the fiscal year is projected to range between $34 million and $29 million, a $13 million year-over-year improvement at the midpoint. For the full fiscal year, we expect adjusted EBITDA to range from negative 19 million to negative 14 million, and we expect our non-GAAP loss per share to range from negative 36 cents to negative 33 cents, which assumes a basic weighted average share count of approximately 148 million shares. First quarter results exceeded our expectations and leave Spire well positioned to deliver on our full year financial projections. We remain focused on execution, delivering customer success, and improving margins with scale and leverage. Thanks for joining us today. Now I'd like to open up the call for questions.

Thank you. At this time we will be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from the line of Austin Weller with Canaccord Genuity. Please proceed with your questions.