AST SpaceMobile, Inc. (ASTS) Q2 2025 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call summary reflects a positive outlook with strong financial performance, new government contracts, and strategic partnerships with major companies like AT&T and Verizon. The Q&A section revealed optimism about government growth opportunities and spectrum utilization, with management providing satisfactory answers to most concerns. Although there were some unclear responses, the overall sentiment remains positive due to the potential for revenue growth and strategic expansions. Considering the market cap, the stock is likely to experience a positive movement in the range of 2% to 8% over the next two weeks.

Key Financial Performance

Non-GAAP adjusted operating expenses $51.7 million in Q2 2025, a $6.8 million increase year-over-year. The increase was due to a $5.5 million rise in adjusted general and administrative costs and a $2.1 million increase in adjusted engineering services costs, partially offset by an $800,000 reduction in R&D costs. The rise was attributed to large transaction expenses, including the Ligado L-Band spectrum transaction and work on the joint venture with Vodafone.

Capital expenditures $323 million in Q2 2025, up from $124 million in Q1 2025. This increase was driven by $298 million in capitalized direct materials and labor for Block 2 BlueBird satellites and payments for multiple launch contracts, as well as facility and production equipment expenditures. The rise was also influenced by early procurement of satellite materials and a $25 million launch payment made earlier than planned.

Gateway equipment bookings $14.9 million in Q2 2025, showing a sequential increase. This was driven by the accelerated deployment of global network infrastructure.

Revenue from U.S. government contracts Revenue was recognized on 4 milestones related to U.S. government contracts in Q2 2025. Additionally, 2 new early-stage contracts were won, bringing the total to 8 contracts to date. The increase in revenue reflects growing interest from the U.S. Department of Defense for AST SpaceMobile's satellite technology.

Cash, cash equivalents, and restricted cash Over $1.5 billion as of June 30, 2025, on a pro forma basis. This increase was driven by $397 million net proceeds from ATM facilities, $25 million from the Trinity Capital equipment loan, and $360 million in debt equitization transactions.

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Operating Highlights

BlueBird Block 2 satellites: Completed assembly of microns and phase arrays for eight Block 2 BlueBird satellites, with plans to complete 40 satellite equivalents by early 2026. Manufacturing cadence of six satellites per month during 2025.

Satellite capabilities: Block 2 BlueBirds are 3.5x larger with 10x capacity compared to Block 1. They enable broader cellular coverage, lower latency, and better signal quality.

Global manufacturing footprint: Over 400,000 square feet of manufacturing space and a workforce of over 1,200 globally.

Market expansion: Preparing for nationwide interim service in the U.S. by the end of 2025, followed by the UK, Japan, and Canada in Q1 2026.

Partnerships: Agreements with over 50 MNO partners globally, representing nearly 3 billion subscribers. Recent agreement with Vodafone Idea in India and progress in Europe with Vodafone joint venture.

Spectrum acquisition: Acquired 60 MHz of global S-Band spectrum priority rights, enhancing global service capabilities.

Manufacturing efficiency: 95% vertical integration in satellite manufacturing, enabling cost and production efficiency.

Launch cadence: Plans for at least five orbital launches by Q1 2026, with launches every 1-2 months to achieve 45-60 satellite launches during 2025-2026.

Revenue growth: Expected revenue of $50-$75 million in the second half of 2025, driven by gateway sales, government contracts, and service activations.

Government contracts: Secured eight contracts with the U.S. government, with plans to expand organizational capabilities for government business.

Financial strategy: Over $1.5 billion in cash, supported by convertible notes and ATM facilities. Reduced outstanding debt and pursuing non-dilutive financing options.

Spectrum strategy: Utilizing MNOs' low-band spectrum while complementing with proprietary spectrum to create a competitive advantage.

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Risk or Challenges

Regulatory hurdles: The company faces challenges in obtaining country-level regulatory approvals for its spectrum rights, which are critical for global service deployment.

Capital expenditures: Significant capital expenditures are required to support manufacturing and launch objectives, with costs influenced by geopolitical factors and potential tariff volatility.

Revenue dependency on satellite deployment: Revenue opportunities are closely tied to the successful launch and deployment of Block 2 BlueBird satellites, which are subject to various contingencies and risks.

Supply chain risks: Procurement of satellite materials is impacted by an increasingly volatile tariff environment, which could disrupt manufacturing schedules and increase costs.

Government contract dependencies: Revenue from U.S. government contracts is contingent on achieving specific milestones, and delays or failures could impact financial performance.

Competitive pressures: The company faces competition from other satellite systems that require tens of thousands of satellites, although AST SpaceMobile claims technological superiority.

Operational scalability: Achieving manufacturing cadence and scaling operations to meet launch objectives is critical, with risks tied to workforce and facility expansion.

Debt management: The company has reduced its outstanding debt but still faces risks related to its convertible notes and reliance on non-dilutive financing options.

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Guidance & Outlook

Satellite Manufacturing and Deployment: The company plans to complete the assembly of approximately 40 satellites by early 2026 and achieve a manufacturing cadence of six satellites per month during 2025. They anticipate at least five orbital launches by the end of Q1 2026, with a total of 45 to 60 satellite launches during 2025 and 2026 to achieve continuous coverage in key markets and approximately 90 satellites for global coverage.

Commercial Service Rollout: AST SpaceMobile aims to deploy nationwide interim service in the United States by the end of 2025, followed by the United Kingdom, Japan, and Canada in Q1 2026. The company is preparing for commercial service activations in key partner markets.

Revenue Projections: The company expects revenue in the range of $50 million to $75 million in the second half of 2025, contingent on successful satellite launches, gateway equipment sales, and service activations.

Government Contracts and Revenue: AST SpaceMobile anticipates significant revenue growth from U.S. government contracts in the coming quarters, with a robust pipeline of opportunities and plans to expand organizational capabilities to serve the U.S. government.

Spectrum Strategy: The company has acquired 60 MHz of global S-Band spectrum priority rights and plans to complement this with L-Band spectrum in the U.S. and Canada. This strategy aims to enhance subscriber capacity and support global deployment.

Capital Expenditures and Financial Position: Capital expenditures for Q3 2025 are expected to range between $225 million and $300 million. The company estimates the average cost per satellite to be $21 million to $23 million and has over $1.5 billion in cash to support its operational plans.

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Shareholder Return Plan

The selected topic was not discussed during the call.

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Key Q&A

Q:Given the current launch cadence and near-term goals, is your current funding runway sufficient to reach initial commercial revenue or do you foresee additional capital needs?

A:Management stated that their balance sheet, combined with near-term government and commercial inflows, is sufficient to achieve their strategy. They are fully funded to reach 45-60 satellites, with a pro forma balance sheet of over $1.5 billion. Future capital strategy will focus on commercial and strategic development rather than threshold business delivery needs.

Q:Investors are confused about the recent achievement of a first-ever native voice call VoLTE and text SMS. How does this differ between the voice, video, text achievements that you achieved in the past?

A:Management explained that the recent achievement involved native calling directly from the phone's dialer into space using the operator's core infrastructure, without requiring apps or modifications to the phone. Previous achievements used partner spectrums and technology, while this milestone demonstrated full integration with operator infrastructure.

Q:Any further barriers to the Ligado transaction formally closing?

A:Management stated that the court approved the definitive documents and the transaction has closed. They are working on bridge financing ahead of FCC approval and expect initial filings in the coming months. They also highlighted the strategic importance of combining L-Band, S-Band, and low-band spectrum for global access.

Q:What is your current monthly production rate for Block 2 satellites, micron phased arrays, and control stats? And what will it take to ramp up to 6 satellites per month?

A:Management reported they are close to achieving a production rate of 6 satellites per month, with one launch every 45-60 days. They have 9 satellites ready, 5 already in orbit, and aim to build 40 phased arrays by the end of the year. They have expanded their manufacturing facility to 400,000 square feet and have over 1,200 employees working on the program.

Q:Can you comment further on the revenue share agreements and the economics there with the MNO partners?

A:Management emphasized the 50-50 revenue share model, where the company provides the network and the operator provides the spectrum and customer base. They noted that spectrum is valuable and their contracts with over 50 operators adhere to this model.

Q:With the addition of the spectrum, is there any way you can further translate the 120 megabits per second peak data rate per cell to real-world examples of concurrent users?

A:Management explained that the 120 Mbps peak data rate per cell is shared among users within a 12 km radius. The number of users depends on cell density and capacity is managed dynamically. They aim to combine low-band and mid-band spectrum to enhance global capacity.

Q:Regarding the launch cadence, is there a chance to see a batch launch of Blockbird BlueBird 2 satellites ahead of the ISRO launch within the next couple of months?

A:Management stated that this is not the plan. The satellite is ready to ship, and discussions are ongoing with ISRO regarding the exact launch date. They have six launches planned with multiple vendors and partners.

Q:Can you help us better understand the types of use cases you're targeting in the government space and the advantages your tech offers?

A:Management highlighted both communications and non-communications applications for the government. They are under contract with eight programs and noted that their technology offers unique advantages in size, power, and cost. They see significant growth opportunities in the government sector.

Q:Now that you have global coverage, should we view this spectrum as being all that you need? Or could we see you purchase other licenses here going forward?

A:Management believes the current spectrum is sufficient to provide 120 Mbps globally. They do not rule out future opportunities but are focused on their current plans.

Q:Is the timing of the FM1 launch on the critical path for other launches?

A:Management stated that the timing of the FM1 launch is not critical for other launches. They are treating launches separately and have a plan for non-continuous service deployment.

Q:What would a nationwide intermittent service look like? Would you charge for it or use it as an early promotion vehicle?

A:Management plans to coordinate with telco partners on the deployment of intermittent service. They noted that the government is already using the satellites on an intermittent basis.

Q:How should we think about AST's ability to get spectrum cheaper because you have the tech partners to use it better?

A:Management explained that their technology enables dual use of satellite and terrestrial spectrum, creating significant value. They believe their ability to reuse spectrum makes it more affordable and valuable.

Q:Can you comment on the timeline for government program awards and the factors that make AST competitive?

A:Management expects awards potentially this year and noted that their technology's size, power, and cost advantages make them competitive. They see multiple program opportunities with significant budgets.

Q:On the latest purchase of the S-Band spectrum, can you give more color on its current use and your confidence in utilizing it?

A:Management stated that the S-Band spectrum has limited current use and is reserved for space usage. They are confident in utilizing it and plan to secure country-by-country approvals.

Q:What is the history of the S-Band spectrum and is it being used terrestrially in any locations?

A:Management noted that the S-Band spectrum has some history of use in the U.S. and Europe but is largely reserved for space usage in other markets. They see significant opportunities for its use globally.

Q:How do you plan to use intermittent service as a segue to full 24-hour service?

A:Management plans to coordinate with telco partners and noted that the government is already using the satellites intermittently. They aim to rapidly increase persistence as more satellites are launched.

Q:Where does IoT fit into the carrier partner timeline and landscape?

A:Management views IoT as a smaller market compared to broadband and government opportunities. They plan to enable IoT in addition to consumer broadband capabilities.

Q:On the Ligado transaction, is the cost primarily asset-backed or financed?

A:Management confirmed that the $500 million cost is primarily asset-backed and financed through SPV financing. They are working on bridge financing ahead of FCC approval.

Q:Are the government requirements for orbit and inclination complementary to what you're doing commercially?

A:Management could not comment on specific requirements but noted that dual usage of satellites is a significant interest.

Q:Were government capabilities designed into the original satellites or added later?

A:Management stated that government capabilities were incorporated into the satellites 1.5 years ago and are already in use.

Q:Review of Unclear Management Responses

A:Management avoided providing specific details on the revenue share model when services are bundled for free by telco partners. They also did not provide a clear timeline for S-Band spectrum approvals or specific government program awards.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

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The earnings call summary and Q&A session reveal strong financial performance, optimistic guidance, and strategic partnerships. The company is on track with satellite deployment, has raised substantial capital for expansion, and expects significant revenue growth. The positive sentiment from analysts and management's confidence in achieving timelines and securing government contracts further supports a positive outlook for the stock price.

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The earnings call reflects several concerns: EPS missed expectations, higher operating expenses, and increased capital expenditures. The company's revenue projections are heavily reliant on successful satellite launches and government contracts, which are uncertain. Additionally, the Q&A highlighted cost challenges and management's unclear responses on cost mitigation strategies. Despite a strong cash position, the competitive market and economic factors pose significant risks. Given the market cap, these factors suggest a negative stock price movement of -2% to -8% over the next two weeks.

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