AST SpaceMobile Provides Business Update and First Quarter 2024 Results

Rhea-AI Summary

AST SpaceMobile (NASDAQ: ASTS) released its Q1 2024 results and business update. The company is set to launch its first five commercial satellites by July or August 2024, enabling nationwide non-continuous service in the U.S. with over 5,600 cells in premium low-band spectrum. They signed a 6-year agreement with AT&T for SpaceMobile services and are working with the FCC and other partners.

Financially, ASTS reported $212.4 million in cash and equivalents and an additional $51.5 million in liquidity from a secured credit facility. Q1 operating expenses were $56.0 million, down from $60.9 million in Q4 2023. Adjusted operating expenses were $31.1 million, down from $38.6 million in the previous quarter.

Capital expenditures included $326.4 million in property and equipment costs. They incurred $81.1 million in accumulated depreciation and amortization.

Positive

• Launch of 5 Block 1 satellites scheduled for July or August 2024.
• Signed a 6-year commercial agreement with AT&T for SpaceMobile services.
• U.S. nationwide non-continuous service enabled with over 5,600 cells in premium low-band spectrum.
• $212.4 million in cash, cash equivalents, and restricted cash.
• $51.5 million additional liquidity available under a Senior Secured Credit Facility.
• Q1 2024 adjusted operating expenses of $31.1 million, down from $38.6 million in Q4 2023.
• Total operating expenses decreased by $4.9 million compared to Q4 2023.
• Advancing discussions with government regulatory bodies, including the FCC.

Negative

• Total operating expenses for Q1 2024 were $56.0 million.
• Increased general and administrative costs by $1.7 million compared to Q4 2023.
• $81.1 million in accumulated depreciation and amortization.
• Subject to certain conditions and approvals for additional liquidity from the credit facility.

Insights

Financial Analyst

Financial Performance: AST SpaceMobile's first-quarter financial results show a significant decrease in operating expenses to $31.1 million compared to $38.6 million in the previous quarter. This reduction is primarily driven by decreased R&D costs, highlighting a strategic shift to control expenses. However, the increase in general and administrative costs by $1.7 million suggests rising operational complexities as the company edges closer to commercial deployment.

Liquidity Position: The company holds $212.4 million in cash and equivalents, with an additional $51.5 million available under its credit facility. While this provides a reasonable buffer for upcoming expenditures, the substantial capitalized costs of $326.4 million indicate high ongoing investments. Investors should be aware of the potential cash burn rate, especially given the capital-intensive nature of the satellite industry.

Revenue Prospects: The signing of a 6-year definitive commercial agreement with AT&T is a positive indicator of future revenue streams. This partnership is expected to provide a stable and recurring revenue base, which is important for AST SpaceMobile's financial stability.

Market Research Analyst

Market Position and Strategic Partnerships: AST SpaceMobile's unique network aims to offer cellular broadband directly to smartphones via space-based satellites. This technology holds disruptive potential in both commercial and government applications. The partnership with AT&T not only validates the commercial viability of their technology but also sets a precedent for future strategic partnerships.

Regulatory Environment: Advancements in regulatory discussions, particularly with the FCC, are encouraging. Regulatory approval is a critical hurdle for any satellite-based service. Progress in this area bodes well for the timely deployment and operational scaling of their service.

Competitive Landscape: While AST SpaceMobile has a first-mover advantage, the market is highly competitive, with players like SpaceX's Starlink also vying for dominance in the satellite internet space. Investors should monitor how AST SpaceMobile differentiates itself and its partnership strategy to maintain its competitive edge.

MIDLAND, Texas--(BUSINESS WIRE)-- AST SpaceMobile, Inc. (“AST SpaceMobile”) (NASDAQ: ASTS), the company building the first and only space-based cellular broadband network accessible directly by everyday smartphones, and designed for both commercial and government applications, is providing its business update for the three months ended March 31, 2024.

“I am grateful for our global team's unwavering dedication and hard work as we prepare for the launch of our first five commercial satellites and initial commercial service," said Abel Avellan, Chairman and CEO of AST SpaceMobile. "We are set up for an exciting summer ahead as we push forward on all fronts of our business.”

Business Update

• On target for July or August delivery of 5 Block 1 satellites to Cape Canaveral
• Signed milestone, 6-year definitive commercial agreement with AT&T for SpaceMobile Service
• First 5 satellites allow U.S. nationwide non-continuous service with 5,600+ cells in premium low-band spectrum
• Activities and discussions with government regulatory bodies, including FCC, are advancing as expected
• Continue to advance discussions with additional strategic partners, following the blueprint of commercial payments alongside commercial agreements

First Quarter 2024 Financial Highlights

• As of March 31, 2024, we had cash, cash equivalents, and restricted cash of $212.4 million. We have additional liquidity of $51.5 million in gross proceeds available to draw under the Senior Secured Credit Facility, subject to certain conditions and approvals
• Total operating expenses for the first quarter of 2024 were $56.0 million, including $24.9 million of depreciation and amortization and stock-based compensation expense. This represents a decrease of $4.9 million as compared to $60.9 million in the fourth quarter of 2023, due to a $6.5 million decrease in research and development costs and a $0.5 million decrease in engineering services costs, offset by a $1.7 million increase in general and administrative costs and a $0.4 million increase in depreciation and amortization expense
• Total Adjusted operating expenses for the first quarter of 2024 were $31.1 million, a decrease of $7.5 million as compared to $38.6 million in the fourth quarter of 2023, due to a $6.5 million decrease in research and development costs, a $0.6 million decrease in Adjusted engineering services costs and a $0.4 million decrease in Adjusted general and administrative costs⁽¹⁾
• As of March 31, 2024, we have incurred approximately $326.4 million of gross capitalized property and equipment costs and accumulated depreciation and amortization of $81.1 million. The capitalized costs include costs of satellite materials for BlueBird satellites, advance launch payments, BlueWalker 3 satellite, assembly and integration facilities including assembly and test equipment, and ground antennas

(1) See reconciliation of Adjusted operating expenses to Total operating expenses, Adjusted engineering services costs to Engineering services costs and Adjusted general and administrative costs to General and administrative costs in the tables accompanying this press release.

Non-GAAP Financial Measures

We refer to certain non-GAAP financial measures in this press release, including Adjusted operating expenses, Adjusted engineering services costs and Adjusted general and administrative costs. We believe these non-GAAP financial measures are useful measures across time in evaluating our operating performance as we use these measures to manage the business, including in preparing our annual operating budget and financial projections. These non-GAAP financial measures that have no standardized meaning prescribed by U.S. GAAP, and therefore have limits in their usefulness to investors. Because of the non-standardized definitions, these measures may not be comparable to the calculation of similar measures of other companies and are presented solely to provide investors with useful information to more fully understand how management assesses performance. These measures are not, and should not be viewed as, a substitute for their most directly comparable GAAP measures. Reconciliation of non-GAAP financial measures and the most directly comparable GAAP financial measures are included in the tables accompanying this press release.

Conference Call Information

AST SpaceMobile will hold a quarterly business update conference call at 5:00 p.m. (Eastern Time) on Wednesday, May 15, 2024. The call will be accessible via a live webcast on the Events page of AST SpaceMobile’s Investor Relations website at https://ast-science.com/investors/. An archive of the webcast will be available shortly after the call.

About AST SpaceMobile

AST SpaceMobile is building the first and only global cellular broadband network in space to operate directly with standard, unmodified mobile devices based on our extensive IP and patent portfolio, and designed for both commercial and government applications. Our engineers and space scientists are on a mission to eliminate the connectivity gaps faced by today’s five billion mobile subscribers and finally bring broadband to the billions who remain unconnected. For more information, follow AST SpaceMobile on YouTube, X (Formerly Twitter), LinkedIn and Facebook. Watch this video for an overview of the SpaceMobile mission.

Forward-Looking Statements

This communication contains “forward-looking statements” that are not historical facts, and involve risks and uncertainties that could cause actual results of AST SpaceMobile to differ materially from those expected and projected. These forward-looking statements can be identified by the use of forward-looking terminology, including the words “believes,” “estimates,” “anticipates,” “expects,” “intends,” “plans,” “may,” “will,” “would,” “potential,” “projects,” “predicts,” “continue,” or “should,” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results. Most of these factors are outside AST SpaceMobile’s control and are difficult to predict.

Factors that may cause such differences include, but are not limited to: (i) expectations regarding AST SpaceMobile’s strategies and future financial performance, including AST’s future business plans or objectives, expected functionality of the SpaceMobile Service, anticipated timing of the launch of the Block 1 Bluebird satellites, anticipated demand and acceptance of mobile satellite services, prospective performance and commercial opportunities and competitors, the timing of obtaining regulatory approvals, ability to finance its research and development activities, commercial partnership acquisition and retention, products and services, pricing, marketing plans, operating expenses, market trends, revenues, liquidity, cash flows and uses of cash, capital expenditures, and AST’s ability to invest in growth initiatives; (ii) the negotiation of definitive agreements with mobile network operators relating to the SpaceMobile service that would supersede preliminary agreements and memoranda of understanding and the ability to enter into commercial agreements with other parties or government entities; (iii) the ability of AST SpaceMobile to grow and manage growth profitably and retain its key employees and AST SpaceMobile’s responses to actions of its competitors and its ability to effectively compete; (iv) changes in applicable laws or regulations; (v) the possibility that AST SpaceMobile may be adversely affected by other economic, business, and/or competitive factors; (vi) the outcome of any legal proceedings that may be instituted against AST SpaceMobile; and (vii) other risks and uncertainties indicated in the Company’s filings with the SEC, including those in the Risk Factors section of AST SpaceMobile’s Form 10-K filed with the SEC on April 1, 2024.

AST SpaceMobile cautions that the foregoing list of factors is not exclusive. AST SpaceMobile cautions readers not to place undue reliance upon any forward-looking statements, which speak only as of the date made. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors incorporated by reference into AST SpaceMobile’s Form 10-K filed with the SEC on April 1, 2024. AST SpaceMobile’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, AST SpaceMobile disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

First Quarter Financial Results

AST SPACEMOBILE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Dollars in thousands, except share data)
		March 31, 2024				December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents		$	209,973			$	85,622
Restricted cash			2,467				2,475
Prepaid expenses			5,033				4,591
Other current assets			22,036				14,194
Total current assets			239,509				106,882
Non-current assets:
Property and equipment, net			245,284				238,478
Operating lease right-of-use assets, net			12,796				13,221
Other non-current assets			4,139				2,311
TOTAL ASSETS		$	501,728			$	360,892
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	14,528			$	20,575
Accrued expenses and other current liabilities			15,593				23,926
Current operating lease liabilities			1,505				1,468
Current portion of long-term debt			255				252
Total current liabilities			31,881				46,221
Non-current liabilities:
Warrant liabilities			11,746				29,960
Non-current operating lease liabilities			11,429				11,900
Long-term debt, net			160,827				59,252
Total liabilities			215,883				147,333
Commitments and contingencies
Stockholders' Equity:
Class A Common Stock, $.0001 par value; 800,000,000 shares authorized; 138,153,310 and 90,161,309 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively.			14				9
Class B Common Stock, $.0001 par value; 200,000,000 shares authorized; 39,747,447 and 50,041,757 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively.			4				5
Class C Common Stock, $.0001 par value; 125,000,000 shares authorized; 78,163,078 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively.			8				8
Additional paid-in capital			373,773				288,404
Accumulated other comprehensive income			121				227
Accumulated deficit			(209,392	)			(189,662	)
Noncontrolling interest			121,317				114,568
Total stockholders' equity			285,845				213,559
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	501,728			$	360,892

AST SPACEMOBILE, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (Dollars in thousands, except share and per share data)
		For the Three Months ended March 31,
		2024				2023
Revenues		$	500			$	-
Operating expenses:
Engineering services costs			19,511				16,483
General and administrative costs			12,287				9,857
Research and development costs			4,257				16,381
Depreciation and amortization			19,945				1,733
Total operating expenses			56,000				44,454
Other income (expense):
Gain on remeasurement of warrant liabilities			18,214				7,498
Interest (expense) income, net			(2,222	)			2,093
Other (expense) income, net			(2	)			(10,237	)
Total other income (expense), net			15,990				(646	)
Loss before income tax expense			(39,510	)			(45,100	)
Income tax expense			(294	)			(116	)
Net loss before allocation to noncontrolling interest			(39,804	)			(45,216	)
Net loss attributable to noncontrolling interest			(20,074	)			(28,898	)
Net loss attributable to common stockholders		$	(19,730	)		$	(16,318	)
Net loss per share attributable to holders of Class A Common Stock
Basic and diluted		$	(0.16	)		$	(0.23	)
Weighted-average shares of Class A Common Stock outstanding
Basic and diluted			121,447,138				71,845,206

AST SPACEMOBILE, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED) (Dollars in thousands)
		For the Three Months ended March 31,
		2024				2023
Net loss before allocation to noncontrolling interest		$	(39,804	)		$	(45,216	)
Other comprehensive loss
Foreign currency translation adjustments			(216	)			(128	)
Total other comprehensive loss			(216	)			(128	)
Total comprehensive loss before allocation to noncontrolling interest			(40,020	)			(45,344	)
Comprehensive loss attributable to noncontrolling interest			(20,184	)			(28,980	)
Comprehensive loss attributable to common stockholders		$	(19,836	)		$	(16,364	)

AST SPACEMOBILE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Dollars in thousands)
			For the Three Months ended March 31,
			2024				2023
Cash flows from operating activities:
Net loss before allocation to noncontrolling interest			$	(39,804	)		$	(45,216	)
Adjustments to reconcile net loss before noncontrolling interest to cash used in operating activities:
Depreciation and amortization				19,945				1,733
Gain on remeasurement of warrant liabilities				(18,214	)			(7,498	)
Amortization of debt issuance costs				900				-
Stock-based compensation				4,933				2,474
Changes in operating assets and liabilities:				-				-
Prepaid expenses and other current assets				(8,306	)			(12,168	)
Accounts payable and accrued expenses				(8,396	)			5,553
Operating lease right-of-use assets and operating lease liabilities				(8	)			6
Other assets and liabilities				828				17,383
Net cash used in operating activities				(48,122	)			(37,733	)
Cash flows from investing activities:
Purchase of property and equipment and advance launch payments				(39,568	)			(15,388	)
Net cash used in investing activities				(39,568	)			(15,388	)
Cash flows from financing activities:
Proceeds from debt				110,000				-
Repayments of debt				(62	)			(60	)
Payment for debt issuance costs				(5,162	)			-
Proceeds from issuance of common stock, net of issuance costs				107,718				-
Issuance of equity under employee stock plan				-				96
Employee taxes paid for stock-based compensation awards				(314	)			-
Net cash provided by financing activities				212,180				36
Effect of exchange rate changes on cash, cash equivalents and restricted cash				(147	)			(475	)
Net increase (decrease) in cash, cash equivalents and restricted cash				124,343				(53,560	)
Cash, cash equivalents and restricted cash, beginning of period				88,097				239,256
Cash, cash equivalents and restricted cash, end of period			$	212,440			$	185,696
Supplemental disclosure of cash flow information:
Non-cash transactions:
Purchases of property and equipment in accounts payable and accrued expenses			$	5,734			$	4,077
Right-of-use assets obtained in exchange for operating lease liabilities				-				5,507
Cash paid for:
Interest			$	2,205			$	52
Income taxes, net				710				282

AST SPACEMOBILE, INC. RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED MEASURES (UNAUDITED) (Dollars in thousands)
		For the Three Months Ended March 31, 2024
		GAAP Reported				Stock-Based Compensation Expense				Adjusted
Engineering services costs		$	19,511			$	(1,607	)		$	17,904
General and administrative costs			12,287				(3,326	)			8,961
Research and development costs			4,257								4,257
Depreciation and amortization			19,945								19,945
Total operating expenses		$	56,000			$	(4,933	)		$	51,067
Less: Depreciation and amortization											(19,945	)
Adjusted operating expenses										$	31,122

		For the Three Months Ended December 31, 2023
		GAAP Reported				Stock-Based Compensation Expense				Adjusted
Engineering services costs		$	19,992			$	(1,475	)		$	18,517
General and administrative costs			10,528				(1,219	)			9,309
Research and development costs			10,766								10,766
Depreciation and amortization			19,592								19,592
Total operating expenses		$	60,878			$	(2,694	)		$	58,184
Less: Depreciation and amortization											(19,592	)
Adjusted operating expenses										$	38,592

Adjusted operating expenses, Adjusted engineering services costs and Adjusted general and administrative costs are alternative financial measures used by management to evaluate our operating performance as a supplement to our most directly comparable U.S. GAAP financial measure. We define Adjusted operating expense as Total operating expenses adjusted to exclude amounts of stock-based compensation expense and depreciation and amortization expense and define Adjusted engineering services costs and Adjusted general and administrative costs as engineering services costs and general and administrative costs adjusted to exclude stock-based compensation expenses.

We believe Adjusted operating expenses, Adjusted engineering services costs and Adjusted general and administrative costs are useful measures across time in evaluating our operating performance as we use these measures to manage the business, including in preparing our annual operating budget and financial projections. Adjusted operating expenses, Adjusted engineering services costs, and Adjusted general and administrative costs are non-GAAP financial measures that have no standardized meaning prescribed by U.S. GAAP, and therefore have limits in their usefulness to investors. Because of the non-standardized definitions, these measures may not be comparable to the calculation of similar measures of other companies and are presented solely to provide investors with useful information to more fully understand how management assesses performance. These measures are not, and should not be viewed as, a substitute for their most directly comparable GAAP measure of Total operating expenses, Engineering services costs and General and administrative costs.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240515962345/en/

Investor Contact:

Scott Wisniewski

investors@ast-science.com

Media Contact:

Allison

Eva Murphy Ryan

917-547-7289

ASTSpaceMobile@allisonpr.com

Source: AST SpaceMobile, Inc.

FAQ

When is AST SpaceMobile launching its first five commercial satellites?

AST SpaceMobile plans to launch its first five commercial satellites by July or August 2024.

What is the new agreement between AST SpaceMobile and AT&T?

AST SpaceMobile signed a 6-year commercial agreement with AT&T for SpaceMobile services.

How much cash does AST SpaceMobile have as of Q1 2024?

As of Q1 2024, AST SpaceMobile reported $212.4 million in cash, cash equivalents, and restricted cash.

What were AST SpaceMobile's operating expenses for Q1 2024?

AST SpaceMobile's total operating expenses for Q1 2024 were $56.0 million.

What is the status of AST SpaceMobile's regulatory discussions?

AST SpaceMobile is advancing discussions with government regulatory bodies, including the FCC.