AST SpaceMobile Provides Business Update and Second Quarter 2024 Results

Rhea-AI Summary

AST SpaceMobile (NASDAQ: ASTS) provided a business update for Q2 2024. Key highlights include:

1. First 5 commercial satellites ready for launch in September 2024.
2. Secured FCC approval for initial satellite launch.
3. Verizon joined as a strategic investor with a $100 million commitment.
4. Expanded U.S. Government relationship with successful initial tests.
5. Q2 2024 cash position: $287.6 million.
6. Q2 2024 total operating expenses: $63.9 million.
7. Adjusted operating expenses: $34.6 million.
8. Gross capitalized property and equipment costs: $347.5 million.

The company is progressing towards its goal of providing space-based cellular broadband connectivity, with partnerships including AT&T, Google, Verizon, Vodafone, and Rakuten.

Positive

• First 5 commercial satellites ready for launch in September 2024
• Secured FCC approval for initial satellite launch
• Verizon joined as strategic investor with $100 million commitment
• Expanded U.S. Government relationship with successful initial tests
• Strong cash position of $287.6 million as of June 30, 2024
• AST5000 ASIC chip development completed, expected to improve satellite processing bandwidth by up to 10x

Negative

• Total operating expenses increased to $63.9 million in Q2 2024, up from $56.0 million in Q1 2024
• Adjusted operating expenses increased to $34.6 million in Q2 2024, up from $31.1 million in Q1 2024

Insights

Financial Analyst

AST SpaceMobile's Q2 2024 results reveal significant progress towards commercialization, but with increased operating expenses. The company's cash position of $287.6 million, plus $51.5 million available credit, provides a solid financial foundation. However, total operating expenses rose to $63.9 million, up $7.9 million from Q1. This increase, primarily in G&A and engineering costs, reflects the company's scaling efforts but could pressure profitability in the near term.

The strategic investment from Verizon, totaling $100 million, is a significant vote of confidence and provides additional liquidity. The $65 million in commercial prepayments is particularly positive, potentially accelerating revenue recognition. The expanding commercial ecosystem, now including both AT&T and Verizon, strengthens AST's market position but may increase competitive pressures to deliver on promises.

Tech Expert

AST SpaceMobile's technological advancements are impressive. The completion of their AST5000 ASIC chip, developed over five years at a cost of $45 million, promises up to 10x improvement in satellite processing bandwidth. This could significantly enhance service quality and capacity, potentially giving AST a competitive edge in the space-based cellular market.

The 95% vertical integration for satellite component manufacturing is a strategic advantage, potentially reducing costs and improving quality control. However, it also increases the company's exposure to supply chain risks. The successful tape-out phase with TSMC for the ASIC chip is crucial, as it moves the company closer to production-ready hardware for their ambitious satellite network.

Market Research Analyst

AST SpaceMobile's progress towards launching its first 5 commercial satellites marks a critical inflection point. The potential for nationwide, non-continuous service with AT&T and Verizon in the coming months could be a game-changer, addressing the persistent issue of cellular dead zones. This unique offering could capture significant market share, especially in rural and underserved areas.

The expansion into U.S. Government contracts opens new revenue streams and validates the technology's potential beyond commercial applications. However, investors should note that the initial service will be non-continuous, which may impact user experience and adoption rates. The success of the upcoming launch and subsequent in-orbit testing will be important in determining the company's ability to deliver on its ambitious promises and maintain its first-mover advantage in this nascent market.

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 second quarter ended June 30, 2024.

"We stand at a pivotal moment for AST SpaceMobile," said Abel Avellan, Founder, Chairman and CEO of AST SpaceMobile. "The arrival of our first five commercial satellites at the launch site marks the culmination of years of relentless innovation and perseverance, in partnership with industry leaders like AT&T, Google, Verizon, Vodafone, and Rakuten, among others. The upcoming orbital launch is a significant step toward fulfilling our mission to eliminate dead zones and empower communities worldwide with space-based cellular broadband connectivity."

Business Update

• First 5 commercial satellites on target for dedicated orbital launch in first half of September, each the largest-ever communications arrays to be deployed commercially in low Earth orbit
  • Final assembly and environmental testing completed successfully at AST SpaceMobile manufacturing facilities in Texas
  • Satellites are now at Cape Canaveral preparing for launch vehicle integration ahead of a confirmed launch date
  • Secured FCC approval with initial license for launch of first 5 commercial satellites
• Expanded the AST SpaceMobile commercial ecosystem, adding Verizon as strategic investor and customer, joining AT&T in the U.S.
  • Strategic investment by Verizon brings $100 million financial commitment, including $65 million ​of​ commercial prepayments and $35 million of convertible notes
  • Along with AT&T, which signed a definitive commercial agreement in May, enables nationwide ~100% geographical coverage target of the continental U.S. on premium 850 MHZ low-band spectrum
  • Continue to advance discussions with additional strategic partners, following the blueprint of commercial prepayments alongside commercial agreements
• First 5 commercial satellites capable of U.S. nationwide non-continuous service with 5,600+ cells in premium low-band spectrum
  • Expect initial nationwide, non-continuous service to be available with AT&T and Verizon beta test users following in-orbit service activation over the coming months
  • Coverage and service to increase as satellite constellation is expanded with Block 2 satellites
• ASIC chip tape-out phase completed with TSMC, expected to support up to 10x improvement of processing bandwidth per satellite
  • AST5000 ASIC is a novel, custom and low-power architecture developed over five years and approximately $45 million of development cost
• Initial Block 2 BlueBird planning and production of 17 satellites underway at AST SpaceMobile manufacturing facilities in Texas
  • Approximately 95% vertically integrated for manufacturing of satellite components and subsystems, for which we own or license the IP and control the manufacturing process
• Expanded U.S. Government relationship with initial in-orbit testing and additional early-stage contract awards to one of our prime contractors
  • Successful initial in-orbit and ground tests for non-communications applications, reflected in completed contractual milestones and revenue
  • Additional U.S. Government contract awards in recent months, with outlook for additional and larger sized contract awards

Second Quarter 2024 Financial Highlights

• As of June 30, 2024, we had cash, cash equivalents, and restricted cash of $287.6 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 second quarter of 2024 were $63.9 million, including $29.3 million of depreciation and amortization and stock-based compensation expense. This represents an increase of $7.9 million as compared to $56.0 million in the first quarter of 2024, due to a $5.6 million increase in general and administrative costs, a $1.7 million increase in engineering services costs, a $0.4 million increase in depreciation and amortization expense, and a $0.2 million increase in research and development costs
• Total Adjusted operating expenses for the second quarter of 2024 were $34.6 million, an increase of $3.5 million as compared to $31.1 million in the first quarter of 2024, due to a $2.0 million increase in Adjusted general and administrative costs, a $1.3 million increase in Adjusted engineering services costs and a $0.2 million increase in research and development costs⁽¹⁾
• As of June 30, 2024, we have incurred approximately $347.5 million of gross capitalized property and equipment costs and accumulated depreciation and amortization of $99.3 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, August 14, 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 could 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 SpaceMobile’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 Securities and Exchange Commission (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 in 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.

Second Quarter Financial Results

AST SPACEMOBILE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Dollars in thousands, except share data)
		As of
		June 30, 2024				December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents		$	285,085			$	85,622
Restricted cash			2,482				2,475
Prepaid expenses			7,359				4,591
Other current assets			20,233				14,194
Total current assets			315,159				106,882
Non-current assets:
Property and equipment, net			248,162				238,478
Operating lease right-of-use assets, net			12,344				13,221
Other non-current assets			3,972				2,311
TOTAL ASSETS		$	579,637			$	360,892
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	12,175			$	20,575
Accrued expenses and other current liabilities			13,653				23,926
Contract liabilities			21,780				-
Current operating lease liabilities			1,517				1,468
Current portion of long-term debt			258				252
Total current liabilities			49,383				46,221
Non-current liabilities:
Warrant liabilities			77,886				29,960
Non-current operating lease liabilities			10,952				11,900
Long-term debt, net			199,546				59,252
Total liabilities			337,767				147,333
Commitments and contingencies
Stockholders' Equity:
Class A Common Stock, $.0001 par value; 800,000,000 shares authorized; 148,751,110 and 90,161,309 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively.			15				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 June 30, 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 June 30, 2024 and December 31, 2023, respectively.			8				8
Additional paid-in capital			427,096				288,404
Accumulated other comprehensive income			52				227
Accumulated deficit			(281,942	)			(189,662	)
Noncontrolling interest			96,637				114,568
Total stockholders' equity			241,870				213,559
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	579,637			$	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 June 30,									For the Six Months Ended June 30,
			2024				2023					2024				2023
Revenues		$	900			$	-				$	1,400			$	-
Operating expenses:
Engineering services costs			21,202				22,813					40,719				39,296
General and administrative costs			17,839				10,221					30,126				20,078
Research and development costs			4,460				10,921					8,711				27,302
Depreciation and amortization			20,392				14,115					40,336				15,848
Total operating expenses			63,893				58,070					119,892				102,524
Other income (expense):
(Loss) gain on remeasurement of warrant liabilities			(66,140	)			6,475					(47,926	)			13,973
Interest (expense) income, net			(2,238	)			1,724					(4,460	)			3,816
Other income (expense), net			252				(507	)				250				(10,743	)
Total other income (expense), net			(68,126	)			7,692					(52,136	)			7,046
Loss before income tax (expense) benefit			(131,119	)			(50,378	)				(170,628	)			(95,478	)
Income tax (expense) benefit			(231	)			789					(526	)			673
Net loss before allocation to noncontrolling interest			(131,350	)			(49,589	)				(171,154	)			(94,805	)
Net loss attributable to noncontrolling interest			(58,800	)			(31,181	)				(78,874	)			(60,079	)
Net loss attributable to common stockholders		$	(72,550	)		$	(18,408	)			$	(92,280	)		$	(34,726	)
Net loss per share attributable to holders of Class A Common Stock
Basic and diluted		$	(0.51	)		$	(0.24	)			$	(0.70	)		$	(0.47	)
Weighted-average shares of Class A Common Stock outstanding
Basic and diluted			141,185,500				75,640,650					131,316,319				73,753,412

AST SPACEMOBILE, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED) (Dollars in thousands)
		For the Three Months Ended June 30,								For the Six Months Ended June 30,
			2024				2023				2024				2023
Net loss before allocation to noncontrolling interest		$	(131,350	)		$	(49,589	)		$	(171,154	)		$	(94,805	)
Other comprehensive loss
Foreign currency translation adjustments			(123	)			(40	)			(339	)			(168	)
Total other comprehensive loss			(123	)			(40	)			(339	)			(168	)
Total comprehensive loss before allocation to noncontrolling interest			(131,473	)			(49,629	)			(171,493	)			(94,973	)
Comprehensive loss attributable to noncontrolling interest			(58,854	)			(31,196	)			(79,038	)			(60,176	)
Comprehensive loss attributable to common stockholders		$	(72,619	)		$	(18,433	)		$	(92,455	)		$	(34,797	)

AST SPACEMOBILE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Dollars in thousands)
			For the Six Months Ended June 30,
				2024				2023
Cash flows from operating activities:
Net loss before allocation to noncontrolling interest			$	(171,154	)		$	(94,805	)
Adjustments to reconcile net loss before noncontrolling interest to cash used in operating activities:
Depreciation and amortization				40,336				15,848
Amortization of debt issuance costs				1,901				-
Loss on disposal of property and equipment				2,221				-
Loss (gain) on remeasurement of warrant liabilities				47,926				(13,973	)
Stock-based compensation				13,807				8,006
Paid-in-kind ("PIK") interest expense				2,959				-
Changes in operating assets and liabilities:
Prepaid expenses and other current assets				(10,128	)			(15,547	)
Accounts payable and accrued expenses				(14,873	)			(4,112	)
Operating lease right-of-use assets and operating lease liabilities				(21	)			35
Contract liabilities				21,780				-
Other assets and liabilities				972				16,559
Net cash used in operating activities				(64,274	)			(87,989	)
Cash flows from investing activities:
Purchase of property and equipment				(61,770	)			(22,972	)
Net cash used in investing activities				(61,770	)			(22,972	)
Cash flows from financing activities:
Proceeds from debt				145,000				-
Repayments of debt				(124	)			(120	)
Payments for debt issuance costs				(5,162	)			-
Proceeds from issuance of common stock				189,921				64,284
Payments for equity issuance costs				(2,757	)			(717	)
Issuance of equity under employee stock plan				105				180
Employee taxes paid for stock-based compensation awards				(1,240	)			-
Net cash provided by financing activities				325,743				63,627
Effect of exchange rate changes on cash, cash equivalents and restricted cash				(229	)			(451	)
Net increase (decrease) in cash, cash equivalents and restricted cash				199,470				(47,785	)
Cash, cash equivalents and restricted cash, beginning of period				88,097				239,256
Cash, cash equivalents and restricted cash, end of period			$	287,567			$	191,471
Supplemental disclosure of cash flow information:
Non-cash activities:
Right-of-use assets obtained in exchange for operating lease liabilities			$	-			$	6,510
Non-cash investing and financing activities:
Purchases of property and equipment in accounts payable and accrued expenses			$	8,073			$	852
PIK interest paid through issuance of PIK notes				2,959				-
Cash paid for:
Interest			$	4,422			$	105
Income taxes, net				902				370

AST SPACEMOBILE, INC. RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED MEASURES (UNAUDITED) (Dollars in thousands)
		For the Three Months Ended June 30, 2024
		GAAP Reported				Stock-Based Compensation Expense				Adjusted
Engineering services costs		$	21,202			$	(2,032	)		$	19,170
General and administrative costs			17,839				(6,842	)			10,997
Research and development costs			4,460				-				4,460
Depreciation and amortization			20,392				-				20,392
Total operating expenses		$	63,893			$	(8,874	)		$	55,019
Less: Depreciation and amortization											(20,392	)
Adjusted operating expenses										$	34,627

		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

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/20240814230496/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 (ASTS) launching its first commercial satellites?

AST SpaceMobile (ASTS) is targeting to launch its first 5 commercial satellites in the first half of September 2024.

What was AST SpaceMobile's (ASTS) cash position as of June 30, 2024?

As of June 30, 2024, AST SpaceMobile (ASTS) had cash, cash equivalents, and restricted cash of $287.6 million.

How much did Verizon invest in AST SpaceMobile (ASTS)?

Verizon made a strategic investment in AST SpaceMobile (ASTS) with a $100 million financial commitment, including $65 million of commercial prepayments and $35 million of convertible notes.

What were AST SpaceMobile's (ASTS) total operating expenses for Q2 2024?

AST SpaceMobile's (ASTS) total operating expenses for the second quarter of 2024 were $63.9 million.