AST SpaceMobile Q3 2026 Earnings Call Transcript

AST SpaceMobile (NASDAQ:ASTS) reported third-quarter financial results on Monday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

AST SpaceMobile reported a Q3 2026 revenue of $42.3 million, with a strong cash position of $3.2 billion, and reiterated its full-year revenue guidance of $150 to $200 million.

Key strategic initiatives include the launch of Blacklift, a reusable rocket starting in late 2028, and securing $1 billion in non-dilutive subsidies from Japan for satellite manufacturing.

The company plans to activate intermittent service in the U.S. and other key markets by year-end 2026, with a target of deploying 100 Bluebird satellites by 2028.

AST SpaceMobile entered into new government contracts, including a $100 million U.S. Space Force award, and secured dual-use commercial and government DPAS ratings.

Management expressed confidence in the future, aiming for a $1 billion revenue target in the 12 months following commercial service launch, and highlighted partnerships with major mobile network operators globally.

Full Transcript

OPERATOR

Good day and thank you for standing by. Welcome to AST SpaceMobile third quarter 2026 business update. Please be advised that today’s call is being recorded. I will now turn the conference over to Max Colbert, Investor Relations Manager of AST SpaceMobile. Thank you. You may begin.

Max Colbert (Investor Relations Manager)

Thank you and good afternoon everyone. Today I’m also joined by Chairman and CEO Abel Avellan, President Scott Wisniewski and CFO and Chief Legal Officer Andy Johnson. Let me refer you to slide 2 of the presentation which contains our Safe Harbor disclaimer. During today’s call we may make certain forward-looking statements. These statements are based on current expectations and assumptions and as a result are subject to risks and uncertainties. Many factors could cause actual events to differ materially from the forward-looking statements on this call.

For more information about these risks and uncertainties, please refer to the Risk Factors section of AST SpaceMobile’s Annual Report on Form 10-K for the year ending December 31, 2025 with the Securities and Exchange Commission and other documents filed by AST SpaceMobile with the SEC from time to time. Also, after our initial remarks, we’ll be starting our Q and A section with questions submitted in advance by our shareholders. For those of you who may be new to our company and mission, there are nearly 6 billion mobile phones today around the world. But many of us still experience gaps in coverage as we live, work and travel. Additionally, there are billions of people without cellular broadband and who remain unconnected to the global economy.

The markets we are pursuing at AST SpaceMobile are massive and the problem we are solving is important and touches nearly all of us. In this backdrop, AST SpaceMobile is building the first and only global cellular broadband network in space to operate directly with everyday unmodified mobile phones supported by our extensive IP and patent portfolio. It is now my pleasure to pass this over to Chairman and CEO Abel Avellan who will go through our activities since our last public update.

Abel Avellan (Chief Executive Officer)

Thanks Max. As always, our mission is simple to say and hard to do: to build the first and only space-based cellular broadband network accessible directly by everyday smartphones, designed for both commercial and government applications. This quarter we made real progress on every front: service, launch capability, government and capital. Let me walk through it. If you remember only one message from today, make it this one. Four milestones defined this quarter. First, service: we’re on track for nationwide intermittent service activation in the United States and other key markets before year end 2026. This is the moment we have been building towards. Second, launch: we announced Blacklift, our own 20-ton reusable rocket powered by the Miranda and Vera engines with launches starting in late 2028. Third, government: we secured dual-use commercial and government DPAS rating and we now have launches planned in ’27 and ’28 with SpaceX, Blue Origin and others, supporting a planned hundred satellites in orbit.

Fourth, capital: we secured a billion dollars in non-dilutive subsidies from Japan, Minister of Internal Affairs and Communications for mid-band satellite manufacturing; and the number behind those milestones: 42.3 million in third quarter revenue, 3.2 billion in cash, cash equivalent and restricted cash, more than 100 Bluebirds under launch agreements and a production rate target of 6 per month in December. Let me put this quarter in context. We advanced several important initiatives to support the global expansion of our network. We expect to work with all major mobile network operators in the United States and Europe that give us the potential commercial ecosystem in excess of our current agreement with over 60 mobile network operators representing over 3 billion subscribers globally. On the manufacturing front, we’re transitioning to a full-scale ASIC integration with Bluebird 34 while advancing production through Bluebird 51.

We made that choice deliberately because it substantially increased the capability of every satellite we build and we expect to reach a production rate of 6–8 ASIC satellites per month in December of this year. Looking ahead, our priorities for ’26 and ’27 are: advance service readiness across our initial markets, completely transition to ASIC-enabled production, scale constellation deployment, and be the direct-to-device partner of choice for mobile network operators, technology leaders and the U.S. Government.

Let’s start with service. We expect initially intermittent nationwide coverage in key markets by year end 2026. We’re doing this by leveraging the strengths of our partners: their network infrastructure, their spectrum, their customer relationships combined with our technology leadership. The first step of our coverage rollout is with strategic partners in five markets: United States, Canada, Japan, Saudi Arabia and United Kingdom. I am also proud to share that with our partner AT&T, we validated the first ever satellite beam handover between ground-based and space-based cellular broadband networks.

This means for our customers moving seamlessly from a cell tower to a satellite on the phone already in your pocket. No other company has this capability. On spectrum, we’re combining shared MNO spectrum with our controlled MSS spectrum. On a market-by-market basis we’re targeting approximately 100 MHz of spectrum access in the United States and more than 60 MHz globally. Now to manufacturing. We made a strategic decision to pull forward our next generation ASIC from Bluebird 50 to Bluebird 34. The ASICs deliver 10 times improvement in processing bandwidth compared with the Block 1 Bluebirds in orbit today. Today we’re in production through Bluebird 51 in Texas, with two factories running full shift to reach run-rate production. Every satellite we launch from Bluebird 34 onwards will be dramatically more capable—10 times—and we expect to hit 6 satellites per month in December.

Bluebirds are now on the move. Let me walk through the timeline. In orbit today: Bluebirds 11, 12 and 13 have unfolded successfully and are in operation in space. September 2026: Bluebird 14, 15 and 16 shipped to the Cape and are awaiting their SpaceX launch date confirmation. November 2026: Bluebird 17, 18, 19 are expected to ship for a Blue Origin launch expected in early Q1. Bluebird 20, 21, 22, 23, 24 and 25 shipping during December and January for expected DPAS-rated dual-use launches during Q1 2027.

Mid 2027: we’re targeting 45 Bluebirds in orbit. ’27 through ’28: we’re expecting an aggregated deployment of more than 100 Bluebirds under our launch agreements. Late 2028: Blackleaf, our own rocket, begins launches. Our launch agreements now cover over 100 Bluebird satellites expected to be deployed between ’27 and ’28. Let me spend a moment on Blackleaf because it’s a defining step for the company. Blackleaf is our purpose-built reusable rocket to deploy Bluebirds into low Earth orbit. It is a 20-ton vehicle able to carry up to five Bluebirds per launch with initial launches planned for late 2028. It uses the Miranda and Vera engines architecture with over a decade of development and proven flight heritage. Why this matters: it gives us greater control over launch availability and deployment schedules.

It offers attractive ownership economics over the long term. It complements—it does not replace—our launch agreements with SpaceX, Blue Origin and others for ’27 and ’28, and it gives us access to further launches for U.S. government missions alongside our DPAS-rated programs. In short, regular, unconstrained access to orbit with attractive owners economics. Our ambitions go beyond direct-to-device. We are positioned in AST SpaceMobile as the partner of choice for global mobile network operators, technology leaders and the United States government. In government, we were awarded an approximate $100 million U.S. Space 4 contract to advance space-based sensing capabilities. We now have 16 U.S. government awards to date. Internationally, we’re growing our partnership strategy by combining S-band spectrum with IMT spectrum allocations in large international markets like Brazil.

In technology, we operate the largest phased array low Earth orbit. Combined with our ASIC micron, they open a dramatically expanded addressable market across capabilities beyond direct-to-device, including in-orbit AI inference, space-based sensing and other applications around physical AI—and this is showing up in our results. We remain on target for our full year 2026 revenue guidance of 150 to 200 million, with an upside from recent contract signatures, and our balance sheet is strong: $3.2 billion in cash, cash equivalent and restricted cash, reinforced by US$1 billion in G Leo non-dilutive subsidies with our partner Rakuten and a 1.2 billion non-dilutive additional quasi-governmental non-dilutive financing that is pipeline for 2027. With that I will turn the call over to Scott who will take you through our business update in more detail.

Scott Wisniewski (President)

Thank you, Abel. We’ve made great strides advancing service readiness, manufacturing, growing our commercial and U.S. government ecosystem, and ensuring regular, unconstrained access to orbit with BlackLift. I’ll highlight our progress and put into context the enormous opportunity to deliver space-based cellular broadband for our partners amidst a large and growing total addressable market. Demand for direct-to-device connectivity has grown significantly during 2026. Space-based cellular broadband connectivity and critical non-communication services like sensing and radar are considered must-have capabilities between wireless and defense ecosystems, and our BlueBird satellite platforms operate as a leading satellite technology platform capable of performing both. We believe that unconstrained access to orbit will be both a key differentiator among technology companies operating in space and the way to continue to address the very large expanded TAM over time.

What ultimately gave us conviction that building our own 20-ton rocket was feasible, and the timeline was set forth, was by starting from a place of strength, acquiring trusted and tested engine technology. The backbone of every rocket is its engines. The Miranda engine combines repeated successful testing, patent-protected propulsion technology, and maximum performance, making it the right engine to build a purpose-built rocket around. The Miranda engine has conducted over 175 successful hot-fire tests for more than 4,200 seconds, the equivalent of about 20 full first-stage flights, and completed a flight-like test at 110% performance of the 230,000 pounds of thrust engine. This was pushing the Miranda engine beyond nominal parameters where performance earns its marks. We are not buying just any rocket engine technology, nor are we starting from scratch. The Miranda engine leverages an architecture with over a decade of development and proven flight heritage, immediately kickstarting BlackLift’s development with a massive leap forward.

We’re doing this with Firefly, one of the few companies in the United States with a proven liquid engine of this scale, making their engine, intellectual property, and rocket technology both proven and scarce. They’ve also demonstrated repeated launch success to orbit with their Alpha rocket, whose engine IP is what the larger Miranda engines were built upon. They’ve also completed several missions for the U.S. government and defense customers. They’re also the first and only private company to ever successfully land and operate spacecraft on the Moon, a monumental achievement for American dominance in space.

This transaction was structured carefully with a mix of proceeds in cash and stock and further payments over time alongside the significant value we expect to receive. Additionally, we are assessing our forward capex and expect to spend several hundred million dollars of incremental capex in 2027 associated with BlackLift and any upside associated with pulling forward internal project milestones as appropriate. Supplemental to our BlackLift news, we have new agreements with our external launch providers. External launch remains critical to our near- and medium-term network deployment objectives. These agreements now cover in total over 100 BlueBird satellites expected to be deployed cumulatively between 2027 and 2028 by launch providers with active manifest.

We also have access to further launches for U.S. government missions alongside our DPAS-rated program, the Defense Priorities and Allocation System, which helps assure that strategic resources for national security are timely available to meet current National Defense and Emergency Preparedness Program requirements. Take this as a signal that our on-orbit technology is strategic, innovative, and flexible, especially to meet the needs of the United States government.

Our focus at AST SpaceMobile has always been on building a network capable of delivering cellular broadband connectivity everywhere, working in partnership with mobile network operators around the world. Today we have more than 60 MNO partners collectively covering over 3 billion subscribers. But what we have developed is much more than a satellite connectivity solution. Our differentiated technology, extensive intellectual property, vertically integrated manufacturing capabilities, global MNO ecosystem, comprehensive spectrum strategy, and sophisticated in-orbit platform position us to pursue opportunities across multiple industries.

As our technology has matured, so has the breadth of the markets we can address. Now anchored by the direct-to-device market, we’ve identified other leading industries where we’re already developing business like IoT services, radar and space-based sensing, secure communications, federal emergency services, sovereign funded networks, AI inference, and other applications around physical AI. Now let me highlight several of the most significant markets where we’ve made recent important traction.

Our recently announced award for advanced sensing capabilities through the U.S. Space Force will produce approximately 100 million in revenue. This is a small step towards a much larger program of record for AMTI, or Airborne Moving Target Indication, a capability which is highly strategic for the United States and we believe to be a top priority for the Space Force. On the sovereign front, we are seeing a trend of large countries and regional bodies looking to replicate owned, resilient communications in orbit, driven by a desire for greater operational control over communications in their territory. This is a market we expect to deliver meaningfully in, and no better example than with our J-LEO initiative in Japan. With approximately 1 billion in funding to support a mid-band constellation and in-country traffic providing critical resilient communications to Japan, using architecture that lands traffic in country uniquely positions us to serve this need and into further connectivity layers to meet this demand.

This follows our continued work with FirstNet, our partner through AT&T, supporting emergency and first responder networks in the United States, and recent announcements with multiple governments through partners like Vodafone. A few notes on the mechanics of the J-LEO award: for modeling purposes we expect the funding to be made ahead of investment in spacecraft and launch, with the majority of proceeds received during 2027. In consideration for this subsidy, the joint venture in which we will hold 49% of the equity will receive the revenue for three targeted exclusive markets in Asia. The remaining capacity of these subsidized satellites outside of Japan will operate as part of our global mid-band network and be available to our global partners in the normal course, with a low single-digit net revenue share to the joint venture.

Lastly, progress on gateway deliveries, commercial service, and executing milestones under our U.S. government contracts reinforce our conviction in achieving our full-year 2026 revenue goals. As a result, we are reiterating our guidance of 150 to 200 million on the year, and even with the expected Q4-weighted revenue build, we see potential upside to our guidance depending on the timing of certain milestones and the J-LEO program. Altogether, the pieces of our global space-based cellular broadband network are coming together alongside non-dilutive financing as we prepare for commercial service with our MNO partners and drive business in a large and growing total addressable market. I’m now happy to pass the call over to Andy to walk through our financial update.

Andrew M. Johnson (Chief Financial Officer)

Thanks, Scott, and good afternoon, everyone. During the third quarter of 2026, we maintained focus on our strategic objectives by further fortifying our capital position and on a multitude of commercial, operational, and financial objectives. Revenue in Q3 came in consistent with our internal plans. As I previously noted, we expect revenues to build sequentially each quarter during 2026 with contributions from both commercial revenue, including gateway sales revenue, and U.S. Government milestones met.

I am pleased to confirm that we remain on track to meet our full year 2026 revenue guidance of $150 million to $200 million. With respect to manufacturing, in September of this year we shipped Bluebirds 14, 15, and 16 to Cape Canaveral and are currently awaiting their SpaceX launch date confirmation this month. In November of 2026, Bluebirds 17, 18, and 19 are expected to ship for a Blue Origin launch that we anticipate in early Q1 of 2027. Additionally, Bluebirds 20, 21, 22, 23, 24, and 25 are shipping during December and January for expected DPA-rated dual-use launches during Q1 of 2027.

Our manufacturing facilities in Midland are completely transformed and buzzing with activity to achieve a manufacturing cadence now of six Bluebird satellites per month before the end of this year. That manufacturing progress positions us well to support our current network deployment plan targeting approximately 45 Bluebird satellites in orbit by the middle of 2027. Beyond ’27 through 2028, we anticipate reaching deployment of more than 100 Bluebirds under our current launch agreements and, in late 2028, we expect to bring BlackLift, our own rocket, to launch on a go-forward basis.

The strength of our balance sheet, further bolstered by July’s convertible debt offering, positions us not only to complete the full buildout and launch of a constellation of over 100 Bluebird satellites to provide worldwide SpaceMobile service and deploy our controlled spectrum bands on a global basis, but also to pursue critical growth initiatives like securing additional access to orbit through our recently announced BlackLift 20-ton reusable rocket, which further vertically integrates AST SpaceMobile all the way to the launch pad.

Our intentional focus on investing in the growth of our operations led to higher adjusted operating expenses in Q3 2026 as compared to Q2, consistent with our expectations as previously communicated during our second quarter 2026 earnings call in August 20. Now, moving to the operating and capital metrics slide, let’s review the key metrics for the third quarter in a bit more detail. On the first chart, for the third quarter of 2026 we incurred non-GAAP adjusted operating expenses of $133.6 million versus $119.1 million in the second quarter. Non-GAAP adjusted operating expenses exclude non-cash operating costs.

The quarter-over-quarter increase of $14.5 million resulted primarily from a $1 million increase in adjusted cost of revenues due to higher revenue in the quarter, together with an $11 million increase in adjusted engineering service costs, a $1.2 million increase in adjusted general administrative costs, and a $1.3 million increase in R&D costs. Our Q3 2026 adjusted operating expenses, excluding adjusted cost of revenues, were $109.4 million compared to $95.9 million in Q2 of 2026.

This amount was within the $105 to $115 million guidance for Q3 adjusted operating expenses that I previously provided. The primary drivers of the increase versus the prior quarter were growth in our workforce including contractors and consultants, our expanded production facilities, offset by a favorable one-time R&D tax credit in the amount of $4.5 million. Turning towards the second chart on this slide, our capital expenditures for the third quarter of 2026 were approximately $310 million versus approximately $610 million for the second quarter. This figure was made up primarily of payments made in connection with multiple launch contracts, capitalized direct materials and labor for our Bluebird satellites, with the balance relating to facility and production equipment expenditures.

This amount for the quarter was below the guidance of $350 million to $425 million that I provided during our last earnings call, primarily due to the timing-related shifts in launch payments for the fourth quarter of 2026. We estimate that our adjusted operating expenses, excluding adjusted cost of revenues, will increase to the range of approximately $130 million to $140 million as we continue to absorb the full quarter of cost of our expanded workforce, continue growing talent across our organization to scale our efforts on commercial readiness, address our expanding TAM, pursue the monetization of our L- and S-band spectrum usage rights, and begin to ramp efforts related to our BlackLift rocket capability.

Following lighter-than-originally-anticipated capex spend in Q3, we expect our capital expenditures in Q4 of 2026 to be in the range of approximately $400 to $500 million, primarily driven by the timing of launch payments which, as I’ve previously explained and evidenced by historical spend, varies from quarter to quarter. Importantly, our continued spend on growth-related capex reflects our increasing satellite production and our active orbital launch plans.

We continue to estimate that our average capital costs, including direct materials and launch costs for our constellation of over 90 Bluebird satellites, will fall in the range of approximately $21 million to $23 million per satellite, excluding certain initial satellites and corresponding launch that are used to validate performance and operations, and may increase as we work to continually expedite our launch schedules. Our cost-per-satellite estimates are subject to fluctuations based on dynamic geopolitical factors that could impact our cost.

As a reminder, changes in our adjusted operating expenses and capital expenditures as I’ve just described could be delayed or may not be realized due to a variety of factors. Turning to revenue, in the third quarter we recognized revenue of $42.3 million, primarily driven by commercial gateway deliveries and various U.S. government service milestone achievements. Our revenue increased sequentially and year over year in the third quarter as we expected due to the timing of gateway deployment at our commercial customers and the timing of completion of certain government contract milestones.

With respect to commercial revenue generation, we believe we can enable continuous SpaceMobile service across key markets such as the United States, Europe, Japan, and other strategic markets with the launch and operation of approximately 45 to 60 Bluebird satellites, and additional strategic worldwide markets with the launch and operation of approximately 90 Bluebird satellites. Further, as we continue to launch and deploy our constellation, we will continue to support U.S. Government applications currently ongoing and accelerating as our constellation grows.

As we reiterated previously, we expect to generate full year 2026 revenue in the range of $150 to $200 million. We manage the top line with a focus on full year performance given the quarterly variability inherent to our business, including the timing of contract signings, equipment sales, and milestone achievements. We continue to work on several Q4 revenue opportunities that will ultimately determine where we fall within our guidance range, but have high confidence that revenue acceleration this quarter will result in achievement of our full year 2026 revenue guidance, with potential upside.

We expect revenue to continue to be driven by gateway deliveries; achievement of contracted milestones for the U.S. government; MNO consulting services; and software licensing. The achievement of our revenue plan remains subject to several contingencies, including the successful launch and deployment of our Bluebird satellites related to U.S. government applications and those contractual milestone achievements; critical gateway equipment sales to our MNO partners in support of their anticipated commercialization efforts of our SpaceMobile service; and service and software revenues in connection with the activation of our commercial service provided by our existing and planned, deployed, and operational satellites.

Now, turning to the balance sheet as I previously reviewed with you on our Q2 earnings call in August, in July this year we executed a convertible debt transaction for $1.15 billion aggregate principal amount of 1.625% convertible senior notes due in 2034. As part of the transaction, we purchased a capped call hedge to increase the effective conversion price to $149.20 per share, a price well above our all-time high trading price. This financing was pivotal in allowing us to pursue additional access to orbit through the creation of our BlackLift rocket, which we expect to provide critical vertical integration of our business to the launch vehicle over the next couple of years.

Finally, on the final chart on this slide, inclusive of that $1.15 billion in gross proceeds from the convertible notes offering, our cash, cash equivalents, and restricted cash as of September 30, 2026 was over $3.2 billion. And with that, I’d like to thank you for your continued support as we continue executing on our commercial, operational, and financial objectives. We are in the midst of an exciting Q4 at AST SpaceMobile and look forward to sharing more on our progress with you, starting with this Thursday’s BlackLift unveiling event in New York City.

We hope you’ll join us for that milestone event, and with that, this completes the presentation component of our business update call, and I’ll pass it back to Max.

Max Colbert (Investor Relations Manager)

Thank you, Andy. Before we go to the queue of analyst questions, we’d like to address a few of the questions submitted by our investors. Operator, could you please start us off with the first question?

OPERATOR

Kevin from Vancouver asks: When facing a launch supply constraint, do you plan on stockpiling satellites to be “ready to ship,” or will you slow down production to align with available launch capacity?

Abel Avellan (Chief Executive Officer)

Thank you, Kevin. No, we do not stop production. As a matter of fact, that’s why we are on satellite 51. 14, 15, and 16 were shipped to the Cape, and they’re awaiting SpaceX launch date confirmation. 17, 18, 19 will be shipped during November. 21, 22, 23, 24, and 25 shipments will happen in December and January, and our plan is to continue with six a month. We are already on satellite 51 in production and all the way to satellite 28 in very final stage.

OPERATOR

Scott from North Carolina asks: Could you expand on your relationship with non-MNO commercial customers such as Google and Meta?

Abel Avellan (Chief Executive Officer)

Thank you, Scott. Well, Google is an investor, and we have been working with them for a long time. Meta owns WhatsApp, which has over 3.3 billion monthly active subscribers, and of course we’re very active with all the technology companies working on AI and AI everywhere to enable physical AI, and this is a very strategic relationship for us. And we obviously have a very unique capability that enables the ability to do inference on the satellites itself.

And when you combine that with a very large phased array with a constant latency into the satellite, that improves the performance of AI inferences exponentially, above and apart, that you basically enable AI everywhere into everything combined with the ability to connect very small form factor devices — phones or things that are smaller than phones — machines, cars, drones, and everything that requires AI to be able to function. So yeah, we’re working with Google, we’re working with Meta, we’re working with many other AI enablers in combining our very unique capability of very large phased array with a lot of power, with a constant latency, minimum latency, to enable AI inferences.

OPERATOR

Artishir from Georgia asks: Hello, I was very curious to see a filing for E-band phased array on our satellites. What’s the use case for these?

Abel Avellan (Chief Executive Officer)

Ardesh? I mean, good catch on following what we’re doing, regulatory speaking. We do have the ability to launch and operate the largest phased arrays ever put into orbit, and of course our team is extremely advanced on our RF capabilities, low band, mid band, and other coming bands including the E band, and we plan to introduce this into our satellite roadmap. Part of our belief is that throughput and speed and lower latency are the key aspects of any infrastructure for direct-to-device.

We’re adding other bands into the architecture, and yes, we have done filings for even phased array capabilities to be combined with our cellular direct-to-device small-footprint terminals capability.

Max Colbert (Investor Relations Manager)

Johan from New York asks how much of the new facility will support cellular broadband satellites versus defense, sensing, and other government-related satellite systems.

Abel Avellan (Chief Executive Officer)

Thank you, Johan, for the question. Well, as you can see, the demand for our satellites is exponentially growing, as you saw in our announcement this morning from J. Leo in Japan. We have many other regions requesting a similar setup, and the way that we do this is these constellations can be reused for all the regions and they are all designed to be able to support all the applications that the satellites support. Obviously everything anchored around D to D and the ability to connect to very small terminals like phones, but smaller, even smaller terminals as well.

So these facilities, we don’t divide the facilities by application. We divide the facilities basically into how many satellites we can build a month, which we see demands of that continue to grow significantly in what we see in Japan, in Europe, in North America, in Canada, in Brazil, and many other regions. And for that, every satellite that we build will be designed to support all the applications in multiple bands: our low-band frequencies, where we anchor a lot around our cellular operators partnerships; mid band, including our own spectrum holdings, L band in the United States, Mexico, Canada; S band in selected large markets like we have seen in Brazil; and other future spectrum that we all combine in order to have access to the most spectrum possible combined with the very large phased arrays to enable direct-to-device connectivity, sensing which includes radar as well, and AI with particular focus on AI everywhere and physical AI.

Max Colbert (Investor Relations Manager)

And with that, I’d like to thank our shareholders for submitting those questions. Operator, let’s open up the call to analyst questions.

OPERATOR

Thank you. 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 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. We ask all those in the queue to limit themselves to one question and one follow-up question to allow everyone a chance.

Our first question comes from the line of Colin Canfield with Cantor Fitzgerald. Please proceed with your question.

Colin Canfield (Analyst at Cantor Fitzgerald)

Hey, thanks for the question. As you think about 2027 revenue building blocks, rough numbers, is it fair to think of, so if we break it apart into gateways, U.S. government work, international work, and commercial service, assuming, call it, 100 to 200 million of gateway work, maybe 200 to 300 million of U.S. government work, and then maybe, rough numbers, 100 to 200 million of international work, and swing factor is commercial service to get to the midpoint, 500 million to $1 billion revenue opportunity.

So as we think about those key building blocks, maybe can you sign on to kind of is that framework of maybe 500 million to a billion still kind of the right framework for 2027, 750 at the midpoint? And then in terms of as we think about what’s moving forward versus what’s pushing out, how do you think about the key dynamic factors to what to pull left? Thank you.

Andrew M. Johnson (Chief Financial Officer)

Hey Colin, thanks for the question. So, you know, we stand behind our guidance on, you know, the 12 months following commercial service start, right? We see that approaching a billion dollars. And in terms of looking at calendar year next year, I think over 100 million plus of gateway sales probably makes sense. We’re going to continue to build out our infrastructure. We’ve been doing a lot of that, so that makes sense. U.S. government, you know, we hope to outperform, but we have, you know, just announced another $100 million contract today. And so there’s going to be definitely 100 million plus of government already executed just based on pipeline. And then commercial service revenue will come in with commercial service. And in international revenue, you know, we just announced J. Leo. We haven’t given a lot of feedback yet on accounting treatment for that, and we will, you know, probably in the coming months and leading into the next call.

But I think, you know, as we approach the commercial service, we feel good about the following 12 months being at that approaching a billion dollars, or frankly even maybe in excess given our progress on the U.S. government front. But otherwise we’re not going to give, obviously, forward guidance on revenue. But I think your building blocks are generally right.

Colin Canfield (Analyst at Cantor Fitzgerald)

That’s great. Thank you.

OPERATOR

Thank you. Our next question comes from the line of Mike Crawford with B. Riley Securities. Please proceed with your question.

Mike Crawford (Analyst at B. Riley Securities)

Thank you. So Firefly began co-developing Eclipse with Northrop Grumman four years ago. But Blacklift is not going to do things like translunar injection. And so can you just provide some examples of what you’re going to do to simplify production and also lower unit production costs for your mission, which only needs to get to LEO reliably and at the lowest possible cost?

Abel Avellan (Chief Executive Officer)

Yeah, that’s a very good question. So we are executing on Blacklift for a single-purpose mission, yes: lift BlueBirds into 550 km of orbit. There is no plan to go to the Moon. There’s no plan to go to Mars. There’s no plan to flip over in space. It is designed to simply, simply lift our satellites in the most effective and the fastest way possible. So, of course, we are piggybacking into over a decade of investment and research and development that was put into the engine technology and the tap-off engine technology that is basically the foundation of Firefly technology, for rockets that were used in the Alpha rocket, planned to be used in their Eclipse rockets. And obviously we’re also working with them very, very closely in the final integration of Blacklift. But the simplification in our engineering philosophy, we have two key tenets in everything that we do on satellites and what we’ll do now on rocket: best step is no step, best part is no part, and simplicity.

And this rocket is designed with everything—everything that we’re doing in this rocket is designed with those three tenets on them.

Mike Crawford (Analyst at B. Riley Securities)

Okay, thank you, Abel. And then just for my one follow-up question, and I don’t know, maybe it’s best for Andy, but can you give rough timelines on when some of these components get paid to Firefly: the 400 million of cash, shares based on the forward VWAP, the amounts paid over three years for delivery of engines, and as well as the engineering support?

Andrew M. Johnson (Chief Financial Officer)

Sure. Real quick. The upfront cash and consideration in stock will be paid imminently, within days, and some of the shares will be held back in order to true up for that VWAP calculation. And then the service agreement will be paid out over three years, pretty much pro rata. And then the supply agreement will be paid out with a little upfront payment and then due at delivery of engines. So it’s pretty straightforward. But importantly, we designed it to have a mix of cash and stock so that the upfront payment was a little lower so we could preserve capital for other things.

And then we defer, you know, some of these payments over time as value is being delivered.

Mike Crawford (Analyst at B. Riley Securities)

All right, thank you, Scott.

OPERATOR

Thank you. Our next question comes from the line of Tim Horan with Oppenheimer and Company. Please proceed with your question.

Tim Horan (Analyst at Oppenheimer & Co.)

Thanks a lot, guys. Can you give as much detail or color as possible on the satellite manufacturing? It’s been delayed for a while, but it sounds like you’re extremely confident now in the delivery schedule. Can you just talk about, you know, what happened with the delay and why the confidence? Thank you.

Abel Avellan (Chief Executive Officer)

Well, we announced we have the next batch of satellites waiting for confirmation on SpaceX’s exact launch date. We hope that to be imminent. We have three more satellites ready to ship this month, and we have six more the month after. So we are at the rate of six per month starting in December for the ASIC configuration. So I think in satellite manufacturing, we are tracking very well our plan. We’re on satellite 51, as we mentioned in the previous remarks, and we are accelerating.

We’re expanding with new facilities for government opportunities that we have in front of us. But we see our ability to manufacture be materializing in about six satellites per month, every month.

Tim Horan (Analyst at Oppenheimer & Co.)

Thank you. And then maybe just on the launch side, how firm are the launch commitments that you’ve received and how much visibility do you have on that over the next 12 months?

Scott Wisniewski (President)

So we feel very good. I mean, we have a lot of contracted launch. Our launch with Blue Origin looks very promising. They’re getting back to the pad very soon. And then we also have this DPAS rating that gives us access to government priority launch. So we’ve got a good mix of launch providers now. We’ve signed more launch. We’ve recently received that DPAS rating, and we’ve got more available if we want to go pursue it.

Tim Horan (Analyst at Oppenheimer & Co.)

Very helpful. Thanks.

OPERATOR

Thank you. Our next question comes from the line of Chris Quilty with Quilty Space. Your line is now live.

Chris Quilty (Analyst at Quilty Space)

Thanks. Just wanted to follow up. I think you mentioned for the upcoming New Glenn launch, it’s three satellites, which is below the rocket’s capacity. Is that due to, you know, the availability of satellites, or is that a risk mitigation as they return to flight?

Abel Avellan (Chief Executive Officer)

That is a risk mitigation as they return to flight. We obviously have satellites to launch all the way to satellite 28 in the very early launch from Blue Origin coming back to launch. We do not want to put more than three satellites on the immediate launch.

Chris Quilty (Analyst at Quilty Space)

Fair enough. And as a follow-up on the Blacklift, do you intend to use Firefly’s existing launch pads or do you intend to build your own launch pad? And question, you know, if the latter, is there the availability of, you know, government financing with the government’s increasing focus on increasing launch access?

Abel Avellan (Chief Executive Officer)

Yeah, I think the administration had a very clear mandate of multiplying by an order of magnitude the number of launches a year. We are very happy with the support that we’re getting in terms of launch pads, upgrading them. First launches are going to be upgrades on existing launch which Firefly already have prearranged for their Eclipse configuration. But the answer for that, Chris, is both. We plan to use existing launch—Wallops will require an upgrade that we can fit in the time frame that we have—but we’re also working on additional two locations as part of the execution of Blacklift.

Chris Quilty (Analyst at Quilty Space)

And would you look at locations outside the U.S. for launch?

Abel Avellan (Chief Executive Officer)

Not initially.

Chris Quilty (Analyst at Quilty Space)

Got it. Fair enough. Thanks, guys.

OPERATOR

Thank you. Our next question comes from the line of Brian Kraft with Deutsche Bank. You may proceed with your question.

Brian Kraft (Analyst at Deutsche Bank)

Thanks. Good afternoon. If I could, first wanted to see if you could expand on the additional pipeline of approximately 1.2 billion non— Non-dilutive US quasi-government financing. You know, if you could just talk about maybe what that is, how firm it is, you know, what can the funding be used for. And then separately, you mentioned several hundred million in incremental CAPEX during ’27 to support the BlackLift program. What does the incremental CAPEX look like post-2027 roughly? Obviously it’s early days, and can you just maybe talk high level if there would be other incremental OPEX that would be significant over the next couple of years to support the program?

I guess maybe a lot of it would be capitalized, but just wondering if you could provide any color there. And how do you think about—I know that BlackLift is also about flexibility and controlling your own launch, but I think, you know, it also gives you owner’s economics. So I was wondering if you could talk about how you think about the break-even point economically in terms of, you know, the number of launches or how long it might take you to break even on the program versus using commercial.

Scott Wisniewski (President)

Thanks, Brian. What was the first question again? Remind me.

Brian Kraft (Analyst at Deutsche Bank)

The first one was if you could just expand on the quasi-government financing. You know, what is that? How firm is it? Is it kind of locked in at this point, or is it something you’re pursuing but is still TBD?

Scott Wisniewski (President)

Right. Well, the $1.2 billion that we referenced in pipeline for quasi-governmental financing is very serious. It’s comprised of a couple different pieces. A few small components are subsidies that are active, in particular two programs—one of which we’ve received, another that is in process—and then the balance is, think of it as first-lien or CAPEX-support type of debt. And so those are—one of those is done awaiting final approval. The much larger piece is something that is kind of a six-plus month timeframe, puts us kind of in the middle of 2027.

So those are all pieces of paper that we’re evaluating on their merits but very active, and at a minimum through kind of initial transaction approval committees and that sort of thing. So that’s a very real pipeline, one we’ve worked for a very long time, and it’s important to us to protect shareholder value. And you can see that, in fact, with the announcement today with J. Leo with a billion dollars coming in in non-dilutive financing. So that’s going to be a huge focus for us, as you would expect, as it should be.

And that’s how that pipeline is comprised. And then in terms of go-forward CAPEX, I think we said for 2027 we see several hundred million dollars of incremental CAPEX for BlackLift, and those are things as you would expect: equipment, facilities, development materials, test equipment, manufacturing equipment, and initial investments in the infrastructure you’ll need to get these things going, whether it’s at the launch pad, launch site, or transportation. So those are the kind of things we’ll be doing in 2027.

And anything we can do to accelerate, I mean we’re going to move—we’ve already been in planning stages and even spending money in the last several months. So this is something that we’re going to move lightning fast on and we’re going to look for any opportunity to accelerate. And at this point I don’t think we want to give guidance on 2028. And then owner’s economics—I think that’s pretty well understood in the industry. You know, there are prices out there today for launch that have very high margins given kind of the shortage we experience. And, you know, I think launch prices in the market coming down 75% to reach an owner’s economics is very feasible and frankly probably much more so. We’ll talk about that more at our Thursday event and going forward. But the opportunity for owner’s economics here is very, very interesting to us and a key part of the transaction.

And that math is pretty simple. We’ll make investments, and after a period of time, especially as we access this expanded TAM, we’ll start to see those benefits in a big way.

Brian Kraft (Analyst at Deutsche Bank)

Okay, thanks, Scott.

OPERATOR

Thank you. Our next question comes from the line of Michael Funk with Bank of America. You may proceed with your question.

Michael Funk (Analyst at Bank of America)

Yeah, thank you for the questions, guys. I want to go back to Firefly and the next-generation engines. I think you mentioned Miranda, and they also have Vera next generation. So the Alpha engine, I think they’ve had about a 57% success rate with that engine. So, you know, first, what gives you confidence in the next-generation engines? And then, you know, I’m sure you’ll give us more details on Thursday. But, you know, with your own program for the full rocket assembly and reusability, I think only two companies—SpaceX and China—actually have shown success, and Rocket Lab has been trying for a while and have not really proven full reusability kind of beyond size of Falcon 9. So just wondering what gives you confidence in that component of the exercise as well. And then I’ll have one follow-up, please.

Abel Avellan (Chief Executive Officer)

Yeah, I think if you see, if history repeats itself, every successful launch company had started with a smaller rocket and then upsized it and basically abandoned the smaller rocket and stayed with the bigger rocket. And that’s simply part of the development cycle. So what we have done here is basically bypass all that process, which takes anywhere between seven and ten years. Historically those numbers have significantly come down if you see the eight launch companies that now exist in China and how long have they taken to get to orbit.

But that’s basically the normal process of learning an engine, developing a rocket, and then basically upsizing it. That’s what basically every successful launch provider has gotten into. So we structured this in a way that we bypass all of that—that we get owner’s economics for the engine. In other words, we had acquired the IP with certain—we didn’t set the parameters—but we had acquired the IP to manufacture the engines and use exactly the same technology, which is now hot-fired over 150 times, ready to fly in terms of qualification and testing that have gone through. And that’s the foundation of any rocket development. I mean, not to oversimplify, you can think about a rocket as a big tank that feeds engines to put things in a certain payload.

So engine is the core of the system. And then we are partnering with Firefly also on the engineering and integration of the remaining of the system from first stage, second stage, and third stage, which they have done—something similar—with other companies. But our focus is basically simplify that design. Simplify the way that these rockets are designed and built. Take advantage of the very extensive manufacturing capability, industrial capacity that we have built, especially around composite.

I mean, our satellites, if you see them and you see them stack up, they’re not that dissimilar to a first stage for a rocket. And we’re reusing all of that capability in order to manufacture at rate all the composite material that gets used in the rocket. I mean, the satellites are all composite now. All the structures are all composite now. And this rocket is all composite as well.

Michael Funk (Analyst at Bank of America)

Thank you for all the detail. I look forward to hearing more on Thursday. In previous quarters, you mentioned a billion-dollar run-rate target for, call it, quarters after commercial availability. Can you reiterate that target, or has that target changed?

Scott Wisniewski (President)

Yeah, Mike, we still believe that the revenue opportunity is approaching a billion dollars in the 12 months following commercial service launch. And in fact, given the progress on the government front and on the international front, we feel increasingly confident about that. But it is based on the 12 months after commercial service launch.

Michael Funk (Analyst at Bank of America)

Great. Thank you both for the time.

OPERATOR

Thank you. Our next question comes from the line of Louis De Palma with William Blair. Please proceed with your question.

Louis De Palma (Analyst at William Blair)

Good evening, Abel, Scott, and Andy. For the planned trials for the intermittent service prior to year-end, are these trials contingent on 16 active satellites, or will the trial still proceed with 13? And also, will these trials be broadly available to wireless customers, or will it be for a very select user pool? Thanks.

Scott Wisniewski (President)

Hey, Louis. So the coverage that we’re lighting up for our top partners in a few key markets is providing the service to them. So what they’re going to see is the combination of gateways working, spectrum available, and nationwide availability when a satellite is overhead. So that’s a very key step here, and that’s what we can do, right. So providing beta to the end user—that’s with our customer. And so those trials we see as happening in early 2027 after we’ve provided this initial availability.

So we think that those beta trials are best with about 25 satellites, although there’s some flexibility there. But for us, our long-held target has been to light up that network for them, and that’s what we’re focused on right now, with beta to follow shortly thereafter and early in the year.

Louis De Palma (Analyst at William Blair)

Thanks, Scott. And the team previously discussed the $21 million to $23 million cost per BlueBird satellite. How does this range potentially change with BlackLift?

Scott Wisniewski (President)

Hey, so we’re doing a big unveiling this week, and we hope you or someone from your team can attend, Louis. But, you know, with owner’s economics, obviously we expect those numbers to be way lower as we reach rate and as we start launching this rocket ourselves. So that’s really the whole intent, right. And so today launch is a significant majority of our unit cost. So yes, with that launch coming down, we do expect our $21 to $23 range to be much lower, frankly, based on kind of apples-to-apples satellite tech.

So that’s how to think about it. But we will sharpen those numbers for you in the weeks to come. But think about it that way.

OPERATOR

Excellent. Thanks, everyone. Thank you. Our next question comes from the line of David Barden with New Street Research. Please proceed with your question.

David Barden (Analyst at New Street Research)

Hey guys, thanks so much for taking the questions. I guess first, Abel, could you elaborate a little bit on the materiality of what it means to shift the manufacturing to an ASIC basis, you know, beyond like the 10 times? Does that mean, is this like—for the laypeople—would this be the equivalent of, you know, the V4 evolution of what the BlueBird could be? And that’s going to be coming in Satellite 31, which I guess under the current cadence would be a 2028 type of evolution.

And what does that mean in terms of service capability and capacity? That’d be super helpful. And then if I could go backwards, apologies, but I learned an awful lot about satellite trajectories and orbital clearances after the BlueBird 11 failed to kind of get to where it was supposed to get when it was supposed to get there. And so the question becomes, what, if anything, have you had to do to the rest of the satellite manufacturing capability to prevent that from happening again? Or was it all a secret plan to test orbital elevations, you know, with a satellite, and maybe we will see it again?

That’d be helpful, thank you.

Abel Avellan (Chief Executive Officer)

I’m not sure if you are referring to BB11 or BB7. Okay, so BB7 was part of the last batch. 11, 12, or 13, they all deployed successfully and are in operation. BB11 took longer. We needed to literally take it to spin in order to warm it up and open it, and that took longer than the other two satellites that were open, deployed, and put in operation within weeks of the launch. BB11 took longer, but successful—successful open—and it is in operation today.

That does not have any change to any of our designs or any difference with the old satellites that are in build. So they’re going to be the same as the 13 that are successfully operating. In terms of the materiality of the ASIC, I mean, this is the most advanced ASIC we believe to be in orbit. It’s a 7-nanometer ASIC that basically multiplies by 10 the amount of processing power per spacecraft. You basically go from 1 gigabit per second—1 gigahertz of processing spectrum—to 10 gigabit of processing spectrum. So what it means is more traffic per satellite. What it means is a lower cost per gigabyte delivered to an end user. That’s why it’s important that we do this transition as a multiplier on capacity per spacecraft.

OPERATOR

Thank you. Our next question comes from the line of Scott Searle with Roth Capital Partners. Please proceed with your question.

Scott Searle (Analyst at Roth Capital Partners)

Good afternoon. Thanks for taking the questions. Maybe just to follow up, on the Sovereign Constellation front, with the success now of J Leo, it sounds like there are other inbound interests of similar size and magnitude. I’m wondering if you could maybe provide some parameters around the number of potential engagements that you have, the size or maybe timeline—would