ASTS - Earnings call 2 2021 | AST SpaceMobile, Inc.

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Operator

Hello, and welcome to the AST SpaceMobile business update for the second quarter of 2021.

As a reminder, this conference is being recorded. It is my pleasure now to introduce the company's Executive Vice President and Chief Strategy Officer, Scott Wisniewski. Thank you. Scott, you may begin.

Scott Wisniewski

morning, good and you, everyone. Thank

you Let presentation, X the Slide contains me our refer which safe of to harbor disclaimer.

During forward-looking forward-looking on statements. actual events current may statements and uncertainties. make made are to differ could are we and on cause factors result, assumptions, expectations today's based and materially risks this a subject to call. Many These call, statements as certain from the

AST by as Risk obligation be SpaceMobile's discussed Readers these and about and forward-looking forward-looking filed time please Factors statements, risks may SpaceMobile not to June from section the the statements quarter Commission company that of reliance SEC to for S-X For and more information are others second with disclaims specifically update on often Form refer the time. uncertainties, XXXX the any with to in Form AST filed Exchange to and the during the cautioned of put Securities as XX-Q call. this well undue

that, Abel, Avellan; Officer, the and to and Tom Severson, like Chief call. CEO, Abel to With to Financial you. introduce over Chairman I'd

Abel Avellan

an you, is on for really Scott. be community to provide our our a public really as Thank us shareholders update broader the progress. excited you, This and quarterly our and milestone first here, a I'm update special company.

we team As many and of and deliver be day not could our fully my AST more to SpaceMobile and you on mission, work know, night life, committed our is it. to

solution long will more that using your that best life, it you one pocket. belief but have increasingly the the the are everyday term in becoming relevant most already is solutions and important the phone of part Space-based be and our for

phone not additional As incur or on specialized an usual, equipment. it satellite for cost will

XXX are world of million without There more any Over it coverage. And mobile half population, broadband. than X without the approximately cellular people are is phones. already billion cellular

financials. our of where with of about remind every today, to day. highlights of focus and an we also will But strategy, thought will plan execution, some try start our the company I talk we second plan business I to I we talk quarter you on and As update our first

Starting on Page X.

down strategy conclusion their industrialization, where we signing countries in divide about commercial us agreements and our network X to then development mobile is for efforts, we for mark execution. BlueWalker into organizational. X organizational people access and place will and Industrialization, breaks which Our X of we into the with getting market Commercial, BlueBird parts: to getting parts: into the phase; and split in operate subscribers. want operators for MOU And access right X.

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LIBTELCO both through and recently Africell, globally, a others. based We directly operators MUNI, with disclosure MOUs We regulators continue UT partners. network signed to new our Communications, and and with have broad mobile Smart Mobile,

early, first network total million. over from quarter. from X.X we end to had still count approval billion the with of have increasing X.X operators billion regulatory subscriber the in with mobile XXX date, it's X at we the countries to up under As -- population of MOU a And granted while result,

organizational progress, continue grew all enhancing to second across terms plan our of XX our in in-house employees by And the offices, our alone, in spacecraft hiring of quarter order we production. bring support Mobile. In significantly engineering, contractors to manufacturing, procurement XXX XXX employees, and third-party full-time including at dedicated working XXX corporate to services ], activities. [ XX our AST This team XXX full-time (sic) and engineering Space scaled

time some office our and will an office there opened but We was business for also a We regulatory U.K. felt engineering development, time, our employees that the support good had to now we and functions. in open

Scott. you. you, that, Thank back With to

Scott Wisniewski

Abel. you, Thank Great.

solution to I briefly on want Over we and SpaceMobile the are what to of couple and launch is now of link opportunity the BlueWalker AST to back the frame that next X. minutes, towards working working

may of to this little on repetitive, continues a ground quarterly as but our be want we to our Some the grow, audience update fundamentals. first

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subscribers. they operators devices numbers understanding our the network X.X like of ours would in where out we first mobile as coverage people are are are work fit, and travel. and who think cellular unique move billion to with and paying of our These live, relevant that Some service mobile

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look see and base at a huge of the we unmet broadband, So cellular users we installed in state and of play needs.

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just our to to able directly network. be will You connect

dollar this extra device is an pinch the changes the because For expensive those very service. need for price less the a several familiar special unit a by with base. points user economics purchase network bypassing And a user solving the requirement expanding for global aside adopting offering telecom subsidy you service the provider, and you network at new about once considers or more points, have put potential it thinking lower when can hundred start user

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the side of the to business. commercial Shifting

offering operators to and and existing that network is and and deliver plan feels we so service strategy go-to-market network to partner service, a looks their build it like simple, mobile subscribers. Our to our and cellular pretty organize that with service we

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XX almost commercial billion we But collaborations, technology have we and have As a date, we MOUs cumulatively sign with will we approach. MNOs more we subscribers. to have with elegant updates. an provide matched X.X who Overall, believe revolutionary agreements different

X. Slide to Moving

So what's Cape announced next? our out to with backyard. own weeks BlueWalker Canaveral, SpaceX are of of and launching ago, X our expected we be March couple from launch A we thrilled for

delays in of studio is using BlueWalker to validate features now capable the with This notable our phased a from effects orbit and planned refresher, of system standard cell communication BlueWalker spacecraft Earth ever XG XXXX, apartment. to satellite, SpaceMobile directly was XXX size deployed of a the network test this, low end-to-end is via or feet and As the space, used our it square about measuring XGPP communicating in on protocol. launched phones X, architecture Building design, LTE Doppler demonstrate of frequencies. was the X arrays largest one as managing the

we project testing including with a mobile believe signal of nonrecurring required small generate here with over engineering to incurred on key progress, powered and to miles XX% hundreds of frame, phone CapEx attribute communicate for expenses. manufacturing and continue assembly in Overall, order time and planned target March and a the away. to size is and The a we're relatively paid, power strength low

to launch be mobile elements other we be will months following Ultimately, goal are checks, Texas, Hawaii phones. get XG of and of doing We'll some the but X sense testing to date, backhaul equipment able and and and provide of SpaceMobile's orbital more basic with give there as to In Immediately launch, following for of configure ground production spacecraft details doing couple including placement, after be the we launch, connectivity. the happens spacecrafts. a we wellness closer network test you to unmodified locations the a XG full what will with deployment to interconnect and globally. operators system We is health ensure launch, mobile BlueWalker will in plan.

Slide want put solutions and space-based SpaceMobile with AST of into it it lots of off I flowing key LEO X, and to Moving few think a only for to for I the into investors play that space Tom, is leave a context. AST shows differentiation importance you telecom pure investment networks, points to public we before hand to and of With tech, the in broadband. SpaceMobile broader

large going are to with market $X is not we over mobile playing in X a giants, We are trillion with them. we TAM, jointly solution a applicable competing phones and also to very and related and with are a billion market industry that

We and revenue message, text business approximately of allow have up cash model simple million users to designed to phase a fund spacecraft. and the $XXX share we business sign first operations have to with production a

is hand off with pleasure to Now to that, Tom. it my

Thomas Severson

Thank you, Scott.

welcome everyone too, call second which first business like a quarter company. public our to conference update, I would as our is First, to

production and with combination and The started used X, to which of the ticker April business business $XXX.X On net operations our the New trading construct million proceeds, Corp. in on satellites. provided the our Providence ASTS. to NASDAQ be will closed fund transaction Acquisition phase under first we

we the cash As of XXXX, quarter company debt is of and hand, ended $XXX.X June on currently XX, million the free. with

of from transactions through the account New from $XXX financing. pipe proceeds Trust cash also sale million derived and a were The in Providence the the

space-based to first the the the Tower of risk production eliminated delivery the financing was funding our and also Vodafone, new technology our Rakuten, extremely addition to it of the investors, phase In company supported and capital for was with proof associated pre-transaction provided investors, and as cellular American important satellites. pipe Cisneros. including by transaction This our

with constellation Now to well public the satellites. positioned the XXX additional are SpaceMobile capital raise currency, complete the required of we to

primarily ongoing into some I'd to to forward second services, operating engineering into increase increased over first of of as the sequential quarter quarterly see which second look initiatives to due $XX of the compared quarter of increase give Cash highlights to the we $XX.X were expect operational XXXX. on of first financial expenses, and from and to turn $XXX,XXX million trends quarter to for million now million. R&D million 'XX This and G&A, our XXXX and for for of half R&D $XX.X XXXX the $X.X was the the second for we quarter XXXX, color like including a quarter second for expenses, XXXX.

During time expenses XXXX engineering engaged third-party our the production to aggressively to quarter, and work remainder lead in of complete to we ramped optimize technology constellation long to electronic seek expect order we our continue meet I our efforts timing R&D design with goals. and up second the of third-party the partners XXXX relating as our and satellites. through would items

staff increased becoming million as the a related company, public in million other $X.X we legal, to D&O $X.X In relating addition, and to prior from QX expenses quarter expenses. insurance, including corporate G&A incur

of XXXX of Engineering quarter $X.X Services $X.X XXXX. million the compared million to increased to for the first second quarter for

expenses as refer our facility for ramp and testing, engineering responsible satellite Texas. integration in add We assembly, Midland, to grow our as we AIT staff and which we to team also additional engineering-related expect at continue up to

We the our in are in to order process full-scale currently production meet requirements. of AIT our process industrializing

In QX grew count the XXX end XXX head end from AIT the QX. our to of full-time engineering at of of employees terms consultants, total and and at

the We our as ramp XXX this capabilities. grow to by expect approximately to of end XXXX AIT we

in watch CapEx, of incur satellite, our $XX.X an the project satellite nonrecurring bring significant we cost the A $XX invested BWX million also total the expect of million to is completion. $XX of portion to million and development costs. includes terms BWX to the In to and of additional componentry and have project date, we to construction

launch that Total investments And facility our plant $XX.X X quarter. were through in Phase million Texas AIT X equipment to our property, is the report assembly of Midland, end substantially in happy of and BlueWalker plan in second complete. March have integration which we the the the and to to we're next of process And testing year. in of we are currently satellite, ready

move continue launch support into timing and As will in we our to expand we capabilities AIT prepare to production that will full-scale a manner goals. production, our

cost ramp XXXX as it we begin spending, in each process through the Finally, are to production these constellation XXXX the first first satellite relates launch million to half and range. of $XX the satellites, for still and estimates satellites average And expected our to we to our in million to up XXX per investments first cost currently XXXX. expect satellites, XX to build the the engaged the with our of satellite million as in $XX phase $XX.X be is close to through CapEx and for We procurement our $XX million reaffirm we range.

our we procurement As execution the satellite close ability our further remain move we confident plan, technology. to our the process production to deliver the and respect our design, our of and of into cost plan with

open And with the questions. that, let's operator, for call

Operator

[ have Crilty [ question, [Operator our from first Instructions] ]. Analytics we Crilty For Chris ]

Unknown Analyst

in the to Soyuz make I no increase cost Tom. CapEx changes from phase from any material question switching CapEx to assuming you there was First profile, or over Since hear for [indiscernible]. didn't I'm

Thomas Severson

material. right, Nothing which do Chris. engineering some We we changes, did. to had That's obviously

X, the XX And we're for cost so complete. in have of XX% XX you see to go, to terms total and we BlueWalker

Unknown Analyst

or And just actual are going to Great. an an the insertions? purposes? those us, orbit availability if remind testing planning Does types it's it equatorial rideshare you is launch your that both what's orbit? a for still rideshare of be around launch? for doing of on if can matter that a And you And event, inclined

Scott Wisniewski

Chris, I'll start.

that the one do SpaceX launches pretty factors we and them but for to plans we've payload, as provided will the that it with primary timing that that comfortable going we're was the not number of increase motivating protected, with the window feel are and of been We certainty.

of feel even we we're know, primary to... terms So the though Abel, good payload. the don't you do orbit, about not that want And I in

Abel Avellan

with want BlueWalker Yes, it's orbit, inclined to a very and take XXX-kilometer what orbit, we of representative it's well X. an

Unknown Analyst

And a calculation antenna that, smaller it presumably a with lower planned that with simulate the than altitude? which was is from higher a made antenna XXX-kilometer to be larger would altitude, size the operational orbit, what

Abel Avellan

the you to it to sides, basically, Basically, Well, XXX change the to handset. change the the BlueBird capability time to and available being that's for have that, achieve what between we Yes. directly X -- to XXX can XXX difference BlueWalker handset XXX both testing, that connect XXX the is broadband X, a designed in and And altitude. directly connect of kilometers speeds. the range of doesn't

Unknown Analyst

congrats room I recent FCC. some regulatory us your and of Can of I stand update of give might on in regulatory while you, MOUs process elephant waiver you and we see expectations on have guess, approvals. the the an the where guess just Abel, I the you is And progress the kind milestones? in Great. when

Abel Avellan

service around actually Well, them countries. reminder, the after from the to and get after equatorial as approved process in hear so the the expecting to our and U.S. actually comments the is later application November, commentary step is November. we -- about FCC. the Yes. a next just FCC to application we're in subject in with period The our But

Unknown Analyst

that And NASA the Can you an know altitude -- the situation? around intended on A were give us update and I there your issues some train.

Abel Avellan

Well, they will application. communicated oppose our FCC the actually, the -- to officially not that NASA

of relationship our of operation to had with them. We satellites have NASA and anticipate to long-term the agreed a working the satellites. built regards with with We share our position with relationship a them

resolved So ago. -- many many, was but completely that months issue

Unknown Analyst

source? as not And anticipate components do clearly supply in your chips issues, parts suppliers, critical you Great. production chain to But you're shortage, any or or you you're currently now. mode and global at chip looking that look

Abel Avellan

Yes.

X, don't. we BlueWalker For

approximately actually ago. for parts the and a have purchased in year X. integration final actually electronic on testing BlueWalker hand. All stage We We're all the we on parts

a developing constellation, had for we BlueBird ASICs. X where and we For our plan the own are

procuring an are production also that advance. items very manage the moment, It's advanced procuring we to of by At lead the production We long this in issue the we are monitoring that can in Xs, preparation basically we it long items feel in satellites. lead BlueBird closely.

Unknown Analyst

understandably, And that more be. guess is I substantially the units to portion applicable The cost Great. compare of Or when probably a volume? price? expect there cost around BlueWalker question. is production But significant and projected of you beyond NRE projected X, And assume than to what elements final I on that X now BlueBirds the the to also. that I the are driven at cost is production to targeted you primarily reduction get BlueWalker mean that, look other your a satellites, you it

Abel Avellan

BlueWalker loaded in we went we Yes. that where satellite heavily have pre-metal to through X heavily, phase to Basically, a development now. get NRE. design is some the

know BlueWalker had X. X. will Bluebird for We simply the estimation construction cost very, a the we of very close And because BlueWalker X of of

beginning had BlueWalker we significant the stage cases, using X. at There are the we volume. do more are lot panel prices the design some FPGAs some focusing we're the We satellites and one some last the that at that said very for confidence a of mean the transition hard part, material to target effective is basically industrializing BlueWalker in ASICs as using cost advantages cost the has to And production of BlueWalker from for are I process that we're solar we're for one than with I the developed as have. in X Also, to much this The that the of conference, on with them. of X. on the

satellites, for much ground built as lever think remind that we when And technology in possible parts that modular. are satellites use or all identical used consumer want equipment the our pricing as is They on to electronic also one components. they order to with our thing about are people that

buy are or our a design vertically manufacture pretty we where We much in all components fully volume integrated the of or the electronics design and system.

our have we system. electronic own So

own panel anticipating for order in reaction en our we're wheels be to We cost produced have that masse had BlueBird We solar our to own the make X. system.

Unknown Analyst

up separate question. that brings Actually, a

that given X global per constellation, think targeted a I first sort the production would you rate intended do you rate and through production satellites I the the of month. in of time? And you'll consider production the that the there? size guess of full Or of is production target script, capacity the the question mentioned that phase equatorial for full you ramp from

Abel Avellan

capacity XXXX. in Yes, that is our production

need continue we But We it. run, walk. to will we before increase to

Midland. So XX,XXX had feet an square in facility we

be that us We will manufacturing satellites. time allowed modular that, All is production quarter. that much In to quarter order We X support to and for would satellites the expanding capacity to the we're order rather launches to that this satellites with to we that a XX be ourselves designing. in achieve we're roughly fully satellites every number month. identical. in That per us space pretty produce roughly frame availability follow launch to do, able system to are of than setting provided the allowing which process satellites automotive XX closer to XX of to us satellites is XX allow a in working between are launch available,

Operator

question, our Kraft Bryan from Bank. next we Deutsche For have

Bryan Kraft

you you industry out know, and why the the help you array. are of in versus have some including size assessment, still at among the your the the skeptics point? of Can figured you maybe if design, the understand already viability just have kind wrong don't there this of us regarding where satellite is as point satellite design out namely there in around you're what those efficacy Abel, the you some skepticism and you of engineering, the of think it at an mind, this out confidence figuring

Abel Avellan

recently, hardware Again in to how starting I just SpaceX satellite company for the the model are very industry, mean and space. build for doing much have pretty others over change to general, same ourselves, been a the like conservative Yes. a decades. industry, on

support X,XXX before. patents patent our in any previous design of design different to That's design. than is completely spacecrafts the order we reason I and have will claims our say, around other why

directly of enough what term produce to -- to the new is it design connect weight, compared in power been is handsets, to the and has ability mechanically a doing. industry gain thermally, to So

the say, directly connect with extensively our What first wireless satellites. we that our That purpose tested was we Rakuten, American whole is viability test handset reviewed Vodafone, the That we satellite Tower. to partners, with of something can that. have have to a

XXX of is largest Then it square what phase of tricks handset. one it part feet deployed. a That roughly largest makes of to array. directly will phase BlueWalker the one to -- X array will connect already to be be the be It's

years that will have over very confident of technology. deployment We we spent X.X testing on that the ground, that the so and support we've deploy

to So and the able in viability of satellite module at we're why reason is this done technology, order a to really the that to the be break point, connect the build approach a the very produce directly in confident it. and to that nobody feasibility enough to somebody before, novel basically code. to on has handsets. power We did broadband speed gain And needed and

phase industrialization, with phase multi-ton, fast the moving of BlueWalker closing the we've We rate month. starting to satellites. into large. produce are able basically of development to they are and X these of Even X at per the they though -- basically the which launch move are We produce them been

Bryan Kraft

before multiple you launch see Will space the okay, in made will at you're first be of the any be there correctly be that understand sort there of came going in could Or to modifications many of a across any satellites need one first and how issues it the it just you test deployments are one? orbit or any whole launch? trying without to I launching in environment commercial can deploy to after will be risk starting ask hope launches into once commercial unfolds If I to putting you're much right but design you BlueBird kind just one launch where case follow-up. that X that tranche. into test you -- in

Abel Avellan

that's no, great a So question.

or in obviously, launch to way BlueWalker X single is, in X same the So is us in up a our a satellites XX to smaller March. launcher, launcher launch plan vehicle. for a there Then well, with

We will that. doing not be

plan So and of BlueBird we is items will X. purchasing we're BlueWalker end of to lead parts the all we the Xs a launch that our handful launch which By do for that. XXXX, long would require to

then will to and that And we XX line XXXX. launch XX things to launch be QX, QX other need in pending availability up to

to up we So with go is not that on to capability our launches anticipate the the whole take -- XX, launch. at which will for satellites, we first with the

one then X, we launch between to point, in able and be satellite, launch. to then BlueWalker few So And a XXXX. per hope XX that at XX

Operator

don't any concludes for all We further you call. and conference this Thank at today's time, that have questions participating.

disconnect. You may now

AST SpaceMobile (ASTS) 16 Aug 212021 Q2 Earnings call transcript