AST SpaceMobile, Inc. (ASTS) Earnings

Management highlights

- Strategic Position & Technology Differentiation * ASD SpaceMobile is building the first global space-based cellular broadband network that works directly with standard unmodified mobile devices, designed to extend and complement existing terrestrial MNO networks rather than replace them. * The company holds over 3,900 patents and patent-pending claims, with satellite technology capable of tuning ~1,150 MHz of low-band, mid-band, and future C-band spectrum globally. It has access to ~100 MHz of combined MNO-partnered and directly controlled spectrum in the U.S. and over 60 MHz globally, creating a significant competitive advantage. * The ASIC chip for satellites is now in full production, supporting up to 10 GHz of processing bandwidth per satellite (a ~10x improvement over the first generation Bluebird satellites), with potential for an additional 10x user experience gain via AI-enabled spectrum management. - Commercial Ecosystem & Deployment Progress * The company has secured over 60 MNO partners globally covering 3 billion combined subscribers, including major partners AT&T, Verizon, Vodafone, Rakuten, and Bell Canada. * As of Q2 2026, 3,000 low-band cellular cells have been deployed in the U.S., with the full 5,600 cells needed for U.S. coverage expected to be deployed by the end of 2026. 50 gateways are in various stages of completion/installation across 20 global markets, with 13 gateways delivered to 7 customers across 5 continents in Q2 2026. * Bluebird satellites 11-13 have been successfully launched and are operating as expected; Bluebird 14-16 are nearly completed with final testing underway, and satellites 17 through 46 are in various stages of production. The company targets 45 Bluebird satellites in orbit by early 2027. - Manufacturing Expansion * The company follows a 95% vertically integrated manufacturing strategy and currently operates over 500,000 square feet of global manufacturing space, with a current production cadence targeting six fully assembled satellites per month. * A new 400,000 square foot manufacturing facility is planned in Midland, Texas, which will bring total global manufacturing capacity to over 1 million square feet (over 900,000 square feet in the U.S.) to meet growing demand from government and new commercial end markets. - Expanded Total Addressable Market (TAM) * Beyond core direct-to-device cellular broadband, the company is leveraging its existing satellite and gateway platform to expand into multiple new high-value markets, each projected to become multi-billion dollar annual revenue opportunities: government defense communications and non-communications (radar), sovereign national resilient communications, federal emergency/backup communications, IoT, and space-based AI edge compute. * The company was selected for Japan's GLEO (Low Earth Orbit Infrastructure Development Project) with an expected total value of up to $1 billion in non-dilutive government funding, following prior ongoing work with FirstNet (U.S.) and multiple international government partners.

Guidance

- Full-year 2026 revenue guidance is maintained at $150 to $200 million, with revenue expected to grow sequentially quarter-over-quarter and be weighted toward Q4 2026. The company confirms it remains on track to hit this target based on contracted programs already underway. - Q3 2026 adjusted operating expenses (excluding adjusted cost of revenues) is projected to be in the range of $105 to $115 million, with full-year 2026 adjusted operating expenses (excluding adjusted cost of revenues) expected to total $400 million, an average of $100 million per quarter. - Q3 2026 capital expenditures are projected to be in the range of $350 to $425 million, with timing of launch payments causing quarter-over-quarter variability in capex. - The average total capital cost per Bluebird satellite (including direct materials and launch costs, excluding early validation satellites) is maintained at $21 to $23 million per satellite, with the company targeting potential cost reductions over time as production scales. - Management reaffirms its long-term target of approaching $1 billion in revenue in 2027, the first full year of expected commercial service, with government projected to contribute roughly half of that revenue, infrastructure/gateway revenue contributing a portion, and commercial service revenue ramping to contribute the balance. Commercial service revenue recognition is expected to begin when commercial service launches in 2027.

Segment performance

ASD SpaceMobile reports total Q2 2026 revenue of $31.5 million, more than doubling Q1 2026 revenue. Revenue is split between two core segments: 1) Commercial MNO (Mobile Network Operator) segment: Revenue comes primarily from gateway equipment sales and MNO consulting services, which makes up the majority of the $1.3 billion total contracted revenue backlog, with government contracts accounting for a minority share of the backlog. 2) U.S. and International Government segment: Revenue is generated from contract milestones for communications and non-communications (including radar) services, with three new contract awards awarded in Q2 2026 totaling over $100 million in expected funded value for 2026 and 2027. The company does not break out segment-specific revenue contribution percentages for the quarter.

Risks & headwinds

- Launch timing variability and launch provider performance risks: The timing of launch payments causes quarterly variability in capital expenditures, and Blue Origin's recovery from its May 2024 launch anomaly creates uncertainty around the timeline for its upcoming launches, though the company has a diversified portfolio of contracted launches across two providers to mitigate this risk. - Cost volatility: Satellite manufacturing and launch costs are subject to fluctuations from dynamic geopolitical factors that could increase projected per-satellite costs. - Revenue achievement contingency: Meeting 2026 revenue targets depends on successful launch and deployment of Bluebird satellites, achievement of contracted government milestones, completion of gateway sales to MNO partners, and successful activation of initial commercial service. - Market and regulatory uncertainty: Expansion into new sovereign government and international markets depends on ongoing regulatory approvals and government funding decisions that are outside of the company's direct control.

Analyst Q&A

• Q: When will meaningful government revenue scale, and what are the details of the company's radar capabilities?

  A: Over $100 million in new government contract awards were secured in Q2 2026, and the company expects government revenue to grow into a recurring multi-billion dollar annual opportunity starting in 2027. Radar applications use government-provided lower-band spectrum, leveraging the company's existing large satellite phase arrays and in-orbit sensing capabilities that are already operational.

• Q: What demand is driving the 400,000 square foot Texas manufacturing expansion, and what is the target monthly satellite production rate?

  A: The company currently targets six completed Bluebird satellites per month at existing facilities. The expansion is needed to add additional production capacity to meet growing demand for satellites from both government applications and new non-core commercial opportunities. Once completed, total global manufacturing space will reach nearly 1 million square feet.

• Q: How does the proposed U.S. MNO joint venture affect existing agreements with AT&T and Verizon, and does it open opportunities for T-Mobile?

  A: Existing binding agreements with AT&T and Verizon remain fully unchanged and unaffected by the joint venture. The joint venture actually frees up opportunities for ASD SpaceMobile to partner with additional U.S. MNOs including T-Mobile, consistent with the company's carrier-agnostic strategy of serving all operators.

• Q: What is the current cost per Bluebird satellite, and how is this expected to trend over the next 12 months?

  A: The company's all-in average cost per satellite (including direct materials, labor, and launch, excluding initial prototype validation satellites) remains in the previously guided $21 to $23 million range for the full 90+ satellite constellation. The company expects this range to hold for the first constellation, and will work to reduce costs over time as launch and production economies of scale improve.

• Q: What common infrastructure is leveraged for the Japanese GLEO sovereign constellation, and are other similar opportunities expected globally?

  A: The GLEO satellites use identical design to the company's core Bluebird constellation and can leverage the company's existing global gateway architecture, so most infrastructure is shared. Management notes that resilient, sovereign controlled communications infrastructure is a strategic priority for most major economies, and confirms multiple ongoing discussions with other countries for similar dedicated constellation projects.