Q4 2025 Earnings Call — March 2, 2026
Griffin Voss (B Riley Securities): Hey, good afternoon. Thanks for taking my question. So, first I just want to talk about, you know, this expanding TAM that you talked about with the dual use capabilities and government contracts. Do you see any scenario where you build and launch future BlockBird satellites with different payloads that might be exclusively for government customers or applications?
Abel (Executive): Listen, the satellites are really designed to manage all these applications in a single platform. So we do not need multiple satellites for multiple payloads. The core applications for our government contracts for our partnership with the MNOs are all possible through the same platform, which are in fact already being used in combination of the two. So we want to maximize and take advantage of a platform that can be used simultaneously for the two times.
Got it. Okay, understood, Abel. Thanks for that. And then this second one for me, you know, you always mention your thousands of patents and you talked about on this call, you know, your expertise in building and deploying massive structures in low Earth orbit that could be used for, you know, myriad opportunities and, you know, you specifically call out these burgeoning opportunities in AI. You called that out with the convertible rays too. But you have this one specific patent that's been of interest to us for a while for thermal management systems for structures in space. And that's a patent that describes a process for satellites wherein heat is dissipated locally at each antenna. and heat could be directed to each antenna assembly during periods of extreme cold. So just curious if you could maybe elaborate on that specifically as well as, you know, your other capabilities and how that could, you know, potentially be used for opportunities in data centers in space or why that makes, you know, ASG satellites attractive for those types of capabilities.
Yeah, no, absolutely. I mean, there are many key enablers that needed to be designed by us and deployed in patent in order to solve probably the most difficult problem, which is connecting broadband regular handsets. So for that, we needed to develop and vertically integrate 95% of our technology, have the technology to produce a low-cost power. That's a very significant size. We are on a factor of 10 lower per square meter power production of what historically manufacturers had been using, the size of the satellite. And then the ability to generate power at a low cost per square meter, and then being able to dissipate, and effectively run a lot of wattage per square meter within the power constraints of the space. So we have, that's where we have built up a significant portfolio of IP. That is a particular, I think you hit it right, that's a particular technology that enable a lot of things. Then when we talk about the ability to manage the spectrum using AI capabilities, we call it spectrum, AI spectrum management, the ability to use these satellites, not only for communications, but other applications like radar.
When you combine that with the ability to store, manage data in a way that uses the spectrum very, very efficiently, it opened a lot of other opportunities on the TAM that we have. We believe the largest TAM is in broadband, through broadband, directly to the handset, where you will be basically becoming what I call the third leg of communications. You have Wi-Fi, you have cellular and now you have space. And our belief is to participate at a scale in a way that is meaningful for our global operators, the broadband capability is essential. And it's something that we have now. I mean, that's what we have with the satellite that we're deploying right now. And we're extremely happy of the performance that we see on our VB6 in the new 2400 square feet platform that we just launched.
Got it. Thanks for all the color, Abel. I'll hand it off here and hop back in the queue. Thanks for taking my questions.
Colin Canfield (Cancer Fitzgerald): Thank you for the question. As we parse out the comments that you talked about on 2028 revenue potential, just kind of thinking about the bull bear of what you said, so multiple versus 1 billion of potential in 27, which suggests, you know, let's call it 1.5 to 3 for 28. How does the team kind of think about the mix of opportunities between government and B2B customers? And then kind of within B2B, how do you think about tech discussions between communications intelligent and then intelligence and on-orbit compute thank you.
Management: Thanks, Colin. I'll take that. So we put forward our expectations for revenue in 2026, building on, you know, the high end of our guidance that we achieved in 2025. And then we stated a goal for 2027. So we did not state anything for 2028. So I'll keep my comments to 2027. But I think what we see is as we get this platform on a full year run rate and we're able to put the consumer business, the D2D communications business in place in some of the most favorable markets globally, and then you put that alongside our government applications, getting some time to mature and some potential contract wins we're chasing. That's how we got to that 2027 goal number. And we think that, you know, that's probably, you know, more weighted towards commercial based on that framework. But, of course, upside, I think if government does better. And as you go out into 2028 and later in the decade, ultimately, we do think that our commercial business is going to be bigger. That's always been the premise. So commercial, I think, at scale should be bigger than government. We think that market's really attractive. We think all the demand drivers will attract for commercial.
The seven, eight years of the company are intact and growing stronger by the day. But the government business is also very attractive. And as we said, with all the various use cases we're tracking, there's potential for multiple billions of annual revenue through those use cases as well. So we see a really bright picture. I'd say it's largely consistent with how we've always seen it, although governments trended up over the last year or two. But that's how we see the mix playing out. And, you know, I think that's, you know, as we're deploying and as you saw, we put out a number of customer announcements today, we see the strength of that demand as strong as ever. Thank you. I appreciate it.
And then as we think of the progression of growth, is it fair to use the 4Q performance as a baseline for 2026 and then growing from there? Or is the commentary in terms of growth for 2026 more aligned with just growing from the...
Management: The way I think about it is, you know, before we initiate commercial service here, we're doing revenue that's kind of earlier stage, right? So the commercial revenue is not as consistent and the government revenue is building nicely, but much lower than where it can be. So quarter to quarter, I wouldn't say we're planning on building quarter to quarter. I think think about it annually, like Andy put it in his speech. It's really about an annual target. And so I think at least doubling where we hit in 2025 is the right way to think about it, with, of course, upside as we launch commercial service. But quarter to quarter, at least in the next few quarters, before commercial service comes into play in the second half of 2026, that's how to think about it is, you know, we're putting commercial infrastructure in place and we're performing against our government pipeline. That's great. Thank you.
Brian Graff (Deutsche Bank): Hi, good afternoon. I'm just trying to understand the manufacturing side a little bit better. Would you mind providing just some color on how many satellites beyond BB-7 are built and ready to ship today, and maybe how many you expect to be built and ready to ship by mid-year? I know you talked about the microns, and those are the hardest part, but I think there is some assembly that takes some time beyond the microns themselves. And then, you know, just related to that, I mean, you know, I think, you know, clearly the manufacturing pace is somewhat behind where you had expected it to be. Perhaps you could maybe just give us some appreciation for the kinds of things that maybe took longer than you had expected and whether you think you've now worked through all those issues and you're kind of accelerated or accelerating the pace up to where, you know, you had expected it to get to. Thank you.
Management: Yeah. I think we are at a point where you see that acceleration. We certainly see that in the manufacturing of the key building block, which is the micron, so which we are on satellite 30. We are on target to at least be ready to chip this year 60 satellites, with a minimum of 45 into orbit. So we went through a phase and, you know, just a year ago, the satellites were three and a half times smaller. They were already very big. They were the biggest ever launched. These ones are three and a half times bigger. And those will be six and seven. By that, basically, what is something that help us to accelerate our cadence of satellites in orbit is we are able to stack them. And that stack is difficult, you know. You need to be able to stack either three, four, six, or eight satellites. And that is near completion. So that's where you will... You see batches of six in the getting out of the factory very soon here.
And, okay, so on the stacking, if I may, just in layman's terms, are you saying that there are specific engineering things that you had to figure out in order to get the stacking right? Or are you just saying that, you know, getting that many done at once so that you could stack and get it ready for a combined launch took some time? Just if you don't mind clarifying.
Management: Getting them ready for a combined launch is the ability of, I mean, you're talking about something like a five-story building worth of satellites. Stacking them in either blocks of three of them, four, six of eight. But that process is completed. And the next batch of six, you see the pictures in the deck that we put in the AR deck. And we pass that phase as we get ready to resume the achievements to the gate.
Thank you. If I may sneak one more in, I know you said that BB7 is expected to go up this month and then, you know, launches every one to two months. Could we expect possibly a launch with multiple satellites in April, or is it likely to be two months post the Mars launch?
Management: Yes. I mean, the All further launches are in a stack configuration. We don't have any more single launches like we did on BB6 and BB7. This next coming launch is super important for us as basically allows to reuse the first stage of the new Glenn, which is the only platform commercial that exists that can actually stack eight of our satellites. There are other platforms that stack six or three, but with the new Glenn, we get the maximum amount of satellites per launch. And that ability is becoming available with the new satellites. And, Brian, I'd just add, you know, we expect to ship that next batch in April. So depending on timing and, of course, under ideal conditions, it's about three weeks or so to launch from there. So we're not going to speculate on launch timing for that, but we look like we're going to be in a position to ship those in April. And you can see that on page 10 in our deck.
Great. Thank you.
Louis de Palma (William Blair): Good evening, Abel, Scott, and Andy. Congrats on all of the partnership announcements and the progress with your constellation. First, I was wondering, are you in Barcelona for the conference? And will there be more announcements this week besides what you've already announced? Are you... Are you holding back certain announcements?
Scott (Executive): Yeah, we are in a conference room in Barcelona, so it's great to do the call this quarter on the road. But, yeah, we had a flurry of announcements today, and, yeah, you can expect more for the rest of the week as well.
Excellent. And my second question is, what service level – will your network support when you launch the different beta offerings in the summer? Will there be different phases in terms of the service capabilities as more satellites come online? Or should the initial beta that launches whenever that takes place, will that have close to a true 5G experience?
Abel (Executive): Yeah, the way to think about this is peak data rate. So what peak data rate you can expect on the phone will be directionally proportional to the amount of spectrum that we get allocated. And with some partners we have between our spectrum and their spectrum, enough to around 100 megahertz and you can think you can put a multiple of that number of megahertz to think about what is the big data rate today we're managing between three and four bits per hertz so so that multiple is in that order. So the initial launch of commercial services is with the lower end of that. As the allocated spectrum, it will be less. But as we enable more spectrum, which the satellites support them now, they have great flexibility to keep adding spectrum and keep adding and later even combining low-band spectrum with mid-band spectrum. then you see the peak data rates keep enhancing. So that's the way to think about the key performance metrics as we launch services.
Thanks. That makes sense, Abel. And one financial question. For the $1 billion revenue goal for 2027, how much of that is customer or subscriber usage based versus being like minimum revenue commitments that are contractually obligated with your MNO partners such that like if you actually are able to get like between the 45 and 50 satellites online by the end of the year, how much of that $1 billion is then, like, already in the bag, so to speak?
Scott (Executive): Sure. So remember, we're at $1.2 billion contracted backlog right now, which we're very proud of and is a testament to, you know, how we've built the ecosystem with our partners and how confident our partners are in the business that we're building, right? But that is still past. very, very low number compared to what our expectations are for the revenue potential of the business. So while it's a good indicator, that backlog, which again is over $1.2 billion at this point, but in terms of its contribution to each individual year, it'll be a minority for sure. So if we're – in terms of a goal of $1 billion, you know, you can think of that in the low hundreds of millions, you know, somewhere 100 to 300 range depending on the year.
Great. Thanks, Scott. Thanks, everyone.
Chris Scholl (UBS): Great. Thank you. Looking at your new disclosure, it appears your services gross margins are around 90%. Is this a good way to think about the business longer term? And as revenue generation starts to kick in, can you just remind us how you're thinking about operating leverage and where you believe steady state EBITDA margins can reach for the business? Thank you.
Management: Yeah, we've been pretty consistent about this over time. And when you look at the history of the satellite industry, when it's been performing well, it has margins in the 80-plus percent range. And even today, if you look across the market, there are businesses with 90-plus percent flow-through margins in certain segments of their business. They just might not report it that way. So this has just tremendous operating leverage in it, and we've always known that off a fixed cost base. So as we've built the business, nothing's really changed. I mean, we struggle to find true variable cost in a meaningful way, and this is compounded by the fact that, remember, our go-to-market strategy is with the revenue share. So that is a big way that we even get greater leverage in the business and make it not just wholesale but super wholesale. So at this point, you know, our flow-through margins and our operating leverage, we think over time could contribute to any bit of margin, you know, in the 90% area or higher.
Great. Thank you. If I can just fit in one more. I recognize the 10K talks about 90 satellites supporting your longer-term business goals, but does your ability to raise capital maybe incentivize you to perhaps go beyond what is contemplated in the original business plans?
Andy (Executive): I think having that flexibility, I mean, the market, the capital markets have been wonderful for us over the past year. So that's absolutely the case. But the reality is when we get our constellation built, we're going to get leverage in the P&L to actually be cash flow positive from operations. So we don't feel like at this point we need to look beyond what we've raised right now. It provides us the flexibility to make additional investments, opportunistic, and some of the other things that we're doing on our spectrum strategy. But the real goal is to generate revenue and profit from the constellation as we get a launch. So that's kind of how we're thinking about it right now, but it's certainly nice to have the balance sheet fortified the way it is.
Okay, great. Thank you.
Greg Appendi (Clear Street): Hey, guys. Thanks for taking my question. Just a real quick one. On the operating expenses that you outlined, could you just remind us what you said, and does that include what will likely be spectrum licensing fees, maybe around 20 million a quarter? Or lease, I'm sorry, spectrum lease payments?
Andy (Executive): Yeah, this is Andy. So it's a bit of a walk here. You've got, you know, sort of the GAAP OPEX, which includes the normal non-cash items, which we adjust out, which we've talked about. And then from there, we also have the cost of revenues, which, you know, when we get to service, we'll move into a more traditional COGS service. P&L that you'd be more used to there. But then when you net that out, my commentary was that we were just slightly over where we were in Q3 of 25 and right in that guidance that I gave for Q4 in the mid-60s. It does not include spectrum costs, as you described, for licensing, given that those are capitalized until we actually start monetizing that asset. And, of course, we're at the point where we're awaiting FCC approval. So we will speak to that as a specific item when it comes time to kind of build that into the operating expense. But right now, apples to apples, that's been out during the course of 2015.
Very helpful. Thanks a lot.
Management: And we have reached the end of the question and answer session. And therefore, I'll now turn the call back over to Scott Wisniewski for closed remarks.
Scott (Executive): Thank you, Operator. And we want to thank all of our shareholders and research analysts for joining the call. We hope to see many of you down in Florida at our upcoming launch. Thank you. Bye.
And this concludes today's conference and you may disconnect your lines
at this time.
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