AST SpaceMobile, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. The company is developing a low-Earth-orbit satellite network intended to provide cellular broadband directly to standard mobile devices. Its SpaceMobile service had not launched and generated no revenue; reported revenue came from its 51%-owned Nano subsidiary’s satellite products and services. The 2021 comparison is AST LLC, the accounting predecessor, before the April 2021 business combination.
Financial performance and position
| Metric | Q1 2022 | Q1 2021 |
|---|---|---|
| Revenue | $2.4 million | $1.0 million |
| Gross profit / margin | $0.4 million / 17.0% | $0.1 million / 5.8% |
| Operating expenses | $32.7 million | $12.1 million |
| Net loss before noncontrolling interest | $37.9 million | $12.1 million |
| Net loss attributable to common stockholders | $10.7 million; $0.21 per share | $11.6 million; EPS not presented |
| Cash used in operations | $47.5 million | $8.5 million |
| Cash used in investing | $21.6 million | $11.4 million |
- Revenue increased 152%, primarily from Nano contract performance. Operating expenses rose 170%, driven by engineering, public-company and administrative costs, and BlueBird research and development. Gross margin improved, but remained modest.
- Cash, cash equivalents and restricted cash totaled $255.1 million at quarter-end, down from $324.5 million at year-end 2021. Unrestricted cash and cash equivalents were $253.7 million. Total assets were $414.6 million; total liabilities were $98.7 million.
- Long-term debt was $4.9 million, primarily a $5.0 million property-secured term loan. Warrant liabilities were $63.5 million. The reported $5.5 million warrant remeasurement expense was noncash.
Changes, outlook and risks
- Management said existing cash should cover working capital, planned operating expenses and capital expenditures for at least 12 months from the filing date. It also expects to need substantial additional capital: estimated spending for the first 20 BlueBird satellites is $260–300 million during the remainder of 2022 and 2023; estimated constellation capital expenditures through 2025 are approximately $1.9 billion.
- At March 31, 2022, BW3 had $82.7 million of capitalized costs and was substantially complete, with launch targeted for summer 2022, subject to completion of testing. The company planned initial BlueBird launches in Q2 2023, substantial global coverage after 110 satellites by end-2024, and MIMO capability after 168 satellites in 2025. These are plans, not assurances.
- A March 2022 SpaceX agreement established a launch framework through 2024. The company paid $22.8 million, including BW3 launch costs and deposits/reservations for BlueBird launches; delays may incur rebooking fees. It reported $35.2 million of contractual commitments for R&D, capital improvements and satellite components.
- On May 6, 2022, the company obtained the option, not obligation, to sell up to $75 million of Class A shares to B. Riley over 24 months at 97% of the calculated VWAP, subject to conditions and limitations. Share sales could dilute existing holders.
- On May 2, 2022, the FCC issued an experimental license for U.S.-based BW3 testing, subject to restrictions. Further FCC authorizations are required for the planned BlueBird constellation.
- Key execution risks include satellite design, testing and manufacturing, launch availability and reliability, regulatory approvals, commercial agreements, supply chain and cost increases, and the ability to raise financing on acceptable terms. Management reported no material litigation and no material changes to previously disclosed risk factors. Disclosure controls were assessed as effective.
Important facts for investors to verify
- Progress and timing of BW3 testing and launch, and whether the required FCC authorizations are obtained.
- BlueBird launch schedule, total constellation costs, and the assumptions behind the $1.9 billion estimate.
- Cash burn, cash runway, and the amount and terms of future financing; potential dilution from the B. Riley facility.
- Execution of definitive commercial agreements with mobile network operators and the conditions for any early service revenue.
- Nature and timing of the $14.8 million BlueBird launch deposits recorded in other non-current assets, and remaining SpaceX and other contractual commitments.