AST SpaceMobile, Inc. — 2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. The filing was signed April 1, 2024. AST SpaceMobile is developing a satellite network intended to deliver cellular broadband directly to standard mobile phones through mobile network operator (MNO) partners. Its SpaceMobile Service had not launched and generated no revenue in 2023.
Financial results and liquidity
| Metric | 2023 | 2022 |
|---|---|---|
| Revenue | $0 | $13.8 million |
| Operating expenses | $222.4 million | $152.9 million |
| Net loss attributable to common stockholders | $87.6 million | $31.6 million |
| Basic and diluted loss per Class A share | $1.07 | $0.58 |
| Cash used in operating activities | $148.9 million | $156.5 million |
| Cash used in investing activities | $118.8 million | $31.4 million |
The $222.7 million consolidated net loss before allocation to noncontrolling interests is distinct from the $87.6 million loss attributable to common stockholders. 2022 revenue and cost of sales came from Nano, sold in September 2022; the company reported no gross profit or revenue in 2023, so a current-period gross margin is not meaningful.
- Balance sheet: At December 31, 2023, cash and cash equivalents were $85.6 million and restricted cash was $2.5 million, versus $238.6 million and $0.7 million, respectively, a year earlier. Total assets were $360.9 million; total liabilities were $147.3 million.
- Debt: Gross debt was $71.8 million at year-end, compared with $5.0 million in 2022; debt net of issuance costs was $59.3 million. The Atlas facility carries a 14.75% fixed rate and is secured by substantially all assets other than certain excluded subsidiaries’ assets. The company reported covenant compliance at year-end.
- Cash outlook: Management estimated cash and cash equivalents of $210.8 million at March 31, 2024, following January financing, and said available resources and financing programs were expected to cover working capital and planned spending for 12 months from the filing date. It cautioned that this estimate depends on assumptions and capital-market access.
Material changes and unusual items
- Operating expenses rose 45% to $222.4 million. Engineering services increased 45% to $78.8 million, while research and development rose 4% to $47.5 million. General and administrative costs fell 14% to $41.6 million, partly because Nano was no longer consolidated.
- Depreciation and amortization increased to $54.5 million from $4.7 million, principally because BW3 began depreciation in April 2023.
- Other expense was $10.3 million, compared with other income of $21.5 million in 2022. The comparison reflects the prior-year $24.5 million gain on the Nano sale and a $10.0 million payment in 2023 after the company missed Rakuten agreement milestones.
- The company recorded a $9.0 million noncash gain from remeasurement of warrant liabilities, compared with a $19.1 million gain in 2022. Warrant-liability fair-value changes can cause earnings volatility.
- Investing cash outflow increased, mainly reflecting satellite materials, property and equipment, and advance launch payments. Year-end cash, cash equivalents and restricted cash together declined to $88.1 million from $239.3 million.
Outlook, risks, and contingencies
- Development and launch plans: The five Block 1 commercial satellites were delayed; the company estimated transport to the launch site in July–August 2024, with the launch window still to be agreed. It planned limited, noncontinuous service in targeted markets after launch, subject to regulatory approvals and definitive MNO agreements. The first Block 2 satellite had a stated launch window of December 15, 2024 to March 31, 2025.
- Funding needs: Management estimated it would need an additional $350–$400 million to fund operating and capital expenditures for 20 Block 2 satellites and operation of a 25-satellite constellation. The estimate is subject to change; there is no assurance financing will be available on acceptable terms. The company also estimated average capital costs of $16–$18 million per Block 2 satellite.
- January 2024 financing and commercial developments: The company issued $110 million of subordinated convertible notes to AT&T, Google and Vodafone, bearing 5.50% interest, with a 10-year term unless earlier converted. Investors may convert at an initial $5.75 per share starting January 16, 2025, subject to terms. A January public stock offering generated approximately $107.7 million net. AT&T’s $20 million prepaid-service payment is contingent on launch and successful initial operation of the first five commercial satellites; Vodafone’s stated $25 million revenue commitment depends on a future definitive agreement. These are not equivalent to recognized 2023 revenue.
- Regulatory and commercial execution: Key U.S. FCC authorizations remained pending, including authority for the satellite system and service links to handsets. The company needs regulatory approvals in each intended market and definitive MNO agreements; many of its 45-plus MNO arrangements were preliminary and may require renewal.
- Operational risks: Satellite assembly, launch, deployment, and in-orbit performance involve execution and cost risks. Supplier delivery delays contributed to the Block 1 schedule slippage. The company also faces spectrum access, interference, competition, and supply-chain risks.
- Legal matters: Two Delaware stockholder class actions allege fiduciary-duty breaches relating to the de-SPAC merger and seek equitable relief and unspecified damages. Management said it did not believe material loss was reasonably possible based on its assessment of loss contingencies; litigation outcomes remain uncertain.
- Governance and dilution: CEO Abel Avellan and permitted transferees controlled approximately 81.5% of voting power as of March 28, 2024 through the multi-class structure. Outstanding warrants and convertible notes could add shares and dilute existing holders. The company reported no dividends and no intent to pay them in the foreseeable future.
Important facts for investors to verify
- Progress against Block 1 completion, launch-window, deployment, and service-readiness milestones, including any further schedule or cost changes.
- Whether pending FCC and other jurisdictional approvals are obtained, and whether preliminary MNO relationships become definitive commercial agreements.
- Actual cash burn, restricted-cash availability, covenant headroom, and financing raised versus the estimated $350–$400 million requirement.
- Conditions and timing attached to the AT&T and Vodafone commercial commitments, and conversion and interest-payment terms of the $110 million notes.
- Potential share dilution from equity programs, warrants, convertible notes, and exchangeable AST LLC units.
- Developments in the Delaware litigation and any material change in the company’s legal-loss assessment.