AST SpaceMobile Q2 2024 Earnings Call Transcript

Quartr
Provided by Quartr
August 14, 2024

There are 8 speakers on the call.

Operator

Good day, and thank you for standing by. Welcome to the AST SpaceMobile First Quarter 2024 Business Update Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your host today, Scott Wusniewski, Chief Strategy Officer of ASP and SpaceMobile. Please go ahead.

Speaker 1

Thank you, and good afternoon, everyone. Let me refer you to Slide 2 of the presentation, which contains our Safe Harbor disclaimer. During today's call, we may make certain forward looking statements. These statements are based on current expectations and assumptions and as a result are subject to risks and uncertainties. Many factors could cause actual events to differ materially from the forward looking statements on this call.

Speaker 1

For more information about these risks and uncertainties, please refer to the Risk Factors section of AST SpaceMobile's Annual Report on 10 ks for the year that ended December 31, 2023 with the Securities and Exchange Commission and other documents filed by AST SpaceMobile with the SEC from time to time. Also, after our initial remarks, we will begin the Q and A section with questions submitted by our shareholders. Welcome everyone. For those of you who may be new to our company and mission, there are over 5,000,000,000 mobile phones in use today around the world, but many of us still experience gaps in coverage as we live, work and travel. There are also still billions of people without cellular broadband and who remain unconnected to the global economy.

Speaker 1

The markets we are pursuing are massive and the problem we are solving is important and touches nearly all of us. In this backdrop, ASP SpaceMobile is building the 1st and only global cellular broadband network in space to operate directly with everyday mobile phones, supported by our extensive IP and patent portfolio. It is now my pleasure to pass it over to Chairman and CEO, Abel Pavilon.

Speaker 2

Thank you, Scott. Good day to everyone. The hard work of the past few years is culminating in a period of tremendous activity and excitement for AST SpaceMobile. We have moved past a primary focus on proving our technology and funding our growth into the next phase of executing our vision and operationalizing our business. We are shifting from R and D to full scale production and commercialization of our base based cellular broadband network.

Speaker 2

Our technology is proven, patented and validated. Our commercial ecosystem is in place and growing. We are funded to achieve our near term goals and reach initial revenue. Our business is now accelerated. Just last week, our first 5 commercial satellite called Bluebirds arrived in Cape Canaveral, Florida after completing final assembly at our manufacturing facilities in Texas.

Speaker 2

These satellites are now undergoing final preparation for integration with Falcon 9 launch vehicle for a dedicated mission. We have 7 day contracted orbital launch window in the first half of September. Our current expectation is that we will launch in the first half of September. So this is ultimately based on a variety of factors outside our control, including the weather conditions. As the target date is finalized, we will communicate this with the public.

Speaker 2

To put our first commercial satellites into orbit, really is a culmination of significant progress to the day. I am incredibly proud of our team. We have spent over 7 years and over $1,000,000,000 investment dollars to get to this point, along the way generating over 3,400 patent and patent pending claims. Completing the assembly, testing and other logistics to ensure that our bluebird were ready to transport to Florida and we're ready to launch is a major

Speaker 3

milestone for our company and mission. These bluebirds will

Speaker 2

each be the largest These bluebirds will each be the largest communications array ever to be deployed commercially into low dead orbit. This array provide a strong signal that can reach standard smartphone directly to provide cellular broadband service and other non communication government applications. With these initial commercial satellites, we are targeting nearly 100% geographical coverage for the continental United States using premium 850 megahertz low band spectrum, which offers superior signal penetration in the low band spectrum range. Low band frequency travel longer distances and penetrate deeper into buildings and through foliage compared to higher frequencies. These first five satellites will provide non continued cellular broadband service nationwide across the United States.

Speaker 2

After a few months of in orbit service activation, this initial service for AT and T and Verizon, beta test user will start with 5,600 sales across the country. This program was made possible in large part due to the continued and growing support of our strategic partners. During the Q2, we secured another major strategic financing partner and customer, adding Verizon to a top tier group that also include AT and T, Vodafone, Google, American Tower, Rakuten, Bell Canada and others. This $100,000,000 commitment from Verizon including $65,000,000 of commercial prepayments and $35,000,000 convertible notes just a few months after strategic financing with AT and T, Google and Vodafone. It's another powerful validation of our technology and our business model.

Speaker 2

This investment closely follow the definitive commercial agreement announced with AT and T in May, bringing on board 2 major U. S. Mobile operators in the most valuable wireless market in the world was a transformational commercial milestone for us. During the last few months, we shifted our manufacturing focus to increase Block II production incorporating the lesson learned from manufacturing of the FERC-five commercial satellites. We are continuing planning and initial production for the first 17 Block II satellite to be built in phases within the initial launch in Q1 of 2025.

Speaker 2

These satellites when equipped with our ASIC will be approximately 2,400 square feet in size and are expected to support up to 10 fold improvement of processing bandwidth per satellite compared to Block 1 satellite that we are launching this September. We expect to start using our ASIC on our 6 Block 2 satellite and we can use existing FPGA configuration for as long as it's required. Alongside this activity, we have not lost sight of our technology roadmap. We can now report that we have completed the ASIC chip tape out with TSMC. This technology is the cornerstone of our Bluebird Block II program.

Speaker 2

The FT5000 ASIC is a novel custom low power architecture developed to enable up to a 10 fold improvement in processing bandwidth on each satellite, unlocking opportunity from seamless space based cellular broadband services worldwide. With the 3 bit per hertz that we have demonstrated using BlueWalker 3 and our planned and commercial satellite capacity of up to 40 megahertz per beam, this translates into performance of up to 120 megabits peak data rates. The completion of the tape out is a milestone that marked the culmination of 5 years of dedicated research, development and engineering expertise with approximately 45,000,000 all developed. In summary, we want to change the world. We're seeking to connect the billions of people who are not connected, improving public safety, enabling global commerce, and for the average user who can see fewer drop calls, frustrating dead zones and missing connections.

Speaker 2

This has not been easy. We entered a new phase for our company. I am deeply proud of the team we have assembled and confident in the plan ahead of us. I will now pass to Scott to provide more details on our commercial and regulatory process.

Speaker 1

Thank you, Abel. As we accelerate the commercialization of our network, I wanted to spend a few moments to go through the commercial and regulatory progress during the quarter, including some early wins for the first five commercial satellites. Earlier this month, we received an initial license for space based operations in the U. S. From the FCC.

Speaker 1

This initial license authorizes AST SpaceMobile to operate using V, F and UHF frequencies to support our gateway, feeder link and telemetry tracking control operations for the first five commercial Bluebird satellites. This license will serve as our primary license for operations in the U. S. Over the life of the constellation. So it was a big deal for the company and our commercialization, both in the U.

Speaker 1

S. And as a blueprint globally. Going forward, we continue to work with the FCC as well as our partners AT and T and Verizon to apply for upgrades and modifications to this license to facilitate full scale commercial operations on wireless frequencies and to expand the license to support our operations over time. This FCC authorization followed the March 2024 update of our Constellation filings with the International Telecommunication Union and related filings with the FCC that placed our planned commercial satellites under the jurisdiction of the United States. This initiative represented a closer strategic alignment of our network build out and future network operations with the United States and is a key piece of our overall regulatory strategy.

Speaker 1

In addition to the progress that Bell reported with AT and T and Verizon, we continue to believe our patented technology, including our large phased array antenna technology in space, creates significant opportunities for new mission critical capabilities in the government sector. We are moving forward with these dual use capabilities on our constellation and expect to generate revenue from both commercial and government applications. To this effect, earlier this year, we announced that AST SpaceMobile had been awarded a new contract through a prime contractor working with the United States government. This initial phase contract, which covers the use of BlueWalker 3 as well as the first five commercial satellites is well underway. And during the Q2, we completed successful in orbit and ground tests, resulting in completing contractual milestones and top line revenue.

Speaker 1

This government sector strategy continues to show additional early signs of strength with 2 new U. S. Government contract awards in recent months to one of our prime contractors. Like the February contract, these awards represent relatively small revenue by themselves, but seek to evaluate potential for full scale multi year contracted services in the future. As is customary, contracts for these 2 new opportunities are still being finalized and we will provide detail if and when it becomes available.

Speaker 1

Our primary commercialization strategy is to position for significant revenue opportunities as we scale the constellation, but this initial progress is encouraging. And we believe the progress represents an upgraded outlook for additional and larger signed contract awards over time. With that, I will now pass it to Andy Johnson, our new Chief Financial Officer to take you through the financial update. Thanks, Scott, and good afternoon, everyone. I joined AST this past May because I believe wholeheartedly in the company's mission to close the digital divide by connecting the unconnected and was convinced that this was a once in a lifetime opportunity after visiting the manufacturing facilities in Midland, Texas.

Speaker 1

There I saw firsthand the sophistication of the company's technology and most importantly, the incredible commitment of our team led by Abel in producing the world's 1st space based cellular broadband service satellites. This is a seminal moment in the history of AST SpaceMobile, and I want to personally thank all of my teammates for their dedication to our mission and delivering our first five commercial Bluebird satellites for launch in just a few short weeks. I also want to thank Sean Wallace, our former CFO, who continues to consult for us for his leadership, service to the company and partnership in making my transition seamless. It's a fantastic time to be a part of the AST SpaceMobile ecosystem, which includes our shareholders, our talented employees across the globe, and our mobile network operator partners. We are at the forefront of our commercial constellation deployment, and I deeply appreciate those of you who are on this life changing journey with us.

Speaker 1

Let's review the key operating metrics for the Q2 that are displayed on Slide 10. On the first chart, we see for the Q2 of 2024, we had non GAAP adjusted cash operating expenses of $34,600,000 versus $31,100,000 in the Q1. Non GAAP adjusted operating expenses excludes certain non cash operating costs, including depreciation and amortization and stock based compensation. These expenses are up slightly from the Q1 due to final Block 1 expenses as we neared the finish line of producing 5 of the largest satellites ever to be deployed in low earth orbit, including required travel expenses to the production site in Texas, expedited hiring of engineering talent in connection with our Block 2 mechanical work as we ramp up production of our next satellites and the impact of an approximately $1,000,000 one time G and A expense reversal in Q1 that affects the quarter over quarter comparison. Turning towards the second chart on this page, our capital expenditures for the Q2 were $21,200,000 versus $26,600,000 for the Q1.

Speaker 1

The figure was made up of capitalized direct materials and labor for Block 1 and Block 2 satellites and additional facility and production equipment for our 185,000 square foot assembly, integration and test facilities in Midland. As expected, capital expenditures trended down in connection with the completion of the Block 1 satellites ahead of ramping Block 2 production. By the end of the second quarter, we incurred and paid all amounts for the 5 Block 1 satellites. Total spend for those satellites did not materially exceed our prior estimate of $115,000,000 The design, integration, testing and launch of satellites and related ground infrastructure is capital intensive. We do expect our experience completing Block 1 will allow us to leverage our learnings to improve and optimize manufacturing costs for our Block 2 satellites.

Speaker 1

And on the final chart on this slide, we ended the 2nd quarter with $287,600,000 in cash, up from $212,400,000 at the end of the first quarter. This increase includes $55,000,000 of previously announced investment from our valued M and O partner Verizon, inclusive of a $20,000,000 prepayment for future cellular broadband service. Our strengthened cash position at the end of Q2 also reflects our disciplined and effective use of our now completed at the market or ATM equity facility from which we raised approximately $80,000,000 during the quarter at increasing market prices for our common stock. As of the end of July, we completed the 2 year use of the existing ATM facility and the existing common stock purchase facility with $164,000,000 of total raise to support operating expenses and preserve our capital for building the constellation. During this 2 year period, we were prudent in our timing and use of these facilities consuming less than 75% of the combined facilities capacity and raising capital at more than a 50% premium to our stock's volume weighted average price.

Speaker 1

We continue to consider using the balance of our senior credit facility, which has a gross amount available to us of $51,500,000 To date, however, our efforts around raising strategic capital, including non dilutive prepayments from our M and O partners as we're ready for service are taking precedence over the senior credit facility, which in turn continues to reduce negative carry we would have incurred if we had accessed the facility earlier. Our ability to access this facility remains subject to certain conditions and approvals. I'd like to reiterate that we currently have no plans for the remainder of this year to pursue an underwritten public equity offering. We previously provided guidance on our expected operating expense levels. We have been supporting the development and production efforts of our 2 critical satellite designs, Block 1 and Block 2, our ASIC ship design and the 5 Block 1 satellites.

Speaker 1

The completion of this Block 1 work and a significant portion of the Block 2 development and ASIC tape out completion is expected to result in a reduction in our adjusted operating expenses and capital expenditures in future periods. Consistent with the 1st and second quarters of 2024, we continue to project that our adjusted cash operating expenses for the remainder of the year will come in within a range of $30,000,000 to $35,000,000 per quarter based on business conditions and speed of constellation deployment and as the Block II design approaches completion and our focus turns to scaled production. We believe efforts to optimize our OpEx will result in a run rate at the low end of that range. These figures will vary depending upon manufacturing activity in each period. This guidance does not include the expected costs of approximately $15,000,000 related to the tape out and initial production of our ASIC chips.

Speaker 1

These ASIC related costs will be recognized as an R and D expense in subsequent quarters in 2024 as milestones are completed. Timing of the changes in our adjusted operating expenditures and capital expenditures, as I've just described, could be delayed or may not be realized due to a variety of factors. Finally, we continue to work on developing a financing package from export credit agencies to source cost effective long term debt funding of large projects. We will keep you abreast of our progress. It's been a fantastic first 90 days.

Speaker 1

I look forward in the future to getting to know many of you and working hard to drive value for our shareholders as we position AST for full scale commercial operations. And with that, this completes the presentation component of our earnings call, and I pass it back to Scott. Thank you, Andy. Before we go to the queue of analyst questions, we'd like to address a few of the questions submitted by our investors. Operator, could you please start us off with the first question?

Operator

Tanner asked, will you wait until the 1st BB Block II is launched and unfolded before working on additional BBs?

Speaker 2

Thanks, Tanner, for the question. No, the answer is no. We are already working on the next build of the subsequent satellites. We are actually in the process of building parts for the next 17 satellites. The main mechanical system is changes on upgrade, but it's basically the same as BlueWalker 3 and Block 1.

Speaker 2

And we will now wait for that deployment to continue building. So we're in the process building, we actually started a few months back. Our next satellites built. With the next satellites, we will have a satellite that will be equipped with the FPGA and a satellite that will be equipped with the ASIC. And the first launch of 4 will be based on SPGAs and the subsequent satellites that will be of Block 2, first four Block 2 and the subsequent after that will be all based on AC, which is a tenfold improvement compared to the FPGA.

Speaker 2

And we're fully focused on building our next batch of satellites and to get them on the air as soon as possible.

Operator

Matt asked, you mentioned that full U. S. Coverage is the first priority. What regions will you look to fulfill next and in what timeframe?

Speaker 2

Hey, Matt. Thank you for the question. Yes, our obviously, the U. S. Market is the largest, more developed wireless market.

Speaker 2

And in this market, we have AT and T and Verizon and yes, we will be prioritizing the deployment for the U. S. Market. Then we will prioritize investors and M and Os that are paying prepaid revenue. That includes Vodafone markets, that include Rakuten in Japan and then new M and O that are going to be prepaid for initialization of the service as a priority.

Speaker 2

We are launching on a 50 degree of inclination. So basically, we can cover all the latitudes from 59 degrees north to 59 degrees south. So we have the benefit of being able to select the regions that we prioritize according to prepayments priorities set by new investors.

Operator

Cody asked, what concerns does the company have being that we are currently in a solar maximum? How susceptible are your satellites to solar storms?

Speaker 2

Thank you, Cody for the question. Well, first of all, before I answer the question, let me remind everybody about how we design these satellites. These satellites, they are big. They are built out of identical modules that we call Microns that make the satellite system very resilient and it's built out of a distributed system that no one single part can make the satellite to fail. And And that make it very resilient to the space weather, including solar storms and other conditions.

Speaker 2

We had all the data that we have collected over 2 years operating BlueWalker 3. And we really of course, we have needed a time to react to solar activities, but never having a failure caused by it. So we are very confident and our satellite resilient is where it need to be as it relates to weather conditions.

Operator

Tanner asked, after the first BB Block 2, how many at a time will be launched?

Speaker 2

Okay. Well, we have decided thank you, Tanner, for the question. But we have decided the system to be launch agnostic. So we basically envelope our profile to be able to support basically every large or medium launch service provider, launch systems. Depending on the size of the launch, I mean, on Block 1, we are launching 5 satellites in Falcon 9.

Speaker 2

And depending on the launch configuration and the launch vehicle, it will be anywhere between 4 per launch for the new larger Block IIs or 8 per launch, depending on the launch vehicles.

Speaker 1

And with that, I'd like to thank our shareholders for submitting these questions. Operator, let's open the call to analyst questions now.

Operator

Thank you. We will now be conducting a question and answer session. And our first question comes from the line of Griffin Baugh with B. Riley Securities. Please proceed with your question.

Speaker 4

Hi, good afternoon. Thanks for taking my questions. So first for me, the 17 satellites under construction is certainly more than what we expected. How would you characterize your current production capacity? I know in the past you've discussed expectations to reach something, I think, equivalent to 6 satellite per month cadence.

Speaker 4

Have you reached that? Are you tracking better? Any more color would be helpful.

Speaker 2

Yes. I mean, when we say 17 satellites, that refer to the subsystem that we are producing. They don't need to be all produced at the same time. So we actually time them. So we start with the long lead items.

Speaker 2

We start them first. The parts that take more time to get out of the factory, they are being produced for 17 units and for that, we buy parts in advance. We start manufacturing them way in advance and as we need it, so we keep ordering the different parts for the system. Yes, we are ramping up. We are accelerating our production cadence going through the 5 first commercials that we are launching now in September.

Speaker 2

It has helped us to expand our production capacity. And also going forward, we have work on vertically integrating around 95% of the subsystems. So we either control the IP, manufacture by ourselves and control the manufacturing process for around 95% of the satellites are on build going forward.

Speaker 4

Great. Thanks, Abhail, for that color. I appreciate it. And in terms of the initial Block II satellite launch, are you still tracking for the late 4Q, early 2025 kind of launch window there? Are there any delays or issues you are seeing with the launch provider?

Speaker 2

No. We are still tracking for Q1 2025.

Speaker 4

Okay. Great. Great. Glad to hear it. And then, so Scott, there was sort of an informal interview with you recently on a financial blog where you cited some ARPU assumptions for the U.

Speaker 4

S. I can't recall hearing the company formally mention potential ARPU in the past. So, would love it if there are any assumptions or expectations for ARPU you can share today, especially now that you've got 2 definitive agreements under your belt?

Speaker 1

Hey, Griffin. How are you doing? No, we've been making a lot of progress with commercial agreements and alongside that been advancing our go to market strategies as you would expect. We don't have any pricing or go to market strategies to report at this time and I think that article was misquoted. But we're very excited about the revenue share model that we've been pushing for a long time.

Speaker 1

And we're very excited about the adoption rates and the ability to command good wallet on this service. So no pricing guidance at this time, but I would say the go to market planning has definitely accelerated.

Speaker 4

Okay, got it. Understood. Thanks, Scott. And last for me very quickly and I'll pass it off. I just want to confirm that this new contract liabilities line item we're seeing in the statement of cash flows, is that reflecting the Verizon revenue commitment or is that something else?

Speaker 5

Yes. This is Andy Griffin. I do think it's the revenue commitments against the prepayments and so forth. So none of that's revenue at this point yet until the services are initiated.

Speaker 4

Got it. Okay. Thanks, Andy. And welcome to the company and thanks for taking my questions everyone.

Operator

Thank you. Our next question comes from the line of Benjamin Soff with Deutsche Bank. Please proceed with your question.

Speaker 3

Yes. Hey, guys. Thanks for taking the question. Exciting quarter with a lot of interesting developments. I was wondering now that the satellites are on-site in Florida, can you walk us through the timeline and key milestones between launching in early September until you get to commercial service?

Speaker 2

Yes. We actually hi, Ben, how are you? So we actually indicate now we were on final preparation for launch. The plan is to launch early September, first half of September. We anticipate few months to basically activate service on those verified satellites.

Speaker 2

We have 2 type of users already booked on them. 1 is Gorman user and then we have our M and Os. We are prioritizing U. S, Vodafone and our investors and people that have an M and Os are prepaying or are going to prepay for services. And so in terms of timeline is we launch a few months to activate services, and then we are already preparing and have prepared the all the ground infrastructure to start connecting to the spacecraft.

Speaker 2

So we will have some early usage immediately after for the government in part of it with the MNOs.

Speaker 3

Okay. Great. And then just going back to the 17 Block II satellites, do you have any updated thoughts on the cost per satellite and the timing to launch those?

Speaker 2

Yes. We are maintaining our guidance on cost. Actually, we continue to look for ways to continue to improve our cost basis as we are getting to close to 95% vertical integration. But the guidance per satellite remained the same. And as I said, we're starting a launch campaign that started in Q1 and then following up with additional launches as these satellites are ready and the launches are available.

Speaker 3

Okay, great. Thanks, guys.

Operator

Thank you. Our next question comes from the line of Chris Choe with UBS. Please proceed with your question.

Speaker 6

Great. Thank you. We've seen a number of regulatory milestones here in recent months. Can you help us think through your remaining approval process We've seen a number of regulatory milestones here in recent months. Can you help us think through your remaining approval process here in the U.

Speaker 6

S. And the likely timeline for that? And I think there was general optimism previously that other countries could follow suit with similar rulemaking to the U. S. Have you seen any evidence of that to date?

Speaker 1

Hey, Chris, it's Scott here. Yes, so clearly, we're happy with the progress this year on the regulatory front, as we mentioned in our remarks. And the SEC does truly play a leadership role globally with other countries. So in our initial markets, we're working with our close partners on moving all the regulatory processes forward. We've been relatively pleased with how that's progressed with no showstoppers really.

Speaker 1

We really view it as a process that we go through diligently and that the FCC has demonstrated a lot of leadership this year with developing new rules for supplemental coverage from space and things like that. So for us, I think initial markets are trending positively in the U. S. Next milestone to look for, there'll be a lot of filings going forward. I think part of commercial service is just there's a lot of regular filings that come.

Speaker 1

So there'll be filings about gateways on the ground. There'll be filings about test campaigns on when we first start getting Block 1 going. And then the big one is SCS rights in the U. S. With the FCC.

Speaker 1

So that is that's something that will be they'll start seeing filings on that with us and with our 2 partners in the U. S.

Speaker 6

Okay, great. And if I can just fit in one more, I think you mentioned no public equity offering this year, but as you look toward Block 2 and beyond, can you just help us think through the timing of additional funding requirements and how do you think about the trade offs for different capital sources going forward? Thank you.

Speaker 5

Sure. This is Andy. Chris, thanks for the question. So as we noted, I think our priority right now is to continue our current operating model of working on prepayment relationships with our M and O partners. That's been a very effective way to raise required capital, and we have a number of M and O partners that we're making progress with in that respect.

Speaker 5

So non dilutive approach is sort of how we're viewing our near term opportunity. We also have in that same vein, we have the opportunity to realize certain milestones in connection with the launch with respect to our existing M and O partners among Vodafone and AT and T and Verizon, which could be meaningful capital. And we'll continue to analyze what's available to us. We're very cognizant of different capital structures, debt, equity opportunities. But we wanted to reiterate the fact that we are focused on being good custodians and weighing the capital needs that are inherent to a satellite business that's as capital intensive as we are with the fact that our shareholders expect us to be responsible as it relates to dilution.

Speaker 5

So I reiterated our point from last quarter that we have no current plans to do a public security equities offering. And that's our plan through the end of 'twenty four and we think we have a lot of opportunity to continue to make progress on cash as we optimize some of our expenses and turn toward a real focus on Block II for the remaining 4 or 5 months of the year.

Speaker 6

Great. Thank you very much.

Operator

Thank you. Our next question comes from the line of Chris Quilty with Quilty Analytics. Please proceed with your question.

Speaker 7

Thank you. So I noted that in the press release you mentioned that there is an outlook for larger size government contract awards. And I mean are we talking kind of like SBIRS Phase 3 or some OTAs or budget line item in terms of the types of programs that you might be able to participate in?

Speaker 1

Hey, Chris. Yes, Scott here. I think all of the above are on the table, Chris, over time, right? The contracts that we announced earlier in the year and then the awards we referenced on this call, these are all, like I said, early opportunities, small revenue, kind of the SIBR or Phase 1 type of stuff that you referred to. But as you know, the intent of programs like that is not to do a science project, but rather to build out a capability.

Speaker 1

And so that's what we were referring to in our remarks that initial tests are going well. Other initial contracts awards have been made through our prime contractor partners and the outlook for those has improved.

Speaker 7

Got you. And mentioning your prime contractors, some of those are involved in the PLEO contract. Is it fair to assume that that could be a potential vehicle for funding or

Speaker 1

We don't want to comment on specific programs at this time, Chris.

Speaker 7

Also just back to the ASIC, I mean, is it fair to assume that the ASIC production or delivery into production is sort of the gating factor for scaling up to the full Block II satellite?

Speaker 2

No, Chris. I mean, the size of the satellite, the 2,400 square feet, the largest size for Block II is independent if they are equipped with FPGA or ASIC. We have completed the ASIC tape out. The first launches will be still on an FPGA configuration, but we can keep launching on FPGA for as long as it's needed. So there is no upper requisite for launches.

Speaker 2

But of course, we want to incorporate the ASIC as that is a 10x increase in capacity per satellite. And we are very happy to conclude the tape out. We received the first guide several weeks back and we're cooperating into our Micron design. We continue to build the next batch of satellites.

Speaker 7

Great. Thanks for all the details.

Operator

Thank you. At this time, I'm showing no further questions. I would like to turn the call back over to management for closing remarks.

Speaker 1

Thank you, operator. We're building a space based cellular broadband network designed for the use of the phone in your pocket today and other government applications. We want to thank all of our shareholders and the research analysts for joining the call and everyone's continued strong support of our mission and we look forward to the upcoming launch. Thank you.

Operator

And this concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.

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