Prepared remarks
Good day, and thank you for standing by. Welcome to AST SpaceMobile Second Quarter 2026 Business Update. Please be advised that today's call is being recorded. I will now turn the conference over to Max Colbert, Investor Relations Manager of AST SpaceMobile. Thank you. You may begin.
Thank you, and good afternoon, everyone. Today, I'm also joined by Chairman and CEO, Abel Avellan; President, Scott Wisniewski; and CFO and Chief Legal Officer, Andy Johnson. 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. For more information about these risks and uncertainties, please refer to the Risk Factors section of AST SpaceMobile's annual report on Form 10-K for the year ending December 31, 2025, 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'll be starting our Q&A section with questions submitted in advance by our shareholders. For those of you who may be new to our company and mission, there are nearly 6 billion mobile phones today around the world, but many of us still experience gaps in coverage as we live, work and travel. Additionally, there are billions of people without cellular broadband and who remain unconnected to the global economy. The markets we are pursuing in AST SpaceMobile are massive, and the problem we are solving is important and touches nearly all of us. In this backdrop, AST SpaceMobile is building the first and only global cellular broadband network in space to operate directly with everyday unmodified mobile phones, supported by our extensive IP and patent portfolio. It is now my pleasure to pass this over to Chairman and CEO, Abel Avellan, who will go through our activities since our last public update.
Thank you, Max. Our execution in 2026 continues to reinforce what we have believed since we created AST SpaceMobile and invented the space-based cellular broadband market. That combining differentiated technology, deep partnership with leading mobile network operators and a scale vertical integration position us to define the future of direct-to-device cellular broadband. Our space-based direct-to-device network will be the first of its kind to leverage low-band and mid-band spectrum with broadband speeds and native cellular application, combining a feature set and technology stack that puts us in a category of one. From the beginning, we designed our network architecture alongside existing mobile network operators, not as a replacement of them. Rather than requiring operators to rebuild their infrastructure, our architecture and technology extend and complement their existing terrestrial network into space, allowing us to integrate efficiently while evolving alongside future 3GPP standards. To put this concept simply, we are building the direct-to-device network of the future today in partnership with, not in competition with, mobile network operators. This new layer of connectivity that we are creating is not just for addressing gaps in terrestrial network but is to create a seamless connectivity experience wherever you live, work and travel anywhere on the planet. Spectrum is another area where we believe we have significant competitive advantage. Through a combination of low-band spectrum contributed by our MNO partners and the spectrum we directly control, we are building access to the broadest spectrum portfolio in the industry with satellite technology capable of tuning approximately 1,150 megahertz for low-band and mid-band and, in the future, C-band tunable spectrum globally. In the United States alone, we are on the path to approximately 100 megahertz of spectrum from a combination of MNO partner provided spectrum and our own access spectrum, which will be a lead that is difficult for others to match. In particular, we're combining our over 3,900 patents and patent pending claims intellectual property and very large phased arrays with our spectrum access. This provides greater network capacity, better coverage and significant flexibility as demands grow. We are confident that our comprehensive spectrum strategy is the winning one, giving us the tech needed to increase subscriber capacity and bring services to target markets with our partner MNOs. Direct-to-device cellular broadband is establishing itself as a new additional connectivity layer. Our differentiated in-orbit technology and scaled direct-to-device cellular broadband network serves as a resilient and reliable source of an additional and new connectivity layer serving commercial MNO partners and government agencies alike. Incremental to delivering direct-to-device cellular broadband connectivity, our total addressable market is rapidly expanding. We see several growth opportunities across government communications and noncommunications opportunities, including radar, emergency response, Internet of Things, AI edge compute and other advanced connectivity solutions. We see these markets as beneficiaries of our space-based direct-to-device network. We recently received an award pending government approvals and final agreements with long-time partner, Rakuten, regarding the selection for participation in the low Earth Orbit Satellite Infrastructure Development Project or J-LEO in Japan, designed to address the Japanese and Asian markets with a total expected value of up to approximately USD 1 billion in non-dilutive, non-debt government capital. This follows continued work with FirstNet emergency, the First Responder Network in the United States with partner AT&T and recent announcements with multiple governments through partners like Vodafone and Rakuten. Our partner-first strategy positions us as the partner of choice for direct-to-device cellular broadband among mobile network operators. Our commercial ecosystem is growing with over 60 MNO partners who cover over 3 billion subscribers globally, including key partners like AT&T, Verizon, Vodafone, Rakuten, STC Group, Bell Canada and Telus. We are on the cusp of commercial deployment, and we prepare to scale our SpaceMobile service to everyday, unmodified smartphones. With 13 spacecraft in orbit and approximately 20,000 square feet of combined aperture hardware and approximately 50 gateways globally that are in various stages of completion, installation and planning, we prepare for beta service with key MNO partners in selected markets globally. In the United States, we have deployed over 3,000 low-band cellular cells. We expect to deploy the remaining cells this year to light up the roughly 5,600 cellular cells that cover the United States. On network deployment, BlueBird 14 to 16 are undergoing final testing as their manufacturing assembly is nearly completed. The recent launch of BlueBird 11 to 13 demonstrates our ability to rapidly and repeatedly build, launch and deploy the largest phased array in low Earth orbit using advanced composite material for lighter and even bigger satellites. Our largest, newest, fully composite BlueBird satellites are operating as expected, and we prepare them for their communication and noncommunication missions for government and MNO applications. Our ASIC chip is now in full production, and we are expecting to nearly double the peak data speed of 98.9 megabits per second achieved using our on-orbit Block 1 BlueBird satellites. As a reminder, our ASIC is designed to support up to 10 gigahertz of processing bandwidth per satellite, which is nearly 10x improvement from our in-orbit Block 1 BlueBird satellite. Over time, we expect further gains of up to additional 10x improvement in user experience through AI-enabled spectrum management. Turning to manufacturing. We're in various stages of production and assembly through BlueBird 46, which is in line with the number of spacecraft required for continuous coverage in key markets. A detailed cadence of our deployment plan is shown in the accompanying quarterly presentation found on our IR website. We continue to leverage our 95% vertically integrated manufacturing strategy to move at the pace and precision needed to scale a constellation of the largest satellites in LEO at a scale unprecedented in low Earth orbit. We currently have over 500,000 square feet of manufacturing and operations space globally, including our dedicated macro production facility to help accelerate satellite production as we ramp up into our target cadence of 6 fully assembled satellites per month. We recently unveiled plans for an additional 400,000 square feet of manufacturing and production space in Midland, Texas, and we prepare to further scale production for United States government and our extended TAM of commercial applications. We expect our global manufacturing and operations footprint will exceed 1 million square feet of manufacturing capability with over 900,000 square feet residing in the United States once completed. We are proud to be manufacturing the largest satellites in LEO here in the United States and in Texas, where bigger is better. In summary, AST SpaceMobile is executing across every critical dimension of our business. We have expanded our commercial partner ecosystem now with over 60 MNO partners globally who collectively cover over 3 billion subscribers. Our comprehensive spectrum strategy continues to strengthen across our satellite technology capable of tuning to approximately 1,150 megahertz of tunable spectrum with shared MNO spectrum and control MNO spectrum, totaling approximately 100-megahertz access in the U.S. and over 60-megahertz access globally. As an early indicator of success from our expanding total addressable market of opportunities, we increased our revenue backlog to approximately $1.3 billion in aggregated contracted revenue, agreements with partners and contract awards with the U.S. government. These opportunities are supported by our robust balance sheet of more than $3.7 billion, making us well positioned to lead the commercialization of space-based cellular broadband and create significant long-term value for our shareholders. And with that, I will hand it over to Scott.
Thank you, Abel. Since our last investor update call, AST SpaceMobile has continued to make great progress in our commercialization efforts. I would like to take you through some of that progress across our MNO and government customers and put in context the business opportunity ahead of us, which only continues to increase at breathtaking speed. In the commercial ecosystem, we are viewed as the partner of choice for direct-to-device with mobile network operators, as evidenced by the ecosystem we have built with now over 60 MNO partners globally who collectively cover over 3 billion subscribers. Network deployment in key markets with strategic partners is well underway, and our challenge is how to balance deployment of our cellular broadband service into the next set of markets beyond the U.S., Canada, Europe, Japan, Saudi Arabia and the U.S. government. We are balancing this today with active engagement with more than 20 mobile network operators across over 50 country markets. We are developing these markets together with our partners with an increasingly scaled and programmatic effort with services that are designed to be turned on as BlueBirds come online. These efforts are going to manifest themselves not only in more market announcements with our partners, but also, importantly, progress in the delivery and setup of about 50 gateways across 20 markets. In fact, in Europe, you're already starting to see this infrastructure in action as we recently announced network integration and testing activities across several European countries with Vodafone, Orange, Telefonica, Vodafone Ukraine and Deutsche Telekom. Meanwhile, the regulatory backdrop also continues to support our commercialization efforts and provides a window into how we expect the business to develop. While the U.S. was an early leader on the regulatory front with full commercial service approvals delivered earlier this year, we are seeing good progress internationally in the U.K., Japan, Brazil and other countries. Meanwhile, we have seen multiple countries provide commercial authorization to use our MSS spectrum assets, specifically in the S-band outside the United States. Altogether, these are strong signs of scaling our global cellular broadband network. More spectrum lanes of traffic for our network means more subscribers and better services when paired with our unique technology. Meanwhile, the U.S. government customer has been a major focus for us, and we see great progress this quarter, both in terms of revenue capture and building the backlog. We drove revenue against several existing contracts and received 3 new contract awards. Our U.S. government partners view our in-orbit technology as unique, strategic, innovative and flexible with communications and noncommunications capabilities. We have foreshadowed the trend of small development contracts becoming larger contracts ahead of still larger operationalization of the capabilities through programs of record. Today, you can see that trend as we are announcing 3 new contract awards with funded near-term value of over $100 million in total expected during 2026 and 2027. We plan to talk more about these awards publicly soon, but they represent near-term capabilities that have been in development with the U.S. Department of Defense for years and leverage our unique in-orbit technology to solve large strategic needs. In general, the backdrop in size of the Golden Dome opportunity, coupled with the Arsenal of Freedom initiative remains very strong for companies that have unique capabilities that can be deployed in the near term and can move fast. Now taking a step back, I want to take a moment to discuss the large addressable markets for the company beyond direct-to-device. We see the opportunity to leverage our unique platform that we have created to dramatically expand the company's total addressable market, leveraging our differentiated technology, deep intellectual property portfolio, vertically integrated manufacturing and, of course, the comprehensive spectrum strategy. In part, this is now possible because of the maturity of the business and our fortified balance sheet, utilizing the same spacecraft design and ground-based gateways that we're already scaling today. We believe each of these new additional end markets could ultimately become multibillion-dollar annual plus revenue opportunities for AST SpaceMobile. In the government and defense market, firstly, we've seen early traction around noncommunications, including radar. Our spacecraft are uniquely positioned to provide some of these services given the size of the array aperture, the frequencies we serve and our ability to deploy quickly a global capability for an order of magnitude lower cost than historically possible. This application is a majority of our U.S. government revenue to date. Secondly, we have the ability to provide secure communications directly to low-profile, low-power devices. This means regular 3GPP devices, but also custom-designed handsets, existing radios, headsets, wearables and drones. This will be with a technology that is already showing broadband speeds of over 100 megabits per second to extremely low-profile and sized devices. These applications will be new to the warfighter and greatly simplify and improve communications for them in the years to come. Each of these capabilities can be served with the same in-orbit network of AST SpaceMobile spacecraft, a combined capability that addresses the strategic needs of the U.S. government customer for decades to come. And apart from defense, we also see a few more funded comms opportunities. First, we are seeing a trend with large countries or regional bodies looking to replicate owned in-orbit resilient communications. This is born from a desire to have increased operational control of communications over their territory. Given the AST SpaceMobile architecture of landing traffic in-country, we are uniquely positioned to serve this need and to add additional layers for this demand with the Japan J-LEO preliminary award falling into this category. Second, federal emergency and backup is another market taking shape, which you can see from our announcement with Vodafone Ireland, but it has been long planned both in the U.S. with FirstNet and in Japan. The 700-megahertz band, in particular, is viewed as a federal resiliency frequency and thus is an attractive match for our network. This capability could be used broadly for first responders and also as a large-scale backup during periods of network outage with Spain and Australia offering some notable recent outages that are driving political need for action. Thirdly, IoT or Internet of Things is an attractive market for cellular and satellite operators, which positions us well to provide a unified service across both broadband and narrowband applications. With our controlled MSS frequencies, combined with extremely low-cost devices, this is another attractive use of our existing in-orbit network. One final network I wanted to highlight today is space-based AI edge compute. As companies are starting to think about how to service this market in a big way, one of the key elements is the ability to deploy and control large structures in space, which is what we do. This is significant power to orbit at meaningful scale and with competitive cost. This provides clear cost and scale advantages for supplying power and compute in space. What you will see from us in the near term is stretching from a bent pipe network and building additional edge computing capabilities valuable to those networks. In total, all of these markets represent an expansion of our incredibly strong core direct-to-device total addressable market into new large markets, primarily on a funded basis, leveraging the incredible platform we have built. Closing out with a quick discussion on Q2 revenue. We achieved over $30 million in revenue during the quarter, more than doubling our Q1 revenue. This was driven by a combination of milestone achievements under our U.S. government contracts and commercial infrastructure for our mobile network operator partners. Our commercial and government efforts to date serve as important milestones in our roadmap to much larger opportunities, each with potentially billions of dollars in revenue per year as we scale our business. In Q2 specifically, we delivered against 13 gateways to 7 customers across 5 continents. And we remain confident in our ability to achieve our full year 2026 revenue goals and are reiterating our guidance of $150 million to $200 million, supported by contracted programs already underway together with our existing commercial and government pipeline. Altogether, we're very pleased with the progress we've made across the business. Commercial readiness continues to advance. Government demand continues to expand. Our deployment roadmap remains on track, and our operational capabilities continue to scale. These milestones reinforce our confidence as we prepare for commercial service and position AST SpaceMobile for meaningful long-term growth. I'm now happy to pass the call over to Andy to walk through our financial update.
Thanks, Scott, and good afternoon, everyone. During the second quarter of 2026, we maintained focus by further fortifying our capital position, executing on our commercial objectives, accelerating our manufacturing cadence, leveraging our growing footprint in Texas and beyond, and expanding our total addressable market or TAM for additional applications, including U.S. government secure communications and noncommunications, radar, emergency response, Internet of Things, AI edge compute and other advanced connectivity applications. Revenue in Q2 came in consistent with our internal plans. As I've previously noted, we expect revenue to build sequentially each quarter during 2026 with contributions from both commercial revenues, primarily gateway sales revenue and U.S. government contracts. I am pleased to confirm that we remain on track to meet our full year 2026 revenue guidance of $150 million to $200 million. With respect to manufacturing, BlueBirds 14 to 16 are ready to ship shortly, while BlueBird 17 through BlueBird 46 are in various stages of production and assembly as we continue scaling our production capabilities, building the largest phased arrays in low Earth orbit. Our manufacturing progress positions us well to support our current network deployment plan, targeting approximately 45 BlueBird satellites in orbit by early 2027. The strength of our balance sheet, further bolstered with last month's convertible debt offering, positions us not only to complete the full build-out and launch of a constellation of over 100 BlueBird satellites to provide worldwide SpaceMobile service and deploy our controlled spectrum bands on a global basis, but also to pursue an expanding universe of growth initiatives and secure additional access to orbit for our space-based cellular broadband network, including partnerships and/or acquisitions to further vertically integrate our business and mitigate risks associated with third-party launch providers. Our intentional focus on investing in the growth of our operations led to higher adjusted operating expenses in Q2 2026 as compared to Q1, consistent with our expectations as previously communicated during our first quarter of 2026 earnings call in May. Now moving to the operating and capital metrics slide. Let's review the key metrics for the second quarter in a bit more detail. On the first chart, for the second quarter of 2026, we incurred non-GAAP adjusted operating expenses of $119.1 million versus $91.2 million in the first quarter. Non-GAAP adjusted operating expenses exclude noncash operating costs and insurance proceeds in connection with our BlueBird 7 loss. The quarter-over-quarter increase of $27.9 million resulted primarily from an $11.9 million increase in adjusted cost of revenues due to higher revenue in the quarter, together with a $12.3 million increase in adjusted engineering service costs, a $3.1 million increase in adjusted general and administrative costs and a $600,000 increase in R&D costs. Our Q2 2026 adjusted operating expenses, excluding adjusted cost of revenues, were $95.9 million compared to $79.8 million in Q1 of 2026. This amount was near the high end of the $85 million to $95 million guidance for Q2 adjusted operating expenses that I previously provided. The primary drivers of the increase versus the prior quarter were growth in our workforce, including contractors and consultants, our expanded production facilities, other professional fees and critical investments relating to artificial intelligence. Turning towards the second chart on this slide. Our capital expenditure for the second quarter of 2026 was approximately $610 million versus approximately $257 million for the first quarter. This figure was made up primarily of payments made in connection with multiple launch contracts, capitalized direct materials and labor for our BlueBird satellites with the balance relating to facility and production equipment expenditures. This amount for the quarter was just below the midpoint of the guidance of $575 million to $650 million that I provided during our last earnings call, which assumed a significant launch payment in Q2 that was originally scheduled to be paid in the first quarter. For the third quarter of 2026, we estimate that our adjusted operating expenses, excluding adjusted cost of revenues will increase to the range of approximately $105 million to $115 million as we continue to absorb the full quarter of cost of our expanded workforce and continue growing talent across our organization to scale our efforts to address our expanding TAM as well as pursue the monetization of our L- and S-band spectrum usage rights. For the full year of 2026, we expect adjusted OpEx, excluding adjusted cost of revenues to average approximately $100 million per quarter or $400 million total for the year. Consistent with average quarterly CapEx spend during the first half of 2026, we expect our capital expenditures in Q3 of 2026 to be in the range of approximately $350 million to $425 million primarily driven by the timing of launch payments, which, as I previously explained and evidenced by the first half of this year do vary from quarter-to-quarter. Importantly, our continued spend on growth-related CapEx reflects our increasing satellite production and our active orbital launch plans. We continue to estimate that the average capital costs, including direct materials and launch costs for our constellation of over 90 BlueBird satellites will fall in the range of approximately $21 million to $23 million per satellite, excluding certain initial satellites that are used to validate performance and operations. Our cost-per-satellite estimates are subject to fluctuations based on dynamic geopolitical factors that could impact our costs. And as a reminder, changes in our adjusted operating expenses and capital expenditure, as I've just described, could be delayed or may not be realized due to a variety of factors. Turning to revenue. In the second quarter, we recognized revenue of $31.5 million, primarily driven by commercial gateway deliveries and various U.S. government service milestone achievements. Our revenue increased sequentially and year-over-year in the second quarter as we expected due to the timing of gateway deployment to our commercial customers and the timing of completion of certain government contract milestones. With respect to commercial revenue generation, we believe we can enable continuous SpaceMobile service across key markets such as the United States, Europe, Japan and other strategic markets with the launch and operation of approximately 45 to 60 BlueBird satellites and additional strategic worldwide markets with the launch and operation of approximately 9 BlueBird satellites. Further, as we continue to launch and deploy our constellation, we will continue to support U.S. government applications currently ongoing and accelerating as our constellation grows. As we reiterated in our Q1 2026 earnings call, we expect to generate full year 2026 revenue in the range of $150 million to $200 million. We manage the top line with a focus on full-year performance given the quarterly variability inherent to our business, including the timing of contract signings, equipment sales and milestone achievements. As a way to be helpful and for the avoidance of doubt, we expect revenue in each quarter to continue to grow sequentially but will likely be weighted towards the fourth quarter. As a result, we believe our revenue performance is best evaluated on a full year basis. We expect revenue to continue to be driven by gateway deliveries, achievement of contracted milestones for the U.S. government, MNO consulting services and with potential upside related to the recognition of initial commercial service revenue. The achievement of our revenue plan remains subject to several contingencies, including the successful launch and deployment of our BlueBird satellites related to U.S. government applications and those contractual milestone achievements. Critical gateway equipment sales to our MNO partners in support of their anticipated commercialization efforts of SpaceMobile service and service revenues in connection with the activation of our commercial service provided by our existing and planned deployed and operational satellites. Now turning to the balance sheet. With this backdrop, in July, we executed a convertible debt transaction for $1.15 billion aggregate principal amount of 1.625% convertible senior notes due in 2034. As part of the transaction, we purchased a capped call hedge to increase the effective conversion price to $149.20 per share, a price well above our all-time high trading price. This financing allows us to pursue an expanding universe of growth opportunities, further continue vertical integration efforts and secure additional access to orbit for our space-based cellular network. The notes have our lowest coupon ever at 1.625%, providing cost-efficient capital with effective dilution of less than 2%. Finally, on the final chart on this slide, on a pro forma basis, inclusive of that $1.15 billion in gross proceeds from the convertible notes offering, our cash, cash equivalents and restricted cash as of June 30, 2026, was over $3.7 billion. In closing, we are making progress on all fronts in accomplishing our near-term objectives. The hard work across the organization continues with revenue building on plan for 2026, satellite manufacturing increasing to support our orbital launch campaign and increasing applications within our rapidly expanding TAM. We look forward to sharing additional achievements with you during Q3 and throughout the second half of 2026. Thank you for your continued support as we continue the hard work of connecting the unconnected at AST SpaceMobile. And with that, this completes the presentation component of our business update call, and I'll pass it back to Scott.
Thank you, Andy. Before we go to the queue of analyst questions, I would like to address a few of the questions submitted by our investors. Operator, could you please start us off with the first question?
David from New Jersey asks, how should investors think about the expected timing of meaningful government revenue? And could you expand some more on the radar capabilities of the constellation?
Thank you, David. As we said in our remarks, we're making good progress on these contracts, including over $100 million of contract awards in the last couple of months. So consistent with how we've always talked about it, these are kind of initial phases as we scale up the opportunity, and the government wants to see you perform against that. Of course, we're uniquely able to perform given the size of our satellite, our technology, the fact that we're in orbit and the fact that we're vertically integrated. What we're seeing is that this opportunity is going to start scaling up into a recurring multibillion dollar a year opportunity starting in 2027.
Lydon from New Zealand asked, how does ASTS' ownership of spectrum assets affect the company?
Thank you, Lydon, for the question. Spectrum is like fuel for our business. But also how efficient the machine is to utilize that fuel is super important. So it's the combination of the very large phased array supported by over 3,600 patents and patent pending claims, the power of that phased array and access to MNO partner spectrum and our own spectrum, that makes that fuel very efficient. The power in terms of creating additional lines of revenue to our government. As Scott presented in our brief today, this is allowing us to scale up into a multitude of new applications that create a multiplication of our TAM, our current TAM from D2D to seven more new applications that really multiply the addressable TAM that we have today. Ownership of spectrum is super strategic for us. We were the first company in direct-to-device that started this trend of direct-to-device operators to own spectrum. We have the largest combined spectrum access when you combine our MNO partners' spectrum plus our own spectrum in addition to a very large phased array with a lot of power that creates that fuel that creates multiple lines of capabilities for our company.
Kevin from Vancouver asked, what kind of demand drivers are you seeing to trigger the massive 400,000 square feet of manufacturing expansion in Texas? How many BlueBirds per month are you aiming to produce?
We're currently producing roughly 6 per month. We want to expand that to be able to supply enough capacity for our government and non-government applications. With the additional 400,000 square feet of manufacturing, we would be close to 1 million square feet of manufacturing facility. We want to continue expanding our capability of producing even larger satellites that allow us to support communications, radar, GPS, AI, cloud computing, IoT and other very strategic applications that we have. That's why we are investing efficiently in extending our manufacturing capability in Texas to close to 1 million square feet.
Lydon from New Zealand asks, does ASTS believe other countries will come forward with their own FirstNet or J-LEO programs that ASTS can support?
Thank you, Lydon. Yes, we see the J-LEO project as a real proof point for how large countries are thinking about their own infrastructure. This is infrastructure they can control and get access to. We see others thinking about it. This is a trend that's going to play out multiple times in the coming years. This is really a new layer of communication that gives governments and nations capabilities they can access and control. In particular, the 700-megahertz band is one that we've put on the satellite to address opportunities like this, both in the U.S. and Europe and in places like Latin America as well. With that, I'd like to thank our shareholders for submitting those questions. Operator, let's open up the call to analyst questions now.
Questions and answers
The following instructions were provided to participants to manage the question queue.
Can you share with us on the Rakuten JV? I know it's in advanced discussions. But what stood out to get you guys to this stage, given it was pretty competitive with some other bidders out there. What do you think you offer to the table that really moved you guys along in that process?
Thank you, Greg, for the question. We are the only platform that has demonstrated and is delivering broadband capability today. That is one key factor. The other is the architecture we offer that allows nations and regulatory bodies to keep data and management of the infrastructure on the ground. Third, the long partnership with Rakuten over many years has been important. Fundamentally, we have the only platform that can deliver broadband that is in operation and that has demonstrated the ability to deliver seamless connectivity between terrestrial and space on a scalable basis.
Great. That's very helpful. And is there any way you can give us an idea — I know you don't break it out, so if you don't want to — but the backlog growing nicely to $1.3 billion, how much of that might be government?
I would say a minority of it is government. The recent adds were primarily government, but the overall backlog, a minority of it is government. We expect that to scale in the near term most significantly.
Our next question comes from the line of Mike Crawford with B. Riley Securities.
Of these first 46 BlueBirds that you have under partial stage of construction now, how many of these already have or are targeted to have L-band or S-band connectivity installed on the modules? And then how should we think of the spectrum mix of a full 90 satellite constellation?
We are producing roughly at a rate of 6 per month in terms of modules. We are on Micron 46. We're starting the production of the mid-band capability later this year to start launching very early in 2027 for urban capability. So the current Microns are low-band systems.
And then my second question is, how does this potential U.S. MNO joint venture affect your discrete agreements with AT&T and Verizon and as well as with T-Mobile that you don't have an agreement with?
Thanks, Mike. Our existing agreements are not affected. The joint venture actually frees up a third and fourth customer for us in the United States. We are carrier agnostic; our network is good for all operators. We have strong partners, and those partners are important to us. As markets grow and mature, we expect to be available to all operators. This is consistent with the strategy we put forward two years ago when Verizon joined with AT&T to support us. Existing agreements and the lead we have in the market for delivering cellular broadband are unaffected.
Our next question comes from the line of Colin Canfield with Cantor Fitzgerald.
As we put into the building blocks on revenue for '27, just rough numbers here. It seems like there's probably $100 million to $200 million of gateway support, $100 million to $200 million of U.S. government support and maybe $100 million of international government support. As we think about the upside to that framework, can you refresh investors on how to think about revenue recognition for commercial service? And essentially, what are you hearing from commercial operators about pushing revenue or allowing AST to recognize revenue with a partial deployment of the constellation?
Colin, first, what we're hearing from operators is that they want the service now. We are pushing extremely hard. You've seen our comments on beta, getting that out the door to demonstrate scaled capabilities and then start rolling out commercial service with as few as 45 satellites in orbit. We're racing towards that with our strategic partners, as many partners as we can simultaneously. Generally speaking, revenue recognition should begin for commercial service when commercial service begins. When that happens next year, that will start being recognized. Regarding your revenue blocks, gateway is in excess of $100 million as we continue to grow that. Government revenue, we hope, will greatly exceed your number, but that's still being played out now and we'll have more announcements in the near term. Commercial services revenue is what we're playing for, and we're very excited and expect that to ramp quickly once we get going.
Got it. And then for the international government opportunities, can you talk about the market structure you expect in Germany as well as the rest of Europe? How do you think about customer appetite to multi-source supply chains? If they're not multi-sourcing, what sort of milestones do you think it takes for them to secure their supply chain? Specifically, we're talking about IRIS.
There is a lot there because there are many different markets. What we can do in the defense market, which is comms and noncommunication services with a unique technology in orbit, is attractive to many parties. We see the trend playing out in other sectors where international governments are placing bets around services. Over time, those governments will turn attention to larger scaled services like ours because having that capability is powerful. You see that with the J-LEO preliminary award. This is a trend to watch. I won't speak to individual markets in detail, but certainly Europe and NATO show how it's playing out through MSS processes, prioritizing providers with European operations, etc. Those are trends we're positioning around. It's important that we have strong partners like Rakuten in Japan and Vodafone in Europe, which facilitates access to these opportunities.
Our next question comes from the line of Michael Funk with Bank of America.
First, excluding Blue Origin, how many launches do you have contracted for the remainder of 2026 and 2027? And what is the stackability on those vehicles?
We have 10 launches booked with two different providers, and we're targeting a cadence of every month or two on average. Beyond that, we've been providing disclosure about two months in advance as we get launch down-selected. With Blue Origin, we were sad to see the May anomaly, but they've made progress on resolution recently. They're targeting this year. We're not betting on that necessarily. We'll be happy if they do it, but we're not basing our numbers on that. With a mix of launches, we think we can get to early 2027 for our initial 45 satellites.
That was great. On build cost per satellite, where are you today and where do you see that trending over the next 12 months?
Cost per satellite has been consistent for several quarters: we are between $21 million and $23 million per satellite. That includes launch, direct labor and so forth, and we track that each quarter. Some initial satellites may exceed that, but over time in our planning the range holds for the first constellation. We continue to look at ways to reduce cost as we engage with launch providers and acquire more launches; the economics scale better. Over time, we hope to bring the cost down, but currently we feel good with that $21 million to $23 million range over the life of the 90 satellites.
Our next question comes from the line of Chris Schoell with UBS.
You mentioned the expanding TAM, citing AI edge computing, federal emergency and IoT. Can you help us better understand what needs to be done operationally to tap into some of these markets, and any rough sense on the timeline? As you target these areas, how should we think about funding needs? Will you continue to be opportunistic or do you have much of what you need for the foreseeable future?
All these opportunities leverage the architecture we have: the largest capacity to generate power in space and the largest antenna gain per spacecraft. We're piggybacking on the space and gateway architectures. For AI compute, we are starting to add that capability into our satellites. We mentioned we're on satellite 46 in production now. We're starting to add compute capability on satellite 47 and 48, so later in the year we integrate it into our system. IoT, radar, emergency and dedicated constellations like Japan's are already part of the architecture. These are incremental opportunities that take advantage of our intellectual property and platform.
If I can fit in one more: you mentioned the path to 100 megahertz of spectrum in the U.S. and 60 megahertz globally. Can you clarify how much you have access to today, and what are the alternatives for securing additional airwaves to reach these levels?
We can tune our satellites between low-band and mid-band with close to 1,200 megahertz of capacity that we can tune per country. In addition, we can tune our own controlled MSS frequencies. The 100 megahertz in the U.S. is roughly what you see from our acquisition of spectrum through Ligado plus access to spectrum of our MNO partners here in the United States. Overseas, it's country-by-country. We had a joint venture in Europe with Vodafone. Twenty-one of the top 25 operators in Europe have indicated they want to partner with us in accessing capacity. When we talk about spectrum, we're talking about the collection of our own spectrum and the spectrum that MNOs make available to our satellites.
Our next question comes from the line of Louie DiPalma with William Blair.
On prior calls, you discussed the target for 2027 revenue to approach $1 billion. Given the different puts and takes and the backlog of $1.3 billion now, how should we model next year's revenue and beyond?
Louie, the principle was based on the first full year of commercial service. Nothing's changed on our expectation and our goal of approaching $1 billion of revenue in our first year of commercial service. Next year should be strong: government could contribute as much as half of that, infrastructure revenue similar to this year, and commercial service ramping into the balance. We feel good about that number; timing depends on when we kick off commercial service and when we hit the run rate.
You discussed beta trials. What is the timing for consumers to trial your network? Have carrier partners given any sense of when AT&T and Verizon customers will be able to test the service? Relatedly, if there are about 25 satellites in orbit from a general location in the U.S., what percentage of the day will a satellite be overhead such that consumers can connect?
Getting capability ready for consumers is something we're targeting for later in 2026. How we go to market will be decided with our partners and there will be announcements. We're focused on enabling that. There's a lot you can do separate from the space element. Historically, we've said 25 satellites is a right way to think about it; we have flexibility on how to do beta. We're racing to put satellites in the air and get a scaled beta available; the steps from scaled beta to commercial service are quick and primarily a function of satellites in orbit. For about 25 satellites, think about roughly half-day coverage, though there's variance.
Our next question comes from the line of Bryan Kraft with Deutsche Bank.
On the JV: how do you expect to work with the JV in the U.S.? Do you expect the 50-50 revenue share model to still be the revenue model for you with the JV? Separately, are you in talks with T-Mobile or Deutsche Telekom over partnerships given integration and testing with Deutsche Telekom? Anything you can share would be great.
We expect to work with all operators in the United States and all major operators in Europe. We announced 60 mobile operators around the globe with access to around 3 billion devices. As it relates specifically to the United States, as Scott explained, we plan to keep the contracts that we have with our current partners the way they are and expand the relationships with all of them, both through the JV and directly with each one of them.
Our next question comes from the line of Christopher Quilty with Quilty Analytics.
We finally got visibility on the upper C-band. Is that upper C-band a reference design in your current ASIC? Or will that require a Rev 2 when that spectrum becomes available at the end of the decade?
We are working on C-band already in our ASIC architecture. We're working on a third generation that will include L-band, MSS, mid-band and C-band.
Will you need different satellite designs because of antenna requirements to support multiple bands, or is there a way to consolidate that in the future?
We plan to keep different phased arrays per block of spectrum. So you'll have low-band, mid-band and in the future C-band phased arrays incorporated into satellites.
On the radar applications question: are these active or passive applications, and is this using your spectrum or government spectrum?
The radar application in the United States is using government spectrum. It takes advantage of our very large phased array and the sensitivity of the satellites, which is a capability already built and in orbit for government customers. The major application for radar is in the lower bands.
Our next question comes from the line of Scott Searle with ROTH Capital.
On dedicated constellation work: the J-LEO opportunity seems exciting. Can you address the architectural approach in terms of how much commonality you can leverage from existing infrastructure like gateways as you build that constellation? And regarding Japan's commitment of $1 billion in capital, what is the capital requirement from AST's standpoint? Also, are there other opportunities percolating globally for similar dedicated sovereign constellations?
The satellites flagged as Japanese are basically identical to the rest of the constellation. The plan is that when flagged as Japanese satellites, they can be used anywhere in the world using the same architecture of gateways and the rest of the American constellation. These represent roughly half of the investment in those satellites that is non-dilutive and non-debt for global usage of these satellites, but with a Japanese flag for that subset of satellites.
Any other opportunities percolating that you can address in terms of number of opportunities or timelines for other dedicated sovereign constellations?
There are other discussions with other parties, but we don't want to comment on specifics. If you think about it, having resilient communications capabilities is attractive to major countries given the price. We see this as an attractive place for us to continue to build our network and partner the way we've been doing. You'll likely see more of this over time, because many major countries could want this capability.
We have reached the end of the question-and-answer session. I would now like to turn the floor back over to Max Colbert for closing remarks.
Thank you, operator. We want to thank all of our shareholders and research analysts for joining the call. We really appreciate it, and have a great rest of your week.
Thank you. This concludes today's conference, and you may disconnect your lines at this time. We thank you for your participation.