Spire Global reports Q2 2025 revenue guidance of $19.5M to $21.5M, driven by new contracts and strategic focus on space services after maritime business sale.

OPERATOR - (00:01:55)

Welcome to The SpInvestor Relationse Global Second Quarter 2025 Business and Financial Update conference call. At this time all participants are in a listen only mode. A question and answer session will follow a formal presentation. If anyone should requInvestor Relationse operator assistance, please press Star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Ben Hackman, Head of Investor Relations. Please go ahead.

Ben Hackman - Head of Investor Relations - (00:02:22)

Thank you. Hello everyone and thank you for joining Spire's second quarter 2025 business and financial Update conference call. Our Business and Financial Update press release is posted on the company's IR website. A replay of today's call will also be made available. With me on the call today is Teresa Condor, CEO and Ali Engel, CFO. As a reminder, our commentary today includes preliminary and unaudited values. Some of our comments today contain forward looking statements that are subject to risks, uncertainties and assumptions. In particular, our expectations around our results of operations and financial condition are uncertain and subject to change should any of these expectations fail to materialize or should our assumptions prove to be incorrect as actual company results could differ materially from these forward looking statements. A description of these risks, uncertainties and assumptions and other factors that could affect our financial results is included in our SEC filings. With that, let me hand the call over to Teresa.

Teresa Condor - Chief Executive Officer - (00:03:23)

Thank you Ben, Good afternoon and thank you for joining us today. This quarter marked a transformative milestone in Spire's journey to successful sale of our maritime business. This strategic transaction has fundamentally strengthened our financial foundation, eliminating debt entirely and establishing a robust balance sheet. With this significant chapter now behind us, our team at Spire is channeling our collective energy towards what matters most, delivering exceptional operational performance, generating compelling financial results and unlocking growth opportunities that will define our future. Spire's differentiated capabilities enable us to unlock insights powered by our versatile multipurpose satellite constellation. Our recurring revenue model provides meaningful operating leverage, fueling sustained growth while supporting a rich portfolio of products that address the challenges faced by our diverse customer base. The European Space Agency recently procured historical weather data from spire's satellite constellation to support advanced scientific research and the development of operational applications. Additionally, NASA awarded Spire a Task order extension modification under its Commercial Satellite Data Acquisition Program for the provision of radio occultation, reflectometry and space weather data. We expect this extension to serve as a bridge contract to a potential annual data purchase which we hope to announce in the near future. Both contracts contribute to improving global weather forecasting and atmospheric understanding. SPIRE recently submitted a proposal to deliver near real time Global Navigation Satellite system reflectometry data with a primary focus on measuring ocean surface wind speeds. This data would support the evaluation of the quality and applicability of commercial GNSSR observations across a range of domains, including enhanced weather forecasting models. The initiative directly addresses the growing need for accurate global sea surface wind measurements critical for marine weather forecasting, hurricane tracking, ocean current analysis, and climate science. We are also actively engaged in our annual radio occultation weather data acquisition agreement with noaa. As discussed during our last earnings call, there is the potential for NOAA to Purchase up to 20,000 radio occultation profiles per day in the coming years. We're encouraged by NOAA's growing recognition of the importance of expanding data acquisition to enhance both the accuracy and timeliness of weather forecasts. While we continue to deliver reliable solutions that support our recurring revenue model, Spire is also making thoughtful strategic investments to expand our capabilities and meet evolving market demands. SPIRE is making remarkable strides in developing its hyperspectral Microwave sounder technology. These advanced sounders play a vital role in weather forecasting models because they can peer through clouds to gather crucial atmospheric data, something other instruments cannot do as reliably. Among all sources of weather data, microwave sounder observations consistently rank among the most impactful for improving forecast accuracy. Spire's Hyperspectral Microwave Sounder enhances the vertical resolution of atmospheric profiles, enabling more precise measurements of temperature and water vapor from near the surface to the top of the atmosphere. We are pleased to share that our Microwave sounder has successfully completed flight testing aboard an aircraft testbed, reaching an important milestone in its development. We are targeting the first launch of this sensor in orbit for early 2026. There is significant interest in this technology from government weather agencies and SPIRE plans to use this data to enhance our own AI and physics based modeling capabilities. Spire's development of this capability strengthens our comprehensive portfolio of weather data offerings ranging from radio occultation and polarimetric radio occultation to reflectometry and soon hyperspectral microwave soundings. As severe weather events grow more frequent and intense, the need for diverse and high quality observational data to improve forecasting models becomes increasingly urgent. SPIRE is well positioned to meet this demand with a unique and expanding set of satellite based measurements. As we continue to advance weather forecasting capabilities, customers are also finding creative ways to leverage spire's aviation data. For example, researchers at Imperial College London purchased our ADS B data to study contrails and their impact on weather. This data has been instrumental in validating models that simulate contrail formation and behavior, with findings incorporated into published scientific research demonstrating yet another high impact application of SPIRE'S unique datasets. In addition to cutting edge research, our aviation data continues to support more traditional applications. Aircraft owners, for instance, use SPIRE data to track takeoff and landing times for each flight, enabling accurate logging of crew hours, calculation of airport charges, and optimization of aircraft utilization. Within our aviation portfolio, we recently launched a new product, SPIRE Aircraft Exposure Analytics. This solution empowers users to quantify aircraft level exposure to hazardous weather by analyzing real flight trajectories alongside global weather alerts. By integrating flight paths with real time and historical weather hazard data, aircraft Exposure analytics pinpoints when and where individual aircraft have encountered conditions such as turbulence, icing thunderstorms, volcanic ash, tropical cyclones, and more. This valuable insight helps airlines, maintenance teams, OEMs, lessors and aviation insurers gain a clearer understanding of how environmental factors impact asset valuation, aircraft performance, safety and long term wear. Geopolitical developments continue to fuel demand for robust space reconnaissance solutions. While we must maintain discretion regarding specific contracts, we are excited to highlight spire's expanding capabilities. Our latest space reconnaissance offering merges advanced data collection with AI powered processing to deliver differentiated insights enabling persistent monitoring, real time geolocation and and multi layered situational awareness. SPIRE can now collect, extract and interpret publicly broadcast voice transmissions from space, applying AI to transcribe, translate and summarize these communications in near real time, supporting more effective assessment of intent and potential threats. Today's security landscape demands faster, smarter insights, beginning with real time awareness of activities on the ground. With our advanced RF detection and geolocation capabilities, we empower partners and agencies worldwide with the critical intelligence needed to make confident, informed decisions even in the most challenging and remote environments, from maritime zones and border regions to conflict and disaster areas. Beyond these specific product enhancements, we are making broad based investments to strategically position ourselves for larger long term opportunities on a global scale. NATO recently introduced its inaugural Commercial Space Strategy aimed at strengthening collaboration with the commercial space sector by streamlining engagement and expanding business opportunities. The strategy emphasizes leveraging commercial solutions to complement allied space capabilities with the goal of ensuring uninterrupted access to space services during peacetime and conflict and fostering more flexible, resilient partnerships with industry. Key initiatives include adaptable contracting models, deeper integration of commercial services and into NATO operations and exercises, and the establishment of a new Space Capabilities Group to promote cooperation, standardization and interoperability among NATO members and commercial partners. This strategic shift reflects a growing demand for commercial innovation in the defense space market, opening significant opportunities for industry leaders. NATO member countries have committed to increasing defense and security investments to 5% of GDP by 2035 a substantial rise from current levels which bodes well for companies positioned to deliver sovereign capabilities. In response to these trends and opportunities across the us, Canada, the UK and Europe, we have made the strategic decision to establish manufacturing facilities in each of these critical markets. Additionally, we continue to invest in top tier talent to strengthen our regional presence and accelerate market penetration. Earlier this year we expanded our leadership team with seasoned experts bringing deep European defence experience. And most recently we announced that Quinton Jones will be joining Spire, adding extensive expertise working with the US Government and allied partners. We will continue to prudently make investments in the sales and marketing team to drive growth for the company. And finally, just this afternoon we announced an eight figure five year space services contract from a repeat commercial customer, underscoring the value Spire delivers to those seeking reliable, proven technology on an accelerated timeline. Spire has the right resources, tools, team technology and opportunities to drive success. We remain focused on execution, agile in adapting to the evolving landscape and committed to investing in the areas that fuel long term growth. I'm proud of the progress we've made this quarter and optimistic about the promising opportunities ahead. With that I will turn it over to Ali.

Ali Engel - Chief Financial Officer - (00:14:55)

Thank you Teresa. I'd like to begin with an update on our efforts to hire a new independent auditor. Over the past few weeks we've made meaningful progress in this process. After initial exploratory discussions, we've moved into the request for proposal stage and are now engaged in in depth conversations with several firms. Our goal is to identify the right long term partner. We expect to receive proposals from all participating firms by mid to late August, after which we will review the proposals and make a decision. We are currently in the final stages of closing our second quarter results. This process is taking slightly longer than usual due to additional complexities, particularly those related to the maritime transaction. While we finalize the full financials, we're providing preliminary unaudited revenue figures to keep you informed in the interim. As a reminder, Spire's Q2 2025 results and prior quarter's results include portions of the maritime business which was sold at the end of April. GAAP revenue for the second quarter is expected to be in the range of 18 to 19 million dollars. Given the deployment of satellites this year, we expect space services to be a continued driver of our revenue expansion in the second half of the year. Along with revenue growth from our Wildfire SAT contract and NOAA RO weather data. We finished the quarter with cash and cash equivalents and marketable securities of $117.6 million. We have an active and robust pipeline and are diligently working to close more deals by the end of the year. At this time, we are only providing revenue guidance for the third quarter and full year. In addition to reiterating our expectations to finish the year with over $100 million of cash, cash equivalents and marketable securities. We plan to provide additional guidance upon the filing of our second quarter. 10-Q. As we shared last quarter, we anticipate continued momentum in the second half of the year. For the third quarter, we expect revenue to be in the range of $19.5 million to $21.5 million for the full year. We reiterate our previous expectations for revenue to be between $85 million and $95 million. Now I would like to open the call for questions.

OPERATOR - (00:17:28)

Thank you. We'll now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star2 to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please, while we poll for questions. Thank you. Our first question is from Eric Rasmussen with Stifel.

Eric Rasmussen - Equity Analyst at Stifel - (00:18:03)

Yeah, thanks. And congrats on the new eight figure Space Services award. Maybe can you just offer any additional details on how big this could be for spire how many satellites this represents, maybe what kind of markets it will serve and maybe when you expect to see the revenue impact?

UNKNOWN - (00:18:26)

Yeah, so I mean, I think it's a really nice contract for us. We mentioned an eight figure deal, and I think the other thing that can share is this is a good example of our kind of land and expand strategy. So it's a customer that we've worked. With previously who has continued to build. Out their capabilities with us. This is going to be a standard space services contract in that we will recognize revenue once the assets are in orbit and collecting data. So it's going to have that 12. To 18 month time lag given the. New revenue recognition policies that we have in place. Okay.

Eric Rasmussen - Equity Analyst at Stifel - (00:19:07)

But along the way though, you'll get reimbursed for manufacturing and for billings, right?

UNKNOWN - (00:19:14)

That's right. We'll have billings all along the way.

Eric Rasmussen - Equity Analyst at Stifel - (00:19:17)

Okay. And maybe just on sort of the revenue results, Q2 looks like you lowered the midpoint by about 500k. Can you just maybe provide a little bit of color on that? What drove that? And then, and then on the outlook for the year, you're still targeting 85 to 95 million seems a pretty steep second ramp. Maybe just what gives you the confidence of hitting that?

UNKNOWN - (00:19:43)

Yeah, thanks, Eric. So, you know, we provided a million dollar range because we're really still in the process of completing our close, particularly around a couple of our larger contracts and with our auditor transition and other things, it's just taking a little bit longer than we anticipated. So we want to be, you know, we want to give a range but also give ourselves leeway in case we need it. So we don't, we don't surprise anyone. Our confidence in the second half really comes from, you know, a lot of the satellites that were deployed in the first half. We deployed 27 satellites in the first half and a lot of those were launched for our Space Services customers. So it gives us clarity into the revenue ramp up for the next half of the year. We're also starting to recognize revenue on our Wildfire SAT contract. And so that's an execution story for us that as we execute, we drive revenue and we expect a step up in the revenue from our NOAA RO weather data effort that Teresa's talked a lot about over the past few months. And this would start in late September and give us a full quarter of higher revenue. So we. That's what's driving the confidence in that ramp.

Eric Rasmussen - Equity Analyst at Stifel - (00:20:54)

Great. Maybe just my last one. You. Would you still be targeting 20% plus for next year when the sale of the maritime business on an equal sort of comparison?

UNKNOWN - (00:21:08)

Absolutely. We're kicking off our 2026 planning process and that is the stated objective. So that is where we are targeting for, if not even maybe better.

Eric Rasmussen - Equity Analyst at Stifel - (00:21:21)

We'll see great and still positive operating cash flow maybe in the second half of this year. Still on track.

UNKNOWN - (00:21:28)

You know, we're working through that. We're committed to ending the year at still over 100 million in cash and cash equivalents. We are experiencing increased costs due to certain things with respect to the accounting transition and a few other matters. So, you know, I'm a little bit hesitant, but that is where we are focused on managing our cash and, and hoping to get to that objective, if not in the back half of this year and early next year.

Eric Rasmussen - Equity Analyst at Stifel - (00:22:02)

Great, thanks. Good luck.

UNKNOWN - (00:22:04)

Thanks, Eric.

OPERATOR - (00:22:08)

Our next question is from Jeff Van Ree with Craig Hallam Capital Group.

Jeff Van Ree - Equity Analyst at Craig Hallum Capital Group - (00:22:13)

Great, thanks for taking my questions. I had a question along the lines of the pipeline and maybe specifically around Space services, but obviously there's a lot of disruption with the Kepler sale, maritime sale and the situation with the balance sheet. But now that that's behind you and the balance sheet's in good shape or debt free. Just. I realize it's somewhat early, but, you know, how has that resonated in terms of unlocking maybe some frozen sales cycles and impacting those that were already in flight?

UNKNOWN - (00:22:44)

What I can say, Jeff, is I feel very good about the pipeline that we have ahead of us. There's a lot of them that we have some visibility into coming up that we already talked a lot about noaa, we talked about N, and a lot of the names that we can't talk about a lot on the radio frequency geolocation side. So I want to highlight that not just talking about space services, but what we're doing on the space reconnaissance side. And what I would say is that it's kind of interesting in the current environment. We're having probably more inbound interest than. I've seen in a long time at a company. Normally you have your sales teams are out. There pushing hard and we're in a. Current situation in particular with rfgl where we actually have people coming to us because we have a good product, we. Have something that can be used with. Customers worldwide, and we're in a very particular moment in time. So I feel very positive about the pipeline that we have and that we felt strongly enough that we can keep the revenue range and really feel optimistic about 20, 26.

Jeff Van Ree - Equity Analyst at Craig Hallum Capital Group - (00:23:54)

Okay, and then Ali, maybe a few for you. The. I didn't hear on the 10-Q. What is the estimate in terms of filing time? One, two, where's headcount right now? And then maybe just lastly the range, 85 to 95. A lot of space in there with just a couple quarters here to go. So just simply put, what gets you to low end, what gets you to high end, what drives that variability?

UNKNOWN - (00:24:18)

Yeah, so I don't, I don't, I. Look, I don't have a. I can't give a solid date on the 10Q. I can assure you that we are all working diligently here towards it. Everyone wants to get it filed. I'm, you know, hopeful in the next few weeks we will be able to do that. But I'm really hesitant to put a firm date on that as there's just still a few open items that we're working through. The maritime transaction came with about, you know, 20 contracts. That was extremely a lot of work for the company. This is the first quarter we've really recognized anything on Wildfire Sat that is a big contract for us to work through. So there are issues that we are working through. But we're confident right now in our top line and we are going to file this as soon as humanly possible. We're right around where we were in headcount. We were at about380. We're down from that. We're in the more like 3, 365 range from what I saw last week. So we're managing headcount. We're making very selective hires, as you've seen. And Theresa can talk about some of that, but we are, we're trying to hold steady if we're not being down from last time we talked. And you know, again, I just say on the range for the full year. I think the confidence comes from what we have launched for space services revenue that we can start recognizing the Wildfire SAC contract and the NOAA RO deal. That gives us confidence that we can be in that range without a lot of hesitation.

Jeff Van Ree - Equity Analyst at Craig Hallum Capital Group - (00:25:56)

Okay, great. Thanks for taking the questions. I'll leave it there.

UNKNOWN - (00:25:59)

Thanks, Jeff.

OPERATOR - (00:26:04)

Our next question is from Brian Kinslinger with Alliance Global Partners.

Brian Kinslinger - Equity Analyst at Alliance Global Partners - (00:26:10)

Great. Thanks so much for taking my questions. You launched 27 new satellites in the first half. I believe that was the number. Is there a way to quantify what the annual run rate of revenue is from the data services that will be delivered on those 27 satellite?

UNKNOWN - (00:26:35)

Yes, there is a way. Yeah, exactly. I think, look, I would say, and I think I've said this before, like Ben and I are spending a lot of time post maritime thinking about how to reposition, how we talk about revenue. We're not there yet, but that is something that we're working on for 2026. I think the main thing to know is that it's, you know, the space services revenue is growing, it's increasing. The new deal continues to add to the remaining performance obligation that we can recognize over time. So that's all positive. But I think this is to come in terms of a little bit more detail on those numbers. The only other thing I think I would add there is just to remind you that we really operate this constellation as a network. All these satellites are doing multipurpose things and we're operating it all together as a network. So you also should not think about this as something that is like revenue per satellite. Right. We've never talked about it that way. And I don't think that's the right. Way to think about it. The better way to think about it is really at looking what is the. Replenishment capex that we have per year. As that baseline and then all the revenue that we can grow on top of that, that leverage model that we Continue to talk about.

Brian Kinslinger - Equity Analyst at Alliance Global Partners - (00:27:58)

You answered my next question without me even have to ask it. Good job. I'm curious for the eight figure contract you highlighted, this was already a customer. Can you share? Because we don't know who that customer is, what that rough revenue run rate of that customer is before this contract. Just trying to gauge that we're very big, very small and Joanna, anything you can share?

UNKNOWN - (00:28:25)

Yeah, I don't think that's something that we're publicly sharing other than, you know, we're continuing to look at the, I. Would say the quality and the long term relationship of the type of customers. That we work with on a space services side. So we're being, you know, I would say we're being particular about, you know, who we work with and the type of deals that we do. And this is the type of customer that we feel good about as a. Long term partner that we want.

Brian Kinslinger - Equity Analyst at Alliance Global Partners - (00:28:56)

Okay, last question I have. I was, one of the questions was about cash. I think I heard you have about 100, just below 118 million of cash and you expect to end the year at 100. Does that approximate your EBITDA loss in the second half of the year? Otherwise, where does that 18 million come from?

UNKNOWN - (00:29:22)

Hang on, I'm just, I'm thinking through that. I mean, I think, look, I think that there are, there are, I'm just trying to think through how I want to answer this. There are some pressures on cash that may or may not be reflected in adjusted ebitda. So we, you know, there are certain items that we adjust out that are, you know, cash flow uses of cash. So I'm not sure that it's the best estimate because we do have things that we are adjusting out. So I just want to make sure I clarify that. Okay.

Brian Kinslinger - Equity Analyst at Alliance Global Partners - (00:30:04)

All right, thank you.

OPERATOR - (00:30:11)

Our next question is from Austin Mohler with Canacore Genuity.

Austin Mohler - Equity Analyst at Canaccord Genuity - (00:30:17)

Hi, good afternoon. Teresa and Allie. So just my first question. On the microwave sounder, when placed in orbit, would that particular instrument strengthen your competitive positioning versus companies like Tomorrow IO by putting that into your toolbox? And ultimately do you plan to deploy several of those and add it to the broader Lemur constellation?

UNKNOWN - (00:30:41)

I would say the short answer is yes. I mean, we're not doing direct competitive things with them necessarily at the moment, but it's absolutely something that we work with customers today who are looking at that data and testing that data, including from the test flight that we did. And we do have an expectation that this is something that we start selling the data sets that goes into our own forecasting. Models and becomes part of our product portfolio.

Austin Mohler - Equity Analyst at Canaccord Genuity - (00:31:13)

Okay. And just a follow up, do you have any update on the development of the four Yryala satellites?

UNKNOWN - (00:31:23)

They are being worked on and in process right now. So that contract continues to be executed nicely and on track.

Austin Mohler - Equity Analyst at Canaccord Genuity - (00:31:37)

Very exciting. I'll pass it back there.

UNKNOWN - (00:31:38)

Thank you. Thank you.

OPERATOR - (00:31:43)

Our next question is from Chris Quilty with Quilty Space.

Chris Quilty - Equity Analyst at Quilty Space - (00:31:48)

Thanks.

UNKNOWN - (00:31:49)

Teresa. You mentioned you're seeing more inbound interest than you've seen in a long time. Is that specific to the space services side of the business or is it the new RF mapping service or is.

Chris Quilty - Equity Analyst at Quilty Space - (00:32:00)

It just broad based?

UNKNOWN - (00:32:03)

I would say it's broad based, but probably more broad based on the government side. So it's going to include space services. A lot of it is related to inbound looking at sovereign capabilities. So I mean, this is a theme that we've talked about quite a lot. I think the space sector overall is talking about quite a lot. And then it also is going to. Be related to the space reconnaissance, which I really see as an important growth area for spire. And again, where we have assets in orbit and we have good competitive differentiation.

Chris Quilty - Equity Analyst at Quilty Space - (00:32:39)

Gotcha. And on that service, that's something you sort of developed and launched. Was there customer pull for that and do you have specific customers you're targeting for that service?

UNKNOWN - (00:32:57)

There's, you know, we develop the service certainly because there's customer demand for it. I mean, we generally like for that. To be the case. When we develop something and take it. Out into the market, it's very difficult. Unfortunately, to talk about customer base for that product. And all I can say is that, you know, we can have customers in the United States and we can have customers outside of the United States.

Chris Quilty - Equity Analyst at Quilty Space - (00:33:23)

Understand? And how would that service differentiate from what Hawkeye 360 unseen Labs Sierra Space are doing?

UNKNOWN - (00:33:33)

Yeah, so I think everyone is doing slightly different things and picking up slightly different spectrum. I think we've got assets in orbit, we have quality geolocation that we're able to deliver. I think we have a really nice automated pipeline where we can get, you know, good latency out to the customers. And I think we have the ability to work with a diverse set of. Customers, which is something that's unique.

Chris Quilty - Equity Analyst at Quilty Space - (00:34:03)

Gotcha. A follow up on the Canadian space agency, the wildfiresat program. Does that one follow the same sort of 12 to 18 month build cycle or I think you're doing an AIT facility up in Montreal. Does this one have a much longer lead to get to the service revenue?

UNKNOWN - (00:34:25)

So this is a percent completion. So we're actually taking revenue along the way. That's why we talk a lot about that contract being relevant for the revenue recognition in 2025. I don't know, Ali, if you need Absolutely correct.

Chris Quilty - Equity Analyst at Quilty Space - (00:34:40)

Gotcha. And a question on the Sounder program. What size satellite will you use to host that Sounder? Is that standard 3U, 6U, 12U?

UNKNOWN - (00:34:55)

So it's on the larger end because this is a more complicated payload, I. Think has more power requirements, but it. Fits within the form factors that Spire already does.

Chris Quilty - Equity Analyst at Quilty Space - (00:35:10)

Gotcha. Very good. Appreciate the feedback.

UNKNOWN - (00:35:14)

Thank you so much. Thanks, Chris.

OPERATOR - (00:35:20)

Thank you. There are no further questions at this time. This does conclude today's conference call. We thank you for your participation. You may now disconnect your lines.