Spire Global, Inc. (SPIR) Earnings Call Transcript

Thank you. Greetings and welcome to the SPIRE Global Second Quarter 2026 Results Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.

pleasure to introduce Ben Hackman, head of IR. Please go ahead. Thank you. Hello, everyone, and thank you for joining SPIRE's second quarter 2026 earnings conference call. Earnings press release and related SEC filings are posted on the company's IR website. The replay of today's call will also be made available. With me on the call today is Theresa Condor, CEO, and Allie Engel, CFO. As a reminder, our commentary today will include non-GAAP items. Reconciliations between our GAAP and non-GAAP results, as well as our guidance, can be found in our earnings press release, which can be found on our IR website. Some of our comments today contain forward-looking statements that are subject to risks, uncertainties, and assumptions. In particular, our expectations around our future 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, 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 Theresa. Thank you, Ben, and good afternoon, everyone. The revenue for the second quarter was $18 million. Excluding the maritime business we divested last year, core revenue expanded both year over year and sequentially, marking our strongest core revenue quarter since the divestiture. This is consistent with what we outlined in March, as a sequentially building second half weighted year. Two quarters in, that's exactly what we're seeing in the numbers. As a result, we're reaffirming our full-year revenue guidance. which at the midpoint represents 50% year-over-year core revenue growth. On our last call, I pointed to the specific milestones investors should watch this quarter. NOAA decisions on our in-year hyperspectral microwave sounding proposals are contract activity, and the continued expansion of our RFGL collection capacity. There was progress on each, so let me start there. On NOAA, the proposals we told you we were submitting in May have advanced to negotiation or closed. We are currently in the negotiation phase on an eight-figure contract opportunity tied to our hyperspectral microwave sounding capability, following the successful on-orbit validation of our project. our HIMSS payload. Combined with last week's NOAA Hyperspectral Microwave Founder Data Contract Extension, valued at up to $5 million in revenue over a nine-month term, we're encouraged by the growing interest in HIMSS. These are two sizable opportunities that grew directly out of the flight-proven data we have been generating since the first quarter. On RFGL, we secured awards from four new international customers in the second quarter, on top of the five new U.S. awards and three new international customers we reported in the first quarter. On capacity, the 19 satellites we deployed in the first quarter are reaching full operational status on schedule, and In early July, we launched 10 more, bringing our total to 29 satellites launched in 2026. Today, I want to go deeper on three things. Where the U.S. government weather opportunity stands, why demand for RF intelligence keeps building, and how our European position and manufacturing footprint turn that demand into long-term growth. Going back to NOAA, on our first quarter call, we told you we were actively bidding on more than 150 million of opportunities across the NOAA portfolio. last week marked a key milestone as the first of these opportunities crossed the finish line with a signed contract worth up to $5 million. On top of that, the eight-figure microwave sounding opportunity is within that pipeline and both advanced from proposal to negotiation or signature since our last call. Each is built on the flight proven data our HIMSS payload has been generating since first light in March. And that's before our existing NOAA radio occultation contract, which has been a cornerstone of our government weather business. year's one-year RO award was $11.2 million. That contract is in full execution today and we expect the follow-on award to begin in September. As a reminder, NOAA is working to establish a multi-year $8 billion IDIQ contract under which efforts like RO can be awarded. Because that IDIQ vehicle is still being finalized, we expect the RO renewal to come in two phases. First, a shorter bridge award we expect to be finalized very soon, followed by a longer-term award once the IDIQ is in place. Taken together, we expect these contracts for RO data to be larger on an annual basis than the $11.2 million contract awarded last year. Beyond these three opportunities, a number of other opportunities within the NOAA portfolio continue to move through the pipeline. We're seeing similar weather demand internationally and in the commercial market as well. Recently, we were awarded a contract from UMITSAT for RO data. This has been an annual contract for SPIRE, but this year, we were able to expand this contract with a total annual value now over 4 million euros. And on the commercial weather front, we started off July by signing two six-figure awards for global weather forecasts along with historical weather data. Let me turn to RF intelligence because demand for this business is being shaped by something larger than any single program or procurement. Around the world, the radio frequency environment has become contested, and it is staying that way. GNSS jamming and spoofing now affect thousands of commercial ships and aircraft from Eastern Europe and the Baltic to the Middle East and Asia Pacific. Vessels broadcast positions that place them on land or go dark entirely. Aircraft reroute around interference corridors that persist for months. In a growing number of regions, operators simply cannot trust the navigation and identification signals the global economy was built on. When those signals are denied or falsified, governments and operators need an independent way to reestablish ground truth. where an emitter actually sits, which vessels have gone dark and where they went, which corridors are unsafe for aircraft. Our constellation delivers that intelligence today, drawing on more than a decade of investment in radio frequency geolocation, in jamming and spoofing detection through our ADS-B quality indicators, and in a constellation that revisits every point on Earth more than 100 times a day. We believe this demand is durable. Interference outlasts the conflicts that put it in the news, and governments have started budgeting for space-based RF awareness the way they budget for other core infrastructure. That spending pattern has years left to run. We see it in our own bookings. In the second quarter, we secured RFGL awards from four new international customers, we continue to sign new pilots and extend existing ones. These engagements typically develop in stages, a pilot first, then a data subscription, then a larger operational program, and most of our international relationships sit in the early stages today. We see that as the setup for a multi-year runway. Our capacity is scaling alongside the demand. The six new satellite pairings deployed in the first quarter are reaching full operational status through the second and third quarters as planned. Our single-satellite geolocation capability, demonstrated earlier this year on S-band and X-band signals, expands what each satellite can collect and lowers the constellation cost of coverage. With launch capacity reserved through 2028, we can keep adding collection capacity on our own timeline, even in a constrained launch market. Very few companies can meet this requirement with a deployed constellation, slight proven capability, and manufacturing on both sides of the Atlantic. That positioning is a large part of why the European partnerships I'll describe next came to us. During the quarter, we announced two strategic partnerships with Germany-based companies, Schaeffler and Deal Defense, that we believe significantly strengthen our long-term positioning within the European space ecosystem. Our collaboration with Schaeffler brings together complementary capabilities to explore sovereign European space infrastructure and next generation satellite technologies. Germany has long been one of Europe's leading industrial economies, and partnerships with established industrial leaders create opportunities to combine advanced manufacturing expertise with our operational space capabilities. Likewise, our agreement with Deal Defense reflects growing interest in leveraging commercial space capabilities to support national security and defense applications. As governments modernize their defense architectures, resilient commercial satellite networks are increasingly viewed as important complements to traditional government-owned systems. We view these partnerships as more than individual agreements. They reflect our flight-proven infrastructure and operational track record, becoming the foundation other industrial leaders build on as they extend into space. And the timing matters because the European demand backdrop just got more concrete. In July, NATO leaders met in Ankara for the 2026 summit the Alliance's Defense Industry Forum announced more than $50 billion in new procurement commitments spanning integrated air and missile defense, uncrewed systems, and intelligence capabilities, building on the more than $139 billion increase in core defense investment. that European allies in Canada have already delivered since last year's Hague summit. Also in early July, the European Union proposed five new European defense projects of common interest, including the Space EDPCI, worth up to 24 billion euros by 2034. This is a great opportunity for the European Union to develop a new defense project. In the space, EDPCI is structured around seven capability areas, including space-based early warning and intelligence, surveillance and reconnaissance, a category that encompasses signals intelligence. The project aims to transform mature R&D into sovereign operational capabilities that no single member state can develop alone. Across Europe, governments increasingly recognize that sovereign access to space-derived data, resilient commercial infrastructure, and responsive satellite capabilities are strategic priorities. These investments will take time to translate into specific procurement programs, but we believe the direction is unmistakable, and the RFGL awards I described are the early evidence of this movement reaching our backlog. As these European opportunities continue to mature, they will further broaden and diversify our revenue base, reinforcing that our growth is being driven by multiple markets rather than any single opportunity. Because we already operate globally, maintain manufacturing capabilities in Europe, and have years of operational experience delivering mission-critical services, We believe we are well positioned in a European market that has years left to run. Supporting all of this demand is a team we continue to strengthen. This quarter, we welcomed Eric Mel Mellinger to SPIRE as our Chief Commercial Officer. Mel joins us from Mantec International, where he helped drive double-digit year-over-year growth. is straightforward. Convert the demand I have been describing into revenue. And that demand extends beyond the $150 million in NOAA opportunities I described earlier, We are also tracking more than $100 million in opportunities across the U.S. federal pipeline, from ROMs to submitted proposals and active negotiations, with the potential for these to convert over the remainder of 2026. We're seeing that same momentum on the commercial side as we continue to build our commercial pipeline with recognizable brands. All of this demand only matters if we can build and launch to meet it. I noted at the top, the 10 satellites we launched in early July brought our 2026 total to 29. That pace reflects the maturity of our manufacturing organization and the operational discipline we have built over many years. our Constellation strategy has always been about more than adding satellites. It is about operating a platform that delivers reliable, scalable services for customers who increasingly depend on real-time global data. One of the milestones I'm particularly proud of this quarter was the official opening of our new satellite manufacturing facility in Munich during May. With manufacturing operations now established in North America, Germany, and the UK, our footprint provides the scale and rapid deployment capability required to capture government and defense pipelines. It expands our production capacity to approximately 300 to 400 satellites annually. We have already begun to use that capacity in both regions. The satellites for the StratFi program are being built in Boulder and are expected to launch later this year. And so, we're going to be using that capacity in both regions. Satellite integration work is underway in Munich today. As governments prioritize sovereign space capabilities and supply chain resilience, meaningful manufacturing on both sides of the Atlantic becomes an increasingly important competitive advantage. And it is one very few companies in our industry can claim. We also continued to advance our technology. In July, SPIRE achieved a major milestone in our optical intersatellite link program, successfully establishing our first cross-plane laser connection between two OISL-equipped satellites, building on our previous in-plane demonstrations. The satellites held a stable link for more than five minutes across roughly 5,000 kilometers, about the distance from New York to London. This This technology lets satellites pass data directly to one another in orbit, cutting latency and reducing dependence on ground station proximity as our constellation scales. Before I hand the call to Ali, I want to spend a moment on how the rest of the year comes together. because I know the math many of you are doing. First half revenue was $33.9 million. Our full year guidance of $75 to $85 million, therefore implies roughly $41 to $51 million in the second half. And I want to be specific about what carries us there. Start with what is already under contract. As of the end of July, over 85% of our full year guidance is contracted, up from the 76% shared in May. Our NOAA radio occultation contract remains in full execution. Our European radio occultation work, our space services programs, and our expanded commercial agreements are all in delivery through year end. StratFi program continues to progress with satellites being built in Boulder and expected to launch later this year. And last week's Hyperspectral Microwave Founder Data Extension is now under contract, which represents up to $5 million in potential revenue over a nine-month term. then add what we expect to close in the near term, the eight-figure microwave sounding opportunity that is in active negotiation now, and the radio occultation bridge award that is expected to begin in September. We continue to expect the follow-on RO contracts taken together to exceed the $11.2 million annual value of last year's award. So, when we reaffirm guidance today, that reaffirmation rests on a contracted base in execution, a renewal we expect shortly, and NOAA negotiations whose estimated scale we have now quantified for you. What remains between here and the high end of the range is execution through the second half. It's worth calling out that last week we filed an 8K disclosing the dismissal of all of Northstar's claims and awarding approximately $12.4 million in favor of Spire. are pleased with this result. Between now and our next call, the markers to watch are the RO Bridge Award, the outcome of the microwave-sounding negotiations, the Stratfy launch and continued RFGL awards. We will report against each of them in the fall. With that, Allie, over to you.

Thank you, Teresa, and good afternoon, everyone. I'll ground the financial picture in the same operating momentum Teresa just described. As a reminder, unless otherwise noted, I'll be discussing non-GAAP financial measures. Reconciliations between our GAAP and non-GAAP financial measures are included in our press release. Revenue remains the metric we watch most closely because it reflects execution across both sales and operations, it's the primary driver of our financial progress. As we've discussed in the past, Spires cost base is largely fixed, and so as revenue scales, a meaningful share of that growth converts directly into margin. On revenue, we continued to make strong progress during the second quarter. The second quarter gap revenue was $18 million, up 16% year over year on a core basis, excluding the maritime business we divested last year, and up 19% sequentially from the first quarter. The year over year growth was primarily driven by higher delivery of space services and increased RFGL data purchases. That sequential growth is an important marker. It's evidence of the back half acceleration we've been describing since our fourth quarter call. Non-GAAP gross margin was 38%, down from 52% in the second quarter of last year. This decrease was primarily a result of impacts associated with the wildfire SAC contract, which was canceled for convenience in the second quarter while there gross margin was down this quarter, we expect gross margin expansion in the second half as revenue increases on a relatively fixed cost structure. Adjusted EBITDA was negative $8.6 million, an improvement of 16% year-over-year and 15% sequentially, which is primarily driven by lower operating expenses. Based on our current trajectory, we continue to expect adjusted EBITDA break-even by late 2026 to early 2027. Cash flow used in operations was $23.4 million, improving 32% year-over-year and 11% sequentially. This figure is the most recent. This reflects lower operating expenses compared to the second quarter of last year and is consistent with the broader trend of improving financial performance as we scale. We expect that trajectory to hold through the second half with cash flow used in operations continuing to improve sequentially in both the third and fourth quarters of 2026. We ended the quarter with approximately $92 million in cash, cash equivalents, and marketable securities, and we remain debt-free. full year 2026 revenue outlook of 75 million to $85 million. This represents more than 50% core year-over-year growth at the midpoint. I'll point you back to Teresa's comments on the NOAA pipeline as the clearest illustration of why our confidence in that range continues to build. eight-figure HIMSS opportunity and an RO renewal we expect to be larger than last year's on an annual basis. This is exactly the kind of layered near-term visibility that supports the back half of this guidance. These opportunities sit on top of the strong visibility we already have to the midpoint of our full year guidance. As of the end of July, over 85% of that midpoint is already under contract. The headline I'd leave you with is this. Revenue growth accelerated both year over year and sequentially this quarter, and the operational proof points behind that trend, satellite launches, expanded manufacturing capability, and a deepening government and defense pipeline on both sides of the Atlantic, moved in the same direction at the same time. That alignment is what gives us confidence heading into the second half with.

With that, let's open it up for questions. Thank you. We'll now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 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 CIFL.

Yes, thanks for taking the questions and great to hear all the progress. Maybe just on the guidance, you've talked now several quarters about the second half weighted ramp. It seems like that's still intact. But if we look at sort of the transition from Q2 to Q3, is that... that step up a little bit smaller and then maybe more of the majority of that to make up, we'll call it the 46 million to get to your midpoint of your guided, guided range. Um, Is that step up smaller in Q3 and then more of an impact in Q4?.

That's correct, Eric. That's the right way to think about it. There should be some step up in Q3, but the majority of it will come in the fourth quarter.

Great. And very good to hear about the eight-figure contract in progress. You know, it sounds like, though, this was... I guess this came about because of the contract extension and then I guess does the extension have to run its course before a decision is made? or will we start to see some of that happen sooner?.

Yes, these are two separate things, both related to microwave sounding. So, you know, we're delivering that data by and the next eight-figure contract, as we said, we're in negotiation. We do expect that that gets awarded in, you know, in the relatively short term. short term, I think sometime in the next month, but they're separate things. So I expect that they'll both happen in parallel.

Okay. And maybe just one more, if I can, on the NOAA RO, you know, it sounds like there's going to be a shorter bridge award. any sense of sort of, you know, timing? Will that happen sort of when it expires in September? And then how quickly after that could we see? any announcement or see some news about the RO. And then you said you'd mentioned probably more than the $35 million that was last year's award, you know,.

how large of a magnitude of increase could we see there yes so the the RO bridge award we are expecting to happen in August you know could could potentially be any day now it is a bridge award so it will not be a full one-year program we have to see how NOAA does it exactly but potentially before before the end of the year, they would then move into the new IDIQ and then do kind of like the proper full award. I think the important thing to note is they're very keen to make sure that there is not a single day that they don't get the radio occultation data sets go into the weather forecast every day. So however they do the exact contract mechanisms, this is going to be seamless delivery and therefore revenue recognition for SPIRE. In terms of order of magnitude, because there's going to be a bridge contract, you have to look at what that would be on an annual basis and then know that. that there's another one coming. The one last year was, just to correct your numbers, it was $11.2 million, I believe. And we feel very comfortable that it is going to be larger than that number. Okay.

Got you. No, the 35 was the total and it was split. You had the 11-2. Yes. Just wanted to get a sense of what you You saw this next award. Yes. Right, the total award. And then do you think your percentage could actually go up? I think you had about 25% of that award last year.

Yes, I do expect that there are larger dollars, larger number of soundings, and I think we can capture a solid share of that. It will definitely be dual source. So I feel very good about our positioning there in terms of relevant price to delivery requirement.

Great. Thanks. I'll jump back into queue. Our next question is from Jeff Van Re with Craig Hallam Capital Group.

Hi, this is Daniel on for Jeff. Just in regards to the space data that you're talking about benefiting, I assume that's in reference to the space services RevRec coming online for those 19 satellites that were launched in Q1, just confirming that's what you're talking about. And then just sort of the cadence of that sequentially in terms of when those satellites were commissioned and data delivery began, is that something that happened? early in Q2, such that you kind of got a full quarter out of that, or something that happened late in Q2 where we should see another step up into Q3? Just your thoughts on the space services ramp.

Yes, so I mean, Ali can correct me, but some of this is going to happen a little bit later in Q2, and it's all going to vary depending on the satellite and what is on it and how long the customer takes to go through testing out their payload, but they're still back half loaded, which is why we've continued to tell people there's the step up in the second half of the year. But the space services ones we're talking about are from some of the satellites that launched that we then deliver the data on and can start collecting revenue that we wouldn't recognize the revenue earlier in the year.

Yes, that's helpful. And then in terms of RFGL, maybe you could just sort of rank order, you know, the key drivers for that. if that really leads for new international customers and the customers that already international customers came on in Q1, or if that's more so expansion in the US, or just sheer volume increases due to what you can sell from the six new satellite pairs that have gone up, just sort of rank ordering RFTO, what the biggest movers are there.

Yes, I mean, I think the increase of capacity is definitely helpful. I think from the beginning of the year, we've had about a 10x increase in RFGL capacity. We have, as you heard, we've signed new international customers, and that's across different locations and a variety of use cases. We've also re-signed with some customers that we had already worked with from the beginning part of the year, and we're definitely continuing to sign and do tasking for end users out of the United States. The other thing I would say is that we still are early in the process, I would say, with these customer sets, so I feel pretty excited about the growth opportunity with these existing customers as well as, of course, the new pipeline of opportunity that we're still working through.

Okay, that's helpful. And then maybe one last one for you, Teresa, on the NOAA opportunity set. So, stepping out of the ROs and the microwave soundings, just your thoughts on GNSS, reflectometry, space weather, any of the other modalities. Are those things that we should be looking for at all in the second order?.

I am not very certain that those things will come in the second half of the year. I think it's also possible that they go into 2027. don't have a straight answer for that because we just don't know how NOAA will end up making things happen, but we've definitely heard that they're prioritizing RO and microwave sounding stuff first.

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

Great. Thanks. Good to hear about the robust pipeline and some of the bookings. Last quarter, you mentioned the... operating leverage you had been discussing for the last few quarters was going to become visible this quarter, yet despite the significant increase in revenue, gross margin dropped by more than 500 basis points versus the first quarter. Can you help bridge that gap and when we might see that leverage in gross margin?.

Sure. Hey, Brian, it's Allie. We, the decline was really driven by the impacts associated with the cancellation of the wildfire SAC contract and some balance sheet cleanup we had to do. If you'll recall, that contract was terminated for convenience in the second quarter. So, I'd say I'd focus more on the trend rather than any single quarter such as the second quarter, the non-GAAP gross margin's been on an upward trajectory over the last three quarters. Prior to this quarter, we expect that to resume trend as revenue scales in the second half. and we expect to continue getting towards our gross margin excuse me, target of 60 to 70% going forward, but we were a little bit impacted by some balance sheet cleanup in the second quarter for wildfire sap.

Great. And maybe a follow-up for you, Allie. Maybe you can speak to the magnitude of the improvement of the cash burn coupled with You're at about 29 million. What are CapEx plans for the second half of the year? How much could operating cash flow or usage improve? And then how much longer should we expect unusual costs based on your comments? Is that just one more quarter?.

Yes, so I'd say, you know, again, looking at our trends, we improved 32% in OCF year and 11% sequentially, so we're definitely headed in the right direction. We feel good about 27 million in total for the year for kind of of the fixed asset purchases, property, plant, equipment purchases, that number, I think, will hold pretty comfortably. We do expect our cash usage to moderate in the back half of 2026, probably more weighted to Q4, based on the revenue trends. But we do expect to continue to improve in the third quarter as well. We remain really happy about our liquidity position and our path towards operating cash flow break even, hopefully sometime in 2027. The one-time costs definitely have slowed down. As you're aware, we received our favorable ruling with our North Star arbitration. a lot of legal fees associated with that should slow down, as well as the wildfire sack contract termination, that there's not a lot left going on there. So I do expect one-time costs. And I think you even see it in the second quarter compared to the first quarter. We had a nice decline in those one-time costs.