AST SpaceMobile’s Revenue Arrived. So Did a $1 Billion Burn

AST SpaceMobile produced its first quarter in which revenue became financially visible rather than incidental. Q2 FY2026 revenue was $31.5 million, up from $1.2 million in Q2 FY2025. Product revenue contributed $24.4 million and service revenue contributed $7.1 million. Management attributed the total to gateway deliveries and milestones met under U.S. Government programs. That mix matters: the quarter demonstrated that the company can recognize meaningful revenue before widespread commercial broadband service begins, although it did not yet demonstrate recurring consumer usage.

The company maintained FY2026 revenue guidance of $150.0 million to $200.0 million. The midpoint is $175.0 million, while H1 revenue was $46.3 million, meaning the second half must contribute $128.7 million to reach that midpoint. Management said the company remains on track, supported by additional U.S. Government contract awards. Backlog increased to approximately $1.30 billion across commercial contracts and government awards, including multiple U.S. Government awards with an aggregate value above $125 million. The release did not disclose the backlog’s recognition schedule, cancellation provisions or expected margin.

The physical network also advanced. Six BlueBird spacecraft were launched within 50 days, taking the in-orbit fleet to 13 and combined deployed aperture hardware to approximately 20,000 square feet. BlueBirds 14, 15 and 16 were expected to be ready to ship shortly, while BlueBird 17 through BlueBird 46 were in various stages of production and assembly. AST SpaceMobile also reported nearly 50 gateways in completion, installation or planning and said 3,000 digital cells had been activated across the continental United States ahead of beta service.

The cost of that progress was substantial. Total operating expenses rose to $329.1 million from $164.1 million in Q1 FY2026. The increase included a $125.9 million loss on involuntary conversion, while stock-based compensation and depreciation and amortization also inflated the GAAP total. Adjusted operating expenses were $119.1 million, up $27.9 million sequentially, and adjusted operating expenses excluding adjusted cost of revenue increased to $95.9 million from $79.8 million. Even after excluding unusual and non-cash items, the underlying organization became more expensive as production and deployment scaled.

Quarterly free cash flow was not separately disclosed because the cash-flow statement covers six months. For H1 FY2026, operating cash outflow was $145.2 million and purchases of property and equipment were $859.2 million, producing free cash flow of -$1.00 billion. The comparable H1 FY2025 figure was -$502.6 million. Capital expenditure therefore remains the dominant financial variable, even as reported revenue begins to rise.

The quarter strengthened the demand side of the thesis more than the economics. Revenue grew by $30.4 million year over year, backlog reached $1.30 billion, and government awards broadened the customer set beyond mobile network operators. Network testing was underway with Vodafone, Orange, Telefónica, Vodafone Ukraine and Deutsche Telekom in Europe, as well as partners in Canada, Japan and Saudi Arabia, subject to final regulatory approvals. These developments reduce—but do not eliminate—the risk that the technology reaches orbit without paying customers.

The production update also matters because AST SpaceMobile’s valuation depends on converting a technically ambitious system into a repeatable deployment cadence. Having BlueBird 17 through BlueBird 46 in production or assembly provides better visibility than a small number of isolated spacecraft. The recently launched satellites expanded the fleet to 13, while management said Block 2 spacecraft are expected to deliver peak data rates approaching 200 Mbps. The release also cited a nearly 100 Mbps demonstration on a Block 1 BlueBird. Those are encouraging technical markers, but neither beta usage nor commercial service revenue was quantified.

The weak part of the thesis remains capital intensity. Property and equipment purchases nearly doubled year over year in H1, while the company had incurred approximately $2.3 billion of gross capitalized property and equipment costs by June 30. Cash, cash equivalents and restricted cash totaled approximately $2.7 billion at quarter-end. A July convertible-note offering added $1.15 billion of gross proceeds, lifting pro forma cash and restricted cash above $3.7 billion, but it also added debt and potential dilution. The financing extends the deployment runway; it does not prove that the constellation will earn an adequate return on that capital.

Margins are not yet a useful indicator of mature economics. Q2 gross margin was 25.2%, calculated from $31.5 million of revenue and $23.6 million of product and service costs. Operating margin was -944.1%, although that was much better than -6,297.3% a year earlier because revenue expanded from a very small base. EPS deteriorated to -$0.77 from -$0.41. P/E and EV/EBITDA are therefore not meaningful, and the supplied FY2024 ROIC of -266.6% confirms that current accounting returns cannot support the market valuation.

There is no prior SageNoodle fair value to carry forward, so this update establishes an initial base case of $45 per share. We use a FY2030 revenue-multiple framework because current earnings, EBITDA and free cash flow are negative. The approach is necessarily assumption-driven: the release provides FY2026 guidance and backlog, but it does not provide long-range revenue, mature margins or commercial pricing.

Each scenario applies an assumed enterprise-value-to-FY2030-revenue multiple, subtracts approximately $0.25 billion of June 30 net debt based on $2.72 billion of cash and restricted cash and $2.97 billion of debt, and divides by 299.1 million weighted-average Class A shares. This denominator does not fully model every class, warrant or future convertible outcome, so dilution remains a valuation risk. We also do not give separate value to the preliminary Japan initiative because its funding, timing and economics were not finalized in the release.

The bear case assumes FY2030 revenue of $1.0 billion and a 7.75 times enterprise-value-to-sales multiple, producing approximately $25 per share. The base case assumes $1.8 billion of FY2030 revenue and a 7.6 times multiple, producing approximately $45. The bull case assumes $3.0 billion and an 8.55 times multiple, producing approximately $85. These are high revenue multiples, reflecting the potential value of a differentiated global network, but they also require sustained growth well beyond the disclosed FY2026 guidance.

At $59.905, the stock trades 33.1% above the $45 base case. Under SageNoodle’s valuation rule, the shares are Overvalued because fair value is less than 85% of the market price. The quarter improved the operating evidence behind the business, but not enough to move the central valuation into the current quotation. The price requires an outcome between the base and bull cases before accounting for execution slippage or additional dilution.

The clearest upside risk to our cautious valuation is that backlog converts faster and at better margins than assumed. AST SpaceMobile could also receive substantial non-dilutive funding: the release described the preliminary selection of the Rakuten and AST SpaceMobile joint venture for Japan’s J-LEO initiative, with an expected value of up to approximately $1 billion. Faster government awards, successful beta service and commercial activation by major mobile operators could make the $1.8 billion FY2030 base assumption too conservative.

The downside case begins with deployment. Launch failures, delayed satellite production, gateway delays or weaker-than-expected Block 2 performance would postpone revenue while capital spending continues. The company also requires market-by-market regulatory approvals and spectrum access. Partnerships covering more than 3 billion subscribers are strategically useful, but the release does not establish how many subscribers will pay, what they will pay, or how revenue will be shared with mobile network operators.

Financing is the second major fault line. The balance sheet is liquid, but H1 free cash flow of -$1.00 billion illustrates the scale of the build. Debt stood near $3.0 billion at June 30 before the July convertible issuance, and Class A shares outstanding increased from 285.4 million at year-end to 299.7 million at quarter-end. If deployment requires more capital before recurring service revenue reaches scale, debt service, dilution or both could reduce per-share value even if the network ultimately succeeds.

This quarter changed the evidence, not the nature of the wager. AST SpaceMobile now has more revenue, more contracted backlog, more satellites and more liquidity. It also has a larger cost base and a deployment program consuming roughly $1 billion of free cash flow in six months. The next decisive evidence will be whether beta service becomes commercial usage and whether revenue can scale faster than the capital required to produce it.