SPIR - NYSE

Greetings, and welcome to Spire Global's Second Quarter 2023 Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Ben Hackman, Head of IR. Please go ahead.

Thank you. Hello, everyone, and thank you for joining us for our second quarter 2023 earnings conference call. Our earnings press release and SEC filings can be found on our IR website at ir.spire.com. A replay of today's call will also be made available. With me on the call today is Peter Platzer, CEO; and Tom Crewe, 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. Some of our comments today may contain forward-looking statements that are subject to risks, uncertainties and assumptions. In particular, our expectations around our results of operations and financial conditions 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 Peter.

The second quarter was another quarter of strong growth and progress towards profitability. In addition to Spire adding another quarter to our unbroken record of quarterly revenue growth since becoming public, we exceeded expectations by delivering more revenue and stronger margins than anticipated. Alongside our strong results, we continue to see broad-based demand for our solutions. We signed another 32 solution customers achieving nearly $113 million in ARR and yet again increased our rolling 12 months organic net retention rate to 117%. Based on first half results that exceeded our guidance and market expectations, we are thrilled to improve our margin guidance for the full year and share these important anticipated milestones. We expect to generate positive cash flow from operations during the fourth quarter of this year. The adjusted EBITDA positive in the first or second quarter of next year 2024, delivered positive operating margins in the second quarter of 2024 and be free cash flow positive in the second or third quarter of 2024. I could not be more proud or excited about Spire's prospects for profitability and sustainable growth. The macro environment has become more stable over the past quarter. The U.S. Federal Reserve is no longer forecasting of recessions and markets are showing strength. With businesses adjusting to our interest rates and a more stable outlook, we are seeing a renewed focus from customers looking to drive cost out of their business. We have not seen a further degradation in time to contract. And in some instances, we have actually seen some of the fastest time to contract since becoming public. The flip side to these improved macro conditions is a still very tight capital market that is putting a conservative overlay to the business environment in terms of customers making investments for their growth. Businesses continue to be ever more aware of the risk and cost that weather and climate have on their operations, and I'm increasingly eager to find solutions to manage, mitigate and reduce that risk and cost. At the World Economic Forum, Davos this year, the burgeoning future of space-based businesses was top of mind. The global management consulting for McKinsey values the space market at $447 billion this year and on track to exceed $1 trillion by 2030. In fact, McKinsey recently stated that we believe that space is at the point at which leaders must consider its potential impact and more importantly, begin to shape their organizational strategy to unlock the potential of this domain as it accelerates over the next 5 to 10 years. Irrespective of industry investments or daily plans, the world is now remarkably interconnected, global events from severe weather to cargo congestion draws closer together. The world has seen the hottest days in hundreds, if not thousands of years. Wildfire smoke has impacted many cities and communities, thousands of miles away flooding has severely impacted many diverse geographic areas, and the U.S. has already seen 12 weather events in 2023 alone with losses exceeding $1 billion each. These extreme weather events are causing insurance companies to reevaluate the geographic areas they are willing to cover. Against this demand backdrop, Spire has been building over the last 10 years, the technology to gain insights to better navigate this changing environment. With more than 100 LoRa multiuse receiver satellites in orbit, Spire's Earth observation coverage is near real time and spans the entire globe. This comprehensive network empowers companies and governments worldwide to leverage radio frequency intelligence to make decisions with confidence in a rapidly changing world, reduce costs from climate and weather risks and strengthen global security. This is not a vision of what we plan to do in the future. It is built today, and we are utilizing it for our customers to make a meaningful impact to the world around us. Spire's unique data collection methods and world-leading analytics open a range of use cases, enabling weather forecasting, monitoring ocean wins and waves, plotting and monitoring optimal courses for cargo ships, forecasting whether that could impact the power grid, estimating take-off and arrival times for airlines, even measuring headwinds that could impact the flights fuel usage. We are leveraging the continued advancements in machine learning in the eye to provide insights that were not previously available. We have used this technology to combine our weather forecast with publicly available data to create even more accurate forecasts and to determine the probabilistic forecast for specific customer needs. Using AI, we are also able to create better soil moisture estimates at a higher resolution than would be otherwise possible as well as provide predictive analytics using our historical data to infer the likely estimate time of arrival for a vessel and like the weather conditions during their voyage. Against this spectrum and the multibillion-dollar global weather forecasting services market that's expected to double by 2030, Spire has continued to invest in our weather prediction capabilities. We recently rolled out our deep vision weather solution and higher resolution forecast models. Deep vision is a cross-industry weather solution, which moves us up the value chain from clean and smart data to decision solutions for our customers. We help our customers answer the question, what should I do? Whether Despot and weather risk communication support team are trusted partners for our customers who need the most accurate weather data to be able to quickly make decisions that impact the safety of people and property. With our new high-resolution weather products, we're taking our global leader model and improving the resolution 144x to a 1-1 kilometer resolution. This provides additional detail to help understand what populated areas are at risk, what infrastructure is at risk and what weather is occurring around important weather transition zones, such as Lance interface or in mountains or Hillier. With a powerful combination of our leading forecasts, high-resolution weather model and on call weather experts, we can provide enhanced knowledge of likely weather outcomes, coated and simple red, yellow and green status to indicate levels of risk and allow our customers to take appropriate action. Such actions could include prepositioning crews before weather events. So utilities can restore services as soon as possible or suspending site operations and moving at risk assets or helping supply chain leaders make decisions related to transporting weather or time-sensitive goods. The annual cost of not making these decisions is estimated in the hundreds of billions of dollars. Spire's mission is to help the world reduce that cost significantly. For over a decade, Spire has actively grown our data sets. Every second, our data sets grow, we increase our ability to create machine learning models and train AI for predictive insights across virtually all industries. One such data set is radio citation data. Spire is the largest provider of radio occasion data in the world with the ability today to produce approximately 20,000 so-called RO profiles daily. The addition of these proprietary or profiles to numerical weather models has resulted in Spire's global forecast consistently outperforming leading public global forecast models. However, the forecast improvement does not stop with 20,000 profiles. Scientists have demonstrated increased forecast accuracy with the addition of up to 100,000 hour profiles a day. Fire empowers our customers with the ability to predict weather events with heightened precision and accuracy, meaning early warnings for see weather phenomena are more reliable. Customers such as NASA are purchasing this data from Aspire in increasing amounts. We recently announced that we have renewed and increased our NASA contract to $6.5 million for Earth observation data, including GNSS RO, which can be assimilated into weather models. GNSS, which can measure CI, solid moisture and ocean surface wind speed and space weather measurements. As our customers continue to look for ANSYS in this ever-changing environment, Spire stands ready to serve them with our growing set of unique data sets and powerful insights about Earth. For several years now, the aviation industry was impacted by lower demand driven by COVID. However, we are now seeing global travel demand approach 2019 levels again, and we have seen domestic travel demand in some markets surpass 2019 levels. The aviation market was one which Spire targeted early on. While our aviation business lagged our other 3 businesses and did not contribute as meaningfully to Spire's impressive growth over the past several years, primarily due to the impact of COVID, we are very excited about the opportunities in front of us for our aviation solution and the increased demand for Spire's products and capabilities. Monitoring planes from space offers one of the most notable advantages, unrivaled accessibility to even the most remote areas as well as continents with burgeoning and rapidly growing aviation activity like Asia and Africa. These are areas that planes fly over but do not have traditional ground-based assets to track their moments. Spire now has over 500 years of flight heritage, operating sensors and satellites in space and more than a decade of experience in satellite design, mission operations and radio frequency technology. Given this impressive pedigree, Spire and only Spire was uniquely positioned co-contract with the European Space Agency to build a best-in-class system designed to make the skies safer. This EUR 16 million contract is to design and demonstrate a satellite-based aviation surveillance system for ESA's urea program. Currently, air traffic surveillance heavily relies on radar systems and technology dating back to WorldWaI [ph]. These radar systems have drawbacks, including high cost, demanding maintenance and some technical limitations. Additionally, they fail to provide coverage in vast areas such as the oceans, remote or mountainous regions as well as the 90% of the world population living outside the Western world. Modern air traffic surveillance systems like terrestrial and space-based ADS-B depend on the global navigation satellite system to determine an aircraft's position. However, GNSS signals can be interfered with or spoofed, leading to inaccuracies in tracking aircraft locations, ultimately impacting air traffic control operations. Recent incidents over the Baltic Sea exemplified as potential risks. Frequent GNSS jamming in the area has disrupted civilian air traffic, necessitating rerouting that causes delays and increases fuel burn, resulting in higher emissions and costs. even super yards, employing GNSS charming to evade papers have inadvertently affected ATC operations in the vicinity. The urealo program is intended to develop and demonstrate a first of its kind aviation surveillance system that will independently determine aircraft position using geolocation. It will be complementary to existing surveyor systems, providing a reliable and resilient space-based surveillance solutions. Beyond the significant opportunity that could potentially see Aspire be selected to build out the full constellation of a large number of satellites, we are seeing growing interest from aviation-related technology companies. One area where space-based ADS-B data has had a significant impact is in airline economics. In the North American market alone, there is an estimated potential of $600 million to $800 million of achievable savings for carriers flying narrow-body aircraft. Having granular and holistic data on cost is crucial for airlines, and it helps them to easily identify areas where they can reduce spending and improve efficiency. This can include everything from fuel consumption and maintenance expenses to fleet planning and route optimization. In order to create comprehensive bottom-up models, accurate historical flight data is needed to better understand which flights actually took place, meaning scheduled flight data cannot be relied upon. Spire's flight report, which aggregates hundreds of millions of satellite and terrestrial ASP positions to provide actionable flight aircraft and airline meta data was chosen by both RDC Aviation and Skylart to support their businesses. With an estimated 1,500 aviation-related technology companies that can benefit from integrating Spire's Global Flight Analytics and Insights, Spire has plenty of room to push the envelope with our aviation solution, and that's exactly what we're doing. Last year, we brought the world insights on the location of sanctioned Russian oligardmovements. Just recently, we know this something interesting regarding sanctioned Russian oligard plan movements. We have seen more reporting on airplane turbulence recently and expert estimate that severe turbulence has increased 55% over the past 44 years. Spiro has the ability to track Cleartrbulence, which can improve the safety of a flight. And as air travel demand has returned, we're looking to bring insights around fuel burn and emissions while aircraft are taxing on the ground. The urea award is a great example of how geolocation is being utilized for civil and commercial means in the future. Spire currently operates over 40 satellites that help detect and geolocate signal interference, jamming and spoofing. We have upcoming deployments of new satellites, such as customer Sierra Nevada Corporation for satellite RFG location cluster. These satellites can identify the power, location and directionality of such events in multiple frequency bands. With these capabilities, we are continuing to see customer demand for our radio frequency geolocation data from those groups tasked with providing global security. While we can't openly discuss the continued demand we're seeing in this segment, we can say we have recently received additional multimillion-dollar agreements for RFGL real-time tasking. In addition to the strength and future opportunities we see in our Weather and aviation businesses, we are continuing to see demand in our space services and Maritime businesses. Just yesterday, GHT set a leader in greenhouse gas monitoring announced that they are expanding their existing contract with us to add 4 additional satellites to the 3 that were announced last year. And during the quarter, Spire signed an agreement with Aurora Tech to build, launch and operate and aid satellite constellation dedicated to global temperature monitoring. Auroratan has successfully operated a precursor sensor in orbit on a satellite design, build and operated by Spire for 18 months. Initially, intended as a technology demonstration, it exceeded expectation and is now serving as an active fire monitoring instrument for customers across the globe. In our Maritime business, a market that is early in its digitalization journey, we announced that Navideum will integrate Spire's data to help users track vessel positions along a route, reoptimize routes based on various conditions and automatically record environmental compliance data. No video is also leveraging Spire's historical and real-time ARS data to train machine learning algorithms that provide users with AI insights to augment decision-making and optimize their vessels for safety, emissions and performance, giving them an edge in a highly competitive environment. Speaking of AI, not only are we utilizing it to enhance our customer offerings and provide new analytics and insights, we are also using it to improve our internal processes. Given our large number of multisensor satellites, we have a vast number of options to consider when it comes to deciding what data to collect from which satellite at what time as the satellite is passing over an area. We have successfully deployed and optimizer tool to help us with this decision-making. We start by providing requirements such as how many RO profiles or the number of ARS or ADSB messages we would like to collect. This information is combined with the capabilities and positions of each satellite. Our optimizer will then suggest how best to configure our satellites to achieve our goal. This has made our satellite operations much more effective and provides the ability for us to scale our Constellation as the market dictates without a corresponding growth to our operations. We plan to incorporate AI capabilities to further improve the robustness and operability of our Optimizer tool. In the 8 quarters that we have been a public company, we have delivered high revenue growth and improving profitability metrics. Given this reliable execution, we need a backdrop of a large growing demand for our products. We are excited about the prospect of all of our key profitability metrics turning positive over the next few quarters, starting with positive cash flow from operation, which is expected in Q4 of 2023. Just as the Internet brought the world of comers and utility to our doorsteps space-based data is connecting us with the environmental and security realities that surround each of us. It is allowing us to make better decisions with speed and confidence in the context of an increasingly complicated relationship between all the activities happening on planet Earth. I could not be more excited about Spire's future as we continue expanding into our growing and global markets, convert our top line growth into bottom line profitability and continue to grow our impact on making the world a more safe, sustainable and prosperous place for all. And with that, I'll turn it over to Tom.

Thanks, Peter. We had another strong quarter of execution from the top line down to margins with revenue, non-GAAP operating loss, adjusted EBITDA, non-GAAP loss per share and ARR solution customers all coming in above the high end of our guidance. Our results also provided another successful quarter, methodically progressing on our trajectory towards profitability. Q2 revenue increased 37% year-over-year to $26.5 million, once again hitting a quarterly record and exceeding the high end of our guidance by $1.5 million. Gross margins expanded to 64% on a GAAP basis and 68% on a non-GAAP basis, representing a 13 percentage point improvement over Q2 2022 on a GAAP basis and an 11 percentage point improvement on a non-GAAP basis. ARR at quarter end was $112.8 million, up 32% year-over-year, with adding $8 million of sequential growth quarter-over-quarter. This included a nice mix of adding new logos while expanding with our existing customers. We finished the quarter above guidance with 813 ARR solution customers, a net add of 32 customers quarter-over-quarter. Our Q2 ARR net retention rate was 112%, up from 108% last quarter and in the same quarter a year ago. The rolling 12-month organic ARR net retention rate was 117%, up from last quarter's rolling 12-month organic ARR net retention rate of 116%. Now I'll be discussing non-GAAP financial measures unless otherwise stated. We have provided a reconciliation of GAAP to non-GAAP financials in our earnings release that should be reviewed in conjunction with this earnings call. Driven by exceeding our Q2 revenue expectations, our leveraged business model across 4 solutions and our high asset utilization, our Q2 operating loss came in at $6.1 million, which is $2.7 million better than the top end of our guidance. This is an improvement of $4 million year-over-year and an improvement of over $3.7 million quarter-over-quarter. Likewise, total adjusted EBITDA for the second quarter came in better than guidance at negative $3 million or negative 11% of revenue, a $4.3 million or 58% improvement from negative $7.3 million in the same period a year ago. We ended the quarter with cash, cash equivalents, restricted cash and short-term marketable securities of $64.7 million, down $8.3 million sequentially quarter-over-quarter. Now turning to our outlook for the third quarter and full fiscal year 2023. For the third quarter, we expect revenue to range between $26 million and $27 million. We are holding our full year guidance at a range between $104 million and $109 million. We expect a single quarter drop in ARR to range between $107.5 million and $108.5 million. This anticipated decrease is due to the timing of one ARR contract finishing prior to other ARR contracts coming online. We remain confident in the opportunity to win back that contract along with executing on our strong Q3 and Q4 2023 pipeline like we did in Q1 and Q2 of this year. As such, we are holding our full year ARR guidance at a range between $129 million and $135 million. We are continuing to see expanding demand for our solutions and expect third quarter ARR solution customers to range from 835 to 845. We are increasing the midpoint of our full year ARR solution customers guidance, which now ranges from $855 and $875 million -- given the operational leverage we are continuing to see across our headcount and infrastructure, we anticipate third quarter non-GAAP operating loss to range between $7 million and $6 million, which is a $4.9 million or 43% improvement year-over-year at the midpoint. For the full year, we are improving our guidance by $2 million at the midpoint, and we expect non-GAAP operating loss to range between $32 million and $27 million. Adjusted EBITDA for the third quarter is expected to range from negative $3.5 million to negative $2.5 million, which represents an improvement of $5.3 million or 64% year-over-year at the midpoint. For the full year, we are improving our guidance by $1 million at the midpoint with a range from negative $18 million to negative $13 million. We expect non-GAAP loss per share for the third quarter to range from negative $0.08 to negative $0.07, which assumes a basic weighted average share count of approximately 167.1 million shares. We are improving our full year guidance for non-GAAP loss per share by $0.04 at the midpoint with our non-GAAP loss per share to range from negative $0.32 to negative $0.29, which assumes a basic weighted average share count of approximately 157.5 million shares. Given the strong results in the second quarter, we expect some very exciting milestones in the upcoming quarters. We expect cash from operations to turn positive later this year. Non-GAAP operating margins turning positive in the second quarter of 2024, adjusted EBITDA turning positive by the first or second quarter of 2024, and we expect positive free cash flow by the second or third quarter of 2024. Additionally, we expect to execute a reverse stock split within the next 30 days, designed to regain compliance with our New York Stock Exchange listing requirements. We have seen 2 quarters in a row of revenue ARR solution customers, non-GAAP operating loss, non-GAAP loss per share and adjusted EBITDA results exceeding our expectations, and this has allowed us to improve our margin expectations for the full fiscal year. We remain focused on execution, and we are excited about the opportunity ahead -- thanks for joining us today. Now I would like to open up the call for questions.

[Operator Instructions] Our first question today is from Austin Moeller of Canaccord Genuity.

My first question here, Peter. Last quarter, we discussed how some contracts and expansions of contracts from customers had been delayed. Is the takeaway from the strong results and the higher number of AR solution customers this quarter that some of these delayed contracts got closed out in.

I think that’s a good way to approach it, Austin. I mean we certainly have seen the business environment to kind of like maintain and, in some areas, actually improve. Interest rates are still high, but they have stabilized and businesses seem to feel more confident about plantability. They feel more, okay, I understand how this is going to look like, and they’re increasingly looking for, okay, how can I take now cost out of my system with having a greater sense of how the world is going to look like. And so indeed, we have seen a very, very good conversion in the quarter that has continued that momentum into the current quarter. So we continue to see that this greater predictability of a challenging but noble environment translates into more predictable sales cycles and conversations with customers.

Excellent. And are the majority of the customers you're seeing right now for RF Sign currently coming from NATO Europe? I know you can't say who they are.

No. We have actually a very, very good mix between like 5 eyes and non-FIS customers and feel that we are still just scratching the surface there. Spire has assets which are purely an exclusively United States assets. So U.S. license, U.S. technology, downloading data over the U.S., but we also have assets which are non-U.S. that facilitate that process outside of the U.S., for example, in Europe, as you have mentioned.

Excellent. Very exciting congrats on the quarter.

The next question is from Erik Rasmussen of Stifel.

Congrats on the strong results and margin improvement.

Appreciate it.

Yes. And then maybe sticking with margins. You obviously continue to see nice progression there and if you just reported 64% on a GAAP basis. But as we think about your more recent target, I think you gave last quarter a goal of GAAP gross margins of 70%. What do you see you hitting this target?

Yes. Eric, we had mentioned that it was in the coming years. We didn’t give like a specific date, but we said that was coming in the near term. I think, though, as you can see from the results, getting the 64 and 68 million on a non-GAAP basis, we’re moving up that path quite fast. The non-GAAP was obviously early getting to that 70% mark. I think the most amazing thing that we had in the quarter was the 11 percentage point improvement that we saw both on a GAAP and a non-GAAP basis over the last 2 quarters. So that’s just been done in the first half of this year. So really happy with that progression and that leveraged infrastructure we have, the leverage headcount we have, all that’s coming to fruition because it’s not just the revenue growth. I mean, that's obviously going to be super helpful, but it’s also that cost maintaining and spreading that over our 4 solutions, and that’s driving our gross margins up on a fast pace. So yes, those numbers are getting closer and closer by the quarter.

Great. And then maybe just -- you had a number of contract signings and pretty meaningful. It seems like the pace of those awards is picking up and also the magnitude and level of engagement seems to be increasing. But what's driving this relative strength? And how do you see the split maybe between your native services and space services business as it relates to sort of the opportunities the team is tracking?

So what is driving it is a little bit of what I mentioned earlier, Eric, is that the world feels a little bit more attuned to a challenging but predictable environment. And that is – it is driving those decisions. I think the other thing you’re seeing is that customers are becoming selective with who they work with because they know that it has to work, be that data, be that analytics, be that space services, their business relies on that, right? You don’t get to 117% retention rate with your customers, if you’re not reliable. And what we see is an environment where those that consistently and reliably deliver for their customers are winning more and more of the business from those customers, but are also attracting other companies in terms of like, “Oh, everyone needs to have a space strategy, if you were to believe McKinsey what they have said, who do I work with? Well, if I’m in the maritime aviation whether or space services, Spire is the place that I probably should be calling first. And it’s that confidence in that, that brand that starts to drive some of those ever larger wins that you rightfully have called out.

Yes. And Eric, just to put some numbers around some of the -- that expansion, both landing and expanding with the customers. I mean we're able to get 80 net new customers in the first half of this year. So we're seeing that progression and being able to land a new logos across all 4 of our solutions. I think Peter mentioned earlier about the aviation business is really starting to kick into gear now that we're coming out of COVID years, and that was obviously not our highest growing business during those years, and now we're starting to see that. So that's 1/4 of our solution really starting to kick into gear. And then on the expansion side, there's also just amount of time has gone by with a lot of customers. And we've listed some of these in the press releases, but these expansions with -- if it's in space services, where they might start out with 1 or 2 or 3 satellites and now they're doing full constellations with us. A lot of that was built into our contracts when we signed it with them, and now they're coming to fruition like people like Aurora tech and other folks that we listed or we just announced today expanding with NASA, taking that contract from $6 million to $6.5 million for another annual year with them. So they're just seeing that we can solve more and more use cases with them and then expanding with them. So not only landing those new ones, but then also expanding with the existing...

Great. And then maybe on the CFO transition. Do you have any updates you could share on how the process is going and what we could sort of expect to see?

Yes. So you can expect to hear something quite specific from us very soon. Tom has been giving us a lot of time. He's also going to stay on for a transition period as a consultant to the company. So we feel extremely good about the whole handover. And the process has been going very well. And I'm quite excited about something that I will be able to share pretty soon with you.

Great. I’ll jump back in the queue. Congrats again.

The next question is from Ric Prentiss of Raymond James.

First, since this is probably the last call for Tom, I wanted to say I enjoyed working with you. It's been a pleasure. So best wishes.

Thank you very much.

You mentioned on the ARR that there's a timing issue, on ARR finished up, and that's the reason for the quarter-to-quarter downtick in the ARRs. But you also, I think, mentioned that you had some confidence about winning it back. Can you give us a little more color on kind of what's involved in that contract? And why you think you can win it back? And are they using anybody else right now?

Yes. So I mean, as you see, we’ve delivered very, very strong revenue, 37% year-over-year growth. We exceeded all the margins. We kept the revenue guidance for the year constant. But you saw that we improved the margin guidance. So that gives you a good of sense of how confident we are about the revenue side. Indeed, ARR has like this mathematical drop. It’s an RO contract with Noah. We have multiple contracts with Nora, they decided to give in their last award only to one company and not to 2 companies. They gave them a 6 months, so a reasonably short-term contracts. So very, very near term, we have the opportunity to add to that, again, with our $59 million IDIQ contract. In the meantime, Noah has reached out to us for other data types that we have with regard to weather. So that gives us great confidence on that. But even more importantly, it’s like the traction that we have seen as we have reallocated assets that are for R into RF geolocation. And those contracts are multimillion-dollar contracts often for very, very short delivery times, and we have seen several of those coming repeatedly also from the same customer. So that reallocation has helped us a lot and giving us great confidence in the growth. The momentum that we talked about a little bit on this call already that we have seen in the second quarter has carried into the third quarter. So overall, we feel very confident about the guidance that we have given. I think we’ve done – Tom has done a very good job historically and give very accurate guidance. And so we have every intention of continuing on that trend.

Very good. And the stock split is coming up in the next 30 days. Has the decision been made as far as what magnitude or reverse split will be?

So we have spoken with numerous advisers, investors and parties. And there’s certainly, I would say, like a common sense consensus emerging from that. You need to balance the amount of shares that will trade on a number of shares per day with the stock price that you achieve, keeping in mind that above a stock price of $3, $4, $5, you open yourself up to a lot more of the investor community that can invest in stocks that are a little bit higher in that $3, $4, $5, $6 range. So taking all of that into consideration, we feel pretty good, and we have received very positive feedback. The sense that I have is there’s a lot of people waiting for us to do this because it allows them to actually be part of this pie story.

Exactly. And when will that decision be made and announced, do you know?

Yes, we were just waiting for the earnings stock activity just to settle down, and then we're -- we'll make action.

Makes sense. Okay. And the final one for me. Tom, you mentioned some of the per share numbers out there. And the share count is going up more significantly than what we had in our model. Is there anything going on specifically as far as the share count?

Yes. We had set up the ATM a year ago, and we hadn't used it up until actually June. In June, there were some unique days where there was high volume and high trade activity. We did take advantage of that to help boost the balance sheet a bit and get a little bit of that ATM money through. Obviously, that was why we put the team in place. We haven't used it since the month of June because we just felt we didn't have a need to do it thereafter. But if there's other days like that, where there's some opportunistic days to take advantage of using the ATM to improve the balance sheet and give us more business flexibility with investments, then we'll take advantage of that. So that was the reason for the share count increase.

Okay. And that’s also – since it was June, it doesn’t reflect much within 2Q, but it affects more side.

Because we're a weighted average share count, it really shows up kind of in the Q3 time frame and not so much because we did it the last month of the quarter.

Right. Okay. Appreciate it. Alone again, Tom, best wishes.

[Operator Instructions] Our next question is from Jeff Meuler of Baird.

Yes, Peter. Thanks for all the use case and AI examples. But just on the financials, like -- I know this has been asked, but it does look like a really big step-up sequentially from Q3 to Q4 to hit the full year ARR guidance. And you've announced a bunch of really large contracts. Are a lot of these large contracts not hitting until Q4, and that's a big part of the answer? Or is it more based upon confidence in pipeline of large opportunities that are at an advanced stage, but which you've not yet announced?

Yes. It’s definitely the confidence in the pipeline. What we’ve been able to do to date and making those conversions and making those things happen, the expansions that we’ve had with our customers along the way. We still have a lot of activity in the pipeline for the rest of the year in that front. And as we did mention, we have the capability to win back some portion or all of that contract in the fourth quarter also that would help boost the ARR, too. So it’s a mix of all that. But we are very confident with the pipeline and where we’re at. And that’s why we’re keeping that guidance at that point.

And can you get into the guidance range without winning back a portion of the NOA contract before year-end?

Yes. I mean, we could. Yes, there’s very significant deals out there and deals. It just depends on closing time and all that wonderful stuff. But yes, we could. We’re very confident with that.

Got it. And then, Peter, you referenced kind of the unusual weather activity in the first half of the year and insurance companies stopping writing business in certain states. Just help me with like the insurance market opportunity for you? Have you started to make good inroads there? Do you tend to go direct to the insurers? Or do you tend to partner with or sell into some of the other data and analytics solution providers that sell through to the insurance industry? Just talk through the insurance market as an opportunity for you.

So I would say that the insurance market, the reason why we mentioned it is one that is becoming more to the forefront as their business model is now starting to be impacted. And I don’t know how much time you have spent with insurance companies. I apologize if you have covered them in the past, and I’m not aware of it. They are not the fastest changing industries. I’m thinking of some companies from Switzerland and have been around for a couple of hundred years. So what has happened though is that the ever-increasing amount of extreme weather events. And you said the extreme weather rents in the first half of the year, and I think that statement has been true for the last decade. But now after a decade of those surprising extreme weather events, even that industry has to start to adjust their business model. A lot of parametric insurance starts to come into play. The reinsurance industry has to adjust. It’s a quite active provider industry with analytics for the insurance industry, which has arisen. And we certainly are a beneficiary of that change in business model of the change in how they approach whether given the type of data that we have. And in some instance, is the long history that we have for some of our data types.

Okay. And then just last, anything you can say about like from a geographic perspective, it looks like your growth has been quite a bit stronger in the Americas. Just any reason for that? I don't know if it's sales resources driven or opportunity driven?

It’s more opportunity driven, I would say, rather than sales force – and from my perspective, the way I look at it is it just means that the opportunities we have in the other parts of the world have not been unearthed and we have great opportunity to leverage them by paying even more attention to the other parts of the world as well. If you think about it from an overall GDP growth perspective, 80% of the world’s GDP growth is outside of the Western world. And I think we have absolutely just scratched the surface there in providing that large GDP growth, large population area, large land mass area that very often does not have the traditional land-based infrastructure, be that for weather information, be that for flight tracking that the Western world has, which creates even more opportunities for Spire to deliver directly a space-based solution leapfrogging the traditional development of having something installed on land that eventually gets augmented with something from space, which is something you see more in the Western world, but actually leapfrogging that for large portions of the earth, delivering space-based solution directly. Spire’s a large constellation that covers the earth at least 100 times a day and in many instances, 200 times a day. That’s a pretty big coverage area and a bitty high advantage from the low-temp resolution that we have to deliver solutions to these areas.

There are no additional questions at this time. I'd like to turn the call back to Peter Platzer, CEO, for closing remarks.

Thank you. And in closing, I would really like to thank our customers, employees and numerous suppliers for partnering with us in bringing innovative solutions to solve the challenges that people, communities and countries face every day across the globe. As uncertainty and challenges in the world at large increase, we see ever-increasing demand for space-based solutions, as I just talked about, be that supply chain or mobility, communication, remote Internet, whether climate change, global security, agriculture, energy, that list of areas which increasingly use and depend on space just keeps growing. And just like computers and the Internet driven by Moore’s Law became inextricably linked without daily lives and the global economy in the ‘80s, ‘90s and early 2000s, we see the same thing happening today with space. Driven by a similar law of constant performance improvements, tenfold every 5 years for satellite capabilities. And that has been working now for a quarter century and shows no sign of abating anytime soon. The mission-driven and incredibly motivated team that we have here at Spire, we are proud to be part of and indeed, I would argue, shape this transformational wave of change to create a safer, more prosperous and sustainable future on earth by serving our customers everywhere in the world every single day. And I look on with great optimism to the rest of 2023 and onwards into the future as we drive towards profitability and sustainable growth.