Right. I think overall, we see a lot of that land and expand strategy working for us. On our data side, we just talked about that. But also on the space services side, we’re now more and more customers are coming to us and expanding their number of assets that they want on orbit from one or two to four or eight. You just heard me talk about wildfires, but we had a couple other customers in this quarter, GHG one, for example, which is also expanding dramatically because the global demand for these types of solutions keeps on rising rapidly.
Operator: Your next question comes from Rick Prentiss with Raymond James. Your line is open.
Rick Prentiss: Thanks, Stephanie, everybody. A couple of quick questions. One, appreciate you’re looking at the cash and the working capital policies. What do you think you need on a normal basis cash to run the business? Where would you like to see the balance to stay at?
Leo Basola: Yeah, so I think that the balance will remain between $40 million and $50 million for the foreseeable future. So we talked about Q4 being a operating cash flow positive quarter with about $8 million of CapEx. So we’re going to be landing year end north of $40 million of cash. Going forward, and as we described, there is two components of cash, right? So we talked about the Spire cash for replenishment of our assets and our fully deployed constellation. But then on top of that, we have the pre-space CapEx that we have that is mostly funded by our customers. So you need to think about that as timing, right? So you may see a month or a quarter with a peak on receivables and a peak on CapEx that kind of come hand in hand.
But very shortly after, we’ll receive the cash from the customers to really fund those cash outlays. So generally speaking, I don’t expect the cash flow to really swing more than maybe $10 to — $10 million to $15 million of where we sit right now as of today.
Rick Prentiss: And I appreciate you all looking at your debt and thinking you could get better rates or different situations where you’re at if you put up several quarters of positive results. But remind us what the new current debt has as far as covenants and requirements on ARR and any other items out there?
Leo Basola: Yeah, so the negotiation with Blue Torch was very interesting. They were very open and we had a very good relationship with them as we negotiated the deal we had with them. Actively, we have reduced some of the covenants that we had before. So you know this was triggered basically by an ARR covenant that we missed in July. So we were able to lower our ARR covenant all the way through June, which is when we shift from ARR to EBITDA. And we think we are fairly covered with those because they allowed us to put the covenants where we expect to have a comfortable buffer for ARR and for EBITDA going forward. From a cash standpoint, we have a minimum liquidity covenant that was increased from $25 million to $30 million.
And again, as I mentioned before, we feel we have significant amount of buffer to operate with the level of cash that we have at the moment, plus the cash improvements that I discussed earlier on in the call. So we are actively putting in place some working capital cash flow actions, which is really block and tackle. It’s really a playbook that you can have for most industrial settings where you work on receivables, you work on payables, you work basically on your inventory management. And that in itself will free up a significant amount of cash. And then as I said, from a CapEx standpoint, we think we have a very good plan and a very good strategy in terms of our design of our contracts where most of the CapEx that you see for pre-space, which people may look into this and say, oh, you’re spending $20 million of CapEx. What’s going on?
Well, what’s going on is I’m setting up a paycheck for four years with assets that I’m building. And by the way, the customers are helping us fund these deployments of the assets in the pre-space portion of the deals. So I feel very comfortable that our cash position is way sufficient for us to continue to operate without any problems going forward.
Operator: Your next question comes from the line of Jeff Mueller with Baird. Your line is open.
Stephen Bolligon: Yeah, thank you. Stephen Bolligon for Jeff. Any comments you can give around how sales are trending? It sounded like last quarter things were stabilizing. Just how that’s evolving, whether new business or the latest expansion strategy?
Peter Platzer: Well, I mean, I don’t know. We just delivered more revenue than we thought we would deliver. We just came in and rise to revenue guidance for the full year. I don’t know what else to tell you. I think it’s going pretty well. We see customers coming to us both from a new customer perspective. And we see customers coming for us for more, which is always a great sign from an expand perspective. We see customers coming to us sometimes with very, very large contracts, unfortunately related often to imminent negative events, be it on the climate side or be it on the global security side, that we get to monetize very quickly, even though we don’t chalk them up immediately as ARR because they’re negative. But they’re now coming in very quickly, even though we feel very confident they will eventually turn into very large, often multi-year ARR contracts.
So I would say the underlying premise that we had a long time ago, that climate change, extreme weather and global security is going to continue to be a secular, massive trend that is exponential and it is driving demand that is impacting massive portions of the global economy and creating tens if not hundreds of billions dollar markets for companies to operate in, continues to be absolutely true. I mean, we have set out a profitability target almost two years ago now, way before wars happened, before inflation happened, before extreme risk happened, before a whole bunch of things happened. And we have been able to hold that course without any deviation and on the margin have delivered better profitability results almost every single quarter because of the diversified nature of our portfolio.
We’re not a one trick pony. We have a balanced book, 55% commercial, 45% government roughly, right? we have at least four different solutions, aviation, maritime, weather, space services, now added RLGL to it. That is all supported from one single shared infrastructure that we get to monetize in many, many ways. And that has allowed us to keep on growing at a rapid pace and improve our profitability at an even more rapid pace. So, I don’t know what to tell you. I think the numbers speak for themselves when it comes to how is the growth going and how is the prospect from that perspective.
Stephen Bolligon: Appreciate that. And I hear you on the sort of the ARR per customer strategy. I guess just how are you balancing, achieving that with sort of not leaving customers at the table? And then as far as the Salesforce goes, is just a change in priority or is there like a change in incentive? Can you comment on that?
