Good afternoon, and welcome to the Spire Global fourth quarter 2022 earnings 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 during this conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference call over to our host, Ben Hackman, Head of Investor Relations. Thank you. You may begin.
Thank you. Hello, everyone, and thank you for joining us for our fourth quarter 2022 earnings conference call. Our results 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 are Peter Platzer, CEO, and Tom Krywe, 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 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.
Thank you, Ben, thank you everyone joining us on the call today. When we started this company over 10 years ago, we had a very simple mission: To improve life on planet Earth. The human impact on Earth, both from a climate perspective and a global security perspective, has been profound, and it is therefore up to us to identify ways to mitigate the negative impacts and contribute to building a more sustainable, equitable, and prosperous future. The markets encompassing climate change and global security are large, global, and growing. The climate change impact on the global GDP is measured in the trillions of dollars . Mitigating just 10% of that is worth $100 billions. Ocean shipping accounts for 80%-90% of global trade and was estimated to hit roughly $25 trillion in 2022.
Illegal, unreported, and unregulated fishing causes up to $50 billion of economic loss a year, and piracy accounts for $16 billion of annual economic loss. The global signals intelligence market is estimated to be over $13 billion currently, with a sizable and rapidly growing contribution from space-based geolocation and spectrum monitoring capabilities. These are all massive markets, and they are markets we are just beginning to capture share in. As demonstrated by our increasing net retention rate, our initial foothold in these markets is growing, strengthened by substantial, sustainable competitive advantages. We believe Spire's addressable market is in the range of $100 billion, encompassing 150,000 to 200,000 customers. While we are immensely proud of growing from $1 million to nearly $100 million of ARR in just five years, we believe there is so much more opportunity ahead of us.
We finished 2022 serving more than 730 ARR solution customers across 65 countries on six continents, leaving a substantial opportunity right in front of us for continued growth. If you think about our business opportunities, it's obvious to start by thinking of the shipping companies that own around 55,000 merchant vessels, the 800 container ports or the 5,000 airlines that own roughly 25,000 cargo and passenger aircraft. However, this is just a small subset of the customers that find value in our solutions. We track hundreds of thousands of vessels and over 60,000 aircraft per day. We are aware of only one other company that has the ability to provide clean satellite AIS data for tracking maritime movements. Another one very different company that has the ability to provide clean satellite ADS-B data for tracking global aviation movements and locations.
Only two, again, different companies with the ability to provide clean satellite weather data via GPS- RO. We are not aware of any other company other than Spire to have all of these satellite data and analytic solutions combined under one roof, available to help customers solve their most pressing challenges. Our customers include ports, financiers, insurance companies, traders, transportation and logistics companies, renewable energy companies, route planners, sports teams, and asset maintainers, to name just a few. These are each large industries that make up the ecosystem around shipping, aviation, and weather, and they are all part of Spire's target customer base.
For example, Spire provides our customer, Gravity, with real-time information and analytics based on global maritime automatic identification system technology. This information allows clients to get precise insights about maritime traffic, including the exact location of a ship carrying what they need and when it will get to where they need it to be. This enhanced visibility of vessels for those awaiting their arrival, like logistic companies, enables organizations to make better data-driven decisions. This is one example within the $3.4 billion inventory optimization, logistics, and reporting market, which is crucially reliant on having access to global, near real-time, precise location and movement data of goods. In another customer example, Shipnext, a freight-matching platform covering bulk, oversized, and containerized cargo, leverages satellite data from Spire to gain real-time insight into fleet operations.
There are estimated to be over 800 ship brokers and freight forwarders providing services similar to Shipnext to the nearly 20,000 shipping lines across the globe. The collaboration between Shipnext and Spire has resulted in real-time visibility around ports, including congestion management solutions. This is powerful data, as ships spend on average 40% of their time in port waiting to be called. On the aviation side, Spire was selected to provide ADS-B positional information to myairops so that operators could get an accurate picture of the operational landscape, including aircraft position, weather, crewing, customer requirements, and maintenance. Industry reports estimate that there are roughly 21,000 business jets and a nearly $3 billion aviation analytics market, a market that is expected to grow double digits and top $8 billion in 2030.
Our relationship with myairops was expanded when it was announced earlier this year that they will be also integrating Spire weather data into their platform. This is an example of how our weather data is being utilized beyond only generating weather forecasts. It's being utilized as another layer of insight on top of the maritime and aviation data we provide. In yet another example of how our data is utilized, BluePulse combined data and artificial intelligence by integrating Spire's weather data forecast to its refrigerated or reefer fleet energy simulation tool. Utilizing Spire's historical weather data of temperature, humidity, dew point, solar radiation, and wind, BluePulse ran different alternatives over 70 routes across the Atlantic and Pacific Oceans.
What it found was that by only going 2% longer than the shortest possible route, 5%-7% of the ship's fuel was saved on roughly 60% of the routes, and from 300-700 MWh of reefer energy was saved per crossing. This results in over tens of millions of EUR saved and tens of thousands of equivalent tons of CO2 emissions saved on an annual basis. This is an exciting area of the business as the maritime industry is poised for a digital transformation. BluePulse is part of over 1,000 SME and start-up companies in the maritime space, a number that has been growing steadily in the double digits. In the scientific community, we are continuing to see strong demand for our weather data.
We currently provide 3,300 radio occultation profiles to NOAA. The scientific community has studied the significant impacts and improvements in numerical weather prediction by using 25,000 RO profiles a day, 50,000 profiles a day, all the way to over 100,000 profiles a day. These weather prediction improvements are often particularly strong for extreme weather events like hurricanes or heavy snow or rain. With the NOAA Satellite and Information Service budget at roughly $2 billion for FY 2023 and dozens of similar agencies across the world, these studies are an indication of potential further demand for our data, along with growing broader demand for our commercial weather data. This past year, Spire was awarded contracts to detect and geolocate certain objects based on targeted radio frequency or RF emissions.
One such example was an award from Sierra Nevada Corporation for a cluster of four 6U satellites. This is an example of how Spire can compete and win in the $13 billion and growing signals intelligence market. Spire's spacecraft are equipped with highly sensitive radio signal detection devices which listen to the slightest changes of these signals. This capability, for example, allows us to measure the temperature in Earth's atmosphere with incredible accuracy or measure the level of moisture in the soil on the ground. Identifying, characterizing, and where possible, mitigating ground-based RF and GPS interferences is a critical component of correctly capturing this data.
It can also have great importance to national security and U.S. Space Force operations, an organization whose budget has grown to over $26 billion, up from $19.5 billion in 2022. RF signals intercepted in open air space are liabilities that directly threaten on-orbit space assets of civilian, commercial, and military missions. Spire solutions are also utilized to protect life and property. A recent agreement with a launch provider has Spire supplying vessel-tracking data for the coast of California, Hawaii, Florida, and Texas in support of launch day planning and mission-critical situational awareness. To put this opportunity in perspective, there are over 30 active launch service providers, and we're tracking over 50 new launch vehicles. At Cape Canaveral in Florida alone, there are expected to be 87 orbital- class launches in 2023, a sharp increase from the record-setting 57 in 2022.
Globally, there has been a rocket launch every two days in 2022. By having better insights on marine traffic around launch operations, lives can be protected, and launch delays can be prevented. In another example, one of our partners successfully used Spire data to find a lost boat in the Philippines and save the lives of the seafarers. In yet another example, we heard from our customer that our data was being utilized to keep seafarers out of the path of hurricanes. With storms in the vicinity of the vessels, this customer was utilizing our dynamic AIS data to track their vessels and keep their employees out of harm's way and their cargo safe. With existing business and ample opportunities in front of us, Spire continued to prudently scale the company during 2022.
As we celebrated Spire's tenth anniversary, we grew our revenue 85% year-over-year and expanded our team by just 10% year-over-year, showcasing the enormous operational leverage that our business model has. The amazingly talented teammates at Spire are the fuel for our business growth and the source of immense customer satisfaction, highlighted by a net retention rate of 117% for 2022. Our team members representing over 45 countries bring exceptional diversity of thought and experience to our organization. At Spire, we're continually working to build a company where our teammates can learn, grow, and succeed. This past year, we invested in the employee experience by listening and investing heavily in opportunities for learning and development.
These are investments in our team that we are happy and excited to make as we prepare for the opportunities of the next decade. We continue to make prudent investment decisions to replenish and improve our infrastructure and enhance our technology, consistently adding to our already substantial competitive moat. During 2022, we had 3three launches. We had our first launch of 2023 shortly after the new year. In total, we have completed 34 launches with 10 different launch providers over the past decade. We have launched more than 160 satellites and accumulated over 500 years of space heritage. Only through the experience of operating in space does one understand exactly what it takes to be successful in the space environment, as that environment cannot be replicated on Earth. Our substantial experience on this front further bolsters our competitive moat.
With these recent launches, our space services customers were able to bring capabilities to market faster and more efficiently. Customers like OroraTech, with its wildfire detection service, and Austrian Space Forum's ADLER-1 space debris monitoring satellite are just two examples highlighting capabilities in large, growing markets. We were also able to continually upgrade our technology in orbit. Spire's in-house developed optical laser-based inter-satellite links are but one example of how Spire's smart investment in R&D continually enhances the value we can deliver to our customers and the competitive moat we enjoy in our business model. We deployed satellites equipped with an antenna and software-defined radio tuned to capture signals from L-band satcom, which further improves our geolocation capabilities and increases the type of products and solutions we can offer in the growing market for global security.
We unveiled a 16U satellite bus that allows for more power, volume, and data capabilities as we increasingly seen that our customers' missions require buses that offer the performance of a larger satellite, but with the agility of a nanosatellite. We invested in Hyperspectral Microwave Sounders and polarimetric radio occultation to augment weather data and forecasting. The microwave sounders will enable a higher level of measurement accuracy for both moisture and temperature, which are essential in numerical weather prediction. This investment was awarded a $4 million contract by NOAA for the development, integration, testing, and demonstration of a Hyperspectral Microwave Sounder payload. As we look to the future. There are generational trends that provide reliable tailwinds for our business and align with our mission of leveraging data and analytics from space to improve life on Earth. For decades, climate change has been impacting our planet.
As populations continue to grow, humans are exacting an ever larger toll on the place we call home. For the three decades spanning the 1950s, 1960s, and 1970s, there wasn't a year in which the world experienced economic loss from weather-related disasters of more than $100 billion. Yet during the 21st century, the annual economic loss associated with weather-related disasters has averaged over $300 billion, over 3x as much. In addition to climate change, we have witnessed a rapid change in our global security environment. 2022 was a sober lesson in how quickly the world can change. Overnight, a sovereign country was invaded, millions of people were displaced, and the world was reminded of how fragile peace can be. With these real-time reminders, Spire remains steadfast in our mission of providing critical and actionable intelligence to provide truth and transparency from space.
We believe that through the application of insights that can only be captured from space, Spire is making an outsized impact on the world as we increasingly apply AI and machine learning techniques to our data. Spire has been looking at different ways to detect Essential Climate Variables so companies can reduce their operational weather risk and researchers can understand more about how the Earth is changing. In one such example, GNSS Reflectometry, Spire has been using the exceptional RF sensitivity of our space technology to measure and assess different types of sea ice. Sea ice has been explained by scientists as the centerpiece of the climate change jigsaw puzzle connecting atmosphere, ocean, and ice processes. With the combination of analytics and machine learning, our customers have been impressed by the results.
Scientists have stated that the team has successfully distinguished between Antarctic ice and ocean, as well as between first-year and multi-year ice with 90% accuracy, higher accuracy than was hoped for. One customer noted that this is a data resource that we've never really had. While this is just a single use case of the data that Spire collects, it opens the aperture of what is possible by combining data that is becoming available for the first time, along with AI and machine learning. With robust business prospects and a strategic plan in place to scale the company, we are steadfastly focused on driving the company to profitability. We believe that we have identified the correct key markets for our solutions and remain focused on those markets. This focus has allowed us to extract a high utilization from our assets.
Our constellation supports three sizable market opportunities, where we collect data once and sell it many, many times. Our expansion into space services further increases the utilization and monetization of the infrastructure and teams we have in place. By leveraging our R&D, our manufacturing and operations teams, and our ground station network, we can provide exceptional solutions to our customers and high operational leverage to our shareholders. Even as the macro environment continues to be challenging and we see extension in the time to sign customer contracts while businesses dynamically balance growth and profitability, our high asset utilization allows us to fully stay on track in our drive towards profitability. As our margins have continued to expand, our cash usage has declined very meaningfully over the past two quarters, despite our strong year-over-year growth rate.
We have remained resolute on our projected profitability time frame, which has remained unchanged since the time we introduced it one year ago. We feel this creates exceptional opportunities for those looking at the incredible strength, growth, and trajectory of our business. As we remain heads down on execution, we are focused on what we can control. What inspires us is a tremendous long-term demand for our solutions, a demand that is rooted in Spire's mission of improving life here on planet Earth. With that, I'll turn it over to Tom.
Thanks, Peter. The fourth quarter ended the fiscal year with results that clearly demonstrate our path to profitability and to positive free cash flow. Q4 revenue increased 49% year-over-year to $22.4 million, once again hitting a quarterly record. For the full fiscal year, we finished at $80.3 million, an 85% year-over-year improvement and within our guidance range provided this past November. ARR at quarter end was $99.4 million, up 41% year-over-year. We fell a little short of our goal of ending the fiscal year with just over $100 million of ARR. Due to continued pressure from the macro environment, such as customer timing delays, funding issues, and a slower time to close the seven-digit-plus sales deals.
However, in February, we received nearly $20 million of cash from the remaining amount of our existing $120 million credit facility after achieving the ARR milestone. We finished the year with 733 ARR solution customers, a 23% increase year-over-year, and a net add of 135 customers during the fiscal year 2022. Our Q4 ARR net retention rate was 110%, and the rolling 12-month ARR net retention rate for fiscal year 2022 was 117%, up from 110% for the rolling 12-month for fiscal year 2021. Our land and expand strategy has continued to serve us well as we once again finished another full fiscal year with an ARR net retention rate at or above 110%.
These trends represent a healthy future revenue growth, not only from new customers, but with our existing customer base. 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. Spire has methodically progressed on our strong trajectory towards profitability and achieving positive free cash flow, driven by our leveraged business model and high asset utilization. Our Q4 operating margin improved 40 points to -46% from -86% a year ago. In addition to the significant year-over-year improvement, we executed a 10-point sequential improvement from the third quarter of 2022. Our Q4 operating loss was $10.2 million, an improvement of $2.7 million from a year ago.
For the full year, our operating loss was $44.5 million, which was over $1.3 million better than the midpoint guidance we had provided in March of 2022. Total Adjusted EBITDA for the fourth quarter was negative $7.3 million, an improvement from negative $10.6 million a year ago. For the full year, Adjusted EBITDA was negative $32.6 million, which was within the guidance range we had provided in March of 2022. We ended the quarter with cash equivalents, restricted cash, and short-term marketable securities of $70.7 million. We utilized $8.1 million of free cash flow in the quarter, which was a 66% reduction over the same quarter a year ago and over 41% reduction in free cash flow usage from last quarter.
While cash can fluctuate from quarter to quarter, this significant progress in lowering the net cash burn is in line with our objective of generating positive free cash flow in 12 to 18 months. Given the significant improvement in cash utilization over the past six months, along with receiving nearly $20 million cash from the existing credit facility, we are feeling very comfortable with our balance sheet. Turning to our outlook for the first quarter and full fiscal year 2023. For the first quarter, we expect revenue to range between $21.7 million and $23.7 million. Q1 revenue reflects the smaller amount of ARR added during the fourth quarter of fiscal year 2022, along with taking into account the timing of project-based revenue.
For the full fiscal year, we expect a range of $104 million-$109 million, which represents growth of 33% at the midpoint from fiscal year 2022. Q1 ARR is expected to range between $104 million and $106 million. We expect to finish the year with ARR ranging from $129 million to $135 million, which represents a growth of 33% at the midpoint. ARR solution customers for Q1 is expected to range between 750 and 760. We expect to end the fiscal year with 835-885 ARR solution customers.
For Q1, we expect non-GAAP operating loss to range between $12.8 million and $10.8 million, which is a $1 million midpoint improvement from the first quarter of fiscal year 2022. For the full fiscal year 2023, we expect non-GAAP operating loss to range between $34 million and $29 million, a $13 million improvement from fiscal year 2022 at the midpoint. The improvement in non-GAAP operating loss reflects further leverage of our headcount and infrastructure across our 4 solutions. Adjusted EBITDA for the first quarter is expected to range from negative $9.6 million to negative $7.6 million, and we expect our non-GAAP loss per share for Q1 to range from negative $0.12 to negative $0.11, which assumes a basic weighted average share count of approximately 144.7 million shares.
For the full fiscal year, we expect Adjusted EBITDA to range from -$19 million to -$14 million, and we expect our non-GAAP loss per share to range from -$0.36 to -$0.33, which assumes a basic weighted average share count of approximately 148.4 million shares. In closing, Spire had a great year with bringing in solid top-line growth from new and existing customers, improving margins with scale and leverage, significantly lowering the net cash burn quarter-over-quarter, and improving the balance sheet with additional cash sources. Our 2023 guidance reflects another year of focus and dedication to growing the business while taking further steps towards our path to profitability and being free cash flow positive. Thanks for joining us today. I'd like to open up the call for questions.
Thank you. Ladies and gentlemen, at this time we will conduct 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 that your line is in the question queue. You may press the star key followed by the number two if you would like 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. Once again, to ask a question, press star one on your telephone keypad. Our first question comes from Erik Rasmussen with Stifel. Please state your question.
Yeah, thanks for taking the questions, and congratulations on the lower net cash burn and the trajectory there. I wanted to just on the guidance for 2023. You know, at the midpoint, you are guiding to 33% year-over-year growth. Obviously, still good growth, but it is a deceleration from what we saw in 2022. Has anything changed, you know, in your business that is impacting your revenue opportunities? Maybe you could just provide some high-level assumptions you have baked in to that outlook for the year. I have a follow-up.
Of course, Erik, happy to do that. Nothing has really changed because the driving principle for us is profitability. When we start our process, we start at the bottom of the income statement, because at the end of the day, what matters is not what enters the income statement at the top, but what the cash that falls out at the bottom. That's where we start. We look at the operation improvements. We look at leveraging the infrastructure, the people, the processes that we have, then we end up as a top line that is prudent and meaningful growth. Yes, you know, we grew 40% ARR roughly in 2022, and this is kind of like in the mid-thirties.
You can always drive up your top line by just spending more money on sales and marketing, right? That is not conducive to the way I think about a business whose job it is to produce cash. You can use that cash to invest in the business in like sales and marketing and keep on driving your top line. There's nothing really that has changed. You know, we are cognizant of the macroeconomic environment, right? I mean, we, it might now feel normal, but in 2022, you know, we started out the year, you know, 12 months ago when we gave guidance. Since then, you know, we had a war, we had, you know, almost runaway inflation. We had interest rates, you know, growing a few hundred %. People talking about recession. The stock market collapsed.
You know, there's been a lot of stuff that has happened, and I don't think that they have worked its way through the system completely at this point in time. We feel that the prudent way for us to build a business is to continue to stay on our path, on our focus as we delivered in 2022, which is the bottom end of the income statement. The top end falls out of that and can always be increased. As you produce more cash, you just invest in more sales and marketing because we have more than clearly demonstrated the demand for our products. There is not a whole lot of companies that can grow their recurring revenue business from $1 million to almost $100 million in five years. You can only do that if there is overwhelming pent-up demand for the products and services that you have.
Yeah. I think one thing I'll add, Erik, is the one key component that, you know, we're heavily looking at for the path to profitability and our the results in the bottom line is when you look at what the streets put out for the expectations, we are actually slightly ahead of the midpoint on the non-GAAP operating loss for our projections at our midpoint to what's out there. We're feeling very good on where we are, and we're doing that right mix of the top line and getting that path to profitability. As Peter mentioned, we don't wanna over-index on sales and marketing to get that higher number, and we don't get to these goals and achieve the what the market's thinking and then what we're we're very comfortable with our, with our guidance.
Very good. Maybe just some comments, if you can, on the pipeline. Maybe some of the types of deals the team is tracking. Are you starting to see any larger deals emerging? I know we had some seven, and eight -figure deals; maybe you could just sort of comment on that. Thank you.
Absolutely, Erik. You're absolutely correct that 2022 has seen an increasing number of substantial-sized seven-figure, eight-figure deals. That trend is something that we continue to see based on the additional products that we have been rolling out. You know, we have released a number of analytics products leveraging AI capabilities inside Spire that are really resonating strong with the customer base. Broadening the customer base, but also broadening the value that we provide to them. The RF geolocation capabilities that Spire has deployed in 2022 also continue to resonate and continue to find a customer interest that is often expressed in deals that are substantially larger.
You know, certainly last but not least, the offering of renting Spire's infrastructure, providing that incredible scale and resilience and the planability that allows both government and commercial customers to launch and provide space-based solution and products and services really resonates and goes from, you know, launching, you know, one or two payloads on orbit delivering data to whole constellations of payloads delivering data, which of course results in substantial-sized deals. We continue to see that. You know, we're looking forward in 2023 to see those deals making a solid contribution to our top and bottom line.
Great. Thanks, and good luck.
Appreciate it.
Your next question comes from Austin Moeller with Canaccord. Please state your question.
Hi. Good afternoon, Peter.
Good afternoon. How are you doing, Austin?
Very good. Hope you're doing good as well.
That's correct. I am.
Great. My first question here, is there any pressure on the LEMUR constellation to get new satellites launched this year, just given the delays with Virgin Orbit? Does the launch that you did in the first quarter and the progress on the root cause analysis make you confident that you can get those satellites launched on LauncherOne this year or move to another provider?
We are extremely comfortable with the current capabilities of the constellation and the launch plan and manifest that we have, which is, you know, I would say, appropriate, conservative, and not overly aggressive or in need of many launch vehicles or launches. I mean, we've done this 34 x, Austin, with 10 different launch providers. You know, the team at Spire has exceptional connection to the launch market, and there are, you know, a number of launch service providers outside of Virgin with which we have launched, which we have strong relationships, and with which we continue to talk. We feel very, very relaxed about that side of the story, of our LEMUR constellation.
Okay, great. Then just on the Dark Shipping detection service, is Ukraine war driving more government customer demand for that, just given Russia's been out there trying to move its Urals crude oil through a lot of third-party shipping companies?
Yes.
Okay, great. Thanks for the details.
My pleasure, Austin.
Thank you. Our next question comes from Ric Prentiss with Raymond James. Please state your question.
Thanks. Good morning, afternoon, everyone. Long day.
Good afternoon.
Hey, a couple of questions if I could. Thanks for the update on the cash draw. We were wondering when that was coming in. With regards to gas, as far as in the interest rate environment, how much interest expense is going to be impacted as we think through this calendar year from drawing down on that?
Yeah, I mean, it's roughly, like, $15 million if you keep going at the same pace that we're going for, the quarterly amounts that we have to pay if we're at roughly the same rates.
Okay. as you called out, obviously, a couple of things. You wanna focus on what you can control, focus on, you know, the customers, macro environment. any FX impact that affected you in 2022 and 2023?
I mean, in 2022, we did have some impacts. Obviously, we did really well to get to the guidance that we had put out. You know, there was obviously impacts on that front. For 2023, you know, we're doing the best we can to put that into all of our expectations and forecasts, so it's all built in. We've, you know, talked to a lot of folks out there in the banks, we got as many points and estimates that we could, and that's all been factored into the guidance that you have today.
The other thing, Ric.
Go ahead, Peter.
Sorry. The other thing that you see there is that we have been doing a very, very steady and deliberate effort to move more and more of our contracts into a US dollar base, which has a reducing impact and a mitigating impact on the FX risk.
Yeah. You can see that in our, in our Form 10-K and 10-Qs . The quarter-over-quarter keeps dropping down. We're about down to 30% of our deals and revenues coming from currencies not in the U.S. d ollar.
Don't forget that we have not all of our cost is in U.S. dollars. Like, you know, we don't wanna drive the number to zero, but we're steering that very, very carefully so that there's a matching impact, which then, you know, reduces the volatility from FX. Net net, I think we are starting the year 2023 in a better position than we started the year in 2022 with regards to FX risk.
Obviously, you've kept a resolute focus on the free cash flow path, kind of, circling March to September of 2024. What variables push you to the March side of that versus the September side of that? Is it revenues ramping? Is it cost control? Is it CapEx? What kind of drives to the higher or lower end date as far as when free cash flow positive?
I mean, you hit all the fronts. You know, it's a mix of everything, right? We're, that's why we've, you know, put out the guidance that we have on the top line. We feel it's, you know, like, strong guidance there. You know, we're constantly looking for ways to improve and leverage the business even further, even though you can see in our results, we already have very strong leverage across all four of our solutions. The CapEx front, you know, we're always managing that.
We've been doing a great job year after year after year on the replenish satellites. We've been still sticking with the same amount of money we spend on an annual basis. I think this year we actually did a little bit less on that front than the normal, $10 million-$12 million that we do on the replenish. Yeah, it's actually all of them, and we're constantly looking how to improve those. I think we've done a fantastic job on the results in 2022 in all those areas, and then the guidance that we put out, covering all that.
I really wish that, you know, you could be part of some of our operational meetings, Ric, and see the relentless drive that we have, right? You know, we use that word, and it's a common English word, but it is one of Spire's six values. it means for us a little bit more than just a word out of the Oxford Dictionary in looking to improve things. Just as a small anecdote, there is a reasonably famous book that talks about removing constraints from processes and streamlining them, achieving higher quality, more throughput with less resources. It's called The Goal.
Every single one of my senior managers and executives got a personal copy signed by me with a strong ask, under quotation marks, to read it over the holidays because this is what we are about, constantly looking for operational improvements. I don't think you get the operational leverage that you see in our margin improvements unless you're constantly asking yourself, "How can I do more with the same resources, increasing customer satisfaction, but decreasing costs and improving our margins?
Thanks, appreciate the extra details. I will stay well.
Thank you.
The next question comes from Jeff Meuler with Baird. Please state your question.
Hi. Thank you. It's Steven Pawlak on for Jeff. I guess the question is around the ARR shortfall in the fourth quarter relative to the guidance. You know, I appreciate the detail, Tom, but I guess any more detail we can get. Was it just some larger contracts that took more time? Was the sales cycle lengthening happening sort of across the market? Is there, I guess, slower upsell, or is it sort of new business issues? Any more detail you can get on that? Thanks.
Yeah. No, that'd be great. I think one way to think about it is really taking a step back and looking at our ARR for the full year. We grew 41% year-over-year. If you average that out, and I'm making it perfectly linear on a quarter-over-quarter basis, the sequential growth was $7.2 million. You know, which is a really nice progress that we made all year on constantly adding more and more ARR. If you also look at our land and expand strategy that goes along with that, we added 135 net new customers in the year. We added in a nice pool of new customers to the group across all four of our solutions. When you look at the expansion side, we had a 117% net retention rate.
That's up from 110% the year before. You know, you don't get that kind of improvement and those type of numbers if you don't have stickiness in your solutions, if you don't have low churn, you don't have the many use cases that you're solving and the value add that you're giving to your customers. We felt very happy on what we did from a full year basis. Where the area that we wish we had done better is the linearity from a quarter-to-quarter standpoint. Really the macro environment did hurt us there, where, you know, you start the quarter, everything seems great, the pipeline's nice and solid.
Especially with those seven-digit-plus deals that you were talking about, you know, as you're going through the quarter, all of a sudden they start going, "Well, actually now I need to get further approval processes," or, "Well, you know what? The funding's getting a little bit frozen at the moment," but then things free up later, and it might then wrap quarters. Ultimately, we always got these wins, and we get the deals, and that's why our annual numbers came out to where they are, and we were really happy with things. The linearity from a quarter to quarter, not exactly what we would always perfectly want there. We'd love to have just to be more spread out evenly, so. Very happy where we ended the overall top-line growth in the numbers.
If I maybe add, like, a little bit more, you know, in Germany we would say, "Aus dem Nähkästchen plaudern," you know, like, to give you more color there. If you look at our mix between commercial and government, you know, we always talk about it roughly being equal is kind of like where we want to steer the ship. We've seen such tremendous amount of growth in our business on the commercial side in 2022 that we ended up the year a bit over-indexed on the commercial side, right? So, you know, we have efforts to kind of like, you know, move the ship back to, like, more 50/50 based.
On the commercial side, you see more impact from from macroeconomic headwinds than you see on the government side. It wasn't really that people said, "I don't want the solution." I just said, like, "I just can't get it done right now. I really still want it. You know, can we get things done a little bit later?" That happens more on the commercial side than on the government side.
Appreciate the color. Thank you.
Of course.
Thank you. Our next question comes from Will Jackson with Credit Suisse. Please state your question.
Hey, guys. Good afternoon. Thanks for taking the call.
Good afternoon.
Tom, looking at Adjusted EBITDA for the full year guide and Q1, it looks like we should expect a pretty sizable increase after Q1. I'm wondering if you can give any info on either the drivers behind that or maybe the cadence behind it. Either we should expect a steady progression for Q2 through Q4 or maybe a more discrete inflection after Q1.
No, we do expect the continual improvement as we go throughout the year. Q1 guidance, we did bake in what we know, and just like I was talking about the linearity, you know, all the consideration of what we know in the quarter has been built into the first quarter. You know, the first quarter for many times for us, and I'm not sure about the other companies, can't speak on their behalf, but we tend to find, obviously, that's when everybody that it's on a calendar year goes through their budgeting processes. You know, not everybody gets done perfectly on December 31st and has their budgets.
We find that our customers tend to come out of that somewhere throughout the first quarter, and then they've got their budget, and then they start working with us, and that doesn't always give us the perfect amount of time to close things in the first quarter. That was built into the Q1 guidance. We expect some really strong movement as we go from the second to third and the fourth quarter. You're definitely gonna get that progression as we go. We saw that this year, right? You constantly saw the progression as we went throughout the year in 2022, and we expect that to continue because you can't get to those bottom-line results unless we have that path.
Gotcha. Makes sense. That's really helpful. Then one more if that's okay. For you again, Tom. It looked like ARR for full year 2022 or at year-end, I should say, was nearly $100 million. Your 2023 guidance is only about 4%-9% above that. Can you maybe kind of just bridge the gap there? I would have thought that full year 2023 would be higher given your ARR number.
The ARR number, actually guidance that we have, the range is $129 million-$135 million. $132 million is.
Right. Sorry. I'm comparing end of year 2022 where we are right now versus a full year 2023 guidance number for our ARR right now and regular revenue for full year 2023. If that's the wrong way to think about this, let me know.
Yeah. You're talking about the. Yeah, you got to remember, just like we mentioned, if there is a building effect as you go on ARR throughout the quarters, you can get additional ARR, let's just say, in Q4 of 2023. You're just not gonna get a lot of revenue for that in that particular, right? Because it's a forward-looking measurement rather than an instant output, right? If you have a little bit more in the third and fourth quarter in our guidance, then that revenue is gonna really flow in more in 2024. Does that help explain the difference, obviously, from the recognized revenue compared to the ARR? The ARR is you could book a fourth quarter deal that's ARR, but it's not gonna generate a ton of revenue for you in the fourth quarter.
Gotcha. Makes sense. Okay, thanks so much, guys.
Of course.
Thank you. Our next question comes from Stefanos Crist with CJS Securities. Thank you. Please, Stan, say your question.
Hi, I just want to ask about the intersatellite links. Any plans for progression there in 2023?
Yeah, absolutely. It is a technology that we consider crucial for, our competitive mode. We continue to roll it out. We continue to offer it to customers, make it available to them, to offer them solutions which have lower latency data. We feel, you know, very encouraged by the progress in the rollout on both the RF inter-satellite links as well as the optical inter-satellite links, which is already the next generation technology there.
All right, thanks.
Of course.
Thank you. A reminder to ask a question, press star one. To remove yourself from the queue, press star two. Our next question comes from Elizabeth Grenfell with Bank of America. Please state your question.
Hi, good afternoon.
Good afternoon, Elizabeth.
Hi. I thought we could delve into the balance sheet a little bit and how we should think about the minimum amount of cash that you need on the balance sheet to operate the business, versus your target for being free cash flow positive?
Yeah, I can answer that. You know, one thing, you know, to look at is the last two quarters, we had the cash that we did in usage was about $11 million, just over 11, two quarters in a row. We just got roughly $20 million for the remaining amount of our credit facility. You know, if you also looked at the path that we've been on, the free cash flow, going from negative 25 to negative 13 and change to negative 8.1. You know, we're really seeing that reduction, we're really seeing that leverage, and we're seeing, you know, less and less cash usage on a quarter-over-quarter basis.
We ended the quarter at $70.7 million. We added that extra roughly $20 million of cash. We've been only burning about 11 a quarter. You know, it's a, it's a good path, right? You can do that math. It takes us, you know, into the period, well past, you know, the period that we said we're gonna be free cash flow positive. We're very comfortable where we're sitting on the balance sheet.
Like, what is the minimum amount of cash that you need on the balance sheet, though, just to run day-to-day operations?
Well, I mean,
we're only spending $11.
Yeah.
If we do 11 every quarter, that's the current numbers. But then, of course, we're gonna be doing better and better as we go throughout 2023. That number is gonna start diminishing as we keep, you know, delivering on the guidance that we've got putting forth on the top line and then what we're expecting to do on the cost front. I think using that number, Elizabeth, as like a guidance of what we need to run the business is basically what you hear us saying from a, from a modeling perspective.
Great. Thank you very much.
Happy.
Thank you. There are no further questions at this time. I'll hand the floor back to Peter Platzer for closing remarks.
Thank you. As we wrap up, I would really like to thank our customers and employees and the numerous suppliers for partnering with us as we continue on our substantial growth trajectory to its profitability. Without our customers, employees, and business partners, we would not be where we are today. On a daily basis, the news reminds us that the shocks of climate change and geopolitical events shake the already fragile world we live in. With our data and solutions, we strive to provide transparency and stability for the world. I could not be more excited about the prospects for Spire as we work together to create a more sustainable, equitable, and prosperous future right here on planet Earth.
Thank you. With that, we conclude today's conference. All parties may disconnect. Have a great day.