Q1 2022 ViaSat Inc Earnings Call
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Ladies and gentlemen, todays conference is scheduled to begin shortly please continue to standby and thank you for your patience.
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Okay.
Okay.
Hello, and welcome to Viasat fiscal year, 2022 first quarter earnings Conference call.
Hopefully, it's a day call, it's Rick Baldridge, President and CEO you May proceed Mr. Paul Rich.
Okay.
Thanks, everybody for joining us today.
Released our shareholder letter earlier today with 1 of the market open.
And we hope you guys are ahead of time to review of today's call.
Brief opening remark and then the well go into Q&A.
But the first Robert can you provide the safe Harbor.
Thanks, Rick.
The discussion will contain forward looking statements. This is a reminder of the factors could cause actual results to differ materially additional information concerning these factors is contained in our SEC filings, including our most recent reports on form 10-K and form 10-Q copies are available from the SEC or from our website.
Okay the truck.
In addition to the <unk>.
Robert the joining me on the call the Mark Thanks, Rick our executive Chairman.
Our CFO Shawn Duffy.
Paul Froelich co developed.
The development and Peter Lopez.
From Investor Relations.
Just a couple of comments before we jump into the Q&A, we had another great quarter, we generated record revenue.
Record adjusted EBITDA, and we've kind of built on the momentum that we finished our last fiscal year with Reg.
Revenue grew 25% year over year to $665 million.
On adjusted EBITDA grew at more than twice that rate of 52%.
That's part of that's reflecting last year was the quarter was 1 of them was hardest hit our first steps by commercial air.
Each of our segments delivered strong year over year revenue growth.
I would like services year over year double digit organic revenue growth was driven mainly by the improvement in our in flight connectivity business, which was as we've mentioned severely impact of last year by Covid.
We continue to see sequential quarterly improvements as passengers return to air travel, but we're still well below pre pandemic business levels are.
Fixed broadband revenue continued to grow organically as well of year over year and sequentially as we continue to see strong demand in the market.
Strong organic growth across the segment was also cognizant of the 2 acquisitions, we've made rig net in the MDI that closed early in the quarter.
Government systems had good revenue and EBITDA performance up 4% from 6% year over year.
22% year over year increase in service revenue was the main driver while tactical data links of cyber security.
In mobile broadband product lines also contributed.
We expect continued growth in the segment in addition.
To another 900 earned on the large IQ.
IQ $820 million of the backlog.
But that idea of IQ in the period.
That award.
28 represents the kind of I don't know.
What are the potential value of that 1 and the <unk>.
Add those IDI cues of about $4 billion on awarded IV IQ values that doesn't use it reflected in our backlog.
The commercial networks had a great.
Great performance with strong revenue growth.
On a large reduction in.
Our reported loss in that segment.
A lot of the as it was from the ramp up of biopsy terminals shipments of the kind of restart.
Restarted and we had another strong contribution from our grasp.
Systems Division, which was driven by all of the new space demand.
In addition to the really good financial results, we completed several key execution milestones we closed on the rig net.
And the Epi our European broadband acquisition in late April both of these will accelerate our expansion into new and adjacent vertical markets, such as energy and maritime and new geographical markets, particularly in EMEA region.
Both expand our global operational and customer facing capabilities supported by a set of 3 <unk>.
Global constellation.
Kind of launch services in those geographies.
Reading device of 3 <unk>.
Regarding the bite the 3 constellation the payload of our first satellite the Viasat 3 for the Americas has.
There's been a Boeing for 2 months now for integration with the bus module and final environmental testing.
We began installing IFC equipment on the first aircraft of our new customer Delta Airlines, with whom we have over 550 aircraft under contract.
We expect the install rate to continue the accelerated over the next few quarters and by this weekend, we'll have about 80 aircraft installed.
And that's accelerating.
Of these achievements reflect our continued focus on execution ahead of Viasat 3 the required global footprint expand into new geographic and vertical markets.
The recent results.
I think key proof points, we remain confident in our build deliver on our 5 year financial targets that we communicated last year.
To that end have you seen on our letter we also introduced revenue and adjusted the EBITDA guidance at this time.
You have a picture of the near term ramp towards that 5 year goals that we talked about last year.
This guidance shows that we expect solid growth over the next 2 years across all of our business as we began to bring the Viasat 3 network on line.
So with that operator, we'll go to questions.
Thank you.
Ladies and gentlemen to ask the question.
The Star then 1 on your telephone.
The all your questions the question.
Again to withdraw your question press the pound key.
The next I wanted to ask the question. Please standby, while we compile the Q&A roster.
The first question comes from the line of Philip Cusick with Jpmorgan. Your line is open.
Thank you this is sebastiani.
Phil.
The fixed broadband versus.
On mobility and other fixed broadband.
Break out in the letter was very helpful.
Wondering if you could perhaps provide some more similar incremental color just on the domestic broadband trends what are you seeing in terms of subscribers and <unk>.
<unk> where the.
The stronger than we had anticipated.
Just wanted to see if we can maybe delve a little deeper into some of the underlying trends and what if any change of.
Occasion of impact are you seeing from space the star links launch.
And ramp.
The Mark Okay, It's mark.
The dominant issue for us over the next few quarters in the U S broadband.
Can it be supply.
Pretty much sold out.
The satellites that we have look of the U S. So the.
Main trend we're seeing is.
High demand for more bandwidth and a lot of that is being absorbed by customers that are upgrading to <unk>.
It provides more bandwidth so we're seeing probably a few thousand the order of a few thousand fewer subscribers, but the soup Congress that we have.
Buying more.
More of a premium plans and so that's sort of holding that steady to up.
That's been the other.
On the other factor of that.
Entering into it is all of these other markets that we are developing in advance of.
A viasat 3.
And the return of the in flight connectivity.
So that is causing us to.
Basically allocate our bandwidth in the ways that.
Both paved the way for the fastest growth in the in.
And the new businesses and.
And delivery of the revenue and earnings.
We're counting on.
On the new system sales.
The net sales of kind of factors that are in play in terms of overall demand.
The overall demand is really high.
Yes of course, we can.
We have tools that we can see that day.
Starting to serving people in the market, but the overall.
Overall demand is far greater than.
What they're soaking up which has so far not really material.
Thank you the last call we indicated that we would expect the decline in subscribers in the U S market over until Viasat 3 comes on line, but in general we think the revenue would be about flat year over year.
On that residents the broadband segment.
That's helpful.
Yes.
And you guys havent been any headlines subsequent to the links of the potential divestiture of.
A portion of the government business. So anything there I mean, how should we be thinking about that obviously, the link 16 business and some of the other verticals remains strong.
So I think what we should be thinking about as it pertains to the potential monetization of a portion of your government business.
No.
So if there was we wouldn't say anything about it here, but but we like Kevin the business is growing.
And so we see continued very high demand and and good growth in there.
The segment. So I think we're positioned strongly you.
You saw on the note I think we're going to.
Here pretty soon we will launch our <unk>.
First Leo that has link 16 on it and so that new space element of the links in existing business as a growth area. So.
But in general with.
It's acquisitions or divestitures, we wouldn't make any comments out of here.
And maybe 1 last 1 for Sean.
Just how should we think about the capex of run rate for the remainder of the year, obviously, you called out about leverage ticking higher through the roof.
First of the year.
Overall capex expectations within the fiscal 'twenty 2.
It would be great quality on Jack.
Yes, no problem.
We talked about last quarter net on average kind of targeting that $300 million per quarter.
Corner of kind of March we were a little lighter.
Corner of that it starts to ramp through the year as we get closer to launch so that's the Pelican number.
Okay.
Thank you.
Our next question comes from the line of Rick Prentiss with Raymond James Your.
Your line is open.
Yes.
All day.
Sure.
Hey, a couple of questions and I appreciate that near term guidance on the long term path.
1 quick housekeeping, 1 I assume rig net is not in the fixed U S. Fixed broadband per cent then that is just truly U S fixed broadband.
That's correct.
Shawn.
That's correct.
Okay, and when we think about that near term guidance of of revenue average annual revenue growth of <unk>.
Approximately 20% of an average annual EBITDA growth in the mid teens. Obviously this fiscal year you get the 11 months worth of benefit of the 2 acquisitions, how should we think about what ex M&A growth might look like over that period, you did call on how much M&A was helping in the quarter.
Yeah, I think while the type thing.
That guidance the kind of looked at all and if you recall last quarter, we talk about the kind of either at the least and share her right net in EMEA.
Not only marginally about $40 million on the EBITDA line.
Okay, and it looks like rig net does split between services and product, though are on commercial networks.
There was about 90% of it shows up on the certified and about 10% range from their product efforts on.
<unk> 90 per site and the satellite service side of about 10% of the shows up on commercial.
Sure, Okay that makes sense.
And then when we think about from the letter you mentioned the recalibration of the metrics reported.
Can you help us understand what you're thinking about how you're reporting on what you might add to what youre, telling us of what you might take away from what Youre telling us.
Sure.
So.
Right now what we're seeing is.
A lot of demand across multiple vertical and geographic markets.
Residential enterprise implied connectivity general aviation and local government Maritime energy, we've got all of these different markets.
We've got to figure out how to allocate that across them.
Yes.
Clearly there is way more demand than we can serve with the resources that we have for the next few quarters.
On the aggregate cost of all of those markets.
We really like.
Having of broad robust and resilient.
Based on the markets, we don't want to be over exposed in the 1.
Geographic market or any 1.
The vertical market so so.
What we're trying to do the safety look here's the here's what our focus is we want we want on earned revenue earnings and cash flow of in line with our capital planning and the leverage objectives.
We also want to build momentum.
For the.
The increased economic productivity of the coverage will get the total bandwidth will have the geographic flexibility on outlook.
<unk> 3.
And what that increase on revenue and earnings diversity and resilience and robustness.
So that's those are our objectives.
The local we're looking to do is.
1 is we know that people are kind of use some of these other metrics the forecast what our growth LIFO.
Giving you that we're basically saying here's the guidance that we're going to get.
Revenue and adjusted EBITDA and we'll also we'll continue to give the metric that shows the diversification of our business, which is kind of is the U S which has been.
Especially during the Covid it was very U S.
Residential centric and now you can see we are back on track to get that diversification. So we'll give you that we're still looking at ways to refine those metrics that takes into account all of these markets and.
The capture them Holistically.
Probably introduce some of your metrics over the next year.
Next year, so certainly guidance on yet.
III and service.
Okay. It makes sense from the 1 thing I don't hear a lot about public because it's such low bandwidth is internet of things. Other companies are looking at Iot opportunities should we assume that is not as high of priority given the good problem to have you've got way more demand than supply right now.
Yes.
A lot of people define Iot businesses out of.
<unk> sort of by definition the level of bandwidth of states.
There actually are some really interesting Iot businesses that we're working on especially with the addition of Rick that our broadband applications.
Those are.
They are.
Basically think of them as the recurring revenue is.
It's pretty high relative to the acquisition cost of the terminals. So that type of Iot stuff is really interesting to us and there are some of a lot of those you might imagine are things that are a video intensive.
Those types of Iot applications.
Our our bandwidth intensive so our things and monitoring sort of industrial processes drilling.
Mining things like that so those are absolutely in the near term near term.
Opportunity set for us.
The things that need to be.
The need the cloud compute to be able to the head of AI elements back to how you control elements and so those things are very data intensive.
But we look right now, we're just including all of that in our enterprise segment.
They are all enterprise applications.
Okay. Thanks, Mark Thanks, Mark Thanks, Shawn.
Thanks, Rick Thank you.
Our next question comes from the line of Matthew.
<unk> with Barclays. Your line is open.
Yes. Good morning, good afternoon. Thank you all.
I had the question first with regards to some of the guidance.
It's great that you gave more clarity, but I guess the world, we've got a bit more and I was wondering.
What is the lumps launch schedule of true Ashish.
And in the guidance in terms of of of the satellites in order to deliver but growth both of those.
My first question.
Yeah, well it hasnt changed.
Obviously those things Kevin.
Can move around a little bit, but it hasnt changed since we gave us before.
When we've talked about.
Roughly of 9 months scheduled from the time, we delivered the satellite the Boeing until the time they would ship. It. Obviously there is multiple factors that can cause that the move to the left or to the right. It should be the most predictable part of the schedule.
Versus building the payload. So you could you could say well that represents the timeframe of ex and then you add a month or 2 to that for launch preparation and then.
And then.
Couple of 3 months for testing and once it gets on orbit.
But right now we don't have a real reasons the change the schedule was given.
And what we might see something could happen in the.
The interim.
It's just too early since we gave it the Boeing the change going on.
To predict.
And the different anything different than what we've said before right now.
Okay. So that's until Q1.
Some of them 'twenty 2 calendar kind of.
Okay, well on Q2, Q on Q2 timeframe.
I would say.
On the schedule of the things we're likely Q2.
Yep Yep.
Thank you I had the second question about the Capex.
Kevin indicates.
The indications over the years.
On.
Hello.
Because of phasing can be different per month, we assume at some point in time.
Always difficult due to COVID-19, it's quite simple on.
On our side, but I just wanted to confirm the the kind of numbers given the mutually about the cost of the constellation of we're basically on track and what I have noted down looks like they're moving.
In dollars per Viasat 3 satellite plus.
Maybe of 115 billion for growth.
No.
That was the plan from Viasat 3.
Just wanted to confirm the truth.
Still more or less what you guys have the mine.
Whether or not you're already spending something on by us at the floor on.
That is something the b, which could wait to low twos part 2 of <unk>.
Incorporate in our estimate.
Yeah.
On a couple of things on.
And we've talked about.
Paul Coster from its Paul.
The constellation and the range is there anything about on.
$2.3 billion in sales of our entre ally and so we're continuing the progress I think coming out of it.
Both of that hasn't launched.
The ground and the satellite zone.
On the English on ground kind of please make sure that you've got all of that into engineered on merit.
The other thing is we're about right now 16 per that maybe a little bit more.
Lee on that funding from what you've seen kind of.
Continuation of what's left of it.
Yes.
Okay and on Brian.
Of course, sorry, maybe I missed it in your hands free.
There anything already being spent.
The relevant.
We're going from some early.
Initial efforts are the response coming out like that.
Net line looks like.
So I started some growth spending if that makes sense.
Yes.
We have started work on but.
Paul.
But the strength of them.
Yes.
Great and maybe the last question so think of those yesterday there was the Nordic coal.
Pete touched on by Baidu cloud, which is.
Respectable as far as I can say in the.
It shows up.
Some of the speeds on the Starlink Rick.
True.
Megabits.
You guys on Hughes and the.
There are more around 20 megabytes.
From there I realize this is not apples to apples.
Our full capacity trying.
Trying to.
To manage thought of as well as you Kevin does obviously of different mixing the customer base.
I just was curious.
So we hear from you what you thought about those numbers.
But the the.
The in line with growth you're expecting in the hull.
You can start to think about.
The lever with Viasat 3 I guess its again.
It's always the mix between volume speed Harpoon.
Yes, so 1 is yesterday and all of those.
But the most obvious thing on the speed test measurement.
We offer service plans with different speeds so the.
Vast majority of our customers are on plans with 12 of 25 megabit per second speeds, we have tens of thousands of customers with 50 to 100 gigabit speeds in the speech.
Of that we deliver on those plans are above the.
100, Megabits planning there of about 100 Megabits per second.
I mean that would be the the apples to apples comparison.
The thing I would emphasize is that.
Even with the the number of subscribers that we have in our satellites being effectively flow. We do meet the speed that we that we advertise.
That includes the 500 megabit per second plans for the 2 that would be of more relevant comparison of us versus anything.
And the same is true.
If you look at the article on the article that you.
Referencing what it does is it's not just for US it's for all service providers that provide multiple speeds pay Jeff provided the average across all the different service tiers and compare that to start in the bank, which has on the 1 surface Peter.
So that's really the part that I think people should pay close attention to.
Yep.
Uh huh.
Thank you.
Thank you for guidance.
The next question comes from the line of Simon Flannery with Morgan Stanley. Your line is open.
Great. Thank you very much I wanted to talk about some of them, but you talked about the link 16, Leo going up what is the process for the the PS.
Testing of that on the potentially for a larger order following that and then I think in the past you've talked about you know if there was government funding domestic Leo kind of broadband product might be interesting to you. We've obviously got the brought onto all of the infrastructure Bill working its way through Congress with significant funding for broadband so I wonder if you have any.
Any thoughts on that on how that might apply to viasat as well. Thanks.
Okay.
So first on the on the link 16 Leo.
There is definitely interest in U S. Dod.
To extend the range of <unk> 16, which is it's a line of sight of network.
And it has terrestrial relays, but you still happen per.
Really limited.
Average area of any particular network.
The data that is on the <unk> 16 is really really valuable for a number of applications, including in applications that are well beyond the range of each network.
So the.
That's what's fundamentally thats whats driving the deal with the interesting things.
There are.
I'd say a few different initiatives.
All of which were involved in.
<unk> 16 in the space.
How.
How what's the ultimate manifestation of that is it will depend a little bit on which organization ended up having the lead on it.
Right now we.
We have in the Air Force program, there's a space for the program as well that we're involved in.
The <unk> space there are.
We believe.
There's still a bunch of.
Additional work could be done on networking ground.
The terminal interoperability with the space, what the functionality of the space that is how it integrates with other data links.
So overall, we see it as really really.
Drifting and potentially a really big opportunity, but it is a little bit early to.
To be more specific about how programmatically, how it will turn out of also I think the.
The other thing that we really like about it is of that.
There's opportunities for us, especially given what's going on now to work with Nevada.
Customer organizations that we do work with.
In order to help shape that program and Thats. It may 16th that's really been 1 of the reasons. We've been so successful is our ability to kind of.
Work with end users and anticipate what their needs are and that's how that's how we can go.
Most of all of <unk> product line.
Through that type of non developmental item, we think of it really.
Good similar opportunity in the space.
On the on the commercial Leo of front, yes, we have.
We had a filing that we've done for K band.
The non geosynchronous orbit system, where we've proposed to lower the attitudes from meal to Leo.
In order to delivery of latency.
The sub 100 millisecond range, so that we're still.
It's still pending approval from the FCC.
I'd also say we're doing additional work on Leo's, we're doing work on the video business models.
You've done a ton of work on space of sustainability, which is really I think is going to be a very big factor in how the entirety of market developments, especially given filings.
Close to 100000, new layouts and the vast.
A couple of quarters.
So.
So I'd say just stay tuned for that.
Come on we're going to we're going to continue to evolve our plans. We're also willing to work with other and GSO partners. So the.
That we can.
We are an area where the artisan.
They'd rather work with others and just own everything ourselves, but that would allow us to deliver the services that we want to do these hybrid.
Hybrid model, which we think ultimately it's still the right things, we're going to turn out.
Okay. Thanks Mark.
Thanks, Kevin.
Thank you.
Our next question comes from the line of Mike Crawford.
With the rally security your line is open.
Thank you.
To reward the proliferation of all of these.
The sensory satellite constellations going outside of just collecting them.
Just the ever increasing amounts of data has there been any more progress on talking to anyone about using the viasat 3 is sort of like of backhaul network, where they get up the the data into <unk>.
The G O and then down back down to Earth. They get the data in the hands of the people that 1 of them more quickly.
Yes.
Yes, absolutely.
And that would require pointing just pinpointing an edge on it to you that's the main.
On the main requirement there.
You can think of it.
Think of it as the way things work now primarily.
There's really 2 modes. The dominant mode now is that satellite kind of ground pointing radios that.
Think of the database to go back to Earth stations that are distributed around the world pretty much safer government and commercial systems the.
You know the.
1 of the main issues is that.
There are no ground drift patients insight.
A lot of places, where we're trying to collect information.
Especially over ocean.
On the other areas and so.
People are interested in getting net net.
Data back sooner so.
We're involved in a number of different.
Ways to do that 1 of which is what you just mentioned, which is satellites could have on additional upward pointing radio.
Net realized stuff pretty much immediately upon the.
The way in the world. They can rely data back if they use of June.
From the satellite at the kind of a related COVID-19.
And there are a number of government and some civilian.
So I do just that already it's very very expensive when you use government tens of billions.
NASA or the government satellites to do that and it can be far far less expensive with the.
Out of it like Viasat 3.
So we're working with.
Both government government commercial operators, who are interested in doing that without the.
The thing that we're doing.
As well as people are doing the sort of a similar thing.
Relying on other.
The other and GSO satellites and that's another area of that we've been really successful in.
For instance on the Iridium network, we'd go there out of there.
And our satellite links and we have a number of government.
Programs on those theaters satellite links as well so that would allow people to really control of our data information.
At the Alpha 2 slower.
Geosynchronous.
And then the other thing that we're doing.
Just ties into the same thing is.
Specialty building a number of really large ground group of patients which.
Little out the sensing kind of ice to transfer the much higher volumes of data without having to make the satellite is bigger and more powerful from.
From a transmission perspective, so that's so basically the think of it is.
Different approaches all aimed at the same issue, which is how do I get a lot of data down really fast and then the other part of how do I do that.
As quickly as possible from 1 type of collect that data to get it.
On the ground.
Okay. Thank you Mark and then.
The final question from me just relates to us.
The T cell.
As of invested billions of dollars in trying to make phase of.
Flat panel of incentives that of low cost and easy for consumers to install and get there their day.
8 out of the buyback.
And.
It's still something that you envision being able to offer with Viasat 3 and if so how soon would that just be with your own technology are you looking at others as well.
Okay. So.
The phase III are valuable.
When you have to kind of come to be reported and that can be because you can have a fifth satellite and of moving platform now. It means you have to constantly reboot.
2 of them 3 point or you could have a fixed user terminal end up moving satellite net.
That's why you have to have them 4 or something similar to that for from a non view of synchronous contemplation of the government moving platform and moving terminals or move moving kind of thing.
So.
We are working on all of those modes.
We recently did a flight test of a small phase III of antenna on the business jet.
So we think mobility platforms are probably.
The first place.
We would apply.
That type of phase III technology Gulf of could apply it to ground terminals 1 of the other benefits on the ground terminals is how are you.
To quickly half of them.
Multiple different satellites, so that could be multiple different fixed out of eye toward multiple different and GSO satellite.
And for the types of hybrid services that we're talking about having a phase III of tenant even from a fixed terminal.
Makes that possible.
So we're working on all of those yeah sure of it certainly will have those out in the the Viasat 3 time frame.
In addition to that I mean, 1 of the things on the residential stuff you can do self install it doesn't have to be a phased array of low other low cost things, we're working on those as well.
Okay. Thank you Rick Mark.
Thanks, Mike.
Thank you.
Our next question comes from the line of Covid.
Well the quantity.
Open.
Hi, guys I had a question about the price roll.
On the recent $950 million.
Q contracts I think the 27 different companies on that can you share of.
What exactly Viasat Spooled is amongst that group then perhaps of the 950 million.
The percentage of you. Thank you.
For Viasat the claim.
The purpose.
The value isn't distributed among everybody. That's that's the idea of IQ contract for Viasat.
And the task orders will evolve from industrial to moving both from studies the specific.
Contractual tasks and that Theres, a lot of things in there that the that.
That we could do over the window, but that's not a shared value.
But from what we do on that is it is an area that we've done for.
30 years.
<unk>.
Stipulations for multiple of our aircraft on the.
We have we have been the primary developer and provider of the simulators that are used to.
<unk> aircraft.
It's hard to it's hard to estimate what the.
Paul It can be the kitchen can't forget the communication has stimulated primarily.
Communications and other.
Things that metric with the community.
Yeah.
Yeah.
And then we've done that for.
Alright got it looks like 1 of them.
Major markets for all of the advanced Fighter Jets.
They all use on our simulation equipment.
It pertains to.
Certainly the near term desk scores.
Okay.
Just a clarification on something you said earlier I wasn't sure if I heard right did you say the Viasat 3 will have 3 months of testing once its launched.
But I said it would have 2 to 3 months I mean, it could be it could be 4 we're hoping for it to be sooner because of very very complicated network. Obviously, it's our first 1 and we want to be incredibly thorough on the testing of it so but we will give more updates as we get closer to that but.
Wed love for it to be too it could be Florida.
Paul.
And then just a question on the real time Earth.
Net working you were just talking about various solutions for ground connectivity.
How many of those antennas. The gaming stations have you completed at this point and can you remind us how many of you deploying globally.
We've been working on the space for a long time.
So it's there's a bunch of the newspaper platforms that Mark was talking about in <unk>.
Very very very large.
And the tenants.
On the market right now we have multiple programs going on simultaneously right now.
There's 2 different there's 2 different.
Yeah.
Element to this 1 is us providing antennas to customers that purchase of those and kind of use of only for their own networks, but we also have.
The service.
Whenever we will either use antennas that we own all of that partners.
And.
So time on those and kind of the multiple symptoms at the surface.
The others that do a similar service with the services can be differentiated in a number of ways by the size of the attendance by.
Where they're located with RF and the operating.
Well, we've been oriented towards our more of the emerging markets, which are the higher frequency bands.
And placing those in kind of thing.
On the places, where we think of it.
Well suited to those applications, but our main effort right now is not on owning a whole bunch of antennas, but on building of partner network for that.
Yeah.
Hey.
I'm not I'm not going to give an answer right now on the number of antenna I don't know what it is exactly it's not it's not enormous but what matters of out of the capacity the placement of those antennas.
Okay, and what we think is the.
But the way the market emerges and which Inc.
Kind of an RF bands will turn out to be the most important.
We are really oriented.
Towards where we think the market is going which is the higher bands of higher speeds.
Thank you.
Thank you.
Our next question comes from the line of Ryan <unk> with Needham and company. Your line is open.
Thanks for the question.
That's your supply chain and youre seeing much of impact from it.
That makes that the shortage.
The impacts on your terminals comps deliverables.
Sort of thing.
Yes really.
For deliveries to date, the seem very little impact, but we're starting to see the impact.
Across the business mainly in EMEA.
And the longer lead items that were the we have so we're going on we will have it.
Oh.
Yes.
The I'd say the good news during the window, where it had the biggest impact on everybody. We have less deliveries in the cycle of pretty good inventory, we actually have pretty good of inventory builds on the government side and.
And so we haven't seen much to date, but we have forecast in our outlook.
The additional impact for delays.
That's helpful. Thanks very much.
Thank you.
Our next question comes from the line of Don with Jefferies. Your line is open.
Right.
Thank you.
1 of the my favorite pronunciation of my name.
Yes.
Uh huh.
Hi, Kevin.
In summary, the American sitcom net.
You guys Paul.
The.
Hum.
I wanted to come back on.
Rick.
On Alere.
True.
The mobility.
But then.
About the program.
Hum.
Bye.
Non.
The development in the past.
You reap the Mark 1 installed on them.
Please.
In active discussions with several of the airlines in predicting the 90 tenants on net.
The traffic.
I believe.
Rick.
The big the costs arising from what anyone else the design.
And then obviously amongst top of the dry run on having amongst less.
Net net.
The infrastructure.
Yeah.
No.
Hey, Richard.
It's kind of a comment on.
Sure.
What are you thinking about.
Okay.
Well it is.
Is not super surprising there.
And operator that has on agree of let's.
I'd say that right now.
Of the market will go to Leo operators.
There are some there are some really difficult challenges with doing mobility with.
Uh-huh, especially low funding Leo satellites that have very small.
Beach.
And we've kind of seen this in other than the other engineer sort of systems were think of it.
Hey, I might have global coverage.
Global coverage might mean, I can be anywhere, but I can't be everywhere.
I have.
Especially if you think about some of the problems that are around of airports, where you have large numbers of airplanes that dispersed in all directions, where lots of different directions. Those are really hard problems or for a real kind of on its with the various won't beat the unless you have very very large numbers of satellites.
I think the.
Oh of issue of down.
Space of sustainability satellites can be supported and half of it should be allocated kind of turned out to be a very big big factor in that but we do think of that a hybrid approach on multi orbit approach, which.
We're seeing I'd say more operators.
The kind of come come to conclusion, the multi orbit of hybrid it makes complete sense. That's 1 thing we've been saying that day.
I think of it.
More likely long term solution.
And going to the Inmarsat Orchestra thing.
Could you bake terrestrial into that.
Well certainly for.
For the terrestrial mobile and mobile or in view of land.
You could.
Net.
I think there's some challenges with the <unk>.
Scale.
It's possible.
Well, we well we would say is.
That having.
More tools in your toolkit to deliver a comprehensive services is good and remember the comprehensive services are going to include not just the internet access, but those of you can.
Probably.
The entertainment other other forms of communications as well.
That answer your question.
1 thing.
But.
We still think the dimension of value that we had been successful at the net is the right 1 that's delivering a lot of bandwidth.
Area, where there's high demand.
That's the problem most banks I mean bandwidth as the dominant.
The the dominant value proposition and the thing we've been the most focused on.
Profit group absolutely on the right track is most of most bandwidth in the right place for the lowest capital cost.
Remember Gogo was at very low latency network here of that.
We never go ahead of the ground that we compete against some of it.
The lower latency that Leo.
And that wasn't the right dimension of value.
[laughter] kind of yield.
Comments on mobility.
Do you see yourself on the Canadian capital into layer from ability in the medium term.
It sounds like non.
I mean, that's something the link.
Right.
Uh huh.
Sure.
The fit in Mds, who were interested in hybrid networks, we have discussions going on with <unk>.
And DSO of providers about cooperating so that's 1 way.
1 way to do it.
We've been pretty clear.
And it is the look at research from Cisco or standard volume or others that.
The low latency component of total broadband traffic not a very big traction of the total so we can certainly we can certainly entered the market using third party networks, whether it makes sense for us to 2 to 1.
Just to get owner economics, or because we can greatly improve the productivity of others. Those are the things that.
We're still looking at sort of out of it will depend on them.
So when somebody can bring these things.
Market at scale.
And when we get from pricing on them.
That will have an influence on whether or not we invest capital on it and.
And our confidence that they're going to be there and for accounting on the most part of our network.
Yeah.
Understood. Thank you.
Thanks Shawn.
Thank you.
Ladies and gentlemen, we have time for 1 more caller on the call is from Louie Dipalma with William Blair. Your line is open.
Rick Mark and Shawn good afternoon.
Okay.
Many of the defense Tech providers like Booz Allen Parsons Mantech and Mercury systems are seeing funding and program delays are you seeing this as well, even though youre government division grew nicely.
During the quarter.
We've talked about it last year, where we had seen some AMT.
The impact of both Covid and the administration changes in terms of delays, but not really I mean, I'd say, it's not back to normal, but we've seen a lot of <unk>.
Order flow in that business segment.
Sounds good and for from Mark as it.
Relates to the space sustainability.
Do you think that there is a limit to the number of satellites that can ultimately go into Leo in order to.
Keith.
Everything is sustainable on and prevent collisions and do you expect regulators to eventually like pause or even stop granting licenses because there.
And it can be so much traffic up there.
Yes.
Okay, Yeah. So.
Complicated question with the same.
Simple answer is our number 1 of.
Yes.
The answer is yes, there's a limit to what can go in the leader it's a low.
All of the complicated because it's not only the number of kind of like the depends on.
Things like the cross sectional area of the patent life.
But all of its there in how.
How those orbitz vehicles real effort intersect with the mass of the satellites on so I don't want to oversimplify the.
Yes, Theres a limit.
The FCC itself when it comes to the U S has said on 3 times in proposed rule makings of or other proceedings that yes, physical mimic of the number of of <unk>.
It can be in Libya.
No.
I don't know.
The only a question of time.
People start calculating what those limits on it.
Also refer you to.
The research what others are published on including but Theres, an NSF study that was done by Mitre the calculated.
For the number of for satellite center, let's say have the same characteristics starlink and the roughly 600 kilometer orbit.
It's like low tens of thousands of satellites before.
The brief starts growing without the bounds and you can even maintain that the many satellites in orbit.
Because of Covid.
The conditional probability.
Likelihood.
The.
It's the real issue, it's not just outside of the St.
Moving on out of work to help.
<unk> and <unk>.
Sort of correlate of.
The other people's inputs as well, but that is where things are headed and I think that the the.
Main issue 1 of things that we're seeing with a lot of international operators Youre certainly seeing.
Europe on the European Union is talking about having of constellation.
And then right.
Other administrations as well.
If there's a if there's a founded number of satellites.
Well think of satellites with given characteristics, how should that number be allocated among different countries and then what tools. The countries have to to help the sort of what they are what they are right.
And.
That is.
I think of rapidly evolving.
The situations, but I think we're headed is where youre, saying the 2 is that there will be limits to what can be put in all of its very very similar to what's been done with orbital spots at geosynchronous.
The other thing that I would just add we won't make it really clear we're not against Lee of <unk>.
Therefore responsible approach to.
Oliver on the space so.
But to underscore what Mark said.
Okay.
That makes sense.
And 1 last 1 for Sean you discussed have.
You have 600 million in liquidity is that 600 million enough.
To fully fund the Buildout of the Viasat, 3 or do you either need.
You know raise more capital either from the debt markets or.
As part of the potential divestiture.
Yeah, well I think if you look at our apartment.
Operating cash requirements on the cash generation and what we can pick up any of that involved that's less on liquidity. We're in a really good position.
Catherine.
It kind of hits.
Thanks, a lot because your guidance last quarter I can probably take a different form other than just using the revolver, but yes. It.
Let me turn off the cash.
Yep.
Sounds good thanks, everyone.
Thank you.
Ladies and gentlemen that concludes our Q&A session I would now like to turn the call back over to management for closing remarks.
Okay. Thank you operator.
Kevin with Mark and the rest of our team.
Thank you for joining us this afternoon, and we had a strong quarter.
To start off of the year on our operating momentum is.
Really positive.
The you heard that we're confident in our outlook, including achieving both near term financial targets and our longer term financial targets.
We're really excited to bring the viasat three's capabilities to market, our leadership team and our employees are diligently focused on executing the plan.
We want to say, thank you to them, they're been fortunate when parts of this.
Pandemic in today.
I don't have the same contact Peter or the rest of our team Shawn R. R.
Paul If you guys have any other questions on our results are of topics today, and we look forward to updating you on our continued progress next quarter.
So with that I hand, it back to the operator thanks.
Thank you ladies and gentlemen, this concludes today's conference call.
Participation you may now disconnect.
Okay.
[music].
Yes.
[music].
Okay.