Q3 2022 ViaSat Inc Earnings Call

[music].

Okay.

Speaker 1: Welcome to Viasat's fiscal year 2022 third quarter earnings conference call. Your host for today's call is Rick Baldridge, president and CEO . You may proceed, Mr. Baldridge.

Welcome to Viasat fiscal year 2022 third quarter earnings Conference call. Your host for today's call is Rick Baldridge, President and CEO . You May proceed Mr. Baldrige.

Okay. Thanks, Thanks for joining us today everybody.

Speaker 2: Okay, thanks. Thanks for joining us today everybody. We released our shareholder letter earlier today before the market opened and we hope you've had a chance to take a look at that. Joining me today on the call is Mark Dankberg, our Executive Chairman.

We released our shareholder letter earlier today before the market opened.

We hope you've had a chance to take a look of that joining me today.

Mark Thank Burger.

<unk> chairman.

Speaker 2: Sean Duffy, our CFO , Robert Blair, our General Counsel, Paul Froelich from Corporate Development, and Peter Lopez from Investor Relations.

Shawn Duffy, our CFO , Robert Blair, Our general counsel.

Paul Froelich from corporate development, Youre Lopez from Investor Relations.

Speaker 3: Today's call will consist of just a couple of brief opening remarks, then we'll go into Q&A. First, let Robert provide us our state and Harvard. Thanks, Rick. As you know, this discussion will contain four looking statements. This is a reminder that factors could cause actual results to differ materially. Additional information concerning these factors is contained in our SEC filings, including our most recent report from importance 10-K and 10-Q. Copies are available from the SEC or from our website. With that back here, I can conclude the session.

Today's call will consist of some just a couple of brief opening remarks, and then we'll go into Q&A first let's have Robert providers are safe Harbor. Thanks.

Thanks, Rick as you know this discussion will contain forward looking statements.

Mind, you that factors could cause actual results to differ materially initial information concerning these factors is contained in our SEC filings, including our most recent reports on forms 10-K 10-Q.

These are available from the SEC or from our website.

With that back to you okay. Thanks Robert.

Speaker 2: Okay, thanks Robert. First, if you did have a chance to read the letter, you can see our business continues to perform well on almost every front. So today we'll go into some of the details, talk about the Biasat 3 schedule a little bit, and give you an update on the MRSAAT transaction. We've tried to answer a lot of the questions that we've been getting in the letter, but also hope to answer any remaining questions here in a few minutes.

First if you if you didn't have a chance to read the letter you can see our business continues to perform well on almost every front.

So today, we'll go into some of the details talked about Viasat three schedule a bit and give you an update on the Inmarsat transaction. We've we've tried to answer a lot of the questions that we've been getting in the letter, but also hope to answer any remaining questions here in a few minutes.

With that I'll start with a few of the important highlights for the quarter revenue grew by $144 million year over year to a record $720 million. While adjusted EBITDA also reached a new record of $163 million, which continues the momentum of the last several quarters.

Speaker 2: With that I'll start with a few of the important highlights for the quarter. Revenue grew by 144 million year over year to a record 720 million while adjusted EBITDA also reached a new record of 163 million which continues the momentum of several quarters.

Speaker 2: We grew year over year in each of our segments as well. Satellite services year over year revenue growth of 40% was driven mainly by the performance in our IFC business.

We grew year over year in each of our segments as well and satellite services year over year revenue growth of 40% was driven mainly by the performance in our IFC business Eric.

Speaker 2: both aircraft return to service and new customers such as Delta coming online, as well as contributions from the Rigna.

Craft returned to service in new customers, such as Delta coming online.

As well as contributions from the rig and <unk> acquisitions.

Speaker 2: fixed broadband was reasonably flat as we continued to reallocate finite bandwidth resources to our growing mobility business.

Fixed broadband was reasonably flat as we continue to reallocate finite bandwidth resources to our growing mobility business.

Overall, 37% of our satellite services revenue came for mobility in the quarter.

Speaker 2: Over all 37% were satellite services revenue came from mobility in the quarter.

Speaker 2: international and other revenue underscoring the increasingly diverse the diversity of our business.

International and other revenue underscoring the increasingly diverse.

<unk> of our businesses.

Speaker 2: those businesses have the greatest growth opportunity, and we anticipate we'll continue to diversify our satellite services portfolio as we go forward.

Those businesses have the greatest growth opportunity and we anticipate we will continue to diversify our satellite services portfolio as well.

Go forward.

Speaker 2: Government systems had good revenue performance with service revenues of 5% over year and total revenue of 2% over year.

Government systems had good revenue performance with service revenues up 5% year over year, and total revenue up 2% year over year.

Speaker 2: What we saw strong performance from Tactical Satcom radio and Tactical Data Links products. There have been longer than anticipated delays in processing certification.

We saw strong performance from tactical Satcom radio and tactical data link products there have been.

There have been longer than anticipated delays in processing certifications.

Speaker 2: required prior to delivery of some of our security assurance product orders.

Wired.

Here to delivery of some of our security assurance product orders.

Speaker 2: In addition to the $956 million of backlog, we have 90 IQ contracts with almost $4 billion in 2020 about our world's potential value, none of which is included.

In addition to the 956 million of backlog.

We have an idea of acute contracts with almost $4 billion about awarded potential value.

None of which is included in our backlog number.

Commercial networks continue to deliver good results with revenues up 55% year over year increase was mostly driven by increased IFC terminal shipments.

Speaker 2: Commercial networks continue to deliver good results with revenues up 55% year over year. Increase was mostly driven by increased IFC terminal shift.

And another strong contribution from our ground and test systems Division and rig net product revenue.

Speaker 2: Another strong contribution from our graded Intest Systems Division and Rignette Product Revenue.

Speaker 2: We expect that our IFC orders and antenna systems backlog will support continued good results in this segment.

We expect that our IFC orders and antenna systems backlog will support continued good results in this segment.

Speaker 2: Turning to our announce acquisition in Marsath. We spent our time since the announcement preparing the record filings and are progressing well in multiple fronts.

Turning to our announced acquisition of Inmarsat.

We've spent our time since the announcement preparing the required filings and are progressing well on multiple fronts.

Speaker 2: We completed the required loan amendment of Viasat's $700 million dollar revolver, and in Marsat's $700 million dollar credit facility and $1.7 billion dollar term loan.

We completed the required loan amendment by us at $700 million revolver, and Inmarsat $700 million credit facility and $1 $7 billion term loan.

Speaker 2: We're progressing well on the regulatory front both in the US and UK and have made initial regulatory filings with the US Department of Justice and the SEC and plan to make many additional filings within the next few weeks.

We're progressing well on the regulatory front, both in the U S U K and debate initial regulatory filings with the U S Department of Justice and the FCC and plan to make many additional filings in the next few weeks.

Speaker 2: And, Marsett itself is delivering strong financial and operational results consistent with what we thought. You can see further details on page 8 of the shareholder letter.

<unk> itself is delivering strong financial and operational results consistent with what we thought and.

You can see further details on page eight of the shareholder letter.

Speaker 2: It also reminds you to keep an eye out for our transaction proxy was expected to be filed very soon.

I'd also remind you to keep an eye out for.

Our transaction proxy was expected to be filed very soon.

Speaker 2: We're very excited about the transaction and so are our customers. A number of airlines have been reaching out to learn more about the transaction, including how it will help us better serve our existing and future customers.

We're very excited about the transaction and so our customers a number of airlines have been reaching out to learn more about the transaction, including <unk>.

How it will help us better serve our existing and future customers.

Speaker 2: We think our dedication to global growth has been a big consideration in recent business activity and new orders for long-range aircraft.

We think our dedication to global growth has been a big consideration in recent business activity in new orders for long range aircraft.

On our last call. We said, we expect to close and nine to 18 months from signing.

Speaker 2: On our last call, we said we expect to close in 9 to 18 months from signing.

Speaker 2: We continue to believe that's a good estimate, hopefully by the end of this calendar year.

We continue to believe that's a good estimate hopefully by the end of this calendar year.

Speaker 2: Regarding the virus at three consolation, the virus at three America's launches now expected to be late summer due to some modest slippage in our supply chain.

Regarding viasat three constellation the Viasat three Americas losses now.

<unk> to be late summer due to some modest slippage in our supply chain.

<unk> been working through limited availability of specific critical skilled workers.

Speaker 2: We've been working through limited availability of specific critical skill workers.

Speaker 2: We've made really good progress on alpha testing of our space ground system integration using one of our own orbit satellites.

We've made really good progress on alpha testing of our space ground system integration using one of our own orbit satellites.

Speaker 2: And we're working to take advantage of that to manage one orbit testing.

And we're working to take advantage of that to manage one orbit testing.

Speaker 2: So we can maintain the commencement of initial services by the end of the calendar.

So we can maintain the commencement of initial services by the end of the calendar year.

We don't expect this which is consistent with what we said before so we don't expect this to materially impact our financial outlook. We previously provided.

Speaker 2: We don't expect this, which is consistent with what we said before. So we don't expect this to maturely impact our financial outlook. We've previously provided.

The Viasat three payload module has progressed very well in our <unk> facility by taking advantage of the learnings from Black one Americas, we're now 95% of the completed the payload units.

Speaker 2: The myself three may have payload modules progress very well in our TIP-D facility by taking advantage of the learning from flag 1 America's, we're now at 95% of the complete of the payload units or have been already installed.

Have been already installed.

Speaker 2: We're in the final stages prior to shipping that to Boeing for integration with the bus.

We're in the final stages prior to shipping that to Boeing for integration with the bus.

Speaker 2: Expect learnings on the payload bus integration will benefit Flight 2 schedule at Boeing.

We expect learnings on the payload bus integration will benefit applied to schedule at Boeing.

And we continue to target that launched about six months after after flight.

Speaker 2: We continue to target that launch about six months after Flight 1.

Speaker 2: Turning the outlook briefly, our company White Outlook remains strong. We continue to believe we'll achieve our standalone financial targets, including our average annual adjusted EBITDA growth in the midteens for FY22-23.

Turning to the outlook briefly our company wide outlook remains strong we continue to believe we will achieve our standalone financial targets, including our average annual adjusted EBITDA growth in the mid teens for FY 'twenty two 'twenty three.

Speaker 2: relative to FY21, as we previously stated. We also believe we're on track to more than double the density by FY25 relative to FY20 on a standalone basis.

Relative to FY 'twenty one as we've previously stated we also believe we are on track to more than double adjusted EBITDA by FY 'twenty five relative to FY 'twenty on a standalone basis.

Speaker 2: While of course we're very excited about the MR set acquisition and bias of three, our strong operational and financial performance demonstrates that our teams are working diligently to drive good execution. I think the same can be said for the MR set based on their strong performance.

Well of course, we're very excited about the inmarsat acquisition and by US and three our strong operational and financial performance demonstrates that our teams are working diligently to drive good execution I think the same can be said for the inmarsat based on their strong performance.

So with that I will turn it over for questions.

Speaker 1: As a reminder, to ask a question, please press star 1 on your touch tone telephone. Again, that's star 1 on your touch tone telephone. To ask a question, to withdraw your question, press the pound key. We stand by while we compile the Q&A roster.

As a reminder to ask a question. Please press star one and you touched on telephone again Thats star one on your touch tone telephone to ask a question to withdraw your question press the pound key please standby, while we compile the Q&A roster.

Speaker 4: Our first question comes from the line of Rick Prentice of Raymond James. Your line is open. Hey everybody.

Our first question comes from the line of Ric Prentiss of Raymond James Your line is open.

Hello, everybody.

Hi.

Happy New year, I guess essentially.

Happy new year.

Speaker 5: Couple questions for you guys first obviously by set three a slipping a little bit 3b and about six months still after the first 3a

Two questions for you guys.

First obviously viasat three.

Looking a little bit.

Yes.

You said about six months still answer the first question.

Speaker 5: How should we think about magnitude of costs that you need to put in for ground and other operating expenses before the revenues start generating? And what kind of pacing there might be as far as cost before revenues on the salary at once?

If we think about.

Magnitude of costs that you need to put in for ground and other operating expenses before the revenues start generating.

The pacing there might be as far as cost before revenues and the phone launches.

Alright, Thanks John .

Speaker 6: Here I have the sushon. So, you know, okay, we're starting to incur some of those as we speak, but there, you know, we've been trying to pay those somewhat with the launch. You can think of those, this quarter is maybe $5 million. As we get closer and closer to launch, like I said, those will start to ramp up. So maybe in the annual rate around 35, you know, right before we go into service, is a good idea.

No.

Okay.

And that incur some of those at least.

Here in China.

With the launch.

You can think about.

This quarter is maybe.

Ryan.

As we get closer and closer to launch.

Start to ramp up so maybe.

In the annual rate around 35.

Right before we got into service and again.

$35 million annual.

Speaker 5: 35 million annual basis. Yeah, that kind of ramps up to that.

Yes.

Thank you Matt.

Makes sense.

Speaker 5: Makes sense. And obviously, about a year from now, that you get into service, hopefully we'll sooner, how are you guys dealing about maintaining flat revenue on the US consumer broadband side, given the demand for move-like connectivity, or should we expect some declines in the revenues on consumer broadband as we look into the future?

And obviously, it's about a year from now let's get into service sooner.

Are you guys feeling about maintaining flat revenue on the on the U S consumer broadband side.

Given the demand for connectivity and should we expect some some declines.

Consumer broadband as we look into the future.

Speaker 7: So far what we've seen is kind of the ARPU growth has maintained pretty much the same pace and actually in some cases a little bit better than the sub decline.

Hey, Rick it's Mark Yeah, so far we've.

We are seeing is kind of.

<unk> growth has maintained pretty much the same pace actually in some cases, a little bit better than that.

Sub decline and I think Thats also kind of consistent with what's going on in the industry. So.

Speaker 7: And I think that's also kind of consistent with what's going on in the industry. So we think that's more or less kind of the trend that we'd expect between now and entering service in the U.S.

So we think thats.

More or less kind of a trend that we would expect between now and entering service in the U S.

Speaker 5: Okay, we saw some announcements. It looks like on the competitive front, SpaceX Starlink is starting to pivot to some more business enterprise with $500 plans, $2,500 CPE costs. How are you thinking about the competitive dynamics out there as far as your ability to grow once Biasat-3A is in the air?

Okay.

We saw some announcements it looks like the <unk>.

Stay safe.

Starting to pivot to small business enterprise.

And it all pools $2500.

CPE pulse.

Thinking about the competitive dynamics out there.

As far as your ability to grow.

<unk> is in the air.

Speaker 7: Well, it's a few things. One, it's a very big market. We have seen so far sort of, I'd say, de minimus in material impact in the overall markets due to space. So certainly you can see that they're out there. But one of the points that we've made, and I think this is turning out to be true, is that

Hello.

Few things one its a very big market.

We have seen so far sort of I'd say de minimis and immaterial impact in the overall market due to anticipate excellent certainly you can see that they are out there.

One of the points that we've made.

I think that.

Turning out to be true is that.

Speaker 7: the better the services, the more value you can offer as a function of price, the bigger the market is. And so, what's happening is, we're seeing the market grow, and I think we're still getting a share of that market.

The better the services the more value you can offer as a function of price because the market is and so what's happening is.

You've seen in the market.

We're seeing the market grow and I think we're still getting share of that market.

That's sufficient for our our growth targets.

Speaker 7: that's sufficient for our growth targets. The other point I would say is...

The other point I would say is.

If you look at what we're doing on the enterprise side.

Speaker 7: You know, if you look at what we're doing on the enterprise side, we tend to be a lot more vertically integrated into each specific market, where there's quite a bit of value add besides just providing a broadband pipe. And we think that's really a good fit for us.

Tend to be a lot more vertically integrated into each specific market, where there is quite a bit of value add besides just providing.

A broadband pipe.

<unk>.

And we think that that's really a good fit for us. So the types of plans if they are describing.

Speaker 7: So the types of plants that they're describing, well, you know, they're sort of interesting, but we don't really see them having any impact on our forward-looking outlook.

They are sort of interesting, but we don't really see them, having any impact on our forward looking outlook.

Outlook.

Thanks, everyone stay well.

Right.

Thank you. Our next question comes from Landon Park Morgan Stanley . Please go ahead.

Speaker 1: Thank you our next question comes from Landon Park, Morgan Stanley . Please go ahead.

Thank you Hello, everyone.

Speaker 5: Thank you, hello everyone. Couple of questions. So could you talk about the conversations that you've had with the UK government over the last couple of weeks and maybe some of your takeaways from those and what type of, you know, confessions or agreement you guys are thinking about as part of the deal? Yeah, so.

Questions so could.

Could you talk about.

The conversations that you've had with <unk>.

UK government over the last couple of weeks and maybe some of your takeaways from those.

What types of.

<unk> our agreements you guys are thinking about as part of the deal.

Okay.

Yes so.

When we when we announced the deal.

Speaker 2: We were actually ready to go a little earlier in the assistant lab. They had worked out.

We were actually ready to go a little earlier and they asked us to delay or they.

They had worked out.

Speaker 2: what they call undertakings with the previous private equity group that had taken this thing private.

What they call a undertakings with the previous private equity groups that are taking this thing private.

Speaker 2: And I'd say the discussions we've had are fairly consistent with those types of things. There's not quite frankly

And I would say the discussions we've had are fairly consistent with those types of things.

Quite frankly.

Speaker 2: The plans that we have in the UK, in my view, are quite a bit more favorable to the UK than what's going on. We're more vertically integrated. We'll bring more R&D's. I think the types of people we hired will be more technical people. So I think we just have a really positive story.

The plans that we have in the UK.

My view are quite a bit more favorable to the UK.

Let's go on out.

We're more vertically integrated.

We'll bring more R&D I think the types of people, we hired will be.

More technical people. So I think we just have a really positive story.

Speaker 2: And you've read the things in the newspaper, what they're worried about. And I just don't think we have that situation. Not every deal is the same. And so those have been the discussions, just talking about what our plans are. And I think the discussions have gone really well.

And you've read the things in the newspaper what they're worried about.

I'm just.

I don't think we have that situation not every deal is the same and so those have been the discussions is talking about what our plans are and I think the discussions have gone really well.

There were there.

Speaker 8: There were some articles that came out that by the same three people that previously written about them a very negative way. And the new articles are much more balanced. So I think that we've got a good story. We've been in the UK for 10 years, over 10 years. We have data at rest, security products over there that we provide today. That actually provides most of the data at rest security across their MOD. We've previously...

There were some articles that came out by the same three people that previously written about it in a very negative way.

Articles are much more balanced so.

I think that we've got a good story, we've been in the U K for 10 years over 10 years, we have data at rest.

Security products over there that we provide today that actually provides most of the data at rest security across there.

<unk>.

We previously announced the satellite.

Speaker 2: Operation Center investment in the UK prior to this deal even getting signed and so there's had a very good story and

Operation Center investment in the UK prior to this deal even getting signed and so we just have a very good story.

And they seem to be pretty receptive.

Speaker 8: And is the deal going to be subject to the new national security oversight law that recently went into place? Yes, yes. So we expect a full review across the board on all that.

And is the deal going to be subject to the new National security oversight.

Recently went into place.

Yes, so we expect a full review across the board.

All that's what we expected going in.

Speaker 9: Moving on to the broadband business, there's been some needs that Facebook is going to be winding down some of their, I think most of their international Wi-Fi express business. They partnered with you in Mexico. Could you maybe just talk about any impacts that might have on you and maybe just a broader update on that international Wi-Fi program you guys have been running and what type of returns you've been able to see out of that?

Great.

Moving on to.

The broadband business.

<unk> been some needs that Facebook is going to be sort of winding down some of their.

I think most of our international Wi Fi Express business.

They partnered with you in Mexico could you maybe just talk about any impacts that might have on you and maybe just a broader update on that.

National Lifeline program, you guys have been running and what type of returns you've been.

We want to see out of that business I.

Speaker 7: I'm sorry I missed the very first sentence that was not the company that you mentioned? Facebook. Oh Facebook. Oh Facebook. Okay, um, for

Im sorry, I missed the very first sense of that.

Those who are not the company that you mentioned Facebook.

Oh, okay.

Speaker 7: No, okay. Yeah, so our, no, on the international front in terms of fixed services, we have two sets of initiatives. One is direct residential broadband that we're doing in several countries.

Okay, Yeah, so our.

On the international front in terms of fixed services, we have two sets of initiatives one is.

Direct residential broadband that we're doing in several countries.

Speaker 7: since acquired in Europe , the other part of the joint venture we have with Udelsat. And the other part, which is the part, I think you're referring to, who's called Community Internation, or Shared Internet Service.

<unk> acquired in Europe .

The other part of the joint venture we have.

Other part which is the part.

Youre, referring to are the what we call community Internet of shared Internet services, and we're doing that in a few different ways.

Speaker 7: And we're doing that in a few different ways. The main...

The main.

Speaker 7: The main common element is to bring bandwidth in by satellite. Some central point and then distribute that bandwidth to end users. And we're doing that actually in multiple different ways. We're doing it by land, we're doing it by wireless, we're doing it by, you know, by unlicensed Wi-Fi. And each of those, we think that each of those...

Main common element is to bring bandwidth in by satellite some central point, and then distribute that bandwidth.

To end users and we're doing that actually.

In multiple different ways, we're doing it.

We're doing it by wireless we're doing it.

Yes.

Since the Wi Fi.

Each of those but we think that each of those will have places under different circumstances.

Speaker 7: will have places under different circumstances.

Speaker 7: But right now, all three modes of delivery are, I think, are growing in our track and two, under different circumstances. On the Facebook things specifically, we're working with those guys right now and transitioning that so we don't see any impact. Yeah. The other part of it is our, you know, we're doing what Facebook was more about.

Right now all three modes of delivery are.

I think are growing and are attracted to us under different circumstances on the Facebook thing specifically, we're currently we're working with those guys right now on transitioning that so we don't see any impact.

The other part of it.

Our.

We're doing with Facebook was more about.

Speaker 7: trying to understand where to deliver service and how effective that service was. And I think that the activity has been benefiting both companies.

Trying to understand where to deliver service and how effective that service.

And I think that that activity is benefiting both companies.

Speaker 9: Great. And the last one for me, just on the commercial network side, can you talk about some of the managed services that you guys expect to ramp up in that business over the next couple of years? And maybe what that, the margin profile looks like for some of that and the prospects to get that segment closer to break even.

Great.

Last one for me just on the commercial network side can you talk about some of the managed services that you guys expect.

The ramp up in that business over the next couple of years and maybe what that.

Margin profile looks like for some of that in.

The prospects to get that segment closer to breakeven.

Okay. So on the <unk>.

Speaker 7: Okay, so on the communications networks side, I mean, I'm back, I'm a little bit, so what is from a managed services perspective, the main thing that we've been doing there is in what we call real time earth, is that, is that what you, so that is, that is a shared network services business primarily for earth observation down links, data down.

Relocations networks alright.

<unk>.

We've got a little bit of a managed services perspective. The main thing that we've been doing there is in what we call real time Earth does that does that so that is that is a shared network services business primarily for Earth observation.

Thanks, David.

Speaker 7: Is that what you're referring to? Yes, that is what I'm referring to. Yeah, so it's still a relatively small business, but it's growing pretty steadily. And right now, what we've been doing is working primarily with third-party partners.

Is that what you're referring to yes that is yes.

So that's still a relatively small business.

But it's growing pretty steadily.

Right now what we've been doing is working primarily with third party partners Christmas We did one.

Speaker 7: We did one with indigenous people in Australia. We just recently did one in Ghana, and we have more opportunities for that. And then the other, the other kind of really, two other really interesting elements, so that one of them.

With indigenous people in Australia, we just recently did one in China and we.

We have more opportunities for that and then the other the other kind of really.

Two other really interesting elements of it what are the.

<unk>.

Speaker 7: main businesses in our communication network, it's accounted for a lot of growth for us, is building kind of the largest, most capable full motion ground antenna systems. The reason that's valuable is a very large antenna is just a lot more efficient at getting high speed data down to highest speed for the highest resolution sensor data. And then the other one is

<unk> business is in.

And our communication networks.

Provide a growth for us is building kind of the largest most capable.

Hi.

Full motion ground antenna systems and the reason that's valuable.

Very large antenna it took a lot more efficient.

High speed data down to high speed for the highest resolution sensor data and then the other one is.

Speaker 7: that makes the most effective for these new generation of very, very small satellites. So you don't need a lot of power or sophistication.

That makes them most effective for these new generation of very very small satellites.

Power's sophistication on the spacecraft focus must figure value on the sensing part.

Speaker 7: spacecraft, you can focus most of your value on the sensing part. So those two things are really valuable. And the other thing that we're working to integrate with that is...

Those two things are really valuable and the other thing that we're working to integrate with us.

Speaker 7: think of it as Leo-Geo relay, which is a very unique mission that the BISAC 3 constellation can do because of the global coverage in the high capacity. So right now they're small businesses, they're good margin businesses, and we think that is the variable costs are low so if they scale those margins will improve.

Think of it as Leo Geo really.

Which is a very unique mission.

Net debt at three compensation can do because of the global coverage.

The high capacity.

So right now they are small businesses.

They are good margin businesses.

We think that is the variable cost level. So.

So as they scale those margins will improve.

Speaker 7: On the overall issue of

On the overall issue.

<unk>.

Speaker 7: of the EBITDAQ, you know, turning that business EBITDAQ positive. You know, the main, kind of the main...

Of EBITDA.

Turning that business EBITDA positive the main.

The main thing that has been a drag on EBITDA.

Speaker 7: thing that has been a drag on EBITDA is...

Speaker 7: What we think is actually a benefit, which is...

We think it's actually.

Benefit which is.

Speaker 7: We're doing our own payload designs for the VISA satellite series, and we're also now extending some of those payload capabilities into third-party satellites, like one area.

We're doing our own payload.

<unk> for Viasat satellite.

And we're also now extending some of those payload capabilities.

Third party satellites what area that's been.

Good for us has been.

Crossings for satellites and we have a number of government contracts for that would add commercial contracts for our cross linking we think.

That's a really attractive.

Speaker 7: So the fact that we do that for both ourselves and others, as opposed to just buying satellites, like most other satellite operators do, means that we expense the R&D, as opposed to capitalizing the R&D, that goes into these next generation satellites.

So the fact, the fact that we do that for both ourselves and <unk>.

Others as opposed to just buy.

I think most others Halloween operators two themes that we expense the.

R&D as opposed to capitalizing the R&D that goes into these next generation satellite design and Thats.

Speaker 7: And that is the single biggest, I mean, it's probably the only factor in the negative even time.

That is the single ticket, it's really the only factor in the negative EBITDA in that business yes.

Most of our R&D, we centralized and that segment right.

Right.

Outside of that.

A nicely profitable.

No I understand I was just trying to understand it.

Speaker 9: No, I understand. I was just trying to understand it on a reported basis if there was a path over the next three years or so to get it closer to break.

Ported basis, if there was a path over the next three years or so to get it closer to breakeven.

Yes.

Speaker 6: Yeah, I think we'll see improvements in that. We're going to continue to have good momentum in IFC and delivery of terminals there, but we're going to continue to invest as well for next gen and things that we think are very valuable in commercial applications as well as government.

I think.

I think we'll see in <unk>.

Now we're going to continue to have good momentum in IFC and delivery and terminal there, but we're going to continue to invest as well for nexgen and things that we think are very valuable and commercial applications as well as government.

Speaker 9: And R&D at 5% of revenues is still a good list. Yeah, this quarter we are about 5.2% so, you know, 5 and a half somewhere between there is a good estimate. Great, thanks everyone for all the calls.

And R&D at 5% of revenues is probably good.

Darren.

This quarter, we were about five 2%.

I'm going to have somewhere between there is a good estimate.

Great. Thanks, Thanks, everyone for all the color.

Hey, Ken.

Yes.

Speaker 1: Thank you. Our next question comes from Matthew Robert Art of Barclays. Your line is old.

Thank you. Our next question comes from Matthew Robert and Art.

Barclays. Your line is open.

Good afternoon, and thank you very much.

Speaker 10: Good afternoon and thank you very much. I have three questions, please. The first one relates to the Inmarsat acquisition you were mentioning in your scripted remarks.

Questions. Please the first one.

<unk> two.

Inmarsat acquisition, you were mentioning in your scripted remarks.

Speaker 10: that you've engaged with clients and clients are asking about what this could mean and what kind of services maybe you can provide. Could you give us a little bit more color in terms of what is...

But you've engaged with declines from clients.

Asking about what this could mean and what kind of services, maybe you can provide.

Could you give just a little bit more color in terms of what it is.

Speaker 10: What is their interest focused on in the combined, in Marsat, via Marsat proposition?

What is their interest focused on.

In March the proposition.

Sure.

Speaker 7: Sure. Yeah, so the main thing that we've been focused on.

Yeah. So the main things that we've been focused on.

And these are I would say these are common.

Speaker 7: I'd say these are common among a lot of these mobility businesses. Number one is this issue about bandwidth density, which is how do you avoid congestion in your network so that your mobility customers…

A lot of these mobility businesses.

One is this issue about bandwidth density, which is how do you.

How do you avoid congestion in your network.

So that year mobility customers get.

Speaker 7: get a reliable service even when they go into busy airports or hubs. You know what I think we showed? We thought it was one of the most important.

A reliable service, even when they go into busy airports or hubs.

Youre one of the things we showed which we thought was one of the most important sides and in our presentation about the Inmarsat acquisition.

Speaker 7: and our presentation of the Houghton and Mars acquisition was just the density of demand for commercial air and commercial air is rather easy to show because it's changing.

Just the.

Density of demand for commercial air and commercially is relatively easy to show because its scheduled airlines, but similar situations occur in things like general aviation Maritime and other.

Speaker 7: But similar situations occur in a general aviation maritime and other even in land mobile.

And land mobile applications, so that one of the things that's really been an important factor.

Speaker 7: So that, you know, one of the things that's really been an important factor for BIAFAT's growth has been our ability to deal with that, especially in the U.S., which is the largest domestic market for air travel and the large airlines that we serve.

<unk> growth has been our ability to deal with that.

Especially in the U S, which is the largest domestic market for air travel.

With large airlines that we serve in the March.

Speaker 7: airport cities, I think we've been able to demonstrate our ability to to keep ahead of that issue. So that's one. The other one that I think people are really interested in.

Airports cities I think we've been able to demonstrate our ability to keep.

Keep ahead of that of that issue. So thats one you have another one.

I think people are really interested in.

Speaker 7: And especially in maritime and in some of the intercontinental aviation, is the hybrid services between K-band and L-band and being able to provide that continuity of service even under the worst weather conditions, which is where, when you think of a airline takes your maritime safety, where a lot of the most distress or situations are associated.

And especially in.

In maritime and.

And indeed, some of the Intercontinental aviation.

Hybrid services between K band and help and being able to.

Provide that continuity of service, even under the worst weather conditions, which is where when you pick up I would say to you maritime safety, where a lot of the.

The most stress.

Situations are associated with bad weather, so thats being able to bundle those things into attractive system.

Speaker 7: So that's being able to bundle those things into a tractor. This is a really good thing. And then the other, which has been...

Really good thing.

Other.

Which has been kind of the main thing that.

Speaker 7: kind of the main thing that airlines have been looking to buy at that point, and we believe in March that really, accelerates is redundant global coverage.

Airlines have been looking to biotech, Florida, we believe inmarsat really accelerates as redone.

Our redundant global coverage and so we will get there faster.

Speaker 7: And so we'll get there faster and we'll have multiple satellites that serve those, those modern-mile international routes. I'd say those are kind of the main topics that customers have come to us to discuss for.

We will have multiple satellites et cetera.

Those long haul international routes I'd say those are the kind of the maybe some of the main topics that cut.

<unk> have come to us to discuss first.

And then just if I can follow up is that also a discussion you are having with governments.

Speaker 10: And that is I can follow up. Is that also a discussion you're having with governments? That may require more capacity.

May require more.

Our capacity.

Well, yes, if you look at I mean, one of the things that <unk>.

Speaker 7: Well, yes, if you get, I mean, one of the things that's also been a valuable business for us as well as for Denmark's Act is in dealing with government applications. And you know, the big thing with government applications is

Also been a valuable business for us as well as for Inmarsat is in dealing with government applications and the big thing with government applications is.

Speaker 7: They don't really know where their hospice will be. They can anticipate, but they can pop up anywhere in the world. And when they do, they also have this issue about very large amounts of demand concentrated in relatively small geographic areas. So being able to deal with those issues and being able to deal with some of the unique things that we bring, for instance, with Viasat 3 or

They don't really know where their hospice will be they can anticipate.

Dissipate.

They can pop up anywhere in the world and when they do they have.

We have this issue about very large amounts of demand concentrated and relatively small geographic areas, so being able to deal with those issues and being able to deal with some of the unique things that we bring for instance, with Viasat three or.

Speaker 7: potential to deliver upling speeds from platforms that are exceptionally much better than even a lot of these new NGSO systems.

The potential to deliver ups uplink speeds from platforms that are exceptionally good much better than <unk>.

Out of these new Mgs's systems.

Speaker 7: So those are just the attractions of the combined resources and capabilities of the company.

So those are there.

They are just the attractions of the combined resources and capabilities for the companies.

Thank you if I can.

Speaker 10: Thank you. If I continue on the government and specifically service revenues, which kind of links a bit to what we just discussed, I realize service revenues and bandwidth demand for you today in government services is a small part of your revenues, but I was wondering if you're seeing any increase in demand recently. Obviously, we're in a slightly more tense geopolitical situation and whether in the past you've seen big, big increases in demand linked to any deterioration on that front.

On the government.

Specifically service revenues, which kind of links would be to what we just discussed.

Our realized service revenues.

Demand.

For you today and government services, it's a small part of your revenues, but I was wondering if you're seeing any increase in demand recently obviously.

Especially more tense geopolitical situations.

In the past you've seen.

Increases in demand linked.

Deterioration on that point.

Yes.

Speaker 7: Yet so, I mean, I think all satellite operators tend to see increase demand for government bandwidth when there are, you know, when there are conflicts in the world. So, you know, we're not, well, today, if you have bandwidth in the places where it's needed and then you're in a position to be able to help support that. You know, I think more recently, together, there's threats of...

I mean, I think all satellite operators tend to see increased demand for government bandwidth when there are.

Our confidence in the world.

Okay.

So.

We're not.

If you have bandwidth in the places where it's needed and then you're in a position to be able to help support that.

More recently.

There is a threat.

Of conflict.

Speaker 7: conflict, it doesn't come out, turn out to be that way. So right now we're just really seeing more, I'd say, inquiries about, you know, more about planning and contingency planning. What can be done? I think we're...

It doesn't come out turned out to be that way. So right now, we're just really seeing more.

I would say inquiries about.

More around planning and contingency planning.

What can be done I think we are.

Speaker 7: I think we're in a position to be able to deliver more support. And in general though, some places demands gone down, and it'll probably appear in new places if it does.

I think.

As we've grown I think we're in a position to be.

To be able to deliver more support in general though.

Some places demand has gone down.

Probably appear in new places if it does.

Speaker 8: And overall satellites, not satellites, but the services portion of our government revenue has been growing over the last few years.

Overall satellites.

Satellite services portion of our government revenue has been growing over the last few years.

Yes.

Speaker 11: I think we've talked about that thing in the 20, 25% range of total services being that's a total government systems rather than

I think we've talked about that being in the 20% to 25% range of total services be per loan.

Government systems revenue.

Great. Thanks, and if I finish with one question on the U S broadband market.

Speaker 10: Great thanks. And if I finish with one question on the US broadband market, so you do mention in your press release that the number of subscribers has come down a bit, and that's kind of voluntary. Some extent it is you want to use market capacity and IFC, but I had a broader question concerning the market and the competition there, because some of the telecom players are pushing a lot more. It seems FWA solutions as a way to increase their revenues and I was wondering if you saw that as potentially a new source of competition, a reduction of your potential addressable market in the US. Thank you.

So you mentioned in your.

Press release.

The number of subscribers has come down a bit.

That's kind of voluntary some extent business you want to use more capacity in IFC, but I had a broader question concerning the market and the competition Derek because some of the telecom players.

We're seeing a lot more it seems that's double UAS solutions.

As a way to increase their revenues and I was wondering if you saw that.

And a new source of.

Competition, a reduction of your potential addressable market in the U S. Thank you.

Okay.

Speaker 7: Okay, no, we don't... It turns out fixed wireless has not really been a material factor in...

We don't.

It turns out fixed wireless has not really been a material factor in.

Speaker 7: You know, in changing the market for satellite profit, and in the US, there are other factors. I mean, so cable, edge-outs, new fiber builds, those are probably more of a factor, and then the other one.

Sure.

Changing the market for satellite broadband in the U S. There are other factors.

So.

Cable edge outs fiber new fiber builds those are probably more of a factor and then the other one.

Speaker 7: I think kind of as in flows depending on the economy demand and a couple other factors are people just using their mobile service plan as their own raw band.

I think kind of ebbs and flows depending on.

The economy demand in a couple of other factors.

People just using their mobile service plan is their home broadband.

Speaker 7: service and that becomes a little more terrible for people when they have, when they're going to the office and they have broadband resources that work or somewhere other than home. But those are the, those are the,

Service and that becomes a little more tangible for people when they have when they are going to the office may have.

Broadband resources at work or somewhere other than home.

But those are those are the main factors.

Speaker 7: and that's how what we see.

And.

What we see probably shaping the market over the next few years, we've done a pretty.

Speaker 7: probably shaping the market over the next few years. We've done a pretty detailed microanalysis of that on a region-based basis. And the only way we think it will eat into the market, but it's not gonna go.

Pretty detailed.

Micro analysis of that on a region by region basis and.

We think it will eat into the market, but it's not going to eliminate the market.

Speaker 7: And what we've expected over the next...

What we've expected over the next.

Speaker 7: Five years, we talked about this a few times. It's kind of modest growth on a subscriber basis in the US between now and May 2025.

Five years, we've talked about this a few times, it's kind of modest growth on a subscriber basis in the U S between now and 2025.

Great. Thank you very much.

Thank you.

Speaker 1: Thank you. Our next question comes from Chris Quilty of Quilty Analytics. Your line is open.

Thank you. Our next question comes from Chris Quilty of Quilty analytics. Your line is open.

Speaker 3: Thanks guys. I had a question about the forgotten...

Thanks, guys.

Question about the forgotten acquisition, maybe with written that we haven't talked about it in a lot of detail, but can you give us maybe a status update now that you've had.

Speaker 3: haven't talked about it in a lot of detail, but can you give us maybe a status update now that you've had it?

Add in a couple of more quarters under your belt.

Speaker 3: your belt of what you're seeing in that business in terms

What youre seeing in that business in terms of both business operations integration cost reductions.

Speaker 3: both business operations, integration, cost reductions.

I guess, putting inmarsat side.

Speaker 3: side for the moment because there's a lot of changes that could come but like what plans

Aside from moment Theres, a lot of changes that could come but Mike what plans do you have now.

For that business in terms of rolling it and migrating it with the Viasat three services.

Yes, so the integration has gone very well between the two groups there was some initial.

Speaker 8: Yeah, so the integration has gone very well between the two groups. There was some initial.

Speaker 8: There were some initial, you know, cost reductions that took place early on. We've been working on the integration of the business areas and become our global operations have all been integrated under one group.

There was some initial cost reductions that took place early on.

We've been working on integration the business areas have become our global operations have all been integrated under one under one.

Group.

Speaker 8: So that's gone well. Uh, we have started our initial first.

So that's gone well.

Have started our initial first.

Speaker 8: K.A. Band deployment and some of the risks where they were previously leasing capacity. But that's just the very beginning, just started with some trials. That's obviously one of the big benefits here to both drive performance and help in the cost profile over time. That will improve as we began to launch these 5-SET-3 satellites. That's where the real growth opportunity there is. And the end telepart of that business has been a very positive surprise.

K band deployment and some of the rigs where they were previously leasing capacity.

But thats just just at the very beginning just started with some trials.

That's.

Obviously, one of the big benefits here to drive performance and helping the cost profile over time that will improve as we began to launch. These viasat three satellites, that's where the real growth opportunity there.

Im telling part of that business has been a very positive surprises really strong team has a good platform. They continue to win new business and Theres other applications across bias that where that group can help so.

Speaker 3: really strong team as a good platform. They continue to win new business. And there's other applications across by a set where that group can help. So we're, you know, I'd say things are about as expected so far. That's right. And question on that KA band rolled out on the rigs. There was probably some reason in the past why I rigged it.

We are.

I'd say things are about as expected so far.

Gotcha and question on the E band rollout on the rigs.

There was probably some reason in the past by rig that was hesitant to use inmarsat is the backup but have you determined what the backup path will be there for those systems.

Speaker 8: So yet one of the things we're not doing is just floating on our execution strategy to the competition. So I get one of the things we're doing in these trials is demonstrating what's capable.

So one of the things we're not doing is disclosing our execution strategy to the competition. So.

One of the things we're doing in these trials demonstrating what capable and so our view isn't to give a whole bunch of people a bunch more bandwidth and charging them a lot less.

Speaker 8: And so our view is that if you give a whole bunch of people a whole bunch more bandwidth and charge them a lot less, is you create things that they would have done had

As you create things that they would have done.

Have they been able to do and work.

Speaker 8: And so we're able to do that in areas where we have footprints right now, which is limited. That those satellites roll out. And then with MRSAD, we won't be limited to that. And so we'll be able to do that across the board. So the real opportunity here is groaning the type of services we deliver to all these plants.

So we're able to do that in areas, where we have footprint right now which is limited.

Satellites rollout.

And then with Inmarsat, we won't be limited to that and so we'll be able to do that across the board. So the real opportunity here is growing the type of services, we deliver to all of these platforms.

Understand different question Mark you mentioned cross links I assume you were referring to RF and optical cross links.

Speaker 3: A different question, Mark. You mentioned cross-links. I assume you were referring to RF and not optical cross-links?

Yes, correct.

Okay can you name any of the programs, where youre targeting business, because I'm not aware of any off hand at least on classified.

Speaker 3: can can you name any of the programs where you know you're you're targeting business because i'm not aware of any offhand

Speaker 7: I can blow the glass commercial one that we had is that ready. So we did all of the onboard, you remember the radiums are cross-winged systems. So we did all of the onboard cross-banks for radium.

Okay.

The largest commercial one that we've had.

So we did.

The onboard remember iridium is approximately.

So we did all of the onboard cross links for Iridium.

Speaker 7: We have mostly otherwise, so far, have been mostly government programs, including, I don't really want to name them, but some name brand new multi-satellite government programs will be, we've been funded, and I think we'll be in the production version of those satellites as well.

We have mostly otherwise so far have been mostly government programs, including.

I don't really want to enable some name brand new.

Multi satellite government programs will be we've been funded and I think we'll be in the production version of those satellites as well.

Speaker 7: And the crossings that we've been doing are generally K band or much higher frequencies that have a lot more capacity. I think

The cross selling that we've been doing are generally K band or much higher frequency that have a lot more capacity I think one of the.

Speaker 7: one of the most interesting ones where we are getting traction as well in both.

One of the most interesting ones, where we are getting traction as well.

Speaker 7: government and commercial programs is in the Lea of the GeoCross.

Government and commercial programs is in the low <unk>.

Oh cross links.

Speaker 7: And that puts you the pretty unique capability with the big advantage there. If you have a very high path to the global system like 5.3, you can just insert.

Which is a pretty unique capability with the big the big advantage. There. If you have a very high capacity global system like biotech III you can just in Sir.

Speaker 7: real crossings into the global coverage capability of a virus.

Leo across things into.

No.

Global coverage capability of our Viasat three so thats, a really really interesting opportunity and we're getting good traction on that on both government and commercial sides.

Speaker 7: So that's a really, really interesting opportunity. And we're getting traction on that on those government commercial sites.

Gotcha.

Speaker 3: And the sort of high profile government name is that perhaps a new effort with a generic sounding dumb name in very high volume where the primary focus is on optical.

Sort of high profile government name is that.

Perhaps.

A new effort with generic sounding dumb name in very high volume are the primary focus is on optical.

Speaker 7: No, no. And you know, the, I don't know, that kind of stokes speculation. So there's certainly a place for for obstacle crossings. So the big advantage of of RF crossings, and you know, let's, our <expletive> kind of interesting in the gigabit up to the gigabit range, and you may see obstacle crossings and the, and or more gigabit range. But if a gigabit is a worthwhile,

No no.

No.

Still speculation.

There is certainly a place for optical processing the big advantage of.

RF Crosswinds.

So, let's say RF kind of interesting in the gigabit up to gigabit range and he makes the optical cross things.

10, or more gigabit range, but if a gigabits.

Is it worthwhile.

Speaker 7: bandwidth, the biggest thing that's still not to go is much power, much less power, doesn't require the platform's ability. You can network it until you can hop the links around. How easy are to make and break connections. Go pack it in.

Bandwidth the big advantage of optical.

Much tomorrow and much less power it doesn't require the platform stability you can network. It. So you can have the links around hot easier to make and break connections built packet networks.

Speaker 3: So there's, you know, I know there's a lot of focus on laser crossings, but the optimal one is it's a really interesting market and one that I think we are. I mean, the RF, I'm sorry again, the RF is really interesting. And it's one where I think we have a really good competitive position. Gotcha. And because I didn't have Sean and he

I know, there's a lot of focus on laser.

<unk> optical one is it's a really interesting market and one that I think we are.

Alright, I'm, sorry, again, RF is really interesting and it's one where I think we have a really good competitive position.

Okay, because I didn't Sean any questions.

Follow up with one financial question, which is.

Speaker 3: When you were mentioning with Rick earlier the ground equipment cost.

When you were mentioning.

Mentioning with Rick earlier, the ground equipment costs.

Speaker 3: Are those capitalized costs now or are those costs cost?

Are those capitalized costs now or those costs as cost that you are.

Okay.

Speaker 6: And Chris, what I was trying to capture for you guys is how the op-ax will ramp ahead of the service launch of something tap back.

Okay.

Capture for you guys, how that Opex will ramp ahead of that search box.

Okay.

Speaker 3: Okay, and you're not, again, not able to capitalize any of the ground equipment R&D and build out until the...

Again, not able to capitalize any of the ground equipment R&D and build out until the satellite is operational.

No. It is part of the fall.

Speaker 8: No, it's part of the full project profile that we've given you guys, which includes the satellite, the launch insurance, all the initial ground. That stuff is capitalized. It's just not operating when you light it up, essentially, it gets exposed. Think of power and fiber optics and rent, and all of those types.

That project profile that we've given you guys that concludes the satellite launch insurance all the initial guidance.

Top line is just the operating when you lined it up essentially.

They can power and fiber optics.

Rent and.

All of those types of expenses.

Speaker 3: And I know you haven't given out a specific number of......use the term gateway...

Great.

I know you havent given out a specific number.

And do you use the term gateway.

Uh huh.

What's the name used here.

Speaker 7: The name used for your back those? They're feing caateways. Yes, okay.

Satellite access nodes.

Yes.

Vito and gateways, yes, okay.

What percent of those are installed now and do you light them up and keep them, let up until Viasat. Three is launched or do you kind of line them up and turn them off just to test them.

Speaker 3: you light them up and keep them lit up until Viasat 3 is lost, or do you kind of light them up and turn them off just to test them.

So we probably have.

Close to half of the initial set of facts.

Speaker 7: Close to half of the initial set of fans.

Speaker 7: In the US coming up in the next few months, yeah. Yeah, somewhere in that range is what will happen. No, wait, one of the things Rick mentioned is that things are going well on space ground testing. We're able to test a lot of the integration.

In the U S coming up.

Yes, yes, yes.

We're in that range is what will happen.

Well one of the things Rick mentioned is that.

Things are going well on space ground testing, we're able to test a lot of the integration using the new ground network.

Speaker 7: using the new ground network and one of our existing satellites we can test a lot of functionality. So what we are doing is we're hiding up some of them along the way to increase the scope of that testing. But the bulk of them will be activated very close to the launcher post one.

One of our existing satellites, we can test a lot of functionality. So we are doing is we are dividing up some of them are underway to increase the scope of that testing, but the bulk of them will be activated.

Close to the launch or post launch.

Got you and.

Speaker 3: final question for Sean that I think the last number you gave was 2.3 billion for the ViASA 3 program just a clarification does that include capitalized interest or not?

Final question for Sean I think the last number you gave was $2 3 billion for the Viasat three program just a clarification does that include capitalized interest or not.

That is.

Without the capitalized interest.

About that range.

Okay.

Perfect. Thank you.

Thanks, Chris.

Thank you. Our next question comes from Louie Dipalma of William Blair. Your line is open.

Speaker 1: Thank you. Our next question comes from Louis Dupalma of William Blair. Your line is open.

Speaker 12: Good afternoon, Rick, Mark, and Sean.

Good afternoon, Rick Mark and Sean.

Afternoon.

Speaker 13: I was wondering, um, does...

I was wondering.

Yes.

The UK government.

Speaker 12: The UK government has any interest in investing in the Viasat-Inmarsat combination in the same way that they invested $500 million into OneWeb?

Interest in investing on the bias.

That combination on the same way that they invested $500 million.

One lab.

Speaker 2: But we haven't had that discussion. I think one way was having those discussions, I'd say that's a big difference. They were looking for investors.

We haven't had that discussion I think one way of having those discussions I would say that the big differences they were looking for investors.

Speaker 8: I don't think the UK government is probably interested in investing in a public company. Okay, is that...

I don't think that UK government is probably interested in investing in a public company.

Okay.

<unk> comps.

Switching.

Speaker 12: switching to Viasat 3. I was wondering what is your degree of confidence?

The Viasat three I was wondering what.

Is your degree of confidence.

Speaker 12: that you will have via that three services commencing.

You will have <unk>.

Is that lease.

<unk> services.

Commencing.

Speaker 12: for either consumer broadband or aviation.

Or either consumer broadband our aviation this year.

Speaker 7: I would say pretty good. I mean, we have a plan that does that. But there's uncertainties along the way. I wish we could be certain, but you can't be certain.

I would say pretty good.

Have a plan that does that.

There is uncertainties along the way.

We could be I wish we could be certain.

Can't be certain.

Speaker 7: I think we have a plan. But if you look at sort of the main thing that caused the rush.

I think we have I think we have a plan, but if you look at sort of the main thing that.

The launch schedule it was.

Speaker 11: You know, the risk is the lack of availability and specific people who have been able to forecast that three months ago, things looked like all COVID stuff was going away and life was going back to normal.

The risks to the back of availability of specific people, who have been able to forecast that.

Three months ago things looked like.

<unk> is going away and that was coming back to normal.

Speaker 7: So I wish I could say we're certain, but we have a plan. Generally, we've been pretty good at executing plans when the assumptions behind them are all true.

I wish I could say there are certain but we have a plan.

<unk> been pretty good at executing plans when the assumptions behind them.

True.

Speaker 12: Okay, thanks Mark. And for the customer premise equipment and the terminals associated with the Viasat 3 system,

Okay. Thanks, Mike.

Yes.

First the customer premise equipment, the terminal associated with Viasat three system.

Speaker 12: How will the economics be different for new customers?

Hum.

Economics be different or new customers.

Speaker 12: that want to use the Viasat 3 system versus existing customers that are currently on Viasat 1 or Viasat 2 that are looking to upgrade. And the reason I'm asking is a lot has been made about how...

Want to use.

We saw some vessels.

And customers that are currently on Viasat, one and Viasat two.

That are looking to upgrade on the.

Reason I'm asking a lot has been made about how.

Speaker 12: SpaceX with Starlink takes a pretty hefty loss on their terminals, and I'm wondering, like, how does that loss, like, compare to the economics for your geostationary-type terminals?

<unk> paid a pretty hefty loss on more.

Terminal and I'm wondering how does that compare.

The economics for your geostationary type of.

Terminal.

So.

So one is the Viasat three overall economics, I think will be in line with what we've experienced since we did viasat one.

Speaker 7: So one is the ViASAT 3 overall economics. I think we'll be in line with what we've experienced since we did ViASAT 1, which is, think of it as, you know, customer lifetime value compared to customer acquisition cost. You know, the lifetime, it tends to be.

Think of it is.

Customer active customer lifetime value compared to customer acquisition cost.

Lifetime tends to be.

Three X.

Speaker 7: Some words at that range, right, about take a lifetime value. And that's based on, you know, many, many years and good understanding of custom acquisition costs, turns, statistics, the ongoing.

Somewhere in that range right about <unk>.

<unk> lifetime value and Thats based on.

Many many years and good understanding of customer acquisition cost churn statistics, the ongoing customer support and I think.

Speaker 11: And I think we have some initiatives that actually reduce costs and can improve that. We'll see similar things with BISAT3, kind of what we expect.

We have some initiatives that actually reduce cost and can prove that we will see similar things with viasat three is kind of what we expect.

The.

So.

Speaker 7: So the thing I'll say to them maybe doesn't get as much attention as it probably should from investors to think about is, really there's...

The thing the thing that I would say that maybe doesn't get as much attention as it probably should from investors to think about is really theirs.

Speaker 7: you that the kind of the biggest issue in running these businesses to deliver an attractive service and to do it properly is the amortize airtime cost.

Yes.

The biggest issue in running these businesses.

To deliver an attractive service and to do it profitably as the amortized.

Costs and so.

Speaker 7: And so, you know, what, if you think about it, this is kind of what we said in the past, there's kind of a rule of thumb of think of bandwidth in space.

If you think about it this is Ken.

What we've said in the past is there is kind of a rule of thumb.

Bandwidth and space inventory.

Speaker 7: And you're seeing that right now, right? Whether it doesn't matter if it's GL or Leo, if you don't have enough bandwidth and you add more customers, or that you're saying customers use more bandwidth, speeds can drop. And that's exactly what you're seeing. For instance, in the Leo world, this speeds are dropping. You don't add more bandwidth, and the customers you already have, use more bandwidth even if you don't.

And you're seeing that right now.

It doesn't matter, if it's GL or Leo if you don't have enough bandwidth.

And.

And you add more customers or that you are seeing customers use more bandwidth speeds can drop and thats exactly what youre seeing for instance in the real world. This speeds are dropping.

More and more bandwidth and the customers you already have just more bandwidth, even if you don't add any new ones.

Speaker 7: So what we think about is, when we bring out these systems that have big improvements in the airtime economy...

No.

So what we think about is when we bring all of these systems that have big improvements in the airtime economics.

Speaker 7: Well, we tend to value the bandwidth on all of our systems at the lower cost too.

We tend to value the bandwidth on all of our systems lower cost inventory.

Alright.

Customer.

Speaker 7: market, right? That's kind of the way that you tend to think about. So we can offer, we'll be able to offer a lot of the same services that we do in Vice-Hat 3 on the older satellite.

Market, Alright, thats kind of the way that you tend to think about bandwidth. So we can offer we will be able to offer.

A lot of the same services that we do on Viasat three on the older satellites.

Speaker 7: They're capable of doing it. You don't have to necessarily switch satellite or get a new seat.

They are capable of doing it you don't have to necessarily switch kind of aggregate new CPE to be able to get the new services.

Speaker 7: to be able to get the new services. That's kind of what the payoff of that. And that helps us to preserve.

That's kind of the pet.

The pay off of that and that helps us to preserve this kind of ratio.

Speaker 14: And it's ratio of lifetime value to customer position cost. That answer your question? Yes, great. Thanks. Thanks.

Alright time value to customer acquisition cost.

Does that answer your question.

Yes, great. Thanks, Thanks, Mike Thanks, Mike.

Sure Okay.

Thanks Luke.

Speaker 1: I think we got it. Thank you. Our next question comes from Ryan Coons of Needham & Company. Your line is open.

I think we got thank you. Our next question comes from Ryan Koontz.

<unk> of Needham <unk> Company. Your line is open.

Speaker 15: Next question. On the Delta-IFC business, sounds like that's really common here.

Thanks for the question.

On the Delta IFC business sounds like Thats really hamann here.

Would you expect that to peak on the commercial side as you kind of penetrate the fleet.

Speaker 15: Expect that to peak on the commercial side as you penetrate the fleet there. You need any help?

I'll look on timeline.

Speaker 8: So we're a little over halfway through the build out of the current backlog with

So we're.

We're a little over halfway through the build out of the current backlog with with.

Speaker 8: Delta and so we're still ramping there. And there are, there's a lot of other activity thanks for being on the commercial or marketplace. So.

Delta So we're still ramping there.

There are there is a lot of other activity.

In the commercial air marketplace. So.

Speaker 7: It's only a fraction of our, you know, if you look at the number of new planes that we have on order, that we describe them a letter, Delta.

A fraction of our if.

If you look at the number of new planes that we have on order that we described in the letter Delta.

Speaker 2: less than half that. Well under half, yeah. And it's not, it hasn't been, we don't expect it to stop. There's just a lot of new interest.

Less than half that.

Well under half so.

And it's not.

We don't expect it to stop.

Theres, just a lot of new interest.

Got it.

Speaker 15: Housekeeping question here on the Appliations expense, popping up in the quarter there, expect that to stay pretty steady into the close of the deal and kind of ramp post integration within Marcent.

Housekeeping question here on the acquisition expense.

Pop up in the quarter. There do you expect that to stay pretty steady into the close of the deal and kind of ramp post integration of Inmarsat.

Speaker 8: No, right up front was pretty heavy on the expense side. Where we are still running, where's still spending money? There's definitely lawyers still working on regulatory violence. And they can spend money for sure. But it's not the rate of was in the December quarter.

No.

Oh, right upfront was pretty heavy on the expense side.

Are still running we're still spending money theres definitely lawyers still working on regulatory filings.

And they can spend money for sure.

It's not at the rate of what's in the.

In the December quarter.

That's it.

Thanks, Ron.

Speaker 16: Okay, I think there's last question. So...

Okay.

I think.

I think there is a last question so.

Just wanted to say.

Speaker 8: Operator, thank you and thanks everybody to go with Mark and

Operator, thank you.

Thanks to everybody together with Marc.

And the rest of the team here and we want to thank you guys for spending some time with us.

Speaker 8: The rest of the team here, we want to thank you guys for spending some time with us.

Speaker 8: Hopefully you found the letter informative and you're continuing to feed that on that back to Pete is helpful. Makes it continue to make it better for trying to answer your questions next time.

Hopefully you found the letter.

Informative and your continued feedback on that back to Pete.

That's helpful makes it continue to make it better for trying to answer your questions next time.

Speaker 8: Our operational momentum is still really positive. We're excited.

Our operational momentum is.

Really positive we're excited.

Speaker 8: about the capabilities and opportunities that in our seventh ring, we think they have got us from team and their performance has been excellent over the same period. But at the same time, we're focused on what we're doing. We're focused on our execution.

About capabilities and opportunities that inmarsat will bring.

They have got a strong team and their performance has been excellent over the same period.

Same time, we are focused on what we're doing we're focused on our execution.

Speaker 8: Our leadership team and our employees are really focused on executing our plans.

Our leadership team and our employees are really focused on executing our plan.

Speaker 2: So again, don't hesitate to reach out to Peter with input or other questions you've got. We look forward to following up with you guys. Thanks.

So again don't hesitate to reach out to Peter.

With input or other question you have got and we look forward to following up with you guys. Thanks.

Speaker 1: And this concludes today's conference call. Thank you for participating. You may now disconnect.

And this concludes today's conference call. Thank you for participating you may now disconnect.

Speaker 17: Music

[music].

Speaker 17: Music

Speaker 17: F Le D F Le F? R.

Yes.

[music].

Speaker 17: No.

[music].

Speaker 17: You

[music].

Speaker 1: Welcome to VIESAT's fiscal year 2022, third quarter earnings conference call. Your host for today's call is Rick Baldritch, President and CEO . You may proceed, Mr. Baldritch.

Welcome to Viasat fiscal year 2022 third quarter earnings Conference call. Your host for today's call is Rick Baldridge, President and CEO . You May proceed Mr. Baldrige.

Speaker 8: Okay, thanks. Thanks for joining us today, everybody. We released our shareholder letter earlier today before the market opened. And we hope you've had a chance to take a look at that. Joining me today, when the call is Mark Tankberg, our Executive Chairman.

Okay. Thanks, Thanks for joining us today everybody.

We released our shareholder letter earlier today before the market opened.

We hope you've had a chance to.

Joining me today.

Mark Thank Berg, our executive chairman.

Speaker 8: Sean Duffy, our CFO . Robert Blair, our General Counsel. Paul Froelich from Corporate Development and Peter Lopez from Investor Relations.

Shawn Duffy, our CFO , Robert Blair, Our general counsel.

Off Rohan from corporate development, Youre Lopez from Investor Relations.

Speaker 3: Today's call will consist of just a couple of brief opening remarks, and then we'll go into Q&A. First, let's have Robert provide us our state and Harvard. Thanks, Rick. As you know, this discussion will contain four looking statements. This is a reminder that factors could cause actual results to differ materially. Additional information concerning these factors is contained in our FCC filings, including our most recent report from forms 10-K and 10-Q. Copies are available from the FCC or from our website. With that, back to you, Rick.

Today's call will consist of some just a couple of brief opening remarks, and then we'll go into Q&A first let's have Robert providers are safe Harbor. Thanks.

Thanks, Rick as you know this discussion will contain forward looking statements and as a reminder, that 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 forms 10-K 10-Q copies are available from the SEC or from our website.

Back to you.

Speaker 8: Okay, thanks Robert. First, if you did have a chance to read the letter, you can see our business continues to perform well on almost every front. So today we'll go into some of the details, talk about the Biasat-3 schedule a little bit, and give you an update on the MRSAAT transaction. We've tried to answer a lot of the questions that we've been getting in the letter, but also hope to answer any remaining questions here in a few minutes.

Okay. Thanks Robert.

First if you if you didn't have a chance to read the letter you can see our business continues to perform well on almost every front.

So today, we'll go into some of the details talk about Viasat three scheduled debt and give you an update on the Inmarsat transaction, which we've tried to answer a lot of the questions that we've been getting in the letter, but also hope to answer any remaining questions Aaron a few minutes.

Speaker 8: But that all start with a few of the important highlights for the quarter. Revenue grew by 144 million year over year to a record of 720 million, while Justin Ibiddo also reads a new record of 163 million, which continues the momentum of the last several quarters.

With that I'll start with a few of the important highlights for the quarter.

<unk> grew by $144 million year over year to a record $720 million, while adjusted EBITDA also reached a new record of $163 million, which continues the momentum of the last several quarters.

Speaker 8: We grew year-over-year in each of our segments as well. In satellite services, year-over-year revenue growth of 40% was driven mainly by the performance in our IFC business.

We grew year over year in each of our segments as well and satellite services year over year revenue growth of 40% was driven mainly by the performance in our IFC business.

Speaker 2: both aircraft return to service and new customers such as Delta coming online, as well as contributions from the rig net.

Kraft returned to service in new customers, such as Delta coming online.

As well as contributions from the rig that Abi acquisitions.

Speaker 8: Fixed broadband was reasonably flat as we continue to reallocate finite bandwidth resources to our growing mobility bus.

Fixed broadband was reasonably flat as we continue to reallocate finite bandwidth resources to our growing mobility business.

Speaker 8: Overall 37% were satellite services revenue came from mobility in the quarter.

Overall, 37% of our satellite services revenue came for mobility in the quarter.

Speaker 8: international and other revenue underscoring the increasingly diverse diversity of our business.

International and other revenue underscoring the increasingly diverse.

<unk> of our businesses.

Those business have the greatest growth opportunity and we anticipate we will continue to diversify our satellite services portfolio as well.

Speaker 8: Both businesses have the greatest growth opportunity, and we anticipate we'll continue to diversify our satellite services portfolio as we go forward.

Go forward.

Speaker 8: Government systems had good revenue performance with service revenues up 5% over year and total revenue of 2% over year.

Government systems had good revenue performance with service revenues up 5% year over year, and total revenue up 2% year over year.

Speaker 8: What we saw strong performance from Tactical Satcom radio and Tactical Data Links products. There have been longer than anticipated delays in processing certification.

While we saw strong performance from tactical Satcom radio and tactical data link products.

There have been longer than anticipated delays in processing certifications.

Speaker 8: required prior to delivery of some of our security assurance product orders.

Wired for prior to delivery of some of our security assurance product orders.

Speaker 8: In addition to the 956 million of backlog, we have an IDIQ contracts with almost 4 billion about awarded potential value, none of which is included.

In addition to the 956 million of backlog.

We have an IV IQ contracts with almost 4 billion about awarded potential value.

None of which is included in our backlog number.

Commercial networks continue to deliver good results with revenues up 55% year over year increase was mostly driven by increased IFC terminal shipments.

Speaker 8: Commercial networks continue to deliver good results with revenues up 55% year over year. Increase was mostly driven by increased IFC terminal shift.

Speaker 2: and another strong contribution from our Ground and Test Systems Division and Rignet product revenue.

And another strong contribution from our ground and test systems Division and rig net product revenue.

We expect that our IFC orders and antenna systems backlog will support continued good results in this in this segment.

Speaker 8: We expect that our IFC orders and antenna systems backlog will support continued good results in this segment.

Turning to our announced acquisition of Inmarsat.

Speaker 8: Turning to our announced acquisition of Inmarsat, we spent our time since the announcement preparing the required filings and are progressing well on multiple fronts.

We've spent our time since the announcement and preparing the required filings and are progressing well on multiple fronts.

Speaker 8: We completed the required loan amendment of Viasat's $700 million dollar revolver, and in Viasat's $700 million dollar credit facility and $1.7 billion dollar term loan.

We completed the required loan amendment of <unk> $700 million revolver, and Inmarsat $700 million credit facility and $1 $7 billion term loan.

Speaker 8: We're progressing well on the regulatory front, both in the U.S. and U.K., and have made initial regulatory filings with the U.S. Department of Justice, the FCC, and plan to make many additional filings in the next few weeks.

We're progressing well on the regulatory front, both in the U S and UK innovative initial regulatory filings with the U S Department of Justice and the SEC and plan to make many additional filings in the next few weeks.

Speaker 2: And, Marsset itself is delivering strong financial and operational results consistent with what we thought. You can see further details on page 8 of the shareholder letter.

And Marseille itself and delivering strong financial and operational results consistent with what we thought you can see further details on page eight of the shareholder letter.

I'd also remind you to keep an eye out for.

Speaker 8: It also reminds you to keep an eye out for our transaction proxy. It was expected to be filed very soon.

Our transaction proxy was expected to be filed very soon.

Speaker 8: We're very excited about the transaction, and so are our customers. A number of airlines have been reaching out to learn more about the transaction, including how it will help us better serve our existing and future customers.

We're very excited about the transaction and so our customers a number of airlines have been reaching out to learn more about the transaction, including.

<unk> will help us better serve our existing and future customers.

Speaker 2: We think our dedication to global growth has been a big consideration in recent business activity and new orders for long range aircraft.

We think our dedication to global growth has been a big consideration in recent business activity in new orders for long range aircraft.

On our last call we saw.

Speaker 8: On our last call, we said we expect to close in 9 to 18 months from signing.

Third we expect to close and nine to 18 months from signing.

Speaker 2: We continue to believe that's a good estimate, hopefully by the end of this cover here.

We continue to believe that's a good estimate and hopefully by the end of this calendar year.

Regarding the Viasat three constellation Viasat, three Americas losses now.

Speaker 8: Regarding Biosat-3 consolation, Biosat-3 America's launch is now expected to be late summer due to some modest slippage in our supply chain.

Expected to be late summer due to some modest slippage in our supply chain.

Speaker 8: We've been working through limited availability of specific critical skill workers.

We've been working through limited availability of specific critical skilled workers.

Speaker 8: We've made really good progress on alpha testing of our space ground system integration using one of our own orbits.

We've made really good progress on alpha testing of our space ground system integration using one of our own orbit satellites.

Speaker 2: And we're working to take advantage of that to manage one orbit testing.

And we're working to take advantage of that to manage on orbit testing.

Speaker 8: So we can maintain the commencement of initial services by the end of the calendar.

So we can maintain the <unk>.

Vincent of initial services by the end of the calendar year.

Speaker 2: We don't expect this, which is consistent with what we said before, so we don't expect this to materially impact our financial outlook we've previously provided.

We don't expect us, which is consistent with what we said before.

We don't expect this to materially impact our financial outlook, we previously provided.

Speaker 2: The Vice-3 and May of payload modules progress very well in our TIP-E facility by taking advantage of the learning from flag-1 and America's, we're now at 95% of the complete of the payload units, or have been already installed.

As I said three EMEA payload modules progressed very well in our <unk> facility by taking advantage of the learnings from flag one Americas, we're now 95%.

Completed the payload units.

Have been already installed.

Speaker 8: We're in the final stages prior to shipping that to Boeing for integration with the bus.

The final stages prior to shipping that to Boeing for integration with the bus.

Speaker 8: Expect learnings on the payload bus integration will benefit flight to schedule at Boeing

We expect learnings on the payload bus integration room benefit applied to schedule at Boeing.

Speaker 8: We continue to target that launch about six months after flight one.

We continue to target that launched about six months after after platform.

Turning to the outlook briefly our company wide outlook remains strong we continue to believe we will achieve our standalone financial targets, including our average annual adjusted EBITDA growth in the mid teens for FY 'twenty two 'twenty three.

Speaker 8: Turning the outlook briefly, our company wide outlook remains strong. We continue to believe we'll achieve our stand-alone financial targets, including our average annual adjusted evapot growth in the mid-teens for FY22-23.

Relative to FY 'twenty one as we previously stated when we also believe we are on track to more than double adjusted EBITDA by FY 'twenty five relative to FY 'twenty on a standalone basis.

Speaker 8: relative to FY21, as we previously stated. We also believe we're on track to more than double adjusted EBITDA by FY25 relative to FY20 on a standalone basis.

Well of course, we're very excited about the inmarsat acquisition and bias and three our strong operational and financial performance demonstrates that our teams are working diligently to drive good execution I think the same can be said for the MSA.

Just on their strong performance.

So with that level.

Turn it over for questions.

Speaker 1: As a reminder, to ask a question, please press star 1 on your touch tone telephone. Again, that's star 1 on your touch tone telephone. To ask a question, to withdraw your question, press the pound key. We stand by while we compile the Q&A roster.

As a reminder to ask a question. Please press star one and you touched on telephone again star one on your Touchstone telephone to ask a question to withdraw your question press the pound key please standby, while we compile the Q&A roster.

Our first question comes from the line of Ric Prentiss of Raymond James Your line is open.

Speaker 4: Our first question comes from the line of Rick Prentiss of Raymond James. Your line is open. Hey. Hey, everybody. Hi. Hi. Hi. Hi. Hi. Hi. Hi. Hi. Hi. Hi. Hi. Hi. Hi. Hi. Hi. Hi. Hi. Hi. Hi. Hi. Hi. Hi.

Hey, everybody.

Happy New year, I guess essentially.

Sure.

Yeah happy new year.

Speaker 5: A couple questions for you guys. The first obviously by sat 3 slipping a little bit, 3B, we said about six months still after the first 3A.

Couple of questions for you guys.

Obviously, viasat three is slipping a little bit.

Still after three eight.

Speaker 5: How should we think about magnitude of costs that you need to put in for ground and other operating expenses before the revenues start generating? And what kind of pacing there might be as far as cost before revenues on the salary at once?

How should we think about Maggie.

Magnitude of costs that you need to put in for ground and other operating expenses before the revenues start generating.

The pacing there might be as far as cost before revenues from the sandwiches.

Speaker 6: Here at Excessa Sean. So, you know, okay, we're starting to incur some of those as we speak, but there, you know, we've been trying to pay those someone with the launch. You can think of those, this quarter is maybe $5 million. As we get closer and closer to launch, like I said, those will start to ramp up. So maybe in the onion array around 35, you know, right before we go into service is a good deal.

Alright, Thanks John .

Okay.

And that incur some of the at least eight.

Here in China.

With the launch.

You can think about this quarter is maybe.

$8 million.

As we get closer and closer to launch.

Ill start to ramp up.

And the annual rate around 35, and our ranking by regarding furnace and again.

Speaker 5: $35 million on an annual basis. Yeah, that kind of ramped up to that.

$35 million in annual basis.

That makes sense.

Speaker 5: makes sense. And obviously, it's about a year from now that you get into service, hopefully a little sooner. How are you guys feeling about maintaining flat revenue on the on the US consumer broadband side? Given the demand for more like connectivity? Or should we expect some some declines in the revenues on consumer broadband as we look into the future?

And obviously, it's about a year from now get into service sooner.

Are you guys feeling about maintaining flat revenue on the on the U S consumer broadband side.

Given the demand for those like connectivity or should we expect some some declines in our revenues.

When consumer bloggers and looking to the future.

Speaker 7: Sorry, it's Mark. So far, you know, so far what we've seen is kind of, the R-proof growth has maintained pretty much the same pace and actually, in some cases, a little bit better than the sub-tikines.

Sure Thanks, Mark so far.

We are seeing is kind of.

Yes.

<unk> growth has maintained pretty much the same pace and actually in some cases, a little bit better than.

Seven decline and I think Thats also kind of consistent with what's going on in the industry. So.

Speaker 7: And that, you know, I think that's also kind of consistent with what's going on in the industry. So we think that's, you know, more or less kind of a trend that we'd expect between now and entering service in the U.S.

So we think thats.

More or less kind of a trend that we would expect between now and entering service in the U S.

Yes.

Okay.

Speaker 5: We saw some announcements, it looks like on the competitive front, SpaceX Starlink is starting to pivot to some more business enterprise with $500 plans, $2,500 CPE costs. How are you thinking about the competitive dynamics out there as far as your ability to grow once Biosat 3A is in the air?

You saw some announcements it looks like the <unk>.

<unk>.

Thanks Sandeep.

Starting to pivot to small business enterprise.

With 500, all pools $2500.

CPE cost.

Thinking about the competitive dynamics out there.

As far as your ability to grow.

Viasat three is in the air.

Speaker 7: Well, it's a few things. One, it's a very big market. We have seen so far sort of, actually, the minimum is in material impact in the overall market due to space exit. Certainly you can see that they're out there. But one of the points that we've made, and I think that this is turning out to be true, is that,

Well.

A few things one its a very big market.

We have seen so far sort of I'd say de minimis and immaterial impact in the overall market due to anticipate extra service you can see that there are out there.

One of the points that we've made I.

I think this is.

Now turning out to be true is that.

Speaker 7: The better the service is, the more value you can offer as a functional price, the bigger the market is. And so what's happening is, you see the market, we're seeing the market grow. And I think we're still getting a share of that market.

The better the services the more value you can offer as a function of price because the market is and so what's happening is.

You've seen in the market.

We're seeing the market grow and I think we're still getting share of that market.

Speaker 7: that's sufficient for our growth targets. The other point I would say is...

Thats sufficient for our our growth targets.

The other point I would say is.

Okay.

Speaker 7: You know, if you look at what we're doing on the enterprise side, we tend to be a lot more vertically integrated into each specific market, where there's quite a bit of value add besides just providing a broadband pipe. And we think that's really a good fit for us.

If you look at what we're doing on the enterprise side, we tend to be a lot more vertically integrated into each specific market, where there is quite a bit of value add besides just providing.

Broadband pipe and.

And we think that that's.

Really good fit for us so the types of plans that they are describing.

Speaker 7: So the types of plants they're describing, well, you know, they're sort of interesting, but we don't really see them having any impact on our forward-looking outlook.

They are sort of interesting, but we don't really see them, having any impact on our forward looking outlook.

Outlook.

Thanks, everyone stay well.

Thanks Anthony.

Speaker 1: Thank you our next question comes from Landon Park, a Morgan Stanley . Please go ahead.

Thank you. Our next question comes from Landon Park Morgan Stanley . Please go ahead.

Speaker 14: Thank you. Hello, everyone. A couple of questions. So could you talk about your conversations that you've had with the UK government over the last couple of weeks and maybe some of your takeaways from those and what type of concessions or agreements you guys are thinking about as part of the deal? Yeah, so

Thank you Hello, everyone.

Questions. So could you talk about.

Your conversations that you've had with the.

UK government over the last couple of weeks and maybe some of your takeaways from those.

Hi, Sean concession.

Concessions are agreements you guys are thinking about as part of the deal.

Yes so.

When we when we announced the deal.

Speaker 8: We were actually ready to go a little earlier in the assist to the lab. They had worked out.

We were actually ready to go a little earlier and they asked us to lay out.

They have worked out.

Speaker 8: What they call undertakings with the previous private equity group that had taken this thing private

What the Golar undertakings with the previous private equity groups that are taking this thing private.

And I would say the discussions we've had a fairly consistent with those types of things theres not.

Speaker 8: I'd say the discussions we've had are fairly consistent with those types of things. There's not quite frankly...

Quite frankly.

Speaker 8: The plans that we have in the UK, in my view, are quite a bit more favorable to the UK. Let's go on on. We're more vertically integrated. We'll bring more R&Ds. I think the types of people we hired will be more technical people. So I think we just have a really positive story.

The plans that we have in the UK.

My view are quite a bit more favorable to the UK.

What's going on.

We're more vertically integrated.

We'll bring more R&D I think the types of people, we hired or be more technical people.

I think we just have a really positive story.

Speaker 8: And you've read the things in the newspaper what they're worried about. And I just, I don't think we have that situation. Not every deal is the same. And so those have been discussions just talking about what our plans are. And I think the discussions have gotten really well.

And.

You've read the things in the newspaper what they're worried about.

Just I don't think we have that situation not every deal is the same and so those have been the discussions is talking about what our plans are and I think the discussions have gone really well.

Speaker 8: there were some articles that came out that by the same three people that previously written about in a very negative way. And the new articles are much more balanced. So, you know, I think that we've got a good story. We've been in the UK for ten years, over ten years. We have data at rest security products over there that we provide today. That actually provides most of the data at rest security across their MOD. We've previously..................

There were.

There were some articles that came out by the same three people that previously written about and a very negative way and the new articles are much more balanced so.

I think that we've got a good story, we've been in the U K for 10 years over 10 years, we have data at rest.

Security products over there that we provide today that actually provides most of the data at rest security across there.

<unk>.

We've previously announced that satellite.

Speaker 8: Operation Center investment in the UK prior to this deal even getting signed and so we have a very good story and they seem to be

Operation Center investment in the UK prior to this deal even getting signed and so we set up a very good story.

They seem to be pretty receptive.

Speaker 8: And is the deal going to be subject to the new national security oversight law that recently won the place? It is. Yes. So we expect a full review across the board on all that.

And is the deal going to be subject to the new National security oversight law.

Recently went into place.

Yes, so we expect a full review across the board.

All that's what we expected going in.

Great.

Speaker 9: Great. Moving on to the broadband business, there's been some news that Facebook is going to be sort of winding down some of their, or I think most of their, international Wi-Fi Express business. They had partnered with you in Mexico. Could you maybe just talk about any impacts that might have on you, and maybe just a broader update on that international Wi-Fi program you guys have been running, and what type of returns you've been able to see so far?

Moving on to.

Okay.

<unk> business.

Theres been some need the Facebook is going to be sort of winding down some of their.

Most of our international Wifi Express business.

<unk> with you on Mexico could you maybe just talk about any impact that might have on you and maybe just a broader update on that international lifestyle program you guys have been running and what type of returns you've been able to see out of that business.

Speaker 7: I'm sorry I missed the very first sentence about who was not the company that you mentioned? Facebook. Facebook. Okay, um, Bert.

Sorry, I missed the very first sense of that.

That's a company that you mentioned Facebook page.

Thanks.

Oh, okay.

Sure.

Okay, Yeah, so our.

Speaker 7: No, okay, yeah, so our, no, on the international front, in terms of fixed services, we have two sets of initiatives. One is direct residential broadband that we're doing in several countries.

No on the international front in terms of fixed services, we have two sets of initiatives one is.

Direct residential broadband that we're doing in several countries.

Speaker 7: since acquired in Europe , the other part of the joint touch we have with Udalsat. And the other part, which is the part, I think you're referring to, who's all community internet or shared internet service.

Vincent acquired in Europe .

The other part of the joint venture we have in Europe .

And the other part which is the part.

I think youre, referring to are the <unk>.

Community Internet, our shared Internet services, and we're doing that in a few different ways.

Speaker 7: and we're doing that in a few different ways that the main...

Maine.

Speaker 7: The main common element is to bring bandwidth in by satellite. Some central point and then distribute that bandwidth to end users. And we're doing that actually in multiple different ways. We're doing it by land, we're doing it by wireless, we're doing it by unlicensed Wi-Fi. And each of those, we think that each of those,

The main common element is to bring bandwidth and by satellite some central point, and then distribute that bandwidth to.

To end users and we're doing that actually.

In multiple different ways, we're doing it.

We're doing it by wireless we're doing it.

Yes.

Since Wi Fi.

Each of those.

We think that each of those will have places under different circumstances.

Speaker 7: will have places under different circumstances.

Speaker 7: But right now, all three modes of delivery are, are, I think, are growing and are attracted to us under different circumstances. On the Facebook things specifically, we're working with those guys right now and transitioning that so we don't see any impact. Yeah, you remember the other part of it is, right? Our, you know, we're doing what Facebook was more about.

Right now all three modes of delivery or.

Secular growing and are attractive.

Under different circumstances on the Facebook thing specifically, we currently are working with those guys right now on transitioning that so we don't see any impact.

The other part of it.

Or what.

What we're doing with Facebook was more about.

Speaker 7: trying to understand where to deliver service and how effective that service was. And I think that the activity has been benefiting both companies.

Trying to understand where to deliver service and how effective that service.

And I think that the activity is benefiting both companies.

Speaker 9: And the last one for me, just on the commercial network side, can you talk about some of the managed services that you guys expect to ramp up in that business over the next couple years and maybe what the margin profile looks like for some of that and the prospects to get that segment closer to breakeven?

Great.

Last one for me just on the commercial network side can you talk about some of the managed services that you guys expect.

To wrap up in that business over the next couple of years and maybe what that.

Margin profile looks like for some of that in.

The prospects to get that segment closer to breakeven.

Speaker 7: Okay, so on the communications networks side, I mean, I'm happy, I'm a little bit, so what is, from a managed services perspective, the main thing that we've been doing there is in what we call real time earth, is that, is that what you, so that is, that is a shared network services business primarily for earth observation down links, data down.

Okay. So on the <unk>.

Indications networks alright.

So what is a managed services perspective, the main thing that we've been.

Doing there is in what we call real time Earth is that that way so that as that is a shared network services business primarily for Earth observation.

Thanks, David Downlinks.

Speaker 7: Is that what you were referring to? Yes, that is what I'm referring to. Yeah, so that's still a relatively small business. But it's growing pretty steadily. And right now, what we've been doing is working primarily with third party partners.

That what youre, referring to that is yes.

So that's still a relatively small business.

But it's growing pretty steadily.

Right now what we've been doing is working primarily with third party partners Christmas We did one.

Speaker 7: We did one with indigenous people in Australia. We just recently did one in Ghana, and we have more opportunities for that. And then the other, the other kind of rowing, two other rowing interesting elements, so that one of them.

With indigenous people in Australia, we just recently did one in China and.

And we have more opportunities for that and then the other the other kind of really.

Two other really interesting elements of it what are the.

Speaker 7: main businesses in our communication network. It's kind of for a lot of growth for us. It's building kind of the largest, most capable, full-motion ground antenna systems. The reason that's valuable is that, you know, very large antenna to be a lot more efficient at getting high-speed data down, so high speed for the highest resolution sensor data. And then the other one is,

Main businesses.

And our communication networks at first kind of provide a growth for us is building kind of the largest most capable of.

Full motion ground antenna systems and the reason that's valuable.

Every large antenna to far more efficient and getting high speed data down to high speed for the highest resolution sensor data and then the other one is.

Speaker 7: that makes them most effective for these new generation of very, very small satellites. So you don't need a lot of power or sophistication.

That makes them most effective for these new generation of very very small satellite. So you don't need a lot of <unk>.

Power's certification from the spacecraft you can focus most of the year value on the sensing part.

Speaker 7: spacecraft you can focus most of your value on the sensing part. So those two things are really valuable. Then the other thing that we're working to integrate with that is

Those two things are really valuable and the other thing that we're working to integrate with.

As.

Speaker 7: I think it was Leo Geo really, which is a very unique mission that That buys that free Constellation you can do because of the global coverage in the high capacity So right now that they're small businesses. They're good good margin businesses And we think that is you know the variable costs or love so as they scale those margins will improve

Think of it as Leo Geo really.

Which is a very unique mission.

At that time.

<unk> III concentration can do because of the global coverage.

The high capacity.

So right now they are small businesses they are there.

They are good margin businesses.

And we think that is the variable cost level, so as they scale those margins will improve.

Speaker 7: On the overall issue of

On the overall issue.

<unk>.

Speaker 7: of the EBITDA, you know, turning that business EBITDA positive. You know, the main, kind of the main...

Of EBITDA.

Turning that business EBITDA positive.

<unk>.

Kind of the main thing that has been a drag on EBITDA.

Speaker 7: thing that has been a drag on EBITDA, is what we think is actually a benefit, which is...

So what we think is actually a benefit which is.

Speaker 7: You know, we're doing our own payload designs for the Viasat satellite series, and we're also now extending some of those payload capabilities into third-party satellites, like one area

We're doing our own payload designs.

Has that satellite cities and we're also now extending some of those payload capabilities into third party satellites one area that's been.

Speaker 7: Good for us has been cross-linked for satellite and we have a number of government contracts with all of that commercial contracts for cross-linking. We think that's a really attractive.

Good for us has been.

Cross links for satellites and we have a number of government contracts for that would add commercial contracts for our cross linking we think.

That's a really attractive business. So the fact, the fact that we do that for both ourselves and others as opposed to just.

Speaker 7: So the fact that we do that for both ourselves and others, as opposed to just buying satellites, like most other satellite operators do, means that we expense the R&D, as opposed to capitalizing the R&D, that goes into these next generation of satellites.

Buying patterns I think most others Halloween operators two themes that we expense the.

R&D as opposed to capitalizing the R&D that goes into these next generation satellite design and Thats that is the single biggest I mean, it's really the only factor in the negative EBITDA in that business yes.

Speaker 7: And that is the single biggest, I mean it's really the only factor in the negative EBITDA.

Speaker 6: Yeah, when did this challenge at the ASA, right? We most of our R&D, we centralized in that segment, right, eight, then fifth across the segment. That's the worst. Most of the info is there. So outside of that, it's a nicely profitable segment for us.

Most of our R&D, we centralized and that segment right.

Right.

Outside of that.

A nicely profitable.

Yes.

Speaker 9: No, I understand. I was just trying to understand if on a reported basis, if there was a path over the next three years or so to get it closer to breakeven.

No I understand I was just trying to understand that on a reported basis. If there was a path over the next three years or so to get it closer to breakeven.

Speaker 6: Yeah, I think we'll see improvements in that. We're going to continue to have good momentum in IFC and delivery of terminals there, but we're going to continue to invest as well for next gen and things that we think are very valuable in commercial applications as well as government.

Yeah I think.

I think we'll see in.

And pregnant now are going to continue to have good momentum in IFC and delivery and terminal there, but we're going to continue to invest as well for nexgen and things that we think are very valuable and commercial applications as well as government.

Speaker 5: and R&D at 5% of revenues is going to be good. Yeah, this quarter we are about 5.2% so, you know, 5 and a half somewhere between there is a good estimate. Great, thanks everyone for all the calls.

And R&D at 5% of revenues.

Yes. Thanks.

Quarter, we were about five 2%.

Hi, guys.

Somewhere between there is a good estimate.

Great. Thanks, Thanks, everyone for all the color.

Hey, Ken.

Speaker 1: Thank you. Our next question comes from Matthew Robillard of Barclays. Your line is open.

Thank you. Our next question comes from Matthew Robert.

Barclays. Your line is open.

Speaker 10: Good afternoon then. Thank you very much. I have three questions. Please the first one

Good afternoon, and thank you very much.

Questions. Please the first one.

Speaker 10: relates to the in-marsata acquisition you were mentioning in your scripted remarks if you engage with clients and clients asking about what this could mean and what kind of services maybe you can provide could you give us a little bit more color in terms of what is their interest focused on in a combined in-marsat via-sat proposition.

As it relates to <unk>.

In Marseille acquisition, you are mentioning in your scripted remarks.

But you've engaged with declines in times.

Asking about what this could mean and what kind of services you can provide.

Could you give just a little bit more color in terms of what.

Lotteries.

What is their interest focused on.

In March <unk> proposition.

Sure.

Speaker 7: Sure, yes, so the main thing that we've been focused on...

Yeah. So the main things that we've been focused on.

And these are I would say these are common among a lot of these mobility businesses.

Speaker 7: And these are common among a lot of the mobility businesses. Number one is the issue about bandwidth density, which is how do you how do you avoid congestion in your network? So that your mobility cuts.

Number one is this issue about bandwidth density, which is how do you how do you avoid congestion in your network.

So that year mobility customers.

Speaker 7: get a reliable service even when they go into busy airports or hubs. You know what I think we showed? We thought it was one of the most important.

Net.

A viable service, even when they go into busy airports or hubs.

One of the things we showed which we thought was one of the most important sides and in our presentation about the Inmarsat acquisition.

Speaker 7: slides in our presentation about the Inmarsat acquisition was just the density of demand for commercial air and commercial air is relatively easy to show because it's...

Just the.

The intensity of demand for commercial air Courseware is relatively easy to show because it scheduled airlines.

Speaker 7: But similar situations occur in things like general aviation, maritime, and other, even in land mobile.

Similar situations occur.

Like General Aviation Maritime and <unk>.

EBIT in land mobile applications, so that one of the things that's real.

Speaker 7: So that, you know, one of the things that's really been an important factor for Vyaphat's growth has been our ability to deal with that, especially in the US, which is the largest domestic market for air travel. And, you know, it's the same with our Geralines that we serve.

Only been an important factor for <unk> growth has been our ability to deal with that.

Especially in the U S, which is the largest domestic market for air travel.

Okay.

With large airlines that we serve and the large.

Speaker 7: airport cities, I think we've been able to demonstrate our ability to keep ahead of that issue. So that's one. The other one that I think people are really interested in.

Airports cities I think we've been able to demonstrate our ability to.

Keep ahead of that of that issue. So thats one another one that I think people are really interested in.

Speaker 7: And especially in Maritime and in some of the intercontinental aviation is the hybrid services between K-ABAND and L-BAND and being able to...

And especially in.

In maritime and.

And in some of the Intercontinental aviation.

Hybrid services between K band and help and being able to to provide that continuity of service even under the worst weather conditions, which is where when you think of the airlines ATR Maritime safety.

Speaker 7: to provide that continuity of service even under the worst weather conditions, which is where, when you think of airline safety or maritime safety, where a lot of the most stressful situations are associated with the airport.

Out of the.

The most stress.

Situations are associated with bad weather, so thats being able to bundle those things into attractive.

Speaker 7: So that's being able to bundle those things into a tractor. This is a really good thing. And then the other, which has been...

It's a really good thing and then the other which has been.

Speaker 7: kind of the main thing that airlines have been looking to buy that for, and we believe that Marsette really, celebrates his redundant global cover.

The main thing.

Airlines have been looking to buy at that floor and that we believe inmarsat really accelerates.

<unk> redundancy.

A redundant global coverage and so we'll get there faster.

Speaker 11: And so we'll get there faster and we'll have multiple satellites that serve those, those bottom-ile international routes. I'd say those are kind of the main topics that customers have come to us to discuss first.

We will have multiple satellites et cetera.

Those long haul international routes I'd.

I'd say those are the kind of the main some of the main topics that cut.

<unk> have come to us to discuss first.

Speaker 10: And is that if I can follow up? Is that also a discussion you're having with governments? That may require more capacity.

And then you start if I can follow up is that also a discussion you are having with <unk>.

Governments.

May require more.

Mark capacities.

Speaker 7: Well, yes, if you get, I mean, one of the things that's also been a valuable business for us as well as Renmar's Act is in dealing with government applications. And you know, the big thing with government applications is...

Yes, if you look at I mean, one of the things that.

Also been a valuable business for us as well as from Inmarsat is in dealing with government applications and the big thing with government applications as they don't really know where their hospice will be taken they can anticipate.

Speaker 7: They don't really know where their hotspots will be. They can anticipate them, but they can pop up anywhere in the world. And when they do, they also have this issue about very large amounts of demand concentrated in relatively small geographic areas. So being able to deal with those issues and being able to deal with some of the unique things that we bring, for instance with Biostat 3 or...

They can pop up anywhere in the world and when they do they also have this issue about very large amounts of demand concentrated and relatively small geographic areas, so being able to deal with those issues and being able to deal with some of the unique things that we bring for instance, with Viasat three.

Sure.

Speaker 7: potential to deliver up-up-ling speeds from platforms that are exceptionally good, much better than even a lot of these new NGSO systems.

Potential to deliver ups uplink speeds from platforms that are better exceptionally good much better than even <unk>.

These new NGL systems.

Speaker 7: So those are, they're just the attractions of the combined resources and capabilities of the company.

So those are there.

Peter just the attractions of the combined resources and capabilities of the companies.

Speaker 10: Thank you. If I continue on the government and specifically service revenues, which kind of links a bit to what we just discussed, I realize service revenues and bandwidth demand for you today in government services is a small part of your revenues, but I was wondering if you seeing any increase in demand recently, obviously, we're in a slightly more tense geopolitical situation. And whether in the past you've seen big increases in demand linked to any deterioration on that form.

Thank you.

On the government.

Specifically service revenues, which kind of links would be to what we just discussed.

I realised service revenues and then bandwidth demand.

For you today and government services, it's a small part of your revenues, but I was wondering if you're seeing any increase in demand recently obviously.

Especially more tense political situation and whether in the past you've seen.

The increases in demand linked <unk> deterioration on that point.

Speaker 7: Yeah, so, I mean, I think all satellite operators tend to see increased demand for government bandwidth when there are conflicts in the world, you know, so we're not, well, if you have bandwidth in the places where it's needed, then you're in a position to be able to help support that. I think more recently, you know, there's threats of...

Yes, so I think all satellite operators tend to see increased demand for government bandwidth when there are.

As our confidence in the world.

Okay.

So.

We're not too.

If you have bandwidth in the places where it's needed and then youre in a position to be able to help support that I think more recently.

There is a threat.

<unk>.

Of contract.

Speaker 7: conflict with doesn't come out turn out to be that way. So right now we're just really seeing more, I'd say inquiries about more about planning and contingency planning. What can be done? I think we're...

It doesn't come out turn out to be that way. So right now were just really seeing more.

I would say inquiries about.

More around planning and contingency planning.

What can be done I think we are.

Speaker 7: I think we're in a position to be able to deliver more support. And in general though, some places demands gone down. And it'll probably appear in new places if it does.

I think Congress is.

As we've grown and I think we're in a position to be.

To be able to deliver more support in general though.

Some places demand has gone down.

Probably appear in new places if it does.

Overall satellites.

Speaker 8: Overall, not sound like the service's portion of our government revenue has been growing over the last year.

Not satellite services portion of our government revenue has been growing over the last few years.

Yes.

Speaker 11: I think we talked about that being in the 20, 25% were injured, total services being that's a total government systems, rather than

I think we've talked about that being in the 20% to 25% range of total services tunnel.

Government systems revenue.

Speaker 10: Great, thanks. And if I finish with one question on the US broadband market, so you do mention in your press release that the number of subscribers has come down a bit, but that's kind of voluntary. To some extent, as you want to use more capacity and IFC, but I had a broader question concerning the market and the competition there, because some of the telecom players are pushing a lot more teams FWA solutions as a way to increase their revenues. And I was wondering if you saw that as potentially a new source of competition, a reduction of your potential addressable market in the US. Thank you.

Great. Thanks.

Finish with one question on the U S broadband market.

So you mentioned in your press release.

The number of subscribers has come down a bit.

But that's kind of voluntary to some extent business you want to use more capacity in IFC, but I had a broader question.

Turning then to the market and the competition Darrin because some of the telecom players.

We're seeing a lot more it seems if double UAS solutions.

The way to increase their revenues and I was wondering if you saw that.

Potentially in a new source of.

Competition, a reduction of your potential addressable market in the U S. Thank you.

Speaker 7: Okay, no, we don't turn out fixed wireless is not really been a material factor in

Okay.

We don't.

It turns out fixed wireless has not really been a material factor in.

Speaker 7: You know, changing the market for satellite product and in the US, there are other factors. So cable, edge-outs, new fiber builds, those are probably more of a factor, and then the other one.

<unk>.

Changing the market for satellite broadband in the U S. There are other factors.

So.

Our cable edge outs fiber new fiber builds those are probably more of a factor and then the other one.

Speaker 7: I think kind of ebbs and flows, depending on the economy, demand, and a couple other factors, is people just using their mobile service plan as their home broadband.

I think kind of ebbs and flows depending on.

The economy demand and couple of other factors.

People just using their mobile service plan is their home broadband.

Speaker 7: service and that becomes a little more tenable for people when they have, when they're going to the office and they have broadband resources at work or somewhere other than home.

Service and that becomes a little more tenable for people when they have when they are going to the office.

Broadband resources at work or somewhere other than at home.

But those are those are the main factors.

Speaker 7: and that's how what we see.

And.

What we see probably shaping the market over the next few years, we've done a pretty.

Speaker 7: probably shaping the market over the next few years. We've done a pretty detailed microanalysis of that on a region-based basis. And knowing we think it will eat into the market, but it's not going to.

Pretty detailed.

Micro analysis of that on a region by region basis, and we think it will eat into the market, but it's not going to eliminate the market.

Speaker 7: what we've expected over the next.

What we've expected over the next.

Speaker 7: Five years, we talked about this a few times. It's kind of modest growth on a subscriber basis in the US between now and May 2025.

Five years, we've talked about this a few times is kind of modest growth on a subscriber basis in the U S between now and May 2025.

Great. Thank you very much.

Thank you.

Speaker 1: Thank you. Our next question comes from Chris Quote of Quote Analytics. Your line is all.

Thank you. Our next question comes from Chris Quilty of Quilty analytics. Your line is open.

Speaker 3: Thanks guys, how do you question about the forgot?

Thanks, guys.

And about the forgotten acquisition, maybe with written that we haven't talked about it in a lot of detail, but can you give us maybe a status update now that you've had in a couple of more quarters under your belt.

Speaker 3: haven't talked about it in a lot of detail, but can you give us maybe a status update now that you've had it?

Speaker 3: you're seeing in that business in terms

What youre seeing in that business in terms of both business operations integration cost reductions.

Speaker 3: both business operations, integration, cost reductions.

And I guess, putting inmarsat aside for a moment, there's a lot of changes that could come but Mike what plans do you have now.

Speaker 3: side for a moment, because there's a lot of changes that could come, but like, what plans

For that business in terms of rolling and migrating it with the Viasat three services.

Speaker 8: Yeah, so the integration has gone very well between the two groups. There was some initial.

Yes, so the integration has gone very well between the two groups there was some initial.

Speaker 8: There were some initial cost reductions that took place early on. We've been working on integration of the business areas that become our global operations have all been integrated under one group.

There was some news some initial cost reductions that took place early on.

We've been working on integration.

Areas have become our global operations have all been integrated under one under one.

Group.

Speaker 8: So that's gone well. We have started our initial first.

So thats gone well.

Have started our initial first.

Speaker 8: Ka-band deployment and some of the rigs where they were previously leasing capacity But that's just just the very beginning just started with some trials That's obviously one of the big benefits here to both drive performance and and help in the cost profile Over time that will improve as we began to launch these Biasat-3 satellites that's where the real growth opportunity there is and the Intelli part of that business has been a very positive surprise

K band deployment and some of the rigs where they were previously leasing capacity.

But thats just just at the very beginning just started with some trials.

That's obviously one of the big benefits here to both drive performance and helped on the cost profile over time that will improve as we began to launch. These viasat three satellites, that's where the real growth opportunity there.

Until a part of that business has been a very positive surprise really strong team has a good platform. They continue to win new business and Theres other applications across by asset where that group can help so.

Speaker 3: really strong team has a good platform. They continue to win do business and there's other applications across biaset where that group can help. I'd say things are about as expected so far. Gotcha. And question on that KA band roll out on the RIGs. There was probably some reason in the past why RIGNAB was not a good place to start.

Sure.

I'd say things are about as expected so far.

Gotcha and question on the K band rollout on the rigs.

There was probably some reason in the past by rig net was hesitant to use inmarsat is the backup but have you determined what the backup path will be there for those systems.

So yes, one of the things we're not doing is disclosing our execution strategy to the competition. So.

Speaker 8: So yet one of the things we're not doing is just closing our execution strategy to the competition. So one of the things we're doing in these trials is demonstrating what's capable.

One of the things we're doing in these trials demonstrating what's capable and so our view is that if you gave a whole bunch of people whole bunch more bandwidth and charging them a lot less.

Speaker 8: And so, you know, aren't you, and then give a little bunch of people a whole bunch more bandwidth and charge them a lot less? Is you create things that they would have done?

As you create things that they would have done.

<unk> been able to do and work.

Speaker 8: And so we're able to do that in areas where we have footprint right now, which is limited. That's those satellites roll out. And then with MRSAT, we won't be limited to that. And so we'll be able to do that across the board. So the real opportunity here is groaning the type of services we deliver to all these plants.

So we're able to do that in areas, where we have footprint right now which is limited.

Satellites rollout.

And then with Inmarsat, we won't be limited to that and so it will be able to do that across the board. So the real opportunity here is growing the type of services, we deliver to all of these platforms.

I understand different question Mark you mentioned cross links I assume you were referring to our apps and non optical cross links.

Speaker 3: And a different question mark, you mentioned cross lengths. I assume you were referring to RF and not optical cross lengths.

Yes, correct.

Okay can you name any of the programs, where youre targeting business, because I'm not aware of any off hand at least on classified.

Speaker 3: Can you name any of the programs where you're targeting business? Because I'm not aware of any offhand.

Speaker 7: Well, the largest commercial one that we had is that we did all of the onboard, you remember the radiums are cross-winged systems, so we did all of the onboard cross-banks for radium.

Okay.

The largest commercial.

Okay.

So we did all of the onboard remember iridium as a cross point.

So we did all of the Onboarding cross links for Iridium.

Speaker 7: We have mostly otherwise so far have been mostly government programs, including I don't really want to name them. Some name brand new Mochicanoite government programs where we'll be we've been funded and I think we'll be in the production version of those satellites as well

We have mostly otherwise so far have been mostly government programs, including.

I don't really want to enable some named brand new.

Multi satellite government programs, we will be we've been funded and I think we'll be in the production version of those satellites as well.

Speaker 7: And the crossings that we've been doing are generally cave and or much higher frequencies that have a lot more capacity. I think

Yes.

<unk>, we've been doing are generally K band or much higher frequencies that have a lot more capacity.

One of the.

Speaker 7: One of the most interesting ones we are getting traction as well in both

One of the most interesting ones, where we are getting traction as well in both.

Speaker 7: speaking in questions and Homeland Security.??? colors. What is the that you would agree and share everything by having a

Our government and commercial programs.

The geo crossings that net.

Speaker 7: that not which is a pretty unique capability with the big advantage there if you have a very high a considerable desired system.

Which is a pretty unique capability with the big the big advantage. There. If you have a very high capacity global system.

Biotech III you congestion Sir.

We are cross wings into.

Speaker 7: Leo crossings into the global coverage capability of a virus.

On the.

Global coverage capability out of our Viasat three so thats, a really really interesting opportunity and we're getting good traction on that on both government and commercial sides.

Speaker 7: So that's a really, really interesting opportunity. And we're getting traction on that on those government commercial slides.

Got you.

Speaker 3: And the sort of high profile government name is that perhaps a new effort with a generic sounding dumb name and very high volume where the primary focus is on optical.

The sort of high profile government name is that.

<unk>.

A new effort with generic sounding dumb name in very high volume are the primary focus is on optical.

Speaker 7: No, no. And you know, there's certainly a place for optical crosslinks. The big advantage of RF crosslinks, and let's say RF is kind of interesting in the gigabit, up to the gigabit range and you may see optical crosslinks in the 10 or more gigabit range, but if a gigabit is a worthwhile...

No no.

Thanks.

Sure.

Still speculation.

There is certainly a place for optical processing the big advantage of.

<unk>.

RF cross meetings.

Let's say RF kind of interesting in the gigabit up to gigabit range and he makes the optical cross things and are more gigabit range, but if a gigabit.

Is it worthwhile.

Speaker 7: Man with the biggest in-hatchyl obstacle is much more, much less power. Doesn't require the platform's ability. You can network it so you can hop the links around. How easy are to make and break connections. Go pack it down.

Bandwidth the big advantage of optical.

Much tomorrow and much less power doesn't require the platform stability you can network. So you can have buildings around hot easier to make them very connection built packet networks. So there.

Speaker 3: So there are, there's, you know, I know there's a lot of focus on laser crossings, but the optimal one is, it's a really interesting market and one that I think we are. I mean, the R, R F, I'm sorry again, the R F, that's really interesting. And it's one where I think we have a really good competitive position. That's right. And because I didn't, Sean, any questions?

I know theres a lot of focus on laser.

Crossings, but the optical one is it's a really interesting market and one that I think we RF.

Jeff I'm, sorry, again, RF is really interesting and it's one where I think we have a really good competitive position.

Got you and because I didn't Sean any questions.

To follow up with one financial question, which is.

When you were mentioning.

Speaker 3: When you were mentioning with Rick earlier the ground equipment cost.

Mentioning with Rick earlier, the ground equipment costs.

Speaker 3: Are those capitalized costs now or are those costs...

Are those capitalized costs now or are those costs as cost that you are.

Okay.

Speaker 6: Chris, what I was trying to capture for you guys is how the op-ax will ramp ahead of the service launch of something cat-back.

Okay.

Capture for you guys, how that Opex will ramp ahead of ceramic box.

Yes.

Okay.

Speaker 3: Okay, and you're not, again, not able to capitalize any of the ground equipment R&D and build out until the...

Again, not able to capitalize any of the ground equipment R&D and build out until the satellite is operational.

Speaker 8: No, it's part of the full project profile that we've given you guys, which includes the satellite, the launch, the insurance, all the initial grout. That stuff is capitalized. It's just not operating when you light it up, essentially, that gets expensed. Think of power, and fiber optics, and rent, and all of those types.

No it's part of the fall.

That project profile that we've given you guys that concludes the satellite launch.

All of the initial guidance.

Capitalized interest the operating when you line it up essentially.

Speaking of power and fiber optics.

And rent and all of those types of expenses.

Great.

Speaker 3: And I know you haven't given out a specific number of Wendy use the term gateway

I know you havent given out a specific number.

And do you use the term gateway.

<unk>.

Speaker 18: the name of use for your... What about sound active? Yes, they're pedaling K-lays. Yes, okay.

Now what's the name used here.

Federal access nodes.

Yes.

Tito and gateways, yes, okay.

What percent of those are installed now and do you light them up and keep them, let up until Viasat. Three is launched or do you kind of line them up and turn them off just to test them.

Speaker 3: you light them up and keep them lit up until VSS 3 is lost, and you kind of light them up and turn them off just to test them.

So we probably have.

Speaker 7: close to half of the initial set of fans.

Close to half of the initial set of facts.

Speaker 7: In the US coming up in the next few months, yeah. Tell us how somewhere in that range is what will happen. What are things Rick mentioned is that. Things are going well on space ground testing. We're able to test a lot of the integration.

In the U S.

Yes somewhere in that range is what will happen.

One of the things Rick mentioned is that.

Things are going well on space ground testing, we're able to test a lot of the integration using the new ground network.

Speaker 7: using the new ground network and one of our existing satellites, we can test a lot of functionality. So what we are doing is we're lighting up some of them along the way to increase the scope of that testing. But the bulk of them will be activated, very close to the launcher post one.

One of our existing satellites with intestinal other functionality. So we are doing is we are dividing up some of them along the way to increase the scope of that testing, but the bulk of them will be activated.

Close to the launch of post launch.

Got you and final question for Sean I think the last number you gave was $2 3 billion for the Viasat three program just a clarification does that include capitalized interest or not.

Speaker 3: final question for Sean that I think the last number you gave was 2.3 billion for the ViASA 3 program just a clarification does that include capitalized interest or not?

That is.

Without the capitalized interest.

Okay.

Perfect. Thank you.

Thanks, guys.

Speaker 1: Thank you. Our next question comes from Louis De Palma of William Blair. Your line is open.

Thank you. Our next question comes from Louie Dipalma of William Blair. Your line is open.

Good afternoon, Rick Mark and Sean.

Speaker 12: Good afternoon, Rick, Mark, and Sean.

Afternoon.

Speaker 13: I was wondering, um, does...

I was wondering.

Yes.

Speaker 12: The UK government has any interest in investing in the virus that in Mars that combination in the same way that they invested $500 million into our one web.

The UK government.

Interest in investing on the Viasat on March that combination on the same way that they invest.

$100 million.

One labs.

Okay.

Speaker 8: But we haven't had that discussion. I think one way was having those discussions, I'd say that's a big difference, is they were looking for investors.

We haven't had that discussion I think one we're having those discussions I would say that the big differences they were looking for investors.

I don't think the U K government is probably interested in investing in a public company.

Speaker 8: I don't think the UK government is probably interested in investing in a public company. Okay, is that...

Okay.

And.

Speaker 12: switching to the Viast at 3. I was wondering what is your degree of confidence?

Switching.

Viasat three I was wondering what.

Is your degree of confidence.

Speaker 12: that you will have via that three services commencing.

You will have <unk>.

Is that three services.

Commencing.

Speaker 12: or either consumer broadband or aviation.

Or either consumer broadband our aviation this year.

Speaker 7: I would say pretty good. I mean, we have a plan that does that. There's uncertainties along the way. We wish we could be certain, but you can't be certain.

I would say pretty good.

We have a plan that does that.

There's uncertainties along the way.

Wish we could be and wish we could be certain.

You can't be certain.

Speaker 7: I think we have a plan. But you know, if you look at sort of the main thing that caused the rush.

I think we have I think we have a plan.

If you look at sort of the main thing that.

The launch schedule it was.

Speaker 11: The risk of lack of availability is specific people who have been able to forecast that three months ago. Things looked like all COVID stuff was going away and life was going back to normal.

Is the risk.

So the actual availability of specific people, who have been able to forecast that.

Three months ago things looked like Covid stuff is going away in life is coming back to normal.

Speaker 7: So I wish I could say we're certain that we have a plan. Generally we've been pretty good at executing plans when the assumptions behind them are hold true.

I wish I could say there are certain but we havent plan.

Generally we've been pretty good at executing plans when the assumptions behind them or hold true.

Okay. Thanks, Mike.

Speaker 12: Okay, thanks, St. Marks. And for the customer premise equipment and the terminals associated with the Viasset 3 system. Okay. Laura

Sure.

First the customer premise equipment.

Terminal associated with the Viasat three system.

Speaker 12: How will the economics be different for new customers?

How will the economics be different for new customers.

Speaker 12: that want to use the Biostat 3 system versus existing customers that are currently on the Biostat 1 or Biostat 2 that are looking to upgrade. And the reason I'm asking is a lot of them made about how.

I want to use.

At three <unk>.

Versus existing customers that are currently on Viasat, one and Viasat two.

We're looking to upgrade and the reason I'm asking a lot has been made about how Spain.

<unk>.

Speaker 12: space experts Starlink takes a pretty hefty loss on their terminal. And I'm wondering, how does that loss, but compare to the economics for your geostationary type terminal?

A pretty hefty loss on more Lauren terminal and I'm wondering how does that compare.

The economics for your geostationary.

Paramount.

Okay. So.

Speaker 7: So one is that the ViASAT 3 overall economics, I think will be in line with what we've experienced since we did ViASAT 1, which is, think of it as customer lifetime value compared to customer acquisition cost. The lifetime, it tends to be...

So one is the Viasat three overall economics, I think will be in line with what we've experienced since we did viasat one were to think of it is.

No.

Customer active customer lifetime value compared to customer acquisition cost.

Lifetime that tends to be.

Three X.

Speaker 7: somewhere in that range, right, about, take it like lifetime value and that's based on, you know, many many years of good understanding of customer acquisition costs, churn statistics.

Somewhere in that range right about.

Hey, good lifetime value and Thats based on.

Many many years and good understanding of customer acquisition cost churn statistics ongoing customer support and I think.

Speaker 11: And I think, you know, we have some initiatives that actually reduce cost and can improve that. So we'll see similar things with ISAP 3, it's kind of what we expect. The

We have some initiatives that actually reduce cost and can improve that we'll see similar things with viasat three kind of what we expect.

Hey.

Speaker 7: So the thing I'd say that maybe doesn't get as much attention as I probably should from investors to think about is, really there's...

So.

And the thing the thing I would say that maybe doesn't get as much attention as it probably should from investors to think about is really theirs.

Speaker 7: you the kind of the biggest issue in running these businesses to deliver an attractive service and to do it properly is the amortize airtime cost.

Yes.

Kind of the biggest issue in running these businesses.

To deliver an attractive service and to do it profitably as the advertiser airtime costs.

Speaker 7: And so, you know, if you think about it, this is kind of what we said in the past, is there's kind of a rule of thumb, think of bandwidth in space.

And so what.

You think about it this is kind of what we've said in the past is there is.

The rule of thumb.

Bandwidth and space of inventory.

Speaker 7: And you're seeing that right now, right? Whether it's a ton of benefits, GL or Leo, if you don't have enough bandwidth and you add more customers, or that you're saying customers use more bandwidth, speeds can drop. And that's exactly what you're seeing. For instance, in the Leo world, this speeds are dropping, you don't add more bandwidth. And the customers you already have, use more bandwidth even if you don't.

Youre seeing that right now.

Whether it doesn't matter if it's <unk>, if you don't have enough bandwidth.

And you add more customers or that you are seeing customers use more bandwidth speeds can drop and thats exactly what youre seeing for instance in the real world. This speeds are dropping.

Add more for bandwidth and the customers you already have just more bandwidth, even if you don't add any new ones.

Speaker 7: So, so what we think about is, when we bring on these systems that have big improvements in the airtime economic.

So what we think about is when we bring all of these systems that have big improvements in the airtime economics.

Speaker 7: Well, we tend to value the bandwidth on all of our systems at the lower cost.

Well, we tend to value the bandwidth on all of our systems at lower cost.

Right.

Sure.

Speaker 7: Market, that's kind of the way that you tend to think about. So we can offer, we'll be able to offer a lot of the same services that we do in Vios 3 on the older satellite.

Market right, that's kind of the way that you tend to think about bandwidth. So we can offer we will be able to offer a lot of the same services that we do on Viasat three on the older satellites their.

Speaker 7: They're capable of doing it. They don't have to necessarily switch that over either. Get it, you see.

They are capable of doing it.

I'll have to necessarily switch kind of aggregate, new CPE to be able to get the new services.

Speaker 18: to be able to get the new services. That's kind of what the payoff of that. That helps us to preserve.

That's kind of a pet.

Got to pay up for that and that helps us to preserve this kind of this ratio.

Speaker 14: And it's ratio of lifetime value to customer acquisition costs. That answer your question? Yes, great, thanks, thanks.

Alright on value to customer acquisition cost.

That answer your question.

Yes, great. Thanks, Thanks, Mark Thanks, Mike.

Sure Okay.

Thanks Luke.

Speaker 1: Thank you. Our next question comes from Ryan Coons. Up Needham Company. Your line is open.

Thank you. Our next question comes from Brian <unk>.

Of Needham <unk> Company. Your line is open.

Thanks for the question.

Speaker 15: The question on the Delta-IFC business sounds like that's really common here.

On the Delta IFC business sounds like Thats really hamann here.

We expect that to peak on the commercial side as you kind of penetrate the fleet.

Speaker 15: expect that to peak on the commercial side as you penetrate the fleet there.

Outlook on timeline.

Speaker 8: So we're a little over halfway through the build out of the current backlog with.

Well were.

We're a little over halfway through the build out of the current backlog with with.

Speaker 8: delta and so we're still ramping there. And there are there's a lot of other activity on the in the commercial or marketplace so

Delta and so we're still ramping there.

There are there's a lot of other activity.

In the commercial air marketplace. So.

The fraction of our, you know, if you look at the number of new planes that we have on order, that we describe them a letter, Delta.

A fraction of our.

If you look at the number of new claims that we have on order.

Described in the letter Delta is less than half that well under half.

Less than half that. Well, well under half, you know, so. And it's not, it's been, we don't expect it to stop. There's just a lot of new interests.

<unk>.

And it's not.

We don't expect it to stop.

Theres, just a lot of new interest.

Got it. It's a housekeeping question here on the Appliations expense, popping up in the quarter there. Expect that to stay pretty steady into the close of the deal and kind of ramp post integration within Marcent.

Got it.

Housekeeping question here on the acquisition expense.

After the quarter there do you expect that to stay pretty steady into the close of the deal and kind of ramp post integration of Inmarsat.

No, you know, right up front was pretty heavy on the expense side. Where we are still running, we're still spending money. There's definitely lawyers still working on regulatory violence. And they can spend money for sure. But it's not the rate it was in the December quarter. Yeah, double.

Yes.

Right upfront was pretty heavy on the expense side, we are still running we're still spending money. There is definitely lawyers still working on regulatory filings.

And they can spend money for sure.

But it's not at the rate it was in the.

In the December quarter guidance.

That's it.

Thanks, Ron.

Okay.

Okay, I think that's the last question. So.

Inc.

I think there is last question so.

I just wanted to say.

Operator, thank you.

Operator, thank you and thanks everybody to go with Mark and

And thanks to everybody together with Marc.

The red team here, we want to think you guys should spend some time with us.

And the rest of the team here and we want to thank you guys for spending some time with us.

Hopefully you found the letter informative and you're continuing to feed that on that. Back to Pete is helpful. It makes it continue to make it better for trying to answer your questions next time.

Hopefully you found the letter.

Informative and your continued feedback on that back to Pete.

That's helpful makes it continue to make it better for trying to answer your questions next time.

Our operational momentum is still really positive. We're excited.

Our operational momentum is still really positive we're excited.

About the Cape Village and opportunities at N-R7 will bring. We think they have got us from team and their performance has been excellent over the same period. But at the same time we're focused on what we're doing. We're focused on our execution.

About capabilities and opportunities that inmarsat rank.

We think they have got a strong team and their performance has been excellent over the same period.

At the same time, we are focused on what we're doing we're focused on our execution our.

Our leadership team and our employees are really focused on executing our plans.

Our leadership team and our employees are really focused on executing our plan.

So again, don't hesitate to reach out to Peter with input or other questions you've got and we look forward to following up with you guys. Thanks.

So again don't hesitate to reach out to Peter.

With input or other questions, you've got and we look forward to following up with you guys. Thanks.

And this concludes today's conference call. Thank you for participating you may now disconnect.