Q1 2023 Viasat Inc Earnings Call

August 8, 2022

Welcome to Viasat fiscal year 'twenty 'twenty three first quarter earnings conference call. Your host for today's call is Mark Dank Bergh Chairman and CEO . You May proceed Mr. Deng Berg.

Okay. Thanks, Thanks for joining us today.

We released our shareholder letter shortly after the market closed today and is available on our website, we will be referring to it.

Joining me on the call today, Rick Baldridge, our Vice Chairman now.

Yes, I can Ryan our Chief operating officer, Shawn Duffy.

Chief Financial Officer, Robert Blair General Counsel, Paul Froelich, corporate development, Peter Lopez Investor Relations.

Robert provider.

Fantastic.

Thank you.

This discussion will contain forward 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 reports on Form 10-K and Form 10-Q.

Copies are available from the SEC or from our website.

Hubert.

Our results for the first quarter were consistent with the outlook.

We described in our fiscal year 'twenty, two fourth quarter year end call in May.

Several factors, including seasonality delays in certifying some new information security products, some transient supply chain issues that affected our sequential top line.

And improved <unk>.

Revenue mix across our service networks, lower R&D spend in the quarter heavily offset the lower revenue as well as our.

Growing viasat three ground infrastructure operating expenses that are in preparation for this fall start.

So collectively the result.

Alright.

The sequential decline in adjusted EBITDA, It's worth noting that our consolidated service revenues and satellite services segment revenue both achieved new records in the quarter, partially offset by the impact of product revenue from some of the factors I just described.

We expect.

First quarter EBITDA to be the low point this fiscal year with good sequential growth from here throughout fiscal year, 'twenty, three driven largely by scheduled inside connectivity installations.

The patients significant government.

Strong governance systems orders in the first quarter and also so far in the second quarter.

We're expecting that we'll grow our fleet of active aircraft.

By about 500 over the remainder of this fiscal year on both new and retrofit aircraft for both new and existing customers.

So I had three program is making good progress the first.

First satellite entered his final assembly.

Any mechanical environmental testing and second Teva is now at Boeing for space, Perhaps English.

And in service scheduled targets for the first flight of the holdings.

Holding from last quarter.

You also want to add a little color on the point in Nevada regarding the $62 million.

Payment we collected just after the close of the first quarter from Acacia communications.

Payment is for vacations use of our intellectual property includes contractual statutory interest.

We had previous previously one jury verdict order indications acreage use of our technology and.

Subsequently obtain vertical insurance.

Economical premium so that we can be certain other payments and that was prior to ultimately also winning court decision that upheld that.

While we didn't expect to receive the payments quite assumed it was factored into our outlook for the year.

In addition to the things that will help offset.

The prelaunch year over year ground infrastructure expenses.

Up to the Viasat three launch.

In support of additional discretionary investments and the significant growth opportunities, we are targeting in both fixed and mobile business areas.

So with that as a little bit.

Background, we'll open it up for questions.

At this time, if you would like to ask a question simply press star followed by one on your telephone keypad.

To withdraw your question Star one again, please standby, while we compile the Q&A roster.

Okay.

We will now take the first question from the line of Landon Park with Morgan Stanley .

Great great. Thanks, very much for taking my questions and good afternoon, everyone.

I'm wondering if we can.

Thanks, I'm wondering if we can start.

On the government side of the business and there's obviously been some press releases about our.

For services news reports about potential strategic options for part of that business I'm. Just wondering if you can update us on your views there in terms of willingness to honor to part with portions of our business and then maybe also just provide some disclosure around what is the right way to think about the size of the major pieces.

With that business and if there is any margin differentials within the different parts of that business.

So ill start with that and then I just have one follow up.

Okay. Okay. So first.

Scott.

We don't comment on.

Speculation or rumors about.

You may have.

I can.

I can give you.

The answer to the other parts of your question.

Around what to make up the businesses and the relative size.

Roughly.

<unk> compounds to one is.

Tactical data links.

Next primarily business around 2016.

It's been a longtime 70 growing part of the business. So.

Think of it.

In the range of maybe a third of that business.

Total revenue business there is another piece.

<unk>.

Information security based cyber security base.

Sure.

A third of the business and then there is one more piece, which is the satellite oriented and that includes both technology products that we sell and satellite services.

Kind of the fastest growing part of the business.

Satellite services business.

The most synergy with the rest of our industry.

Yes.

And thanks.

That kind of describes.

Sure.

Are there any margin differentials between the different portions of the business that you would highlight.

In general the services businesses tend to have the highest margins.

But.

The business businesses as a whole.

It's not enormously.

The margin characteristics of those businesses.

Okay.

I understand that you don't want to comment on press reports. So maybe can you just refresh us on your strategic view in terms of.

How you think about.

Potential optionality for that business.

Yes, youre willingness to.

To surface value, if you don't feel it.

I don't know if you think youre getting full credit for the value of that business today, but how are you thinking about that.

Hello.

The main way, we tend to think about all of our businesses.

It is really in the way that they provide synergy with each other we don't really like having just a collection of disparate businesses.

So far.

It's paid off well for us.

Clearly.

The defense business is the one that.

Probably the greatest amount of synergy with the overall direction of the company.

Satellite partners, having the services part.

The main thing.

I think that we've done well in order to grow steadily as we have over a long period of time.

And we've been pretty good at being able to.

Determined and relative growth opportunities or different areas.

Okay.

Both emphasis on those with the greatest amount of growth in that.

I think if you want to think about.

How we think strategically and how that product.

Probably the underlying.

The most fundamental underlying factor.

Revenue in our businesses.

And how would you say that the encryption portion of the business figures into that.

The long term strategic.

Given that you have for the company as a whole.

Just on the encryption part.

Tendency to think about is encryption.

Overall component of cyber security.

And there is.

There is a lot of borrowing in the cyber security.

In the cyber security segment.

What we believe is theres going to be more and more.

No spillover.

Security side into the commercial markets and so.

That's an example of one of the areas, where there where we're.

We're looking at synergies.

There is no other.

Well I guess.

We wouldn't have the collection of businesses that we do if we didnt see synergy opportunities across.

The only thing I would say is that.

Ari.

Significant may vary over time, and what circumstances and it will tend to respond to that.

And sometimes it's not so much that there is.

That opportunity in a given area, sometimes there's just way more opportunity in other areas I think those are the things that we've done a good job.

Managing and.

That's what we're constantly trying to assess.

I'd say.

Okay.

All very helpful Mark and just one last one for me.

Switching gears to Inmarsat.

I might have missed in the release, but.

Can you give us your latest timeline in terms of closing expectations.

And just maybe how youre thinking about the EU review that was recently announced along with the other.

Doj.

Yes reviews that are ongoing.

Thanks, Paul.

I think.

We've made pretty steady progress and achieved.

In Idaho.

That debt.

That we haven't for us.

Just on the actions and activities that we need to do we're entering into a period where.

We need some responses from the government that they need to draw some conclusions of references that we have a little bit less control over that.

Overall, our target is still we haven't learned anything I would say.

We should deviate from the target that we had.

Basically.

We still have a wait.

We'll get more information over the next few months and so we're looking at the back of that effort right now still aiming kind of program, where we were I think were close closing in on 99, So it's probably going to be more biased towards the back end of that but it would be towards the front end.

The prior I guess.

I'd like to close by the end of calendar year or is that still.

Yes within the realm of possibility.

That's the way to put it.

It's within the realm.

But then the real possibility.

It's hard for us to anticipate especially.

Regulatory is high.

The responses will come back from the agency has given the information that we provided.

We will get a lot more information over the next two or three months.

And it's possible that we can still close by the end of the year it's possible.

It turned out.

To the 18 months.

It's conceivable it could go beyond.

We will learn a lot more over the next.

Few weeks to a month or two.

In the EU review was that expected.

Anticipating or was there any surprise.

Yes.

Yes, it wasn't expected.

Because.

Most of the activity that we have in these sectors.

It covers both the EU and the U K so that's done.

Surprising.

Great well, thanks, very much for taking the questions.

Thank you Ed.

Yes.

Your next question comes from the line of Philip Cusick with JP Morgan Chase.

Oh Youre on mute, if you're trying to talk.

Okay.

Maybe we should take a question from somebody else and come back to Phil.

The next question comes from Chris Quilty with Quilty analytics.

Thanks, Mark I wanted to follow up on the I think you said you expect to add about 500 aircraft.

Into the 500 incremental orders going into the year, how much visibility do you have into that number and does that include southwest Airlines.

Yes.

Yes, the 500 and crews.

As I mentioned it today.

It includes both.

New claim and retrofits for both new and existing customers and that would include new collector with southwest in particular, we have new aircraft that are not.

No.

We will deliver equivalent to that.

So the uptake.

As new.

We have.

I think thats.

That's a pretty reasonable target.

There are factors that can drive it up or down from there, but thats kind of a pretty reasonable estimate.

Yes.

Got you.

Given there is capacity shortages.

Internationally and here in the U S.

Pretty.

Saturated market in terms of airlines.

That have already picked solution. So we're seeing some switching.

When can you reasonably start to target more international Airlines, given the timing of the your.

Your second satellite coming online.

Okay.

Yes.

So first of all.

Roughly ballpark, probably 30 ish.

Aircrafts.

Rough estimate aircrafts so probably.

All in.

15% to 20% penetration of existing aircraft and that people think thats going to 40000 aircrafts.

Mid to late thirties.

We think theres still a lot of growth in the market as a whole we have been.

Mostly.

Most successful in the U S market.

And so international traffic to and from the U S.

That's where most of it.

The installs are coming in this.

Yes.

Next in this current fiscal year.

We've done we've done well on international.

Places, where we have coverage and thats really been the.

The main.

Hi.

Factoring in determining our success recently, we've announced more transatlantic.

International So I think I think that.

Airlines are looking at deployment on Viasat three is seeing the progress.

And I think.

That's really well.

Two.

Two factors factory, one is getting the coverage on an international basis, and the places where we had international coverage.

We've done well.

The other one is.

Pat.

Airlines tend to see a good insight connectivity.

<unk>.

Yes.

Competitive differentiator, yes, thats a good point.

And so in the U S.

It's most prevalent.

Okay.

Competitive factor and I think thats some b.

Yes.

Kind of been a factor on the major long haul International Airlines Intercontinental flights I think theres still lot of opportunity among more regional airlines and that will become more and more accurate as you see the penetration growth.

Those are the things that we've got our eye on.

Overall penetration in the commercial implant market expands.

And do you have or will you have an antenna product for those regional aircraft.

There are.

Yes short answer is yes, okay, I think that the.

Airline.

Use of <unk>.

What the purposes for.

Outfitting regional air craft is evolving.

Yes.

Having impact connectivity is sort of an integral product to their entire fleet and other services, including on connecting flights in on these shorter.

So I think that their view of what what's needed is evolving and I think we'll be well equipped to deal with.

And there are there are I would say we are.

We're seeing more.

<unk>.

An outstanding regional Chen with more expansive view of what that means as well.

Regional Jets.

Yes.

Going forward is probably different than what you might have one two or three or four years ago.

Great and if I can one one final question.

Last week.

Echostar talked about loser.

Losing subs directly to starlink in part because of latency and youre introducing a hybrid cellular satellite solution to try to address that and of course, we also had.

The acquisition announcement with Eutelsat, and one web and again in part.

Udall said trying to get a latency solution.

Do you still feel that.

Ill only solution.

For consumer or IFC market sufficient or are you seeing an increasing need to be.

Companies with gasoline.

So.

Got it.

I think our view hasn't really changed that much.

To say that I would say.

It's one of the unique things about satellite as we do thing.

A little bit of a trade off between bandwidth and speed on one hand and latency.

We think we can.

And in fact your bandwidth.

Really efficiently from Geo and aiming in places, where there is demand and have the flexibility to move it around with that Fernandez, especially mobility.

Further out you go from the Earth alarmingly agencies and so there's this trade off.

You just have to hit the right mix for each particular vertical market segment.

One of the things. We said is we think that hybrid solutions are.

Good.

Good way to deal with that and we can mix in.

Lower agency options, whether those be satellite or terrestrial options.

Wired or wireless.

For terrestrial options.

So to try to hit the sweet spot of <unk>.

Each of the vertical markets.

Geographic areas.

I understood.

So we've done work on that.

Right now what we think is.

Specially.

Great.

Just the blooming growth in streaming and more and more video entertainment our switching from broadcast streaming I think that that's a lot of what we see is going on in satellite industry is kind of a big pivot to being asked for data.

And some of thats going to be through high throughput.

High capacity high throughput Geo satellite some of them might be.

From a latency perspective on neo or arena.

We've been really focused on is that.

Bandwidth component, we paint that streaming is.

Really driving.

Substantial growth in demand.

30 ish percent year over year on a per subscriber basis.

So we're really focused on being able to address that.

Thanks.

We are glad to be able to address low latency.

As kind of kind of the next thing next most important thing behind that with the <unk>.

Other thing that we.

<unk> been really interested in is is hybrid solutions, including multi work that we've been working with.

Therefore non geosynchronous.

Operators or prospective operators in order to be able to do that we don't think we necessarily need to own a non geosynchronous constellation in order to be able to do.

Grid solutions hybrid multi orbit solutions.

I do think that.

Just to elaborate.

A little bit more.

There is some sense that.

Only the geosynchronous operator interesting that multi orbit makes sense, but the non geosynchronous operators.

We think that there is a need for.

Non geosynchronous have just kind of.

ALLETE geosynchronous and one of the things Thats interesting about one web and.

Does that <unk> got.

Hi.

Do you think that as operators, saying, both Europe is the right answer.

And that's kind of that.

This might be the most.

First most explicit case or that you've also got Sds investing in both neo.

And Geo satellites telesat.

<unk>.

That's a significant geo operator, that's also doing multi orbit. So we thank you.

Just as indicative.

Or would it make sense from either direction.

Okay.

Kind of how we see it as well.

I think that.

The other point too.

One we are in euros.

The stack.

For the highlights one of the things that we've been looking at and we try to do this.

It is much commonality in our network infrastructure as we Canada for instance.

Choosing to acquired Inmarsat, one of the good things as their broadband network in Canada.

And especially in the mobility space.

<unk> already got nature tracking antennas you can.

Phasor antenna system, one of the things we've been working on demonstrating there as well.

A lot simpler to do them in the same operating pads as opposed to doing it in two different bands and so Thats. An example, upon a pain.

We are looking to do.

Average between <unk> and non <unk>, just trying to get some of the pain.

Cost efficiencies.

The ability to work with the infrastructure from both sides.

Sure.

Simpler more unified way.

Those are kind of the main takeaways.

We've been taking that things are still evolving in the space.

Perfect.

We still are interested in multi orbit to the and again I want to emphasize is to the extent that our customers are.

Delivers more value to them and to their to their users.

Great. Thanks for the detailed answer.

Okay.

Your next question comes from the line of Ric Prentiss with Raymond James.

Thanks, Good afternoon, everyone.

Alright.

Okay.

Questions one.

Housekeeping one on the legal settlement the $62 million I assume that was a revenue sounds like you might have done some kind of payment to lock it in <unk>, what should we think the EBITDA effect of that legal settlement was.

Hey, Rich this is Sean so, yes, youre right get Amanda is going to come in the revenue line.

We do have some cash.

They are going to offset that.

And some of the insurance costs and legal costs.

So I would think of that as well.

Finally net around SD.

The EBITDA contributing.

In the second quarter.

Okay.

Yes.

And let me just add a little bit will go into interest income.

Sure Okay.

And then mark.

Kind of strategic thinking.

We saw that the FCC voted four zero recently.

Have an effort on reviewing the space race.

What do you think the FCC is looking to do and what would you like to see the outcome of that and then I have one final follow up.

Well I think that.

On the one hand, I think thats the FCC.

Anticipating that hey, the options of doing things in the face of increasing and I think that what they've said and what would make sense to try to get ahead of that to try to think about.

What.

Congratulations.

It could turn out to inhibit <unk>.

The bottlenecks and then try to address those in the context of preserving access to space.

That's a good thing.

I think.

I think thats fine.

Interested in some there is something else.

Elements.

Okay.

Structures in space that are really interesting for the kinds of things that we do so we think we think it's good to be considering that I think that.

Yes, what I would like to see I think that.

The risks and space.

From very large numbers relatively large space past.

That represent.

I'll pass.

The cross sectional area.

That is really being dominated by.

By these large mega constellations that are really communications oriented and it's very difficult to see.

That.

Do you think this notion that.

Academics and other researchers are quite a few organizations are.

Orienting around which is the notion of carrying capacity.

How much.

Space is sustainable how much of too much how do you measure that and thats really likely to be driven by these mega constellations and so what we'd like to see.

They don't.

We look past the issue with the Mega constellation to focus on something Thats, probably not likely to represent as much as we are.

Two two.

Congestion in the space environment.

As some of the issues that we're already dealing with.

Okay.

One more follow up on the government side.

US understand on the tactical link 16 side.

What kind of synergies are you looking at there what kind of opportunities between the different business cycles through the tactical and <unk> kind of offer.

Well.

Two one of the.

Yes.

Couple of things that are going on there.

One of them.

Biggest.

Long term themes and defense communications and actually sort of overall.

Intelligence and Battle management as is.

Different names for it but what are the main English.

One of the congestion to our ordinary joint all domain command and control our communications and what that is intended to do this.

Synthesize.

Okay.

A number of disparate communications, who makes an intelligent sources into one sort of.

Seamless comprehensible hole and so when you think about that there are definitely things that you can do with terrestrial networks.

<unk> being an important one for that.

And in the way you combine that with space. So that's.

That's one.

Avenue that we would look at them familiar with the space and addressable parts of it I think we have quite a bit to contribute to that and we've been pretty successful in participating.

One of the other areas that is.

<unk> got significant synergy opportunities.

The notion of 2016 from space and we've been that's one of the areas that we've been pretty successful as well and as well the notion.

We think of.

Basically realize theres other applications for space reiterate that we've been successful with as well. So there is there is definitely synergy opportunities. There I think just to go back to what I said before in response Landon's question really the issue for us.

Trying to assess how those different synergy opportunities, which ones have the greatest growth opportunities, where can we play which would be the most successful just make sure that we're focused on that.

Okay.

Those are the two main thread.

When it comes to the tactical data links.

Kind of.

Satellite services space services mobility businesses that were growing.

Okay and final one from me then sure Phil wants to get back in.

The.

This industry has been trying for a long time to consolidate all of a sudden we're seeing a bunch of Warren's proposed viasat Inmarsat Eutelsat, one web rumors of Ses and Intelsat, what do you think the industry is looking at now that they're trying to solve for.

How do those differing potential permutations affect how you view your opportunity.

Okay.

Terrific picture question.

For one thing the one thing that I wanted to point out when people talk about consolidation a lot of times.

With the economy as a growth is slowing and we want to we want to take advantages of cost synergies.

What we see is thank.

Think of it as like the agents satellite.

Broadcast mechanism sort of winding down but the age of satellite data transmission medium is really just getting started.

How we look at it and so.

From our perspective.

What we did is we took we took two companies us and Inmarsat that were never really in broadcast business. We're really focused on data and we're trying to combine them in a way that creates more more opportunities for growth that was really the thesis for <unk>.

Tonnage I think that.

There is another theme, which is more among the large legacy operators, which is how does a more of a pivot from.

From broadcast to data.

So a lot of the other combinations that are fine.

That are either happening or being speculated on are really kind of around executing that using maybe the broadcast business.

Charge offs the data business.

What we think is that the data the data businesses.

So different from the broad business.

Almost everybody analogy.

We always use is if you look at the company we were preliminary.

Eminent.

Using.

Terrestrial broadcast frequencies those none of those companies are the ones that have really been active in the data customer data business, which is primarily the global cellular.

So we just think they are really really different.

Really good skills announced Scott.

Good growth, we think inmarsat is a great customer base could asset leverage that's kind of our thoughts on it I think theres.

Theories behind some of the other combinations are a little bit different than that.

That really helps.

We will sell well.

Thanks, Nick.

Your next question comes from the line of Ryan.

With Needham <unk> company.

Thanks for the question.

I wanted to ask you your updated view of how we should think about the viasat three kind of revenue ramp here next year, how long until you can.

We monetize that capacity what percentage has kind of spoken of spoken for today with your current.

Business plan, then secondly is there going to be any cannibalistic effect on your business from lower price lower cost per bit platform.

Yes.

Okay.

Yes so.

Just two.

Review kind of what we've done with both line, one and Viasat two and we think.

We think things will play out fairly similarly unbalanced three.

One and two we really grew.

Commentary at the beginning.

On the residential business because that was one that we can address the fastest.

Times, what Youre seeing is.

New operators trying to get into the data space and also tried to scale around the residential space.

Then what we did with <unk>.

With one or two as we really aren't growing.

Ability business around some of the government business, so now coming to Viasat three.

Yes.

The mobility businesses for us have more scale than they did when we did wanted to so we can scale those fueled.

By expanding them.

Using our existing business as a platform for that by providing more services to some of our existing customers are making.

Some of the services that will do for existing customers and as we've talked about before when it comes to competitive differentiation in areas.

Being able to do.

Streaming videos.

Really attractive feature for employee communications.

You know that.

I think we'll get.

More contribution early on from the mobility businesses with Viasat three than we did with one or two but we also see big opportunities in the.

In the.

Fixed residential business as well.

Just one.

Thank you talked about sort of like deterioration kind of the way the the way we framed this week.

We didn't put it in this current level.

As shareholder presentations kind of our main focus has been the productivity of bandwidth. So if we can get a lot more bandwidth for the same amount of capital investment what our strategy has been proven to share that with our customers.

What we can do is we can.

Existing customers more bandwidth for roughly the same amount of money or we may come up with different price tiers.

<unk> will be more bandwidth value per dollar.

But as long as our productivity improvements are greater than what we shared with our customers.

We bought back from that.

So that's that's the theme.

<unk> increased bandwidth value, that's what enabled us to grow our customer base. Each time, we've launched a new satellite with better economics, and so we see the same things here.

The thing that we've been able to do pretty consistently and we see that happening here as well.

Aim to have the satellite.

So you can say for that is we've sold about the bandwidth within like two to three years, but then what we tend to do is we follow up.

By constantly evolving that user base towards more and more economically valuable application.

Helps to drive our margins and our revenue and that's what we've done each time.

No.

Rather than less.

One thing you can imagine as well if I just sold a whole bunch of digital assets that are at the beginning.

Maybe I'd be getting rid of risk on the other hand, our opportunity to sort of groom that base and identify the applications and the customers that place value on it to return to use it in new markets, where we can.

Additional products and services to increase the value that's what's really enabled us to grow the revenue or the margins on the existing satellites for the last.

10, or 11 years that we've been doing this and we see the same things happening at this time.

That's helpful. Thanks, a lot et cetera, it sounds like a lot of the terminals you have shipped at least for some of the recent past is upgradable to support Viasat three.

Yes, yes.

Given that we've known what the architecture is that's what we've been aiming to do there are no there are based.

Basically each time, what we've been able to do is we've been able to make the existing <unk> the existing terminal set.

Can be.

Used on the new satellites, but the new terminal sets have additional features or capabilities that make them more useful or economical and a lot of that.

Cousins.

One of them one of the things that takes a little bit underappreciated and this is.

What we're doing is we're mixing many different types of service agreements and value proposition.

In order to do that efficiently you need to be able to.

We call schedule looks like how do I fit together all these disparate types of services.

And exists on the satellite so that we get very very high efficiency of use.

One Great example would be if you are an airline mobility space and you have airport with connecting clients from one airline and a bunch of different airline several times a day you have enormous demand at that airport for maybe an hour or so and then in between that the demand is way way lower so what you really want.

Do you don't want to take all of that other bandwidth out of service just because you're waiting for that next wave of abuse. So that the idea. There is how do you schedule your bandwidth resources to get high efficiency those.

Peak to average demands, especially in the mobility space can be accurate can easily between high peak areas.

Gary.

What we tend to do is we build into the network and the latest generation of terminals more and more capabilities.

Schedule, it really really efficient.

Those are some of the things that drive our ability to.

Increased margins in revenues, even after we've called out the satellite.

That's really helpful. Mark Thank you Mark.

Thanks.

Your next question comes from the line of Mike Crawford from B Riley.

Thank you just to go back to the Acacia Award.

It does.

That mean that Cisco Acacia has.

The downstream license or.

Do bear customers like momentum that use the DSP is Pamela sorry, I missed your call. Please thanks, Vanessa concluding your phone number and I will return your call as soon as possible.

Hello.

I'm sorry.

Okay.

Did you hear the first part of my question.

So.

Robert.

So acacia has.

<unk> done some customers like momentum that use a DSP do they need a license or is that incorporated in this agreement.

So there is just to be clear Mike there is no agreement.

This was the result of a verdict.

They paid a judgment until those damages are four areas of our technology.

Here are in agreement that they do not pay us under so they were ordered to pay us for the use of the technology through 2018 excellent that Eric.

Is it related to so.

Our license or they provided under that agreement has a <unk> date.

In order to pay so.

That's correct.

That's what the verdict covers.

Does that answer your question well, partially so that's what I was getting at so.

Now you are paid up to 2018, but theres another four years.

Under.

Ill pass the bridge plus others using that DSP. So.

Is there an expectation you might be able to get some more out of this or is this issue settled in your opinion, yes. So we have two pending lawsuits against Acacia they were state pending alkylate appeal.

Our sales team and will be probably restarted in the next month or so one of them relates to the same technology that we issue it.

An issue in the first case from the period. After the end of 2018 to the present and the other one relates to additional technology. So those cases are still pending.

I'm not going to speculate on.

Comment on pending litigation and what might happen with us, but those things will be restarted here probably within certainly in this.

In this current quarter hopefully within the next month or so.

Excellent great that's kind of what I thought and then just switching gears.

With that.

Luster failure on this annick FTE satellite the power of some of your northwest.

U S residential subscribers.

I understand that satellite is going to move to an inclined orbit and grab that.

Sooner then.

Expected end of life, so what's the risk to your U S subscribers and that sounded like theres going to be avoid service, particularly since we don't appear to have an official launch date, our window for Viasat three although you do say that you hope to have that launched by the end of December .

Yes.

And I got to spend.

It's been a good highlight for us for longer than its expected life, but just to put things in perspective.

That's well under 1% or 1% of our satellite capacity so that.

We've been able to constantly make improvements.

Yes.

We have been constantly make improvements.

The existing satellites that sort of make up for that.

<unk>.

In the cases of individual customers, who have turnover arrangement et cetera, what we'll do is we'll.

We will provide an upgrade path for those customers, if we need to move them to a different satellite.

Okay. It was my understanding like let's say my father, and Peekaboo, Idaho that that was the only satellite that you could hit from Viasat.

No no.

Bob.

Sample Wildblue overlaps.

Yes.

And we may have other resources.

Yes.

Yes, yes, viasat two providers.

Yes.

Okay and then.

Anil question is you talked about these robust tactical data link orders in this quarter does that include Charlotte Square waveforms.

No.

<unk> is a different it's a different way form them.

And in 16 years.

And it's.

Got it different applications different different uses morford personal communications.

Machine to machine.

She's machine parts of it.

Different application.

Yes.

Good luck in English.

2016.

Right.

Given that the Super high margin revenue I think mostly royalty revenue for you can you just characterize what's going on with Charles We're right now.

Okay, Yeah, So Charles Charles.

Just to recap.

A subsidiary, we own a little more than half of that subsidiary.

What are their biggest businesses.

They developed a wave form under a.

Government wanted a library of license thoughtful way form.

Wave one was one of those.

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