Q1 2024 Viasat Inc Earnings Call
Yeah.
Welcome to Viasat off why 24 first quarter earnings Conference call. Your host for today's call is marked Inkberry Chairman and CEO . You May proceed Mr. Deng Burke.
Okay.
Thanks, Good afternoon, everybody and thanks for joining on our call today.
With me.
Shawn Duffy, our Chief Financial Officer, and Robert Blair, Our General Counsel.
So before we start Robert Safe Harbor disclosure.
Mark.
As you know 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 forms 10-K, and 10-Q copies are available from the SEC or from our website.
Okay. Thanks.
We encourage everybody to read the shareholder letter posted on our website earlier this afternoon and it will have a.
In detail.
Again, an overview.
The main points upfront and then move out.
Questions.
So the first quarter results were very good.
That acquisition closed in May and contributed to.
To our first quarter results year over year consolidated continuing revenue grew 36% to $780 million and adjusted EBITDA.
87% to $183 million with good performance across the business.
Got it that Standalone revenues grew 12% and adjusted EBITDA grew 13% year over year.
Lawrence and backlog and momentum has continued into the second quarter, especially.
On connectivity.
Go forward basis, we'll refer to consolidated and segment results for the combined company and adjust for continuing operations that is appropriate.
This merger, we're starting with a stronger than anticipated balance sheet and even stronger than what we expected when we close the tech sale back in January .
We're making good progress on the integration and are on track to achieve our royal synergies.
Aiming to improve on those.
So I'd like to mention that any formulary.
Formulary, Maurice <unk>, Chairman and Rajeev Suri.
In March that CEO joins advised our board of directors and we're looking forward to their contributions.
So I'll start with a little more color on the Viasat three Americas situation.
And then shot and drew will add some color on our financial results operations and our outlook and then we'll go to the questions.
So last month, we reported an anomaly with the deployable antenna on Viasat three.
Since then we've been working with the antenna supplier.
Manufacturer to more fully assess situation for the first party and the implications for flight.
I'll discuss contingency plans in a minute, but given those plans.
I'd have to point out that we do not currently anticipate that.
The year 2024 financial results will be significantly affected alright, five one performance FY 2025 will be affected by the performance of <unk>.
And the timing of the corrective actions on slide two.
The current information we believe we will continue to grow in fiscal year 'twenty five as well.
Not to the same extent, we would have without the anomaly.
While we are making steady progress we expect that analyses that are underway to provide more definitive insight and we'll provide updates when we have more information, which we currently estimate will be.
When we report earnings next quarter.
Okay.
Color on the background of the antenna.
<unk> is a major aerospace supplier a decade long history.
Successful space appointments.
Can you tell us from a product with a history of 100% successful deployment on a number of emissions, including five on Inmarsat satellites.
One antenna was partially and fully deployed with nominal results several times during manufacturing and testing.
If I had to satisfy it uses the same antenna.
Three uses a completely different design from a different manufacturer that satellite is unaffected by that one anomaly.
Alright, one satellite is insured and insurance has already placed on slide two.
Hey, Mark.
Prior Standalone outlook had no dependence on Viasat three of course, and we still do expect to capture revenue synergies with the Viasat three fleet.
We've got four main work streams underway.
One is to work with the manufacturer and our satellite supplier to determine the root cause of the reflector anomaly and the appropriate corrective actions from by two.
Land to collect additional data and incorporate that into the deployment fault analysis.
So expect more information to report regarding corrective actions like too.
To date in line schedule next quarter.
Second is to assess the performance of the satellites with the antenna as it.
This initial end to end measurements with the effected antenna indicate the rest of the satellite, including the innovative payload and ground infrastructure built by us.
Operating as expected or better.
We have a plan for additional measurements.
I expect will give us more definitive data and the throughput of the satellite including the effects of the anomaly.
And the potential operational mitigation and we are targeting to drive.
Advocate on that next quarter also.
Third is to assess the potential of improving the antenna deployment on fiber one.
The outcome of this will depend on the results of the first two work streams and again, we expect to provide an update next quarter.
And then fourth is to mitigate the effects of the one anomaly.
Our global mobility business.
Especially via optimizations of our existing fleet optionality in the near and longer term orbital locations of each of the Viasat three satellites.
Additional third party capacity is required.
These plans are already well underway and we're confident we can continue to support our global mobility customers.
<unk>.
As we do today and going forward.
Fixed broadband today represents about 13% of revenue in that business will be the one that is primarily affected by the anomaly, we'll be better able to assess that impact next quarter also.
Importantly for Viasat 352, and three are test and measurements to date planned increased confidence to those parts of the Viasat three system.
Where the new innovations are.
The launch schedule for flight III is unaffected and will provide an update on slide two inclusive of corrective actions as I mentioned next quarter.
In March the acquisition expands our enormous Keybank fleet to a total of 13 Ku band satellite, including five one.
Six.
Two satellite, which was launched earlier this year and is undergoing orbit raising.
We have a board K aam's satellites under construction with five of those planned for launch before the end of calendar year 'twenty five.
So we have a greater diversity of iron Ormat technologies.
Previously discussed an opportunity to substantially improve the capacity of art on orbit fleet via ground network technology and optimizations that was one of our objectives with the acquisition.
We believe we will show the benefits associated.
Associated with that through our resilience and growth in both the near and long term timeframe.
So with that Sean I'll go into some of the financial.
Thanks.
Some brief color on our financial Q1 revenue was 789.
And for that 30% compared to the revenue.
In your operation.
<unk> hundred 75 million in Q2, I think that my timeframe.
Our results include one.
One month revenue contribution from the acquisition date.
Definitely.
Yes.
We estimate.
ISI. Thank you with that revenue for the quarter, including the pre acquisition period would have been about $1 billion.
And increased at about 11% year over year and help companies achieve double digit revenue growth.
Net loss totaled 77 million.
Thank you Matt.
The 40 million net loss in the year ago period, due primarily to the nonrecurring acquisition related expenses.
Our intangible amortization and higher interest expense.
Adjusted EBITDA for the quarter was 183 million an.
An increase at 87% year over year from continuing operations.
Q1, FY 'twenty for adjusted EBITDA included a one month impact from Inmarsat.
$72 million.
We estimate that the combined bias.
Thank you good afternoon.
We are including the pre acquisition period would have been approximately 331, an increase of about 9% year on year.
So a little more color on that.
So the June quarter, we estimate revenues around $400 million and adjusted EBITDA about 220.
A third of which is included in our consolidated results for the quarter.
Our revenue mix for the 12 months ended March 31.
36% from government customers, 34% in maritime, 22% business in commercial aviation and 8% enterprise and other.
High quality diverse revenue base, which fits well with <unk>.
And our growth objectives, and then mobility and government markets.
And we have contribution.
We continue we will continue to be folded into our existing segments as follows.
Results will be included in our government systems segment.
In the individual largest revenue component of that.
Led by recurring Satcom and the service revenues.
And MRSA Maritime Aviation and enterprise revenue will be included in our satellite service segment and as a result.
Alrighty Robyn this will make a strong majority of that segment's performance.
And our commercial networks segment will be focused on women's health as it is today with no meaningful contribution from any.
And you can find more complete review of our results in the shareholder letter we're investing today.
We ended the quarter with over $2 1 million of cash and short term investments.
We expect to maintain additional liquidity for our time.
Given tight credit market and return to schedule and low rates on our outstanding debt and higher rates of return on the cash we hold in order to preserve the company's financial flexibility.
We expect growth and the realization of synergy will improve our cash flow from operations.
And one last item so.
The debt, we issued related to the financing of our <unk> transaction.
135 billion and currently held by the patients.
We will provide marketing support for them when and if they choose to go to market.
As a reminder, the interest rate on the debt are already based on the original financing.
2021, and will not be impacted by the transaction.
I'll pass it Ian Garrett.
Great. Thanks, Sean I'll cover three key topics one double click on overall operational performance to talk about our new combined company and exciting possibilities and opened up for us and trading combined outlook.
So as you just heard from Sean financial results in Q1 were excellent with healthy year over year growth across the businesses.
Government systems had another quarter of strong demand for our information assurance products, especially including our high speed data Center.
And during the quarter, we earned an additional type one certification for our next generation government space encryption product.
During the product quarter, we signed 187 million Australian dollar.
Contract with southern positioning an augmentation network to support improved satellite based positioning and accuracy.
And then Capex since U S fixed broadband revenue declined due to fewer residential subscribers, partially offset by higher hard to as we continue to reallocate bandwidth to rapid sequel.
Fee growth and update the new service plans.
And commercial IFC and so with aircraft grew 18% year on year.
On a combined basis to 3230 aircrafts.
Passenger usage also increased driving up revenue per aircraft.
And our quarter end contracted backlog in commercial IFC tanks, and approximately 600 aircraft.
Momentum have continued at a pace to date in Q2, including additional new airlines in additional aircraft for existing customers.
And Mark that achieved 11% growth year on year growth in cloud Xpress platforms. We are excited about having greater diversity and scale market outlets in global mobile broadband.
And this quarter, we announced fleet reached close to <unk> LTE service, which is designed to augment uninterrupted high speed broadband to merchant offshore energy and fishing customers and sailing near the close of our Doctor important.
Commercial IFC equipment deliveries continues to be a strength this quarter and are reported in our commercial segment.
Total debt and return a good leading indicator of commercial IFC service growth and support our FY 'twenty, four and FY 'twenty five options.
So overall this was an excellent quarter with the closing of the acquisition strong financial performance and an important step forward.
Now to the combined company I would like to start by reminding everyone. Why we are so excited about the possibilities open to us as a combined company and then I'll provide an update on where we are with the integration.
Let's review why this transaction is so compelling strategically.
It accelerates, our global mobility and government strategy.
Our strategy is focused on the best and fastest growing markets, including aviation government mobility services Maritime land mobile and enterprise.
And Mark that brings global K, H and L band coverage with a robust satellite launch formats that both augment coverage and as resiliency and redundancy.
We are excited by future upside from value add about spectrum assets, including the Iot and director device opportunities.
Third and Mark Thats, well established business greatly enhances our global distribution.
The company has a large installed base of existing customers across our broader portfolio of markets and products that can provide greater overall revenues to our financial performance.
This is also a compelling financial combination we both have strong businesses today, but together, we are enhancing our future free cash flow at <unk>.
Important by an estimated $1 $5 billion in synergies on a post tax NPV basis.
Now, we intend to be aggressive considering all options open to us as we build the business and focus on markets, where we can win and scale cost effectively.
In terms of revenue we are already seeing revenue synergies take form across key business units, such as government aviation and maritime.
In terms of cost efficiencies, we are focused on achieving and accelerating our targeted cost synergies.
FY 'twenty five we expect to achieve about half of before captured $80 million in annual cost synergies.
Capex synergies remain a key lever for value creation is what we are targeting $110 million annually a few years out.
Now behind the actual numbers, we are integrating capabilities with an eye to being the best of the best from the perspective of people business processes, and our partner and supplier ecosystem.
I should add here that culturally we are all.
Already seen the two companies are a great fit and Thats very important.
We recently formalized our go forward leadership team is focused on scale, capturing the benefits of our technology and furthering enhancing measurable value we deliver for our customers.
Coming to to delivering our successfully integrated operating model, while continuing to maintain momentum and delivering value to our customers and shareholders and we are excited by the many opportunities ahead.
And we think it is important to spend this time to communicate how we view the significance of this combination and how that informs our diligent approach to integration.
Now moving to combined outcome.
GAAP up with a high level summary of our financial outlook Theres more on this in the shareholder letter as well.
<unk>.
For FY 2024, we expect revenue growth in the high single digit percent agents for the combined companies relative to pro forma view of both for FY 2023.
A simple view of expected FY 2024, adjusted EBITDA can be approximated by adding why SaaS standalone prior expectations of high single digit to low double digit growth for full year FY 2024, adjusted EBITDA from continuing operations to approximately 10 months of it.
Marsa contributions.
We expect will grow slightly throughout the fiscal year.
We expect growth in revenue and adjusted EBITDA for FY 2025, including assuming a full year contribution from Inmarsat for FY 2024.
Our expectations are supported by our healthy backlog and strong waters, we do anticipate that FY 2025 growth rate will be affected by Wi Fi. So you have one anomaly, especially by the fixed broadband business where growth will be debate, but that's currently about 13% of our revenue and we anticipate growth in rest of the.
Business as it is not directly affected and that is 87% of our business.
Our positive free cash flow inflection point is targeted to occur in the second half of calendar 2025.
Lastly, our plan is to hold an investor day before the end of our fiscal year. So we can share more details of our plans with you.
So there you have we had a strong operational performance in Q1, we are on track to deliver a very material synergy value and we expect the combined company to grow revenue and adjusted EBITDA in FY 'twenty, four and FY 'twenty, five while creating a powerful global mobility and government leader.
Thanks.
With that we'll be happy to take questions.
Thank you and if you would like to ask a question. Please press star one on your telephone keypad. The first question comes from Simon Flannery Morgan Stanley .
Great. Thank you very much.
For all of the information.
It sounds like you havent, yet determined whether it's or whether it's a slight one is the total loss or not maybe we can just assume if the worst happens what would be the timing of collecting the $420 million.
Hurdles you have to go through to get that.
And what would your mitigation strategy P. I think you've talked before about perhaps repositioning up too.
And what about ordering.
For satellite how much would that cost.
Sort of timeframe would you put around that.
Hey, Simon this is John I can take your first question Sharon I mean clearly were.
It's really really early in the process.
And we had a lot of success and the timing of our prior question on <unk>.
But I think that.
It's hard to estimate when we'll know it happened right now.
Yes things are things are currently in the process to make it saturation around.
And was that about 18 months or something like that before.
Yes, I think it was a little short of that.
And timing around the 12 ish Mark.
Okay.
And then in terms of some of the other questions that you asked.
We don't want to put out any any.
Assessments are statements of what we think that capacity will it won't be including going down to zero.
Having without having more facts.
<unk>.
I think we have we do have plans that cover.
Yes.
All of the things that you asked but obviously.
What we would do before.
As an example would be for replacement satellite it depends a lot on what the performance of this this one as well.
We expect to be able to take measurements on that.
So as I mentioned, we have been able to get in.
Measurement through the satellite so that.
That's where we're starting from.
As to quantify those.
Don't really want to speculate but we do have we do have.
Plans that range from what we would do if we got very little or no capacity to what we would do if it turns out to be to be more and more.
Closer to what we originally expected.
<unk>.
We will.
So some of those to the extent that some of the plans involve forks in the road, we're not going to go through a fork in the road without having the data that supports it.
Understood and you've already called out the impact on the consumer broadband business, what happens to the IFC business sounds like that's still growing rapidly.
Are you going to have to work with the airlines to mitigate some of the.
Their demand is to bring the pains Andre do you think you can handle the backlog as it comes on with.
Without.
The new satellite.
So we can handle the backlog.
At least for some period of time.
But we can and we can handle all the backlog that we have.
Not all of it depends on.
On this particular satellite.
<unk>, we've been doing to handle our backlog so far is transferring business transferring bandwidth from the fixed applications to be.
Two of the mobility business. So we have that going for us and we also mentioned we have additionally, more.
More additional maneuvering room.
Using some of the Inmarsat fleet, we have the potential to relocate that alright.
But we're not going to make.
Premature judgments on what we need to do until we get the data that supports it.
That'd be completely fine for our mobility businesses.
Yes.
Actually for an indefinite period, but certainly for a period of time, it will take us to figure that out.
Alright, Thanks, a lot mark.
Thanks Brendan.
Next up we'll hear from Mike Crawford B Riley Securities.
Thank you.
The Viasat three Americas play one is the total loss isn't it likely that the.
Satellite <unk> bin.
We're expecting to put up over to Europe . It would make most sense supported over North America first until you could get.
Other satellite up and then you can move that satellite over to its European or EMEA slot.
Okay, Yes, yes that is a possibility I think that from our perspective, we will move satellites in a way that gives us the best shot in serving our customers all of our customers demands. So we have the flexibility to do that.
It would be premature to jump.
<unk> to us.
The operational scenario.
That assumes that the satellite has no.
Has no utility.
What we are trying to do is we're trying to work through the financial scenarios.
Take that into account.
That's different than what the operational scenarios would be because we have more time to work on those until we will.
We'll get the data floor and then we'll make decisions.
Hello.
Just maybe one more on that front, if you don't mind so.
The APAC satellite configured differently with a different antenna so pretty much that one I would imagine is going up over APAC, regardless and then you have also been developing your bias for payloads, so wouldn't it make sense.
To maybe take some of those features.
Viasat three dot one come up over.
Erica is eventually after the slide two on slide <unk>.
Yes, okay. So so just to be clear any of the satellites can operate effectively in any of your locations. So that gives us that does give us more flexibility. There was there is.
There is additional operational flexibility that's built into the flight III satellite.
<unk> works in Asia Pacific, but it also works in other areas.
But I don't want to imply that we have made any decisions on that because we.
You want to get the data before we make the decisions on the Viasat four.
There are some.
There are some significant improvements there that we could use as the foundation for a replacement satellite, but again, what we do there will depend.
And what we measure.
And analyze.
In the near term.
I think thats the main thing I would.
Encourage investors.
To think through is that we're going to make.
A sound methodical decision with with real data, we'll be able to get the data and there'll be a lot more clear.
Everybody wants to know quickly.
Yeah.
Knowing that Theres no theres no consequences to us taking.
Another couple of three months to get good measurement, and then making those decisions.
Okay. Thank you that makes sense and then just a completely unrelated quick question.
Does that $4 8 billion unwarranted IQ that's not in your government systems backlog.
No.
In the past you had a single award contract.
Been able to realize most of that but is there can you breakdown how much of that might be single award versus multi award where youre competing against others.
No there is a diversity of INTL.
I don't.
Maybe we might get back to you in a little bit more of a split there.
That is that some of those <unk> contracts a fair number of them are for.
There are a broad range of services, but they are pretty well contemplated services.
So we would that are unique to us others are more like.
Political fraud agency announcements there are multiple bidders.
Allocation of rewards everywhere.
Sir.
I don't think it would be I don't think we can give you a good breakdown of that right now in this call.
Okay, well, thank you Mark.
Thanks, Mike.
The next question is from Chris Quilty Quilty.
Alright, great.
The Guy from Colby space is going to go against format actually got a question about the government business.
Which is.
Good numbers here on the quarter.
Good order flow.
Just at a high level as you look out over the next 12 months in that business line. What are the things that you think of as the.
The worrying case continuing resolution two.
Upside scenarios that overall, when we think about the outlook there.
Boy.
It's hard to tie facilities macro trends, we will know more.
There's generally a lot of activity right around the end of the government fiscal year. So that will gives us more insight, but some of the things that we're doing.
For instance, one of the growth areas.
Got it.
<unk> this quarter.
It came out better than we expected was for high speed data Center.
Good.
<unk>.
They're one of the things you can look at is just how much interest there is in AI and big data processing.
For government applications of that occurs in classified levels of course, that's going to drive some of the.
Drive the demand for the types of products that we provide.
So.
So.
Sure.
So.
Okay.
So some of those things besides just the way the budget is determining what are the factors will be how our customers decided to use their budget and things like these information assurance appliances, we have a lot more.
Right.
Because I think you make decisions.
The other thing is that we do have.
This is part of what we're aiming for with a lot more of our government revenues and recurring services revenue and those are.
Much more predictable than say.
So the individual contracts is timing might be affected by some of the budget realities.
That's one of our one of our objectives as we like.
Those types of revenues, which can change over several years, but are less subject to some of these.
Got it.
Sure.
Short term budget nuances.
Thank you you are asking about.
Yes.
A quick follow on to that have you now identified what sort of synergies you see between the inmarsat.
Government side.
Brian .
Yes, I'd say we.
Because of the nature of some of the contracts we have it takes a little while for us to get the details crops across there, but yes.
Yes, we're getting more and more exposure to that and obviously theres a bunch of.
Similar.
We have similar applications for <unk>.
Similar but different customers and opportunities to extend things like geographic coverage areas or types of services or.
Technology equipment across those customer basis, those are the things we're looking at.
We have we and we have identified.
These revenue synergy opportunities in the government area as well as in the aviation area and starting to the maritime area.
We're not going to give any specifics yet.
We will be able to comment more on specific values.
In the next couple of quarters or so.
Got you and if I can totally switch gears the IFC business.
You've had tons of customer wins.
Both domestically here some big international deals.
Some of which I am assuming were predicated on capacity that those customers were expecting.
Are there any.
New customers southwest is a big win.
Don't know how far they are in the process that.
Youre feeling pushback from those customers around how youre going to transition and provide the capacity needed.
Okay.
So the approach that we've been taking in the aviation business, which has been very successful for US is to is to provide.
Specific service level agreements that are end to end for their route system. So when we take on new customers.
We look at.
<unk> fleet their routes.
We look at the airports that they are serving and we show them.
Here's the service level agreement that we can deliver it here's why how we know we can deliver that and so we're going through that I think that.
Kind of what is happening is we're going through.
Those details again with our customers in light of the Viasat three scenario.
Yes.
The initial.
Question is can you still serve.
That we have in the routes that we have going forward.
And so far that's.
I would say quite well.
Because we do have the resources to deal with the.
The customers that we have we may have.
Some cases, we may end up with slightly.
Different or somewhat different service level agreements for some routes, where some portions of some routes.
So those are going through with spin.
Specific customers, but overall.
I'd say that the.
Qualitative reception has been really good.
Because it's based on the approach that we've used to understand them.
Having a larger fleet and then the other thing that we did kind of mentioned is.
For going into the second quarter, a large amount of which is since we we did.
Disclosing nominally on Viasat.
Slide one our order book still been really good in that order flow includes both new airlines in different geographic regions as well as existing airlines.
Sure.
Yes.
Take placing orders for new aircraft as well and the large majority I think of it as well.
If you think about it too.
As the two different businesses.
The ISS business. The legacy Viasat portion was heavily north American oriented and we have plenty of resources to serve that we've been able to demonstrate that to customers whether there.
New line fit aircraft of Retrofits, and then the Inmarsat order book tended to be.
More international but didnt, none of their service level agreement depended on Viasat three and so both of those are still proceeding.
Sure.
So if the.
It's pretty clear given where most of your customers orders are there.
The next new capacity has to go to North America, whether thats. The next Viasat three months' worth Gx seven the next inmarsat.
But.
With that I mean, it's best case scenario a year, depending on the strategy three years, if you build something new.
Would you if you have to burn down and you've been burning down a lot of the consumer.
Hit a point, where at a year to two years out.
Not worth trying to scale that business.
No.
Sure short answer to that is no.
Bill.
The things that we've been emphasizing and I think our airline customers do understand lower then.
I mean to great extent, because they're so logistics focused what really matters is not just the amount of bandwidth, we have where we have it and so.
That's what we're doing is we're able we are.
We have good route maps of course, we take into account that the.
The routes arent, 100% deterministic they take different routes depending on weather.
Schedule issues at time, so while we build the demand.
From that and then we work on supply and for supply.
What are the good things if you think of it as this way is that.
If you if the real problem is reinforcing the areas with the highest demand and when we add multiple satellites across the fleet that gives us a lot of maneuvering room for reinforcing the high demand areas. What we are doing and we had already we mentioned this before we had already done.
Partly because there were concerns about additional schedule delays as we do have agreements with partner operators to reinforce both North America.
And some of the ocean crossing routes and in other the other high demand areas. So we already had some of those agreements will probably exit.
Execute those and then we have our other tools and.
Good.
It will take I would say is what we're talking about financially what are.
What's our outlook without one.
One that's not the same as saying you won't have pipeline so I think.
Again, the fact that we can communicate through it.
<unk> is helpful, but I don't want to take any.
Any.
Surgeons about what the capacity will be until we get more our data we will be able to do that in November .
Got you.
That note.
Maybe my condolences ducks.
<unk> you guys have worked hard at this and innovative.
That kind of binary outcome on a component.
<unk>.
Thanks, I appreciate that.
And through it.
The next question comes from Ric Prentiss Raymond James.
Yes, good afternoon everybody.
Hey, rich.
Obviously, it's been a busy earnings day, earning season, it seems like we've heard them.
You are of this last week.
A couple of questions if I could obviously I'll echo chris's comments, but maybe not used some four letter words, but just say clearly disappointing.
Yes.
Im glad youre working through it.
I might've missed this but did you talk about the review process of what it's doing to flight <unk> timeframe and assume you want to make sure everything is good but when should we expect quite too would be going up.
Yes, so what are the work streams that I did mention is we are.
So really the intent of manufacturer is the most knowledgeable they are the ones that are leading the root cause analysis, we are participating the spacecraft manufacturers participating.
We are.
Still collecting and analyzing data to get to root cause.
We think we will.
Have more insight into the corrective actions based on a root cause analysis, probably by next quarter those corrective actions will.
That's what will determine help help us determine when the launch date is for the next satellite.
Good.
Again, we shouldn't speculate on what they will be but I'm sure you can imagine that the corrective actions can range from nine to more complex.
So there is no.
Basis too.
One any one timeframe over another without the data from the root cause analysis, which is underway.
Theres a schedule for <unk> retail to report more about the timetable to launch.
<unk>.
Next quarter, it was pretty close to being able to launch when we had the Santana anomaly. So that's probably the corrective actions for the antenna will be there.
The main factor in determining when the launch dates.
Okay.
I remember, maybe remind us previously path to positive free cash flow is going to be.
Certain was at six months after.
Slide two was up.
The previous thought it with free cash flow positive was going to be.
Hey, Rick This is John So I think we had earlier.
Ed.
Spring 2020.
So yes, we're still shooting event planning.
Currently in the back half.
Alright.
Okay.
Okay.
Anthony if you have already provided but did you provide some capex guidance I know you had buyers that was separate yet inmarsat you had to bring them. All together you have to figure out what the ranges, we're going to be but how should we think about capex over the next this fiscal year next fiscal year at least.
So on the Capex by themes.
Yes, we have only one line.
You need to think about having a full three months for amyris.
And breath of each quarter this year.
And way to think about the rest of this year.
131 4 billion.
And of course for both campaigns for the next nine months.
And then as you think about next year I would say, we could see that kind of down.
Year over year.
Yet today here.
Okay.
And obviously one of the big events in our universe was dish.
Buying echostar couple of questions there or is that an asset you would have been interested in or were shown and part of what they talk to you on the dish Echostar call was.
The excitement about both directed device.
Also private <unk> network. So if you could maybe expound on that.
Okay.
I'm going to I'm going to pass on the FERC and diverse.
About acquiring them I think.
Thanks Ryan.
Okay.
Yes.
Yes.
So on the direct to device part we have talked about that we do we are optimistic about that.
We are.
We're working it from a number of dish.
From our perspective, including.
How we evolve the business from <unk>.
Using <unk> using <unk> band for specialized satellite devices, and we don't think that goes away, but what do we need to do to our systems to really make the director device business scale, we think that.
It's both a interesting technical.
Technical problem and one that we think will.
Well suited to deal with and then the other implication good thing I think.
Also keep in mind as you know in order to be able to close good.
<unk> had good service to off the shelf cell phones or smart watches the types of devices that people are putting that director device category.
Youll need.
Got more throughput effective throughput from the satellites, which will also.
Greatly.
Enhance the demand.
For more specialized mobile satellite services, because we'll be able to deliver a lot higher speeds and more bandwidth into its still very small terminals, but with antennas that are.
Still you'll still have if you look at a normal cycle, that's not a big device looking antenna satellite antenna adaptor prices can be as much as.
Five to 10 times better than that.
Conventional cell phone so that creates opportunities.
Looking to do as this director device business matures, we want to be able to still.
Still.
Use the space system assets, we have in our capital invest that monetize after these other markets that were really familiar with so yes. The short answer is we think it's a really big opportunity I think.
And then you get into the details and we do think it's going to play out over several years, but we think the.
Stages, really really attractive and we think that the.
Both the assets resources technology, we have will help us be successful there.
And I also don't think.
I mean personally I know people want to.
His position these things as sort of a winner take all I think that in order for the business to really be scalable theres going to be an opportunity for certain types of standards that will.
I think <unk>.
Operators.
Work within those standards.
Delivery space systems that work well with them ground technology that uses them.
Steph will play into.
It being a big sector I'm, just waiting for one individual operator.
Okay. It makes sense, we'll stay tuned there would say well.
Thank you Rick.
We'll go to Ryan <unk> Needham <unk> company.
Yes.
Thanks, I wanted to ask about the.
The core maritime business that Inmarsat, and obviously, that's been a long time legacy strength of theirs and ask about the competitive environment. That's changing at all it seems to me, there's lower barriers to entry from the Leos and Starlink and I hear about some progress from them in the maritime area. So any insight you can share.
And that space would be great I appreciate it.
Yes.
The maritime space is changing I think a lot of that is because of the entry barriers are available.
The thing.
This is actually a big part of what we do.
Across the mobility businesses and part of what we think makes the mobility business. What's interesting is if you look at it from the perspective of.
Where geographically where is the demand.
Then what Ty.
What type of service are different segments of the maritime market looking for Thats, where the opportunity to spy because the big issue.
We have.
Spoken over and over on the <unk> space.
The real problem that the real problem.
For airlines, especially.
Enterprise users, who need to provide a predictable level of service the big problem is not connecting an individual plant in flight.
Providing.
Predictable level of service and the places where the airlines congregate, which is especially.
Alright.
The airport hubs to what we are seeing in the maritime space is.
Surprisingly congestion.
At major ports, where the places where people are trying.
These Leo systems, especially early on.
That.
Things like leisure leisure boats, we're dealing with an individual that may use a ship.
Radically or occasionally.
Yes.
Connectivity is nice to have but it's not.
Operationally important to them.
<unk> of those ships so that that those areas are the areas where.
Ships are looking for end to end.
Service level agreements at a predictable level.
And we're already seeing congestion.
Some of these Leo systems, there is a real opportunity for us to both improve our services and to make them more enduring and Thats where were focused.
Print segment.
The maritime business.
Sure that's really helpful. Thanks, Thanks Mark.
Meanwhile, Inmarsat has.
Has maritime customers across multiple segments. That's the segment that really is the one that they've grown up the most and I think thats, one where we have the best opportunity to show that we can do.
Got it got it thank you.
Thanks Rod.
Our last question today comes from Louie Dipalma of William Blair.
Mark Shawn and Peter Good afternoon.
Okay.
Yes.
Yes.
On the government defense side, there's been a lot of publicity regarding how the Ukraine more and geopolitical tension in.
And Asia has triggered umbro bus demand for for Starlink.
Backup or even a primary source of defense connectivity has the Ukraine <unk> also led to a surge in demand for inmarsat.
And services.
The I think.
Yes.
Right.
I don't think we're going to go into great depth about what we're doing.
Specific defense communications.
You don't you just read the newspapers and one of the things you can see is that there.
Is concerned.
But in multiple fronts about being overly dependent on single sources.
Connectivity for various reasons and so I think.
I think.
A number of satellite operators are seeing demand.
Different operators are somewhat uniquely positioned to.
Okay.
Certain different elements of that demand.
You could put us in that group.
Great.
<unk>.
On different lines.
Mark Legato was recently in the news regarding potential re structuring.
Can you discuss the status of your end Inmarsat relationship with legato and is there the potential that legato can begin.
Again, making large payments to inmarsat.
Okay. So <unk>.
And in Marseille, Egypt.
Yes.
Relationships with legato for quite a while but in different domains.
B.
Hey, Mark saturation ship was really around.
But our spectrum.
Our relationship has been more around operational performance using their satellites.
<unk>.
I think what we're trying to do is bring those too.
Two things together.
It's really going to be up to the Gao to determine.
Sure.
How they want to proceed.
Not on their own but.
Discussing we're in discussions with legato.
Out how best to proceed on both of those fronts.
Some of that depends on decisions that legato mix as well as.
Choices.
So it's a little early to tell.
They have expressed.
One of things that legato is expressed as <unk>.
Interest in the long term side of it.
More more than they have in the past and so that's the basis for further.
Further discussions.
But.
It's just too early for us to comment on what the outcome of those discussions one piece mark to add annually.
I'd say, we have excluded in the guidance from our financial models, so any payments or return spectrum would be an upside. So we've not included that in our models. Thanks. Thanks, Mike that's been our position all along and so we announced the acquisition.
Great.
Final one.
For Mark what is the process to make.
Existing viasat inflight connectivity systems.
For your like North American airline customers interoperable with.
The Inmarsat network that also has coverage over.
North America.
Okay.
It's a little bit it's a little bit of a nuanced problem.
Either so think of it as one of the ways to start with.
We can build on this is that.
So.
We can support both either networks pretty straightforwardly.
Think of it is.
The.
Okay.
There is a little bit of a nuance for part of our fleet.
Becomes a little more.
A little bit of a newest part of our fleet, but basically that.
We can make.
And you've seen this <unk>.
For instance, with Inmarsat, where inmarsat is used third party satellites, we've used third party satellites and what that speaks to is just the ability to adapt the networks to other satellites.
Some of the specific satellites, but not all.
It's a little more complicated too.
So.
Networks at the same time and exactly the same place.
But not but theres lots of places, where we can do that as well so think of I mean, the simplest way to think about it is that the.
Because they are not.
Other than that one one special case, theyre, not really onboard process satellites satellite or just repeaters.
There is from a basic interoperability perspective, we can run.
Our network and Inmarsat can run their networks over third party satellites, including each others.
Including different parts of each other's as we need to.
Last piece is to be able to do to do that.
Exact used both of them at exactly the same place exactly the same time.
And what we can do that in some cases not all that's the last piece is that does that get to what you are asking about.
That covered yes, youre asking for.
Yes.
Are your existing North American customers, such as Jetblue, United American Airlines Delta.
You've discussed how you need to add.
Certain amount of capacity to make up for the lost for Viasat three and I was wondering if the inmarsat capacity over North America can be one of those sources of capacity and.
Thanks for the aircraft that are being in a line fit.
Now have you already done the work to make the antenna interoperable with book both networks.
Yes.
So there are a couple of nuances that apply to specific.
Specific airplanes, depending on the age of those airplanes.
That's somewhat different than the equipment thats on the airplane. So there are it.
What I'm going to strive through across the board, but it's largely true and it's especially more true for the newer the newer equipment that we're deploying and the newer satellites.
Yes.
But yes. The short answer here is we've already have theres already inmarsat.
<unk> centered over the Americas that covers north and South America, and the ocean to the east and West.
No.
And then think of it is going back to the answer.
Laura Chris Quilty.
We want to add airplanes.
Our service or our customers want to improve the service level agreement towards service doesn't mean that we need bandwidth everywhere, we needed in the places where we can forecast.
What the demand will be.
And so we can draw on.
The Inmarsat fleet.
Provided that problem for us.
Excellent.
Okay.
Yes, that's exactly what I was looking for thanks Martin.
Shannon and Peter.
Take care.
Thanks.
And good luck with the.
If I ask three investigations. Thank you I appreciate that we'll give an update next quarter.
Okay.
Conclude our question and answer session I would like to turn the call back to Mr. Mark Goldberg for any additional or closing remarks.
Okay. Thanks so.
Thanks again for joining us this afternoon.
I would like to leave you with three important takeaways.
One we had a really good first quarter strong financial performance out of that.
Based on the.
The specific businesses that we're in and the backlog that we had.
We expect to continue to grow revenue and adjusted EBITDA. Both this year next year, even even if we make.
Very conservative assumption about no contribution from Viasat, one that is not the same just to be clear thats not the same as a prediction about what being a third viasat three Taiwan, that's not the same as a prediction of what the Viasat 351.
Do.
Then we do have a great long term opportunity to create a lot of value. We can build on our market leading positions in these growing global mobility and government services markets for both broadband and the mobile device market.
Not material synergy opportunities that we're executing on and we like building a diverse and resilient.
Financial profile.
It does bring strong free cash flow potential with it.
So with that look forward to updating you on our <unk>.
Progress next quarter and add back to the operator.
Once again, everyone that does conclude today's conference we would like to thank you all for your participation you may now disconnect.
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Yes.
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Yes.